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Speaker 2: With us again and ring us back to back.
Speaker 3: Stephen Flynn here in a moment on the credit side
Speaker 3: of this historic transaction, a trooper Getha ragenoffen with us
Speaker 3: in the last hour and joins again. Githa, somebody emails
Speaker 3: in from Delaware loose beach or something.
Speaker 2: It never goes under freezing on the Delaware beach. Githa,
Speaker 2: what happens to CNN?
Speaker 4: So what happens to CNN? So the Netflix transaction actually
Speaker 4: is only for the streaming and the studio business. So CNN, TBSTNT,
Speaker 4: which are all part of the Turner Networks, they are
Speaker 4: going to be spun out into a separate company by
Speaker 4: the end of the third quarter of next year. And
Speaker 4: you know, hopefully, I think along the way, Warner Brothers
Speaker 4: is going to look for some m and a combination
Speaker 4: for that asset as well.
Speaker 3: With mister Roberts. I don't mean that's exactly right. Wait
Speaker 3: a minute, let's get this straight. Geitha expert, Sweeney expert,
Speaker 3: Keen the dummy.
Speaker 5: I'll shut up, Paul, Please, Hey, Keith, I was just
Speaker 5: gonna ask David Zaslov, the CEO of Warner Brothers Discovery,
Speaker 5: a self proclaimed media mogul, here, what happens to him
Speaker 5: in this transaction?
Speaker 4: Yeah, that's what's kind of been the real head scratcher here, Paul,
Speaker 4: because you know, as we were chatting a little bit
Speaker 4: earlier this week, I mean, we thought that they would
Speaker 4: really favor the Comcast transaction because NBC was going to
Speaker 4: be spun out and they had reportedly offered David Zaslav
Speaker 4: the position of CEO for the combined NBC and Warner
Speaker 4: Brothers streaming and studio. So it's it's really a little
Speaker 4: bit puzzling at this point. But I think what David's
Speaker 4: love has done here is the best outcome for shareholders. So,
Speaker 4: you know, as he promised.
Speaker 5: Yes he did, he absolutely delivered for shareholders here. What
Speaker 5: is the you know, Jason Bezen end at City had
Speaker 5: a nice comment earlier this week. I was listening to
Speaker 5: one of his podcasts. This is kind of a long term.
Speaker 5: This is going to be really good for Netflix because
Speaker 5: they need, believe it or not, even more content. They
Speaker 5: spend seventeen eighteen billion dollars a year own content, but
Speaker 5: they really need a library. Do you think this is
Speaker 5: a deal that Netflix really had to do, Githa.
Speaker 4: I think I think so, Paul. I mean, we were
Speaker 4: we were talking about whether this was really existential for Netflix.
Speaker 4: You know, many on the street had argued that this
Speaker 4: would be a major distraction. But I think it's not
Speaker 4: so much the cost of doing the deal. It's the
Speaker 4: cost of not doing the deal. And yeah, and really
Speaker 4: it's like as they kind of play the long game here.
Speaker 4: You know, Netflix is not competing against Disney Plus or
Speaker 4: Amazon Prime. They are competing against YouTube and you know,
Speaker 4: this is where they really need to kind of you know,
Speaker 4: double dow on franchises on. You know, they're getting a
Speaker 4: lot here. Of course, you have all the franchises, you
Speaker 4: have the library, you have a prestige brand, and HBO
Speaker 4: you get a studio lot. So this was a once
Speaker 4: in a lifetime opportunity in Netflix made sure, you know,
Speaker 4: they didn't mess up.
Speaker 3: Okay, but Thel, you just mentioned the elephant in the room,
Speaker 3: which is Google Now they're distracted with AI, AI eio, Google,
Speaker 3: Gemini home run this That what Google does for us
Speaker 3: every day here at Bloomberg Surveillance.
Speaker 2: Subscribe to Bloomberg Podcast. Keitha.
Speaker 3: Raganathan, what is the response of Google to this transaction question?
Speaker 4: I mean they're already responding, Tom. I mean, you have
Speaker 4: AI here. Netflix is really kind of looking at this
Speaker 4: as AI kind of comes in and changes the whole
Speaker 4: content cost structure, changes the whole content industry. You can
Speaker 4: basically make a movie. You have all these video or
Speaker 4: text to video functionality on these lllms right now, and
Speaker 4: that can completely change the game. And that's really what
Speaker 4: Netflix is protecting against here. YouTube already is doing a
Speaker 4: lot in that field, so you know, they don't really
Speaker 4: need to do anything. They just keep doing what they're
Speaker 4: doing and everybody else has to really get scared and
Speaker 4: you know, buckle up. And that's exactly what Netflix has done.
Speaker 6: So Keetha.
Speaker 5: We're going to talk to Jenery Bloomberg Intelligence antitrust analyst
Speaker 5: in the next hour here. But what's the what are
Speaker 5: the companies saying about the regulatory risks to this transaction?
Speaker 5: Because I know there's a really big breakup fees here
Speaker 5: in the billions of dollars.
