Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg glovel News. It is almost eight months
Speaker 1: since the Russian invasion and war in Ukraine. Just over
Speaker 1: six million people who fled their homes because of that
Speaker 1: invasion have since come back, and an online story at
Speaker 1: Bloomberg business Week dot Com takes us to the individuals
Speaker 1: behind those numbers. Tim Mark Champion is the senior reporter
Speaker 1: for international affairs. He's behind this story. It's available online
Speaker 1: right now. Mark is joining us on the phone from London,
Speaker 1: and Mark spent a lot of time in Ukraine reporting
Speaker 1: out this story. We got Joel Weber with us he's
Speaker 1: the editor of Bloomberg Business Week. He's with us right
Speaker 1: now in the Bloomberg Interactive Broker Studio. Joel We spent
Speaker 1: a lot of time in the early part of the
Speaker 1: war hearing about many and many of them were women
Speaker 1: and children who left Ukraine when Russia started bombing it's cities, uh,
Speaker 1: and it's countryside as well. Why are so many people
Speaker 1: returning even as the war continues to drag on. Well,
Speaker 1: I mean this is the home, their home, right and
Speaker 1: so at some level, um getting back there is is uh,
Speaker 1: you know, as long as you could take years in
Speaker 1: some instances, but you know, there has been um despite
Speaker 1: this kind of more recent um barrage, there had been
Speaker 1: a little moment where it felt like you could potentially return.
Speaker 1: And so what when Mark set out here, you know,
Speaker 1: he told us that he was interested in kind of
Speaker 1: documenting this a while ago. And and really what what
Speaker 1: gets me is just this the humanity of this and
Speaker 1: what it's like to live through um, a total tragedy.
Speaker 1: And then also like there are things that feel really
Speaker 1: special there and you know, the dance studio is one
Speaker 1: market I wanted to ask you about what what what
Speaker 1: sticks out to you mark you you've you've been there
Speaker 1: multiple times now and I'm just curious, like bringing back
Speaker 1: for those of us who haven't been there, what's it like?
Speaker 1: And as these people return to their homes. Yes, I
Speaker 1: mean all zones are strange places because they often have
Speaker 1: a sort of huge variation in uh, you know, in
Speaker 1: how things are, not just in terms of place, you know,
Speaker 1: for one area of a country to another, but also
Speaker 1: in terms of time. So when you're in a place
Speaker 1: like Butcher or ip In, Um, these were absolutely horrific
Speaker 1: places at a certain you know, just a few months ago. Um.
Speaker 1: And the stuff that was being done to people we
Speaker 1: discovered since of course people who lived there new at
Speaker 1: the time was unspeakable. Um. And yet you go back
Speaker 1: now and people are rebuilding their lives. Um. You know,
Speaker 1: the restaurants are reopening, people are trying to make things work.
Speaker 1: All those women and their children, it's on. They want
Speaker 1: to come back. Almost everybody left Butcher for example, Um.
Speaker 1: But they want to come back because they left their
Speaker 1: husbands behind, they left you know, parents, grandparents behind who
Speaker 1: couldn't move. Uh. And so you see them come back,
Speaker 1: And what interested me was what happens to them when
Speaker 1: they come back. Um, you know, are they are they
Speaker 1: the lucky ones who escaped, or are they themselves um,
Speaker 1: you know, kind of traumatized by it or um and
Speaker 1: the experience. The result of you know, my reporting was
Speaker 1: simply that it's very difficult to escape the trauma because
Speaker 1: you know, for example, one lady was a uh a
Speaker 1: life coach, so she fled to Poland with their children,
Speaker 1: you know, right at the beginning before, which was occupied
Speaker 1: and was still fighting and uh. And she's in Poland.
Speaker 1: But what did she do. She carries on her work online.
Speaker 1: She's talking to people, her clients who are living through everything,
Speaker 1: and so she lives through the same experiences. Another woman,
Speaker 1: very very impressive woman, was running a business center and
Speaker 1: she decided, well, what can I do to help? As
Speaker 1: as she was leaving, and she decided to set up
Speaker 1: a call center so that they could you know, uh,
Speaker 1: find out which people were stuck in their homes, couldn't
Speaker 1: get medicine, couldn't get food, needed help, and they could
Speaker 1: send people into help. Um. In the end, because it
Speaker 1: was occupied and you couldn't move, they couldn't do a
Speaker 1: lot of that. But they got twenty calls from people saying, uh,
Speaker 1: you know, what's the news on the escape routes. You know,
Speaker 1: the green corridors are being made so they could help
Speaker 1: organize people to get out. UM. They also people would
Speaker 1: just call in and say, I just saw two people,
Speaker 1: you know, children killed in a car happened at this place. UM.
