This is Bloomberg business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Masser and Tim stinebec from Bloomberg Radio.
We're going to stay with the economy. Get to a story that is among the most read on the Bloomberg about how it's frequently argued that once our economy gets past this burst of inflation, interest rates will in fact fall back to their pre pandemic lowse kind of just talking about that and perhaps go lower in the future. What if that is wrong? This is in a new
Bloomberg opinion column by Alison Schrager. She covers economics. She's a senior fellow at the Manhattan Institute, author of An Economist Walks Into a Brothel and Other Unexpected Places to Understand Risk. She's with us via zoom uh in New York City. Alison, I'm so glad you're here. Wanted to talk to you. Um, let's get to this assumption we were just talking about with Mike and Creed. There is a assumption that j you know, j Pal keep saying
we're gonna get back to two percent um. That's our backdrop, but it could be wrong. Yeah, I mean, I think there are two assumptions. One that inflation is going to go back to two person and to that there was this just sort of natural interest rate that was near zero and once we get through inflation, that's where interest rates are going to go back to. And you know that might not be true either. Well, talk to us about why you wrote this column and what you know.
You you sign a couple of different economists or macro economists. Olivia Blanchard ken rogue Off talked to us about some of the thinking about maybe why uh two percent isn't it and you you also write about natural interest rates. Yeah. So, I mean I've always been struck that whenever you read any big financial institutions reports their outlooks on the economy for years, they've been saying that interest rates are trending down because of an aging relation. It's always in the methods,
always in the world. Thank, it's always in every central bank, it's and banks, it's everywhere. And you know, I've always sort of like never quite understood why. I've understood the economic reasoning, but it never seemed quite right to me, But everyone would have jumped on this bandwagon because really, over the last thirty years, the population did age and interest rates went down, and everyone sort of just blamed
on an aging population. Um. But really, you know, it struck me most recently when Illevia Blanchard said, don't worry, interest rates will go back because the population is aging, and I just, I guess I felt compelled to dig
a little deeper. And it just so happened that kenn roll Goff had sent me this paper where he looked at interest rates going back seven hundred years and found that while interest rates have been trending down, not as much as we think, and actually the last fifteen years at least might not have been part of a trend.
It might have been an anomaly. And also when he did sort of more aggressions in a longer period of time, he didn't find that an aging population brings down interest rates at all, so in fact, the opposite might be true.
I also think about we talk a lot about and I'm assuming this comes on your radar as well, you know, just these kind of changing macro ideas, whether it's the pushback against globalization, you know, the move towards localization when it comes to manufacturing supply chains, you know, maybe continuing to be disrupted and being more local and what that does for costs, and move towards climate change alternative energy, like, all of this has some costs to what we are doing. Um,
is that part of it? Yeah? I mean, I think it's also wishful thinking that we have a lot of big physical plans and they rely on us having very low costs of borrowing. So I I you know, I think all these sort of sort of conventional macro wisdoms sort of get tied up together and we get maybe a little over invested in them. But you know, I think that the struggle for a macro economist is always how much can you separate out what cyclical and temporary
and what's really structurally changing? And that's always a challenge, I think for everyone. I also like this thing, you know where you talk about the demographics and an older population that if it ultimately is a younger is it a younger population that ultimately helps keep rates lower? Well, Um, we've been thinking that the argument has been for since
a couple of decades. Now, then older population lowers rates and it's partially this idea that, as you like, people anticipate this long retirement, so they save a lot, so you build up a huge stock of savings. And you know, interest rates are ultimately a function of supply and demand of savings, so the idea is that there's this huge
demand for savings and that effectively lowers interest rates. Um. Of course, Um, you know, it might not work out that way, even the I ME points out that, you know, we really haven't saved enough for retirement, and in fact, the government is probably gonna have to borrow a lot to fund our retirement. I mean, just look at the State of the Union the other day where Joe Biden was quite strident that we will never cut entitlements, and
