WEBVTT - Bloomberg Surveillance: Netflix Earnings; NFL Playoffs 0:00:05.040 --> 0:00:08.639 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:08.680 --> 0:00:12.040 with Paul Sweeney. Join us each day for insight from 0:00:12.039 --> 0:00:16.240 the best in economics, finance, investment, and international relations. You 0:00:16.239 --> 0:00:19.599 can also watch the show live on YouTube. Visit the 0:00:19.600 --> 0:00:24.360 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:24.360 --> 0:00:27.400 mornings from seven to ten am Eastern from our global 0:00:27.440 --> 0:00:32.080 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:32.440 --> 0:00:36.000 or anywhere else you listen, and always I'm Bloomberg Radio, 0:00:36.200 --> 0:00:40.280 the Bloomberg Terminal, and the Bloomberg Business App. Victoria Fernandez 0:00:40.520 --> 0:00:43.919 joins us. Sorry to Paul's got some serious market questions 0:00:44.159 --> 0:00:46.760 in this melt up and participating. I just want to 0:00:46.800 --> 0:00:50.480 ask one question to Victoria Fernandez. Are the Kansas City 0:00:50.600 --> 0:00:53.560 Chiefs the new Dallas Cowboys discuss? 0:00:54.320 --> 0:00:57.560 Oh that's tough, You're just you know, the poor Cowboys. 0:00:57.600 --> 0:01:00.240 I couldn't believe that game that we saw. I don't no, 0:01:00.480 --> 0:01:02.880 it's going to be tough for anyone to beat Baltimore. 0:01:03.040 --> 0:01:06.320 So I think we'll have to wait and see you again. 0:01:06.360 --> 0:01:08.080 But we got some good games to watch. 0:01:08.760 --> 0:01:09.880 Tom. 0:01:10.440 --> 0:01:13.840 And by the way, I grew up watching wrestling. My 0:01:13.920 --> 0:01:17.080 mother used to go to the Houston Coliseum with Paul 0:01:17.200 --> 0:01:20.440 Bosh and watch wrestling when I was a kid, so. 0:01:21.360 --> 0:01:23.759 Everywhere that helped run the CFA example. 0:01:25.200 --> 0:01:27.520 Hey Victoria, I mean, you know, I would love to 0:01:27.520 --> 0:01:30.240 get your perspective on what did we see in the 0:01:30.319 --> 0:01:32.320 last two months of twenty twenty three when we had 0:01:32.319 --> 0:01:37.120 that huge move higher in stocks and bonds, and how 0:01:37.160 --> 0:01:39.240 does that set us up for twenty twenty four here, 0:01:39.280 --> 0:01:41.000 how do you think about this year? 0:01:42.240 --> 0:01:46.040 Yeah, coming off those October lows that we saw last year, 0:01:46.120 --> 0:01:46.839 there was just a. 0:01:46.760 --> 0:01:48.800 Tremendous amount of momentum. 0:01:48.880 --> 0:01:51.480 Most of that led by the fact that the market 0:01:51.680 --> 0:01:56.080 took a fed pivot full force and just priced in 0:01:56.240 --> 0:02:00.840 those six rate cuts starting in March. A soft landing 0:02:00.960 --> 0:02:04.720 was almost a one hundred percent probability from the view 0:02:04.760 --> 0:02:05.480 of the market. 0:02:05.800 --> 0:02:08.000 And you know, look, we all spoke. 0:02:08.280 --> 0:02:10.600 During that time period and we said, hey, wait a minute, 0:02:10.600 --> 0:02:13.320 the market is way ahead of itself, right, It's ahead 0:02:13.320 --> 0:02:15.520 of its skis here. We've got to have some of 0:02:15.560 --> 0:02:18.040 this price back out of the market, so we expect 0:02:18.040 --> 0:02:20.480 to see a pullback. We saw some of that in 0:02:20.520 --> 0:02:24.399 the first couple weeks of this year, but we're starting 0:02:24.440 --> 0:02:27.760 to see new highs again, but it's all led by 0:02:27.800 --> 0:02:29.919 those tech stops, that Magnificent seven. 