Speaker 1: And they have this record of what happened throughout in
Speaker 1: Butcher where people were calling it in UM and that
Speaker 1: now record now remains that woman was really very sort
Speaker 1: of damaged by the whole experience because she was to
Speaker 1: live through it while it was happening and then again
Speaker 1: when it came over in the news and was made public. Mark,
Speaker 1: I mean you've been back and forth, like what strikes
Speaker 1: you the most as you talk to these individuals, because
Speaker 1: I do think there is this sense that often sometimes
Speaker 1: all of us who are far removed, it's just another headline.
Speaker 1: But as you really tell us, I mean, the faces,
Speaker 1: the people, the stories, these are real lives that we're
Speaker 1: talking about. Yes, very much so. And it's it's hard, Uh,
Speaker 1: you know, the jobs really aren't there. Butcher strangely is
Speaker 1: relatively lucky, which is a very strange thing to say,
Speaker 1: but uh, it is was always a clearly middle class
Speaker 1: suburb just outside of Kiev. Uh and because of its
Speaker 1: fame or or notoriety, whatever you wanted to call it,
Speaker 1: as a result of the massacres there where they found
Speaker 1: uh you know, mass grades and so on. Um, there
Speaker 1: is a lot of international attention. There are a lot
Speaker 1: of international donors. Um they you know, if they are
Speaker 1: able to open doors and to get help in a
Speaker 1: way that a lot of other places in Ukraine that
Speaker 1: nobody has ever heard of can't. So in one sense
Speaker 1: they're quite lucky. But even there, uh you know, they
Speaker 1: they fifty percent of businesses are still closed. People can't
Speaker 1: get jobs. The deputy mayor that I was talking to,
Speaker 1: not a great dynamic woman, was saying that, uh, she
Speaker 1: is hiring all kinds of hopeless the overqualified people to
Speaker 1: work in the you know, with her and the administration
Speaker 1: in the city hall, because they can't get any other work.
Speaker 1: And and samaries are lower than new work. Before the war,
Speaker 1: public fatories were never very high, and yet people are
Speaker 1: willing to come and work. Okay, Mark, can you take
Speaker 1: us back to the Ango studio because it still gives
Speaker 1: me chills a little bit, and I just want to
Speaker 1: hear about what why why tango and what it's done
Speaker 1: for those that you spoke with, Mark, Just so you know,
Speaker 1: we've got about in a a minute. Okay, So it's the
Speaker 1: really extraordinary thing about the tangle was that these are
Speaker 1: all beginners, and they are mostly women who came back
Speaker 1: and they are looking for ways of thinking about anything
Speaker 1: else other than you know, the grind of life and
Speaker 1: the trauma and everything else. And this is a way
Speaker 1: that they found to do it that if you if
Speaker 1: they have to just focus on their bodies and just
Speaker 1: focus on you know, moving your feet the right way. Um,
Speaker 1: that for a couple of outs at least, that's the
Speaker 1: only thing that they think about. Uh. And uh, it
Speaker 1: was really it was uh you know, it's it's not
Speaker 1: literally therapy, it's not clinical, but it is something that
Speaker 1: they found to kind of make life more livable. Well,
Speaker 1: as you say in your story about for two hours
Speaker 1: twice week, the dancers leave those horrors behind and we
Speaker 1: can only just imagine, uh, in that break that that
Speaker 1: gives them. Mark Champion, thank you so much. We've really
Speaker 1: been appreciate you reporting on all of this. Senior reporter
Speaker 1: for International Affairs at Bloomberg News, joining us on the
Speaker 1: phone from London. This story you can find at Bloomberg
Speaker 1: dot com, Slash business Week, and of course our thanks
Speaker 1: to Joel Webber, editor of Bloomberg Business Week, joining us
Speaker 1: here in our Interactive Brokers studio. You're listening to Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes. Tim
Speaker 1: Stinovic on Bloomberg Radio. I gotta say, how did you
Speaker 1: do a presentation for someone? And we're talking about Bloomberg,
Speaker 1: And I said, one of the things I really do
Speaker 1: love about Bloomberg is how wide and deep we are
Speaker 1: in terms of scope, in terms of news coverage. You
Speaker 1: can go anywhere in the globe and find a reporter
Speaker 1: to talk about who have boots on the ground and
Speaker 1: really under a understanding story. And lucky for us, we
Speaker 1: have a colleague who's normally in Hong Kong, but she's
Speaker 1: in New York this week. We're very pleased to have
Speaker 1: with a Sophia Horte Coast. She's chief China Markets correspondent
Speaker 1: for Bloomberg near She's based on Hong Kong Bureau. Yeah,
Speaker 1: but she's with us right now in the Bloomberg Interactive
Speaker 1: Broker's Studio. She's been here in New York for a
Speaker 1: little over a week. So if you're good to have
Speaker 1: you with us this afternoon. We want to talk China markets.
