Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Paul Sweeney along
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Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. And liz
Speaker 2: Anne Sanders, she's not sitting one hundred eighty nine bion
Speaker 2: os a cash.
Speaker 3: She puts it to work.
Speaker 2: Liz Ane Sonder's chief investment strategist for Charles Schwab. I
Speaker 2: don't know, Lizanne, if you're sitting one hundred and eighty
Speaker 2: nine billion dollars of cash this morning, what would you
Speaker 2: do with it?
Speaker 3: Oh?
Speaker 4: Bill and Chill, I kind of agree with that, but
Speaker 4: you know the real answer to that, leaving Warren, Buffett
Speaker 4: and Berkshire. How theway is, you know, we also have
Speaker 4: a decent size in terms of client assets at what
Speaker 4: nine point one trillion dollars. But the answer to ascid
Speaker 4: allocation how much to have in cash? That's obviously specific
Speaker 4: to each investor. There's no sort of blanket comment about that.
Speaker 4: But there's income and fixed income and therein lies this story.
Speaker 5: So there in lies the story lives. It's great to
Speaker 5: see you. So Lzianne, where does that leave us?
Speaker 6: Then?
Speaker 5: How long does that story go on for?
Speaker 4: Well, I think you know. Key to the equity market
Speaker 4: is more on the longer end of the bond spectrum.
Speaker 4: You've seen this pretty tight inverse relationship between the ten
Speaker 4: year yield and the US equity market, and the really
Speaker 4: acute inverse correlation dates back to the middle part of
Speaker 4: last year when you saw the big move up in
Speaker 4: the ten year yield from sub four percent to five
Speaker 4: percent from late July to late October, and that led
Speaker 4: to almost during the exact same period of time, a
Speaker 4: ten percent in the s and p twelve percent in
Speaker 4: the Nasdaq, and then of course yield started to move down,
Speaker 4: and the early part of that moved down, it was
Speaker 4: to the benefit of equal weight, it was to the
Speaker 4: benefit of small caps, and then we saw the yield
Speaker 4: move up from three point eight to more recently four
Speaker 4: point seven. The first part of that was largely to
Speaker 4: the detriment of smaller cap stocks of equal weight sort
Speaker 4: of down the spectrum, But then when you got up
Speaker 4: to the four to seven it obviously caused some trouble
Speaker 4: for the market more broadly. Now I think we're back
Speaker 4: in that more nuanced part of the cycle where moves
Speaker 4: up and down and yields is likely to have more
Speaker 4: of a direct impact down the cap spectrum, where you
Speaker 4: have the zombie companies, the companies that are more at
Speaker 4: the mercy of what happens with yields. You know, you've
Speaker 4: been reporting on it a lot this morning. Many of
Speaker 4: the larger companies earn more interest on their cash and
Speaker 4: they pay interest on debt. So I still think that
Speaker 4: the bond market is in large part in the driver's
Speaker 4: seat for the equity market market, even more so than
Speaker 4: this parlor game of when's the Fed, you know, going
Speaker 4: to cut rates? When's the first meeting? And how quickly
Speaker 4: and how many.
Speaker 2: Lizenne, We're I guess about eighty percent away through the
Speaker 2: earnings for the S and P five hundred here any
Speaker 2: takeaways for you one way or the other.
Speaker 4: Yeah, So the beat rate on earnings is above the
Speaker 4: long term average, but below the average over the last
Speaker 4: four quarters, although the percent by which companies have beaten
Speaker 4: is decent, but it's the top line number where the
Speaker 4: beat rate has been well below long term and shorter term.
Speaker 4: So I think the real key is the companies that
Speaker 4: have been beating on the bottom line. Particularly if they
Speaker 4: haven't beaten on the top line, it's largely because of
Speaker 4: cost cutting methods in order to protect margins, so I
Speaker 4: think that's part of the underlying story. But we are
Speaker 4: looking at about a ten percent growth rate, and that
Speaker 4: excludes the big one time charge for Bristol Myers Squib
Speaker 4: It would be two or three percentage points lower than that,
Speaker 4: but since that's one company, one time nature, I'm using
Speaker 4: more the ten percent number. But we're not seeing much
Speaker 4: movement in terms of extrapolating that better than expected first
Speaker 4: quarter into the latter part of the year. So I
Speaker 4: still think the outlooks are important. And then, as has
Speaker 4: been the case in recent quarters, companies stocks of companies
Speaker 4: that have missed earnings are getting disproportionately hurt relative to
Speaker 4: the reward accrue to companies outperforming expectations, so it just
Speaker 4: tells you that the market's in a little bit of
Speaker 4: a skittish state.