0:02:30.240 --> 0:02:32.799 In our opinion, that's not sustainable for the whole year. 0:02:32.840 --> 0:02:35.600 I want to get back to brass tax Victoria Fernandez, 0:02:35.639 --> 0:02:40.840 Bob Dole, Bob Dole, brass tax Victoria. I type in 0:02:40.880 --> 0:02:44.920 a mutual fund from a UTE, which is basically a 0:02:45.160 --> 0:02:48.320 trust like fun like Rebecca Patterson would have known a 0:02:48.320 --> 0:02:52.799 Bessemer years ago. As conservative Victoria's you get for people 0:02:52.919 --> 0:02:57.880 scared stiff five year eighty fourth percentile, three year, ninetieth 0:02:58.120 --> 0:03:03.079 percentile one year, ninety percentile five years delivered twelve point 0:03:03.160 --> 0:03:07.359 four percent net clean after fees. That's what the market 0:03:07.400 --> 0:03:09.840 timers are missing. How do they catch up? 0:03:11.120 --> 0:03:13.520 Yeah, I'm not sure they're gonna want to play catch 0:03:13.600 --> 0:03:15.240 up at this point. What they want to do is 0:03:15.600 --> 0:03:18.720 position themselves for the rest of this year and not 0:03:18.800 --> 0:03:21.320 worry about the part that they missed. But you can't 0:03:21.320 --> 0:03:24.040 do that by just going all in one area. So 0:03:24.120 --> 0:03:27.720 there's so much cash flow going into some of these 0:03:27.760 --> 0:03:32.480 magnificent seven stocks again, like we saw last year, that 0:03:32.600 --> 0:03:34.720 has to stop and we have to have a broadening out. 0:03:34.760 --> 0:03:37.600 So you look at those returns that you're just mentioning. 0:03:37.880 --> 0:03:42.160 I guarantee those are not concentrated, they're diversified. You've probably 0:03:42.200 --> 0:03:45.320 got a little bit of global exposure, which I think 0:03:45.360 --> 0:03:47.480 you can do, especially if the FED is going to 0:03:47.480 --> 0:03:50.560 be the first central bank to start cutting rates, you 0:03:50.600 --> 0:03:53.320 can dip your toe internationally. You know, I like my 0:03:53.400 --> 0:03:55.840 fixed income, so I want people to have some fixed 0:03:55.840 --> 0:03:59.080 income exposure, even if they keep it very short on 0:03:59.120 --> 0:04:02.880 the conservative side and give themselves five percent cash flow 0:04:03.160 --> 0:04:05.160 coming through. And I think you need to use some 0:04:05.280 --> 0:04:09.840 alternative options in regards to call options, in regards to 0:04:10.120 --> 0:04:13.200 long short portfolios. These are things that are going to 0:04:13.280 --> 0:04:16.880 help you position yourselves for the volatility that we expect 0:04:17.160 --> 0:04:20.080 coming over the next couple quarters, especially as earnings are 0:04:20.120 --> 0:04:22.240 not coming in as strong as many people expected. 0:04:22.360 --> 0:04:22.560 Paul. 0:04:22.560 --> 0:04:28.120 This fun Broadcom, Microsoft Cash, United Healthcare are the top four. 0:04:28.279 --> 0:04:30.920 This is a conservative grandma widow's fund. 0:04:31.240 --> 0:04:31.520 Paul. 0:04:31.640 --> 0:04:35.360 It is eleven point seven percent in semiconductors. 0:04:35.839 --> 0:04:39.320 That's unbelievable. That's a nice place to be, Victoria. 0:04:39.440 --> 0:04:41.000 I know you cut your teeth in the fixed income 0:04:41.040 --> 0:04:43.960 space at Faia's Seraphin one of my favorite clients from 0:04:43.960 --> 0:04:47.320 back in the day in Houston. Where do I go 0:04:47.360 --> 0:04:48.960 and fix income. Do I just sit in a two 0:04:49.040 --> 0:04:51.440 year treasury at four point three percent? Or do I 0:04:51.560 --> 0:04:54.400 try to take some credit risk here, because again I'm 0:04:54.400 --> 0:04:56.440 banking on a soft landing, So do I go out 0:04:56.480 --> 0:04:57.479 there and take some credit risk? 0:04:58.600 --> 0:05:01.360 So, Paul, it really depends on what you're trying to 0:05:01.400 --> 0:05:04.120 do with your fixed income allocation. If that's what you're 0:05:04.200 --> 0:05:07.640 using to generate cash flow, then yes, do a Barbelle 0:05:07.680 --> 0:05:10.800 strategy and put some in that short term. The two 0:05:10.880 --> 0:05:13.440 years actually a little bit overbought right now, So I 0:05:13.440 --> 0:05:16.400 would go even a little shorter twelve months, eighteen months, 0:05:16.600 --> 0:05:18.960 skip that two year period, and then go a little 0:05:18.960 --> 0:05:21.800 bit longer