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Disney Tops Estimates, Tariffs Latest · Bloomberg Intelligence

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  Speaker 2: All right, let's get back to Disney. I'm told the
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  Speaker 2: market can't make up its mind. I'm interested to see
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  Speaker 2: what the experts think we got, Paul. Let's get Keitha
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  Speaker 2: either wrong Nathan Boomberg, Intelligence, Senior analyst on US Media.
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  Speaker 3: All right, Keitha, what was your biggest takeaway here from Disney?
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  Speaker 4: Really solid quarter for them, Alex and this is a
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  Speaker 4: really strong start for them for fiscal twenty twenty five.
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  Speaker 4: So you know, the big numbers, of course that we
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  Speaker 4: constantly look for when Disney reports is how did it
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  Speaker 4: do on the streaming subscriber front? And we did expect
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  Speaker 4: them to lose a good amount of subscribers, just kind
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  Speaker 4: of given the price increases that went in effect date
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  Speaker 4: last year, almost fifteen to twenty five percent price increases,
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  Speaker 4: but churn was very very limited, so came in much
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  Speaker 4: better than they had expected, than we had expected. And
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  Speaker 4: then again the parks numbers. Now, remember, you know we
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  Speaker 4: have been seeing some demand moderation at the parks, but
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  Speaker 4: they actually again held up better than expected. So all
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  Speaker 4: of those you know, you put all of that together,
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  Speaker 4: including streaming profits, you had over a forty percent increase
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  Speaker 4: in adjusted EPs. So financially, I think the company is
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  Speaker 4: off on a solid footing and off to a very
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  Speaker 4: good start for twenty twenty five.
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  Speaker 5: What could be a less than positive view of this
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  Speaker 5: quarter here because I'm seeing the stock kind of all
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  Speaker 5: over the place, gith it teams like maybe the market
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  Speaker 5: can't really decide, So what are some of the concerns
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  Speaker 5: out there? Maybe from this quarter?
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  Speaker 4: I think what was slightly disappointing, Paul, is that they
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  Speaker 4: didn't raise guidance. So you know, they did deliver forty
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  Speaker 4: percent increase in EPs, but they're still talking about fullier
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  Speaker 4: EPs only growing in the high single digits. I think
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  Speaker 4: that's where maybe the market is slightly disappointed again with
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  Speaker 4: the parks, also, they didn't necessarily raise guidance. And remember
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  Speaker 4: with the parks, there is a little bit of concern
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  Speaker 4: about what competition can potentially do when a new theme
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  Speaker 4: park from Comcast NBC Epic Universe opens this May, and
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  Speaker 4: there's still like, you know, really conflicting views about this,
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  Speaker 4: although management seems to think that it's actually it's kind
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  Speaker 4: of this rising tide that lifts all boats, so they've
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  Speaker 4: downplayed it, but I think there is still some concern
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  Speaker 4: about that. And then the other big thing that you know,
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  Speaker 4: everyone's kind of looking at or waiting for, is the
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  Speaker 4: launch of what they call Flagship ESPN, which is the
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  Speaker 4: first time that ESPN, the full blown product will be
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  Speaker 4: available without a PATV subscription. So that's going to happen
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  Speaker 4: sometime in the fall of this year, and so again
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  Speaker 4: there are going to be some launch casts where that
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  Speaker 4: product prices, what the subscriber outlook will be, so a
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  Speaker 4: little bit of uncertainty there as well. But overall, really
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  Speaker 4: really strong results and.
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  Speaker 2: The streaming operation in Film Studio look me in like
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  Speaker 2: a thirty percent thirty one percent gain and operating income.
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  Speaker 3: For the quarter. Was that really driven by price hikes
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  Speaker 3: for streaming.
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  Speaker 4: For streaming, yes, it was a lot of it was
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  Speaker 4: driven by you know, we saw really solid our pool growth.
