1 00:00:01,320 --> 00:00:05,680 Speaker 1: This is Bloomberg business Week Inside from the reporters and 2 00:00:05,840 --> 00:00:09,400 Speaker 1: editors who bring you America's most trusted business magazine, plus 3 00:00:09,440 --> 00:00:13,640 Speaker 1: global business, finance and tech news. The Bloomberg Business Week 4 00:00:13,680 --> 00:00:18,600 Speaker 1: Podcast with Carol Masser and Tim stinebec from Bloomberg Radio. 5 00:00:20,400 --> 00:00:22,200 Speaker 1: We're going to stay with the economy. Get to a 6 00:00:22,320 --> 00:00:24,279 Speaker 1: story that is among the most read on the Bloomberg 7 00:00:24,320 --> 00:00:27,520 Speaker 1: about how it's frequently argued that once our economy gets 8 00:00:27,520 --> 00:00:30,280 Speaker 1: past this burst of inflation, interest rates will in fact 9 00:00:30,560 --> 00:00:33,040 Speaker 1: fall back to their pre pandemic lowse kind of just 10 00:00:33,080 --> 00:00:35,800 Speaker 1: talking about that and perhaps go lower in the future. 11 00:00:36,120 --> 00:00:39,159 Speaker 1: What if that is wrong? This is in a new 12 00:00:39,159 --> 00:00:43,120 Speaker 1: Bloomberg opinion column by Alison Schrager. She covers economics. She's 13 00:00:43,120 --> 00:00:45,519 Speaker 1: a senior fellow at the Manhattan Institute, author of An 14 00:00:45,520 --> 00:00:48,800 Speaker 1: Economist Walks Into a Brothel and Other Unexpected Places to 15 00:00:48,880 --> 00:00:52,000 Speaker 1: Understand Risk. She's with us via zoom uh in New 16 00:00:52,080 --> 00:00:54,800 Speaker 1: York City. Alison, I'm so glad you're here. Wanted to 17 00:00:54,840 --> 00:00:58,160 Speaker 1: talk to you. Um, let's get to this assumption we 18 00:00:58,160 --> 00:00:59,840 Speaker 1: were just talking about with Mike and Creed. There is 19 00:00:59,840 --> 00:01:03,520 Speaker 1: a assumption that j you know, j Pal keep saying 20 00:01:03,560 --> 00:01:07,280 Speaker 1: we're gonna get back to two percent um. That's our backdrop, 21 00:01:07,319 --> 00:01:11,200 Speaker 1: but it could be wrong. Yeah, I mean, I think 22 00:01:11,240 --> 00:01:13,400 Speaker 1: there are two assumptions. One that inflation is going to 23 00:01:13,480 --> 00:01:16,400 Speaker 1: go back to two person and to that there was 24 00:01:16,480 --> 00:01:18,800 Speaker 1: this just sort of natural interest rate that was near 25 00:01:18,920 --> 00:01:23,039 Speaker 1: zero and once we get through inflation, that's where interest 26 00:01:23,120 --> 00:01:24,840 Speaker 1: rates are going to go back to. And you know 27 00:01:25,040 --> 00:01:28,280 Speaker 1: that might not be true either. Well, talk to us 28 00:01:28,280 --> 00:01:31,320 Speaker 1: about why you wrote this column and what you know. 29 00:01:31,440 --> 00:01:35,199 Speaker 1: You you sign a couple of different economists or macro economists. 30 00:01:35,240 --> 00:01:38,600 Speaker 1: Olivia Blanchard ken rogue Off talked to us about some 31 00:01:38,640 --> 00:01:43,280 Speaker 1: of the thinking about maybe why uh two percent isn't 32 00:01:43,319 --> 00:01:48,240 Speaker 1: it and you you also write about natural interest rates. Yeah. So, 33 00:01:48,320 --> 00:01:51,240 Speaker 1: I mean I've always been struck that whenever you read 34 00:01:51,320 --> 00:01:55,600 Speaker 1: any big financial institutions reports their outlooks on the economy 35 00:01:55,640 --> 00:01:58,440 Speaker 1: for years, they've been saying that interest rates are trending 36 00:01:58,440 --> 00:02:02,240 Speaker 1: down because of an aging relation. It's always in the methods, 37 00:02:02,240 --> 00:02:03,960 Speaker 1: always in the world. Thank, it's always in every central bank, 38 00:02:04,000 --> 00:02:06,880 Speaker 1: it's and banks, it's everywhere. And you know, I've always 39 00:02:06,880 --> 00:02:09,840 Speaker 1: sort of like never quite understood why. I've understood the 40 00:02:09,840 --> 00:02:13,560 Speaker 1: economic reasoning, but it never seemed quite right to me, 41 00:02:13,800 --> 00:02:16,800 Speaker 1: But everyone would have jumped on this bandwagon because really, 42 00:02:16,800 --> 00:02:19,000 Speaker 1: over the last thirty years, the population did age and 43 00:02:19,080 --> 00:02:21,440 Speaker 1: interest rates went down, and everyone sort of just blamed 44 00:02:21,520 --> 00:02:25,880 Speaker 1: on an aging population. Um. But really, you know, it 45 00:02:25,919 --> 00:02:28,560 Speaker 1: struck me most recently when Illevia Blanchard said, don't worry, 46 00:02:28,560 --> 00:02:31,120 Speaker 1: interest rates will go back because the population is aging, 47 00:02:31,680 --> 00:02:33,400 Speaker 1: and I just, I guess I felt compelled to dig 48 00:02:33,400 --> 00:02:35,520 Speaker 1: a little deeper. And it just so happened that kenn 49 00:02:35,560 --> 00:02:38,399 Speaker 1: roll Goff had sent me this paper where he looked 50 00:02:38,440 --> 00:02:41,960 Speaker 1: at interest rates going back seven hundred years and found 51 00:02:42,120 --> 00:02:45,000 Speaker 1: that while interest rates have been trending down, not as 52 00:02:45,080 --> 00:02:48,360 Speaker 1: much as we think, and actually the last fifteen years 53 00:02:48,400 --> 00:02:50,320 Speaker 1: at least might not have been part of a trend. 54 00:02:50,360 --> 00:02:53,160 Speaker 1: It might have been an anomaly. And also when he 55 00:02:53,560 --> 00:02:56,480 Speaker 1: did sort of more aggressions in a longer period of time, 56 00:02:56,760 --> 00:02:59,200 Speaker 1: he didn't find that an aging population brings down interest 57 00:02:59,280 --> 00:03:01,880 Speaker 1: rates at all, so in fact, the opposite might be true. 58 00:03:02,360 --> 00:03:04,359 Speaker 1: I also think about we talk a lot about and 59 00:03:04,360 --> 00:03:06,640 Speaker 1: I'm assuming this comes on your radar as well, you know, 60 00:03:06,720 --> 00:03:10,519 Speaker 1: just these kind of changing macro ideas, whether it's the 61 00:03:10,520 --> 00:03:15,440 Speaker 1: pushback against globalization, you know, the move towards localization when 62 00:03:15,440 --> 00:03:18,800 Speaker 1: it comes to manufacturing supply chains, you know, maybe continuing 63 00:03:18,880 --> 00:03:21,280 Speaker 1: to be disrupted and being more local and what that 64 00:03:21,360 --> 00:03:24,720 Speaker 1: does for costs, and move towards climate change alternative energy, like, 65 00:03:24,760 --> 00:03:28,440 Speaker 1: all of this has some costs to what we are doing. Um, 66 00:03:28,960 --> 00:03:32,840 Speaker 1: is that part of it? Yeah? I mean, I think 67 00:03:32,840 --> 00:03:34,840 Speaker 1: it's also wishful thinking that we have a lot of 68 00:03:34,840 --> 00:03:37,720 Speaker 1: big physical plans and they rely on us having very 69 00:03:37,960 --> 00:03:40,960 Speaker 1: low costs of borrowing. So I I you know, I 70 00:03:41,000 --> 00:03:43,720 Speaker 1: think all these sort of sort of conventional macro wisdoms 71 00:03:43,720 --> 00:03:45,839 Speaker 1: sort of get tied up together and we get maybe 72 00:03:45,880 --> 00:03:49,200 Speaker 1: a little over invested in them. But you know, I 73 00:03:49,600 --> 00:03:52,000 Speaker 1: think that the struggle for a macro economist is always 74 00:03:52,000 --> 00:03:55,000 Speaker 1: how much can you separate out what cyclical and temporary 75 00:03:55,000 --> 00:03:58,160 Speaker 1: and what's really structurally changing? And that's always a challenge, 76 00:03:58,160 --> 00:04:00,280 Speaker 1: I think for everyone. I also like this thing, you 77 00:04:00,280 --> 00:04:02,280 Speaker 1: know where you talk about the demographics and an older 78 00:04:02,280 --> 00:04:05,440 Speaker 1: population that if it ultimately is a younger is it 79 00:04:05,480 --> 00:04:12,240 Speaker 1: a younger population that ultimately helps keep rates lower? Well, Um, 80 00:04:12,640 --> 00:04:15,920 Speaker 1: we've been thinking that the argument has been for since 81 00:04:15,960 --> 00:04:19,000 Speaker 1: a couple of decades. Now, then older population lowers rates 82 00:04:19,040 --> 00:04:22,479 Speaker 1: and it's partially this idea that, as you like, people 83 00:04:22,480 --> 00:04:25,760 Speaker 1: anticipate this long retirement, so they save a lot, so 84 00:04:25,800 --> 00:04:28,200 Speaker 1: you build up a huge stock of savings. And you know, 85 00:04:28,400 --> 00:04:30,559 Speaker 1: interest rates are ultimately a function of supply and demand 86 00:04:30,640 --> 00:04:33,640 Speaker 1: of savings, so the idea is that there's this huge 87 00:04:33,680 --> 00:04:38,560 Speaker 1: demand for savings and that effectively lowers interest rates. Um. 88 00:04:38,680 --> 00:04:41,280 Speaker 1: Of course, Um, you know, it might not work out 89 00:04:41,320 --> 00:04:44,360 Speaker 1: that way, even the I ME points out that, you know, 90 00:04:44,440 --> 00:04:46,679 Speaker 1: we really haven't saved enough for retirement, and in fact, 91 00:04:46,760 --> 00:04:48,520 Speaker 1: the government is probably gonna have to borrow a lot 92 00:04:48,560 --> 00:04:50,320 Speaker 1: to fund our retirement. I mean, just look at the 93 00:04:50,360 --> 00:04:53,080 Speaker 1: State of the Union the other day where Joe Biden 94 00:04:53,160 --> 00:04:56,200 Speaker 1: was quite strident that we will never cut entitlements, and 95 00:04:56,279 --> 00:04:59,240 Speaker 1: I guess the Republicans agreed with that. So I mean, okay, 96 00:04:59,480 --> 00:05:01,920 Speaker 1: I mean, if that's what we want to do, I mean, 97 00:05:02,320 --> 00:05:04,680 Speaker 1: we're going to have to borrow to pay for people's retirements, 98 00:05:04,680 --> 00:05:06,960 Speaker 1: and that puts more bonds on the market, which you 99 00:05:06,960 --> 00:05:10,680 Speaker 1: think would increase interest rates. So um, I think we've 100 00:05:10,720 --> 00:05:12,520 Speaker 1: just sort of been assuming that we would have this 101 00:05:12,680 --> 00:05:15,359 Speaker 1: huge stock of savings to push down rates. But maybe 102 00:05:15,360 --> 00:05:17,359 Speaker 1: that's not how it's going to work. You know, and 103 00:05:17,400 --> 00:05:19,119 Speaker 1: you also just point out and just got about forty 104 00:05:19,120 --> 00:05:21,479 Speaker 1: seconds left here. I mean it's you say we should 105 00:05:21,480 --> 00:05:23,600 Speaker 1: also be concerned because interest rates are largely function of 106 00:05:23,680 --> 00:05:26,080 Speaker 1: risk in the market, not just some abstract natural rate. 107 00:05:26,120 --> 00:05:27,919 Speaker 1: I mean, this is something we talk about about what 108 00:05:28,000 --> 00:05:30,240 Speaker 1: the markets and what the traders are saying about kind 109 00:05:30,240 --> 00:05:33,040 Speaker 1: of where rates land versus what we keep hearing from J. Powell, 110 00:05:33,320 --> 00:05:36,560 Speaker 1: and that certainly plays a partner thinking. Yeah, I mean, 111 00:05:36,560 --> 00:05:38,440 Speaker 1: the risk premium is super important, and I think risk 112 00:05:38,440 --> 00:05:40,960 Speaker 1: premium has got very low because inflation have been so stable. 