WEBVTT - 2020 Global Outlook, Six Word Market Narratives 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penl 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 Penl podcast on Apple 0:00:15.520 --> 0:00:17.960 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:24.080 at Bloomberg dot com. One big question heading into since 0:00:24.120 --> 0:00:27.200 we are now there has been how much has the 0:00:27.200 --> 0:00:30.320 FED bolstered stock prices and how much will they continue 0:00:30.360 --> 0:00:32.400 to do? So we're so lucky to have tourist in 0:00:32.479 --> 0:00:35.120 stock with US chief economists and managing director at totter 0:00:35.200 --> 0:00:39.040 Bag Securities here in our interactive broker studios, Touristen puts 0:00:39.040 --> 0:00:43.080 out some of the most interesting and provocative charts that 0:00:43.159 --> 0:00:45.600 I get in my inbox. I'm very excited to have 0:00:45.680 --> 0:00:48.240 you on. Let's just first talk about how much you've 0:00:48.240 --> 0:00:52.800 found that the FED stimulus last year actually bolstered stock valuations. 0:00:53.000 --> 0:00:55.120 So what we try to do was to ask the question, 0:00:56.800 --> 0:00:59.440 when the fit basically expands that balance sheet, there various 0:00:59.480 --> 0:01:01.440 reasons why banishing could go up, and we can discuss 0:01:01.440 --> 0:01:03.120 for a long time, whether it's called qui or not. 0:01:03.480 --> 0:01:05.800 But the bottom line is when the Fed expanses balance sheet, 0:01:05.959 --> 0:01:08.520 then you can measure that on a weekly basis when 0:01:08.560 --> 0:01:10.440 the balance sheet data comes out, and then you can 0:01:10.480 --> 0:01:12.240 try to ask the question, let's try to go back 0:01:12.280 --> 0:01:14.640 since October when they started expanding the balance sheet and 0:01:14.680 --> 0:01:18.039 say for every one percent that the balance sheet expanded, 0:01:18.160 --> 0:01:20.199 how much did the stock market go up or down? 0:01:20.280 --> 0:01:22.440 And what we found in our very simple scatter diagram 0:01:22.560 --> 0:01:24.560 is that for every one percent increase in the fifth 0:01:24.560 --> 0:01:26.759 balance sheet, this in p. Five hundred has actually gone 0:01:26.800 --> 0:01:29.119 up by roughly one percent. Also, so in that sense, 0:01:29.319 --> 0:01:32.800 fit banasheat expansion has at least been correlated with the 0:01:32.840 --> 0:01:35.399 increase in the stock marget that we have seen since October. 0:01:35.480 --> 0:01:37.560 Now you can ask, looking ahead, of course, if this 0:01:37.600 --> 0:01:39.840 will continue, if the fIF balant sheat expansion is continuing, 0:01:39.840 --> 0:01:41.800 but at least for now, that has been a very 0:01:41.840 --> 0:01:44.679 tight relationship for the last several months. Has the FEDS 0:01:44.720 --> 0:01:46.760 activity as it relates to the balance sheet and growing 0:01:46.800 --> 0:01:50.520 its balance sheet? How unusual is that? You know? Kind 0:01:50.520 --> 0:01:53.480 of activity? Is it something that we should consider for 0:01:54.480 --> 0:01:58.000 so a very important part of that question is that Traditionally, 0:01:58.000 --> 0:02:00.400 when the fit has done que or quantity V saying 0:02:00.480 --> 0:02:02.920 they've been buying the long end of the yield curve 0:02:03.000 --> 0:02:04.920 with the whole intention of trying to lower long term 0:02:04.920 --> 0:02:07.560 interst rates. What's really unusual about what they're doing today 0:02:07.880 --> 0:02:09.640 is that they're buying T bills, meaning the short end 0:02:09.639 --> 0:02:11.640 of the yeld curve, And therefore we're getting a lot 0:02:11.639 --> 0:02:13.360 of questions from clients about, well, why should that be 0:02:13.400 --> 0:02:15.560 helping the stock market. It makes sense that when you 0:02:15.639 --> 0:02:18.000 shift long bunds that you could begin to buy long 0:02:18.080 --> 0:02:20.280 duration assets. But if you buy a T bill, why 0:02:20.280 --> 0:02:22.639 would that be substituted with the S and P. That's 0:02:22.639 --> 0:02:25.800 probably not many who on their own just substitute