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Speaker 2: Jitting a manuel jointed to surround a table Chief Equity
Speaker 2: just over at evercor SI jitting Good mornings here, Good morning.
Speaker 2: Have you been participating in this wonderful, beautiful thing that
Speaker 2: is an eight day winning streak.
Speaker 3: Yeah, we have, you know, several weeks ago we just
Speaker 3: felt that when you backed off of that five percent yield,
Speaker 3: And I know we've been talking about it, but it
Speaker 3: is the fact that in this world now for the
Speaker 3: last year and a half, where stocks and bonds have
Speaker 3: been positive correlated, if bond yields go down, stocks go up,
Speaker 3: and backing off of five percent was huge for the psychology.
Speaker 3: And now we've got this unexpected oil price plunge, which
Speaker 3: is even bigger for Cheryl.
Speaker 2: I'm with you. Those two points yesterday stood out for me.
Speaker 2: Break a four to fifty on a ten year break
Speaker 2: of eighty on Brent crude. At what point do these
Speaker 2: correlations start to break the other way? What brings up
Speaker 2: hot that change?
Speaker 3: Well, we are watching that very closely. And guess what,
Speaker 3: the high frequency data is really important because that chart
Speaker 3: you were talking about a few moments ago, with the
Speaker 3: unemployment rate rising from three to four to three nine
Speaker 3: in the past, when that starts to happen, it tends
Speaker 3: to snowball. But where we're going to get the initial
Speaker 3: read on that is that eight thirty jobless claims number
Speaker 3: starts edging over two hundred and fifty thousand, we get
Speaker 3: a little bit cautious. Three hundred thousand is where we
Speaker 3: know the economy is going to turn down.
Speaker 1: I'm supposed to fold in now A question on Ed
Speaker 1: Hyman's Hicksy and Islm theory and his disinflation theory into
Speaker 1: your stock babble, forget about it. I love the single
Speaker 1: sentence you have which pushes against all that malarkey by
Speaker 1: saying price is paramount. Right now, when you talk to
Speaker 1: Ed Hyman, how does a respond to you telling them
Speaker 1: your economics doesn't matter, price is paramount.
Speaker 3: I'll tell you how five weeks ago Ed Heyman started
Speaker 3: putting out in almost daily the act that gasoline lean
Speaker 3: prices started falling as the conflict was erupting. You already
Speaker 3: had the turn in gasoline prices completely, you know, devoid
Speaker 3: of real sort of.
Speaker 1: Prosperity with Hymen's disinflationary tendency or outright deflation in China.
Speaker 3: Look, if you look at the last fifteen years, you've
Speaker 3: had episodic times of that from again. Obviously the financial
Speaker 3: crisis is one of those times. But ultimately what it
Speaker 3: comes back to again for equity investors, for bond investors.
Speaker 3: First of all, the whole idea of getting a real
Speaker 3: return on money in this world now is actually a
Speaker 3: positive for financial assets. It's a positive for capital allocation,
Speaker 3: and long term, it's a positive for growth. And that's
Speaker 3: you know, that's part of the equity investing mindset.
Speaker 4: Do you need a long term view right now or
Speaker 4: do you just trade the short term.
Speaker 3: It's really difficult to have a long term view because
Speaker 3: of what we're talking about the inflection in the economy
Speaker 3: potentially happening. But if you take the super long term view,
Speaker 3: is that even if you get the recession that Ed's
Speaker 3: thinking we're going to get, that it's going to be
Speaker 3: mild in twenty twenty four. What you're left with is
Speaker 3: a labor market that has rebalanced. What you're left with
Speaker 3: is again a real cost of money, better capital allocation,
Speaker 3: and frankly, we've talked about this before, you have new
Speaker 3: technological developments like generative AI that is going to improve
Speaker 3: the productivity of corporate America over the long term.
Speaker 4: One of the main frustrations of this year was that
Speaker 4: pretty much everything everyone said at the beginning of the
Speaker 4: year has proven to be wrong, including that this would
Speaker 4: be the year that tech stocks would fade more meaningfully
Speaker 4: and you start to see a broadening out in the rally.
Speaker 4: Energy stocks would start to be the true leaders. You
Speaker 4: just actually moved away from an overweight and energy and
Speaker 4: are talking more about generative AI. It seems like the
Speaker 4: theme just keeps on being that the leaders will keep leading.
Speaker 4: Everything else will just have to figure out where they
Speaker 4: fit in.
Speaker 3: Well, look, again, the recession will probably, you know, to
Speaker 3: the extent that it does arrive in the next twelve
Speaker 3: months or so, rationalize some of this, but ultimately what
Speaker 3: it's going to do, and look, part of the consternation
Speaker 3: on equity investors' minds is the fact that the Russell
Speaker 3: two thousand is making new lows. Ultimately, you're going to
Speaker 3: get to a point where there will be an attractive
Speaker 3: price for the other four hundred and ninety three stocks
Speaker 3: away from the Magnificent seven, and you will get to
Speaker 3: an earnings reset. We think that's part of next year's narrative.
