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L’Oreal Sales Surge, Netflix Falls, Israel Hits Back · Bloomberg Intelligence

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Speaker 3: The one of the stocks in the news is Lorel,
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Speaker 3: the cosmetics company. Put us some good numbers here. Let's
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Speaker 3: break it down with deb Acon. She is a luxury
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Speaker 3: goods analyst for Bloomberg Intelligence. She joins us from London
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Speaker 3: via Zoom So, deb Lorel Cosmetics. I've come to understand
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Speaker 3: just really through the pandemic from my observation of the
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Speaker 3: Sepphor store across the street from Bloomberg headquarters. People buy
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Speaker 3: cosmetics like, no matter what is going on in the world.
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Speaker 4: What did you learn from Loriel's numbers?
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Speaker 5: Feel good factor, right, Paul?
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Speaker 6: Yeah, So actually the number is I'm in above nine percent.
1:01
Speaker 6: So there was a big pickup from four Q where
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Speaker 6: we had a solid first half and a shorter second half,
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Speaker 6: a slower second half in twenty twenty three across the
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Speaker 6: whole of the beauty industry, and so we had a
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Speaker 6: big beat on the Q one just a sales number,
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Speaker 6: but it was really about double digit growth in Europe.
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Speaker 6: We then saw high single digit growth when we pull
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Speaker 6: away anomalies in the US and then are definitely emerging
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Speaker 6: markets like fifteen sixteen percent growth there. And the other
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Speaker 6: side of it was that mass market is also holding
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Speaker 6: up because luxury right now in beauty is difficult if
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Speaker 6: you're a company like Laurel or Estel Order or Biasedov's
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Speaker 6: La Prairie with exposure in skin care in China, where
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Speaker 6: in trade travel retail is still stuffed with skincare, so
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Speaker 6: that still takes another quarter to normalize. But elsewhere mass
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Speaker 6: market passing on price and do very well across makeup,
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Speaker 6: across fragrances in particular. Yeah, it's all going well.
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Speaker 4: Yeah, it's interesting.
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Speaker 3: And just talk to us about the cosmetics business in general. Again,
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Speaker 3: I just was, you know, while everything was shutting down
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Speaker 3: in New York City during the pandemic, there's a four
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Speaker 3: store across the street stayed open, Number one and number two.
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Speaker 3: There were people in there every day. I don't care
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Speaker 3: what was going on in the world. They were there
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Speaker 3: every day. Talk to us about just the overall cosmetics market,
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Speaker 3: the growth characteristics of that market.
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Speaker 5: So typically we look at the market.
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Speaker 6: I'm as you know, I covered the luxury market too,
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Speaker 6: and we're in this show. We're looking at a normalized
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Speaker 6: growth rate in luxury goods of five to six percent,
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Speaker 6: and you could say that we're looking at that rate too,
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Speaker 6: and I'm fine to know over the last several years
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Speaker 6: that the beauty industry is growing in line with the
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Speaker 6: luxury industry. And that's because there's more and more premiumization
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Speaker 6: and ultra high end and that is fined in the
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Speaker 6: same growth rate and profitability in some cases as the
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Speaker 6: luxury industry. So you typically get a three to five
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Speaker 6: percent growth rate from mass market and five percent upwards
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Speaker 6: on premium and then super premium and luxury type products.
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Speaker 5: It's a feel good factor. It's for everyone, you know.
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Speaker 6: Over the last few years, so Forest Does, for example,
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Speaker 6: are within a selective retailing division which sits in Alvimh,
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Speaker 6: the owner Ofly with a Tom Murray Hennessy. So and
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Speaker 6: then you know, it's about making sure that the product
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Speaker 6: in there is innovative. There's a lot of new products
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Speaker 6: coming out. Lorel talked about AI using it to look
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Speaker 6: at the scalp look of look at Skincare, their professional
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Speaker 6: hair care division was really high looking at the at
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Speaker 6: the hair care and the scalp and what's going on there.
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Speaker 5: So it's been used.
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Speaker 6: In so many ways, and also because of social media
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Speaker 6: in the way that you can really get to understand
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Speaker 6: how the cosmetics products are in dermatology, for example, as grown.
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Speaker 6: When I look at the Loreal, twenty to thirty percent
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Speaker 6: plus every quarter for since twenty twenty, so it's now
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Speaker 6: become twenty percent of their business very quickly, when a
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Speaker 6: couple of years ago we were talking about it being
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Speaker 6: ten percent. Well, yeah, so it's it's you know, it's
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Speaker 6: having belief, it's it's feel good.
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Speaker 5: But it's also got like a healthy side to it
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Speaker 5: as well.
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Speaker 3: Well, that's what my co host Alex Steele, that's what
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Speaker 3: she always says. She invests in her face now guys
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Speaker 3: like John Tucker and Joe Mysek and we obviously missed
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Speaker 3: that train, so that's too late.
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Speaker 4: But yeah, I think that seems to be a thing.
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Speaker 3: All right, deb let's step back a little bit and
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Speaker 3: just talk about what you're seeing in luxury overall. If
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Speaker 3: I go to the high streets in London, in Paris,
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Speaker 3: how's traffic out there.
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Speaker 4: How's business?
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Speaker 6: I think, well, what we've seen overall, certainly Europe has
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Speaker 6: really been the surprise. Now for the third quarter, we're
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Speaker 6: just starting with the ending season, but now for the
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Speaker 6: third quarter more robust than we expected. Again a lot
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Speaker 6: of local touris because I think if we think about
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Speaker 6: Europe in particular, twenty two we had the dollar over
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Speaker 6: here spending strength of the dollar into Europe beginning of
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Speaker 6: twenty three, and that phased out the second half twenty
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Speaker 6: twenty three. But the Europeans are doing particularly well with
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Speaker 6: new designs, new products, new designers. But it is really
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Speaker 6: the very high end where you're getting and also what
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Speaker 6: you know that quiet luxury, the view of products like
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Speaker 6: Laura Piano, Brunellocution Elly. We just had their results this week,
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Speaker 6: very very strong, really really decent teams growth, and so
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Speaker 6: there are brands out there, but it tends to be
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Speaker 6: that they really are they really are the luxury price
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Speaker 6: tag and it's value for money at that price point.
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Speaker 6: You don't have many of those products in your wardrobe
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Speaker 6: and you're proud to wear them, and they're the ones
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Speaker 6: that are driving the business. It's across all categories too,
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Speaker 6: we're talking from Kashmir to very high end leather goods
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Speaker 6: to high end fragrances. We're see more and more I
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Speaker 6: suppose we see more and more momentum in very high
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Speaker 6: end fragrances as well, with acquisitions coming through and IPOs
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Speaker 6: as well.
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Speaker 3: Hey, deb you know when we talk about I know,
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Speaker 3: just reading your research talking to you in the past,
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Speaker 3: the Chinese consumer is really a big, big, important player
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Speaker 3: in the world of luxury spending, both home in China
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Speaker 3: but also abroad as the Chinese consumer travels to New York,
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Speaker 3: to London, two Paris in Italy for example. Talk to
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Speaker 3: us about China. Is that a net positive or net negative?
