WEBVTT - Bloomberg Surveillance: Tesla Slumps, Netflix Soars 0:00:05.040 --> 0:00:08.639 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:08.680 --> 0:00:12.040 with Paul Sweeney. Join us each day for insight from 0:00:12.039 --> 0:00:16.240 the best in economics, finance, investment, and international relations. You 0:00:16.239 --> 0:00:19.599 can also watch the show live on YouTube. Visit the 0:00:19.600 --> 0:00:24.360 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:24.360 --> 0:00:27.400 mornings from seven to ten am Eastern from our global 0:00:27.440 --> 0:00:32.080 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:32.440 --> 0:00:36.000 or anywhere else you listen, and always on Bloomberg Radio, 0:00:36.200 --> 0:00:40.680 the Bloomberg Terminal, and the Bloomberg Business App. For this introduction, 0:00:41.000 --> 0:00:44.480 I need to go to a note which was codified 0:00:44.520 --> 0:00:48.239 in market economics long ago at CJ. Lawrence. You had 0:00:48.240 --> 0:00:52.319 a headline, and then you had a subhead, and then 0:00:52.360 --> 0:00:54.360 you had a chart. And it was of course the 0:00:54.480 --> 0:00:57.680 discussion around the chart that led to the invention of 0:00:57.760 --> 0:01:02.040 modern market economics and many people. This began with Eddheimen 0:01:02.120 --> 0:01:05.040 at CJ. Lawrence just a few years ago. Ed, let 0:01:05.080 --> 0:01:08.280 me get to your most recent note, coveted on Wall Street. Remember, folks, 0:01:08.360 --> 0:01:11.480 we protect the copyright of all of our guests. Get 0:01:11.600 --> 0:01:16.280 the Edheimen note through Evercore Isi Edheimen. We're back in 0:01:16.319 --> 0:01:20.560 the old normal inflation range. Is it all clear on 0:01:20.600 --> 0:01:22.759 the Edheimen front for Jerome Powell? 0:01:24.200 --> 0:01:27.040 I wouldn't say it's all clear, but it's pretty dark clear. 0:01:27.720 --> 0:01:31.800 It's clear enough for them to continue to pursue the pause. 0:01:32.760 --> 0:01:35.560 Whether they cut in March, it's a little early. It 0:01:35.640 --> 0:01:39.280 might you'll want to wait another meeting or two. But 0:01:39.880 --> 0:01:44.600 my strongest conviction is that inflation is slowing and we'll 0:01:44.640 --> 0:01:49.000 continue to slow. You have rents, wages, but I don't 0:01:49.000 --> 0:01:52.280 want to overlook that there are some prices that are 0:01:52.280 --> 0:01:56.600 going up like crazy. But in general I think that 0:01:56.680 --> 0:01:58.760 inflation is coming down. 0:01:59.200 --> 0:02:00.240 And tell that know. 0:02:00.360 --> 0:02:03.720 I have a warm spot of a warm spot in 0:02:03.800 --> 0:02:08.400 my heart for Milton Friedman, and money growth has slowed down. 0:02:08.480 --> 0:02:12.560 So I'm sort of following his right and his footsteps, and. 0:02:12.480 --> 0:02:15.320 I'm looking at shelter inflation as a part and parcel 0:02:15.400 --> 0:02:18.880 the goofiness of a you've always ignored that you've gone 0:02:18.919 --> 0:02:22.800 out for granular data and you feature mortgage rates coming down? 0:02:23.280 --> 0:02:26.160 Is the mortgage rates coming down from eight percent? Say? 0:02:26.680 --> 0:02:29.440 Is it a linear function or is there a tip 0:02:29.480 --> 0:02:32.840 point where home building becomes normal again? 0:02:34.280 --> 0:02:36.960 It seems to be a tip point somewhere, a little 0:02:36.960 --> 0:02:41.600 bit above seven. Boys race War eight, maybe a little 0:02:41.639 --> 0:02:46.720 over eight, and now they're around seven. And all the 0:02:46.760 --> 0:02:50.839 information that we have shows that housing has bounced back 0:02:50.960 --> 0:02:55.959 pretty nicely. Even Tom, we're getting a little bit of 0:02:56.040 --> 0:02:59.040 an improvement in rents, which surprises me. 0:02:59.120 --> 0:03:00.240 For three weeks. 