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  Speaker 4: What we're going to continue to see Alex through the
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  Speaker 4: rest of the quarters is what you know, exactly what
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  Speaker 4: Netflix did. You know, Disney's kind of taking a page
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  Speaker 4: out of that Netflix playbook with what they call page
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  Speaker 4: sharing or cracking down on passwords sharing, and so we're
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  Speaker 4: going to see that kind of really ramp up in
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  Speaker 4: terms of the streaming profitability numbers. And then you pointed to,
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  Speaker 4: you know, content, the box office has absolutely had a
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  Speaker 4: marvelous run kind of reversing so many of you know,
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  Speaker 4: the misfires that we had in earlier years, and they're
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  Speaker 4: going to continue to build on that. And as some
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  Speaker 4: of those movies come on to the streaming platform again,
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  Speaker 4: they expect that to drive subscriber growth as well.
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  Speaker 5: So, Keith, what's the market thinking about profitability for streaming
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  Speaker 5: at Disney? We kind of you look at the Netflix
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  Speaker 5: margins and is there a belief that this isn't can
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  Speaker 5: at least get approached. The Netflix profitabiliting absolutely, I think so.
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  Speaker 4: I don't think it's going to be immediate though, Paul.
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  Speaker 4: I mean for this year they are guiding to about
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  Speaker 4: a billion dollars in profit. They did say that they
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  Speaker 4: will get to double digit margins in fiscal twenty twenty six. Now,
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  Speaker 4: remember Netflix is already close to thirty percent margins. So
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  Speaker 4: you know, you still do have that big delta ten
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  Speaker 4: percent versus thirty percent. But I think that's where all
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  Speaker 4: of the upside really is with Disney. I mean, this
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  Speaker 4: is a complex story with many many different moving parts,
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  Speaker 4: but streaming is obviously one of the you know, huge
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  Speaker 4: positive catalysts and I think we're going to see that
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  Speaker 4: streaming profitability continue to build, especially as they have a
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  Speaker 4: lot of pricing power and all of these other different initiatives.
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  Speaker 4: And remember, for them, as opposed to Netflix, one area
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  Speaker 4: where Disney is better than Netflix is advertising. They've got
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  Speaker 4: all of those different you know, all of the plumbing
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  Speaker 4: is in place. They are the biggest digital advertiser right
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  Speaker 4: now out there in the market. They make even more
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  Speaker 4: in connected TV advertising than YouTube does, so you know,
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  Speaker 4: they obviously have you know, an advantage of first moved advantage,
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  Speaker 4: I would say with respect advertising.
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  Speaker 3: Okay, so you mentioned how that flagship ESPN.
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  Speaker 6: Area will do.
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  Speaker 3: What's your biggest question now going forward?
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  Speaker 4: Yes, it's really going to be how exactly. So again
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  Speaker 4: with with ESPN, we have a little bit of you know,
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  Speaker 4: questions in terms of where exactly the subscribers will trend
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  Speaker 4: for that product. A lot of it I think will
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  Speaker 4: depend on where the product prices. So that's a little
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  Speaker 4: bit of a wait and watch story. And then with parks,
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  Speaker 4: you know, yes, we do have confidence that they do
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  Speaker 4: have a lot of positive levers. We know that, you know,
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  Speaker 4: the international parks are performing extremely well. Cruise lines is
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  Speaker 4: something that they're really expanding into. And if you just
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  Speaker 4: kind of look at the cruise line trajectory, I mean,
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  Speaker 4: this was a two billion dollar revenue business in twenty
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  Speaker 4: twenty four. We think this will potentially get to about
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  Speaker 4: ten billion dollars by you know, twenty thirty. And at
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  Speaker 4: that point, Paul, you know, we think it could make
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  Speaker 4: well over three four billion dollars in ibade, which means
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  Speaker 4: it's bigger than ESPN at that point. So, you know,
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  Speaker 4: cruises is going to be a big portion of their
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  Speaker 4: park story. So I think the diversification you know, story
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  Speaker 4: is playing out really well for them with barks. But
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  Speaker 4: again there's a little bit of weight and watch. I
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  Speaker 4: think twenty twenty five is still a little bit of
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  Speaker 4: a transition year for them.
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  Speaker 5: All right, Githa, let's back up. We you know, I
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  Speaker 5: think there's a fair level of confidence in the Disney
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  Speaker 5: story how about some of the other companies.