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Speaker 4: Where are we here?
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Speaker 5: Yeah, so net negative.
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Speaker 6: So if we think about let's focus pre pandemic, and
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Speaker 6: we had a travel event last week in London, we're
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Speaker 6: looking at.
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Speaker 5: Where the Chinese consumer was.
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Speaker 6: So in terms of the Chinese consumer as part of
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Speaker 6: luxury goods, pre pandemic a third of the business. We
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Speaker 6: now think they're back to around twenty three percent. But
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Speaker 6: how that's changed in terms of geography. It used to
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Speaker 6: be that they've scored less than So if we think
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Speaker 6: about the luxury industry, around ten percent was Chinese spending
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Speaker 6: at home. Now it's sixteen percent Chinese spending at home.
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Speaker 6: So we have these conflict in numbers. China is up
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Speaker 6: double digit, but China is still below where it was,
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Speaker 6: and that is true. But it's the US consumer and
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Speaker 6: the European consumer who've taken a lot of the slack.
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Speaker 6: And that's why the industry versus twenty nineteen. Over all,
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Speaker 6: the luxury goods is around thirty five to forty percent bigger.
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Speaker 5: Than it was.
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Speaker 4: Really.
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Speaker 7: Yeah, wow, that's.
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Speaker 6: How that's how you know you've you've got double digit,
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Speaker 6: high single digit growth growing annually.
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Speaker 3: All right, I mean I'll walk down the Penn Station
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Speaker 3: today down Fifth Avenue or mont Madison Avenue and I'll
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Speaker 3: see a lot of people in those stores here. All Dad,
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Speaker 3: thanks so much for joining us. Their Debacon luxury Goods
8:02
Speaker 3: analys for Bloomberg Intelligence. She's based in London and she's
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Speaker 3: really one of the best animals out there, covering a
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Speaker 3: lot of retail. We're really focusing on the luxury space
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Speaker 3: and as deb says, you know, he's been telling us
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Speaker 3: that's a mid good, solid mid the mid high single
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Speaker 3: digit growth business, you know, well above GDP, and that
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Speaker 3: kind of goes to some of the wealth creation out
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Speaker 3: there and widening gaps there in wealth inequality. It's not
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Speaker 3: just in the US or in the Western markets, it's
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Speaker 3: also in Asia as well, so deb gives us some
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Speaker 3: of the best research out there. Loreal again, the cosmetics
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Speaker 3: company reported some better than expected numbers and stock is
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Speaker 3: up five percent today.
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Speaker 4: It's about flat for the year.
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Speaker 3: It's a big company, two hundred and forty billion euros
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Speaker 3: in market caps, so just a huge company there.
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9:06
Speaker 3: Of course, the geopolitical issues globally are back on the
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Speaker 3: forefront here overnight Israel retaliatory strike on Iran last night,
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Speaker 3: many folks calling it a measured response, maybe proportionate, if
9:20
Speaker 3: you will.
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Speaker 4: I'm not sure how the fin all that.
9:22
Speaker 3: I guess that's different for everyone. But let's check in
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Speaker 3: with someone with feet on the ground, Ethan Bronner. He's
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Speaker 3: the Israel Bureau chief and Senior Mid East editor for
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Speaker 3: Bloomberg News. He joins us from tel Aviv via zoom Ethan,
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Speaker 3: what's the feeling on the ground in tel Aviv today
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Speaker 3: as it relates to Israel's strike on Iran last night?
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Speaker 8: I think you described it well.
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Speaker 9: I think that the view here is that it what
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Speaker 9: Israel did was to sort of smack at Iran in
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Speaker 9: a place that says we can get to you. There
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Speaker 9: are where it hit was one of the air bases
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Speaker 9: from which last weekends attack came, and also not far
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Speaker 9: from nuclear sites.
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Speaker 8: So the Israelies their attitude, at least their claim.
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Speaker 9: I'd say the mainstream claim is that we we we
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Speaker 9: we hit back in a way that said we want
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Speaker 9: you to know that we can do this, and we're
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Speaker 9: not going any further, and let's stop this here. There
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Speaker 9: are those who are very upset that it wasn't sufficient.
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Speaker 9: There are those who wanted nothing to happen. But I
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Speaker 9: would say that you know, it is not being criticized
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Speaker 9: too heavily except from from the far right.
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Speaker 10: Right now, Yeah, Ben Ben Gavier, the hawkish national security
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Speaker 10: minister in Israel, tweeting just one word week.
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Speaker 9: Right, I mean that that word was a Hebrew praate
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Speaker 9: word for meeting, more like lame or wimpy.
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Speaker 8: Yeah, yeah, very very critical.
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Speaker 10: I mean that that one word doing a lot of
10:50
Speaker 10: work here to suggest that not everyone is in agreement.
10:54
Speaker 10: And at the end of the day, Ethan, I mean,
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Speaker 10: this is a big change from going Israel in ran
10:59
Speaker 10: in the shadows fighting to now out in the open
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Speaker 10: and out and open conflict. So while markets are treating
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Speaker 10: it as if it's over, I mean, this is a shift,
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Speaker 10: isn't it.
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Speaker 9: It's a shift, of course, it's in many ways a
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Speaker 9: shift that began not by Israel this week, but by
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Speaker 9: Iran last week.
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Speaker 8: That was the beginning of the big shift.
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Speaker 9: Israel has been hitting on occasion inside Iran. No one's
11:21
Speaker 9: kind of acknowledged it, but two or three occasions and
11:24
Speaker 9: where with missiles and other and drones and other occasions
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Speaker 9: where they have assassinated Iranian Iran nuclear scientists and so forth.
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Speaker 9: But the big change began last Saturday night when Iran said, okay,
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Speaker 9: all of this stuff you guys are doing to us
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Speaker 9: both of our proxies in Iraq, Seria, eleven on and
11:41
Speaker 9: so forth, and now us we're coming back at you
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Speaker 9: directly that was the change, and now Israel hitting back
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Speaker 9: saying we can't let this happen without some response. You know,
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Speaker 9: the whole debate is should there have been a response?
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Speaker 9: All week, the Americans, the French, the Germans, the British
11:58
Speaker 9: were coming by personally on the phone and saying to
12:01
Speaker 9: Prime Minister in to Tanya, who let it go.
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Speaker 8: Take your win.
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Speaker 9: You stopped all those attacks last Saturday.
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Speaker 8: This is a win. You don't have to go back
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Speaker 8: at them.
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Speaker 9: But the Israelis felt they did, and this was their response.
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Speaker 8: We'll see where it takes us. It isn't obvious that
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Speaker 8: it's over.
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Speaker 9: But the Iranians have been saying publicly today they don't
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Speaker 9: think much happened and they don't see any particular need
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Speaker 9: to respond.
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Speaker 3: So all right, Ethan, let's get our focus back on
12:26
Speaker 3: kind of probably where it needs to be, which is
12:29
Speaker 3: in Gaza. What's the latest thinking about Israeli strategy in Gaza?
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Speaker 3: It feels like a stalemate and status quo is there?
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Speaker 3: What's the strategy here from the Israeli government.
