1 00:00:05,040 --> 00:00:08,639 Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 2 00:00:08,680 --> 00:00:12,040 Speaker 1: with Paul Sweeney. Join us each day for insight from 3 00:00:12,039 --> 00:00:16,200 Speaker 1: the best in economics, finance, investment, and international relations. You 4 00:00:16,239 --> 00:00:19,599 Speaker 1: can also watch the show live on YouTube. Visit the 5 00:00:19,600 --> 00:00:24,360 Speaker 1: Bloomberg Podcast channel on YouTube to see the show weekday 6 00:00:24,360 --> 00:00:27,400 Speaker 1: mornings from seven to ten am Eastern from our global 7 00:00:27,440 --> 00:00:32,080 Speaker 1: headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 8 00:00:32,440 --> 00:00:36,000 Speaker 1: or anywhere else you listen, and always on Bloomberg Radio, 9 00:00:36,159 --> 00:00:39,360 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. 10 00:00:39,479 --> 00:00:44,040 Speaker 2: NYCB cut to junk by Moodies as stock hits lois 11 00:00:44,040 --> 00:00:47,040 Speaker 2: since nineteen ninety seven. The real question for investors, just 12 00:00:47,080 --> 00:00:48,560 Speaker 2: like it was a year ago some of the West 13 00:00:48,600 --> 00:00:51,159 Speaker 2: Coast banks, is is this specific to one or two 14 00:00:51,520 --> 00:00:54,760 Speaker 2: individual banks? This indicative and maybe some risk in the 15 00:00:54,840 --> 00:00:56,920 Speaker 2: US banking system. For that, we turn to Herman Chant. 16 00:00:57,000 --> 00:00:59,840 Speaker 2: He covers the regional banks for Bloomberg Intelligence. He joins 17 00:00:59,840 --> 00:01:02,320 Speaker 2: his us here in our Bloomberg Interactive Broker Studio. So 18 00:01:02,400 --> 00:01:04,880 Speaker 2: Hermann tell us, just summarize for us what happened at 19 00:01:05,000 --> 00:01:07,960 Speaker 2: NYCB and what do you think is going to happen 20 00:01:07,959 --> 00:01:08,600 Speaker 2: going forward? 21 00:01:08,840 --> 00:01:09,559 Speaker 1: Right for this bank. 22 00:01:09,720 --> 00:01:13,800 Speaker 3: So there's two things. One is our idios and credit factors, 23 00:01:13,840 --> 00:01:16,560 Speaker 3: and one that's the overall risk and commercial real estate. 24 00:01:16,920 --> 00:01:21,279 Speaker 3: The and credit factor is your community cleared one hundred 25 00:01:21,280 --> 00:01:24,880 Speaker 3: billion dollar asset threashold with the acquisition of signature banks 26 00:01:25,400 --> 00:01:29,200 Speaker 3: that was facilitated by the FDIC last year. That ushers 27 00:01:29,200 --> 00:01:32,600 Speaker 3: in higher capital and liquidity requirements and they're trying to 28 00:01:32,640 --> 00:01:35,880 Speaker 3: digest that. The second is that they cut their dividend 29 00:01:35,959 --> 00:01:39,600 Speaker 3: to be able to increase their capital and increase their 30 00:01:39,640 --> 00:01:43,399 Speaker 3: reserves because of some issues on the credit quality side, 31 00:01:44,000 --> 00:01:47,880 Speaker 3: some losses in multi family, commercial real estate and in office. 32 00:01:48,280 --> 00:01:49,600 Speaker 1: All right, So for. 33 00:01:49,520 --> 00:01:53,400 Speaker 2: Our listeners and viewers out there nationwide worldwide, does the 34 00:01:53,560 --> 00:01:55,880 Speaker 2: US have a regional bank problem. 35 00:01:56,760 --> 00:02:00,480 Speaker 3: The United States does not have a regional bankrob It 36 00:02:00,600 --> 00:02:06,440 Speaker 3: has a burgeoning potential problem in losses and commercial real estate, 37 00:02:06,520 --> 00:02:09,840 Speaker 3: specifically office and if you want to throw in multifamily 38 00:02:10,200 --> 00:02:13,160 Speaker 3: regulated multifamily, it's a niche business in New York City. 39 00:02:13,680 --> 00:02:17,320 Speaker 3: That's not going to be a issue across the industry. 40 00:02:18,600 --> 00:02:22,400 Speaker 3: We'll see losses percolate in twenty twenty four and throughout 41 00:02:22,440 --> 00:02:25,000 Speaker 3: the next few years, but it's going to be a 42 00:02:25,040 --> 00:02:26,120 Speaker 3: longer term issue. 43 00:02:26,160 --> 00:02:29,760 Speaker 1: How many more nycbs are. There's a general number, there's 44 00:02:29,760 --> 00:02:32,120 Speaker 1: four thousand banks. I don't need a number, most of 45 00:02:32,200 --> 00:02:35,040 Speaker 1: minus ten. But do you feel in very William Isaac 46 00:02:35,200 --> 00:02:39,120 Speaker 1: SNL crisis Robert McTeer of the eighties or the complete 47 00:02:39,160 --> 00:02:42,160 Speaker 1: disaster of the reats in the seventies, or is this 48 00:02:42,320 --> 00:02:43,560 Speaker 1: really hyper selective. 49 00:02:43,720 --> 00:02:46,280 Speaker 3: It's going to be selective going forward and it has 50 00:02:46,360 --> 00:02:51,440 Speaker 3: been right so the banks that FAED, we're very focused 51 00:02:51,440 --> 00:02:55,040 Speaker 3: on certain businesses that really didn't pan out when rates 52 00:02:55,040 --> 00:02:59,520 Speaker 3: went higher, and now we're facing the similar issues with 53 00:02:59,680 --> 00:03:03,600 Speaker 3: rates where they are elevated. It's tougher for these commercial 54 00:03:03,639 --> 00:03:07,520 Speaker 3: real estate lenders to in their bars to refinance, and 55 00:03:07,560 --> 00:03:10,639 Speaker 3: it's creating asset quality issues. And it's going to be 56 00:03:10,720 --> 00:03:13,639 Speaker 3: banks that have an intense focus on commercial real estate 57 00:03:13,680 --> 00:03:15,840 Speaker 3: and that's going to be a small subset of the 58 00:03:15,880 --> 00:03:16,960 Speaker 3: overall banking system. 59 00:03:17,040 --> 00:03:18,639 Speaker 2: And you know, because Tom and I were talking about this, 60 00:03:18,680 --> 00:03:21,760 Speaker 2: and we follow the news flow in this very carefully, 61 00:03:21,760 --> 00:03:24,720 Speaker 2: which is when we see some of these big pieces 62 00:03:24,720 --> 00:03:27,640 Speaker 2: of real estate change hands. Now it's fifty cents on 63 00:03:27,680 --> 00:03:30,760 Speaker 2: the dollar, right, and it's all over the country. It's 64 00:03:30,800 --> 00:03:35,400 Speaker 2: not just San Francisco or New York. It's everywhere. So 65 00:03:35,480 --> 00:03:38,280 Speaker 2: but I guess what I'm asking you is what percentage 66 00:03:38,320 --> 00:03:41,400 Speaker 2: of that type of real estate is part of the 67 00:03:41,480 --> 00:03:43,600 Speaker 2: portfolio of the regional banks out there in the US. 68 00:03:43,640 --> 00:03:45,240 Speaker 2: Is it a big piece, small piece? 