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Speaker 2: NYCB cut to junk by Moodies as stock hits lois
Speaker 2: since nineteen ninety seven. The real question for investors, just
Speaker 2: like it was a year ago some of the West
Speaker 2: Coast banks, is is this specific to one or two
Speaker 2: individual banks? This indicative and maybe some risk in the
Speaker 2: US banking system. For that, we turn to Herman Chant.
Speaker 2: He covers the regional banks for Bloomberg Intelligence. He joins
Speaker 2: his us here in our Bloomberg Interactive Broker Studio. So
Speaker 2: Hermann tell us, just summarize for us what happened at
Speaker 2: NYCB and what do you think is going to happen
Speaker 2: going forward?
Speaker 1: Right for this bank.
Speaker 3: So there's two things. One is our idios and credit factors,
Speaker 3: and one that's the overall risk and commercial real estate.
Speaker 3: The and credit factor is your community cleared one hundred
Speaker 3: billion dollar asset threashold with the acquisition of signature banks
Speaker 3: that was facilitated by the FDIC last year. That ushers
Speaker 3: in higher capital and liquidity requirements and they're trying to
Speaker 3: digest that. The second is that they cut their dividend
Speaker 3: to be able to increase their capital and increase their
Speaker 3: reserves because of some issues on the credit quality side,
Speaker 3: some losses in multi family, commercial real estate and in office.
Speaker 1: All right, So for.
Speaker 2: Our listeners and viewers out there nationwide worldwide, does the
Speaker 2: US have a regional bank problem.
Speaker 3: The United States does not have a regional bankrob It
Speaker 3: has a burgeoning potential problem in losses and commercial real estate,
Speaker 3: specifically office and if you want to throw in multifamily
Speaker 3: regulated multifamily, it's a niche business in New York City.
Speaker 3: That's not going to be a issue across the industry.
Speaker 3: We'll see losses percolate in twenty twenty four and throughout
Speaker 3: the next few years, but it's going to be a
Speaker 3: longer term issue.
Speaker 1: How many more nycbs are. There's a general number, there's
Speaker 1: four thousand banks. I don't need a number, most of
Speaker 1: minus ten. But do you feel in very William Isaac
Speaker 1: SNL crisis Robert McTeer of the eighties or the complete
Speaker 1: disaster of the reats in the seventies, or is this
Speaker 1: really hyper selective.
Speaker 3: It's going to be selective going forward and it has
Speaker 3: been right so the banks that FAED, we're very focused
Speaker 3: on certain businesses that really didn't pan out when rates
Speaker 3: went higher, and now we're facing the similar issues with
Speaker 3: rates where they are elevated. It's tougher for these commercial
Speaker 3: real estate lenders to in their bars to refinance, and
Speaker 3: it's creating asset quality issues. And it's going to be
Speaker 3: banks that have an intense focus on commercial real estate
Speaker 3: and that's going to be a small subset of the
Speaker 3: overall banking system.
Speaker 2: And you know, because Tom and I were talking about this,
Speaker 2: and we follow the news flow in this very carefully,
Speaker 2: which is when we see some of these big pieces
Speaker 2: of real estate change hands. Now it's fifty cents on
Speaker 2: the dollar, right, and it's all over the country. It's
Speaker 2: not just San Francisco or New York. It's everywhere. So
Speaker 2: but I guess what I'm asking you is what percentage
Speaker 2: of that type of real estate is part of the
Speaker 2: portfolio of the regional banks out there in the US.
Speaker 2: Is it a big piece, small piece?
Speaker 3: It's a fairly small we're talking about when we say
Speaker 3: fifty cents on a dollar. It's like those B and
Speaker 3: C class properties in central business districts that aren't getting
Speaker 3: a lot of occupancy. And that's not like typically where
Speaker 3: the regional banks play there, like medical offices where the
Speaker 3: operators also.
Speaker 1: Okay, so there's this headline story here when I hear
Speaker 1: bankers tell me things will be fine, or even someone
Speaker 1: as cynical as you. The heart of the matter is
Speaker 1: is we're looking at them like they own every office
Speaker 1: hour out there, right, and they don't. They don't.
Speaker 3: And even if they do, you can go back to
Speaker 3: their underwriting right where their loan to value is about
Speaker 3: fifty five to sixty years.
