Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg Termament. Michael McKee, what
Speaker 1: a joy. I loved what you did with Neil cash
Speaker 1: Curry here in the last number of days. And now
Speaker 1: you've got the wonderful mathematician from Cleveland, Loretta Mester. Yes,
Speaker 1: time we do. We'd like to welcome the Cleveland Fed
Speaker 1: Bank President Lorettamester to Bloomberg Television and Radio worldwide. Thank
Speaker 1: you for joining us on this beautiful morning, at least
Speaker 1: here in Boston. Uh looks like the narrative, President Mester,
Speaker 1: that the American people are going to be recovering more
Speaker 1: quickly and everybody anticipated might not be correct. I mean,
Speaker 1: they're still spending money, but not at an increasing pace. Yeah,
Speaker 1: I mean I think this is probably what we should expect. Right.
Speaker 1: We have pent up demand coming back as the vaccinations
Speaker 1: have been distributed more widely, and that's a strong demand.
Speaker 1: We also have supply issues affecting the economy, and this
Speaker 1: interplay between demand and supply is what we're seeing in
Speaker 1: some of the data coming out, whether it be today's
Speaker 1: retail sales report or the labor market reports. So the
Speaker 1: volatility month to month, I think is something we should expect.
Speaker 1: I think that what's happening, though, is that we do
Speaker 1: see the recovery continuing. It's just that we're going to
Speaker 1: have these months to month changes depending on which factors
Speaker 1: are more dominant. Is at the supply side or is
Speaker 1: it demand side? And I think the bottom line is
Speaker 1: it just you know, we're really at the beginning of
Speaker 1: this vaccinations widely distributed part of the recovery, and I
Speaker 1: think we just have to, you know, wait and be
Speaker 1: a little bit patient and let the recovery continue. Well,
Speaker 1: we just got the CDC advice that people don't have
Speaker 1: to wear masks anymore. I can tell you people in
Speaker 1: Boston are still wearing masks as they are in New York.
Speaker 1: Do you think that reluctance to go out and spend
Speaker 1: is going to fade rapidly now, Well, it's hard to
Speaker 1: see how rapidly. I mean myself, you know, I'm still
Speaker 1: you know, wearing masks when I go outside. I think
Speaker 1: it all is a good sign though, that we are
Speaker 1: getting to the other side of this. And I think
Speaker 1: that the vaccinations still have some further way to go.
Speaker 1: I think we need to distribute them more evenly across
Speaker 1: the country. But as a that continues, as we can
Speaker 1: relax mask wearing for those who have been vaccinated, all
Speaker 1: of that is on a good path to get us
Speaker 1: back to some semblance of normal. And I do think
Speaker 1: people are going to feel more comfortable re engaging. I
Speaker 1: am feeling more comfortable re engaging, and I think I'm
Speaker 1: representing of others that you know, we have a reluctance.
Speaker 1: But now as things continue on, and you know, we've
Speaker 1: intellectualized the fact that we have gotten vaccinated and we
Speaker 1: are protected, we're going to be more able and willing
Speaker 1: to go out and re engage. And I think we're
Speaker 1: going to see that, you know, over the rest of
Speaker 1: the year. This is where I put in my plug
Speaker 1: to come visit you in Cleveland and do the next
Speaker 1: interview there. Uh, neither you or I have had a
Speaker 1: real chance to dig into these retail sales numbers. But
Speaker 1: the interesting thing about retail sales is they're reported in
Speaker 1: dollar terms, and so one would have thought that there
Speaker 1: would be a big impact from the April CPI numbers. Uh,
Speaker 1: what was your reaction to that and the idea that
Speaker 1: maybe inflation is accelerating more quickly than the Fed anticipated. Well, again,
Speaker 1: I think we're seeing the clash between you know, kentup demand,
Speaker 1: the surgeon demand, and some of the supply issues that
Speaker 1: we're seeing. And coupled on, you know, with that also
Speaker 1: is the fact that the month you know, year over
Speaker 1: year number are really incorporating those very low inflation readings
Speaker 1: we had um last year. As those you know, come
Speaker 1: out of the numbers, we're gonna just seem mathematically inflation
Speaker 1: going up. But no doubt, you know, we're seeing some
Speaker 1: real supply constraints in particular areas. I think you were
Speaker 1: mentioning lumber earlier. There's commodity prices, there's energy prices now
Speaker 1: with the pipeline issue, so you're we're seeing those in
Speaker 1: the inflation data. I think the real question for monetary
Speaker 1: policy is is that gonna you know, abate over the
Speaker 1: rest of the year as supply comes back on, as
Speaker 1: some of the stimulus checks that people have um are
Speaker 1: used up, and so I think we're gonna see that
Speaker 1: play out. And my baseline scenario for inflation is that
Speaker 1: we're gonna have high higher inflation this year above two percent.