Speaker 1: We want to talk about what happened over the weekend
Speaker 1: in China. But first I want an update from you
Speaker 1: about what things are like in Hong Kong right now,
Speaker 1: because there's been some big changes over the last couple
Speaker 1: of years. Sure, I actually moved there m almost five
Speaker 1: years ago. Now it's coming up to five years in January,
Speaker 1: and what what period it's been. I mean, when I
Speaker 1: moved there in thousand eighteen, Hong Kong was kind of
Speaker 1: the the Wild East, as it were, and it was
Speaker 1: it was the freest city in China. It is at
Speaker 1: the end of the day, still a Chinese city, even
Speaker 1: though it has its own independent structures, independent systems. UM
Speaker 1: and the erosion of those independent systems is really really
Speaker 1: common to play in the five years that I've been there.
Speaker 1: But also UM and we were talking about this during
Speaker 1: the break. I mean, COVID zero was such a huge
Speaker 1: thing in Hong Kong. And when I say was should say,
Speaker 1: I should really say it is? I mean, you still
Speaker 1: have to wear a mask every every single day or
Speaker 1: wherever you are even outside in Hong Kong. So I
Speaker 1: mean for me here, it's it's wild that you can
Speaker 1: just walk around the street and show your face and
Speaker 1: can see people smiling. Um. But really, I mean that
Speaker 1: was smiling in New York. I saw people smile. Maybe
Speaker 1: I just smile everyone. People smile back. Maybe they think
Speaker 1: I'm weird, Yeah exactly, No, but but really smile. Okay yeah,
Speaker 1: Carol's um, but no, but but really, I mean my
Speaker 1: point is that, yes, the protests were hard on the city,
Speaker 1: the aftermath of that national security law that came into play,
Speaker 1: that was obviously very very controversial, But it was really
Speaker 1: this year that you saw people just throwing in the
Speaker 1: talent saying I want to leave. Um. I mean February
Speaker 1: you had the stories that you heard here of parents
Speaker 1: being separated from the children. That's all true, that happened. Um.
Speaker 1: I mean, you would go into the hospital system if
Speaker 1: you tested positive for COVID, and you really had to
Speaker 1: think about maybe not leaving for at least fifty days
Speaker 1: because you have to test negative so many times. So
Speaker 1: people did leave and and a lot of them didn't
Speaker 1: come back. The brain drain was extremely severe, so Sofia
Speaker 1: like when we think about um the next tenure of
Speaker 1: President g and there's a lot of news that came
Speaker 1: out over the weekend. We've been talking about it all week.
Speaker 1: So this will be his third term. You know, what
Speaker 1: kind of China is it going forward? You know, coming
Speaker 1: after decades of being a market that everybody wanted to
Speaker 1: be a part of and to be able to tap
Speaker 1: into that, you know, growing domestic home base, the one
Speaker 1: billion plus population. So how should global investors think of
Speaker 1: China going forward? I think there was a lot of
Speaker 1: expectation and hope that during the Party Congress there would
Speaker 1: be any any kind of signal, any kind of signal
Speaker 1: or or because you know, when it comes to China,
Speaker 1: it's all about signals. It's never straightforward reading what's happen
Speaker 1: penning in China, that there would be some kind of
Speaker 1: pivot from Shi jumping, or at least a government that
Speaker 1: was more pragmatic and more focused on growth and again
Speaker 1: looking at the economy. Uh instead of um, you know,
Speaker 1: prioritizing Si jimping thought um but stead they delayed right GDP,
Speaker 1: which was kind of like blew your mind. Yeah, So
Speaker 1: though there is kind of a there might be a
Speaker 1: boring explanation to that that people actually need to physically
Speaker 1: sign off on those reports, and there might be a
Speaker 1: COVID zero element there that the people who needed to
Speaker 1: to stamp them couldn't couldn't physically do that. UM. But
Speaker 1: obviously it adds to the whole noise, in the whole
Speaker 1: uncertainty around where China's priorities are in terms of growth.