113 00:05:41,279 --> 00:05:43,240 Speaker 1: But you know if that cuts out of the bag 114 00:05:43,279 --> 00:05:46,040 Speaker 1: now and you know we have a more volatile inflation environment, 115 00:05:46,040 --> 00:05:48,640 Speaker 1: then there's a higher risk premium, certainly on bonds that 116 00:05:48,680 --> 00:05:51,000 Speaker 1: are longer term, and that will mean rates are higher 117 00:05:51,000 --> 00:05:53,120 Speaker 1: for a long time too. Well, it's certainly something that's 118 00:05:53,120 --> 00:05:55,560 Speaker 1: so relevant to the conversation right now, especially if you 119 00:05:55,600 --> 00:05:57,719 Speaker 1: watch I'm looking at yields certainly take a little bit 120 00:05:57,760 --> 00:06:01,640 Speaker 1: higher on this Thursday. Alison, thank you as always. Alison Schreeger. 121 00:06:01,640 --> 00:06:04,120 Speaker 1: She's senior Fellow at the Manhattan Institute. She's a Bloomberg 122 00:06:04,120 --> 00:06:06,680 Speaker 1: Opinion columnist. You can check her out on Twitter at 123 00:06:06,680 --> 00:06:10,080 Speaker 1: Allison Schreeger. She's also, as we've mentioned, an author of 124 00:06:10,080 --> 00:06:13,240 Speaker 1: an economist walks into a brothel, So UH love her 125 00:06:13,279 --> 00:06:15,120 Speaker 1: take on this. And this is, as I said, such 126 00:06:15,120 --> 00:06:17,159 Speaker 1: a relevant conversation right now as we try to figure 127 00:06:17,160 --> 00:06:22,880 Speaker 1: out ultimately where rates land. This is Bloomberg business Week 128 00:06:23,240 --> 00:06:26,480 Speaker 1: Inside from the reporters and editors who bring you America's 129 00:06:26,520 --> 00:06:31,080 Speaker 1: most trusted business magazine, plus Blombo Business Finance and tech news. 130 00:06:31,279 --> 00:06:35,440 Speaker 1: The Bloomberg Business Week Podcast with Carol Masser and Tim 131 00:06:35,440 --> 00:06:40,279 Speaker 1: stinebec from Bloomberg Radio. So what does it take for 132 00:06:40,440 --> 00:06:42,480 Speaker 1: a big billionaire to see about a hundred billion dollars 133 00:06:42,480 --> 00:06:45,479 Speaker 1: in counting be lost from his empire? Help out a 134 00:06:45,520 --> 00:06:48,320 Speaker 1: little research firm? Will That big billionaire we're talking about 135 00:06:48,400 --> 00:06:51,880 Speaker 1: is Guanta Madonni, head of the Adani Group conglomerate in India. 136 00:06:52,000 --> 00:06:55,960 Speaker 1: The little research firm is Nate Anderson's Hindburg Research. Well, 137 00:06:56,000 --> 00:06:58,240 Speaker 1: with more on that little research firm that came up 138 00:06:58,240 --> 00:07:00,560 Speaker 1: with a big short on a donny, we got Bloomberg 139 00:07:00,600 --> 00:07:04,440 Speaker 1: Business Week editor um Pat regne Or he's actually Finance 140 00:07:04,520 --> 00:07:07,160 Speaker 1: editor Pat Regneer and Bloomberg News Wealth for Port and 141 00:07:07,360 --> 00:07:10,480 Speaker 1: as unders Mill, and we caught up with them earlier 142 00:07:10,520 --> 00:07:13,680 Speaker 1: and Papigan by setting the stage about who is exactly 143 00:07:13,760 --> 00:07:16,520 Speaker 1: guantam Annady. He may not be a household name in 144 00:07:16,560 --> 00:07:18,880 Speaker 1: the United States, but he is absolutely a household name 145 00:07:18,920 --> 00:07:21,400 Speaker 1: in India. Um. He's probably one of the most important 146 00:07:21,440 --> 00:07:25,320 Speaker 1: businessmen in modern India. Um uh. Unders can talk about 147 00:07:25,360 --> 00:07:27,440 Speaker 1: this a little bit, but almost anything that you might 148 00:07:27,480 --> 00:07:31,200 Speaker 1: do in India, his businesses will touch your life. So 149 00:07:31,440 --> 00:07:34,760 Speaker 1: he's built this enormous empire. UM. But a lot of 150 00:07:34,800 --> 00:07:40,560 Speaker 1: the the the growth in its value really came during 151 00:07:40,800 --> 00:07:45,160 Speaker 1: the global everything rally that began with the snap back 152 00:07:45,280 --> 00:07:48,800 Speaker 1: from the COVID crash. But it just kept going even 153 00:07:48,840 --> 00:07:51,280 Speaker 1: through two You just like when you when you do 154 00:07:51,320 --> 00:07:53,720 Speaker 1: a chart, you just see it just going like hockey stick. 155 00:07:54,080 --> 00:07:56,720 Speaker 1: You know, this, this, this, this, this, so many right 156 00:07:56,800 --> 00:07:59,640 Speaker 1: during the pandemic. Yeah. Um, but then but then also 157 00:07:59,720 --> 00:08:02,960 Speaker 1: just two is like global markets were falling, this one's 158 00:08:02,960 --> 00:08:06,480 Speaker 1: still just going up, up, up and up. So uh, 159 00:08:06,560 --> 00:08:09,560 Speaker 1: you know, he's he's become sort of this like very 160 00:08:09,680 --> 00:08:12,840 Speaker 1: visible global success story, you know, and he starts, you know, 161 00:08:13,160 --> 00:08:15,600 Speaker 1: you know, he starts coming on the radar of even people, 162 00:08:16,160 --> 00:08:17,720 Speaker 1: you know outside of India. He may not be a 163 00:08:17,720 --> 00:08:21,680 Speaker 1: consumer household name. But if you're like watching as Andrews does, uh, 164 00:08:21,920 --> 00:08:25,160 Speaker 1: who's who's wealthy? Uh? He is now beginning to like, 165 00:08:25,240 --> 00:08:27,240 Speaker 1: you know, top every league table that you can see. 166 00:08:27,280 --> 00:08:30,120 Speaker 1: I mean, this was Asia's richest man, India's richest man. 167 00:08:30,480 --> 00:08:32,800 Speaker 1: He was one of the richest people in the world. 168 00:08:33,240 --> 00:08:35,160 Speaker 1: Anders come on in on it because he was also 169 00:08:35,240 --> 00:08:37,839 Speaker 1: a man who seemed to like his privacy and kind 170 00:08:37,840 --> 00:08:39,520 Speaker 1: of stay out of the limelight. Talk to us a 171 00:08:39,520 --> 00:08:42,439 Speaker 1: little bit more about his empire and then the allegations 172 00:08:42,440 --> 00:08:49,040 Speaker 1: by Hindenburg. Yeah, he definitely has tended to stable of 173 00:08:49,120 --> 00:08:55,800 Speaker 1: the radar until recent years. Um, and his empire really is, 174 00:08:56,160 --> 00:09:00,920 Speaker 1: like that said, it's it's one that touches a lot 175 00:09:01,160 --> 00:09:04,400 Speaker 1: of citizens in India every day. He owns a series 176 00:09:04,440 --> 00:09:09,400 Speaker 1: of infrastructure companies that that all hang together in when 177 00:09:09,480 --> 00:09:12,760 Speaker 1: one conglomerate. So everything from coal mines to power plants, 178 00:09:12,800 --> 00:09:19,360 Speaker 1: to power lines to um cements, production facilities and data 179 00:09:19,440 --> 00:09:22,160 Speaker 1: storage centers. And he's getting into media and he owns 180 00:09:22,440 --> 00:09:28,960 Speaker 1: food companies. So it's things that touch lots of Indian 181 00:09:29,000 --> 00:09:33,680 Speaker 1: citizens every day. And he sort of came onto the 182 00:09:33,720 --> 00:09:38,720 Speaker 1: scene internationally. For those who don't necessarily watch India that 183 00:09:38,840 --> 00:09:42,280 Speaker 1: closely really, like pet said, two and during the covid 184 00:09:42,400 --> 00:09:47,040 Speaker 1: rally and in two and things started falling. He just 185 00:09:47,120 --> 00:09:50,560 Speaker 1: really went off the church that shares of his companies 186 00:09:50,600 --> 00:09:53,080 Speaker 1: just went up, up, up, and all of a sudden, 187 00:09:53,080 --> 00:09:55,520 Speaker 1: he was the second richest man in the world in 188 00:09:55,559 --> 00:09:59,640 Speaker 1: September last year, which was just quite surprising to see. 189 00:09:59,720 --> 00:10:03,640 Speaker 1: The as the rise was was so incredibly it was 190 00:10:03,679 --> 00:10:08,480 Speaker 1: just so incredibly baffling, especially for infrastructure companies, which don't 191 00:10:08,520 --> 00:10:12,040 Speaker 1: really tend to have those kinds of rich valuations. And 192 00:10:12,080 --> 00:10:15,520 Speaker 1: that piqued a lot of interest among people who said, 193 00:10:15,840 --> 00:10:18,880 Speaker 1: this just doesn't make sense. It's too good to be true. 194 00:10:18,960 --> 00:10:23,079 Speaker 1: These financials just can't be they can't be real. And 195 00:10:23,960 --> 00:10:29,320 Speaker 1: there's been whispers and news reports in India for quite 196 00:10:29,320 --> 00:10:33,400 Speaker 1: a few years about various aspects of the finances of 197 00:10:33,559 --> 00:10:39,440 Speaker 1: his companies, um