WEBVTT - Trump Has No Plan To Open Schools Safely: AFL-CIO's Weingarten 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.240 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.400 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Kind the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple podcast or wherever you listen to podcasts, 0:00:17.000 --> 0:00:22.279 and on Bloomberg dot com. So we have a severe 0:00:22.480 --> 0:00:25.560 debates going on right now about whether children should be 0:00:25.560 --> 0:00:28.160 going back to school and the full what's good for them, 0:00:28.200 --> 0:00:30.080 what's not so good for them, what they'll be missing 0:00:30.120 --> 0:00:32.320 out on if they do go back, what they'll be 0:00:32.360 --> 0:00:35.240 missing out on if they don't go back. One person 0:00:35.320 --> 0:00:37.720 right at the center of this is Randy wine Garden, 0:00:38.400 --> 0:00:43.440 and Randy has been literally fielding questions and trying to 0:00:43.479 --> 0:00:46.479 figure out what to do for all of the teachers 0:00:46.520 --> 0:00:49.639 and the support staff of the American Federation of Teachers, 0:00:50.040 --> 0:00:54.000 the largest union in the country. So Randy, thanks for 0:00:54.080 --> 0:00:58.520 joining us. And I'm curious where your members stand right now. 0:00:58.880 --> 0:01:01.000 Is it different and different rights of the country or 0:01:01.040 --> 0:01:03.080 is there one sort of the united voice on what 0:01:03.120 --> 0:01:08.320 should happen. So it's different in different parts of the country. Um, 0:01:08.440 --> 0:01:13.480 the president's actions in July made things a gazillion times 0:01:13.480 --> 0:01:19.560 worse because he made what should be a really important 0:01:20.200 --> 0:01:24.800 public health issue into a political one and completely polarized 0:01:24.800 --> 0:01:30.120 it and angered everyone because of his lack of diligence 0:01:30.240 --> 0:01:33.959 and responsiveness to actually handling the virus. So this is 0:01:34.000 --> 0:01:36.600 so right now, we have a mess on our hands. 0:01:37.000 --> 0:01:40.680 At the end of June, my membership I pulled them 0:01:40.840 --> 0:01:43.920 said that if we could get the safety safeguards that 0:01:44.120 --> 0:01:48.960 c d C had originally and still maintained or necessary, 0:01:49.120 --> 0:01:53.360 seventy percent of them said that they were comfortable going 0:01:53.600 --> 0:01:58.200 into public schools um and and instead of starting remotely, 0:01:58.480 --> 0:02:02.320 starting the year in school because they know, just like 0:02:02.480 --> 0:02:06.080 parents know how important it is for kids to have 0:02:06.320 --> 0:02:10.080 life instruction and to be in person. We have to 0:02:10.320 --> 0:02:14.720 combat the social isolation that kids have. We have to 0:02:14.760 --> 0:02:17.440 make sure that kids are fed, We have to deal 0:02:17.520 --> 0:02:21.200 with kids well being, so parents and teachers are aligned 0:02:21.360 --> 0:02:25.040 on that. What's happened since the end of June is 0:02:25.080 --> 0:02:28.799 that we've seen a virus surge, particularly in the South 0:02:28.919 --> 0:02:33.800 and the Southwest, and Congress has refused or failed. The 0:02:33.840 --> 0:02:37.040 Senate has failed to act on the resources that are 0:02:37.080 --> 0:02:41.440 absolutely necessary to get these safeguards into place at the 0:02:41.480 --> 0:02:44.600 same time as we're about to start schools. So you 0:02:44.720 --> 0:02:51.160 have this huge sense of um, adda anxiety and and 0:02:51.639 --> 0:02:55.760 um and a sense of mistrust that what is needed 0:02:55.880 --> 0:02:59.760 to make school safe for kids and for their teachers 0:03:00.120 --> 0:03:05.160 will actually happen. That's why you've seen districts who actually 0:03:05.280 --> 0:03:07.440 wanted to start in a hybrid. And I'll talk about 0:03:07.440 --> 0:03:09.480 that in a sect if you want me to have 0:03:09.760 --> 0:03:14.040 kind of moved back to starting remotely because they don't 0:03:14.080 --> 0:03:17.120 have They see the cases in their areas spiking. They 0:03:17.160 --> 0:03:20.000 don't have the testing and the