0:03:01.520 --> 0:03:06.040 We survey, the survey we've done of apartment companies has 0:03:06.080 --> 0:03:07.000 picked up a little bit. 0:03:07.160 --> 0:03:11.480 Right, excuse excuse me, it's okay. 0:03:11.520 --> 0:03:14.079 We a love gasping on the show at Heimen. I'm 0:03:14.120 --> 0:03:17.920 gasping when it's okay, you know, just have some tang 0:03:17.960 --> 0:03:18.360 and move on. 0:03:18.480 --> 0:03:20.920 Paul, Hey, save us ed talk to us about the 0:03:21.000 --> 0:03:24.959 labor market. I have been so amazed and surprised, pleasantly 0:03:24.960 --> 0:03:29.520 so by the strength the resilience of the US labor market. 0:03:29.960 --> 0:03:32.760 How do you put that into context with everything else 0:03:32.760 --> 0:03:33.560 that's going on out there? 0:03:35.160 --> 0:03:38.200 Economy is still pretty good. But I'm just I'm just 0:03:38.560 --> 0:03:40.960 telling you what you just told me. It's pretty good 0:03:40.960 --> 0:03:42.680 because the labor market is still pretty good. 0:03:42.760 --> 0:03:43.040 YEP. 0:03:43.880 --> 0:03:46.160 In about twenty five minutes, we'll get another reading for 0:03:46.240 --> 0:03:53.000 unemplomba claims. But uneplomba claims are the government's best economic indicator, 0:03:53.520 --> 0:03:57.360 and last week they fell below two hundred thousand and 0:03:57.480 --> 0:04:02.080 was just incredible how low they are. And so until 0:04:02.280 --> 0:04:06.360 the lever market eases up a little bit, the Fed 0:04:06.480 --> 0:04:09.000 is going to be reluctant to cut rates. I think 0:04:09.040 --> 0:04:12.480 they'd be happy to be pausing because inflation is coming down. 0:04:13.720 --> 0:04:16.360 Now there are I thought you were going. 0:04:16.320 --> 0:04:20.000 To say that you've been surprised at how much wages 0:04:20.040 --> 0:04:23.680 have slowed given how strong labor markets are. But there 0:04:23.720 --> 0:04:26.880 are some signs that the laver markets are easing up. 0:04:26.920 --> 0:04:31.240 For example, the Basebook came out last week and like 0:04:31.320 --> 0:04:35.320 some others, it showed some easing in the labor markets. 0:04:35.720 --> 0:04:41.400 And we survey employment agencies every week like a Manpower Inc. 0:04:42.440 --> 0:04:47.600 And they and they have reported a clear easing up 0:04:47.640 --> 0:04:53.239 in the labor market and in wages, and a measured 0:04:53.279 --> 0:05:00.080 by Indeed Lever Market company has showed a way h 0:05:00.240 --> 0:05:02.120 tracker has come from five and a half down to 0:05:02.160 --> 0:05:04.760 three and a half. There's a lot of signs that 0:05:04.839 --> 0:05:10.200 labor has eased, but not enough. I'm not I guess 0:05:10.760 --> 0:05:13.720 I guess I've been I'm not sure shocked, but I've 0:05:13.720 --> 0:05:17.080 been surprised. But whatever it is, it's the key. You've 0:05:17.080 --> 0:05:20.120 got to get labor to ease up. Some to get 0:05:20.120 --> 0:05:23.200 the economy to slow down more than it has. If 0:05:23.200 --> 0:05:27.039 you're plumbing, increases have slowed. From about five hundred thousand 0:05:27.080 --> 0:05:29.920 a month, they were increasing five hundred thousand a month. 0:05:30.520 --> 0:05:33.160 In the past three months they've been about one seventy. 0:05:33.800 --> 0:05:38.280 So you know, it's like, you know, watching a frog. 0:05:38.400 --> 0:05:42.279 Cook in a path. They don't notice it, but I 0:05:42.400 --> 0:05:42.840 noticed it. 0:05:43.400 --> 0:05:49.640 Wonderful. We're going to continue. We are commercial free. Don't 0:05:49.640 --> 0:05:53.080 don't go away. We are commercial free across this entire hour. 0:05:53.400 --> 0:05:56.120 Lukashaw to join us on the side of the economic 0:05:56.400 --> 0:05:59.640 data here but on YouTube and on card play. We're 0:05:59.680 --> 0:06:02.880 thrilled bring you Ed Hyman this morning, Paul Sweeney. 