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  Speaker 7: I think about.
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  Speaker 5: Warner Brothers Discovery, I think about Paramount. What are companies
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  Speaker 5: like that do this in this world? How do you
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  Speaker 5: think that plays out?
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  Speaker 4: Yeah, So I think for Warner Brothers Discovery, Paul, I
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  Speaker 4: think there is still going to be a lot of
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  Speaker 4: focus on how the TV business is going to perform. Ironically,
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  Speaker 4: I think this year TV is actually in good shape.
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  Speaker 4: I mean why I say ironically is because they actually
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  Speaker 4: lost the rights to the NBA, and so everybody was
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  Speaker 4: kind of very, very fearful of how exactly, you know,
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  Speaker 4: Ibadah was going to be, how affiliate revenue was going
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  Speaker 4: to be for this year. But they actually got two
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  Speaker 4: huge deals in place, one with Comcasts, the other one
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  Speaker 4: with Charter, which basically kept their affiliate fees flat. So
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  Speaker 4: the revenue trajectory looks decent. I would say for Warner
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  Speaker 4: Brothers Discovery, I think the problem really for them is
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  Speaker 4: going out, you know, into the future, and what they
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  Speaker 4: decide to do. Is consolidation going to be a big thing.
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  Speaker 4: It could be a big thing for them. I mean,
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  Speaker 4: we already know that Comcast is kind of spun out.
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  Speaker 4: It's cable networks. We don't know if Warner Brothers is
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  Speaker 4: kind of going to follow suit and you know, maybe
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  Speaker 4: do some kind of transaction with Comcast. So that's a
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  Speaker 4: little bit of a wait and watch. And again with
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  Speaker 4: Paramount again, we're kind of in limbo here because we
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  Speaker 4: really don't know what sky Dance is going to do
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  Speaker 4: in terms of strategy for the new company. I mean,
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  Speaker 4: they're already facing some regulatory hurdles, but assuming the transaction
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  Speaker 4: goes through, we really have to kind of wait and
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  Speaker 4: see exactly what sky Dance wants to do with the
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  Speaker 4: assets again, whether they're going to let go of some
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  Speaker 4: of those linear TV assets, what their real trust is
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  Speaker 4: going to be.
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  Speaker 2: Great stuff, Thank you so much. Gita really appreciated best analysis.
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  Speaker 2: Along with Paul on the street. The two of you
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  Speaker 2: like cannot get any better than that, Either wrong or
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  Speaker 2: anthen a Bloomerg Intelligence Senior US media analyst.
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  Speaker 2: daughter still loved Mowana to and Mohana had a sister
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  Speaker 2: Mowana too, so cute, so that worked.
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  Speaker 8: Did you miss Tom singing the Moana song this morning?
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  Speaker 3: I did. That's sad for you. It's good for you.
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  Speaker 3: That's all right, because I was to like this song.
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  Speaker 2: Back to the markets and the question marks, the question
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  Speaker 2: marks right now, coming very much from DC. I want
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  Speaker 2: to get more intake right now with Henry de Tris,
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  Speaker 2: Managing partner and director of Economic Policy at Beta Partner.
• 8:48
  Speaker 2: She joins us from Louisiana. Henritta, Last time we talked,
• 8:51
  Speaker 2: you said you're going to be looking for signals from
• 8:53
  Speaker 2: what happens to Trump's cabinet nominees. Who protests, who doesn't?
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  Speaker 2: Do they sail through? To me, everyone's sailing through. So
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  Speaker 2: what does that tell you?
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  Speaker 6: Yeah?
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  Speaker 7: Absolutely, it tells me quite a few things actually, which
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  Speaker 7: is really helpful and constructive. Number One the Senate Majority
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  Speaker 7: Leader John Dune does not want to hear Trump reiterate
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  Speaker 7: his calls for recess appointments, which takes quite a bit
• 9:15
  Speaker 7: of power away from the United States Senate to advising consent,
• 9:18
  Speaker 7: which they take very seriously.
• 9:20
  Speaker 6: So they're picking and choosing their battles.
