WEBVTT - L’Oreal Sales Surge, Netflix Falls, Israel Hits Back 0:00:02.960 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.880 --> 0:00:15.040 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:15.080 --> 0:00:17.400 Eastern on Apple Car playing Android. 0:00:17.040 --> 0:00:18.759 Auto with the Bloomberg Business app. 0:00:18.800 --> 0:00:21.960 Listen on demand wherever you get your podcasts, or watch 0:00:22.079 --> 0:00:24.480 us live on YouTube. 0:00:24.960 --> 0:00:27.320 The one of the stocks in the news is Lorel, 0:00:27.400 --> 0:00:30.040 the cosmetics company. Put us some good numbers here. Let's 0:00:30.040 --> 0:00:32.040 break it down with deb Acon. She is a luxury 0:00:32.040 --> 0:00:35.440 goods analyst for Bloomberg Intelligence. She joins us from London 0:00:35.640 --> 0:00:40.240 via Zoom So, deb Lorel Cosmetics. I've come to understand 0:00:40.640 --> 0:00:43.279 just really through the pandemic from my observation of the 0:00:43.520 --> 0:00:47.000 Sepphor store across the street from Bloomberg headquarters. People buy 0:00:47.040 --> 0:00:50.520 cosmetics like, no matter what is going on in the world. 0:00:50.880 --> 0:00:52.519 What did you learn from Loriel's numbers? 0:00:53.920 --> 0:00:55.440 Feel good factor, right, Paul? 0:00:56.560 --> 0:01:01.280 Yeah, So actually the number is I'm in above nine percent. 0:01:01.560 --> 0:01:03.960 So there was a big pickup from four Q where 0:01:03.960 --> 0:01:07.800 we had a solid first half and a shorter second half, 0:01:07.840 --> 0:01:10.880 a slower second half in twenty twenty three across the 0:01:10.920 --> 0:01:14.560 whole of the beauty industry, and so we had a 0:01:14.600 --> 0:01:18.880 big beat on the Q one just a sales number, 0:01:18.959 --> 0:01:22.800 but it was really about double digit growth in Europe. 0:01:23.720 --> 0:01:26.640 We then saw high single digit growth when we pull 0:01:26.720 --> 0:01:32.640 away anomalies in the US and then are definitely emerging 0:01:32.680 --> 0:01:35.960 markets like fifteen sixteen percent growth there. And the other 0:01:36.000 --> 0:01:39.520 side of it was that mass market is also holding 0:01:39.600 --> 0:01:43.479 up because luxury right now in beauty is difficult if 0:01:43.560 --> 0:01:47.360 you're a company like Laurel or Estel Order or Biasedov's 0:01:47.440 --> 0:01:51.720 La Prairie with exposure in skin care in China, where 0:01:51.880 --> 0:01:55.680 in trade travel retail is still stuffed with skincare, so 0:01:55.800 --> 0:01:59.639 that still takes another quarter to normalize. But elsewhere mass 0:01:59.640 --> 0:02:03.559 market passing on price and do very well across makeup, 0:02:03.600 --> 0:02:08.040 across fragrances in particular. Yeah, it's all going well. 0:02:08.600 --> 0:02:09.560 Yeah, it's interesting. 0:02:09.560 --> 0:02:13.280 And just talk to us about the cosmetics business in general. Again, 0:02:13.400 --> 0:02:15.560 I just was, you know, while everything was shutting down 0:02:15.560 --> 0:02:17.799 in New York City during the pandemic, there's a four 0:02:17.880 --> 0:02:20.880 store across the street stayed open, Number one and number two. 0:02:21.040 --> 0:02:23.160 There were people in there every day. I don't care 0:02:23.200 --> 0:02:24.919 what was going on in the world. They were there 0:02:24.919 --> 0:02:27.959 every day. Talk to us about just the overall cosmetics market, 0:02:28.000 --> 0:02:30.040 the growth characteristics of that market. 0:02:31.200 --> 0:02:32.960 So typically we look at the market. 0:02:34.120 --> 0:02:37.240 I'm as you know, I covered the luxury market too, 0:02:37.400 --> 0:02:40.320 and we're in this show. We're looking at a normalized 0:02:40.320 --> 0:02:42.480 growth rate in luxury goods of five to six percent, 0:02:42.560 --> 0:02:45.440 and you could say that we're looking at that rate too, 0:02:45.480 --> 0:02:47.560 and I'm fine to know over the last several years 0:02:47.600 --> 0:02:51.120 that the beauty industry is growing in line with the 0:02:51.200 --> 0:02:54.760 luxury industry. And that's because there's more and more premiumization 0:02:55.440 --> 0:02:58.160 and ultra high end and that is fined in the 0:02:58.200 --> 0:03:01.920 same growth rate and profitability in some cases as the 0:03:01.960 --> 0:03:04.919 luxury industry. So you typically get a three to five 0:03:04.960 --> 0:03:09.239 percent growth rate from mass market and five percent upwards 0:03:09.240 --> 0:03:12.400 on premium and then super premium and luxury type products. 0:03:12.880 --> 0:03:15.680 It's a feel good factor. It's for everyone, you know. 0:03:15.760 --> 0:03:19.119 Over the last few years, so Forest Does, for example, 0:03:19.560 --> 0:03:24.080 are within a selective retailing division which sits in Alvimh, 0:03:24.200 --> 0:03:28.280 the owner Ofly with a Tom Murray Hennessy. So and 0:03:28.320 --> 0:03:31.040 then you know, it's about making sure that the product 0:03:31.120 --> 0:03:34.200 in there is innovative. There's a lot of new products 0:03:34.200 --> 0:03:38.280 coming out. Lorel talked about AI using it to look 0:03:38.320 --> 0:03:41.000 at the scalp look of look at Skincare, their professional 0:03:41.120 --> 0:03:44.120 hair care division was really high looking at the at 0:03:44.120 --> 0:03:46.400 the hair care and the scalp and what's going on there. 0:03:46.480 --> 0:03:47.960 So it's been used. 0:03:47.760 --> 0:03:50.920 In so many ways, and also because of social media 0:03:51.000 --> 0:03:53.600 in the way that you can really get to understand 0:03:54.080 --> 0:03:58.960 how the cosmetics products are in dermatology, for example, as grown. 0:03:58.960 --> 0:04:01.760 When I look at the Loreal, twenty to thirty percent 0:04:01.840 --> 0:04:06.200 plus every quarter for since twenty twenty, so it's now 0:04:06.280 --> 0:04:09.440 become twenty percent of their business very quickly, when a 0:04:09.480 --> 0:04:11.400 couple of years ago we were talking about it being 0:04:11.520 --> 0:04:15.280 ten percent. Well, yeah, so it's it's you know, it's 0:04:15.320 --> 0:04:18.320 having belief, it's it's feel good. 0:04:18.360 --> 0:04:21.039 But it's also got like a healthy side to it 0:04:21.080 --> 0:04:21.440 as well. 0:04:21.520 --> 0:04:23.880 Well, that's what my co host Alex Steele, that's what 0:04:23.920 --> 0:04:27.080 she always says. She invests in her face now guys 0:04:27.120 --> 0:04:30.240 like John Tucker and Joe Mysek and we obviously missed 0:04:30.279 --> 0:04:31.960 that train, so that's too late. 0:04:32.600 --> 0:04:34.200 But yeah, I think that seems to be a thing. 0:04:34.240 --> 0:04:35.800 All right, deb let's step back a little bit and 0:04:35.839 --> 0:04:39.240 just talk about what you're seeing in luxury overall. If 0:04:39.279 --> 0:04:41.560 I go to the high streets in London, in Paris, 0:04:41.960 --> 0:04:43.360 how's traffic out there. 0:04:43.640 --> 0:04:44.920 How's business? 0:04:45.320 --> 0:04:49.600 I think, well, what we've seen overall, certainly Europe has 0:04:49.920 --> 0:04:53.280 really been the surprise. Now for the third quarter, we're 0:04:53.320 --> 0:04:55.200 just starting with the ending season, but now for the 0:04:55.240 --> 0:04:58.880 third quarter more robust than we expected. Again a lot 0:04:58.920 --> 0:05:02.480 of local touris because I think if we think about 0:05:02.520 --> 0:05:06.320 Europe in particular, twenty two we had the dollar over 0:05:06.360 --> 0:05:09.760 here spending strength of the dollar into Europe beginning of 0:05:09.839 --> 0:05:12.839 twenty three, and that phased out the second half twenty 0:05:12.920 --> 0:05:17.560 twenty three. But the Europeans are doing particularly well with 0:05:18.200 --> 0:05:23.040 new designs, new products, new designers. But it is really 0:05:23.080 --> 0:05:26.840 the very high end where you're getting and also what 0:05:27.080 --> 0:05:32.680 you know that quiet luxury, the view of products like 0:05:32.800 --> 0:05:36.280 Laura Piano, Brunellocution Elly. We just had their results this week, 0:05:36.760 --> 0:05:41.160 very very strong, really really decent teams growth, and so 0:05:41.240 --> 0:05:43.279 there are brands out there, but it tends to be 0:05:43.400 --> 0:05:45.839 that they really are they really are the luxury price 0:05:45.920 --> 0:05:49.080 tag and it's value for money at that price point. 