0:06:02.600 --> 0:06:05.400 So, Ed, can we officially take I don't know, for 0:06:05.440 --> 0:06:07.279 the remainder of twenty twenty four, can we take the 0:06:07.920 --> 0:06:11.080 recession talk off the table? I've had enough of this. 0:06:11.200 --> 0:06:11.680 How about you? 0:06:13.200 --> 0:06:17.000 Well, I probably have been giving you a problem in this, 0:06:17.160 --> 0:06:21.080 but I don't think so. I appreciate the question, and 0:06:21.480 --> 0:06:27.600 let me give you my best shot. So, the yell 0:06:27.680 --> 0:06:30.400 curve has worked seven times, six times in a row. 0:06:30.480 --> 0:06:33.080 Every time you've had a recession, your curves been inverted. 0:06:33.120 --> 0:06:36.400 So I'm just saying that we've had extreme monetary titan. 0:06:37.240 --> 0:06:41.440 Now it's taken eighteen months for that to work, so 0:06:41.720 --> 0:06:45.240 long that by the time you get to like month fourteen, 0:06:46.000 --> 0:06:48.120 all you and I want to say is like, get 0:06:48.160 --> 0:06:50.159 out of here. It's not going to happen. It's different 0:06:50.240 --> 0:06:55.479 this time. But the Yell curve inverted, for example, in 0:06:55.600 --> 0:07:02.040 the summurb of six, and the recession didn't start until 0:07:02.320 --> 0:07:05.839 eight eighteen months later. So we still have another four 0:07:05.880 --> 0:07:09.440 months and if we can stand it. But I guess 0:07:09.440 --> 0:07:11.720 the main thing I'm trying to say from a practical 0:07:11.760 --> 0:07:14.480 point of view is that I think the economy is 0:07:14.480 --> 0:07:15.640 at a slowing pattern. 0:07:15.920 --> 0:07:20.640 I mentioned the plummet increases slowing, and so I. 0:07:20.600 --> 0:07:25.480 Could continue to be part of Tom's thought process. 0:07:25.760 --> 0:07:27.320 Our company surveys have slowed. 0:07:27.840 --> 0:07:31.000 They were we survey companies and zero to one hundred 0:07:31.040 --> 0:07:32.400 and fifty is in the middle. 0:07:32.960 --> 0:07:38.040 And the surveys two years ago were sixty one and 0:07:38.160 --> 0:07:39.520 last week there were forty nine. 0:07:40.040 --> 0:07:43.320 And I want to digress over to your wonderful page 0:07:43.320 --> 0:07:47.280 and your research note on China and what ed Heymen does, folks, 0:07:47.320 --> 0:07:49.760 and this is textbook at Hymen is he looks at 0:07:49.760 --> 0:07:52.360 the equity market and all the media overwhelm of the 0:07:52.400 --> 0:07:55.280 hangsing in, the indecks, the Hong Kong Index, and the 0:07:55.320 --> 0:07:58.560 Shanghi composite, and you bring it right over ed hein 0:07:58.640 --> 0:08:01.800 to the decline and interest rates in China. Are they 0:08:01.840 --> 0:08:04.600 going to export a new low yield? Are they going 0:08:04.640 --> 0:08:08.560 to export disinflation? Wow? In deflation to the United States? 0:08:09.640 --> 0:08:13.320 Well, I was you got me there. I was going 0:08:13.360 --> 0:08:15.200 in a different direction. But let me explain. 0:08:16.640 --> 0:08:19.760 Their yields, like you point out, have been making new lows, 0:08:20.600 --> 0:08:24.200 and that helps explain why US yields have been pretty quiet. 0:08:25.640 --> 0:08:29.440 And also the weakness in China has helped explain why 0:08:29.480 --> 0:08:34.200 commodity prices have been weak. And it's been pretty clear 0:08:34.240 --> 0:08:38.400 to me that China has been exporting at least disinflation 0:08:38.920 --> 0:08:44.480 or slower inflation and in some cases deflation. There's a 0:08:44.480 --> 0:08:47.680 lot of news in the papers a day about lithium 0:08:47.720 --> 0:08:53.680 prices which are down eighty percent, and so there's you're right, 0:08:53.760 --> 0:08:57.280 they're exporting either disinflation or deflation. 0:08:58.040 --> 0:08:58.800 But also. 0:09:00.080 --> 0:09:02.840 You go back to the George Soros reflexivity, which is 0:09:02.880 --> 0:09:07.760 that when something can't go on forever, it doesn't, And 0:09:08.000 --> 0:09:11.720 there's a chance that we've reached that point in China 0:09:12.320 --> 0:09:16.400 this week with their cut in the triple R and 0:09:16.520 --> 0:09:21.360 so the stock market there has rallied almost ten percent. 