Speaker 2: This is the difficult question I think people have got
Speaker 2: to confront at the moment. Do I want to buy
Speaker 2: the recovery to the recession I've not had yet, given
Speaker 2: the damage we've seen in the small camps. You can
Speaker 2: pick up various places to back up the consumer discretionary story. Allines,
Speaker 2: for instance, which have come way off the peak back
Speaker 2: of the summer. Do I want to start picking up
Speaker 2: the pieces going into what could be a slow down
Speaker 2: next year.
Speaker 3: We think you need to be balanced. It's one of
Speaker 3: those things where again, given the lack of visibility into
Speaker 3: next year, what we always say, we've had a very
Speaker 3: nice run in recent weeks, and if you go back
Speaker 3: over the last year, it's been a very nice run
Speaker 3: off the October lows. You need to be comfortable with
Speaker 3: the fact that if the market comes in ten or
Speaker 3: fifteen percent, which it does in any typical year, as
Speaker 3: it did several weeks ago, that you're a buyer of
Speaker 3: the dips and whatever that asset allocation is to you.
Speaker 3: That's the kind of discipline you need to employ.
Speaker 2: Goldman speak to this as well. We've gone through their
Speaker 2: note this morning a few times. It's worth doing it again.
Speaker 2: The hard part's over. More disinflation is in store over
Speaker 2: the next year. On growth, they see limited risk of
Speaker 2: a recession, and they say this on central bank policy.
Speaker 2: Then this is a really really interesting point. An increased
Speaker 2: willingness of central banks to deliver insurance cuts it grows slows.
Speaker 2: Earlier this week, Ben later on this program of E Toro,
Speaker 2: was saying the FED put was back. Lisa and I
Speaker 2: looked at each other and almost spat out our water.
Speaker 2: The FED put is back insures cuts of growth slows.
Speaker 2: Is the old fetch story returning?
Speaker 5: No?
Speaker 2: Why are they wrong?
Speaker 1: No?
Speaker 3: Look, because there is an assumption that there is a
Speaker 3: reflex reaction to a minus GDP quarter. Thankfully we didn't
Speaker 3: see it in twenty twenty two when we had that,
Speaker 3: because if you had interrupted the rate hiking program, you
Speaker 3: wouldn't have gotten to where you are. And you can
Speaker 3: argue both sides of this case, but frankly, for US,
Speaker 3: there is a commitment, given the fact that core PCE
Speaker 3: is still solidly with a three handle, that you just
Speaker 3: can't go down that road unless it really looks like
Speaker 3: there's a severe economic downturn. And we still think there's
Speaker 3: enough savings left over so that won't be the case.
Speaker 2: Judy and awesome as a was Emmanuel have et a court.
Speaker 1: Joining us now to brief off the GOP debate. Last night,
Speaker 1: Gregory Vliate, US policy strategist at AGF Investments. Gregory stood
Speaker 1: on the floor of the GOP convention of two thousand
Speaker 1: and four, and it was a different Republican Party. George
Speaker 1: Bush Junior wanted a more hopeful America. What's going to
Speaker 1: be that slogan this summer for the Republicans?
Speaker 6: Well, I think they'll emphasize the economy. They'll state that
Speaker 6: Biden has not done a good job. Frankly I would disagree,
Speaker 6: but I think that they'll make it more about the
Speaker 6: economy than anything else. The really intriguing issues are abortion
Speaker 6: number one, number two. How much more involved are we
Speaker 6: going to get in Ukraine and Israel?
Speaker 1: What about the idea that they're losing elections, not doing
Speaker 1: as well in certain elections. It going to be the
Speaker 1: mix of that we just saw it can be from
Speaker 1: a year ago, November, etc. How do they start winning again?
Speaker 6: Well, I don't think you talk like Ramaswami. I think
Speaker 6: he talked himself off the boat last night. I don't
Speaker 6: see much of a future for him. Probably not much
Speaker 6: of a future for Tim Scott. So it's dwindling. You've
Speaker 6: really only got three challengers. DeSantis, who was okay last
Speaker 6: night but made a strategic error he didn't mention the
Speaker 6: governor of Iowa had endorsed him. I can't believe he
Speaker 6: didn't talk about that. And then you've got Nicky Haley.
Speaker 6: He'll stick around for a while, maybe Chris Christy, but
Speaker 6: we'll begin at twenty twenty four. I think with just
Speaker 6: two challengers to Trump, that would be DeSantis and Haley.
Speaker 4: Do you think either of them have a chance of
Speaker 4: taking Trump off the ticket? Who would either of them?