Speaker 5: Yeah, I mean sometimes those drops like I'm on the
Speaker 5: closing bell, we report earnings and man, sometimes that punishment
Speaker 5: as an understatement, so we like a little bit tab
Speaker 5: in two bill and chill. I've been trying to come
Speaker 5: up with something really clever and it's not happening, but
Speaker 5: like large and lush like? Is it large caps and bust?
Speaker 6: Like?
Speaker 3: Is that?
Speaker 5: Is that where you have to just I think it's Yeah.
Speaker 4: I think where the factor focus needs to be in
Speaker 4: things like interest cover strength and balance sheet strong, free
Speaker 4: cash flow to enterprise value. High return on equity does
Speaker 4: tend to generally correlate up the cap spectrum, but that
Speaker 4: doesn't mean that there aren't opportunities outside of those megacap areas.
Speaker 4: And that's why we continue to think you want to
Speaker 4: have that factor orientation around some of those characteristics that
Speaker 4: I just mentioned. I think what you really want to
Speaker 4: avoid is the ultra low quality zombie company not profitable
Speaker 4: segment within indexes like the Wrestle two thousand.
Speaker 2: Listen and talk to us about valuation. What's your call here.
Speaker 2: You know, we've had a big run up off those
Speaker 2: October lows and the stock prices. Earnings, as you mentioned,
Speaker 2: have come in better than expected. Is that enough to
Speaker 2: support valuations here?
Speaker 3: Well?
Speaker 4: Last year was a year where at the at least
Speaker 4: at the index level, the market did quite well, but
Speaker 4: we had very little learnings growth. So most of last
Speaker 4: year was valuation expansion. The recent draw down that we
Speaker 4: got in the S and P and the nasdact to
Speaker 4: a greater degree indexes like the Wrestle two thousand, that
Speaker 4: was largely multiple contraction. Because we're now in positive earnings territory,
Speaker 4: although importantly not for the Rustle, we're still in negative territory.
Speaker 4: So valuations are on the rich end of the spectrum.
Speaker 4: But as I always say, much like I say about sentiment,
Speaker 4: valuation is a terrible market timing pool. You could talk
Speaker 4: about it as a backdrop. Markets are still fairly rich,
Speaker 4: but that is not the same thing as it's sending
Speaker 4: a message that you need to sell stocks because of
Speaker 4: rich valuation. Valuations can get rich, centement can get frothy,
Speaker 4: and it can stay that way for quite some time.
Speaker 4: As we all learned in the late nineteen nineties, yep.
Speaker 3: Absolutely all right, Luzanne, thank you so much for joining us.
Speaker 2: As always, Lizzie Saunders, folks, she is a chief investment
Speaker 2: strategist at Charles Schwabi.
Speaker 3: Appreciate getting a few minutes of her time.
Speaker 5: We have lots of FEDS speak out today, three two
Speaker 5: FED speakers, eleven this week. Those are really going to
Speaker 5: be the main event. We also have some ECV speakers
Speaker 5: talking today as well, talking about how rates will be
Speaker 5: lowered gradually over time. One is looking at three interest
Speaker 5: rate cuts so far this year and again saying that
Speaker 5: the ECB is independent of FED decisions and that the
Speaker 5: impact will be contained on the euro Area. Let's get
Speaker 5: more insight into all this. Jackie Bowie is managing partner
Speaker 5: and head of EA firm Chatham Financial. Jackie, do you
Speaker 5: do you agree with that idea that, look, the ECB
Speaker 5: can cut three times, if they can do what they want,
Speaker 5: the ECB in Europe is going to be relatively insulated,
Speaker 5: no problems.
Speaker 3: Yeah.
Speaker 7: There certainly seems to be some transatlantic divergence and monetary policy,
Speaker 7: and that really reflects the very different economic conditions in
Speaker 7: the US versus Urope. You know, we've been talking a
Speaker 7: year about the strength of the US economy. You know,
Speaker 7: despite all those rate increases in the last two years,
Speaker 7: the economy has been very resilient. In the Euro Area,
Speaker 7: it's the opposite, the economies are extremely weak. The UK
Speaker 7: had the COVI session at the end of last year,
Speaker 7: so the divergence and monetary policy I think reflects those
Speaker 7: underlying economic conditions.
