WEBVTT - Surveillance: Tchir's Fed Forecast 0:00:05.160 --> 0:00:08.480 This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along 0:00:08.520 --> 0:00:12.360 with Jonathan Farrow and Lisa Abramowitz. Join us each day 0:00:12.400 --> 0:00:16.840 for insight from the best and economics, geopolitics, finance and investment. 0:00:17.280 --> 0:00:22.119 Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 0:00:22.320 --> 0:00:26.600 anywhere you get your podcasts, and always on Bloomberg dot Com, 0:00:26.640 --> 0:00:30.560 the Bloomberg Terminal, and the Bloomberg Business App. We talked 0:00:30.600 --> 0:00:33.720 to someone more conceptual and just as wonderful. Peter Sheer 0:00:33.800 --> 0:00:37.839 Joints said of a macro strategy at Academy Securities. As 0:00:37.920 --> 0:00:41.360 John mentioned, there's no visibility. Peter share, how do you 0:00:41.400 --> 0:00:43.120 get out beyond labor day? 0:00:43.680 --> 0:00:46.080 And I think it's difficult. We've got to get through 0:00:46.159 --> 0:00:48.400 the summer jobs numbers. I think we're going to see 0:00:48.400 --> 0:00:50.559 some headwinds on the job numbers. I actually think we're 0:00:50.560 --> 0:00:53.320 going to see some deflationary pressure, so that's going to 0:00:53.440 --> 0:00:56.400 kick in. I think, you know, into the fall. Right now, 0:00:56.440 --> 0:00:58.279 it's all about earning, so for I think they'll come 0:00:58.320 --> 0:00:59.920 and find I think we're going to see those rotation 0:01:00.080 --> 0:01:02.640 where the laggers get bought. Part of it driven by 0:01:02.680 --> 0:01:05.640 some of the index rebalancing that's going to go on 0:01:05.640 --> 0:01:08.280 on Friday. But partly I think people are finally seeing 0:01:08.280 --> 0:01:09.840 this trade work. So you want to own the rustle 0:01:09.880 --> 0:01:11.680 two thousand, you want to own the laggards, and I 0:01:11.680 --> 0:01:13.360 think you're going to see some underperformance. So I think 0:01:13.400 --> 0:01:17.120 that's the trade for August and September. It's going to 0:01:17.120 --> 0:01:17.640 be unclear. 0:01:18.400 --> 0:01:21.840 The unclear of it all redounce to nominal GDP is 0:01:21.880 --> 0:01:26.360 statistic for real GDP plus the inflation overlay on top 0:01:26.440 --> 0:01:29.760 of it. Are you constructive that the machine can continue 0:01:29.800 --> 0:01:32.959 to develop four percent nominal GDP per year? 0:01:34.640 --> 0:01:36.319 Yeah, I think we can get to the four percent 0:01:36.520 --> 0:01:38.640 nominal GDP. But if we're an interest rates are at 0:01:38.640 --> 0:01:39.959 five and a quorter, the Fed's going to have to 0:01:39.959 --> 0:01:42.039 do something right. I think we do not want real 0:01:42.120 --> 0:01:45.840 rates above one percent. So if we start seeing nominal 0:01:45.959 --> 0:01:47.920 GDP tick down, and I think it's going to be 0:01:47.960 --> 0:01:52.000 a function of slower overall GDP and less inflation, that's 0:01:52.040 --> 0:01:54.040 what's going to try and to drive the Fed's decision 0:01:54.640 --> 0:01:57.200 into latet into late this year early next year. Though 0:01:57.240 --> 0:01:59.000 for the next three to four months, I really think 0:01:59.040 --> 0:02:01.920 the Feds a non factor. They'll hike in July and 0:02:01.960 --> 0:02:02.720 then that's about it. 0:02:02.800 --> 0:02:05.040 Let's stand that sweet spot next three months. Let's work 0:02:05.040 --> 0:02:07.680 through that together. Pete, you've shifted away then to the 0:02:07.720 --> 0:02:09.600 equal way I believe in the market. Can't wait at 0:02:09.680 --> 0:02:11.799 call on the s and P five hundred, pet What 0:02:12.000 --> 0:02:14.720 changed for you that ultimately got your ranted a view 0:02:14.720 --> 0:02:15.639 that this can broaden out? 0:02:16.480 --> 0:02:17.919 You know, I think for the last little while, you're 0:02:17.919 --> 0:02:20.239 starting to see some of the