Latest / Bloomberg Intelligence / Israel, Biden-Trump, Tesla, and Netflix

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Israel, Biden-Trump, Tesla, and Netflix · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
0:04
Speaker 1: my co host Matt Miller.
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Speaker 2: Every business day we bring you interviews from CEOs, market pros,
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Speaker 2: and Bloomberg experts, along with essential market moving news.
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Speaker 1: I'm the Bloomberg Markets podcast called Apple Podcasts or wherever
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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.
0:20
Speaker 1: We're going to get the latest on what's happening in Israel.
0:23
Speaker 1: Hillary Kalisman, professor at the University.
0:26
Speaker 3: Of Colorado, Boulder. Oh, she may have been to, could
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Speaker 3: have been where?
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Speaker 2: Let's ask her before we get into the Middle East situation, Joe,
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Speaker 2: because I don't want to, you know, because it's such
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Speaker 2: a tragic and horrible situation that we don't want to
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Speaker 2: be at all lighthearted.
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Speaker 3: But before we get there, have you been to Casa
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Speaker 3: I have not.
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Speaker 4: I've driven past it many times though, and I would
0:46
Speaker 4: like to go, but I think it's hard to get there.
0:48
Speaker 4: Right now, I have another.
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Speaker 3: Good recommendation for you.
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Speaker 1: I just went this weekend my son and graduated from
0:52
Speaker 1: INERSH at Colorado. He picked I think the most expensive
0:54
Speaker 1: restaurant in Denver, Fruition. So I recommend fruition if you
0:58
Speaker 1: haven't been there. All right, let's get to Israel here,
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Speaker 1: very very difficult situation here. Do you have a sense
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Speaker 1: of how this might play out? I mean, it's just
1:09
Speaker 1: been on and on and on, and now with the
1:11
Speaker 1: horrific attack from you know, now ten days ago, it's
1:14
Speaker 1: taken a whole new level here. Do you have any
1:16
Speaker 1: sense of how this might develop over the coming weeks
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Speaker 1: and months.
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Speaker 4: It's a difficult question, and I would say I would
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Speaker 4: see I don't. I don't necessarily see any kind of
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Speaker 4: long term easing of the conflict either. It's something where
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Speaker 4: you have an Israeli government reeling from intelligence failures, trying
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Speaker 4: to figure out what is the best option while trying
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Speaker 4: to kind of please like trying to reassure their constituents
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Speaker 4: that they can in fact tech their citizens. On the
2:03
Speaker 4: other hand, their tactics so far have been it seems
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Speaker 4: quite ineffective and causing a lot of civilian deaths within Gaza.
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Speaker 4: So I do think a ground invasion is imminent. I
2:19
Speaker 4: think the part that I worry about in particular is
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Speaker 4: what is the endgame for any of the involved parties here.
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Speaker 1: So, if you're the Palestinians, can you give us just
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Speaker 1: educase a little bit here to what extent do the
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Speaker 1: Palestinian people in that region support Hamas.
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Speaker 4: Well? So Hamas was elected in two thousand and six
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Speaker 4: over you know, sort of about fifty percent of the
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Speaker 4: population in Gaza would not have been old enough to
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Speaker 4: elect them. And I would say I don't I haven't
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Speaker 4: heard sort of very many support people supporting Hamas's current
3:01
Speaker 4: actions and also their fallout. Right. It's something though where Hamas,
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Speaker 4: you know, sort of, so it's been a long time
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Speaker 4: since two thousand and six, right, and you've had Palestinians
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Speaker 4: in Gaza, in particular also in the West Bank protesting
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Speaker 4: sort of demanding that their self determination not continue to
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Speaker 4: be put on the back burner, that their material conditions improve.
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Speaker 4: In twenty eighteen, you had this great March of Return
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Speaker 4: where you had Palestinians protesting daily at the border fence
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Speaker 4: with Gaza, and it had no effect. Many of them
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Speaker 4: were killed. So it's something where the Palestinians living in
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Speaker 4: those areas, The Palestinians living in Gaza, I don't think,
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Speaker 4: have seen any tangible benefits from hamas as a government,
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Speaker 4: and they're certainly not seeing any tangible benefits from Hamas
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Speaker 4: acting as it has been historically is a terrorist organization.
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Speaker 2: Have they any have they did they see any tangible
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Speaker 2: benefits from.
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Speaker 3: The PLO the PLA. Have they seen any.
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Speaker 2: Tangible benefits from help out of Jordan or Egypt? I mean,
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Speaker 2: has anything been helpful to the Palestinians since like nineteen
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Speaker 2: forty eight.
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Speaker 4: I would say there have been periods where things have
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Speaker 4: been better. The period you know, sort of so between
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Speaker 4: nineteen forty eight and nineteen sixty seven, the West Bank
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Speaker 4: in particular belonged to Jordan. Right Jordan annexed it, including
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Speaker 4: East Jerusalem, and Palestinians were made citizens. Now again, Palestinians
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Speaker 4: were many were extremely angry. The King of Jordan gets
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Speaker 4: assassinated for agreeing to sort of work with Israel in
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Speaker 4: nineteen forty eight, and Gaza is occupied by Egypt. But
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Speaker 4: Egypt doesn't want to annex it, It doesn't want to make
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Speaker 4: it part of Egypt. It doesn't want that Palestinian population.
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Speaker 4: That said, during that period you are able to have
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Speaker 4: you know, sort of Palestinian it's beginning to kind of
5:01
Speaker 4: build up a livelihood again. But I want to emphasize
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Speaker 4: they don't have Palestinian sovereignty. They don't have a state.
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Speaker 4: And one of the other things to remember, right, is
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Speaker 4: that the Palestinian population without a state, without a standing army,
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Speaker 4: without even you know, sort of the ability to collect
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Speaker 4: their own taxes. And again this worsens under Israeli occupation.
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Speaker 4: After the War of nineteen sixty seven, you have essentially
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Speaker 4: against sort of their self determination postponed and one of
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Speaker 4: the and they also have sort of very little bargaining
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Speaker 4: power visa viv the Israeli state. The periods in which
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Speaker 4: they are able to get bargaining power are periods in
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Speaker 4: which they make it harder for Israel to continue the
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Speaker 4: situation of having Palestinians without of state and continue to
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Speaker 4: occupy them.
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Speaker 3: Yeah, this is right, Just no, please continue.
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Speaker 1: Just thirty seconds left, professor. Is there anywhere for Palestinians
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Speaker 1: to go in this world?
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Speaker 3: I mean, what do they do?
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Speaker 4: It's so hard? And again it is so many ordinary
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Speaker 4: people who would like to live somewhere in safety with
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Speaker 4: their children. And one of the things I want, I
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Speaker 4: really want to emphasize here is that the future, the
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Speaker 4: future safety of Israel also depends on their being somewhere
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Speaker 4: for Palestinians to go and be safe. They're entwined, and
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Speaker 4: I think the Hamas terrorist attacks are a horrible, horrible,
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Speaker 4: unjustified wake up call for the Israeli government to sort
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Speaker 4: of say, no, look, you cannot keep your population safe
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Speaker 4: with this Palestinian population without statehood.
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Speaker 1: Next to you, all right, professor, thank you some much.
7:00
Speaker 1: We appreciate that. Hillary Kllisman, she's a professor at the
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Speaker 1: University of Colorado at Boulder.
