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Bitcoin Tops $72,000 · Bloomberg Intelligence

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Speaker 3: It feels like a quiet Monday, and the asset that's
0:28
Speaker 3: moving is definitely gonna be Bitcoin and all the crypto
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Speaker 3: related stocks. We've got to go to Mike mcloon, Bloomberg Intelligence,
0:33
Speaker 3: Senior Commodities Strategies. Not to mention that gold's little softer
0:36
Speaker 3: at the moment, but that's also still at a record
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Speaker 3: for reasons. It's really hard, I think to pinpoint that
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Speaker 3: reason for it. Hey, Mike, first of all, start with
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Speaker 3: bitcoin here, what if you say having I mean, come on, now,
0:48
Speaker 3: what else is leading this rally?
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Speaker 4: So it's mostly ETF inflows.
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Speaker 5: Alex it was about I think it was January tenth
0:57
Speaker 5: that they're first launching his country. What it was almost
1:00
Speaker 5: almost a dozen of them, and the inflows have been
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Speaker 5: shockingly strong. So I just looked in the numbers on
1:05
Speaker 5: the terminal. Right now, the total mount tracking Bitcoin and
1:08
Speaker 5: ETF now is about seventy billion dollars. I compare that
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Speaker 5: to gold, which is stuck around one hundred and eighty
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Speaker 5: four billion, it's about forty percent. So massive inflows and
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Speaker 5: the having the cut and supply basically around tax day.
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Speaker 5: It's a pretty significant sweet spot for bitcoin. But I
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Speaker 5: find most significant lately is the fact that bitcoin is
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Speaker 5: showing divergent strength versus beta, with the S and P
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Speaker 5: five hundred down this morning.
1:31
Speaker 4: Yeah.
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Speaker 6: I guess one thing about bitcoin, though, is that is
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Speaker 6: a question about volume. We've got a supply shortage, and
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Speaker 6: yet there's tens of billions of dollars trading every day.
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Speaker 6: How do you square these two things.
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Speaker 5: Well, it's not so much a supply storage shortage. I guess,
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Speaker 5: it's just you can see it coming down. It's something
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Speaker 5: that it's the high price care that affects all commodities.
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Speaker 5: With the exception of gold, you don't have that supply
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Speaker 5: coming on with higher prices. But I love when you
1:53
Speaker 5: mentioned volume because I love clicking on coin marketcap dot
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Speaker 5: com and checking volume and the volume of Heather, the
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Speaker 5: number one traded token of which is the US dollar,
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Speaker 5: is basically double bitcoin on a twenty four hour basis,
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Speaker 5: and it's it's market caps up to one hundred and
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Speaker 5: twenty one hundred and two billion now. So it's one
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Speaker 5: thing that a lot of people don't know in the
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Speaker 5: space is bitcoin is speculative. Yes, it's a replacement for gold.
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Speaker 5: It's a digital version. But in this space, the most
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Speaker 5: widely traded acid is the dollar.
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Speaker 3: When you look at say the offshoots of crypto, like
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Speaker 3: the stocks he exchanges, the miners, et cetera, are they
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Speaker 3: trading as well as the underlying asset.
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Speaker 5: Yes, well, I guess we have to mention micro strategy.
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Speaker 5: We've all heard Michael Saylor. I just saw him on
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Speaker 5: a few other programs. Chasing on a one year basis,
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Speaker 5: micro strategy is up almost six hundred percent compared to
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Speaker 5: bitcoin of two hundred and thirty percent. And the significance
2:45
Speaker 5: of him is he's been buying bitcoin. He's one of
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Speaker 5: the stages that really got me somewh at Bullish a
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Speaker 5: few years ago when he's pointing out the history and
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Speaker 5: he says, hey, the world's going digital. This is a
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Speaker 5: potentially replacement of the dollar, not so much the dollar,
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Speaker 5: but of gold. And he's been converting a lot of
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Speaker 5: micro strategy strategy to buying bitcoin rather than doing other
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Speaker 5: things in technology.
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Speaker 6: I guess. But if you go back to your point
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Speaker 6: that we started out with on the ETF flows, I mean,
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Speaker 6: who are the winners and losers here amongst the ETF providers.
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Speaker 6: I mean, is this still a black Rock versus everyone
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Speaker 6: else story? Or is there something more interesting to think about.
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Speaker 5: That The biggest winner is great Scale. They're the ones,
3:24
Speaker 5: so we got to remember they kind of tilted this over.
3:26
Speaker 5: Michael Schoenstein of gray Scale is the one who initiated
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Speaker 5: the litigation with the SEC and he took a major risk.
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Speaker 5: I call it profiles and courage, and he won. So
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Speaker 5: right now, Grayscale, the GBTC, the Greyscale Bitcoin Trust is
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Speaker 5: about twenty eight billion, and the next is the I
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Speaker 5: Shares Bitcoin Trust about thirteen billion. But the thing about
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Speaker 5: I Shore's Bitcoin trust is that didn't exist just a
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Speaker 5: few months ago, and Grayscale was higher. So a lot
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Speaker 5: of that money's migrated. But now it's just net inflows,
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Speaker 5: and I think it's at the stage we're hearing this
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Speaker 5: from professional money managers are tilting that way. And that's
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Speaker 5: what really struck me. When to the ETF conference about
4:01
Speaker 5: a month ago in Miami, Eric Belchuna's moderated panel, and
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Speaker 5: there was so much interest from these you know, i'd
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Speaker 5: say professional money manners in bitcoin.
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Speaker 3: Well that really that's my question. Do if all of
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Speaker 3: a sudden, Bitcoin, for whatever reason, sort of tanks twenty thousand, right,
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Speaker 3: it's super volatile asset, right, Like, no one's pretending that
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Speaker 3: it's not. Do those people that want a one percent
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Speaker 3: allocation in their portfolio to bitcoin care or is this
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Speaker 3: now a long buy and hold strategy with some traders
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Speaker 3: trading around the volatility.
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Speaker 5: Obviously it's the number one traded I like call it
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Speaker 5: the number one traded acid on the planet, twenty four
4:37
Speaker 5: to seven, number one leading indicator alex. But I think
4:39
Speaker 5: what's happening now is we're in the early days of
4:42
Speaker 5: the institutional the rias in pension funds and downments getting
4:46
Speaker 5: allocated in this space. They're starting with one percent. Yeah,
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Speaker 5: of course they care, but they're there. The back tests
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Speaker 5: look too good. Unfortunately. I like to pair it with gold,
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Speaker 5: and I think it's one of those spaces it's either
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Speaker 5: way it goes.
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Speaker 4: It's just it's just early days those inflows.
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Speaker 5: What thing really shocked me was I didn't think there
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Speaker 5: would be that much interest in these ETFs.
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Speaker 4: And you just got to follow the money. It's very
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Speaker 4: strong inflows.
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Speaker 6: Yeah, you know, as you say, it's early days for
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Speaker 6: this ETF strategy. And how do you compare this to
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Speaker 6: the birth of other ETF's markets, Like what can we expect?
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Speaker 6: Can we expect a whole lot more players or is
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Speaker 6: it all going to get weeded out very quickly?
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Speaker 5: That's the thing. It's broken all the records. Compared to
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Speaker 5: GLD or even SPY their early days, it's broken all
5:29
Speaker 5: the records. It's it's basically the benchmark now for it,
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Speaker 5: and I don't think we'll ever be able to match it.
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Speaker 5: The thing is, I compare it somewhat into Tesla. Tesla
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Speaker 5: pays pays, spends nothing on advertising. They don't have to
5:40
Speaker 5: because everybody loves Tesla. Bitcoins the same way. There's nothing
5:43
Speaker 5: to advertise it. But it's so in your face. It's
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Speaker 5: one of those things I put on my d E lists.
