WEBVTT - Big Banks' Announced Job Cuts Don't Match The Reality 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel podcast. I'm Paul swing you, 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma wits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money, whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penil podcast on Apple 0:00:15.520 --> 0:00:17.959 Podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:21.119 at Bloomberg dot com. We have seen news across the 0:00:21.120 --> 0:00:24.160 Bloomberg termoil seems for years now, but maybe maybe even 0:00:24.200 --> 0:00:27.040 more so in twenty nineteen about big job cuts across 0:00:27.400 --> 0:00:31.480 Wall Street and the city in London. But there's indications 0:00:31.480 --> 0:00:34.160 that there might be pockets of growth actually and job 0:00:34.200 --> 0:00:36.760 growth in the financial services industry. To help us put 0:00:36.800 --> 0:00:38.600 it on perspective, we welcome a good Fred yeaman on 0:00:38.640 --> 0:00:41.320 iran senior finance writer for Bloomberg News, joining us here 0:00:41.320 --> 0:00:44.239 in our Bloomberg Interactor Brooker Studio. So yeah, m give 0:00:44.280 --> 0:00:45.960 us a sense of Again, we've seen a ton of 0:00:46.000 --> 0:00:49.080 reporting about job cuts. Morgan Stanley News out this week, 0:00:49.080 --> 0:00:52.440 we heard city maybe doing some things. What's your reporting showing? 0:00:52.920 --> 0:00:57.120 So you know, I I try to look at their 0:00:57.200 --> 0:00:59.560 actual numbers at the end of every quarter. And I've 0:00:59.600 --> 0:01:02.280 been tracked in this for about twelve years now, since 0:01:02.320 --> 0:01:07.080 the crisis. I started the first job spreadsheets during the crisis, 0:01:07.120 --> 0:01:10.080 because you know, during the crisis it was big. And 0:01:10.200 --> 0:01:13.080 a few years after our crisis, Europe went to the crisis, 0:01:13.120 --> 0:01:15.440 and then they were big. But then it kind of 0:01:15.480 --> 0:01:20.720 started slowing down into the fourteen fifteen. UM started reversing 0:01:20.840 --> 0:01:23.760 in sixteen um And and I still look at the 0:01:23.800 --> 0:01:27.160 actual numbers of employees the banks higher and the last 0:01:27.200 --> 0:01:29.440 time I took was what looked was the middle of 0:01:29.480 --> 0:01:33.759 the year. And and actually several banks they're up from 0:01:34.240 --> 0:01:36.880 where they were during the crisis. So in other words, 0:01:36.880 --> 0:01:41.440 they cut a big chunk, then they started adding. JP 0:01:41.600 --> 0:01:44.920 Morgan is pretty much even uh bamp Party, but pretty 0:01:45.000 --> 0:01:49.640 much even UM And and many banks, after many years 0:01:49.640 --> 0:01:53.240 of cutting, have stopped and started adding slowly, not not 0:01:53.320 --> 0:01:56.160 too much. But there are still those that need to 0:01:56.240 --> 0:01:59.040 keep cutting, like doa Bank. And if you look at 0:01:59.040 --> 0:02:03.720 today's story, the top bank cutting is dotche Bank. It's 0:02:03.760 --> 0:02:06.520 it wants to cut eighteen thou it also has a 0:02:06.640 --> 0:02:10.480 terrible record of job cuts, has announced ten thousand job 0:02:10.560 --> 0:02:14.399 cuts three years ago. How many cut three in three 0:02:14.480 --> 0:02:17.040 years so so, and they kept talking about that ten 0:02:17.040 --> 0:02:19.919 thousand and they managed to cut three. Now they say eighteen, 0:02:20.320 --> 0:02:24.480 so with that same rate, maybe they'll cut five if 0:02:24.520 --> 0:02:27.760 they can. They're they're really bad. Uning Credit, which is 0:02:27.800 --> 0:02:30.840 the biggest Italian bank, is also on the list. They 0:02:30.919 --> 0:02:34.280 said eight. They have a better record. They actually have 0:02:34.520 --> 0:02:37.880 cut a lot since the crisis. A lot of it 0:02:37.919 --> 0:02:40.760 is not necessarily Italy, but they un Credit has also 0:02:40.840 --> 0:02:44.040 gotten out of countries where where they just don't think 0:02:44.080 --> 0:02:48.320 they're core it's their core business anymore. So Italian and 0:02:48.360 --> 0:02:51.600 French banks have done that, um, getting out of markets 0:02:51.639 --> 0:02:53.520 that they don't think they really need to be in. 0:02:54.040 --> 0:02:56.240 UH and that reduces the headcount when you're no longer 0:02:56.480 --> 0:02:59.239 don't have a subsidiary there, but really has a terrible, 0:02:59.440 --> 0:03:03.280 terrible It's hard. I mean, I understand it's harder for 0:03:03.360 --> 0:03:07.160 European banks to cut people than it is for US banks. 