Speaker 4: Yeah, yeah, it's a five point eight billion dollars break off,
Speaker 4: one of the highest I think ever in a media transaction.
Speaker 4: You know, we're almost six percent of the end more
Speaker 4: than six percent of the enterprise value here, so they're
Speaker 4: definitely a huge number. Yeah, anti trust is going to
Speaker 4: be a problem. Obviously, genre has much more perspective than
Speaker 4: I do. But you're basically combining the number one streaming
Speaker 4: service with the number three streaming service, So that's not
Speaker 4: going to fly nicely with regulators. So again, it's it's
Speaker 4: going to be a little bit of a weight and watch,
Speaker 4: and Netflix really didn't provide too much color on that,
Speaker 4: so we don't know whether they're going to sell the
Speaker 4: HBO service or how exactly they're going to manage that
Speaker 4: going forward.
Speaker 3: Gaza, you know, this is the question of the day.
Speaker 3: I'm sorry all this other stuff. Yeah, Sarah, coming out
Speaker 3: of a Thursday night, you know, what are what do
Speaker 3: you used to call Thursday nights in college? Oh?
Speaker 5: Just that's my Friday, you know, like rip it on Thursdays,
Speaker 5: rip it on Thursday.
Speaker 3: This is a Temple University in Philly, Sarah, thanks for
Speaker 3: emailing in what happens to my Netflix Bill?
Speaker 2: I mean, geith, is the price of all this is
Speaker 2: going to go up?
Speaker 4: It has to, Tom, you know, it has to.
Speaker 2: Can you round it up? Are we going to stay
Speaker 2: under twenty dollars a month for Netflix?
Speaker 4: I think eventually it's going to go higher than that.
Speaker 4: But yeah, as much as we complain about you know,
Speaker 4: Netflix of price being high for the cost of the
Speaker 4: streaming service, if you're actually looking at the value you're
Speaker 4: getting a per dollar, you know, in terms of time
Speaker 4: spent per dollar, it's actually really a pretty compelling value proposition.
Speaker 4: And I think as they keep adding more content, as
Speaker 4: they keep adding you know, more to the library of
Speaker 4: that give them huge pricing power. It also helps them
Speaker 4: to build their advertising business, so maybe you know a
Speaker 4: little bit of that the price increase, they can kind
Speaker 4: of offset that by also building their advertising business and
Speaker 4: keeping costs slow.
Speaker 3: Keithie, your trooper, I'm sure you got a twenty four
Speaker 3: hour day ahead of you. Getha Raganath and driving our
Speaker 3: expertise on Netflix given this historic just transaction.
Speaker 2: Stay with us.
Speaker 3: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
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Speaker 3: One of our most popular guests a huge value added
Speaker 3: through the year is Katherine Kaminski. She's with Alpha Simplex,
Speaker 3: hugely associated with the Massachusetts Institute of Technology. Katie Kominski
Speaker 3: here on trend, Katie, when we had some angst here recently,
Speaker 3: I guess we have a trend and we have stopped loss.
Speaker 3: Were your stops violated within all the angst or were
Speaker 3: you okay to stay on trend?
Speaker 7: I would say that there was a little bit of
Speaker 7: a pullback in equities, but you really haven't seen anything
Speaker 7: substantial enough, and as you've seen the last two weeks,
Speaker 7: equities back in motion again, so that that's kind of surprising.
Speaker 8: There there are some jitters, though, I'd say.
Speaker 3: What's the technical characteristic of the new strength in this
Speaker 3: equity market.
Speaker 8: I say it's re emerging.
Speaker 7: So you've seen definite strength in the equity markets, but
Speaker 7: you've seen that sort of consolidate and then re emerge
Speaker 7: in the sense that you know a trend that started
Speaker 7: to consolidate.
Speaker 8: Still kind of is holding on.
Speaker 3: One of the heroes for Catherine Coavinsky and meet paul
Speaker 3: Is Louise Eumada.
Speaker 2: Yeah, I kind of absolutely iconic, and she.
Speaker 3: Would say, Luis Jumada would say, we're seeing distribution and
Speaker 3: then boom, yeah you.
Speaker 2: Go where down you go? Yep, distribution is what we
Speaker 2: enjoyed this year.
Speaker 5: So Katie talked us about the dollar here. It seems
Speaker 5: to have kind of stabilized here. I'm not sure from
Speaker 5: your perspective is that a trend because we had an
Speaker 5: eight percent nine percent soft, but it's kind of stabilized here.
Speaker 7: Yeah, the dollar is stabilized from the week dollar trend,
Speaker 7: but we've seen very different positioning in the dollar across
Speaker 7: different em and developed currencies. I think I'm the most
Speaker 7: interested to see what happens with the VOJ because you know,
Speaker 7: you have US cutting rates and then you have VOJ
Speaker 7: potentially hiking rates, which is going to kind of cause
Speaker 7: currencies to dislocate and move around, I would guess.
Speaker 8: So I'd say the currency trade is.
Speaker 7: One that is up for grabs going on in the
Speaker 7: next two three weeks.