• 9:22
  Speaker 7: And why is that Because we have a massive legislative
• 9:25
  Speaker 7: agenda heading their way and they want to be able
• 9:28
  Speaker 7: to override the House Republican leadership. So this comes into
• 9:32
  Speaker 7: play with a one or two reconciliation bill strategy, and
• 9:36
  Speaker 7: as of this afternoon, Senate Budget Committee Chairman Lindsay Graham
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  Speaker 7: is going to start exerting his power to run over
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  Speaker 7: the better legislative agenda intuitions of the House Republican leadership.
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  Speaker 7: So this to me signals that the Senate's trying to
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  Speaker 7: keep Trump happy knowing that they're about to run rough
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  Speaker 7: shot over the House, which is very normal, and that
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  Speaker 7: they also want to avoid the idea of recess appointment
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  Speaker 7: constructive guidance coming from just their actions here.
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  Speaker 5: All right, from the White House. Henriette Tariff's on Tariff's off,
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  Speaker 5: Tariff's delayed, is there? What's the sense in Washington, DC
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  Speaker 5: about what the strategy is maybe a President Trump administration.
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  Speaker 7: I think a lot of members are sort of not
• 10:19
  Speaker 7: even bothering to pretend that they know strategy, but are
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  Speaker 7: instead giving us also really important context clues about what
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  Speaker 7: they're expecting to factor in from tariff revenue on the
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  Speaker 7: next tax bill or the next immigration, military spending.
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  Speaker 6: Energy package.
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  Speaker 7: They are factoring in some level of revenue from tariffs,
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  Speaker 7: and the estimates are anywhere between seven hundred billion and
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  Speaker 7: one trillion dollars. So it's not really a question of
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  Speaker 7: how the President goes about landing on putting tariffs in place.
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  Speaker 7: There's obviously been fits and starts, thirty day delays with Canada, Mexico.
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  Speaker 6: Maybe there will be a phone call with President she
• 10:54
  Speaker 6: and China. But they're really more.
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  Speaker 7: Giving us the valuable guidance that they are going to
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  Speaker 7: be being tariffs in their revenue scores, which means that
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  Speaker 7: they expect tariffs to go on. However the President decides
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  Speaker 7: to impose them, so again instructive just in their directionality
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  Speaker 7: of incorporating tariff revenue into their forecast.
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  Speaker 2: Yeah, I thought we were going to get that g
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  Speaker 2: Trump call yesterday, So I don't know. I'll keep waiting
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  Speaker 2: for that one. So actually, let's combine these two points then,
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  Speaker 2: because if we do expect to see some form of
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  Speaker 2: tariffs because of that revenue estimate that you talked about,
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  Speaker 2: and we do see no one wanting to torpedo the
• 11:25
  Speaker 2: Trump agenda on their Republican side, does this mean that
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  Speaker 2: the tax bill has a significant chance of getting through
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  Speaker 2: and getting through quickly.
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  Speaker 6: No, definitely not.
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  Speaker 7: What's never reminds the Senate is about too, it's exactly
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  Speaker 7: the opposite of that. I think the House Republican Conference
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  Speaker 7: is effectively nowhere on a budget. They have a very
• 11:44
  Speaker 7: fractured conference and only one seat to spare in terms
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  Speaker 7: of votes, so they don't have a path.
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  Speaker 6: Forward on one big bill or maybe even two.
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  Speaker 7: However, what the Senate is doing is they're trying to
• 11:54
  Speaker 7: give President Trump a legislative win, especially going into his
• 11:56
  Speaker 7: Joint Address to Congress on March fourth. They have an
• 11:59
  Speaker 7: ambitious online where they're going to try to get budget
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  Speaker 7: reconciliation instructions done in February and early March. Tea up
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  Speaker 7: actually writing the bill in April, but this would be
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  Speaker 7: on the smaller immigration and military spend package the tax bill.
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  Speaker 6: In my opinion has been consistent. It's not going to
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  Speaker 6: pass until December.