69 00:03:45,440 --> 00:03:48,680 Speaker 3: It's a fairly small we're talking about when we say 70 00:03:48,720 --> 00:03:51,160 Speaker 3: fifty cents on a dollar. It's like those B and 71 00:03:51,200 --> 00:03:54,520 Speaker 3: C class properties in central business districts that aren't getting 72 00:03:54,560 --> 00:03:58,280 Speaker 3: a lot of occupancy. And that's not like typically where 73 00:03:58,280 --> 00:04:02,320 Speaker 3: the regional banks play there, like medical offices where the 74 00:04:02,360 --> 00:04:03,360 Speaker 3: operators also. 75 00:04:03,360 --> 00:04:06,560 Speaker 1: Okay, so there's this headline story here when I hear 76 00:04:06,640 --> 00:04:09,360 Speaker 1: bankers tell me things will be fine, or even someone 77 00:04:09,400 --> 00:04:12,880 Speaker 1: as cynical as you. The heart of the matter is 78 00:04:12,880 --> 00:04:15,000 Speaker 1: is we're looking at them like they own every office 79 00:04:15,040 --> 00:04:17,440 Speaker 1: hour out there, right, and they don't. They don't. 80 00:04:17,839 --> 00:04:20,400 Speaker 3: And even if they do, you can go back to 81 00:04:20,440 --> 00:04:24,920 Speaker 3: their underwriting right where their loan to value is about 82 00:04:25,040 --> 00:04:26,400 Speaker 3: fifty five to sixty years. 83 00:04:26,600 --> 00:04:28,800 Speaker 1: So who takes a loss cut to the chase. There's 84 00:04:28,800 --> 00:04:31,320 Speaker 1: a building out there, it's down fort it's going to 85 00:04:31,360 --> 00:04:34,840 Speaker 1: be the headlining cranes two days from now. Who takes 86 00:04:34,880 --> 00:04:35,720 Speaker 1: that laws. 87 00:04:35,520 --> 00:04:37,920 Speaker 3: Ermage in the loss is going to be on the 88 00:04:37,960 --> 00:04:41,160 Speaker 3: owner of the building predominantly, and the banks will take, 89 00:04:41,240 --> 00:04:44,479 Speaker 3: you know, maybe some sliver, but it's going to be 90 00:04:45,520 --> 00:04:49,920 Speaker 3: the losses will be prevailing in areas like commercial banks, 91 00:04:49,960 --> 00:04:53,520 Speaker 3: It's going to be in commercial real estates, the NBS, reads, 92 00:04:53,600 --> 00:04:57,760 Speaker 3: insurance companies, the entire financial system will face some sort 93 00:04:57,800 --> 00:04:58,040 Speaker 3: of way. 94 00:04:58,520 --> 00:05:00,920 Speaker 2: Tom. It just feels like one of the markets where 95 00:05:01,680 --> 00:05:03,520 Speaker 2: this smart money is gonna come in soon, and I 96 00:05:03,520 --> 00:05:06,159 Speaker 2: don't know who that is. Is it private equity, is 97 00:05:06,160 --> 00:05:08,919 Speaker 2: it just some smart real estate money? Is it the 98 00:05:09,000 --> 00:05:12,120 Speaker 2: rooting found start buying the stuff at fifty cents on 99 00:05:12,160 --> 00:05:14,920 Speaker 2: the dollar, and we're gonna have the story five or 100 00:05:15,120 --> 00:05:17,600 Speaker 2: ten years from now. Wow, at a time, I. 101 00:05:17,520 --> 00:05:20,080 Speaker 1: Get I do agree with that, But then here's the 102 00:05:20,120 --> 00:05:22,279 Speaker 1: next question. Herman Chan what I see And I'm reading 103 00:05:22,320 --> 00:05:25,760 Speaker 1: cranes voraciously just to get the gossip and all that. 104 00:05:26,000 --> 00:05:29,800 Speaker 1: You know, I don't know anything about this. The foreign 105 00:05:29,920 --> 00:05:32,599 Speaker 1: money is like a drug. I mean, they just show 106 00:05:32,720 --> 00:05:34,800 Speaker 1: up in New York. Are they going to show up 107 00:05:34,800 --> 00:05:35,880 Speaker 1: in Topeka? 108 00:05:36,680 --> 00:05:38,320 Speaker 3: I don't think they're going to show up and say 109 00:05:38,720 --> 00:05:42,400 Speaker 3: the foreign money has to be in large metro city, 110 00:05:42,600 --> 00:05:44,240 Speaker 3: So it's gonna be in New York Miami. 111 00:05:44,440 --> 00:05:46,240 Speaker 1: Are they buying LA with a train wreck in the 112 00:05:46,320 --> 00:05:48,080 Speaker 1: central district LA. 113 00:05:48,160 --> 00:05:51,480 Speaker 3: That remains the BC? Maybe if if valuations have become 114 00:05:51,600 --> 00:05:53,720 Speaker 3: really really attractive, but we haven't really seen them. 115 00:05:55,920 --> 00:05:58,880 Speaker 2: Told the Jepanese there was a there was a time 116 00:05:58,880 --> 00:06:01,000 Speaker 2: when I first started playing Public thirty years ago that 117 00:06:01,640 --> 00:06:03,520 Speaker 2: every time I went out and played, which is probably 118 00:06:03,520 --> 00:06:05,960 Speaker 2: two or three times a year, it was my foursome 119 00:06:06,080 --> 00:06:09,320 Speaker 2: was all Japanese players. Because the japan economy is so strong, 120 00:06:09,360 --> 00:06:11,880 Speaker 2: the yen was so strong, it was close by they 121 00:06:11,920 --> 00:06:14,520 Speaker 2: owned it. You know, you don't see that anymore. But again, 122 00:06:14,560 --> 00:06:17,520 Speaker 2: the foreign buyers have been in the big metro markets. 123 00:06:17,600 --> 00:06:22,360 Speaker 2: What are the banks saying about will they underwrite commercial 124 00:06:22,360 --> 00:06:24,840 Speaker 2: real estate today? Are they? Are they making loans? Are 125 00:06:24,839 --> 00:06:28,080 Speaker 2: they trying to say? Are they refinancing? Are they how's 126 00:06:28,080 --> 00:06:30,160 Speaker 2: it typically happening? Because if I have to go refinance 127 00:06:30,200 --> 00:06:32,839 Speaker 2: a real estate loan in Topeka, I gotta pay a 128 00:06:32,839 --> 00:06:33,680 Speaker 2: lot more interest rate. 129 00:06:33,760 --> 00:06:35,520 Speaker 3: Yeah, You're gonna have to pay a lot more interest rate. 130 00:06:35,560 --> 00:06:37,279 Speaker 3: What they're what the banks are doing is trying to 131 00:06:37,320 --> 00:06:41,479 Speaker 3: make sure that the existing bioer can repay and maybe 132 00:06:41,480 --> 00:06:43,640 Speaker 3: in Jeck some equity into it. Because the value of 133 00:06:43,640 --> 00:06:45,719 Speaker 3: that real estate is not what it was two, three, four, 134 00:06:45,760 --> 00:06:46,360 Speaker 3: five years ago. 135 00:06:46,480 --> 00:06:49,080 Speaker 1: Thomas showed question over. Keith Brey added, woods, are we 136 00:06:49,120 --> 00:06:50,720 Speaker 1: going to see m and A? What are we gonna 137 00:06:50,720 --> 00:06:52,680 Speaker 1: do here? Come on, Herman, I mean, it's got to 138 00:06:52,720 --> 00:06:53,880 Speaker 1: be mating season. 139 00:06:53,680 --> 00:06:57,159 Speaker 3: Right, it's got to be at this point. You see 140 00:06:57,240 --> 00:07:00,960 Speaker 3: all these banks, and especially the banks that are wobbling, 141 00:07:01,160 --> 00:07:05,160 Speaker 3: and then any other management team is going to be 142 00:07:05,600 --> 00:07:08,240 Speaker 3: is going to be a bit shaken what happened. So 143 00:07:08,320 --> 00:07:12,360 Speaker 3: I think bigger, bigger is better and need for scale 144 00:07:12,600 --> 00:07:16,080 Speaker 3: is something that I think the industry needs a consolidate 145 00:07:16,120 --> 00:07:17,000 Speaker 3: and create the value. 146 00:07:17,000 --> 00:07:19,640 Speaker 1: Add go to the Bloomberg terminal, look at Bloomberg Intelligence. 