five year, seven year. Lock in some of 0:05:21.839 --> 0:05:24.240 those rates that we're seeing, especially now with a ten 0:05:24.320 --> 0:05:26.600 year back around a four to ten level. We think 0:05:26.640 --> 0:05:28.880 that's probably going to be towards the higher end of 0:05:28.880 --> 0:05:31.600 the trading range that we'll see for a while. Lock 0:05:31.640 --> 0:05:34.560 in some of those cash flows there. But look, credit 0:05:34.720 --> 0:05:38.680 is tight. We are not seeing spread widening like many 0:05:38.720 --> 0:05:41.039 people anticipated that we would see, and I think it's 0:05:41.080 --> 0:05:44.920 because the market anticipates that soft landing. But the way 0:05:45.000 --> 0:05:48.839 earnings are going right now, we have the blended net 0:05:48.880 --> 0:05:53.000 profit margin the lowest in three years. The quarter over 0:05:53.080 --> 0:05:56.240 quarter decline is the largest we've seen since the first 0:05:56.360 --> 0:05:59.000 quarter of twenty twenty. So I would be looking for 0:05:59.040 --> 0:06:02.320 some opportunities spreads to widen out a little bit. Then 0:06:02.360 --> 0:06:04.919 you can jump in and put some high quality bonds 0:06:04.920 --> 0:06:06.960 in there, so an investment grade credit and I think 0:06:06.960 --> 0:06:08.320 you're in a good spot. 0:06:08.560 --> 0:06:11.840 So on the equity side of Victoria again, I mean, 0:06:12.040 --> 0:06:15.440 Tom's been in that Magnificent seven all all along, so 0:06:15.480 --> 0:06:18.000 he's just kind of singing to the choir here. 0:06:18.040 --> 0:06:19.480 But how about the rest of us? 0:06:19.640 --> 0:06:21.240 What do we do here? Do we chase those names 0:06:21.320 --> 0:06:22.880 or do we try to find some value? 0:06:23.960 --> 0:06:24.760 Yeah, don't chase. 0:06:24.800 --> 0:06:28.279 Hopefully you've been in these names all along, right, Even 0:06:28.320 --> 0:06:31.039 though we've been more conservative and we feel like the 0:06:31.120 --> 0:06:34.400 soft landing is not a done deal at this point, 0:06:34.600 --> 0:06:37.680 we've still been fully invested in the market. Microsoft, however, 0:06:37.839 --> 0:06:40.599 is our only name out of the Magnificent seven that 0:06:40.640 --> 0:06:42.320 we've actually been overweight? 0:06:43.040 --> 0:06:45.240 Is the end? What's a pixie? Does there? Come on? 0:06:45.400 --> 0:06:48.800 What's a Bob Dail? I can't believe because he bobbed 0:06:48.800 --> 0:06:53.280 all overweight? Microsoft? Come on, Victoria, what's the magic about Microsoft? 0:06:53.880 --> 0:06:56.119 Well? Look, Microsoft is one of those names. 0:06:56.120 --> 0:06:58.400 And you know, when we talk to our clients, we 0:06:58.480 --> 0:07:02.200 say we want quality of earnings, strength of balance sheet, 0:07:02.560 --> 0:07:06.800 strong cash flows. Microsoft provides us that. We don't think 0:07:06.800 --> 0:07:09.600 you're going to see as much volatility in Microsoft as 0:07:09.600 --> 0:07:11.760 you're going to see in some of the other names 0:07:11.760 --> 0:07:15.120 that have shot up so significantly and then pulled back. 0:07:14.880 --> 0:07:16.080 And now they're back up again. 0:07:16.120 --> 0:07:19.080 Microsoft, out of all of them, has probably been the 0:07:19.120 --> 0:07:22.400 most steady and just moving slowly up into the right. 0:07:22.640 --> 0:07:24.960 So we think it's a good labor term holding in 0:07:25.000 --> 0:07:25.720 your portfolio. 0:07:25.880 --> 0:07:28.040 Twenty seconds. That's all the time. I got to Thank god, 0:07:28.360 --> 0:07:31.760 Lions are forty nine ers. Victoria please, Hey. 0:07:31.600 --> 0:07:34.120 I'm going for the forty nine. 0:07:34.680 --> 0:07:38.280 My god, it's just too much. I get rich once 0:07:38.320 --> 0:07:38.680 a year. 0:07:38.840 --> 0:07:39.720 Victoria. 0:07:40.040 --> 0:07:43.160 Oh, you can't beat that O line in Trent Williams. 