Speaker 1: So who takes a loss cut to the chase. There's
Speaker 1: a building out there, it's down fort it's going to
Speaker 1: be the headlining cranes two days from now. Who takes
Speaker 1: that laws.
Speaker 3: Ermage in the loss is going to be on the
Speaker 3: owner of the building predominantly, and the banks will take,
Speaker 3: you know, maybe some sliver, but it's going to be
Speaker 3: the losses will be prevailing in areas like commercial banks,
Speaker 3: It's going to be in commercial real estates, the NBS, reads,
Speaker 3: insurance companies, the entire financial system will face some sort
Speaker 3: of way.
Speaker 2: Tom. It just feels like one of the markets where
Speaker 2: this smart money is gonna come in soon, and I
Speaker 2: don't know who that is. Is it private equity, is
Speaker 2: it just some smart real estate money? Is it the
Speaker 2: rooting found start buying the stuff at fifty cents on
Speaker 2: the dollar, and we're gonna have the story five or
Speaker 2: ten years from now. Wow, at a time, I.
Speaker 1: Get I do agree with that, But then here's the
Speaker 1: next question. Herman Chan what I see And I'm reading
Speaker 1: cranes voraciously just to get the gossip and all that.
Speaker 1: You know, I don't know anything about this. The foreign
Speaker 1: money is like a drug. I mean, they just show
Speaker 1: up in New York. Are they going to show up
Speaker 1: in Topeka?
Speaker 3: I don't think they're going to show up and say
Speaker 3: the foreign money has to be in large metro city,
Speaker 3: So it's gonna be in New York Miami.
Speaker 1: Are they buying LA with a train wreck in the
Speaker 1: central district LA.
Speaker 3: That remains the BC? Maybe if if valuations have become
Speaker 3: really really attractive, but we haven't really seen them.
Speaker 2: Told the Jepanese there was a there was a time
Speaker 2: when I first started playing Public thirty years ago that
Speaker 2: every time I went out and played, which is probably
Speaker 2: two or three times a year, it was my foursome
Speaker 2: was all Japanese players. Because the japan economy is so strong,
Speaker 2: the yen was so strong, it was close by they
Speaker 2: owned it. You know, you don't see that anymore. But again,
Speaker 2: the foreign buyers have been in the big metro markets.
Speaker 2: What are the banks saying about will they underwrite commercial
Speaker 2: real estate today? Are they? Are they making loans? Are
Speaker 2: they trying to say? Are they refinancing? Are they how's
Speaker 2: it typically happening? Because if I have to go refinance
Speaker 2: a real estate loan in Topeka, I gotta pay a
Speaker 2: lot more interest rate.
Speaker 3: Yeah, You're gonna have to pay a lot more interest rate.
Speaker 3: What they're what the banks are doing is trying to
Speaker 3: make sure that the existing bioer can repay and maybe
Speaker 3: in Jeck some equity into it. Because the value of
Speaker 3: that real estate is not what it was two, three, four,
Speaker 3: five years ago.
Speaker 1: Thomas showed question over. Keith Brey added, woods, are we
Speaker 1: going to see m and A? What are we gonna
Speaker 1: do here? Come on, Herman, I mean, it's got to
Speaker 1: be mating season.
Speaker 3: Right, it's got to be at this point. You see
Speaker 3: all these banks, and especially the banks that are wobbling,
Speaker 3: and then any other management team is going to be
Speaker 3: is going to be a bit shaken what happened. So
Speaker 3: I think bigger, bigger is better and need for scale
Speaker 3: is something that I think the industry needs a consolidate
Speaker 3: and create the value.
Speaker 1: Add go to the Bloomberg terminal, look at Bloomberg Intelligence.
Speaker 1: Herman Chan c ch A and Herman Chan is just
Speaker 1: absolutely encyclopedic on the regional banks, not so much the
Speaker 1: hot air the emotion of it, but the actual matthewness
Speaker 1: of where we're.
Speaker 2: Going to be in.