147 00:07:19,720 --> 00:07:22,480 Speaker 1: Herman Chan c ch A and Herman Chan is just 148 00:07:22,760 --> 00:07:28,720 Speaker 1: absolutely encyclopedic on the regional banks, not so much the 149 00:07:28,760 --> 00:07:31,320 Speaker 1: hot air the emotion of it, but the actual matthewness 150 00:07:31,920 --> 00:07:32,800 Speaker 1: of where we're. 151 00:07:32,640 --> 00:07:33,160 Speaker 2: Going to be in. 152 00:07:43,440 --> 00:07:45,360 Speaker 1: Pall Swunian time, keen, and we're going to do now 153 00:07:45,400 --> 00:07:48,600 Speaker 1: for Global Wall Street. We're going to get wonky. We're 154 00:07:48,600 --> 00:07:51,239 Speaker 1: going to edge on the edge of Imperial College in London, 155 00:07:51,480 --> 00:07:54,480 Speaker 1: n Yu Currant in a small shop and the rivers 156 00:07:54,880 --> 00:07:57,880 Speaker 1: of Boston the Charles River of Boston. That would be 157 00:07:57,920 --> 00:08:02,200 Speaker 1: the Massachusetts Institute of Technology. That can only mean Katie Kimsky, 158 00:08:02,760 --> 00:08:06,480 Speaker 1: Katie Kaminski joins us with Andre Loo's Elpha. Simplex, folks. 159 00:08:06,480 --> 00:08:08,640 Speaker 1: This is going to be a little bit of jargon laced, 160 00:08:08,960 --> 00:08:11,800 Speaker 1: but it's going to give you a window into how 161 00:08:11,840 --> 00:08:15,240 Speaker 1: the animals in the derivative space think. Katie, I have 162 00:08:15,400 --> 00:08:18,440 Speaker 1: up in front of me the Magnificent Seven, and I've 163 00:08:18,480 --> 00:08:24,240 Speaker 1: got a five trend quant log chart up. I have 164 00:08:24,360 --> 00:08:30,040 Speaker 1: the Magnificent seven on trend with log convexity. I've got 165 00:08:30,120 --> 00:08:33,839 Speaker 1: room to run. I'm up only at two standard deviations 166 00:08:33,920 --> 00:08:36,920 Speaker 1: up among those seven stocks. And maybe there's an argument 167 00:08:36,920 --> 00:08:39,680 Speaker 1: about is Tesla in it or though can you do 168 00:08:39,880 --> 00:08:44,880 Speaker 1: trend analysis on this historic moment, this Magnificent seven? 169 00:08:45,960 --> 00:08:48,280 Speaker 4: Well, I mean, I think if you look at the 170 00:08:48,280 --> 00:08:52,120 Speaker 4: Magnificent seven, they have been the ballast for US markets 171 00:08:52,320 --> 00:08:56,760 Speaker 4: and they have driven a divergence trade for the US. 172 00:08:56,840 --> 00:08:59,000 Speaker 5: It's put the US in a much better position. 173 00:08:59,120 --> 00:09:02,000 Speaker 4: But as we know, the trend can keep going longer 174 00:09:02,040 --> 00:09:05,200 Speaker 4: than you think it can. And that's what we continue 175 00:09:05,240 --> 00:09:08,440 Speaker 4: to see is that there's still continued strength in that 176 00:09:08,559 --> 00:09:11,199 Speaker 4: trend despite some critics. 177 00:09:11,120 --> 00:09:12,800 Speaker 1: Is that trend LinkedIn I'm going to go over to 178 00:09:12,800 --> 00:09:16,280 Speaker 1: the fundamental world away from alpha simplex, which is this 179 00:09:16,440 --> 00:09:20,440 Speaker 1: new belief in an annuitization. And frankly, folks, I'm talking 180 00:09:20,480 --> 00:09:22,640 Speaker 1: the Bloomberg book here. This is what we do with 181 00:09:22,720 --> 00:09:25,240 Speaker 1: the Bloomberg terminal. It's been a real gift to us 182 00:09:25,559 --> 00:09:30,360 Speaker 1: over thirty years plus. But the annuitization of free cash flow, 183 00:09:30,640 --> 00:09:35,000 Speaker 1: the annuitization of that hunk of money at the EBITDA line, 184 00:09:35,280 --> 00:09:39,400 Speaker 1: does that fold over into your technical analysis as a 185 00:09:39,480 --> 00:09:44,040 Speaker 1: force and an inertial force to a higher priced Magnificent seven. 186 00:09:45,240 --> 00:09:47,440 Speaker 4: Well, I mean, I think as you said, I mean, 187 00:09:47,480 --> 00:09:51,080 Speaker 4: we're much more of a technical trader, and at the 188 00:09:51,200 --> 00:09:53,520 Speaker 4: end the fundamentals become clear. 189 00:09:53,679 --> 00:09:56,240 Speaker 5: But what you've really seen is resilience. 190 00:09:56,360 --> 00:10:01,800 Speaker 4: They're in prices for those technical and there doesn't seem 191 00:10:01,840 --> 00:10:06,040 Speaker 4: to be any indication that that's abating. And the other 192 00:10:06,080 --> 00:10:08,840 Speaker 4: thing that's interesting to me is that, you know, if 193 00:10:08,880 --> 00:10:11,640 Speaker 4: you look at where we are, even with higher rates, 194 00:10:11,679 --> 00:10:15,520 Speaker 4: those type of companies should be more duration sensitive, and 195 00:10:15,679 --> 00:10:16,120 Speaker 4: they've been. 196 00:10:16,400 --> 00:10:17,560 Speaker 5: They've wavered the storm. 197 00:10:17,760 --> 00:10:20,400 Speaker 4: So perhaps it's perhaps it's you know, sort of the 198 00:10:20,440 --> 00:10:23,319 Speaker 4: future is the value in the future is more technology 199 00:10:24,280 --> 00:10:27,199 Speaker 4: than what we're used to thinking about for value companies. 200 00:10:27,640 --> 00:10:29,640 Speaker 2: Hey, Katie, I know you guys at Alpha Simplex or 201 00:10:30,000 --> 00:10:35,480 Speaker 2: as you mentioned, technical uh focused, you're also global. Where's 202 00:10:35,559 --> 00:10:39,199 Speaker 2: the global relative value? I actually, for the first time 203 00:10:39,240 --> 00:10:41,680 Speaker 2: in twenty or twenty five years, I hear people talking 204 00:10:41,679 --> 00:10:44,600 Speaker 2: about Japan here, So I'm wondering, where's the relative value 205 00:10:44,600 --> 00:10:45,000 Speaker 2: out there? 206 00:10:45,800 --> 00:10:48,720 Speaker 4: So the interesting thing that we have seen, and this 207 00:10:48,880 --> 00:10:50,559 Speaker 4: is something that we can talk about this in a 208 00:10:50,559 --> 00:10:54,120 Speaker 4: minute because I'm a little I'm always nervous. You've seen 209 00:10:54,320 --> 00:10:58,520 Speaker 4: very strong signals in the US and Japan, and you've 210 00:10:58,520 --> 00:11:00,920 Speaker 4: seen very weak signals in China. 211 00:11:01,040 --> 00:11:02,800 Speaker 5: In fact, China's been down. 212 00:11:02,640 --> 00:11:06,160 Speaker 4: For two years and almost fifty percent if you look 213 00:11:06,160 --> 00:11:08,800 Speaker 4: at the A fifty. So that to me is something 214 00:11:09,000 --> 00:11:14,640 Speaker 4: very interesting that this huge divergence across performance. Albeit that 215 00:11:14,720 --> 00:11:16,720 Speaker 4: you know, we just talked about the tech names really 216 00:11:16,760 --> 00:11:19,640 Speaker 4: being a leader for the US. But the question for 217 00:11:19,720 --> 00:11:22,560 Speaker 4: that that all comes back to inflation too, is if 218 00:11:22,679 --> 00:11:25,600 Speaker 4: China has been down so much, they're a huge driver 219 00:11:25,760 --> 00:11:29,640 Speaker 4: of demand for raw commodities and the commodity sector, is 220 00:11:29,720 --> 00:11:33,080 Speaker 4: that the missing sort of key component that has driven 221 00:11:33,120 --> 00:11:37,040 Speaker 4: inflation down in the short term is that China is 222 00:11:37,080 --> 00:11:39,080 Speaker 4: a big player and they've definitely been in the bunker. 