leaders not do quite 0:02:20.240 --> 0:02:22.680 as well, and you're starting to see the story broaden. Right, 0:02:22.680 --> 0:02:24.120 if we are going to get some sort of a 0:02:24.200 --> 0:02:27.440 soft landing or some sort of period that's not imminent recession, 0:02:27.919 --> 0:02:30.320 I think those laggards have to be bought. That's where 0:02:30.320 --> 0:02:32.160 people are going to look. That's where the value is. 0:02:32.560 --> 0:02:35.640 And even on conceptually AI, right, if AI is really 0:02:35.680 --> 0:02:38.440 going to work, it's going to work for individual companies 0:02:38.440 --> 0:02:40.640 as they figure out how to be more strategic or 0:02:40.680 --> 0:02:43.800 get efficiencies on their strategy on their tactical level. So 0:02:43.960 --> 0:02:46.000 I think you're going to see this chasing of that. 0:02:46.240 --> 0:02:47.880 It's been a problem trade. I'm a little bit worried 0:02:47.919 --> 0:02:49.840 it's consensus. I think people have been piling into this 0:02:49.880 --> 0:02:51.640 trade for the last month. It has not been working. 0:02:51.840 --> 0:02:53.800 But I think we're kind of poised with this earnings, 0:02:53.840 --> 0:02:57.040 this rebalancing that's going to occur on Friday, that we 0:02:57.120 --> 0:02:58.800 can finally see this catch up. 0:02:59.000 --> 0:03:00.760 Do you think that's spread please? 0:03:01.240 --> 0:03:03.280 Just to build on that, do you think that optimism 0:03:03.400 --> 0:03:06.000 constructive tone around the equal Wait and sorry for speaking IV, 0:03:06.600 --> 0:03:07.480 I was eaging to jump in. 0:03:07.520 --> 0:03:10.840 Pee spreads from you're rude, I'm not OK. 0:03:11.200 --> 0:03:13.520 You didn't pay that spreads from equity to credit because 0:03:13.560 --> 0:03:16.280 high yield spreads it's still pretty down tight gun into 0:03:16.280 --> 0:03:16.560 all this. 0:03:17.400 --> 0:03:19.160 Yeah, I think credits gonna help lead the way, right. 0:03:19.160 --> 0:03:20.840 I think you're going to see credit spreads continue to 0:03:20.880 --> 0:03:23.160 grind tighter. You know, there's a lot of fear every 0:03:23.200 --> 0:03:24.880 once in a while people are talking about this wall 0:03:24.919 --> 0:03:27.120 of debt maturities in the high yield market. I think 0:03:27.200 --> 0:03:31.000 right now it's still providing attronactive yield. The overall quality 0:03:31.000 --> 0:03:33.000 of issuer is better. The banks have been getting rid 0:03:33.040 --> 0:03:34.720 of some of their kind of hung inventory, some of 0:03:34.760 --> 0:03:37.800 their bad commitments made you know, during the peak, and 0:03:37.880 --> 0:03:39.960 with lack of supply, especially in the IG side, I 0:03:39.960 --> 0:03:42.760 think spreads grind tighter. That's very supportive and if high 0:03:42.800 --> 0:03:45.360 yield spreads can go further tighter. That does tend to 0:03:45.400 --> 0:03:48.800 tie really well into a rally in the Russell two thousand, so. 0:03:48.760 --> 0:03:51.600 I paid constructive on stocks, equal way and small capity, 0:03:51.640 --> 0:03:54.160 and there on the Russell constructive on high yield credit 0:03:54.200 --> 0:03:58.600 as well. Here's a risk factor real estate. Can you 0:03:58.680 --> 0:04:01.560 just weigh in on Commo shall real estate pee and why? 0:04:01.600 --> 0:04:03.560 You don't think that's going to be a broad problem. 0:04:03.680 --> 0:04:06.280 You think it's going to be a local regional problem. 