0:03:07.160 --> 0:03:09.200 Some of the laws over there is that a challenge. 0:03:10.360 --> 0:03:12.000 It is anyway to get it. I know, like in 0:03:12.040 --> 0:03:14.320 Germany when they're talking about maybe merging with the Torch 0:03:14.440 --> 0:03:16.919 back with Commerce Bank, the big issue was how many 0:03:16.919 --> 0:03:19.160 employees of the merged bank would be cut, and that 0:03:19.240 --> 0:03:20.960 was one of the reasons I think that that, I 0:03:20.960 --> 0:03:23.480 mean they have they have labor laws that are much tougher. 0:03:24.200 --> 0:03:27.000 H France and Germany and Italy, they all have a 0:03:27.040 --> 0:03:31.119 tougher labor laws. Politically, it's very challenging. Um. I mean, 0:03:31.560 --> 0:03:34.600 Germany is the strongest economy in the world. How can 0:03:34.639 --> 0:03:38.480 you then go say I'm cutting thousands of jobs when 0:03:38.560 --> 0:03:42.840 you should be hiring thousands of people. Yet Germany is overbanked. 0:03:43.160 --> 0:03:46.280 It has too many banks. Um of them should be 0:03:46.280 --> 0:03:48.360 shut down. And I've been saying this, you know, for 0:03:48.400 --> 0:03:51.280 about ten years now. The whole chapter in my book 0:03:51.640 --> 0:03:53.520 that came out in two thousands eleven was about this, 0:03:53.920 --> 0:03:58.880 and and German um advisors, analysts, professors have been saying 0:03:58.880 --> 0:04:00.960 the same thing for twenty years, that they have too 0:04:01.000 --> 0:04:03.720 many banks, they need to cut them down, and they 0:04:03.760 --> 0:04:08.680 can't do it because politically it's a rich, economically doing 0:04:08.760 --> 0:04:11.840 great country. So they can't do it. So they there's 0:04:11.840 --> 0:04:15.160 always pressure not to. So Germany, not just labor laws, 0:04:15.440 --> 0:04:17.640 but politics also works against it. How about some of 0:04:17.640 --> 0:04:20.480 the big US investment banks, the JP Morgan's of the world, 0:04:20.880 --> 0:04:23.520 the banks of America. You know, as you walk on 0:04:23.560 --> 0:04:25.599 those trading floors, I grew up on a trading floor 0:04:25.720 --> 0:04:28.920 from a generation ago, where they're just packed massive floors, 0:04:29.000 --> 0:04:32.159 packed with people, people yelling, buying, selling all kinds of stuff. 0:04:32.160 --> 0:04:34.239 You go on a trading floor, it's a lot different way. 0:04:34.480 --> 0:04:38.120 Way fewer people, I guess, replaced with technology. So if 0:04:38.160 --> 0:04:40.799 these US investment banks and you're reporting our adding jobs, 0:04:41.240 --> 0:04:45.560 where are they? So they they are, You're right, trading 0:04:45.560 --> 0:04:47.800 floors are very quiet. For one thing, even if there 0:04:47.800 --> 0:04:51.239 are people, they're using instant chat programs instead of yelling 0:04:51.279 --> 0:04:53.479 at each other. Right that there's a big difference. I 0:04:53.520 --> 0:04:56.159 remember the days when you could go and people were yelling. 0:04:56.160 --> 0:04:58.000 But it's it's not it's been gone for a while. 