223 00:11:39,600 --> 00:11:42,319 Speaker 2: They have been and I'm not sure if it's technical 224 00:11:42,440 --> 00:11:46,920 Speaker 2: or just the fundamentals of is China even investible here? 225 00:11:46,960 --> 00:11:50,040 Speaker 2: So I'm guessing your technical signals are flashing pretty green 226 00:11:50,920 --> 00:11:54,360 Speaker 2: for China. But then how do you overlay I guess 227 00:11:54,440 --> 00:11:57,240 Speaker 2: the fundamental just kind of country risk factor. 228 00:11:58,200 --> 00:12:00,000 Speaker 5: Oh well, I think that's definitely an issue. 229 00:12:00,120 --> 00:12:03,640 Speaker 4: I think what we're more concerned about is is there 230 00:12:03,720 --> 00:12:07,280 Speaker 4: a stimulus package? Is there a way out of that 231 00:12:07,400 --> 00:12:12,000 Speaker 4: trend which causes increased demand for commodities because we've kind 232 00:12:12,000 --> 00:12:13,560 Speaker 4: of like forgotten about China. 233 00:12:13,960 --> 00:12:16,680 Speaker 5: If they get back in the game, things change. 234 00:12:16,800 --> 00:12:20,360 Speaker 4: I mean, if they increase their demand for commodities, you'll 235 00:12:20,360 --> 00:12:21,080 Speaker 4: see that change. 236 00:12:21,120 --> 00:12:23,880 Speaker 1: But the heart of the matter here, Katie, is the 237 00:12:23,960 --> 00:12:26,440 Speaker 1: stochastic view of catching the knife in the dark, and 238 00:12:26,520 --> 00:12:28,959 Speaker 1: right now China is a knife coming down, down, down. 239 00:12:29,520 --> 00:12:31,800 Speaker 1: What you're saying, and Andrew Lows saying, is you've got 240 00:12:31,840 --> 00:12:35,720 Speaker 1: to find trend when China turns, and let's be optimistic 241 00:12:35,760 --> 00:12:40,040 Speaker 1: and believe a society has to when China turns. How 242 00:12:40,040 --> 00:12:43,800 Speaker 1: do you know when to get on board a nascent 243 00:12:44,040 --> 00:12:45,040 Speaker 1: China bull market? 244 00:12:46,120 --> 00:12:48,320 Speaker 4: So we're not seeing I mean, we're starting to see 245 00:12:48,320 --> 00:12:50,920 Speaker 4: some indications this week. I mean people have been looking 246 00:12:51,000 --> 00:12:53,960 Speaker 4: for a bottom in that market for some time now, 247 00:12:54,360 --> 00:12:56,679 Speaker 4: but we need to see confirmation in the data, and 248 00:12:56,720 --> 00:12:58,079 Speaker 4: we haven't seen that yet. 249 00:12:58,559 --> 00:13:00,839 Speaker 5: I think people are nervous right now because. 250 00:13:00,600 --> 00:13:03,520 Speaker 4: It is the holiday season and you know how far 251 00:13:03,600 --> 00:13:05,520 Speaker 4: that trend has really gone a long way. 252 00:13:05,720 --> 00:13:09,440 Speaker 1: You know, you got some parchment from MIT. I mean, 253 00:13:09,480 --> 00:13:11,360 Speaker 1: you know she does like doublele and you know a 254 00:13:11,440 --> 00:13:15,080 Speaker 1: bunch of other fancy degrees thought about it's off furymed Katie. 255 00:13:15,080 --> 00:13:17,640 Speaker 1: But I want to go all eric Rinjelsnania. Can we 256 00:13:17,679 --> 00:13:20,679 Speaker 1: do that? Is it okay? If I go rieln On 257 00:13:20,760 --> 00:13:23,640 Speaker 1: you what is this AI stuff? I mean I get 258 00:13:23,679 --> 00:13:28,160 Speaker 1: the idea Chat, gpt works, Microsoft co Pilot, Azure, blah 259 00:13:28,200 --> 00:13:31,960 Speaker 1: blah blah, But you how about what portion, Katie Kaminsky 260 00:13:32,080 --> 00:13:34,640 Speaker 1: of AI is hot air. 261 00:13:36,040 --> 00:13:40,320 Speaker 4: So AI is great for solving some simple problems and 262 00:13:40,480 --> 00:13:45,119 Speaker 4: to deal with data and to analyze lots of information 263 00:13:45,280 --> 00:13:48,560 Speaker 4: in an efficient way. We see it in our space 264 00:13:48,679 --> 00:13:52,640 Speaker 4: more for things like execution, just dealing with very complex, 265 00:13:52,840 --> 00:13:56,280 Speaker 4: complicated data sets and distilling that down into information. 266 00:13:57,000 --> 00:14:00,280 Speaker 5: I think the idea that you're going to let AI trade. 267 00:14:00,080 --> 00:14:03,360 Speaker 4: Your money is still very far away, at least for 268 00:14:03,520 --> 00:14:04,960 Speaker 4: my personal view as well. 269 00:14:05,040 --> 00:14:07,120 Speaker 5: But it is a tool. 270 00:14:06,760 --> 00:14:10,520 Speaker 4: To help us to analyze more things in less time 271 00:14:10,640 --> 00:14:13,600 Speaker 4: and automate a lot of things that you know, could 272 00:14:13,600 --> 00:14:15,559 Speaker 4: make our focus onto something else. 273 00:14:15,600 --> 00:14:17,280 Speaker 5: So that's kind of how I see it. 274 00:14:17,280 --> 00:14:19,760 Speaker 4: It is the future, but it has to be taken 275 00:14:19,880 --> 00:14:22,920 Speaker 4: with trust and with understandability. 276 00:14:23,480 --> 00:14:25,960 Speaker 2: Yeah, it seems like I'm one of the questions I 277 00:14:26,000 --> 00:14:28,240 Speaker 2: asked the tech analyst Katie when we have them on 278 00:14:28,400 --> 00:14:32,120 Speaker 2: is how much of you know, is AI capital spending 279 00:14:32,240 --> 00:14:34,680 Speaker 2: or just development of AI? How much is that just 280 00:14:35,360 --> 00:14:37,720 Speaker 2: taking is it new money? Is it new spending on 281 00:14:37,760 --> 00:14:40,320 Speaker 2: AI or is it just just moving it from some 282 00:14:40,400 --> 00:14:43,520 Speaker 2: other it budgets and things like that. So from your perspective, 283 00:14:43,800 --> 00:14:47,760 Speaker 2: just from the you know, the academics, is AI really 284 00:14:47,920 --> 00:14:50,000 Speaker 2: new or is it just taking the next step in 285 00:14:50,600 --> 00:14:51,800 Speaker 2: making everything more techy. 286 00:14:53,400 --> 00:14:54,800 Speaker 5: A is definitely not new. 287 00:14:55,160 --> 00:14:58,240 Speaker 4: It's just about can we find new applications for it 288 00:14:58,640 --> 00:15:01,400 Speaker 4: and are there ways see this In the financial sector, 289 00:15:01,400 --> 00:15:04,640 Speaker 4: It's interesting all the large firms have really invested in 290 00:15:04,840 --> 00:15:08,160 Speaker 4: AI because they know they need to be there, and 291 00:15:08,200 --> 00:15:10,360 Speaker 4: they're still trying to sort out Okay, how do we 292 00:15:10,440 --> 00:15:12,960 Speaker 4: use it and what are the applications? So I think 293 00:15:13,000 --> 00:15:17,320 Speaker 4: it's it's the next phase and there's the adoption, but 294 00:15:17,480 --> 00:15:18,760 Speaker 4: the application is still unclear. 