tracing, and they don't 0:03:20.040 --> 0:03:26.120 have the equipment, the ventilation systems, the mass, the cleaning, 0:03:26.840 --> 0:03:31.760 or even the space to actually make a hybrid a 0:03:31.840 --> 0:03:35.920 blended model work. So it's a mess right now, and 0:03:35.920 --> 0:03:38.760 and it was far less of a mess in June 0:03:39.240 --> 0:03:41.040 when we thought we were going to get the funding 0:03:41.080 --> 0:03:45.320 from the Heroes Act, and before the President um and 0:03:45.320 --> 0:03:49.400 and Secretary Divorce started with their threats and their demands 0:03:49.800 --> 0:03:52.800 without a plan and without resources. So, Randy, speaking of 0:03:53.320 --> 0:03:56.040 Secretary Divorce, have you spoken to her. Do you get 0:03:56.080 --> 0:04:01.839 a sense that she understands the views of America's teachers, Well, 0:04:01.960 --> 0:04:04.480 she doesn't understand the views of America's teachers and or 0:04:04.520 --> 0:04:08.800 America's parents. Frankly, I haven't spoken to Secretary Divance since 0:04:08.880 --> 0:04:11.040 I invited her to come to a school with me 0:04:11.160 --> 0:04:14.320 in Ohio and we spent a day together, and she 0:04:14.480 --> 0:04:17.160 promised that she wanted to meet, she wanted to do 0:04:17.200 --> 0:04:20.320 different things. We haven't heard from her since. The only 0:04:20.360 --> 0:04:23.239 time I heard from her is I got a note 0:04:23.520 --> 0:04:28.279 congratulating me on getting married to my partner, um to 0:04:28.400 --> 0:04:31.680 my partner, and and and I you know, and so 0:04:32.279 --> 0:04:35.320 that we have not heard from her. All of what 0:04:35.400 --> 0:04:39.000 she's doing is political. She she hasn't. But what's worse 0:04:39.040 --> 0:04:43.400 than us not heard hearing from her? Every Republican or 0:04:43.480 --> 0:04:48.279 Democratic secretary of education in a circumstance like this, Margaret Spellings, 0:04:48.600 --> 0:04:52.440 Arnie Duncan, John King, Rod Page what they would have done. 0:04:53.000 --> 0:04:57.479 They were brought together, um the stakeholders to figure out 0:04:57.680 --> 0:05:00.760 how to actually have guidance for how to end last 0:05:00.760 --> 0:05:03.520 school year and then how to have guidance for how 0:05:03.560 --> 0:05:06.160 to start this year, not as a mandate, but how 0:05:06.160 --> 0:05:09.600 to have guidance and instead of us doing the this 0:05:09.680 --> 0:05:11.760 is what it costs. We thought it cost about a 0:05:11.839 --> 0:05:15.240 hundred and sixteen billion dollars twenty three hundred dollars per 0:05:15.279 --> 0:05:19.839 student UM the district, the district administrators thought a cost 0:05:19.880 --> 0:05:23.440 about eleven d dollars per student. Why are we the 0:05:23.440 --> 0:05:26.279 ones who are saying this is what the PPE wal cost, 0:05:26.400 --> 0:05:28.200 this is what the cleaning will cost, this is what 0:05:28.279 --> 0:05:31.640 the ventilation systems will cost. And both the superintendents and 0:05:31.760 --> 0:05:35.080 we put these figures out in May. We put our 0:05:35.120 --> 0:05:40.320 first UM guidance out in April, and so so you 0:05:40.440 --> 0:05:44.560 hear the frustration of my voice, because teachers know it's 0:05:44.640 --> 0:05:49.480 important for kids. But what's happened is that the can 0:05:49.520 --> 0:05:51.920 has been kicked down and down and down the road 0:05:52.400 --> 0:05:56.279 where the you know, administration is still pretending the virus 0:05:56.320 --> 0:05:59.440 doesn't exist. And so it's now left the teachers and 0:05:59.480 --> 0:06:02.320 parents to figure out child care, to figure out schooling 0:06:02.560 --> 0:06:05.760 without the resources. It's just wrong. And that's why you're 0:06:05.800 --> 0:06:08.760 seeing so many people go to remote Yes, and many 0:06:08.839 --> 0:06:11.520 teachers are parents themselves and are in the exact same 0:06:11.600 --> 0:06:13.479 boat as all of the other parents of the kids 0:06:13.560 --> 0:06:16.240 they teach. RANDI, what do you say to parents that 0:06:16.279 --> 0:06:20.520 are frustrated with teachers, because many parents want to send 0:06:20.520 --> 0:06:22.559 