directly 0:02:25.840 --> 0:02:28.240 a four week th bill with a long term asses 0:02:28.280 --> 0:02:31.399 by S and P five. But remember money is much fungible, 0:02:31.440 --> 0:02:34.440 so in that sense, if there is a portfolio induced 0:02:34.600 --> 0:02:37.360 re balancing, you could easily to see that someone at 0:02:37.360 --> 0:02:39.399 the end of a long process would end up allocating 0:02:39.400 --> 0:02:42.600 more money to risky assets. Therefore, this in the long 0:02:42.600 --> 0:02:45.119 answer to a question Paul, is that I still think 0:02:45.160 --> 0:02:46.960 that as we look into this year, the more the 0:02:47.000 --> 0:02:49.880 fat penalty is going to expand, it will be still 0:02:50.080 --> 0:02:53.480 something that provides support to the stock market. So that's 0:02:53.600 --> 0:02:57.960 fantastic perspective as to what potentially could drive stock gains 0:02:58.120 --> 0:03:01.079 further in te thing that I love about your research 0:03:01.160 --> 0:03:04.440 is you take a more holistic approach, not just stock valuations, 0:03:04.600 --> 0:03:07.000 diving deeper into the economy. And one thing that you've 0:03:07.040 --> 0:03:10.200 highlighted increasingly is that there is a whole swath of 0:03:10.280 --> 0:03:12.920 Americans that have been left behind in the rally, whether 0:03:12.960 --> 0:03:15.240 it comes whether whether it comes to income gains, whether 0:03:15.280 --> 0:03:18.079 it comes to spending more than their bringing in every month, 0:03:18.120 --> 0:03:20.440 whether it comes to healthcare costs. Can you give us 0:03:20.440 --> 0:03:23.760 a sense of just your overarching thesis when it comes 0:03:23.760 --> 0:03:26.280 to the widening gap and what that could potentially do 0:03:27.040 --> 0:03:30.919 economically and frankly as as surprise wise, absolutely, we think 0:03:30.960 --> 0:03:34.800 a very important issue going into two thousand twenty, and 0:03:34.880 --> 0:03:38.080 of course, particularly with the election in November, continues to 0:03:38.120 --> 0:03:40.920 be inequality in all dimensions. The way we look at 0:03:40.920 --> 0:03:42.960 it is that there are four different dimensions to an equality. 0:03:43.000 --> 0:03:46.680 There's income inequality, there's wealth inequality, but there also two 0:03:46.720 --> 0:03:50.360 other very important dimensions that are often ignored, namely health inequality. 0:03:50.400 --> 0:03:53.360 Different people have different access to healthcare and finally education 0:03:53.400 --> 0:03:56.160 in equality, that education has become very expensive, which also 0:03:56.240 --> 0:03:58.680 means that different people have different access And if look 0:03:58.720 --> 0:04:01.880 at these different dimensions, it is basically things that are 0:04:01.880 --> 0:04:05.200 dominating the political conversations. So we're trying to think about 0:04:05.320 --> 0:04:07.080 and trying to figure out, as hard as it is, 0:04:07.320 --> 0:04:09.680 should we just ignore this and say, hey, I just 0:04:09.680 --> 0:04:11.200 look at the stock market, this is what I do. 0:04:11.480 --> 0:04:14.760 Or should we say, well, these are actually now indicators 0:04:14.800 --> 0:04:17.719 and data points that have become so important in the 0:04:17.760 --> 0:04:21.000 conversation politically that maybe we need to take into account. 0:04:21.160 --> 0:04:23.400 How should I think about as an investor? Should I 0:04:23.480 --> 0:04:25.440 take it into account and see this could apply something 0:04:25.480 --> 0:04:30.040 in terms of policy changes on education, healthcare, student loans, taxes. 