0:04:58.640 --> 0:05:01.640 But they add they've been in many areas well. For 0:05:01.800 --> 0:05:06.040 one thing, banks need to invest in in programmers, technology 0:05:06.080 --> 0:05:08.719 people that's we can actually do the I mean. And 0:05:08.720 --> 0:05:12.440 and technology has become so important to every industry, including 0:05:12.480 --> 0:05:17.600 finance um and to compete with all these new fintech 0:05:17.640 --> 0:05:20.440 companies that could be a threat to them, big banks 0:05:20.440 --> 0:05:24.560 have been buying those some of those companies, really increasing 0:05:24.560 --> 0:05:26.760 the number of people who do technology for them so 0:05:26.800 --> 0:05:29.680 they can stay on top of the technology spectrum. And 0:05:30.080 --> 0:05:35.039 compliance has been a big boon for employment at Wall 0:05:35.080 --> 0:05:38.240 Street firms around the world, but especially as firms on 0:05:38.360 --> 0:05:41.880 the pressure from the FED to comply with new regulations 0:05:41.920 --> 0:05:43.960 which were even harsher than the rest of the world, 0:05:44.520 --> 0:05:47.920 added thousands and thousands of people to make sure compliance 0:05:48.680 --> 0:05:51.920 was really tip top. And now it is. But and 0:05:51.920 --> 0:05:56.440 and maybe Dave's stopped hiring more, but that really compensated 0:05:56.480 --> 0:05:58.480 for a lot of people who were leaving the trading 0:05:58.560 --> 0:06:01.760 rooms and and other sale positions other things. So those 0:06:01.800 --> 0:06:06.040 areas have have really made the difference interesting. Uh, yeaman 0:06:06.200 --> 0:06:08.640 on An thank you so much for your reporting here. 0:06:09.000 --> 0:06:11.840 Yamen is a senior finance writer for Bloomberg News. Joinings 0:06:11.839 --> 0:06:14.599 here in our Bloomberg Interact. Their broker studio continues to 0:06:14.640 --> 0:06:17.520 be a big story on Wall Street. The head count 0:06:17.560 --> 0:06:20.720 issues when there's pressure on lower interest rates and on 0:06:20.839 --> 0:06:23.480 fees um one of the areas, uh, you know, obviously 0:06:23.560 --> 0:06:26.320 that banks can look at is their head count. That 0:06:26.400 --> 0:06:28.760 is one of their biggest costs, and it walks in 0:06:28.760 --> 0:06:31.039 and out of the door every day their biggest assets. 0:06:31.080 --> 0:06:34.279 So when there is fee pressure, we certainly see time 0:06:34.320 --> 0:06:36.280 and time again the big investment banks and big financial 0:06:36.320 --> 0:06:39.599 institutions look to the head count none, you know, more 0:06:39.680 --> 0:06:42.520 so than in Europe, as you Yeaman was just reporting 0:06:42.720 --> 0:06:45.960 Deutsche Bank. You know, clearly it's been reported that they 0:06:45.960 --> 0:06:47.440 have a lot of cost cutting to do there and 0:06:47.440 --> 0:06:49.640 again they have to take a very hard look at 0:06:50.000 --> 0:07:07.240 headcount and we'll see how that plays out in Well, 0:07:07.279 --> 0:07:09.479 what a difference a year makes. You think back to 0:07:09.520 --> 0:07:12.240 a year ago, almost to the day markets were in 0:07:12.280 --> 0:07:15.720 a free fall, setting many setting lows on Christmas Eve. 0:07:15.960 --> 0:07:18.320 Compared that to this year where most asset classes, certainly 0:07:18.320 --> 0:07:21.960 on the risky side, have put up some stellar, stellar performance. 0:07:22.120 --> 0:07:23.840 Let's get a sense trying to put all of that 0:07:23.920 --> 0:07:26.320 in perspective. We welcome my next guest, Jim Vogel. He's 0:07:26.320 --> 0:07:29.960 an interest rate strategist for FT and Financial based in Memphis, Tennessee. 0:07:30.000 --> 0:07:32.080 Joining us on the phone. Jim, thanks so much for 0:07:32.160 --> 0:07:35.680 joining us, help us, you know, put into perspective what 0:07:35.880 --> 0:07:38.480 really the last twelve months have meant to the markets, 0:07:38.520 --> 0:07:40.760 starting with that free fall we saw back in you know, 0:07:40.800 --> 0:07:42.560 almost a little more than a year ago, to where 0:07:42.600 --> 0:07:45.240 we are today. How do you put that in perspective? Well, 0:07:45.280 --> 0:07:47.520 that was an enormous wake up call, not only for 0:07:47.560 --> 0:07:50.760 investors but also for the Federal Reserve, and so they 0:07:50.800 --> 0:07:54.320 responded almost immediately, and it really set the tone for 0:07:54.400 --> 0:07:57.240 all of two thousand and nineteen where the FED no 0:07:57.360 --> 0:08:01.000 longer was wed to a particular forecast, was prepared to 0:08:01.080 --> 0:08:04.600 react throughout the year. It's interesting, so as we think 0:08:04.640 --> 0:08:06.920 about it here today, how would your characterize kind of 0:08:06.920 --> 0:08:09.960 