0:07:43.200 --> 0:07:46.040 Come on, there we go, Victoria for this is real 0:07:46.040 --> 0:07:48.760 football talk. She's diable Texas. It's like she knows what 0:07:48.760 --> 0:08:01.640 it's just like. This is an esteemed guest. He's been 0:08:01.680 --> 0:08:05.760 a huge supporter of Bloomberg Savaniance. Brian Weezer's with Madison Wall, 0:08:05.800 --> 0:08:09.800 where he writes, writes rights and consults to the advertising industry, 0:08:09.880 --> 0:08:13.520 think Madmen, think Madison Avenue of Long Ago and far Away. 0:08:13.600 --> 0:08:17.480 Brian knows. I am a confirmed reader of Lucas Shaw 0:08:17.680 --> 0:08:21.480 at Bloomberg. I can't say enough about the value of 0:08:21.560 --> 0:08:25.480 Lucas Shaw's newsletter at Bloomberg. I'll put it out on LinkedIn. 0:08:25.800 --> 0:08:28.480 And also I Readigitay, which is like the Brian Rezer 0:08:28.600 --> 0:08:32.560 Report and Paul the industry that you follow that Brian 0:08:32.559 --> 0:08:37.199 Weezer's part of it's insane. It's like it's like Reavers 0:08:37.240 --> 0:08:39.240 from years ago. That's nuts. 0:08:39.440 --> 0:08:42.720 It is absolutely crazy. And thankfully for us Brian Weezers 0:08:42.800 --> 0:08:45.160 on top of the Brian Wheezer, he's a principal Madison 0:08:45.200 --> 0:08:47.520 and Wall. Hey, Brian, thanks so much for joining us here. 0:08:47.600 --> 0:08:50.760 You know, we got a report from Netflix last night 0:08:50.880 --> 0:08:52.439 and boy, they're. 0:08:52.200 --> 0:08:53.160 Doing it right. 0:08:53.559 --> 0:08:58.160 What are they doing right that perhaps the traditional media 0:08:58.200 --> 0:09:00.880 companies just aren't getting it right now. 0:09:02.240 --> 0:09:04.000 Well, first of all, thanks for having me as always, 0:09:04.040 --> 0:09:06.600 but yeah, it's what they're doing right. I think they're 0:09:06.600 --> 0:09:09.320 investing in their business. What a crazy idea that you 0:09:09.400 --> 0:09:13.480 can grow when you invest. But yeah, that's different than 0:09:13.520 --> 0:09:15.319 a lot of the media industry right now, where they're 0:09:15.320 --> 0:09:19.079 really talking more in terms of austerity, and what a shocker, 0:09:19.280 --> 0:09:23.000 they're not really growing as much. I think they've been 0:09:23.440 --> 0:09:26.079 focused on a global opportunity and the fact that there 0:09:26.160 --> 0:09:30.600 is more growth from globalization also shocking statement. And yet 0:09:30.840 --> 0:09:32.000 it seems to work. 0:09:32.200 --> 0:09:34.360 Right my reading of this. And of course this has 0:09:34.400 --> 0:09:36.760 everything to do folks with our new distribution of Apple 0:09:36.800 --> 0:09:40.560 car Play, and we're absolutely thrilled with the YouTube live response. 0:09:40.679 --> 0:09:42.720 Look for that Bloomberg podcast. I'll do all that on 0:09:42.760 --> 0:09:46.079 LinkedIn and Twitter and that. But Brian, to me, it's 0:09:46.120 --> 0:09:50.040 almost monopsimistic in that there's going to be a few standing. 0:09:50.440 --> 0:09:53.880 Let me pick on two are Netflix in YouTube the 0:09:53.960 --> 0:09:55.800 few standing in five years. 0:09:57.480 --> 0:09:59.960 No, I think it's much broader than that. I mean 0:10:00.120 --> 0:10:02.760 to be clear, when it comes to video industry, the 0:10:02.800 --> 0:10:05.559 three players you could point to who are with fairly 0:10:06.040 --> 0:10:10.280 certain fair certainty doing it right are Netflix, Amazon and Apple. 0:10:10.800 --> 0:10:14.720 They're all investing billions of dollars against content. They're focused 0:10:14.760 --> 0:10:21.360 on global opportunities. You know, they're basically positioning themselves where 0:10:21.400 --> 0:10:25.840 they can apply scale economics. So they're all in pretty 0:10:25.840 --> 0:10:31.800 good shape. Disney, notwithstanding some setbacks, is relatively better off 0:10:32.559 --> 0:10:35.440 than others. At least they are more focused on the 0:10:35.480 --> 0:10:38.520 global opportunity than others. They're just kind of Disney's a 0:10:38.520 --> 0:10:42.800 little strategically adrift right now. I assume look that they're 0:10:42.800 --> 0:10:46.440 footing once well either Aiger has his team in place, 0:10:46.480 --> 0:10:50.120 because I don't think he does necessarily, or whenever there's 0:10:50.160 --> 0:10:53.160 a successor. But they really do seem to have the 0:10:53.240 --> 0:10:54.840 right bones. 