Speaker 1: And what She Jumping really made clear in the past
Speaker 1: two years is that UM communists the Communist Party's policies.
Speaker 1: And when when we say the Communist Party nowadays, it
Speaker 1: really does mean Si Jimping. I mean, he's not called
Speaker 1: the Chairman of Everything for no reason. UM. And that
Speaker 1: trumps everything. It trumps economic growth, it trumps pragmatism, it
Speaker 1: trumps UM you know, profits by by corporates and by
Speaker 1: the China's biggest companies, and it trumps the markets. I
Speaker 1: mean the sell off that we saw in in Chinese
Speaker 1: financial markets, not just this year but last year. Importantly,
Speaker 1: that was all down to policy. And that's something that
Speaker 1: I think would never happen in a place like the US.
Speaker 1: You know, if if Biden saw financial markets tanking because
Speaker 1: of policies, UM, you know that his government brought out
Speaker 1: there would be a kind of rollback, and we're seeing
Speaker 1: that in the UK now, I mean less trust is
Speaker 1: rolling back policies because of the market reaction. Shijiping didn't
Speaker 1: do that and didn't do that, really stuck to those
Speaker 1: damaging policies for for for two years. But at the
Speaker 1: same time and really unfortunately about a minute left, but
Speaker 1: there are there was also at the same time policies
Speaker 1: that they said certain I guess Chinese regulators were talking
Speaker 1: about ways to prop up the Chinese equity markets. So
Speaker 1: sometimes it feels like mixed signals. It's mixed sALS. I
Speaker 1: mean it is. It is kind of invest as much
Speaker 1: as you like from you know, China is still does
Speaker 1: still want foreign capital inside its markets. It's still wants
Speaker 1: to roll out the red carpet for um capital to
Speaker 1: come into China. It needs that capital, but it's very
Speaker 1: much on China's terms. That capital can't go everywhere. It
Speaker 1: can't go um you know, to kind of big tech
Speaker 1: or two streaming companies for example. He needs to go
Speaker 1: where she jumpin. C's are the biggest policy priorities for
Speaker 1: the future, and that's green, that's high tech, that's AI
Speaker 1: that's chip making. China wants that kind of growth and
Speaker 1: not the you know, the kind of big tech or
Speaker 1: property market growth of the past decade. It's really fascinating. Hey,
Speaker 1: just have like fifteen seconds left. Sofia, do you ever
Speaker 1: envision at COVID zero policy going away or easing at all? Uh? Well,
Speaker 1: it can't last forever, is my conclusion, but it can
Speaker 1: last for a very long time. All right, there, it
Speaker 1: is big thank you to Sofia Rtea E. Coasta. She's
Speaker 1: chief China Markets correspondent for Bloomberg New is usually based
Speaker 1: in our Hong Kong bureau, but with us in the
Speaker 1: Bloomberg Interactive Brokers studio from Hong Kong. It's not like
Speaker 1: there's a time difference or anything. It's bedtime. It's like
Speaker 1: the middle of the night. There, come back, come back,
Speaker 1: come back to New York and I love to continue
Speaker 1: and talk more with you. Our thanks to Sophia. All right,
Speaker 1: you're listening in watching Bloomberg Business Week. This is Bloomberg Radio.
Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes. Tim Stinovic on Bloomberg Radio. We gotta read
Speaker 1: on the economy thanks to the FED Beige Book. We
Speaker 1: did that at the top of our broadcast and keep
Speaker 1: it only. There are two FED meetings left in two
Speaker 1: we're talking about in November and December. We're very pleased
Speaker 1: with us. A tap with us this afternoon, Chris Ansy,
Speaker 1: senior editor for Bloomberg News, who joins us on the
Speaker 1: phone from Boston. Chris, it's interesting because we got some
Speaker 1: data from the Federal Reserve earlier today in the Beige Book.
Speaker 1: I don't want to call it data, but it was
Speaker 1: anecdotes about what you know, the country is seeing in
Speaker 1: different or with the Federal Reserve is seeing in different districts,
Speaker 1: and we saw a little bit of a cooling. Sort
Speaker 1: of difficult to kind square that with the CPI data
Speaker 1: that we got last week, but it always all raises
Speaker 1: a big question about, you know what, the Fed hiking
Speaker 1: rates so aggressively right now, why aren't we seeing it
Speaker 1: really play out when it comes to tightening financial conditions
Speaker 1: at least bringing down inflation. Yeah, that's uh, that's a
Speaker 1: good question. Uh. And uh, you know, we look at
Speaker 1: financial markets. Uh, we've got a beer market in stocks,
Speaker 1: We've got an historic beer market in bonds. We've got
Speaker 1: a super strong dollar. All of these kinds of signs
Speaker 1: are screaming, uh, major reaction to the federal reserves, aggressive tightening.
