1 00:00:02,960 --> 00:00:10,840 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,880 --> 00:00:15,040 Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am 3 00:00:15,080 --> 00:00:17,400 Speaker 1: Eastern on Apple Car playing Android. 4 00:00:17,040 --> 00:00:18,759 Speaker 2: Auto with the Bloomberg Business app. 5 00:00:18,800 --> 00:00:21,960 Speaker 1: Listen on demand wherever you get your podcasts, or watch 6 00:00:22,079 --> 00:00:24,480 Speaker 1: us live on YouTube. 7 00:00:24,960 --> 00:00:27,320 Speaker 3: The one of the stocks in the news is Lorel, 8 00:00:27,400 --> 00:00:30,040 Speaker 3: the cosmetics company. Put us some good numbers here. Let's 9 00:00:30,040 --> 00:00:32,040 Speaker 3: break it down with deb Acon. She is a luxury 10 00:00:32,040 --> 00:00:35,440 Speaker 3: goods analyst for Bloomberg Intelligence. She joins us from London 11 00:00:35,640 --> 00:00:40,240 Speaker 3: via Zoom So, deb Lorel Cosmetics. I've come to understand 12 00:00:40,640 --> 00:00:43,279 Speaker 3: just really through the pandemic from my observation of the 13 00:00:43,520 --> 00:00:47,000 Speaker 3: Sepphor store across the street from Bloomberg headquarters. People buy 14 00:00:47,040 --> 00:00:50,520 Speaker 3: cosmetics like, no matter what is going on in the world. 15 00:00:50,880 --> 00:00:52,519 Speaker 4: What did you learn from Loriel's numbers? 16 00:00:53,920 --> 00:00:55,440 Speaker 5: Feel good factor, right, Paul? 17 00:00:56,560 --> 00:01:01,280 Speaker 6: Yeah, So actually the number is I'm in above nine percent. 18 00:01:01,560 --> 00:01:03,960 Speaker 6: So there was a big pickup from four Q where 19 00:01:03,960 --> 00:01:07,800 Speaker 6: we had a solid first half and a shorter second half, 20 00:01:07,840 --> 00:01:10,880 Speaker 6: a slower second half in twenty twenty three across the 21 00:01:10,920 --> 00:01:14,560 Speaker 6: whole of the beauty industry, and so we had a 22 00:01:14,600 --> 00:01:18,880 Speaker 6: big beat on the Q one just a sales number, 23 00:01:18,959 --> 00:01:22,800 Speaker 6: but it was really about double digit growth in Europe. 24 00:01:23,720 --> 00:01:26,640 Speaker 6: We then saw high single digit growth when we pull 25 00:01:26,720 --> 00:01:32,640 Speaker 6: away anomalies in the US and then are definitely emerging 26 00:01:32,680 --> 00:01:35,960 Speaker 6: markets like fifteen sixteen percent growth there. And the other 27 00:01:36,000 --> 00:01:39,520 Speaker 6: side of it was that mass market is also holding 28 00:01:39,600 --> 00:01:43,479 Speaker 6: up because luxury right now in beauty is difficult if 29 00:01:43,560 --> 00:01:47,360 Speaker 6: you're a company like Laurel or Estel Order or Biasedov's 30 00:01:47,440 --> 00:01:51,720 Speaker 6: La Prairie with exposure in skin care in China, where 31 00:01:51,880 --> 00:01:55,680 Speaker 6: in trade travel retail is still stuffed with skincare, so 32 00:01:55,800 --> 00:01:59,639 Speaker 6: that still takes another quarter to normalize. But elsewhere mass 33 00:01:59,640 --> 00:02:03,559 Speaker 6: market passing on price and do very well across makeup, 34 00:02:03,600 --> 00:02:08,040 Speaker 6: across fragrances in particular. Yeah, it's all going well. 35 00:02:08,600 --> 00:02:09,560 Speaker 4: Yeah, it's interesting. 36 00:02:09,560 --> 00:02:13,280 Speaker 3: And just talk to us about the cosmetics business in general. Again, 37 00:02:13,400 --> 00:02:15,560 Speaker 3: I just was, you know, while everything was shutting down 38 00:02:15,560 --> 00:02:17,799 Speaker 3: in New York City during the pandemic, there's a four 39 00:02:17,880 --> 00:02:20,880 Speaker 3: store across the street stayed open, Number one and number two. 40 00:02:21,040 --> 00:02:23,160 Speaker 3: There were people in there every day. I don't care 41 00:02:23,200 --> 00:02:24,919 Speaker 3: what was going on in the world. They were there 42 00:02:24,919 --> 00:02:27,959 Speaker 3: every day. Talk to us about just the overall cosmetics market, 43 00:02:28,000 --> 00:02:30,040 Speaker 3: the growth characteristics of that market. 44 00:02:31,200 --> 00:02:32,960 Speaker 5: So typically we look at the market. 45 00:02:34,120 --> 00:02:37,240 Speaker 6: I'm as you know, I covered the luxury market too, 46 00:02:37,400 --> 00:02:40,320 Speaker 6: and we're in this show. We're looking at a normalized 47 00:02:40,320 --> 00:02:42,480 Speaker 6: growth rate in luxury goods of five to six percent, 48 00:02:42,560 --> 00:02:45,440 Speaker 6: and you could say that we're looking at that rate too, 49 00:02:45,480 --> 00:02:47,560 Speaker 6: and I'm fine to know over the last several years 50 00:02:47,600 --> 00:02:51,120 Speaker 6: that the beauty industry is growing in line with the 51 00:02:51,200 --> 00:02:54,760 Speaker 6: luxury industry. And that's because there's more and more premiumization 52 00:02:55,440 --> 00:02:58,160 Speaker 6: and ultra high end and that is fined in the 53 00:02:58,200 --> 00:03:01,920 Speaker 6: same growth rate and profitability in some cases as the 54 00:03:01,960 --> 00:03:04,919 Speaker 6: luxury industry. So you typically get a three to five 55 00:03:04,960 --> 00:03:09,239 Speaker 6: percent growth rate from mass market and five percent upwards 56 00:03:09,240 --> 00:03:12,400 Speaker 6: on premium and then super premium and luxury type products. 57 00:03:12,880 --> 00:03:15,680 Speaker 5: It's a feel good factor. It's for everyone, you know. 58 00:03:15,760 --> 00:03:19,119 Speaker 6: Over the last few years, so Forest Does, for example, 59 00:03:19,560 --> 00:03:24,080 Speaker 6: are within a selective retailing division which sits in Alvimh, 60 00:03:24,200 --> 00:03:28,280 Speaker 6: the owner Ofly with a Tom Murray Hennessy. So and 61 00:03:28,320 --> 00:03:31,040 Speaker 6: then you know, it's about making sure that the product 62 00:03:31,120 --> 00:03:34,200 Speaker 6: in there is innovative. There's a lot of new products 63 00:03:34,200 --> 00:03:38,280 Speaker 6: coming out. Lorel talked about AI using it to look 64 00:03:38,320 --> 00:03:41,000 Speaker 6: at the scalp look of look at Skincare, their professional 65 00:03:41,120 --> 00:03:44,120 Speaker 6: hair care division was really high looking at the at 66 00:03:44,120 --> 00:03:46,400 Speaker 6: the hair care and the scalp and what's going on there. 67 00:03:46,480 --> 00:03:47,960 Speaker 5: So it's been used. 68 00:03:47,760 --> 00:03:50,920 Speaker 6: In so many ways, and also because of social media 69 00:03:51,000 --> 00:03:53,600 Speaker 6: in the way that you can really get to understand 70 00:03:54,080 --> 00:03:58,960 Speaker 6: how the cosmetics products are in dermatology, for example, as grown. 71 00:03:58,960 --> 00:04:01,760 Speaker 6: When I look at the Loreal, twenty to thirty percent 72 00:04:01,840 --> 00:04:06,200 Speaker 6: plus every quarter for since twenty twenty, so it's now 73 00:04:06,280 --> 00:04:09,440 Speaker 6: become twenty percent of their business very quickly, when a 74 00:04:09,480 --> 00:04:11,400 Speaker 6: couple of years ago we were talking about it being 75 00:04:11,520 --> 00:04:15,280 Speaker 6: ten percent. Well, yeah, so it's it's you know, it's 76 00:04:15,320 --> 00:04:18,320 Speaker 6: having belief, it's it's feel good. 77 00:04:18,360 --> 00:04:21,039 Speaker 5: But it's also got like a healthy side to it 78 00:04:21,080 --> 00:04:21,440 Speaker 5: as well. 79 00:04:21,520 --> 00:04:23,880 Speaker 3: Well, that's what my co host Alex Steele, that's what 80 00:04:23,920 --> 00:04:27,080 Speaker 3: she always says. She invests in her face now guys 81 00:04:27,120 --> 00:04:30,240 Speaker 3: like John Tucker and Joe Mysek and we obviously missed 82 00:04:30,279 --> 00:04:31,960 Speaker 3: that train, so that's too late. 83 00:04:32,600 --> 00:04:34,200 Speaker 4: But yeah, I think that seems to be a thing. 84 00:04:34,240 --> 00:04:35,800 Speaker 3: All right, deb let's step back a little bit and 85 00:04:35,839 --> 00:04:39,240 Speaker 3: just talk about what you're seeing in luxury overall. If 86 00:04:39,279 --> 00:04:41,560 Speaker 3: I go to the high streets in London, in Paris, 87 00:04:41,960 --> 00:04:43,360 Speaker 3: how's traffic out there. 88 00:04:43,640 --> 00:04:44,920 Speaker 4: How's business? 89 00:04:45,320 --> 00:04:49,600 Speaker 6: I think, well, what we've seen overall, certainly Europe has 90 00:04:49,920 --> 00:04:53,280 Speaker 6: really been the surprise. Now for the third quarter, we're 91 00:04:53,320 --> 00:04:55,200 Speaker 6: just starting with the ending season, but now for the 92 00:04:55,240 --> 00:04:58,880 Speaker 6: third quarter more robust than we expected. Again a lot 93 00:04:58,920 --> 00:05:02,480 Speaker 6: of local touris because I think if we think about 94 00:05:02,520 --> 00:05:06,320 Speaker 6: Europe in particular, twenty two we had the dollar over 95 00:05:06,360 --> 00:05:09,760 Speaker 6: here spending strength of the dollar into Europe beginning of 96 00:05:09,839 --> 00:05:12,839 Speaker 6: twenty three, and that phased out the second half twenty 97 00:05:12,920 --> 00:05:17,560 Speaker 6: twenty three. But the Europeans are doing particularly well with 98 00:05:18,200 --> 00:05:23,040 Speaker 6: new designs, new products, new designers. But it is really 99 00:05:23,080 --> 00:05:26,840 Speaker 6: the very high end where you're getting and also what 100 00:05:27,080 --> 00:05:32,680 Speaker 6: you know that quiet luxury, the view of products like 101 00:05:32,800 --> 00:05:36,280 Speaker 6: Laura Piano, Brunellocution Elly. We just had their results this week, 102 00:05:36,760 --> 00:05:41,160 Speaker 6: very very strong, really really decent teams growth, and so 103 00:05:41,240 --> 00:05:43,279 Speaker 6: there are brands out there, but it tends to be 104 00:05:43,400 --> 00:05:45,839 Speaker 6: that they really are they really are the luxury price 105 00:05:45,920 --> 00:05:49,080 Speaker 6: tag and it's value for money at that price point. 