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Speaker 5: You're listening to the Team Ken's Are Live program Bloomberg
7:09
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg dot Com,
7:13
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7:16
Speaker 5: on demand wherever you get your podcasts.
7:19
Speaker 1: Matt Miller, Paul Sweeney live here in our Bloomberg Interactive
7:22
Speaker 1: Brokers studio. What's a fixingcome investor to do? Twenty twenty
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Speaker 1: two was just the worst bait maybe of all time
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Speaker 1: for fixing come investing. This year is it's not much better.
7:31
Speaker 1: If you're not this year bad. If you're in high yield,
7:34
Speaker 1: you've had some positive returns, but that's about it. So
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Speaker 1: let's check in with somebody who does this investing stuff
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Speaker 1: for living Mike Green.
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Speaker 3: He's a portfolio.
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Speaker 1: Manager in chief strategist at Simplify Asset Management. Mike, thanks
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Speaker 1: so much for joining us here. How are you guys
7:47
Speaker 1: approaching this market here? I love to get kind of
7:49
Speaker 1: how you entered the year and maybe how you've kind
7:52
Speaker 1: of repositioned, if at all here as we get into
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Speaker 1: the fourth quarter.
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Speaker 6: Well, fortunately at simplfy we run a nonumber of strategies,
8:00
Speaker 6: so we've had everything ranging from our interest rate hedge
8:05
Speaker 6: product prefix, which looks like it's on track for a
8:08
Speaker 6: second year of a row of just being a phenomenal performer.
8:11
Speaker 6: But simply that's just betting against rates, right, it's betting
8:13
Speaker 6: on higher interest rates. It's worked as a fantastic portfolio hedge.
8:17
Speaker 6: In terms of my personal exposure in funds that I
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Speaker 6: directly manage, I have been biased towards bonds and duration,
8:24
Speaker 6: and obviously that's been the wrong call for the year.
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Speaker 6: I think the interesting question is why, in the face
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Speaker 6: of much higher interest rates are we not seeing equity
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Speaker 6: markets respond? And I think the most interesting aspect of
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Speaker 6: it is simply that we're not seeing flexing and demand.
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Speaker 6: We're not seeing that marginal player who can say I
8:43
Speaker 6: think equities are relatively unattractive versus bonds. We hear an
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Speaker 6: awful lot about the very low equity risk premium, but
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Speaker 6: we're not really seeing allocations change in a meaningful way.
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Speaker 6: And that strikes me as one of the most interesting
8:56
Speaker 6: dynamics playing out in markets today. I think it plays
8:59
Speaker 6: into a a bunch of the material and emphasis that
9:02
Speaker 6: I placed on passive investment strategies. Systematic investment strategies for
9:06
Speaker 6: portfolio construction is not really tied to the underlying fundamentals.
9:10
Speaker 6: It's tied to historical return profiles.
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Speaker 2: Yeah, well, it seems like everybody, well, it seems like
9:17
Speaker 2: a lot of big names have been burned.
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Speaker 3: You know.
9:20
Speaker 2: Stephen Major recently came out and said he was wrong
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Speaker 2: on bonds. He pointed out that debts and deficits hadn't
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Speaker 2: mattered in the past, and now they do. Lacy Hunt
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Speaker 2: over at Hoysington Investment Management has said this is one
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Speaker 2: of the toughest years of his career, and he's eighty one,
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Speaker 2: so he's been in the market for a long time.
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Speaker 2: And everybody is like, hey, inflation is coming down. In fact,
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Speaker 2: there has been no decline this large in inflation that
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Speaker 2: hasn't been involved with a recession and its immediate aftermath.
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Speaker 2: So I guess I have two main questions, Mike. One
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Speaker 2: do you think inflation is really solved? Has the FED
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Speaker 2: you know, done it?
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Speaker 3: And two?
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Speaker 2: Are we headed for a recession or is Paul's soft
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Speaker 2: landing scenario going.
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Speaker 3: To play out?
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Speaker 6: So I'm very much in the camp that says that
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Speaker 6: the data is currently misleading us. I agree by the
10:18
Speaker 6: way that the inflatory has played out as many of
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Speaker 6: the transitory infliction as myself included would have argued, we've
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Speaker 6: seen a remarkable deceleration if you go further within the
10:29
Speaker 6: infant data series and you focus on market based measures,
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Speaker 6: and so just very quickly remember that about thirty five
10:36
Speaker 6: percent of the CPI numbers that we see, or what
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Speaker 6: are called imputed measures. Those would include things like owners
10:42
Speaker 6: equivalent rent, very slow moving adjustments that they make. Even
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Speaker 6: those silly things like the cost of banking services is
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Speaker 6: currently very elevated because of the way we define that right,
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Speaker 6: So crazily enough, the cost of banking services is defined
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Speaker 6: by the spread between the risk free rate and the
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Speaker 6: rate that is being paid on deposits. That means that
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Speaker 6: as the FED has raised interest rates, they've dramatically increased
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Speaker 6: the imputed costs of banking services. So those are the
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Speaker 6: factors that are actually currently driving or keeping inflation elevated.
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Speaker 6: If you use the market based measures, the ones that
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Speaker 6: you experience on a year over year basis as you
11:18
Speaker 6: go to the grocery store, those are now running below
11:21
Speaker 6: two percent, below the below Powells targets, and would suggest
11:26
Speaker 6: that that's not the problem at all. I think the
11:29
Speaker 6: clear challenge that we're facing is modestly increased supply. Again,
11:34
Speaker 6: not a crazy increase. I understand people point to higher
11:37
Speaker 6: level of deficits, etc. We haven't seen an unbelievably large
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Speaker 6: increase in the supply of bonds. But the bigger story
11:45
Speaker 6: continues to be the relative challenge of getting people to
11:47
Speaker 6: actually change their allocations and say, should we allocate two
11:51
Speaker 6: equities away? So that's just a structurally very slow process.
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Speaker 2: What about I saw a story this morning China or
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Speaker 2: Chinese investors have sold more US holding stocks and bonds
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Speaker 2: than they have in the past four years because they're
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Speaker 2: defending the U on and a lot of countries are
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Speaker 2: defending their currency against a stronger dollar. To foreign investors
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Speaker 2: who are.
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Speaker 3: Huge holders of treasuries. Are they a problem for this market?
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Speaker 6: Well, they're definitely not helping, right, because we would hope
12:25
Speaker 6: to see an increase in demand.
12:26
Speaker 2: Now.
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Speaker 6: The irony, of course, is that their source of supply,
12:29
Speaker 6: the reason that they've accumulated those are the very large
12:32
Speaker 6: trade surpluses that they run with the United States, and
12:34
Speaker 6: then their failure to reinvest in any meaningful way, which
12:38
Speaker 6: historically would have led to their currency appreciating. Now as
12:42
Speaker 6: they face commodity prices, they face a slowing in the
12:46
Speaker 6: Chinese economy, as they face capital flight from within their
12:48
Speaker 6: own economy, You're seeing them effectively have to defend their
12:52
Speaker 6: currencies against the rising US dollar, and you know, yes,
12:57
Speaker 6: they're no longer accumulating in the same manner. But we're
13:00
Speaker 6: not really seeing a wholesale crash, right. The tick type
13:05
Speaker 6: indicators for demand from foreign buyers are muted, but it's
13:09
Speaker 6: not a crash in demand. The other thing that I
13:11
Speaker 6: would just highlight is is that we're seeing this this
13:13
Speaker 6: is not a US story. We're seeing bond sell off
13:16
Speaker 6: on a global basis, and so we hear an awful
13:19
Speaker 6: lot about the unsustainability of US fiscal policy. The simple
13:23
Speaker 6: reality is, I look at a place like France, which
13:25
Speaker 6: is running almost the same deficit to GDP as the
13:28
Speaker 6: United States and doing so on a much more structural basis,
13:32
Speaker 6: and their bonds are actually trading inside the United States.