0:05:49.520 --> 0:05:51.840 You don't have many of those products in your wardrobe 0:05:52.560 --> 0:05:54.320 and you're proud to wear them, and they're the ones 0:05:54.400 --> 0:05:57.359 that are driving the business. It's across all categories too, 0:05:57.680 --> 0:06:03.840 we're talking from Kashmir to very high end leather goods 0:06:04.360 --> 0:06:08.520 to high end fragrances. We're see more and more I 0:06:08.560 --> 0:06:11.360 suppose we see more and more momentum in very high 0:06:11.480 --> 0:06:16.000 end fragrances as well, with acquisitions coming through and IPOs 0:06:16.040 --> 0:06:16.440 as well. 0:06:16.680 --> 0:06:18.320 Hey, deb you know when we talk about I know, 0:06:18.440 --> 0:06:20.440 just reading your research talking to you in the past, 0:06:20.560 --> 0:06:25.039 the Chinese consumer is really a big, big, important player 0:06:25.200 --> 0:06:29.279 in the world of luxury spending, both home in China 0:06:29.320 --> 0:06:33.080 but also abroad as the Chinese consumer travels to New York, 0:06:33.080 --> 0:06:36.600 to London, two Paris in Italy for example. Talk to 0:06:36.640 --> 0:06:39.160 us about China. Is that a net positive or net negative? 0:06:39.240 --> 0:06:39.880 Where are we here? 0:06:41.000 --> 0:06:43.719 Yeah, so net negative. 0:06:44.160 --> 0:06:49.480 So if we think about let's focus pre pandemic, and 0:06:49.720 --> 0:06:53.680 we had a travel event last week in London, we're 0:06:53.680 --> 0:06:54.279 looking at. 0:06:54.160 --> 0:06:56.080 Where the Chinese consumer was. 0:06:56.120 --> 0:06:59.440 So in terms of the Chinese consumer as part of 0:06:59.520 --> 0:07:02.800 luxury goods, pre pandemic a third of the business. We 0:07:02.920 --> 0:07:06.000 now think they're back to around twenty three percent. But 0:07:06.560 --> 0:07:10.920 how that's changed in terms of geography. It used to 0:07:10.960 --> 0:07:13.840 be that they've scored less than So if we think 0:07:13.840 --> 0:07:18.760 about the luxury industry, around ten percent was Chinese spending 0:07:18.840 --> 0:07:22.120 at home. Now it's sixteen percent Chinese spending at home. 0:07:22.160 --> 0:07:25.000 So we have these conflict in numbers. China is up 0:07:25.160 --> 0:07:27.960 double digit, but China is still below where it was, 0:07:28.280 --> 0:07:32.040 and that is true. But it's the US consumer and 0:07:32.080 --> 0:07:34.760 the European consumer who've taken a lot of the slack. 0:07:34.800 --> 0:07:38.040 And that's why the industry versus twenty nineteen. Over all, 0:07:38.080 --> 0:07:41.040 the luxury goods is around thirty five to forty percent bigger. 0:07:40.800 --> 0:07:41.320 Than it was. 0:07:42.480 --> 0:07:42.800 Really. 0:07:43.840 --> 0:07:45.240 Yeah, wow, that's. 0:07:45.040 --> 0:07:47.680 How that's how you know you've you've got double digit, 0:07:48.040 --> 0:07:50.560 high single digit growth growing annually. 0:07:51.000 --> 0:07:53.559 All right, I mean I'll walk down the Penn Station 0:07:53.600 --> 0:07:56.720 today down Fifth Avenue or mont Madison Avenue and I'll 0:07:56.720 --> 0:07:59.360 see a lot of people in those stores here. All Dad, 0:07:59.360 --> 0:08:02.000 thanks so much for joining us. Their Debacon luxury Goods 0:08:02.040 --> 0:08:06.360 analys for Bloomberg Intelligence. She's based in London and she's 0:08:06.400 --> 0:08:08.600 really one of the best animals out there, covering a 0:08:08.600 --> 0:08:12.320 lot of retail. We're really focusing on the luxury space 0:08:12.400 --> 0:08:14.480 and as deb says, you know, he's been telling us 0:08:14.480 --> 0:08:17.480 that's a mid good, solid mid the mid high single 0:08:17.520 --> 0:08:20.120 digit growth business, you know, well above GDP, and that 0:08:20.200 --> 0:08:22.480 kind of goes to some of the wealth creation out 0:08:22.520 --> 0:08:25.520 there and widening gaps there in wealth inequality. It's not 0:08:25.600 --> 0:08:27.320 just in the US or in the Western markets, it's 0:08:27.320 --> 0:08:30.760 also in Asia as well, so deb gives us some 0:08:30.800 --> 0:08:33.920 of the best research out there. Loreal again, the cosmetics 0:08:33.920 --> 0:08:37.319 company reported some better than expected numbers and stock is 0:08:37.400 --> 0:08:38.360 up five percent today. 0:08:38.679 --> 0:08:40.000 It's about flat for the year. 0:08:40.480 --> 0:08:44.280 It's a big company, two hundred and forty billion euros 0:08:44.320 --> 0:08:46.720 in market caps, so just a huge company there. 0:08:48.240 --> 0:08:52.120 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:08:52.200 --> 0:08:55.280 weekdays at ten am Eastern on applecard. 0:08:54.760 --> 0:08:57.559 Play and Android Auto with the Bloomberg Business app. 0:08:57.640 --> 0:09:00.480 You can also listen live on Amazon Alex from our 0:09:00.520 --> 0:09:04.480 flagship New York station Just Say Alexa playing Bloomberg eleven. 0:09:06.120 --> 0:09:09.520 Of course, the geopolitical issues globally are back on the 0:09:09.559 --> 0:09:14.320 forefront here overnight Israel retaliatory strike on Iran last night, 0:09:15.160 --> 0:09:20.319 many folks calling it a measured response, maybe proportionate, if 0:09:20.320 --> 0:09:20.680 you will. 0:09:20.720 --> 0:09:22.040 I'm not sure how the fin all that. 0:09:22.040 --> 0:09:23.760 I guess that's different for everyone. But let's check in 0:09:23.840 --> 0:09:26.240 with someone with feet on the ground, Ethan Bronner. He's 0:09:26.240 --> 0:09:29.560 the Israel Bureau chief and Senior Mid East editor for 0:09:29.600 --> 0:09:34.160 Bloomberg News. He joins us from tel Aviv via zoom Ethan, 0:09:34.200 --> 0:09:36.520 what's the feeling on the ground in tel Aviv today 0:09:37.080 --> 0:09:39.840 as it relates to Israel's strike on Iran last night? 0:09:41.440 --> 0:09:42.600 I think you described it well. 0:09:42.679 --> 0:09:47.640 I think that the view here is that it what 0:09:47.720 --> 0:09:52.000 Israel did was to sort of smack at Iran in 0:09:52.080 --> 0:09:54.960 a place that says we can get to you. There 0:09:55.160 --> 0:09:58.240 are where it hit was one of the air bases 0:09:58.240 --> 0:10:03.400 from which last weekends attack came, and also not far 0:10:03.559 --> 0:10:05.720 from nuclear sites. 0:10:06.160 --> 0:10:09.480 So the Israelies their attitude, at least their claim. 0:10:09.880 --> 0:10:13.760 I'd say the mainstream claim is that we we we 0:10:13.760 --> 0:10:15.600 we hit back in a way that said we want 0:10:15.640 --> 0:10:18.080 you to know that we can do this, and we're 0:10:18.080 --> 0:10:21.160 not going any further, and let's stop this here. There 0:10:21.200 --> 0:10:23.719 are those who are very upset that it wasn't sufficient. 0:10:24.240 --> 0:10:26.800 There are those who wanted nothing to happen. But I 0:10:26.800 --> 0:10:30.640 would say that you know, it is not being criticized 0:10:30.640 --> 0:10:33.360 too heavily except from from the far right. 0:10:33.480 --> 0:10:37.079 Right now, Yeah, Ben Ben Gavier, the hawkish national security 0:10:37.120 --> 0:10:40.120 minister in Israel, tweeting just one word week. 0:10:40.160 --> 0:10:43.960 Right, I mean that that word was a Hebrew praate 0:10:44.160 --> 0:10:46.680 word for meeting, more like lame or wimpy. 0:10:47.280 --> 0:10:48.800 Yeah, yeah, very very critical. 0:10:49.040 --> 0:10:50.800 I mean that that one word doing a lot of 0:10:50.840 --> 0:10:53.840 work here to suggest that not everyone is in agreement. 0:10:54.160 --> 0:10:56.199 And at the end of the day, Ethan, I mean, 0:10:56.360 --> 0:10:59.160 this is a big change from going Israel in ran 0:10:59.240 --> 0:11:01.880 in the shadows fighting to now out in the open 0:11:01.920 --> 0:11:04.360 and out and open conflict. So while markets are treating 0:11:04.360 --> 0:11:07.280 it as if it's over, I mean, this is a shift, 0:11:07.320 --> 0:11:08.839 isn't it. 0:11:08.840 --> 0:11:11.160 It's a shift, of course, it's in many ways a 0:11:11.200 --> 0:11:14.520 shift that began not by Israel this week, but by 0:11:14.600 --> 0:11:15.520 Iran last week. 0:11:15.559 --> 0:11:17.360 That was the beginning of the big shift. 0:11:17.440 --> 0:11:21.080 Israel has been hitting on occasion inside Iran. No one's 0:11:21.160 --> 0:11:23.480 kind of acknowledged it, but two or three occasions and 0:11:24.480 --> 0:11:27.880 where with missiles and other and drones and other occasions 0:11:27.880 --> 0:11:33.600 where they have assassinated Iranian Iran nuclear scientists and so forth. 0:11:33.720 --> 0:11:36.720 But the big change began last Saturday night when Iran said, okay, 0:11:36.800 --> 0:11:38.839 all of this stuff you guys are doing to us 0:11:38.880 --> 0:11:41.800 both of our proxies in Iraq, Seria, eleven on and 0:11:41.800 --> 0:11:44.439 so forth, and now us we're coming back at you 0:11:44.520 --> 0:11:47.680 directly that was the change, and now Israel hitting back 0:11:47.720 --> 0:11:51.679 saying we can't let this happen without some response. You know, 0:11:51.760 --> 0:11:53.760 the whole debate is should there have been a response? 