I guess the Republicans agreed with that. So I mean, okay, I mean, if that's what we want to do, I mean, we're going to have to borrow to pay for people's retirements, and that puts more bonds on the market, which you think would increase interest rates. So um, I think we've just sort of been assuming that we would have this huge stock of savings to push down rates. But maybe that's not how it's going to work. You know, and you also just point out and just got about forty
seconds left here. I mean it's you say we should also be concerned because interest rates are largely function of risk in the market, not just some abstract natural rate. I mean, this is something we talk about about what the markets and what the traders are saying about kind of where rates land versus what we keep hearing from J. Powell,
and that certainly plays a partner thinking. Yeah, I mean, the risk premium is super important, and I think risk premium has got very low because inflation have been so stable. But you know if that cuts out of the bag now and you know we have a more volatile inflation environment, then there's a higher risk premium, certainly on bonds that are longer term, and that will mean rates are higher
for a long time too. Well, it's certainly something that's so relevant to the conversation right now, especially if you watch I'm looking at yields certainly take a little bit higher on this Thursday. Alison, thank you as always. Alison Schreeger. She's senior Fellow at the Manhattan Institute. She's a Bloomberg Opinion columnist. You can check her out on Twitter at Allison Schreeger. She's also, as we've mentioned, an author of an economist walks into a brothel, So UH love her
take on this. And this is, as I said, such a relevant conversation right now as we try to figure out ultimately where rates land. This is Bloomberg business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus Blombo Business Finance and tech news. The Bloomberg Business Week Podcast with Carol Masser and Tim stinebec from Bloomberg Radio. So what does it take for a big billionaire to see about a hundred billion dollars
in counting be lost from his empire? Help out a little research firm? Will That big billionaire we're talking about is Guanta Madonni, head of the Adani Group conglomerate in India.
The little research firm is Nate Anderson's Hindburg Research. Well, with more on that little research firm that came up with a big short on a donny, we got Bloomberg Business Week editor um Pat regne Or he's actually Finance editor Pat Regneer and Bloomberg News Wealth for Port and as unders Mill, and we caught up with them earlier and Papigan by setting the stage about who is exactly guantam Annady. He may not be a household name in the United States, but he is absolutely a household name
in India. Um. He's probably one of the most important businessmen in modern India. Um uh. Unders can talk about this a little bit, but almost anything that you might do in India, his businesses will touch your life. So he's built this enormous empire. UM. But a lot of the the the growth in its value really came during the global everything rally that began with the snap back
from the COVID crash. But it just kept going even through two You just like when you when you do a chart, you just see it just going like hockey stick. You know, this, this, this, this, this, so many right during the pandemic. Yeah. Um, but then but then also just two is like global markets were falling, this one's
still just going up, up, up and up. So uh, you know, he's he's become sort of this like very visible global success story, you know, and he starts, you know, you know, he starts coming on the radar of even people, you know outside of India. He may not be a consumer household name. But if you're like watching as Andrews does, uh, who's who's wealthy? Uh? He is now beginning to like, you know, top every league table that you can see. I mean, this was Asia's richest man, India's richest man.
He was one of the richest people in the world. Anders come on in on it because he was also a man who seemed to like his privacy and kind of stay out of the limelight. Talk to us a little bit more about his empire and then the allegations by Hindenburg. Yeah, he definitely has tended to stable of the radar until recent years. Um, and his empire really is, like that said, it's it's one that touches a lot
of citizens in India every day. He owns a series of infrastructure companies that that all hang together in when one conglomerate. So everything from coal mines to power plants, to power lines to um cements, production facilities and data storage centers. And he's getting into media and he owns food companies. So it's things that touch lots of Indian citizens every day. And he sort of came onto the
scene internationally. For those who don't necessarily watch India that closely really, like pet said, two and during the covid rally and in two and things started falling. He just really went off the church that shares of his companies just went up, up, up, and all of a sudden, he was the second richest man in the world in September last year, which was just quite surprising to see.