0:04:30.279 --> 0:04:32.280 There's a lot of time mentions that become very important 0:04:32.279 --> 0:04:34.960 for the overall business environment and therefore also for the 0:04:35.000 --> 0:04:36.839 out there, for the stock market, and ultimately also for 0:04:36.839 --> 0:04:40.080 the fit and rates. So in short, this agenda is 0:04:40.160 --> 0:04:43.400 very confusing and fluffy in the sense of there's a 0:04:43.400 --> 0:04:45.719 lot of arm waving around a lot of these data points, 0:04:45.760 --> 0:04:48.440 but it still turns out in almost all our conversations 0:04:48.480 --> 0:04:50.400 to be at the end of the day, a very 0:04:50.480 --> 0:04:53.480 very critical input to how will markets actually do as 0:04:53.480 --> 0:04:55.760 we sit here on the first days of two thousand twenty, 0:04:55.760 --> 0:04:57.799 do you think some of those inequalities that you identified 0:04:57.920 --> 0:05:00.240 have had an economic impact in the US? Has it 0:05:00.279 --> 0:05:02.160 impacted g d P? There's a lot of folks, a 0:05:02.200 --> 0:05:04.600 lot of economists are saying we're gonna be slower growth 0:05:04.920 --> 0:05:07.360 for a longer, you know, kind of two percent GDP. 0:05:07.440 --> 0:05:09.120 Do you think one of the contributors of that could 0:05:09.160 --> 0:05:11.359 be some of these inequalities were seeing. Absolutely, we do 0:05:11.400 --> 0:05:13.440 think that a very important reason why this expansion was 0:05:13.480 --> 0:05:16.559 so weak for the last ten years was probably that 0:05:16.760 --> 0:05:19.560 the main boost from policy makers. Remember policy in two 0:05:19.600 --> 0:05:23.040 thousand nine and ten basically responded less with fiscal policy 0:05:23.040 --> 0:05:24.920 and mold with monetary policy. And what did mind story 0:05:24.920 --> 0:05:27.760 opposed to do. It lifted stock prices and home prices. 0:05:27.800 --> 0:05:30.200 Who benefits on that people who own stocks, people who 0:05:30.279 --> 0:05:33.400 own homes. And because there were fewer people who own homes, 0:05:33.400 --> 0:05:36.320 the home ownership rate was going down. Fewer people owning stocks. 0:05:36.440 --> 0:05:39.120 That meant that the benefits in this expansion were concentrated 0:05:39.120 --> 0:05:41.520 on a fewer hands. So in that sense, the benefits 0:05:41.560 --> 0:05:44.159 of highest stock price and high home prices were basically 0:05:44.320 --> 0:05:47.719 more concentrated in a smaller group of the population. That 0:05:47.800 --> 0:05:51.040 meant that the impact on consumer spending, the wealth effect, 0:05:51.160 --> 0:05:53.400 the impact overall on the economy turned out to be 0:05:53.480 --> 0:05:56.159 driven a lot by asset prices going up in some 0:05:56.240 --> 0:05:59.280 sexes and some people benefiting, but a significant part of 0:05:59.279 --> 0:06:01.360 the population not efiting. So we do believe that one 0:06:01.400 --> 0:06:04.120 critical reason why these expanion has been so weak is 0:06:04.320 --> 0:06:07.960 because of inequality that has continued to widen Torsen's law. 0:06:08.000 --> 0:06:09.760 Thank you so much for joining us. We really appreciate 0:06:09.800 --> 0:06:12.240 you coming into our Bloomberg Interactive Broker studio. Torsen's and 0:06:12.320 --> 0:06:30.400 chief economist at Deutsche Bank Securities hockey stick growth. That 0:06:30.480 --> 0:06:32.640 is what people are expecting for the first quarter of 0:06:32.720 --> 0:06:35.719 the first half of joining us here in our interactive 0:06:35.720 --> 0:06:39.599 broker studios. Nick Cholis, co founder of Data Track Research, 0:06:39.760 --> 0:06:42.120 and I want to talk about the consensus idea that 0:06:42.160 --> 0:06:45.160 we have here, which is that the first half of 0:06:45.200 --> 0:06:48.080 the year will be frontloaded in terms of gains in 0:06:48.120 --> 0:06:51.360 the SMP and beyond as companies report earnings that are 0:06:51.440 --> 0:06:54.360 solid and show study growth in the U S economy. 0:06:54.760 --> 0:06:57.280 Do you agree with that consensus call. I think it's 0:06:57.320 --> 0:06:59.200 a bit tough and I'll tell you why. If you 0:06:59.240 --> 0:07:01.400 look at the first half of last year, you saw 0:07:01.440 --> 0:07:05.040 that SMP five companies registered revenue growth of five percent 0:07:05.080 --> 0:07:07.440 in Q one and four percent in Q two, and 0:07:07.480 --> 0:07:09.640 that's trailed off to three and then two percent what 0:07:09.640 --> 0:07:12.200 we're expecting for the fourth quarter. And those are tough 0:07:12.240 --> 0:07:14.880 comps because the U. S economy and global economy is 0:07:14.920 --> 0:07:18.040 still growing only fairly slowly. And even though the effect 0:07:18.120 --> 0:07:21.160 of FED rate cuts and perhaps the trade US UM 0:07:21.320 --> 0:07:24.440 trade war settlements will spur business spending, it'll be in 0:07:24.480 --> 0:07:26.080 the back half of the year. So I'm not as 0:07:26.120 --> 0:07:28.920 optimistic that we'll see those really healthy comps in Q 0:07:29.120 --> 0:07:31.680 one and Q two. So Nick, I'm looking at your research, 0:07:31.800 --> 0:07:35.320 and I love your your theme here, six word market narratives. 