WEBVTT - Markets Ready for FOMC and Amazon Earnings Breakdown 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.119 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:47.080 the Bloomberg Terminal, and the Bloomberg Business App. We're gonna 0:00:47.080 --> 0:00:48.880 start strong. Stuart Kaiser is going to be with the 0:00:48.920 --> 0:00:51.720 sunny equity market, set her moment, Tom Vercelli on later 0:00:52.080 --> 0:00:55.200 of course, on FED Day and the myriad challenges that 0:00:55.320 --> 0:00:58.560 Jay Paul has. But we start especially strong. You know, 0:00:58.680 --> 0:01:02.480 she's an iron Woman, really, Gargey's out of Jones Beach. Okay, 0:01:02.680 --> 0:01:05.120 she She's like, you know, we're punting. I mean, Gargy 0:01:05.200 --> 0:01:07.760 is toughest nails with black Rock, and you know she's 0:01:07.760 --> 0:01:10.640 doing the Iron Man thing and and all that. Yeah, 0:01:10.680 --> 0:01:12.600 you know, it's like like pray eth a lot but tough. 0:01:12.959 --> 0:01:15.119 I don't know Garge's with us this morning. Gardy, thank 0:01:15.160 --> 0:01:18.399 you so much for starting strong. What happens to your 0:01:18.560 --> 0:01:21.959 world if rates keep going higher? 0:01:23.440 --> 0:01:27.639 Good morning, Paul and Tom. Longtime listener, first time joiner, 0:01:27.800 --> 0:01:31.080 Really excited to be here. So what happens to my 0:01:31.240 --> 0:01:34.640 world if rates continue to go higher? Two things. Number One, 0:01:35.000 --> 0:01:40.080 there's going to be continued focused on selectivity within equities, 0:01:40.200 --> 0:01:42.600 and the areas of the equity market in the US 0:01:42.640 --> 0:01:46.000 that have earnings growth are continue are going to continue 0:01:46.040 --> 0:01:49.080 to outperform. So that's number one. Number two, And you know, 0:01:49.120 --> 0:01:51.120 we've been talking about this for a while, and Tom, 0:01:51.160 --> 0:01:52.960 you know, you and I have chatted about this before. 0:01:53.000 --> 0:01:55.640 But the long end, anything sort of longer than the 0:01:55.680 --> 0:01:58.320 five to six year part of the interest rate curve 0:01:58.960 --> 0:02:02.040 is going to become more and more difficult for investors, 0:02:02.200 --> 0:02:05.360 especially given that, you know, given that there has been 0:02:05.680 --> 0:02:08.400 five percent that you can earn or more in cash. 0:02:08.560 --> 0:02:11.040 So I think two things for investors to keep in 0:02:11.080 --> 0:02:14.440 mind is staying in high quality in the equity markets 0:02:14.480 --> 0:02:17.040 and staying in the very front end to maybe the 0:02:17.040 --> 0:02:19.079 belly of the curve in fixed and come markets. I 0:02:19.080 --> 0:02:20.720 think that's going to be the exact. 0:02:20.560 --> 0:02:23.000 I'm looking at the real rate. Kenneth Roguoff of Harvard 0:02:23.160 --> 0:02:25.040 was with David West and Wall Street week. Look for 0:02:25.080 --> 0:02:29.080 that this week, and Professor Rogoff is riveted on the 0:02:29.160 --> 0:02:33.760 real yield, the inflation adjusted yield. I'm sorry, Gargey. If 0:02:33.760 --> 0:02:35.720 it walks like a duck, works like a duck, it's 0:02:35.720 --> 0:02:38.239 a duck. And the ten year real yield I'm rounded 0:02:38.320 --> 0:02:40.960 up to two point two eight percent is the real 0:02:41.040 --> 0:02:42.720 yield walking away from us. 0:02:44.639 --> 0:02:47.200 It looks like, you know, obviously, it has arisen pretty 0:02:47.240 --> 0:02:50.160 meaningfully for good reason. If we look at the month 0:02:50.200 --> 0:02:54.080 of April, everything that we have gotten so far, whether 0:02:54.120 --> 0:02:56.160 it's the payroll data, whether it was ISM in the 0:02:56.160 --> 0:02:59.000 beginning of the month, whether it was CPI and PCE, 0:02:59.680 --> 0:03:03.160 all of that have contributed to yields moving higher. What 0:03:03.280 --> 0:03:05.160 I will