The as the rise was was so incredibly it was just so incredibly baffling, especially for infrastructure companies, which don't really tend to have those kinds of rich valuations. And that piqued a lot of interest among people who said, this just doesn't make sense. It's too good to be true. These financials just can't be they can't be real. And there's been whispers and news reports in India for quite a few years about various aspects of the finances of
his companies, um but nothing really had happened. But that obviously changed a couple of weeks ago when Hindenberg Research put out their honor Page note sort of aggregating a lot of what I've been out there already and then dove deeper into certain aspects. And most people in India, i think it's safe to say, expected that nothing would
really happen. But the shares of his companies started falling, and then they just fell and fell and fell, and the company is look at Lunia value has been about cut in half since in the Birst report came out. Andrews we uh as we were preparing this story and
it comes it comes through so well. In your piece, UM talked a lot about kind of a culture clash between UM Corporate India and UM sort of it's suddenly it got big enough that it met the markets and the end of the way that people operate in uh New York and London and other financial markets, and it suddenly met this kind of brass knuckles culture of shorts UM, And Uh, can you just talk a little bit about sort of like how how that, how that, how that's
played out. Yeah. So one of the unique aspects with kut Madonni's group of companies is that it's it's built sort of like a traditional Indian family conglomerate, which is a series of businesses that a family that it's sort of a a group of businesses that a family builds over time, and they tied together sometimes in some ways, and and you can help support each other financially when needed, and you can move personnel between them. Um And this has been it has a long storied history in the
Indian business culture. In the United States, they used to be common back in the day. They are much less so now. And one thing that people that I talked to ahead of writing the story pointed out to me was that within these conglomerates, historically there has tended to be quite a bit of really related party transactions and money being moved between different parts of of the conglomerate.
And sometimes that might have been done in ways that others would not pick up on, or that security lawyers maybe would frown upon because it was sort of a family affair. And um and that's something that some people are told to stressed that here you have a certain culture of doing business, a certain way of doing business that has worked extremely well for the country over a really long time that is now clashing with how things are done in the financial centers of capital like New
York and London, where the culture is very different. Most companies tend to have a really broad shareholder base and
not be controlled by a family. Boards tend to not be stacked by family members, Executive roles tend to not be stacked by family members UM and a lot of people in India are feeling a sense of frustration, I think because they feel like people in the West just look at this kind of corporate structure and think that there's something inherently suspicious with it, when in reality it's it's just a it's a slightly different way of just looking at how business is done and how priorities are set.
The other thing I just want to us, and we just have about a minute left here is I think another layer that you do so well when you're reporting is the connection between India, the country, India, the Prime
Minister and a Donnie Right, the relationship just seems very close. Yes, Donnie and Prime Minister and Rundromody have known each other for twenty years and people that knowing me a well, they say that these two are are quite close and their goals are aligned and they have benefited from each other. And in that vein, Donnie has especially in recent years taking on a really strong UM profile of trying to link himself and his company with the future UM and
the success of India. And that's also something that he's pushed really hard on. Now that the company is under attacked by the New York short seller that last voice Bloomberg News Wealth reporter on under Melon along with Bloomberg Business Week Markets and Finance editor Pat Ragneer. Now, this story is the cover story of Bloomberg Business Week. We caught up with them a little bit earlier for our weekend broadcast. UM, but really gets into what Gautamadanni the
tough year he's certainly having. And we continuen to see the pressure in UH shares of the Donni empire overnight again, so it continues to be certainly on investors radar. UM. Coming up, we're gonna more on the story, including the little research company that came up with that big short on a Donnie. That's coming up next with our Joel Weber and Ed Ludlow. We're talking about the research firm that is run by Nate Anderson and his Hindenburg Research.
