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You can absorb light.
I can see it, and Kamala who's Kamala?
She can turn light into physical matter, which I have never heard of.
I can totally show you. The question that I have for you, Jennifer, is if you're going to go spend how much does it cost to go to a movie now? Eighteen bucks?
Something like that?
Are you gonna go smend eighteen bucks to see that movie?
Not sure?
Not sure? Okay?
I think well that's the big question, right. That's an excerpt from the preview of the thirty third film in the Marvel Cinematic Universe aka MCU for those in the know, which is not me. It hits theaters today. It's aptly named The Marvels. I'm not in the Knowel. Joel Webber just Joel Webber just looked at me like I was, you know, a superhero.
I thought, you know, you seem like you should know.
I told Jennifer this story earlier, Joel, at the beginning of the pandemic, back in like March of twenty twenty, my wife and I were like, oh, let's watch all the Marvel movies.
How far do you make it?
We made it through two of them, just started waking.
Thirty more to go.
Yeah, so you still got time? Okay, So Thomas Buckley's got a great.
Disney would appreciate your business.
Well, it doesn't matter. I pay for Disney Plus regardless. Right, as long as there's Bluey there we're.
Paying for it.
So well, you got that, you got a whole bunch of other Marvel movies. And ever since Disney acquired Marvel more than a decade ago, they have just turned Marvel into a blockbuster powerhouse.
That voice you're hearing, by the way, is none other than Joel Weber. He's editor of Bloomberg Business Week by day, but by night he's a superhero. Sure, DC or Marvel superhero, that's the question.
It would be a Marvel one.
Okay. We also have joining us Jim Ellis. He's assistant managing editor for Bloomberg Business He edited Thomas Buckley's story in the current issue of Bloomberg Business Week, available on newstands now online at the Bloomberg Terminal, and of course at Bloomberg dot com slash business Week. Joel, I'm sorry, now you can talk.
Okay, So great acquisition. In two thousand and nine, Disney spent four billion dollars. The catalog. The MCU universe that has transpired from this Marvel acquisition generated close to thirty billion dollars at the box office. All those movies that you haven't watched are adored by Lee sustains on theaters Okay, well, it's starting to get to a point where these movies aren't having quite as big of a success, or any success that they've previously had, so more muted fans maybe
getting a little tired of that superhero genre. And now we have yet another movie coming out this weekend. Jim elis the Marvels by Marvel by Disney. How's the Marvels going to do?
We're working on getting now, Oh there's Jim Elis. Sorry, Jim, sorry, just go go start over one more time. We have trouble getting your How's the Marvel's gonna do?
Jim?
Most likely, the Marvels will probably do about half the week opening weekend business that the previous installment of this franchise.
Did you know?
That is a disappointment, obviously because this is an expensive movie to make. You know, this was probably but then one hundred and fifty to two hundred million dollar movie. And the big question for Marvel right now is, given the cost of all these films that they've made in the MCU, can they actually start keeping the profits running on these new installments even though fewer people are going
to theaters. I mean, they've already had a disappointment earlier this year with the latest installment of the ant Man franchise. That movie did not make its production costs back. And so that's sort of a warning here. I mean, there's been a lot of content, a lot of MCU content out there. There's a lot of Disney content out but the MCU content is and.
There's a lot of it. A lot of people say, well, you know, there are a lot of movies.
I'll sit down and watch them like you Tom, Let's say like, oh, I'm going to get to that. The issue though, is that there's so much of it as you could sort of lost in it. We took a look at just how much MCU content was out there.
We figured it out. We clocked it out by.
The minutes that are available right now, and you can do thirty one days and fifty two minutes of non stop watching of MCU content. That includes the movies, the television shows that they've made, They've gone a bunch of specials, and they've got a lot of animated content that's been coming up since two thousand and nine. So it's an amazing amount of just stuff of Marvel stuff that's out there. And so we're hitting the point where a lot of people are saying, well, maybe I've had enough.
Look at your life, look at your choice, Tim You could spend thirty one days and fifteen minutes NonStop.
Let us know how that works out.
Well, it might be there. I'll let you know in thirty three days.
But you get looking back to where Disney stands in all of this. I mean, if one, we're writing the screenplay of let's buy a blockbuster franchise and produce a lot of movies out of it, we would be getting to the point where the profits are starting to fall off. And surely the audience saw this coming. I mean, what's Disney's plan here? Have they prepared for it? Is this something they're communicating to investors? Do you have any idea?