but nothing really had happened. But that 198 00:10:39,559 --> 00:10:43,040 Speaker 1: obviously changed a couple of weeks ago when Hindenberg Research 199 00:10:43,679 --> 00:10:47,960 Speaker 1: put out their honor Page note sort of aggregating a 200 00:10:47,960 --> 00:10:50,040 Speaker 1: lot of what I've been out there already and then 201 00:10:50,120 --> 00:10:54,680 Speaker 1: dove deeper into certain aspects. And most people in India, 202 00:10:54,720 --> 00:10:57,240 Speaker 1: i think it's safe to say, expected that nothing would 203 00:10:57,280 --> 00:11:01,559 Speaker 1: really happen. But the shares of his companies started falling, 204 00:11:01,640 --> 00:11:04,360 Speaker 1: and then they just fell and fell and fell, and 205 00:11:04,640 --> 00:11:08,839 Speaker 1: the company is look at Lunia value has been about 206 00:11:08,840 --> 00:11:11,400 Speaker 1: cut in half since in the Birst report came out. 207 00:11:11,960 --> 00:11:14,480 Speaker 1: Andrews we uh as we were preparing this story and 208 00:11:14,480 --> 00:11:16,800 Speaker 1: it comes it comes through so well. In your piece, 209 00:11:17,120 --> 00:11:19,440 Speaker 1: UM talked a lot about kind of a culture clash 210 00:11:19,600 --> 00:11:24,840 Speaker 1: between UM Corporate India and UM sort of it's suddenly 211 00:11:25,200 --> 00:11:28,320 Speaker 1: it got big enough that it met the markets and 212 00:11:28,600 --> 00:11:33,280 Speaker 1: the end of the way that people operate in uh 213 00:11:33,559 --> 00:11:36,880 Speaker 1: New York and London and other financial markets, and it 214 00:11:36,960 --> 00:11:41,840 Speaker 1: suddenly met this kind of brass knuckles culture of shorts UM, 215 00:11:41,960 --> 00:11:44,760 Speaker 1: And Uh, can you just talk a little bit about 216 00:11:44,880 --> 00:11:47,480 Speaker 1: sort of like how how that, how that, how that's 217 00:11:47,480 --> 00:11:53,160 Speaker 1: played out. Yeah. So one of the unique aspects with 218 00:11:53,840 --> 00:11:59,200 Speaker 1: kut Madonni's group of companies is that it's it's built 219 00:11:59,240 --> 00:12:02,880 Speaker 1: sort of like a traditional Indian family conglomerate, which is 220 00:12:04,000 --> 00:12:08,600 Speaker 1: a series of businesses that a family that it's sort 221 00:12:08,600 --> 00:12:12,439 Speaker 1: of a a group of businesses that a family builds 222 00:12:12,480 --> 00:12:16,680 Speaker 1: over time, and they tied together sometimes in some ways, 223 00:12:16,760 --> 00:12:20,439 Speaker 1: and and you can help support each other financially when needed, 224 00:12:20,520 --> 00:12:24,280 Speaker 1: and you can move personnel between them. Um And this 225 00:12:24,360 --> 00:12:27,480 Speaker 1: has been it has a long storied history in the 226 00:12:27,559 --> 00:12:31,079 Speaker 1: Indian business culture. In the United States, they used to 227 00:12:31,160 --> 00:12:33,880 Speaker 1: be common back in the day. They are much less 228 00:12:33,880 --> 00:12:38,880 Speaker 1: so now. And one thing that people that I talked 229 00:12:38,920 --> 00:12:41,680 Speaker 1: to ahead of writing the story pointed out to me 230 00:12:42,000 --> 00:12:47,120 Speaker 1: was that within these conglomerates, historically there has tended to 231 00:12:47,160 --> 00:12:52,440 Speaker 1: be quite a bit of really related party transactions and 232 00:12:52,520 --> 00:12:57,400 Speaker 1: money being moved between different parts of of the conglomerate. 233 00:12:57,800 --> 00:13:01,520 Speaker 1: And sometimes that might have been done in ways that 234 00:13:01,720 --> 00:13:05,480 Speaker 1: others would not pick up on, or that security lawyers 235 00:13:05,520 --> 00:13:07,840 Speaker 1: maybe would frown upon because it was sort of a 236 00:13:08,000 --> 00:13:13,240 Speaker 1: family affair. And um and that's something that some people 237 00:13:13,240 --> 00:13:17,319 Speaker 1: are told to stressed that here you have a certain 238 00:13:17,480 --> 00:13:20,160 Speaker 1: culture of doing business, a certain way of doing business 239 00:13:20,160 --> 00:13:23,400 Speaker 1: that has worked extremely well for the country over a 240 00:13:23,520 --> 00:13:29,720 Speaker 1: really long time that is now clashing with how things 241 00:13:29,760 --> 00:13:34,440 Speaker 1: are done in the financial centers of capital like New 242 00:13:34,480 --> 00:13:38,199 Speaker 1: York and London, where the culture is very different. Most 243 00:13:38,200 --> 00:13:41,080 Speaker 1: companies tend to have a really broad shareholder base and 244 00:13:41,120 --> 00:13:44,200 Speaker 1: not be controlled by a family. Boards tend to not 245 00:13:44,280 --> 00:13:47,840 Speaker 1: be stacked by family members, Executive roles tend to not 246 00:13:47,920 --> 00:13:52,120 Speaker 1: be stacked by family members UM and a lot of 247 00:13:52,160 --> 00:13:56,240 Speaker 1: people in India are feeling a sense of frustration, I 248 00:13:57,840 --> 00:14:01,960 Speaker 1: think because they feel like people in the West just 249 00:14:02,280 --> 00:14:05,800 Speaker 1: look at this kind of corporate structure and think that 250 00:14:05,840 --> 00:14:10,120 Speaker 1: there's something inherently suspicious with it, when in reality it's 251 00:14:10,160 --> 00:14:12,840 Speaker 1: it's just a it's a slightly different way of just 252 00:14:13,040 --> 00:14:17,280 Speaker 1: looking at how business is done and how priorities are set. 253 00:14:17,559 --> 00:14:19,920 Speaker 1: The other thing I just want to us, and we 254 00:14:20,000 --> 00:14:22,000 Speaker 1: just have about a minute left here is I think 255 00:14:22,040 --> 00:14:24,880 Speaker 1: another layer that you do so well when you're reporting 256 00:14:25,800 --> 00:14:30,600 Speaker 1: is the connection between India, the country, India, the Prime 257 00:14:30,640 --> 00:14:38,320 Speaker 1: Minister and a Donnie Right, the relationship just seems very close. Yes, 258 00:14:39,400 --> 00:14:43,000 Speaker 1: Donnie and Prime Minister and Rundromody have known each other 259 00:14:43,080 --> 00:14:48,200 Speaker 1: for twenty years and people that knowing me a well, 260 00:14:48,280 --> 00:14:51,120 Speaker 1: they say that these two are are quite close and 261 00:14:51,440 --> 00:14:54,680 Speaker 1: their goals are aligned and they have benefited from each other. 262 00:14:54,920 --> 00:14:58,640 Speaker 1: And in that vein, Donnie has especially in recent years 263 00:14:59,280 --> 00:15:04,080 Speaker 1: taking on a really strong UM profile of trying to 264 00:15:04,160 --> 00:15:09,160 Speaker 1: link himself and his company with the future UM and 265 00:15:09,280 --> 00:15:13,520 Speaker 1: the success of India. And that's also something that he's 266 00:15:13,560 --> 00:15:15,720 Speaker 1: pushed really hard on. Now that the company is under 267 00:15:15,720 --> 00:15:19,280 Speaker 1: attacked by the New York short seller that last voice 268 00:15:19,280 --> 00:15:24,600 Speaker 1: Bloomberg News Wealth reporter on under Melon along with Bloomberg 269 00:15:24,600 --> 00:15:27,080 Speaker 1: Business Week Markets and Finance editor Pat Ragneer. Now, this 270 00:15:27,120 --> 00:15:29,760 Speaker 1: story is the cover story of Bloomberg Business Week. We 271 00:15:29,760 --> 00:15:31,520 Speaker 1: caught up with them a little bit earlier for our 272 00:15:31,560 --> 00:15:36,920 Speaker 1: weekend broadcast. UM, but really gets into what Gautamadanni the 273 00:15:36,920 --> 00:15:39,480 Speaker 1: tough year he's certainly having. And we continuen to see 274 00:15:39,480 --> 00:15:44,640 Speaker 1: the pressure in UH shares of the Donni empire overnight again, 275 00:15:44,720 --> 00:15:47,880 Speaker 1: so it continues to be certainly on investors radar. UM. 276 00:15:47,920 --> 00:15:50,000 Speaker 1: Coming up, we're gonna more on the story, including the 277 00:15:50,000 --> 00:15:52,640 Speaker 1: little research company that came up with that big short 278 00:15:53,080 --> 00:15:55,680 Speaker 1: on a Donnie. That's coming up next with our Joel 279 00:15:55,680 --> 00:15:59,720 Speaker 1: Weber and Ed Ludlow. We're talking about the research firm 280 00:15:59,800 --> 00:16:02,920 Speaker 1: that is run by Nate Anderson and his Hindenburg Research. 281 00:16:03,480 --> 00:16:07,320 Speaker 1: You might remember Nicola when he ran after that company. UM, 282 00:16:07,400 --> 00:16:10,280 Speaker 1: so it's interesting to hear about the fourner pages plus 283 00:16:10,320 --> 00:16:12,760 Speaker 1: if you will, that he put together on a Donnie. 