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Speaker 6: That suggests to me there's a combination of diversification and
13:38
Speaker 6: very slow to respond demand.
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Speaker 1: Hey, Mike, thanks so much for joining us. Always appreciate
13:42
Speaker 1: getting a couple of minutes of your time. That's Mike Green.
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Speaker 1: He's sup portfolio manager and chief strategist at Simplify Asset Management.
13:50
Speaker 1: He's been in the business long time, has seen the
13:52
Speaker 1: various cycles.
13:53
Speaker 3: Here used to run Peter Thiel's money. Yeah, that's kind
13:55
Speaker 3: of cool.
13:56
Speaker 2: Which is a lot of money. And we have an
13:58
Speaker 2: amazing story on the terminal today showing that of the
14:03
Speaker 2: two hundred and seventy one people Peter Teal has bribed
14:07
Speaker 2: to drop out of college, yeah, you know, he pays
14:09
Speaker 2: kids one hundred thousand dollars to drop out of college,
14:12
Speaker 2: eleven have founded billion dollar plus businesses, almost twelve because
14:17
Speaker 2: one guy just sold out with nine hundred and seventy
14:20
Speaker 2: five for here.
14:20
Speaker 3: That's a good return on that investment.
14:23
Speaker 5: You're listening to the tape kets are live program Bloomberg
14:26
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the
14:30
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14:33
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Speaker 5: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
14:42
Speaker 1: Here's I think one of the most fascinating stories on
14:44
Speaker 1: the Bloomberg terminal today. A Bloomberg News and Morning Console
14:48
Speaker 1: poll provides one of the most detailed looks yet at
14:51
Speaker 1: how the twenty twenty four presidential race is playing out
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Speaker 1: in the seven swing states that could decide who wins.
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Speaker 1: The title of the reporter on this story, Gregory Courty
15:00
Speaker 1: joins us. He's a White House and political corresponding with
15:02
Speaker 1: Bloomberg News. Gregory, what's the poll telling us here?
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Speaker 7: Well, what this poll does Unlike a lot of the
15:09
Speaker 7: other polls you see out there, which are national polls,
15:11
Speaker 7: this just looks at the seven swing states that are
15:14
Speaker 7: most likely to matter next year, and they are Arizona, Georgia,
15:18
Speaker 7: North Carolina, Pennsylvania, Michigan, Wisconsin, and Nevada. And what we
15:24
Speaker 7: see in this poll is that president former President Trump
15:27
Speaker 7: is up in five of those seven states, Biden is
15:31
Speaker 7: up in only one. President Biden is leading in Nevada,
15:34
Speaker 7: and then Michigan is a dead tie according to our poll.
15:37
Speaker 7: But across these if you look across the swing states,
15:40
Speaker 7: president former president Trump is overperforming what you see in
15:45
Speaker 7: the national polls. And obviously that's a good sign for
15:47
Speaker 7: him because these are the states that are actually going
15:49
Speaker 7: to matter.
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Speaker 1: So we're, you know, thirteen months before the election. If
15:55
Speaker 1: I were the Biden reelection campaign, how would I interpret
15:58
Speaker 1: these numbers? How concerned would I be?
16:01
Speaker 2: Oh?
16:01
Speaker 7: I think they're concerned, and they're very likely seeing similar
16:04
Speaker 7: kinds of things in their own internal polling. But they
16:07
Speaker 7: would also say, look, it's thirteen months before the election.
16:10
Speaker 7: Certainly we've had some economic challenges coming out of the pandemic.
16:14
Speaker 7: Inflation is ebbing somewhat, but people still feel it absolutely.
16:21
Speaker 7: What we see in this poll is it's those kitchen
16:23
Speaker 7: table issues. It's those bread and butter household economics that
16:28
Speaker 7: is really killing the president right now. There's a huge
16:32
Speaker 7: trust deficit people voters in these swing states are trusting
16:37
Speaker 7: former President Trump on the issue of the economy and
16:40
Speaker 7: all the sub issues that we look at the economy,
16:42
Speaker 7: we really delve deep to look at Okay, when you
16:44
Speaker 7: talk about the economy, are you're talking about inflation, are
16:46
Speaker 7: you talking about the stock market? Are you talking about
16:48
Speaker 7: taxes or spending? And across all of those economic issues.
16:52
Speaker 7: President Trump had the advantage in these swing state voters.
16:56
Speaker 7: What President Biden is hoping is that as the economy
16:59
Speaker 7: and if we're able to have that soft landing and
17:02
Speaker 7: avoid the recession, if people are looking up by this
17:05
Speaker 7: time next year more optimistic about where the economy is
17:09
Speaker 7: going and not just where it has been, there is
17:11
Speaker 7: an opportunity for present Biden to be reelected.
17:14
Speaker 2: The problem is, I think pretty clearly inflation, Like, even
17:19
Speaker 2: if inflation got down to zero today, you've still seen
17:22
Speaker 2: prices run up at an unbelievable pace and they're not
17:25
Speaker 2: turning around.
17:26
Speaker 3: Plus wages have not kept up even nearly with inflation.
17:31
Speaker 3: Wages is not going ahead of No, no, no, no
17:33
Speaker 3: no no.
17:34
Speaker 2: I mean, I look obviously very closely at cars, and
17:37
Speaker 2: I just see Hannah was right. Hannah Elliott wrote a
17:40
Speaker 2: story about the Jeep three ninety two two years ago
17:44
Speaker 2: going for seventy four thousand dollars, and she thought that
17:47
Speaker 2: was way too expensive. I wrote about it or I'm
17:49
Speaker 2: looking at it this week and I see it at
17:51
Speaker 2: ninety two to five, So that's a huge jump. It's
17:54
Speaker 2: up twenty three percent. And I guess my question, Gregory,
18:01
Speaker 2: is this a lot of this is very clearly inflation
18:06
Speaker 2: is very clearly being fueled by excess spending, which was
18:11
Speaker 2: understandable during COVID. But we're still running one and a
18:17
Speaker 2: half trillion dollar deficits. And President Biden is like all
18:21
Speaker 2: in favor of spending as much as possible, or at
18:24
Speaker 2: least that's how it appears, right, So how does he
18:27
Speaker 2: turn that narrative around, you know, while we're while we're
18:32
Speaker 2: while we're looking at these huge deficits in debt.
18:35
Speaker 7: Yeah, so what you've seen is and I think you
18:38
Speaker 7: exactly nailed it, right, So even if there's a little
18:41
Speaker 7: bit of disinflation, that's not the same as deflation.
18:43
Speaker 8: Right.
18:43
Speaker 7: So, so people have seen this cumulative inflation over the
18:46
Speaker 7: course of the Biden years. Again, we're coming out of
18:49
Speaker 7: a pandemic. You know, this is a lot of the
18:52
Speaker 7: spending happened, and the tail and the Trump administration, those
18:56
Speaker 7: arguments are falling on deaf years. Republicans have have branded
19:01
Speaker 7: this economy is Bidenomics, right, that all this inflation.