Speaker 1: But when we look at the actual uh you know,
Speaker 1: economic data, we don't see any major problems here. Even
Speaker 1: you know, this morning's housing starts. Uh, they came off
Speaker 1: a bit in September, but the level of housing starts
Speaker 1: is still above where it was before COVID. Uh. We
Speaker 1: look at yesterday's industrial production figure, Uh, it handily beat forecasts. Uh.
Speaker 1: And uh, the percentage of factory capacity that's in use
Speaker 1: is at a multi decade high. Um. Job games are
Speaker 1: still going pretty well. So uh. You know you were
Speaker 1: referring before to the jargon that economists use these long lags. Uh,
Speaker 1: they aren't that variable right now, I got to say,
Speaker 1: but there are these long lags between Fed policy action
Speaker 1: and fundamental turns in the economy. Chris, I was trying
Speaker 1: to get uh tim to sing Long and Winding Road
Speaker 1: by the Beatles came into my head when I was
Speaker 1: reading long invariable Lags. I don't know why, Yeah, like
Speaker 1: it just as kind of a one of my least
Speaker 1: favorite Beatles songs. I haven't say, that's why I don't
Speaker 1: want to sing a carol. I don't want to send
Speaker 1: a favorite one. Okay, UM, so soon we're going to
Speaker 1: be singing help nicely done, nicely done? Well you know
Speaker 1: in your writing today, um, in the Bloomberg New Economy Daily,
Speaker 1: because you you mentioned tourists who's got a story out
Speaker 1: about the report last week regarding central banks and how
Speaker 1: they have now quote revised down significantly end quote their
Speaker 1: estimate of where the U S economy speed limit is.
Speaker 1: The significance of that, So that is significant because it
Speaker 1: means if the economy is kind of trend growth rate
Speaker 1: is lower than it was, it means that all of
Speaker 1: these indicators that we get uh don't need to be
Speaker 1: too hot to trigger inflation. That means that the economy
Speaker 1: is going to react in a more inflationary way uh
Speaker 1: to just small opticks in economic activity. Uh. And so
Speaker 1: it makes it all the harder to ring inflation out
Speaker 1: of the system. Uh. And you know we meant just
Speaker 1: mentioned industrial output. Yesterday after that report, Goldman sacked economists
Speaker 1: came out and up to their running calculation for third
Speaker 1: quarter g d P to two point four percent, now
Speaker 1: two point four percent is above everybody's estimate of the
Speaker 1: U S trend. So if the US is clocking that
Speaker 1: kind of growth pacee, it just means more inflationary pressure
Speaker 1: and more work for the Federal Reserve to do to
Speaker 1: bring it down. So what does this all mean in
Speaker 1: the last minute that we have with you, Chris, for
Speaker 1: the path of rate hikes going forward? I mean we're
Speaker 1: thinking for November obviously, what about December? What about what
Speaker 1: cash car? He said yesterday? Uh? How are you reading
Speaker 1: into it more and more and more looking at this
Speaker 1: whole time? Well, it means a hard day's night for
Speaker 1: Mr Powell and his colleague, that's for sure. But you
Speaker 1: know what I think is that, you know, uh Anna
Speaker 1: Wong and Bluebrig Economics was pretty prescient predicting, you know,
Speaker 1: a five percent policy rate next year. Uh. And it's
Speaker 1: a call that she's increasingly uh that is increasingly shared
Speaker 1: by others. All right, well you work in yellow submarine
Speaker 1: next time, and uh, you are then going to be
Speaker 1: my favorite person. I'm gonna be totally in awe of you, Chris,
Speaker 1: more than I am already. Um, Chris, thank you so much,
Speaker 1: really appreciate it really fits into our coverage here of
Speaker 1: Beige Book and just all things fed and especially as
Speaker 1: we get ready for that Bloomberg exclusive with Jim Buller,
Speaker 1: the president of the St. Louis Fed Our Thanks to
Speaker 1: Bloomberg New Senior Editor Chris Anty and who also knows
Speaker 1: his Bloomberg Bloomberg songs, I should say Beatles songs really well.
Speaker 1: Writing in the Bloomberg New Economy Daily. You're listening to
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes.