Speaker 1: But then as some of those constraints on supply ease UM,
Speaker 1: I think we're gonna see inflation go back down and
Speaker 1: we'll have to you know, monitor that as we go forward.
Speaker 1: I'm really focused on inflation expectations because I think that
Speaker 1: is really where you know, you'll begin to see if
Speaker 1: those go up UM, and they're going up a little
Speaker 1: bit now, we'll have to look to see whether longer
Speaker 1: run expectations are going up, and that's really a key
Speaker 1: to me in terms of you know, where inflation is
Speaker 1: likely to go um over the longer run. Wall Street's
Speaker 1: favorite drinking game is the word transitory with BEETE officials,
Speaker 1: how do you define transitory? How long is it? When
Speaker 1: would you know whether you're right or wrong about your
Speaker 1: inflation forecast? Right? So again, I think transitory is a
Speaker 1: word that was meant to convey whether those are supply
Speaker 1: issues that will abate over time and that's what push
Speaker 1: pushing up prices, or whether it really is in these
Speaker 1: underlying inflation measures. So far, we don't see right much
Speaker 1: impact on measures like the Cleveland Fits Median cp I
Speaker 1: and other measures that really try to look at what
Speaker 1: the trend in inflation is. And the key to that
Speaker 1: is this real inflation expectations. So it really is going
Speaker 1: to depend on how long it takes her supply conditions
Speaker 1: to to ease and get back to normal, and that
Speaker 1: could take some time. It's going to depend on what
Speaker 1: commodity we're looking at. It's going to depend on what
Speaker 1: part of the economy we're looking at. You know, we
Speaker 1: all have talked about the chip you know shortage, that's
Speaker 1: going to take some time. When we talk to our
Speaker 1: um contacts in the auto industries, many of them are
Speaker 1: saying it's gonna be six months to even nine months
Speaker 1: for that to get back to normal. So some of
Speaker 1: those transitory gives the impression of over and done very quickly.
Speaker 1: I don't think that's what we'll see. I think some
Speaker 1: of those are gonna last longer. But whether that gets
Speaker 1: embedded in underlying inflation rates, which is what the FED
Speaker 1: looks at, that's a different story. And that in that sense,
Speaker 1: I think a lot of the supply conditions that are
Speaker 1: pushing up inflation now will abate over time. Well, there's
Speaker 1: definitely gonna be a staring contest between the Federal Reserve
Speaker 1: and the people on trading guests on Wall Street over
Speaker 1: the next couple of months we get this economic data.
Speaker 1: Are you gonna be able to resist pressure from the
Speaker 1: markets if they see concern about inflation and start raising rates.
Speaker 1: I'm sure you'll tell me yes, you can. But traders
Speaker 1: also remember December of two thousand eighteen. You know, we
Speaker 1: have been very clear, I hope in UM telling everyone
Speaker 1: sort of our strategy and the fact that we want
Speaker 1: to see right it in the data. We want to
Speaker 1: not just based our our policy actions on what we
Speaker 1: project is going to be happening, but also seeing it
Speaker 1: really in the data. And I think that's a really
Speaker 1: good strategy for times like this where you have demand
Speaker 1: and supply factors clashing and coming together and the outcomes
Speaker 1: and the data. So again, you know, I think we're
Speaker 1: gonna be looking at outcomes are forward GUIDs tells us,
Speaker 1: you know, tells the markets and the public where what
Speaker 1: we're looking at we want to see inflation go up,
Speaker 1: and we want to see it be on track to
Speaker 1: go above two percent um and that's you know, what
Speaker 1: we're going to be looking at and basing our inflation
Speaker 1: on the inflation side, and we want to get back
Speaker 1: to maximum employment. You know, we still are in spite
Speaker 1: of the pretty good labor market data we've gotten over
Speaker 1: the past several months. Despite last month's a little bit
Speaker 1: disappointment in that report, we're still making progress on the
Speaker 1: labor market side. But right again, supply issues are affecting
Speaker 1: those numbers too, and you know, we have to sort
Speaker 1: of continue on the path we're on until we get
Speaker 1: more people back into the labor market um and more
Speaker 1: progress towards our goals. So again, I think we're seeing
Speaker 1: this play out in both labor markets and product markets,
Speaker 1: and the FED is just going to be focused on
Speaker 1: outcomes to see that, you know, and Greek calibrate our
Speaker 1: policy appropriately to the outcomes. What you're saying about the
Speaker 1: employment report, um, do you have a read on what
Speaker 1: happened there? Do you think that, uh, the enhanced unemployment
Speaker 1: benefits play a major role, is a lot of least
Speaker 1: politicians thing. So I think a lot of things that
Speaker 1: are going on in the labor markets still reflects some
Speaker 1: moneys that we were talking about earlier in terms of