0:09:22.440 --> 0:09:27.120 And this morning the price of oil the WTI in 0:09:27.160 --> 0:09:30.520 the US is up to about forty six dollars. It 0:09:30.640 --> 0:09:31.840 was in the low forties. 0:09:34.400 --> 0:09:37.360 So so anyway, so, Ed, I mean, you know, that 0:09:37.480 --> 0:09:38.720 kind of brings up a good point. I want to 0:09:38.720 --> 0:09:42.480 follow on Tom's question here. If we've got China slower 0:09:42.480 --> 0:09:45.720 than people anticipated, if we've got Europe weaker than people 0:09:45.760 --> 0:09:47.920 would like to see, particularly Germany, I mean, boy, you 0:09:47.960 --> 0:09:50.920 see that the challenge is there, can the US be 0:09:51.040 --> 0:09:53.600 that decoupled from the rest of the world in being 0:09:54.320 --> 0:09:56.599 a growth marketplace when so much of the rest of 0:09:56.640 --> 0:09:59.360 the world is, you know, if not in recession, darned 0:09:59.360 --> 0:09:59.880 close to it. 0:10:01.559 --> 0:10:08.880 No to Alan Greenspan, who enjoyed being inscrutable, but he 0:10:09.000 --> 0:10:14.200 also coined some pretty good dogs, one of which in 0:10:14.280 --> 0:10:18.480 the late nineties was that the US cannot be an 0:10:18.480 --> 0:10:22.840 oasis of prosperity. And that's what we have now. I 0:10:22.840 --> 0:10:27.280 think you're correctly pointing that out. And the data of 0:10:27.280 --> 0:10:31.320 this morning out of Europe is week we also survey 0:10:31.400 --> 0:10:35.280 companies that have sales week in Europe and that survey 0:10:35.360 --> 0:10:40.200 is about thirty two. The US comparable survey is forty nine, 0:10:40.280 --> 0:10:44.800 to put it in perspective. And then over in China, 0:10:45.280 --> 0:10:49.200 our survey there is about thirty two, and so that 0:10:49.320 --> 0:10:51.000 gives the world economy, you know. 0:10:50.960 --> 0:10:52.720 A soft inclination. 0:10:53.160 --> 0:10:56.160 But like I mentioned this morning, because I live up 0:10:56.240 --> 0:11:00.360 right on the edge, the news out of China is 0:11:00.720 --> 0:11:01.559 a little bit better. 0:11:03.440 --> 0:11:05.360 I mentioned, all prices have bounced. 0:11:05.120 --> 0:11:08.080 Up a little bit, and there's not market has bounced 0:11:08.120 --> 0:11:10.520 up a little bit. So I can't tell if if 0:11:10.559 --> 0:11:13.920 this triple R cut this week is the beginning of a. 0:11:13.920 --> 0:11:17.040 Real serious effort. 0:11:17.440 --> 0:11:20.120 They've had some false starts before, but it's a move 0:11:20.160 --> 0:11:22.440 in the right direction and we'll see if it bears fruit. 0:11:22.600 --> 0:11:24.439 And Man, I want you to talk about one of 0:11:24.440 --> 0:11:26.680 the great fears you harken back the nineties, and I'd 0:11:26.720 --> 0:11:29.000 even take it back to mister Isaacs in the eighties 0:11:29.040 --> 0:11:32.920 as well. In the zeitgeist of American global Wall Street, 0:11:33.320 --> 0:11:37.920 there is a real fear of our small banks linked 0:11:38.000 --> 0:11:42.400 in to bad real estate loans. Is it a legitimate fear? 0:11:42.960 --> 0:11:45.600 Is this something that we need to study or is 0:11:45.640 --> 0:11:46.280 it noise? 0:11:48.720 --> 0:11:51.959 It's not noise. So every week. 0:11:53.760 --> 0:11:57.320 On Friday afternoon, I get the GUMMA data on bank 0:11:57.400 --> 0:12:02.200 deposits and they are going down. They're down about two 0:12:02.280 --> 0:12:05.880 or three percent, which is the biggest drop since the nineteen. 0:12:05.520 --> 0:12:08.760 Thirties, which is a sobering point by itself. 0:12:09.640 --> 0:12:13.480 So I guess back, the bank deposits are essentially the 0:12:13.520 --> 0:12:16.480 money supply. It's eighty five percent of the money supply. 