0:10:55.040 --> 0:10:55.679 For lack of a. 0:10:55.600 --> 0:10:58.480 Better word, I think it's the others who are in 0:10:58.520 --> 0:11:01.080 a really really bad place. Cast I should add also, 0:11:01.240 --> 0:11:06.199 because you know they're not going anywhere with NBCU, They'll 0:11:06.200 --> 0:11:09.160 be fine, probably, but I think that they also haven't 0:11:09.200 --> 0:11:11.800 invested as much against the global opportunity outside of Sky 0:11:12.920 --> 0:11:16.000 really covered just a handful of markets for the most part. Anyways, 0:11:16.080 --> 0:11:18.200 I think that because you need to invest in content, 0:11:18.240 --> 0:11:21.120 you need to invest globally, and you need to actually 0:11:21.160 --> 0:11:24.160 believe in your business. Those are the three elements. 0:11:24.160 --> 0:11:26.240 And it's not just Netflix, so Brian, I mean, there's 0:11:26.280 --> 0:11:28.520 a whole host of you know, kind of what i'll 0:11:28.559 --> 0:11:33.000 call traditional media companies, legacy media companies. I just don't 0:11:33.040 --> 0:11:34.760 know what to do. I mean, you know, I've been 0:11:34.760 --> 0:11:36.800 in this business as long as you have. If I 0:11:36.840 --> 0:11:38.920 were an investor, I couldn't put any money to work 0:11:38.960 --> 0:11:40.480 in that space. I don't know what to do with 0:11:40.520 --> 0:11:43.480 the traditional media companies, how do you think they adapt? 0:11:43.480 --> 0:11:45.520 There's just going to be a consolidation wave. What do 0:11:45.559 --> 0:11:47.280 you think is going to happen to you know, all 0:11:47.320 --> 0:11:49.079 these legacy media companies. 0:11:49.559 --> 0:11:52.839 Well, exactly, And I think that everyone's expecting that there 0:11:52.840 --> 0:11:56.160 definitely needs to be again more strategic clarity that would 0:11:56.280 --> 0:11:58.920 that would be helpful, and and a belief that it 0:11:59.000 --> 0:12:00.840 that you know, it's it is about more than just 0:12:00.920 --> 0:12:03.720 consolidation because right now, certainly when it comes to Paramount, 0:12:03.720 --> 0:12:07.679 when it comes to Warner that's certainly where the focus is. 0:12:07.760 --> 0:12:10.120 And I think the expectation is NBCU and in set 0:12:10.160 --> 0:12:12.520 of Concast is in both. But in terms of like 0:12:12.559 --> 0:12:15.480 where the opportunity is, yeah, it's you have to find 0:12:15.480 --> 0:12:17.200 your spots in the right value of the right day. 0:12:17.520 --> 0:12:21.680 Brian, a major major value investor with huge R squared 0:12:21.760 --> 0:12:25.640 success in the industry, emails in worships. Everything you talk about, 0:12:26.120 --> 0:12:30.080 you've just described content, and that describes a train wreck 0:12:30.240 --> 0:12:34.240 known as Warner Brothers Discovery. We've all got our biases here. 0:12:34.240 --> 0:12:37.520 I read variety like everybody else. But what I see 0:12:37.520 --> 0:12:39.719 in a way that the average cost of capital all 0:12:39.760 --> 0:12:44.160 of the recent radio bankruptcy that we saw is a 0:12:44.320 --> 0:12:49.000 ton of debt. At WBD, I got them listed out 0:12:49.000 --> 0:12:52.559 as sixty two point nine percent debt. Can Warner Brothers 0:12:52.679 --> 0:12:55.920 make the divide to successful the reach go over the 0:12:55.960 --> 0:12:59.600 canyon to the nirvana of successful content? 0:13:01.480 --> 0:13:01.800 Again? 