0:04:07.080 --> 0:04:08.800 Yeah, I think it's going to be very local. You're 0:04:08.800 --> 0:04:11.000 gonna have areas I think like San Francisco where there 0:04:11.080 --> 0:04:13.160 was a lot of money invested at the peak, where 0:04:13.160 --> 0:04:15.520 work from home is going to continue. As people start 0:04:15.520 --> 0:04:17.480 seeing a little bit more pressure moving away from work 0:04:17.480 --> 0:04:20.720 from home, I think that'll help some the cre space. Plus, 0:04:20.760 --> 0:04:24.400 these things do take time to lead out. And even 0:04:24.440 --> 0:04:26.000 want to tie back to some of your comments earlier 0:04:26.000 --> 0:04:28.160 about homebuilders. I think the one thing that doesn't get 0:04:28.160 --> 0:04:30.480 talked about enough about the home builders is this trend 0:04:30.520 --> 0:04:33.280 of where people are moving. So homebuilders can do very 0:04:33.320 --> 0:04:35.479 well when people are moving to new areas, and so 0:04:35.600 --> 0:04:37.800 that trend away from some of the cities into other 0:04:37.880 --> 0:04:41.080 regions really helps homebuilders. So I'm looking at more and more. 0:04:41.279 --> 0:04:43.839 I'm trying to get down in the economy, looking at 0:04:43.880 --> 0:04:45.880 a region by region, because I think we are starting 0:04:45.880 --> 0:04:48.159 to see the separation. And that's one thing. If you 0:04:48.240 --> 0:04:50.680 kind of caught that on homebuilders, you would have seen, Oh, 0:04:50.760 --> 0:04:53.920 with everyone moving to Tennessee, Florida, Texas, there is a 0:04:53.960 --> 0:04:56.919 great opportunity for homebuilders, even with higher mortgage rates. So 0:04:56.960 --> 0:05:00.960 I think that translates very similarly into CRE. Some problem areas. 0:05:01.080 --> 0:05:03.000 There's going to be some good areas, but even the 0:05:03.000 --> 0:05:04.800 problem areas are going to take longer to play out, 0:05:04.839 --> 0:05:05.800 I think than people expect. 0:05:05.920 --> 0:05:07.960 So time to try it is that long Texas, short, 0:05:08.000 --> 0:05:08.560 New Jersey? 0:05:08.560 --> 0:05:09.040 What is it? 0:05:10.120 --> 0:05:10.320 You know? 0:05:10.640 --> 0:05:12.440 As a contrarian, I wanted to start getting along the 0:05:12.480 --> 0:05:14.239 other stuff. So I've been long some of these CRE 0:05:14.480 --> 0:05:16.520 stocks for a little while. I've been pairing gains in 0:05:16.560 --> 0:05:20.279 that just because you know, everyone was so doom and gloom, 0:05:20.680 --> 0:05:22.520 and I think that's one of the things we look 0:05:22.520 --> 0:05:24.320 at when you know, everyone loves to talk about the 0:05:24.360 --> 0:05:27.080 great financial crisis that took years to play out, right, 0:05:27.120 --> 0:05:29.000 it took a long period of time. I think it 0:05:29.040 --> 0:05:31.039 was the summer of two thousand and seven when Merrill 0:05:31.120 --> 0:05:33.200 Lynch had to cut the dividend, and it wasn't until 0:05:33.240 --> 0:05:35.880 October two thousand and eight that you had Lehman moments 0:05:36.000 --> 0:05:38.880 quote unquote moment. So I think people got a bit 0:05:38.920 --> 0:05:41.480 ahead of themselves. Banks have a lot of leeway to 0:05:41.560 --> 0:05:44.360 figure these things out. The companies themselves will work it out. 0:05:44.400 --> 0:05:46.240 There's a lot of pressure, I think, to move a 0:05:46.240 --> 0:05:48.000 little bit away from work from home to back to 0:05:48.040 --> 0:05:50.400 work from office. So that's kind of why I'm constructive 0:05:50.400 --> 0:05:50.880 there for now. 0:05:51.000 --> 0:05:54.760 Everyone's so harsh on New Jersey. P you know, Oh, 0:05:55.000 --> 0:05:57.640 it gives New Jersey such a hard time. I never 0:05:57.720 --> 0:05:58.279 understood that. 0:05:58.320 --> 0:06:00.560 It's always well, one loves. 0:06:00.040 --> 0:06:03.200 One loves the Hampton's, but Jersey Show is what's. 0:06:02.880 --> 0:06:05.640 That about it? You still don't get it. 0:06:05.640 --> 0:06:06.640 It's like snubble. 0:06:07.000 --> 0:06:10.280 It's it's like massively like the beaches and the beaches 0:06:10.320 --> 0:06:11.680 that the Hampton's aren't that nice? 0:06:11.800 --> 0:06:15.479 Yeah, when you start in on there's Stephanie Rull's hair curls. 0:06:15.800 --> 0:06:17.240 She gets likes the Jersey Show. 0:06:17.520 --> 0:06:18.480 Oh yeah, she's all Jersey. 