Speaker 5: So how do we think about just going into twenty
Speaker 5: twenty six. Are there any themes you're you guys are
Speaker 5: looking at from a kind of momentum type perspective.
Speaker 7: Yeah, this is a good question, because you know, I
Speaker 7: think the really interesting thing that we're seeing right now
Speaker 7: is just the very dispergent or disparate trends that you're
Speaker 7: seeing across the globe. Fixed income in particular is very
Speaker 7: interesting just this idea.
Speaker 8: I mean, let's take Japan and Australia.
Speaker 7: They're in a completely different trajectory than the US, So
Speaker 7: I think it could be a very exciting year next
Speaker 7: year where you'd have sort of cycles of boom and deflation.
Speaker 7: And that's always exciting for us who are looking for
Speaker 7: different themes and trends over time.
Speaker 3: Katie Kminsky with us A very strong thirty five to
Speaker 3: forty minutes for you. Katie Kiminski with us the Uri
Speaker 3: and Shimmer. Good morning to Boston as we look at
Speaker 3: different sides of the Charles River. In ninety two nine
Speaker 3: FM UP in Boston features Up thirteen, Town features up
Speaker 3: forty three. Right now again for you, in a historic
Speaker 3: moment for American capitalism, Paul am I right, the only
Speaker 3: equivalent I can think of as Time Warner AOL a
Speaker 3: few years ago.
Speaker 2: I mean, it's that kind of romance and emotion, isn't it. Yeah?
Speaker 5: Absolutely, And this this is a very interesting deal because
Speaker 5: you have two really really high quality companies coming together.
Speaker 3: The headline Netflix to buy Warner Brothers in seventy two
Speaker 3: billion dollar cash in stock deal. We continue with Katie Kaminski.
Speaker 3: Katie the idea that we are resilient. That's a word
Speaker 3: I've seen fourteen times in the last forty eight hours.
Speaker 3: I would say we are resilient. Are we resilient because
Speaker 3: we allow capitalism, because we have a shepherdarian ability to
Speaker 3: allow failure?
Speaker 7: I mean, I think that's a very good existential question.
Speaker 7: I'd say that, you know, the US markets still have
Speaker 7: been leaning on relatively strong growth and the numbers are
Speaker 7: still in our favor. What is a cautionary tale, though,
Speaker 7: is looking at places like Australia that had out all
Speaker 7: of their rate cuts for next year. So I think
Speaker 7: it's still a very you know, you know, the tides
Speaker 7: can turn and you can see a hot inflation print
Speaker 7: or things that might kind of change direction. But for
Speaker 7: right now, growth has been steady. The US is looking strong,
Speaker 7: but that can change if we start to see more deterioration.
Speaker 3: I mean, I look, Katie, at where we are, and
Speaker 3: there's going to be winners and losers. What flavor I
Speaker 3: mean within CTAs and hedge funds, what flavors the winner
Speaker 3: this year? Off trend analysis? What flavor is the loser?
Speaker 7: Oh, that's a good one. Equities have definitely been a winner.
Speaker 7: Besides what happened in April. Gold is also a clear winner.
Speaker 8: Silver.
Speaker 7: But when you look at things that have been hard
Speaker 7: to trade, I'd say it's fixed income because fixed income
Speaker 7: has been very back and forth, and there's been a
Speaker 7: lot of speculation about sort of the general move the FED.
Speaker 7: There's been descents in the FED. So I think fixed
Speaker 7: income has been hard to trade this year.
Speaker 5: But Katie, how about it on the commodity side, Boy,
Speaker 5: that dollar? I mean the gold's ripping, silver even more so.
Speaker 5: I mean, I haven't seen movements in these precious metals
Speaker 5: in a long time.
Speaker 2: Here.
Speaker 5: How do you think about it going forward?
Speaker 7: So I think to think about the gold trade, especially
Speaker 7: in a situation when the dollar is weaker as this
Speaker 7: potential hedge, and you're really seeing something that people are
Speaker 7: holding on to while they hold on to something that
Speaker 7: they know they should hold, so equity, So it's kind
Speaker 7: of this risk mitigator in a sense. And I think
Speaker 7: that's why gold is so valuable. People are thinking we
Speaker 7: got to hold onto something real and that way, if
Speaker 7: things do get challenging, we have that.
Speaker 2: I got opinion down O. Katie De Paul's good question.
Speaker 3: In commodities, I brought up the Bloomberg Commodity Index iconic
Speaker 3: at UBS. It's a really important blended index at what's
Speaker 3: going on. I took it back, Katie to Richard Nixon
Speaker 3: in Gold nineteen seventy. I've got a multi decade rushier
Speaker 3: Sharma commodity boom.
Speaker 2: It ends O nine to ten.
Speaker 3: I got a bear market in commodities, but you know what,
Speaker 3: I'm sort of teen swings kind of breaking out. Do
Speaker 3: you have an up trend on a blended commodity index.