295 00:15:18,800 --> 00:15:21,600 Speaker 1: He Katie one found a questionnaire. My quota of the 296 00:15:21,640 --> 00:15:23,680 Speaker 1: year last year was a guy named Ta Leb. He's 297 00:15:23,680 --> 00:15:27,000 Speaker 1: pretty good and derivatives and that seeing Taleb said, the 298 00:15:27,080 --> 00:15:29,720 Speaker 1: gravity's returned, And that's really what's going on here. We 299 00:15:29,800 --> 00:15:31,760 Speaker 1: finally have interest rates up, We've got a risk for 300 00:15:31,840 --> 00:15:35,920 Speaker 1: you rate, We've got a legitimate, calculable sharp ratio. You know, 301 00:15:36,000 --> 00:15:39,200 Speaker 1: all the mumbo jumbo as well. Can there be too 302 00:15:39,320 --> 00:15:42,480 Speaker 1: much gravity? Can there be too much like a higher 303 00:15:42,520 --> 00:15:45,880 Speaker 1: real rate that gums up our investment horizon? 304 00:15:47,200 --> 00:15:48,960 Speaker 5: So I think that's a great point. 305 00:15:49,000 --> 00:15:52,320 Speaker 4: I mean, I think for us, everybody's sitting around hoping 306 00:15:52,840 --> 00:15:55,600 Speaker 4: for lower rates because who doesn't like that? But the 307 00:15:55,680 --> 00:15:59,400 Speaker 4: truth is that's not the normal equilibrium. And I think 308 00:15:59,680 --> 00:16:01,840 Speaker 4: what you're seeing as well as I mean, do you 309 00:16:01,880 --> 00:16:03,359 Speaker 4: think policy is restrictive? 310 00:16:03,440 --> 00:16:03,600 Speaker 3: Now? 311 00:16:04,320 --> 00:16:04,880 Speaker 5: I don't think so. 312 00:16:06,960 --> 00:16:10,080 Speaker 1: Lisa Minteo, did you see how Kaminsky did that? Who's 313 00:16:10,160 --> 00:16:13,560 Speaker 1: running this program? Do I think things are restrictive? There's 314 00:16:13,600 --> 00:16:15,120 Speaker 1: a lot of people out there going to come on, 315 00:16:15,200 --> 00:16:19,920 Speaker 1: Tom answer, Oh look Mike from rebuta to see be 316 00:16:19,960 --> 00:16:24,640 Speaker 1: able to say. Don't answer, Katie Kaminski, go away. You're 317 00:16:24,720 --> 00:16:29,200 Speaker 1: restrictive but also accommodative as well, Katrin Kaminsky. Folks with 318 00:16:29,400 --> 00:16:36,800 Speaker 1: Alpha Simplex can't say enough about their work. We're gonna 319 00:16:36,800 --> 00:16:39,520 Speaker 1: stop the show right now and take a broader view 320 00:16:39,680 --> 00:16:43,000 Speaker 1: kind of Leon So c if RA a research usually 321 00:16:43,040 --> 00:16:45,360 Speaker 1: joins us in the big bank days. He does not 322 00:16:45,720 --> 00:16:48,880 Speaker 1: cover the regional banks, and there's also of legal issues. 323 00:16:48,920 --> 00:16:51,200 Speaker 1: You don't talk about what you don't cover. But his 324 00:16:51,320 --> 00:16:54,840 Speaker 1: research director for CFRA, We're going to take a broader 325 00:16:54,960 --> 00:16:58,080 Speaker 1: view of the nyc B tobacco and not speak to 326 00:16:58,160 --> 00:17:01,760 Speaker 1: him about the individual's securities. Ken, What are the government 327 00:17:01,920 --> 00:17:06,280 Speaker 1: doing right now? I mean, this is a dibaccle commercial 328 00:17:06,320 --> 00:17:09,439 Speaker 1: real estate, a tobacco, this singular bank. Maybe there'll be 329 00:17:09,520 --> 00:17:13,399 Speaker 1: others like them. What are government institutions like the FED 330 00:17:14,119 --> 00:17:17,560 Speaker 1: institutions in Washington in this case Albany, what are they 331 00:17:17,600 --> 00:17:18,359 Speaker 1: doing right now? 332 00:17:19,520 --> 00:17:22,359 Speaker 6: Great to be with you, Tom, And what's going on 333 00:17:22,400 --> 00:17:27,399 Speaker 6: in Washington is we had comments this week from the 334 00:17:27,440 --> 00:17:30,959 Speaker 6: head of the OCC that m and A for the 335 00:17:31,000 --> 00:17:35,719 Speaker 6: banks is going to be tougher, and also there's going 336 00:17:35,760 --> 00:17:39,720 Speaker 6: to be significant capital built for most of the banks. 337 00:17:40,760 --> 00:17:44,040 Speaker 6: And what this means, I think for investors is that 338 00:17:44,520 --> 00:17:48,960 Speaker 6: we're not going to see systemic bank failure of the industry, 339 00:17:49,760 --> 00:17:53,639 Speaker 6: but we're going to see kind of situations as we 340 00:17:53,680 --> 00:17:58,000 Speaker 6: did with New York community banks. So I think it 341 00:17:58,160 --> 00:18:01,639 Speaker 6: just has to be put in the right placement that 342 00:18:01,680 --> 00:18:05,600 Speaker 6: this is not going back to March twenty twenty three, 343 00:18:06,400 --> 00:18:09,040 Speaker 6: but it's something that gets the attention of the market. 344 00:18:09,240 --> 00:18:12,399 Speaker 1: If the industry struggles with this gets the attention of 345 00:18:12,440 --> 00:18:17,280 Speaker 1: the market and there's smaller institutions, does that lead to 346 00:18:17,480 --> 00:18:20,919 Speaker 1: more consolidation of the industry. 347 00:18:21,640 --> 00:18:24,600 Speaker 6: There is, and there are still four thousand banks in 348 00:18:24,640 --> 00:18:28,720 Speaker 6: the United States. Regularly, Tom we speak about the big 349 00:18:28,880 --> 00:18:33,800 Speaker 6: six that dominate and are gaining market share and expanding 350 00:18:34,280 --> 00:18:39,720 Speaker 6: across the US. So again, it's what's happening with really 351 00:18:39,800 --> 00:18:43,240 Speaker 6: small banks that might have founders that want to sell 352 00:18:43,320 --> 00:18:48,399 Speaker 6: because there's no succession. In some instances, you're going to 353 00:18:48,440 --> 00:18:52,359 Speaker 6: see these elevated risks for real estate for those that 354 00:18:52,480 --> 00:18:55,719 Speaker 6: have a high percentage of their loan book related to 355 00:18:55,760 --> 00:18:57,040 Speaker 6: some troubled real estate. 356 00:18:58,040 --> 00:19:00,240 Speaker 2: And can I guess what a lot of investors trying 357 00:19:00,280 --> 00:19:01,960 Speaker 2: to get a handle of And it was literally a 358 00:19:02,080 --> 00:19:04,520 Speaker 2: year ago that we had some problems with some of 359 00:19:04,520 --> 00:19:07,800 Speaker 2: the regional banks on the West Coast, and now we've 360 00:19:07,800 --> 00:19:10,520 Speaker 2: got the New York Community Bank. So what are the 361 00:19:10,520 --> 00:19:13,520 Speaker 2: good folks at CFOA. Are you concerned about the status 362 00:19:13,560 --> 00:19:16,720 Speaker 2: of just kind of the regional banking system in general, 363 00:19:16,880 --> 00:19:19,240 Speaker 2: or again, can we chalk this up to some more 364 00:19:19,480 --> 00:19:21,840 Speaker 2: just specific idiosyncratic issues. 365 00:19:22,680 --> 00:19:24,879 Speaker 6: It's a good question. If you go back in time 366 00:19:25,000 --> 00:19:28,840 Speaker 6: over decades, you know, a bank analyst would say by region, 367 00:19:28,920 --> 00:19:31,919 Speaker 6: you might have more exposure to Texas banks if the 368 00:19:32,080 --> 00:19:37,000 Speaker 6: energy industry was failing in this situation. Today we go 369 00:19:37,080 --> 00:19:40,600 Speaker 6: through really rigorous bank metrics and to see who is 370 00:19:40,720 --> 00:19:45,520 Speaker 6: under reserve, who has not really not had a good 371 00:19:45,560 --> 00:19:50,760 Speaker 6: balance in terms of diversifying their loans and in situations 372 00:19:50,800 --> 00:19:55,040 Speaker 6: of in this case commercial real estate, it's going to 373 00:19:55,119 --> 00:20:00,240 Speaker 6: be those banks with assets perhaps of fifty bill million 374 00:20:00,480 --> 00:20:01,480 Speaker 6: to one hundred billion. 