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Speaker 9: So they're not being exceptionally open as you can imagine
12:46
Speaker 9: in the middle of their deliberations, and there are you know,
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Speaker 9: It's like a Rubik's cube. There are all these things
12:53
Speaker 9: going on at once, including, of course what's happening with
12:55
Speaker 9: around that we've just talked about. That the Israelis began
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Speaker 9: their attacks six plus months ago. Recently they pulled many
13:03
Speaker 9: of their troops out, but there remains in southern Gaza,
13:08
Speaker 9: in the city of Raphach five to eight thousand Hamas
13:12
Speaker 9: troops in tunnels and so forth, and some hundred or
13:17
Speaker 9: so Israeli hostages. Israel has been repeatedly saying that it
13:22
Speaker 9: needs to go in there eventually and take them out
13:25
Speaker 9: so that Hamas can no longer be the kind of
13:28
Speaker 9: force to do what it did on October seventh, and
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Speaker 9: the Americans have been saying, be careful, please don't what
13:35
Speaker 9: about all the people who are a million plus people
13:38
Speaker 9: who are taking shelter above ground in Rapha. So I
13:41
Speaker 9: think that my instinct at the moment is that there
13:45
Speaker 9: will be some time off here as we see whether
13:49
Speaker 9: this negotiation can get anywhere in Cairo about a piece
13:53
Speaker 9: about a ceasefire, and that Israel will begin to take
13:58
Speaker 9: steps to have the civilian in Rapa moved elsewhere for
14:03
Speaker 9: some kind of operation in the coming month or two
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Speaker 9: its scale is very difficult for me to assess at.
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Speaker 10: This point, Ethan, if I could tie these two together,
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Speaker 10: does the fact that Iran has struck Israel out in
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Speaker 10: the open? Is there a sense to which this gives
14:21
Speaker 10: the Israelis more I don't know, more impetus to say, look, clearly,
14:26
Speaker 10: we need to be out there and we need to
14:28
Speaker 10: be strong. And again this more hawkish attitude towards Gaza
14:31
Speaker 10: and what they say Iranian proxies.
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Speaker 9: Yes, absolutely, but you see, it's like everything, it's it's
14:39
Speaker 9: not one force at worker.
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Speaker 8: And so what you said is true.
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Speaker 9: On the other side of the of the equation is
14:46
Speaker 9: the fact that last Saturday, all these countries, including Jordan,
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Speaker 9: Saudi Arabia and other Arab states, helped Israel push Iran back.
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Speaker 9: And Israel is feeling, you know, in the bosom of
14:59
Speaker 9: some kind of alliance and doesn't want.
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Speaker 8: To mess that up either.
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Speaker 9: So you know, I think that what it wants to
15:06
Speaker 9: do is sort of show restraint toward Iran on its
15:10
Speaker 9: mainland and get everyone to accept that it needs to
15:13
Speaker 9: do something in Gaza. And because as you say, AMASA
15:17
Speaker 9: is after all funded and paid for by Iran as well.
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Speaker 4: So Ethan.
15:23
Speaker 3: You're based in Tel Aviv. You have a good sense
15:27
Speaker 3: of kind of the common person on the street. Is
15:29
Speaker 3: there any sense that among the people of Israel that
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Speaker 3: there's a sense of fatigue setting in here? It's been
15:36
Speaker 3: six months here, they've basically occupied Gaza. Is there a
15:41
Speaker 3: sense of that maybe the people would like to move
15:44
Speaker 3: on to the next step.
15:47
Speaker 8: There is some of that. I don't think it's overwhelming, though.
15:50
Speaker 9: I have to tell you, Paul them and there really
15:53
Speaker 9: is a sense what happened on October seventh, it's very
15:55
Speaker 9: difficult for those abroad to grasp the sense of trauma
16:00
Speaker 9: and defeat that it created in this country, the sense
16:03
Speaker 9: that its very existence is its stake, its ability to
16:08
Speaker 9: allow people to live at the edges of its country
16:12
Speaker 9: and not feel that someone is going to come in
16:14
Speaker 9: and carve them up and unprotected. It's been so overwhelming
16:19
Speaker 9: that I think that there remains a desire here among
16:24
Speaker 9: most Israelis to quote unquote finish with Kamas and make
16:28
Speaker 9: clear to other militias, proxies and enemies not far away
16:33
Speaker 9: that Israel is willing to fight for its existence. So
16:36
Speaker 9: I don't think that a fatigue is the overwhelming sentiment,
16:41
Speaker 9: although you are right that it exists, and there are
16:43
Speaker 9: many who say, we've done what we can, let's cut
16:46
Speaker 9: a deal, let's get out.
16:48
Speaker 8: We can't do this forever. But I don't think it.
16:50
Speaker 9: I think it's still leaning in the other direction for now.
16:54
Speaker 10: Ethan, if I can quickly ask a military amateurish question,
16:59
Speaker 10: because this I don't understand, and maybe it's a minor point,
17:01
Speaker 10: but I'd just be interested to know when Israel we
17:03
Speaker 10: have reports of them launching the strikes, also a report
17:06
Speaker 10: of them striking a Syrian aerial defense position. Israel never
17:10
Speaker 10: confirms them. Their official line is always one of unconfirming.
17:15
Speaker 4: Why is that, you know?
17:20
Speaker 9: I think that their view in particular with regard to
17:23
Speaker 9: say around is that it in particular today, they view
17:27
Speaker 9: that it allows them some kind of rhetorical and strategic
17:31
Speaker 9: flexibility to not specifically say what they did. They certainly
17:37
Speaker 9: acknowledge when they attack and Lebanon and often in Syria,
17:40
Speaker 9: by the way, if they say these are his blove
17:43
Speaker 9: positions that we have taken out. That goes on in
17:46
Speaker 9: terms of the sort of scariest stuff that goes on
17:48
Speaker 9: when they take out, you know, an alleged nuclear reactor
17:52
Speaker 9: or when they do what they did today, they they
17:55
Speaker 9: have found it useful.
17:57
Speaker 8: To not to not talk about it publicly.
17:59
Speaker 9: I mean, you know, Israel has nuclear weapons, that's had
18:02
Speaker 9: them for years, it has never officially acknowledged them.
18:05
Speaker 3: Ethan, thank you so much for this reporting. Ethan Browner
18:08
Speaker 3: Israel Bureau chief and senior Mideast editor for Bloomberg News.
18:11
Speaker 3: He's based in our Tel Aviv bureau. There, so again,
18:15
Speaker 3: fluid situation there.
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Speaker 3: in this Internet age talking about streaming kind of internet
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Speaker 3: delivery of media.
19:01
Speaker 4: It's all about Netflix.
19:03
Speaker 3: Netflix is a two hundred and fifty billion dollar market
19:06
Speaker 3: cap company. It's up seventeen percent year to date, up
19:09
Speaker 3: seventy six percent over the past twelve months, but it's
19:12
Speaker 3: down six point six percent today. I'm not sure what's
19:15
Speaker 3: going on there. I thought they had good numbers last night.
19:16
Speaker 3: But let's chicken with somebody who gets paid to understand
19:19
Speaker 3: this stuff.