Speaker 2: So Jackie, let's start with the UK. What is the
Speaker 2: Bank of England saying these days? What does a market
Speaker 2: believe the Bank of England will do.
Speaker 3: Well?
Speaker 7: There's certainly an expectation that a rate cut is coming
Speaker 7: early in the summer. So we have the Bank of
Speaker 7: England meeting and this week, so we'll get the announcement
Speaker 7: on the ninth of May. The market is really now
Speaker 7: pricing in a hold for this meeting and the first
Speaker 7: cut to come slightly later. And I guess that's been
Speaker 7: the story all year with all the central banks, where
Speaker 7: you know, the FED and the ECB and the Bank
Speaker 7: of England. We were all expecting these quite significant rate
Speaker 7: cuts to come, and what's happened is the timing of
Speaker 7: the first cut is getting pushed further out and the
Speaker 7: extent of the cuts being reduced down is to save
Speaker 7: story for the Bank of England.
Speaker 5: But you know, come May nineteenth, there could be a
Speaker 5: save in Europe that will help growth and maybe boost inflation.
Speaker 5: What is that. She goes by the name of Taylor Swift.
Speaker 5: Oh boy, and I say that jokingly, but there was
Speaker 5: an argument that Taylor Swift's concert schedule in the US
Speaker 5: last year did a tremendous amount for the economy, and
Speaker 5: many economists have actually put numbers on it. She kicks
Speaker 5: off for European tour May ninth. Do you think it's
Speaker 5: going to materially help like services spending, really help boost
Speaker 5: growth or at least provide a floor. Joking but serious question.
Speaker 7: Well, interestingly, if you look at the two sides of
Speaker 7: the economy, between the manufacturing industrial side and the services
Speaker 7: sector side, the services sector side has actually been holding
Speaker 7: up slightly better. And that's the argument as to why
Speaker 7: inflation hasn't come down quite so much across Europe, and
Speaker 7: that that services sector wage inflation has been slightly sticky.
Speaker 7: So if we get the Taylor Swift about here in Europe,
Speaker 7: actually it's on the wrong side of the economy. What
Speaker 7: the European economy, especially Germany, is an improvement in the
Speaker 7: heavy industrial construction side of the economy.
Speaker 2: So Todd gives an update Jackie on on Germany. We
Speaker 2: know that that's a challenging situation. They have kind of
Speaker 2: the double whammy, the exposure to Russian from the energy perspective,
Speaker 2: and then number two, they're you know, exposure to China
Speaker 2: on the export side. Where is the German economy now
Speaker 2: and how are the how's the European Center Bank viewing Germany.
Speaker 7: Yeah, so there has been some flash data just in
Speaker 7: the last few weeks which is showing a little bit
Speaker 7: of signs of recovery, but it's very marginal and generally,
Speaker 7: you know, economists are still seeing this isn't the start
Speaker 7: of a recovery trend. And you've hit on the exact
Speaker 7: two points. Germany's getting squeezed. They have They're very dependent
Speaker 7: on energy coming from elsewhere Russia pre the war. Those
Speaker 7: energy prices now they know and year increase in those
Speaker 7: prices is coming back down, but they're still quite inflated.
Speaker 7: And as you is an expert led economy led by
Speaker 7: heavy industrial, the auto sector, and where you're going to
Speaker 7: have a whole other conversation about the EB market and
Speaker 7: what's happening there. But Germany's really stuck in the middle.
Speaker 7: So you're right, the European Central Bank has a bit
Speaker 7: of a dilemma because the peripheral European economy, so poachspin
Speaker 7: in Italy, are actually doing a bit better service sector tourism,
Speaker 7: but then the biggest economy in Germany obviously not doing
Speaker 7: quite so well. So trying to find a monetary policy
Speaker 7: stance that can fit both those scenarios is pretty challenging.
Speaker 5: What's interesting, though, is that President Jijenping didn't go to Germany,
Speaker 5: so I went to France and then going to Hungary,
Speaker 5: basically other countries that have a tangentile tie in essence
Speaker 5: to rush up. Do you make anything of the fact
Speaker 5: that president did not go to Germany.