where we are in terms of the economy, in terms 0:08:10.040 --> 0:08:13.000 of the interest rate environment. How constructive are you kind 0:08:13.000 --> 0:08:15.320 of on the markets here? Given kind of this performance 0:08:15.320 --> 0:08:20.120 we've seen, we're looking for more of the same. In particular, 0:08:20.360 --> 0:08:24.520 um the um increases that we've seen in stocks should 0:08:24.520 --> 0:08:28.240 start moving to emerging market classes as well as the 0:08:28.320 --> 0:08:31.240 FED and the other sent large central banks stay on hold. 0:08:31.520 --> 0:08:36.160 That's very important. Meantime, we've got the possibility that that 0:08:36.320 --> 0:08:40.360 long term interest rates also stay within a band and 0:08:40.400 --> 0:08:42.280 that we don't get the kind of increase you would 0:08:42.320 --> 0:08:46.640 typically see as other risk assets begin to recover and 0:08:46.679 --> 0:08:49.560 continue to set new highs. It's interesting you think you 0:08:49.600 --> 0:08:52.280 talk about emerging markets as you know it's still I 0:08:52.280 --> 0:08:55.040 would say, kind of an a sector and asset class 0:08:55.120 --> 0:08:56.679 that a lot of folks are kind of split on. 0:08:56.679 --> 0:08:59.839 What makes you think about going that far out on 0:09:00.080 --> 0:09:02.360 the risk parameter, the risk curve, if you will, and 0:09:02.520 --> 0:09:07.959 think about emerging markets. The reason to consider is that 0:09:09.080 --> 0:09:13.880 UM investors are too focused on difficulties and individual markets 0:09:13.920 --> 0:09:17.520 and individual regions when they should be thinking about a 0:09:17.640 --> 0:09:22.200 five to six year horizon that allows a look for 0:09:22.480 --> 0:09:25.960 those to begin to catch up, become less commodity dependent, 0:09:26.400 --> 0:09:32.160 become more uh in terms of putting into work their workforce. 0:09:32.960 --> 0:09:37.040 That's going to be prized as developed markets continue to 0:09:37.120 --> 0:09:42.319 see a particular tight labor pool. How about it. It's 0:09:42.360 --> 0:09:46.280 interesting we think about the bond market again, another asset 0:09:46.320 --> 0:09:51.439 class had just a fantastic year. When we think about 0:09:51.440 --> 0:09:54.760 the credit markets, how do you think about allocation between 0:09:54.760 --> 0:09:58.599 perhaps investment grade, high yield, maybe even going out that 0:09:58.679 --> 0:10:01.120 you know, kind of the leverage loans side of the business. 0:10:02.320 --> 0:10:04.400 We've got an awful lot of forecasts by people on 0:10:04.400 --> 0:10:07.120 Wall Street that the leverage loan market is going to 0:10:07.200 --> 0:10:09.720 get a little thinner in terms of performance this year 0:10:09.720 --> 0:10:14.200 as they again focus on specific assets. But overall, there's 0:10:14.200 --> 0:10:16.959 an awful lot of money still waiting to go into 0:10:17.000 --> 0:10:19.520 that market and find bargains as they can, and we 0:10:19.559 --> 0:10:23.360 think that provides support both for leverage loans and for 0:10:23.600 --> 0:10:27.480 high yield debt as well. Then investment grade is all 0:10:27.559 --> 0:10:30.520 going to be a question of supply, and right now 0:10:30.559 --> 0:10:33.800 our forecasts are for modest growth and supply. But if 0:10:33.880 --> 0:10:38.880 we see large um corporations tapping the market consistently, you'll 0:10:38.920 --> 0:10:42.040 see investment grade begin to widen. How about the menus 0:10:42.080 --> 0:10:44.240 of a bond market, just to take it one step further, 0:10:44.320 --> 0:10:48.800 that there's a market where we've seen tremendous inflows of capital. 