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  Speaker 7: We're talking about five trillion dollars worth of negotiations that
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  Speaker 7: takes months, indeed almost a full year, and they've known
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  Speaker 7: that this is coming since twenty seventeen when the tax
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  Speaker 7: bill passed. So we still have a lot of work
• 12:27
  Speaker 7: to do, and in the intervening months we have to
• 12:30
  Speaker 7: deal with a government shutdown on March fourteenth, a debt
• 12:33
  Speaker 7: ceiling negotiation over the summer, another perspective, government shutdown September thirtieth.
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  Speaker 7: There's a lot of opportunities for Democrats to throw wrenches
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  Speaker 7: in the gears of the Republican legislative agenda, and to me,
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  Speaker 7: that point's a pretty clear experienced picture that the tax
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  Speaker 7: bill won't happen until December.
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  Speaker 5: Henryette, I guess it's to be no surprise to observers
• 12:54
  Speaker 5: that President Trump sucks most of the air out of
• 12:57
  Speaker 5: the room most of the time. Are you surprised that
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  Speaker 5: we don't hear more leadership from either congressional Republicans or Democrats.
• 13:07
  Speaker 7: I think that they have been out of session, to
• 13:10
  Speaker 7: be fair, and now that they are back in session,
• 13:14
  Speaker 7: they have to deal with things like Hey, are we
• 13:16
  Speaker 7: going to occupy Gaza. What's going on with DOJE, what's
• 13:19
  Speaker 7: going on with potentially the DOGE team being able to
• 13:24
  Speaker 7: access treasury payment systems. There's so much out there that
• 13:28
  Speaker 7: they're really just flying with it and negotiating behind the
• 13:32
  Speaker 7: scenes on those legislative agenda items. Especially on the Republican side.
• 13:36
  Speaker 7: I think Democrats have not found their footing at all.
• 13:38
  Speaker 7: I do see some opportunity for them to coalesce behind
• 13:41
  Speaker 7: that March fourteenth deadline for a government funding bill.
• 13:44
  Speaker 6: If they can come together with the appropriators.
• 13:47
  Speaker 7: And leadership and say we want one percent more in
• 13:49
  Speaker 7: federal spending in twenty five, we want aid to the
• 13:51
  Speaker 7: California wildfires, etc.
• 13:54
  Speaker 6: They can get in a cohesive place. But right now
• 13:56
  Speaker 6: they're just letting Trump.
• 13:57
  Speaker 4: Have the show.
• 13:58
  Speaker 3: So what is up with doche.
• 14:01
  Speaker 7: What's up with those That's a great question. I think
• 14:03
  Speaker 7: that is the question right now. They've implemented a number
• 14:06
  Speaker 7: of freezes and that is something that's obviously creating a
• 14:10
  Speaker 7: lot of lawsuits, and two judges have stayed those actions.
• 14:14
  Speaker 7: They are going through and combing through the trade repayment systems.
• 14:18
  Speaker 7: There's reports that Elon Musk has been at the VA
• 14:20
  Speaker 7: going through some of those payment systems potentially, And the
• 14:23
  Speaker 7: question is, really, have they identified via their AI tech
• 14:27
  Speaker 7: savvy any duplicatus payments, any payments they.
• 14:30
  Speaker 6: Are going to people who are no longer with us?
• 14:32
  Speaker 5: You know?
• 14:32
  Speaker 7: Is there any kind of abnormalities? Those are the areas
• 14:35
  Speaker 7: where they're trying to find savings. And then obviously you
• 14:38
  Speaker 7: have that idea of cutting the overall federal employee base.
• 14:42
  Speaker 7: But all told, those are really small dollar amounts, less
• 14:46
  Speaker 7: than one percent of federal spending.
• 14:48
  Speaker 6: And by the things that.
• 14:49
  Speaker 7: I just listed a moment ago, aid to the wildfires,
• 14:51
  Speaker 7: aid to farmers, as we prepare for the trade wars.
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  Speaker 6: Continued spending on the tax side.
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  Speaker 7: And one percent increases in twenty twenty five, spending hundred
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  Speaker 7: billion dollars in military spending. Whatever Dude is able to find,
• 15:03
  Speaker 7: Congress has already spent. So I'm not seeing a lot
• 15:06
  Speaker 7: in terms of functional deficit reduction or spending cuts that
• 15:09
  Speaker 7: will offset what Congress will do.