375 00:20:01,560 --> 00:20:03,679 Speaker 1: It could be at rest Kin Leon was his director 376 00:20:03,760 --> 00:20:08,920 Speaker 1: research at CFIRA. Previously scheduled to be on Disney. Oh 377 00:20:09,080 --> 00:20:11,440 Speaker 1: they report airnings after the club joining us. Now ken 378 00:20:11,520 --> 00:20:16,399 Speaker 1: Leon bank expert on the don't bank on Disney. I 379 00:20:16,440 --> 00:20:18,479 Speaker 1: guess is it or the other media stax Paul, why 380 00:20:18,480 --> 00:20:21,520 Speaker 1: don't you talk to Kenn Lean about absolutely dibaccle known 381 00:20:21,520 --> 00:20:22,600 Speaker 1: as Disney Ken. 382 00:20:22,600 --> 00:20:24,560 Speaker 2: So we've got Disney after the close, and there's a 383 00:20:24,800 --> 00:20:28,000 Speaker 2: million issues to discuss. But I guess the latest one 384 00:20:28,080 --> 00:20:29,879 Speaker 2: is just kind of what we heard the announcement today 385 00:20:29,920 --> 00:20:33,639 Speaker 2: that you know, Disney's gonna hook up with you know, 386 00:20:33,720 --> 00:20:39,080 Speaker 2: Warner Brothers, Discovery and Fox to create a standing sports 387 00:20:39,080 --> 00:20:41,800 Speaker 2: streaming offering. I didn't see that coming, do you. What 388 00:20:41,800 --> 00:20:42,760 Speaker 2: do you think is going on there? 389 00:20:43,520 --> 00:20:44,080 Speaker 1: Good for that? 390 00:20:44,480 --> 00:20:46,960 Speaker 6: So, you know, I think when you look at Disney, 391 00:20:47,200 --> 00:20:52,560 Speaker 6: Warner Brothers, Discovery and also Fox, they basically were victims 392 00:20:52,760 --> 00:20:56,160 Speaker 6: to the NFL and other major sports leagues of spending 393 00:20:56,200 --> 00:21:00,080 Speaker 6: billions of dollars. It still continues. But putting them all 394 00:21:00,119 --> 00:21:04,040 Speaker 6: together and putting them in a package for streaming, this 395 00:21:04,080 --> 00:21:06,040 Speaker 6: gives them an opportunity to have a little bit more 396 00:21:06,119 --> 00:21:10,440 Speaker 6: pricing power to defend. And also it puts at risk 397 00:21:10,520 --> 00:21:14,000 Speaker 6: those that are not in this droika, which would be 398 00:21:14,480 --> 00:21:19,080 Speaker 6: comcast with Peacock. We saw what happened with viewers infumed 399 00:21:19,480 --> 00:21:25,120 Speaker 6: when the Miami game was not on NBC but on Peacock. 400 00:21:25,720 --> 00:21:28,240 Speaker 6: So you know, I think there's a lot of moving 401 00:21:28,320 --> 00:21:33,240 Speaker 6: parts here, but essentially what we're seeing as an opportunity 402 00:21:33,840 --> 00:21:37,400 Speaker 6: to really get more rational pricing. But Disney's got more 403 00:21:37,520 --> 00:21:40,600 Speaker 6: to say later today after the closed because they're still 404 00:21:40,640 --> 00:21:46,040 Speaker 6: looking for an equity investor into ESPN besides this partnership 405 00:21:46,080 --> 00:21:49,160 Speaker 6: with Fox and Warner Brothers Discovery. And that's a deep 406 00:21:49,280 --> 00:21:53,760 Speaker 6: risking by Eiger about ESPN because you're falling off the 407 00:21:53,800 --> 00:21:55,680 Speaker 6: cliffs in terms of table viewers. 408 00:21:55,760 --> 00:21:59,000 Speaker 1: Paul on your head, what's your percentage of investment in 409 00:21:59,280 --> 00:22:03,200 Speaker 1: ESPN by dreaded outsider? Is it like a minority five 410 00:22:03,200 --> 00:22:04,719 Speaker 1: to ten percent? Bigger? 411 00:22:04,760 --> 00:22:06,959 Speaker 2: I think it'd be bigger. I think particularly if it's 412 00:22:07,000 --> 00:22:09,080 Speaker 2: a big entity like the NFL, I think they would 413 00:22:09,080 --> 00:22:10,840 Speaker 2: not be a controlling stake, but it would be a 414 00:22:10,920 --> 00:22:13,320 Speaker 2: large stake so that they would have multiple seats at 415 00:22:13,320 --> 00:22:15,600 Speaker 2: the table. And Ken, I guess you know, what do 416 00:22:15,600 --> 00:22:18,159 Speaker 2: you think is the big I don't know what do 417 00:22:18,160 --> 00:22:20,800 Speaker 2: you think Bob Iger needs to do here this afternoon 418 00:22:20,840 --> 00:22:23,840 Speaker 2: on this conference call because the stock you know, investors 419 00:22:23,920 --> 00:22:26,639 Speaker 2: used to love this name that I just get the 420 00:22:26,680 --> 00:22:28,600 Speaker 2: sense they have no idea what to do with this story. 421 00:22:29,640 --> 00:22:32,520 Speaker 6: Well, they're beginning to prone assets. They may have something 422 00:22:32,560 --> 00:22:35,680 Speaker 6: to say in NDA, which was never it was an 423 00:22:35,720 --> 00:22:40,400 Speaker 6: either of assets but not profitable, so selling that business. 424 00:22:41,119 --> 00:22:43,439 Speaker 6: And as Tom knows, you got James Gorman now on 425 00:22:43,480 --> 00:22:46,840 Speaker 6: the board of Disney. So looking for businesses that have 426 00:22:47,000 --> 00:22:51,240 Speaker 6: durable revenues and really have the magic of Disney will 427 00:22:51,280 --> 00:22:53,840 Speaker 6: be the thing in parts and renewing film. So I 428 00:22:53,880 --> 00:22:55,119 Speaker 6: think that's a big change. 429 00:22:55,320 --> 00:22:58,080 Speaker 1: Ken, What do you do? You said, grizzled pro You know, 430 00:22:58,080 --> 00:22:59,840 Speaker 1: I was going back looking. Get to read the back 431 00:22:59,880 --> 00:23:02,280 Speaker 1: of the seventies. You know, all good things in trees 432 00:23:02,320 --> 00:23:04,920 Speaker 1: don't grow to the sky. Rumor thank you Goldbin Sex 433 00:23:04,960 --> 00:23:08,520 Speaker 1: for that quote. The Weinberg family, you know, Kelly, and 434 00:23:08,600 --> 00:23:11,040 Speaker 1: help me here, what do you do with a magnificent seven? 435 00:23:13,080 --> 00:23:18,840 Speaker 6: So for CFRA, what we see again is valuations that 436 00:23:18,920 --> 00:23:24,440 Speaker 6: still seem reasonable for most. It becomes challenging for investors 437 00:23:24,440 --> 00:23:27,480 Speaker 6: when you look at the overall stock market because of 438 00:23:27,520 --> 00:23:32,119 Speaker 6: the significant weighting that these stocks have. I don't believe 439 00:23:32,160 --> 00:23:35,919 Speaker 6: it's like really in my career when we had the 440 00:23:36,000 --> 00:23:39,320 Speaker 6: tech boom bust, because these are our businesses that are 441 00:23:39,359 --> 00:23:44,199 Speaker 6: throwing off enormous cash flow and are also innovating to 442 00:23:44,359 --> 00:23:48,359 Speaker 6: drive organic revenue growth. It's a little bit different, but 443 00:23:48,440 --> 00:23:50,840 Speaker 6: I never like to say this time is different than 444 00:23:50,880 --> 00:23:54,320 Speaker 6: the others, whether it's the nifty to fifty back way 445 00:23:54,320 --> 00:23:57,680 Speaker 6: in time. So I think investors have to be prudent. 