0:10:48.840 --> 0:10:51.120 We've seen you know, you know, all in returns of 0:10:51.280 --> 0:10:53.280 you know, proximately seven percent this year, which for the 0:10:53.280 --> 0:10:58.320 mini bond markets fantastic. Here is that a healthy move 0:10:58.440 --> 0:10:59.960 for this market? You think that market may have got 0:11:00.000 --> 0:11:02.280 in a little bit ahead of itself. It's a little 0:11:02.280 --> 0:11:05.160 bit of head but it's also it benefits an awful 0:11:05.160 --> 0:11:09.800 lot from uh tax policy, tax policy uncertainty in an 0:11:09.800 --> 0:11:12.200 election year, and we'll see that, of course continue in 0:11:13.360 --> 0:11:17.320 And also you've got an awful lot of domestic savings 0:11:17.360 --> 0:11:21.319 that wants to stay in fixed income because they realize 0:11:21.360 --> 0:11:23.720 that there's a after the last couple of years, there's 0:11:23.720 --> 0:11:26.600 a possibility that some of their big equity gains could 0:11:26.600 --> 0:11:29.199 pull back a little bit, and they want that core 0:11:29.320 --> 0:11:32.600 holding and fixed income as something of an anchor on 0:11:32.640 --> 0:11:36.360 the portfolio and that just hasn't changed for municipals at all, 0:11:36.600 --> 0:11:38.960 and nor should it next year. So, Jim, you've been 0:11:38.960 --> 0:11:41.600 in the markets a long time. You've seen these cycles, 0:11:41.840 --> 0:11:45.120 whether they're economic cycles and also political cycles. As you mentioned, 0:11:45.280 --> 0:11:48.439 this is a presidential election year we're coming into. How 0:11:48.480 --> 0:11:50.760 are you kind of factoring that into kind of your 0:11:50.840 --> 0:11:53.080 view about how much risk you may you want to 0:11:53.120 --> 0:11:55.240 take or what sectors you may want to have exposure 0:11:55.240 --> 0:11:57.280 to where you just kind of play that out and 0:11:57.320 --> 0:12:01.680 really don't pay too much attention to the uh clitical aspect. Well, 0:12:01.720 --> 0:12:05.240 the political aspect is important because right now the market's 0:12:05.280 --> 0:12:08.040 not focused on it, and if you look at two 0:12:08.120 --> 0:12:11.160 thousand and nineteen, it was a year when things sort 0:12:11.160 --> 0:12:14.600 of did not things did definitely did not go to plan, 0:12:14.920 --> 0:12:18.719 but then we recovered with moves by the Fed, by 0:12:18.760 --> 0:12:22.960 the ECB, and then investors sort of recalibrated. One of 0:12:23.000 --> 0:12:27.520 the things that's difficult to recalibrate for our political surprises 0:12:27.760 --> 0:12:32.520 and could bring that and if it ends up where 0:12:32.559 --> 0:12:34.440 you have a Democrat in the White House and a 0:12:34.480 --> 0:12:39.480 democrat Um controlled Senate, then you've got the possibility for 0:12:39.520 --> 0:12:43.360 a surprise that the markets simply not thinking about. And 0:12:43.440 --> 0:12:50.920 although policies may move slowly, investor fears can develop quite quickly. Absolutely, Jim, Jim, 0:12:50.920 --> 0:12:53.280 thanks so much for sharing us, sharing with us your 0:12:53.280 --> 0:12:55.480 thoughts here. Jim is an interestrate strategist for f TN 0:12:55.720 --> 0:12:58.280 Financial based in Memphis, Tennessee, joining us on the phone 0:12:58.280 --> 0:13:01.040 today giving us his thoughts kind of us asset classes. 0:13:01.120 --> 0:13:04.920 That sounds like Jim Vogel continues to be pretty constructive 0:13:05.120 --> 0:13:08.280 on the markets here, uh, in terms of taking uh 0:13:08.400 --> 0:13:10.320 you know, kind of being out there on the risk curve, 0:13:10.360 --> 0:13:13.400 not pulling back, trying to get a sense across uh, 0:13:13.640 --> 0:13:17.120 you know, strategist, fund managers, economist kind of their view. 0:13:17.200 --> 0:13:35.000 For time to check in with Bloomberg Opinion, we're joined 0:13:35.040 --> 0:13:39.080 by opinion columnist Tera La Chapelle. She covers entertainment and telecommunication. 0:13:39.160 --> 0:13:41.840 She joins us here on a Bloomberg Interactive broker's studio, 0:13:41.880 --> 0:13:44.719 and she is out with a stellar column today. It's 0:13:44.800 --> 0:13:46.439 really awesome. If you want to get a sense and 0:13:46.559 --> 0:13:49.360 really get a primer for the streaming business and what 0:13:49.400 --> 0:13:52.840 it's done to Hollywood, I highly recommend you read Terrorist 0:13:52.840 --> 0:13:56.040 Calm on the terminal end on Bloomberg dot com. So 0:13:56.400 --> 0:13:59.480 Tera again. I followed the media industry for about thirty years, 0:13:59.480 --> 0:14:03.320 and by far the biggest disruption