5:48
Speaker 5: I try to deliberately ignore, but I can't because you
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Speaker 5: just hear about it and.
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Speaker 4: Read about it everywhere. So that to me is what's happening.
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Speaker 5: And it's just that significant of an asset at the moment,
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Speaker 5: and at some point, yes, it should have a good correction.
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Speaker 5: The key thing that's been bothering me is we've had
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Speaker 5: basically straight up in the S and B five hundred
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Speaker 5: since the low in October.
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Speaker 4: No correction.
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Speaker 5: The most significant correction was the first week of the
6:09
Speaker 5: year is one point five percent. But we've had good
6:11
Speaker 5: corrections in gold, which founded a good foundation. We've had
6:14
Speaker 5: good corrections at bitcoin, which formed a good foundation, you know,
6:17
Speaker 5: flushes out the week longs. We haven't had that in
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Speaker 5: the stock market, and that's what I'm afraid we're way
6:21
Speaker 5: over due for it. Just a normal ten percent correction,
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Speaker 5: you know, like used to happen. How does bitcoin respond
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Speaker 5: in that space? And I think what's happening now, Sure
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Speaker 5: it should go down, but we think the responsive buyers
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Speaker 5: will be greater in bitcoin.
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Speaker 3: So basically it's going to go down less. This is
6:34
Speaker 3: totally the classic gold argument too, like when everything goes down,
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Speaker 3: so does gold, but it goes down less Bitcoin the same.
6:39
Speaker 5: Then, yes, well it did initially two thousand and eight.
6:42
Speaker 5: But the difference with gold now is it it's basically
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Speaker 5: been unchanged for three years. It's had that time correction,
6:47
Speaker 5: it's had that little correction this year down to two thousand,
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Speaker 5: and that's the difference with the S and B five hundred.
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Speaker 4: I love watching the E mini weeklies. I used to
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Speaker 4: trade them.
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Speaker 5: There's a gap and WENT mini weeklies from last year
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Speaker 5: when we broke out and the Powell pivot.
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Speaker 4: It's about TEMP ten percent below the market.
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Speaker 5: We've never left the gap in the S and P
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Speaker 5: mini since trading A nineteen ninety seven on a weekly basis,
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Speaker 5: So that kind of stuff concerns me.
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Speaker 6: Okay, one last question for you if you don't mind.
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Speaker 3: For bitcoin mines. He doesn't like talking about bitcoin at all.
7:15
Speaker 6: No, No, I think I'll think I'll just say this one.
7:17
Speaker 3: I want to get out of here. Back to the song.
7:18
Speaker 6: If we do see an SMP correction anytime this year,
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Speaker 6: how do you what do you think the margin's going
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Speaker 6: to be like between the Bitcoin correction and the SMP correction.
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Speaker 5: Typically Bitcoin trades with about a three x beta or
7:30
Speaker 5: three x volatility. You know, if it SMP corrects ten percent,
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Speaker 5: Bitcoin goes down thirty percent. But what it's showing right
7:36
Speaker 5: now is divergent strength. As you see it today, S
7:38
Speaker 5: and P five hundreds down, Bitcoin's up. So if it
7:42
Speaker 5: was put this way, a successful divergent strength with to
7:45
Speaker 5: save the SMP five five hundred corrects ten percent and
7:47
Speaker 5: bitcoin corrects only ten or fifteen percent. That's a sign
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Speaker 5: of divergent strength. Right now, stock market's going up and bitcoins.
7:54
Speaker 5: I'm sorry, stock Mark's going down and bitcoin's going up. Now,
7:56
Speaker 5: that's somewhat unstoppable for money flows. If people see this
7:59
Speaker 5: as a ursa fire's going to be. It's gonna just
8:02
Speaker 5: the horde will come. And that's what I'm afraid of.
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Speaker 3: Hey, my really good perspective. Love that you look a
8:07
Speaker 3: little tan. How's that sun there in Florida?
8:10
Speaker 4: It's it's rough. I mean, the vitamin D is great,
8:12
Speaker 4: keeps you healthy.
8:13
Speaker 3: Mike mcgloan, Paul SMENI always jealous that Mike. When is
8:17
Speaker 3: his way to Florida? Mike mcgloan, he covers everything a
8:19
Speaker 3: commodities research focused for a Bloomberg Intelligence. I mean I
8:24
Speaker 3: think that once I get positive on bitcoin, then we
8:26
Speaker 3: probably have a problem.
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Speaker 6: Oh that would definitely be a signal for myself if
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Speaker 6: I'm starting to look at it, and that would mean
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Speaker 6: so that right, I.
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Speaker 3: Mean, that's what I'm looking at. But it's going to
8:34
Speaker 3: be interesting. I think just in terms of how much
8:36
Speaker 3: portfolios wind up allocating, right, Like I remember this with gold,
8:40
Speaker 3: I mean back in the day. You know, if you
8:41
Speaker 3: have central banks reallocate by one per extra percent, it
8:44
Speaker 3: would be a huge boon to gold prices. And you
8:46
Speaker 3: have to wonder beating a ten percent portfolio for people
8:49
Speaker 3: or is it really just going to be one percent?
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Speaker 3: And that what that shift actually winds up looking like.
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Speaker 6: But that's the issue. It's like where does central banks
8:55
Speaker 6: stand on the matter. And there's a lot of unhappy
8:58
Speaker 6: not unhappiness, but a lot of reluctance. I mean, Powell
9:00
Speaker 6: last week said pretty firmly the FED is not anywhere
9:03
Speaker 6: near there yet. So we're not going to have that
9:05
Speaker 6: dynamic anytime soon to worry about.
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Speaker 3: John Tucker, you got bitcoin that portfolio?
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Speaker 7: Uh no, that's the one. I don't have.
9:12
Speaker 3: The crypto stocks.
9:14
Speaker 4: My no.
9:15
Speaker 7: My philosophy is if you don't understand its, stay far
9:18
Speaker 7: far away.
9:19
Speaker 3: I know, but at some point we're gonna look at
9:21
Speaker 3: it and be like, we got to get into that.
9:24
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9:41
Speaker 3: Okay, so markets, let's be honest, not doing that much.
9:44
Speaker 3: We're looking at that weakness and meta that we were
9:46
Speaker 3: just talking about. We're kind of questioning if bitcoin's going
9:48
Speaker 3: to keep rallying, if an ASDAC doesn't really get any
9:52
Speaker 3: support here. And my big question, of course, throughout the
9:54
Speaker 3: whole two hours is I will find someone who has
9:57
Speaker 3: watched the oscars and can talk with me about I'm
9:59
Speaker 3: just ken. Maybe this person will be Sarah Ponzick, financial
10:03
Speaker 3: advisor at UBS Private Wealth Management. Is it?
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Speaker 8: Is it?
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Speaker 3: Sarah? Are you that person for me?
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Speaker 9: Alex, I'm so sorry to disappoint you, but no. Last night,
10:14
Speaker 9: but I have seen Barbie, but no, I didn't watch.
10:19
Speaker 3: This does not count Sarah. You okay?
10:21
Speaker 8: All right?
10:22
Speaker 3: Well this is actually going to be a thing. This
10:23
Speaker 3: is Will I find someone in the next hour and
10:26
Speaker 3: a half that has seen the oscars that can talk
10:28
Speaker 3: about I'm just Ken? In the meantime, Sarah, let's talk
10:31
Speaker 3: about the markets. What do you make of this?
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Speaker 4: Uh?
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Speaker 10: Oscars are more important, right, I know, I.
10:36
Speaker 3: Mean to them for Sureticlarly for Disney, they did really well.
10:41
Speaker 3: They did, they did. Yeah, they probably were very happy
10:43
Speaker 3: about that. Anyway, Sarah, Nvidia losing a little bit of steam.