0:06:19.120 --> 0:06:22.159 She's got one of our clients. 0:06:22.400 --> 0:06:24.520 She's got like six thousand square feet down there. 0:06:24.680 --> 0:06:26.640 Okay, I think Pete wanted to jump in, then, Pete, 0:06:26.640 --> 0:06:28.039 you can't jump in by all means. 0:06:28.600 --> 0:06:30.240 I was gonna say. One of our clients is always 0:06:30.279 --> 0:06:32.599 wanted to use the term jersey math on like TV. 0:06:32.720 --> 0:06:34.320 I still don't know what jersey math is, but it 0:06:34.320 --> 0:06:35.880 seems like an appropriate time to mention it. 0:06:35.960 --> 0:06:36.840 Do you get money for that? 0:06:36.880 --> 0:06:39.400 Do we get do we get a share of that. 0:06:40.480 --> 0:06:40.720 Shot? 0:06:40.920 --> 0:06:42.159 The guess that come on and they have a bet 0:06:42.200 --> 0:06:44.360 and they have to say a word. You know those guests. 0:06:44.680 --> 0:06:46.560 I didn't realize Pete was one of those guests. Peter, 0:06:46.720 --> 0:06:49.320 Chair of Academy Securities. Pete, thank you, sir. 0:06:54.760 --> 0:06:56.120 What I'm going to do and I think I can 0:06:56.120 --> 0:06:58.000 speak for the pros. What the pros do is not 0:06:58.080 --> 0:07:00.400 only look at the last six months last year, but 0:07:00.480 --> 0:07:03.600 where are we pre pandemic. Keetha Raghanathen is expert at 0:07:03.600 --> 0:07:07.919 this US media analyst for Bloomberg Intelligence. Ketha, let me 0:07:07.960 --> 0:07:10.160 go to what's important. Have you seen Barbie yet? 0:07:12.080 --> 0:07:14.480 No, not yet, but I'm looking forward to it. Then 0:07:14.480 --> 0:07:17.000 there is actually going to be the double feature. It's Barbenheimer. 0:07:17.160 --> 0:07:19.680 Yeah, well there's Barbarenheimer and all that. I guess we'll 0:07:19.680 --> 0:07:21.640 talk about that once we see the box office. I 0:07:21.640 --> 0:07:24.640 do want somebody emailed in, folks, And yes, there is 0:07:24.680 --> 0:07:28.280 a Ken surveillance. It's the more solid kind of Ken. 0:07:28.360 --> 0:07:29.840 You know, it's a different Ken than what you had 0:07:29.880 --> 0:07:32.920 in the sixties. Keith, I want to talk about Netflix here. 0:07:33.240 --> 0:07:38.400 I don't have faith in the profitability stream. They make hits, 0:07:38.480 --> 0:07:41.520 they succeed at Wednesday, they fail at this, et cetera. 0:07:42.120 --> 0:07:45.360 Can you develop a persistent free cash flow? Can you 0:07:45.480 --> 0:07:51.040 develop a persistent ebitdah off of the creative process of 0:07:51.120 --> 0:07:52.280 success and failure. 0:07:54.160 --> 0:07:55.960 That's a really good question, Tom, and I think they've 0:07:56.000 --> 0:07:59.160 actually shown us that they can. So you know, obviously, 0:07:59.200 --> 0:08:02.240 the content business, it is a hit or miss business. 0:08:01.840 --> 0:08:04.680 It's very unpredictable, as you just kind of pointed out. 0:08:04.680 --> 0:08:06.680 But if you kind of looked at that report yesterday 0:08:07.000 --> 0:08:09.320 and you looked at the free cash flow story, I mean, 0:08:09.400 --> 0:08:12.840 this is a dramatic turnaround in what Netflix has been 0:08:12.880 --> 0:08:15.880 able to achieve. Look at the operating margin leverage. So 0:08:15.920 --> 0:08:18.280 we're seeing a lot of operating margin leverage, We're seeing 0:08:18.280 --> 0:08:20.880 a lot of you know, free cash flow leverage. And 0:08:20.880 --> 0:08:24.200 this is exactly what you want a streaming model to 0:08:24.280 --> 0:08:26.480 kind of look like. So they obviously raise their free 0:08:26.480 --> 0:08:29.240 cash flow guidance by forty percent, and there is going 0:08:29.280 --> 0:08:31.240 to be a little bit of lumpiness. I mean, we're 0:08:31.280 --> 0:08:34.240 looking at five over five billion dollars in free cash 0:08:34.240 --> 0:08:36.840 flow and going into twenty twenty four again we think 0:08:36.880 --> 0:08:38.480 it would probably be six to six and a half 0:08:38.520 --> 0:08:40.160 billion free cash flow. So this is going to be 0:08:40.240 --> 0:08:45.199 a persistent, growing, sustainable, free cash positive free cash flow 0:08:45.240 --> 0:08:46.880 story for many years to come. 0:08:46.960 --> 0:08:49.760 Do they have the ability do they have the elasticity 0:08:49.880 --> 0:08:53.480 to raise prices? We saw peacock Maybe some would say desperate, 0:08:53.800 --> 0:08:56.840 come up a buck can Netflix ruin my afternoon and 0:08:56.920 --> 0:08:59.240 come up one dollars or two dollars per month? 