Speaker 6: Oh? No, not at all. I mean Trump would have
Speaker 6: to do something really egregious, and he's pretty much filled
Speaker 6: the role on that for the last couple of years.
Speaker 6: So no, I don't see anything, you know, barring a
Speaker 6: health issue, that will keep Trump from being the nominee.
Speaker 4: Meanwhile, President Biden is going to meet with the UAW
Speaker 4: leader today and the there's a real question of what
Speaker 4: he can do to shore up the image of bignomics,
Speaker 4: of what's happened in the economy, which some people are
Speaker 4: saying on paper doesn't look so bad, yet in practice,
Speaker 4: has a lot of people feeling like they want something different.
Speaker 6: Well, it's a good question, Liza. I'm told that within
Speaker 6: the White House, Trump Biden is angry, he feels he's
Speaker 6: done a pretty good job in the economy and gets
Speaker 6: no credit. So he's going to hit the road and
Speaker 6: try to make his case. The problem is an awful
Speaker 6: lot of Americans fear that we're not out of the woods,
Speaker 6: and there's still more inflation threats, food, gasoline still to come.
Speaker 1: Greg Valier one oh one. Folks, this is a great
Speaker 1: course to take in politics. You get it off the
Speaker 1: back of a matchbook. You can take Valier one oh one. Greg,
Speaker 1: Your value one oh one is fiscal issues at the
Speaker 1: day of the election don't matter. Are you telling me
Speaker 1: the debt and the deficit don't matter the first Tuesday
Speaker 1: of November.
Speaker 6: Well, when you look at net inter cost, you look
Speaker 6: at borrowing costs, this is becoming a major crisis for
Speaker 6: the bond market, and there's no mood in Congress whatsoever
Speaker 6: to dramatically cut the deficit. However, I think that once
Speaker 6: we get through Labor Day of this coming year, this
Speaker 6: stuff will be irrelevant. I think attitudes harden during the summer.
Speaker 6: If Trump is well ahead, he could pull us out.
Speaker 6: But I have a feeling that Biden will come back.
Speaker 6: I have a feeling that the Democrats all of a
Speaker 6: sudden are motivated because of what happened in Kentucky.
Speaker 1: Is a path of least resistance for the former president.
Speaker 1: Another tax cut.
Speaker 6: That's going to be on the agenda. You're absolutely right, Tom,
Speaker 6: and I think with the Senate probably flipping, in the
Speaker 6: House probably flipping, you're going to have a climate that
Speaker 6: will be ripe for a huge argument on whether we
Speaker 6: extend the Trump tax cuts. I think we will. I
Speaker 6: think Trump will talk about tax cutting even though the
Speaker 6: deficit is enormous.
Speaker 4: Greg, I have to wonder whether this time is different.
Speaker 4: A lot of people come on the show. We'll say
Speaker 4: dysfunction in Washington, DC is the reason why yields have
Speaker 4: been flipping and flopping and going all over the place,
Speaker 4: and then they talk about a potential government shutdown and.
Speaker 7: Say markets won't care.
Speaker 4: Have we reached the point where market dysfunction is going
Speaker 4: to result from political dysfunction in DC in a more
Speaker 4: material way.
Speaker 6: Well, we're going to see probably another alleged crisis on
Speaker 6: November seventeenth if there's no budget. I don't think the
Speaker 6: markets will be all that concerned about it. I do
Speaker 6: worry about the credit agencies, you know, fitch S and
Speaker 6: p downgrading US debt, not just because of the size
Speaker 6: of our debt, but because things are so dysfunctional in
Speaker 6: getting a budget.
Speaker 2: Great to catch up, Greg, appreciate your input. Greg Vally.
Speaker 2: THEFJEFF investment's gone into next year, as Ed.
Speaker 1: Marangi and Emmanuel. So are you a confirmed bull?
Speaker 5: Cameron?
Speaker 8: I think that given the setup into your end, we
Speaker 8: can expect some kind of Santa claus rally just because
Speaker 8: of tax loss dynamics into the end of the year.
Speaker 8: The largest weights in the index are up the most
Speaker 8: this year, which means that you don't have eager sellers
Speaker 8: to recognize tax games. This is very different than last year,
Speaker 8: where the largest weights in the index were down a
Speaker 8: lot people sold them and you effectively puked into the
Speaker 8: end of the year. What it's the proverbial puke into
Speaker 8: the end of the year?
Speaker 1: Okay, thank you? Can we say that on radio? We
Speaker 1: just did, Cameron seriously our Warner Brothers discovery yesterday. Puke
Speaker 1: as you call it. Okay, how does that handle by
Speaker 1: tax saw selling?
