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