0:11:53.840 --> 0:11:58.199 All week, the Americans, the French, the Germans, the British 0:11:58.280 --> 0:12:01.080 were coming by personally on the phone and saying to 0:12:01.120 --> 0:12:03.240 Prime Minister in to Tanya, who let it go. 0:12:03.480 --> 0:12:04.080 Take your win. 0:12:04.160 --> 0:12:06.800 You stopped all those attacks last Saturday. 0:12:07.320 --> 0:12:09.320 This is a win. You don't have to go back 0:12:09.360 --> 0:12:09.679 at them. 0:12:09.720 --> 0:12:13.239 But the Israelis felt they did, and this was their response. 0:12:13.800 --> 0:12:15.720 We'll see where it takes us. It isn't obvious that 0:12:15.760 --> 0:12:16.120 it's over. 0:12:16.160 --> 0:12:19.640 But the Iranians have been saying publicly today they don't 0:12:19.640 --> 0:12:22.520 think much happened and they don't see any particular need 0:12:22.559 --> 0:12:23.240 to respond. 0:12:23.360 --> 0:12:26.320 So all right, Ethan, let's get our focus back on 0:12:26.600 --> 0:12:28.880 kind of probably where it needs to be, which is 0:12:29.040 --> 0:12:34.440 in Gaza. What's the latest thinking about Israeli strategy in Gaza? 0:12:34.600 --> 0:12:38.760 It feels like a stalemate and status quo is there? 0:12:39.480 --> 0:12:42.000 What's the strategy here from the Israeli government. 0:12:43.080 --> 0:12:46.560 So they're not being exceptionally open as you can imagine 0:12:46.600 --> 0:12:51.480 in the middle of their deliberations, and there are you know, 0:12:51.480 --> 0:12:53.360 It's like a Rubik's cube. There are all these things 0:12:53.400 --> 0:12:55.840 going on at once, including, of course what's happening with 0:12:55.920 --> 0:12:59.240 around that we've just talked about. That the Israelis began 0:12:59.320 --> 0:13:03.480 their attacks six plus months ago. Recently they pulled many 0:13:03.520 --> 0:13:08.480 of their troops out, but there remains in southern Gaza, 0:13:08.520 --> 0:13:12.520 in the city of Raphach five to eight thousand Hamas 0:13:12.640 --> 0:13:17.600 troops in tunnels and so forth, and some hundred or 0:13:17.640 --> 0:13:22.040 so Israeli hostages. Israel has been repeatedly saying that it 0:13:22.160 --> 0:13:25.560 needs to go in there eventually and take them out 0:13:25.600 --> 0:13:28.480 so that Hamas can no longer be the kind of 0:13:28.520 --> 0:13:32.000 force to do what it did on October seventh, and 0:13:32.760 --> 0:13:35.840 the Americans have been saying, be careful, please don't what 0:13:35.920 --> 0:13:38.480 about all the people who are a million plus people 0:13:38.520 --> 0:13:41.880 who are taking shelter above ground in Rapha. So I 0:13:41.960 --> 0:13:45.079 think that my instinct at the moment is that there 0:13:45.120 --> 0:13:49.360 will be some time off here as we see whether 0:13:49.400 --> 0:13:53.360 this negotiation can get anywhere in Cairo about a piece 0:13:53.440 --> 0:13:57.960 about a ceasefire, and that Israel will begin to take 0:13:58.000 --> 0:14:03.040 steps to have the civilian in Rapa moved elsewhere for 0:14:03.240 --> 0:14:06.000 some kind of operation in the coming month or two 0:14:06.679 --> 0:14:09.839 its scale is very difficult for me to assess at. 0:14:09.800 --> 0:14:12.520 This point, Ethan, if I could tie these two together, 0:14:13.320 --> 0:14:17.920 does the fact that Iran has struck Israel out in 0:14:17.960 --> 0:14:21.280 the open? Is there a sense to which this gives 0:14:21.320 --> 0:14:26.120 the Israelis more I don't know, more impetus to say, look, clearly, 0:14:26.480 --> 0:14:27.960 we need to be out there and we need to 0:14:28.000 --> 0:14:31.760 be strong. And again this more hawkish attitude towards Gaza 0:14:31.760 --> 0:14:33.440 and what they say Iranian proxies. 0:14:34.720 --> 0:14:39.880 Yes, absolutely, but you see, it's like everything, it's it's 0:14:39.920 --> 0:14:41.560 not one force at worker. 0:14:41.720 --> 0:14:43.120 And so what you said is true. 0:14:43.280 --> 0:14:46.240 On the other side of the of the equation is 0:14:46.280 --> 0:14:49.840 the fact that last Saturday, all these countries, including Jordan, 0:14:49.920 --> 0:14:55.440 Saudi Arabia and other Arab states, helped Israel push Iran back. 0:14:55.920 --> 0:14:59.760 And Israel is feeling, you know, in the bosom of 0:14:59.800 --> 0:15:02.040 some kind of alliance and doesn't want. 0:15:01.880 --> 0:15:03.200 To mess that up either. 0:15:03.360 --> 0:15:06.360 So you know, I think that what it wants to 0:15:06.360 --> 0:15:10.080 do is sort of show restraint toward Iran on its 0:15:10.120 --> 0:15:12.960 mainland and get everyone to accept that it needs to 0:15:13.000 --> 0:15:17.800 do something in Gaza. And because as you say, AMASA 0:15:17.880 --> 0:15:21.760 is after all funded and paid for by Iran as well. 0:15:22.280 --> 0:15:22.880 So Ethan. 0:15:23.240 --> 0:15:27.000 You're based in Tel Aviv. You have a good sense 0:15:27.000 --> 0:15:29.560 of kind of the common person on the street. Is 0:15:29.560 --> 0:15:33.640 there any sense that among the people of Israel that 0:15:33.680 --> 0:15:36.280 there's a sense of fatigue setting in here? It's been 0:15:36.400 --> 0:15:41.400 six months here, they've basically occupied Gaza. Is there a 0:15:41.440 --> 0:15:44.040 sense of that maybe the people would like to move 0:15:44.080 --> 0:15:45.000 on to the next step. 0:15:47.720 --> 0:15:50.880 There is some of that. I don't think it's overwhelming, though. 0:15:50.920 --> 0:15:53.120 I have to tell you, Paul them and there really 0:15:53.240 --> 0:15:55.880 is a sense what happened on October seventh, it's very 0:15:55.920 --> 0:15:59.960 difficult for those abroad to grasp the sense of trauma 0:16:00.520 --> 0:16:03.880 and defeat that it created in this country, the sense 0:16:03.920 --> 0:16:08.800 that its very existence is its stake, its ability to 0:16:08.920 --> 0:16:12.040 allow people to live at the edges of its country 0:16:12.080 --> 0:16:14.400 and not feel that someone is going to come in 0:16:14.640 --> 0:16:18.480 and carve them up and unprotected. It's been so overwhelming 0:16:19.000 --> 0:16:24.200 that I think that there remains a desire here among 0:16:24.240 --> 0:16:28.160 most Israelis to quote unquote finish with Kamas and make 0:16:28.280 --> 0:16:32.560 clear to other militias, proxies and enemies not far away 0:16:33.000 --> 0:16:36.240 that Israel is willing to fight for its existence. So 0:16:36.320 --> 0:16:40.880 I don't think that a fatigue is the overwhelming sentiment, 0:16:41.000 --> 0:16:43.400 although you are right that it exists, and there are 0:16:43.440 --> 0:16:46.560 many who say, we've done what we can, let's cut 0:16:46.600 --> 0:16:48.040 a deal, let's get out. 0:16:48.240 --> 0:16:50.560 We can't do this forever. But I don't think it. 0:16:50.680 --> 0:16:53.880 I think it's still leaning in the other direction for now. 0:16:54.440 --> 0:16:58.520 Ethan, if I can quickly ask a military amateurish question, 0:16:59.000 --> 0:17:01.360 because this I don't understand, and maybe it's a minor point, 0:17:01.400 --> 0:17:03.880 but I'd just be interested to know when Israel we 0:17:03.920 --> 0:17:06.760 have reports of them launching the strikes, also a report 0:17:06.960 --> 0:17:10.400 of them striking a Syrian aerial defense position. Israel never 0:17:10.440 --> 0:17:14.960 confirms them. Their official line is always one of unconfirming. 0:17:15.440 --> 0:17:19.919 Why is that, you know? 0:17:20.040 --> 0:17:23.520 I think that their view in particular with regard to 0:17:23.520 --> 0:17:27.920 say around is that it in particular today, they view 0:17:27.960 --> 0:17:31.400 that it allows them some kind of rhetorical and strategic 0:17:31.480 --> 0:17:36.959 flexibility to not specifically say what they did. They certainly 0:17:37.280 --> 0:17:40.520 acknowledge when they attack and Lebanon and often in Syria, 0:17:40.560 --> 0:17:43.040 by the way, if they say these are his blove 0:17:43.119 --> 0:17:46.439 positions that we have taken out. That goes on in 0:17:46.520 --> 0:17:48.840 terms of the sort of scariest stuff that goes on 0:17:48.880 --> 0:17:51.920 when they take out, you know, an alleged nuclear reactor 0:17:52.000 --> 0:17:55.840 or when they do what they did today, they they 0:17:55.880 --> 0:17:57.480 have found it useful. 0:17:57.119 --> 0:17:59.720 To not to not talk about it publicly. 0:17:59.760 --> 0:18:02.280 I mean, you know, Israel has nuclear weapons, that's had 0:18:02.320 --> 0:18:05.200 them for years, it has never officially acknowledged them. 0:18:05.320 --> 0:18:08.080 Ethan, thank you so much for this reporting. Ethan Browner 0:18:08.200 --> 0:18:11.240 Israel Bureau chief and senior Mideast editor for Bloomberg News. 0:18:11.240 --> 0:18:14.879 He's based in our Tel Aviv bureau. There, so again, 0:18:15.400 --> 0:18:16.840 fluid situation there. 