19:19
Speaker 4: KEITHA.
19:20
Speaker 3: Ranganathan. She is the the media analyst of Bloomberg Intelligence.
19:24
Speaker 3: She's done in our Princeton office. Keith, I thought it
19:26
Speaker 3: was a really good quarter in terms of you know,
19:28
Speaker 3: particularly the subscriber ads.
19:30
Speaker 4: Why do you think there' stocks trading down today?
19:32
Speaker 11: Yeah, it was not just a good quarter, Paul, it
19:35
Speaker 11: was an excellent quarter. I mean, they blew out subscribers.
19:38
Speaker 11: We were expecting, you know, four and a half million
19:40
Speaker 11: subscriber ads. They came in at over nine million. It
19:42
Speaker 11: was the best first quarter ever, you know, kind of
19:45
Speaker 11: almost reminiscent of COVID times. But I think why investors
19:49
Speaker 11: are a little bit spooked ever since they reported is
19:51
Speaker 11: because they said that they're no longer going to be
19:53
Speaker 11: providing disclosure on their subscriber numbers as well as on
19:58
Speaker 11: our pools starting in the first ord of twenty twenty five.
20:01
Speaker 11: And I think what that really signals is that this
20:03
Speaker 11: company is transitioning into this more mature phase. I mean,
20:07
Speaker 11: you know, well, investors in the market likes transparency, and
20:11
Speaker 11: anytime you reduce disclosure, it really kind of causes a
20:14
Speaker 11: lot of uncertainty, a lot of anxiety.
20:17
Speaker 10: If it's entering a more mature phase. Gita, does that
20:20
Speaker 10: mean that this thing can no longer be priced as
20:22
Speaker 10: a growth stock, That the era of adding on huge
20:26
Speaker 10: amounts of subscribers growing like gangbusters, that that's over, and
20:29
Speaker 10: so this repricing in that scenario makes sense.
20:34
Speaker 11: So, you know, there are a couple of different things here.
20:36
Speaker 11: I think with the whole streaming wars and the media
20:39
Speaker 11: landscape as a whole, I mean, there has been kind
20:41
Speaker 11: of this shift away from this hyper focus on just
20:44
Speaker 11: subscriber growth. I mean, there was going to be eventually
20:47
Speaker 11: some type of a wall or some type of a ceiling.
20:49
Speaker 11: The question was where it would be Again, that question
20:53
Speaker 11: is still an open question. But I think what you
20:55
Speaker 11: have to remember with Netflix is, yes, there is going
20:58
Speaker 11: to be some limits to subscriber growth. Think we're going
21:00
Speaker 11: to see peak subscriber growth this year, it is going
21:02
Speaker 11: to start to decelerate a little bit. But I think
21:04
Speaker 11: what Netflix has managed to do being a first mover
21:07
Speaker 11: in this space is really scale and operating leverage. And
21:10
Speaker 11: we're seeing that in the profitability metrics. We're seeing that
21:13
Speaker 11: in the operating margin, We're seeing that in the free
21:16
Speaker 11: cash flow, and they are just way ahead of their peers.
21:20
Speaker 11: And so I think, you know, you know, yes, valuation
21:23
Speaker 11: might have to take a little bit of a more
21:25
Speaker 11: modest kind of approach or has to be maybe a
21:28
Speaker 11: little bit more cautious here. But at the same time,
21:30
Speaker 11: I mean, this is a very different company from your
21:32
Speaker 11: traditional media company because most of them are still losing
21:36
Speaker 11: money on their streaming business. Meanwhile, you have Netflix generating
21:39
Speaker 11: close to about nine to ten billion dollars in profit
21:41
Speaker 11: this year with a twenty five percent operating margin.
21:44
Speaker 3: Yeah, just amazing what they've done there in terms of
21:46
Speaker 3: getting to profitability, which beg begs a question at Githa,
21:50
Speaker 3: how about is there I mean, you can be a
21:53
Speaker 3: very profitable streaming company.
21:55
Speaker 4: We see that with Netflix.
21:56
Speaker 3: Do you think that paramount pluses of the world that
21:58
Speaker 3: Disney pluses the world, all the other pluses out there
22:01
Speaker 3: from the media companies, can they get to a similar
22:03
Speaker 3: level of profitability too, because right now, as you mentioned,
22:06
Speaker 3: the streaming business has been a money loser for most
22:08
Speaker 3: of the traditional media companies.
22:11
Speaker 11: Yeah, so exactly to that point, Paul. Last year, when
22:14
Speaker 11: Netflix reported about seven billion dollars in profit, all of
22:17
Speaker 11: these other streamers combined reported the exact same amount in losses.
22:20
Speaker 11: So they lost about seven billion dollars, and you know,
22:23
Speaker 11: it's going to be a little bit different story for
22:25
Speaker 11: each one of them. I don't think all of them
22:27
Speaker 11: can necessarily get to profitability. So Disney is almost on
22:30
Speaker 11: the cusp of profitability. They're probably going to break even
22:32
Speaker 11: in a couple of quarters. They have all the levers
22:34
Speaker 11: in place to kind of really make it a very
22:36
Speaker 11: profitable business. Of course, it's going to take them some
22:38
Speaker 11: time to get to the levels of a Netflix, but
22:41
Speaker 11: they definitely have the formula. When it comes to a paramount,
22:44
Speaker 11: I think that's going to be a completely different story.
22:46
Speaker 11: The company is still losing money. It will probably lose
22:49
Speaker 11: about a billion a billion two plus. They have too
22:51
Speaker 11: many other distractions going on with Warner Brothers Discovery. Yes,
22:56
Speaker 11: they did turn a slight profit last year with you know, Max,
23:00
Speaker 11: But you know, Paul, you really have to kind of
23:01
Speaker 11: look at this in the context of the Warner Brothers
23:04
Speaker 11: Discovery business. I mean HBO in its heyday, and this
23:07
Speaker 11: is HBO, which is basically turned into the streaming business.
23:09
Speaker 11: In it's heday, was generating two billion dollars in ebitdah,
23:12
Speaker 11: and last year they reported one hundred million dollars on
23:15
Speaker 11: their streaming business and ibadah. And you know, if they
23:18
Speaker 11: want the street to be excited about that, I'm not
23:19
Speaker 11: so sure. You know, investors are going to be too happy.
23:22
Speaker 11: So it's they're not going to be able to get
23:25
Speaker 11: to the level of profitability and definitely not going to
23:28
Speaker 11: be able to get to it in the timeframe that
23:29
Speaker 11: investors are hoping that they would.
23:32
Speaker 10: So Netflix might have won the battle there, but get
23:34
Speaker 10: the one battle that seems yet to have been one
23:36
Speaker 10: is who's the dominant sports streaming place. You have Netflix
23:40
Speaker 10: with the WWE rod deal, and then you have this
23:43
Speaker 10: other platform which we heard be announced earlier in this year, which,
23:46
Speaker 10: to be honest, I feel like I've heard nothing of
23:48
Speaker 10: since the ESPN, Fox, Warner Bros. Discovery. I don't even
23:51
Speaker 10: think we still know what a name is. We don't
23:53
Speaker 10: know whether it's going to happen, whether Congress will even
23:55
Speaker 10: allow it to happen. How is that shaping up in
23:58
Speaker 10: terms of who becomes the go to player to watch
24:01
Speaker 10: all of your live stream sports?