Speaker 1: Pall Swunian time, keen, and we're going to do now
Speaker 1: for Global Wall Street. We're going to get wonky. We're
Speaker 1: going to edge on the edge of Imperial College in London,
Speaker 1: n Yu Currant in a small shop and the rivers
Speaker 1: of Boston the Charles River of Boston. That would be
Speaker 1: the Massachusetts Institute of Technology. That can only mean Katie Kimsky,
Speaker 1: Katie Kaminski joins us with Andre Loo's Elpha. Simplex, folks.
Speaker 1: This is going to be a little bit of jargon laced,
Speaker 1: but it's going to give you a window into how
Speaker 1: the animals in the derivative space think. Katie, I have
Speaker 1: up in front of me the Magnificent Seven, and I've
Speaker 1: got a five trend quant log chart up. I have
Speaker 1: the Magnificent seven on trend with log convexity. I've got
Speaker 1: room to run. I'm up only at two standard deviations
Speaker 1: up among those seven stocks. And maybe there's an argument
Speaker 1: about is Tesla in it or though can you do
Speaker 1: trend analysis on this historic moment, this Magnificent seven?
Speaker 4: Well, I mean, I think if you look at the
Speaker 4: Magnificent seven, they have been the ballast for US markets
Speaker 4: and they have driven a divergence trade for the US.
Speaker 5: It's put the US in a much better position.
Speaker 4: But as we know, the trend can keep going longer
Speaker 4: than you think it can. And that's what we continue
Speaker 4: to see is that there's still continued strength in that
Speaker 4: trend despite some critics.
Speaker 1: Is that trend LinkedIn I'm going to go over to
Speaker 1: the fundamental world away from alpha simplex, which is this
Speaker 1: new belief in an annuitization. And frankly, folks, I'm talking
Speaker 1: the Bloomberg book here. This is what we do with
Speaker 1: the Bloomberg terminal. It's been a real gift to us
Speaker 1: over thirty years plus. But the annuitization of free cash flow,
Speaker 1: the annuitization of that hunk of money at the EBITDA line,
Speaker 1: does that fold over into your technical analysis as a
Speaker 1: force and an inertial force to a higher priced Magnificent seven.
Speaker 4: Well, I mean, I think as you said, I mean,
Speaker 4: we're much more of a technical trader, and at the
Speaker 4: end the fundamentals become clear.
Speaker 5: But what you've really seen is resilience.
Speaker 4: They're in prices for those technical and there doesn't seem
Speaker 4: to be any indication that that's abating. And the other
Speaker 4: thing that's interesting to me is that, you know, if
Speaker 4: you look at where we are, even with higher rates,
Speaker 4: those type of companies should be more duration sensitive, and
Speaker 4: they've been.
Speaker 5: They've wavered the storm.
Speaker 4: So perhaps it's perhaps it's you know, sort of the
Speaker 4: future is the value in the future is more technology
Speaker 4: than what we're used to thinking about for value companies.
Speaker 2: Hey, Katie, I know you guys at Alpha Simplex or
Speaker 2: as you mentioned, technical uh focused, you're also global. Where's
Speaker 2: the global relative value? I actually, for the first time
Speaker 2: in twenty or twenty five years, I hear people talking
Speaker 2: about Japan here, So I'm wondering, where's the relative value
Speaker 2: out there?
Speaker 4: So the interesting thing that we have seen, and this
Speaker 4: is something that we can talk about this in a
Speaker 4: minute because I'm a little I'm always nervous. You've seen
Speaker 4: very strong signals in the US and Japan, and you've
Speaker 4: seen very weak signals in China.
Speaker 5: In fact, China's been down.
Speaker 4: For two years and almost fifty percent if you look
Speaker 4: at the A fifty. So that to me is something
Speaker 4: very interesting that this huge divergence across performance. Albeit that
Speaker 4: you know, we just talked about the tech names really
Speaker 4: being a leader for the US. But the question for
Speaker 4: that that all comes back to inflation too, is if
Speaker 4: China has been down so much, they're a huge driver
Speaker 4: of demand for raw commodities and the commodity sector, is
Speaker 4: that the missing sort of key component that has driven
Speaker 4: inflation down in the short term is that China is
Speaker 4: a big player and they've definitely been in the bunker.
Speaker 2: They have been and I'm not sure if it's technical
Speaker 2: or just the fundamentals of is China even investible here?