0:09:00.640 --> 0:09:03.200 They absolutely can. So this at the end of the day, 0:09:03.240 --> 0:09:04.640 if you just kind of look at the breadth and 0:09:04.679 --> 0:09:08.199 the depth of content, I think Netflix still is fairly underpriced. 0:09:09.400 --> 0:09:12.920 They do offer a very compelling value proposition kind of 0:09:12.960 --> 0:09:15.120 just looking at the amount of content that they have 0:09:15.200 --> 0:09:17.040 and they're going to keep adding to it. And then 0:09:17.080 --> 0:09:20.120 remember that these the labor strikes, while they're not good 0:09:20.120 --> 0:09:23.040 for the industry as a whole, they actually put Netflix 0:09:23.080 --> 0:09:24.719 in a little bit of a competitive advantage and a 0:09:24.720 --> 0:09:27.079 little bit of a sweet spot relative to its peers. 0:09:27.120 --> 0:09:29.640 Of course, it will be damaged if you know, or 0:09:30.000 --> 0:09:34.000 it will be heard if the strikes prolong for you know, 0:09:34.360 --> 0:09:36.800 into twenty twenty four. But I think relative to peers, 0:09:36.800 --> 0:09:38.560 we're going to see that they're going to do well 0:09:38.600 --> 0:09:42.200 and that's probably going to give them some more pricing power. 0:09:42.240 --> 0:09:44.079 Okay, So what did they say about I guess today, 0:09:45.800 --> 0:09:46.280 So what. 0:09:46.280 --> 0:09:48.440 They said so this is, you know, one thing that 0:09:48.920 --> 0:09:51.520 I think the key takeaway for me from the earnings 0:09:51.520 --> 0:09:56.040 report was that this whole password crackdown initiative has definitely 0:09:56.080 --> 0:09:58.880 got off to a very good start. So execution is good. 0:09:59.320 --> 0:10:01.439 There is a little bit of a balancing act that 0:10:01.480 --> 0:10:03.880 they've got to do when it comes to subscriber growth 0:10:03.880 --> 0:10:06.640 as well as our pool growth, right, revenue growth, and 0:10:06.679 --> 0:10:08.880 so what we're seeing this year twenty twenty three, I 0:10:08.920 --> 0:10:11.160 think is going to be more of the new member 0:10:11.280 --> 0:10:14.520 or new subscriber growth, and then as they kind of 0:10:14.559 --> 0:10:18.760 get that benefit of subscribers, we're going to be able 0:10:18.800 --> 0:10:22.040 to see them to increase pricing to increase revenue. So 0:10:22.040 --> 0:10:24.200 I think the revenue growth becomes more of a four 0:10:24.280 --> 0:10:26.360 Q and a twenty twenty four story to. 0:10:26.320 --> 0:10:27.120 Put prices up. 0:10:27.160 --> 0:10:30.480 You need a decent content slight, a deep catalog, and 0:10:30.559 --> 0:10:32.480 a lot in the pipeline. At Gaithie, you brought up 0:10:32.520 --> 0:10:34.360 the right to strike. What did they say and the 0:10:34.400 --> 0:10:36.920 call yesterday about when that might buy? How long does 0:10:36.920 --> 0:10:38.600 this need to go on for before it becomes a 0:10:38.600 --> 0:10:39.760 big problem. 