0:18:19.240 --> 0:18:23.120 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:18:23.200 --> 0:18:26.280 weekdays at ten am Eastern on Apple Card playing Android 0:18:26.320 --> 0:18:29.400 Auto with the Bloomberg Business app, Listen on demand wherever 0:18:29.480 --> 0:18:33.320 you get your podcasts, or watch us live on YouTube. 0:18:34.040 --> 0:18:36.320 We are here in a Bloomberg Interactive Broker studio, Danny 0:18:36.320 --> 0:18:39.480 Berger sitting in for Alex Steel, who's on holiday today 0:18:39.520 --> 0:18:41.560 and all of next week. We're here in a Bloomberg 0:18:41.560 --> 0:18:45.840 INTERACTI Brooker studio. We're streaming live on YouTube. That's the Internet, 0:18:45.920 --> 0:18:49.680 Danny YouTube, dot com search Bloomberg Podcast. Apparently that's what 0:18:49.680 --> 0:18:52.600 the kids are doing every day. We're on this YouTube thing. 0:18:52.720 --> 0:18:56.320 Tom's all over. Tom Keeney's becoming a new person here 0:18:56.440 --> 0:19:00.760 in this Internet age talking about streaming kind of internet 0:19:00.760 --> 0:19:01.600 delivery of media. 0:19:01.680 --> 0:19:02.879 It's all about Netflix. 0:19:03.800 --> 0:19:06.520 Netflix is a two hundred and fifty billion dollar market 0:19:06.520 --> 0:19:09.600 cap company. It's up seventeen percent year to date, up 0:19:09.640 --> 0:19:12.000 seventy six percent over the past twelve months, but it's 0:19:12.160 --> 0:19:15.160 down six point six percent today. I'm not sure what's 0:19:15.200 --> 0:19:16.919 going on there. I thought they had good numbers last night. 0:19:16.920 --> 0:19:19.479 But let's chicken with somebody who gets paid to understand 0:19:19.480 --> 0:19:19.800 this stuff. 0:19:19.840 --> 0:19:20.080 KEITHA. 0:19:20.160 --> 0:19:24.200 Ranganathan. She is the the media analyst of Bloomberg Intelligence. 0:19:24.400 --> 0:19:26.439 She's done in our Princeton office. Keith, I thought it 0:19:26.440 --> 0:19:28.760 was a really good quarter in terms of you know, 0:19:28.800 --> 0:19:30.280 particularly the subscriber ads. 0:19:30.280 --> 0:19:31.879 Why do you think there' stocks trading down today? 0:19:32.840 --> 0:19:35.000 Yeah, it was not just a good quarter, Paul, it 0:19:35.040 --> 0:19:38.120 was an excellent quarter. I mean, they blew out subscribers. 0:19:38.280 --> 0:19:40.320 We were expecting, you know, four and a half million 0:19:40.359 --> 0:19:42.919 subscriber ads. They came in at over nine million. It 0:19:42.960 --> 0:19:45.359 was the best first quarter ever, you know, kind of 0:19:45.359 --> 0:19:49.159 almost reminiscent of COVID times. But I think why investors 0:19:49.160 --> 0:19:51.720 are a little bit spooked ever since they reported is 0:19:51.760 --> 0:19:53.879 because they said that they're no longer going to be 0:19:53.920 --> 0:19:58.240 providing disclosure on their subscriber numbers as well as on 0:19:58.400 --> 0:20:01.080 our pools starting in the first ord of twenty twenty five. 0:20:01.080 --> 0:20:03.080 And I think what that really signals is that this 0:20:03.119 --> 0:20:07.040 company is transitioning into this more mature phase. I mean, 0:20:07.119 --> 0:20:10.960 you know, well, investors in the market likes transparency, and 0:20:11.040 --> 0:20:14.199 anytime you reduce disclosure, it really kind of causes a 0:20:14.240 --> 0:20:17.480 lot of uncertainty, a lot of anxiety. 0:20:17.560 --> 0:20:20.280 If it's entering a more mature phase. Gita, does that 0:20:20.320 --> 0:20:22.840 mean that this thing can no longer be priced as 0:20:22.880 --> 0:20:26.000 a growth stock, That the era of adding on huge 0:20:26.000 --> 0:20:29.800 amounts of subscribers growing like gangbusters, that that's over, and 0:20:29.840 --> 0:20:32.680 so this repricing in that scenario makes sense. 0:20:34.240 --> 0:20:36.160 So, you know, there are a couple of different things here. 0:20:36.240 --> 0:20:39.119 I think with the whole streaming wars and the media 0:20:39.280 --> 0:20:41.960 landscape as a whole, I mean, there has been kind 0:20:41.960 --> 0:20:44.520 of this shift away from this hyper focus on just 0:20:44.560 --> 0:20:47.359 subscriber growth. I mean, there was going to be eventually 0:20:47.440 --> 0:20:49.640 some type of a wall or some type of a ceiling. 0:20:49.880 --> 0:20:53.399 The question was where it would be Again, that question 0:20:53.480 --> 0:20:55.919 is still an open question. But I think what you 0:20:55.960 --> 0:20:58.520 have to remember with Netflix is, yes, there is going 0:20:58.560 --> 0:21:00.439 to be some limits to subscriber growth. Think we're going 0:21:00.440 --> 0:21:02.399 to see peak subscriber growth this year, it is going 0:21:02.440 --> 0:21:04.920 to start to decelerate a little bit. But I think 0:21:04.920 --> 0:21:07.120 what Netflix has managed to do being a first mover 0:21:07.200 --> 0:21:10.280 in this space is really scale and operating leverage. And 0:21:10.320 --> 0:21:13.560 we're seeing that in the profitability metrics. We're seeing that 0:21:13.760 --> 0:21:16.680 in the operating margin, We're seeing that in the free 0:21:16.720 --> 0:21:20.240 cash flow, and they are just way ahead of their peers. 0:21:20.920 --> 0:21:23.480 And so I think, you know, you know, yes, valuation 0:21:23.640 --> 0:21:25.480 might have to take a little bit of a more 0:21:25.760 --> 0:21:28.119 modest kind of approach or has to be maybe a 0:21:28.160 --> 0:21:30.240 little bit more cautious here. But at the same time, 0:21:30.280 --> 0:21:32.159 I mean, this is a very different company from your 0:21:32.160 --> 0:21:36.400 traditional media company because most of them are still losing 0:21:36.440 --> 0:21:39.360 money on their streaming business. Meanwhile, you have Netflix generating 0:21:39.400 --> 0:21:41.600 close to about nine to ten billion dollars in profit 0:21:41.680 --> 0:21:44.240 this year with a twenty five percent operating margin. 0:21:44.359 --> 0:21:46.239 Yeah, just amazing what they've done there in terms of 0:21:46.480 --> 0:21:50.199 getting to profitability, which beg begs a question at Githa, 0:21:50.240 --> 0:21:53.639 how about is there I mean, you can be a 0:21:53.840 --> 0:21:55.080 very profitable streaming company. 0:21:55.080 --> 0:21:56.160 We see that with Netflix. 0:21:56.200 --> 0:21:58.840 Do you think that paramount pluses of the world that 0:21:58.880 --> 0:22:01.199 Disney pluses the world, all the other pluses out there 0:22:01.240 --> 0:22:03.800 from the media companies, can they get to a similar 0:22:03.840 --> 0:22:06.280 level of profitability too, because right now, as you mentioned, 0:22:06.720 --> 0:22:08.639 the streaming business has been a money loser for most 0:22:08.680 --> 0:22:09.960 of the traditional media companies. 0:22:11.320 --> 0:22:14.080 Yeah, so exactly to that point, Paul. Last year, when 0:22:14.119 --> 0:22:17.159 Netflix reported about seven billion dollars in profit, all of 0:22:17.200 --> 0:22:20.679 these other streamers combined reported the exact same amount in losses. 0:22:20.680 --> 0:22:23.600 So they lost about seven billion dollars, and you know, 0:22:23.760 --> 0:22:25.439 it's going to be a little bit different story for 0:22:25.520 --> 0:22:27.440 each one of them. I don't think all of them 0:22:27.440 --> 0:22:30.320 can necessarily get to profitability. So Disney is almost on 0:22:30.359 --> 0:22:32.480 the cusp of profitability. They're probably going to break even 0:22:32.480 --> 0:22:34.880 in a couple of quarters. They have all the levers 0:22:34.880 --> 0:22:36.520 in place to kind of really make it a very 0:22:36.520 --> 0:22:38.480 profitable business. Of course, it's going to take them some 0:22:38.680 --> 0:22:41.000 time to get to the levels of a Netflix, but 0:22:41.080 --> 0:22:44.640 they definitely have the formula. When it comes to a paramount, 0:22:44.640 --> 0:22:46.399 I think that's going to be a completely different story. 0:22:46.440 --> 0:22:49.960 The company is still losing money. It will probably lose 0:22:49.960 --> 0:22:51.920 about a billion a billion two plus. They have too 0:22:51.920 --> 0:22:55.960 many other distractions going on with Warner Brothers Discovery. Yes, 0:22:56.080 --> 0:22:59.800 they did turn a slight profit last year with you know, Max, 0:23:00.400 --> 0:23:01.840 But you know, Paul, you really have to kind of 0:23:01.920 --> 0:23:04.520 look at this in the context of the Warner Brothers 0:23:04.520 --> 0:23:07.560 Discovery business. I mean HBO in its heyday, and this 0:23:07.640 --> 0:23:09.760 is HBO, which is basically turned into the streaming business. 0:23:09.840 --> 0:23:12.040 In it's heday, was generating two billion dollars in ebitdah, 0:23:12.760 --> 0:23:15.520 and last year they reported one hundred million dollars on 0:23:15.560 --> 0:23:18.040 their streaming business and ibadah. And you know, if they 0:23:18.040 --> 0:23:19.919 want the street to be excited about that, I'm not 0:23:19.960 --> 0:23:22.879 so sure. You know, investors are going to be too happy. 