say, though, and you know this is something 0:03:05.200 --> 0:03:07.840 that we lay out in our Spring Investment Directions, is 0:03:07.960 --> 0:03:11.079 owning real rates in the very short end, so sort 0:03:11.120 --> 0:03:13.000 of the zero to five year part of the curve 0:03:13.320 --> 0:03:14.959 we think make a lot of sense. And if you 0:03:15.080 --> 0:03:17.240 look at returns for the month of April, and if 0:03:17.240 --> 0:03:21.280 you compare sort of what s step has done versus 0:03:21.320 --> 0:03:24.520 many of the other front end securities or longer fixed 0:03:24.520 --> 0:03:27.359 income securities. You've actually been a little bit more preserved 0:03:27.880 --> 0:03:30.080 being in the front end of the inflation link curve. 0:03:30.240 --> 0:03:34.320 Why because inflation has surprise to the upside, and you know, 0:03:34.360 --> 0:03:36.440 for a big part of the month, oil was surprising 0:03:36.480 --> 0:03:38.840 to the upside as well. So we do think that 0:03:39.000 --> 0:03:42.360 front end inflation can be a good place for investors 0:03:42.400 --> 0:03:46.600 to be invested in, especially at these really strong real rates. 0:03:46.600 --> 0:03:49.960 But again, keeping your duration short is very important. 0:03:50.360 --> 0:03:52.600 So Gark, I like to keep in the duration short 0:03:52.640 --> 0:03:55.920 call here, Should I just park my money in the 0:03:55.960 --> 0:04:00.520 two year United States Treasury at five point zero three percent? 0:04:01.360 --> 0:04:03.440 Is that is that the trader? Should I take some 0:04:03.520 --> 0:04:06.200 take some credit risk here? And maybe you know, I 0:04:06.200 --> 0:04:09.080 don't know, corporates are high yields. How do I think 0:04:09.080 --> 0:04:11.160 about credit versus just the treasury market? 0:04:11.640 --> 0:04:14.000 Yeah, look, it's it's really attractive. You know, you look 0:04:14.040 --> 0:04:15.720 at two years, you look at where they are, where 0:04:15.760 --> 0:04:18.440 it is, and it's certainly very attractive. But I would 0:04:18.520 --> 0:04:22.160 also say that as of right now, the economy looks good. Yes, 0:04:22.640 --> 0:04:24.839 the first look at the first quarter GDP was a 0:04:24.880 --> 0:04:28.800 little bit softer than expected, but we're still growing much 0:04:28.880 --> 0:04:32.440 higher than what expectations were coming into the years. So credit, 0:04:32.520 --> 0:04:34.920 we think will remain okay. And if you look at 0:04:34.960 --> 0:04:38.159 owning sort of that front end, corporate credit maybe in 0:04:38.200 --> 0:04:39.839 the one to three are part of the curve, you 0:04:39.960 --> 0:04:43.000 are picking up a little bit of extra carry, and 0:04:43.040 --> 0:04:46.040 we think that makes sense and I want to highlight 0:04:46.120 --> 0:04:49.760 those that, especially given how tight spreads are both in 0:04:49.839 --> 0:04:53.000 ig credit as well as high as well as high yield. 0:04:53.279 --> 0:04:55.240 You know, when you look at for centile levels, they're 0:04:55.279 --> 0:04:58.480 at their riches that they have been on a spread basis, 0:04:58.720 --> 0:05:01.279 but then when you look at in yield basis, they're 0:05:01.279 --> 0:05:04.920 obviously a lot more attractive. So I think selectivity really 0:05:04.960 --> 0:05:07.159 plays a role here. So looking at you know, we're 0:05:07.160 --> 0:05:10.039 telling investors, if you're looking at high yield, go into 0:05:10.160 --> 0:05:13.160 defensive high yield, and look at if you're looking into 0:05:13.240 --> 0:05:16.279 corporate credit or even securitized asset, go with an active 0:05:16.360 --> 0:05:19.719 manager that can actually pick the bonds for you where 0:05:19.760 --> 0:05:21.960 you can earn your income, earn your carry, but at 0:05:22.000 --> 0:05:24.920 the same time be a little bit preserved for some 0:05:25.040 --> 0:05:28.800 of that downside given the level of the tightness of spreads. 