their kids back to school as well, because they need 0:06:22.600 --> 0:06:25.240 to go and work. They haven't been working. Who knows 0:06:25.279 --> 0:06:27.719 what Congress is going to come up with, the future 0:06:27.839 --> 0:06:32.599 is very uncertain. And you know, parents are also, you know, 0:06:32.640 --> 0:06:36.200 to a large extent, very worried about jobs. Yes, no, 0:06:36.440 --> 0:06:42.520 and I completely I've taught I've spoken to many parents, um, 0:06:42.560 --> 0:06:47.159 who are in this terrible predicament, and and this should 0:06:47.200 --> 0:06:51.120 be something that their employers should actually be working with 0:06:51.400 --> 0:06:54.920 us and trying to deal with these situations. It shouldn't, 0:06:55.200 --> 0:06:58.960 It shouldn't. So so so we need to work together, 0:06:59.040 --> 0:07:01.400 teachers and parents and need to work together. And what's 0:07:01.440 --> 0:07:05.000 happened now is that as we have engaged with parents 0:07:05.040 --> 0:07:08.400 more and more and tried to figure out how to 0:07:08.440 --> 0:07:14.480 deal with childcare, how to deal with these this terrible dilemma, 0:07:15.000 --> 0:07:18.200 parents are starting to say to us more and more, Look, 0:07:18.280 --> 0:07:20.840 we don't want our kids to be sick either, and 0:07:20.920 --> 0:07:24.680 so ultimately we need to work together on making sure 0:07:25.120 --> 0:07:30.200 that kids and teachers don't get sick and don't start 0:07:30.320 --> 0:07:34.560 by opening schools prematurely like they did in Israel. Don't 0:07:34.640 --> 0:07:39.600 start a new epidemic. And so even Dr Burke's this weekend, 0:07:40.120 --> 0:07:43.960 because of the science said, um that you know, if 0:07:44.000 --> 0:07:47.160 you have high caseload and active community spread. We are 0:07:47.280 --> 0:07:50.120 asking people to distance learn at this moment so we 0:07:50.160 --> 0:07:53.800 can get this epidemic under control. So I you know, 0:07:53.920 --> 0:07:56.440 so we have been pushing very hard to have the 0:07:56.560 --> 0:08:01.280 child care and we've also done the kind of thing. Hey, Randy, 0:08:01.320 --> 0:08:02.920 thank you so much for joining us and sharing this 0:08:03.080 --> 0:08:06.320 important information. Randy Wine Garton, President of the American Federation 0:08:06.320 --> 0:08:08.960 of Teachers, are really really critical issue in this country. 0:08:09.280 --> 0:08:12.360 As schools start to open up here for the false semester, 0:08:12.440 --> 0:08:15.480 the question is how to do it safely. There is 0:08:15.520 --> 0:08:17.560 no federal guidance here, so it's left up to the 0:08:17.560 --> 0:08:23.200 local municipalities. All right, Yesterday, around midday or shortly after midday, 0:08:23.240 --> 0:08:27.440 we got headlines crossing that Argentina had agreed in principle 0:08:27.520 --> 0:08:29.800 to a deal with its creditors in order to take 0:08:29.840 --> 0:08:35.800 that country out of default status. It's third default happening 0:08:35.800 --> 0:08:39.320 a few months ago in this decade nine default. Overall, 0:08:39.400 --> 0:08:41.319 Let's bring in somebody who knows a lot more about 0:08:41.400 --> 0:08:45.679 Argentina's economy, our chief Emerging markets credit strategist, Damian Sassour 0:08:46.320 --> 0:08:49.559 so Daman. Yesterday I was talking with one of the creditors. 0:08:49.600 --> 0:08:51.960 In fact, to Argentina who said that the deal was 0:08:52.080 --> 0:08:54.640 about fifty five cents on the dollar, depending on where 0:08:54.640 --> 0:08:57.160 you were on the curve. How does that compare with 0:08:57.200 --> 0:09:00.640 other restructuring deals. Well, I saw that interview with Robert 0:09:00.679 --> 0:09:03.679 Koenigsberger of Grammarcy, who's an old hand when it comes 0:09:03.679 --> 0:09:07.400 to em sovereign distressed UH situations, Bonnie, and you know, 0:09:07.440 --> 0:09:10.400 there's no question about it. This is something that was 0:09:10.480 --> 0:09:13.679 much needed, much expected, quite frankly, but really all eyes 0:09:13.760 --> 0:09:16.360 now focused on the i m F because while sixty 0:09:16.360 --> 0:09:19.440 five billion dollars