You might remember Nicola when he ran after that company. UM, so it's interesting to hear about the fourner pages plus if you will, that he put together on a Donnie. You're listening to the Bloomberg Business Week Podcast. Catch us live week days from two to five pm Eastern on Bloomberg Radio, The Bloomberg Business A B and you too. You can also listen live to our flagship New York station Just Say Alexa play Bloomberg, E Love and Dierdi
well As. We just heard from pat Rick near Bloomberg and Under's Melon his cover stories about billionaire Guatamadnni having a rough start to three. The Indian industrial tycoon's empire has taken a roughly a hundred billion dollar hit in a matter of days following accusations of financial wrongdoing from
an American activist short seller. We wanted to share more on that activist short seller, and that is Nate Anderson and as Hindenburg Research with more on that in a story in the upcoming new issue of Bloomberg Business Week magazine out on newsstands. On the Bloomberg and Bloomberg dot COM's last Business Business Week, Let's bring in Bloomberg Business Week editor Joel Webber and Bloomberg Technology co host ed Ludlow Joel here in our Bloomberg Into Factor Broker studio
ed in our nine sixties studio in San Francisco. All right, Joel, so we did hear from Patton Andrews. We just played that for our audience. Um, but this story, it's an interesting one. Yes, So we had that that main bar sort of in motion, and you know, the other big question and all of this was more about the short, and so we reached out to ed because well, you know, as ed knows, um, you know very well Nicola story, um,
which was a huge one. And when that he was instrumental in in our coverage of uh, Nate Anderson figured into that, and you know, everything was kind of quiet, and then everybody was like, oh my gosh, Nate Anderson and Hindburg is suddenly became the story of the moment with this short on the Donning group. Um, there's still kind of shrouded in mystery, but are tasked at Edwards sort of figure out as much as you can figure out. So, Edward,
what were you able to figure out? Yeah? You know, I'm hesitant to call it a David and Goliath story, right, but that's kind of what it's like. You know, Hindenberg researches this sort of merry how about I do it?
And then you don't have to do it. So this is a great Devid Glaire's story, right, go ahead, Well, it's just gonna say you know, it's this merry band of fewer than a dozen analysts journalists, and we know very little about them, and yet they take on Asia's what was Asia's richest man at the time, in this massive conglomerate, and you know, to the outside world, they're short sellers right there in it to make a profit, as all short sellers are when the value of a
security tied to the company they targets declined. But you know it's more than that, you know, they see themselves as being this kind of really important function of a healthy financial market, which is to make investors and regulators aware of what they allege is a fraud. And then once they've done their report and the market's done its thing, they leave us in the media to cover the story and leave the market to make their own conclusion, because
that is what an activist short seller is to their mind. Well, and you know, it's not just about unveiling you know, possible fraud or what have you. In you know, various situations are various companies, and again these are allegations because the company has come out and said very differently and come out with its own I think four hundred page report as a take that um. Having said that, tell us about the dynamics in terms of who trades on
this ultimately, because people do make money off of this. Yeah, so I think the mechanics of Hindenburg are interesting. You know, put the sort of loftier goals to one side. Their business model is based on making profit from a short and actually another part of their business model is eventually making money from whistleblower payouts. But my understanding is they've
never actually been paid one. Um. But what's so interesting here is that in the past Hindenberg basically makes deal with a group of passive investors or one single big passive investor and says, hey, if you take on the short position on our behalf, we will let you look at the research before we publish it, and in exchange, you give us Hindenburg a share of the profits. That way, Hindenburg doesn't have to kind of reach into its own pockets,
and it's kind of a small group anyway. Right. But again, this is the biggest question, and you know, these stories are actually some of the most fascinating where you don't find the answer. What the market wants to know right now is is this short position closed or is it still open. We don't know the answer to that. And the reason it's important is because if they ride the shot or the way to a lower value, there will
be more profitable. But now the markets trading on uncertainty in both directions, and that's not just in equities markets. But as we've learned in this case, all we know about the short is that it was in dollar bonds and non Indian listed derivatives tied to those companies within
the Adane group. So it's a fascinating market dynamic where the market doesn't know so and you know, obviously will be choosing everything that we can to figure out you know, when, when and if it if it's open or a closure or whatever. It's just ongoing mystery, what other what other kind of mysteries remain here? Ed that that's your way boss of saying, nudge, nudge, get on with it. We can wrap. Yeah, yeah, yeah. Look. So so core to the Danny story was like, what is the goal here?