0:05:28.920 --> 0:05:30.720 All right, for those out there that want to take 0:05:30.760 --> 0:05:33.680 some equity risk here. I mean, I'm not sure what. 0:05:33.600 --> 0:05:34.040 To do here. 0:05:34.040 --> 0:05:36.080 I mean, we've all kind of grown up over the 0:05:36.160 --> 0:05:40.200 last fifteen twenty years with technology leading the way. Do 0:05:40.320 --> 0:05:42.159 I just stick with the big tech names, or do 0:05:42.240 --> 0:05:44.719 I try to find some value out there, whether it's 0:05:44.760 --> 0:05:47.600 financials or energy or consumer staples. 0:05:48.320 --> 0:05:48.560 Yeah. 0:05:48.760 --> 0:05:50.839 So, you know, again, if we look at the just 0:05:50.920 --> 0:05:53.640 even since the earnings that have come up just over 0:05:53.680 --> 0:05:56.479 the last week or so, I think what we're finding 0:05:56.800 --> 0:06:00.520 is that earnings growth is coming. You know, it is 0:06:00.560 --> 0:06:02.760 surprising to the upside, which is part of the reason 0:06:02.800 --> 0:06:05.880 why last week we had an okay week in the markets. 0:06:06.360 --> 0:06:08.680 I think focusing on areas of the market, of the 0:06:08.720 --> 0:06:13.160 equity market where earnings growth remains stable, which companies which 0:06:13.200 --> 0:06:18.000 are able to generate cash flow, companies that very importantly 0:06:18.120 --> 0:06:21.479 have low leverage, and we call that high quality companies. 0:06:22.040 --> 0:06:24.680 I think that is what investors should focus on. And 0:06:24.720 --> 0:06:26.680 you know, the question that we get over and over 0:06:26.720 --> 0:06:30.000 again from investors from clients when they're building their portfolios 0:06:30.120 --> 0:06:32.479 is that, you know, is this the time to get 0:06:32.520 --> 0:06:35.120 into cyclicals and is this the time to get into 0:06:35.120 --> 0:06:37.880 small caps? And that is where you know, when we 0:06:37.880 --> 0:06:40.880 look at a portfolio analysis, we see that investors are 0:06:41.040 --> 0:06:44.520 largely overweight small caps, and we think that in this 0:06:44.800 --> 0:06:49.440 rising rate and higher rate period, away from the small 0:06:49.520 --> 0:06:53.599 cap and into larger companies, larger cap quality companies is 0:06:53.640 --> 0:06:54.360 what makes sense. 0:06:57.640 --> 0:06:59.919 We're out of time. Thank you so much, Gary Chattery. 0:07:00.160 --> 0:07:13.240 This is the black rock. Stuard Chuycer with us right now. 0:07:13.320 --> 0:07:15.800 Let's get right into it. An important conversation. He has 0:07:15.840 --> 0:07:19.680 been incredibly on on this great bull market, a very 0:07:19.760 --> 0:07:23.120 articulate voice on having the courage to stay in. Oh 0:07:23.200 --> 0:07:27.560 my word, a drawdown four point two percent SPX. I 0:07:27.600 --> 0:07:30.640 know you're gonna tell me there's an opportunity here because 0:07:30.680 --> 0:07:34.760 you are a bull. What does your world do if 0:07:34.880 --> 0:07:39.160 Powell or Paul Sweeney force interest rates higher? What what 0:07:39.440 --> 0:07:42.880 happens to the equity world if the real yield breaks 0:07:42.920 --> 0:07:45.040 through to two point three to zero two point three 0:07:45.080 --> 0:07:45.600 two percent? 0:07:46.000 --> 0:07:47.720 I mean, there's definitely gonna be pressure on markets. I 0:07:47.720 --> 0:07:49.720 think if really yields keep rising, to us, it's more 0:07:49.760 --> 0:07:51.800 the velocity move than the level though. I mean, I 0:07:51.800 --> 0:07:54.400 think if we moved twenty basis points higher and then stabilized, 0:07:54.400 --> 0:07:56.320 I think equities can deal with that just fine. But 0:07:56.480 --> 0:07:58.680 you know, what we've had is just a very rapid, 0:07:58.800 --> 0:08:00.960 you know, sort of acceleration that's been disrupted. 