Speaker 8: Well? I think that it will magnify as we go
Speaker 8: into the end of the year. You look at the
Speaker 8: areas that are down the most. This is small caps,
Speaker 8: This is cyclicals, This is healthcare some of your defensives.
Speaker 8: These are the areas where people are looking for tax
Speaker 8: sace harvesting opportunities. The key point though, is that they're
Speaker 8: smaller weights in the index or they're not part of
Speaker 8: the index.
Speaker 7: So when we just look.
Speaker 8: At the S and P five hundred, that could be
Speaker 8: something that supports it into end year.
Speaker 2: So help me here. Am I buying the index the
Speaker 2: S and P five hundred? And am I looking for
Speaker 2: buying opportunities in small camps? The financials, things that have struggled?
Speaker 2: What am I doing?
Speaker 8: I think that you have to look for opportunities and
Speaker 8: things that have struggled as you go into twenty twenty four,
Speaker 8: because we know that pain trades usually are reversal trades
Speaker 8: in leadership and just at the point where everybody throws
Speaker 8: in the towel and says, well, you can't own anything
Speaker 8: but the magnificent seven. These are the names that give
Speaker 8: you optionality on AI and they have.
Speaker 7: The best earnings growth.
Speaker 8: Everybody crowds into them, that's typically the moment that that's
Speaker 8: when they start to lag. And so I think we
Speaker 8: have to have the imagination that other things could do
Speaker 8: well in twenty twenty four. Other than just the narrow
Speaker 8: leadership that we've had this year.
Speaker 2: The Tilson Slock of Apollo's writing questions for us this morning.
Speaker 2: This is the question he's asking in its most recent note.
Speaker 2: Everyone who's bullish on equities and lower rated credit should
Speaker 2: ask them sound where they think the labor market will
Speaker 2: be in three months. With the Fed on hold and
Speaker 2: not showing any signs of cutting anytime soon, what's your
Speaker 2: labor market bed With that in mind.
Speaker 8: We are having the ultimate debate is if we're seeing
Speaker 8: normalization or we're seeing weakening. And the challenge is that
Speaker 8: normalization is usually the gateway drug two weakening, meaning that
Speaker 8: you see a little easing that turns into a lot
Speaker 8: of easing. But we're not yet seeing definitive data yet
Speaker 8: to say that the uplift we've had in unemployment is
Speaker 8: going to barrel higher. The key thing to remember, though,
Speaker 8: the Fed itself in its SEP the Summary Economic Projections
Speaker 8: has unemployment going to four point one percent next year
Speaker 8: and they're not forecasting a recession. So that's going to
Speaker 8: be a key question of if we get that four
Speaker 8: point one percent, does that justify them easing policy?
Speaker 4: Is it okay to sort of say we don't care
Speaker 4: for now. Down the line, whatever happens will happen. In
Speaker 4: the meantime, we can dance in the head of a
Speaker 4: pin with oil prices coming off, yield coming lower, and
Speaker 4: risk appetite still available.
Speaker 8: Yeah, because if we think going into CPI next week,
Speaker 8: remember that gasoline prices are down ten percent over the
Speaker 8: month of October. That's very different over the summer months
Speaker 8: where gas prices were up a lot. It pinched consumer
Speaker 8: spending maybe a little bit at the margin. So that
Speaker 8: does create this beneficial environment. But I think it's important
Speaker 8: to remember twenty twenty two, we priced in the earnings recession.
Speaker 8: In twenty twenty three, twenty three, we priced in the
Speaker 8: earnings recovery in twenty four. What are we going to
Speaker 8: price in twenty twenty four as we looked at twenty
Speaker 8: twenty five, are we still confident that this entire economic
Speaker 8: setup can remain very strong, that unemployment won't be an issue,
Speaker 8: consumer spending can remain.
Speaker 4: Robust Given the lack of certainty around some of the outcomes,
Speaker 4: the potential outcomes with the economy, How nimble are you
Speaker 4: remaining How are you remaining nimble? To be able to
Speaker 4: adjust quickly.
Speaker 8: I think we have to remain completely nimble. We saw
Speaker 8: that over thet last couple of weeks where we went
Speaker 8: from deeply oversold to deeply over to getting close to
Speaker 8: being overbought. It means that technicals become really important. We
Speaker 8: can't get too lodged into narratives because narratives would have
Speaker 8: told you everything's ending back a couple of weeks ago.
Speaker 7: Be scared.
Speaker 8: Now the narratives are saying everything is fantastic. The thing
Speaker 8: is that we are at resistance when we look at
Speaker 8: technical levels forty four hundred very important for the s
Speaker 8: and P five hundred four and a half percent very
Speaker 8: important support for the tenure. How we interact with those
Speaker 8: resistance and support levels will be very indicative of the
Speaker 8: next couple of months.