that I've seen has 0:14:03.400 --> 0:14:07.160 been Netflix and the whole streaming concept, because it really 0:14:07.240 --> 0:14:13.000 changed the way people consume media, and Hollywood is trying 0:14:13.200 --> 0:14:15.760 in the media industries trying to react. Tell us what 0:14:16.040 --> 0:14:18.760 comes some of the key findings in your column. So 0:14:18.800 --> 0:14:21.560 I think what you know consumers see is how it's 0:14:21.640 --> 0:14:24.720 changed their own habits, how it's changed us some of 0:14:24.760 --> 0:14:28.000 our entertainment, the way we watch TV, the way creative 0:14:28.040 --> 0:14:30.360 decisions are made. But in the business world, what's been 0:14:30.360 --> 0:14:33.800 really interesting is it's driven multi billions of dollars worth 0:14:33.840 --> 0:14:37.120 of mergers. So you saw Disney and twenty one century 0:14:37.160 --> 0:14:39.760 Fox combined. So now Disney owns those studios. A T 0:14:39.880 --> 0:14:43.200 and T bought Time Warner and HBO via Common CBS 0:14:43.240 --> 0:14:47.080 have gotten together Charter the cable company about Time Warner Cable. 0:14:47.160 --> 0:14:49.440 So it just goes on and on and on, and 0:14:49.600 --> 0:14:51.440 you know, little by little, when you see one of 0:14:51.480 --> 0:14:54.160 those deals piece by piece, it doesn't really seem like 0:14:54.240 --> 0:14:56.040 that much of a transformation. But I think when you 0:14:56.080 --> 0:14:57.960 look at the long list of what's happened in the 0:14:58.040 --> 0:15:01.400 last decade, you start to see how drastically it really 0:15:01.440 --> 0:15:03.320 has changed, and how it's really because of kind of 0:15:03.360 --> 0:15:06.280 like one company, Netflix causing all of this. Yeah, there's 0:15:06.320 --> 0:15:08.680 a great graphic that you have in your column that 0:15:08.840 --> 0:15:12.000 it's called Disappearing Act, and basically it just compares the 0:15:12.120 --> 0:15:14.240 kind of the big media companies that were in the 0:15:14.280 --> 0:15:16.720 marketplace in two verses today and the list is almost 0:15:16.720 --> 0:15:19.360 half of what it was, you know, back in the day. 0:15:19.400 --> 0:15:23.400 So is there any sense of whether any of these 0:15:23.440 --> 0:15:26.960 media companies can really compete against Netflix? Well, it's funny 0:15:27.000 --> 0:15:29.400 because I was looking at the market caps for I 0:15:29.440 --> 0:15:32.120 think it was the ten biggest media giants right now, 0:15:32.440 --> 0:15:35.360 and all of those combined are still smaller than Apple. 0:15:35.480 --> 0:15:37.840 For example, Apple has got an over a trillion dollar 0:15:37.920 --> 0:15:40.240 market cap. So I think that tells you right there 0:15:40.320 --> 0:15:42.720 that the scale. It kind of puts it into perspective 0:15:42.760 --> 0:15:45.200 that even Disney, after doing all these deals, is still 0:15:45.240 --> 0:15:47.760 small compared to the tech giants. On the other hand, 0:15:47.800 --> 0:15:49.280 I think Disney is one of the sort of the 0:15:49.280 --> 0:15:51.720 best equipped to weather this, and maybe you feel the same. 0:15:51.800 --> 0:15:54.200 You know, they have the Disney Plus app, which had 0:15:54.200 --> 0:15:56.440 a really good launch. A lot of people seem to 0:15:56.480 --> 0:15:59.560 like it. They're really investing in content for streaming, more 0:15:59.640 --> 0:16:01.520 so than I would have expected for a company that 0:16:01.600 --> 0:16:04.760 has its profits so tied to traditional television. So I 0:16:04.800 --> 0:16:06.360 think some of these companies they do have a lot 0:16:06.480 --> 0:16:09.640 to prove, But when it comes to content, you know, HBO, Disney, 0:16:09.840 --> 0:16:11.600 they know great content and it's going to come down 0:16:11.680 --> 0:16:13.400 to that. So I think we'll see, you know, what 0:16:13.480 --> 0:16:16.080 happens over the next year. Maybe Netflix starts to feel 0:16:16.120 --> 0:16:19.280 some pressure of that. You mentioned a big tech and 0:16:19.680 --> 0:16:22.600 UM interested in what your sources are telling you, because 0:16:22.640 --> 0:16:25.840 we we've