Speaker 2: So I'm guessing your technical signals are flashing pretty green
Speaker 2: for China. But then how do you overlay I guess
Speaker 2: the fundamental just kind of country risk factor.
Speaker 5: Oh well, I think that's definitely an issue.
Speaker 4: I think what we're more concerned about is is there
Speaker 4: a stimulus package? Is there a way out of that
Speaker 4: trend which causes increased demand for commodities because we've kind
Speaker 4: of like forgotten about China.
Speaker 5: If they get back in the game, things change.
Speaker 4: I mean, if they increase their demand for commodities, you'll
Speaker 4: see that change.
Speaker 1: But the heart of the matter here, Katie, is the
Speaker 1: stochastic view of catching the knife in the dark, and
Speaker 1: right now China is a knife coming down, down, down.
Speaker 1: What you're saying, and Andrew Lows saying, is you've got
Speaker 1: to find trend when China turns, and let's be optimistic
Speaker 1: and believe a society has to when China turns. How
Speaker 1: do you know when to get on board a nascent
Speaker 1: China bull market?
Speaker 4: So we're not seeing I mean, we're starting to see
Speaker 4: some indications this week. I mean people have been looking
Speaker 4: for a bottom in that market for some time now,
Speaker 4: but we need to see confirmation in the data, and
Speaker 4: we haven't seen that yet.
Speaker 5: I think people are nervous right now because.
Speaker 4: It is the holiday season and you know how far
Speaker 4: that trend has really gone a long way.
Speaker 1: You know, you got some parchment from MIT. I mean,
Speaker 1: you know she does like doublele and you know a
Speaker 1: bunch of other fancy degrees thought about it's off furymed Katie.
Speaker 1: But I want to go all eric Rinjelsnania. Can we
Speaker 1: do that? Is it okay? If I go rieln On
Speaker 1: you what is this AI stuff? I mean I get
Speaker 1: the idea Chat, gpt works, Microsoft co Pilot, Azure, blah
Speaker 1: blah blah, But you how about what portion, Katie Kaminsky
Speaker 1: of AI is hot air.
Speaker 4: So AI is great for solving some simple problems and
Speaker 4: to deal with data and to analyze lots of information
Speaker 4: in an efficient way. We see it in our space
Speaker 4: more for things like execution, just dealing with very complex,
Speaker 4: complicated data sets and distilling that down into information.
Speaker 5: I think the idea that you're going to let AI trade.
Speaker 4: Your money is still very far away, at least for
Speaker 4: my personal view as well.
Speaker 5: But it is a tool.
Speaker 4: To help us to analyze more things in less time
Speaker 4: and automate a lot of things that you know, could
Speaker 4: make our focus onto something else.
Speaker 5: So that's kind of how I see it.
Speaker 4: It is the future, but it has to be taken
Speaker 4: with trust and with understandability.
Speaker 2: Yeah, it seems like I'm one of the questions I
Speaker 2: asked the tech analyst Katie when we have them on
Speaker 2: is how much of you know, is AI capital spending
Speaker 2: or just development of AI? How much is that just
Speaker 2: taking is it new money? Is it new spending on
Speaker 2: AI or is it just just moving it from some
Speaker 2: other it budgets and things like that. So from your perspective,
Speaker 2: just from the you know, the academics, is AI really
Speaker 2: new or is it just taking the next step in
Speaker 2: making everything more techy.
Speaker 5: A is definitely not new.
Speaker 4: It's just about can we find new applications for it
Speaker 4: and are there ways see this In the financial sector,
Speaker 4: It's interesting all the large firms have really invested in
Speaker 4: AI because they know they need to be there, and
Speaker 4: they're still trying to sort out Okay, how do we
Speaker 4: use it and what are the applications? So I think
Speaker 4: it's it's the next phase and there's the adoption, but
Speaker 4: the application is still unclear.
Speaker 1: He Katie one found a questionnaire. My quota of the
Speaker 1: year last year was a guy named Ta Leb. He's
Speaker 1: pretty good and derivatives and that seeing Taleb said, the
Speaker 1: gravity's returned, And that's really what's going on here. We
Speaker 1: finally have interest rates up, We've got a risk for
Speaker 1: you rate, We've got a legitimate, calculable sharp ratio. You know,
Speaker 1: all the mumbo jumbo as well. Can there be too
Speaker 1: much gravity? Can there be too much like a higher
Speaker 1: real rate that gums up our investment horizon?