19:04
Speaker 3: That peoples branded this economy is biden.
19:06
Speaker 7: Well, what President Biden has tried to do is rebrand
19:09
Speaker 7: it as this package of social spending and investment in
19:15
Speaker 7: green energy technologies, infrastructure, all of these things. But people
19:21
Speaker 7: are looking the outputs and not the policy inputs, and
19:24
Speaker 7: so I think you're absolutely right, it's the economic indicators.
19:28
Speaker 7: But even more than that, just what people are feeling
19:30
Speaker 7: that that perception, and it's going to take a while
19:32
Speaker 7: to change perceptions because the cumulative inflation during the Biden
19:36
Speaker 7: years is more than sixteen percent. People, it takes a
19:39
Speaker 7: while for people to digest that prices are now stabilizing
19:43
Speaker 7: a little bit. They still are comparing what they're spending
19:45
Speaker 7: now to what they were spending pre pandemic.
19:47
Speaker 2: Yeah, what I'm feeling is I can barely afford like groceries, childcare,
19:52
Speaker 2: and housing at a time when you know, if you
19:55
Speaker 2: want to buy a car, get ready for eight or
19:57
Speaker 2: nine percent interest rates on that. If you want to
20:00
Speaker 2: buy a house, ditto with the mortgage. So it's like
20:05
Speaker 2: and we're still going to say, hey, let's do a
20:09
Speaker 2: one trillion dollar additional spending bill, right, exactly.
20:13
Speaker 3: What so Gregory the president.
20:16
Speaker 1: We had some more news on some of his legal
20:17
Speaker 1: challenges today regarding one of his former aides pleading guilty.
20:21
Speaker 1: He still has a lot of legal challenges ahead of him.
20:24
Speaker 1: That doesn't seem to be hurting him at all, does it.
20:28
Speaker 4: Yeah?
20:28
Speaker 7: I just saw the headline crossing the Bloomberg terminal as
20:31
Speaker 7: I was coming on here. What we saw in this
20:35
Speaker 7: poll was one of the interesting things is one of
20:37
Speaker 7: the questions we asked is what have you seen, read,
20:39
Speaker 7: or heard about these candidates in the past few days
20:43
Speaker 7: or weeks, And it called for an open ended response.
20:46
Speaker 7: We got to see actually what they were hearing, how
20:49
Speaker 7: they were viewing these candidates, and what you heard a
20:52
Speaker 7: lot about President Biden about his age, and what you
20:55
Speaker 7: heard overwhelmingly about President Trump is about his legal troubles. Interestingly,
21:00
Speaker 7: we heard it both from Democrats and Republicans. Trump supporters
21:03
Speaker 7: are talking a lot about his legal troubles. Of course
21:05
Speaker 7: they're doing in a different context. They're saying, all I
21:08
Speaker 7: hear about is President Trump's legal troubles. I wish I
21:11
Speaker 7: would hear less about it. Everybody's fixated on it. This
21:14
Speaker 7: is all sort of a witch hunt. But it's certainly
21:18
Speaker 7: that news is permeating. People are reading it, and they're
21:21
Speaker 7: reading it on a more granular level than I expected.
21:23
Speaker 7: When when the former President Trump is hit with a
21:26
Speaker 7: gag order, people mentioned that gag order. They're they're they're
21:29
Speaker 7: following some of the the micro developments of this. So
21:32
Speaker 7: it really is capturing people's attention. But the partisanship is
21:35
Speaker 7: just so entrenched that it's not moving those numbers, and
21:38
Speaker 7: the economic issues, as we're seeing in this sing state's poll,
21:42
Speaker 7: are dwarfing everything else that people know about these candidates.
21:46
Speaker 2: Doesn't the Democratic Party, doesn't the DNC need to do
21:51
Speaker 2: more to boost Kamala Harris's profile, because if you're worried
21:54
Speaker 2: about President Biden's age, you know, without discussing saying whether
22:00
Speaker 2: or not that's a valid concern, you've got to feel
22:04
Speaker 2: comfortable with the vice president because in that case, you're casting.
22:08
Speaker 3: A vote not just for President Biden.
22:11
Speaker 2: But it's I guess you're saying, if you're worried about
22:15
Speaker 2: his age, it's likely that you must think Kamala Harris
22:19
Speaker 2: could eventually take that spot over.
22:22
Speaker 7: Yeah, we asked this question in this swing state's poll,
22:25
Speaker 7: and a majority of voters said that the vice presidential
22:30
Speaker 7: pick is more important this year than it has been
22:32
Speaker 7: in the past. For Democrats, thirty percent said it was
22:36
Speaker 7: much more important who the vice president is because of
22:39
Speaker 7: the age of these candidates. A little bit less, maybe
22:41
Speaker 7: twenty four percent for Republican voters said the vice presidential
22:44
Speaker 7: pick is more important. Of course, we don't know who
22:47
Speaker 7: President Trump, assuming he's a nominee, we don't know who
22:49
Speaker 7: his running mate will be. It will be almost certainly
22:52
Speaker 7: someone other than Mike Pence, who is vice president his
22:55
Speaker 7: first term. But yes, voters in both parties are more
22:59
Speaker 7: fixated on the vice presidency just because of the age
23:02
Speaker 7: of these two candidates.
23:04
Speaker 1: All right, Gregory, thank you so much for joining us
23:06
Speaker 1: fascinating reporting here today.
23:08
Speaker 3: Gregory Cordey Corti.
23:10
Speaker 1: He is the White House and Politics correspondent with Bloomberg
23:14
Speaker 1: News and Bloomberg News along with Morning Consult, did a
23:19
Speaker 1: pretty deep dive poll focusing on seven swing states that
23:24
Speaker 1: could decide who wins the White House.
23:27
Speaker 5: You're listening to the Team Ken's Are Live program Bloomberg
23:31
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg dot Com,
23:34
Speaker 5: the iHeartRadio app, and the Bloomberg Business app or listen
23:37
Speaker 5: on demand wherever you get your podcasts.
23:41
Speaker 1: Matt Miller Paul Sweeney live here in on our Bloomberg Interactive
23:44
Speaker 1: Broker Studio or streaming live on YouTube's to go over
23:46
Speaker 1: and check that out. Little roundtable here on some earnings.
23:49
Speaker 1: Dan Ives, senior equity analysts at Whatbush Securities. He joins
23:53
Speaker 1: us live here in his Bloomberg Interactive Broker Studio. I'm
23:56
Speaker 1: not sure if he's going to State College this week.
23:58
Speaker 1: I'm not sure about that or they are They?
24:00
Speaker 9: Yes, Yeah, we'll be going to Columbus Friday.
24:02
Speaker 3: Oh you're going to Columbus. Oh nice, very good.
24:04
Speaker 2: I got a bar for you there. Uh, you go
24:07
Speaker 2: in there, order whatever you want food and drink. If
24:10
Speaker 2: Penn State wins, they will pick up the tab. I'm
24:13
Speaker 2: gonna hook you up all right.
24:14
Speaker 1: Keithan Ron Gonnatin, She's definitely not going to Columbus, Ohio
24:17
Speaker 1: because she's a professional. She covers the media sector for
24:20
Speaker 1: Bloomberg Intelligence. And we want to talk about Netflix and ESPN,
24:23
Speaker 1: Dan Knives, Let's start with you. Tesla Stoka not liking
24:27
Speaker 1: what they're hearing from Elon Musk.