Speaker 1: re engaging. And I also believe that the and we
Speaker 1: hear this from our context all the time, the childcare
Speaker 1: school reopening that is affecting the labor markets. I think
Speaker 1: people are making decisions based on those things, but the
Speaker 1: fact that they have the unemployment benefits gives them the
Speaker 1: financial wherewithal to actually be making those decisions, whereas in
Speaker 1: the past they may not have been able to make
Speaker 1: the decision they would like to meet be able to
Speaker 1: meet make because they didn't have the wherewithals. So in
Speaker 1: that sense, it's interacting. But I think the main drivers
Speaker 1: are these other considerations in terms of the virus and schools,
Speaker 1: and that's why I think we're going to see some
Speaker 1: of that downward pressure on labor supply abate too over time,
Speaker 1: because I think as schools reopened, as people get more
Speaker 1: comfortable with the vaccinations being widely distributed, I think people
Speaker 1: will feel more comfortable coming back into the labor market,
Speaker 1: and we're gonna be watching for that. I certainly will
Speaker 1: be watching for that. Um as we go through the
Speaker 1: rest of the year. Let me ask you this, A
Speaker 1: number of people, including your former colleague Bill Dadley, the
Speaker 1: former President of the New York Fed have been speculating
Speaker 1: lately that the economy could rebound more quickly and more
Speaker 1: strongly than people anticipated, and that by the time you
Speaker 1: get around to looking at actual realized data, you will
Speaker 1: have passed maximum employment and the inflation danger will rise,
Speaker 1: and then you're gonna have to raise rates farther and
Speaker 1: faster than you thought. What's your view on that? So,
Speaker 1: I think, you know, we are going to be watching
Speaker 1: very closely how the economy and the recovery evolves over
Speaker 1: the year UM as we get more data in so
Speaker 1: and we're guided by our our dual mandate goals progress
Speaker 1: towards there's goals. So yes, there's you know, uncertainty around
Speaker 1: the outlook, there's risks around the outlook. Things could you know,
Speaker 1: pick up faster than we anticipate, Things could go slower
Speaker 1: than we anticipate, and we're prepared for that. I think
Speaker 1: we're in a good place right now with our policy,
Speaker 1: and we're going to adjust it as appropriate depending on
Speaker 1: how the actual recovery um progressive. So that's why this is,
Speaker 1: you know, not the time to really be adjusting anything
Speaker 1: on policy. It really is a time for watchful waiting
Speaker 1: seeing how the recovery evolved, seeing how some of this
Speaker 1: apply constraints dissipate or not seeing what happens on the
Speaker 1: labor side, um and keeping focused on our dual mandate goals.
Speaker 1: So you know, I understand where bills coming from. I
Speaker 1: think the way I would what would I would say
Speaker 1: in responses. We're well positioned now for upside and downside risks,
Speaker 1: and we're just gonna have to be patient where we
Speaker 1: are now and wait a little bit a little bit
Speaker 1: longer looking at the data to see where this recovery
Speaker 1: is going. But I'm very I have a positive outlook.
Speaker 1: I think the outlook is bright. I just think that
Speaker 1: we need to let it continue on a little bit longer, because,
Speaker 1: you know, opening up the economy after such a deep,
Speaker 1: deep UH shocked downward right is proving to be you know,
Speaker 1: there's some some stumbles along the way, and I think
Speaker 1: we should have expected that, and I think that's what
Speaker 1: we're seeing in the data right now. Well, let me
Speaker 1: ask you one last quick question. Do you think it's
Speaker 1: a foregone conclusion that when you finally talk about or
Speaker 1: talk about talk about UH tapering, that you're going to
Speaker 1: get a taper tantrum that the markets are going to
Speaker 1: try to reprice immediately and we're going to have a
Speaker 1: market disruption. Well, I mean, obviously that would not be
Speaker 1: a good outcome. I think we've been very clear and
Speaker 1: Share Palace been very clear that we are going to
Speaker 1: be communicating well in advance UM what our policy stance
Speaker 1: is and where it's going. And my hope is that
Speaker 1: UM will be articulate enough UM and explain enough our
Speaker 1: rationales and and our UM expectations that we will avoid
Speaker 1: the worst UM in terms of the financial markets. I mean,
Speaker 1: bolatil and financial markets is what financial markets are. UM.
Speaker 1: We just want to make sure that you know, we're
Speaker 1: communicating as best we can our rationales and our approach
Speaker 1: to policy. And you know, we'll just have to wait
Speaker 1: and see how how well we do that. Laura Best,
Speaker 1: the President of the Federal Reserve Bank of Cleveland, thank
Speaker 1: you very much for joining us this morning here on
Speaker 1: Bloomberg Radio and television worldwide. Fantastic Marchael McKay that with
Speaker 1: President Mesta, always right to hit from President Mesta as well.