Speaker 7: I didn't read into that too much. I'm sure there
Speaker 7: might have been an underlying message there, but certainly in
Speaker 7: the in the London headlines this morning, it was very
Speaker 7: much all around, you know, the Chinese French relationship and
Speaker 7: how this could be, you know, a bell weather for
Speaker 7: China and the rest of Europe. It seems like a
Speaker 7: bit of a leap to take it to that conclusion,
Speaker 7: but certainly that's the way it's being reported here in London.
Speaker 2: To you, all right, Jackie, Given that background, that central
Speaker 2: bank background across Europe, where are your clients when you
Speaker 2: talk to them, were they most comfortable allocating capital these days?
Speaker 7: Well, Chatham really works and much more in the private
Speaker 7: capital markets. So we have a lot of clients who
Speaker 7: are heavily invested into real assets, so real estate and
Speaker 7: private equity infrastructure. There certainly is still a fairly negative
Speaker 7: view on big parts of real estate across Europe, and
Speaker 7: that's completely related to where these interest rates are, you know,
Speaker 7: combination of the valuation of those assets and also the
Speaker 7: cost of debt to borrow to fund new investments. So
Speaker 7: still quite a bit of negative sentiment there. I would
Speaker 7: say that on the other side, what we would call
Speaker 7: the infrastructure assets, so that's everything that sits within renewable
Speaker 7: energy and big public sected infrastructure. That's certainly where we're
Speaker 7: seeing clients raising you capital and allocating into those alternative
Speaker 7: energy and infrastructure sectors. So anything in the public markets
Speaker 7: that also relates to that, I would say, is where
Speaker 7: capital is being allocated.
Speaker 5: What are your clients most worried about then?
Speaker 7: Right now, refinancing debt at higher rates.
Speaker 5: Of interest and when is that going to come down? Yet,
Speaker 5: it's a fair point, and when does that strike for them?
Speaker 7: It will be the second half of this year. So
Speaker 7: there's been there was a little half tongue in cheap
Speaker 7: phrase about in real estate that you just had to
Speaker 7: stay alive until twenty five and that would mean that
Speaker 7: interests were coming back down and you would be able
Speaker 7: to refinance. Now that is correct. The interest rates will
Speaker 7: be lower in twenty twenty five than beware at their
Speaker 7: peak of twenty three, but they're still going to be
Speaker 7: significantly higher than they were at the origination of some
Speaker 7: of those loans. So this refinancing avalanche, as it's being described,
Speaker 7: will really start to hit the second half of this
Speaker 7: year and in the next year. So there's been a
Speaker 7: little bit of a delay of some of those borrowers
Speaker 7: refinancing as they wait to see what the interst rate
Speaker 7: market looks like in the second half.
Speaker 5: All right, Jackie, thanks a lot, We really appreciate it.
Speaker 5: Thank you for your time today. Jackie Bowie, Managing partner
Speaker 5: at Chatham joining us there on Europe the UK. What
Speaker 5: clients are worried about? You're in T bills. You're making
Speaker 5: two million dollars a minute, and by you, I mean
Speaker 5: one the general investor. I would love to make two
Speaker 5: million dollars a minute. Here with more is even devitt
Speaker 5: a cheap global market. It is over at Monetta, even
Speaker 5: T bill and chill. When you're taking a look at
Speaker 5: treasury paying at two million dollars a minute, what do
Speaker 5: you make of that? It's where we have been. Cash
Speaker 5: is no longer trash.
Speaker 6: It's a great place to stash money and to sit
Speaker 6: on dry powder. That has certainly been the case for
Speaker 6: the last eighteen months. However, we've seen investors get a
Speaker 6: little certain about that, especially with the FOMO we've seen
Speaker 6: around equity markets and inflation staying hi that hash yield. Remember,
Speaker 6: after inflation what we're thinking about isn't quite as compelling,
Speaker 6: but it has put pressure on bond substitutes, so things
Speaker 6: like infrastructure, real estate, defensive stocks, they are all suffering
Speaker 6: from this. But as we can see from the rally
Speaker 6: in markets, it isn't making any dent in the desire
Speaker 6: for growth participation and some of those higher octane stocks
Speaker 6: you know, I saw over.
Speaker 2: The weekend that out West and Tahoe the skiers. I
Speaker 2: got like two or three feet of snow over the weekend.