0:10:40.440 --> 0:10:42.920 It's not going to become a big problem for Netflix 0:10:43.440 --> 0:10:45.319 for a considerable period of time. I mean, we've kind 0:10:45.320 --> 0:10:48.040 of seen them go through a very similar situation, not 0:10:48.480 --> 0:10:51.320 exactly the same, but we've seen them, you know, having 0:10:51.400 --> 0:10:53.720 to deal with a whole shutdown in production during COVID 0:10:53.760 --> 0:10:56.559 and they still held up relatively well. So remember, they 0:10:56.559 --> 0:10:59.560 have some advantages relative to peers because they do have 0:10:59.600 --> 0:11:02.559 a huge backlog. They have a huge content pipeline. That's 0:11:02.600 --> 0:11:06.480 because of very long lead in production times. The other 0:11:06.520 --> 0:11:09.480 thing that they benefit from relative to their peers is 0:11:09.640 --> 0:11:12.000 they have a lot of foreign content, so you know 0:11:12.040 --> 0:11:14.240 a lot of content coming from you know, Spanish language 0:11:14.320 --> 0:11:17.439 markets from South Korea. So they've been able to diversify 0:11:17.440 --> 0:11:20.840 that really well. So they're not necessarily hugely dependent on Hollywood. 0:11:21.000 --> 0:11:22.520 But of course it will affect them, and I don't 0:11:22.520 --> 0:11:25.560 think they're going to see any material adverse impacts up 0:11:25.640 --> 0:11:27.920 until at least the latter half of twenty twenty four. 0:11:28.080 --> 0:11:31.839 What does the rest of LA media do given the 0:11:31.880 --> 0:11:35.680 Netflix performance? Are they having meetings today going who do 0:11:35.720 --> 0:11:36.360 we merge with? 0:11:37.920 --> 0:11:39.959 I mean, this is you know, media of course, is 0:11:40.040 --> 0:11:42.960 under tremendous pressure. Tom, So we're seeing the linear TV 0:11:43.080 --> 0:11:45.800 business almost on the verge of collapse. And I think, 0:11:46.840 --> 0:11:49.560 you know, the alarm bells kind of really went off 0:11:49.600 --> 0:11:51.959 when when Bob Eiger just spoke a few days ago 0:11:52.040 --> 0:11:54.480 about how the linear TV assets are really no longer 0:11:54.600 --> 0:11:56.840 core to Disney's business. I mean, this is this is 0:11:56.840 --> 0:12:01.800 something unimaginable, right, So obviously linear under considerable pressure. The 0:12:01.800 --> 0:12:05.160 good thing with Netflix is they're the cleanest story in 0:12:05.200 --> 0:12:07.880 media right now because they are pure streamer right, whereas 0:12:07.920 --> 0:12:09.840 most of these other companies are having to manage this 0:12:09.920 --> 0:12:12.839 transition from linear to streaming. So yeah, it's a very 0:12:12.880 --> 0:12:15.760 very different problem for all of them. Again, they have 0:12:15.840 --> 0:12:18.800 to manage a declining linear TV business. They have to 0:12:19.120 --> 0:12:21.760 show profitability on the streaming side, something that Netflix has 0:12:21.760 --> 0:12:25.080 managed to do really really well. So it's going to 0:12:25.080 --> 0:12:27.080 be very very hard for the media companies. And as 0:12:27.120 --> 0:12:29.800 you point out, yes, consolidation is definitely on the cards case. 0:12:29.920 --> 0:12:31.160 Let's talk about that a little bit more. 0:12:31.240 --> 0:12:35.400 Is that consolidation Disney basically consuming all of Hulu, have 0:12:35.440 --> 0:12:38.760 an ESPN and keeping Disney Plus. Is that how it 0:12:38.760 --> 0:12:40.920 all works over at Disney and the rest is. 0:12:40.960 --> 0:12:43.120 Up for sale? Yeah? 0:12:43.160 --> 0:12:46.800 So I mean yes, in a nutshell, yes, So Disney 0:12:46.880 --> 0:12:49.000 is definitely going to buy Hulu. You know, there are 0:12:49.040 --> 0:12:51.240 all indications for that. The price point, of course, we 0:12:51.280 --> 0:12:52.760 don't know yet, but I think it will be upwards 0:12:52.800 --> 0:12:56.040 of ten billion, and then merge that into Disney Plus. 0:12:56.080 --> 0:12:59.120 And yes, everything other than ESPN is for sale. That's 0:12:59.160 --> 0:13:02.480 exactly what Bob has said. But the question is going 0:13:02.480 --> 0:13:04.240 to be who's really going to be willing to buy it? 0:13:04.240 --> 0:13:05.400 Because it's a declining business. 