10:48
Speaker 3: It's flat right now, Meta kind of rolling over. What's
10:51
Speaker 3: your read on tech right now?
10:53
Speaker 10: Right?
10:54
Speaker 9: So it's only natural that we are seeing some of
10:56
Speaker 9: these big tech names taking a breather.
11:00
Speaker 10: We can't see them continue to.
11:01
Speaker 9: Power higher and higher and higher at the rate of
11:04
Speaker 9: what we've seen over the past year, let's say. But
11:08
Speaker 9: with that said, we're still pretty optimistic on tech here,
11:13
Speaker 9: and there's.
11:13
Speaker 10: A couple of reasons for that. One.
11:15
Speaker 9: Yes, AI has this massive buzzword, but when you look
11:21
Speaker 9: at the underlying fundamentals and you look at the amount
11:24
Speaker 9: of money that companies are spending on infrastructure, spend on
11:29
Speaker 9: technology to make sure that they are at the forefront
11:31
Speaker 9: of their AI game, we sow it and in Video's
11:34
Speaker 9: earnings just a few weeks ago, there is actually truth
11:39
Speaker 9: to this, and our Chief Investment office actually estimates that
11:42
Speaker 9: AI revenues are going to grow seventy percent a year
11:47
Speaker 9: through twenty twenty seven, so massive growth aheads. So there
11:51
Speaker 9: is reason that and there are numbers, frankly that are
11:55
Speaker 9: driving this rally.
11:56
Speaker 10: So we're still optimistic on tech.
11:58
Speaker 9: That doesn't mean that these magnificent companies are your entire
12:02
Speaker 9: equity portfolio. But what it does mean is you want
12:05
Speaker 9: to make sure that you're.
12:05
Speaker 10: Not under exposed to tech. You don't want so much.
12:09
Speaker 9: Less tech than your portfolio than the benchmark, per se,
12:12
Speaker 9: because the risk here is really missing out and being
12:16
Speaker 9: under exposed to what might be one of the greatest
12:19
Speaker 9: growth trends in the stock market over the next decade.
12:22
Speaker 6: I want to push you a little bit on your
12:23
Speaker 6: point about companies continuing to spend and invest. I mean,
12:27
Speaker 6: what's your outlook for companies to continue to have strong
12:30
Speaker 6: power to do that, because you know what's the market
12:32
Speaker 6: thinking about now. They're thinking about the FED meeting coming
12:35
Speaker 6: up next week and the prospects for a soft landing.
12:37
Speaker 6: If there is slow down, then that would set the
12:40
Speaker 6: read across to that for company spending would be reduced spending.
12:44
Speaker 6: So how do you put these two things together?
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Speaker 9: You're right, and we've seen that run and center over
12:50
Speaker 9: the past couple of years, especially in the technology space.
12:52
Speaker 9: We have seen some technology companies that for years they've
12:56
Speaker 9: been known for having vast expansive workforces, go through a
13:01
Speaker 9: series of layoffs, and.
13:02
Speaker 10: They have been doing cost cuts. But when you think
13:04
Speaker 10: about the.
13:05
Speaker 9: Overall economy and not just the US economy, the global economy,
13:08
Speaker 9: and when companies are sitting in a room together and
13:12
Speaker 9: they're thinking about what is the most important thing for
13:14
Speaker 9: us to be spending our revenues on in the years ahead,
13:19
Speaker 9: the decade ahead. Oftentimes, and we've heard this in earnings calls,
13:23
Speaker 9: it's artificial intelligence because many companies know that again they
13:27
Speaker 9: can't risk falling behind, they don't want to risk their
13:31
Speaker 9: competitors serving ahead of them.
13:33
Speaker 10: So, yes, you're absolutely right.
13:35
Speaker 9: We have seen companies cost cutting, and those that have
13:37
Speaker 9: been cost cutting have.
13:38
Speaker 10: Been rewarded for that.
13:40
Speaker 9: But when it comes to deciding where you want to
13:43
Speaker 9: spend your money, tech spend has still been very important.
13:47
Speaker 3: So, Sarah, if though we take a little bit of
13:49
Speaker 3: breather intech, do you think that there's enough of a
13:51
Speaker 3: powerful rotation into other areas of the market, aka some
13:55
Speaker 3: kind of value in cyclicals to help support the overall
13:57
Speaker 3: index or we're just going to see some level of softness.
14:00
Speaker 10: All so, we have seen a broadening out. Absolutely.
14:03
Speaker 9: We have seen a broadening out since late last year
14:05
Speaker 9: and even more so this year, and we do expect
14:08
Speaker 9: that to continue. So to give you an idea, yes,
14:11
Speaker 9: we do like technology here, but a couple of other
14:13
Speaker 9: sectors we still like here are healthcare and industrials.
14:17
Speaker 10: A few reasons for that.
14:18
Speaker 9: One is healthcare can be seen as a more defensive
14:21
Speaker 9: area if you want to diversify your portfolio, but has
14:24
Speaker 9: also had a major boost from all these OBESD drugs
14:27
Speaker 9: that have just exploded in popularity.
14:30
Speaker 10: Industrials, that's more of a cyclical play.
14:32
Speaker 9: If we truly do see this goldilocks economic scenario in
14:36
Speaker 9: a soft landing, which has come to be the base case,
14:39
Speaker 9: you would expect that more cyclical areas of the economy
14:42
Speaker 9: are going to start doing some of the heavy lifting.
14:44
Speaker 9: It's not going to be tech alone. So yes, even
14:46
Speaker 9: if we do see tech take a breather, look, we're
14:49
Speaker 9: probably not going to see the same returns that we
14:51
Speaker 9: saw last year in the SMB and then ADDAC, but
14:54
Speaker 9: you could still see positive returns going forwards for equity
14:57
Speaker 9: markets as we start to see other sectors other industries
15:01
Speaker 9: pull their.
15:01
Speaker 10: Weight as well.
15:02
Speaker 6: What's the sector that you think it's gonna be suffering
15:05
Speaker 6: the most going ahead.
15:07
Speaker 10: It's a great question. What I would say.
15:11
Speaker 9: Certain areas of the market that we haven't been huge
15:13
Speaker 9: fans of lately have been utilities real estate. Some of
15:18
Speaker 9: that was a yield play with interest weights where they are,
15:21
Speaker 9: you don't really need to go find higher paying dividend
15:26
Speaker 9: stocks or bond proxies in the sense of utilities. But
15:30
Speaker 9: it's just not an area that we've favored so far.
15:34
Speaker 3: What is your thought though on Bitcoin? Let's kind of
15:37
Speaker 3: end where we left off, which is the idea of Okay,
15:40
Speaker 3: you have this tech softness, Bitcoin's on a tear, and
15:43
Speaker 3: having tech be a teeny bit softer and Bitcoin doing
15:46
Speaker 3: really well is a bit of a head scratcher. So
15:48
Speaker 3: I'm wondering what you think about it.
15:51
Speaker 9: I should have known coming into this that you would
15:53
Speaker 9: ask me about the oscars and Bitcoin.
15:57
Speaker 3: I really should have.
15:58
Speaker 10: I should have known. This is what I would say.
16:02
Speaker 9: There really are still no fundamental drivers behind bitcoin. Yes,
16:06
Speaker 9: there has been a massive rust to the space ever
16:09
Speaker 9: since launch of bitcoin ets. It's just made it much
16:12
Speaker 9: easier for investors to get a piece of it. I
16:16
Speaker 9: will say crypto is becoming it is an asset class.
16:18
Speaker 10: It's not becoming.
16:19
Speaker 9: It is an asset class, and for many it has
16:23
Speaker 9: become a small component of portfolios as a diversified portfolio.