0:07:35.320 --> 0:07:38.760 Give us your six word market narratives for nineteen and 0:07:38.800 --> 0:07:41.840 maybe how we should think about You know, the six 0:07:41.920 --> 0:07:43.880 word narrative is an exercise to try to just to 0:07:43.960 --> 0:07:47.560 steal down what happened in twenty nineteen, then what could 0:07:47.600 --> 0:07:50.960 happen this year. The summary of it was that eighteen 0:07:51.120 --> 0:07:54.000 was a year of a huge policy mistake. The FED 0:07:54.040 --> 0:07:55.840 thought that neutral rates were much higher than they were. 0:07:56.200 --> 0:07:58.920 You know, if J don't touch that. Dial's kind of 0:07:58.960 --> 0:08:02.720 the six word market narrative in we had a reversal 0:08:02.760 --> 0:08:05.080 of that. Basically, the FED came out on January four, 0:08:05.520 --> 0:08:08.080 apologize for getting it wrong, and spent the rest of 0:08:08.080 --> 0:08:11.320 the year cutting So it was okay, we know, you're sorry, 0:08:11.520 --> 0:08:15.440 it's okay. Is going to be this issue of look, 0:08:15.440 --> 0:08:17.720 there's a hundred different ways to cut this market and 0:08:17.800 --> 0:08:20.840 say you shouldn't be involved. Valuations are very high. Corporate 0:08:20.880 --> 0:08:23.800 that's very high. We talked about the earnings cops, all 0:08:23.920 --> 0:08:26.160 very real issues. But at the same time, we still 0:08:26.200 --> 0:08:28.600 have the flow through of these policy makers, both at 0:08:28.600 --> 0:08:30.720 the FED now saying they're not going to raise rates 0:08:31.000 --> 0:08:32.760 and in the White House saying, you know what, the 0:08:32.880 --> 0:08:35.480 trade war probably should be over because President Trump wants 0:08:35.520 --> 0:08:38.040 to get reelected. And it's a flow through of those 0:08:38.040 --> 0:08:40.760 two narratives that says this year might be okay. All right, 0:08:40.880 --> 0:08:43.079 let's talk about where it's going to be most okay. 0:08:43.240 --> 0:08:45.719 I was looking at the City Economic Surprise Index for 0:08:45.760 --> 0:08:48.880 both the US and Europe this morning. In the US 0:08:48.960 --> 0:08:51.680 it's going down and it is negative. In Europe, it's 0:08:51.679 --> 0:08:56.640 the highest level UH since February, basically meaning that the 0:08:56.679 --> 0:08:59.760 economic data coming out was beating expectations by the most 0:09:00.080 --> 0:09:03.080 since then, do you agree that this sort of supports 0:09:03.080 --> 0:09:05.840 the narrative that Europe will perform the US at an 0:09:05.920 --> 0:09:08.480 economic basis on a relative basis, meaning they're going to 0:09:08.559 --> 0:09:10.640 grow a little faster on a quarter of a quarters 0:09:10.720 --> 0:09:14.040 quantial basis. Absolutely. The issue with Europe as a stock 0:09:14.080 --> 0:09:17.000 market is it's so little exposed to technology. The IFA 0:09:17.040 --> 0:09:20.640 index is only seven percent technology, and that includes Japan obviously, 0:09:20.679 --> 0:09:25.959 but developed non US US. Here we're tech between tech, Amazon, Google, 0:09:26.000 --> 0:09:28.760 and Facebook. So you really have to make a very 0:09:28.760 --> 0:09:31.160 big bet on financials, which is fine. European financial has 0:09:31.160 --> 0:09:33.880 done really well in the fourth quarter and should continue 0:09:33.920 --> 0:09:36.160 to do well as bodon rates continue to rise. So 0:09:36.240 --> 0:09:38.840 it's a good story. It's just not the same kind 0:09:38.920 --> 0:09:40.680 of story as the US market. I still like the 0:09:40.720 --> 0:09:43.920 US market better, but it's for that tech exposure. So 0:09:43.960 --> 0:09:48.640 typically after a very strong year like we had in 0:09:48.640 --> 0:09:51.040 in the SMP, what is your research show to what 0:09:51.080 --> 0:09:54.120 the markets tend to do in the year after. Well, 0:09:54.160 --> 0:09:57.280 here's the good news, let's star. The good news is. 0:09:59.559 --> 0:10:02.280 The good news is you don't see markets puke the 0:10:02.320 --> 0:10:05.520 next year. The market is pretty efficient and it tends 0:10:05.559 --> 0:10:07.920 to see through. The only time we had a really 0:10:07.920 --> 0:10:10.959 bad sequential year after a bat after a great year 0:10:11.040 --> 0:10:14.200 was thirty seven. Uh yeah, nineteen thirty seven market was 0:10:14.240 --> 0:10:18.880 down thirty eight percent thirty eight um and then but 0:10:19.040 --> 0:10:21.360 on average you do about ten percent. Is a short 0:10:21.400 --> 0:10:23.200 answer to your question. You know do as well as 0:10:23.240 --> 0:10:25.720 average because there is a little bit of pull forward, 0:10:26.080 --> 0:10:28.400 but you tend to have another good year. The problem 0:10:28.440 --> 0:10:30.760 is the wind rates not as good on average S 0:10:30.800 --> 0:10:35.400 ANDP win rate since night against these years, it's more 0:10:35.440 --> 0:10:38.280 like sixt so a little bit closer to a coin toss. 0:10:38.840 --> 0:10:41.080 We had tour sence lock On earlier from Deutsche Bank 0:10:41.080 --> 0:10:43.280 and he was talking about something that you mentioned, the 0:10:43.320 --> 0:10:48.360 FED support of markets, and talking about the correlation between 0:10:48.520 --> 0:10:51.880 the increase in the Fed's balance sheet and increases in 0:10:51.880 --> 0:10:54.280 the SMP five hundred. Granted it's not a long time 0:10:54.760 --> 0:10:58.000 time set. Do you, though, believe that the expansion of 0:10:58.000 --> 0:11:00.520 the balance sheet, call it whatever you will, perhaps don't 0:11:00.559 --> 0:11:03.720 use quantitivities because it is controversial. Do you think that 0:11:03.720 --> 0:11:06.240 that is supporting a rally much more than some people 0:11:06.320 --> 0:11:10.480 are allowing. I think it is absolutely helpful. It does 0:11:10.559 --> 0:11:13.480 show that the FED put and we all hate that phrase, 0:11:13.559 --> 0:11:16.400 but it's real. The FED put applies to a whole 0:11:16.520 --> 0:11:18.960 range of things, including things like the repo market, and 0:11:19.000 --> 0:11:20.839 they want to make sure that the system can use 0:11:20.920 --> 0:11:23.280 to work as it should. So I think it's a 0:11:23.320 --> 0:11:25.840 comforting notion. I don't know how much it directly affects 0:11:25.840 --> 0:11:28.439 stock prices, but let's put it this way. It helps 0:11:28.440 --> 0:11:31.400 more than it hurts. So again, are you in the 0:11:31.480 --> 0:11:34.560 camp that like I? This is where at least And 0:11:34.559 --> 0:11:36.720 I had a little bit bund of contention before the holidays. 0:11:36.760 --> 0:11:40.080 I said, if the data was to come in, you know, 0:11:40.240 --> 0:11:43.160 strong economic data, that is there a scenario where the 0:11:43.160 --> 0:11:46.000 FED could hike raise And she quote unquote rejected that. 0:11:46.880 --> 0:11:49.559 She rejected that assertion. Is there any scenario where in 0:11:49.600 --> 0:11:52.240 an election year the FED would even consider if the 0:11:52.320 --> 0:11:54.760 data lead them there to be raised rates? Absolutely? No. 0:11:55.720 --> 0:11:57.800 It doesn't feel like if I'll tell you why, we do. 0:11:57.960 --> 0:11:59.839 Every time we see a new set of dot plots 0:11:59.840 --> 0:12:01.760 from the FED would do a standard deviation of all 0:12:01.760 --> 0:12:05.360 them participants and look at how certain they are about 0:12:05.400 --> 0:12:09.600 their future expectations. The FED is more certain now, right 0:12:09.600 --> 0:12:13.000 now about than it has ever been since the dot 0:12:13.000 --> 0:12:16.680 plots started for a future year. They are signaling very 0:12:16.760 --> 0:12:19.640 strongly that