Speaker 7: So we're definitely seeing generally up trends in commodities. The
Speaker 7: best ones have been the base and precious metals aags
Speaker 7: have been more mixed, and energies have actually frankly been
Speaker 7: a little difficult to trade because they've been somewhat range bound.
Speaker 7: If you look at the BCom Index, it does have
Speaker 7: a significant energy tilt, so that may make a difference
Speaker 7: in terms of looking at that particular index, but more
Speaker 7: equal weighted index I would assume would be definitely up,
Speaker 7: particularly because of what's going on in the metals.
Speaker 5: Katie, We're going to hear from the feeder Reserve next Wednesday.
Speaker 5: How do you guys, as you know, kind of momentum
Speaker 5: type traders, trend traders, how do you guys factor in
Speaker 5: kind of FED policy? And maybe we'll get it and
Speaker 5: get a change in FED leadership.
Speaker 7: Actually, so i'd say that, you know what's interesting, that's
Speaker 7: a very good question because right now I am scratching
Speaker 7: my head a little bit about fixed income because you
Speaker 7: do see yields going up in anticipation of what is
Speaker 7: seen as a foregone conclusion, and the way that we
Speaker 7: trade fixed income trends is really about where the prices move.
Speaker 7: So I think it is interesting to think about more
Speaker 7: short signals and perhaps less conviction and fixed income because
Speaker 7: yields are rising, I think that's really more of the
Speaker 7: market being concerned about the BOJ in the short term,
Speaker 7: but the general trend has been more long for fixed
Speaker 7: income and anticipation of a tilt in the fed to
Speaker 7: a much more dubbish stance.
Speaker 3: Katie, thank you so much for joining us all through
Speaker 3: the year. Kathy Kominsky with Elpha Simplex huge. You get
Speaker 3: a huge response from our work on trend analysis and
Speaker 3: all this of course off the work of Andrew Low
Speaker 3: and Mit just absolutely legendary up in Boston.
Speaker 2: Stay with us.
Speaker 3: More from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business App. You can also listen live
Speaker 1: on Amazon Alexa from our flagship New York station, Just
Speaker 1: say Alexa Play Bloomberg eleven thirty.
Speaker 2: We start with the heart and soul of our coverage.
Speaker 3: He has built our entertainment franchise truly worldwide. Felix Gillette,
Speaker 3: who's done serious reporting on this. You're right now at
Speaker 3: Michaels and you're having a Felix Gillette Power launch at Michael's.
Speaker 3: Zazz Love's with you. Maybe kind of let it with
Speaker 3: all of their history here. What's David Zevlav thinking about
Speaker 3: this morning?
Speaker 9: I mean, I think that it's hilarious that you know,
Speaker 9: we're just talking. Three years ago, we heard the argument
Speaker 9: that combining the Warner brother assets with the Discovery assets
Speaker 9: was going to unleash all of this synergy that was
Speaker 9: going to better position this company to take on Netflix.
Speaker 9: And here we are three years later, after Zaslov made
Speaker 9: that argument to all of us, and he's saying, you
Speaker 9: know what, like you know, it would be really great,
Speaker 9: is combining these assets with Netflix?
Speaker 2: Exactly right? What do you think the Netflix strategies?
Speaker 5: Because one could argue Netflix was doing great, Yeah, stock.
Speaker 2: Was doing great. Shareholders loved in the bond market, it
Speaker 2: loved them.
Speaker 5: There was a nice clean story. Now they're going to
Speaker 5: go do this huge acquisition and deal with all these
Speaker 5: crazy people in Hollywood. What do you think they're they're
Speaker 5: strategies here?
Speaker 9: Well, I think if you listened to what they were
Speaker 9: saying today, they think that those all the you know,
Speaker 9: TV series, all the movies, one hundred years of library
Speaker 9: that you're getting from Warner Brothers, that those assets are
Speaker 9: really have not been utilized to great extent, both in
Speaker 9: the US, but also they mentioned a lot internationally that
Speaker 9: you know, they see a lot of room for growth
Speaker 9: in getting more money out of the HBO brand, in
Speaker 9: particular in markets overseas. I mean, HBO had this incredibly
Speaker 9: rich brand history in the US, but overseas they always
Speaker 9: license their content to other local distributors. And I think
Speaker 9: Netflix has built this new model with the truly international
Speaker 9: distribution brand, and they think, Hey, now we can have
Speaker 9: all of those HBO shows, all of those Warner Brothers movies,
Speaker 9: and we can get a lot more out of them
Speaker 9: in these markets around.
Speaker 2: Hey, you're the expert.
Speaker 8: I mean, it always looks great on paper.
Speaker 2: What do you do with Castle blank? Make a Saturday
Speaker 2: Morning cartoon?
Speaker 9: Yeah, I think a video game or two, you know,
Speaker 9: for your mobile phone on your Netflix app? Yeah, I
Speaker 9: think it's again, these things always sound great when you
Speaker 9: look at them on paper, and then of course you
Speaker 9: get into the messy business of trying to act actually
Speaker 9: combine these different groups of people, and that's where it
Speaker 9: gets a little messy.