106 00:05:49,520 --> 00:05:51,840 Speaker 6: You don't have many of those products in your wardrobe 107 00:05:52,560 --> 00:05:54,320 Speaker 6: and you're proud to wear them, and they're the ones 108 00:05:54,400 --> 00:05:57,359 Speaker 6: that are driving the business. It's across all categories too, 109 00:05:57,680 --> 00:06:03,840 Speaker 6: we're talking from Kashmir to very high end leather goods 110 00:06:04,360 --> 00:06:08,520 Speaker 6: to high end fragrances. We're see more and more I 111 00:06:08,560 --> 00:06:11,360 Speaker 6: suppose we see more and more momentum in very high 112 00:06:11,480 --> 00:06:16,000 Speaker 6: end fragrances as well, with acquisitions coming through and IPOs 113 00:06:16,040 --> 00:06:16,440 Speaker 6: as well. 114 00:06:16,680 --> 00:06:18,320 Speaker 3: Hey, deb you know when we talk about I know, 115 00:06:18,440 --> 00:06:20,440 Speaker 3: just reading your research talking to you in the past, 116 00:06:20,560 --> 00:06:25,039 Speaker 3: the Chinese consumer is really a big, big, important player 117 00:06:25,200 --> 00:06:29,279 Speaker 3: in the world of luxury spending, both home in China 118 00:06:29,320 --> 00:06:33,080 Speaker 3: but also abroad as the Chinese consumer travels to New York, 119 00:06:33,080 --> 00:06:36,600 Speaker 3: to London, two Paris in Italy for example. Talk to 120 00:06:36,640 --> 00:06:39,160 Speaker 3: us about China. Is that a net positive or net negative? 121 00:06:39,240 --> 00:06:39,880 Speaker 4: Where are we here? 122 00:06:41,000 --> 00:06:43,719 Speaker 5: Yeah, so net negative. 123 00:06:44,160 --> 00:06:49,480 Speaker 6: So if we think about let's focus pre pandemic, and 124 00:06:49,720 --> 00:06:53,680 Speaker 6: we had a travel event last week in London, we're 125 00:06:53,680 --> 00:06:54,279 Speaker 6: looking at. 126 00:06:54,160 --> 00:06:56,080 Speaker 5: Where the Chinese consumer was. 127 00:06:56,120 --> 00:06:59,440 Speaker 6: So in terms of the Chinese consumer as part of 128 00:06:59,520 --> 00:07:02,800 Speaker 6: luxury goods, pre pandemic a third of the business. We 129 00:07:02,920 --> 00:07:06,000 Speaker 6: now think they're back to around twenty three percent. But 130 00:07:06,560 --> 00:07:10,920 Speaker 6: how that's changed in terms of geography. It used to 131 00:07:10,960 --> 00:07:13,840 Speaker 6: be that they've scored less than So if we think 132 00:07:13,840 --> 00:07:18,760 Speaker 6: about the luxury industry, around ten percent was Chinese spending 133 00:07:18,840 --> 00:07:22,120 Speaker 6: at home. Now it's sixteen percent Chinese spending at home. 134 00:07:22,160 --> 00:07:25,000 Speaker 6: So we have these conflict in numbers. China is up 135 00:07:25,160 --> 00:07:27,960 Speaker 6: double digit, but China is still below where it was, 136 00:07:28,280 --> 00:07:32,040 Speaker 6: and that is true. But it's the US consumer and 137 00:07:32,080 --> 00:07:34,760 Speaker 6: the European consumer who've taken a lot of the slack. 138 00:07:34,800 --> 00:07:38,040 Speaker 6: And that's why the industry versus twenty nineteen. Over all, 139 00:07:38,080 --> 00:07:41,040 Speaker 6: the luxury goods is around thirty five to forty percent bigger. 140 00:07:40,800 --> 00:07:41,320 Speaker 5: Than it was. 141 00:07:42,480 --> 00:07:42,800 Speaker 4: Really. 142 00:07:43,840 --> 00:07:45,240 Speaker 7: Yeah, wow, that's. 143 00:07:45,040 --> 00:07:47,680 Speaker 6: How that's how you know you've you've got double digit, 144 00:07:48,040 --> 00:07:50,560 Speaker 6: high single digit growth growing annually. 145 00:07:51,000 --> 00:07:53,559 Speaker 3: All right, I mean I'll walk down the Penn Station 146 00:07:53,600 --> 00:07:56,720 Speaker 3: today down Fifth Avenue or mont Madison Avenue and I'll 147 00:07:56,720 --> 00:07:59,360 Speaker 3: see a lot of people in those stores here. All Dad, 148 00:07:59,360 --> 00:08:02,000 Speaker 3: thanks so much for joining us. Their Debacon luxury Goods 149 00:08:02,040 --> 00:08:06,360 Speaker 3: analys for Bloomberg Intelligence. She's based in London and she's 150 00:08:06,400 --> 00:08:08,600 Speaker 3: really one of the best animals out there, covering a 151 00:08:08,600 --> 00:08:12,320 Speaker 3: lot of retail. We're really focusing on the luxury space 152 00:08:12,400 --> 00:08:14,480 Speaker 3: and as deb says, you know, he's been telling us 153 00:08:14,480 --> 00:08:17,480 Speaker 3: that's a mid good, solid mid the mid high single 154 00:08:17,520 --> 00:08:20,120 Speaker 3: digit growth business, you know, well above GDP, and that 155 00:08:20,200 --> 00:08:22,480 Speaker 3: kind of goes to some of the wealth creation out 156 00:08:22,520 --> 00:08:25,520 Speaker 3: there and widening gaps there in wealth inequality. It's not 157 00:08:25,600 --> 00:08:27,320 Speaker 3: just in the US or in the Western markets, it's 158 00:08:27,320 --> 00:08:30,760 Speaker 3: also in Asia as well, so deb gives us some 159 00:08:30,800 --> 00:08:33,920 Speaker 3: of the best research out there. Loreal again, the cosmetics 160 00:08:33,920 --> 00:08:37,319 Speaker 3: company reported some better than expected numbers and stock is 161 00:08:37,400 --> 00:08:38,360 Speaker 3: up five percent today. 162 00:08:38,679 --> 00:08:40,000 Speaker 4: It's about flat for the year. 163 00:08:40,480 --> 00:08:44,280 Speaker 3: It's a big company, two hundred and forty billion euros 164 00:08:44,320 --> 00:08:46,720 Speaker 3: in market caps, so just a huge company there. 165 00:08:48,240 --> 00:08:52,120 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 166 00:08:52,200 --> 00:08:55,280 Speaker 1: weekdays at ten am Eastern on applecard. 167 00:08:54,760 --> 00:08:57,559 Speaker 2: Play and Android Auto with the Bloomberg Business app. 168 00:08:57,640 --> 00:09:00,480 Speaker 1: You can also listen live on Amazon Alex from our 169 00:09:00,520 --> 00:09:04,480 Speaker 1: flagship New York station Just Say Alexa playing Bloomberg eleven. 170 00:09:06,120 --> 00:09:09,520 Speaker 3: Of course, the geopolitical issues globally are back on the 171 00:09:09,559 --> 00:09:14,320 Speaker 3: forefront here overnight Israel retaliatory strike on Iran last night, 172 00:09:15,160 --> 00:09:20,319 Speaker 3: many folks calling it a measured response, maybe proportionate, if 173 00:09:20,320 --> 00:09:20,680 Speaker 3: you will. 174 00:09:20,720 --> 00:09:22,040 Speaker 4: I'm not sure how the fin all that. 175 00:09:22,040 --> 00:09:23,760 Speaker 3: I guess that's different for everyone. But let's check in 176 00:09:23,840 --> 00:09:26,240 Speaker 3: with someone with feet on the ground, Ethan Bronner. He's 177 00:09:26,240 --> 00:09:29,560 Speaker 3: the Israel Bureau chief and Senior Mid East editor for 178 00:09:29,600 --> 00:09:34,160 Speaker 3: Bloomberg News. He joins us from tel Aviv via zoom Ethan, 179 00:09:34,200 --> 00:09:36,520 Speaker 3: what's the feeling on the ground in tel Aviv today 180 00:09:37,080 --> 00:09:39,840 Speaker 3: as it relates to Israel's strike on Iran last night? 181 00:09:41,440 --> 00:09:42,600 Speaker 8: I think you described it well. 182 00:09:42,679 --> 00:09:47,640 Speaker 9: I think that the view here is that it what 183 00:09:47,720 --> 00:09:52,000 Speaker 9: Israel did was to sort of smack at Iran in 184 00:09:52,080 --> 00:09:54,960 Speaker 9: a place that says we can get to you. There 185 00:09:55,160 --> 00:09:58,240 Speaker 9: are where it hit was one of the air bases 186 00:09:58,240 --> 00:10:03,400 Speaker 9: from which last weekends attack came, and also not far 187 00:10:03,559 --> 00:10:05,720 Speaker 9: from nuclear sites. 188 00:10:06,160 --> 00:10:09,480 Speaker 8: So the Israelies their attitude, at least their claim. 189 00:10:09,880 --> 00:10:13,760 Speaker 9: I'd say the mainstream claim is that we we we 190 00:10:13,760 --> 00:10:15,600 Speaker 9: we hit back in a way that said we want 191 00:10:15,640 --> 00:10:18,080 Speaker 9: you to know that we can do this, and we're 192 00:10:18,080 --> 00:10:21,160 Speaker 9: not going any further, and let's stop this here. There 193 00:10:21,200 --> 00:10:23,719 Speaker 9: are those who are very upset that it wasn't sufficient. 194 00:10:24,240 --> 00:10:26,800 Speaker 9: There are those who wanted nothing to happen. But I 195 00:10:26,800 --> 00:10:30,640 Speaker 9: would say that you know, it is not being criticized 196 00:10:30,640 --> 00:10:33,360 Speaker 9: too heavily except from from the far right. 197 00:10:33,480 --> 00:10:37,079 Speaker 10: Right now, Yeah, Ben Ben Gavier, the hawkish national security 198 00:10:37,120 --> 00:10:40,120 Speaker 10: minister in Israel, tweeting just one word week. 199 00:10:40,160 --> 00:10:43,960 Speaker 9: Right, I mean that that word was a Hebrew praate 200 00:10:44,160 --> 00:10:46,680 Speaker 9: word for meeting, more like lame or wimpy. 201 00:10:47,280 --> 00:10:48,800 Speaker 8: Yeah, yeah, very very critical. 202 00:10:49,040 --> 00:10:50,800 Speaker 10: I mean that that one word doing a lot of 203 00:10:50,840 --> 00:10:53,840 Speaker 10: work here to suggest that not everyone is in agreement. 204 00:10:54,160 --> 00:10:56,199 Speaker 10: And at the end of the day, Ethan, I mean, 205 00:10:56,360 --> 00:10:59,160 Speaker 10: this is a big change from going Israel in ran 206 00:10:59,240 --> 00:11:01,880 Speaker 10: in the shadows fighting to now out in the open 207 00:11:01,920 --> 00:11:04,360 Speaker 10: and out and open conflict. So while markets are treating 208 00:11:04,360 --> 00:11:07,280 Speaker 10: it as if it's over, I mean, this is a shift, 209 00:11:07,320 --> 00:11:08,839 Speaker 10: isn't it. 210 00:11:08,840 --> 00:11:11,160 Speaker 9: It's a shift, of course, it's in many ways a 211 00:11:11,200 --> 00:11:14,520 Speaker 9: shift that began not by Israel this week, but by 212 00:11:14,600 --> 00:11:15,520 Speaker 9: Iran last week. 213 00:11:15,559 --> 00:11:17,360 Speaker 8: That was the beginning of the big shift. 214 00:11:17,440 --> 00:11:21,080 Speaker 9: Israel has been hitting on occasion inside Iran. No one's 215 00:11:21,160 --> 00:11:23,480 Speaker 9: kind of acknowledged it, but two or three occasions and 216 00:11:24,480 --> 00:11:27,880 Speaker 9: where with missiles and other and drones and other occasions 217 00:11:27,880 --> 00:11:33,600 Speaker 9: where they have assassinated Iranian Iran nuclear scientists and so forth. 218 00:11:33,720 --> 00:11:36,720 Speaker 9: But the big change began last Saturday night when Iran said, okay, 219 00:11:36,800 --> 00:11:38,839 Speaker 9: all of this stuff you guys are doing to us 220 00:11:38,880 --> 00:11:41,800 Speaker 9: both of our proxies in Iraq, Seria, eleven on and 221 00:11:41,800 --> 00:11:44,439 Speaker 9: so forth, and now us we're coming back at you 222 00:11:44,520 --> 00:11:47,680 Speaker 9: directly that was the change, and now Israel hitting back 223 00:11:47,720 --> 00:11:51,679 Speaker 9: saying we can't let this happen without some response. You know, 224 00:11:51,760 --> 00:11:53,760 Speaker 9: the whole debate is should there have been a response? 225 00:11:53,840 --> 00:11:58,199 Speaker 9: All week, the Americans, the French, the Germans, the British 226 00:11:58,280 --> 00:12:01,080 Speaker 9: were coming by personally on the phone and saying to 227 00:12:01,120 --> 00:12:03,240 Speaker 9: Prime Minister in to Tanya, who let it go. 228 00:12:03,480 --> 00:12:04,080 Speaker 8: Take your win. 229 00:12:04,160 --> 00:12:06,800 Speaker 9: You stopped all those attacks last Saturday. 