they are not going to raise rates. It's 0:12:19.720 --> 0:12:21.920 really unusual. Standard deviation is like a third of what 0:12:22.000 --> 0:12:24.400 it usually is from an end of year forward year. Look, 0:12:25.840 --> 0:12:29.960 that sounds like a rejection. He didn't reject lightly helitely 0:12:30.040 --> 0:12:33.400 rejected your assertion. I I very impolitely rejected your just 0:12:33.520 --> 0:12:36.280 we just follow the numbers. Yeah, right, I just reject 0:12:36.280 --> 0:12:38.120 things out right. I do think when you say, Jay, 0:12:38.120 --> 0:12:40.040 don't touch that dial, the idea that they will be 0:12:40.080 --> 0:12:43.240 on hold at best, uh, you know, at worst, if 0:12:43.240 --> 0:12:47.360 things do deteriorate, they will cut rates and support the 0:12:47.440 --> 0:12:50.360 economic and asset price expansion. One thing I noticed is 0:12:50.400 --> 0:12:52.760 that you came in with a prop today. Yes, the 0:12:52.800 --> 0:12:54.760 prop has to do with the fact that a hundred 0:12:54.880 --> 0:12:58.480 years ago today was the liftoff point for radio as 0:12:58.520 --> 0:13:03.400 a medium. The first broadcast news was Warren Harding winning 0:13:03.400 --> 0:13:05.800 the nineteen twenty election, and it was really what spurred 0:13:05.920 --> 0:13:09.679 radio into popular use. You know, the at the being 0:13:09.720 --> 0:13:11.800 in eighteen twenties, one percent of the population I had 0:13:11.840 --> 0:13:15.920 a radio. By nineteen thirty, it was closer. He has this, uh, 0:13:16.280 --> 0:13:21.400 the wireless age issue from April nineteen twenty two, Uh, 0:13:21.520 --> 0:13:27.120 it's got wow. It was Amazon eBay five five bucks 0:13:27.160 --> 0:13:30.240 on eBay. Wireless Age was the hobbyist magazine of the 0:13:30.360 --> 0:13:33.600 radio age in the nineteen twenties. Uh, and it looks 0:13:33.640 --> 0:13:36.840 exactly like a computer nerd magazine from the nineteen eighties 0:13:36.840 --> 0:13:39.240 and nineties. It was really you know, the industry was 0:13:39.280 --> 0:13:42.600 built by enthusiasts and only slowly commercialized. It's funny. We're 0:13:42.600 --> 0:13:44.920 just talking to Justin Fox of Bloomer talking about the 0:13:44.960 --> 0:13:48.360 evolution of media, and primarily from a news perspective, about 0:13:48.400 --> 0:13:50.720 the obviously the decline in the local newspaper and local 0:13:50.760 --> 0:13:54.439 media and how that may be contributing to the polarization 0:13:54.440 --> 0:13:56.760 of the US and you know the left and the right, 0:13:56.800 --> 0:13:59.680 and how cable television and you know, talk shows and 0:13:59.679 --> 0:14:01.920 so on and so forth may have contributed to that. 0:14:02.040 --> 0:14:04.600 So it kind of brings into context the one hundred 0:14:04.720 --> 0:14:07.160 years of it and it all started with radio, and 0:14:07.160 --> 0:14:09.719 it all started with radio. And yes, and here we are, 0:14:09.840 --> 0:14:12.800 and here we are continuing to beat that drum exactly. 0:14:12.840 --> 0:14:15.320 Thank you so much for going with us. Nick Nichole's 0:14:15.360 --> 0:14:17.840 co founder Data Track Research, joining us here on our 0:14:17.880 --> 0:14:21.240 Bloomberg Interactive Broker Studio giving us lots of perspective on 0:14:21.280 --> 0:14:27.840 the markets coming from the disappointment extraordinary performance. The question 0:14:27.920 --> 0:14:31.160 is what does what do the markets hold in store 0:14:31.280 --> 0:14:50.560 for us? With a launch of Disney Plus in November 0:14:50.640 --> 0:14:53.640 of last year, many expect to be the year that 0:14:53.680 --> 0:14:56.360 the streaming wars really heat up. To get a sense 0:14:56.440 --> 0:14:57.880 kind of where we are here in the early days, 0:14:57.920 --> 0:15:00.760 we welcome Roman Crossing, He's said, of data analytics at 0:15:00.760 --> 0:15:04.720 Eagle Alpha, joins us on the phone from Dublin, Ireland. Ronan, 0:15:04.720 --> 0:15:07.320 thanks so much for joining us. It seems like, you know, 0:15:07.360 --> 0:15:09.560 as we entered twenty nineteen, it was all pretty much 0:15:09.840 --> 