0:23:22.880 --> 0:23:25.800 So it's they're not going to be able to get 0:23:25.800 --> 0:23:28.040 to the level of profitability and definitely not going to 0:23:28.080 --> 0:23:29.639 be able to get to it in the timeframe that 0:23:29.720 --> 0:23:31.680 investors are hoping that they would. 0:23:32.080 --> 0:23:34.000 So Netflix might have won the battle there, but get 0:23:34.040 --> 0:23:36.160 the one battle that seems yet to have been one 0:23:36.320 --> 0:23:40.879 is who's the dominant sports streaming place. You have Netflix 0:23:40.960 --> 0:23:43.439 with the WWE rod deal, and then you have this 0:23:43.480 --> 0:23:46.920 other platform which we heard be announced earlier in this year, which, 0:23:46.960 --> 0:23:48.520 to be honest, I feel like I've heard nothing of 0:23:48.600 --> 0:23:51.600 since the ESPN, Fox, Warner Bros. Discovery. I don't even 0:23:51.640 --> 0:23:53.400 think we still know what a name is. We don't 0:23:53.440 --> 0:23:55.480 know whether it's going to happen, whether Congress will even 0:23:55.520 --> 0:23:58.399 allow it to happen. How is that shaping up in 0:23:58.480 --> 0:24:01.359 terms of who becomes the go to player to watch 0:24:01.400 --> 0:24:03.280 all of your live stream sports? 0:24:03.920 --> 0:24:07.600 Yeah, that really is is the question the question right now? 0:24:07.600 --> 0:24:09.480 And Danny, you know, you kind of really hit the 0:24:09.520 --> 0:24:11.320 nail on the head there. We're gonna have to wait 0:24:11.359 --> 0:24:14.440 and see what happens with you know, the joint venture 0:24:14.480 --> 0:24:16.760 the ESPN Fox Warner Brothers. In the meantime, Disney has 0:24:16.760 --> 0:24:20.240 also said that they will take ESPN standalone over the 0:24:20.280 --> 0:24:22.520 top in twenty twenty five. But in the meantime, you 0:24:22.560 --> 0:24:24.600 do have all these tech giants kind of making a 0:24:24.640 --> 0:24:26.800 play for sports, right Amazon I think to date has 0:24:26.840 --> 0:24:30.320 been the most aggressive. They have the Thursday night football package. 0:24:31.080 --> 0:24:33.600 You know, they've now introduced ads on their service, they 0:24:33.640 --> 0:24:37.119 have a lot of the football content from Europe, so 0:24:37.320 --> 0:24:39.280 you know, you know, they're definitely making a big play. 0:24:39.280 --> 0:24:41.520 And as you mentioned Netflix too, I think the big 0:24:41.560 --> 0:24:43.520 thing that we are kind of really watching out for 0:24:43.640 --> 0:24:46.600 is this July twentieth event where they're kind of dipping 0:24:46.600 --> 0:24:49.399 into live sports a little bit with the Mike Tyson 0:24:49.520 --> 0:24:51.960 versus Jake Paul and that kind of then gives them, 0:24:52.000 --> 0:24:55.159 I think, allows them to gauge a little bit, you 0:24:55.160 --> 0:24:58.200 know what the appetite for for live sports is, because 0:24:58.200 --> 0:25:00.920 remember again ww's is a little bit quasi sports. It 0:25:00.960 --> 0:25:03.280 is more what they call sports entertainment. But it's going 0:25:03.320 --> 0:25:04.879 to be interesting to see whether they really want to 0:25:04.920 --> 0:25:08.399 go charging, go really aggressive with sports. I think if 0:25:08.400 --> 0:25:10.480 they want to build their advertising business, I think it 0:25:10.520 --> 0:25:13.440 is a critical piece that is missing for them right now. 0:25:13.760 --> 0:25:16.080 And so there is this chatter and this speculation about 0:25:16.080 --> 0:25:18.080 whether they're even going to be this dark horse bidder 0:25:18.080 --> 0:25:21.280 for the NBA negotiations that are currently ongoing. 0:25:21.760 --> 0:25:24.080 All right, gith, let's switch gears to our good friends 0:25:24.160 --> 0:25:27.160 at Paramount. The stocks up about ten percent today. The news, 0:25:27.160 --> 0:25:30.280 I guess is Paramount shares jump as Apollo and Sony 0:25:30.680 --> 0:25:34.240 are said to weigh a joint bid out there. What's 0:25:34.280 --> 0:25:36.720 the latest there? Are we going to get some kind 0:25:36.720 --> 0:25:40.440 of deal here for some of Paramount, all of Paramount? 0:25:40.440 --> 0:25:41.400 How do you think it shakes out? 0:25:42.520 --> 0:25:43.760 I certainly hope so, Paul. 0:25:43.800 --> 0:25:46.439 I mean, it's Sony kind of getting into this equation. 0:25:46.480 --> 0:25:50.800 I think they are the most credible bidder to date, 0:25:51.560 --> 0:25:53.320 and you know, I really hope that they come in 0:25:53.359 --> 0:25:56.560 with something that kind of entices the Paramount board to 0:25:56.600 --> 0:25:59.560 engage with them, because remember the Apollo bid before for 0:25:59.640 --> 0:26:02.439 twenty six billion. I mean, there were just or at 0:26:02.520 --> 0:26:04.280 least the way management spun it was that, you know, 0:26:04.280 --> 0:26:07.600 there were all these financing concerns. So this I think definitely, 0:26:08.359 --> 0:26:11.359 you know, we'll have a lot of firepower because the 0:26:11.400 --> 0:26:14.480 sky Dance deal, that Paramount is currently engaged, and there's 0:26:14.520 --> 0:26:18.240 just been so much of backlash against that deal because 0:26:18.280 --> 0:26:21.480 what most of the common shareholders have felt is that 0:26:21.600 --> 0:26:24.879 it is only going to benefit the Redstone family, it 0:26:24.960 --> 0:26:28.560 is going to dilute all of the other shareholders. So 0:26:28.600 --> 0:26:30.520 there is all of that going on. Meanwhile, you had 0:26:30.520 --> 0:26:34.440 four board members that kind of left, you know suddenly 0:26:34.880 --> 0:26:36.520 again that kind of screams. 0:26:36.119 --> 0:26:36.720 A hard no. 0:26:37.200 --> 0:26:39.240 So the sky Dance deal as it stands right now 0:26:39.320 --> 0:26:43.280 really seems fraught with litigation risk, which is why I 0:26:43.280 --> 0:26:45.720 think Sony coming in is kind of a welcome change 0:26:45.760 --> 0:26:47.119 and investors will definitely cheer that. 0:26:47.280 --> 0:26:50.560 But to be clear, share Redstone doesn't need to let 0:26:50.640 --> 0:26:52.800 the other shareholders have a say or have a vote, 0:26:52.840 --> 0:26:54.040 right and how this goes. 0:26:55.200 --> 0:26:57.439 She doesn't need to, but she should. I mean, she 0:26:57.480 --> 0:26:59.240 does have a fiduciary responsibility. 0:27:00.000 --> 0:27:00.359 That funny. 0:27:00.320 --> 0:27:02.440 We were speaking Tom Keen and I earlier today with 0:27:02.520 --> 0:27:05.040 Chris Morangi, who's a co CIO at Gabelli Funds, and 0:27:05.040 --> 0:27:09.160 Gabelli is they own the control shares, they don't own 0:27:09.400 --> 0:27:11.399 the non voting they own the voting shares. They're the 0:27:11.400 --> 0:27:16.159 second largest owner after the Redstone trust here, and he 0:27:16.240 --> 0:27:19.640 seemed to imply that, you know, he thinks the company 0:27:19.680 --> 0:27:23.200 should treat all shareholders. I guess similarly, but again, as 0:27:23.200 --> 0:27:26.720 you mentioned, they don't have to, assuming they want to 0:27:26.720 --> 0:27:27.760 take some litigation risks. 0:27:27.800 --> 0:27:29.119 Is that kind of how you think about Akita? 0:27:30.200 --> 0:27:30.400 Yeah? 0:27:30.400 --> 0:27:32.720 I think you know, that's what they don't have to. 0:27:32.760 --> 0:27:35.320 You're absolutely right. I mean, Sherry Redstone can pretty much 0:27:35.359 --> 0:27:37.840 do whatever she wants. The problem is, you know, the 0:27:37.880 --> 0:27:42.120 other shareholders are going to definitely revolve. There's already been 0:27:42.240 --> 0:27:45.280 so much of public protest and backlash. Not that that 0:27:45.280 --> 0:27:49.200 has stopped her, but again we'll have to see. 0:27:49.400 --> 0:27:53.480 Yeah, it's amazing, and again I just rewind my investment 0:27:53.520 --> 0:27:56.680 banking clock. You know, five years, ten years, and what 0:27:56.720 --> 0:27:59.359 you could have gotten, what this company could have been 0:27:59.359 --> 0:28:02.160 paid for, or change and control, what it's been multiples 0:28:02.200 --> 0:28:04.920 of where we are today. It's just kind of sad 0:28:04.960 --> 0:28:06.760 to see how the value has declined. 0:28:06.560 --> 0:28:08.520 And probably the idea of a dual class share back 0:28:08.560 --> 0:28:10.480 then was different. People are looking at it different than 0:28:10.520 --> 0:28:11.639 they are at this very moment. 0:28:11.760 --> 0:28:12.600 Yeah, exactly. 0:28:12.680 --> 0:28:15.000 It's been something that media investors have had to deal 0:28:15.000 --> 0:28:15.600 with for a long time. 0:28:15.640 --> 0:28:16.480 Keitha wrong and nothing. 