in dollar denominated, WILL dollar and Euro 0:09:19.520 --> 0:09:22.240 denominated hard currency debt has now been or is now 0:09:22.320 --> 0:09:25.360 being restructured as we speak, there's still another call at 0:09:25.400 --> 0:09:29.280 fifty three billion of hard currency UM i F I 0:09:29.760 --> 0:09:31.600 UM debt payments that need to go through. And when 0:09:31.640 --> 0:09:34.400 I say i IF, I'm talking about international finance institutions 0:09:34.400 --> 0:09:35.920 of which the i m F is one, and they 0:09:35.960 --> 0:09:39.160 are the biggest creditor accounting for roughly forty five billion 0:09:39.200 --> 0:09:42.840 dollars of Argentina hard currency debt that must come do. 0:09:43.800 --> 0:09:47.560 Repayments start start in the third quarter of one and 0:09:47.720 --> 0:09:50.679 total roughly fifty three billion THO. So that's a lot 0:09:50.720 --> 0:09:52.839 of money that Argentina needs to repay in the next 0:09:52.920 --> 0:09:55.000 five years, and obviously we need to see that get 0:09:55.080 --> 0:09:58.480 pushed back. All right, So what is the posture of 0:09:58.880 --> 0:10:01.000 the i m F now d me and given that 0:10:01.000 --> 0:10:04.360 we've seen this deal for another big tronch of debt, well, 0:10:04.400 --> 0:10:07.880 I mean, Christelina Grgovo runs the IMF has has been 0:10:08.000 --> 0:10:11.160 very supportive of this restructuring. I mean, I obviously expect 0:10:11.200 --> 0:10:13.480 the IMF to tow the line and basically agree to 0:10:13.559 --> 0:10:16.960 something that works for the sovereign. But you know whether 0:10:17.080 --> 0:10:18.880 or not. You know, IBIRD, which is a part of 0:10:18.880 --> 0:10:21.760 the World Bank, the Internet, the Interamerican Development Bank. I 0:10:21.760 --> 0:10:25.200 mean again, these are other institutional financial institutions that have 0:10:25.480 --> 0:10:28.520 billions and billions of dollars owed to them by Argentina. 0:10:28.640 --> 0:10:30.439 So you know, I think they all have to come together, 0:10:30.520 --> 0:10:33.319 they have to agree to something, and I expect that's 0:10:33.320 --> 0:10:35.240 where you know, the focus is going to shift for 0:10:35.400 --> 0:10:38.040 most reading agencies and most sovereign creditors over the near term. 0:10:38.080 --> 0:10:42.080 Pole Yeah, the i m F is often credited for 0:10:42.360 --> 0:10:45.199 just being that a little bit too hard line on 0:10:45.200 --> 0:10:47.480 some of these countries that just aren't able to pay 0:10:47.559 --> 0:10:52.240 and and just you know, really imposing the strictest of conditions. 0:10:52.640 --> 0:10:55.839 How much leeway does the I MF have with Argentina, 0:10:56.080 --> 0:10:58.520 or rather vice versa, how much leeway does the Argentina 0:10:58.600 --> 0:11:02.200 economy have. Well, the I m F has really made 0:11:02.200 --> 0:11:04.560 its bed, so to speak, lonny with regard to Argentina. 0:11:04.679 --> 0:11:08.120 They are I mean, that's that most of their balance sheet. 0:11:08.160 --> 0:11:10.800 I mean, it's their biggest um, it's their biggest loan. Basically, 0:11:10.840 --> 0:11:13.720 it's it's they have, you know, the biggest exposure to Argentina. 0:11:14.040 --> 0:11:16.040 So they need to get that righted because it really 0:11:16.040 --> 0:11:17.559 will mark whether or not the I m F is 0:11:17.600 --> 0:11:20.840 successful going forward at you know, I won't say bailing out, 0:11:20.880 --> 0:11:24.280 but assisting you know, frontier sovereign nations as they you know, 0:11:24.360 --> 0:11:26.440 as they seek to kind of grow and emerge from 0:11:26.600 --> 0:11:29.640 you know, the coronavirus. So you know, I think, look, 0:11:29.720 --> 0:11:32.199 you know, from where we sit right now, obviously those 0:11:32.200 --> 0:11:34.200 discussions are going to take place. I expect them to 0:11:34.200 --> 0:11:37.920 go over rather well. But the real challenge for Argentina 0:11:38.080 --> 0:11:41.160 is getting locals confident in the Argentine pay so and 0:11:41.240 --> 0:11:43.839 right now, that disconnect between where the PASO is treating, 0:11:43.880 --> 0:11:46.679 at least officially and where it's trading in the black 0:11:46.720 --> 0:11:50.360 market is just so very great, and a huge devaluation 0:11:50.440 --> 0:11:52.840 is probably in store for the Argentine past. So and 0:11:52.840 --> 0:11:55.319 and look, you know that's that's something that is widely expected. 