Yeah?
I mean what they're saying now is that they're going to reduce both the number of movies that Marvel produces and also they're going to actually cut down on the amount of money that's spent on a per film basis. Now Wall Street likes that, but the worrisome part of that is that is what's left in that intellectual property trow that is Marvel, the comic book company that they bought and basically have mined successfully for all this time.
But what characters are left if you're not doing sequels because they're saying also they're not going to do as many sequels, then you know, are you going to have to move to the sort of third tier or fourth tier hero or are you really going to have to go and look for different types of people who know how to you know, sort of produce this type of
film and our TV shows. I mean they're already saying now that they're going to go out and hire you know, showrunners who are used to producing you know, regular sort of network and streaming shows, not just in house at Disney. They're sort of recognizing that they need more juice to
get consumers interested. I mean, they've gotten a lot of black this past year over things like you know, she Hulk Law, you know, Attorney at Law and shows like that that it sort of stretched the franchise in a way that you know a lot of people didn't connect to.
So it's for every Loki that a lot of people have gotten excited about, there are an awful lot of she Hulks and other things that people say like, ah, you know, I don't really feel it even something like Secret Invasion that was a series that they had earlier this year that I personally liked a lot, But I
seem to have been in the minority on that. I mean a lot of people are just saying, you know, these it's so much there's so much content, and there's so many characters, and there's so many interconnections, which was good at the beginning, but now it can be a little daunting, particularly if you want to start watching the MCU, because who's going to go back and say, I'll go back and look at the previous thirty two movies before I watched.
This, Tim maybe that was maybe that was my problem, Jim. Maybe I shouldn't have done that. Jim.
We'll get back to your It's like a weird order too, there you have to well we had to get the order weird or is actually just the order?
Jim?
Like that?
There are rules to this.
There were prequels and sequels. Yeah, that's what made it excit stories. Yeah, there were ones that came out more clearly.
You haven't watched Star Wars also on Disney Plus. Okay, so Jim, we'll get back to your your personal taste in movies momentarily, but I do want to also just put out there, Jim, this is not just a test of Marvel, it's actually a test of the superhero genre. Because Marvel, which is you know, we've we've seen the treasure trove, that is, it's archive, it's minted, you know, billions for for Disney. D C has also an immense library, but we haven't seen as many of those movies on the big screen.
And they're actively.
Working on it.
They're actively working on it, and they've hired some you know, sort of big talent to in the superhero world. But that way, they've hired the director who did a bunch of the X Men films. They've uh, you know, they they're looking to come up with their own universe of interconnected characters. However, you know, they have also been victims to this sort of cooling of enthusiasm for superheroes.
I mean, this is past year.
They had Shazam, Fury of the Gods, they had The Flash, they had the Blue Beetle.
All of those are DC comic characters.
All of those movies disappointed at the box office, and you know, it sort of goes into this theme that maybe we've had too much. Have we had too much? Are the stories just not that great? The test of that, at least for d C is going to come in December when Aquaman, which is also a sequel you know to their Aquaman movie that came out in twenty.
Eight which was a huge success.
That was a huge success, and that brought in a billion one, you know at the box office, and so now we're going to see if this sequel to that can do as well or sort of and factoring in that this is a very different environment now where people are still not back to normal going to theaters and the you know, the profits that you can make from streaming world on this aren't what you can do on a real big theatrical hit.
Where does CGI come into this and what did what did what did we learn in the story about c g I.
Well, we learned that a lot of a lot of critics and a lot of the want of a better word, you know, mc u uh fanboys sort of think that the CGI has gotten a little either sloppy or it's just not of the quality that we saw.
On some of the early documentary.
A lot of a lot of complaints about you know, some of the c G I in some of the television shows like a she Hulk, and also that the last movie, Quantum Mania, which was earlier this year, a lot of people thought that that came across as sort of video gamish and not movie ish. And the thing is that, let's face it, a lot of these movies are filmed in front of Green Springs the same way that a video game would be, but they're not supposed
to look that way. So that's, uh, I don't know if that's something that a lot of average moviegoers think about, but it seems to be quite a lot of people who are the sort of the influencers and also the people who write reviews, they care quite a lot about that. And so that's something that Disney is going to have to think more about, particularly when they've got a visual
effects team that stretched across so many platforms. So it's not just theatrical movies, it's you know, having to do things for the Disney Plus streaming service as well as you know, they're putting things with you know, movies and specials inside their theme parks, so there's a lot of work going on there.