Speaker 5: So I think that's a great point.
Speaker 4: I mean, I think for us, everybody's sitting around hoping
Speaker 4: for lower rates because who doesn't like that? But the
Speaker 4: truth is that's not the normal equilibrium. And I think
Speaker 4: what you're seeing as well as I mean, do you
Speaker 4: think policy is restrictive?
Speaker 3: Now?
Speaker 5: I don't think so.
Speaker 1: Lisa Minteo, did you see how Kaminsky did that? Who's
Speaker 1: running this program? Do I think things are restrictive? There's
Speaker 1: a lot of people out there going to come on,
Speaker 1: Tom answer, Oh look Mike from rebuta to see be
Speaker 1: able to say. Don't answer, Katie Kaminski, go away. You're
Speaker 1: restrictive but also accommodative as well, Katrin Kaminsky. Folks with
Speaker 1: Alpha Simplex can't say enough about their work. We're gonna
Speaker 1: stop the show right now and take a broader view
Speaker 1: kind of Leon So c if RA a research usually
Speaker 1: joins us in the big bank days. He does not
Speaker 1: cover the regional banks, and there's also of legal issues.
Speaker 1: You don't talk about what you don't cover. But his
Speaker 1: research director for CFRA, We're going to take a broader
Speaker 1: view of the nyc B tobacco and not speak to
Speaker 1: him about the individual's securities. Ken, What are the government
Speaker 1: doing right now? I mean, this is a dibaccle commercial
Speaker 1: real estate, a tobacco, this singular bank. Maybe there'll be
Speaker 1: others like them. What are government institutions like the FED
Speaker 1: institutions in Washington in this case Albany, what are they
Speaker 1: doing right now?
Speaker 6: Great to be with you, Tom, And what's going on
Speaker 6: in Washington is we had comments this week from the
Speaker 6: head of the OCC that m and A for the
Speaker 6: banks is going to be tougher, and also there's going
Speaker 6: to be significant capital built for most of the banks.
Speaker 6: And what this means, I think for investors is that
Speaker 6: we're not going to see systemic bank failure of the industry,
Speaker 6: but we're going to see kind of situations as we
Speaker 6: did with New York community banks. So I think it
Speaker 6: just has to be put in the right placement that
Speaker 6: this is not going back to March twenty twenty three,
Speaker 6: but it's something that gets the attention of the market.
Speaker 1: If the industry struggles with this gets the attention of
Speaker 1: the market and there's smaller institutions, does that lead to
Speaker 1: more consolidation of the industry.
Speaker 6: There is, and there are still four thousand banks in
Speaker 6: the United States. Regularly, Tom we speak about the big
Speaker 6: six that dominate and are gaining market share and expanding
Speaker 6: across the US. So again, it's what's happening with really
Speaker 6: small banks that might have founders that want to sell
Speaker 6: because there's no succession. In some instances, you're going to
Speaker 6: see these elevated risks for real estate for those that
Speaker 6: have a high percentage of their loan book related to
Speaker 6: some troubled real estate.
Speaker 2: And can I guess what a lot of investors trying
Speaker 2: to get a handle of And it was literally a
Speaker 2: year ago that we had some problems with some of
Speaker 2: the regional banks on the West Coast, and now we've
Speaker 2: got the New York Community Bank. So what are the
Speaker 2: good folks at CFOA. Are you concerned about the status
Speaker 2: of just kind of the regional banking system in general,
Speaker 2: or again, can we chalk this up to some more
Speaker 2: just specific idiosyncratic issues.
Speaker 6: It's a good question. If you go back in time
Speaker 6: over decades, you know, a bank analyst would say by region,
Speaker 6: you might have more exposure to Texas banks if the
Speaker 6: energy industry was failing in this situation. Today we go
Speaker 6: through really rigorous bank metrics and to see who is
Speaker 6: under reserve, who has not really not had a good
Speaker 6: balance in terms of diversifying their loans and in situations
Speaker 6: of in this case commercial real estate, it's going to
Speaker 6: be those banks with assets perhaps of fifty bill million
Speaker 6: to one hundred billion.