284 00:16:13,800 --> 00:16:17,320 Speaker 1: You're listening to the Bloomberg Business Week Podcast. Catch us 285 00:16:17,400 --> 00:16:20,040 Speaker 1: live week days from two to five pm Eastern on 286 00:16:20,120 --> 00:16:23,320 Speaker 1: Bloomberg Radio, The Bloomberg Business A B and you too. 287 00:16:23,560 --> 00:16:26,320 Speaker 1: You can also listen live to our flagship New York 288 00:16:26,360 --> 00:16:30,040 Speaker 1: station Just Say Alexa play Bloomberg, E Love and Dierdi 289 00:16:31,960 --> 00:16:34,920 Speaker 1: well As. We just heard from pat Rick near Bloomberg 290 00:16:35,040 --> 00:16:39,880 Speaker 1: and Under's Melon his cover stories about billionaire Guatamadnni having 291 00:16:39,880 --> 00:16:44,080 Speaker 1: a rough start to three. The Indian industrial tycoon's empire 292 00:16:44,080 --> 00:16:45,880 Speaker 1: has taken a roughly a hundred billion dollar hit in 293 00:16:45,880 --> 00:16:49,240 Speaker 1: a matter of days following accusations of financial wrongdoing from 294 00:16:49,240 --> 00:16:52,840 Speaker 1: an American activist short seller. We wanted to share more 295 00:16:52,960 --> 00:16:56,560 Speaker 1: on that activist short seller, and that is Nate Anderson 296 00:16:56,800 --> 00:16:58,880 Speaker 1: and as Hindenburg Research with more on that in a 297 00:16:58,960 --> 00:17:01,640 Speaker 1: story in the upcoming new issue of Bloomberg Business Week 298 00:17:01,640 --> 00:17:05,199 Speaker 1: magazine out on newsstands. On the Bloomberg and Bloomberg dot 299 00:17:05,240 --> 00:17:08,240 Speaker 1: COM's last Business Business Week, Let's bring in Bloomberg Business 300 00:17:08,240 --> 00:17:10,960 Speaker 1: Week editor Joel Webber and Bloomberg Technology co host ed 301 00:17:11,040 --> 00:17:13,760 Speaker 1: Ludlow Joel here in our Bloomberg Into Factor Broker studio 302 00:17:14,000 --> 00:17:17,800 Speaker 1: ed in our nine sixties studio in San Francisco. All right, Joel, 303 00:17:17,880 --> 00:17:20,200 Speaker 1: so we did hear from Patton Andrews. We just played 304 00:17:20,240 --> 00:17:23,359 Speaker 1: that for our audience. Um, but this story, it's an 305 00:17:23,400 --> 00:17:25,560 Speaker 1: interesting one. Yes, So we had that that main bar 306 00:17:25,640 --> 00:17:27,960 Speaker 1: sort of in motion, and you know, the other big 307 00:17:28,040 --> 00:17:30,840 Speaker 1: question and all of this was more about the short, 308 00:17:30,920 --> 00:17:34,720 Speaker 1: and so we reached out to ed because well, you know, 309 00:17:35,000 --> 00:17:39,280 Speaker 1: as ed knows, um, you know very well Nicola story, um, 310 00:17:39,320 --> 00:17:41,159 Speaker 1: which was a huge one. And when that he was 311 00:17:41,200 --> 00:17:45,439 Speaker 1: instrumental in in our coverage of uh, Nate Anderson figured 312 00:17:45,440 --> 00:17:48,240 Speaker 1: into that, and you know, everything was kind of quiet, 313 00:17:48,280 --> 00:17:51,639 Speaker 1: and then everybody was like, oh my gosh, Nate Anderson 314 00:17:51,720 --> 00:17:54,320 Speaker 1: and Hindburg is suddenly became the story of the moment 315 00:17:54,359 --> 00:17:58,600 Speaker 1: with this short on the Donning group. Um, there's still 316 00:17:58,680 --> 00:18:01,800 Speaker 1: kind of shrouded in mystery, but are tasked at Edwards 317 00:18:01,840 --> 00:18:04,359 Speaker 1: sort of figure out as much as you can figure out. So, Edward, 318 00:18:04,560 --> 00:18:06,960 Speaker 1: what were you able to figure out? Yeah? You know, 319 00:18:07,000 --> 00:18:09,960 Speaker 1: I'm hesitant to call it a David and Goliath story, right, 320 00:18:09,960 --> 00:18:12,000 Speaker 1: but that's kind of what it's like. You know, Hindenberg 321 00:18:12,119 --> 00:18:15,280 Speaker 1: researches this sort of merry how about I do it? 322 00:18:15,320 --> 00:18:16,920 Speaker 1: And then you don't have to do it. So this 323 00:18:17,000 --> 00:18:20,159 Speaker 1: is a great Devid Glaire's story, right, go ahead, Well, 324 00:18:20,200 --> 00:18:22,480 Speaker 1: it's just gonna say you know, it's this merry band 325 00:18:22,560 --> 00:18:26,320 Speaker 1: of fewer than a dozen analysts journalists, and we know 326 00:18:26,760 --> 00:18:29,560 Speaker 1: very little about them, and yet they take on Asia's 327 00:18:29,600 --> 00:18:31,679 Speaker 1: what was Asia's richest man at the time, in this 328 00:18:31,760 --> 00:18:35,120 Speaker 1: massive conglomerate, and you know, to the outside world, they're 329 00:18:35,200 --> 00:18:37,160 Speaker 1: short sellers right there in it to make a profit, 330 00:18:37,520 --> 00:18:39,560 Speaker 1: as all short sellers are when the value of a 331 00:18:39,600 --> 00:18:44,040 Speaker 1: security tied to the company they targets declined. But you 332 00:18:44,080 --> 00:18:46,760 Speaker 1: know it's more than that, you know, they see themselves 333 00:18:46,800 --> 00:18:49,719 Speaker 1: as being this kind of really important function of a 334 00:18:49,720 --> 00:18:54,360 Speaker 1: healthy financial market, which is to make investors and regulators 335 00:18:54,400 --> 00:18:57,240 Speaker 1: aware of what they allege is a fraud. And then 336 00:18:57,359 --> 00:18:59,680 Speaker 1: once they've done their report and the market's done its thing, 337 00:19:00,040 --> 00:19:02,280 Speaker 1: they leave us in the media to cover the story 338 00:19:02,720 --> 00:19:05,919 Speaker 1: and leave the market to make their own conclusion, because 339 00:19:05,920 --> 00:19:09,560 Speaker 1: that is what an activist short seller is to their mind. Well, 340 00:19:09,560 --> 00:19:12,679 Speaker 1: and you know, it's not just about unveiling you know, 341 00:19:12,800 --> 00:19:17,520 Speaker 1: possible fraud or what have you. In you know, various 342 00:19:17,520 --> 00:19:20,480 Speaker 1: situations are various companies, and again these are allegations because 343 00:19:20,520 --> 00:19:22,520 Speaker 1: the company has come out and said very differently and 344 00:19:22,560 --> 00:19:24,400 Speaker 1: come out with its own I think four hundred page 345 00:19:24,440 --> 00:19:32,280 Speaker 1: report as a take that um. Having said that, tell 346 00:19:32,320 --> 00:19:34,560 Speaker 1: us about the dynamics in terms of who trades on 347 00:19:34,560 --> 00:19:38,359 Speaker 1: this ultimately, because people do make money off of this. Yeah, 348 00:19:38,400 --> 00:19:41,639 Speaker 1: so I think the mechanics of Hindenburg are interesting. You know, 349 00:19:41,840 --> 00:19:44,400 Speaker 1: put the sort of loftier goals to one side. Their 350 00:19:44,440 --> 00:19:47,159 Speaker 1: business model is based on making profit from a short 351 00:19:47,240 --> 00:19:50,080 Speaker 1: and actually another part of their business model is eventually 352 00:19:50,119 --> 00:19:53,440 Speaker 1: making money from whistleblower payouts. But my understanding is they've 353 00:19:53,480 --> 00:19:56,920 Speaker 1: never actually been paid one. Um. But what's so interesting 354 00:19:56,920 --> 00:20:00,320 Speaker 1: here is that in the past Hindenberg basically makes deal 355 00:20:00,520 --> 00:20:03,200 Speaker 1: with a group of passive investors or one single big 356 00:20:03,240 --> 00:20:05,639 Speaker 1: passive investor and says, hey, if you take on the 357 00:20:05,680 --> 00:20:08,360 Speaker 1: short position on our behalf, we will let you look 358 00:20:08,400 --> 00:20:11,240 Speaker 1: at the research before we publish it, and in exchange, 359 00:20:11,600 --> 00:20:14,640 Speaker 1: you give us Hindenburg a share of the profits. That way, 360 00:20:14,720 --> 00:20:17,680 Speaker 1: Hindenburg doesn't have to kind of reach into its own pockets, 361 00:20:17,920 --> 00:20:21,159 Speaker 1: and it's kind of a small group anyway. Right. But again, 362 00:20:21,320 --> 00:20:23,520 Speaker 1: this is the biggest question, and you know, these stories 363 00:20:23,520 --> 00:20:25,920 Speaker 1: are actually some of the most fascinating where you don't 364 00:20:25,960 --> 00:20:28,639 Speaker 1: find the answer. What the market wants to know right 365 00:20:28,680 --> 00:20:31,840 Speaker 1: now is is this short position closed or is it 366 00:20:31,840 --> 00:20:35,040 Speaker 1: still open. We don't know the answer to that. And 367 00:20:35,040 --> 00:20:37,920 Speaker 1: the reason it's important is because if they ride the 368 00:20:37,960 --> 00:20:39,679 Speaker 1: shot or the way to a lower value, there will 369 00:20:39,720 --> 00:20:43,080 Speaker 1: be more profitable. But now the markets trading on uncertainty 370 00:20:43,359 --> 00:20:46,480 Speaker 1: in both directions, and that's not just in equities markets. 371 00:20:46,520 --> 00:20:48,560 Speaker 1: But as we've learned in this case, all we know 372 00:20:48,600 --> 00:20:50,760 Speaker 1: about the short is that it was in dollar bonds 373 00:20:50,800 --> 00:20:54,560 Speaker 1: and non Indian listed derivatives tied to those companies within 374 00:20:54,640 --> 00:20:57,800 Speaker 1: the Adane group. So it's a fascinating market dynamic where 375 00:20:57,960 --> 00:21:02,000 Speaker 1: the market doesn't know so and you know, obviously will 376 00:21:02,040 --> 00:21:05,560 Speaker 1: be choosing everything that we can to figure out you know, when, 377 00:21:05,560 --> 00:21:07,440 Speaker 1: when and if it if it's open or a closure 378 00:21:07,520 --> 00:21:09,840 Speaker 1: or whatever. It's just ongoing mystery, what other what other 379 00:21:09,880 --> 00:21:14,080 Speaker 1: kind of mysteries remain here? Ed that that's your way 380 00:21:14,119 --> 00:21:17,320 Speaker 1: boss of saying, nudge, nudge, get on with it. We 381 00:21:17,359 --> 00:21:22,199 Speaker 1: can wrap. Yeah, yeah, yeah. Look. So so core to 382 00:21:22,240 --> 00:21:24,560 Speaker 1: the Danny story was like, what is the goal here? 383 00:21:24,720 --> 00:21:27,119 Speaker 1: You know, India is a very different market to the 384 00:21:27,119 --> 00:21:30,240 Speaker 1: ones that Hindenberg's targeted in the past. They've largely been 385 00:21:30,359 --> 00:21:33,760 Speaker 1: small US listed companies that Hindenberg has gone after the 386 00:21:33,800 --> 00:21:37,119 Speaker 1: regulatory situation in India is completely different. It's not clear 387 00:21:37,160 --> 00:21:39,920 Speaker 1: what kind of action could or hypothetically will be taken 388 00:21:39,920 --> 00:21:42,640 Speaker 1: against a DANI. So what is it that Hindenberg's trying 389 00:21:42,640 --> 00:21:45,760 Speaker 1: to achieve the FPO or that the follow on primary 390 00:21:45,760 --> 00:21:49,560 Speaker 1: offering was scrapped, their their activity in the bond market 391 00:21:49,600 --> 00:21:52,960 Speaker 1: or debt markets has been scrapped. Is that satisfaction enough 392 00:21:53,160 --> 00:21:55,320 Speaker 1: for Hindenberg? When it goes back to the core question 393 00:21:55,359 --> 00:21:57,879 Speaker 1: in the story, why is it that Hindenberg