0:15:13.200 a Netflix story. But it's getting pretty competitive out there, 0:15:13.200 --> 0:15:16.640 isn't it. It is absolutely yeah, no, it is getting 0:15:16.680 --> 0:15:20.160 more competitive. But what we're actually seeing is that with 0:15:20.280 --> 0:15:22.400 the launch of Disney Plus, what we've actually seen is 0:15:22.480 --> 0:15:26.320 Disney Plus have grown the market um like we around 0:15:26.320 --> 0:15:30.160 the time of the Netflix they're disappointing Q two earnings 0:15:30.240 --> 0:15:34.440 last year, we started tracking Netflix using social media data, 0:15:34.480 --> 0:15:37.960 particularly from Twitter, and what we noticed was that Netflix 0:15:38.040 --> 0:15:40.880 was continuing to gain momentum and was continuing to get 0:15:40.880 --> 0:15:43.920 stronger and stronger. Then around the time of the Disney 0:15:43.920 --> 0:15:46.960 Plus launch, in November, we saw that actually that grew 0:15:47.040 --> 0:15:50.800 the market, and Netflix continued to grow as Disney Plus did, 0:15:51.360 --> 0:15:54.120 and so we're seeing, actually, it's it's not necessarily a 0:15:54.200 --> 0:15:57.640 zero sum game. The market continues to grow overall. All Right, 0:15:57.680 --> 0:16:00.000 This is a really interesting take because I think Netflix 0:16:00.120 --> 0:16:02.040 x is one of the most compelling companies to watch 0:16:02.040 --> 0:16:06.320 in because of Disney Plus, because of this consensus that 0:16:06.400 --> 0:16:09.720 there can only be so many streaming services. What do 0:16:09.760 --> 0:16:12.480 you think will drive their profitability the fact that they 0:16:12.560 --> 0:16:14.560 might not just burn through cash. Is it going to 0:16:14.680 --> 0:16:17.960 be uh, charging subscribers more, Is it going to be 0:16:18.000 --> 0:16:20.240 expanding their subscriber base, or is it going to be 0:16:20.280 --> 0:16:25.040 monetizing things like advertising or data streams? Well, I think 0:16:25.200 --> 0:16:27.360 it always comes back to the content, right, and the 0:16:27.440 --> 0:16:30.160 Netflix has consistently invested in their content, and we actually 0:16:30.200 --> 0:16:34.400 saw that as we track the conversation online, it's the 0:16:34.440 --> 0:16:38.040 top shows that are continuing to gain momentum. And actually, 0:16:38.080 --> 0:16:41.120 what we saw in twenty eighteen was that there was 0:16:41.400 --> 0:16:44.080 somewhat of a depth of news shows coming on that 0:16:44.120 --> 0:16:48.000 we weren't seeing the same appetite and enthusiasm on one 0:16:48.080 --> 0:16:50.960 on on online for those those shows at Netflix. But 0:16:50.960 --> 0:16:54.240 actually nineteen. It feels like they got it right, particularly 0:16:54.240 --> 0:16:56.840 towards the second half of the year, and so we 0:16:56.880 --> 0:17:02.240 think they did take the higher subscription um Earlier last year, 0:17:02.280 --> 0:17:05.320 they increased their subscription prices, and we think that that, 0:17:05.520 --> 0:17:08.480 combined with the weaker content of teen was probably what 0:17:08.640 --> 0:17:11.760 led to those leaker, weaker numbers in Q two. But 0:17:11.880 --> 0:17:13.960 actually the content has got much stronger and we think 0:17:14.000 --> 0:17:16.800 we can can absorb that pricing, and we we were 0:17:16.800 --> 0:17:19.240 seeing that in terms of the momentum coming out of 0:17:19.240 --> 0:17:23.399 the year. So running as you monitor and analyze social media, 0:17:24.280 --> 0:17:26.439 you know, commentary as it relates to some of these 0:17:26.480 --> 0:17:28.720 streaming companies, are you hearing anything about some of the 0:17:28.760 --> 0:17:30.560 others out there? What are you hearing about some of 0:17:30.600 --> 0:17:33.879 the others, whether it's a an existing streaming thing, a 0:17:33.920 --> 0:17:36.960 brand like Hulu or something new like the you know, 0:17:37.119 --> 0:17:39.639 HBO max is coming out, and then I think Comcast 0:17:39.720 --> 0:17:43.040 has uh coming out with Peacock. Are you are they 0:17:43.200 --> 0:17:46.080 registering at all on social media right now? Yeah, so 0:17:46.080 --> 