Speaker 1: Speak to the people who listened to you and said, Okay,
Speaker 1: I'm really nervous, but I'm going to participate in this
Speaker 1: market and they own tech which literally on an hourly basis,
Speaker 1: has a bid right now. What's the character of that
Speaker 1: bid on the Magnificent seven.
Speaker 8: Well, it's extraordinarily strong. But then think about the difference
Speaker 8: in the setup going into twenty twenty two Magnificent seven
Speaker 8: earnings had been cut by about twenty percent over the
Speaker 8: course of the year. Now going into twenty twenty three,
Speaker 8: over the course of twenty three, Magnificent seven earnings had
Speaker 8: been revised higher by sixty seventy percent sent on average
Speaker 8: because of the better growth that they've had. So it's
Speaker 8: a much higher bar and I think that's where the
Speaker 8: discipline is is not trying to extrapolate too much of
Speaker 8: the experience of twenty three, get too crowded, and instead
Speaker 8: look for opportunities and areas that might be more left behind.
Speaker 4: You've been talking, Cameron about how difficult it is to
Speaker 4: follow the mood because it.
Speaker 7: Swings so massively from week to week.
Speaker 4: How much has the move that we've seen in yields
Speaker 4: underpinned your conviction that you can lean into the rally
Speaker 4: heading into your end.
Speaker 7: It certainly has helped.
Speaker 8: We've seen it play out in the valuation and now
Speaker 8: valuations are back to about eighteen and a half time's earnings.
Speaker 8: The question is is that the right valuation even given
Speaker 8: where yields are at four and a half percent, where
Speaker 8: that equity risk premium is The challenge with valuations though,
Speaker 8: is they are terrible timing tools and that they have
Speaker 8: no predictive power.
Speaker 7: On a one year forward basis.
Speaker 8: So we can look at the market and say, hey,
Speaker 8: it's expensive here, expensive there, but that may not actually
Speaker 8: show up in price action for two, three, four years.
Speaker 8: And that's where that discipline of not chasing very high
Speaker 8: valuations comes in. When you have a longer holding period, you.
Speaker 2: Go breaking news TK on donuts? Is that where you
Speaker 2: want to go? DONI plural don't I?
Speaker 1: Yeah? Yeah, longer going far away the way a prime
Speaker 1: broker attracted a hedge fund. We can get you shares
Speaker 1: of krispy Kreme short. There's a in the East Coast,
Speaker 1: particularly in the krispy Kreme's more southern thing, and they're
Speaker 1: a different don I than what you get from Dunkin Donuts,
Speaker 1: which is, you know, there's cultures here. John, It's like
Speaker 1: it's like Greg's, but it's like American. Okay, all of
Speaker 1: a sudden, krispy Kreme nice video on radio. You are
Speaker 1: missing the making of the Magnificent. And the answer here
Speaker 1: is krispy Kreme is looking for a partnership with McDonald's.
Speaker 1: John Tower out with this and it's a mixed story
Speaker 1: of Ibada out there. But John Tower, a city group
Speaker 1: says first bite on d n ut. It's a McDonald's
Speaker 1: partnership that we may see.
Speaker 2: Do you know what you don't know? And I know
Speaker 2: this story already because Bramo shared it with me before
Speaker 2: Bramo breaking into the news industry and Fargo years and
Speaker 2: years ago for the first Crispy Kreme shop tre Tree story,
Speaker 2: true story.
Speaker 7: I covered it and people lined up.
Speaker 4: They camped out overnight to get the first Krispy krama.
Speaker 2: I went to interview that. You can't imagine that Bramo
Speaker 2: was what Bradma was like in local news, right, just
Speaker 2: get into a fluff.
Speaker 7: It was like, it's an investive piece.
Speaker 2: What are they doing with that?
Speaker 7: Money?
Speaker 2: Is unreal?
Speaker 1: Bramo and Farco, Yeah, I'm enough of a dunkin donut,
Speaker 1: which Krispy Kreme is just two sugary and sweet. Like
Speaker 1: camera doesn't help us out here, Krispy Kreamer duncan, he's.
Speaker 7: Never had a donut.
Speaker 8: There is nothing better than a hot, fresh Krispy Kreme
Speaker 8: donut straight from the friar.
Speaker 7: Nothing better, all right?
Speaker 2: The scripting at me.
Speaker 1: In the control room shot there. Please let's make sure
Speaker 1: we're running at nine o'clock today. Look for Cameron Dawson
Speaker 1: had Krispy Creekdnie. What you need to know is it's
Speaker 1: April of twenty eleven. There was a show then Game
Speaker 1: of Thrones Winter Is Coming was the first episode. And
Speaker 1: that's where we are right now. With the screaming success
Speaker 1: in days of Blue Eye Samurai on Netflix. I'm watching it.
Speaker 1: I can't say enough about the shocking beauty of it.