Speaker 1: It could be at rest Kin Leon was his director
Speaker 1: research at CFIRA. Previously scheduled to be on Disney. Oh
Speaker 1: they report airnings after the club joining us. Now ken
Speaker 1: Leon bank expert on the don't bank on Disney. I
Speaker 1: guess is it or the other media stax Paul, why
Speaker 1: don't you talk to Kenn Lean about absolutely dibaccle known
Speaker 1: as Disney Ken.
Speaker 2: So we've got Disney after the close, and there's a
Speaker 2: million issues to discuss. But I guess the latest one
Speaker 2: is just kind of what we heard the announcement today
Speaker 2: that you know, Disney's gonna hook up with you know,
Speaker 2: Warner Brothers, Discovery and Fox to create a standing sports
Speaker 2: streaming offering. I didn't see that coming, do you. What
Speaker 2: do you think is going on there?
Speaker 1: Good for that?
Speaker 6: So, you know, I think when you look at Disney,
Speaker 6: Warner Brothers, Discovery and also Fox, they basically were victims
Speaker 6: to the NFL and other major sports leagues of spending
Speaker 6: billions of dollars. It still continues. But putting them all
Speaker 6: together and putting them in a package for streaming, this
Speaker 6: gives them an opportunity to have a little bit more
Speaker 6: pricing power to defend. And also it puts at risk
Speaker 6: those that are not in this droika, which would be
Speaker 6: comcast with Peacock. We saw what happened with viewers infumed
Speaker 6: when the Miami game was not on NBC but on Peacock.
Speaker 6: So you know, I think there's a lot of moving
Speaker 6: parts here, but essentially what we're seeing as an opportunity
Speaker 6: to really get more rational pricing. But Disney's got more
Speaker 6: to say later today after the closed because they're still
Speaker 6: looking for an equity investor into ESPN besides this partnership
Speaker 6: with Fox and Warner Brothers Discovery. And that's a deep
Speaker 6: risking by Eiger about ESPN because you're falling off the
Speaker 6: cliffs in terms of table viewers.
Speaker 1: Paul on your head, what's your percentage of investment in
Speaker 1: ESPN by dreaded outsider? Is it like a minority five
Speaker 1: to ten percent? Bigger?
Speaker 2: I think it'd be bigger. I think particularly if it's
Speaker 2: a big entity like the NFL, I think they would
Speaker 2: not be a controlling stake, but it would be a
Speaker 2: large stake so that they would have multiple seats at
Speaker 2: the table. And Ken, I guess you know, what do
Speaker 2: you think is the big I don't know what do
Speaker 2: you think Bob Iger needs to do here this afternoon
Speaker 2: on this conference call because the stock you know, investors
Speaker 2: used to love this name that I just get the
Speaker 2: sense they have no idea what to do with this story.
Speaker 6: Well, they're beginning to prone assets. They may have something
Speaker 6: to say in NDA, which was never it was an
Speaker 6: either of assets but not profitable, so selling that business.
Speaker 6: And as Tom knows, you got James Gorman now on
Speaker 6: the board of Disney. So looking for businesses that have
Speaker 6: durable revenues and really have the magic of Disney will
Speaker 6: be the thing in parts and renewing film. So I
Speaker 6: think that's a big change.
Speaker 1: Ken, What do you do? You said, grizzled pro You know,
Speaker 1: I was going back looking. Get to read the back
Speaker 1: of the seventies. You know, all good things in trees
Speaker 1: don't grow to the sky. Rumor thank you Goldbin Sex
Speaker 1: for that quote. The Weinberg family, you know, Kelly, and
Speaker 1: help me here, what do you do with a magnificent seven?
Speaker 6: So for CFRA, what we see again is valuations that
Speaker 6: still seem reasonable for most. It becomes challenging for investors
Speaker 6: when you look at the overall stock market because of
Speaker 6: the significant weighting that these stocks have. I don't believe
Speaker 6: it's like really in my career when we had the
Speaker 6: tech boom bust, because these are our businesses that are
Speaker 6: throwing off enormous cash flow and are also innovating to
Speaker 6: drive organic revenue growth. It's a little bit different, but
Speaker 6: I never like to say this time is different than
Speaker 6: the others, whether it's the nifty to fifty back way
Speaker 6: in time. So I think investors have to be prudent.