230 00:12:07,320 --> 00:12:09,320 Speaker 8: This is a win. You don't have to go back 231 00:12:09,360 --> 00:12:09,679 Speaker 8: at them. 232 00:12:09,720 --> 00:12:13,239 Speaker 9: But the Israelis felt they did, and this was their response. 233 00:12:13,800 --> 00:12:15,720 Speaker 8: We'll see where it takes us. It isn't obvious that 234 00:12:15,760 --> 00:12:16,120 Speaker 8: it's over. 235 00:12:16,160 --> 00:12:19,640 Speaker 9: But the Iranians have been saying publicly today they don't 236 00:12:19,640 --> 00:12:22,520 Speaker 9: think much happened and they don't see any particular need 237 00:12:22,559 --> 00:12:23,240 Speaker 9: to respond. 238 00:12:23,360 --> 00:12:26,320 Speaker 3: So all right, Ethan, let's get our focus back on 239 00:12:26,600 --> 00:12:28,880 Speaker 3: kind of probably where it needs to be, which is 240 00:12:29,040 --> 00:12:34,440 Speaker 3: in Gaza. What's the latest thinking about Israeli strategy in Gaza? 241 00:12:34,600 --> 00:12:38,760 Speaker 3: It feels like a stalemate and status quo is there? 242 00:12:39,480 --> 00:12:42,000 Speaker 3: What's the strategy here from the Israeli government. 243 00:12:43,080 --> 00:12:46,560 Speaker 9: So they're not being exceptionally open as you can imagine 244 00:12:46,600 --> 00:12:51,480 Speaker 9: in the middle of their deliberations, and there are you know, 245 00:12:51,480 --> 00:12:53,360 Speaker 9: It's like a Rubik's cube. There are all these things 246 00:12:53,400 --> 00:12:55,840 Speaker 9: going on at once, including, of course what's happening with 247 00:12:55,920 --> 00:12:59,240 Speaker 9: around that we've just talked about. That the Israelis began 248 00:12:59,320 --> 00:13:03,480 Speaker 9: their attacks six plus months ago. Recently they pulled many 249 00:13:03,520 --> 00:13:08,480 Speaker 9: of their troops out, but there remains in southern Gaza, 250 00:13:08,520 --> 00:13:12,520 Speaker 9: in the city of Raphach five to eight thousand Hamas 251 00:13:12,640 --> 00:13:17,600 Speaker 9: troops in tunnels and so forth, and some hundred or 252 00:13:17,640 --> 00:13:22,040 Speaker 9: so Israeli hostages. Israel has been repeatedly saying that it 253 00:13:22,160 --> 00:13:25,560 Speaker 9: needs to go in there eventually and take them out 254 00:13:25,600 --> 00:13:28,480 Speaker 9: so that Hamas can no longer be the kind of 255 00:13:28,520 --> 00:13:32,000 Speaker 9: force to do what it did on October seventh, and 256 00:13:32,760 --> 00:13:35,840 Speaker 9: the Americans have been saying, be careful, please don't what 257 00:13:35,920 --> 00:13:38,480 Speaker 9: about all the people who are a million plus people 258 00:13:38,520 --> 00:13:41,880 Speaker 9: who are taking shelter above ground in Rapha. So I 259 00:13:41,960 --> 00:13:45,079 Speaker 9: think that my instinct at the moment is that there 260 00:13:45,120 --> 00:13:49,360 Speaker 9: will be some time off here as we see whether 261 00:13:49,400 --> 00:13:53,360 Speaker 9: this negotiation can get anywhere in Cairo about a piece 262 00:13:53,440 --> 00:13:57,960 Speaker 9: about a ceasefire, and that Israel will begin to take 263 00:13:58,000 --> 00:14:03,040 Speaker 9: steps to have the civilian in Rapa moved elsewhere for 264 00:14:03,240 --> 00:14:06,000 Speaker 9: some kind of operation in the coming month or two 265 00:14:06,679 --> 00:14:09,839 Speaker 9: its scale is very difficult for me to assess at. 266 00:14:09,800 --> 00:14:12,520 Speaker 10: This point, Ethan, if I could tie these two together, 267 00:14:13,320 --> 00:14:17,920 Speaker 10: does the fact that Iran has struck Israel out in 268 00:14:17,960 --> 00:14:21,280 Speaker 10: the open? Is there a sense to which this gives 269 00:14:21,320 --> 00:14:26,120 Speaker 10: the Israelis more I don't know, more impetus to say, look, clearly, 270 00:14:26,480 --> 00:14:27,960 Speaker 10: we need to be out there and we need to 271 00:14:28,000 --> 00:14:31,760 Speaker 10: be strong. And again this more hawkish attitude towards Gaza 272 00:14:31,760 --> 00:14:33,440 Speaker 10: and what they say Iranian proxies. 273 00:14:34,720 --> 00:14:39,880 Speaker 9: Yes, absolutely, but you see, it's like everything, it's it's 274 00:14:39,920 --> 00:14:41,560 Speaker 9: not one force at worker. 275 00:14:41,720 --> 00:14:43,120 Speaker 8: And so what you said is true. 276 00:14:43,280 --> 00:14:46,240 Speaker 9: On the other side of the of the equation is 277 00:14:46,280 --> 00:14:49,840 Speaker 9: the fact that last Saturday, all these countries, including Jordan, 278 00:14:49,920 --> 00:14:55,440 Speaker 9: Saudi Arabia and other Arab states, helped Israel push Iran back. 279 00:14:55,920 --> 00:14:59,760 Speaker 9: And Israel is feeling, you know, in the bosom of 280 00:14:59,800 --> 00:15:02,040 Speaker 9: some kind of alliance and doesn't want. 281 00:15:01,880 --> 00:15:03,200 Speaker 8: To mess that up either. 282 00:15:03,360 --> 00:15:06,360 Speaker 9: So you know, I think that what it wants to 283 00:15:06,360 --> 00:15:10,080 Speaker 9: do is sort of show restraint toward Iran on its 284 00:15:10,120 --> 00:15:12,960 Speaker 9: mainland and get everyone to accept that it needs to 285 00:15:13,000 --> 00:15:17,800 Speaker 9: do something in Gaza. And because as you say, AMASA 286 00:15:17,880 --> 00:15:21,760 Speaker 9: is after all funded and paid for by Iran as well. 287 00:15:22,280 --> 00:15:22,880 Speaker 4: So Ethan. 288 00:15:23,240 --> 00:15:27,000 Speaker 3: You're based in Tel Aviv. You have a good sense 289 00:15:27,000 --> 00:15:29,560 Speaker 3: of kind of the common person on the street. Is 290 00:15:29,560 --> 00:15:33,640 Speaker 3: there any sense that among the people of Israel that 291 00:15:33,680 --> 00:15:36,280 Speaker 3: there's a sense of fatigue setting in here? It's been 292 00:15:36,400 --> 00:15:41,400 Speaker 3: six months here, they've basically occupied Gaza. Is there a 293 00:15:41,440 --> 00:15:44,040 Speaker 3: sense of that maybe the people would like to move 294 00:15:44,080 --> 00:15:45,000 Speaker 3: on to the next step. 295 00:15:47,720 --> 00:15:50,880 Speaker 8: There is some of that. I don't think it's overwhelming, though. 296 00:15:50,920 --> 00:15:53,120 Speaker 9: I have to tell you, Paul them and there really 297 00:15:53,240 --> 00:15:55,880 Speaker 9: is a sense what happened on October seventh, it's very 298 00:15:55,920 --> 00:15:59,960 Speaker 9: difficult for those abroad to grasp the sense of trauma 299 00:16:00,520 --> 00:16:03,880 Speaker 9: and defeat that it created in this country, the sense 300 00:16:03,920 --> 00:16:08,800 Speaker 9: that its very existence is its stake, its ability to 301 00:16:08,920 --> 00:16:12,040 Speaker 9: allow people to live at the edges of its country 302 00:16:12,080 --> 00:16:14,400 Speaker 9: and not feel that someone is going to come in 303 00:16:14,640 --> 00:16:18,480 Speaker 9: and carve them up and unprotected. It's been so overwhelming 304 00:16:19,000 --> 00:16:24,200 Speaker 9: that I think that there remains a desire here among 305 00:16:24,240 --> 00:16:28,160 Speaker 9: most Israelis to quote unquote finish with Kamas and make 306 00:16:28,280 --> 00:16:32,560 Speaker 9: clear to other militias, proxies and enemies not far away 307 00:16:33,000 --> 00:16:36,240 Speaker 9: that Israel is willing to fight for its existence. So 308 00:16:36,320 --> 00:16:40,880 Speaker 9: I don't think that a fatigue is the overwhelming sentiment, 309 00:16:41,000 --> 00:16:43,400 Speaker 9: although you are right that it exists, and there are 310 00:16:43,440 --> 00:16:46,560 Speaker 9: many who say, we've done what we can, let's cut 311 00:16:46,600 --> 00:16:48,040 Speaker 9: a deal, let's get out. 312 00:16:48,240 --> 00:16:50,560 Speaker 8: We can't do this forever. But I don't think it. 313 00:16:50,680 --> 00:16:53,880 Speaker 9: I think it's still leaning in the other direction for now. 314 00:16:54,440 --> 00:16:58,520 Speaker 10: Ethan, if I can quickly ask a military amateurish question, 315 00:16:59,000 --> 00:17:01,360 Speaker 10: because this I don't understand, and maybe it's a minor point, 316 00:17:01,400 --> 00:17:03,880 Speaker 10: but I'd just be interested to know when Israel we 317 00:17:03,920 --> 00:17:06,760 Speaker 10: have reports of them launching the strikes, also a report 318 00:17:06,960 --> 00:17:10,400 Speaker 10: of them striking a Syrian aerial defense position. Israel never 319 00:17:10,440 --> 00:17:14,960 Speaker 10: confirms them. Their official line is always one of unconfirming. 320 00:17:15,440 --> 00:17:19,919 Speaker 4: Why is that, you know? 321 00:17:20,040 --> 00:17:23,520 Speaker 9: I think that their view in particular with regard to 322 00:17:23,520 --> 00:17:27,920 Speaker 9: say around is that it in particular today, they view 323 00:17:27,960 --> 00:17:31,400 Speaker 9: that it allows them some kind of rhetorical and strategic 324 00:17:31,480 --> 00:17:36,959 Speaker 9: flexibility to not specifically say what they did. They certainly 325 00:17:37,280 --> 00:17:40,520 Speaker 9: acknowledge when they attack and Lebanon and often in Syria, 326 00:17:40,560 --> 00:17:43,040 Speaker 9: by the way, if they say these are his blove 327 00:17:43,119 --> 00:17:46,439 Speaker 9: positions that we have taken out. That goes on in 328 00:17:46,520 --> 00:17:48,840 Speaker 9: terms of the sort of scariest stuff that goes on 329 00:17:48,880 --> 00:17:51,920 Speaker 9: when they take out, you know, an alleged nuclear reactor 330 00:17:52,000 --> 00:17:55,840 Speaker 9: or when they do what they did today, they they 331 00:17:55,880 --> 00:17:57,480 Speaker 9: have found it useful. 332 00:17:57,119 --> 00:17:59,720 Speaker 8: To not to not talk about it publicly. 333 00:17:59,760 --> 00:18:02,280 Speaker 9: I mean, you know, Israel has nuclear weapons, that's had 334 00:18:02,320 --> 00:18:05,200 Speaker 9: them for years, it has never officially acknowledged them. 335 00:18:05,320 --> 00:18:08,080 Speaker 3: Ethan, thank you so much for this reporting. Ethan Browner 336 00:18:08,200 --> 00:18:11,240 Speaker 3: Israel Bureau chief and senior Mideast editor for Bloomberg News. 337 00:18:11,240 --> 00:18:14,879 Speaker 3: He's based in our Tel Aviv bureau. There, so again, 338 00:18:15,400 --> 00:18:16,840 Speaker 3: fluid situation there. 339 00:18:19,240 --> 00:18:23,120 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 340 00:18:23,200 --> 00:18:26,280 Speaker 1: weekdays at ten am Eastern on Apple Card playing Android 341 00:18:26,320 --> 00:18:29,400 Speaker 1: Auto with the Bloomberg Business app, Listen on demand wherever 342 00:18:29,480 --> 00:18:33,320 Speaker 1: you get your podcasts, or watch us live on YouTube. 