Speaker 1: Tim Stinovic on Bloomberg Radio talking about Netflix throughout the day,
Speaker 1: Shares just off their high, still up about surging as
Speaker 1: a subscriber growth signaling the worst is over. It added
Speaker 1: two point forty one allion customers in the third quarter,
Speaker 1: exceeding internal forecast as well as expectations on Wall Street.
Speaker 1: Well chairman, president, co CEO, and of course the co
Speaker 1: founder of Netflix. We're talking about read Hastings Winging on
Speaker 1: the conference call last night. He too, issuing a bit
Speaker 1: of a sigh of relief. Check it out. Well, thank god,
Speaker 1: we're done with shrinking quarters. So it's a big feeling
Speaker 1: of we're back to the positivity. We still got f X,
Speaker 1: so that's a huge hit, you know, as we've explained,
Speaker 1: So that's not going to go away. Um, but other
Speaker 1: than that, all the stars are lining up very well
Speaker 1: for us. That was Netflix co founder co CEO, Read
Speaker 1: Hastings and chairman as well, from the company's conference call
Speaker 1: following Tuesday's earnings results. We've got a great voice with us.
Speaker 1: Geta Rananathan is technology and media analysts for Bloomberg Intelligence.
Speaker 1: She joins us on Zoom from our Princeton, New Jersey bureau. GA.
Speaker 1: Great to have you with us. So is it true?
Speaker 1: I mean, are we should Read Hastings actually be breathing
Speaker 1: a sigh of relief here? Is you know, one quarter
Speaker 1: does not change everything, does it. Yeah, that's a great question.
Speaker 1: But I think we're back on track here finally. Um.
Speaker 1: You know, there was so much I think what had
Speaker 1: happened earlier in this year was this kind of perfect
Speaker 1: storm of all negatives, right, whether it was the COVID hangover,
Speaker 1: whether it was increasing subscriber uh you know, competition from
Speaker 1: other rival streaming services, whether it was the COVID log jam,
Speaker 1: you know, causing all the production delays. It really kind
Speaker 1: of everything went wrong for Netflix at at the wrong time, right,
Speaker 1: and Um, you know, finally we're seeing some green shoots here,
Speaker 1: so they have a good trajectory in place. I mean,
Speaker 1: make no mistake, this is still a model that is maturing,
Speaker 1: so we're not going to see those explosive subscriber gains anymore.
Speaker 1: But there are some catalysts in place which tells us
Speaker 1: that they do have a sustainable path to revenue reacceleration
Speaker 1: as well as opening up the market to you know,
Speaker 1: to reach a much broader audience with this new add
Speaker 1: tear that they're coming up with, which is priced really aggressively.
Speaker 1: In my view, hey, listen, will will be as excited
Speaker 1: with Netflix that that add to your story? Wasn't part
Speaker 1: of it? Right now? Geta in your in your view, yeah,
Speaker 1: I don't think so. I think we we definitely needed it.
Speaker 1: Wasn't just reversal of subscriber losses, right, we need something
Speaker 1: at the end of the day, you know, this is
Speaker 1: a subscribe This is pretty much a subscriber story. Yes,
Speaker 1: they're trying to shift, They're trying to pivot away from
Speaker 1: just that hyper focus on subscribers to other financial metrics.
Speaker 1: We're seeing that they're they're going to even stop issuing
Speaker 1: subscriber guidance, but still at the very core of the story,
Speaker 1: it is a subscriber story, and so you do need
Speaker 1: that add heere for kind of boosting those subscriber numbers,
Speaker 1: especially in a lot of the developing economies. Alright, So
Speaker 1: we're rebummed out that they didn't give some kind of
Speaker 1: a forecast. Were you expecting that from them or were
Speaker 1: you expecting to get some kind of guy So they
Speaker 1: did give us a forecast for four Q and and
Speaker 1: the good news is the forecast was actually above consensus estimates. Uh,
Speaker 1: there's also potential upside because they didn't really bake in
Speaker 1: anything from the AD model. Given that it's still early days,
Speaker 1: what's going to happen is going here? Okay, that they
Speaker 1: didn't break out like in terms of a forecast for
Speaker 1: the AD model, that's okay, Yeah, No, I think that's okay.
Speaker 1: I think it's it's still really really early days. It's
Speaker 1: it's very hard to say how that's going to pan out.
Speaker 1: I think what they're trying to do now is obviously
Speaker 1: really shift focus away from you know, kind of just
Speaker 1: that hyper focus on subscriber editions quarter and quarter out.