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  Speaker 5: Okay, Henriette, thank you so much for that great synopsis.
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  Speaker 5: There a lot of moving parts down there in Washington,
• 15:17
  Speaker 5: DC in Congress with all those bills that Hendriyette was
• 15:20
  Speaker 5: laying out for us. Henrietta Tres, managing partner and director
• 15:23
  Speaker 5: of Economic Policy of Bervada Partners, kind of laying it
• 15:25
  Speaker 5: all out for us.
• 15:28
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• 15:42
  Speaker 5: In the streets.
• 15:43
  Speaker 8: You know what they impact stuff?
• 15:46
  Speaker 7: State business?
• 15:46
  Speaker 3: Oh yeah, it does.
• 15:47
  Speaker 5: It's a real estate business. Lisa Need joins us, managing
• 15:49
  Speaker 5: partner and head of real Estate for Eisner a Forerd,
• 15:52
  Speaker 5: joining us here in.
• 15:52
  Speaker 3: Our Bloomberg Interactive Brokers studio.
• 15:54
  Speaker 5: Lisa, let's talk about that. I mean, it looks like
• 15:56
  Speaker 5: rates are coming down, but maybe not as fast as
• 15:58
  Speaker 5: people like.
• 15:59
  Speaker 8: How's that impact?
• 16:00
  Speaker 5: I think just commercial real estate probably defined what are
• 16:02
  Speaker 5: you seeing out through with your clients?
• 16:03
  Speaker 8: What a great segue. Thank you for having me. So
• 16:06
  Speaker 8: it's exactly the perfect way to start talking about this
• 16:09
  Speaker 8: is that with interest rates being where they are and
• 16:10
  Speaker 8: the unknown of what's going to happen going forward, we're
• 16:13
  Speaker 8: sort of at a standstill and valuation however, the activity
• 16:17
  Speaker 8: in real estate for twenty twenty four was up, and
• 16:20
  Speaker 8: we do predict twenty twenty five having a lot more
• 16:23
  Speaker 8: trading people going back and forth and trying to figure
• 16:25
  Speaker 8: out some deal flow, which means that valuations have to come,
• 16:27
  Speaker 8: which is tied to interest rates. It's not going to
• 16:29
  Speaker 8: get back up to where we were in twenty seventeen.
• 16:32
  Speaker 8: But I think everyone's really optimistic for twenty twenty five
• 16:34
  Speaker 8: that there is going to be some things happening in there.
• 16:36
  Speaker 8: When we talk about interest rates, and you know, we
• 16:39
  Speaker 8: just heard from Mike McKee where the settling is and
• 16:42
  Speaker 8: what the Feds are doing, it's interesting. Once rates are
• 16:45
  Speaker 8: still low for the people who have existing mortgages and things,
• 16:48
  Speaker 8: it's not going to make us able to go out
• 16:50
  Speaker 8: and sell our houses because we still have very low
• 16:53
  Speaker 8: interest rates, and so all of that is going to
• 16:55
  Speaker 8: affect you know, multi family home buyers, it's going to
• 16:59
  Speaker 8: affect office to trickle through the rest of all the
• 17:01
  Speaker 8: sectors of real estate. So, yes, you're right, it's a
• 17:04
  Speaker 8: great segue into real estate is where we are on
• 17:06
  Speaker 8: interest rates, and that's the big unknown and waiting and
• 17:09
  Speaker 8: seeing with the inflation being where it is and the
• 17:11
  Speaker 8: economy doing well, it's a wait and see approach.
• 17:14
  Speaker 2: Yeah, and just how quickly like we've rerated really like
• 17:16
  Speaker 2: we're looking at just over like forty basis points of
• 17:19
  Speaker 2: couz priced into world imply probability. Morgan Stanley sees just
• 17:23
  Speaker 2: one cut now in June, round than two in March
• 17:25
  Speaker 2: and June.
• 17:27
  Speaker 3: How quickly does that feed through to like prices?