Speaker 1: Let me get onto our next guest, because she is
Speaker 1: very valuable. There are economists to come on here and
Speaker 1: they warble gaily. And there are very few, I think
Speaker 1: John Taylor of Stanford University who actually have a Bloomberg function.
Speaker 1: Claudius Sam is one of our great thinkers, and she
Speaker 1: nailed the recession mathematics a number of years ago at
Speaker 1: the FED. And there is the some rule which you
Speaker 1: could find on the Bloomberg which shows a horrific recession
Speaker 1: of this instant pandemic. And then out we came to
Speaker 1: a better America. Except Claudia Sam and said, wait a minute.
Speaker 1: The inequality that out there is tangible. Claudia, I want
Speaker 1: to get to the inequalities right now, and I want
Speaker 1: to get to what all case say from John Edwards
Speaker 1: is three America's you got an elite boom. You've got
Speaker 1: McDonald's and the rest of them telling us Amazon they're
Speaker 1: gonna hire low wage at a higher wage. And then
Speaker 1: there's the rest of America. How do we pull them
Speaker 1: into the dialogue? Right This is absolutely the right question
Speaker 1: to be asking right now, because we have not in
Speaker 1: the past any good job policymakers getting a recovery for everyone.
Speaker 1: Up to this point. We've seen a lot of messaging,
Speaker 1: We've seen a lot of actions by Congress with the
Speaker 1: Rescue Plan, the FED with their new framework to say,
Speaker 1: we're going to fight for those people, to get everybody back,
Speaker 1: particularly those from minoritized groups. But we got to see it,
Speaker 1: and what you see right now are the other two groups,
Speaker 1: the elite, the wealthy and the large corporations, making a
Speaker 1: lot of noise that they need to be taken care of,
Speaker 1: and not those at the bottom, Claudia. Within the three Americas,
Speaker 1: there's the idea of yeah, we get back, We're gonna
Speaker 1: be fully employed, fully employed, four percent unemployment rate, whatever
Speaker 1: the number is. That math doesn't compute. If we have
Speaker 1: so many people left aside because of technology, because of
Speaker 1: education in the last twenty or thirty years, what's the
Speaker 1: program to actually pull them from a modern welfare state,
Speaker 1: however you want to call it into an actual productivity
Speaker 1: for America? Right? Well, are people are our most valuable asset,
Speaker 1: the thing that we should be investing in, and that's
Speaker 1: where and our infrastructure, right so physical infrastructure, invest in
Speaker 1: our people. We have two proposals going to Congress in
Speaker 1: varying forms, like there's so much we can do in
Speaker 1: terms of investing in people and families in the next
Speaker 1: generation and our physical infrastructure. Those are the kind of
Speaker 1: things we need to do now, like we have to
Speaker 1: fight this recession. But it is not good enough to
Speaker 1: get back to pre COVID because pre COVID there were
Speaker 1: a lot of problems and frankly, our productivity as a
Speaker 1: country had slowed down. I mean we were all suffering,
Speaker 1: and some were suffering even more. And we can fix
Speaker 1: that with good policy and a lot of push from
Speaker 1: markets too. I mean, the private sector has a big
Speaker 1: role to play. Also, Claudia, the complexity of productivity. And
Speaker 1: I really try, Claudia on a Friday not to talk
Speaker 1: about productivity. But I'll dive off the deep end here
Speaker 1: on productivity. It is about this strange m I t
Speaker 1: solo word technology. Are we less productive because we're overwhelmed
Speaker 1: by not the negative but just the realities of our
Speaker 1: modern technology. So I don't want to point paint that
Speaker 1: dark of a picture. I will say, you know, productivity
Speaker 1: is the sum of what we do not know. Right
Speaker 1: is very hard to measure. It's very hard to really
Speaker 1: say where we're at and why it's slowed down. But
Speaker 1: we do know that education helping workers have stable lives,
Speaker 1: economic security, job ladders, right, Like, it's not even if
Speaker 1: we can't see it in the GDP data, Like, that's real,
Speaker 1: that matters to people. So I don't want to like
Speaker 1: technology has always been with us, Automation has always been
Speaker 1: with us. That's not an excuse to throw in the
Speaker 1: towel here, Claudia, you're every Republican leaders worst nightmare. They
Speaker 1: won't they won't talk to you, They hang up the phone.