Speaker 2: I mean, Paul and I just talk about it. Yeah,
Speaker 2: lived it.
Speaker 3: The last time you were at the Sunset Tarro Hotel.
Speaker 3: You almost fell into the pool. You did one too
Speaker 3: many beverages with an umbrella in it. What happens on
Speaker 3: the Warner Brothers lot, What happens in those little cabanas
Speaker 3: that you've been in that Paul and I have never
Speaker 3: been in.
Speaker 9: Yeah, you know, those people have a job. I think
Speaker 9: that a lot of those people are sweating pretty hard
Speaker 9: right now. I mean they're talking about two or three
Speaker 9: billion dollars of savings a year.
Speaker 2: You know, today they're saying, well, we.
Speaker 9: You know, that's going to come out of the tech stack.
Speaker 9: That's not about you know, we're going to continue to
Speaker 9: spend money where We're going to continue everything just as
Speaker 9: it is. We embraced We're going to embrace the theaters,
Speaker 9: even though you know, we've basically been saying for years
Speaker 9: that we don't care about movie theater distribution. And so yeah,
Speaker 9: I think it's it's a little worrisome for all those people.
Speaker 2: We're commercial free for you.
Speaker 3: The day of this historic transit for Hollywood and for
Speaker 3: Los Angeles, New York and America, Felix Jillette with his
Speaker 3: Jason Bezinett and Jenery coming up as well into the
Speaker 3: ten o'clock our Paul, you know I did all the
Speaker 3: work myself.
Speaker 2: I know you did with the help of Google Gemini.
Speaker 3: Three years ago, the Reverse Morris Trust was a forty
Speaker 3: three billion dollar transaction.
Speaker 2: So now they're going to squeeze out of age of
Speaker 2: eighty two billion. Yep, that's a first daf of seging
Speaker 2: those numbers. I know. Yeah, was this a.
Speaker 3: Win win or a win lose or a lose loose transaction?
Speaker 2: Well, ultimately it's going to be good for shareholders.
Speaker 5: I think I have to go back and look at
Speaker 5: the historical returns, but I mean it's certainly way more
Speaker 5: than when the stock was trading just a few months ago. Felix,
Speaker 5: the management team of Netflix very well thought of. They've
Speaker 5: done an extraordinary job reinventing the entire entertainment business. One
Speaker 5: thing they haven't done is they haven't done a big acquisition.
Speaker 5: How are people feeling about that? Do they feel like
Speaker 5: this managing team can execute here?
Speaker 9: Yeah, I mean I think they're feeling like it's a
Speaker 9: big challenge and they haven't done it before. They also,
Speaker 9: you know, not too long ago, were saying we'll never
Speaker 9: do advertising, and then what do they do. They lounge
Speaker 9: an advertising service that now is starting to get traction.
Speaker 9: You know, Oh, we're you know, we're not interested in
Speaker 9: all these things. And they've they've you know, continued to
Speaker 9: evolve and continue to make these big moves. I think
Speaker 9: it's fascinating to watch. You know, Ted Sarandos has been
Speaker 9: chasing the HBO series from twenty ten. You know, they
Speaker 9: used to be you know, partners and the DVD business
Speaker 9: and when they switched to streaming, you know, they'd seen
Speaker 9: how well the Sopranos did for them in the DVD
Speaker 9: era and they wanted it on their streaming service. And
Speaker 9: you were, now, you know, fifteen years into this pursuit
Speaker 9: of various people in the time, Warner Warner Media, Warner Media,
Speaker 9: Discovery World saying no, you know, you can't have those assets.
Speaker 9: We don't want to give you our crown jewels. And
Speaker 9: you know, you pursue something long enough, and now Ted
Speaker 9: Sorrando's will finally get them.
Speaker 5: What's the role these days? I know he's chairman of
Speaker 5: the board Read Hastings. Yeah, the founder here really for
Speaker 5: most people, the visionary for this whole thing, which his
Speaker 5: role these days? And what do you think his role
Speaker 5: was in this transaction?
Speaker 9: I mean, I think he's you know, obviously the architect
Speaker 9: of this whole business from its start, the culture, the history,
Speaker 9: I think, but you know, Surrando's and Greg Peters ye
Speaker 9: have pushed it and they've been you know the last
Speaker 9: couple of years of these big moves. You know you're
Speaker 9: talking about the at first things like password crackdown, which
Speaker 9: didn't seem that glamorous, like oh that's gonna do, but.
Speaker 2: That was pretty effect was like they got a lot
Speaker 2: out of that.
Speaker 5: Then you know, again impacted my household.
Speaker 9: Yeah, have there been some missteps under the current leaders,
Speaker 9: you know, since Hastings kind of moved into this more
Speaker 9: you know step back role. You know, look at the
Speaker 9: video games. You know, they've been talking about video games
Speaker 9: for years as a thing. Netflix was going to get
Speaker 9: a lot of tracks and with nothing right, that's been
Speaker 9: the big.
Speaker 3: That's where I wanted to go here to finish it up.