But you know, with a limited number of people, all right.
Let's bring it back to the Marvels, since that is the movie coming out now, Jennifer Ryan, The Marvels is coming. This is a sequel to Captain Marvel, which we're thrown around billion billions. It made a billion at the box office in twenty nineteen.
Pre Larsen female lead. I think you going, No, not, she's not. I think I saw though, Tim, Yeah, he's going.
I am going tomorrow.
That was what I was waiting for.
Jim already have my ticket. He's going, and I will be able to say whether it was better.
One of the things that I'm surprised that as this this universe expands, I mean a lot of the things that you're seeing now in those movies, you know, like this one is much more of a it will be a female empowerment movie or obviously a female hero, but also in this case three female heroes in the movie, also.
Mixed generation, very young teens plus some you know, sort of older actresses.
And I mean these are things that were not even issues at the beginning with an Iron Man, which the stories were much more traditional comic book hero stories. And now we've gotten more and more into seeing the lives of people on screen, and I'm not certain that that works as well unless you're Spider Man.
You know what works though, man eating kittens with tentacles for tongues.
That's Marvels todight exactly.
Okay, So Jim, we wait, wait a full report.
Yeah, please do come back next week, Jim, and let us know how the how the movie was that Marvel fan you were listening to is? Jim ellis assistant managing editor for Bloomberg's Business Week, also with us Joel Webber. How many of the thirty three movies have you seen?
Joel?
Not all thirty three, but I would say a lot of them.
Okay, all right, well, you still got time. You spend the week on doing it. Check out the days later. Check out the story. It's in the current issue. You have Bloomberg Business Week on newstands.
Now you're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App, or watch us live on YouTube.
Jennifer, hard to believe it, but Thanksgiving is less than two weeks Await? Are you gonna be here for Thanksgiving?
I am, yeah, and I'm not doing any cooking.
I was just gonna ask you knew you knew where I was going. We're gonna go visit our in laws in uh where am I? God, I'm going to Cincinnati.
I'm going to Connecticut.
Oh okay, well you get to drive.
I have to fly.
So yeah, I kind of envy that it's the worst time of year to fly. Okay, So these figures that I'm going to cite right now are dated because did you know that on Friday? Every Friday, the USDA comes out with a turkey National Retail Report. And when I did the research for this segment, the retail report I was looking at was from Friday, November three, and it showed no change in the price of a turkey between
last year and this year. And then I pull it up again right now, and now I have the November tenth one up, and it shows that we actually are seeing turkeys a little bit more expensive this year than last year.
Interestingly, I thought there was a glut.
That's something I had heard.
But I know someone now, I know someone who has been talking turkey for more than twenty years. We love having him join the show because it's kind of a Thanksgiving tradition to check in with him. The CEO of the turkey company Butterbult, Jay Jandrin, is with us right now. He joins us on Zoom from Butterball headquarters in Garner, North Carolina. So Jay, good to have you back with us.
What are we getting wrong when it comes to the way we're looking at these turkey prices that come from the USDA here.
Well, we really have to get through the entire holiday selling season to get a true picture of that. And the reason for that is you've got a lot of heavy discounting and feature activity from the retailers during the holiday. So it's really a matter of timing exactly when we pull the data and once you get through the entire holidays so you see exactly what's sold in at what prices to get a real accurate picture. But overall you seek pricing, it's going to be about the same as it was last year.
How closely do you follow these reports from the USDA?
We do pay attention to those, of course, those are things that we look at. We evaluate the holiday with the sale through is like with the consumers purchase. What our retailers are telling us as far as their overall sales. So it goes into kind of a bigger picture for us to really look at next year and how we're going to how we're going to approach next year's holiday season.
I wondered if you could give us a little bit of insight in what retailers are telling you. I mean, we had our colleagues talking a little while ago, and one of them was mentioning that at one point he saw some free turkeys floating around some retailers, and I just didn't I couldn't get my head around that. But I mean, is that something that you're seeing at all?
You know, each retailer has their own strategy on how they go about that. If some do giveaway turkeys with a certain amount of sale in the basket, uh, some heavily discounted.
Uh.