You know, India is a very different market to the ones that Hindenberg's targeted in the past. They've largely been small US listed companies that Hindenberg has gone after the regulatory situation in India is completely different. It's not clear what kind of action could or hypothetically will be taken against a DANI. So what is it that Hindenberg's trying to achieve the FPO or that the follow on primary offering was scrapped, their their activity in the bond market
or debt markets has been scrapped. Is that satisfaction enough for Hindenberg? When it goes back to the core question in the story, why is it that Hindenberg does what it does? And the answer you get and again is a very lofty goal. We expose fraud because it's the right thing to do and it's part of the healthy functioning financial market globally. So alright, so these activists, short sellers, researchers, they bring attention to companies that might not necessarily beyond
anybody's radar. At the same time, sometimes the short sellers are these activists um that are doing the research, they actually become the target. And I'm thinking about Carson Block like it's I always feel like there's a love hate relationship with anybody who's looking to either talk down or short a name. Yes, so there has been a large
body of academic research in this area. And there is an active d J investigation which looks at some short sellers, some of them well known, such as Muddy Waters and Carson Block. What I would say is a they declined to comment for this story, and and that investigation is one that Bloomberg has previously reported. A source has told me that Hindenberg have never been approached by US regulators or agencies, at least with regards to that existing UH
investing gaistion. And again I go back to the other part of the business model. Longer term, Hindenberg really hope that actually these agencies pay them whistleblower rewards for the work that they're doing. So it's a strange paradox that we discussed in the story. But the accusation broadly from academia through to to the investigations pending, is that some of these short sellers hypothetically could be engaged in market manipulation. And that's the negative side of the story. That there's
more to be reported. On the positive side is if you do this right, it makes you a lot of money. There is always do sides. Alright, Lovela, thank you so much, co host of Bloomberg Technology at Bloomberg News, in our nine sixties studio in San Francisco. Thanks to the editor of Bloomberg Business Week magazine, Joel Webber, this story Anadani
the cover story this week. This is Bloomberg business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus bloom or Business finance and tech news. The bloom Bird Business Week Podcast with Carol
Messer and Tim Stinevic from Bloomberg Radio. Well, we've definitely seen shares of the Walt Disney Company take a little bit of a round trip, if you will, because they definitely rallied big time in the after hours last night, falling their earnings and falling news of a restructuring and
five and a half billion dollars in costs. And then, of course today we had the news that the activist investor who's been kind of pushing for some changes at Disney come out and say, I'm done with my proxy fight. So let's make sense of it, because we've got the perfect voice. Lucas Shaw is entertainment reporter here at Bloomberg News. He joins us from Los Angeles. Lucas, good to have you here with us. A lot going on when it
comes to Disney. I feel like in the last month or so, and certainly in the last day or so, Um, what jumps out for you? I mean, to me, the biggest thing was was igers comments on the company's earnings called yesterday, just because he threw so many different things at people in terms of his plans for Disney, and he talked about having to to fire about seven thousand workers.
He restructured the company to put kind of his his content people in charge of their businesses, reversing a decision by Bob Jpeck, who is both his predecessor and was his successor because remember Bob Iker was with CEO for a long time before him. Um, and then talked about you know everything from them maybe offering too many promotions and not charging enough to cutting back on general entertainment spending.
I mean, there was I looked at the transcript yesterday and there was a paragraph whereas a reporter, I'm I'm sort of overwhelmed, but also drooling because there's like six different things he's talking about that are clear strategy shifts at the company. So that's what jumps out, Because look, the Pelts thing, I always thought it was a weird timing for for for Peltz's move, and a lot of the things that I did today, which Pelts is treating sort of as some grand victory, I think are things
that he would have done whether or not Pelts was agitating. Interesting. Um, were you surprised that Pelts backed off? I? Um, I guess I'm a little. I'm a little surprised at how how little it took. Um. But I was, look, he Pelts started to, you know, get involved here when when Shapeck was the leader. Um, and you know some of it as I think he saw a clear business opportunity. While Disney Company one of the great companies in the world,
you know, the biggest entertainment company. Uh, it's stock is down. People are just are sort of worried about it. But I think most people felt like long term, Disney would figure it out and be fine. And so if you're a savvy investor, which Nelson Pelts obviously is, you get in when the stocks low, you make a bunch of noise,
the stock goes back up, and you gotta win. Um. He He also seemed there seemed to be some personal motivations He's close with, like Pearl Mutter, who who uh you know, is very involved and sold Marvel to Disney. Uh and then kind of got pushed to the side. So he doesn't like Bob. Iger doesn't really like Bob Shapeck.