0:08:01.080 --> 0:08:04.400 Am I stunned that the VIX is sixteen point eight 0:08:04.480 --> 0:08:06.800 When I look at the interest rates soup into the 0:08:07.280 --> 0:08:11.160 one point thirty the Fed sides folks today on Bloomberg Radio. 0:08:11.360 --> 0:08:14.080 When I look at where we are in a sixteen 0:08:14.120 --> 0:08:17.200 point oh eight, let's feeling like a twenty. Why is 0:08:17.200 --> 0:08:18.760 the VIC sixteen point oh eight? 0:08:19.240 --> 0:08:21.320 Yeah, Look, I think it's the reason the VIX is is, 0:08:21.360 --> 0:08:23.240 I think lower than most people expect, is because the 0:08:23.240 --> 0:08:25.720 markets not realizing a lot of volatility. Right The realized 0:08:25.800 --> 0:08:28.040 volatility over the last ten days is probably twelve and 0:08:28.040 --> 0:08:30.560 a half. So it's pretty hard to get the vics higher. 0:08:30.440 --> 0:08:32.680 When day to day the equity markets just aren't moving 0:08:32.679 --> 0:08:33.240 that much. You know. 0:08:33.320 --> 0:08:35.720 Rule of thumb, sixteen vix is a one percent move 0:08:35.760 --> 0:08:38.520 per day implied over the next month. That's actually high 0:08:38.520 --> 0:08:41.720 when you consider what we've had recently. So I agree 0:08:42.040 --> 0:08:44.880 it feels low from a risk perspective, but just you know, 0:08:45.000 --> 0:08:46.920 with the markets as stable as they are, it's just 0:08:46.920 --> 0:08:48.080 hard to get it meaningfully higher. 0:08:48.080 --> 0:08:51.559 From here, stewartis you walk out to the City Trading 0:08:51.600 --> 0:08:54.840 Floor at three ninety Greenwich Street in Lower Manhattan. Are 0:08:54.880 --> 0:08:57.040 your traders there when they're talking to their clients. Are 0:08:57.040 --> 0:09:00.280 their clients wanting to take risk here or they We're 0:09:00.360 --> 0:09:03.240 just I'm sitting on the sidelines here until I get 0:09:03.320 --> 0:09:04.800 better sense of what this Fed's going to do. 0:09:05.240 --> 0:09:06.880 You know, I think I think today for the morning, 0:09:06.880 --> 0:09:08.199 I think people will be sitting on their hands a 0:09:08.200 --> 0:09:10.000 little bit. There's no reason to take risk in the 0:09:10.120 --> 0:09:11.880 you know, a few hours before the FED. I think 0:09:11.920 --> 0:09:14.560 in general people were happy to take risk until you know, 0:09:14.559 --> 0:09:16.199 two to three weeks ago, and then you had kind 0:09:16.200 --> 0:09:18.080 of oil move higher, you had some bad news out 0:09:18.080 --> 0:09:20.160 of the Middle East, and then frankly or you're seeing 0:09:20.200 --> 0:09:24.240 in in am d et cetera overnight is a repeat 0:09:24.240 --> 0:09:26.640 of what we saw out of Taiwan, Senmi and ASML 0:09:26.840 --> 0:09:29.720 and Netflix, which were some big sort of semis focused 0:09:29.720 --> 0:09:32.199 stocks making really large moves on earnings. And I think 0:09:32.200 --> 0:09:34.240 when that happened it impacted us as well. We took 0:09:34.240 --> 0:09:35.760 a step back as wait a second, you know, if 0:09:35.800 --> 0:09:38.160 these these kind of high flying stocks are under this 0:09:38.280 --> 0:09:41.720 much pressure with what I would consider decent results YEPN, 0:09:41.800 --> 0:09:43.400 then maybe we just need to be a little careful, 0:09:43.400 --> 0:09:46.640 So I think I think investors are trying to digest 0:09:46.679 --> 0:09:49.720 all these various risks. And then obviously the GDP report 0:09:49.760 --> 0:09:51.480 definitely got people's attention without a doubt. 0:09:51.679 --> 0:09:54.520 How about earnings were halfway through kind of earning season. 