0:11:55.320 --> 0:11:57.280 But you know, whether or not Argentina can emerge and 0:11:57.320 --> 0:11:59.960 restore confidence in its own currency and get the economy 0:12:00.000 --> 0:12:02.679 growing again remains to be seen. So Damian, what does 0:12:02.720 --> 0:12:06.760 this deal mean for maybe some some of Argentina's neighbors 0:12:06.800 --> 0:12:09.840 in Latin America? Is this any kind of template for 0:12:09.880 --> 0:12:12.680 others that might need some relief? Well, I mean, what 0:12:13.040 --> 0:12:15.400 kind of goes under under the radar here is that? 0:12:15.480 --> 0:12:18.160 You know, this week we've also seen Ecuador agreed to 0:12:18.280 --> 0:12:21.120 terms with its restructuring right that seventeen point four billion 0:12:21.120 --> 0:12:24.480 dollars in debt that you know Ecuador owes too hard 0:12:24.480 --> 0:12:28.200 currency creditors abroad, you know Lenning Marino, you know, you know, 0:12:28.200 --> 0:12:29.920 they did a really really good job. I have to 0:12:29.960 --> 0:12:31.480 be honest, this is the I mean, Ecuador is a 0:12:31.520 --> 0:12:33.160 surreal defaulter as well, and this is one of the 0:12:33.200 --> 0:12:36.240 fastest restructurings that i've I've pretty much ever seen, you 0:12:36.280 --> 0:12:38.680 know writ large. So you know, I think I think 0:12:39.080 --> 0:12:41.640 most creditors are you know, coming to terms of the 0:12:41.640 --> 0:12:43.480 fact that this is the very challenging time they need 0:12:43.520 --> 0:12:46.240 to kind of uh, you know, they made their own 0:12:46.240 --> 0:12:47.880 bed right, they have to take a little bit of 0:12:47.920 --> 0:12:50.400 a hickey also. But you know, as as you see 0:12:50.440 --> 0:12:51.800 from you know, the note in the New York Times 0:12:51.800 --> 0:12:54.000 this morning from Richard Kaschell, who's you know, you're at 0:12:54.040 --> 0:12:55.960 Black Rock and was very much involved in all these 0:12:56.000 --> 0:12:59.439 negotiations through to the end. You know, they have stakeholder 0:12:59.480 --> 0:13:01.680 interest in mine. They have to worry about their own 0:13:01.679 --> 0:13:05.040 fiduciaries and their own fiduciary responsibility when negotiating on behalf 0:13:05.080 --> 0:13:07.280 of them, and so you know, these things tend to 0:13:07.320 --> 0:13:09.680 kind of get drawn out. What I'm just absolutely amazed 0:13:09.720 --> 0:13:11.600 about is how quickly some of these deals are getting 0:13:11.640 --> 0:13:14.440 done and what this expense. But beyond two police and 0:13:14.480 --> 0:13:17.320 you know, Sri Lanka's now having parliamentary elections, they're in trouble. 0:13:17.360 --> 0:13:19.560 They were downgraded to single B minus. So you know, 0:13:19.600 --> 0:13:22.400 there's plenty of frontier sovereigns and Goala Nigeria that come 0:13:22.440 --> 0:13:24.480 to mind that are all hurting all of approach the 0:13:24.480 --> 0:13:26.800 I m F for assistance and look, you know we're 0:13:26.800 --> 0:13:28.360 going to see in the next in the non too 0:13:28.400 --> 0:13:30.640 distant future, how many of them can emerge from this. 0:13:30.760 --> 0:13:33.559 On the on the other side, just briefly, Damian, we're 0:13:33.559 --> 0:13:36.320 seeing Argentina's bonds rise to I mean, how soon can 0:13:36.400 --> 0:13:38.920 Argentina go back to the capital markets literally nothing has 0:13:39.000 --> 0:13:42.160 changed about the underlying economy. Yeah, I mean, you have 0:13:42.320 --> 0:13:45.199 hit right on the spot exactly what I'm thinking. I mean, 0:13:45.240 --> 0:13:47.920 I think a lot of creditors, specifically you know, US 0:13:48.000 --> 0:13:51.520 institutions like pension funds and Commond foundations, it doesn't matter 0:13:51.520 --> 0:13:54.760 whether or not Argentina's permitted back into the US capital markets. 