0:13:05.559 --> 0:13:08.360 Keith, the one final question, it's urgent. Who's going to 0:13:08.400 --> 0:13:11.679 get Otani? I mean, there's Otani such a media value 0:13:11.720 --> 0:13:14.280 that the LA Dodgers just pick them up. It's like 0:13:14.320 --> 0:13:16.720 a no brainer the day one they pay for it. 0:13:18.040 --> 0:13:19.960 I really don't. I wish I had had the answer 0:13:20.000 --> 0:13:20.480 to that question. 0:13:20.520 --> 0:13:24.280 Man, Okay, Keith, you know, prop up next time? 0:13:24.320 --> 0:13:27.160 Come ONKEITHA thank you Keithan rockin Ath and that Flumpeg 0:13:27.200 --> 0:13:28.120 it's setogen. 0:13:38.160 --> 0:13:40.599 For Global Wall Street. Our Interview of the Day with 0:13:40.720 --> 0:13:44.240 Ianlncoln on rates. I was making jokes about it, but 0:13:44.559 --> 0:13:48.360 you and I remember a normal rate environment. The pervading 0:13:48.480 --> 0:13:50.800 feel is we're all going to die. How do we 0:13:50.960 --> 0:13:53.280 survive in a normal rate environment. 0:13:53.960 --> 0:13:57.160 I think that survival in this type of rate environment 0:13:57.360 --> 0:14:00.560 is going to be a function of picking your places 0:14:00.800 --> 0:14:04.199 on the curve. It's an attractive environment to be involved 0:14:04.240 --> 0:14:06.760 in bills, it's an attractive environment to be in the 0:14:06.840 --> 0:14:09.760 front end of the curve. But as we know, when 0:14:09.880 --> 0:14:14.199 that shifts, it shifts very dramatically. And I expect that 0:14:14.360 --> 0:14:17.880 things will look wonderful from an economic perspective, certainly in 0:14:17.920 --> 0:14:20.960 the context of what we would normally anticipate between now 0:14:21.040 --> 0:14:23.360 and the end of the year. But come the fourth quarter, 0:14:23.720 --> 0:14:26.840 we're start to see more evidence of the cumulative impact 0:14:26.880 --> 0:14:27.360 of policy. 0:14:27.440 --> 0:14:29.040 Time to go to the belly of the curve. If 0:14:29.080 --> 0:14:31.800 you're at the five year point and you're rationalizing the 0:14:31.920 --> 0:14:34.880 risk of reinvestment, is your scale to go out to 0:14:35.040 --> 0:14:37.040 seven years or is your scale to go out to 0:14:37.120 --> 0:14:38.120 ten years from five? 0:14:38.880 --> 0:14:41.400 I think you go from five to ten years, And 0:14:41.520 --> 0:14:44.280 I think that the logic behind that is that there 0:14:44.480 --> 0:14:50.160 is enough cyclical risk between year five and year ten 0:14:50.520 --> 0:14:53.320 to justify lower yields over the course of time. And 0:14:53.440 --> 0:14:56.240 let us not forget the ten year treasury is the 0:14:56.320 --> 0:15:00.120 benchmark of all benchmarks, and so for overseas investors it 0:15:00.160 --> 0:15:02.440 will always be an attractive touch point. 0:15:02.600 --> 0:15:05.800 Andrew Holnholst The City just published He said we see 0:15:05.880 --> 0:15:08.080 upside risk to inflation and downside risk to growth three 0:15:08.120 --> 0:15:10.800 emerging in late twenty three. Max Catton has been bullished 0:15:10.800 --> 0:15:12.760 this equity market, and I know equlity' sign your things, 0:15:12.760 --> 0:15:13.840 So I'm not going to go in that direction. 0:15:13.920 --> 0:15:14.400 Don't worry. 0:15:14.760 --> 0:15:17.160 He's bullish and still bullish, but only through the rest 0:15:17.200 --> 0:15:19.920 of the summer. He thinks after the summer, inflation risk 0:15:19.960 --> 0:15:22.200 starts to kick back in What are you telling clients 0:15:22.240 --> 0:15:22.520 about that? 0:15:23.400 --> 0:15:26.520 So I'm completely on board with the notion that once 0:15:26.600 --> 0:15:31.240 we get to the September October CPI numbers that will 0:15:31.320 --> 0:15:34.280 start to get a better sense of how much housing 0:15:35.200 --> 0:15:39.440 costs and oer and rints have actually moderated sustainably. If 0:15:39.520 --> 0:15:43.520 we see a return of those core inflation components, I 0:15:43.600 --> 0:15:45.840 think that's going to be problematic for the FED. It 0:15:45.880 --> 0:15:49.560 