24:28
Speaker 3: What was your takeaway? From the quarter for Tesla.
24:31
Speaker 9: It goes to a disaster conference call, I mean, because it
24:34
Speaker 9: was the street wanted to hear about pricing. Have the
24:38
Speaker 9: price cuts ended? What does the outlook like going forward?
24:41
Speaker 5: You know?
24:41
Speaker 9: Instead, this just really must be more of an economist,
24:44
Speaker 9: you know, obviously much more somber, and I think investors
24:47
Speaker 9: leave with just more questions and answers in terms of
24:50
Speaker 9: this price where that you know, we've talked about here
24:52
Speaker 9: a lot, you know, how long does it continue? And
24:54
Speaker 9: obviously on the cyber truck, that's gonna be a huge
24:57
Speaker 9: vehicle relative to demand, but definitely gonna be a uphill
25:00
Speaker 9: battle from production per.
25:01
Speaker 2: So, I got a million questions after that conference call,
25:05
Speaker 2: but my first one is on the cyber truck. He
25:08
Speaker 2: contends that this is like a special project and that
25:12
Speaker 2: makes it extra difficult to produce.
25:15
Speaker 3: Why is that?
25:16
Speaker 2: Why isn't it just a normal truck. I mean, this
25:19
Speaker 2: could be like an F one fifty competitor. It's so cool,
25:23
Speaker 2: everybody wants it, so many people put in pre orders.
25:27
Speaker 3: Why is it so hard to make?
25:29
Speaker 9: From an engineering perspective, it's very difficult.
25:31
Speaker 3: So it's one one are because it's a special shape.
25:34
Speaker 9: Because of the sheep because of the materials in there
25:37
Speaker 9: as well as what they're trying to do from a
25:39
Speaker 9: technology perspective. That's why you talk about getting mass production.
25:44
Speaker 9: They look, that's essentially why they built out Austin in
25:46
Speaker 9: terms of giga. But I do think must caution of course,
25:50
Speaker 9: not the demand side, but the production. And to Math's point, look,
25:54
Speaker 9: that's always been the issue with Tesla. It's about not
25:58
Speaker 9: about the demand story, it's about the production. Ironically, now
26:02
Speaker 9: for the first time, demand sort of hit so equalibrium
26:05
Speaker 9: when it comes to the supply.
26:07
Speaker 1: All right, so we've got Tesla down about eight nine percent.
26:10
Speaker 1: On the other side, we got Netflix up fifteen percent.
26:13
Speaker 1: Monster quarter, Geitha, What did you hear on the conference
26:17
Speaker 1: call last night? What did investors here on the conference
26:18
Speaker 1: call last night that got them all hot and lathered
26:20
Speaker 1: here for Netflix?
26:22
Speaker 6: Yeah?
26:22
Speaker 8: Absolutely, I mean it was a blockbuster quarter on all fronts, Paul.
26:26
Speaker 8: So absolutely, the beat was it was not just a beat,
26:29
Speaker 8: it was the magnitude of the beat and the story.
26:31
Speaker 8: The narrative is really clean now, it's getting much much clearer,
26:36
Speaker 8: you know, as far as the margin trajectory is concerned.
26:38
Speaker 8: They promised about twenty two to twenty three percent margins
26:41
Speaker 8: going out in twenty twenty four. They promised, you know,
26:43
Speaker 8: subscriber momentum kind of extending into twenty twenty four, so
26:47
Speaker 8: really kind of firing on all cylinders, if you will.
26:50
Speaker 3: So getha.
26:51
Speaker 1: It seems like, I mean, you follow the whole media space,
26:54
Speaker 1: It seems like Tesla's really pulling away from everybody else
26:58
Speaker 1: in Netflix, right netfls thank you that Netflix is just
27:01
Speaker 1: pulling away from all the competitors, maybe including Disney.
27:05
Speaker 8: Oh absolutely, there's no doubt about it. We already know
27:07
Speaker 8: that Netflix is way ahead of its rivals, not only
27:10
Speaker 8: when it comes to subscriber scale, but also in terms
27:12
Speaker 8: of profitability. Remember, this is the only company that is
27:15
Speaker 8: generating profits today, Paul on its streaming business. The rest
27:19
Speaker 8: of the space, this company is going to generate about
27:21
Speaker 8: seven eight billion dollars in profits this year. The rest
27:24
Speaker 8: of the space, including Disney, Warner Brothers, you know, a paramount,
27:27
Speaker 8: all of them collectively will throw out about eight to
27:30
Speaker 8: nine billion dollars in streaming losses. So obviously, when it
27:34
Speaker 8: comes to profitability, when it comes to operating leverage, there
27:37
Speaker 8: is no doubt that Netflix is the clear winner. They
27:40
Speaker 8: are the dominant player. But what was the biggest surprise
27:43
Speaker 8: was the fact that they're just throwing out tons of
27:45
Speaker 8: free cash flow. So this was, you know, a stock
27:48
Speaker 8: that we used to kind of almost mock and ridicule
27:50
Speaker 8: talking about you know, you know, three and a half
27:52
Speaker 8: billion dollars in cash burn this year, They're putting out
27:55
Speaker 8: six and a half billion dollars of free cash flow.
27:58
Speaker 8: So this is yeah, yeah, this is a freak cash
28:00
Speaker 8: flow machine. And not just that, they committed to ten
28:03
Speaker 8: billion dollars in buy back. So as you kind of look,
28:06
Speaker 8: you know at them shrinking that float, look at EPs growth.
28:09
Speaker 8: I mean, it's going to be in the thirty percent
28:11
Speaker 8: range for the next few years, and that is really
28:13
Speaker 8: huge in kind of this media landscape right now.
28:16
Speaker 2: I mean, my takeaway from our stream Time conference last
28:20
Speaker 2: week was that Netflix is the boss of everything. I mean,
28:24
Speaker 2: if I were buying stocks, I would have loaded up
28:27
Speaker 2: after I saw did you watch Harry Styles interviewing Ted Saranda's,
28:30
Speaker 2: I mean, Lucas Shaw interviewing Ted Saranda's I.
28:33
Speaker 3: Did last week?
28:34
Speaker 2: I thought it was that guy came off like an
28:36
Speaker 2: absolute boss.
28:37
Speaker 3: They're doing everything right.
28:39
Speaker 9: They are looking you know, I think the thing here
28:42
Speaker 9: it's all not just about content. You think about the competition,
28:45
Speaker 9: what was coming from Disney. They've now taken a step back,
28:48
Speaker 9: and you look at that conference with that was a
28:50
Speaker 9: flex the muscles, especially when you look at free cash flow.
28:54
Speaker 9: If you look at Netflix versus Tesla, just to take
28:57
Speaker 9: does last night, it's not necessarily the result. It's also
29:01
Speaker 9: if you look at the communication the street ones to
29:04
Speaker 9: understand what the path looks like in a very uncertain
29:07
Speaker 9: quality marketkeetha.
29:09
Speaker 3: What's the headwind?
29:10
Speaker 2: What's the biggest risk for Ted and Flicks?
29:16
Speaker 8: Right now? They seem to be getting everything right. So
29:18
Speaker 8: the one concern I think that kind of is still
29:21
Speaker 8: kind of lingering a little bit, is this whole revenue
29:23
Speaker 8: growth re acceleration. I mean, they've got all the levers
29:25
Speaker 8: in place, but ARPU has been under pressure a little bit.