Speaker 1: They call hello, the Jane Family Institute. But we don't
Speaker 1: want to talk to that wacko economists. Okay, but are
Speaker 1: the people of the Republican Party in sync with their
Speaker 1: leaders or do you buy what's percolating in Washington that
Speaker 1: President Biden can get societal support of Republicans even if
Speaker 1: he doesn't get the leadership support. Yeah, well, I will
Speaker 1: say I talked to Republican voters every day. That being parently,
Speaker 1: I grew up in Indiana. I'm not a political person.
Speaker 1: I do think we need to have policy in an
Speaker 1: economy that works for everyone, but frankly, that is not
Speaker 1: like that's what everybody wants in the United States. There
Speaker 1: are big debates about how to do it best and
Speaker 1: what the role of government versus an old individuals are.
Speaker 1: But I think this is one where we the politics
Speaker 1: that are just crushing work in Congress, in the administration
Speaker 1: and have for decades. This is a real disservice to
Speaker 1: the American people. And I try and am I Lane
Speaker 1: on the economics and not the politics. But it's it's
Speaker 1: it's hard to watch. It's a Brea exclusive, folks, it's
Speaker 1: a surveillance break exclusive here this morning, Claudius Um speaks
Speaker 1: to members of the GOP. It's an extraordinary mom mclaude.
Speaker 1: I want to go back to University of Michigan where
Speaker 1: you took your PhD. It's really been one of our
Speaker 1: hotbeds of inflation and research. What is your observation on
Speaker 1: the fear, the worry, the angst, the pendulum of inflation. Yes,
Speaker 1: I feel like we all just got a step back
Speaker 1: and take a deep breath. Right, there's been a way
Speaker 1: too much attention to the last set of data points,
Speaker 1: whether it's jobs or inflation or today retail sales. Right,
Speaker 1: we have a twenty one trillion dollar economy. We have
Speaker 1: really tried to push it intentionally to get people back
Speaker 1: to work and back on track. This is exactly what
Speaker 1: we said was going to happen, right, Like, you can't
Speaker 1: get all excited about a historic forecast myths or like
Speaker 1: numbers are coming bigger than we thought because this world,
Speaker 1: like the entire last year. I mean, remember last year,
Speaker 1: they were all way worse than we expected. Right, So
Speaker 1: I think there's just we're losing context. And I get it.
Speaker 1: It's scary, it's uncertain. But if you look at especially
Speaker 1: I look at the consumer expectations numbers, I mean, people
Speaker 1: they don't like inflation, this is true, but they will
Speaker 1: tolerated to a moderate level like three. This is not
Speaker 1: as long as wages are rising. But what is really
Speaker 1: really hard is not to have a job very great,
Speaker 1: So we have to keep it in balance. I'm running
Speaker 1: out of time, Claudia, but very quickly. Here is the
Speaker 1: argument of corporations that they've got to pay sixteen seventeen
Speaker 1: dollars an hour going to overwhelm the Deep South that
Speaker 1: wants to pay seven dollars an hour. So there's gonna
Speaker 1: be a lot of adjustments in the labor market coming
Speaker 1: out of this. Again, we're a dynamic economy and it's
Speaker 1: so different across the country. But right now there's a
Speaker 1: lot of talk and we just have to. I mean,
Speaker 1: these are business decisions. This is not something we can
Speaker 1: fine tune from Washington, d C. We've got to leave
Speaker 1: it there. Clodius, I'm thank you so much with the
Speaker 1: Jane Family Institute and their senior fellow today let's go
Speaker 1: to this right now. We are thrilled to bring you
Speaker 1: a Craig Moffatt, Michael Nathanson. Moffatt Nathanson. Of course for
Speaker 1: decades at Sanford at Bernstein, they are definitive on what
Speaker 1: we do in our houses and what we watch and
Speaker 1: when we watch it. Michael Nathan said, let me go
Speaker 1: to you first. On Disney. I know, John's got a
Speaker 1: bunch of questions to to me, it was just simply
Speaker 1: they didn't have Mandalorian too. How much did Disney and
Speaker 1: Mr Chpeck miss Baby Grow Goo? They missed by about
Speaker 1: five to six million subs, and in the New Disney
Speaker 1: that really matters. So it's you know, it's perverse, but
Speaker 1: they crushed every other number but Disney plus subs, And
Speaker 1: unfortunately that's what happens on the stock trades. The way
Speaker 1: it does. I mean, it's the way it is, and
Speaker 1: it's a battle out there. Craig Moffatt you've been doing
Speaker 1: this year is particularly the cabling of it, the routing
Speaker 1: of it, and what we do with our checks. What's
Speaker 1: the theme for you, Craig Moffitt right now into the
Speaker 1: summer in the streaming wars. Well, you know, as much
Speaker 1: as the streaming wars dominate the video side of it.