24:03
Speaker 11: Yeah, that really is is the question the question right now?
24:07
Speaker 11: And Danny, you know, you kind of really hit the
24:09
Speaker 11: nail on the head there. We're gonna have to wait
24:11
Speaker 11: and see what happens with you know, the joint venture
24:14
Speaker 11: the ESPN Fox Warner Brothers. In the meantime, Disney has
24:16
Speaker 11: also said that they will take ESPN standalone over the
24:20
Speaker 11: top in twenty twenty five. But in the meantime, you
24:22
Speaker 11: do have all these tech giants kind of making a
24:24
Speaker 11: play for sports, right Amazon I think to date has
24:26
Speaker 11: been the most aggressive. They have the Thursday night football package.
24:31
Speaker 11: You know, they've now introduced ads on their service, they
24:33
Speaker 11: have a lot of the football content from Europe, so
24:37
Speaker 11: you know, you know, they're definitely making a big play.
24:39
Speaker 11: And as you mentioned Netflix too, I think the big
24:41
Speaker 11: thing that we are kind of really watching out for
24:43
Speaker 11: is this July twentieth event where they're kind of dipping
24:46
Speaker 11: into live sports a little bit with the Mike Tyson
24:49
Speaker 11: versus Jake Paul and that kind of then gives them,
24:52
Speaker 11: I think, allows them to gauge a little bit, you
24:55
Speaker 11: know what the appetite for for live sports is, because
24:58
Speaker 11: remember again ww's is a little bit quasi sports. It
25:00
Speaker 11: is more what they call sports entertainment. But it's going
25:03
Speaker 11: to be interesting to see whether they really want to
25:04
Speaker 11: go charging, go really aggressive with sports. I think if
25:08
Speaker 11: they want to build their advertising business, I think it
25:10
Speaker 11: is a critical piece that is missing for them right now.
25:13
Speaker 11: And so there is this chatter and this speculation about
25:16
Speaker 11: whether they're even going to be this dark horse bidder
25:18
Speaker 11: for the NBA negotiations that are currently ongoing.
25:21
Speaker 3: All right, gith, let's switch gears to our good friends
25:24
Speaker 3: at Paramount. The stocks up about ten percent today. The news,
25:27
Speaker 3: I guess is Paramount shares jump as Apollo and Sony
25:30
Speaker 3: are said to weigh a joint bid out there. What's
25:34
Speaker 3: the latest there? Are we going to get some kind
25:36
Speaker 3: of deal here for some of Paramount, all of Paramount?
25:40
Speaker 4: How do you think it shakes out?
25:42
Speaker 5: I certainly hope so, Paul.
25:43
Speaker 11: I mean, it's Sony kind of getting into this equation.
25:46
Speaker 11: I think they are the most credible bidder to date,
25:51
Speaker 11: and you know, I really hope that they come in
25:53
Speaker 11: with something that kind of entices the Paramount board to
25:56
Speaker 11: engage with them, because remember the Apollo bid before for
25:59
Speaker 11: twenty six billion. I mean, there were just or at
26:02
Speaker 11: least the way management spun it was that, you know,
26:04
Speaker 11: there were all these financing concerns. So this I think definitely,
26:08
Speaker 11: you know, we'll have a lot of firepower because the
26:11
Speaker 11: sky Dance deal, that Paramount is currently engaged, and there's
26:14
Speaker 11: just been so much of backlash against that deal because
26:18
Speaker 11: what most of the common shareholders have felt is that
26:21
Speaker 11: it is only going to benefit the Redstone family, it
26:24
Speaker 11: is going to dilute all of the other shareholders. So
26:28
Speaker 11: there is all of that going on. Meanwhile, you had
26:30
Speaker 11: four board members that kind of left, you know suddenly
26:34
Speaker 11: again that kind of screams.
26:36
Speaker 5: A hard no.
26:37
Speaker 11: So the sky Dance deal as it stands right now
26:39
Speaker 11: really seems fraught with litigation risk, which is why I
26:43
Speaker 11: think Sony coming in is kind of a welcome change
26:45
Speaker 11: and investors will definitely cheer that.
26:47
Speaker 10: But to be clear, share Redstone doesn't need to let
26:50
Speaker 10: the other shareholders have a say or have a vote,
26:52
Speaker 10: right and how this goes.
26:55
Speaker 11: She doesn't need to, but she should. I mean, she
26:57
Speaker 11: does have a fiduciary responsibility.
27:00
Speaker 4: That funny.
27:00
Speaker 3: We were speaking Tom Keen and I earlier today with
27:02
Speaker 3: Chris Morangi, who's a co CIO at Gabelli Funds, and
27:05
Speaker 3: Gabelli is they own the control shares, they don't own
27:09
Speaker 3: the non voting they own the voting shares. They're the
27:11
Speaker 3: second largest owner after the Redstone trust here, and he
27:16
Speaker 3: seemed to imply that, you know, he thinks the company
27:19
Speaker 3: should treat all shareholders. I guess similarly, but again, as
27:23
Speaker 3: you mentioned, they don't have to, assuming they want to
27:26
Speaker 3: take some litigation risks.
27:27
Speaker 4: Is that kind of how you think about Akita?
27:30
Speaker 10: Yeah?
27:30
Speaker 11: I think you know, that's what they don't have to.
27:32
Speaker 11: You're absolutely right. I mean, Sherry Redstone can pretty much
27:35
Speaker 11: do whatever she wants. The problem is, you know, the
27:37
Speaker 11: other shareholders are going to definitely revolve. There's already been
27:42
Speaker 11: so much of public protest and backlash. Not that that
27:45
Speaker 11: has stopped her, but again we'll have to see.
27:49
Speaker 3: Yeah, it's amazing, and again I just rewind my investment
27:53
Speaker 3: banking clock. You know, five years, ten years, and what
27:56
Speaker 3: you could have gotten, what this company could have been
27:59
Speaker 3: paid for, or change and control, what it's been multiples
28:02
Speaker 3: of where we are today. It's just kind of sad
28:04
Speaker 3: to see how the value has declined.
28:06
Speaker 10: And probably the idea of a dual class share back
28:08
Speaker 10: then was different. People are looking at it different than
28:10
Speaker 10: they are at this very moment.
28:11
Speaker 4: Yeah, exactly.
28:12
Speaker 3: It's been something that media investors have had to deal
28:15
Speaker 3: with for a long time.
28:15
Speaker 4: Keitha wrong and nothing.
28:16
Speaker 3: She thank you so much for joining us at Githa
28:18
Speaker 3: is the media anamals for Bloomberg Intelligence, one of the
28:21
Speaker 3: best media anaals out there on the stream. We love
28:23
Speaker 3: getting a few minutes of her time joining us from
28:25
Speaker 3: the Princeton campus of Bloomberg.
28:28
Speaker 4: I've been down to the Bloomberg alses of Princeton, you know,
28:30
Speaker 4: I never have.