29:28
Speaker 8: We saw ARPU decline a little bit in the third quarter.
29:31
Speaker 3: Average revenue per user, revenue per.
29:32
Speaker 8: View, yes, yes, average revenue per user. So that has
29:36
Speaker 8: become like the really big metric now to kind of
29:38
Speaker 8: gauge the success and the streaming world. They did, of course,
29:42
Speaker 8: caution to that. They said it's going to be a
29:44
Speaker 8: little bit flat. But then again, we have price increases
29:47
Speaker 8: that are going into effect. We have the ad business
29:49
Speaker 8: that's going to take off. So as we kind of
29:51
Speaker 8: look to twenty twenty four, you know everything is in
29:54
Speaker 8: place for that that metric to kind of ramp Upretty
29:57
Speaker 8: significantly as well. So right now they're getting everything right.
30:00
Speaker 1: Hey Dan, My big question on EV's in general, and
30:03
Speaker 1: I just purchased a.
30:04
Speaker 3: Movie going back to Tesla. Now you're going back to Tesla.
30:06
Speaker 2: It's kind of hard to keep tracked. That's why I'm
30:08
Speaker 2: there are two very different companies, I know, but this
30:10
Speaker 2: is very They're both ripping stocks.
30:13
Speaker 3: People. These are the ones that are most rich.
30:15
Speaker 2: Testa is getting killed today right Netflix is up fifteen percent,
30:19
Speaker 2: Tesla is down eight point seven.
30:21
Speaker 1: But for me, the big issue having just purchased a
30:23
Speaker 1: new car BMW X three.
30:25
Speaker 3: He loves the X three. We love the X three.
30:27
Speaker 1: Although I have like twelve miles on it. I'm just
30:28
Speaker 1: walking back and forth to the train every day.
30:31
Speaker 3: Is and demand.
30:33
Speaker 1: I really have questions about what is the real demand
30:36
Speaker 1: out there in America for EV's, Like I'm thinking.
30:40
Speaker 2: Beyond the rich, beyond like a second or third car,
30:42
Speaker 2: like is you at a political angle here, like I
30:44
Speaker 2: think half the country will never buy an EV.
30:47
Speaker 9: Look, I mean you're starting to get into a debate
30:50
Speaker 9: around with the demand curb books. Like ultimately, price is
30:53
Speaker 9: so important if you look go back to traditionally Tesla
30:57
Speaker 9: seventy five eighty eighty five thousand, now even with the
31:00
Speaker 9: the tax credits thirty five forty thousand depending on when
31:03
Speaker 9: state living. But it does also talk about the battle
31:06
Speaker 9: from the Beltway and what's happening here even with UAW
31:09
Speaker 9: and what's tapping Detroit with jam and Ford. It's all
31:13
Speaker 9: price driven. Three percent of automobiles in the US for
31:17
Speaker 9: EV's today, so we believe that goes ten to twelve percent.
31:20
Speaker 9: There's me massive winners. But it also comes down to price,
31:24
Speaker 9: especially in this macro.
31:25
Speaker 2: I mean, as long as you know President Biden is
31:28
Speaker 2: gonna pay me, He's basically he's gonna borrow money from
31:30
Speaker 2: my kids and my grandkids to pay me to buy
31:33
Speaker 2: an EV. I'm interested, But I want the cyber truck,
31:38
Speaker 2: that's what That's the one I want.
31:39
Speaker 9: Exactly, and MILLI vehicle and Miller's gonna have the cyber truck.
31:42
Speaker 9: While watching Netflix in full self driving in three four years.
31:47
Speaker 3: Hey, Githa, another big day in the world of media.
31:49
Speaker 1: Yesterday was, or in the past couple of days, Disney
31:52
Speaker 1: for the first time ever released financial results for ESPN,
31:56
Speaker 1: and my takeaway was two things. One, their profit margins
32:01
Speaker 1: are well, there's still a lot of cash loot, almost
32:03
Speaker 1: three billion dollars of EBITA, but it declined big time
32:06
Speaker 1: and it's nowhere near the number used to be. What
32:09
Speaker 1: is ESPN or what is Walt Disney Company could do
32:11
Speaker 1: with ESPN?
32:13
Speaker 8: Yeah, that's the big, big question, Paul, And I mean
32:15
Speaker 8: one of the reasons that they kind of broke this
32:17
Speaker 8: out as a standalone unit was because they really kind
32:19
Speaker 8: of wanted to show, you know, potentially future investors if
32:23
Speaker 8: they're planning to sell a steak or if they're planning
32:24
Speaker 8: to spin it off, you know what the financials kind
32:26
Speaker 8: of look like. But obviously, you know, the top line
32:29
Speaker 8: actually looks pretty stable at sixteen billion dollars. It's really
32:32
Speaker 8: the profit margins, as you rightly pointed out. I mean,
32:34
Speaker 8: you look at the traditional cable business, it's about thirty
32:37
Speaker 8: thirty five percent margins. You look at ESPN's margins, it's
32:40
Speaker 8: fifteen percent this year. So that is a little bit concerning,
32:43
Speaker 8: and obviously it is only going to go lower given that,
32:46
Speaker 8: you know, sports rights fees are increasing astronomically, so they
32:49
Speaker 8: really need to do something with this asset. We know
32:51
Speaker 8: that they need to do it fast. The question is
32:53
Speaker 8: do they sell it? Do they do they actually sell
32:55
Speaker 8: it to Apples? Has kind of been set all and
32:57
Speaker 8: you know, or do they you know, spin it out again.
33:00
Speaker 8: We'll we'll have to wait and watch. Buteah, Definitely.
33:03
Speaker 1: I kind of feel like I have to apologize to
33:05
Speaker 1: GETHA because the twenty five years I had covered the
33:07
Speaker 1: media industry were the golden years.
33:10
Speaker 3: Everybody made money.
33:12
Speaker 1: What I've left to GETHA is just a hodgepodge. I
33:14
Speaker 1: don't know what's going on out there, Githa. What's the
33:17
Speaker 1: I mean, can you get any investor out there to
33:20
Speaker 1: say I want to overweight media?
33:24
Speaker 8: No, not at all. I mean everything is down in
33:27
Speaker 8: the dumbs right now, other than of course Netflix. But
33:29
Speaker 8: we'll have to wait and watch what happens with Disney.
33:31
Speaker 8: I think they have a great collection of assets. They're
33:33
Speaker 8: trying to do everything that they can. But Bob Iger
33:35
Speaker 8: obviously has a lot of challenges ahead of him.
33:38
Speaker 3: All Right, I mean a success or maybe. Yeah, it
33:40
Speaker 3: seems like that.
33:43
Speaker 2: Is one of his worries, but others are just as pressing.
33:46
Speaker 2: I'll be interested to see if the league's come in
33:49
Speaker 2: and get a piece of ESPN. Is that still on
33:51
Speaker 2: the table, Dan, What do you think could could like
33:54
Speaker 2: the NFL and some other professional sports leagues come in
33:59
Speaker 2: and take a big chunk of it.
34:00
Speaker 9: Look, we believe this is ultimately going to lead Apple
34:03
Speaker 9: to acquiring ESPN. Oh you think that's it's Martin. Our
34:07
Speaker 9: thesis has been and Laura has talked about so War
34:11
Speaker 9: talks about Disney, which you know obviously makes sense there too,
34:14
Speaker 9: But we believe it's really about ESPN, the live streaming ASCID.