0:28:16.840 --> 0:28:18.720 She thank you so much for joining us at Githa 0:28:18.800 --> 0:28:21.200 is the media anamals for Bloomberg Intelligence, one of the 0:28:21.240 --> 0:28:23.239 best media anaals out there on the stream. We love 0:28:23.240 --> 0:28:25.360 getting a few minutes of her time joining us from 0:28:25.400 --> 0:28:28.119 the Princeton campus of Bloomberg. 0:28:28.320 --> 0:28:30.439 I've been down to the Bloomberg alses of Princeton, you know, 0:28:30.520 --> 0:28:30.959 I never have. 0:28:31.160 --> 0:28:32.720 I got to just moved back to New York, Paul, 0:28:32.720 --> 0:28:34.040 You've got to give me time. Give me time. And 0:28:34.160 --> 0:28:36.240 how you're in London for almost seven years? 0:28:36.320 --> 0:28:36.639 Wow? 0:28:36.840 --> 0:28:38.680 Yeah, yeah, back in New York. 0:28:38.760 --> 0:28:40.640 So now we'll do the bloomberg Y West road trip 0:28:40.680 --> 0:28:41.320 now that I'm back. 0:28:41.520 --> 0:28:41.880 Very good. 0:28:43.400 --> 0:28:47.320 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:28:47.400 --> 0:28:50.880 weekdays at ten am Eastern on applecar Play and Android 0:28:50.920 --> 0:28:54.080 Otto with the Bloomberg Business. You can also listen live 0:28:54.200 --> 0:28:57.360 on Amazon Alexa from our flagship New York station, Just 0:28:57.440 --> 0:29:01.280 Say Alexa playing Bloomberg eleven thirty Janny. 0:29:01.320 --> 0:29:02.440 We've talked about this market. 0:29:02.440 --> 0:29:04.600 It's rally hard off the October lows, you know, one 0:29:04.640 --> 0:29:06.960 point up about twenty five percent off those October lows, 0:29:07.320 --> 0:29:09.000 and a lot of smart market people are saying, we 0:29:09.040 --> 0:29:11.560 do need to see some pullbacks and draw downs, maybe 0:29:11.680 --> 0:29:15.320 something more than two percent to kind of it's okay 0:29:15.360 --> 0:29:17.800 for a healthy market. So here we are today, we're 0:29:17.840 --> 0:29:20.000 down about four or half maybe five percent on the 0:29:20.080 --> 0:29:22.040 S and P five round of the question is that it? 0:29:22.160 --> 0:29:23.400 I mean, is that kind of the pullback? 0:29:23.600 --> 0:29:26.200 Nicole web joins, a senior vice president financial advisor for 0:29:26.320 --> 0:29:29.720 Wealth Enhancement Group, joining us here in our Bloomberg Interactive 0:29:29.760 --> 0:29:32.240 Broker Studio. So, Nicole, what do you tell your clients 0:29:32.280 --> 0:29:35.560 these days about kind of the you know, the ups 0:29:35.600 --> 0:29:37.280 and downs of this market. Again, we've had a nice 0:29:37.280 --> 0:29:40.320 strong move off those October lows. What do you tell 0:29:40.360 --> 0:29:42.120 them about where you think this market's going to go. 0:29:42.560 --> 0:29:45.720 I mean, pauses and pullbacks are part of a healthy market. 0:29:46.400 --> 0:29:50.480 We can't run further from here. To think it would 0:29:50.520 --> 0:29:53.520 happen in a straight line is you know, that's what 0:29:53.600 --> 0:29:57.960 makes us uncomfortable. When we see things trajectory up into 0:29:58.000 --> 0:30:01.680 the right for two long that's when you start to 0:30:01.720 --> 0:30:06.560 get a little bit concerned about over enthusiasm. And so 0:30:07.040 --> 0:30:10.480 this pause for us is well warranted. I think the 0:30:10.920 --> 0:30:13.640 does the pullback have room from here? You know, I 0:30:13.640 --> 0:30:15.880 think there's a lot riding on big tech earnings and 0:30:15.960 --> 0:30:18.280 I think we can't be overly dismissive of that. It 0:30:18.320 --> 0:30:22.240 has been the defensive play for many years in a 0:30:22.320 --> 0:30:25.560 row now and there's a lot riding on that forward guidance. 0:30:25.640 --> 0:30:27.600 And we're a bit of the camp that there's probably 0:30:27.600 --> 0:30:31.560 a de acceleration of earnings from those names and an 0:30:31.640 --> 0:30:34.200 acceleration of earnings and other sectors of the market in 0:30:34.240 --> 0:30:36.200 the back half of this year. And I think you 0:30:36.240 --> 0:30:38.000 saw a little bit of that play out with Netflix 0:30:38.000 --> 0:30:39.520 and there's a big response. 0:30:40.000 --> 0:30:42.760 Yeah. Again, the irony is this idea that on the 0:30:42.800 --> 0:30:46.479 way up we're freaking out or not weps me freaking 0:30:46.520 --> 0:30:48.240 out that it can't go on and when it starts 0:30:48.280 --> 0:30:50.000 to fall, we freak out the other way. How much 0:30:50.000 --> 0:30:52.520 further will it have to fall? But it's interesting, you say, 0:30:52.520 --> 0:30:55.400 back half of the year, other companies pick up the mantle. 0:30:55.480 --> 0:30:57.280 So is this less of a sell off and more 0:30:57.280 --> 0:30:59.040 of a beginning of a leadership change? 0:30:59.360 --> 0:30:59.600 Yeah? 0:30:59.760 --> 0:31:00.000 I think. 0:31:00.320 --> 0:31:03.719 I mean, there's a lot going on in markets today, 0:31:03.760 --> 0:31:07.239 and I think it's a truly incredible time to be 0:31:07.280 --> 0:31:12.320 an investor. Anytime you see the ten year pushing five percent, 0:31:12.800 --> 0:31:15.040 you have to have a real conversation with your clients 0:31:15.040 --> 0:31:17.160 and working on our side of the business, you know, 0:31:17.200 --> 0:31:21.600 we're not beholden to only one mandate. We're cross asset 0:31:21.840 --> 0:31:24.560 for families and so to us, you have to have 0:31:24.600 --> 0:31:30.760 real conversations about excess return above expectations from equities and 0:31:30.840 --> 0:31:32.920 what you do with that. And when you have a 0:31:33.040 --> 0:31:35.760 ten year that is pushing five percent on a net 0:31:35.880 --> 0:31:39.800 real return after tax basis, you start to go, Okay, well, 0:31:39.800 --> 0:31:42.160 if I was expecting seven or eight from equities over 0:31:42.200 --> 0:31:45.320 that same ten year period, is it prudent of me 0:31:45.480 --> 0:31:49.600 now to start to think about repositioning? And so you know, 0:31:49.680 --> 0:31:52.360 I think this is one of those kind of the 0:31:52.400 --> 0:31:55.520 most overused word of twenty twenty four. This is another 0:31:55.600 --> 0:31:59.600 bifurcation of what are you doing right now? Is it 0:31:59.640 --> 0:32:02.000 a long only strategy? Are you cross asset, are you 0:32:02.040 --> 0:32:06.120 invested across all sectors? And then how are you looking at? 0:32:06.120 --> 0:32:08.920 This market today is full of opportunity for that. 0:32:09.160 --> 0:32:11.600 You have a sixty forty outlook. 0:32:11.680 --> 0:32:15.160 Sixty percent of portfolio and equities forty percent in bonds. 0:32:15.200 --> 0:32:16.600 Is that something you guys do or do you just 0:32:16.640 --> 0:32:17.800 get a little bit more creative than that? 0:32:17.920 --> 0:32:21.120 Definitely more prescriptive than that, and I would say, you know, 0:32:21.960 --> 0:32:26.520 we are big proponents of the third leg of that stool, 0:32:26.560 --> 0:32:28.760 which you know it would be in the world of 0:32:28.800 --> 0:32:34.280 alternative investments, real assets, you know, really looking at underlying risk. 0:32:35.000 --> 0:32:38.200 You know, the unique thing about equity markets today is 0:32:38.200 --> 0:32:41.280 that we have less shares available. There's just less publicly 0:32:41.320 --> 0:32:44.920 traded companies. And so when you take that into consideration, 0:32:45.000 --> 0:32:48.240 I think for people who have the access or the 0:32:48.720 --> 0:32:52.360 lack of liquidity needs. You know that private investment spectrum 0:32:52.360 --> 0:32:54.760 has been a big part of overall acid allocation. 0:32:55.720 --> 0:32:58.880 In terms of this idea that that higher yields, I 0:32:58.920 --> 0:33:01.040 get that all of a sudden have something that's an 0:33:01.040 --> 0:33:04.280 attractive alternative to equities, But just in the mechanism of 0:33:04.320 --> 0:33:07.280 that forcing equities to sell off. Is it different that 0:33:08.120 --> 0:33:10.520 the reason that we have higher yields is because the 0:33:10.640 --> 0:33:13.000 US economy is strong, and the US economy is strong 0:33:13.080 --> 0:33:15.480 enough that we don't need to cut Presumably that's again 0:33:15.480 --> 0:33:17.440 and aroundabout way a good thing for equities. 0:33:17.560 --> 0:33:20.200 Yes. So, And this is where I was saying, there's 0:33:20.240 --> 0:33:22.080 so much unpack, you know, I think this is where 0:33:22.080 --> 0:33:24.200 the story of the inversion of the yield curve, which 0:33:24.240 --> 0:33:26.680 I've been talking about, I feel like since twenty eighteen, 0:33:26.720 --> 0:33:29.400 it's just a nauseum. But what if you really break 0:33:29.440 --> 0:33:31.840 it down to what is it telling us in the moment. 