Speaker 2: They're gonna be skiing to like July fourth here, And
Speaker 2: that was picked up by Ethan. How do you equate
Speaker 2: the snowfall out west to your market? Call Ethan, it's funny.
Speaker 6: I always look for parallels in real life, and we've
Speaker 6: had a bit of a surprise.
Speaker 5: I love skiing.
Speaker 6: I wouldn't say I'm an expert, but I do love it.
Speaker 6: And just what they've said about the I follow all
Speaker 6: the ski resorts and they're saying as long as possible,
Speaker 6: They're staying open as long as possible, and that's that
Speaker 6: open ended the joy that the Springs skiers see. I
Speaker 6: saw parallel to that with some of the rhetoric from
Speaker 6: the FED at last week's meeting that they will leave
Speaker 6: rates high essentially as long as possible. So there's going
Speaker 6: to be not much certainty in terms of the timing
Speaker 6: of rate cuts. And just like the snowpack is looking
Speaker 6: at one hundred and thirty percent of its medium, we
Speaker 6: still have inflation at one hundred and thirty percent of
Speaker 6: its average, so it's around three percent, whereas we would
Speaker 6: hope it'd get closer to just two percent. That's at
Speaker 6: least the target. So we're not there yet. Some are
Speaker 6: making hay and the ski slopes. But for the FED,
Speaker 6: it's that open endedness of it, which I thought didn't
Speaker 6: seem to spook markets.
Speaker 5: I thought it would.
Speaker 6: Actually markets have been surprisingly resilient. I even thought that
Speaker 6: the jobs number on Friday not being as robust would
Speaker 6: spook markets. To have had the opposite effect, and that
Speaker 6: markets seem to have taken from that that the pressure
Speaker 6: on labor is going to be more subdued, that lead
Speaker 6: in to the inflation point is going to be less
Speaker 6: of an issue, and then maybe we will get to
Speaker 6: that soft landing no landing scenario that they've been thinking about.
Speaker 6: So Marcus just seemed to be incredibly resilient. Like the
Speaker 6: snow resorts right now.
Speaker 5: Is is it weird to get snow.
Speaker 3: In May like that? No, No, it is crazy out there.
Speaker 2: They've had some good snow. But when it snows in Tahoe,
Speaker 2: it snows huge because you get the stormsure off the ocean, right,
Speaker 2: So that's not weird.
Speaker 5: But keeping rates this low with the data may be weird.
Speaker 5: I mean this high, I should say, like this high
Speaker 5: versus the data, Like, is that weird? Is that sort
Speaker 5: of an anomaly that financial conditions, for example, continuing to
Speaker 5: get looser. You take a look at sluice in your
Speaker 5: loan Office of Survey and lending standards aren't as tight
Speaker 5: as they might have been other times in the cycle, Like,
Speaker 5: that's weird, No, it is.
Speaker 6: I mean it's interesting. I think that the Fed right
Speaker 6: now is looking at the inflation number, looking at this
Speaker 6: ongoing tightening that they're doing behind the scenes by slowing
Speaker 6: their purchases and actually trying to offload part of their
Speaker 6: balance sheet. So that is a tightening measure. So they
Speaker 6: really are continuing to tighten, and as inflation falls, those
Speaker 6: interest rates will start to pinch more. And simply the
Speaker 6: fact that the longer these high rates are in effect,
Speaker 6: the more consumers and companies will be forced to refinance,
Speaker 6: so that transmission effect is going to start to bite
Speaker 6: even more. So even though they're doing nothing, it's still
Speaker 6: a pretty tight environment. And the question is how long
Speaker 6: can consumers stick with that? And you know, we're already
Speaker 6: feeling the cumulative effect of inflation that hasn't gone away.
Speaker 6: We're seeing the gas price increased at the pumps, and
Speaker 6: this geopolitical uncertainty that is just swirling in the background,
Speaker 6: and as the US election nears, it's going to get
Speaker 6: more and more noisy there, not only domestically, but it
Speaker 6: seems unfortunately internationally.
Speaker 5: So I do see quite a lot of.
Speaker 6: Risks there to this market resilience, and as you said,
Speaker 6: there isn't really that loosening that look to kick off
Speaker 6: anytime soon.
Speaker 2: Given that background, Even where are you suggesting your clients
Speaker 2: allocate capital these days?