0:12:17.240 --> 0:12:21.640 So it's if you've got to watch it. This is 0:12:21.679 --> 0:12:27.719 my thirteenth bed tightening cycle, so I'm not this is 0:12:27.920 --> 0:12:33.520 I'm a I'm a gnarl veteran of these cycles, and 0:12:34.880 --> 0:12:38.760 right every single one of them has had financial shocks 0:12:38.840 --> 0:12:39.479 or crises. 0:12:40.240 --> 0:12:43.320 And so the one we had earlier this year, earlier 0:12:43.400 --> 0:12:44.079 last year. 0:12:43.960 --> 0:12:48.920 Excuse me, with SBB and the small banks having a 0:12:49.000 --> 0:12:53.679 deposit running their deposits, that was a shock crisis. 0:12:55.120 --> 0:12:58.520 And I think we're probably gonna get another one before 0:12:58.559 --> 0:12:59.120 this is over. 0:13:00.200 --> 0:13:03.080 And I got one last thought here before I let 0:13:03.160 --> 0:13:06.120 you go, And this is a great respect for what folks. 0:13:06.200 --> 0:13:09.360 I can't say enough. And I understand Sweeney and McKee 0:13:09.400 --> 0:13:11.160 and Lisa are too young for this, but we used 0:13:11.200 --> 0:13:14.600 to actually get printed research reports and you would wait 0:13:14.679 --> 0:13:17.840 on Tuesday to get the CJ. Lawrence Green Book, and 0:13:17.880 --> 0:13:20.320 it would come out. It was Edjimen, and then a 0:13:20.320 --> 0:13:23.240 guy named Ed yard Denny picked it up. Edjimen, do 0:13:23.320 --> 0:13:27.800 you have the yard Denny optimism? The corporations will adapt 0:13:28.280 --> 0:13:31.440 that we will see a ten fifteen to twenty percent 0:13:31.600 --> 0:13:36.400 lift in the Yard Denny duration of stock prosperity in 0:13:36.440 --> 0:13:40.720 America getting out to what now forty thousand dow forty 0:13:40.760 --> 0:13:44.600 five thousand. Do you share that optimism with the gentleman 0:13:44.600 --> 0:13:45.760 from Yale University? 0:13:47.200 --> 0:13:51.880 I don't, but I like Ed Yardini a lot, and 0:13:52.000 --> 0:13:58.320 I follow his work, I follow his thanking, I respect him. 0:13:58.559 --> 0:14:00.840 When I left CJLR he replaced me. 0:14:03.120 --> 0:14:07.600 I'm happy. So you know, the world goes around, But. 0:14:09.400 --> 0:14:13.520 I really do think about what he's thinking about, and 0:14:13.600 --> 0:14:16.080 it goes back to, you know, some thoughts about the 0:14:16.200 --> 0:14:17.080 nineteen thirties. 0:14:18.080 --> 0:14:21.680 As I mentioned, I think monetary tightening. 0:14:21.480 --> 0:14:25.960 Is extremely strong right now, monetary tightening, and that keeps 0:14:25.960 --> 0:14:26.440 me away. 0:14:26.880 --> 0:14:27.560 At the moment. 0:14:28.800 --> 0:14:32.920 My view and our house view is that the market's 0:14:32.960 --> 0:14:37.040 going up, and that's because inflation's coming down. 0:14:37.360 --> 0:14:40.920 The fence ont pause, and economy is still fine. But 0:14:41.040 --> 0:14:42.720 I would guess, and Paul, you. 0:14:42.680 --> 0:14:45.160 Are needling me a little bit there on the recession 0:14:45.200 --> 0:14:47.760 of the story, but I think the economy can get weaker, 0:14:48.080 --> 0:14:50.760 arnies will go down, and then it'll be a fight 0:14:51.040 --> 0:14:54.840 between declining earnings and the FED cutting interest rates. 0:14:55.400 --> 0:14:58.920 Edheimen, thank you so much with Evercore. I can't say 0:14:59.000 --> 0:15:02.680 enough about how he changed modern market economics. I put 0:15:02.760 --> 0:15:07.160 him and Alan green Span together. They simply changed how 0:15:07.200 --> 0:15:10.160 we digest the game day by day. And I'm in 0:15:10.640 --> 0:15:22.800 thank you on YouTube on card Player, this is a 0:15:22.880 --> 0:15:25.560 joy and Paul like, I gotta I just did this 0:15:25.640 --> 0:15:31.400 on LinkedIn and Twitter, which is it's borderline entertainment about entertainment. 0:15:31.880 --> 0:15:35.640 Lucas Shaw pulls out the typewriter Saturday evening, eight pm. 0:15:36.160 --> 0:15:37.920 And you don't know this, but he's doing this at 0:15:37.920 --> 0:15:41.720 the bar of the Sunset Tower Ill. I mean it's exclusive. 