Speaker 1: The companies that I cover, especially A T and T
Speaker 1: and Verizon, you can talk about media for them if
Speaker 1: you want, but fundamentally it's about It's about the wireless
Speaker 1: business and UM while streaming is sort of a benefit
Speaker 1: that they give away for free, the real battle is
Speaker 1: going to be on networks, capital investment. In five G
Speaker 1: you mentioned capital investment. I don't need to know. We
Speaker 1: don't have time now for a treatment on Verizon. But
Speaker 1: are the traditional companies Craig Moffat, that you follow done
Speaker 1: pretending that they can be the companies that Michael Nathanson follows.
Speaker 1: Not entirely. A T and T is making a good
Speaker 1: go of it for for HBO Max for example. You know,
Speaker 1: the problem is all of HBO combined is less than
Speaker 1: four percent of A T and T. So well, it's
Speaker 1: a good story. Fundamentally, it's it's it's got to be
Speaker 1: about other businesses for them, because I'm just trying to
Speaker 1: work out Disney Company has done nothing. Oh yeah, the
Speaker 1: stock has done absolutely nothing after a huge move into
Speaker 1: year end. Well, John, we had those two huge moves
Speaker 1: and it went to a level that you had to
Speaker 1: do all this fancy math. Some of the parts priced
Speaker 1: to sells multiples to justify where it was, and everyone
Speaker 1: who had a chance to buy it after the investor
Speaker 1: day they did and there was not you know, they
Speaker 1: were not buyers at that level. And you're right, you know,
Speaker 1: we were neutral on the stock. We thought it had
Speaker 1: overshot valuation, and now we think it's gonna grownd lower
Speaker 1: and there'll be at some point we've become constructive on it.
Speaker 1: But we had a hard time looking at thinks some
Speaker 1: of the parts. Right, we're earnings and cashul analysts, and
Speaker 1: we thought, look, let's just wait for a better entry point,
Speaker 1: which I think is gonna happen. Well, let's talk about
Speaker 1: what drives that better entry point. Michael, what do you
Speaker 1: think it is? What's the cantalyst for a move live
Speaker 1: from here? Well, I think it's some of the air
Speaker 1: coming out of the evaluation on on Disney Plus. Right.
Speaker 1: The people were using ten times revenues on to get
Speaker 1: to a Disney Plus number. Right. So I think Disney
Speaker 1: Plus has been a great story, but one third the
Speaker 1: subscriber base has come from India with an are proved
Speaker 1: less than a dollar, right, So you need to you
Speaker 1: need to be cautious on how quickly you want to
Speaker 1: give it a Netflix status on evaluation, and that's been
Speaker 1: our point. So I think it's just more focus on,
Speaker 1: you know, what's the dination Disney Plus. It's been a
Speaker 1: great story, but it's probably not worth two llion dollars today.
Speaker 1: The problem with you guys, as we spend all our
Speaker 1: time our love with Michael natesans is because it's romantic
Speaker 1: to talk about Disney and all that. Craig, you get
Speaker 1: no love. I'm going to Craig Moffitt right now, folks
Speaker 1: on the boredom of my cell phone bill, T Mobile
Speaker 1: and all that. The biggest unseid success Craig Moffitt in
Speaker 1: decades has been Legare and T Mobile. Does T Mobile
Speaker 1: continue to crush American cell phone competitors? Yeah, flat answer, guests, Um,
Speaker 1: you know, we think about it. This is a company
Speaker 1: that has been priced six percent below A T and
Speaker 1: T and Verizon in their consumer prices for for cell
Speaker 1: phone service for years, in large part because their network
Speaker 1: wasn't as good. Now we're going into the five G
Speaker 1: cycle where not only are they cheaper, but they're gonna
Speaker 1: have the best network of any of the three of them,
Speaker 1: and it's kind of worse to first. Stories are very
Speaker 1: rare in American business, and when you find them, they're
Speaker 1: really exciting. Did they sustain that? Can they stay first?
Speaker 1: I mean you look at T Mobile as a premium
Speaker 1: and sustainable cash flow, Yeah, because I mean, telecom cycles
Speaker 1: are not one and two years long. You don't build
Speaker 1: a network in a couple of years and then somebody
Speaker 1: passes you a year or so later. These are ten
Speaker 1: and twenty year cycles. And so we're going into the
Speaker 1: five G cycle. It's coming to last well more than
Speaker 1: a decade um where T Mobile takes a a sustainable
Speaker 1: early advantage and likely holds it for a decade. So
Speaker 1: they're in years into this cycle already, and they've got
Speaker 1: another ten years in front of them, you know, Michael Nasans,
Speaker 1: and I gotta bring it back to you. I guess
Speaker 1: everybody's still changing. Netflix. They had the huge success MAK
Speaker 1: the Oscars, and they had Queen's Gambit and the rest
Speaker 1: of it. What's their pipeline look like, and they still
Speaker 1: wedded to the pipeline to keep Paramount Plus and Disney
Speaker 1: and the rest of them away. Yeah, you know, it's interesting.