does what 394 00:21:57,960 --> 00:22:00,639 Speaker 1: it does? And the answer you get and again is 395 00:22:00,880 --> 00:22:03,800 Speaker 1: a very lofty goal. We expose fraud because it's the 396 00:22:03,880 --> 00:22:06,040 Speaker 1: right thing to do and it's part of the healthy 397 00:22:06,040 --> 00:22:11,000 Speaker 1: functioning financial market globally. So alright, so these activists, short sellers, researchers, 398 00:22:11,000 --> 00:22:14,160 Speaker 1: they bring attention to companies that might not necessarily beyond 399 00:22:14,280 --> 00:22:17,080 Speaker 1: anybody's radar. At the same time, sometimes the short sellers 400 00:22:17,080 --> 00:22:20,040 Speaker 1: are these activists um that are doing the research, they 401 00:22:20,080 --> 00:22:23,240 Speaker 1: actually become the target. And I'm thinking about Carson Block 402 00:22:23,400 --> 00:22:26,200 Speaker 1: like it's I always feel like there's a love hate 403 00:22:26,240 --> 00:22:29,359 Speaker 1: relationship with anybody who's looking to either talk down or 404 00:22:29,480 --> 00:22:32,680 Speaker 1: short a name. Yes, so there has been a large 405 00:22:32,680 --> 00:22:35,280 Speaker 1: body of academic research in this area. And there is 406 00:22:35,320 --> 00:22:39,680 Speaker 1: an active d J investigation which looks at some short sellers, 407 00:22:40,160 --> 00:22:42,720 Speaker 1: some of them well known, such as Muddy Waters and 408 00:22:42,760 --> 00:22:46,280 Speaker 1: Carson Block. What I would say is a they declined 409 00:22:46,320 --> 00:22:49,000 Speaker 1: to comment for this story, and and that investigation is 410 00:22:49,040 --> 00:22:52,120 Speaker 1: one that Bloomberg has previously reported. A source has told 411 00:22:52,119 --> 00:22:55,560 Speaker 1: me that Hindenberg have never been approached by US regulators 412 00:22:55,640 --> 00:22:59,080 Speaker 1: or agencies, at least with regards to that existing UH 413 00:22:59,480 --> 00:23:02,240 Speaker 1: investing gaistion. And again I go back to the other 414 00:23:02,280 --> 00:23:05,680 Speaker 1: part of the business model. Longer term, Hindenberg really hope 415 00:23:05,680 --> 00:23:09,720 Speaker 1: that actually these agencies pay them whistleblower rewards for the 416 00:23:09,720 --> 00:23:12,560 Speaker 1: work that they're doing. So it's a strange paradox that 417 00:23:12,600 --> 00:23:17,280 Speaker 1: we discussed in the story. But the accusation broadly from 418 00:23:17,320 --> 00:23:20,679 Speaker 1: academia through to to the investigations pending, is that some 419 00:23:20,720 --> 00:23:24,880 Speaker 1: of these short sellers hypothetically could be engaged in market manipulation. 420 00:23:25,160 --> 00:23:27,359 Speaker 1: And that's the negative side of the story. That there's 421 00:23:27,359 --> 00:23:30,760 Speaker 1: more to be reported. On the positive side is if 422 00:23:30,760 --> 00:23:32,480 Speaker 1: you do this right, it makes you a lot of money. 423 00:23:33,040 --> 00:23:36,920 Speaker 1: There is always do sides. Alright, Lovela, thank you so much, 424 00:23:36,960 --> 00:23:39,439 Speaker 1: co host of Bloomberg Technology at Bloomberg News, in our 425 00:23:39,520 --> 00:23:42,080 Speaker 1: nine sixties studio in San Francisco. Thanks to the editor 426 00:23:42,119 --> 00:23:45,800 Speaker 1: of Bloomberg Business Week magazine, Joel Webber, this story Anadani 427 00:23:45,920 --> 00:23:51,080 Speaker 1: the cover story this week. This is Bloomberg business Week 428 00:23:51,400 --> 00:23:54,639 Speaker 1: Inside from the reporters and editors who bring you America's 429 00:23:54,680 --> 00:23:58,480 Speaker 1: most trusted business magazine, plus bloom or Business finance and 430 00:23:58,520 --> 00:24:02,399 Speaker 1: tech news. The bloom Bird Business Week Podcast with Carol 431 00:24:02,440 --> 00:24:07,800 Speaker 1: Messer and Tim Stinevic from Bloomberg Radio. Well, we've definitely 432 00:24:07,840 --> 00:24:11,080 Speaker 1: seen shares of the Walt Disney Company take a little 433 00:24:11,119 --> 00:24:13,440 Speaker 1: bit of a round trip, if you will, because they 434 00:24:13,440 --> 00:24:16,960 Speaker 1: definitely rallied big time in the after hours last night, 435 00:24:17,000 --> 00:24:20,399 Speaker 1: falling their earnings and falling news of a restructuring and 436 00:24:20,480 --> 00:24:22,159 Speaker 1: five and a half billion dollars in costs. And then, 437 00:24:22,160 --> 00:24:24,640 Speaker 1: of course today we had the news that the activist 438 00:24:24,680 --> 00:24:27,800 Speaker 1: investor who's been kind of pushing for some changes at 439 00:24:27,840 --> 00:24:30,560 Speaker 1: Disney come out and say, I'm done with my proxy fight. 440 00:24:30,640 --> 00:24:32,840 Speaker 1: So let's make sense of it, because we've got the 441 00:24:32,840 --> 00:24:36,480 Speaker 1: perfect voice. Lucas Shaw is entertainment reporter here at Bloomberg News. 442 00:24:36,560 --> 00:24:39,919 Speaker 1: He joins us from Los Angeles. Lucas, good to have 443 00:24:40,040 --> 00:24:42,199 Speaker 1: you here with us. A lot going on when it 444 00:24:42,240 --> 00:24:44,920 Speaker 1: comes to Disney. I feel like in the last month 445 00:24:45,000 --> 00:24:47,440 Speaker 1: or so, and certainly in the last day or so, Um, 446 00:24:47,520 --> 00:24:51,439 Speaker 1: what jumps out for you? I mean, to me, the 447 00:24:51,440 --> 00:24:55,679 Speaker 1: biggest thing was was igers comments on the company's earnings 448 00:24:55,720 --> 00:24:58,520 Speaker 1: called yesterday, just because he threw so many different things 449 00:24:58,520 --> 00:25:01,520 Speaker 1: at people in terms of his plans for Disney, and 450 00:25:01,720 --> 00:25:05,720 Speaker 1: he talked about having to to fire about seven thousand workers. 451 00:25:05,720 --> 00:25:09,240 Speaker 1: He restructured the company to put kind of his his 452 00:25:09,359 --> 00:25:12,680 Speaker 1: content people in charge of their businesses, reversing a decision 453 00:25:12,760 --> 00:25:15,840 Speaker 1: by Bob Jpeck, who is both his predecessor and was 454 00:25:15,880 --> 00:25:18,959 Speaker 1: his successor because remember Bob Iker was with CEO for 455 00:25:19,000 --> 00:25:21,840 Speaker 1: a long time before him. Um, and then talked about 456 00:25:21,920 --> 00:25:25,480 Speaker 1: you know everything from them maybe offering too many promotions 457 00:25:25,480 --> 00:25:29,119 Speaker 1: and not charging enough to cutting back on general entertainment spending. 458 00:25:29,119 --> 00:25:31,919 Speaker 1: I mean, there was I looked at the transcript yesterday 459 00:25:31,920 --> 00:25:34,600 Speaker 1: and there was a paragraph whereas a reporter, I'm I'm 460 00:25:34,640 --> 00:25:37,160 Speaker 1: sort of overwhelmed, but also drooling because there's like six 461 00:25:37,200 --> 00:25:39,800 Speaker 1: different things he's talking about that are clear strategy shifts 462 00:25:39,800 --> 00:25:42,120 Speaker 1: at the company. So that's what jumps out, Because look, 463 00:25:42,160 --> 00:25:44,840 Speaker 1: the Pelts thing, I always thought it was a weird 464 00:25:44,880 --> 00:25:47,560 Speaker 1: timing for for for Peltz's move, and a lot of 465 00:25:47,600 --> 00:25:50,080 Speaker 1: the things that I did today, which Pelts is treating 466 00:25:50,119 --> 00:25:51,920 Speaker 1: sort of as some grand victory, I think are things 467 00:25:51,960 --> 00:25:56,439 Speaker 1: that he would have done whether or not Pelts was agitating. Interesting. Um, 468 00:25:56,560 --> 00:26:00,840 Speaker 1: were you surprised that Pelts backed off? I? Um, I 469 00:26:00,840 --> 00:26:03,280 Speaker 1: guess I'm a little. I'm a little surprised at how 470 00:26:03,359 --> 00:26:06,840 Speaker 1: how little it took. Um. But I was, look, he 471 00:26:07,160 --> 00:26:10,200 Speaker 1: Pelts started to, you know, get involved here when when 472 00:26:10,240 --> 00:26:14,439 Speaker 1: Shapeck was the leader. Um, and you know some of 473 00:26:14,440 --> 00:26:17,640 Speaker 1: it as I think he saw a clear business opportunity. 474 00:26:17,720 --> 00:26:20,320 Speaker 1: While Disney Company one of the great companies in the world, 475 00:26:20,480 --> 00:26:23,560 Speaker 1: you know, the biggest entertainment company. Uh, it's stock is down. 476 00:26:23,640 --> 00:26:25,720 Speaker 1: People are just are sort of worried about it. But 477 00:26:25,760 --> 00:26:28,080 Speaker 1: I think most people felt like long term, Disney would 478 00:26:28,080 --> 00:26:29,560 Speaker 1: figure it out and be fine. And so if you're 479 00:26:29,600 --> 00:26:32,560 Speaker 1: a savvy investor, which Nelson Pelts obviously is, you get 480 00:26:32,560 --> 00:26:34,840 Speaker 1: in when the stocks low, you make a bunch of noise, 481 00:26:35,080 --> 00:26:37,680 Speaker 1: the stock goes back up, and you gotta win. Um. 482 00:26:37,800 --> 00:26:39,920 Speaker 1: He He also seemed there seemed to be some personal 483 00:26:39,960 --> 00:26:43,600 Speaker 1: motivations He's close with, like Pearl Mutter, who who uh 484 00:26:43,640 --> 00:26:47,560 Speaker 1: you know, is very involved and sold Marvel to Disney. 485 00:26:47,680 --> 00:26:50,119 Speaker 1: Uh and then kind of got pushed to the side. 486 00:26:50,119 --> 00:26:52,479 Speaker 1: So he doesn't like Bob. Iger doesn't really like Bob Shapeck. 