0:33:32.240 --> 0:33:36.240 It's telling us that there's long, long duration demand for 0:33:36.400 --> 0:33:40.440 US treasuries, and that the growth is so strong, and 0:33:40.480 --> 0:33:43.479 that the consumer has strength to the extent that we 0:33:43.520 --> 0:33:47.720 want to slow them down. So when we think about earnings, 0:33:47.760 --> 0:33:50.640 and we think about earnings growth, which the end of 0:33:50.640 --> 0:33:53.000 the day should be a big part of the representation 0:33:53.080 --> 0:33:56.120 of the valuation of the market. Well, then when we 0:33:56.160 --> 0:33:59.440 look at not just US GDP, but we start to 0:33:59.480 --> 0:34:03.400 focus further on the IMF global growth numbers, China GDP, 0:34:03.680 --> 0:34:06.440 China stimulus, this is where I think you start to 0:34:06.480 --> 0:34:11.080 really see, Okay, yes we're in a pullback and there's 0:34:11.120 --> 0:34:13.840 still likely room for this market to grow from here, 0:34:14.120 --> 0:34:15.880 but there's going to be fits and stops to that 0:34:15.880 --> 0:34:17.440 growth trajectory you mentioned. 0:34:17.440 --> 0:34:19.200 On a fixed income side, you can get you a 0:34:19.320 --> 0:34:22.400 nice return on a two year on a ten year treasury. 0:34:22.719 --> 0:34:24.560 How about going on and taking some credit risk. 0:34:24.640 --> 0:34:27.000 Is that something you're advising your clients these days, whether 0:34:27.000 --> 0:34:28.880 it's investment grade or even high yield. 0:34:29.160 --> 0:34:32.719 Yeah, And I think you have to be both tactical 0:34:32.840 --> 0:34:36.400 and active with your fixed income portfolio, you know. I 0:34:36.440 --> 0:34:39.400 think this is where you speak to anyone who works 0:34:39.400 --> 0:34:41.960 directly on the behalf of any families. You start to 0:34:41.960 --> 0:34:45.520 really look at that you know, net after tax equivalent 0:34:45.560 --> 0:34:48.480 basis on your fixed income portfolio. And so you know, 0:34:48.640 --> 0:34:53.799 we have taken on, you know, credit risk across the spectrum, 0:34:54.280 --> 0:34:57.080 and we're just utilizing again going back to kind of 0:34:57.080 --> 0:35:00.000 that prescriptive mandate where we are a bit more creative 0:35:00.080 --> 0:35:01.640 because we work for families. 0:35:02.080 --> 0:35:02.319 Cool. 0:35:02.360 --> 0:35:04.520 I love how you put gold right now, saying that 0:35:04.560 --> 0:35:07.320 gold as an expression of discomfort. I think that's perfect 0:35:07.400 --> 0:35:09.880 because so many of us have been scratching our heads saying, 0:35:10.080 --> 0:35:13.240 what's up with gold? Is this kind of the only 0:35:13.360 --> 0:35:16.240 asset class to express that discomfort at the moment. 0:35:16.360 --> 0:35:18.200 I mean, there's a lot if you look across the 0:35:18.239 --> 0:35:21.319 commodity spectrum right now, there's a there's a lot of 0:35:21.360 --> 0:35:26.000 reasons to feel uncomfortable. I mean I I was speaking 0:35:26.040 --> 0:35:27.400 to one of our analysts. I'm like, talk to me 0:35:27.440 --> 0:35:31.960 about commodities, and he's like, drought, drought, geopolitical drought, this 0:35:32.200 --> 0:35:35.239 and I'm just like, Okay, I just got uncomfortable. How 0:35:35.239 --> 0:35:40.200 do I express my discomfort? You know, for us, gold 0:35:40.480 --> 0:35:44.400 doesn't really play a meaningful place in portfolio construction simply 0:35:44.440 --> 0:35:48.400 because you know of the components of what gold is. 0:35:48.440 --> 0:35:51.120 And so when we see a response like this, it's 0:35:51.120 --> 0:35:53.520 funny because gold can go in a couple of different ways. 0:35:53.520 --> 0:35:56.200 It can be both exuberant and it can also be discomfort, 0:35:56.280 --> 0:35:58.760 and right now we think it's an expression of discomfort 0:35:58.800 --> 0:36:00.319 across the commodity special. 0:36:00.800 --> 0:36:04.040 Dare I suggest you have a viewing bitcoin, crypto, that 0:36:04.080 --> 0:36:06.839 kind of stuff the big having when your clients, when 0:36:06.880 --> 0:36:08.200 your clients call you up and he said they want 0:36:08.200 --> 0:36:09.920 to get exposure or crypto, what do you say, you know, 0:36:10.239 --> 0:36:11.520 I think crypto. 0:36:11.600 --> 0:36:13.239 And this goes back to something we were all saying 0:36:13.280 --> 0:36:15.800 before we came on air, cryptocurrency, and I'm going to 0:36:15.840 --> 0:36:19.279 focus specifically on bitcoin, but it is a supply and 0:36:19.360 --> 0:36:22.319 demand mechanism. And so if you you know, the thing 0:36:22.360 --> 0:36:24.880 that hit me the hardest when I was learning about 0:36:24.920 --> 0:36:28.840 bitcoin over the years was, you know, if you believe 0:36:29.000 --> 0:36:31.839 that the demand for bitcoin is going to increase by 0:36:31.880 --> 0:36:34.560 more than two percent per year, because the supply is 0:36:34.600 --> 0:36:37.120 only going to increase by more than two percent per year, 0:36:37.400 --> 0:36:41.279 then you should probably be long bitcoin. I'm not saying that. 0:36:41.280 --> 0:36:43.640 That's the advice I'm giving to indigital clients. So that's 0:36:43.640 --> 0:36:46.640 our firm's thesis on cryptocurrency. But you know, I think, 0:36:46.920 --> 0:36:49.439 you know what, you always want to boil things down, 0:36:49.480 --> 0:36:52.799 boil down what markets are, boil down what bitcoin is. 0:36:52.840 --> 0:36:54.880 And at the end of the day, you know, I 0:36:54.880 --> 0:36:57.560 think this conversation about having has a lot to do 0:36:57.640 --> 0:37:00.120 with that supply and demand mechanism long term. 0:37:00.239 --> 0:37:01.880 Very good, Nicole, Thank you so much for joining us. 0:37:01.960 --> 0:37:04.960 Nicole Webb, senior vice president, the financial advisor at Wealth 0:37:05.120 --> 0:37:08.320 Enhancement Group, joining us live here in our Bloomberg Interactive 0:37:08.400 --> 0:37:09.439 Brooker Studio. 0:37:11.560 --> 0:37:15.480 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:37:15.520 --> 0:37:18.400 weekdays at ten am Eastern on applecar. 0:37:18.080 --> 0:37:20.799 Play and Android Auto with the Bloomberg Business Act. 0:37:20.960 --> 0:37:23.799 You can also listen live on Amazon Alexa from our 0:37:23.840 --> 0:37:30.000 flagship New York station Just Say Alexa playing Bloomberg eleven thirty. 0:37:29.680 --> 0:37:32.480 Paul Sweeney live here in a Bloomberg Interactive Brooker's Studio 0:37:32.680 --> 0:37:33.680 in New York City. 0:37:33.680 --> 0:37:35.200 We're also streaming live on YouTube. 0:37:35.600 --> 0:37:38.480 Say head over to YouTube dot com and search Bloomberg Podcast, 0:37:38.520 --> 0:37:39.480 and that's where you'll find it. 0:37:39.680 --> 0:37:39.920 All right. 0:37:39.960 --> 0:37:43.000 A lot of market participants, a lot of market observers 0:37:43.080 --> 0:37:45.840 are saying, you know, part of a strong, healthy market 0:37:46.080 --> 0:37:50.359 is an occasional pullback, a drawdown, as the kids call it. 0:37:50.400 --> 0:37:50.919 I'm not sure. 0:37:50.960 --> 0:37:53.719 We're off about five percent here on the s and 0:37:53.760 --> 0:37:56.160 p five hundred from our recent highs. Does that qualify? 0:37:56.480 --> 0:37:59.160 It's checking with Barry Ridholts. He's a host of Masters 0:37:59.160 --> 0:38:01.520 in Business on Bloomer Radio. Is also the founder of 0:38:01.600 --> 0:38:05.800 Ritholt's Wealth of Management. He joins us via zoom here. Hey, Barry, 0:38:05.840 --> 0:38:08.920 I mean, do you ascribe to that kind of thinking 0:38:08.960 --> 0:38:12.719 that every good long term bull market needs some healthy pullbacks? 0:38:12.719 --> 0:38:14.719 And if so, are we in midst one of those. 0:38:14.719 --> 0:38:18.880 Now do you think, Wait, markets go up and down. 0:38:19.320 --> 0:38:21.920 Nobody told me about this. I thought they just went 0:38:22.000 --> 0:38:24.239 straight up and it was easy to make a ton 0:38:24.280 --> 0:38:30.720 of money. Listen, this, this is the nature of a broad, 0:38:31.600 --> 0:38:38.360 deeply participated, enormous market capitalization exchange. 0:38:38.400 --> 0:38:39.800 This is this is what happens. 0:38:40.160 --> 0:38:44.799 You know, the ideas that drive markets kind of get 0:38:44.840 --> 0:38:48.640 tested out, they catch fire for a little while, then 0:38:48.680 --> 0:38:51.600 they sort of get overlooked, and then the narrative changes 0:38:51.680 --> 0:38:57.359 and you know, we've we've figured this out. I love 0:38:57.400 --> 0:39:00.960 the expression investing is a problem that's been solved. But 0:39:01.239 --> 0:39:05.399 investing is something that takes place over decades and month 0:39:05.440 --> 0:39:07.959 to month, week to week, day to day, tick to tick. 0:39:08.640 --> 0:39:12.279 That's fairly random. There's a lot of noise and a 0:39:12.320 --> 0:39:16.520 lot of emotion that weight. We're up twenty five percent 0:39:16.560 --> 0:39:19.600 from the lows. Weight, we're down ten percent from the highs. 