343 00:18:34,040 --> 00:18:36,320 Speaker 3: We are here in a Bloomberg Interactive Broker studio, Danny 344 00:18:36,320 --> 00:18:39,480 Speaker 3: Berger sitting in for Alex Steel, who's on holiday today 345 00:18:39,520 --> 00:18:41,560 Speaker 3: and all of next week. We're here in a Bloomberg 346 00:18:41,560 --> 00:18:45,840 Speaker 3: INTERACTI Brooker studio. We're streaming live on YouTube. That's the Internet, 347 00:18:45,920 --> 00:18:49,680 Speaker 3: Danny YouTube, dot com search Bloomberg Podcast. Apparently that's what 348 00:18:49,680 --> 00:18:52,600 Speaker 3: the kids are doing every day. We're on this YouTube thing. 349 00:18:52,720 --> 00:18:56,320 Speaker 3: Tom's all over. Tom Keeney's becoming a new person here 350 00:18:56,440 --> 00:19:00,760 Speaker 3: in this Internet age talking about streaming kind of internet 351 00:19:00,760 --> 00:19:01,600 Speaker 3: delivery of media. 352 00:19:01,680 --> 00:19:02,879 Speaker 4: It's all about Netflix. 353 00:19:03,800 --> 00:19:06,520 Speaker 3: Netflix is a two hundred and fifty billion dollar market 354 00:19:06,520 --> 00:19:09,600 Speaker 3: cap company. It's up seventeen percent year to date, up 355 00:19:09,640 --> 00:19:12,000 Speaker 3: seventy six percent over the past twelve months, but it's 356 00:19:12,160 --> 00:19:15,160 Speaker 3: down six point six percent today. I'm not sure what's 357 00:19:15,200 --> 00:19:16,919 Speaker 3: going on there. I thought they had good numbers last night. 358 00:19:16,920 --> 00:19:19,479 Speaker 3: But let's chicken with somebody who gets paid to understand 359 00:19:19,480 --> 00:19:19,800 Speaker 3: this stuff. 360 00:19:19,840 --> 00:19:20,080 Speaker 4: KEITHA. 361 00:19:20,160 --> 00:19:24,200 Speaker 3: Ranganathan. She is the the media analyst of Bloomberg Intelligence. 362 00:19:24,400 --> 00:19:26,439 Speaker 3: She's done in our Princeton office. Keith, I thought it 363 00:19:26,440 --> 00:19:28,760 Speaker 3: was a really good quarter in terms of you know, 364 00:19:28,800 --> 00:19:30,280 Speaker 3: particularly the subscriber ads. 365 00:19:30,280 --> 00:19:31,879 Speaker 4: Why do you think there' stocks trading down today? 366 00:19:32,840 --> 00:19:35,000 Speaker 11: Yeah, it was not just a good quarter, Paul, it 367 00:19:35,040 --> 00:19:38,120 Speaker 11: was an excellent quarter. I mean, they blew out subscribers. 368 00:19:38,280 --> 00:19:40,320 Speaker 11: We were expecting, you know, four and a half million 369 00:19:40,359 --> 00:19:42,919 Speaker 11: subscriber ads. They came in at over nine million. It 370 00:19:42,960 --> 00:19:45,359 Speaker 11: was the best first quarter ever, you know, kind of 371 00:19:45,359 --> 00:19:49,159 Speaker 11: almost reminiscent of COVID times. But I think why investors 372 00:19:49,160 --> 00:19:51,720 Speaker 11: are a little bit spooked ever since they reported is 373 00:19:51,760 --> 00:19:53,879 Speaker 11: because they said that they're no longer going to be 374 00:19:53,920 --> 00:19:58,240 Speaker 11: providing disclosure on their subscriber numbers as well as on 375 00:19:58,400 --> 00:20:01,080 Speaker 11: our pools starting in the first ord of twenty twenty five. 376 00:20:01,080 --> 00:20:03,080 Speaker 11: And I think what that really signals is that this 377 00:20:03,119 --> 00:20:07,040 Speaker 11: company is transitioning into this more mature phase. I mean, 378 00:20:07,119 --> 00:20:10,960 Speaker 11: you know, well, investors in the market likes transparency, and 379 00:20:11,040 --> 00:20:14,199 Speaker 11: anytime you reduce disclosure, it really kind of causes a 380 00:20:14,240 --> 00:20:17,480 Speaker 11: lot of uncertainty, a lot of anxiety. 381 00:20:17,560 --> 00:20:20,280 Speaker 10: If it's entering a more mature phase. Gita, does that 382 00:20:20,320 --> 00:20:22,840 Speaker 10: mean that this thing can no longer be priced as 383 00:20:22,880 --> 00:20:26,000 Speaker 10: a growth stock, That the era of adding on huge 384 00:20:26,000 --> 00:20:29,800 Speaker 10: amounts of subscribers growing like gangbusters, that that's over, and 385 00:20:29,840 --> 00:20:32,680 Speaker 10: so this repricing in that scenario makes sense. 386 00:20:34,240 --> 00:20:36,160 Speaker 11: So, you know, there are a couple of different things here. 387 00:20:36,240 --> 00:20:39,119 Speaker 11: I think with the whole streaming wars and the media 388 00:20:39,280 --> 00:20:41,960 Speaker 11: landscape as a whole, I mean, there has been kind 389 00:20:41,960 --> 00:20:44,520 Speaker 11: of this shift away from this hyper focus on just 390 00:20:44,560 --> 00:20:47,359 Speaker 11: subscriber growth. I mean, there was going to be eventually 391 00:20:47,440 --> 00:20:49,640 Speaker 11: some type of a wall or some type of a ceiling. 392 00:20:49,880 --> 00:20:53,399 Speaker 11: The question was where it would be Again, that question 393 00:20:53,480 --> 00:20:55,919 Speaker 11: is still an open question. But I think what you 394 00:20:55,960 --> 00:20:58,520 Speaker 11: have to remember with Netflix is, yes, there is going 395 00:20:58,560 --> 00:21:00,439 Speaker 11: to be some limits to subscriber growth. Think we're going 396 00:21:00,440 --> 00:21:02,399 Speaker 11: to see peak subscriber growth this year, it is going 397 00:21:02,440 --> 00:21:04,920 Speaker 11: to start to decelerate a little bit. But I think 398 00:21:04,920 --> 00:21:07,120 Speaker 11: what Netflix has managed to do being a first mover 399 00:21:07,200 --> 00:21:10,280 Speaker 11: in this space is really scale and operating leverage. And 400 00:21:10,320 --> 00:21:13,560 Speaker 11: we're seeing that in the profitability metrics. We're seeing that 401 00:21:13,760 --> 00:21:16,680 Speaker 11: in the operating margin, We're seeing that in the free 402 00:21:16,720 --> 00:21:20,240 Speaker 11: cash flow, and they are just way ahead of their peers. 403 00:21:20,920 --> 00:21:23,480 Speaker 11: And so I think, you know, you know, yes, valuation 404 00:21:23,640 --> 00:21:25,480 Speaker 11: might have to take a little bit of a more 405 00:21:25,760 --> 00:21:28,119 Speaker 11: modest kind of approach or has to be maybe a 406 00:21:28,160 --> 00:21:30,240 Speaker 11: little bit more cautious here. But at the same time, 407 00:21:30,280 --> 00:21:32,159 Speaker 11: I mean, this is a very different company from your 408 00:21:32,160 --> 00:21:36,400 Speaker 11: traditional media company because most of them are still losing 409 00:21:36,440 --> 00:21:39,360 Speaker 11: money on their streaming business. Meanwhile, you have Netflix generating 410 00:21:39,400 --> 00:21:41,600 Speaker 11: close to about nine to ten billion dollars in profit 411 00:21:41,680 --> 00:21:44,240 Speaker 11: this year with a twenty five percent operating margin. 412 00:21:44,359 --> 00:21:46,239 Speaker 3: Yeah, just amazing what they've done there in terms of 413 00:21:46,480 --> 00:21:50,199 Speaker 3: getting to profitability, which beg begs a question at Githa, 414 00:21:50,240 --> 00:21:53,639 Speaker 3: how about is there I mean, you can be a 415 00:21:53,840 --> 00:21:55,080 Speaker 3: very profitable streaming company. 416 00:21:55,080 --> 00:21:56,160 Speaker 4: We see that with Netflix. 417 00:21:56,200 --> 00:21:58,840 Speaker 3: Do you think that paramount pluses of the world that 418 00:21:58,880 --> 00:22:01,199 Speaker 3: Disney pluses the world, all the other pluses out there 419 00:22:01,240 --> 00:22:03,800 Speaker 3: from the media companies, can they get to a similar 420 00:22:03,840 --> 00:22:06,280 Speaker 3: level of profitability too, because right now, as you mentioned, 421 00:22:06,720 --> 00:22:08,639 Speaker 3: the streaming business has been a money loser for most 422 00:22:08,680 --> 00:22:09,960 Speaker 3: of the traditional media companies. 423 00:22:11,320 --> 00:22:14,080 Speaker 11: Yeah, so exactly to that point, Paul. Last year, when 424 00:22:14,119 --> 00:22:17,159 Speaker 11: Netflix reported about seven billion dollars in profit, all of 425 00:22:17,200 --> 00:22:20,679 Speaker 11: these other streamers combined reported the exact same amount in losses. 426 00:22:20,680 --> 00:22:23,600 Speaker 11: So they lost about seven billion dollars, and you know, 427 00:22:23,760 --> 00:22:25,439 Speaker 11: it's going to be a little bit different story for 428 00:22:25,520 --> 00:22:27,440 Speaker 11: each one of them. I don't think all of them 429 00:22:27,440 --> 00:22:30,320 Speaker 11: can necessarily get to profitability. So Disney is almost on 430 00:22:30,359 --> 00:22:32,480 Speaker 11: the cusp of profitability. They're probably going to break even 431 00:22:32,480 --> 00:22:34,880 Speaker 11: in a couple of quarters. They have all the levers 432 00:22:34,880 --> 00:22:36,520 Speaker 11: in place to kind of really make it a very 433 00:22:36,520 --> 00:22:38,480 Speaker 11: profitable business. Of course, it's going to take them some 434 00:22:38,680 --> 00:22:41,000 Speaker 11: time to get to the levels of a Netflix, but 435 00:22:41,080 --> 00:22:44,640 Speaker 11: they definitely have the formula. When it comes to a paramount, 436 00:22:44,640 --> 00:22:46,399 Speaker 11: I think that's going to be a completely different story. 437 00:22:46,440 --> 00:22:49,960 Speaker 11: The company is still losing money. It will probably lose 438 00:22:49,960 --> 00:22:51,920 Speaker 11: about a billion a billion two plus. They have too 439 00:22:51,920 --> 00:22:55,960 Speaker 11: many other distractions going on with Warner Brothers Discovery. Yes, 440 00:22:56,080 --> 00:22:59,800 Speaker 11: they did turn a slight profit last year with you know, Max, 441 00:23:00,400 --> 00:23:01,840 Speaker 11: But you know, Paul, you really have to kind of 442 00:23:01,920 --> 00:23:04,520 Speaker 11: look at this in the context of the Warner Brothers 443 00:23:04,520 --> 00:23:07,560 Speaker 11: Discovery business. I mean HBO in its heyday, and this 444 00:23:07,640 --> 00:23:09,760 Speaker 11: is HBO, which is basically turned into the streaming business. 445 00:23:09,840 --> 00:23:12,040 Speaker 11: In it's heday, was generating two billion dollars in ebitdah, 446 00:23:12,760 --> 00:23:15,520 Speaker 11: and last year they reported one hundred million dollars on 447 00:23:15,560 --> 00:23:18,040 Speaker 11: their streaming business and ibadah. And you know, if they 448 00:23:18,040 --> 00:23:19,919 Speaker 11: want the street to be excited about that, I'm not 449 00:23:19,960 --> 00:23:22,879 Speaker 11: so sure. You know, investors are going to be too happy. 