0:15:41.720 --> 0:15:44.120 I've sat there with a number of fancy people. I 0:15:44.160 --> 0:15:47.040 mean the owner, Jeff Klein, knows that Lucas Shaw is 0:15:47.080 --> 0:15:49.200 a player. I love what Jeff Clein says about the 0:15:49.200 --> 0:15:51.960 Sunset Tower Grill. He says it's where a duchess can 0:15:52.000 --> 0:15:55.600 be a devil. A celebrity like Lucas Shaw can dine 0:15:55.600 --> 0:15:59.880 with his family one night and this mistress the next 0:16:00.280 --> 0:16:03.560 and that's the la that Lucas Shaw covers here. Have 0:16:03.640 --> 0:16:06.200 you ever been in the Sunset grill with fancy people 0:16:06.520 --> 0:16:11.000 having fancy drinks? I was there. What happens two weeks ago? Okay, 0:16:11.320 --> 0:16:13.160 you didn't fall in the swimming pool, right. 0:16:13.160 --> 0:16:14.160 I did not follow the simmer. 0:16:14.200 --> 0:16:19.400 Okay, what happens now with Paul Sweeney and Lucashaw's Hollywood 0:16:19.480 --> 0:16:23.160 blown up? What are the conversation at Jeff Klein's grill? 0:16:24.000 --> 0:16:27.280 The conversation depending on what company you work for, but 0:16:27.440 --> 0:16:30.160 at a lot of them, is will my company still 0:16:30.200 --> 0:16:33.400 be around, or at least still be independent in six 0:16:33.440 --> 0:16:37.560 to twelve months, I'd say so. You've got Paramount, which 0:16:37.600 --> 0:16:42.400 has been the subject of near constant deal speculation for 0:16:42.480 --> 0:16:44.840 several months, and it's now starting to feel pretty real. 0:16:45.200 --> 0:16:47.800 You've got Warner Brothers Discovery, led by David Zaslev, who 0:16:47.840 --> 0:16:50.840 seems like he realizes his company is still not big enough, 0:16:50.920 --> 0:16:53.200 or feels his company still not big enough and wants 0:16:53.200 --> 0:16:55.720 to merge with something else. You've got Comcast sitting on 0:16:55.760 --> 0:16:58.720 the sidelines figuring if it wants to do something. You've 0:16:58.760 --> 0:17:01.480 got Disney and Bob Eyer making cuts and also talking 0:17:01.520 --> 0:17:03.720 about different deals. So there's a lot going on. 0:17:03.920 --> 0:17:05.920 I got eight questions. They've got to resell those folks. 0:17:05.960 --> 0:17:09.240 We're commercial free this entire hour. We go from Edward 0:17:09.320 --> 0:17:12.360 Hyman and then step it up to Lucas Shaw. I mean, 0:17:12.359 --> 0:17:14.880 it's pretty good here and we're on car play on 0:17:14.920 --> 0:17:19.000 YouTube as well. Paul Swingey with fourteen questions for Lucashaw. 0:17:18.520 --> 0:17:21.560 And Lucashaw covers all a media entertainment for Bloomberg News 0:17:21.600 --> 0:17:26.080 out of our stylish LA office. I will mention Lucas. 0:17:26.160 --> 0:17:28.040 Let's start with Paramount Global. We have to go to 0:17:28.080 --> 0:17:31.840 Sherry Redstone, the daughter of one of the greatest media mobiles. 0:17:31.880 --> 0:17:34.880 I think over the last fifty years, Sumner Redstone, she's 0:17:34.920 --> 0:17:37.960 the controlled shareholder. What do you think she's thinking here? 0:17:38.280 --> 0:17:41.240 Why would she consider now after all these years, maybe 0:17:41.280 --> 0:17:43.000 thinking about selling the company. 0:17:43.080 --> 0:17:44.840 I think there are two primary reasons. I mean, there's 0:17:44.880 --> 0:17:47.640 been a lot of talk about Paramount over the years, 0:17:47.640 --> 0:17:51.159 most of it not real. There weren't she did not 0:17:51.280 --> 0:17:54.000 seem open to selling. But I think now she's looking 0:17:54.000 --> 0:17:57.720 at her business and it is more challenged than it's 0:17:57.760 --> 0:18:01.000 ever been, and it doesn't seem like there's an obvious 0:18:01.280 --> 0:18:04.080 or even a particularly difficult solution. You know, they own 0:18:04.160 --> 0:18:06.760 all these cable networks that are