Speaker 6: Diversification does make sense, but it's an outsized waiting of
Speaker 6: the entire s and P five hundred comes from the
Speaker 6: Magnificent seven. But I'll give you one more tom. In
Speaker 6: the financial sector, which you know we talked about the
Speaker 6: banks being so challenging, there's about twelve stocks that are
Speaker 6: seventy percent of the financial sector. So if you're a
Speaker 6: fund manager and you say I want to be overweight
Speaker 6: the financial sector as CFI does, it really gets to
Speaker 6: names like Berkshire, Hathaway, American Express, MasterCard, Visa, JP, Morgan Chase,
Speaker 6: and others. So it's a big difference. So I think
Speaker 6: that's the conversation, what is the big constituents of the
Speaker 6: market max seven or in any sector, And that's how
Speaker 6: CFA thinks about our waitings.
Speaker 1: You can't get to leave it there. Thank you so much.
Speaker 1: Ken lean with us here today's front page headlines. You know,
Speaker 1: we had like eighteen ideas in the newspapers to what'd
Speaker 1: you top it with?
Speaker 7: Going crazy this morning?
Speaker 2: I know?
Speaker 7: All right, So this first one stood out to me.
Speaker 7: This from the New York Times. There's been a rise
Speaker 7: in the use of psychedelic mushrooms. This is becoming popular.
Speaker 7: There was a study that says that law enforcement they're confiscating,
Speaker 7: confiscating more of it. It's illegal right under federal law,
Speaker 7: but it's getting popularity because people are using as therapy.
Speaker 7: They're saying that it may be useful in treating depressions.
Speaker 7: So a lot more people are taking it. But experts
Speaker 7: are saying that hype. It's really moving faster than the science.
Speaker 7: There's some states that are moving to legalize it. You
Speaker 7: have Oregon, Colorado, it's legal there for therapy. Okay, yes,
Speaker 7: But the New York Times actually had a Wallsteret Journal
Speaker 7: had an article about it. How more high powered working
Speaker 7: moms are using magic mush wise just to take the edge.
Speaker 1: Off a little. You know, that's why listen to berg surveillance. Yeah,
Speaker 1: are we back to Timothy Leary in the early sixties.
Speaker 7: I mean it's coming back. Some gummies were for no
Speaker 7: apparently on that but because the gummies are legal, see,
Speaker 7: this isn't legal too much.
Speaker 1: That would be my I mean, okay, full discasure. I'm
Speaker 1: not really ignored on this, but long agoing far away,
Speaker 1: I remember Fred Brothers that took too much? Can you
Speaker 1: take too much?
Speaker 7: I bet the psychedelics, I'm not sure. I mean, I'm
Speaker 7: sure it'll definitely affect you most definitely.
Speaker 1: Room. Yes, you know, we don't know who that was,
Speaker 1: but dark you guys are killing it. It's like a
Speaker 1: Swiss watch in the control to control room next.
Speaker 7: All right, if you're looking to get in shape in
Speaker 7: the new year, the Wall Street Journal is saying, take
Speaker 7: a break from drinking. Yes, yeah, Jim said, you already
Speaker 7: got a pass.
Speaker 2: Uh.
Speaker 7: They're saying the dry January it helped out a lot
Speaker 7: of people. But it depends on how much and how
Speaker 7: often you drink. If you just keep it to let's
Speaker 7: say the weekends, it might be a little bit better.
Speaker 7: Full disclosure. I used to, you know, have a cocktail
Speaker 7: or two every night during the week, every day, you know,
Speaker 7: but dinner a glass of wine. And when I cut
Speaker 7: that back and I left it to just like maybe
Speaker 7: a Friday happy hour Saturday. You see, the difference are
Speaker 7: so different. But there are they say their health benefits.
Speaker 7: You sleep a little bit better, You get better sleep,
Speaker 7: you're a little bit more rested. You know, people tend
Speaker 7: to lose a little bit of weight when they do that.
Speaker 7: But you know, it's it's up. It's up to everyone.
Speaker 7: Not everyone is you know, like the lecture peering mushrooms
Speaker 7: first and then.