0:13:55.040 --> 0:13:57.040 I think many of them have gotten so fed up 0:13:57.040 --> 0:13:59.800 with losses that they had to incur due to and 0:14:00.040 --> 0:14:02.360 sting in Argentine debt that it's just going to be 0:14:02.559 --> 0:14:04.280 very difficult for them. I mean, I know a handful 0:14:04.320 --> 0:14:06.840 of them that built into their own policy statements that 0:14:06.920 --> 0:14:09.480 they you know, yes, we'll invest in emerging market dollar debt, 0:14:09.480 --> 0:14:11.920 but we will not invest in debt issued by Argentina. 0:14:12.000 --> 0:14:14.160 And that's a real problem to get, you know. So, 0:14:14.240 --> 0:14:16.800 so whether or not they're allowed back to the US 0:14:16.880 --> 0:14:19.800 market to to to to take on more debt, Okay, fine, 0:14:19.880 --> 0:14:21.960 they can do that, but who's gonna buy it? Right, Bonnie, 0:14:22.000 --> 0:14:23.760 I think that's where you're going with this, And I 0:14:23.800 --> 0:14:25.480 think that's the real risk. You know, when you have 0:14:25.640 --> 0:14:27.920 these type of situations and now industries have wised up, 0:14:28.160 --> 0:14:30.240 it's gonna be very difficult to get them back on board. 0:14:30.240 --> 0:14:31.960 The one thing I'll say is that investors have very 0:14:31.960 --> 0:14:34.800 short term memories. You know, when things start to get 0:14:34.880 --> 0:14:37.040 right and and and and you know, and and the 0:14:37.160 --> 0:14:40.200 risk on mentality resumes. Damian sasare thanks so much as 0:14:40.240 --> 0:14:42.440 always giving us the latest on all things emerging markets. 0:14:42.440 --> 0:14:47.040 Staming sassare chief Emerging Markets credit staategists for Bloomberg Intelligence. 0:14:47.320 --> 0:14:51.400 UH debt restruction deal getting done in Argentina, I m 0:14:51.480 --> 0:14:52.960 F is next. What are they going to do there? 0:14:52.960 --> 0:14:55.040 And what does that mean for the emerging markets overall? 0:14:55.120 --> 0:14:59.440 We'll keep on top of that. We had some media 0:14:59.480 --> 0:15:03.080 companies some numbers last night, led by the Walt Disney Company, 0:15:03.120 --> 0:15:06.800 some good numbers, some good streaming numbers or stocks of eleven. Today. 0:15:07.200 --> 0:15:09.800 Fox also reported numbers better than expected for their stocks 0:15:09.800 --> 0:15:12.160 that off about the five or six percent this morning. 0:15:12.200 --> 0:15:15.160 So tail uh to two sides of the coin. We 0:15:15.160 --> 0:15:16.960 want to chat about that. And there's nobody better than 0:15:16.960 --> 0:15:19.560 our good friend Tuna a Mobi. He has been covering 0:15:19.600 --> 0:15:22.560 this industry forever. He's an industry analyst at cf R 0:15:22.680 --> 0:15:25.080 A Research. And for those of you that have seen 0:15:25.160 --> 0:15:27.400 Tuna on television, I can tell you he is the 0:15:27.440 --> 0:15:30.720 best dressed man on Wall Street. Tuna, thanks so much 0:15:30.760 --> 0:15:33.920 for joining us here. Let's start with Disney this stock. 0:15:34.040 --> 0:15:35.600 I mean, I looked at the numbers last night, and 0:15:35.640 --> 0:15:39.200 the costs associated with COVID registered extraordinary close to four 0:15:39.200 --> 0:15:41.760 billion dollars. You have the stocks up ten percent? What 0:15:41.880 --> 0:15:45.920 what did the investors really like? Good morning, Paul, and 0:15:45.960 --> 0:15:49.040 thanks for having me. UM So I started Disney. Um 0:15:49.160 --> 0:15:53.160 earnings was actually UM a lot of interest in um 0:15:53.360 --> 0:15:56.120 not get some information? UM the same parts we knew 0:15:56.160 --> 0:15:58.600 going in was gonna take the major hit from the 0:15:58.640 --> 0:16:02.400 COVID nineteen shot down. UM. But the surprise there was 0:16:02.440 --> 0:16:05.720 actually Media Networks, which had a one billion dollar swing 0:16:05.720 --> 0:16:10.760 in operating income, primarily due to the programming cause deferrals 0:16:10.760 --> 0:16:14.440 with the shutdown of production in Hollywood as well as 0:16:14.440 --> 0:16:17.840 the sports Life sports. But all in all, I thought, UM, 0:16:17.880 --> 0:16:22.080 it was a really um interesting quarter for a direct consumer. 