28:31
Speaker 10: I got to just moved back to New York, Paul,
28:32
Speaker 10: You've got to give me time. Give me time. And
28:34
Speaker 10: how you're in London for almost seven years?
28:36
Speaker 1: Wow?
28:36
Speaker 4: Yeah, yeah, back in New York.
28:38
Speaker 10: So now we'll do the bloomberg Y West road trip
28:40
Speaker 10: now that I'm back.
28:41
Speaker 4: Very good.
28:43
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28:50
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Speaker 1: Say Alexa playing Bloomberg eleven thirty Janny.
29:01
Speaker 4: We've talked about this market.
29:02
Speaker 3: It's rally hard off the October lows, you know, one
29:04
Speaker 3: point up about twenty five percent off those October lows,
29:07
Speaker 3: and a lot of smart market people are saying, we
29:09
Speaker 3: do need to see some pullbacks and draw downs, maybe
29:11
Speaker 3: something more than two percent to kind of it's okay
29:15
Speaker 3: for a healthy market. So here we are today, we're
29:17
Speaker 3: down about four or half maybe five percent on the
29:20
Speaker 3: S and P five round of the question is that it?
29:22
Speaker 4: I mean, is that kind of the pullback?
29:23
Speaker 3: Nicole web joins, a senior vice president financial advisor for
29:26
Speaker 3: Wealth Enhancement Group, joining us here in our Bloomberg Interactive
29:29
Speaker 3: Broker Studio. So, Nicole, what do you tell your clients
29:32
Speaker 3: these days about kind of the you know, the ups
29:35
Speaker 3: and downs of this market. Again, we've had a nice
29:37
Speaker 3: strong move off those October lows. What do you tell
29:40
Speaker 3: them about where you think this market's going to go.
29:42
Speaker 12: I mean, pauses and pullbacks are part of a healthy market.
29:46
Speaker 12: We can't run further from here. To think it would
29:50
Speaker 12: happen in a straight line is you know, that's what
29:53
Speaker 12: makes us uncomfortable. When we see things trajectory up into
29:58
Speaker 12: the right for two long that's when you start to
30:01
Speaker 12: get a little bit concerned about over enthusiasm. And so
30:07
Speaker 12: this pause for us is well warranted. I think the
30:10
Speaker 12: does the pullback have room from here? You know, I
30:13
Speaker 12: think there's a lot riding on big tech earnings and
30:15
Speaker 12: I think we can't be overly dismissive of that. It
30:18
Speaker 12: has been the defensive play for many years in a
30:22
Speaker 12: row now and there's a lot riding on that forward guidance.
30:25
Speaker 12: And we're a bit of the camp that there's probably
30:27
Speaker 12: a de acceleration of earnings from those names and an
30:31
Speaker 12: acceleration of earnings and other sectors of the market in
30:34
Speaker 12: the back half of this year. And I think you
30:36
Speaker 12: saw a little bit of that play out with Netflix
30:38
Speaker 12: and there's a big response.
30:40
Speaker 10: Yeah. Again, the irony is this idea that on the
30:42
Speaker 10: way up we're freaking out or not weps me freaking
30:46
Speaker 10: out that it can't go on and when it starts
30:48
Speaker 10: to fall, we freak out the other way. How much
30:50
Speaker 10: further will it have to fall? But it's interesting, you say,
30:52
Speaker 10: back half of the year, other companies pick up the mantle.
30:55
Speaker 10: So is this less of a sell off and more
30:57
Speaker 10: of a beginning of a leadership change?
30:59
Speaker 2: Yeah?
30:59
Speaker 10: I think.
31:00
Speaker 12: I mean, there's a lot going on in markets today,
31:03
Speaker 12: and I think it's a truly incredible time to be
31:07
Speaker 12: an investor. Anytime you see the ten year pushing five percent,
31:12
Speaker 12: you have to have a real conversation with your clients
31:15
Speaker 12: and working on our side of the business, you know,
31:17
Speaker 12: we're not beholden to only one mandate. We're cross asset
31:21
Speaker 12: for families and so to us, you have to have
31:24
Speaker 12: real conversations about excess return above expectations from equities and
31:30
Speaker 12: what you do with that. And when you have a
31:33
Speaker 12: ten year that is pushing five percent on a net
31:35
Speaker 12: real return after tax basis, you start to go, Okay, well,
31:39
Speaker 12: if I was expecting seven or eight from equities over
31:42
Speaker 12: that same ten year period, is it prudent of me
31:45
Speaker 12: now to start to think about repositioning? And so you know,
31:49
Speaker 12: I think this is one of those kind of the
31:52
Speaker 12: most overused word of twenty twenty four. This is another
31:55
Speaker 12: bifurcation of what are you doing right now? Is it
31:59
Speaker 12: a long only strategy? Are you cross asset, are you
32:02
Speaker 12: invested across all sectors? And then how are you looking at?
32:06
Speaker 12: This market today is full of opportunity for that.
32:09
Speaker 4: You have a sixty forty outlook.
32:11
Speaker 3: Sixty percent of portfolio and equities forty percent in bonds.
32:15
Speaker 3: Is that something you guys do or do you just
32:16
Speaker 3: get a little bit more creative than that?
32:17
Speaker 12: Definitely more prescriptive than that, and I would say, you know,
32:21
Speaker 12: we are big proponents of the third leg of that stool,
32:26
Speaker 12: which you know it would be in the world of
32:28
Speaker 12: alternative investments, real assets, you know, really looking at underlying risk.
32:35
Speaker 12: You know, the unique thing about equity markets today is
32:38
Speaker 12: that we have less shares available. There's just less publicly
32:41
Speaker 12: traded companies. And so when you take that into consideration,
32:45
Speaker 12: I think for people who have the access or the
32:48
Speaker 12: lack of liquidity needs. You know that private investment spectrum
32:52
Speaker 12: has been a big part of overall acid allocation.
32:55
Speaker 10: In terms of this idea that that higher yields, I
32:58
Speaker 10: get that all of a sudden have something that's an
33:01
Speaker 10: attractive alternative to equities, But just in the mechanism of
33:04
Speaker 10: that forcing equities to sell off. Is it different that
33:08
Speaker 10: the reason that we have higher yields is because the
33:10
Speaker 10: US economy is strong, and the US economy is strong
33:13
Speaker 10: enough that we don't need to cut Presumably that's again
33:15
Speaker 10: and aroundabout way a good thing for equities.
33:17
Speaker 12: Yes. So, And this is where I was saying, there's
33:20
Speaker 12: so much unpack, you know, I think this is where
33:22
Speaker 12: the story of the inversion of the yield curve, which
33:24
Speaker 12: I've been talking about, I feel like since twenty eighteen,
33:26
Speaker 12: it's just a nauseum. But what if you really break
33:29
Speaker 12: it down to what is it telling us in the moment.