Speaker 1: It is overwhelming, how it is game changing for streaming.
Speaker 1: Keitha Raganathan knows this. She's US media analyst at Bloomberg Intelligence.
Speaker 1: And I would suggest Disney knows this as well. Githa
Speaker 1: boyd A's Disney need a Blue Eye Samurai.
Speaker 5: They certainly do. And that's one thing Tom that Bob
Speaker 5: Iger really emphasized yesterday. He said he is looking to
Speaker 5: reinvent the studio. Those are the words he used, and
Speaker 5: he really emphasized quality over quantity. So you spoke about
Speaker 5: how spectacular Blue Eyed summariz that's exactly what Disney is
Speaker 5: going to go after. You know, they talked about, you know,
Speaker 5: the studio having some kind of franchise fatigue. Too many
Speaker 5: TV series created for the streaming service. They're really kind
Speaker 5: of streaming down or cutting down, I would say, pairing
Speaker 5: down on a lot of the content costs. You know,
Speaker 5: Lisa was talking about where those savings are going to
Speaker 5: come from, a lot of that is them just really
Speaker 5: cutting down on content costs. So they took down content
Speaker 5: costs from thirty billion to twenty seven billion. For fiscal
Speaker 5: twenty twenty three, they're taking that down further to twenty
Speaker 5: five billion, and that is where you get that big,
Speaker 5: big free cash flow number for them as well. Eight
Speaker 5: billion dollars is what they're projecting for twenty twenty four,
Speaker 5: or sixty percent increase from this year.
Speaker 1: Now I get it, it's anime, it's animation, but the
Speaker 1: basic idea is blue Eyed Samurai is is non diversity
Speaker 1: as we could get in twenty twenty three. Is Disney
Speaker 1: moving on from the tone and temperament of the last
Speaker 1: three or four years. Is Eiger going back to something
Speaker 1: or new to something different?
Speaker 5: I think it's a it's a combination of everything, a
Speaker 5: tom because you know, he needs to go back to
Speaker 5: the drawing board. He knows that there hasn't really been
Speaker 5: a new Star Wars or a lucasfilm movie since twenty nineteen. Obviously,
Speaker 5: the Marvels is in its next kind of iteration, if
Speaker 5: you will. So there's a lot of things that he
Speaker 5: needs to do. But the biggest thing I think for
Speaker 5: them for the Disney studio, and this has kind of
Speaker 5: been a little bit shocking. And you bring up animation,
Speaker 5: and that's a really good point because a lot of
Speaker 5: their recent animated movies have actually not performed as well
Speaker 5: as you know, some of us would have expected. And
Speaker 5: the Pixar has kind of been, you know, has had
Speaker 5: kind of this string of misfires, if you will. And
Speaker 5: the studio that is really kind of giving them a
Speaker 5: run for the money is Universal with Illumination. We had,
Speaker 5: you know, you have Super Mario, you had Minions, all
Speaker 5: of these animated movies from Universal doing really really well.
Speaker 5: So Disney obviously going back to the drawing board and
Speaker 5: kind of doing a lot of rethinking and as Bob
Speaker 5: Iger said, reinventing the whole franchise.
Speaker 2: If Bob Biker was the movie is this nightmare the
Speaker 2: same quote, that's that's a great knocking.
Speaker 5: Well. I mean, he tried his best. And if there
Speaker 5: is you know, any person for the job, any person
Speaker 5: who can actually fix and rebuild Disney. I think it
Speaker 5: definitely is Bob Biger and he, you know, kind of
Speaker 5: delivered signature Bob Biger kind of news yesterday. You know,
Speaker 5: lots of good news, lots of nuggets of you know,
Speaker 5: lots of nuggets of good good, you know, optimistic news
Speaker 5: for investors to kind of hang on to. Obviously, there
Speaker 5: is a lot of work that remains to be done,
Speaker 5: but we do know that there are some real growth
Speaker 5: drivers for Disney. Whether it's the parks business that is
Speaker 5: seventy percent of Disney's operating income, you know, throwing out
Speaker 5: about ten billion dollars in operating profits and cash flow.
Speaker 5: So that definitely is is a huge growth pillar for
Speaker 5: the company. And then of course it is streaming and
Speaker 5: how they're kind of going to manage that whole business.
Speaker 5: You know, we know that they're in the process of
Speaker 5: consolidating Hulu. You know, the big question is how they're
Speaker 5: going to manage the esp and transition. And you know,
Speaker 5: whether that then that Disney bundle, the streaming bundle, really
Speaker 5: becomes the competitor, a true competitor to Netflix.
Speaker 4: Is rebuilding a euphemism for shutting it down in terms
Speaker 4: of streamlining certain businesses and getting off selling the rest
Speaker 4: of it.