shrinking by the day. 0:18:06.880 --> 0:18:11.240 Their streaming service is the sixth best, fifth, sixth best 0:18:11.240 --> 0:18:13.960 streaming service, and it loses a bunch of money. So 0:18:14.040 --> 0:18:16.080 that's one issue. You know, they've had to cut the 0:18:16.119 --> 0:18:18.600 dividend that gets paid to the holding company of her family, 0:18:18.640 --> 0:18:21.080 which is sort of like it's piggybank. The other one 0:18:21.080 --> 0:18:22.760 that I've been told by people close to her was 0:18:22.800 --> 0:18:25.760 that she was pretty seriously She's Jewish, and she was 0:18:26.359 --> 0:18:30.280 very affected by what happened in October and is starting 0:18:30.320 --> 0:18:33.760 to devote more of her time and attention to matters 0:18:33.760 --> 0:18:36.600 related to that and education. And so you combine the 0:18:36.600 --> 0:18:39.880 fact that the family empire is sort of crumbling and 0:18:40.000 --> 0:18:42.280 she now has something else that she figured she could 0:18:42.280 --> 0:18:44.000 spend her time and money on, and I think that 0:18:44.119 --> 0:18:46.679 combination means that she's now ready to part with it. 0:18:46.920 --> 0:18:50.960 Well, the reporting today David Ellison, the son of Larry 0:18:51.000 --> 0:18:54.040 Elson of Oracle, Maybe he's considered what do we know 0:18:54.080 --> 0:18:57.719 about David Ellison and how legit he might be as 0:18:57.800 --> 0:18:58.679 a potential buyer. 0:18:58.920 --> 0:19:03.320 Look, he is is very impressive. I will say he entered. 0:19:03.760 --> 0:19:07.080 You had these two Elison kids, David Ellison and Megan Ellison, 0:19:07.240 --> 0:19:09.480 enter Hollywood ten fifteen years ago, and I think a 0:19:09.520 --> 0:19:11.960 lot of people looked at them with suspicion. You know, 0:19:12.000 --> 0:19:14.119 you trust fund kids. Their dad's one of the richest 0:19:14.119 --> 0:19:15.480 guys in the world. They just want to play with 0:19:15.560 --> 0:19:20.520 daddy's money and make movies. Megan Ellison went one direction. 0:19:20.640 --> 0:19:23.800 She made all these art house movies with high end directors. 0:19:24.359 --> 0:19:27.600 The product creatively was great. Commercially it was a disaster. 0:19:28.160 --> 0:19:31.800 David Ellison basically went in the opposite direction. He decided 0:19:31.840 --> 0:19:35.520 he liked making big, blockbuster movies, and so he went 0:19:35.600 --> 0:19:38.200 and had a deal with Paramount where he co financed, 0:19:38.240 --> 0:19:41.800 co produced their biggest movies, Star Trek and Mission Impossible, 0:19:42.119 --> 0:19:46.119 and has done pretty well and continues to expand his business. Now, 0:19:46.280 --> 0:19:47.960 if he is he the person who's going to have 0:19:47.960 --> 0:19:50.520 a solution for Paramount, that's hard for me to say, 0:19:50.520 --> 0:19:52.840 because I'm not sure anyone does. But it would be 0:19:52.920 --> 0:19:55.520 foolish to bet against him because he's proven to be 0:19:55.520 --> 0:19:57.480 a pretty good operator in the last fifteen years. 0:19:57.680 --> 0:20:01.880 Down Sunset Boulevard is my favorite leather chairs in America. 0:20:01.960 --> 0:20:05.280 It's a Cuban Seed cigar company, which has literally been 0:20:05.320 --> 0:20:07.359 there in the middle of World War Two. It's a 0:20:07.400 --> 0:20:11.000 great story of families that rolls their own cigars. It's 0:20:11.040 --> 0:20:14.719 just a glorious Glories family. Every time I sit there, Lucas, 0:20:14.720 --> 0:20:18.040 somebody fancy walks in. So two guys are sitting there 0:20:18.080 --> 0:20:21.480 right now, what are they saying about David Zavslov. We've 0:20:21.480 --> 0:20:24.920 seen New York media right that this guy, after everything 0:20:24.960 --> 0:20:28.480 with Warner Brothers Discovery, is still an outsider with a 0:20:28.520 --> 0:20:32.800 stock performance. Is mister Zavslov ever more an outsider? 