0:13:02.040 --> 0:13:06.080 I think their focus, unfortunately, has been away from the 0:13:06.120 --> 0:13:08.400 things that one would need to invest into drive growth 0:13:08.440 --> 0:13:09.240 at the present time. 0:13:09.280 --> 0:13:11.920 Why can't they do that? This is critical? Why can't 0:13:11.920 --> 0:13:15.040 they do what Netflix does? What Apple TV's what is it? 0:13:15.160 --> 0:13:18.440 Constellation's coming out? I got scared at the trailer. Yes, 0:13:18.720 --> 0:13:20.960 but Brian, why can't they do what the others are doing? 0:13:22.320 --> 0:13:22.800 They could? 0:13:23.080 --> 0:13:25.000 I mean, I think anyone could. I think it's just 0:13:25.040 --> 0:13:26.760 a matter against strategic clarity? 0:13:27.080 --> 0:13:27.880 Is the thing? 0:13:27.960 --> 0:13:30.560 Right? Go back to Disney twenty eighteen, right when they 0:13:30.559 --> 0:13:33.480 announced Disney Plus. Go back to everything that Bob Iger 0:13:33.679 --> 0:13:36.680 was talking about then. He was absolutely spot on in 0:13:36.760 --> 0:13:39.920 terms of what they needed to do. Unfortunately, Wall Street 0:13:39.960 --> 0:13:43.360 and possibly even Disney did not understand that the economics 0:13:43.400 --> 0:13:46.240 of this were not going to be favorable. But making 0:13:46.280 --> 0:13:49.440 a bad decision was better than making a worse one. 0:13:50.000 --> 0:13:52.880 They made the bad decision, and it was the right 0:13:52.920 --> 0:13:55.920 one given where the industry was going. So sometimes I 0:13:55.920 --> 0:13:57.840 think the companies just need to get comfortable with the 0:13:57.840 --> 0:14:00.360 idea of it's gonna be not as as good as 0:14:00.400 --> 0:14:02.080 you'd like it to be. You can't go back to 0:14:02.120 --> 0:14:04.079 where it was, but you can make the most of 0:14:04.120 --> 0:14:05.320 the world the way it will be. 0:14:06.000 --> 0:14:06.560 And I think. 0:14:06.440 --> 0:14:10.600 That that's the sort of conviction that certainly investors who 0:14:10.640 --> 0:14:13.560 make multi billion dollar bets when they're able to, usually 0:14:13.600 --> 0:14:15.959 have a lot of conviction. You do want to see 0:14:16.000 --> 0:14:19.080 that from the companies putting their capital to work. 0:14:19.200 --> 0:14:22.760 Hey, Brian, with all your experience in any advertising space, 0:14:22.840 --> 0:14:25.800 particularly at Group M, with the biggest TV advertising buyer 0:14:26.200 --> 0:14:29.360 in the world, talk to us about the TV advertising business. 0:14:29.440 --> 0:14:33.800 I mean, outside of some NFL games, is there any 0:14:33.880 --> 0:14:37.640 reason to think that television advertising business, broadcasting cable can 0:14:37.680 --> 0:14:41.120 ever grow again, because that's critical for these media companies. 0:14:42.240 --> 0:14:44.360 Nope, nope, I mean, and this is the thing, at 0:14:44.440 --> 0:14:48.520 least in the United States television outside of the bumps 0:14:48.520 --> 0:14:52.360 you see from political advertising and from the Olympics, which 0:14:52.400 --> 0:14:55.880 you know, it's individual companies on a short term basis, 0:14:56.160 --> 0:14:59.400 but the long term, transpermanent decline. There's no way around it, 0:14:59.480 --> 0:15:03.600 and that why the biggest opportunities are for Meta and 0:15:03.800 --> 0:15:07.920 Alphabet and Amazon and lots of other players, but television 0:15:07.960 --> 0:15:08.800 no permanent decline. 0:15:08.840 --> 0:15:12.720 Ryan thirty seconds here this week without questions, Sports Illustrated 0:15:12.720 --> 0:15:15.040 at the Kiosk down at the corner of Lexington and 0:15:15.120 --> 0:15:17.960 fifty eighths would have a cover of the Detroit Lions 0:15:18.000 --> 0:15:23.440 winning large. It's over, it's gone our SI and magazines 0:15:23.440 --> 0:15:25.680 and honor of Frank to Ford is it dead? 0:15:27.720 --> 0:15:30.280 Yeah, I think magazines in their print form, it's funny. 