It's really all over the board. And they're all, you know, looking for ways to help get that shopper into the door. So they'll try things new each year to see what works for them and and uh or sometimes if this feel the strategy is working for them, whatever that strategy is for their for their stories, they'll stick with it. So it's really it's all over the board. You know, we don't even know really up until the time of the prices are released as well on what they're going
to be. Uh so we're we're certainly paying attention to those prices and those retails as well.
So how long cord is Thanksgiving to your your business? I mean, give us numbers here, just like how many you know, what percentage of sales do you do during the month of November versus year round?
Well, it's certainly a big part of our business, but it's not it's not all of our business. We have over a billion dollars in sales, and this represents a good portion of that.
But what you know, I'm sorry, over fifty percent.
No, no, much less than fifty percent. But what we look at is particularly is how we sell versus other brands and other products in the case auring that period of time. And one of the important facts that we look at is or the measures we look at, is the butterballs. Every one of every three turkey sold in the retail outlets is a butter ball, so that that's
the number. Week a real close attention to what that market share is every year, how it goes up or down, and how tost throughout each each Holday season, So looking away from.
The holidays, I mean, just to help us get a better sense of how your business is out. Where's the big sources of demand for the rest of the year.
Well, it really comes in our CpG products, our consumer packaged goods, maybe in our ground turkey products that we sell throughout the year. We also do a lot of business and food service as well, so that's a big portion of our business may go to restaurant change or to food service distributors who are selling to mom and pop restaurants, and then we have a portion of our business at international as well, so it's pretty well diversified.
Well.
One of the reasons we like having you on around this time of year is not just to prepare us for cooking Thanksgiving turkeys, but also because you guys do a survey each year when it comes to understanding consumers for the holidays. The surveys have been a little interesting over the last few years because of the pandemic, but it seems like a theme this year and the data that you found at Butterball, we're sort of seeing this
return to pre pandemic activity. Talk to us a little bit about what you found.
We are and that's great news. Everyone is finally kind of over the COVID stuff. Then celebrations are back to what they were pre COVID, which is great. You've got more people in households now celebrating together, an opportunity for friends and family to get together, which is which is fantastic. So, you know, we're really happy to see that those levels come back. And the good news for us is that Turkey will be at the center of the table as
it has been year in and year out. Uh So, Turkey sales are expected to be very good this year. People don't break too much from tradition and they they're gonna they're going to celebrate like they did in the past. And uh and that means the Turkey will be will be on the table for sure.
Yeah, that's one thing I wanted to ask you, is how stable is Turkey is a centerpiece of Thanksgiving?
It is stable. It very very little year in the year out, and and uh, you know, we're we were really curious to see what happened during COVID as well, and what we found there is that sales were very very good. It was just a little bit different. We had less larger sized turkey sold and more smaller because the gatherings were smaller because people couldn't travel and get together like they would otherwise. This year, we're seeing more
people at the table. Uh, So we're expecting you will probably see a few more sales of larger turkeys this year.
How early do you have to plan for to anticipate demand? I mean it seems like you have to plan for this year ahead of time.
Well, that's exactly right. As soon as this holiday is done, we're producing product for the next holiday season. So it is a year round production cycle for us, and it gets a little tricky, you know, to try to understand whatever retaillers are going to be looking forward to year. We spend a lot of time talking with our customers and sharing the information that we have from the holidays, so they have a good expectation what they think they
need for the next year as well. So it really begins in earnest as soon as the Thanksgiving meal is over, we're producing more product and talking to our customers for next year's holiday already.
Jay, we got twenty seconds. Are you answering any of the phones at the Turkey talk line this year?
No?
No, I want to only leave that to the experts. Those folks certainly know what they're doing, and I'm going to let them do that.
But I did get a chance to visit with.
Some of them last week at an event we had in New York City with partnership with Bumble for Friends that we did and we had some of our talk line hosts there and it was a great up indish for stas Jay.
Always great to chat with you. Jajandran, Chief executive Officer, President of Butterball, joining us right here on a Bloomberg Business Week from Garner, North Carolina. Happy Thanksgiving Jay. If you're listening to Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty.