There's a political dynamic to it because Nelson Peltz has been is sort of involved in conservative politics, and people were seeing Disney as as kin of to quote unquote woke after this this kind of fight with the state in Florida. Um. And so I guess the fact that all he needed was to come in and say, hey, this is what I'm doing and it's uh and and
back down. Um. But he had chosen to wage this fight like right as the power changed, which is why I thought it was weird timing because it's like, shouldn't you wait to see what Iger's plan is before you say you don't agree with it? So we look at Disney, I mean, what's the what's the weak part of the company, what's the strength? Because I know years ago it was all about ESPN, right, and then it went through like
oh everybody kind of had a hate on for ESPN. Uh, and yet that is going to be one of the one of the three main units. So where the strengths in Disney. What really matters to the top and bottom lines. Where the weakness, I mean the strength is one of the strengths right now is certainly the theme parks. That's the big reason that they had good numbers his most
recent quarter. The attendance at the parks is really solid. Um. The weakness and strength beyond that are I have an open question, right you know, we know that the cable networks are in decline, and so the answer to that is supposed to be the streaming services Disney Plus, Hulu, ESPN plus. But those those streaming services right now lose a bunch of money, um, and so our Hulu doesn't. But but Disney Plus does, I assume ESPN Plus depending
on how Disney chooses to account it does. Disney is having to figure out how to manage that transition from cable to streaming. They've done so more effectively than most of the other media companies, but now they have to prove there's a good business in it. What do you make of and you guys, your story, uh that you put out about Disney exploring more licensing of films TV series to arrivals. Is this a smart idea? Is this like something that actually moves the needle when it comes
to revenue generation profits. Yeah. Look, I think these companies in trying to replicate Netflix, um, you know, went a little too far where they said, if we're going to be like Netflix, we should do everything like them. Um. But what they didn't realize is, you know, well, Netflix doesn't release movies in beat is because Netflix doesn't have big franchises that will guarantee that people come to theaters.
Netflix doesn't license its titles out to competitors in part because it doesn't have this deep catalog that is as valuable and can can give to others. And so I think it does make sense if you're Disney and you're looking at you know, they bought the TV studio from Fox that's got tons of shows in the library. Some of those may be useful to Disney Plus or to Hulu. But if they can get some other company to pay them for shows that people probably aren't gonna watch very much,
you know, that's good business. Bob Iger knows his company so well, right, really helped build it out, you know, whether it's the Pixar side, the Marvel side, A lot of different things here. Um, I wonder how you think about how long he might be at the company, how much time investors will give him. I mean, Pelts is backed off, but investors are gonna be watching very closely. Yeah, I mean I think investors are are are they've bought in right, you know when when I came back, the
stock went up. Generally there's a lot of faith in him. Some of it all the hand on the performance of the company. Of course, if if if the company's doesn't do well in the next few quarters, then people will agitate. But look, Iger has has delineated a very a relatively clear strategy. I would say he still has to fill in a lot of particulars um and it's a pretty seat. There's some pretty significant changes, So I think he's you got to give him at least the the rest of
the year to figure it out. But the truth is is there's still some very big questions hanging over the company. Do that what do they do with THEESPN? You know, they're not going to break it out in reporting. That leads some to believe that they're going to want to spin it out or sell it to someone. What do they do about the thirty percent stake in Hulu that Comcast has. Bob Iger was on TV this morning saying, you know, I haven't committed to keeping it or buying Comcast.
They're clearly in this negotiation with them where they're going to sort of have this staring contest, and so, you know, I think he's he's certainly got the confidence of investors right now, but he needs to provide some some additional clarity to what his big picture strategic plans are Lucas. As you know, Disney has said it has no plans to spin off ESPN, but you're right, like separating it out really is going to give us a clear picture of what this business is all about. Having said that,
I mean, what is a Disney without ESPN? Just fine? I think it's a general entertainment company. If they do that right, the calculation would be sports right now is sports is a rental business. You don't own it like you do you own a Marvel or lucasfilm. The cost of sports keeps going way up, and while it seems like companies have sort of figured out how to make kind of transfer the entertainment part of the cable bundle to the Internet, the sports part is much more difficult.