487 00:26:52,520 --> 00:26:55,880 Speaker 1: There's a political dynamic to it because Nelson Peltz has 488 00:26:55,920 --> 00:26:58,680 Speaker 1: been is sort of involved in conservative politics, and people 489 00:26:58,680 --> 00:27:01,040 Speaker 1: were seeing Disney as as kin of to quote unquote 490 00:27:01,040 --> 00:27:03,960 Speaker 1: woke after this this kind of fight with the state 491 00:27:04,160 --> 00:27:07,359 Speaker 1: in Florida. Um. And so I guess the fact that 492 00:27:07,440 --> 00:27:10,000 Speaker 1: all he needed was to come in and say, hey, 493 00:27:10,040 --> 00:27:12,520 Speaker 1: this is what I'm doing and it's uh and and 494 00:27:12,680 --> 00:27:16,000 Speaker 1: back down. Um. But he had chosen to wage this 495 00:27:16,040 --> 00:27:18,680 Speaker 1: fight like right as the power changed, which is why 496 00:27:18,680 --> 00:27:20,960 Speaker 1: I thought it was weird timing because it's like, shouldn't 497 00:27:21,000 --> 00:27:22,879 Speaker 1: you wait to see what Iger's plan is before you 498 00:27:22,920 --> 00:27:25,960 Speaker 1: say you don't agree with it? So we look at Disney, 499 00:27:26,000 --> 00:27:30,680 Speaker 1: I mean, what's the what's the weak part of the company, 500 00:27:30,800 --> 00:27:32,919 Speaker 1: what's the strength? Because I know years ago it was 501 00:27:32,920 --> 00:27:35,280 Speaker 1: all about ESPN, right, and then it went through like 502 00:27:35,320 --> 00:27:38,200 Speaker 1: oh everybody kind of had a hate on for ESPN. Uh, 503 00:27:38,240 --> 00:27:39,679 Speaker 1: and yet that is going to be one of the 504 00:27:39,960 --> 00:27:43,400 Speaker 1: one of the three main units. So where the strengths 505 00:27:43,400 --> 00:27:45,880 Speaker 1: in Disney. What really matters to the top and bottom lines. 506 00:27:45,920 --> 00:27:48,600 Speaker 1: Where the weakness, I mean the strength is one of 507 00:27:48,640 --> 00:27:50,520 Speaker 1: the strengths right now is certainly the theme parks. That's 508 00:27:50,520 --> 00:27:52,399 Speaker 1: the big reason that they had good numbers his most 509 00:27:52,720 --> 00:27:57,240 Speaker 1: recent quarter. The attendance at the parks is really solid. Um. 510 00:27:57,640 --> 00:28:00,600 Speaker 1: The weakness and strength beyond that are I have an 511 00:28:00,680 --> 00:28:02,720 Speaker 1: open question, right you know, we know that the cable 512 00:28:02,760 --> 00:28:06,280 Speaker 1: networks are in decline, and so the answer to that 513 00:28:06,359 --> 00:28:09,479 Speaker 1: is supposed to be the streaming services Disney Plus, Hulu, 514 00:28:09,920 --> 00:28:13,120 Speaker 1: ESPN plus. But those those streaming services right now lose 515 00:28:13,160 --> 00:28:16,080 Speaker 1: a bunch of money, um, and so our Hulu doesn't. 516 00:28:16,119 --> 00:28:19,280 Speaker 1: But but Disney Plus does, I assume ESPN Plus depending 517 00:28:19,280 --> 00:28:22,040 Speaker 1: on how Disney chooses to account it does. Disney is 518 00:28:22,080 --> 00:28:25,400 Speaker 1: having to figure out how to manage that transition from 519 00:28:25,480 --> 00:28:28,240 Speaker 1: cable to streaming. They've done so more effectively than most 520 00:28:28,280 --> 00:28:29,879 Speaker 1: of the other media companies, but now they have to 521 00:28:29,920 --> 00:28:32,040 Speaker 1: prove there's a good business in it. What do you 522 00:28:32,080 --> 00:28:34,639 Speaker 1: make of and you guys, your story, uh that you 523 00:28:34,680 --> 00:28:37,480 Speaker 1: put out about Disney exploring more licensing of films TV 524 00:28:37,560 --> 00:28:40,719 Speaker 1: series to arrivals. Is this a smart idea? Is this 525 00:28:40,880 --> 00:28:42,920 Speaker 1: like something that actually moves the needle when it comes 526 00:28:42,960 --> 00:28:47,080 Speaker 1: to revenue generation profits. Yeah. Look, I think these companies 527 00:28:47,080 --> 00:28:50,360 Speaker 1: in trying to replicate Netflix, um, you know, went a 528 00:28:50,400 --> 00:28:52,520 Speaker 1: little too far where they said, if we're going to 529 00:28:52,600 --> 00:28:55,560 Speaker 1: be like Netflix, we should do everything like them. Um. 530 00:28:55,600 --> 00:28:58,120 Speaker 1: But what they didn't realize is, you know, well, Netflix 531 00:28:58,160 --> 00:29:01,400 Speaker 1: doesn't release movies in beat is because Netflix doesn't have 532 00:29:01,560 --> 00:29:04,800 Speaker 1: big franchises that will guarantee that people come to theaters. 533 00:29:05,040 --> 00:29:08,160 Speaker 1: Netflix doesn't license its titles out to competitors in part 534 00:29:08,200 --> 00:29:11,320 Speaker 1: because it doesn't have this deep catalog that is as 535 00:29:11,400 --> 00:29:13,680 Speaker 1: valuable and can can give to others. And so I 536 00:29:13,680 --> 00:29:16,360 Speaker 1: think it does make sense if you're Disney and you're 537 00:29:16,400 --> 00:29:18,840 Speaker 1: looking at you know, they bought the TV studio from 538 00:29:18,880 --> 00:29:21,560 Speaker 1: Fox that's got tons of shows in the library. Some 539 00:29:21,640 --> 00:29:24,760 Speaker 1: of those may be useful to Disney Plus or to Hulu. 540 00:29:24,880 --> 00:29:26,640 Speaker 1: But if they can get some other company to pay 541 00:29:26,680 --> 00:29:28,880 Speaker 1: them for shows that people probably aren't gonna watch very much, 542 00:29:29,400 --> 00:29:32,280 Speaker 1: you know, that's good business. Bob Iger knows his company 543 00:29:32,320 --> 00:29:34,440 Speaker 1: so well, right, really helped build it out, you know, 544 00:29:34,440 --> 00:29:36,680 Speaker 1: whether it's the Pixar side, the Marvel side, A lot 545 00:29:36,720 --> 00:29:41,080 Speaker 1: of different things here. Um, I wonder how you think 546 00:29:41,120 --> 00:29:43,239 Speaker 1: about how long he might be at the company, how 547 00:29:43,320 --> 00:29:45,840 Speaker 1: much time investors will give him. I mean, Pelts is 548 00:29:45,880 --> 00:29:51,280 Speaker 1: backed off, but investors are gonna be watching very closely. Yeah, 549 00:29:51,320 --> 00:29:54,160 Speaker 1: I mean I think investors are are are they've bought 550 00:29:54,200 --> 00:29:56,440 Speaker 1: in right, you know when when I came back, the 551 00:29:56,480 --> 00:29:58,800 Speaker 1: stock went up. Generally there's a lot of faith in him. 552 00:29:59,360 --> 00:30:01,360 Speaker 1: Some of it all the hand on the performance of 553 00:30:01,400 --> 00:30:05,719 Speaker 1: the company. Of course, if if if the company's doesn't 554 00:30:05,720 --> 00:30:08,400 Speaker 1: do well in the next few quarters, then people will agitate. 555 00:30:08,680 --> 00:30:12,560 Speaker 1: But look, Iger has has delineated a very a relatively 556 00:30:12,560 --> 00:30:14,960 Speaker 1: clear strategy. I would say he still has to fill 557 00:30:14,960 --> 00:30:17,760 Speaker 1: in a lot of particulars um and it's a pretty seat. 558 00:30:17,800 --> 00:30:20,240 Speaker 1: There's some pretty significant changes, So I think he's you 559 00:30:20,320 --> 00:30:22,240 Speaker 1: got to give him at least the the rest of 560 00:30:22,240 --> 00:30:24,480 Speaker 1: the year to figure it out. But the truth is 561 00:30:24,480 --> 00:30:27,040 Speaker 1: is there's still some very big questions hanging over the company. 562 00:30:27,200 --> 00:30:28,920 Speaker 1: Do that what do they do with THEESPN? You know, 563 00:30:28,920 --> 00:30:30,880 Speaker 1: they're not going to break it out in reporting. That 564 00:30:30,960 --> 00:30:32,680 Speaker 1: leads some to believe that they're going to want to 565 00:30:32,680 --> 00:30:34,600 Speaker 1: spin it out or sell it to someone. What do 566 00:30:34,640 --> 00:30:37,240 Speaker 1: they do about the thirty percent stake in Hulu that 567 00:30:37,320 --> 00:30:40,360 Speaker 1: Comcast has. Bob Iger was on TV this morning saying, 568 00:30:41,120 --> 00:30:43,720 Speaker 1: you know, I haven't committed to keeping it or buying Comcast. 569 00:30:43,960 --> 00:30:46,400 Speaker 1: They're clearly in this negotiation with them where they're going 570 00:30:46,440 --> 00:30:49,480 Speaker 1: to sort of have this staring contest, and so, you know, 571 00:30:49,720 --> 00:30:52,360 Speaker 1: I think he's he's certainly got the confidence of investors 572 00:30:52,440 --> 00:30:55,800 Speaker 1: right now, but he needs to provide some some additional 573 00:30:55,800 --> 00:30:58,840 Speaker 1: clarity to what his big picture strategic plans are Lucas. 574 00:30:58,880 --> 00:31:00,680 Speaker 1: As you know, Disney has said it has no plans 575 00:31:00,720 --> 00:31:03,360 Speaker 1: to spin off ESPN, but you're right, like separating it 576 00:31:03,400 --> 00:31:05,040 Speaker 1: out really is going to give us a clear picture 577 00:31:05,680 --> 00:31:07,920 Speaker 1: of what this business is all about. Having said that, 578 00:31:08,040 --> 00:31:11,240 Speaker 1: I mean, what is a Disney without ESPN? Just fine? 579 00:31:12,640 --> 00:31:14,760 Speaker 1: I think it's a general entertainment company. If they do 580 00:31:14,840 --> 00:31:18,840 Speaker 1: that right, the calculation would be sports right now is 581 00:31:18,840 --> 00:31:21,040 Speaker 1: sports is a rental business. You don't own it like 582 00:31:21,120 --> 00:31:23,720 Speaker 1: you do you own a Marvel or lucasfilm. The cost 583 00:31:23,720 --> 00:31:27,400 Speaker 1: of sports keeps going way up, and while it seems 584 00:31:27,440 --> 00:31:30,440 Speaker 1: like companies have sort of figured out how to make 585 00:31:30,880 --> 00:31:33,360 Speaker 1: kind of transfer the entertainment part of the cable bundle 586 00:31:33,440 --> 00:31:36,520 Speaker 1: to the Internet, the sports part is much more difficult. 587 00:31:36,560 --> 00:31:41,040 Speaker 1: Because sports always you made money by having everybody pay 588 00:31:41,120 --> 00:31:42,920 Speaker 1: for it, even though only a certain subset of the 589 00:31:42,960 --> 00:31:45,840 Speaker 1: people care, and the fees on a per per cable 590 00:31:45,880 --> 00:31:49,040 Speaker 1: customer basis are incredibly high. And so does that that 591 00:31:49,080 --> 00:31:51,959 Speaker 1: business model and a streaming landscape mean that you you 592 00:31:52,080 --> 00:31:56,560 Speaker 1: charge a ton more? Doesn't mean that you sell individual games. 