450 00:23:22,880 --> 00:23:25,800 Speaker 11: So it's they're not going to be able to get 451 00:23:25,800 --> 00:23:28,040 Speaker 11: to the level of profitability and definitely not going to 452 00:23:28,080 --> 00:23:29,639 Speaker 11: be able to get to it in the timeframe that 453 00:23:29,720 --> 00:23:31,680 Speaker 11: investors are hoping that they would. 454 00:23:32,080 --> 00:23:34,000 Speaker 10: So Netflix might have won the battle there, but get 455 00:23:34,040 --> 00:23:36,160 Speaker 10: the one battle that seems yet to have been one 456 00:23:36,320 --> 00:23:40,879 Speaker 10: is who's the dominant sports streaming place. You have Netflix 457 00:23:40,960 --> 00:23:43,439 Speaker 10: with the WWE rod deal, and then you have this 458 00:23:43,480 --> 00:23:46,920 Speaker 10: other platform which we heard be announced earlier in this year, which, 459 00:23:46,960 --> 00:23:48,520 Speaker 10: to be honest, I feel like I've heard nothing of 460 00:23:48,600 --> 00:23:51,600 Speaker 10: since the ESPN, Fox, Warner Bros. Discovery. I don't even 461 00:23:51,640 --> 00:23:53,400 Speaker 10: think we still know what a name is. We don't 462 00:23:53,440 --> 00:23:55,480 Speaker 10: know whether it's going to happen, whether Congress will even 463 00:23:55,520 --> 00:23:58,399 Speaker 10: allow it to happen. How is that shaping up in 464 00:23:58,480 --> 00:24:01,359 Speaker 10: terms of who becomes the go to player to watch 465 00:24:01,400 --> 00:24:03,280 Speaker 10: all of your live stream sports? 466 00:24:03,920 --> 00:24:07,600 Speaker 11: Yeah, that really is is the question the question right now? 467 00:24:07,600 --> 00:24:09,480 Speaker 11: And Danny, you know, you kind of really hit the 468 00:24:09,520 --> 00:24:11,320 Speaker 11: nail on the head there. We're gonna have to wait 469 00:24:11,359 --> 00:24:14,440 Speaker 11: and see what happens with you know, the joint venture 470 00:24:14,480 --> 00:24:16,760 Speaker 11: the ESPN Fox Warner Brothers. In the meantime, Disney has 471 00:24:16,760 --> 00:24:20,240 Speaker 11: also said that they will take ESPN standalone over the 472 00:24:20,280 --> 00:24:22,520 Speaker 11: top in twenty twenty five. But in the meantime, you 473 00:24:22,560 --> 00:24:24,600 Speaker 11: do have all these tech giants kind of making a 474 00:24:24,640 --> 00:24:26,800 Speaker 11: play for sports, right Amazon I think to date has 475 00:24:26,840 --> 00:24:30,320 Speaker 11: been the most aggressive. They have the Thursday night football package. 476 00:24:31,080 --> 00:24:33,600 Speaker 11: You know, they've now introduced ads on their service, they 477 00:24:33,640 --> 00:24:37,119 Speaker 11: have a lot of the football content from Europe, so 478 00:24:37,320 --> 00:24:39,280 Speaker 11: you know, you know, they're definitely making a big play. 479 00:24:39,280 --> 00:24:41,520 Speaker 11: And as you mentioned Netflix too, I think the big 480 00:24:41,560 --> 00:24:43,520 Speaker 11: thing that we are kind of really watching out for 481 00:24:43,640 --> 00:24:46,600 Speaker 11: is this July twentieth event where they're kind of dipping 482 00:24:46,600 --> 00:24:49,399 Speaker 11: into live sports a little bit with the Mike Tyson 483 00:24:49,520 --> 00:24:51,960 Speaker 11: versus Jake Paul and that kind of then gives them, 484 00:24:52,000 --> 00:24:55,159 Speaker 11: I think, allows them to gauge a little bit, you 485 00:24:55,160 --> 00:24:58,200 Speaker 11: know what the appetite for for live sports is, because 486 00:24:58,200 --> 00:25:00,920 Speaker 11: remember again ww's is a little bit quasi sports. It 487 00:25:00,960 --> 00:25:03,280 Speaker 11: is more what they call sports entertainment. But it's going 488 00:25:03,320 --> 00:25:04,879 Speaker 11: to be interesting to see whether they really want to 489 00:25:04,920 --> 00:25:08,399 Speaker 11: go charging, go really aggressive with sports. I think if 490 00:25:08,400 --> 00:25:10,480 Speaker 11: they want to build their advertising business, I think it 491 00:25:10,520 --> 00:25:13,440 Speaker 11: is a critical piece that is missing for them right now. 492 00:25:13,760 --> 00:25:16,080 Speaker 11: And so there is this chatter and this speculation about 493 00:25:16,080 --> 00:25:18,080 Speaker 11: whether they're even going to be this dark horse bidder 494 00:25:18,080 --> 00:25:21,280 Speaker 11: for the NBA negotiations that are currently ongoing. 495 00:25:21,760 --> 00:25:24,080 Speaker 3: All right, gith, let's switch gears to our good friends 496 00:25:24,160 --> 00:25:27,160 Speaker 3: at Paramount. The stocks up about ten percent today. The news, 497 00:25:27,160 --> 00:25:30,280 Speaker 3: I guess is Paramount shares jump as Apollo and Sony 498 00:25:30,680 --> 00:25:34,240 Speaker 3: are said to weigh a joint bid out there. What's 499 00:25:34,280 --> 00:25:36,720 Speaker 3: the latest there? Are we going to get some kind 500 00:25:36,720 --> 00:25:40,440 Speaker 3: of deal here for some of Paramount, all of Paramount? 501 00:25:40,440 --> 00:25:41,400 Speaker 4: How do you think it shakes out? 502 00:25:42,520 --> 00:25:43,760 Speaker 5: I certainly hope so, Paul. 503 00:25:43,800 --> 00:25:46,439 Speaker 11: I mean, it's Sony kind of getting into this equation. 504 00:25:46,480 --> 00:25:50,800 Speaker 11: I think they are the most credible bidder to date, 505 00:25:51,560 --> 00:25:53,320 Speaker 11: and you know, I really hope that they come in 506 00:25:53,359 --> 00:25:56,560 Speaker 11: with something that kind of entices the Paramount board to 507 00:25:56,600 --> 00:25:59,560 Speaker 11: engage with them, because remember the Apollo bid before for 508 00:25:59,640 --> 00:26:02,439 Speaker 11: twenty six billion. I mean, there were just or at 509 00:26:02,520 --> 00:26:04,280 Speaker 11: least the way management spun it was that, you know, 510 00:26:04,280 --> 00:26:07,600 Speaker 11: there were all these financing concerns. So this I think definitely, 511 00:26:08,359 --> 00:26:11,359 Speaker 11: you know, we'll have a lot of firepower because the 512 00:26:11,400 --> 00:26:14,480 Speaker 11: sky Dance deal, that Paramount is currently engaged, and there's 513 00:26:14,520 --> 00:26:18,240 Speaker 11: just been so much of backlash against that deal because 514 00:26:18,280 --> 00:26:21,480 Speaker 11: what most of the common shareholders have felt is that 515 00:26:21,600 --> 00:26:24,879 Speaker 11: it is only going to benefit the Redstone family, it 516 00:26:24,960 --> 00:26:28,560 Speaker 11: is going to dilute all of the other shareholders. So 517 00:26:28,600 --> 00:26:30,520 Speaker 11: there is all of that going on. Meanwhile, you had 518 00:26:30,520 --> 00:26:34,440 Speaker 11: four board members that kind of left, you know suddenly 519 00:26:34,880 --> 00:26:36,520 Speaker 11: again that kind of screams. 520 00:26:36,119 --> 00:26:36,720 Speaker 5: A hard no. 521 00:26:37,200 --> 00:26:39,240 Speaker 11: So the sky Dance deal as it stands right now 522 00:26:39,320 --> 00:26:43,280 Speaker 11: really seems fraught with litigation risk, which is why I 523 00:26:43,280 --> 00:26:45,720 Speaker 11: think Sony coming in is kind of a welcome change 524 00:26:45,760 --> 00:26:47,119 Speaker 11: and investors will definitely cheer that. 525 00:26:47,280 --> 00:26:50,560 Speaker 10: But to be clear, share Redstone doesn't need to let 526 00:26:50,640 --> 00:26:52,800 Speaker 10: the other shareholders have a say or have a vote, 527 00:26:52,840 --> 00:26:54,040 Speaker 10: right and how this goes. 528 00:26:55,200 --> 00:26:57,439 Speaker 11: She doesn't need to, but she should. I mean, she 529 00:26:57,480 --> 00:26:59,240 Speaker 11: does have a fiduciary responsibility. 530 00:27:00,000 --> 00:27:00,359 Speaker 4: That funny. 531 00:27:00,320 --> 00:27:02,440 Speaker 3: We were speaking Tom Keen and I earlier today with 532 00:27:02,520 --> 00:27:05,040 Speaker 3: Chris Morangi, who's a co CIO at Gabelli Funds, and 533 00:27:05,040 --> 00:27:09,160 Speaker 3: Gabelli is they own the control shares, they don't own 534 00:27:09,400 --> 00:27:11,399 Speaker 3: the non voting they own the voting shares. They're the 535 00:27:11,400 --> 00:27:16,159 Speaker 3: second largest owner after the Redstone trust here, and he 536 00:27:16,240 --> 00:27:19,640 Speaker 3: seemed to imply that, you know, he thinks the company 537 00:27:19,680 --> 00:27:23,200 Speaker 3: should treat all shareholders. I guess similarly, but again, as 538 00:27:23,200 --> 00:27:26,720 Speaker 3: you mentioned, they don't have to, assuming they want to 539 00:27:26,720 --> 00:27:27,760 Speaker 3: take some litigation risks. 540 00:27:27,800 --> 00:27:29,119 Speaker 4: Is that kind of how you think about Akita? 541 00:27:30,200 --> 00:27:30,400 Speaker 10: Yeah? 542 00:27:30,400 --> 00:27:32,720 Speaker 11: I think you know, that's what they don't have to. 543 00:27:32,760 --> 00:27:35,320 Speaker 11: You're absolutely right. I mean, Sherry Redstone can pretty much 544 00:27:35,359 --> 00:27:37,840 Speaker 11: do whatever she wants. The problem is, you know, the 545 00:27:37,880 --> 00:27:42,120 Speaker 11: other shareholders are going to definitely revolve. There's already been 546 00:27:42,240 --> 00:27:45,280 Speaker 11: so much of public protest and backlash. Not that that 547 00:27:45,280 --> 00:27:49,200 Speaker 11: has stopped her, but again we'll have to see. 548 00:27:49,400 --> 00:27:53,480 Speaker 3: Yeah, it's amazing, and again I just rewind my investment 549 00:27:53,520 --> 00:27:56,680 Speaker 3: banking clock. You know, five years, ten years, and what 550 00:27:56,720 --> 00:27:59,359 Speaker 3: you could have gotten, what this company could have been 551 00:27:59,359 --> 00:28:02,160 Speaker 3: paid for, or change and control, what it's been multiples 552 00:28:02,200 --> 00:28:04,920 Speaker 3: of where we are today. It's just kind of sad 553 00:28:04,960 --> 00:28:06,760 Speaker 3: to see how the value has declined. 554 00:28:06,560 --> 00:28:08,520 Speaker 10: And probably the idea of a dual class share back 555 00:28:08,560 --> 00:28:10,480 Speaker 10: then was different. People are looking at it different than 556 00:28:10,520 --> 00:28:11,639 Speaker 10: they are at this very moment. 557 00:28:11,760 --> 00:28:12,600 Speaker 4: Yeah, exactly. 558 00:28:12,680 --> 00:28:15,000 Speaker 3: It's been something that media investors have had to deal 559 00:28:15,000 --> 00:28:15,600 Speaker 3: with for a long time. 560 00:28:15,640 --> 00:28:16,480 Speaker 4: Keitha wrong and nothing. 