Well, bitcoin has just been on a tear. I'm actually pulling it up right now because you know, fortunately or unfortunately, it trades twenty four to seven. It's up for the last five days in a row. It's right now trading at thirty seven three hundred and eighty dollars. It's highest since May of twenty twenty two. And our next guest actually thinks that bitcoin still has more room to run, betting it'll increase fifty percent next year. John Wu is
president at Avilabs. The company is developing the blockchain project Avalanche, which it calls the quote fastest smart contracts platform in the blockchain industry and touts it as quote fast, low cost, and equo friendly. John joins us now for our weekly
look at crypto right here in the Interactive Broker's studio. So, John, before we get to the crypto market in your calls, I do want to touch on the Avid Labs news that we got this week, our own Bloomberg News team here reporting that aviad cut jobs by twelve percent this week in a restructuring. We should not it's just the latest layoffs to hit the cryptocurrency sector. What can you tell us about this restructuring.
Well, that's right, Tim, and you know that day was probably the toughest day in my four years at Ava Labs. But in the last four plus years, we've gone from ten people to two seventy before this twelve percent and the world has changed. Like any fast growing business, you have to assess where the market is, what kind of products you're building, and analyze it and then make the
necessary changes. So it was very tough. I call some of the those people my friends, but it was necessary and the team is leaner and I've got two hundred and almost forty people still that I have to think about.
So is this it for cuts the next year?
So it was a one time thing, that's it?
Okay?
Yeah?
I guess one thing though, if you could just pull back and talk a little bit about the market for bigwoinings so far this year. I mean, there's just been this resurgence. What's the Is that going to continue? Are we going to see a bitcoin etf Oh?
I mean that is obviously the rage. I mean, so first the surge in the bigcoon prices. Keiven, I'm an operator, but I used to be a fund manager, so I keep a lot of perspectives in mind. It was really two things. Recently, You've had the call it uninverting of the Yeld curve from a macro perspective. You had also announced that there will be less supply in treasury auction sales. So that created a backdrop from a macro perspective that was very positive for risk assets and crypto included in that.
But on the micro perspective, you had I think you called it on your own show exuberance for these ETF potentials. I think we're getting closer to the reality of one of those, and reality is I think a lot of these institutional managers are trying to get ahead in anticipation of that.
How are they doing that just by buying bitcoin? Or I mean, how do you get ahead of that?
Yeah, I mean I think they are buying Well, if you look at the volumes where they're coming from, if you are doing it on central egs exchanges like a coinbase, or are you doing in a decentral exchange which is on chain. Typically the crossover investors, the institutional hedge fund types, they do it on chain. So you can do it either through coinbase or you can do it through proxies.
Those are basically the gray scales product. Then you also have other proxy products out there, trust like that, and you have certain stocks that you can buy it. So if you look at that, you would say that it was more crossover traditional people getting ahead of the ETF announced.
How much do you think Grayscale is spending on marketing because you cannot go into an airport in the New York City area or the Washington DC area and not see an ad for GBTC.
Listen, when you have thirty billion in assets and you charge or what they charge, you have decent you know, marketing budget.
And do you think they're also doing marketing to get ahead of it, to gin up interest ahead of a spot bit QUINNYTF.
They have been very consistent in their marketing even before this. You know, part of their job is also to proselytize asset managers, and they've been very good at it. I know those guys well, they've been doing it for more than five six years.
One thing, just to go back to the you know, the outlook here, I mean you mentioned this link between a risk on appetite and demand. What's the chance that that risk on appetite is going to continue into next year? I mean we've certainly got a lot of macro feedback that that's not good, that that's not going to.
Be the case.
Yeah, I mean that is everything is likely, and it's a it's a volatile asset class. So anything can happen the short term, but if you look at it over the course of the year, bitcoin is actually a lot better than most TEX stocks. It's up something like two to three hundred somewhere between two and three hundred percent. Literally two or three hundred percent. You can't even tell you exactly unless you're really studying a day to day. So actually, over the longer period of time, it's still
doing relatively well. Can it go backwards, sure, and I wouldn't even be surprised. People have bought in anticipation in the news and then sell it on the news, so to speak of an ETF release. But just think about it.
Blackrock has ten trillion in assets, so you know, if one percent of their distribution picks up on this, that's you know, one hundred billion, one hundred billion, you know, the bitcoin ETF A Bitcoin MARKAB I think is about seven hundred ish, so it's like fourteen percent increased demand, and that's only one percent of just black Rock, ye Fidelity, of all the big players involved. So over time it'll still continue to have positive inflows.
You know, and then just continue on with the sort of sentiment around the market. At this point. Can you explain a little bit about how the implosion of FTX is landing in terms of getting new customers in people sticking with the asset class.