Speaker 6: We're definitely more interesting to hear just the notes from
Speaker 6: Warren Buffett about AI and clearly this concentration in markets
Speaker 6: around AI and technology. We can't ignore that we've never
Speaker 6: had a strict thematic approach. We've always been believers in
Speaker 6: more of a core, broad based approach. We were encouraged
Speaker 6: by some of the sectors that rallied in the first quarter.
Speaker 6: It was pretty much across the board, we had strong performance.
Speaker 6: We're also encouraged by a suggestion that a cut in rates,
Speaker 6: when it finally does happen, will be good for mid
Speaker 6: cap and small cap stocks, so that should then again
Speaker 6: add some breath to this rally, which has been very
Speaker 6: large cap focused. So we're pretty keen on equities still
Speaker 6: as before, we've always been diversifying. Right now, around real
Speaker 6: estate we're a little hesitant. We haven't seen the movement
Speaker 6: and prices to suggest we're at of bottom yet, so
Speaker 6: real estate we'd be more hesitant. But as far as
Speaker 6: picking sectors. Another thing we're exploring is around just how
Speaker 6: digital assets are maturing. We're taking a look at Bitcoin
Speaker 6: two point zero. We're still on the education phase. There's
Speaker 6: a lot to learn about how that behaves in a portfolio.
Speaker 6: But since Warren Buffett seems to think that this is
Speaker 6: a casino economy that we're in, we need to know
Speaker 6: what the odds are at that casino and to try
Speaker 6: to put a little bit of fundamental research behind the
Speaker 6: kind of red black conundrum that investors may feel they're facing.
Speaker 5: Which pairs to the point that Paul and I talked
Speaker 5: about Friday, that David Busters is allowing some gambling when
Speaker 5: it comes to physical stuff in their restaurant's total side note,
Speaker 5: But nonetheless, I would put money on myself for ski
Speaker 5: ball versus Paul. But you know, whatever you mentioned, even
Speaker 5: small cap stocks, for example, if the FED does wind
Speaker 5: up cutting, does that mean you expect that to be
Speaker 5: more of a normalization versus the economy struggling. Therefore I
Speaker 5: must cut. Therefore, small caps make sense, I.
Speaker 3: Would think so.
Speaker 6: I mean, small caps have really been on the back
Speaker 6: foot for a long time. They've got very little attention.
Speaker 6: They've never seen that kind of rally. They would have
Speaker 6: been pinched by inflation, less pricing power, high interstrates, just
Speaker 6: generally less leverage at the bank with banks, with credit providers.
Speaker 6: The one thing that might have been good for small
Speaker 6: cap stocks recently would have been the M and A
Speaker 6: trend which is around this just simply acquisitions by large conglomerates.
Speaker 6: They would have been trying to buy up some stocks.
Speaker 6: So a few tailwinds that mostly headwinds. Yes, I would
Speaker 6: think that they will do well if the economy remains
Speaker 6: strong and the FED does a normalizing rate cut. Clearly,
Speaker 6: if we're in economic woes, that will be hard for
Speaker 6: small caps. The mom and pop shop generally doesn't do
Speaker 6: well in that environment. So it's not a very high
Speaker 6: conviction call, I'll have to say, but it is relating
Speaker 6: to just a reversion to the mean, some kind of
Speaker 6: normalization as to how these sectors and cap that segments perform, right, Thank.
Speaker 3: You, so much for joining us.
Speaker 2: Ethan Devit, chief global market strategists at Moneta groupment all right, folks,
Speaker 2: you're deadly look at the front pages around the world at.
Speaker 3: Least some MATEO. What do you got first today?
Speaker 5: All right, it was something we were talking about earlier.
Speaker 1: You mentioned it too, Alex. The Boeing spacecraft set to
Speaker 1: carry the astronauts for the first time tonight. So it's
Speaker 1: the Starliner blasting off ten thirty four pm Eastern from
Speaker 1: Florida two astronauts of the International Space Station. They're going
Speaker 1: to return them to Earth about a week after. But
Speaker 1: it's really going to test whether it's ready to handle
Speaker 1: like these NASA missions. But it's it's been a struggle.
Speaker 1: The project led to a one point four billion dollar
Speaker 1: accounting losses for Boeing.
Speaker 3: But it could be good news.