16:29
Speaker 9: But at the same time, before any investor is going
16:32
Speaker 9: to dip their toes into the bitcoin market or the
16:35
Speaker 9: crypto market, especially at the levels we see bitcoin trading
16:38
Speaker 9: at now, you have to look yourself in the mirror
16:40
Speaker 9: and ask yourself if you if you're okay and you're
16:43
Speaker 9: prepared and willing to tolerate the volatility that that's going
16:46
Speaker 9: to come with, because yes, it's been a straight shot
16:48
Speaker 9: up over the last year, but we you know, people
16:51
Speaker 9: have amnesia.
16:52
Speaker 10: The same thing with tech stocks too.
16:54
Speaker 9: Yeah, everyone remembers twenty twenty three in which tech ran
16:56
Speaker 9: up and bitcoin ran up, But how did you feel
16:58
Speaker 9: in twenty twenty two.
17:00
Speaker 10: It's all everything you know taking a take time as well.
17:03
Speaker 9: So there's still a lot of unknown surrounding what crypto
17:05
Speaker 9: is going to become, where bitcoin really fits into our
17:09
Speaker 9: economy and the financial marketplace.
17:11
Speaker 10: So there's still going to be volatility. It's an asset class,
17:13
Speaker 10: but you have to.
17:14
Speaker 9: Be able to make sure that if you're going to
17:15
Speaker 9: invest in bitcoin, you need to be able to look
17:18
Speaker 9: at the volatility.
17:18
Speaker 3: All right, Sarah, next time, next time, you'll do better,
17:22
Speaker 3: all right, Sarah Ponzik, financial advisor at UBS Private Wealth Management.
17:26
Speaker 3: Great stuff, joining us there on the idea you got
17:28
Speaker 3: to be cautious when you're buying bitcoin. I love that.
17:30
Speaker 3: Can you look at yourself in the mirror and feel
17:32
Speaker 3: okay about it?
17:36
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
17:40
Speaker 2: weekdays at ten am Eastern on Apple card Play and
17:42
Speaker 2: then Broid Auto with the Bloomberg Business App. Listen on
17:45
Speaker 2: demand wherever you get your podcasts, or watch us live
17:49
Speaker 2: on YouTube.
17:51
Speaker 3: Let's go now to the news over the weekend, which
17:53
Speaker 3: was Reddit finally getting it together to launch its long
17:55
Speaker 3: awaited ipo Amy or Bloomberg Equity Capital Markets reporter joins us. Now, first,
18:01
Speaker 3: did you watch the oscars?
18:03
Speaker 10: I am a lot of journey.
18:04
Speaker 3: I am alone people so far.
18:06
Speaker 7: When the ratings come out, so we know how many
18:09
Speaker 7: people didn't.
18:09
Speaker 3: Want to My husband and my daughter didn't.
18:11
Speaker 7: Like Arbitron or whatever, will we will watch that and
18:15
Speaker 7: learn the Nielsen ratings.
18:16
Speaker 3: Okay, now, John Tucker, your assignment right now, go watch
18:19
Speaker 3: I'm just ken, I'm just watching, just watch him doing
18:22
Speaker 3: the segment.
18:23
Speaker 7: Fine, I want to listen to Amy though.
18:25
Speaker 3: Reddit remind us what redd it is.
18:27
Speaker 1: First of all, it's a social platform essentially for people
18:30
Speaker 1: to to talk about anything, and then it's kind of
18:34
Speaker 1: wolved into a place where you can find information about
18:36
Speaker 1: really deep dive into things.
18:37
Speaker 3: So a lot of like guys would be.
18:39
Speaker 1: Like chatting about like running shoes and what model fits
18:42
Speaker 1: and how it fits and then how to break shoes
18:45
Speaker 1: in that kind of thing and many other more and
18:48
Speaker 1: sometimes it's good, sometimes like questionable. So it's it's a
18:52
Speaker 1: social platform for people to express their views and ideas.
18:57
Speaker 6: I wonder if they must have and I'm just ken
18:59
Speaker 6: thread there has to be have today.
19:01
Speaker 3: Okay, you ask another question that's smart and I'm gonna
19:03
Speaker 3: look that up.
19:04
Speaker 6: Okay, So I guess can you give us some context
19:07
Speaker 6: for the Reddit ipo what's the size that's being projected?
19:10
Speaker 6: And then how does this fit in with how the
19:12
Speaker 6: market is developing so far this year? Because last year
19:14
Speaker 6: it was not such a good IPO market.
19:16
Speaker 9: Wasn't.
19:17
Speaker 1: Yeah, it wasn't, and it's still the IPO market is
19:20
Speaker 1: still rawles subduced. So far this year there were only
19:23
Speaker 1: about seven billion raised, but there were five IPOs more
19:28
Speaker 1: than raising more than five hundred million dollars, which is yeah, decent,
19:32
Speaker 1: but compared to twenty twenty one when redd it actually
19:36
Speaker 1: filed confidentially for an IPO, that was an all time high,
19:39
Speaker 1: that was more than three hundred and thirty billion dollars raised,
19:42
Speaker 1: and then so like in the grand scheme of things,
19:44
Speaker 1: we're definitely not there and might not even see that
19:47
Speaker 1: ever again. And then at that time when Reddit actually
19:50
Speaker 1: filed for an IPO, it was value at ten billion.
19:53
Speaker 1: Right now, at thirty one to thirty four dollars price
19:56
Speaker 1: range per share, it's like if it's price at the
20:01
Speaker 1: upper end of the range is going to be six
20:03
Speaker 1: point four billion in terms of valuation, So it's still
20:05
Speaker 1: like a bit off from the ten billion that it
20:08
Speaker 1: was projected to be back in a few years ago.
20:10
Speaker 1: So it's kind of missed the boat in terms of
20:13
Speaker 1: IPOs sentiment, and so we're going to see whether it's
20:16
Speaker 1: going to be So there is still a tone that
20:18
Speaker 1: they can price above the range, but we'll have a
20:21
Speaker 1: look January.
20:22
Speaker 3: Right there is a Reddit thread I'm just ken, so
20:25
Speaker 3: I find at least somebody is with me on this one.
20:29
Speaker 3: Talk to me about how reddit will also got into
20:31
Speaker 3: the vernacular when it comes to the meme stock craze
20:34
Speaker 3: that we saw, right. I mean, that's when Reddit became
20:37
Speaker 3: super significant to Wall Street in a very particular way.
20:40
Speaker 1: I think it was significant in a lot of people's hearts,
20:43
Speaker 1: like for the geeks, but it's kind of like significant
20:46
Speaker 1: when people actually went on the theme where they can
20:49
Speaker 1: actually talk about stocks and then and to actually to
20:53
Speaker 1: assemble the amount of buying interest in a particular stock
20:56
Speaker 1: that actually drove the prices higher. And I think redd
20:59
Speaker 1: It is trying to replicate that for his own IPO
21:02
Speaker 1: as well. They're giving eight percent of the IPO to
21:06
Speaker 1: people who are really heavy users moderators of Reddit threats.
21:11
Speaker 1: But then the funny thing though, is for these eight
21:14
Speaker 1: percent of the stocks, they do not have a lock up.
21:17
Speaker 1: So it would be very interesting to actually see whether
21:19
Speaker 1: they actually sell on the first day or during the
21:21
Speaker 1: first week, because at the end of the day, these
21:24
Speaker 1: are retail investors. Technically, a lot of the IPOs or
21:27
Speaker 1: issuers do not like retail investors because they're very sentimental.
21:31
Speaker 1: They're very emotional. If it rises a lot, and then
21:34
Speaker 1: on the first day and then people will sell. If
21:37
Speaker 1: it falls a lot, people will pan excel as well.