446 00:23:57,920 --> 00:24:02,280 Speaker 6: Diversification does make sense, but it's an outsized waiting of 447 00:24:02,320 --> 00:24:05,240 Speaker 6: the entire s and P five hundred comes from the 448 00:24:05,240 --> 00:24:07,800 Speaker 6: Magnificent seven. But I'll give you one more tom. In 449 00:24:07,880 --> 00:24:10,679 Speaker 6: the financial sector, which you know we talked about the 450 00:24:10,720 --> 00:24:15,639 Speaker 6: banks being so challenging, there's about twelve stocks that are 451 00:24:15,760 --> 00:24:18,880 Speaker 6: seventy percent of the financial sector. So if you're a 452 00:24:18,880 --> 00:24:21,080 Speaker 6: fund manager and you say I want to be overweight 453 00:24:21,200 --> 00:24:25,080 Speaker 6: the financial sector as CFI does, it really gets to 454 00:24:25,160 --> 00:24:30,560 Speaker 6: names like Berkshire, Hathaway, American Express, MasterCard, Visa, JP, Morgan Chase, 455 00:24:31,040 --> 00:24:33,480 Speaker 6: and others. So it's a big difference. So I think 456 00:24:33,600 --> 00:24:37,239 Speaker 6: that's the conversation, what is the big constituents of the 457 00:24:37,320 --> 00:24:41,320 Speaker 6: market max seven or in any sector, And that's how 458 00:24:41,480 --> 00:24:43,159 Speaker 6: CFA thinks about our waitings. 459 00:24:43,200 --> 00:24:44,800 Speaker 1: You can't get to leave it there. Thank you so much. 460 00:24:44,840 --> 00:24:57,680 Speaker 1: Ken lean with us here today's front page headlines. You know, 461 00:24:57,720 --> 00:25:00,640 Speaker 1: we had like eighteen ideas in the newspapers to what'd 462 00:25:00,680 --> 00:25:01,320 Speaker 1: you top it with? 463 00:25:01,800 --> 00:25:02,760 Speaker 7: Going crazy this morning? 464 00:25:02,760 --> 00:25:02,960 Speaker 2: I know? 465 00:25:03,640 --> 00:25:05,320 Speaker 7: All right, So this first one stood out to me. 466 00:25:05,359 --> 00:25:07,680 Speaker 7: This from the New York Times. There's been a rise 467 00:25:07,720 --> 00:25:11,320 Speaker 7: in the use of psychedelic mushrooms. This is becoming popular. 468 00:25:11,400 --> 00:25:14,560 Speaker 7: There was a study that says that law enforcement they're confiscating, 469 00:25:14,680 --> 00:25:17,920 Speaker 7: confiscating more of it. It's illegal right under federal law, 470 00:25:18,000 --> 00:25:21,120 Speaker 7: but it's getting popularity because people are using as therapy. 471 00:25:21,200 --> 00:25:23,480 Speaker 7: They're saying that it may be useful in treating depressions. 472 00:25:23,480 --> 00:25:26,200 Speaker 7: So a lot more people are taking it. But experts 473 00:25:26,200 --> 00:25:29,560 Speaker 7: are saying that hype. It's really moving faster than the science. 474 00:25:30,480 --> 00:25:32,800 Speaker 7: There's some states that are moving to legalize it. You 475 00:25:32,840 --> 00:25:36,920 Speaker 7: have Oregon, Colorado, it's legal there for therapy. Okay, yes, 476 00:25:38,040 --> 00:25:41,200 Speaker 7: But the New York Times actually had a Wallsteret Journal 477 00:25:41,240 --> 00:25:43,840 Speaker 7: had an article about it. How more high powered working 478 00:25:44,040 --> 00:25:49,160 Speaker 7: moms are using magic mush wise just to take the edge. 479 00:25:48,920 --> 00:25:53,800 Speaker 1: Off a little. You know, that's why listen to berg surveillance. Yeah, 480 00:25:54,040 --> 00:25:56,720 Speaker 1: are we back to Timothy Leary in the early sixties. 481 00:25:56,840 --> 00:26:00,399 Speaker 7: I mean it's coming back. Some gummies were for no 482 00:26:01,280 --> 00:26:04,160 Speaker 7: apparently on that but because the gummies are legal, see, 483 00:26:04,160 --> 00:26:06,800 Speaker 7: this isn't legal too much. 484 00:26:07,080 --> 00:26:11,200 Speaker 1: That would be my I mean, okay, full discasure. I'm 485 00:26:11,240 --> 00:26:14,000 Speaker 1: not really ignored on this, but long agoing far away, 486 00:26:14,720 --> 00:26:17,600 Speaker 1: I remember Fred Brothers that took too much? Can you 487 00:26:17,640 --> 00:26:18,399 Speaker 1: take too much? 488 00:26:18,600 --> 00:26:21,360 Speaker 7: I bet the psychedelics, I'm not sure. I mean, I'm 489 00:26:21,359 --> 00:26:23,560 Speaker 7: sure it'll definitely affect you most definitely. 490 00:26:24,680 --> 00:26:27,560 Speaker 1: Room. Yes, you know, we don't know who that was, 491 00:26:27,680 --> 00:26:30,919 Speaker 1: but dark you guys are killing it. It's like a 492 00:26:31,000 --> 00:26:34,280 Speaker 1: Swiss watch in the control to control room next. 493 00:26:34,760 --> 00:26:36,800 Speaker 7: All right, if you're looking to get in shape in 494 00:26:36,840 --> 00:26:40,000 Speaker 7: the new year, the Wall Street Journal is saying, take 495 00:26:40,040 --> 00:26:43,760 Speaker 7: a break from drinking. Yes, yeah, Jim said, you already 496 00:26:43,760 --> 00:26:44,359 Speaker 7: got a pass. 497 00:26:45,040 --> 00:26:45,240 Speaker 2: Uh. 498 00:26:45,280 --> 00:26:47,560 Speaker 7: They're saying the dry January it helped out a lot 499 00:26:47,560 --> 00:26:50,480 Speaker 7: of people. But it depends on how much and how 500 00:26:50,600 --> 00:26:53,160 Speaker 7: often you drink. If you just keep it to let's 501 00:26:53,160 --> 00:26:55,080 Speaker 7: say the weekends, it might be a little bit better. 502 00:26:55,240 --> 00:26:58,440 Speaker 7: Full disclosure. I used to, you know, have a cocktail 503 00:26:58,520 --> 00:27:01,199 Speaker 7: or two every night during the week, every day, you know, 504 00:27:01,480 --> 00:27:04,600 Speaker 7: but dinner a glass of wine. And when I cut 505 00:27:04,640 --> 00:27:07,080 Speaker 7: that back and I left it to just like maybe 506 00:27:07,080 --> 00:27:11,479 Speaker 7: a Friday happy hour Saturday. You see, the difference are 507 00:27:11,680 --> 00:27:16,440 Speaker 7: so different. But there are they say their health benefits. 508 00:27:16,440 --> 00:27:18,480 Speaker 7: You sleep a little bit better, You get better sleep, 509 00:27:19,840 --> 00:27:22,480 Speaker 7: you're a little bit more rested. You know, people tend 510 00:27:22,520 --> 00:27:24,359 Speaker 7: to lose a little bit of weight when they do that. 511 00:27:24,440 --> 00:27:27,160 Speaker 7: But you know, it's it's up. It's up to everyone. 512 00:27:27,320 --> 00:27:35,440 Speaker 7: Not everyone is you know, like the lecture peering mushrooms 513 00:27:35,520 --> 00:27:36,760 Speaker 7: first and then. 514 00:27:37,600 --> 00:27:39,560 Speaker 1: Give it a beverage of rooms. 515 00:27:39,640 --> 00:27:40,480 Speaker 2: Is that what I'm doing there? 