0:09:54.559 --> 0:09:58.640 Here we've got we had Amazon last night, Apple after 0:09:58.640 --> 0:10:01.960 the clothes tomorrow. What are you guys seeing in earnings 0:10:01.960 --> 0:10:03.880 and what's that doing to your call here? Is it 0:10:03.920 --> 0:10:04.880 impacting your call at all? 0:10:04.960 --> 0:10:07.079 I say we were a little concerned going into TMT 0:10:07.200 --> 0:10:09.840 earnings last week. You know, frankly, they put up solid, 0:10:10.160 --> 0:10:12.760 solid results and that got the market higher. So I 0:10:12.760 --> 0:10:14.800 think by and large, we're getting what you would call 0:10:14.840 --> 0:10:17.440 a pretty solid quarter, like a modest beat on revenue, 0:10:17.480 --> 0:10:20.440 solid beat on EPs, and the biggest stocks in the 0:10:20.480 --> 0:10:23.319 market are delivering, So you know, I think that's gotten 0:10:23.360 --> 0:10:26.600 people fairly comfortable. After what I mentioned was a little bit. 0:10:26.480 --> 0:10:28.400 Of a wobble kind of coming into the scenes. Came 0:10:28.480 --> 0:10:30.440 up with the dining room table last night. It was 0:10:30.600 --> 0:10:35.319 really check cadd that was great after thought picked out 0:10:35.360 --> 0:10:39.200 the food. Stuart Kaiser came up with the dining room table, 0:10:39.240 --> 0:10:42.520 which is how partitioned did this market? My basic take 0:10:42.679 --> 0:10:47.520 is the forget about magnificent seven, the magnificent twenty are 0:10:47.600 --> 0:10:51.839 ever separate from the other four hundred number on SPX. 0:10:52.040 --> 0:10:53.560 Yeah, I think that's right. You know, time we've been 0:10:53.600 --> 0:10:56.600 sort of in this broadening theme. The problem with the 0:10:56.640 --> 0:10:59.120 broadening theme for us has been it doesn't work in 0:10:59.160 --> 0:11:02.040 two conditions when you have risk rising and too frankly 0:11:02.120 --> 0:11:05.760 during earnings, because the fact is your Microsoft's, your Apples, 0:11:05.760 --> 0:11:09.120 your Amazons, your Google's are just putting up huge numbers 0:11:09.320 --> 0:11:11.680 and it's very hard to get the market to broaden. 0:11:11.679 --> 0:11:15.680 Oway, how do you use your theory in textbooks? Somebody 0:11:15.720 --> 0:11:22.240 had out a summary of the new revenue of the 0:11:22.320 --> 0:11:27.000 three major cloud companies. We've never imagined those numbers before. 0:11:27.480 --> 0:11:29.480 So then how do you do your day to day work? 0:11:29.960 --> 0:11:32.480 How odd this tech juggernaut is? 0:11:33.200 --> 0:11:35.280 Yeah, I mean, look, it's it's It harkens back a 0:11:35.320 --> 0:11:37.280 little bit to the late nineties when you were basically 0:11:37.320 --> 0:11:40.959 introducing a new technology into the system and you assumed 0:11:40.960 --> 0:11:43.079 it forecasts really large revenue growth, but you were a 0:11:43.080 --> 0:11:45.440 little uncertain about, you know, both the size and timing 0:11:45.480 --> 0:11:47.360 of it. So I think what you're having is to 0:11:47.400 --> 0:11:50.240 your point, people are compartmentalizing a little bit, right, Like 0:11:50.440 --> 0:11:52.640 I need to have some AI exposure on let me 0:11:52.720 --> 0:11:54.880 choose the way to do that, and then off to 0:11:54.920 --> 0:11:56.720 the side of that, I kind of need to model 0:11:56.760 --> 0:11:59.080 the rest of the market, you know, as a little 0:11:59.080 --> 0:12:01.400 bit independently. So it is a challenge, but it's a 0:12:01.400 --> 0:12:02.840 good challenge to have, right. I think it's a good 0:12:02.920 --> 0:12:05.640 challenge to have that you have this large thematic revenue 0:12:05.640 --> 0:12:08.400 growth impulse kind of coming through the system, and look 0:12:08.400 --> 0:12:10.320 at this is why you know, we've kind of joked 0:12:10.360 --> 0:12:13.480 the Nvidia earnings report in late May is priced as 0:12:13.559 --> 0:12:16.200 as big an event as payrolls on Friday. So to 0:12:16.240 --> 0:12:18.000 your point, it just it just knocks. 0:12:17.760 --> 0:12:19.000 Say that again, that's important. 