Speaker 1: They've hitted dry patches everyone has just because of the pandemic.
Speaker 1: But they're gonna come back with a ton of content
Speaker 1: in the second half of this year, and they put
Speaker 1: a lot of emphasis on big movies, so you're gonna
Speaker 1: see some major block buses coming from them that you
Speaker 1: have thought were you know, theatrial releases will be on Netflix.
Speaker 1: So there's a bit of a temporary pause. Um, we
Speaker 1: think towards you get to the fall, you start saying that,
Speaker 1: you know, what you described as those previous hips coming back,
Speaker 1: But you have a period now where HBO Max is
Speaker 1: probably gonna take a lot more share just because they
Speaker 1: have theatrial release movies that are going on from Max
Speaker 1: day and day. So we have a bit of a
Speaker 1: slow period before I think it keeps up again. You
Speaker 1: know in the fourth quarter, Michael, I wonder whether we're
Speaker 1: reaching that point where people look around at the cost
Speaker 1: of all these streaming business and just say I'm not
Speaker 1: doing this anymore. Pants here there, ten pants here, ten dollars,
Speaker 1: fifteen dollars wherever you might live, Michael, and they just
Speaker 1: say no more. I'm done. Because we've been talking about competition,
Speaker 1: and I noticed the Netflix miss big miss, the Walt
Speaker 1: Disney subscribers, miss big miss. Is something brewing here, yes, John,
Speaker 1: And we think this is what's brewing here is you
Speaker 1: had a year of a major pull forward right when
Speaker 1: we've been doing this. We're doing this from zoom past
Speaker 1: two months. If you're stuck at home, you're streaming, you're
Speaker 1: not doing anything else but streaming. Thank god, we're getting
Speaker 1: out of our house. When when the world opens up,
Speaker 1: I think people will look at their bills and reassess.
Speaker 1: So we have a thesis that you know, we think
Speaker 1: streaming wars will pick up, but also streaming consumer adoption
Speaker 1: will slow the next couple of quarters. So you know,
Speaker 1: we've not recommended Netflix and Disney. Those are great trades
Speaker 1: last year. So we're more we're most we're more secrecal,
Speaker 1: you know, averagising based names as economic strengthened. And that's
Speaker 1: that's been the call. We think it's the right call.
Speaker 1: But your your point is right. As consumers change their
Speaker 1: their spending behavior, some of those streaming services will see
Speaker 1: either hired churn or less adoption. Se it's taking me
Speaker 1: to Facebook essentially, those kind of niks Facebook Google, those
Speaker 1: are the names snap Um. Although you say, hey, you know,
Speaker 1: doesn't everyone to recommend them, they're still really attractive stocks
Speaker 1: given the growth that look both of you jump in here. Unfortunately,
Speaker 1: think this goes to Michael Craig. I'm sorry for that,
Speaker 1: but the Super League English Football uproar. What's it mean
Speaker 1: for the jillions of dollars that's negotiated for this strange
Speaker 1: game called socker? Well, you know that's a questions, that's
Speaker 1: a Greig question. Yeah, I was gonna you know, the
Speaker 1: the Premier League just renewed UM with a flat contract.
Speaker 1: In fact, they didn't even open it up to two
Speaker 1: bidding in the UK. So they've renewed with Sky so
Speaker 1: it stays on and I think probably that as it
Speaker 1: turns out, works out well because I don't know that
Speaker 1: they needed the extra publicity. There's a lot of animus
Speaker 1: over the whole the whole Super League debacle, and it's
Speaker 1: a lot of unhappy fans that still have a bad
Speaker 1: taste in their mouth, Craig, go on, Michael, Yeah. Ironically,
Speaker 1: although football prices in Europe were flattening, in America, the
Speaker 1: prices keep going up. Right. Our markets really tied the
Speaker 1: multi sport in a way that Europe isn't, so we
Speaker 1: keep seeing steady increases in sports cost here, Craig, we
Speaker 1: never get too told much. I'm sorry, let's talk. He's
Speaker 1: always taking your ad time, Craig. We've gotta leave it there.
Speaker 1: Craig Muffett and Michael Nisenson of Muffin Nights and Nipois
Speaker 1: at Senia Research as well analyst. This is barn On
Speaker 1: an important conversation, and ever more important from what we
Speaker 1: heard from CDC yesterday. GJ. Gronville is a real deal
Speaker 1: with a PhD from Johns Hopkins and T cell receptor work.
Speaker 1: Think Catherine Zada Jones. It's about zeta proteins and something
Speaker 1: called c D three zeta change and the rest of it.