34:18
Speaker 9: If you look at happen with you know, MLS and
34:20
Speaker 9: MESSI I think they recognize in terms of cook and
34:23
Speaker 9: Creup Patino, even though M and A is obviously not
34:26
Speaker 9: their sweet spot, ESPN is a unique asset.
34:29
Speaker 3: It'll be a better buy than Beats.
34:31
Speaker 9: Right, and that was three and a half billion.
34:33
Speaker 3: How much is ESPN gonna cost?
34:35
Speaker 9: I mean we think forty to forty five billion is
34:38
Speaker 9: probably what would be the price tag. But then when
34:40
Speaker 9: you look at Disney, you know, it's this conversation talking
34:43
Speaker 9: about some of the parts you sell, and that's why
34:46
Speaker 9: there's more more pressure on Eiger in the board.
34:48
Speaker 2: What's Disney worth like one hundred and fifty let me
34:51
Speaker 2: pull it up here. Yes, Disney is currently in market
34:54
Speaker 2: cap terms worth one hundred and fifty three point seven billion.
34:57
Speaker 9: We think about third of that value.
34:59
Speaker 2: So if they get rid of say they let's say
35:01
Speaker 2: they get fifty billion dollars for ESPN, GITA, what is
35:04
Speaker 2: Disney then worth If they sell ESPN for fifty billion dollars.
35:09
Speaker 8: That is actually a really really high multiple. So you know,
35:11
Speaker 8: if you kind of look where cable stocks are trading
35:13
Speaker 8: right now, they're trading at about seven and a half times EBITDA.
35:16
Speaker 8: At seven and a half times EBITDA, ESPN would be
35:19
Speaker 8: worth about anywhere from about twenty two to twenty five billion.
35:21
Speaker 8: So it'll be interesting, it'll be interesting if they can
35:24
Speaker 8: get that fifty x multiple that that would actually be awesome.
35:26
Speaker 8: But again, you have to kind of kind of look
35:29
Speaker 8: at at Disney's you know, really bread and butter of
35:32
Speaker 8: the business, that is the park's business that is going
35:34
Speaker 8: to you know, just a few years ago, parks used
35:37
Speaker 8: to bring in only about thirty thirty five percent of
35:39
Speaker 8: operating income. This year, it's bringing in about seventy five
35:42
Speaker 8: percent of operating income at ten billion dollars. So you know,
35:45
Speaker 8: Disney really is Parks right now, and Parks itself should
35:49
Speaker 8: be worth I think two hundred billion.
35:51
Speaker 3: Nice. I want to I just want to Dan finally
35:53
Speaker 3: get back to Tesla.
35:55
Speaker 2: In terms of production in the gigafactory, there was a
35:58
Speaker 2: lot of talk on the call, yeah, yesterday about whether
36:02
Speaker 2: Musk could do a lot of his production in Texas.
36:06
Speaker 2: Where are they gonna build the most of their you know,
36:10
Speaker 2: expansion or does their expansion not look as fruitful as
36:14
Speaker 2: it did you know before this call.
36:16
Speaker 9: Expansion is gonna be in Austin, broader Texas as well
36:19
Speaker 9: as in China. I mean, they're they're focusing more and
36:22
Speaker 9: more away from California obviously their course and away from
36:26
Speaker 9: away from mon Yeah, and look and fundamentally just speaks
36:29
Speaker 9: to mathematically economically speaking against Texas. Go about the Mexico
36:34
Speaker 9: plan that they're gonna, you know, ultimately start to build out.
36:37
Speaker 9: But it's really China capacity right now is not the issue.
36:41
Speaker 9: It's about the price cuts. Keep cutting prices. That's a
36:44
Speaker 9: bad spiral.
36:45
Speaker 1: Yep, all right, Dan, I've senior analyst web Bush Security
36:48
Speaker 1: is covering all that fun stuff and tech and githa
36:50
Speaker 1: rang and nothing.
36:51
Speaker 4: Uh.
36:51
Speaker 1: She is an immedia analyst at Bloomberg Intelligence based down
36:54
Speaker 1: in Princeton and Dan heading off to Columbus, Ohio to
36:57
Speaker 1: see undefeated the party State of Ohio take on undefeated
37:01
Speaker 1: the Ohio State University.
37:03
Speaker 3: Ohio State huge.
37:04
Speaker 9: And look, I think it's gonna be a battle. It's
37:06
Speaker 9: gonna be a great game. I think Penn State comes
37:08
Speaker 9: out of the shoe with the W.
37:10
Speaker 5: Nice.
37:11
Speaker 3: There you go. I mean I have no idea about sports.
37:14
Speaker 1: Let's put a public sale on your Ohio State.
37:17
Speaker 2: I'm in. I'm in for Ohio State. Let's put twenty
37:20
Speaker 2: bucks on it.
37:21
Speaker 3: All right, here we go. This is Bloomberg.
37:22
Speaker 5: You're listening to the tape Cat's are live program Bloomberg
37:26
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37:29
Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
37:33
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37:35
Speaker 5: flagship New York station. Just say Alexa, play Bloomberg eleven thirty.
37:41
Speaker 1: It's Thursday, Max So that means we talked to one
37:44
Speaker 1: b Roodholts.
37:46
Speaker 3: Oh yeah, the big.
37:47
Speaker 1: Host masters in business. He's a chairman, chief investment officer
37:50
Speaker 1: Wolts Wealth Management. I'll give let you run with this mat.
37:52
Speaker 3: I don't know.
37:52
Speaker 7: Well.
37:53
Speaker 2: I love the I love his blog, The Big Picture,
37:55
Speaker 2: which you can see on the web at Ritholts dot com. Oh,
37:59
Speaker 2: by the way, kicking off, there's a banner ad Barry
38:03
Speaker 2: at the top of your page for the Jeep Wrangler.
38:06
Speaker 2: And right now I'm driving a Jeep Wrangler Rubicon three
38:12
Speaker 2: ninety two. So basically it's the Jeep Wrangler that everybody
38:15
Speaker 2: knows and loves, Like every high school kid wants this car.
38:19
Speaker 2: But they've shoehorned in a gigantic six point four liter
38:23
Speaker 2: V eight and I'm here to tell you it is
38:26
Speaker 2: loud and terrifying and I'm loving every minute of it.
38:29
Speaker 2: I had no idea, Barry, you still have to crank
38:34
Speaker 2: the steering wheel like three or four rotations before the
38:36
Speaker 2: tires find out about it on a Jeep.
38:38
Speaker 10: Yeah, I don't think they've changed a whole lot there.
38:41
Speaker 10: They just dropped a big engine and off to the races.
38:44
Speaker 10: You know, it's a that seems to be a successful formula,
38:48
Speaker 10: especially for American autumn.
38:50
Speaker 2: I wish somebody would tell the people at Ford, because
38:54
Speaker 2: you know, they still they won't make a Bronco as
38:56
Speaker 2: anything bigger than the V six in it and this
38:58
Speaker 2: three ninety two expensive as it is. And I'll get
39:01
Speaker 2: to that, but it's it's electrifying in its intent, exactly
39:08
Speaker 2: in its analog nature, like it's such a great fun.
39:12
Speaker 3: Piece of gear to drive.
39:14
Speaker 2: In fact, I wish you were here because I would
39:15
Speaker 2: give you the keys and we take it out right now.
39:17
Speaker 3: It's so you have a jeep, right, I.