Speaker 1: Give it a beverage of rooms.
Speaker 2: Is that what I'm doing there?
Speaker 1: You can save us? What's next?
Speaker 7: Okay, we've been talking a lot about this, you know,
Speaker 7: the whole quote unquote Hulu is sports, right, you heard
Speaker 7: Michael Barr talk about it, right, Walt Disney's ESPN, Fox,
Speaker 7: Warner Brothers, Discovery. They're all launching this streaming sports service
Speaker 7: in the fall, of course, right at the start of
Speaker 7: the NFL College football see and just happens to be.
Speaker 7: But I mean, you think about it. You got ESPN's
Speaker 7: Monday Night Football, Foxes Sunday and NFL game March Madness
Speaker 7: college basketball that's carried on Warner Brothers. But there's some
Speaker 7: people missing out of this picture.
Speaker 2: No foot Well, CBS, they've got a big NFL package,
Speaker 2: NBC has the Sunday Night package. So I want to
Speaker 2: see the backstory, which we'll get from somebody how this
Speaker 2: came together? How these you know, these respiration desperation I
Speaker 2: think is the call there?
Speaker 1: Okay, so let's let's review this as Sweeney's like world
Speaker 1: class on this. In the old days, we had one
Speaker 1: hundred dollars cable bill yep. Without question, the biggest hunk
Speaker 1: of that was the ESPN yep. Right. So with that said,
Speaker 1: if we're pricing one hundred million dollars streaming things at
Speaker 1: nine ninety nine a month, where do you think this
Speaker 1: thing will price in?
Speaker 2: Boy, it's not going to be ten or eleven bucks.
Speaker 2: I don't think, like we're all used to for our hulus.
Speaker 1: And our so we're going out and spending twenty something
Speaker 1: or even forty.
Speaker 2: Somethings, I think. So, I mean, ESPN alone is ten bucks.
Speaker 1: So we're popping We're popping another three hundred dollars. You're
Speaker 1: asking three hundred dollars a year.
Speaker 2: Well, I think what happens since all the stuff we
Speaker 2: pay for otherwise, like Max for example, I think if
Speaker 2: I pay for Max, I might get this new thing.
Speaker 2: Like we don't know the name of this new product,
Speaker 2: you know, we don't know the pricing, we don't know
Speaker 2: exactly all those things. I think, if I pay for
Speaker 2: Max or I pay for something else, I'll get Grandfather
Speaker 2: And I don't know. But all I know is I'm
Speaker 2: not paying anymore. So if they want me to pay
Speaker 2: for this standalone thing, I'm cutting out two or three
Speaker 2: other of.
Speaker 7: My stream, right or do you cut the cable? I mean,
Speaker 7: that's the whole thing. That's the question. Comcast, you know,
Speaker 7: what is it? And what is Comcast, NBC paramount Globals, CBS, Like,
Speaker 7: what do they think about this? They're kind of a
Speaker 7: little bit app It's funny.
Speaker 2: You know, Comcasts we used to we'll call it today
Speaker 2: just generically a cable company. They haven't thought of themselves
Speaker 2: as a cable company for five or six or seven years.
Speaker 2: They consider themselves a broadband company. We deliver high capacity
Speaker 2: internet connection to your home. Oh yes, and by the way,
Speaker 2: we also have five hundred shills Liberty.
Speaker 1: So go there. Because I saw this in the zeitgeist
Speaker 1: here in the last twenty four hours, I'm going to
Speaker 1: pick on Charter just because I'm guessing that's where I
Speaker 1: saw it. Charter or the others, they really really want
Speaker 1: to deliver your internet service to your house? Is the
Speaker 1: stuff Lisa's talking about Hulu Sports and the rest is
Speaker 1: that not just noise.
Speaker 2: It's become increasingly just noise for the cable companies because
Speaker 2: they make While they don't like to lose you as
Speaker 2: a video subscriber, they don't care that much because they
Speaker 2: make so much more money profit on you as a
Speaker 2: broadband customer than they do as a video customer. So
Speaker 2: they're willing to trade a little bit at the margin.
Speaker 2: I'll trade away some video customers as long as I
Speaker 2: can keep and keep adding broadband customers.
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