Speaker 1: I mean, Boeing could use some good news, right it's
Speaker 1: facing all the safety issues with its airline business.
Speaker 5: But yeah, this is this is happening tonight.
Speaker 2: So if I'm an astronaut and my little nervous getting
Speaker 2: on it, I don't know, I don't.
Speaker 5: I mean, I think if you're an astronaut, are you
Speaker 5: kind of used to these things from I mean apparently
Speaker 5: Boeing has around a one and a half billion dollars
Speaker 5: extra costs to cover these starliner and delays some technical problems,
Speaker 5: and you would hope that they would all be sussed out. Also,
Speaker 5: I didn't know this, but the Ula rocket is partly
Speaker 5: owned by Boeing and Lockheed Martin. So I just thought
Speaker 5: that was really interesting. And they're both thinking about trying
Speaker 5: to like spin off that steak in in this Pentagon
Speaker 5: and contractor, but it hasn't happened yet. I just found
Speaker 5: that interesting. Also in terms of.
Speaker 3: I'm not allowed to know what he works on.
Speaker 5: Really, Yes, he's on I need to know basis.
Speaker 3: Yeah, he tells me you don't need to know that something.
Speaker 5: I was like, Okay, I'm sure he savors that. He
Speaker 5: savors that away.
Speaker 3: I still pay for his phone bill.
Speaker 5: Will oh that might stop.
Speaker 3: I don't know.
Speaker 5: I feel like that. And the Netflix, that's a little schedule.
Speaker 3: I think we took care of that.
Speaker 5: I'm definitely looking forward to that. That's going to be
Speaker 5: super fun just to see how that all goes. Lisa,
Speaker 5: what else are you interested?
Speaker 2: So?
Speaker 1: This is what Paul is right up your alley with
Speaker 1: the paramount. This is The New York Times said that
Speaker 1: since those guidance talks ended that a special committee their
Speaker 1: Paramounts Board of directors, they signed off to begin deal
Speaker 1: talks with Sony Pick Entertainment Apollo. You remember last week
Speaker 1: they bid that offer for the company around twenty six
Speaker 1: billion in cash.
Speaker 3: So, well, Steve, who this goes?
Speaker 1: You know they if they'll push further for negotiations with
Speaker 1: sky Dance two on top of this, So it's kind
Speaker 1: of opening it up, opening up the bidding.
Speaker 2: Yeah, this one feels more real to me. You've got
Speaker 2: a real teagic player and Sony. You've got a real
Speaker 2: financial player and Apollo, So you think they can come
Speaker 2: up with the money.
Speaker 3: You think they can add value there.
Speaker 2: I don't know what the regulatory environment is for putting
Speaker 2: two big studios, the Sony Studio and the Paramount Studio together.
Speaker 3: I'm sure there's gonna be some regulatory review there. But
Speaker 3: this one feels a little bit more real.
Speaker 2: The question comes down to will this deal result in
Speaker 2: a premium pay to Sherry Redstone and her controlling shares.
Speaker 2: That's what she wants, and will she get it in
Speaker 2: this transaction?
Speaker 5: Well?
Speaker 3: Off to see.
Speaker 5: Apparently, the Financial Times They're reported that James Cameron on
Speaker 5: Ari Emmanuel are actually backing the sky Dance bid. Whether
Speaker 5: or not that actually means something material isn't great, but
Speaker 5: they both came out in favor of.
Speaker 3: That, both players. But they're not in this realm.
Speaker 2: In this I think you need some seriously deep pockets
Speaker 2: like Apollo and some serious strategic value like Sony could work.
Speaker 5: I say, I wonder if sky Dance would come back.
Speaker 3: I mean, yes, sweetened the deal.
Speaker 5: Could they sweeten it anymore?
Speaker 3: You who knows? Did you go to the movies this weekend?
Speaker 5: That's what I want to ask you, guys. Did you
Speaker 5: know what I really wanted to see? Fall?
Speaker 3: Guys?
Speaker 5: Okay, there you go. And you're not the only one
Speaker 5: who did not see The Fall. It's a Ryan Gosling.
Speaker 5: Ryan Gosling, Yes, he plays like this action star. But
Speaker 5: it didn't do well at the box office.
Speaker 1: So it was one hundred and twenty five million dollar
Speaker 1: production Comcast Universal Pictures. It brought him just twenty eight
Speaker 1: and a half million domestic box office over the weekend.