593 00:31:56,600 --> 00:32:00,120 Speaker 1: Nobody's quite cracked that. So I look, I personally think 594 00:32:00,160 --> 00:32:03,080 Speaker 1: that sports is incredibly valuable, and Disney may want to 595 00:32:03,160 --> 00:32:05,760 Speaker 1: keep ESPN, but there's a kind of a loud and 596 00:32:05,800 --> 00:32:08,440 Speaker 1: growing chorus that thinks if Disney could could sell it, 597 00:32:08,600 --> 00:32:10,480 Speaker 1: get a bunch of money, used that to invest in 598 00:32:10,480 --> 00:32:13,080 Speaker 1: a general entertainment streaming service that can kind of compete 599 00:32:13,080 --> 00:32:14,880 Speaker 1: head to head with Netflix, they'd be better off. I 600 00:32:14,920 --> 00:32:16,840 Speaker 1: was gonna say, there's some other streaming services that might 601 00:32:16,880 --> 00:32:19,920 Speaker 1: be interested in sports in general. Having said that, lucause 602 00:32:19,920 --> 00:32:21,920 Speaker 1: if you were sitting down with Bob Biger right now, 603 00:32:22,040 --> 00:32:23,920 Speaker 1: what would be the two top questions you'd want to 604 00:32:23,920 --> 00:32:30,080 Speaker 1: ask him? Um am I assuming that he's that he's 605 00:32:30,080 --> 00:32:33,320 Speaker 1: gonna be like totally honest, because if I think if 606 00:32:33,120 --> 00:32:35,120 Speaker 1: if he's gonna if he's gonna give me, I would 607 00:32:35,160 --> 00:32:39,160 Speaker 1: never say he's dishonest. No, But like, look, I can 608 00:32:39,240 --> 00:32:41,960 Speaker 1: ask him, what is your plan for Hulu? Right That's 609 00:32:42,040 --> 00:32:43,760 Speaker 1: one of the biggest questions I have. But I don't 610 00:32:43,760 --> 00:32:46,080 Speaker 1: think he's gonna tell me that right now. Fair enough, 611 00:32:47,000 --> 00:32:49,040 Speaker 1: so I don't know. But but like to that end, 612 00:32:49,080 --> 00:32:50,960 Speaker 1: I might say, you know, do you you talk a 613 00:32:50,960 --> 00:32:53,520 Speaker 1: lot about general entertainment? Do you see Disney as a 614 00:32:53,560 --> 00:32:57,000 Speaker 1: general entertainment company or sports an integral part of your future? 615 00:32:57,760 --> 00:33:00,719 Speaker 1: And you know, I'm sure he'll find a very delicate 616 00:33:00,760 --> 00:33:02,959 Speaker 1: way to say, we love sports, but you know, we're 617 00:33:03,000 --> 00:33:07,720 Speaker 1: not taking anything off the table something like that. Yeah, okay, 618 00:33:07,880 --> 00:33:10,959 Speaker 1: that's fair. That sounds like a good idea. Um, Lucas, 619 00:33:11,000 --> 00:33:13,800 Speaker 1: thank you so much, really appreciate it. U our Lucas 620 00:33:13,840 --> 00:33:17,080 Speaker 1: Shaw giving us the lowdown on Disney a lot of 621 00:33:17,080 --> 00:33:19,000 Speaker 1: news in the last twenty four hours. Lucas, of course, 622 00:33:19,120 --> 00:33:22,200 Speaker 1: is entertainment reporter here at Bloomberg News, joining us from 623 00:33:22,200 --> 00:33:26,040 Speaker 1: Los Angeles. Find him on Twitter at Lucas Underscore Shaw. 624 00:33:27,120 --> 00:33:30,680 Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us 625 00:33:30,720 --> 00:33:34,400 Speaker 1: live weekdays from two to five pm Easter on Bloomberg Radio, 626 00:33:34,600 --> 00:33:37,840 Speaker 1: the Bloomberg Business Band. You too. You can also listen 627 00:33:37,960 --> 00:33:41,480 Speaker 1: live to our flagship New York station. Just say Alexa 628 00:33:41,720 --> 00:33:52,520 Speaker 1: play Bloomberg E, Love and Dirty. I'm room journal. Yeah, 629 00:33:52,600 --> 00:33:57,560 Speaker 1: but you let me drive? Oh no, no, nor leave, 630 00:33:57,680 --> 00:34:08,520 Speaker 1: I'll revels. I want to dry. Good question, which is 631 00:34:08,560 --> 00:34:15,360 Speaker 1: the Drive to the Clothes on Bloomberg Radio? All right, everybody, 632 00:34:15,560 --> 00:34:18,759 Speaker 1: just about seventeen minutes left in today's trading session, and 633 00:34:18,920 --> 00:34:20,759 Speaker 1: it's definitely a risk off tradel though as you heard 634 00:34:20,760 --> 00:34:22,520 Speaker 1: from Gina Martin Adams a little bit earlier, it's not 635 00:34:22,560 --> 00:34:25,439 Speaker 1: like you're seeing investors, certainly on the equity side of things, 636 00:34:25,520 --> 00:34:27,799 Speaker 1: run into kind of all of those safer plays, if 637 00:34:27,800 --> 00:34:30,719 Speaker 1: you will. So that's kind of an interesting take on it. 638 00:34:31,000 --> 00:34:33,400 Speaker 1: Having said that, we are just off our loads, as 639 00:34:33,400 --> 00:34:35,359 Speaker 1: you just heard from Charlie, but still down about one 640 00:34:35,360 --> 00:34:38,760 Speaker 1: point one percent on the NAS dec and in particular, 641 00:34:38,800 --> 00:34:40,920 Speaker 1: it's what's going on when it comes to yields. We've 642 00:34:40,960 --> 00:34:42,759 Speaker 1: got that to you're just rolling over, but still at 643 00:34:42,800 --> 00:34:45,319 Speaker 1: four point forty nine. So let's see what our Drive 644 00:34:45,360 --> 00:34:47,040 Speaker 1: to the Closed guest has to say about it all. 645 00:34:47,080 --> 00:34:50,759 Speaker 1: Sylvia Jablonski is back with us. She's CEO and Chief 646 00:34:50,760 --> 00:34:53,160 Speaker 1: Investment Officer at Defiance E T f She joins us 647 00:34:53,200 --> 00:34:55,680 Speaker 1: once again on the phone in New York City, Sylvia. 648 00:34:55,840 --> 00:34:57,640 Speaker 1: Nice to have you back here on Bloomberg on a 649 00:34:57,760 --> 00:35:00,520 Speaker 1: day where the tone is a little bit from what 650 00:35:00,560 --> 00:35:05,279 Speaker 1: we've seen so far here in three. How do you 651 00:35:05,360 --> 00:35:09,560 Speaker 1: explain the trade today where we're seeing equities lower and 652 00:35:09,680 --> 00:35:14,439 Speaker 1: we're seeing bonds lower and yields moving up. Hi, Carol, 653 00:35:14,480 --> 00:35:17,239 Speaker 1: great to speak with you again. Well, I think, yeah, 654 00:35:17,280 --> 00:35:19,279 Speaker 1: I think I think a lot of this just has 655 00:35:19,280 --> 00:35:21,640 Speaker 1: to do with the FED and the different UM FED 656 00:35:21,719 --> 00:35:24,520 Speaker 1: chairs out there, you know, sort of singing their song 657 00:35:24,600 --> 00:35:28,480 Speaker 1: about higher for longer UM. I think the market came 658 00:35:28,520 --> 00:35:31,319 Speaker 1: out with a strong start. Investors were really starting to 659 00:35:31,800 --> 00:35:33,799 Speaker 1: think about the idea of a look through that the 660 00:35:33,840 --> 00:35:37,080 Speaker 1: FED would be close to finished raising rates. And you know, 661 00:35:37,080 --> 00:35:39,440 Speaker 1: once they sort of hit that that terminal rate around 662 00:35:39,440 --> 00:35:42,080 Speaker 1: five percent, Okay, we're there. It's going to be higher 663 00:35:42,080 --> 00:35:44,280 Speaker 1: for longer, but it's sort of priced in and and 664 00:35:44,480 --> 00:35:46,600 Speaker 1: you know, it seems like some confidence came back into 665 00:35:46,680 --> 00:35:49,520 Speaker 1: the hands of UM investors when they when they sort 666 00:35:49,520 --> 00:35:52,400 Speaker 1: of purchased their equities. But you know, we see stocks 667 00:35:52,400 --> 00:35:55,520 Speaker 1: sort of retreating, and I think that now there's this 668 00:35:55,680 --> 00:36:00,080 Speaker 1: sense of worry about recession signals kind of flash in 669 00:36:00,280 --> 00:36:03,200 Speaker 1: because hawk ish feds speak from you know, the various 670 00:36:03,680 --> 00:36:08,440 Speaker 1: presidents are talking about not being done, perhaps having to 671 00:36:08,440 --> 00:36:10,160 Speaker 1: go even higher. And then you know, you see all 672 00:36:10,160 --> 00:36:13,160 Speaker 1: these options bets and things like that targeting six percent 673 00:36:13,200 --> 00:36:15,120 Speaker 1: and higher peak rates, and I think that that's really 674 00:36:15,120 --> 00:36:18,040 Speaker 1: what's spooking the market now and and impacting both equities 675 00:36:18,040 --> 00:36:20,560 Speaker 1: and six may come. Does the market have it right? 676 00:36:22,680 --> 00:36:25,160 Speaker 1: You know? I think that if we if we look 677 00:36:25,160 --> 00:36:27,759 Speaker 1: at the data and the bigger macro pictures, there's a 678 00:36:27,800 --> 00:36:32,120 Speaker 1: lot of news in favor of thinking that what Jerome 679 00:36:32,200 --> 00:36:34,319 Speaker 1: Pale sort of said in the message that he gave 680 00:36:34,360 --> 00:36:36,360 Speaker 1: in terms of being a little bit more balanced, that 681 00:36:37,480 --> 00:36:40,239 Speaker 1: there has been some progress. It's probably more true than 682 00:36:40,440 --> 00:36:43,560 Speaker 1: than sort of the fearmongering. I think that we're hearing 683 00:36:43,560 --> 00:36:46,200 Speaker 1: over the last day or two, we're seeing good news 684 00:36:46,239 --> 00:36:49,760 Speaker 1: and good data around inflation falling. Um we are starting 685 00:36:49,800 --> 00:36:51,880 Speaker 1: to see a lot of layoffs and things like that. 686 00:36:51,920 --> 00:36:53,920 Speaker 1: I know the job number was particularly hot, but when 687 00:36:53,960 --> 00:36:56,960 Speaker 1: you see these, you know, constant reminders that jobs are 688 00:36:56,960 --> 00:36:59,000 Speaker 1: starting to fall off, that's eventually going to play out. 689 00:36:59,080 --> 00:37:02,080 Speaker 1: Paine Sumer state things have sort of um loosened a 690 00:37:02,120 --> 00:37:05,600 Speaker 1: little bit. You're starting to see UM earnings fall about 691 00:37:05,680 --> 