33:32
Speaker 12: It's telling us that there's long, long duration demand for
33:36
Speaker 12: US treasuries, and that the growth is so strong, and
33:40
Speaker 12: that the consumer has strength to the extent that we
33:43
Speaker 12: want to slow them down. So when we think about earnings,
33:47
Speaker 12: and we think about earnings growth, which the end of
33:50
Speaker 12: the day should be a big part of the representation
33:53
Speaker 12: of the valuation of the market. Well, then when we
33:56
Speaker 12: look at not just US GDP, but we start to
33:59
Speaker 12: focus further on the IMF global growth numbers, China GDP,
34:03
Speaker 12: China stimulus, this is where I think you start to
34:06
Speaker 12: really see, Okay, yes we're in a pullback and there's
34:11
Speaker 12: still likely room for this market to grow from here,
34:14
Speaker 12: but there's going to be fits and stops to that
34:15
Speaker 12: growth trajectory you mentioned.
34:17
Speaker 3: On a fixed income side, you can get you a
34:19
Speaker 3: nice return on a two year on a ten year treasury.
34:22
Speaker 4: How about going on and taking some credit risk.
34:24
Speaker 3: Is that something you're advising your clients these days, whether
34:27
Speaker 3: it's investment grade or even high yield.
34:29
Speaker 12: Yeah, And I think you have to be both tactical
34:32
Speaker 12: and active with your fixed income portfolio, you know. I
34:36
Speaker 12: think this is where you speak to anyone who works
34:39
Speaker 12: directly on the behalf of any families. You start to
34:41
Speaker 12: really look at that you know, net after tax equivalent
34:45
Speaker 12: basis on your fixed income portfolio. And so you know,
34:48
Speaker 12: we have taken on, you know, credit risk across the spectrum,
34:54
Speaker 12: and we're just utilizing again going back to kind of
34:57
Speaker 12: that prescriptive mandate where we are a bit more creative
35:00
Speaker 12: because we work for families.
35:02
Speaker 6: Cool.
35:02
Speaker 10: I love how you put gold right now, saying that
35:04
Speaker 10: gold as an expression of discomfort. I think that's perfect
35:07
Speaker 10: because so many of us have been scratching our heads saying,
35:10
Speaker 10: what's up with gold? Is this kind of the only
35:13
Speaker 10: asset class to express that discomfort at the moment.
35:16
Speaker 12: I mean, there's a lot if you look across the
35:18
Speaker 12: commodity spectrum right now, there's a there's a lot of
35:21
Speaker 12: reasons to feel uncomfortable. I mean I I was speaking
35:26
Speaker 12: to one of our analysts. I'm like, talk to me
35:27
Speaker 12: about commodities, and he's like, drought, drought, geopolitical drought, this
35:32
Speaker 12: and I'm just like, Okay, I just got uncomfortable. How
35:35
Speaker 12: do I express my discomfort? You know, for us, gold
35:40
Speaker 12: doesn't really play a meaningful place in portfolio construction simply
35:44
Speaker 12: because you know of the components of what gold is.
35:48
Speaker 12: And so when we see a response like this, it's
35:51
Speaker 12: funny because gold can go in a couple of different ways.
35:53
Speaker 12: It can be both exuberant and it can also be discomfort,
35:56
Speaker 12: and right now we think it's an expression of discomfort
35:58
Speaker 12: across the commodity special.
36:00
Speaker 3: Dare I suggest you have a viewing bitcoin, crypto, that
36:04
Speaker 3: kind of stuff the big having when your clients, when
36:06
Speaker 3: your clients call you up and he said they want
36:08
Speaker 3: to get exposure or crypto, what do you say, you know,
36:10
Speaker 3: I think crypto.
36:11
Speaker 12: And this goes back to something we were all saying
36:13
Speaker 12: before we came on air, cryptocurrency, and I'm going to
36:15
Speaker 12: focus specifically on bitcoin, but it is a supply and
36:19
Speaker 12: demand mechanism. And so if you you know, the thing
36:22
Speaker 12: that hit me the hardest when I was learning about
36:24
Speaker 12: bitcoin over the years was, you know, if you believe
36:29
Speaker 12: that the demand for bitcoin is going to increase by
36:31
Speaker 12: more than two percent per year, because the supply is
36:34
Speaker 12: only going to increase by more than two percent per year,
36:37
Speaker 12: then you should probably be long bitcoin. I'm not saying that.
36:41
Speaker 12: That's the advice I'm giving to indigital clients. So that's
36:43
Speaker 12: our firm's thesis on cryptocurrency. But you know, I think,
36:46
Speaker 12: you know what, you always want to boil things down,
36:49
Speaker 12: boil down what markets are, boil down what bitcoin is.
36:52
Speaker 12: And at the end of the day, you know, I
36:54
Speaker 12: think this conversation about having has a lot to do
36:57
Speaker 12: with that supply and demand mechanism long term.
37:00
Speaker 3: Very good, Nicole, Thank you so much for joining us.
37:01
Speaker 3: Nicole Webb, senior vice president, the financial advisor at Wealth
37:05
Speaker 3: Enhancement Group, joining us live here in our Bloomberg Interactive
37:08
Speaker 3: Brooker Studio.
37:11
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37:15
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37:18
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37:29
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37:32
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37:33
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37:39
Speaker 8: All right.
37:39
Speaker 3: A lot of market participants, a lot of market observers
37:43
Speaker 3: are saying, you know, part of a strong, healthy market
37:46
Speaker 3: is an occasional pullback, a drawdown, as the kids call it.
37:50
Speaker 4: I'm not sure.
37:50
Speaker 3: We're off about five percent here on the s and
37:53
Speaker 3: p five hundred from our recent highs. Does that qualify?
37:56
Speaker 3: It's checking with Barry Ridholts. He's a host of Masters
37:59
Speaker 3: in Business on Bloomer Radio. Is also the founder of
38:01
Speaker 3: Ritholt's Wealth of Management. He joins us via zoom here. Hey, Barry,
38:05
Speaker 3: I mean, do you ascribe to that kind of thinking
38:08
Speaker 3: that every good long term bull market needs some healthy pullbacks?
38:12
Speaker 3: And if so, are we in midst one of those.
38:14
Speaker 7: Now do you think, Wait, markets go up and down.
38:19
Speaker 7: Nobody told me about this. I thought they just went
38:22
Speaker 7: straight up and it was easy to make a ton
38:24
Speaker 7: of money. Listen, this, this is the nature of a broad,
38:31
Speaker 7: deeply participated, enormous market capitalization exchange.
38:38
Speaker 4: This is this is what happens.
38:40
Speaker 7: You know, the ideas that drive markets kind of get
38:44
Speaker 7: tested out, they catch fire for a little while, then
38:48
Speaker 7: they sort of get overlooked, and then the narrative changes
38:51
Speaker 7: and you know, we've we've figured this out. I love
38:57
Speaker 7: the expression investing is a problem that's been solved. But
39:01
Speaker 7: investing is something that takes place over decades and month
39:05
Speaker 7: to month, week to week, day to day, tick to tick.
39:08
Speaker 7: That's fairly random. There's a lot of noise and a
39:12
Speaker 7: lot of emotion that weight. We're up twenty five percent
39:16
Speaker 7: from the lows. Weight, we're down ten percent from the highs.