39:19
Speaker 10: Have a twenty thirteen Rubicon, which I use basically that
39:24
Speaker 10: that's my post apocalypse vehicle because it's just a hamster
39:29
Speaker 10: wheel inside and it goes everywhere. It's pretty much and anywhere.
39:34
Speaker 10: It's kind of unstoppable. That's the appeal of those old
39:38
Speaker 10: analog cejs are that they're just great fun cars.
39:43
Speaker 3: So, but I need to go to the inflation picture
39:45
Speaker 3: with that. That's exactly what I wanted to do.
39:47
Speaker 1: Let's go, because I mean, I can't get in the
39:49
Speaker 1: seat and behind the wheel of almost anything that you'd
39:53
Speaker 1: want to.
39:53
Speaker 3: Well, I'll tell you the numbers that you're quote.
39:55
Speaker 2: Exactly, so you know what, Hannah Elliott from Bloomberg pers suits,
40:00
Speaker 2: she drove the same car that I'm driving now two
40:03
Speaker 2: years ago, the Jeep Wrangler Rubicon three ninety two.
40:07
Speaker 3: And back then she.
40:08
Speaker 2: Was like, awesome car, but unbelievably expensive because they wanted
40:12
Speaker 2: seventy four thousand dollars for it to start, right, and
40:16
Speaker 2: that was twenty twenty one. Fast forward two years, the
40:20
Speaker 2: base price ninety two thousand, five hundred dollars. It's gone
40:24
Speaker 2: up more than twenty three percent. And to me, this
40:27
Speaker 2: ties in to the political story we have on the
40:31
Speaker 2: Bloomberg today, the fact that Donald Trump is leading President
40:35
Speaker 2: Biden in several key swing states because America just has
40:38
Speaker 2: had it up to here with this inflation.
40:41
Speaker 10: Yeah. So, first of all, I'm skeptical of all of
40:45
Speaker 10: these surveys. Generally we've spoken about this in the past,
40:49
Speaker 10: not just political surveys a year and change before the
40:52
Speaker 10: election that are notoriously unreliable, but generally speaking, when you
40:57
Speaker 10: ask people, hey, how much you're going to spend on Christmas?
41:01
Speaker 10: What do you think is happening with inflation? What is
41:05
Speaker 10: what is the state of the economy? Uh, you know,
41:07
Speaker 10: I kind of blame the American education system and the
41:10
Speaker 10: emphasis on testing. Nobody is willing to say, how the
41:14
Speaker 10: hell do I know where inflation is going to be
41:15
Speaker 10: a year from now? Instead, Hey, there's no penalties for
41:18
Speaker 10: taking a guess, and so they take a guess. So
41:21
Speaker 10: we end up with these surveys that are rarely accurate
41:25
Speaker 10: and very often tremendously misleading. Just a perfect example, a
41:32
Speaker 10: recent survey on inflation said how's inflation, and something like
41:37
Speaker 10: two thirds of the respondents said, inflation is going up
41:41
Speaker 10: the past quarter. Hey, inflator of the past year. From
41:44
Speaker 10: the past year, inflation fell from nine percent down to
41:48
Speaker 10: three percent.
41:49
Speaker 2: So that's because they look at the cumulative It doesn't
41:52
Speaker 2: matter if inflation they don't know. How you know, we
41:55
Speaker 2: talk about this, We see the data day in and
41:57
Speaker 2: day out, but your average American doesn't care if it's
42:01
Speaker 2: still gone up by so much. No, what I'm getting
42:04
Speaker 2: as the economic sentiment, right, how you know, Biden can
42:09
Speaker 2: be behind five point four percent economic growth in Q three,
42:13
Speaker 2: but the fact that prices have gone up by so
42:16
Speaker 2: much is what everyone cares about. And it doesn't matter
42:18
Speaker 2: if the Fed stops it. They've got to somehow bring
42:20
Speaker 2: it back down to where it was. Right, if they
42:23
Speaker 2: want to average two percent, That's what Neil Grossman goes
42:25
Speaker 2: on about all the time. Right, if they want to
42:27
Speaker 2: average two percent, they've got to hold it there for
42:31
Speaker 2: like the next four decades.
42:33
Speaker 10: I disagree with that assessment. I'll tell you why. So
42:36
Speaker 10: we've talked about labor shortage and how wages are going up.
42:39
Speaker 10: We've talked about housing prices and how those have gone up,
42:42
Speaker 10: and now we're talking about automobiles.
42:45
Speaker 3: All three of these.
42:46
Speaker 10: Higher priced entities are not rising in price because the
42:52
Speaker 10: monetary circumstances are too loose. They're rising in price because
42:56
Speaker 10: we have shortages. We didn't build enough houses for fifteen
42:59
Speaker 10: years following the financial About is that? So That's exactly
43:04
Speaker 10: where I was going. The primary driver of the twenty
43:08
Speaker 10: one to twenty two inflationary surge was a massive, massive
43:13
Speaker 10: increase in fiscal stimulus starting with Cares Act one. Hey,
43:17
Speaker 10: it was ten percent of GDP. That that's a number
43:20
Speaker 10: we haven't seen since the Great Depression. Arguably it was
43:24
Speaker 10: the greatest fiscal stimulus in American history relative to GDP.
43:30
Speaker 10: But it was CARES Act one. It was Kars Act
43:31
Speaker 10: two behind that was the Tax Cuts and Job Act,
43:35
Speaker 10: which was about three trillion dollars over over ten years.
43:39
Speaker 10: Then you have the Chips Act, and you have the
43:41
Speaker 10: Infrastructure Bill under this president and Cares Act three under
43:45
Speaker 10: this president. So the combination of Trump and Biden.
43:48
Speaker 3: The Inflation Reduction Act, by the way, what an ironic name.
43:51
Speaker 10: Also right, it's also a ton of money. Now, some
43:53
Speaker 10: of these are spread out over ten years. The Infrastructure Act,
43:56
Speaker 10: the Chips Act, the Tax Cuts and Jobs Act are
43:59
Speaker 10: spread out over a decade. So it's not five percent
44:02
Speaker 10: this year, it's half a percent a year for ten years.
44:05
Speaker 10: But here's the fascinating thing, and this is what I'm
44:07
Speaker 10: so intrigued by.
44:09
Speaker 3: When we just ask Teat for twenty seconds.
44:11
Speaker 10: Where is cinnamon? I just don't find sentiments. I just
44:15
Speaker 10: don't find the economy worse than the financial crisis, the
44:18
Speaker 10: dot com implosion, or the eighty seven crash. And that's
44:21
Speaker 10: what people are saying.
44:22
Speaker 3: It is all right, Barry, thanks so much for joining us.
44:24
Speaker 1: We've covered a lot there, everything from GDP to the
44:28
Speaker 1: jeep rubicon with the six point something on on the
44:31
Speaker 1: displaced engine. Barry Ridholt's Host of Masters in Business Chairman
44:35
Speaker 1: and Chief investment Officer Ridtholt's Wealth Management joining us here.
44:39
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can
44:43
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever
44:46
Speaker 2: podcast platform you prefer.
44:48
Speaker 3: I'm Matt Miller.
44:49
Speaker 2: I'm on Twitter at Matt Miller nineteen seventy three.
44:53
Speaker 3: And I'm Baul Sweeney. I'm on Twitter at pt Sweeney.
44:55
Speaker 1: Before the podcast, you can always catch us worldwide at
44:58
Speaker 1: Bloomberg Radio