0:20:33.040 --> 0:20:35.160 I have to start by asking what is your favorite 0:20:35.240 --> 0:20:36.399 or preferred type of cigar? 0:20:36.840 --> 0:20:39.280 Well, what I go for is not treated. I mean, 0:20:39.320 --> 0:20:41.000 you know, like Lisa's trying to get me on the 0:20:41.040 --> 0:20:44.000 fancy cherry oaked ones and all that. No, So my 0:20:44.160 --> 0:20:47.320 favorite run of the mill cigar is a Padrona nineteen 0:20:47.440 --> 0:20:50.560 sixty four. It's a little lighter than the nineteen twenty six. 0:20:51.040 --> 0:20:53.520 So I go with that. But you're a Cuban Seed. 0:20:53.520 --> 0:20:56.359 I mean, one day on their cy stalone walks in. 0:20:56.800 --> 0:20:59.280 I mean, what is that about? You know I didn't say, 0:20:59.280 --> 0:21:01.760 mister Stallone. You know, all that Lisa would have gone mental? 0:21:02.119 --> 0:21:05.000 Is the Rock walked in there? Once? We were here yesterday. 0:21:05.320 --> 0:21:07.760 Lisa's going nuts about the Rock. Let's rip up the 0:21:07.760 --> 0:21:10.800 script right, Yes, how big is the Rock in LA 0:21:10.960 --> 0:21:12.879 right now? With this deal with Netflix? 0:21:13.240 --> 0:21:15.360 His deal with Endeavor? Or does he have a deal 0:21:15.359 --> 0:21:16.439 with Netflix that I missed? 0:21:17.040 --> 0:21:18.359 Help me here, Lisa. 0:21:18.480 --> 0:21:21.600 He's now part of the board for TKO. 0:21:21.320 --> 0:21:25.119 Yes, which is sorry affiliated with Endeavor. Yeah, he's one 0:21:25.160 --> 0:21:27.719 of the Well, I'll do the Rock briefly and then 0:21:27.760 --> 0:21:29.720 we can go to Zaslav. The Rock is one of 0:21:29.720 --> 0:21:34.119 the biggest movie stars in the world. His dependability I 0:21:34.119 --> 0:21:36.159 think in the last couple of years has actually been 0:21:36.200 --> 0:21:40.280 a little shakier than it was before. But he's he's 0:21:40.320 --> 0:21:43.359 a huge star, huge following, and then obviously because of 0:21:43.400 --> 0:21:45.800 his his history with the WWB, joining the board at 0:21:45.800 --> 0:21:46.840 TKO makes lots and. 0:21:47.119 --> 0:21:52.560 Things X I do over there, there's a Kleenex full lease. Okay, 0:21:52.600 --> 0:21:54.720 go to Zavizlov. Now this is serious. I mean he 0:21:54.760 --> 0:21:57.679 was CNN and all that. Where does mister Zazlov fit 0:21:57.800 --> 0:21:59.520 in for twenty twenty four? 0:21:59.680 --> 0:22:03.400 Look, he's had his bumps as the CEO of that company. 0:22:03.480 --> 0:22:07.359 A lot of them, I think have been about how 0:22:07.480 --> 0:22:12.359 he's executed, and the selling of those strategies have just 0:22:12.840 --> 0:22:15.359 they have pissed off a lot of people in Hollywood 0:22:15.480 --> 0:22:19.600 because of the way that he's treated certain filmmakers and 0:22:19.640 --> 0:22:24.080 certain ideas. But his company faces basically the same challenges 0:22:24.240 --> 0:22:27.359 as Sherry Redstone in Paramount. They're just maybe twice as big. 0:22:28.880 --> 0:22:31.280 And the two things that I do think they have 0:22:31.320 --> 0:22:34.720 going for them are their TV studio is much larger 0:22:34.760 --> 0:22:36.919 and more productive and so they can keep selling stuff, 0:22:37.040 --> 0:22:39.159 and they have a streaming service that is better than 0:22:39.160 --> 0:22:39.840 Paramount Plus. 0:22:40.119 --> 0:22:43.000 Mike just emailed and I said, my headphones. Mike says, 0:22:43.040 --> 0:22:45.600 forget the Hollywood talk to the market, So hold on, Lucas. 0:22:45.920 --> 0:22:48.600 Paul Sweety's got a bunch of questions. Is Ira Jersey 0:22:48.640 --> 0:22:51.840 told you the GDB price indext really something in yields 0:22:51.840 --> 0:22:54.400 come in. Thank you Rich Truman for that to two 0:22:54.480 --> 0:22:56.880 year yield in a solid two basis points ten You're 0:22:56.920 --> 0:22:59.040 in a big, big three basis points. So there is 0:22:59.080 --> 0:23:01.399