0:16:22.120 --> 0:16:25.120 As you know, Paul. That's where the company has been 0:16:25.160 --> 0:16:29.680 pivoting for quite some time, now, surpassing hundred million UM 0:16:29.720 --> 0:16:35.480 aggregate subscribers between ESPN Plus, Disney Plus, and Hulu. But 0:16:35.640 --> 0:16:40.040 more importantly, the launch of the International Star branded direct 0:16:40.120 --> 0:16:44.560 consumer offering. I think, really, um, you know, puts Disney 0:16:44.600 --> 0:16:47.960 in a very very good position, uh to consolidate its 0:16:48.040 --> 0:16:51.040 gains um and also the Mulan. I'm sure we'll get 0:16:51.040 --> 0:16:54.200 to that shortly. I think Disney, um, more than anyone 0:16:54.240 --> 0:16:56.680 else in Hollywood, has been trying to use the COVID 0:16:56.840 --> 0:17:02.160 nineteen lockdown to reinvent somebody traditional distribution windows. So now 0:17:02.800 --> 0:17:06.919 Disney Plus serving as a major premier outlet for some 0:17:07.040 --> 0:17:10.320 of its marquee uh you know, titles. So all in all, 0:17:10.359 --> 0:17:13.520 we are, um, you know, quite optimistic. The shares are 0:17:14.119 --> 0:17:16.840 up um rightly, so I think when you look to 0:17:16.920 --> 0:17:19.960 the other side of this pandemic, Paul, with a strong 0:17:20.000 --> 0:17:24.480 balance sheet and now almost twenty three billion dollars in liquidity, UM, 0:17:24.520 --> 0:17:28.480 I think no companying arguably in the media spaces better 0:17:28.480 --> 0:17:32.800 position to navigate this pandemic, uh like Disney. Yeah, and 0:17:32.840 --> 0:17:36.080 you're referring, we should say to the live action Mulan, 0:17:36.160 --> 0:17:38.119 which is going to go straight to Disney plus and 0:17:38.160 --> 0:17:40.240 maybe take it. You know, thirty buckser so away from 0:17:40.240 --> 0:17:42.399 movie theaters for the window that it normally will have 0:17:42.400 --> 0:17:45.480 gone to movie theaters first in. So that's all great 0:17:45.480 --> 0:17:48.439 for Walt Disney, but compare it with something like a Comcast. 0:17:49.040 --> 0:17:51.840 Why is Disney performing so much better in the market 0:17:52.480 --> 0:17:55.560 and Comcast is announcing all these layoffs and so on, 0:17:56.240 --> 0:17:59.840 and and really operations are very similar in both cases, right, 0:18:00.440 --> 0:18:04.359 It's all about the portfolio of assets. And also I 0:18:04.440 --> 0:18:08.879 think in this environment, number one, we think Disney's balance 0:18:08.880 --> 0:18:13.240 sheet is superior. UM. But also being a pure content provider. 0:18:13.359 --> 0:18:16.520 Remember coming into this uh you know COVID nineteen, UM, 0:18:16.560 --> 0:18:20.919 you know, Disney had with the Fox acquisition, UM, you know, 0:18:21.040 --> 0:18:24.160 really placed itself in a very enviable position in terms 0:18:24.160 --> 0:18:30.840 of the franchise pipeline acquired in organic franchises. So while 0:18:30.840 --> 0:18:33.639 Comcast is also getting some tail winds from on the 0:18:33.680 --> 0:18:37.800 broadband business and the residential broadband, UM, it's been much 0:18:37.880 --> 0:18:42.400 more UH susceptible. I think, UM to some other areas 0:18:42.520 --> 0:18:46.680 like um, you know, advertising, etcetera. But Disney, I think, UM, 0:18:46.800 --> 0:18:50.880 when when this uh theme parks rebound as we think 0:18:50.920 --> 0:18:55.560 they will. Uh. There's indications of penop demand. ESPN while 0:18:55.640 --> 0:19:00.160 has been adversely affected by the cancelation of Life Sports. 0:19:00.560 --> 0:19:04.040 Now that Life Sports are coming back gradually, UM, we 0:19:04.160 --> 0:19:07.320 think will be uh you know, as best positioned as 0:19:07.359 --> 0:19:11.440 any platform to to benefit from from that. But more importantly, 0:19:11.480 --> 0:19:14.119 I think the major distinction Vney, to your question I 0:19:14.119 --> 0:19:16.399 would draw, is a direct to consumer. That's really what 0:19:16.560 --> 0:19:19.920 separates uh, you know, Disney from Comcast in the eyes 0:19:20.000 --> 0:19:24.359 of investors, and that's a huge opportunity in front of 0:19:24.359 --> 0:19:28.680 the company, especially with the Star branded platform that they 0:19:28.720 --> 0:19:31.600 are going to be launching internationally. I might also add 0:19:31.640 --> 0:19:35.520 that they are shutting down twenties some channels internationally. It 0:19:35.560 --> 0:19:39.440 took a five billion dollar impayment charge, which underscores the 0:19:39.600 --> 0:19:44.800 strategic shift for Disney from linear to to direct to consumer. 