21:40
Speaker 1: So that's why most of the time people will allocate
21:43
Speaker 1: a lot more to institutions. The fact that they actually
21:46
Speaker 1: allocate eight percent, I think they're trying to replicate that
21:50
Speaker 1: meme kind of craze like for his own stock. But
21:52
Speaker 1: whether it works or not is a different story.
21:54
Speaker 6: One crazy question though, I would like to ask you.
21:57
Speaker 6: You might have no view on this, but I want
21:58
Speaker 6: to ask it. Anyway, We've got two very interesting internet
22:02
Speaker 6: plays in the news today. We've got Reddit, but then
22:05
Speaker 6: we also have TikTok. Do you see anyway the put
22:08
Speaker 6: these two together in your head for an investor, for
22:11
Speaker 6: a user, for a sentiment.
22:13
Speaker 1: Well, it's really at the end of the day, it's
22:15
Speaker 1: really about advertising and how much you can and also
22:18
Speaker 1: how sticky in terms of the users. Right, Definitely, a
22:21
Speaker 1: lot of the Reddit users are actually very sticky. But
22:24
Speaker 1: then it's also most of the well not most, but
22:28
Speaker 1: have of the users for Reddit do not actually have
22:30
Speaker 1: a log in or do not actually seize most of
22:33
Speaker 1: the ads. And then so whether it can actually turn
22:36
Speaker 1: that into ad revenue, it's a different story. But then
22:40
Speaker 1: read it now is trying to license some of the
22:43
Speaker 1: geeky kind of links of threats in order to generate
22:47
Speaker 1: revenue for itself. Because it's actually like it struck the
22:50
Speaker 1: first deal with Google right now to read and ask
22:54
Speaker 1: the AI to actually machine to learn it. So at
22:59
Speaker 1: the end of the day AI, the more information, the
23:01
Speaker 1: better information, the more deep dive into things that it gets,
23:05
Speaker 1: the better result it will generate. So it's a good
23:08
Speaker 1: thing that they have that vast eighteen nineteen years of
23:11
Speaker 1: treasure tro that it can actually use. But at the
23:14
Speaker 1: end of the day, it's kind of like Wikipedia. It's
23:17
Speaker 1: sometimes you can't verify stuff, right So yeah, it's it's yeah,
23:22
Speaker 1: up to but.
23:22
Speaker 3: I would say also the big difference is that it's not,
23:25
Speaker 3: in the end of the day a Chinese company right now,
23:27
Speaker 3: this is true. I mean I appreciate TikTok is quote
23:29
Speaker 3: unquote domiciled in the US, but like if you thread
23:32
Speaker 3: the needle, it goes up to China.
23:33
Speaker 6: Indeed, and this is the one issue that TikTok has
23:36
Speaker 6: been trying to convince investors, have convince US politicians of
23:39
Speaker 6: that no, no, no, we're based in the US, but
23:41
Speaker 6: it looks like nobody's bought that story. And here we
23:43
Speaker 6: are with this legislation going through Congress, and.
23:45
Speaker 1: We've seen Sheen as well. Sheen was supposed to actually
23:48
Speaker 1: come this year to the US, and it's exploring other
23:52
Speaker 1: places for listing, like the UK just because of that
23:55
Speaker 1: Chinese connection. So but then arm also has like kind
23:58
Speaker 1: of a like a risk spector in China as well.
24:01
Speaker 1: But then it went through as well. So at the
24:03
Speaker 1: end of the day, like whether like yeah, TikTok bite
24:06
Speaker 1: guns will come, like yeah.
24:08
Speaker 3: We'll have to see. For Reddit, why do you think
24:12
Speaker 3: it's it decided?
24:13
Speaker 8: Now?
24:13
Speaker 3: Is the time?
24:15
Speaker 1: Actually a lot of the times where IPOs actually come
24:19
Speaker 1: to the market at during this time when the market
24:21
Speaker 1: is not fully opens. It's a certain kind of factors.
24:25
Speaker 1: Is whether it needs money for growth or it wants
24:29
Speaker 1: to actually give the venue for his employees to sell.
24:32
Speaker 1: And obviously there are private share platforms that allow that
24:37
Speaker 1: to do that, but then it's not as liquid and
24:40
Speaker 1: so at the end of the day, for this particular
24:44
Speaker 1: Reddit sale ipo, a third of it comes from its
24:47
Speaker 1: employees wanting to sell. So that is part of the
24:51
Speaker 1: driver for his IPO to come right now, you know.
24:54
Speaker 6: What is investor appetite generally now for the risk of
24:57
Speaker 6: an IPO, because you said the market has been like
24:59
Speaker 6: sort of coming back, but this is in the midst
25:01
Speaker 6: of a massive run up in the S and P
25:03
Speaker 6: five hundred exactly.
25:04
Speaker 1: So in terms of equity capital market, all the other
25:08
Speaker 1: chunnels are really fired up, like all the other two
25:11
Speaker 1: engines in terms of secondary share sales and also convertible bonds,
25:15
Speaker 1: they are just going through the roof. Last two weeks,
25:17
Speaker 1: it was like more than ten billion a week, which
25:20
Speaker 1: was amazing, and then like in terms of convertible bonds,
25:23
Speaker 1: like a week was yeah, a third of last year's
25:28
Speaker 1: new issuance as well, so it was great. But then
25:31
Speaker 1: that has not transferred into the IPO, which is an
25:34
Speaker 1: risky asset. So we have seen that the discount that
25:39
Speaker 1: people investors were asking for IPOs is still at twenty
25:43
Speaker 1: twenty five percent discount to a ready list of peers
25:46
Speaker 1: versus ten to fifteen percent in the past, so that
25:49
Speaker 1: sentiment has not come back. People still want to have
25:51
Speaker 1: a bit of a cushion. And the fact that like
25:54
Speaker 1: the first two big IPOs, Aimer Sports and also bright Spring,
25:58
Speaker 1: they weren't trading as well is still like a concern
26:02
Speaker 1: lingering on a lot of investors' mind.
26:05
Speaker 3: Amy, great stuff, a really great conversation. I learned so
26:08
Speaker 3: much in that. Thank you so much, Amy, or Bloomberg
26:09
Speaker 3: Equity Capital Markets Reporter.
26:13
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
26:17
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26:21
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26:23
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26:27
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26:31
Speaker 3: Let's flex the muscles. I know one person who has
26:34
Speaker 3: definitely seen the oscars, and that's keitha wronganath and Bloomberg
26:37
Speaker 3: Intelligence analyst for US Media. Have you Youthael? Actually I
26:42
Speaker 3: don't know for sure. I hope so getha. Have you
26:45
Speaker 3: seen it? Did you see it?
26:47
Speaker 8: I did it away.
26:50
Speaker 3: For the record, I have been trying to find one
26:52
Speaker 3: person on this radio show so far who has seen
26:55
Speaker 3: it who can talk about I'm just ken with me
26:57
Speaker 3: and I have struck out, which I feel like is
27:00
Speaker 3: part of the point. No one watched it with me
27:03
Speaker 3: except for my husband and my daughter.
27:06
Speaker 11: Yeah, I mean this is this has been the perenial question, Alex.
27:10
Speaker 11: I mean about ratings, right, is linear TV even relevant anymore?
27:14
Speaker 11: But you'll be surprised to know the oscars actually are
27:16
Speaker 11: one of the most watched non sports telecast on TV
27:21
Speaker 11: every year. And yes, ratings are down. So back about
27:24
Speaker 11: twenty years ago, it was about forty million people tuning
27:27
Speaker 11: into you know, the Academy Academy Awards ceremony. Now it's
27:31
Speaker 11: closer to about twenty million, but that's still a huge audience,
27:34
Speaker 11: kind of considering that the PATV universe is also kind
27:37
Speaker 11: of shrunk by about twenty five percent.