561 00:28:16,840 --> 00:28:18,720 Speaker 3: She thank you so much for joining us at Githa 562 00:28:18,800 --> 00:28:21,200 Speaker 3: is the media anamals for Bloomberg Intelligence, one of the 563 00:28:21,240 --> 00:28:23,239 Speaker 3: best media anaals out there on the stream. We love 564 00:28:23,240 --> 00:28:25,360 Speaker 3: getting a few minutes of her time joining us from 565 00:28:25,400 --> 00:28:28,119 Speaker 3: the Princeton campus of Bloomberg. 566 00:28:28,320 --> 00:28:30,439 Speaker 4: I've been down to the Bloomberg alses of Princeton, you know, 567 00:28:30,520 --> 00:28:30,959 Speaker 4: I never have. 568 00:28:31,160 --> 00:28:32,720 Speaker 10: I got to just moved back to New York, Paul, 569 00:28:32,720 --> 00:28:34,040 Speaker 10: You've got to give me time. Give me time. And 570 00:28:34,160 --> 00:28:36,240 Speaker 10: how you're in London for almost seven years? 571 00:28:36,320 --> 00:28:36,639 Speaker 1: Wow? 572 00:28:36,840 --> 00:28:38,680 Speaker 4: Yeah, yeah, back in New York. 573 00:28:38,760 --> 00:28:40,640 Speaker 10: So now we'll do the bloomberg Y West road trip 574 00:28:40,680 --> 00:28:41,320 Speaker 10: now that I'm back. 575 00:28:41,520 --> 00:28:41,880 Speaker 4: Very good. 576 00:28:43,400 --> 00:28:47,320 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 577 00:28:47,400 --> 00:28:50,880 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 578 00:28:50,920 --> 00:28:54,080 Speaker 1: Otto with the Bloomberg Business. You can also listen live 579 00:28:54,200 --> 00:28:57,360 Speaker 1: on Amazon Alexa from our flagship New York station, Just 580 00:28:57,440 --> 00:29:01,280 Speaker 1: Say Alexa playing Bloomberg eleven thirty Janny. 581 00:29:01,320 --> 00:29:02,440 Speaker 4: We've talked about this market. 582 00:29:02,440 --> 00:29:04,600 Speaker 3: It's rally hard off the October lows, you know, one 583 00:29:04,640 --> 00:29:06,960 Speaker 3: point up about twenty five percent off those October lows, 584 00:29:07,320 --> 00:29:09,000 Speaker 3: and a lot of smart market people are saying, we 585 00:29:09,040 --> 00:29:11,560 Speaker 3: do need to see some pullbacks and draw downs, maybe 586 00:29:11,680 --> 00:29:15,320 Speaker 3: something more than two percent to kind of it's okay 587 00:29:15,360 --> 00:29:17,800 Speaker 3: for a healthy market. So here we are today, we're 588 00:29:17,840 --> 00:29:20,000 Speaker 3: down about four or half maybe five percent on the 589 00:29:20,080 --> 00:29:22,040 Speaker 3: S and P five round of the question is that it? 590 00:29:22,160 --> 00:29:23,400 Speaker 4: I mean, is that kind of the pullback? 591 00:29:23,600 --> 00:29:26,200 Speaker 3: Nicole web joins, a senior vice president financial advisor for 592 00:29:26,320 --> 00:29:29,720 Speaker 3: Wealth Enhancement Group, joining us here in our Bloomberg Interactive 593 00:29:29,760 --> 00:29:32,240 Speaker 3: Broker Studio. So, Nicole, what do you tell your clients 594 00:29:32,280 --> 00:29:35,560 Speaker 3: these days about kind of the you know, the ups 595 00:29:35,600 --> 00:29:37,280 Speaker 3: and downs of this market. Again, we've had a nice 596 00:29:37,280 --> 00:29:40,320 Speaker 3: strong move off those October lows. What do you tell 597 00:29:40,360 --> 00:29:42,120 Speaker 3: them about where you think this market's going to go. 598 00:29:42,560 --> 00:29:45,720 Speaker 12: I mean, pauses and pullbacks are part of a healthy market. 599 00:29:46,400 --> 00:29:50,480 Speaker 12: We can't run further from here. To think it would 600 00:29:50,520 --> 00:29:53,520 Speaker 12: happen in a straight line is you know, that's what 601 00:29:53,600 --> 00:29:57,960 Speaker 12: makes us uncomfortable. When we see things trajectory up into 602 00:29:58,000 --> 00:30:01,680 Speaker 12: the right for two long that's when you start to 603 00:30:01,720 --> 00:30:06,560 Speaker 12: get a little bit concerned about over enthusiasm. And so 604 00:30:07,040 --> 00:30:10,480 Speaker 12: this pause for us is well warranted. I think the 605 00:30:10,920 --> 00:30:13,640 Speaker 12: does the pullback have room from here? You know, I 606 00:30:13,640 --> 00:30:15,880 Speaker 12: think there's a lot riding on big tech earnings and 607 00:30:15,960 --> 00:30:18,280 Speaker 12: I think we can't be overly dismissive of that. It 608 00:30:18,320 --> 00:30:22,240 Speaker 12: has been the defensive play for many years in a 609 00:30:22,320 --> 00:30:25,560 Speaker 12: row now and there's a lot riding on that forward guidance. 610 00:30:25,640 --> 00:30:27,600 Speaker 12: And we're a bit of the camp that there's probably 611 00:30:27,600 --> 00:30:31,560 Speaker 12: a de acceleration of earnings from those names and an 612 00:30:31,640 --> 00:30:34,200 Speaker 12: acceleration of earnings and other sectors of the market in 613 00:30:34,240 --> 00:30:36,200 Speaker 12: the back half of this year. And I think you 614 00:30:36,240 --> 00:30:38,000 Speaker 12: saw a little bit of that play out with Netflix 615 00:30:38,000 --> 00:30:39,520 Speaker 12: and there's a big response. 616 00:30:40,000 --> 00:30:42,760 Speaker 10: Yeah. Again, the irony is this idea that on the 617 00:30:42,800 --> 00:30:46,479 Speaker 10: way up we're freaking out or not weps me freaking 618 00:30:46,520 --> 00:30:48,240 Speaker 10: out that it can't go on and when it starts 619 00:30:48,280 --> 00:30:50,000 Speaker 10: to fall, we freak out the other way. How much 620 00:30:50,000 --> 00:30:52,520 Speaker 10: further will it have to fall? But it's interesting, you say, 621 00:30:52,520 --> 00:30:55,400 Speaker 10: back half of the year, other companies pick up the mantle. 622 00:30:55,480 --> 00:30:57,280 Speaker 10: So is this less of a sell off and more 623 00:30:57,280 --> 00:30:59,040 Speaker 10: of a beginning of a leadership change? 624 00:30:59,360 --> 00:30:59,600 Speaker 2: Yeah? 625 00:30:59,760 --> 00:31:00,000 Speaker 10: I think. 626 00:31:00,320 --> 00:31:03,719 Speaker 12: I mean, there's a lot going on in markets today, 627 00:31:03,760 --> 00:31:07,239 Speaker 12: and I think it's a truly incredible time to be 628 00:31:07,280 --> 00:31:12,320 Speaker 12: an investor. Anytime you see the ten year pushing five percent, 629 00:31:12,800 --> 00:31:15,040 Speaker 12: you have to have a real conversation with your clients 630 00:31:15,040 --> 00:31:17,160 Speaker 12: and working on our side of the business, you know, 631 00:31:17,200 --> 00:31:21,600 Speaker 12: we're not beholden to only one mandate. We're cross asset 632 00:31:21,840 --> 00:31:24,560 Speaker 12: for families and so to us, you have to have 633 00:31:24,600 --> 00:31:30,760 Speaker 12: real conversations about excess return above expectations from equities and 634 00:31:30,840 --> 00:31:32,920 Speaker 12: what you do with that. And when you have a 635 00:31:33,040 --> 00:31:35,760 Speaker 12: ten year that is pushing five percent on a net 636 00:31:35,880 --> 00:31:39,800 Speaker 12: real return after tax basis, you start to go, Okay, well, 637 00:31:39,800 --> 00:31:42,160 Speaker 12: if I was expecting seven or eight from equities over 638 00:31:42,200 --> 00:31:45,320 Speaker 12: that same ten year period, is it prudent of me 639 00:31:45,480 --> 00:31:49,600 Speaker 12: now to start to think about repositioning? And so you know, 640 00:31:49,680 --> 00:31:52,360 Speaker 12: I think this is one of those kind of the 641 00:31:52,400 --> 00:31:55,520 Speaker 12: most overused word of twenty twenty four. This is another 642 00:31:55,600 --> 00:31:59,600 Speaker 12: bifurcation of what are you doing right now? Is it 643 00:31:59,640 --> 00:32:02,000 Speaker 12: a long only strategy? Are you cross asset, are you 644 00:32:02,040 --> 00:32:06,120 Speaker 12: invested across all sectors? And then how are you looking at? 645 00:32:06,120 --> 00:32:08,920 Speaker 12: This market today is full of opportunity for that. 646 00:32:09,160 --> 00:32:11,600 Speaker 4: You have a sixty forty outlook. 647 00:32:11,680 --> 00:32:15,160 Speaker 3: Sixty percent of portfolio and equities forty percent in bonds. 648 00:32:15,200 --> 00:32:16,600 Speaker 3: Is that something you guys do or do you just 649 00:32:16,640 --> 00:32:17,800 Speaker 3: get a little bit more creative than that? 650 00:32:17,920 --> 00:32:21,120 Speaker 12: Definitely more prescriptive than that, and I would say, you know, 651 00:32:21,960 --> 00:32:26,520 Speaker 12: we are big proponents of the third leg of that stool, 652 00:32:26,560 --> 00:32:28,760 Speaker 12: which you know it would be in the world of 653 00:32:28,800 --> 00:32:34,280 Speaker 12: alternative investments, real assets, you know, really looking at underlying risk. 654 00:32:35,000 --> 00:32:38,200 Speaker 12: You know, the unique thing about equity markets today is 655 00:32:38,200 --> 00:32:41,280 Speaker 12: that we have less shares available. There's just less publicly 656 00:32:41,320 --> 00:32:44,920 Speaker 12: traded companies. And so when you take that into consideration, 657 00:32:45,000 --> 00:32:48,240 Speaker 12: I think for people who have the access or the 658 00:32:48,720 --> 00:32:52,360 Speaker 12: lack of liquidity needs. You know that private investment spectrum 659 00:32:52,360 --> 00:32:54,760 Speaker 12: has been a big part of overall acid allocation. 660 00:32:55,720 --> 00:32:58,880 Speaker 10: In terms of this idea that that higher yields, I 661 00:32:58,920 --> 00:33:01,040 Speaker 10: get that all of a sudden have something that's an 662 00:33:01,040 --> 00:33:04,280 Speaker 10: attractive alternative to equities, But just in the mechanism of 663 00:33:04,320 --> 00:33:07,280 Speaker 10: that forcing equities to sell off. Is it different that 664 00:33:08,120 --> 00:33:10,520 Speaker 10: the reason that we have higher yields is because the 665 00:33:10,640 --> 00:33:13,000 Speaker 10: US economy is strong, and the US economy is strong 666 00:33:13,080 --> 00:33:15,480 Speaker 10: enough that we don't need to cut Presumably that's again 667 00:33:15,480 --> 00:33:17,440 Speaker 10: and aroundabout way a good thing for equities. 668 00:33:17,560 --> 00:33:20,200 Speaker 12: Yes. So, And this is where I was saying, there's 669 00:33:20,240 --> 00:33:22,080 Speaker 12: so much unpack, you know, I think this is where 670 00:33:22,080 --> 00:33:24,200 Speaker 12: the story of the inversion of the yield curve, which 671 00:33:24,240 --> 00:33:26,680 Speaker 12: I've been talking about, I feel like since twenty eighteen, 672 00:33:26,720 --> 00:33:29,400 Speaker 12: it's just a nauseum. But what if you really break 673 00:33:29,440 --> 00:33:31,840 Speaker 12: it down to what is it telling us in the moment. 