Speaker 1: I mean, you thought he brought in the boost for Barbie,
Speaker 1: but it didn't do it with this one.
Speaker 5: I will see it okay, that weekend. I mean you
Speaker 5: got Emily Blunt, Ryan Gosling and Hannah Wattingham. I mean,
Speaker 5: I don't know what more you could possibly want. You
Speaker 5: get cheesy romance, you get things going. This movie was
Speaker 5: literally made for Alex Steele.
Speaker 3: Yet you did not go. Yeah, you did not watch
Speaker 3: the Derby this weekend. To do this weekend? What did
Speaker 3: I do?
Speaker 5: I did some Blandis and I slept on Saturday. Oh,
Speaker 5: I played a skey ball. I played sky Ball on
Speaker 5: Saturday with my daughter in Industry City. That's good. So
Speaker 5: this is Paul and I. We both like the ski ball.
Speaker 5: So I got a couple of thousands to.
Speaker 2: Get Alex down to the Jersey shore this summer. People
Speaker 2: forward to walk a little sky ball, I tell you
Speaker 2: if so. The question is, will any movie this summer
Speaker 2: make a billion dollars in box?
Speaker 1: I mean they said there's too big. There's inside Out
Speaker 1: to which might be a maybe you'll take your daughter
Speaker 1: that one. And then there's also Deadpool and Wolverine.
Speaker 5: So Deadpool, sorry, I can talk for like hours, I
Speaker 5: mean Deadpool Wolverine. I will like take the day off work.
Speaker 5: I will like stay overnight like I hustled to see.
Speaker 3: This movie and who's Who's the Deadpool Day?
Speaker 5: He's the other Ryan, the other Ryan Ryan. Both from Canada.
Speaker 5: Both really funny. Not for the kids, both definitely.
Speaker 3: I know.
Speaker 5: I think that the rumor is that Taylor Swift is
Speaker 5: supposed to be in that, So that makes my daughter
Speaker 5: really really really excited to go see it and we're like, sorry, kid,
Speaker 5: like there, why is it are? It's like r plus
Speaker 5: it was like not freaking really okay, imagine all the
Speaker 5: cursing and anything inappropriate is in this movie, which is
Speaker 5: why it's so good.
Speaker 2: All right.
Speaker 1: Last thing, Yeah, ABC News president Kime Godwin stepping down.
Speaker 1: This was a big thing that came out Sunday night.
Speaker 1: She sent an email out to staffers. She was named
Speaker 1: president twenty twenty one. She worked for CBS before that.
Speaker 1: They don't know who's going to take over from here on.
Speaker 1: But it was a tough role, like it just said,
Speaker 1: there was. It was a cutthroat, toxic work environment. That's
Speaker 1: where people were saying, good morning America. Ratings kind of
Speaker 1: went down a bit, but it's.
Speaker 3: Tough, all right, ABC News.
Speaker 2: I mean it's you know, you wonder where in the
Speaker 2: world of streaming and cord cutting, and you know where
Speaker 2: the investment in broadcast network you tell me, yeah, I
Speaker 2: know it used to be Obviously, it used to be.
Speaker 2: The real pride and joy of a network was your
Speaker 2: news organization, whether it's CBS, ABC, at NBC. But now,
Speaker 2: with you know, declining viewership due to cord cutting, what's
Speaker 2: the investment that those businesses require?
Speaker 3: You know, I don't know. And so that's interesting there,
Speaker 3: and it's it.
Speaker 1: They just did a lot of restructuring in February, so
Speaker 1: it took a lot of away of her management type.
Speaker 5: Okay, this is also very difficult because you need the
Speaker 5: you need the day to day stuff to feed the
Speaker 5: content to feed the beast for streaming and for digital, right,
Speaker 5: but it can't just be that and you need so
Speaker 5: what that balance is I don't I don't think anyone's
Speaker 5: figured that out.
Speaker 3: Podcasts, but now we're runing around.
Speaker 5: Yeah, but then it's only podcast and something's got to give.
Speaker 5: Everyone gets a podcast, you'll dilute it, I know, exactly.
Speaker 2: All right, Lisa Miteo with the newspapers, thank you very much.
Speaker 2: We appreciate that. This is the Bloomberg Surveillance podcast bringing
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