0:19:44.880 --> 0:19:48.120 That's where I think a huge chunk of the value 0:19:48.320 --> 0:19:51.240 is going to come from the catalysts. So, you know, 0:19:51.280 --> 0:19:53.760 what's the company saying about their theme parks. It's such 0:19:53.760 --> 0:19:56.320 an important part of their business. It's been such a 0:19:56.400 --> 0:20:00.440 solid contributor to UH earnings growth for the company for years. 0:20:00.440 --> 0:20:02.960 They invest a tremendous amount of money into that business 0:20:02.960 --> 0:20:05.600 with great returns. I'm thinking about the five billion dollars 0:20:05.600 --> 0:20:08.840 to open Shanghai Disney most recently. Do they believe that 0:20:08.920 --> 0:20:11.679 on the other side of this pandemic, that people are 0:20:11.720 --> 0:20:15.439 going to cram themselves into these parks and you know, 0:20:15.480 --> 0:20:18.439 and and stand in line like we've become accustomed to 0:20:18.440 --> 0:20:20.880 other parks, that they think that it's gonna come back 0:20:20.880 --> 0:20:24.800 to normal. Paul, I think that scenario, frankly is at 0:20:24.880 --> 0:20:27.560 least several years out. Even in the best of times, 0:20:27.760 --> 0:20:30.920 when you're coming out of recession, uh team, parks typically 0:20:31.040 --> 0:20:34.000 takes several years to recover. But in the case of 0:20:34.000 --> 0:20:37.000 Disney now they're in the middle of its phased reopening. 0:20:37.000 --> 0:20:40.760 All these parks not going exactly as smoothly as you 0:20:40.760 --> 0:20:44.800 you might hope, especially with the COVID nineteen resurgence across 0:20:44.880 --> 0:20:47.160 various states in the US, and as you know, they 0:20:47.200 --> 0:20:50.480 had to shut down Hong Kong again after the initial reopening. 0:20:51.040 --> 0:20:53.679 But having said that, I think we take some comfort 0:20:53.720 --> 0:20:57.080 in the fact that you know, Shanghai has been um 0:20:57.119 --> 0:20:59.720 you know, coming along. I think their philosophy and running 0:20:59.720 --> 0:21:02.439 the see parks right now is just to maintain a 0:21:02.560 --> 0:21:06.679 positive um you know, contribution margin. So to the extent 0:21:07.119 --> 0:21:11.440 that the revenues are outweighing the variable costs, I think 0:21:11.960 --> 0:21:16.800 they can justify keeping those parks open, even that limited capacity, UM, 0:21:16.920 --> 0:21:19.560 just to cover some of the fixed overheads. But that 0:21:19.680 --> 0:21:23.080 being said, I think it's in parks probably will be 0:21:23.119 --> 0:21:26.240 one of the last to recover. But when they do, UM, 0:21:26.280 --> 0:21:28.959 there's every indication that they're going to be you know, 0:21:29.000 --> 0:21:32.399 get back to UM you know, normalized attendance levels. Whether 0:21:32.440 --> 0:21:34.440 that takes three to five years, you know, who knows, 0:21:34.520 --> 0:21:36.680 but they just came up the peak attendance in two 0:21:36.680 --> 0:21:38.760 thousand nineteen. So it's kind of going to be a 0:21:38.760 --> 0:21:43.199 gradual process from here, depending on what happens with the resurgence. Basically, 0:21:43.320 --> 0:21:46.439 you know, do you anticipate layoffs and maybe even you know, 0:21:46.760 --> 0:21:49.680 action on the part of the world's employees. At some point, 0:21:50.440 --> 0:21:54.160 they've already come off of massive layoffs Vannio already um 0:21:54.320 --> 0:21:57.280 I frankly, at this point, UM, I don't know, you know, 0:21:57.320 --> 0:22:00.720 how much more that they can you know, much more room. 0:22:00.800 --> 0:22:03.680 What they've done is that actually they've recalled a lot 0:22:03.720 --> 0:22:07.560 of those theme parks UM attend the staff that were 0:22:07.640 --> 0:22:11.080 laid off, So they're actually in the process of rehiring 0:22:11.160 --> 0:22:13.680