Speaker 5: Yeah, so he seemed to actually walk back a little
Speaker 5: bit of you know, the linear TV commentary. I know
Speaker 5: we've talked a lot about ABC and some of the
Speaker 5: other networks kind of being up for sale, but he
Speaker 5: also did say that there is a huge cost opportunity
Speaker 5: when it comes to you know, those linear networks, and
Speaker 5: so they've actually, you know, the Charter deal that they
Speaker 5: recently inked was was kind of a catalyst for them
Speaker 5: kind of you know, shutting down a lot of you know,
Speaker 5: the smaller networks networks that they are that they don't
Speaker 5: consider core, and I think that's what they're going to do.
Speaker 5: They are definitely going to streamline the business. You're absolutely right, Lisa.
Speaker 5: I'm not sure when or how the sale is necessarily
Speaker 5: going to happen, but he did Eigers seem to suggest
Speaker 5: that even if a sale doesn't happen right away, there
Speaker 5: are a lot of synergies and there are a lot
Speaker 5: of cost efficiencies that they can hopefully extract over the
Speaker 5: next few months.
Speaker 2: Okay, so this one's a tough one to answer, but
Speaker 2: explore the question with us if you can. Tom mentioned
Speaker 2: who's buying. If they're selling, who's buying Where did the
Speaker 2: buyers come from?
Speaker 5: So it could be private equity. I mean we know
Speaker 5: that there have there has been interest from certain parties
Speaker 5: Byron Island, but Byron Allen was one who kind of
Speaker 5: made a bid for for you know, the ABC and
Speaker 5: some of the networks. You know, again, private equity would
Speaker 5: always is interested in, you know, the TV assets because
Speaker 5: they do. Yes, it is an industry that is in
Speaker 5: secular decline, but at the end of the day, it
Speaker 5: does throughout a lot of cash and that is valuable.
Speaker 5: So yeah, again it's a little bit of a wait
Speaker 5: and watch. I mean there have been there has been
Speaker 5: some chatter about whether the leagues would be interested in
Speaker 5: kind of going and getting a broadcast asset. I mean
Speaker 5: broadcast assets like ABC don't come up for sale very often,
Speaker 5: so you know, maybe it is something that that the
Speaker 5: league and a leak can potentially consider for reach interesting.
Speaker 2: Gaitha, appreciate the update. You'll valuable. We appreciate your time.
Speaker 2: Geithor Reconnaz and the have Bloomberg Intelligence.
Speaker 4: Ellen Wall joining us now Senior Fellow at the Atlantic
Speaker 4: Council and author of Saudi Inc. Ellen to that point,
Speaker 4: Saudi's energy minister came out and said, it has nothing
Speaker 4: to do with demand, This is just price manipulation.
Speaker 7: Demand is still very strong. What did you make of that?
Speaker 9: Well, I think that he always has a bone to
Speaker 9: pick with the as he called him, the speculators, So
Speaker 9: I'm not surprised to see him talking about how, you know,
Speaker 9: this is all a financial thing and it's all due
Speaker 9: to speculators and it's not a you know, supply demand issue.
Speaker 9: But I think, you know, obviously there's always you know,
Speaker 9: speculation in the market, and we did see a whole
Speaker 9: lot of fund managers dumping oil off the futures this
Speaker 9: past week.
Speaker 10: So I'm sure he's focused on that.
Speaker 9: But the fact remains that the market is reacting to
Speaker 9: what it thinks is lower demand from China, and whether
Speaker 9: or not that's actually true, I think remains to be seen.
Speaker 9: It's always difficult to gauge what exactly is going on
Speaker 9: in China. What the market's reacting to was news that
Speaker 9: refining margins are soft, and you know, Chinese refineries aren't
Speaker 9: making as much, and so you know they're interpreting that
Speaker 9: as weak demand. Now, how does that translate into whether
Speaker 9: China reduces its imports, and there was some indication that
Speaker 9: they are going to be reducing oil imports. In fact,
Speaker 9: one of the interesting things that we've seen is that
Speaker 9: Iranian oil exports in September and October have been lower
Speaker 9: than they were in August. They hit a big high
Speaker 9: in August, but now we're seeing declines and there's some
Speaker 9: speculation that may be due to the sanctions enforcement, but
Speaker 9: it's much more likely due to declining demand from China.
Speaker 10: And we've got.
Speaker 9: Saudi y A holding a million barrels a day off
Speaker 9: the market. I do think Saudi Arabia is in the
Speaker 9: best position to be able to gauge Chinese demand, and
Speaker 9: it may be that this Chinese demand is looking a
Speaker 9: bit soft now. But you know, Abdozi's been someone is
Speaker 9: looking at the longer picture and the longer game, and
Speaker 9: he sees that that is strong well.