Speaker 3: Felis Jill out with us. We're going to go to
Speaker 3: regulation in a moment. The reality folks is Bloomberg and
Speaker 3: Lucas Shaw gets all the romance and love.
Speaker 2: He does screen time and he's you know, he does
Speaker 2: he wear anything but black.
Speaker 3: I don't think, you know, Phoenix Jelllet's do the actual
Speaker 3: work here at Bloomberg.
Speaker 2: And you've got Ashley.
Speaker 3: Carmen and Kelsey Griffithson, this great team we've got and
Speaker 3: they're all writing about stuff. Paul and I don't know,
Speaker 3: like Twitch, is there a rabbit out of the hat
Speaker 3: here in this transaction that justifies it rapidly for Netflix.
Speaker 9: I think it's not some magic, you know, rabbit out
Speaker 9: of the have moment. I really think it's you know,
Speaker 9: they said, well, you know today, Greg Peters, why would
Speaker 9: this be different than all these other media mergers that
Speaker 9: have failed that we've seen have been so tumultuous. Going
Speaker 9: back to AOL Time Warner, we've heard about Senator for
Speaker 9: so long, and he's saying, look, we know this world,
Speaker 9: we know the entertainment world. We've proven it. But this
Speaker 9: gives us more firepower, and we're going to double down
Speaker 9: on what we do to the frontload of synergies.
Speaker 2: On instance of Jason bezen At in a bit to the.
Speaker 3: Front, hold the synergies, stretch it out for five, six,
Speaker 3: seven years.
Speaker 9: I think they're going to get the tech center synergies
Speaker 9: very quickly. I mean getting rid of all the you know,
Speaker 9: the HBO streaming stack. They don't need that stuff, they
Speaker 9: have that in place. Yeah, I think the centergy will
Speaker 9: come quick and heavy back to work.
Speaker 3: Felix Jillette with us just driving all of our entertainment
Speaker 3: coverage here and you're really really appreciated decades of credit
Speaker 3: as well.
Speaker 2: Stay with us.
Speaker 3: More from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. You can also listen live
Speaker 1: on Amazon Alexa from our flagship New York station, Just
Speaker 1: say Alexa play Bloomberg eleven thirty.
Speaker 2: She is been on board this bull market since time.
Speaker 2: You can have bonus round.
Speaker 3: She's the only one on the island of Manhattan who
Speaker 3: shop owned shares in both Netflix. Nice. It's amazing how
Speaker 3: you own both shares as well. How does it change?
Speaker 3: How does this transaction eighty billion dollars? How does it
Speaker 3: change the cast for Byside America?
Speaker 10: But I think this is the big thing is that
Speaker 10: Corporate America feels comfortable that they can make this transaction
Speaker 10: and then it's going to be able to float through
Speaker 10: the system and create shareholder value.
Speaker 6: And that's a big change. Remember, Corporate America has.
Speaker 10: Really been on someone of its back foot and mergers
Speaker 10: and acquisitions have been relatively low, particularly of this size,
Speaker 10: because rates have been so high. So I think it's
Speaker 10: a CE change. I think it's you know, relatively good
Speaker 10: for the S and P five hundred, and I think
Speaker 10: it's going to be a great transaction for shareholders.
Speaker 5: Barbara's but that's you know, M and A coming back
Speaker 5: a little bit as a positive indicator for the market.
Speaker 2: Here me.
Speaker 5: The next data point for this market is the FED
Speaker 5: next week on oh sure, Wednesday. What are you guys
Speaker 5: looking for you positioning one way or the other? Are
Speaker 5: you just kind of like everybody else saying we're going
Speaker 5: to get a cut and we'll go from there.
Speaker 8: Yeah.
Speaker 10: I mean, look, we've been risk on for this entire year, right,
Speaker 10: we thought that equities. We thought that equities we're going
Speaker 10: to be able to power through a lot of geopolitical risk.
Speaker 10: We added to equities back in April of this year,
Speaker 10: so you know, we've had the benefit of the wind
Speaker 10: at our back. I do think that the Fed's likely
Speaker 10: to cut. I think that you've got the labor market
Speaker 10: looks like it could probably use some relief.
Speaker 6: I think consumers could use some relief as well.
Speaker 10: And I think there's enough in the enough in the
Speaker 10: pipeline from the data that we have that says that
Speaker 10: the FED could cut. It may be a hawkish cut
Speaker 10: where they say we're going to cut and this may
Speaker 10: be it for a while, or it may be one
Speaker 10: more of a dubbish cut where they say we're going
Speaker 10: to cut and we're going to be data depending. I
Speaker 10: think that's what the market's going to, indeed going to
Speaker 10: react to. But remember in twenty twenty six, you're only
Speaker 10: looking for maybe three cuts, So if you get another
Speaker 10: one or two, the market taking out one isn't necessarily
Speaker 10: going to cause a lot of damage.
Speaker 3: All the phrase data dependent was a drinking game for
Speaker 3: twenty twenty five.
Speaker 2: What should the phrase be for next year?
Speaker 10: It's going to be who the next FED chairman is.