Because sports always you made money by having everybody pay for it, even though only a certain subset of the people care, and the fees on a per per cable customer basis are incredibly high. And so does that that business model and a streaming landscape mean that you you charge a ton more? Doesn't mean that you sell individual games.
Nobody's quite cracked that. So I look, I personally think that sports is incredibly valuable, and Disney may want to keep ESPN, but there's a kind of a loud and growing chorus that thinks if Disney could could sell it, get a bunch of money, used that to invest in a general entertainment streaming service that can kind of compete head to head with Netflix, they'd be better off. I was gonna say, there's some other streaming services that might
be interested in sports in general. Having said that, lucause if you were sitting down with Bob Biger right now, what would be the two top questions you'd want to ask him? Um am I assuming that he's that he's gonna be like totally honest, because if I think if if he's gonna if he's gonna give me, I would never say he's dishonest. No, But like, look, I can ask him, what is your plan for Hulu? Right That's one of the biggest questions I have. But I don't
think he's gonna tell me that right now. Fair enough, so I don't know. But but like to that end, I might say, you know, do you you talk a lot about general entertainment? Do you see Disney as a general entertainment company or sports an integral part of your future? And you know, I'm sure he'll find a very delicate way to say, we love sports, but you know, we're not taking anything off the table something like that. Yeah, okay, that's fair. That sounds like a good idea. Um, Lucas,
thank you so much, really appreciate it. U our Lucas Shaw giving us the lowdown on Disney a lot of news in the last twenty four hours. Lucas, of course, is entertainment reporter here at Bloomberg News, joining us from Los Angeles. Find him on Twitter at Lucas Underscore Shaw. You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Easter on Bloomberg Radio, the Bloomberg Business Band. You too. You can also listen
live to our flagship New York station. Just say Alexa play Bloomberg E, Love and Dirty. I'm room journal. Yeah, but you let me drive? Oh no, no, nor leave, I'll revels. I want to dry. Good question, which is
the Drive to the Clothes on Bloomberg Radio? All right, everybody, just about seventeen minutes left in today's trading session, and it's definitely a risk off tradel though as you heard from Gina Martin Adams a little bit earlier, it's not like you're seeing investors, certainly on the equity side of things, run into kind of all of those safer plays, if you will. So that's kind of an interesting take on it.
Having said that, we are just off our loads, as you just heard from Charlie, but still down about one point one percent on the NAS dec and in particular, it's what's going on when it comes to yields. We've got that to you're just rolling over, but still at four point forty nine. So let's see what our Drive to the Closed guest has to say about it all.
Sylvia Jablonski is back with us. She's CEO and Chief Investment Officer at Defiance E T f She joins us once again on the phone in New York City, Sylvia. Nice to have you back here on Bloomberg on a day where the tone is a little bit from what we've seen so far here in three. How do you explain the trade today where we're seeing equities lower and we're seeing bonds lower and yields moving up. Hi, Carol,
great to speak with you again. Well, I think, yeah, I think I think a lot of this just has to do with the FED and the different UM FED chairs out there, you know, sort of singing their song about higher for longer UM. I think the market came out with a strong start. Investors were really starting to think about the idea of a look through that the FED would be close to finished raising rates. And you know, once they sort of hit that that terminal rate around
five percent, Okay, we're there. It's going to be higher for longer, but it's sort of priced in and and you know, it seems like some confidence came back into the hands of UM investors when they when they sort of purchased their equities. But you know, we see stocks sort of retreating, and I think that now there's this sense of worry about recession signals kind of flash in because hawk ish feds speak from you know, the various presidents are talking about not being done, perhaps having to
go even higher. And then you know, you see all these options bets and things like that targeting six percent and higher peak rates, and I think that that's really what's spooking the market now and and impacting both equities and six may come. Does the market have it right?