will push rate cuts even further into twenty twenty four, 0:15:50.120 --> 0:15:53.080 and more importantly, I think the FED will focus on 0:15:53.280 --> 0:15:58.240 shifting the conversation to core services X shelter, and that's 0:15:58.360 --> 0:16:02.120 the big uncertainty. If that, given its high correlation with 0:16:02.240 --> 0:16:05.880 nominal wages, continues to moderate, the FED can claim victory 0:16:06.040 --> 0:16:09.080 even if core inflation resurges towards the end of the year. 0:16:09.200 --> 0:16:10.560 Give them what you've just said, How do you think 0:16:10.600 --> 0:16:13.760 that's going to shape communication next week and beyond inch 0:16:13.880 --> 0:16:14.440 Jackson Holle. 0:16:15.160 --> 0:16:19.760 So we're expecting a comparatively dubvish hike next week we 0:16:19.840 --> 0:16:23.160 get twenty five basis points. That's all that's completely priced 0:16:23.200 --> 0:16:26.440 in at this stage. But the Fed yes wants to 0:16:26.560 --> 0:16:30.520 retain a degree of flexibility, but also needs to communicate 0:16:30.560 --> 0:16:33.000 to the market that five point fifty may very well 0:16:33.120 --> 0:16:36.000 be the terminal rate for this cycle. So we're looking 0:16:36.120 --> 0:16:40.440 for a Powell press conference that echoes what we saw 0:16:40.760 --> 0:16:43.920 in June, not what we saw at Humphrey Hawkins. 0:16:44.360 --> 0:16:47.520 Not because of you. It was Beamo Capital Markets. But 0:16:47.640 --> 0:16:50.560 I loaded up on the Austrian twenty one hundred and 0:16:50.640 --> 0:16:53.160 seventeen piece. I thought for the great grandchildren, who'd be 0:16:53.200 --> 0:16:56.040 a great idea and I've enjoyed that from a price 0:16:56.120 --> 0:16:59.080 of two twenty down to seventy five, and critically it 0:16:59.200 --> 0:17:02.480 hasn't come off a mat at all. What's the risk 0:17:02.640 --> 0:17:06.440 to retail of being yield hogs and defining duration of 0:17:06.560 --> 0:17:10.280 twenty years, twenty five years, thirty years. What's the risk 0:17:10.359 --> 0:17:12.840 that you see there at retail? They just love to 0:17:12.880 --> 0:17:14.000 go out to that maturity. 0:17:14.720 --> 0:17:18.480 The biggest risk for that sector is that the subset 0:17:18.560 --> 0:17:21.840 of the market that believes that inflation is structurally higher 0:17:21.960 --> 0:17:25.680 and therefore nominal rates will be higher for longer, over 0:17:25.720 --> 0:17:29.480 an extended period, that they're right. If inflation is structurally 0:17:29.560 --> 0:17:32.040 higher and the FED gives up the inflation target at 0:17:32.040 --> 0:17:35.840 two percent revises to say three percent, then we actually 0:17:35.880 --> 0:17:39.879 are going to be in a sustainably higher rate environment 0:17:39.920 --> 0:17:41.080 for an extended While your. 0:17:41.000 --> 0:17:43.159 Work on the r start debate, John Williams comes out 0:17:43.160 --> 0:17:45.919 and reaffirms lower our start, Others, as you say, are 0:17:46.000 --> 0:17:49.800 looking for higher our start. Where does Governor lingoln think 0:17:49.840 --> 0:17:50.119 we are. 0:17:50.720 --> 0:17:55.080 I think that the post pandemic period we will all 0:17:55.200 --> 0:17:58.479 come to the realization that our start hasn't changed. If anything, 0:17:58.640 --> 0:18:02.320 it's incrementally lower as a result of the dislocations. 0:18:01.880 --> 0:18:03.520 We could do a good co interview here. 0:18:03.560 --> 0:18:07.000 We could do Williams and Williams to Williams on Jackson. 0:18:07.080 --> 0:18:08.960 How why I mean next month is serious? 0:18:09.000 --> 0:18:11.000 Folks. We've got market guy here saying he agrees with 0:18:11.080 --> 0:18:14.680 John Williams as well. What are the high our star 0:18:14.760 --> 0:18:16.440 of the worry warts? What do they get wrong? 0:18:17.720 --> 0:18:22.240 I think that the argument breaks down once we see 0:18:22.480 --> 0:18:26.560