674 00:33:32,240 --> 00:33:36,240 Speaker 12: It's telling us that there's long, long duration demand for 675 00:33:36,400 --> 00:33:40,440 Speaker 12: US treasuries, and that the growth is so strong, and 676 00:33:40,480 --> 00:33:43,479 Speaker 12: that the consumer has strength to the extent that we 677 00:33:43,520 --> 00:33:47,720 Speaker 12: want to slow them down. So when we think about earnings, 678 00:33:47,760 --> 00:33:50,640 Speaker 12: and we think about earnings growth, which the end of 679 00:33:50,640 --> 00:33:53,000 Speaker 12: the day should be a big part of the representation 680 00:33:53,080 --> 00:33:56,120 Speaker 12: of the valuation of the market. Well, then when we 681 00:33:56,160 --> 00:33:59,440 Speaker 12: look at not just US GDP, but we start to 682 00:33:59,480 --> 00:34:03,400 Speaker 12: focus further on the IMF global growth numbers, China GDP, 683 00:34:03,680 --> 00:34:06,440 Speaker 12: China stimulus, this is where I think you start to 684 00:34:06,480 --> 00:34:11,080 Speaker 12: really see, Okay, yes we're in a pullback and there's 685 00:34:11,120 --> 00:34:13,840 Speaker 12: still likely room for this market to grow from here, 686 00:34:14,120 --> 00:34:15,880 Speaker 12: but there's going to be fits and stops to that 687 00:34:15,880 --> 00:34:17,440 Speaker 12: growth trajectory you mentioned. 688 00:34:17,440 --> 00:34:19,200 Speaker 3: On a fixed income side, you can get you a 689 00:34:19,320 --> 00:34:22,400 Speaker 3: nice return on a two year on a ten year treasury. 690 00:34:22,719 --> 00:34:24,560 Speaker 4: How about going on and taking some credit risk. 691 00:34:24,640 --> 00:34:27,000 Speaker 3: Is that something you're advising your clients these days, whether 692 00:34:27,000 --> 00:34:28,880 Speaker 3: it's investment grade or even high yield. 693 00:34:29,160 --> 00:34:32,719 Speaker 12: Yeah, And I think you have to be both tactical 694 00:34:32,840 --> 00:34:36,400 Speaker 12: and active with your fixed income portfolio, you know. I 695 00:34:36,440 --> 00:34:39,400 Speaker 12: think this is where you speak to anyone who works 696 00:34:39,400 --> 00:34:41,960 Speaker 12: directly on the behalf of any families. You start to 697 00:34:41,960 --> 00:34:45,520 Speaker 12: really look at that you know, net after tax equivalent 698 00:34:45,560 --> 00:34:48,480 Speaker 12: basis on your fixed income portfolio. And so you know, 699 00:34:48,640 --> 00:34:53,799 Speaker 12: we have taken on, you know, credit risk across the spectrum, 700 00:34:54,280 --> 00:34:57,080 Speaker 12: and we're just utilizing again going back to kind of 701 00:34:57,080 --> 00:35:00,000 Speaker 12: that prescriptive mandate where we are a bit more creative 702 00:35:00,080 --> 00:35:01,640 Speaker 12: because we work for families. 703 00:35:02,080 --> 00:35:02,319 Speaker 6: Cool. 704 00:35:02,360 --> 00:35:04,520 Speaker 10: I love how you put gold right now, saying that 705 00:35:04,560 --> 00:35:07,320 Speaker 10: gold as an expression of discomfort. I think that's perfect 706 00:35:07,400 --> 00:35:09,880 Speaker 10: because so many of us have been scratching our heads saying, 707 00:35:10,080 --> 00:35:13,240 Speaker 10: what's up with gold? Is this kind of the only 708 00:35:13,360 --> 00:35:16,240 Speaker 10: asset class to express that discomfort at the moment. 709 00:35:16,360 --> 00:35:18,200 Speaker 12: I mean, there's a lot if you look across the 710 00:35:18,239 --> 00:35:21,319 Speaker 12: commodity spectrum right now, there's a there's a lot of 711 00:35:21,360 --> 00:35:26,000 Speaker 12: reasons to feel uncomfortable. I mean I I was speaking 712 00:35:26,040 --> 00:35:27,400 Speaker 12: to one of our analysts. I'm like, talk to me 713 00:35:27,440 --> 00:35:31,960 Speaker 12: about commodities, and he's like, drought, drought, geopolitical drought, this 714 00:35:32,200 --> 00:35:35,239 Speaker 12: and I'm just like, Okay, I just got uncomfortable. How 715 00:35:35,239 --> 00:35:40,200 Speaker 12: do I express my discomfort? You know, for us, gold 716 00:35:40,480 --> 00:35:44,400 Speaker 12: doesn't really play a meaningful place in portfolio construction simply 717 00:35:44,440 --> 00:35:48,400 Speaker 12: because you know of the components of what gold is. 718 00:35:48,440 --> 00:35:51,120 Speaker 12: And so when we see a response like this, it's 719 00:35:51,120 --> 00:35:53,520 Speaker 12: funny because gold can go in a couple of different ways. 720 00:35:53,520 --> 00:35:56,200 Speaker 12: It can be both exuberant and it can also be discomfort, 721 00:35:56,280 --> 00:35:58,760 Speaker 12: and right now we think it's an expression of discomfort 722 00:35:58,800 --> 00:36:00,319 Speaker 12: across the commodity special. 723 00:36:00,800 --> 00:36:04,040 Speaker 3: Dare I suggest you have a viewing bitcoin, crypto, that 724 00:36:04,080 --> 00:36:06,839 Speaker 3: kind of stuff the big having when your clients, when 725 00:36:06,880 --> 00:36:08,200 Speaker 3: your clients call you up and he said they want 726 00:36:08,200 --> 00:36:09,920 Speaker 3: to get exposure or crypto, what do you say, you know, 727 00:36:10,239 --> 00:36:11,520 Speaker 3: I think crypto. 728 00:36:11,600 --> 00:36:13,239 Speaker 12: And this goes back to something we were all saying 729 00:36:13,280 --> 00:36:15,800 Speaker 12: before we came on air, cryptocurrency, and I'm going to 730 00:36:15,840 --> 00:36:19,279 Speaker 12: focus specifically on bitcoin, but it is a supply and 731 00:36:19,360 --> 00:36:22,319 Speaker 12: demand mechanism. And so if you you know, the thing 732 00:36:22,360 --> 00:36:24,880 Speaker 12: that hit me the hardest when I was learning about 733 00:36:24,920 --> 00:36:28,840 Speaker 12: bitcoin over the years was, you know, if you believe 734 00:36:29,000 --> 00:36:31,839 Speaker 12: that the demand for bitcoin is going to increase by 735 00:36:31,880 --> 00:36:34,560 Speaker 12: more than two percent per year, because the supply is 736 00:36:34,600 --> 00:36:37,120 Speaker 12: only going to increase by more than two percent per year, 737 00:36:37,400 --> 00:36:41,279 Speaker 12: then you should probably be long bitcoin. I'm not saying that. 738 00:36:41,280 --> 00:36:43,640 Speaker 12: That's the advice I'm giving to indigital clients. So that's 739 00:36:43,640 --> 00:36:46,640 Speaker 12: our firm's thesis on cryptocurrency. But you know, I think, 740 00:36:46,920 --> 00:36:49,439 Speaker 12: you know what, you always want to boil things down, 741 00:36:49,480 --> 00:36:52,799 Speaker 12: boil down what markets are, boil down what bitcoin is. 742 00:36:52,840 --> 00:36:54,880 Speaker 12: And at the end of the day, you know, I 743 00:36:54,880 --> 00:36:57,560 Speaker 12: think this conversation about having has a lot to do 744 00:36:57,640 --> 00:37:00,120 Speaker 12: with that supply and demand mechanism long term. 745 00:37:00,239 --> 00:37:01,880 Speaker 3: Very good, Nicole, Thank you so much for joining us. 746 00:37:01,960 --> 00:37:04,960 Speaker 3: Nicole Webb, senior vice president, the financial advisor at Wealth 747 00:37:05,120 --> 00:37:08,320 Speaker 3: Enhancement Group, joining us live here in our Bloomberg Interactive 748 00:37:08,400 --> 00:37:09,439 Speaker 3: Brooker Studio. 749 00:37:11,560 --> 00:37:15,480 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 750 00:37:15,520 --> 00:37:18,400 Speaker 1: weekdays at ten am Eastern on applecar. 751 00:37:18,080 --> 00:37:20,799 Speaker 2: Play and Android Auto with the Bloomberg Business Act. 752 00:37:20,960 --> 00:37:23,799 Speaker 1: You can also listen live on Amazon Alexa from our 753 00:37:23,840 --> 00:37:30,000 Speaker 1: flagship New York station Just Say Alexa playing Bloomberg eleven thirty. 754 00:37:29,680 --> 00:37:32,480 Speaker 3: Paul Sweeney live here in a Bloomberg Interactive Brooker's Studio 755 00:37:32,680 --> 00:37:33,680 Speaker 3: in New York City. 756 00:37:33,680 --> 00:37:35,200 Speaker 4: We're also streaming live on YouTube. 757 00:37:35,600 --> 00:37:38,480 Speaker 3: Say head over to YouTube dot com and search Bloomberg Podcast, 758 00:37:38,520 --> 00:37:39,480 Speaker 3: and that's where you'll find it. 759 00:37:39,680 --> 00:37:39,920 Speaker 8: All right. 760 00:37:39,960 --> 00:37:43,000 Speaker 3: A lot of market participants, a lot of market observers 761 00:37:43,080 --> 00:37:45,840 Speaker 3: are saying, you know, part of a strong, healthy market 762 00:37:46,080 --> 00:37:50,359 Speaker 3: is an occasional pullback, a drawdown, as the kids call it. 763 00:37:50,400 --> 00:37:50,919 Speaker 4: I'm not sure. 764 00:37:50,960 --> 00:37:53,719 Speaker 3: We're off about five percent here on the s and 765 00:37:53,760 --> 00:37:56,160 Speaker 3: p five hundred from our recent highs. Does that qualify? 766 00:37:56,480 --> 00:37:59,160 Speaker 3: It's checking with Barry Ridholts. He's a host of Masters 767 00:37:59,160 --> 00:38:01,520 Speaker 3: in Business on Bloomer Radio. Is also the founder of 768 00:38:01,600 --> 00:38:05,800 Speaker 3: Ritholt's Wealth of Management. He joins us via zoom here. Hey, Barry, 769 00:38:05,840 --> 00:38:08,920 Speaker 3: I mean, do you ascribe to that kind of thinking 770 00:38:08,960 --> 00:38:12,719 Speaker 3: that every good long term bull market needs some healthy pullbacks? 771 00:38:12,719 --> 00:38:14,719 Speaker 3: And if so, are we in midst one of those. 772 00:38:14,719 --> 00:38:18,880 Speaker 7: Now do you think, Wait, markets go up and down. 773 00:38:19,320 --> 00:38:21,920 Speaker 7: Nobody told me about this. I thought they just went 774 00:38:22,000 --> 00:38:24,239 Speaker 7: straight up and it was easy to make a ton 775 00:38:24,280 --> 00:38:30,720 Speaker 7: of money. Listen, this, this is the nature of a broad, 776 00:38:31,600 --> 00:38:38,360 Speaker 7: deeply participated, enormous market capitalization exchange. 777 00:38:38,400 --> 00:38:39,800 Speaker 4: This is this is what happens. 778 00:38:40,160 --> 00:38:44,799 Speaker 7: You know, the ideas that drive markets kind of get 779 00:38:44,840 --> 00:38:48,640 Speaker 7: tested out, they catch fire for a little while, then 780 00:38:48,680 --> 00:38:51,600 Speaker 7: they sort of get overlooked, and then the narrative changes 781 00:38:51,680 --> 00:38:57,359 Speaker 7: and you know, we've we've figured this out. I love 782 00:38:57,400 --> 00:39:00,960 Speaker 7: the expression investing is a problem that's been solved. But 783 00:39:01,239 --> 00:39:05,399 Speaker 7: investing is something that takes place over decades and month 784 00:39:05,440 --> 00:39:07,959 Speaker 7: to month, week to week, day to day, tick to tick. 785 00:39:08,640 --> 00:39:12,279 Speaker 7: That's fairly random. There's a lot of noise and a 786 00:39:12,320 --> 00:39:16,520 Speaker 7: lot of emotion that weight. We're up twenty five percent 787 00:39:16,560 --> 00:39:19,600 Speaker 7: from the lows. Weight, we're down ten percent from the highs. 