seen big technology comanies, whether it's Amazon or 0:16:25.880 --> 0:16:28.480 Apple or you know, Google with Facebook kind of I 0:16:28.480 --> 0:16:30.960 would car, you know, argues just kind of dipping their 0:16:31.000 --> 0:16:33.960 toe in the content business, in the video business. Is 0:16:34.000 --> 0:16:37.600 there any sense that maybe will see them really jump 0:16:37.640 --> 0:16:40.360 into the deep end of the pools relates to video programming. Yeah, 0:16:40.360 --> 0:16:43.080 I'm really curious to see what Apple does specifically, because 0:16:43.280 --> 0:16:45.480 I think right now it's been really vague. You know, 0:16:45.520 --> 0:16:48.600 It's like they have the Apple TV Plus app. The 0:16:48.760 --> 0:16:51.800 content didn't really get rave reviews, but they're spending a 0:16:51.840 --> 0:16:53.280 lot of money, but on the other hand, there's not 0:16:53.320 --> 0:16:56.720 really enough on there, you know, to replace television. For instance. 0:16:56.720 --> 0:16:58.200 You know, when you go onto Netflix, there's just a 0:16:58.240 --> 0:17:00.360 load of an endless scroll of things you and watch, 0:17:00.360 --> 0:17:02.680 whether you like all the content or not. Apple had 0:17:02.720 --> 0:17:05.320 like a handful of shows you could watch. So I 0:17:05.320 --> 0:17:07.080 think it'll be interesting to see, you know, if if 0:17:07.080 --> 0:17:09.679 this is successful for them and getting more people to 0:17:09.760 --> 0:17:12.800 buy Apple devices, maybe they go out and buy a studio. 0:17:12.840 --> 0:17:14.720 I know some other people disagree and think this is 0:17:14.800 --> 0:17:16.879 just sort of a loss leader for them, is a 0:17:16.920 --> 0:17:20.879 way to get more iPhones and iPads into people's homes. 0:17:21.359 --> 0:17:24.040 So I guess we'll see. But I always tend to 0:17:24.080 --> 0:17:26.239 air on the side of these companies like to do 0:17:26.320 --> 0:17:28.119 deals and it seems really important to them, and I 0:17:28.119 --> 0:17:30.600 think we're going to see more of those, any idea. 0:17:30.800 --> 0:17:33.320 One of the pet peeves that Tom Keene has is 0:17:33.440 --> 0:17:35.639 he thinks he's subscribing to like ten or eleven different 0:17:35.640 --> 0:17:39.359 streaming services. How many streaming services do you think the 0:17:39.400 --> 0:17:41.560 market can bear? Maybe? Yeah, I think that's going to 0:17:41.640 --> 0:17:44.240 have to change. I mean, most people can't afford to 0:17:44.320 --> 0:17:46.720 subscribe to multiple apps, you know, more than a handful. 0:17:46.880 --> 0:17:49.760 They get very expensive and especially with the cost of Internet, 0:17:50.000 --> 0:17:52.159 and I think what we'll see happen as companies like 0:17:52.200 --> 0:17:54.840 Comcast and Charter, for example, we'll try to bundle some 0:17:54.880 --> 0:17:57.159 of these services. I think they see that this is 0:17:57.200 --> 0:17:59.399 a big consumer pain point, and when there is something 0:17:59.480 --> 0:18:02.040 like that, there's opportunity of business opportunities. So I think 0:18:02.760 --> 0:18:05.360 some of these companies, including Amazon and Apple, will look 0:18:05.400 --> 0:18:08.240 to try to bundle these you know, not just put 0:18:08.280 --> 0:18:10.480 them all in one place where you can subscribe to them, 0:18:10.480 --> 0:18:12.960 but also pay in one spot and maybe pay one 0:18:13.000 --> 0:18:14.760 bill every month and not have to subscribe to them 0:18:14.800 --> 0:18:17.400 individually to get all the content you need. That kind 0:18:17.400 --> 0:18:20.359 of sounds like a cable company exactly. We're bringing that cable, 0:18:20.800 --> 0:18:23.000 but we're still seeing court cutting. We had Craig moffatt 0:18:23.040 --> 0:18:24.600 on from off at Nathanson on a couple of weeks 0:18:24.600 --> 0:18:26.680 ago when he was out with his research showing the 0:18:26.720 --> 0:18:29.879 court cutting is not only continuing, exection actually accelerating. So 0:18:30.080 --> 0:18:32.400 kind of it goes to your point, Tara, the move 0:18:32.440 --> 0:18:35.040 towards streaming it is in full force and probably accelerating. 