0:39:20.920 --> 0:39:25.120 It's everybody making their best guess as to the discounted 0:39:25.160 --> 0:39:28.080 cash flow of stocks and where profits are going to 0:39:28.080 --> 0:39:31.120 be in the future relative to the risk free red 0:39:31.200 --> 0:39:32.080 return of bonds. 0:39:32.440 --> 0:39:34.920 And Barry mentioned where profits are going to be in 0:39:34.920 --> 0:39:38.280 the future. That brings our attention to earnings. It seems 0:39:38.320 --> 0:39:41.040 like the FED story is still out there, but the 0:39:41.080 --> 0:39:43.400 FED will be maybe less active in terms of cutting 0:39:43.480 --> 0:39:46.600 rates in the near near term, So maybe focus needs 0:39:46.600 --> 0:39:49.239 to go a little bit more towards earnings. What are 0:39:49.280 --> 0:39:51.360 you looking for in terms of earning share? What are 0:39:51.480 --> 0:39:52.840 you going to be listening for anything on some of 0:39:52.880 --> 0:39:53.400 these calls? 0:39:54.719 --> 0:39:57.719 So I like to look at two things. I want 0:39:57.719 --> 0:40:01.680 to look at what is the overall all beat rate? 0:40:02.360 --> 0:40:05.840 Right most two thirds of the companies will beat earnings expectations. 0:40:06.200 --> 0:40:13.400 We always laugh at when an earnings report misses the expectations. 0:40:13.600 --> 0:40:16.719 I think everybody gets it backwards. The earnings report is 0:40:16.760 --> 0:40:20.719 the earnings report. Your forecasts were wrong. They are what 0:40:20.760 --> 0:40:22.880 it was you got it wrong. So I want to 0:40:22.920 --> 0:40:26.000 see how well how many companies are beating versus missing. 0:40:27.000 --> 0:40:29.840 I like to look at the overall level. Hey, what 0:40:29.920 --> 0:40:33.200 are we growing really? Adding three four five percent to profits? 0:40:33.520 --> 0:40:36.560 We're pretty close to all time highs for profits for 0:40:36.600 --> 0:40:39.359 the S and P five hundred. But the thing that 0:40:39.440 --> 0:40:42.560 so many people find so challenging is it's not the number, 0:40:42.640 --> 0:40:46.280 it's not the data, it's what are the earnings relative 0:40:46.320 --> 0:40:50.560 to expectations? Netflix? Is a great example. I mean, that 0:40:50.680 --> 0:40:54.920 is a spectacular earnings report, the most new subscribers in 0:40:55.000 --> 0:40:58.720 a long time, revenue profits, everything moving in the right direction, 0:40:59.440 --> 0:41:03.080 but apparently not as much as expected. And so despite 0:41:03.600 --> 0:41:08.520 you know, the really solid report, the initial response was, oh, 0:41:08.600 --> 0:41:13.120 this is disappointing, which it's always about, not the news, 0:41:13.160 --> 0:41:15.440 but how much of the news is already priced in? 0:41:16.000 --> 0:41:19.560 And to that end, Barry, what do you think of 0:41:19.760 --> 0:41:23.120 companies providing kind of point guidance, whether it's a quarter 0:41:23.200 --> 0:41:26.680 out or a year out. I mean, is that something 0:41:26.719 --> 0:41:28.680 they should be doing to kind of manage the whole 0:41:28.719 --> 0:41:31.239 process or should they just run their business and let 0:41:31.280 --> 0:41:32.160 the street take care of it. 0:41:34.520 --> 0:41:37.799 You know, I am not a big fan of you know, 0:41:37.840 --> 0:41:39.759 back in the old days when you pull, when you 0:41:39.800 --> 0:41:43.160 and I were first ye getting started, they used to 0:41:43.239 --> 0:41:47.480 be called whisper numbers. Before reg FD, a handful of 0:41:47.560 --> 0:41:51.520 favored analysts or axes on the stock would get a 0:41:51.640 --> 0:41:56.480 very quiet conversation with the CFO or the CEO. Hey, 0:41:56.560 --> 0:41:59.760 you have us at seven cents a share, you should 0:41:59.760 --> 0:42:02.080 really be close in a nine sense of share, and 0:42:02.480 --> 0:42:04.839 you know, so everybody would be low and the one 0:42:04.880 --> 0:42:08.840 guy the day before would change his estimate, and lo 0:42:08.920 --> 0:42:12.759 and behold, everybody rushes to raise and the stock takes off. 0:42:13.080 --> 0:42:16.960 That sort of nonsense from when we were youngsters, the 0:42:17.080 --> 0:42:20.719 on trading desks, that's all gone, so now everybody has 0:42:20.800 --> 0:42:22.520 to get the disclosure at. 0:42:22.440 --> 0:42:23.080 The same time. 0:42:23.680 --> 0:42:28.000 And I wonder how helpful it is being that precise. 0:42:28.400 --> 0:42:31.640 I love hearing a CEO saying, hey, listen, you know, 0:42:31.840 --> 0:42:35.320 we're expecting to see growth this quarter similar last quarter, 0:42:35.680 --> 0:42:38.920 but we don't know what's happening with fill in the blank, 0:42:39.000 --> 0:42:41.640 the war in the Middle East or the Ukraine. There 0:42:41.640 --> 0:42:43.919 seems to be a lot of inflation stuck in the 0:42:44.000 --> 0:42:48.239 in the services part of the economy. So we're going 0:42:48.320 --> 0:42:51.239 to give you a range and try not to micromanage this. 0:42:51.719 --> 0:42:55.000 And I think that's just honest, because we really don't 0:42:55.000 --> 0:42:58.800 know what the future holds. When someone pretends they're sending 0:42:58.840 --> 0:43:00.839 themselves up for failure, all. 0:43:00.800 --> 0:43:03.239 Right, Barry, I'm looking at some social media from our 0:43:03.280 --> 0:43:06.279 good friend Matt Miller, and he's now showing it looks 0:43:06.280 --> 0:43:11.279 like he's test driving the Lamborghini HURKHN Strato, and he 0:43:11.320 --> 0:43:14.920 notes that it's among the last of the naturally aspirated 0:43:15.000 --> 0:43:16.720 v tens in production. 0:43:16.840 --> 0:43:17.520 Whatever that is. 0:43:17.719 --> 0:43:19.120 Does that kind of car get your attention? 0:43:20.280 --> 0:43:24.799 So I am so I'm not a big Lambeau fan. 0:43:24.960 --> 0:43:28.600 That's not mine. It's a little too flashy for me, Paul, 0:43:28.680 --> 0:43:31.720 you know what a low key of course I am. 0:43:32.120 --> 0:43:36.799 And the Lambeau in that, like lime green, is a 0:43:36.800 --> 0:43:40.520 little too much for me. That said, I gotta give 0:43:40.600 --> 0:43:45.240 Lamborghini credit for saying, wait, a four hundred thousand dollars 0:43:46.040 --> 0:43:50.000 rocket ship, I know, Let's turn it into a decar 0:43:50.960 --> 0:43:54.280 off road racer. Let's let raise it a few inches, 0:43:54.440 --> 0:43:58.799 put some plastic cladding and high intensity light beams and 0:43:58.800 --> 0:44:05.160 some off roads and let this seven hundred horsepower monster loose, 0:44:05.600 --> 0:44:10.440 you know, in the Sahara. Kudos to them for stepping 0:44:10.440 --> 0:44:13.400 out of their comfort zone. The crazy thing about this 0:44:13.480 --> 0:44:17.200 Serrado is not only does it have a giant premium 0:44:17.400 --> 0:44:22.839 over the usual Lamborghini Hurricanes, it sold out instantly. 0:44:22.880 --> 0:44:23.080 Wow. 0:44:23.480 --> 0:44:27.120 And every time people tell me, and admittedly this is 0:44:27.160 --> 0:44:33.719 not exactly a middle class purchase, but wherever I look, cars, watches, 0:44:34.480 --> 0:44:37.560 restaurant reservations, every part time someone tells me how bad 0:44:37.600 --> 0:44:41.120 the economy is? Where do you live? And I'm not 0:44:41.239 --> 0:44:44.120 just in New York, I'm around the country pretty regularly. 0:44:44.160 --> 0:44:46.560 I was just in Salt Lake City, I was in Vegas. 0:44:46.600 --> 0:44:50.440 I was in California and not like Beverly Hills, but 0:44:50.600 --> 0:44:52.160 like middle class parts exactly. 0:44:53.400 --> 0:44:53.600 Yep. 0:44:53.960 --> 0:44:55.359 The wealth effect is it's hard. 0:44:56.080 --> 0:44:58.440 Yeah, it's hard not to look around and say, if 0:44:58.480 --> 0:45:00.640 you think this economy stays all right, we have to 0:45:00.680 --> 0:45:02.120 leave it there. But I think where you live. 0:45:03.080 --> 0:45:03.879 Barry very much. 0:45:03.960 --> 0:45:07.520 Thank you host a master's in business on Bloomberg Radio, 0:45:08.000 --> 0:45:10.800 founder of Ritholtz Wealth Management as well. Appreciate that little 0:45:10.800 --> 0:45:12.960 car talk to finish off your morning. 0:45:13.560 --> 0:45:18.080 This is the Bloomberg Intelligence Podcast, available on apples, Spotify, 0:45:18.280 --> 0:45:21.480 and anywhere else you'll get your podcasts. Listen live each 0:45:21.480 --> 0:45:24.880 weekday ten am to noon Eastern on Bloomberg dot com, 0:45:24.960 --> 0:45:28.600 Beheartradio app, tune In, and the Bloomberg Business app. You 0:45:28.600 --> 0:45:31.799 can also watch us live every weekday on YouTube and 0:45:31.960 --> 0:45:33.560 always on the Bloomberg terminal.