Speaker 1: And remember every time they do report those quarterly ads,
Speaker 1: we we do see huge swings in the stock, so
Speaker 1: I think, what, this is a good thing. I think
Speaker 1: it's actually a positive that they're not going to do
Speaker 1: this because I think it reduces the volatility a little bit. Otherways,
Speaker 1: there's just so much drama, you know, every time they
Speaker 1: report quarterly numbers. Quita, how important was content in this quarter?
Speaker 1: Because we got I mean, it's kind of a funny
Speaker 1: question to ask because Netflix is all content, right, but
Speaker 1: you know, people will quit. They've learned if they don't
Speaker 1: always have something that they want to watch. We saw
Speaker 1: Stranger Things the new season. Uh, they released the Korean
Speaker 1: smash hit Extraordinary, Attorney Woo, some movies Gray Man and
Speaker 1: Purple Hearts. How important was that to the blockbuster number
Speaker 1: that we saw yesterday? Did you guys watch any of that?
Speaker 1: Did you watch any that I did? I did. I'm
Speaker 1: a big Stranger Things fans, so yeah, I watched it multiple.
Speaker 1: You can only say it's part of your job. You
Speaker 1: have to do it. I'm just working here, okay, But
Speaker 1: I know, I mean, I think it's so much of
Speaker 1: the story really banks on content and what was really
Speaker 1: interesting I think in their investor letter, Tim and Carroll Is.
Speaker 1: They kind of showed us some of their pieces of content.
Speaker 1: They showed us engagement and they said that their you know,
Speaker 1: engagement on the Netflix platform is way above their rival services,
Speaker 1: whether it's an Amazon Prime, whether it's a Disney Plus.
Speaker 1: And then they showed us like the Google search trends
Speaker 1: for you know, their latest hit, which is the Jeffrey
Speaker 1: Dahmer Show, and they and they compared that to both
Speaker 1: House of Dragons from HBO as well as you know
Speaker 1: a Lot of the Rings, which was the big splash
Speaker 1: from Amazon. Sign similarities in those stories. No similar these
Speaker 1: no similarities. But it does show that you know, Netflix content,
Speaker 1: once it resonates, resonates and kind of builds that buzz,
Speaker 1: it really becomes like a big hitting title. And that's
Speaker 1: kind of what they're really looking to do. Um, you know,
Speaker 1: not just have a few of these franchises, but kind
Speaker 1: of have multiple many many of these sleeper hits, if
Speaker 1: you will. So what does it mean. I'm just trying
Speaker 1: to make sense of this headline and forgive me if
Speaker 1: you've kind of touched on this stretched then to support
Speaker 1: all advertising demand. Are they saying that they're getting tons
Speaker 1: of it or like, how do you read that? Yeah,
Speaker 1: so they did say they did mention this on the
Speaker 1: call yesterday. They said that advertisers are absolutely wanting to
Speaker 1: get on the Netflix platform. And we're not surprised. I mean,
Speaker 1: this is, you know, a premium experience. If you just
Speaker 1: kind of took a look at one of the ads
Speaker 1: that they debuted, it was actually for their new show
Speaker 1: Emily in Paris, and just to look in the feel
Speaker 1: of things, you know, and just to look in the
Speaker 1: feel of the ad is so different from what you
Speaker 1: normally watch. Right. It's stylish, it's engaging, it's modern. It
Speaker 1: almost feels like it's an integral part of the show. So,
Speaker 1: you know, I think that's what they're gonna do. They're
Speaker 1: going to elevate the ad experience for for all players. Um,
Speaker 1: you know, the creative element is going to be huge,
Speaker 1: and I think advertisers know that. They realize that and
Speaker 1: they want to be on that Netflix platform. Hey, I
Speaker 1: wonder about the people who will be signing up for
Speaker 1: the new version of Netflix, the ad supported version. Are
Speaker 1: Are they saying that it's people who've quit Netflix in
Speaker 1: the past because it's gotten too expensive and they don't
Speaker 1: necessarily have what they want to watch at any given time,
Speaker 1: or are people going to downgrade their memberships for cheaper
Speaker 1: membership options. Yeah, this, this trade down point was was
Speaker 1: brought up multiple times during the calling. What Netflix management
Speaker 1: kept saying is they don't really see a lot of cannibalization.