0:15:30.320 --> 0:15:35.280 The disinvestment of print, the disinvestment of content, the focus 0:15:35.280 --> 0:15:38.320 in the case of SI and the Arena Group unfortunately 0:15:39.120 --> 0:15:45.440 of an original human content is the problem. And yeah, it's. 0:15:44.240 --> 0:15:47.920 Brian Weezer Madison will hugely advantaged. Can't say enough about 0:15:47.920 --> 0:15:55.120 his industry comments. We're gonna get right to it. This 0:15:55.200 --> 0:15:58.680 conversation is so important, joining us from RBC Capital Markets 0:15:58.720 --> 0:16:02.560 just really really exceptional in the acuity of the market 0:16:02.600 --> 0:16:05.360 and looking over what are called the Greek letters and 0:16:05.440 --> 0:16:09.800 the cross moments. That statistical talk is Amy wou Silverman, Amy, 0:16:09.880 --> 0:16:13.640 what's changed in the Greeks with this melt up, particularly 0:16:13.720 --> 0:16:17.440 in magnificent seven, Like what is Skew done for Global 0:16:17.520 --> 0:16:18.040 Wall Street? 0:16:19.840 --> 0:16:22.600 Good morning Tom. You know, it's funny because the market 0:16:22.720 --> 0:16:25.040 is really back to its old ways. The kind of 0:16:25.080 --> 0:16:27.600 things that worked last year are starting to work again, 0:16:28.040 --> 0:16:31.800 But the option sentiment is actually quite different. So, you know, 0:16:31.880 --> 0:16:35.440 even though we have this mag seven megacap tech rally 0:16:35.480 --> 0:16:39.640 again seems familiar, the option sentiment is just not nearly 0:16:39.840 --> 0:16:42.760 as bold up as it was last year when we 0:16:42.800 --> 0:16:45.560 had that Nvidia chase and we had that AI frenzy. 0:16:46.080 --> 0:16:49.360 You know, I'd say it's meant at best in terms 0:16:49.440 --> 0:16:52.800 of the bollishness, but we aren't seeing the bearishness yet. 0:16:52.880 --> 0:16:55.320 So I think it's sort of a tale of both 0:16:55.360 --> 0:16:57.840 headwinds and tailwinds, and the volatility winds. 0:16:57.880 --> 0:16:59.840 Can you can you see if this is cash moving 0:16:59.880 --> 0:17:02.120 into the market, I mean as cash getting out front 0:17:02.120 --> 0:17:04.680 of a move, say from five point one five percent 0:17:04.760 --> 0:17:07.040 yield down to four point eight percent yield. 0:17:08.680 --> 0:17:11.320 You know, it's interesting because I actually think it's a 0:17:11.359 --> 0:17:14.760 function of the fact that cash did move into the market, 0:17:14.800 --> 0:17:18.040 meaning our positioning is far more long now than it 0:17:18.119 --> 0:17:20.360 was at this point last year. Because when you think 0:17:20.400 --> 0:17:23.440 about a lot of that momentum chase up, Tom, it's 0:17:23.480 --> 0:17:25.679 folks who need to jump into the pool, and to 0:17:25.760 --> 0:17:28.119 some degree, everyone's already swimming in the pool, so that 0:17:28.160 --> 0:17:31.320 incremental chase just gets weaker and weaker, which is why 0:17:31.359 --> 0:17:33.760 I don't think we see that call skew that bold 0:17:33.840 --> 0:17:37.199 up sentiment really really high. But you know, again, we 0:17:37.240 --> 0:17:39.560 don't see that downside pick up either. And you know, 0:17:39.640 --> 0:17:41.720 as we know, if tech goes, the market goes, So 0:17:41.720 --> 0:17:42.359 that's what we're wanting. 0:17:42.440 --> 0:17:45.239 Over the weekend, Paul and Amy was Silverman's world. I 0:17:45.320 --> 0:17:49.920 was thunderstruck by the statistical lack of exuberance. I don't 0:17:49.920 --> 0:17:51.639 want to say I've never seen this before, but I 0:17:51.680 --> 0:17:53.560 think I've never seen this right exactly. 