• 17:30
  Speaker 8: It actually feeds through quicker than it's even announced. It's
• 17:32
  Speaker 8: almost like people know before and anticipate it. So the
• 17:35
  Speaker 8: valuation is already baked into it, and so it feeds
• 17:38
  Speaker 8: in immediately. And so when you think that FEDS are
• 17:40
  Speaker 8: going to announce it and things are going to move drastically,
• 17:42
  Speaker 8: it's already moved once the anticipation is there, and what
• 17:44
  Speaker 8: they think are going to do, what they think is
• 17:47
  Speaker 8: going to happen with those rates.
• 17:49
  Speaker 5: You know, office work, Yeah, are there any what are
• 17:52
  Speaker 5: the trends here in office? I guess the first question
• 17:54
  Speaker 5: is does anybody going to call a bottom? Has anybody
• 17:57
  Speaker 5: called a bottom? Is anybody think about that?
• 18:00
  Speaker 8: Do you want me to make a prediction right here?
• 18:01
  Speaker 8: Should we do it?
• 18:03
  Speaker 4: Fun?
• 18:03
  Speaker 8: Okay? So prediction that I heard was twenty twenty six
• 18:07
  Speaker 8: New York city is going to have a shortage of
• 18:10
  Speaker 8: office available, a shortage because there's been a lot less construction.
• 18:15
  Speaker 8: We do have some conversions, not a lot, but there
• 18:17
  Speaker 8: will be some conversions to residential. The trophy buildings are occupied,
• 18:21
  Speaker 8: which is going to help the a's and b's and
• 18:23
  Speaker 8: so you know, we know that tech is back, is
• 18:26
  Speaker 8: going back to work. We've heard those announcements today. This
• 18:30
  Speaker 8: place is the busiest it's been I think in a
• 18:32
  Speaker 8: long time. And media has made announcement that they need
• 18:35
  Speaker 8: to start coming back to work. So with everybody making
• 18:37
  Speaker 8: those announcements of back to work, there's been less office
• 18:40
  Speaker 8: coming on the market in the last two years or
• 18:42
  Speaker 8: three years because of construction costs. And so prediction that
• 18:46
  Speaker 8: New York City, you want another prediction, Yeah, sure, don't
• 18:48
  Speaker 8: write off San Francisco yet. And why I know we're
• 18:51
  Speaker 8: very bleak on that. But seventy two cents of every
• 18:54
  Speaker 8: AI dollar is going into San Francisco. And so with
• 18:57
  Speaker 8: all the money going into something that because people their
• 19:00
  Speaker 8: work there, eighty three point two and I think that's
• 19:02
  Speaker 8: the right statistic. Somebody will write, oh, it's not of
• 19:05
  Speaker 8: the talent is in San Francisco based and so the
• 19:08
  Speaker 8: VC venture capital firms that are funding the AI are
• 19:12
  Speaker 8: mandating that they want to see the people and they
• 19:14
  Speaker 8: want that in office experience. And so if eighty three
• 19:18
  Speaker 8: point two percent of our talent is in the San
• 19:20
  Speaker 8: Francisco Bay Area who are funding and working on the AI,
• 19:24
  Speaker 8: we see where the future is and so maybe not
• 19:26
  Speaker 8: to write off San Francisco. So a little bit of optimism.
• 19:29
  Speaker 8: I think in office. We'll see in a year from
• 19:32
  Speaker 8: now how off I was, but we'll be optimistead have.
• 19:35
  Speaker 5: We've seen many transactions of note in New York City
• 19:38
  Speaker 5: that gives you a sense of where valuations are.
• 19:41
  Speaker 8: Yeah, there's been a bunch of movement. I think there
• 19:43
  Speaker 8: was a fifty seventh Street there was a property that
• 19:46
  Speaker 8: just was acquired, and so people are moving and the
• 19:49
  Speaker 8: values are, strangely enough, they're holding up. And so the
• 19:53
  Speaker 8: whole thing is is the buyer and the seller is
• 19:55
  Speaker 8: willing to come up to where they think prices are.
• 19:58
  Speaker 8: And I think yesterday there was a large transaction that
• 20:00
  Speaker 8: just happened on fifty seventh Street, which is which is noteworthy.