Speaker 1: And with great respect to your book, which is definitive,
Speaker 1: we can take these tensions at least back to the
Speaker 1: Saudi Yemeni War of nineteen thirty four. The Ibn Saud
Speaker 1: family has dealt with this for pushing one hundred years
Speaker 1: the distance to the south. Give us the modern treatment
Speaker 1: of how Riodd and Jiada look at Yemen today.
Speaker 10: Yemen is basically a thorn in their side right now.
Speaker 10: They don't like the Houthies, any group like the Houthies
Speaker 10: has Bulah Hamas.
Speaker 9: All of those groups, while well, you might think that
Speaker 9: ideologically there are similarities and matchups there, they are essentially
Speaker 9: a threat to the Saudi monarchy. The Saudi monarchy is like,
Speaker 9: you know, they're they're like the stated old you know,
Speaker 9: conservative guy who always votes the same way and always
Speaker 9: says the same thing for breakfast. You know, they're they're
Speaker 9: the status quo. And any group that's looking to change
Speaker 9: the status quo, even if there are similarities in terms
Speaker 9: of say religious extremism or religious ideology, that's seen as
Speaker 9: a threat. And what's a bit disturbing is that despite
Speaker 9: prolonged military campaigns by the Saudis and the UAE, they
Speaker 9: haven't been able to dislodge the Whoi's from Yemen.
Speaker 10: In fact, if anything, they're more entrenched.
Speaker 9: And so I do think that given the fact that
Speaker 9: the who these are at least claiming to be involved
Speaker 9: in the Israel Hamas conflict, you'll be interesting to see
Speaker 9: if the Saudis maybe use this as an excuse to
Speaker 9: really try to get them out of Yemen once and
Speaker 9: for all, or if they'll be a bit embarrassed by
Speaker 9: somebody else taking them out.
Speaker 1: And then the conservative guy, as you call Saudi Arabia
Speaker 1: their treatment of the shades of Palestine, how do you
Speaker 1: interpret that, doctor Wald?
Speaker 9: Now that that is a big question, because what we've
Speaker 9: got on one hand is King Salmon, who is nominally
Speaker 9: the king of Saudi Arabia, and he is vehemently I
Speaker 9: mean vehemently anti Israel pro Palestinian.
Speaker 10: I mean, this is a guy who thinks.
Speaker 9: That, you know, the Mossad was responsible for nine to
Speaker 9: eleven and has said so, you know, in public on television.
Speaker 9: So he is a huge barrier to any kind of
Speaker 9: reprochement between Saudi Arabia and Israel. That being said, his son,
Speaker 9: who's really doing most of the ruling, the day to
Speaker 9: day ruling, seems much more inclined to use rapprochemant with
Speaker 9: Israel as a way to get what he wants or
Speaker 9: what he thinks he needs from the United States.
Speaker 10: And in fact, it seemed like that.
Speaker 9: Was about to be a very successful deal before this
Speaker 9: latest conflict derailed all that, and I don't think that
Speaker 9: the general battle, you know, the general lines that are
Speaker 9: drawn here are going to change.
Speaker 10: But I do think, you know, if if King Solomon
Speaker 10: wasn't wasn't.
Speaker 9: There, I think we'd see a much faster progression towards
Speaker 9: Saudi Israeli normalization. I don't think we're going to see
Speaker 9: quite with the UAE or Jordan has But I do
Speaker 9: think that that he that that NBS sees it as
Speaker 9: a beneficial thing or at least a really.
Speaker 11: Good UH tool to get other things that he needs,
Speaker 11: like support for obtaining nuclear power and military pact with
Speaker 11: the United States.
Speaker 4: Just real quick here, how does Saudi Arabia view the
Speaker 4: production in the US. It's gotten to a record level
Speaker 4: and made all of these concerns about demand.
Speaker 9: I think that they they have kind of come to
Speaker 9: terms with the fact that the US is going to produce,
Speaker 9: with the US is going to produce, and there really
Speaker 9: isn't much they can do about it. I think they
Speaker 9: were probably pretty pleased to see that there's more consolidation
Speaker 9: in the oil industry. I think that they see that
Speaker 9: as good for production and for companies who are looking
Speaker 9: at the signs of supply and demand and aren't just pumping, pumping,
Speaker 9: pumping just to stay ahead the way that we saw
Speaker 9: in twenty fifteen, twenty sixteen, and so I think that
Speaker 9: they see this as you know, this is where it
Speaker 9: is right now, and it's not always necessarily going to
Speaker 9: be this high.
Speaker 1: Ell in a wonderful brief, particularly those comments on Yemen.
Speaker 1: Thank you so much, Ellen Wald. Atlanta Council can't say
Speaker 1: enough about Saudi inc. It is absolutely definitive. Subscribe to
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Speaker 1: Thanks for listening. I'm Tom Keen, and this is Bloomberg