0:12:19.080 --> 0:12:21.960 So if you look at S and P five hundred options, 0:12:22.080 --> 0:12:25.000 they're pricing as much risk into the Nvidia earnings print 0:12:25.080 --> 0:12:27.840 as they are into payrolls this Friday. So to your point, 0:12:27.880 --> 0:12:30.120 this not only is it a big theme, it's also 0:12:30.160 --> 0:12:32.960 an uncertain theme. And even at the SMP level, that 0:12:33.040 --> 0:12:34.640 risk is being priced very aggressively. 0:12:35.320 --> 0:12:39.320 So, I mean, Tom's been he's been long the Magnificent seven. 0:12:39.480 --> 0:12:41.439 I mean, he doesn't even come into work much many 0:12:41.480 --> 0:12:44.080 of these days. He's planning his trips to Paris and everything. 0:12:44.200 --> 0:12:46.559 The rest of us, though, what do we do? I mean, 0:12:46.640 --> 0:12:49.959 if we've do I look at energytoe, look at healthcare. 0:12:50.080 --> 0:12:52.080 I mean, what are the smart people at cities saying 0:12:52.080 --> 0:12:52.559 these days? 0:12:52.800 --> 0:12:54.360 Yeah, I think you know, there's a couple of sectors 0:12:54.360 --> 0:12:56.520 people were kind of sniffing around, you know, wonder's healthcare 0:12:56.559 --> 0:12:59.080 because you know, healthcare underperformed so much last year. And 0:12:59.120 --> 0:13:01.240 you also have the GLP one story, which is not 0:13:01.320 --> 0:13:03.079 quite an AI theme, but it is sort of in 0:13:03.200 --> 0:13:04.760 the same general sort. 0:13:04.559 --> 0:13:05.560 Of category as that. 0:13:05.920 --> 0:13:08.520 I think industrials is a big focus right now, just 0:13:08.559 --> 0:13:10.840 because of the IRA spending that's coming through the system 0:13:10.840 --> 0:13:14.280 that's just hitting company revenues right now, and some of 0:13:14.320 --> 0:13:16.640 the reshoring story kind of falls into there as well. 0:13:16.720 --> 0:13:19.480 So I think industrials and healthcare two big areas of 0:13:19.480 --> 0:13:21.600 focus for a lot of clients. It's not just by 0:13:21.640 --> 0:13:24.080 the sector. You know, you're choosing stocks and subtection, but 0:13:24.080 --> 0:13:24.760 those are very important. 0:13:24.800 --> 0:13:28.760 I'm looking at fifteen upgrades today on Amazon across Global 0:13:28.800 --> 0:13:31.480 Wall Street, including City Group, and they're all different levels, 0:13:31.480 --> 0:13:34.319 and it's a parle game. Where are you a year now? 0:13:34.360 --> 0:13:38.960 On SPX? Does Stewart Kaiser have to lift your SPX 0:13:39.040 --> 0:13:40.520 numbers simply because of tech. 0:13:41.400 --> 0:13:44.280 Look, I think it's definitely potentially an upward lift on 0:13:44.800 --> 0:13:47.559 the EPs number. So Scott Cronert, who runs Equity Strategy, 0:13:47.600 --> 0:13:49.320 he's a two forty five. We're a little bit above 0:13:49.360 --> 0:13:51.079 consensus on the EPs number. 0:13:50.880 --> 0:13:53.719 And you're gonna nudge out higher. You're suggesting, you know, 0:13:53.760 --> 0:13:55.280 they understand, you know, we shall see. 0:13:55.280 --> 0:13:55.440 You know. 0:13:55.640 --> 0:13:57.880 It looks like we're going to be consensus by more 0:13:57.880 --> 0:14:00.440 than five percent for this quarter. We revised up census 0:14:00.480 --> 0:14:03.160 by three percent last week. So certainly the pressure is 0:14:03.200 --> 0:14:04.800 to the upside. I think for the average. 0:14:04.840 --> 0:14:07.760 Can you run out Stuart Kaiser and a bloomberg red sticky? 0:14:08.160 --> 0:14:10.000 Kaiser says two fifty from. 0:14:09.840 --> 0:14:11.719 City group exactly? 0:14:12.840 --> 0:14:15.480 You know city group, I mean three eighty eight grantwhich 0:14:15.559 --> 0:14:17.400 is where I work. But the people who actually get 0:14:17.440 --> 0:14:20.640 stuff done, or at three ninety grandish, the traders and salespeople. 