27:39
Speaker 3: Okay, so, so what did you think about I'm just.
27:41
Speaker 11: Can I thought it was brilliant. It might have been
27:45
Speaker 11: the most Yeah, me too, me too. That was the
27:48
Speaker 11: most exciting part of the whole ceremony.
27:50
Speaker 3: It was awesome. And they did a whole like harken
27:53
Speaker 3: back to Marilyn Monroe and then Madonna wearing pink and
27:56
Speaker 3: wearing Gosling and pink and the and the guys in
27:59
Speaker 3: the back in the same cost. You had to see it.
28:02
Speaker 3: You just had to see it. It was really awesome. Okay. Anyway, sorry, Jen,
28:05
Speaker 3: you can ask a real question.
28:06
Speaker 6: Can I ask a real question?
28:07
Speaker 9: So?
28:08
Speaker 6: Who are the winners and losers here in terms of
28:10
Speaker 6: old media versus upstart streamers, it looks like Dizzy did
28:14
Speaker 6: very well. Comcasted, well, what's your take here?
28:18
Speaker 8: Yeah, I'm really glad you asked that question.
28:19
Speaker 11: I think the one big surprise, and this is really
28:22
Speaker 11: good for old media, is that old media is back.
28:24
Speaker 11: Theaters are back, the theatrical experiences back, and you know,
28:29
Speaker 11: in a kind of this wild twist, streaming was kind
28:31
Speaker 11: of almost completely shut out. So going into the Oscars,
28:35
Speaker 11: we really had, you know, the two stream big streaming
28:38
Speaker 11: you know, giants in a way, Netflix with nineteen nominations
28:42
Speaker 11: they only got one. You had Apple with Killers of
28:46
Speaker 11: the Flower Moon with thirteen nominations, they got completely shut out,
28:51
Speaker 11: so you know, and then of course you had the
28:52
Speaker 11: big suite with Comcast, Universal with with Oppenheimer's. So you know,
28:56
Speaker 11: in many ways, this was really a resounding success for
29:00
Speaker 11: the theatrical model and for the long established studios.
29:04
Speaker 3: Also Disney, right, I mean Poor Things, Disney with Poor Things, Yeah,
29:08
Speaker 3: where things came out of nowhere in my world. I mean,
29:11
Speaker 3: I'm not the judge of everything or anything like that,
29:13
Speaker 3: but it seems like Poor Things really came out and
29:15
Speaker 3: stole a lot of awards that maybe we weren't necessarily expecting,
29:19
Speaker 3: which which is a great win for Disney.
29:22
Speaker 11: It absolutely was, and considering you know, the budget, you know,
29:25
Speaker 11: and everything that kind of went with it. It's you know,
29:28
Speaker 11: Searchlight and the Fox acquisition from from this, from this
29:32
Speaker 11: studio point of view, from from the point of view
29:34
Speaker 11: of critical acclaim, I mean, Disney has really really done
29:37
Speaker 11: well with that acquisition because it's gotten them like a
29:40
Speaker 11: lot of critical accolades and some commercial successes as well.
29:44
Speaker 6: So I want to go back to your point that
29:46
Speaker 6: theatrical releases are back, old media is back. What kind
29:50
Speaker 6: of legs do you see on this trend? And I
29:52
Speaker 6: say this as a massive movie buff, but I have
29:55
Speaker 6: yet to really fully return to the cinema. I think
29:58
Speaker 6: the last one I saw was Mission impossib because it's.
30:01
Speaker 8: Just, you know, there's a lot of hassle.
30:03
Speaker 3: Yeah, I mean it's a fair point. I mean I'm
30:05
Speaker 3: not that far from you either.
30:07
Speaker 8: So what absolutely is?
30:09
Speaker 6: Oh yeah, so sorry, yeah, So what's your take are
30:10
Speaker 6: is the pandemic over?
30:12
Speaker 8: Is it all back? What's the story here?
30:15
Speaker 11: It's been a bit of a both a demand and
30:17
Speaker 11: the supply problem. So you know what has happened. Now,
30:21
Speaker 11: we did see somewhat of a decent recovery. I would
30:24
Speaker 11: say in twenty twenty three, we saw box office getting
30:27
Speaker 11: back to nine billion dollars, which is still not equal
30:31
Speaker 11: to pre pandemic levels. We're still about twenty percent short.
30:35
Speaker 11: There's good news and bad news. The bad news is
30:38
Speaker 11: twenty twenty four is not going to be better than
30:40
Speaker 11: twenty twenty three. And the reason is the Hollywood strikes,
30:45
Speaker 11: you know, those the actors strike as well as the
30:47
Speaker 11: writer's strike, kind of created a lot of holes now
30:51
Speaker 11: in the in the calendar. They pushed out a lot
30:53
Speaker 11: of the big releases that were originally slated for twenty
30:56
Speaker 11: twenty four to twenty twenty five. That's going to shave
30:58
Speaker 11: off roughly two billion dollars from the box office. So
31:02
Speaker 11: we're actually going to see twenty twenty four come in
31:04
Speaker 11: much lighter than twenty twenty three. But the good news
31:07
Speaker 11: is that twenty twenty five is everybody's expecting it to
31:10
Speaker 11: kind of be this blockbuster or where we will see,
31:13
Speaker 11: you know, box office kind of really get back hopefully
31:16
Speaker 11: to those pre pandemic levels at about ten billion or so.
31:20
Speaker 11: But I think generally the takeaway agen was that, you know,
31:23
Speaker 11: studios definitely want to make that commitment to theatrical because
31:27
Speaker 11: back in the day, especially when COVID was rampant, I mean,
31:30
Speaker 11: there was this big question about whether we would, you know,
31:32
Speaker 11: with everybody kind of doing the day and date at
31:34
Speaker 11: that point of time, there was this big question about
31:36
Speaker 11: whether everything was going to move to streaming.
31:37
Speaker 8: And I think that's definitely not the case.
31:40
Speaker 3: If you didn't have a job as senior US media
31:42
Speaker 3: analysts for Bloomberg Intelligence, would you have watched the askers,
31:46
Speaker 3: I would have.
31:46
Speaker 8: I definitely would have always watched it.
31:48
Speaker 3: Yeah, Okay, good, all right, And I just want to
31:49
Speaker 3: get that clear. It's not just because it's your job. Okay,
31:53
Speaker 3: let's talk about the elephant in the room, and that
31:54
Speaker 3: elephant is very large in the form of Paramount Plus.
31:57
Speaker 3: Any updates on this, any sort of insight, any sort
32:00
Speaker 3: of what's next now that has mightbe.
32:02
Speaker 11: Changed, Nothing really has changed. So you know, we've had
32:07
Speaker 11: management kind of speak on multiple occasions. All that they've
32:10
Speaker 11: said is they're kind of evaluating all possible offers, which
32:15
Speaker 11: seem to be kind of dwindling. Actually, we had, you know,
32:18
Speaker 11: multiple rumors, I would say swirling about a few weeks ago,
32:23
Speaker 11: but really nothing Alex at this point of time. The studio,
32:26
Speaker 11: of course, is still very much in play. We had
32:27
Speaker 11: some news about Paramount kind of disposing off some of
32:30
Speaker 11: their or wanting to dispose off some of their non
32:32
Speaker 11: core assets, their Indian operations, if you will. So they're
32:36
Speaker 11: definitely looking ready or getting ready for a sale. I
32:39
Speaker 11: just don't know when or how it's going to happen.
32:42
Speaker 10: Now.
32:42
Speaker 6: Can we go back to the streamers a little bit
32:44
Speaker 6: because there is a question that I wanted to ask you.