• 20:03
  Speaker 2: I think, yeah, definitely, what do you think the bottom
• 20:07
  Speaker 2: looks like?
• 20:09
  Speaker 8: I'm hoping we passed it. I think we're headed to
• 20:12
  Speaker 8: a really good direction from So, I.
• 20:14
  Speaker 2: Guess what the trajectory from now until twenty twenty six
• 20:16
  Speaker 2: does look like like?
• 20:17
  Speaker 3: Is it bumpy? Is it a straight lineup?
• 20:19
  Speaker 5: Is it a curve?
• 20:20
  Speaker 8: So everyone was hoping for a soft landing, and I
• 20:22
  Speaker 8: think we got the soft landing. And so when you're
• 20:24
  Speaker 8: looking for the future to where you know, people are
• 20:27
  Speaker 8: seeing where we're at, secondary markets are going to be
• 20:31
  Speaker 8: really really hot. So is the live work play environment
• 20:35
  Speaker 8: and that type of world. Now New York is live
• 20:38
  Speaker 8: work play, but look at the secondary markets that are
• 20:40
  Speaker 8: going to create that live work environment for them. And
• 20:43
  Speaker 8: so if you look at you know, we could go
• 20:45
  Speaker 8: into this another time, the history of the malls, but
• 20:47
  Speaker 8: that's really what was supposed to be created. It wasn't
• 20:49
  Speaker 8: supposed to be a mall with two anchors with seventy
• 20:51
  Speaker 8: acres of parking. It was supposed to be houses, hospitals, schooling,
• 20:57
  Speaker 8: you know, businesses created around the malls. That's what people
• 21:00
  Speaker 8: want and that's what we're going to start creating. And
• 21:03
  Speaker 8: so once we give people that sort of environment, I
• 21:07
  Speaker 8: think it's going to really really work. And then looking
• 21:09
  Speaker 8: at operational real estate data, centers. Yeah. Right, So there
• 21:13
  Speaker 8: is a lot of optimism out there in real estate
• 21:16
  Speaker 8: as to what we're looking forward and then just watching
• 21:19
  Speaker 8: interest rates really closely.
• 21:21
  Speaker 5: You know, I have to admit when I'm still surprised
• 21:23
  Speaker 5: every day I walk out on Lectionington Avenue that retail
• 21:26
  Speaker 5: space has not solved.
• 21:28
  Speaker 2: But they're doing it. It's now rented because that space
• 21:33
  Speaker 2: the gap used to be, but.
• 21:34
  Speaker 5: It still feels like there's so much unrented retail in
• 21:38
  Speaker 5: mid time men that and it really.
• 21:39
  Speaker 3: Surprised me and Upper West Side too.
• 21:41
  Speaker 8: Yeah, but when you look at it that there was
• 21:42
  Speaker 8: so much more, and we know that retail was doing horribly,
• 21:45
  Speaker 8: you know, years ago, and it is making that comeback
• 21:47
  Speaker 8: of changing what's that retail experience for. I mean, I
• 21:51
  Speaker 8: know that we read the five five or four big
• 21:53
  Speaker 8: boxes that are closing stores, and so that scares everybody
• 21:56
  Speaker 8: a little. But again it's coming back to that live
• 21:59
  Speaker 8: work play and finding balance of what people want in
• 22:02
  Speaker 8: that area. This is still relatively commercial here, yeah, and
• 22:05
  Speaker 8: not as residential, so you're not really living where you're
• 22:08
  Speaker 8: working here, and so it'll be interesting to see and
• 22:11
  Speaker 8: without the bloomingills is still a very large anchor to
• 22:15
  Speaker 8: this area, so I think it's going to get least
• 22:18
  Speaker 8: up over time.
• 22:19
  Speaker 3: I don't want to live where I work anyway.
• 22:23
  Speaker 2: Lisa, thanks a lot. Always great to get your perspective.
• 22:25
  Speaker 2: It's so fantastic. Lisaknee managing partner and head of real
• 22:27
  Speaker 2: estate for Eisner Amper, and she comes with predictions.
• 22:31
  Speaker 8: Oh boy.
• 22:31
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