Speaker 1: So what they're really trying to do with this new
Speaker 1: seven dollar price point, and remember this is historically the
Speaker 1: lowest price point that Netflix has ever priced one of
Speaker 1: its plans that is to kind of really attract a
Speaker 1: whole new market, tap to a whole different demographic, probably
Speaker 1: a slightly lower income demographic that wants to watch Netflix
Speaker 1: but just hasn't been able to afford, you know, maybe
Speaker 1: that the ten dollar price point or even the fifteen
Speaker 1: fifteen fifty the standard uh plan. And so that's what
Speaker 1: they're kind of saying. Although the worry on the street
Speaker 1: is that many many subscribers, maybe even of subscribers, actually
Speaker 1: trade down. I don't personally think that's going to happen,
Speaker 1: because remember this is going to be a lower resolution,
Speaker 1: it's a seven twenty versus your ten a DP. And
Speaker 1: also you're not gonna be able to download all of
Speaker 1: the content. In fact, not even all of the content
Speaker 1: is going to be available on this AD supported plan,
Speaker 1: So I really think maybe the risk of trading down
Speaker 1: is going to be somewhat limited. So in an ideal world,
Speaker 1: they don't lose anybody that's existing kind of members to
Speaker 1: some extenders subscribers, and that they just open up a
Speaker 1: whole new revenue stream, right and new members that maybe
Speaker 1: weren't on it because it was too expensive before. I mean,
Speaker 1: that's that's the dream plan, right exactly, exactly, just opening
Speaker 1: up their addressible market. Yep. But the key when it
Speaker 1: comes to the content not all being available on the
Speaker 1: ad supported tier, that's a function of rights that Netflix has, right,
Speaker 1: they don't. It's not like they're withholding content because people
Speaker 1: aren't paying for the full subscription. Can you explain what's
Speaker 1: going on there? No, that's just because of some of
Speaker 1: the licensing deals that they have in placed. And again,
Speaker 1: it's not a whole lot of content that's not available.
Speaker 1: It's only about ten percent of their entire content catalog
Speaker 1: that's not going to be available. And they said that
Speaker 1: they're working through these licensing rights with some of the
Speaker 1: you know, the third party providers. I think over time
Speaker 1: it will become available, but to begin with, they still
Speaker 1: have to iron out a few wrinkles. Kita, what was
Speaker 1: there anything that with all that we got from Netflix
Speaker 1: and on the call after earnings, was there anything that
Speaker 1: you didn't get answered that you would love to just
Speaker 1: you know, hey, read, can you just tell me a
Speaker 1: little bit more about this? Yeah? I think you know.
Speaker 1: One of the things that we've constantly kind of scratched
Speaker 1: our heads with a little bit has been this whole
Speaker 1: gaming effort. And just today we got this new news
Speaker 1: about them exploring a cloud gaming service potentially, now we
Speaker 1: know that anybody who's kind of for it into that venture,
Speaker 1: it's it's been really challenged, right whether it's been a
Speaker 1: Google Stadium, whether it's been Amazon, they haven't really been
Speaker 1: able to make much headway in that space. And so
Speaker 1: I'm just kind of wondering what exactly Netflix's thought process
Speaker 1: is here. Are they really looking to do something big?
Speaker 1: Do they need to make a big acquisition? Um? You know,
Speaker 1: that's obviously one of the things that I think a
Speaker 1: lot of investors would like to hear more about from them.
Speaker 1: Does this just got about thirty seconds forty seconds left?
Speaker 1: Or does this say anything about from the other streaming
Speaker 1: service that we whether it's Disney's or Amazon, that we
Speaker 1: should be looking out for, just quickly now, just that
Speaker 1: you know, I think the streaming story is back in
Speaker 1: a big way. I think investors are kind of totally
Speaker 1: soured on it, but I think what this tells us
Speaker 1: is that there is a lot of growth left. And
Speaker 1: you know, streamers just have to have to be creative
Speaker 1: in order to monetize all the different revenue streams. Oh
Speaker 1: I know is I get so many different services and
Speaker 1: I can't tell you my time, My husband and I
Speaker 1: are like, what do you want to watch? We can't
Speaker 1: find anything that's crazy. Gita, thank you so much. Our
Speaker 1: Gita ring Nathan. She is Bloomberg Intelligence, Technology and media analysts,
Speaker 1: joining us via zoom from our Princeton, New Jersey. You're
Speaker 1: really a great deep dive into Netflix. The stock still
Speaker 1: up about twelve forgive me in today's trading session. If
Speaker 1: you could only have one, which one would it be?
Speaker 1: Streaming app? I have Apple TV. I really kind of
Speaker 1: like Apple TV. Yeah, we're watching for All Mankind now
Speaker 1: we're on season three. It's really good about one show,
Speaker 1: no one service. What service would you to keep? Probably HBO,
Speaker 1: Max HBO Max. Thanks for listening to Bloomberg Business Week.
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