788 00:39:20,920 --> 00:39:25,120 Speaker 7: It's everybody making their best guess as to the discounted 789 00:39:25,160 --> 00:39:28,080 Speaker 7: cash flow of stocks and where profits are going to 790 00:39:28,080 --> 00:39:31,120 Speaker 7: be in the future relative to the risk free red 791 00:39:31,200 --> 00:39:32,080 Speaker 7: return of bonds. 792 00:39:32,440 --> 00:39:34,920 Speaker 3: And Barry mentioned where profits are going to be in 793 00:39:34,920 --> 00:39:38,280 Speaker 3: the future. That brings our attention to earnings. It seems 794 00:39:38,320 --> 00:39:41,040 Speaker 3: like the FED story is still out there, but the 795 00:39:41,080 --> 00:39:43,400 Speaker 3: FED will be maybe less active in terms of cutting 796 00:39:43,480 --> 00:39:46,600 Speaker 3: rates in the near near term, So maybe focus needs 797 00:39:46,600 --> 00:39:49,239 Speaker 3: to go a little bit more towards earnings. What are 798 00:39:49,280 --> 00:39:51,360 Speaker 3: you looking for in terms of earning share? What are 799 00:39:51,480 --> 00:39:52,840 Speaker 3: you going to be listening for anything on some of 800 00:39:52,880 --> 00:39:53,400 Speaker 3: these calls? 801 00:39:54,719 --> 00:39:57,719 Speaker 7: So I like to look at two things. I want 802 00:39:57,719 --> 00:40:01,680 Speaker 7: to look at what is the overall all beat rate? 803 00:40:02,360 --> 00:40:05,840 Speaker 7: Right most two thirds of the companies will beat earnings expectations. 804 00:40:06,200 --> 00:40:13,400 Speaker 7: We always laugh at when an earnings report misses the expectations. 805 00:40:13,600 --> 00:40:16,719 Speaker 7: I think everybody gets it backwards. The earnings report is 806 00:40:16,760 --> 00:40:20,719 Speaker 7: the earnings report. Your forecasts were wrong. They are what 807 00:40:20,760 --> 00:40:22,880 Speaker 7: it was you got it wrong. So I want to 808 00:40:22,920 --> 00:40:26,000 Speaker 7: see how well how many companies are beating versus missing. 809 00:40:27,000 --> 00:40:29,840 Speaker 7: I like to look at the overall level. Hey, what 810 00:40:29,920 --> 00:40:33,200 Speaker 7: are we growing really? Adding three four five percent to profits? 811 00:40:33,520 --> 00:40:36,560 Speaker 7: We're pretty close to all time highs for profits for 812 00:40:36,600 --> 00:40:39,359 Speaker 7: the S and P five hundred. But the thing that 813 00:40:39,440 --> 00:40:42,560 Speaker 7: so many people find so challenging is it's not the number, 814 00:40:42,640 --> 00:40:46,280 Speaker 7: it's not the data, it's what are the earnings relative 815 00:40:46,320 --> 00:40:50,560 Speaker 7: to expectations? Netflix? Is a great example. I mean, that 816 00:40:50,680 --> 00:40:54,920 Speaker 7: is a spectacular earnings report, the most new subscribers in 817 00:40:55,000 --> 00:40:58,720 Speaker 7: a long time, revenue profits, everything moving in the right direction, 818 00:40:59,440 --> 00:41:03,080 Speaker 7: but apparently not as much as expected. And so despite 819 00:41:03,600 --> 00:41:08,520 Speaker 7: you know, the really solid report, the initial response was, oh, 820 00:41:08,600 --> 00:41:13,120 Speaker 7: this is disappointing, which it's always about, not the news, 821 00:41:13,160 --> 00:41:15,440 Speaker 7: but how much of the news is already priced in? 822 00:41:16,000 --> 00:41:19,560 Speaker 3: And to that end, Barry, what do you think of 823 00:41:19,760 --> 00:41:23,120 Speaker 3: companies providing kind of point guidance, whether it's a quarter 824 00:41:23,200 --> 00:41:26,680 Speaker 3: out or a year out. I mean, is that something 825 00:41:26,719 --> 00:41:28,680 Speaker 3: they should be doing to kind of manage the whole 826 00:41:28,719 --> 00:41:31,239 Speaker 3: process or should they just run their business and let 827 00:41:31,280 --> 00:41:32,160 Speaker 3: the street take care of it. 828 00:41:34,520 --> 00:41:37,799 Speaker 7: You know, I am not a big fan of you know, 829 00:41:37,840 --> 00:41:39,759 Speaker 7: back in the old days when you pull, when you 830 00:41:39,800 --> 00:41:43,160 Speaker 7: and I were first ye getting started, they used to 831 00:41:43,239 --> 00:41:47,480 Speaker 7: be called whisper numbers. Before reg FD, a handful of 832 00:41:47,560 --> 00:41:51,520 Speaker 7: favored analysts or axes on the stock would get a 833 00:41:51,640 --> 00:41:56,480 Speaker 7: very quiet conversation with the CFO or the CEO. Hey, 834 00:41:56,560 --> 00:41:59,760 Speaker 7: you have us at seven cents a share, you should 835 00:41:59,760 --> 00:42:02,080 Speaker 7: really be close in a nine sense of share, and 836 00:42:02,480 --> 00:42:04,839 Speaker 7: you know, so everybody would be low and the one 837 00:42:04,880 --> 00:42:08,840 Speaker 7: guy the day before would change his estimate, and lo 838 00:42:08,920 --> 00:42:12,759 Speaker 7: and behold, everybody rushes to raise and the stock takes off. 839 00:42:13,080 --> 00:42:16,960 Speaker 7: That sort of nonsense from when we were youngsters, the 840 00:42:17,080 --> 00:42:20,719 Speaker 7: on trading desks, that's all gone, so now everybody has 841 00:42:20,800 --> 00:42:22,520 Speaker 7: to get the disclosure at. 842 00:42:22,440 --> 00:42:23,080 Speaker 8: The same time. 843 00:42:23,680 --> 00:42:28,000 Speaker 7: And I wonder how helpful it is being that precise. 844 00:42:28,400 --> 00:42:31,640 Speaker 7: I love hearing a CEO saying, hey, listen, you know, 845 00:42:31,840 --> 00:42:35,320 Speaker 7: we're expecting to see growth this quarter similar last quarter, 846 00:42:35,680 --> 00:42:38,920 Speaker 7: but we don't know what's happening with fill in the blank, 847 00:42:39,000 --> 00:42:41,640 Speaker 7: the war in the Middle East or the Ukraine. There 848 00:42:41,640 --> 00:42:43,919 Speaker 7: seems to be a lot of inflation stuck in the 849 00:42:44,000 --> 00:42:48,239 Speaker 7: in the services part of the economy. So we're going 850 00:42:48,320 --> 00:42:51,239 Speaker 7: to give you a range and try not to micromanage this. 851 00:42:51,719 --> 00:42:55,000 Speaker 7: And I think that's just honest, because we really don't 852 00:42:55,000 --> 00:42:58,800 Speaker 7: know what the future holds. When someone pretends they're sending 853 00:42:58,840 --> 00:43:00,839 Speaker 7: themselves up for failure, all. 854 00:43:00,800 --> 00:43:03,239 Speaker 3: Right, Barry, I'm looking at some social media from our 855 00:43:03,280 --> 00:43:06,279 Speaker 3: good friend Matt Miller, and he's now showing it looks 856 00:43:06,280 --> 00:43:11,279 Speaker 3: like he's test driving the Lamborghini HURKHN Strato, and he 857 00:43:11,320 --> 00:43:14,920 Speaker 3: notes that it's among the last of the naturally aspirated 858 00:43:15,000 --> 00:43:16,720 Speaker 3: v tens in production. 859 00:43:16,840 --> 00:43:17,520 Speaker 8: Whatever that is. 860 00:43:17,719 --> 00:43:19,120 Speaker 4: Does that kind of car get your attention? 861 00:43:20,280 --> 00:43:24,799 Speaker 7: So I am so I'm not a big Lambeau fan. 862 00:43:24,960 --> 00:43:28,600 Speaker 7: That's not mine. It's a little too flashy for me, Paul, 863 00:43:28,680 --> 00:43:31,720 Speaker 7: you know what a low key of course I am. 864 00:43:32,120 --> 00:43:36,799 Speaker 7: And the Lambeau in that, like lime green, is a 865 00:43:36,800 --> 00:43:40,520 Speaker 7: little too much for me. That said, I gotta give 866 00:43:40,600 --> 00:43:45,240 Speaker 7: Lamborghini credit for saying, wait, a four hundred thousand dollars 867 00:43:46,040 --> 00:43:50,000 Speaker 7: rocket ship, I know, Let's turn it into a decar 868 00:43:50,960 --> 00:43:54,280 Speaker 7: off road racer. Let's let raise it a few inches, 869 00:43:54,440 --> 00:43:58,799 Speaker 7: put some plastic cladding and high intensity light beams and 870 00:43:58,800 --> 00:44:05,160 Speaker 7: some off roads and let this seven hundred horsepower monster loose, 871 00:44:05,600 --> 00:44:10,440 Speaker 7: you know, in the Sahara. Kudos to them for stepping 872 00:44:10,440 --> 00:44:13,400 Speaker 7: out of their comfort zone. The crazy thing about this 873 00:44:13,480 --> 00:44:17,200 Speaker 7: Serrado is not only does it have a giant premium 874 00:44:17,400 --> 00:44:22,839 Speaker 7: over the usual Lamborghini Hurricanes, it sold out instantly. 875 00:44:22,880 --> 00:44:23,080 Speaker 2: Wow. 876 00:44:23,480 --> 00:44:27,120 Speaker 7: And every time people tell me, and admittedly this is 877 00:44:27,160 --> 00:44:33,719 Speaker 7: not exactly a middle class purchase, but wherever I look, cars, watches, 878 00:44:34,480 --> 00:44:37,560 Speaker 7: restaurant reservations, every part time someone tells me how bad 879 00:44:37,600 --> 00:44:41,120 Speaker 7: the economy is? Where do you live? And I'm not 880 00:44:41,239 --> 00:44:44,120 Speaker 7: just in New York, I'm around the country pretty regularly. 881 00:44:44,160 --> 00:44:46,560 Speaker 7: I was just in Salt Lake City, I was in Vegas. 882 00:44:46,600 --> 00:44:50,440 Speaker 7: I was in California and not like Beverly Hills, but 883 00:44:50,600 --> 00:44:52,160 Speaker 7: like middle class parts exactly. 884 00:44:53,400 --> 00:44:53,600 Speaker 8: Yep. 885 00:44:53,960 --> 00:44:55,359 Speaker 4: The wealth effect is it's hard. 886 00:44:56,080 --> 00:44:58,440 Speaker 7: Yeah, it's hard not to look around and say, if 887 00:44:58,480 --> 00:45:00,640 Speaker 7: you think this economy stays all right, we have to 888 00:45:00,680 --> 00:45:02,120 Speaker 7: leave it there. But I think where you live. 889 00:45:03,080 --> 00:45:03,879 Speaker 8: Barry very much. 890 00:45:03,960 --> 00:45:07,520 Speaker 3: Thank you host a master's in business on Bloomberg Radio, 891 00:45:08,000 --> 00:45:10,800 Speaker 3: founder of Ritholtz Wealth Management as well. Appreciate that little 892 00:45:10,800 --> 00:45:12,960 Speaker 3: car talk to finish off your morning. 893 00:45:13,560 --> 00:45:18,080 Speaker 1: This is the Bloomberg Intelligence Podcast, available on apples, Spotify, 894 00:45:18,280 --> 00:45:21,480 Speaker 1: and anywhere else you'll get your podcasts. Listen live each 895 00:45:21,480 --> 00:45:24,880 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com, 896 00:45:24,960 --> 00:45:28,600 Speaker 1: Beheartradio app, tune In, and the Bloomberg Business app. You 897 00:45:28,600 --> 00:45:31,799 Speaker 1: can also watch us live every weekday on YouTube and 898 00:45:31,960 --> 00:45:33,560 Speaker 1: always on the Bloomberg terminal.