39:20
Speaker 7: It's everybody making their best guess as to the discounted
39:25
Speaker 7: cash flow of stocks and where profits are going to
39:28
Speaker 7: be in the future relative to the risk free red
39:31
Speaker 7: return of bonds.
39:32
Speaker 3: And Barry mentioned where profits are going to be in
39:34
Speaker 3: the future. That brings our attention to earnings. It seems
39:38
Speaker 3: like the FED story is still out there, but the
39:41
Speaker 3: FED will be maybe less active in terms of cutting
39:43
Speaker 3: rates in the near near term, So maybe focus needs
39:46
Speaker 3: to go a little bit more towards earnings. What are
39:49
Speaker 3: you looking for in terms of earning share? What are
39:51
Speaker 3: you going to be listening for anything on some of
39:52
Speaker 3: these calls?
39:54
Speaker 7: So I like to look at two things. I want
39:57
Speaker 7: to look at what is the overall all beat rate?
40:02
Speaker 7: Right most two thirds of the companies will beat earnings expectations.
40:06
Speaker 7: We always laugh at when an earnings report misses the expectations.
40:13
Speaker 7: I think everybody gets it backwards. The earnings report is
40:16
Speaker 7: the earnings report. Your forecasts were wrong. They are what
40:20
Speaker 7: it was you got it wrong. So I want to
40:22
Speaker 7: see how well how many companies are beating versus missing.
40:27
Speaker 7: I like to look at the overall level. Hey, what
40:29
Speaker 7: are we growing really? Adding three four five percent to profits?
40:33
Speaker 7: We're pretty close to all time highs for profits for
40:36
Speaker 7: the S and P five hundred. But the thing that
40:39
Speaker 7: so many people find so challenging is it's not the number,
40:42
Speaker 7: it's not the data, it's what are the earnings relative
40:46
Speaker 7: to expectations? Netflix? Is a great example. I mean, that
40:50
Speaker 7: is a spectacular earnings report, the most new subscribers in
40:55
Speaker 7: a long time, revenue profits, everything moving in the right direction,
40:59
Speaker 7: but apparently not as much as expected. And so despite
41:03
Speaker 7: you know, the really solid report, the initial response was, oh,
41:08
Speaker 7: this is disappointing, which it's always about, not the news,
41:13
Speaker 7: but how much of the news is already priced in?
41:16
Speaker 3: And to that end, Barry, what do you think of
41:19
Speaker 3: companies providing kind of point guidance, whether it's a quarter
41:23
Speaker 3: out or a year out. I mean, is that something
41:26
Speaker 3: they should be doing to kind of manage the whole
41:28
Speaker 3: process or should they just run their business and let
41:31
Speaker 3: the street take care of it.
41:34
Speaker 7: You know, I am not a big fan of you know,
41:37
Speaker 7: back in the old days when you pull, when you
41:39
Speaker 7: and I were first ye getting started, they used to
41:43
Speaker 7: be called whisper numbers. Before reg FD, a handful of
41:47
Speaker 7: favored analysts or axes on the stock would get a
41:51
Speaker 7: very quiet conversation with the CFO or the CEO. Hey,
41:56
Speaker 7: you have us at seven cents a share, you should
41:59
Speaker 7: really be close in a nine sense of share, and
42:02
Speaker 7: you know, so everybody would be low and the one
42:04
Speaker 7: guy the day before would change his estimate, and lo
42:08
Speaker 7: and behold, everybody rushes to raise and the stock takes off.
42:13
Speaker 7: That sort of nonsense from when we were youngsters, the
42:17
Speaker 7: on trading desks, that's all gone, so now everybody has
42:20
Speaker 7: to get the disclosure at.
42:22
Speaker 8: The same time.
42:23
Speaker 7: And I wonder how helpful it is being that precise.
42:28
Speaker 7: I love hearing a CEO saying, hey, listen, you know,
42:31
Speaker 7: we're expecting to see growth this quarter similar last quarter,
42:35
Speaker 7: but we don't know what's happening with fill in the blank,
42:39
Speaker 7: the war in the Middle East or the Ukraine. There
42:41
Speaker 7: seems to be a lot of inflation stuck in the
42:44
Speaker 7: in the services part of the economy. So we're going
42:48
Speaker 7: to give you a range and try not to micromanage this.
42:51
Speaker 7: And I think that's just honest, because we really don't
42:55
Speaker 7: know what the future holds. When someone pretends they're sending
42:58
Speaker 7: themselves up for failure, all.
43:00
Speaker 3: Right, Barry, I'm looking at some social media from our
43:03
Speaker 3: good friend Matt Miller, and he's now showing it looks
43:06
Speaker 3: like he's test driving the Lamborghini HURKHN Strato, and he
43:11
Speaker 3: notes that it's among the last of the naturally aspirated
43:15
Speaker 3: v tens in production.
43:16
Speaker 8: Whatever that is.
43:17
Speaker 4: Does that kind of car get your attention?
43:20
Speaker 7: So I am so I'm not a big Lambeau fan.
43:24
Speaker 7: That's not mine. It's a little too flashy for me, Paul,
43:28
Speaker 7: you know what a low key of course I am.
43:32
Speaker 7: And the Lambeau in that, like lime green, is a
43:36
Speaker 7: little too much for me. That said, I gotta give
43:40
Speaker 7: Lamborghini credit for saying, wait, a four hundred thousand dollars
43:46
Speaker 7: rocket ship, I know, Let's turn it into a decar
43:50
Speaker 7: off road racer. Let's let raise it a few inches,
43:54
Speaker 7: put some plastic cladding and high intensity light beams and
43:58
Speaker 7: some off roads and let this seven hundred horsepower monster loose,
44:05
Speaker 7: you know, in the Sahara. Kudos to them for stepping
44:10
Speaker 7: out of their comfort zone. The crazy thing about this
44:13
Speaker 7: Serrado is not only does it have a giant premium
44:17
Speaker 7: over the usual Lamborghini Hurricanes, it sold out instantly.
44:22
Speaker 2: Wow.
44:23
Speaker 7: And every time people tell me, and admittedly this is
44:27
Speaker 7: not exactly a middle class purchase, but wherever I look, cars, watches,
44:34
Speaker 7: restaurant reservations, every part time someone tells me how bad
44:37
Speaker 7: the economy is? Where do you live? And I'm not
44:41
Speaker 7: just in New York, I'm around the country pretty regularly.
44:44
Speaker 7: I was just in Salt Lake City, I was in Vegas.
44:46
Speaker 7: I was in California and not like Beverly Hills, but
44:50
Speaker 7: like middle class parts exactly.
44:53
Speaker 8: Yep.
44:53
Speaker 4: The wealth effect is it's hard.
44:56
Speaker 7: Yeah, it's hard not to look around and say, if
44:58
Speaker 7: you think this economy stays all right, we have to
45:00
Speaker 7: leave it there. But I think where you live.
45:03
Speaker 8: Barry very much.
45:03
Speaker 3: Thank you host a master's in business on Bloomberg Radio,
45:08
Speaker 3: founder of Ritholtz Wealth Management as well. Appreciate that little
45:10
Speaker 3: car talk to finish off your morning.
45:13
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