00:37:07,800 Speaker 1: ten percent, you know, sort of year over years, you 692 00:37:07,880 --> 00:37:10,440 Speaker 1: kind of had dots you dropped there. So I do 693 00:37:10,520 --> 00:37:12,600 Speaker 1: think that last year the market got hit. I think 694 00:37:12,600 --> 00:37:15,080 Speaker 1: that there's been a rolling recession in various sectors, and 695 00:37:15,480 --> 00:37:17,360 Speaker 1: I think we're probably closer to the end of this 696 00:37:17,480 --> 00:37:19,440 Speaker 1: than we are to the beginning of a profession. That's 697 00:37:19,520 --> 00:37:21,160 Speaker 1: my take on it. Hey, what do you make of 698 00:37:21,280 --> 00:37:24,560 Speaker 1: indicators like UM The latest survey from the American Association 699 00:37:24,560 --> 00:37:27,680 Speaker 1: of Individual Investors which showed that US retail investors turned 700 00:37:27,680 --> 00:37:30,680 Speaker 1: bullish for the first time since April. So that's pretty significant, 701 00:37:30,960 --> 00:37:33,600 Speaker 1: with the bull bear spread rising to twelve point five 702 00:37:33,719 --> 00:37:37,120 Speaker 1: from negative four point seven a week earlier, and the 703 00:37:37,120 --> 00:37:39,279 Speaker 1: percentage of investors with a bearish view over the next 704 00:37:39,280 --> 00:37:43,680 Speaker 1: six months falling to the lowest in November. Markets often 705 00:37:43,719 --> 00:37:45,839 Speaker 1: see that as a contrarian indicator and saying, well, wait 706 00:37:45,880 --> 00:37:48,480 Speaker 1: a minute, we're too We're too all in at this point. 707 00:37:48,560 --> 00:37:53,440 Speaker 1: But having said that, that sentiment is that tell you 708 00:37:53,480 --> 00:37:58,000 Speaker 1: that there is, though possibly the opportunity that investors will 709 00:37:58,360 --> 00:38:00,840 Speaker 1: see pullbacks as an opportunity need to come in the market. 710 00:38:00,920 --> 00:38:03,360 Speaker 1: That is a trade that we have seen, you know, 711 00:38:03,440 --> 00:38:06,839 Speaker 1: certainly over the last couple of years. Yeah, and that's 712 00:38:06,840 --> 00:38:08,719 Speaker 1: a great point, you know, I I definitely take to 713 00:38:08,719 --> 00:38:10,920 Speaker 1: the point about that being a contririor indicator. But if 714 00:38:10,920 --> 00:38:13,359 Speaker 1: you think about, you know, just five minutes ago, that 715 00:38:13,400 --> 00:38:16,800 Speaker 1: report was absolutely flipped, right, everybody was just an absolute 716 00:38:16,800 --> 00:38:19,000 Speaker 1: bear and you were sort of crazy by equities. But 717 00:38:19,120 --> 00:38:21,560 Speaker 1: I think for those of us who have investment here beyond, 718 00:38:22,920 --> 00:38:25,520 Speaker 1: you want to dollar class average in And the truth 719 00:38:25,560 --> 00:38:27,200 Speaker 1: is the market may pull back a little bit, it 720 00:38:27,239 --> 00:38:30,440 Speaker 1: may not. I expect to see this rangebound activity until 721 00:38:30,440 --> 00:38:32,719 Speaker 1: we have more clarity on what the what the FED 722 00:38:32,800 --> 00:38:34,839 Speaker 1: will do and you know, sort of how long I'll 723 00:38:34,840 --> 00:38:37,520 Speaker 1: stay there. But I do think that it's worth looking 724 00:38:37,560 --> 00:38:39,560 Speaker 1: through at this point because I don't think it's going 725 00:38:39,600 --> 00:38:44,320 Speaker 1: to be you know, a significantly higher amount of reduction 726 00:38:44,360 --> 00:38:46,520 Speaker 1: to the liquidity and the markets that is coming our way. 727 00:38:46,560 --> 00:38:49,560 Speaker 1: I think it's mostly done. I think earnings are probably 728 00:38:49,640 --> 00:38:52,480 Speaker 1: close to their their their worst this time around, and 729 00:38:52,600 --> 00:38:55,080 Speaker 1: actually they haven't you know, sort of been that bad. Right, 730 00:38:55,120 --> 00:38:56,880 Speaker 1: It's been ho hum, but it hasn't been the complete 731 00:38:56,880 --> 00:38:59,960 Speaker 1: distatch we're expecting. So to answer your question more specifically, 732 00:39:00,280 --> 00:39:02,640 Speaker 1: the one thing about that survey that is sort of 733 00:39:02,640 --> 00:39:04,120 Speaker 1: in line with what we see in the market is 734 00:39:04,160 --> 00:39:06,359 Speaker 1: that people are actually starting to come in and buy 735 00:39:06,400 --> 00:39:08,440 Speaker 1: the dip again. So buying the dip might just be 736 00:39:08,680 --> 00:39:11,480 Speaker 1: a theme again for finally. All right, So if you're 737 00:39:11,480 --> 00:39:12,839 Speaker 1: going to come in and buy the dip, what do 738 00:39:12,960 --> 00:39:16,080 Speaker 1: you buy? What would you buy? Yeah, I mean I 739 00:39:16,120 --> 00:39:18,719 Speaker 1: think it's it's great to diversify portfolios, But all of 740 00:39:18,760 --> 00:39:21,440 Speaker 1: the tech socks, of the semiconductor stocks stack up just 741 00:39:21,600 --> 00:39:24,319 Speaker 1: absolutely hammered last year. You know, they've they've caught some 742 00:39:24,360 --> 00:39:26,680 Speaker 1: of their returns back, but not even not even to 743 00:39:26,680 --> 00:39:28,759 Speaker 1: the half of the point at this stage. It is 744 00:39:28,760 --> 00:39:30,799 Speaker 1: really remarkable. You know. I have to say every time 745 00:39:30,800 --> 00:39:32,520 Speaker 1: I pull up a name that is rallied, I was 746 00:39:32,560 --> 00:39:34,120 Speaker 1: looking at some of the names that are going to report, 747 00:39:34,520 --> 00:39:37,600 Speaker 1: you know, after the closing bell. Expedia is up thirty 748 00:39:37,640 --> 00:39:40,440 Speaker 1: four percent year to day. It's still down from its 749 00:39:40,520 --> 00:39:43,200 Speaker 1: high back in early two So you have to have 750 00:39:43,239 --> 00:39:47,120 Speaker 1: that perspective. But anyway, go ahead, what would you buy? Yeah? No, absolutely, 751 00:39:47,200 --> 00:39:49,680 Speaker 1: And that's that's exactly my perspective. Right. So, although they've 752 00:39:49,680 --> 00:39:51,279 Speaker 1: brought up into the year a little bit, you know, 753 00:39:51,360 --> 00:39:53,760 Speaker 1: AI is the biggest theme of the year for example, 754 00:39:53,800 --> 00:39:58,279 Speaker 1: and it's actually becoming a practical, practical, investable technology. So 755 00:39:58,320 --> 00:40:00,160 Speaker 1: I think if you look at you know, on the 756 00:40:00,280 --> 00:40:03,120 Speaker 1: computing related stocks, if you look at the AI related stocks, 757 00:40:03,120 --> 00:40:04,960 Speaker 1: you have names like na VideA, A and D the 758 00:40:05,000 --> 00:40:09,320 Speaker 1: tops that my conductors that power this stuff, um, IBM, Google, Microsoft, 759 00:40:09,560 --> 00:40:12,880 Speaker 1: the companies that will have the supercomputers that can you know, 760 00:40:12,920 --> 00:40:15,160 Speaker 1: process data and make it more efficient for AI to 761 00:40:15,239 --> 00:40:18,240 Speaker 1: actually work. And So even though Google stumble this week, 762 00:40:18,560 --> 00:40:22,960 Speaker 1: um with because because they pulled that dramatically over the 763 00:40:23,000 --> 00:40:26,319 Speaker 1: last couple of days, they did, but I think that 764 00:40:26,400 --> 00:40:28,800 Speaker 1: they're you know, their biggest fail was that they didn't 765 00:40:28,840 --> 00:40:31,160 Speaker 1: ask the right question that they knew, you know, was 766 00:40:31,280 --> 00:40:34,560 Speaker 1: sort of superior to the other chatbots, right, and there's 767 00:40:34,719 --> 00:40:37,600 Speaker 1: there's slabs with all of these things, and I think that, um, 768 00:40:37,640 --> 00:40:39,319 Speaker 1: you know, Google just kind of put themselves in a 769 00:40:39,360 --> 00:40:41,319 Speaker 1: bad spot. But what you'll see, I think with the 770 00:40:41,360 --> 00:40:44,040 Speaker 1: development of machine learning and quantum computing, which Google is 771 00:40:44,400 --> 00:40:46,520 Speaker 1: you know, sort of by far one of the leaders 772 00:40:46,560 --> 00:40:49,920 Speaker 1: in once they source that technology to improve their a 773 00:40:50,160 --> 00:40:52,000 Speaker 1: I bought, you know, I think that they're going to 774 00:40:52,040 --> 00:40:53,600 Speaker 1: be leaders in this space. I mean, they got some 775 00:40:53,640 --> 00:40:56,000 Speaker 1: bad press on this. I would actually look to buy 776 00:40:56,040 --> 00:40:58,759 Speaker 1: Google on that a percent pullback. I just think that 777 00:40:59,120 --> 00:41:01,080 Speaker 1: they're really going to day with this. They're sort of 778 00:41:01,120 --> 00:41:03,600 Speaker 1: known for, um, you know, being leaders in this type 779 00:41:03,600 --> 00:41:06,879 Speaker 1: of technology and development. We're really leave it on that note. 780 00:41:06,920 --> 00:41:09,800 Speaker 1: What a great conversation, Sylvia. Thank you so much, Sylvia Jablonsky. 781 00:41:09,920 --> 00:41:12,319 Speaker 1: Love that we can talk to names chief executive officer 782 00:41:12,360 --> 00:41:15,160 Speaker 1: and Chief investment Officer Defiance et F joining us on 783 00:41:15,200 --> 00:41:18,960 Speaker 1: the phone in New York City. This is the Bloomberg 784 00:41:19,040 --> 00:41:23,359 Speaker 1: Business Week podcast, available on Apple, Spotify, and anywhere else 785 00:41:23,400 --> 00:41:26,920 Speaker 1: you get your podcast. Listen live each weekday is starting 786 00:41:26,920 --> 00:41:29,640 Speaker 1: at two pm Eastern on Bloomberg dot Com, the I 787 00:41:29,760 --> 00:41:32,759 Speaker 1: Heart Radio app, tune In, and the Bloomberg Business Happen. 788 00:41:32,840 --> 00:41:35,840 Speaker 1: You can also watch us live every weekday on YouTube 789 00:41:36,040 --> 00:41:37,960 Speaker 1: and always on the Bloomberg Jerminal