You know? I think that if we if we look at the data and the bigger macro pictures, there's a lot of news in favor of thinking that what Jerome Pale sort of said in the message that he gave in terms of being a little bit more balanced, that there has been some progress. It's probably more true than than sort of the fearmongering. I think that we're hearing over the last day or two, we're seeing good news
and good data around inflation falling. Um we are starting to see a lot of layoffs and things like that. I know the job number was particularly hot, but when you see these, you know, constant reminders that jobs are starting to fall off, that's eventually going to play out. Paine Sumer state things have sort of um loosened a little bit. You're starting to see UM earnings fall about ten percent, you know, sort of year over years, you kind of had dots you dropped there. So I do
think that last year the market got hit. I think that there's been a rolling recession in various sectors, and I think we're probably closer to the end of this than we are to the beginning of a profession. That's my take on it. Hey, what do you make of indicators like UM The latest survey from the American Association of Individual Investors which showed that US retail investors turned
bullish for the first time since April. So that's pretty significant, with the bull bear spread rising to twelve point five from negative four point seven a week earlier, and the percentage of investors with a bearish view over the next six months falling to the lowest in November. Markets often see that as a contrarian indicator and saying, well, wait a minute, we're too We're too all in at this point.
But having said that, that sentiment is that tell you that there is, though possibly the opportunity that investors will see pullbacks as an opportunity need to come in the market. That is a trade that we have seen, you know, certainly over the last couple of years. Yeah, and that's a great point, you know, I I definitely take to
the point about that being a contririor indicator. But if you think about, you know, just five minutes ago, that report was absolutely flipped, right, everybody was just an absolute bear and you were sort of crazy by equities. But I think for those of us who have investment here beyond, you want to dollar class average in And the truth is the market may pull back a little bit, it
may not. I expect to see this rangebound activity until we have more clarity on what the what the FED will do and you know, sort of how long I'll stay there. But I do think that it's worth looking through at this point because I don't think it's going to be you know, a significantly higher amount of reduction to the liquidity and the markets that is coming our way. I think it's mostly done. I think earnings are probably close to their their their worst this time around, and
actually they haven't you know, sort of been that bad. Right, It's been ho hum, but it hasn't been the complete distatch we're expecting. So to answer your question more specifically, the one thing about that survey that is sort of in line with what we see in the market is that people are actually starting to come in and buy the dip again. So buying the dip might just be a theme again for finally. All right, So if you're going to come in and buy the dip, what do
you buy? What would you buy? Yeah, I mean I think it's it's great to diversify portfolios, But all of the tech socks, of the semiconductor stocks stack up just absolutely hammered last year. You know, they've they've caught some of their returns back, but not even not even to the half of the point at this stage. It is really remarkable. You know. I have to say every time I pull up a name that is rallied, I was looking at some of the names that are going to report,
you know, after the closing bell. Expedia is up thirty four percent year to day. It's still down from its high back in early two So you have to have that perspective. But anyway, go ahead, what would you buy? Yeah? No, absolutely, And that's that's exactly my perspective. Right. So, although they've brought up into the year a little bit, you know, AI is the biggest theme of the year for example,
and it's actually becoming a practical, practical, investable technology. So I think if you look at you know, on the computing related stocks, if you look at the AI related stocks, you have names like na VideA, A and D the tops that my conductors that power this stuff, um, IBM, Google, Microsoft, the companies that will have the supercomputers that can you know, process data and make it more efficient for AI to
actually work. And So even though Google stumble this week, um with because because they pulled that dramatically over the last couple of days, they did, but I think that they're you know, their biggest fail was that they didn't ask the right question that they knew, you know, was sort of superior to the other chatbots, right, and there's there's slabs with all of these things, and I think that, um, you know, Google just kind of put themselves in a
bad spot. But what you'll see, I think with the development of machine learning and quantum computing, which Google is you know, sort of by far one of the leaders in once they source that technology to improve their a I bought, you know, I think that they're going to be leaders in this space. I mean, they got some bad press on this. I would actually look to buy Google on that a percent pullback. I just think that
they're really going to day with this. They're sort of known for, um, you know, being leaders in this type of technology and development. We're really leave it on that note. What a great conversation, Sylvia. Thank you so much, Sylvia Jablonsky. Love that we can talk to names chief executive officer and Chief investment Officer Defiance et F joining us on the phone in New York City. This is the Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else
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