Well, obviously, when it happened the FTX scenario, it was litterally about a year ago. Everything changed, the market structure of the asset class really deteriorated, a lot of players left the system. I think what's good right now, a year later after the trial, is that people are saying, Okay, it's almost there where we can put this chapter behind
us and move forward. So I think the fact that we can put this chapter, or closer to putting this chapter behind us, we removed a lot of bad actors is all viewed positive going forward.
I saw last week I believe it was last week or the week before. Jennifer correct me if I'm wrong, if you know this, that we saw another person accused of being a bad actor in the crypto space by the Southern District of New York, Like this was an actual, you know complaint. Where are we in weeding everybody out?
I think we're farther along than people realize. There are bad actors. I mean this places. I've been in this space for a while, the space has been a peachy dish of genius experimentation and frauds and scams. Unfortunately, you know, regulatory rules are different in every part of the world and they're frankly uncertain, so it allows the bad actors to come in and try to take advantage of things.
But what is happening with this ETF potential? As well as again I'm an operator, Alva Labs is actually a
software services company helping people build on Avalanche. The partnerships and the business development relationships we're building with professionals tells me professionals are coming into the space, there's new leadership coming and it's frankly nice to see a blend of great technologists working with domain experts, whether that be traditional finance or the stuff we're working on in Asia with gaming companies or loyalty rewards programs.
Yeah, I mean, that's my next question for you, isn't it. It's the industry developing and more professionals coming in. What sort of the vision in terms of pursuing that with corporate partnerships?
So the vision for Ava Labs again software service, just like RedHat was for Linux, is to help people deploy things on top of Avalanche create real business use cases for traditional companies as well as crypto native companies, so giving them product market fit, getting them business use cases. Stable coins was a perfect example. I think that is the real first thing in blockchain or web three if
you will, that has established product market fit. Brevin Howard's research said there was over eleven trillion on chain settlement in stable coins in last year. That's the same volume, almost the same volume as Visa over the course of the year. Soiction you know for next year twenty twenty four is you're going to have uh, the same volume as both Visa and MasterCard in terms of stable coint settlements.
You guys are profitable over at a lab.
Yet Ava Labs is a profitable company.
Yes, uh going public? What's the plan.
We're a little bit away from going public, but we are profitable for it depends because the accounting rules a little bit tricker to be fair. But we are cash full of positive.
How about that cash flow positive? Okay, so not profitable but cash floposit. Okay, all right, Really appreciate you joining us. John Will, President of Ava Labs, the company developing the blockchain project Avalanche.
Marc A.
Journal.
How about you let me drive?
Oh no, no, no, no, honey, please, I'll douse.
I want to drive.
It's a good question.
This is good drive to the clothes pong comer peck Wellga Don on Bloomberg Radio.
All right, I'm certainly flying on this Friday afternoon. We got about eighteen minutes until the close of US equity market trading here in New York. You just heard the numbers from Charlie and Bill, but they are worth repeating. The Dow up more than one percent to reach thirty four seventy eight, the SB five hundred higher by more than one point five percent, in the nasdak hired by a full two percentage points. Really eager what our drive to the closed? Guest has to think about all this.
Rob Hayworth is senior investment strategy at US Bank Asset Management Group. Good to have you with us this afternoon, Rob, What do you make of this rally? The S and P five hundred up eight of the last nine days, Vecho Jpwell, not really successfully throwing water on it yesterday.
No, not quite yet. But I think some of the signs here, especially the strength and the Nasdaq, tells us that the market and investors are still worried about higher interest rates for longer. Right, they may be taking jpe out a little bit at his word, as they're looking for companies that are not going to be reliant on debt market funding for their future growth and probably looking to companies that have more natural growth embedded within them.
We're seeing more of a general rally today, but the leadership certainly speaks to that worry for us.
One thing I'm wondering is, you know, looking at some of the stocks that are struggling today, like Diagio, you're seeing some price sensitivity start to emerge among US consumers. I mean, what does that sort of tell you for the outlook for you know, these consumer facing names to continue to plow ahead strongly.
Yeah, we're very much looking ahead to retail sales next week.
I think the consumer remains a major question in all our outlooks, especially after we got consumer credit and the Senior Loan Officer Opinion survey this week, which pointed out that, you know, lending is down, and there's certainly some question as to what is the resilience left in the consumer after such strong data in Q three, Right, can they maintain it as they have to start paying back student loans and other things that I think, you know, as
we look ahead into some of the big box retailers in coming weeks, that's something we're going to be paying close attention to because the consumer is front and center for what's going to drive the economy in twenty twenty four.