0:17:54.040 --> 0:17:56.359 I know so Amy, I mean, you know, we kind 0:17:56.400 --> 0:17:59.159 of started first of all, I mean that novembery December 0:17:59.240 --> 0:18:01.720 last year to write home about. I'm not really sure 0:18:01.720 --> 0:18:04.359 what drove that, but we started the year kind of 0:18:04.680 --> 0:18:06.200 I kind of thought, you know, the market was soft 0:18:06.200 --> 0:18:08.720 the first week or so of the year. I said, Okay, 0:18:08.720 --> 0:18:10.080 we're going to give back some of the games we 0:18:10.119 --> 0:18:11.680 had at the end of the year, but it's kind 0:18:11.680 --> 0:18:15.240 of solidified here. How do you feel about this market? Here, 0:18:15.280 --> 0:18:17.360 can you work higher? What are the signs that you're 0:18:17.400 --> 0:18:17.800 looking at? 0:18:19.560 --> 0:18:22.400 Yeah, so we are watching these signs really closely. One 0:18:22.440 --> 0:18:24.879 of the things that we will be watching for is 0:18:25.280 --> 0:18:28.080 if we continue to see a shift in option dynamics. 0:18:28.119 --> 0:18:30.280 So we kind of call this spot up wall up. 0:18:30.280 --> 0:18:33.520 But essentially what we mean is, as the market moves higher, 0:18:33.680 --> 0:18:37.280 is volatility moving higher or is it moving lower. Historically 0:18:37.320 --> 0:18:39.800 it's supposed to move lower. Volatilely supposed to go the 0:18:39.880 --> 0:18:43.000 opposite way, right, but we actually occasionally see volatilely go 0:18:43.160 --> 0:18:45.760 up because people are actually buying calls along the way. 0:18:46.200 --> 0:18:48.840 If that starts to strengthen, if that starts the cycle, 0:18:48.920 --> 0:18:50.919 that means we have another leg up. That's what we 0:18:50.960 --> 0:18:54.200 saw during the Nvidia rally, but it's much weaker this time. 0:18:54.240 --> 0:18:56.080 As I was saying, so, you know, I don't know 0:18:56.119 --> 0:18:59.400 how much steam is left in this, but that's definitely 0:18:59.480 --> 0:19:00.600 the sign puts to watch. 0:19:00.720 --> 0:19:03.560 The expect tech to be the leader in twenty four 0:19:03.600 --> 0:19:05.879 as it was in twenty three. I'm not sure if 0:19:05.880 --> 0:19:08.679 it's a Magnificent seven or in Nvidia, but the expect 0:19:08.720 --> 0:19:10.920 Tech broady defined to continue to be a market leader. 0:19:12.800 --> 0:19:15.320 You know, this is obviously a tough question, but I 0:19:15.320 --> 0:19:18.280 think it comes down to what happens with rates, as 0:19:18.720 --> 0:19:22.399 with everything unfortunately, and you know right now it comes 0:19:22.440 --> 0:19:24.840 down to this debate that we have between those March 0:19:24.880 --> 0:19:27.479 and June tenors. I can tell you the way the 0:19:27.520 --> 0:19:30.399 options market is pricing right now is there is like 0:19:30.440 --> 0:19:33.880 a noticeable tick up on the index level. So when 0:19:33.880 --> 0:19:36.879 you talk about VIX and SMP, that would tell me 0:19:37.000 --> 0:19:40.920 that folks aren't nearly as bold up in general as 0:19:40.920 --> 0:19:43.719 they were last year. And occasionally, you know, that can 0:19:43.800 --> 0:19:45.840 be wrong, but it tends to be a good indicator 0:19:45.840 --> 0:19:47.320 of just the fears in the market, and we do 0:19:47.400 --> 0:19:48.720 see that tick up so amy. 0:19:48.760 --> 0:19:50.840 I mean, you know, Tom keeps us on our toes 0:19:50.840 --> 0:19:53.920 here in looking at the vics, looking at volatility here, 0:19:54.400 --> 0:19:57.879 and again of vix it twelve point five. I'm not 0:19:57.880 --> 0:19:58.920 sure what that tells me here. 0:20:00.800 --> 0:20:03.840 It's really tough, and it's given us derivatives folks a 0:20:03.840 --> 0:20:06.400 little bit of existential dread, you know, because a lot 0:20:06.400 --> 0:20:08.359 of this, a lot of those has to do with 0:20:08.440 --> 0:20:10.639 the rise of zero dat to x pre trading. I 0:20:10.960 --> 0:20:14.000 do think there are these structural concerns right now where 0:20:14.040 --> 0:20:17.080 you can't really just use VIX alone anymore because it's 0:20:17.080 --> 0:20:20.159 giving you a thirty day weighted outlook of imply volatility. 0:20:20.160 --> 0:20:22.880 But half the trading is done on options that expire 0:20:22.920 --> 0:20:25.679 within one day. You know, to some degree our toolbox 0:20:25.720 --> 0:20:27.840