32:46
Speaker 6: I mean, we had Netflix upgraded by Oppenheimer today or
32:49
Speaker 6: their target the price target was raised at Oppenheimer today,
32:53
Speaker 6: And this is taking a look at trends and user growth.
32:56
Speaker 6: But you know, Netflix really raised their their costs recently
33:01
Speaker 6: and then that you know, they managed to survive that
33:04
Speaker 6: and subscriptions held up. How do you see that progressing
33:08
Speaker 6: over the course of the year, especially if we have
33:11
Speaker 6: a slower economy.
33:13
Speaker 11: So I think at this point, jen Netflix has kind
33:16
Speaker 11: of really established itself as the dominant streaming platform. And
33:19
Speaker 11: I just say that because you know, kind of when
33:21
Speaker 11: you think about you just go home every night and
33:23
Speaker 11: you think about what do I want to watch. I mean,
33:25
Speaker 11: Netflix has kind of almost become this habit right now,
33:29
Speaker 11: and so people naturally kind of gravitate towards it, and
33:31
Speaker 11: so I think that gives them immense pricing power. So
33:35
Speaker 11: will they be able to raise prices in the future. Absolutely,
33:37
Speaker 11: Do they have more growth levers to pull? Absolutely? They
33:40
Speaker 11: you know, advertising is still a very very small business
33:43
Speaker 11: for them, but they're looking to make it bigger and bigger.
33:46
Speaker 11: You know, we just I don't know if you can
33:48
Speaker 11: if you guys watched there was this exhibition tennis match
33:51
Speaker 11: between Nadal and Alcaraz just a few days ago, and
33:55
Speaker 11: now they have this big fight that's coming up between
33:57
Speaker 11: Mike Tyson and Jake Paul. So they are doing more,
34:00
Speaker 11: more and more to get into kind of you know,
34:02
Speaker 11: live events. You know, obviously we know all of the
34:06
Speaker 11: WWE content, the raw content is coming starting January twenty
34:10
Speaker 11: twenty five, so they're branching out into different things and
34:12
Speaker 11: the whole idea there is to kind of add more content,
34:15
Speaker 11: more breadth, more depth, to give them more pricing powers.
34:19
Speaker 11: So yes, I absolutely think that you know, they can
34:21
Speaker 11: grow both subscriptions those worse revenue.
34:24
Speaker 3: Really yeah, I forgot about that that Tyson fight. Also,
34:26
Speaker 3: are those things less expensive to make? I man, you
34:29
Speaker 3: have probably to pay them a lot, but versus like
34:30
Speaker 3: a series.
34:33
Speaker 8: But almost equal.
34:34
Speaker 11: It would be like one of your big budgets series
34:37
Speaker 11: because I think they're paying about three hundred million for
34:39
Speaker 11: for the fight, so roughly equal to maybe like a
34:43
Speaker 11: big stranger things.
34:44
Speaker 3: Okay, all right, fair enough. I was gonna say, oh,
34:45
Speaker 3: maybe the ROI on that is a little better, but
34:47
Speaker 3: maybe that's not true. What's your go to jen streamer?
34:52
Speaker 10: Well?
34:52
Speaker 6: Actually, now, weirdly enough, it's Hulu.
34:54
Speaker 8: Huh. Yeah.
34:55
Speaker 6: We were obsessed with the Rookie and so I binge
34:57
Speaker 6: watched that whole thing, which is strange. But now we're
35:00
Speaker 6: watching Showgun and we're really just taken to that.
35:04
Speaker 8: It's what we're gon is Showgun, the James Leavell novel.
35:08
Speaker 6: They've redone it. We just watched the first episode lesson
35:12
Speaker 6: it's very good.
35:13
Speaker 3: Okay, But but you're not doing that, Tucker. You're you're
35:16
Speaker 3: reading some kind of serie books on.
35:18
Speaker 7: Yeah, it's a thing about some you can't judge.
35:21
Speaker 3: Anything for I'm just like, what are you watching?
35:24
Speaker 7: No, I'm not watching anything. I'm trying to finish a
35:28
Speaker 7: twelve hundred page book with type about that big?
35:31
Speaker 8: So what book?
35:32
Speaker 6: Tell us?
35:33
Speaker 7: It's been on my shelf for thirty years, literally, I
35:36
Speaker 7: kid you not. And I finally like, I never read this.
35:39
Speaker 7: I got to pick it up the Power Broker, Oh,
35:43
Speaker 7: Robert Carroll, and it's just like one's a Pulitzer prize
35:46
Speaker 7: back in the seventies, and it's just what a tour
35:48
Speaker 7: to force. It's just like and if you're a New Yorker,
35:52
Speaker 7: it is your duty to read this book. Okay, I
35:55
Speaker 7: don't care if it's twelve hundred pages. You have to
35:57
Speaker 7: do it.
35:58
Speaker 6: You know, we saw the play that Ray Fine was
35:59
Speaker 6: in it. It was fantastic.
36:00
Speaker 7: Oh really yeah no, I mean it's right.
36:02
Speaker 3: Fine, so that makes sense. No, I'm reading all the
36:04
Speaker 3: reach your books. It's like Candy, I can just read
36:07
Speaker 3: like one an hour on the train.
36:09
Speaker 7: Well, what's speech perfect?
36:10
Speaker 3: It's perfect. It's it's Alex every day reading, all right.
36:13
Speaker 3: Get the thanks a lot, Eitha Manganathan no Bloomberg Intelligence,
36:16
Speaker 3: a senior US media analyst, and thank you for watching
36:18
Speaker 3: the Oscars, and thank you for saying I am just
36:20
Speaker 3: Ken is brilliant, because it was and everyone should go
36:24
Speaker 3: and watch it. Particularly John Tucker wants to.
36:26
Speaker 7: Be well, it's over. I am not going to watch it.
36:28
Speaker 3: It's called internet.
36:29
Speaker 7: All right, this is Berg.
36:34
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
36:38
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36:42
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36:45
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36:48
Speaker 2: say Alexa play Bloomberg eleven thirty.
36:52
Speaker 3: All right, talking about CPI for tomorrow, we got the
36:55
Speaker 3: New York Fed inflation expectations coming in for one year
36:57
Speaker 3: unchanged right up. For the three year they rose to
37:00
Speaker 3: two point seven percent. For the five year rose to
37:02
Speaker 3: two point nine percent. So let's get the set up
37:05
Speaker 3: then for tomorrow. Adam Kon's is chief portfolio manager Winthrope
37:08
Speaker 3: Capital Management. He joins us from Innneapolis, Indiana. Were you
37:12
Speaker 3: up late watching the oscars.
37:15
Speaker 10: As I play?
37:15
Speaker 12: But not because of that? Got two kids they didn't
37:18
Speaker 12: want to fall asleep.
37:19
Speaker 3: Oh okay, fair enough, so no oscars for you. Just
37:21
Speaker 3: to be clear, Yeah, I'm really bad.
37:25
Speaker 6: Really, you're striking out today.
37:26
Speaker 3: This is toughly. We should do the whole theme for
37:28
Speaker 3: the whole week this way and just like, really get
37:30
Speaker 3: a good read on who watches what all right, Adam?
37:33
Speaker 3: In the market CPI tomorrow? Are we are we selling
37:36
Speaker 3: a little bit in the front end because of that?
37:37
Speaker 3: Is that what we're seeing a little bit? Yeah?
37:40
Speaker 12: I think, you know, Unfortunately, we've gotten to this place
37:44
Speaker 12: where the inflation prints and anything that's going to affect
37:48
Speaker 12: the FED is the primary driver of market. So I
37:51
Speaker 12: think we're going to continue to see that through the
37:53
Speaker 12: rest of twenty twenty four. Expectations here really, you know,
37:57
Speaker 12: right at three point eight, I think we're going to
38:00
Speaker 12: actually see this come in a little bit below that.