Speaker 10: That's going to be the big flash point.
Speaker 5: So how do you handicap that, because I guess there's
Speaker 5: some polar games out there about how who it's going
Speaker 5: to be. Mister Hassett, mister Bessett, I don't know, right,
Speaker 5: do you guys care about.
Speaker 2: It that much?
Speaker 10: Well, of course we care about it, right. The Federal
Speaker 10: Reserve is the central bank of the world. It's a
Speaker 10: big one for us. We don't necessarily position our portfolios
Speaker 10: on who the next FED chairman is going to be.
Speaker 10: We know that the FED chairman, whenever they come in,
Speaker 10: they're always tested by the markets. We've seen this time
Speaker 10: and time again over the past eight FED chairmen that
Speaker 10: have been in place since the nineteen forties. It's either
Speaker 10: because they say something that the market get the misinterprets.
Speaker 10: No one knows exactly where their policy is. You know
Speaker 10: they're going to be able to corral the committee, so
Speaker 10: we know that they'll be volatility around it. But I
Speaker 10: think the earning support for twenty twenty six is likely
Speaker 10: to be strong enough that it would probably present a
Speaker 10: buying opportunity.
Speaker 3: We're ryin Haard with this with voya across this nation.
Speaker 3: Good morning, the way you listen to us, Good Morning,
Speaker 3: ninety two nine FM in Boston, good Morning, and Hartford,
Speaker 3: Connecticut as well at Trinity College. You know, I look
Speaker 3: at this, folks, and I want to give you a
Speaker 3: vignette because what Ms.
Speaker 2: Reinhard just said is really important.
Speaker 3: I'm in a room a couple days ago with Jacob
Speaker 3: Frankel the Bank of Israel, Mister Shirakawa, the Bank of Japan,
Speaker 3: Port Gay of Argentina. In the audience was Exel Weber
Speaker 3: of the bundest Bank, sitting next to John Lichski definitive
Speaker 3: at Salomon Brothers in the IMF, and Barbara Reinhard. When
Speaker 3: port Gay of Argentina talked about the seriousness of this
Speaker 3: FED shift, that you could hear a pin drop in
Speaker 3: the room and why are you to explain why this
Speaker 3: is underestimated by the media. They're treating it like a
Speaker 3: parlor game. It's really serious discuss of.
Speaker 10: Course, Look what the US Federal Reserved of does affects
Speaker 10: the rest of the world, and the transmission mechanism is
Speaker 10: really through the treasury market, which is the benchmark of
Speaker 10: all risk based assets throughout the entire world.
Speaker 6: And importantly, it also will have an effect on the
Speaker 6: US dollar.
Speaker 10: Right, a lot of weakness in the US dollar this
Speaker 10: year has helped propel international equity markets. It means that
Speaker 10: places like the Euro have had a lot of strength
Speaker 10: that tends to be somewhat difficult for their companies to
Speaker 10: be able to digest that increase in their currency makes
Speaker 10: the exporters under a lot more pressure. But the central
Speaker 10: Bank for the US is the central banker to the
Speaker 10: world and I think you can't underestimate that it's more
Speaker 10: than a polo game.
Speaker 6: You have to watch it closely.
Speaker 10: If I think it's one of several things that we're
Speaker 10: watching over the course of twenty sex.
Speaker 5: Mentioned earnings, Barbara, We've had boy really good earnings in
Speaker 5: the third quarter, good earnings in the second quarter.
Speaker 2: Yeah.
Speaker 5: Is the earnings ollops enough to support this market because it's.
Speaker 10: Not cheap this market, No, this market, unfortunately is not cheap.
Speaker 10: But even if you don't get any multiple expansion over
Speaker 10: the course of twenty twenty six, you're likely to have
Speaker 10: and this is if estimates get marked down.
Speaker 6: You have ten percent earnings growth.
Speaker 10: Right, bull markets don't die when they when you have
Speaker 10: earnings growth this strong. They you know, earnings peak out
Speaker 10: generally about two years before a bear market starts and
Speaker 10: bear markets.
Speaker 6: Get slaughtered by the Fed. I have the Fed still
Speaker 6: cutting interest rate.
Speaker 10: So while I realized that valuations are at newsbleeds, I
Speaker 10: don't think you get much in terms of multiple expansion,
Speaker 10: maybe even get a little bit of contraction next year.
Speaker 10: But I would say that the earners are going to
Speaker 10: support the overall equity market.
Speaker 3: You and Jeter Martin atoms are on the same page
Speaker 3: Geno Martin atoms. So it's at HB Wealth Management. In
Speaker 3: the heart of the matter is those earnings and even
Speaker 3: the revenue top comes from an ability to sustain margins.
Speaker 3: I don't hear anybody talking about margin erosion.
Speaker 2: Yeah, I mean, is it even within the thinking.
Speaker 1: Yeah.
Speaker 10: Look, some of the lead indicators that you watch on margins,
Speaker 10: they did come under some pressure earlier this year, but
Speaker 10: it looks like they're starting to bottom out. So for us,
Speaker 10: you know, if you get past you know, don't forget.