I find that it can be just quite difficult to unpack consumer sentiment because if you add to the student loan costs, you've also got massive childcare bills that are going to be landing on people's doorsteps now that federal funding is dried up there, so there's so much pressure on consumer's wallets. But at the same time, the job market is incredibly healthy, so it's hard to know do consumers feel rich or do they feel poor?
Right?
Yeah, no, And the sentiment surveys have made that difficult. Certainly, if we just looked at today's University of Michigan consumer sentiment survey, you'd have to worry about that. But you know, they may be focused on things other than just what's going on in pocketbooks, because as you dig into the survey personal finances, where something consumers felt okay about it was more about the impact of higher cost of sorry, of higher borrowing costs, and of that inflation could worry
them in the future. So I think this is a little bit of a unique environment that we haven't seen in the last two decades in the economy. Where we're getting fairly robust wage growth numbers, we're not seeing a lot of layoffs. I mean, weekly jobless claims remained quite low at set two hundred and seventeen thousand this last week, so that labor market isn't quite as strong as it was,
but it remains fairly strong. And that's giving the consumers some resilience, even if they're not quite happy with where prices have been added.
But doesn't rob that also make the Fed's job that much.
Harder, Absolutely right, And I think that's why we're seeing and we saw a chair palll really emphasize holding rates higher for longer and looking harder and longer at the data. I think, you know, as we're seeing it. I mean that they could be on hold well into the middle of next year, depending upon how the economic data unwinds, and there's and there's room to see that. Right, We're still working through the adjustment to borrowing costs. I mean one of the things we look at is what is
the average mortgage rate for existing mortgages? Right, we know it's seven and a half eight percent for new mortgages.
I'm sorry, is it sub four?
Yeah?
Right?
Existing costs are sub four percent, So that gives current homeowners a lot of a lot of room to still manage their budget because their housing costs aren't going up quite as quickly as what it costs for new buyers. So so I think that means that there's a as as is always want to be said, monetary policy works with long and variable legs, and I think we're seeing that the variance is longer this time.
Well, I mean fed CHERP. Powell talked about this yesterday, Jennifer. He's talked about this id been over the last few months. A lot of the people who live in homes where they have thirty year mortgages that are sub four percent, they're not experiencing higher rates the same way that those first time home buyers are. So, like you said yesterday, those people are sort of exempt from that higher rate environment, at least when it comes to housing.
When it comes to housing, indeed, but then think about their car loans, think about their credit card loans and loans for any other kind of activity, and like you know, like we've already been talking about their student loans, so they are definitely feeling a pinch, but it's just not in the thing that's got the roof over their heads.
Yeah, what do you think about it as quick? Right? Yeah?
Sorry, go ahead.
No, No, we're seeing that in the corporate market as well, right where companies that have borrowed money and their average maturities are out ten years aren't having to come back to market quite as quickly as maybe some smaller companies where the term on their loan is three to five years, so they're having to bear those new costs a little quicker. And I think we're seeing that play out in the differentials within the equity market as well.
One thing I wanted to do if I could switch gears a little bit in our chat about the equity market, is to talk about your thoughts on the big rallies that we're seeing in some techniques like Microsoft. I mean, do you think that this is you know, the look like some crowded trades perhaps, and do you think that this is something that can continue or is it still you know, we were talking earlier in the show about the shift to greed and the marketers, there's still some legs there.
Yeah, I mean, having lived through a couple of market cycles, I'd say that we're not seeing valuations quite as stretched as we may have historically. And I think the constructive thing is this being this is being underpinned by earnings and actual growth in sales and revenue when we think about the push to cloud services, the push for artificial intelligence, the push for software as a service to increase and
enhance productivity. So I think the constructive thing is even though we've seen a tremendous rebound in twenty twenty three after a horrendous twenty twenty two, there's still long term room and long term growth in these markets because our economy and the innovation in our economy is being driven by technology and the distribution of technology throughout the all sectors in the economy.
Yeah, it's just going to be interesting to see moving forward, which of those companies are the ones that get that lion's share, Especially Jennifer, this year we've seen you know, the quote unquote Magnificent seven really lead the way when it comes to rally on y s and p five hundred in the Nasdaq as well. Rob Hayworth, Senior Investment Strategy director at us Bank Asset Management, joining us on Zoom from Seattle. The Big Thank You.
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