38:03
Speaker 12: I think there's gonna be a surprise out of the
38:05
Speaker 12: service sector. We have already seen used car prices start
38:10
Speaker 12: to fall off as well, so that we'll play a role.
38:13
Speaker 12: So we're actually thinking we'll see a slight undertick from
38:18
Speaker 12: the expectations right now on both core and non core CPI.
38:24
Speaker 6: If the print comes in as you expect a little
38:27
Speaker 6: bit of an undertick, how our markets position relative to that,
38:30
Speaker 6: Is there going to be a setup for some serious damage?
38:35
Speaker 12: Well, you know, I think it depends on how you're
38:38
Speaker 12: playing it. I do think you'll start to see interest
38:42
Speaker 12: rates on the short end come down significantly. But yeah,
38:45
Speaker 12: I think when we're talking about equity markets, that would
38:47
Speaker 12: be a sign that things are slowing down. I think
38:50
Speaker 12: a lot of people are kind of overlooking the impact
38:52
Speaker 12: that the slowdown in China is going to have on
38:54
Speaker 12: not just inflation, but just overall kind of consumption demand globally.
38:59
Speaker 12: So that's really what we're thinking is going to drive
39:03
Speaker 12: this downtick, because this is just going to start the snowball.
39:07
Speaker 12: Like I said, as you see these big economies, demand
39:09
Speaker 12: is notably slowing down. US has been resilient, but you
39:14
Speaker 12: know it can't outlive this forever.
39:17
Speaker 3: So you think then that we won't get a rotation,
39:21
Speaker 3: a solid rotation to other assets that will help prop
39:23
Speaker 3: up the market. That doesn't seem to be where you're at, No,
39:28
Speaker 3: I don't.
39:28
Speaker 12: I think what you'll start to see is as this
39:31
Speaker 12: kind of fear starts to pick up. Obviously, there was
39:33
Speaker 12: a lot of fear last year that just didn't materialize,
39:37
Speaker 12: and so some complacency move back into the market. But
39:39
Speaker 12: if we start to see that shift in any direction
39:42
Speaker 12: towards back towards the fear, I think what you'll see
39:45
Speaker 12: is just more of a risk off and you'll just
39:48
Speaker 12: kind of start to see, you know, the treasury market
39:50
Speaker 12: will rally, but everything else, I think we'll have a tough,
39:53
Speaker 12: tough road ahead of it.
39:55
Speaker 6: So what do you think then about overall corporate valuations.
39:58
Speaker 6: Are we in bubble territory? Then, if you know there's
40:00
Speaker 6: this expectation for a little bit of a softness, No.
40:05
Speaker 4: I don't.
40:05
Speaker 12: I mean, I think our valuation's high, yes, but I
40:09
Speaker 12: think largely that can be offset by margin expansion. I
40:13
Speaker 12: think that's going to push us through this cycle, make
40:16
Speaker 12: it this cycle, at least the business cycle i'm referring
40:19
Speaker 12: to slightly more extended than what we've been used to.
40:23
Speaker 12: And that's why we don't think there's really going to
40:24
Speaker 12: be any significant softening or a recession in twenty twenty four.
40:30
Speaker 12: It might see something in twenty twenty five. I think
40:32
Speaker 12: it really just depends on FED policy and how tight
40:34
Speaker 12: they keep things and how long they do that. But no,
40:38
Speaker 12: I think right now valuations are for the most part
40:42
Speaker 12: fairly valued. There are absolutely stocks that are you could
40:45
Speaker 12: consider bubble territory, but markets as a whole, no, not
40:47
Speaker 12: at all.
40:48
Speaker 3: Okay, So in the scenario that you're laying out what
40:50
Speaker 3: happens with the dollar, Like you might have Treasury's rally,
40:53
Speaker 3: But what does the dollar do in that scenario.
40:57
Speaker 12: Honestly, that's a tough one because you know, it's a
41:00
Speaker 12: relative game. And at the same time, as maybe the
41:03
Speaker 12: FED is forced to start to loosen their policy, everywhere
41:07
Speaker 12: else in the world is going to be way looser
41:09
Speaker 12: and have a head start on us. You're already you know,
41:12
Speaker 12: starting to see where China is going to have to
41:15
Speaker 12: produce some significant stimulus measures in order to prop up
41:18
Speaker 12: that economy. Europe is really no different at this point.
41:21
Speaker 12: So I think on a relative basis, I think the
41:24
Speaker 12: US dollar remains fairly strong, which I think will make
41:28
Speaker 12: it difficult to invest in emergency markets as a whole
41:31
Speaker 12: and could weigh down other countries. So I do think
41:35
Speaker 12: the US dollars maintains its strength. It might weaken slightly,
41:40
Speaker 12: but by no means do I see it falling off
41:42
Speaker 12: a cliff like we've seen in past recessions.
41:46
Speaker 6: So where does this leave the progress for FED raitcuts.
41:51
Speaker 12: Well, you know, obviously the market's expectation has changed significantly
41:56
Speaker 12: as this year, just in three months has come along,
41:59
Speaker 12: you know, pricing in six cuts to begin with and
42:03
Speaker 12: now we're well below that, you approaching three to two.
42:07
Speaker 12: From our standpoint, we do think the Fed's going to
42:09
Speaker 12: be a lot slower to react through this, through this
42:15
Speaker 12: monetary cycle when you look at you know how they
42:18
Speaker 12: enter this with very slow changes into increasing interest rates
42:23
Speaker 12: using the transitory narrative for far too long. I think
42:27
Speaker 12: they're going to do the same thing on the back end,
42:29
Speaker 12: is that they're going to hold tight here and it
42:31
Speaker 12: really weight to decrease interest rates until there are some
42:35
Speaker 12: serious cracks in the economy that they can point to
42:38
Speaker 12: and all their data set both hard and soft right now,
42:42
Speaker 12: I think that what they're the rhetoric is that there's
42:47
Speaker 12: this idea that the economy is softening, but there's just
42:49
Speaker 12: not enough data to get the Fed to actually act.
42:52
Speaker 12: And so until you see those data points really screaming
42:55
Speaker 12: that the economy is slowing down, I just don't think
42:57
Speaker 12: the Fed's going to cut and I don't know if
42:58
Speaker 12: they cut it all in twenty twenty four.
43:00
Speaker 3: Oh okay, So joining the Torus and slag Apollo camp
43:03
Speaker 3: that maybe no cuts, which the facto that would kind
43:07
Speaker 3: of be a hike in essence, what would that do
43:10
Speaker 3: you think to the economy.
43:13
Speaker 12: Well, I think honestly, you know, if they don't cut
43:15
Speaker 12: it all this year and they keep things tight for longer,
43:19
Speaker 12: I think that that is gonna that could lead us
43:22
Speaker 12: into a harsh disinflationary period where you know, they overshoot
43:26
Speaker 12: the two percent inflation target and suddenly we we're wondering
43:30
Speaker 12: what happens if we're seeing you know, Japanese style deflation.
43:33
Speaker 7: I think that's a low probability.
43:35
Speaker 12: But if they stay too tight for too long, that
43:38
Speaker 12: is the increasing probability of events that it's a harsher
43:43
Speaker 12: thing for the economy to deal with deflation than some
43:46
Speaker 12: slight inflation.
43:48
Speaker 3: All Right, thanks a lot, really appreciate Adam Kuon's chief
43:50
Speaker 3: portfolio manager at Winthrop Capital Management. That's super interesting. If
43:54
Speaker 3: they have to wait, and the idea is the longer
43:56
Speaker 3: you wait to cut than the worse the circumstance will
44:00
Speaker 3: wind up being.
44:01
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