Speaker 10: In the first quarter, even the first six months of
Speaker 10: twenty twenty six, you're lapsing a big tightening in financial
Speaker 10: conditions because of.
Speaker 6: The tariff shock, and that will make.
Speaker 10: Year over year comps at least for the first half
Speaker 10: of this year, and it's difficult to have a lot
Speaker 10: of visibility beyond that, yep, because of the midterm elections.
Speaker 10: That lapsing of year over year tightening up financial conditions
Speaker 10: with easier financial conditions in twenty twenty six means.
Speaker 6: That it's likely to give a lot of support to equities.
Speaker 5: Yeah, I think that's probably the case. How about just
Speaker 5: what screens well for you guys these days? Because It's
Speaker 5: easy for US to fall back on the AI trade
Speaker 5: because it's such a big trade and it's worked so
Speaker 5: well for many investors. But are there other things that
Speaker 5: are screening well factor wise or sector wise?
Speaker 10: Yeah, I think Look, certainly, I think the emerging markets
Speaker 10: have had They've been on their back for the better
Speaker 10: part of the past decade. They've outperformed the US over
Speaker 10: the course of this year. So has Europe. I think
Speaker 10: maybe some taking some bets on some diversification isn't necessarily
Speaker 10: a bad thing at this point. You can diversify, you know,
Speaker 10: out in em I think you've got a lot of
Speaker 10: good strength in terms of an advanced manufacturing you know,
Speaker 10: push into China. There's green shoots in China at this point,
Speaker 10: so that isn't a bad place to be. And I
Speaker 10: think also you can diversify even down into some lower
Speaker 10: cap size in the US and you'll probably still be
Speaker 10: able to do well in twenty six.
Speaker 3: But then, as you did years ago, do you suggest
Speaker 3: the high quality route is the only way to go?
Speaker 3: I mean, can you buy the garbage here and get
Speaker 3: some beta?
Speaker 10: Well, look, I think the quality has been beaten down,
Speaker 10: especially in Europe at this point, right so you know,
Speaker 10: you kind of say that, like, look as out of
Speaker 10: opportunity overseas. I think in the US you have to
Speaker 10: stick with your winners, right. I know values had a
Speaker 10: nice pop over the past couple of weeks, but I
Speaker 10: would say you probably stick with your US large cap
Speaker 10: growth winners.
Speaker 2: What is your clients? Sorry another time, what do your
Speaker 2: clients say, who said I don't believe you Barbera three
Speaker 2: years ago participate in the joy? Do they speak to
Speaker 2: you anymore?
Speaker 10: Of course they do. Look, we have long term clients
Speaker 10: at WOYA, and we're investing. We're investing for retirement, which
Speaker 10: is really important. So we have a forty year horizon
Speaker 10: and I think the meaningful piece for us is that
Speaker 10: we're helping people retire better and we're helping send children
Speaker 10: to college. Those are our two big things that we
Speaker 10: really feel a trendous amount of meaning to do. We
Speaker 10: our goal is to make sure to give them a
Speaker 10: smoother ride for their retirement investments. And that means that
Speaker 10: when you say signs of weakness, you lean into it.
Speaker 10: When you have the underlying strength of the economy behind you.
Speaker 2: Can I do an audible short letter. You weren't hard
Speaker 2: for right, at Trinity College. Okay, love, all these colleges
Speaker 2: are dying.
Speaker 3: It's you know, whatever the story is, folks, it's sad
Speaker 3: to see colleges that want to be like Trinity dying
Speaker 3: and yet Trinity, I'm going to suggestive Hartford is thriving.
Speaker 2: Yeah, what's the pixie dust?
Speaker 10: Well, I think there's a couple of things. I think
Speaker 10: a lot of colleges in the smaller colleges are under
Speaker 10: pressure because enrollment is is that isn't necessarily so strong, right.
Speaker 10: And I think a lot of kids want to go
Speaker 10: to school in the southeast, right seeing.
Speaker 2: That huge everybody wants to go Duke that Tennessee, you
Speaker 2: name it.
Speaker 10: They all want to be there because the weather is good.
Speaker 10: But I think that the thing that the liberal arts
Speaker 10: schools like Trinity give you is the opportunity to be
Speaker 10: able to analyze something and to be able to write.
Speaker 8: Now.
Speaker 10: I know some CEOs have been out saying that, you know,
Speaker 10: you don't want to go down that road. It has
Speaker 10: served me incredibly well in my career.
Speaker 2: I agree, But what you need to do is switch it.
Speaker 3: Instead of a year abroad at London School of Economics
Speaker 3: or Saint Andrews, you do a.
Speaker 2: Year abroad at for US. Yeah yeah, Barbara, thank you
Speaker 2: so much.
Speaker 3: Robert right at Trinity College, and of course outstanding at VOIA.
Speaker 3: One of the major major people three four years ago
Speaker 3: grab me by the bow tie and said time to
Speaker 3: shut up and get on board this market.
Speaker 2: Of course I didn't listen to her.
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