0:18:35.040 --> 0:18:40.160 In Tara La Chapelle Entertainment and Telecommunications columns for Bloomberg Opinion, 0:18:40.200 --> 0:18:42.720 joining us here on a Bloomberg Interactive broker studio. You 0:18:42.760 --> 0:18:46.200 can read more on this and other stories from Bloomberg Opinion. 0:18:46.280 --> 0:18:48.760 They have great stuff every day. Really makes you think 0:18:48.960 --> 0:18:51.159 you can go to Bloomberg dot com slash opinion, or 0:18:51.200 --> 0:18:52.879 you can go to the terminal by typing in O, P, 0:18:53.119 --> 0:18:55.600 I N GO. And I think the real issue is 0:18:55.640 --> 0:18:58.360 Tara pointed out in her column, is streaming wars are 0:18:58.400 --> 0:19:01.720 heating up. They really kind of art in earnest arguably 0:19:01.760 --> 0:19:04.359 in twenty nineteen. But they're really going to accelerate here. Uh, 0:19:05.160 --> 0:19:07.040 We're gonna see how Disney plays it out. We're gonna 0:19:07.040 --> 0:19:10.040 see Time Warner, A T and T time Warner come 0:19:10.119 --> 0:19:13.720 to the marketplace with a more robust product, Comcast with 0:19:13.720 --> 0:19:17.280 their peacocks. So it's only going to get more aggressive 0:19:17.280 --> 0:19:33.720 out there. So get ready. Take a look at the 0:19:33.760 --> 0:19:37.159 housing market here is a really been fairly strong over 0:19:37.160 --> 0:19:39.399 the years, and you would expect that with interest rates 0:19:39.600 --> 0:19:42.160 so low. Get a sense of kind of how things 0:19:42.160 --> 0:19:44.200 are playing out across the country in the housing market. 0:19:44.240 --> 0:19:47.760 We welcome a good friend. Logan Mohatshami, senior loan officer 0:19:47.800 --> 0:19:51.000 for AMC Lending Group based in Irvine, California. So Logan, 0:19:51.080 --> 0:19:52.920 just give us a kind of a snapshot of kind 0:19:52.960 --> 0:19:55.959 of what you're seeing in the housing market right here 0:19:55.960 --> 0:20:00.360 as we end, well, lower mortgage rates did the or thing. 0:20:00.800 --> 0:20:02.760 Um you know, last year, you know, we had a 0:20:02.800 --> 0:20:06.800 monthly supply spike in new home UH, in new homesale sector. 0:20:06.880 --> 0:20:09.840 People were thinking housing might have peaked. But as soon 0:20:09.880 --> 0:20:13.960 as the tenure yield started going down, really by May 0:20:14.000 --> 0:20:16.960 of this year, the housing market just got back to 0:20:17.040 --> 0:20:21.600 its normal traditional cycle trend, very slow and steady. The 0:20:21.640 --> 0:20:23.720 existing home sales market, even though it's going to be 0:20:23.800 --> 0:20:27.080 slightly negative year to day, has been keeping sales above 0:20:27.119 --> 0:20:29.920 five million for some time now. But really the most 0:20:29.920 --> 0:20:32.600 important factor for twenty nineteen going into twenty is that 0:20:32.640 --> 0:20:35.040 the monthly supply for new home sales have come back down. 0:20:35.280 --> 0:20:37.360 New home sales are up. That's good for the economy. 0:20:37.400 --> 0:20:40.240 That's good for housing. That means housing starts construction job. 0:20:40.720 --> 0:20:42.959 That right there was really the story for twenty nine 0:20:43.200 --> 0:20:46.560 and it should continue into as long as the ten 0:20:46.640 --> 0:20:50.879 year yield doesn't get near two point six or higher. UH, 0:20:50.960 --> 0:20:53.200 the new home sales sector and the and the existing 0:20:53.240 --> 0:20:56.280 home sales sector should have legs for slow and steady growth, 0:20:56.640 --> 0:21:00.320 look and give us a sense of new home struction. 0:21:00.359 --> 0:21:02.159 And we've heard there's some some reports that it's just 0:21:02.240 --> 0:21:04.879 not that much supply, uh, kind of at the lower 0:21:05.000 --> 0:21:06.800 end of the market. Is that something that you're seeing. 0:21:07.800 --> 0:21:10.639 Here's what I disagree with everybody in America. What is 0:21:10.680 --> 0:21:15.000 an affordable house that a builder can build? Right? If 0:21:15.000 --> 0:21:18.800 an affordable house is either a rental, multi family construction 0:21:18.960 --> 0:21:22.040