0:17:48.160 so no, it's a it's a great question, Paul. So 0:17:48.600 --> 0:17:52.320 what we're seeing is not with Disney Plus was definitely 0:17:52.800 --> 0:17:56.080 a breakthrough compared to see Apple TV Plus and what 0:17:56.119 --> 0:17:59.960 we've seen is that, yes, Netflix has continued to perform well, 0:18:00.119 --> 0:18:03.240 but Disney Plus is really showing strong momentum and has 0:18:03.280 --> 0:18:05.840 gone straight in there at number two if you like, 0:18:06.720 --> 0:18:11.320 within the streaming streaming universe, whereas we see someone like 0:18:11.400 --> 0:18:15.760 Hulu and Roku are continuing continuing to to to tread 0:18:15.800 --> 0:18:18.400 at a similar level, whereas Apple TV plus come out 0:18:18.400 --> 0:18:20.520 and come in at a much lower level. So we 0:18:20.600 --> 0:18:24.520 see certainly we see Disney or Netflix at number one, 0:18:24.560 --> 0:18:27.280 but Disney Plus is doing really well and that continued 0:18:27.320 --> 0:18:30.560 into the holiday season. We're seeing the Mandalorian in particular 0:18:30.600 --> 0:18:34.359 has has proven to be particular, particularly popular. All the 0:18:34.400 --> 0:18:36.960 people say that the real game changer will be live 0:18:37.040 --> 0:18:41.440 sports and whether the cable networks will lose live sports 0:18:41.480 --> 0:18:45.720 streaming to some of these services. Do you foresee that 0:18:45.960 --> 0:18:50.359 being a significant game changer that potentially creates losers and 0:18:50.359 --> 0:18:55.359 winners the results in either insolvencies or mergers. Yes, So 0:18:55.600 --> 0:18:58.719 so as a firm, Eagle also we look right across 0:18:58.760 --> 0:19:01.080 the alternative data spectrum. So we've talked a lot about 0:19:01.080 --> 0:19:05.360 the Twitter social media analysis, but as a firm, we're 0:19:05.359 --> 0:19:07.480 looking at many more data sets out there, and I 0:19:07.520 --> 0:19:10.840 think they will be really crivotal in analyzing this trend, 0:19:10.880 --> 0:19:15.040 because you're absolutely right, this is a very fluid market 0:19:15.320 --> 0:19:16.720 and I think we're going to have to you know, 0:19:16.720 --> 0:19:18.920 we're gonna have to monitor that date over time. Live 0:19:19.000 --> 0:19:23.119 sports is absolutely a hot topic. We're seeing it in 0:19:23.240 --> 0:19:26.760 terms of online conversation and there's definitely the appetite for 0:19:27.640 --> 0:19:32.119 more live live sports via the streaming platforms, and I 0:19:32.160 --> 0:19:34.800 think that it's something we're gonna have to monitor very closely, 0:19:34.800 --> 0:19:37.280 and we will be monitoring very closely. Ronan, thank you 0:19:37.320 --> 0:19:39.640 so much for being with us. Ronan Crossing, the head 0:19:39.640 --> 0:19:43.280 of data analytics with Eagle Alpha, joining us on the 0:19:43.280 --> 0:19:46.960 phone from Dublin, Ireland, talking about what I think will 0:19:47.000 --> 0:19:50.159 be one of the most fascinating fields in which is 0:19:50.160 --> 0:20:07.440 the streaming Paul. I love it when we talk about 0:20:07.480 --> 0:20:10.520 cybersecurity because it's always some iteration of why we should 0:20:10.520 --> 0:20:12.600 all be really scared and we're about to deal with 0:20:12.720 --> 0:20:17.320 something really tragic and and regret regretful based on the 0:20:17.359 --> 0:20:19.360 excess of our data out there in the mainstream. Joining 0:20:19.400 --> 0:20:21.640 us now to talk about that. Steve Grogman, he's chief 0:20:21.640 --> 0:20:25.960 technology officer at McAfee, joining us on the phone from Dallas. 0:20:26.200 --> 0:20:27.560 I want to get your son, Steve. So when we 0:20:27.560 --> 0:20:29.800 talk about why we should get scared with respect to 0:20:29.840 --> 0:20:32.200 all of the cybersecurity threats, what are the main reasons 0:20:32.320 --> 0:20:36.000 that we should be nervous right now? Sure you bet. 0:20:36.240 --> 0:20:38.639 First off, Happy New year, Lisa and Paul, and you know, 0:20:38.800 --> 0:20:43.440 cybersecurity is really one of these areas that impacts consumers, 0:20:43.480 --> 0:20:47.240