Speaker 1: Look at the Wikipedia on T cell receptors and you'll
Speaker 1: go oh. She joins us now from the Center for
Speaker 1: Health Security at Johns Hopkins, Dr Gronville, I want to
Speaker 1: cut to the Chase, I'm gonna be in a restaurant.
Speaker 1: My mask is off. The places again packed as we're
Speaker 1: all getting back to, how do I know that somebody's
Speaker 1: not vaccinated and what does it mean within the immunalogy
Speaker 1: in that restaurant? Right? Yeah, you don't know that everybody
Speaker 1: is vaccinated, and by fully vaccinated mean two weeks after
Speaker 1: your final dose um and you will You could be
Speaker 1: exposed if community transmission is high. It's just that with
Speaker 1: your vaccine, you're able to fight that off. Okay, you're
Speaker 1: able to fight it off. But the whole family doesn't
Speaker 1: have vaccines. Somebody under twelve, maybe an infant? Are you
Speaker 1: kidding me on a game theory basis, with all of
Speaker 1: your expertise and T cell receptors, your work at Sloan Kettering, great,
Speaker 1: is this actually gonna work? I am not going to
Speaker 1: take my unvaccinated eleven year old too inside a restaurant
Speaker 1: at this time. That is absolutely the case. But I
Speaker 1: have less concerns about myself and my thirteen year old,
Speaker 1: who I took to get vaccinated yesterday, once he's fully vaccinated.
Speaker 1: So yeah, I mean, people have to make decisions based
Speaker 1: on their own circumstances. It's just that it'll be safer
Speaker 1: for the people who are in the restaurant or working
Speaker 1: the restaurant if you're vaccinated, for sure, and it'll be
Speaker 1: safer for everyone who gets who gets a vaccine. And
Speaker 1: this is a really difficult decision for parents right now.
Speaker 1: Doctor they're trying to work out to what degree that
Speaker 1: children are at risk from this virus. Do we have
Speaker 1: better answers now? Well, I mean, children do get sick
Speaker 1: and and people have I mean just not in comparison
Speaker 1: to adults. Adults have had much worse outcomes when it
Speaker 1: comes to COVID than kids. But um, if you look
Speaker 1: at the numbers, about twenty two million children have gotten
Speaker 1: sick from COVID, and um, if you look at the
Speaker 1: rates of hospitalization, it's worse than aged one and one
Speaker 1: flew in two thousand nine for kids. So it's by
Speaker 1: comparison it's not as bad as adults. But kids do
Speaker 1: get sick, so, um, they still need to take precautions
Speaker 1: and if they're twelve are over they really should be vaccinated.
Speaker 1: If they're twelve or under, How long does this go
Speaker 1: on for for the children of this country or the
Speaker 1: children around the world, believe me, I'm I'm waiting to
Speaker 1: I think the everyone thinks that maybe August September that
Speaker 1: we'll start opening up to being able to vaccinate younger,
Speaker 1: younger kids. I mean, I look, Axios just published moments
Speaker 1: ago Mike Allen doing a great job over there, and
Speaker 1: Dr Gronville, you know, they take the spin of what
Speaker 1: we're doing with c d C and call it liberation Day,
Speaker 1: is it. I I didn't find wearing a mask to
Speaker 1: be all that inconvenient, and um I I saw it
Speaker 1: as a way of being courteous to other people. But
Speaker 1: um it has become obviously a very polarizing issue. So okay,
Speaker 1: let's let's go to the realities here, what we see
Speaker 1: in the hospitals as well. How will this change for
Speaker 1: the essential workers you know, still courageous in the hospitals. Yeah,
Speaker 1: so so, I mean, I think it'll hopefully the community
Speaker 1: transmission will go down, so hopefully they will have more,
Speaker 1: you know, more resources to attend to the patients they have. UM.
Speaker 1: I think that that we need to still do more
Speaker 1: to bring vaccine two people. There are a lot of
Speaker 1: essential workers not in the hospital but in other places
Speaker 1: who can't afford to take the time off to be
Speaker 1: able to get vaccinated, so we still have access issues
Speaker 1: in this country that we need to address. Don't appreciate
Speaker 1: it's on this morning. Thank you. It's gonna say dot
Speaker 1: G Grounville. We really appreciate your perspective. Jones, help Kins,
Speaker 1: censer for the Health Security Sadia Scarla. This is the
Speaker 1: Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays
Speaker 1: from seven to ten am Eastern on Bloomberg Radio and
Speaker 1: on Bloomberg Television each day from six to nine am
Speaker 1: for insight from the best in economics, finance, investment, and
Speaker 1: international relations. And subscribe to the Surveillance podcast on Apple podcast, SoundCloud,
Speaker 1: Bloomberg dot com, and of course on the terminal. I'm
Speaker 1: Tom Keene and this is Bloomberg