516 00:27:40,520 --> 00:27:43,840 Speaker 1: You can save us? What's next? 517 00:27:44,040 --> 00:27:46,240 Speaker 7: Okay, we've been talking a lot about this, you know, 518 00:27:46,320 --> 00:27:49,640 Speaker 7: the whole quote unquote Hulu is sports, right, you heard 519 00:27:49,680 --> 00:27:52,760 Speaker 7: Michael Barr talk about it, right, Walt Disney's ESPN, Fox, 520 00:27:52,800 --> 00:27:56,520 Speaker 7: Warner Brothers, Discovery. They're all launching this streaming sports service 521 00:27:56,520 --> 00:27:58,520 Speaker 7: in the fall, of course, right at the start of 522 00:27:58,520 --> 00:28:01,000 Speaker 7: the NFL College football see and just happens to be. 523 00:28:01,440 --> 00:28:03,360 Speaker 7: But I mean, you think about it. You got ESPN's 524 00:28:03,400 --> 00:28:07,119 Speaker 7: Monday Night Football, Foxes Sunday and NFL game March Madness 525 00:28:07,200 --> 00:28:10,399 Speaker 7: college basketball that's carried on Warner Brothers. But there's some 526 00:28:10,520 --> 00:28:12,119 Speaker 7: people missing out of this picture. 527 00:28:12,200 --> 00:28:16,520 Speaker 2: No foot Well, CBS, they've got a big NFL package, 528 00:28:16,640 --> 00:28:19,800 Speaker 2: NBC has the Sunday Night package. So I want to 529 00:28:19,840 --> 00:28:23,240 Speaker 2: see the backstory, which we'll get from somebody how this 530 00:28:23,359 --> 00:28:27,320 Speaker 2: came together? How these you know, these respiration desperation I 531 00:28:27,320 --> 00:28:28,200 Speaker 2: think is the call there? 532 00:28:28,240 --> 00:28:30,920 Speaker 1: Okay, so let's let's review this as Sweeney's like world 533 00:28:31,000 --> 00:28:33,080 Speaker 1: class on this. In the old days, we had one 534 00:28:33,119 --> 00:28:36,240 Speaker 1: hundred dollars cable bill yep. Without question, the biggest hunk 535 00:28:36,240 --> 00:28:40,000 Speaker 1: of that was the ESPN yep. Right. So with that said, 536 00:28:40,400 --> 00:28:44,280 Speaker 1: if we're pricing one hundred million dollars streaming things at 537 00:28:44,360 --> 00:28:46,640 Speaker 1: nine ninety nine a month, where do you think this 538 00:28:46,680 --> 00:28:47,560 Speaker 1: thing will price in? 539 00:28:47,840 --> 00:28:49,760 Speaker 2: Boy, it's not going to be ten or eleven bucks. 540 00:28:49,840 --> 00:28:52,520 Speaker 2: I don't think, like we're all used to for our hulus. 541 00:28:52,120 --> 00:28:54,640 Speaker 1: And our so we're going out and spending twenty something 542 00:28:54,800 --> 00:28:55,920 Speaker 1: or even forty. 543 00:28:55,680 --> 00:28:59,880 Speaker 2: Somethings, I think. So, I mean, ESPN alone is ten bucks. 544 00:29:00,040 --> 00:29:04,360 Speaker 1: So we're popping We're popping another three hundred dollars. You're 545 00:29:04,400 --> 00:29:06,120 Speaker 1: asking three hundred dollars a year. 546 00:29:06,280 --> 00:29:08,720 Speaker 2: Well, I think what happens since all the stuff we 547 00:29:08,800 --> 00:29:11,000 Speaker 2: pay for otherwise, like Max for example, I think if 548 00:29:11,040 --> 00:29:13,240 Speaker 2: I pay for Max, I might get this new thing. 549 00:29:13,320 --> 00:29:15,120 Speaker 2: Like we don't know the name of this new product, 550 00:29:15,360 --> 00:29:16,920 Speaker 2: you know, we don't know the pricing, we don't know 551 00:29:17,000 --> 00:29:19,920 Speaker 2: exactly all those things. I think, if I pay for 552 00:29:20,280 --> 00:29:22,720 Speaker 2: Max or I pay for something else, I'll get Grandfather 553 00:29:22,880 --> 00:29:25,640 Speaker 2: And I don't know. But all I know is I'm 554 00:29:25,680 --> 00:29:27,440 Speaker 2: not paying anymore. So if they want me to pay 555 00:29:27,440 --> 00:29:29,600 Speaker 2: for this standalone thing, I'm cutting out two or three 556 00:29:29,640 --> 00:29:29,920 Speaker 2: other of. 557 00:29:29,920 --> 00:29:32,240 Speaker 7: My stream, right or do you cut the cable? I mean, 558 00:29:32,240 --> 00:29:34,520 Speaker 7: that's the whole thing. That's the question. Comcast, you know, 559 00:29:34,560 --> 00:29:38,800 Speaker 7: what is it? And what is Comcast, NBC paramount Globals, CBS, Like, 560 00:29:38,920 --> 00:29:40,720 Speaker 7: what do they think about this? They're kind of a 561 00:29:40,760 --> 00:29:42,400 Speaker 7: little bit app It's funny. 562 00:29:42,320 --> 00:29:44,440 Speaker 2: You know, Comcasts we used to we'll call it today 563 00:29:44,480 --> 00:29:47,480 Speaker 2: just generically a cable company. They haven't thought of themselves 564 00:29:47,560 --> 00:29:50,040 Speaker 2: as a cable company for five or six or seven years. 565 00:29:50,040 --> 00:29:54,160 Speaker 2: They consider themselves a broadband company. We deliver high capacity 566 00:29:54,760 --> 00:29:57,640 Speaker 2: internet connection to your home. Oh yes, and by the way, 567 00:29:58,240 --> 00:29:59,920 Speaker 2: we also have five hundred shills Liberty. 568 00:30:00,200 --> 00:30:02,280 Speaker 1: So go there. Because I saw this in the zeitgeist 569 00:30:02,320 --> 00:30:04,120 Speaker 1: here in the last twenty four hours, I'm going to 570 00:30:04,160 --> 00:30:06,280 Speaker 1: pick on Charter just because I'm guessing that's where I 571 00:30:06,320 --> 00:30:10,400 Speaker 1: saw it. Charter or the others, they really really want 572 00:30:10,440 --> 00:30:13,880 Speaker 1: to deliver your internet service to your house? Is the 573 00:30:13,880 --> 00:30:16,920 Speaker 1: stuff Lisa's talking about Hulu Sports and the rest is 574 00:30:16,960 --> 00:30:17,959 Speaker 1: that not just noise. 575 00:30:19,600 --> 00:30:23,000 Speaker 2: It's become increasingly just noise for the cable companies because 576 00:30:23,000 --> 00:30:25,560 Speaker 2: they make While they don't like to lose you as 577 00:30:25,600 --> 00:30:29,600 Speaker 2: a video subscriber, they don't care that much because they 578 00:30:29,640 --> 00:30:32,120 Speaker 2: make so much more money profit on you as a 579 00:30:32,160 --> 00:30:34,960 Speaker 2: broadband customer than they do as a video customer. So 580 00:30:35,000 --> 00:30:36,760 Speaker 2: they're willing to trade a little bit at the margin. 581 00:30:36,800 --> 00:30:38,920 Speaker 2: I'll trade away some video customers as long as I 582 00:30:38,920 --> 00:30:41,120 Speaker 2: can keep and keep adding broadband customers. 583 00:30:41,240 --> 00:30:44,400 Speaker 1: This is the Bloomberg Surveillance Podcast, bringing you the best 584 00:30:44,440 --> 00:30:49,200 Speaker 1: in economics, finance, investment, and international relations. You can also 585 00:30:49,280 --> 00:30:53,320 Speaker 1: watch the show live on YouTube. Visit the Bloomberg Podcast 586 00:30:53,440 --> 00:30:57,480 Speaker 1: channel on YouTube to see the show weekday mornings from 587 00:30:57,520 --> 00:31:00,640 Speaker 1: seven to ten am Eastern from our global head quarters 588 00:31:00,680 --> 00:31:04,560 Speaker 1: in New York City. 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