0:14:21.160 --> 0:14:22.840 What are your traders saying to you as you walk 0:14:22.880 --> 0:14:23.920 through the floor these days? 0:14:24.080 --> 0:14:24.280 You know? 0:14:24.320 --> 0:14:26.160 I think, honestly, I think people have been a little 0:14:26.200 --> 0:14:28.000 surprised at at a little bit of just the lack 0:14:28.040 --> 0:14:29.600 of activity. The last couple of weeks. You know, the 0:14:29.640 --> 0:14:32.120 markets have been moving, but volumes have probably been a 0:14:32.160 --> 0:14:34.080 little lower than you might have expected. I think the 0:14:34.120 --> 0:14:36.440 one notable thing in the last couple of weeks is 0:14:36.480 --> 0:14:38.360 you did get a bit a bid for sort of 0:14:38.360 --> 0:14:41.080 tail risk protection about a week week and a half ago, 0:14:41.200 --> 0:14:44.240 so people buying call options on the vis at Tom's point. 0:14:44.400 --> 0:14:46.560 So I think that was that was pretty notable. It's 0:14:46.560 --> 0:14:48.800 the first time we've seen people kind of, you know, 0:14:48.880 --> 0:14:51.240 making sure they had that tail risk protection on. 0:14:51.720 --> 0:14:54.400 I can just say, folks, it's fascinating. Right now, we're 0:14:54.400 --> 0:14:57.320 gonna have a lot of funds. May Bloomberg surveying on 0:14:57.400 --> 0:15:00.560 Stuart Kaiser, thank you, thank you so much for coming in. 0:15:00.640 --> 0:15:07.520 He's a city group. Sweetey demanded we have to talk paramount. 0:15:07.520 --> 0:15:09.880 We have talk media, the future of TV, and that 0:15:09.920 --> 0:15:13.160 can only mean Brian Weezer yep of Madison and Wallas. 0:15:13.240 --> 0:15:16.520 Let me get one question in here before Sweeney takes over. Brian, 0:15:16.640 --> 0:15:18.440 what is Sherry Redstone waiting for? 0:15:20.640 --> 0:15:24.480 I I don't know. I mean, here, here's the thing. 0:15:24.600 --> 0:15:27.480 There's this fine balance between making the most of her 0:15:27.680 --> 0:15:32.800 personal position or her family's position, and being mindful of 0:15:32.840 --> 0:15:36.640 any legal obligations that she has, and then there's any 0:15:37.040 --> 0:15:40.400 sentimental subjective preferences that she has. And I think it's 0:15:40.600 --> 0:15:43.800 it's what makes it so complicated. It's not just about 0:15:43.920 --> 0:15:46.080 the highest enterprise value. 0:15:47.000 --> 0:15:50.080 So, Brian, it kind of goes to the bigger picture here. 0:15:50.160 --> 0:15:51.760 I mean, some of the restand might look like the 0:15:51.800 --> 0:15:54.240 smartest person in the room because he sold out years 0:15:54.280 --> 0:15:58.600 ago before the media business, you know, the deterioration, you know, 0:15:58.680 --> 0:15:59.840 really accelerated here. 0:16:00.360 --> 0:16:02.080 Well you know, you could say he didn't sell out, 0:16:02.120 --> 0:16:03.280 you exited the business. 0:16:03.640 --> 0:16:08.360 Yep, yep, exactly, so you never sold Yeah. So, Brian, 0:16:08.400 --> 0:16:10.320 what do you think here? I mean, what's the future here? 0:16:10.640 --> 0:16:14.160 How are you thinking about some of these traditional advertising 0:16:14.280 --> 0:16:19.480 driven dependent companies, you know, like the Disney's, like the Paramounts, 0:16:19.560 --> 0:16:23.160 like the Warner Brothers Discoveries, as they transition to streaming, 0:16:23.640 --> 0:16:24.480 are they going to make it? 0:16:25.840 --> 0:16:28.120 I mean, here's the thing. If they keep doing what 0:16:28.200 --> 0:16:31.200 they have always done, they'll get what they've always gotten, 0:16:31.360 --> 0:16:34.280 at least in recent years, which is to say, a 0:16:34.480 --> 0:16:38.360 negative trajectory. I would argue that there is still lots 0:16:38.360 --> 0:16:42.840 of opportunity ahead for any of these companies paramount otherwise, 0:16:43.280 --> 0:16:45.400 as long as they invest in the right direction for 0:16:45.440 --> 0:16:49.400 the future, and basically none of them are. That doesn't 0:16:49.440 --> 0:16:52.840 mean that they can't, but I've argued that, you know, 0:16:53.120 --> 0:16:56.720 certainly for the ad supported platforms, the pathway forward is 0:16:56.760 --> 0:17:00.320 to become a platform, meaning you got to you got 0:17:00.360 --> 0:17:03.400 to eliminate this idea of being a television based company. 0:17:03.480 --> 0:17:06.440 Okay, well, I mean this is so inflammatory what you're saying, Brian, 0:17:06.440 --> 0:17:08.600 I'm going to cut you off. For example, I just 0:17:08.640 --> 0:17:12.240 saw in Variety there's five pilots this season of across 0:17:12.320 --> 0:17:15.200 seven networks. Two of the networks don't even have any pilots. 0:17:15.520 --> 0:17:18.680 What is the Weezer prescription to save streaming? 0:17:20.200 --> 0:17:24.280 Well, I think that subscription based pricing is one thing. 0:17:24.320 --> 0:17:27.080 There's a lot of room for pricing increases, that's one thing. 0:17:27.480 --> 0:17:29.560 There has to be a lot of investment in programming 0:17:29.600 --> 0:17:33.360 and good programming too, right, not just cheap programming. So 0:17:33.400 --> 0:17:35.720 that's part of it. I think that actually they this 0:17:35.800 --> 0:17:39.080 is going to be a little bit of a different view, 0:17:39.440 --> 0:17:42.119 but I think that if they actually kept investing and 0:17:42.160 --> 0:17:45.600 didn't put the brakes on it, if they actually tried 0:17:45.640 --> 0:17:49.680 to become a global platform, if they doubled their spending 0:17:49.840 --> 0:17:52.800 on streaming, programming, for example, and made sure that they 0:17:53.080 --> 0:17:56.080 were a more meaningful platform. They would have had lift 0:17:56.080 --> 0:17:58.240 off trajectory. I think in a way that would have 0:17:58.520 --> 0:18:02.160 helped Sustand the business problem is that it's never going 0:18:02.200 --> 0:18:04.919 to be as profitable as the business is replacing. And 0:18:04.960 --> 0:18:08.040 I don't think that most companies understood that that you're 0:18:08.080 --> 0:18:09.840 going from what would have been a thirty forty percent 0:18:09.880 --> 0:18:11.919 margin business to one that's more like a ten or 0:18:11.920 --> 0:18:14.960 twenty percent margin business. How do you make up for that? 0:18:15.560 --> 0:18:18.760 You make sure you're two or three times bigger, and 0:18:18.800 --> 0:18:22.840 it makes sure that you apply your platform globally. You 0:18:23.920 --> 0:18:26.719 limit how much you are giving up your economics to 0:18:26.760 --> 0:18:31.520 other partners, which Paramount was doing certainly in much of Europe. 0:18:31.640 --> 0:18:35.080 They kind of underinvested elsewhere before kind of throwing in 0:18:35.080 --> 0:18:37.040 the towel with the sky show time. 0:18:38.400 --> 0:18:42.399 So, Brian, what's the just in terms of total ad spend? 0:18:42.920 --> 0:18:44.880 Give us a sense of kind of is there enough 0:18:44.920 --> 0:18:48.200 ad dollars to support broadcasting cable television as we all 0:18:48.240 --> 0:18:50.399 know it, as we all grew up with, or is 0:18:50.440 --> 0:18:52.160 it all going digital? 0:18:53.080 --> 0:18:56.000 Well, this is where I'm going. If you're competing and 0:18:56.040 --> 0:18:58.639 we're talking about two kind of parallel but separate things. 0:18:58.680 --> 0:19:01.200 One is subscription to get a consumers to spend money 0:19:01.200 --> 0:19:04.040 on subscriptions. Right in the United States, there's about one 0:19:04.119 --> 0:19:07.440 hundred and forty billion dollars a year spent on subscriptions, 0:19:07.880 --> 0:19:12.600 video and various forms. Right streamers right now are only 0:19:12.760 --> 0:19:15.679 tapping in about thirty five forty billion dollars of that. 0:19:15.840 --> 0:19:19.560 There's still a lot of money to be gained. I'm 0:19:19.600 --> 0:19:20.920 buildings brilliant. 0:19:20.960 --> 0:19:23.280 And then we have such a respect for Brian Weezer 0:19:23.320 --> 0:19:27.520 going back to time. Shut up, Facebook will be successful, Brian. 0:19:27.960 --> 0:19:31.280 What's going on at the lunch tables in Hollywood? They're 0:19:31.280 --> 0:19:34.399