Disney Poised To Explode At End Of Year: Porter Bibb

most dependable businesses, came in a little bit short. To get the latest on what's going on at Disney as they make this big pivot from or to streaming. We welcome our good friend Porter Bibby's, a managing partner at Media Tech Capital Partenacy drains us here in our Bloomberg Interactive broker studio support a kind of an ugly quarter last night, stocks trading off. What do you what's the

key takeaway for you? Well, the market hadn't digested the investment, uh that that Disney has made not only the seventy three billion dollars that they used to buy Fox, but five billion for the part of Hulu that Comcast didn't known, and they've been spending like drunken sailors getting Disney Plus and ESPN Plus organized as streaming sites, and they will they will continue to spend. UH about a half a billion dollars will go into Disney Plus between now and

November twelve, when it actually launches. I'm struggling to understand not the streaming side of this, but really the theme parks, the idea that the Star Wars Uh Galaxy's Edge didn't didn't fly, and what does this say about their ability

to predict audiences and revenues in this area. I think what they didn't predicted Disney who was the crowds because that Star Wars Uh New theme park was heavily, heavily promoted, and it was over overbooked and jammed, and people just decided, I'm not taking my kids to this thing that I can't get into. It's it's an all day event and it's really spectacular and it will smooth things out over over. Of course, I want to make sure that I understand that.

In other words, you're saying that because it was so popular and because people people didn't get tickets that it sort of diminished demand. But do you think that they didn't inaccurately predict the enthusiasm for it. That's that's exactly right. And I think you're going to see with with the new Star Wars film coming out at Christmas time again a huge new surge of interest in that the theme parks and and the merchandise are the biggest revenue and

profit drivers at Disney right now. They represent more than of Disney's total revenue. Uh. They were down very marginally a couple of points for this last quarter, but that's because they had to invest in building the Star Wars park, and they're suffering modestly in China and in Hong Kong with the protests over there. But those are temporary setbacks and Disney will will just go exploding at the end of this year. With with the streaming networks that they're launching.

One of the things that nobody talks about ESPN is best position with their live sports coverage and the hundreds of millions billions that they've sunk into sports rights to be the platform for online betting, which is coming. There are nine states that have legalized online betting now. UH,

by the end of after the election. I think you're gonna see twenty five or thirty States going because it's found revenue for them, and it beats the pants off of the state lotteries and the other other revenue generators that States has. You go, You go to the Magic Kingdom and just lay down a bet. You know, I don't know what snow white exactly on the next game tonight, so um so Porter. One of the big announcements I thought from last night's results was the company kind of

announced a bundle streaming product. They're going to be putting all this all their streaming products together for one price. We can tell us about that. That was a blockbuster move by Bob Bob iger Uh to counter the falloff in in the share price that his modest earnings miss Uh created twelve nine for Hulu, Disney Plus, and the

ESPN Plus. It's an unstoppable, untouchable idea, and the question is how long can they keep it because they're not going to make any profit with that kind of a price, and there there's no advertising, no um dual revenue stream that that any of those except Hulu has a modest service that you can buy, pay pay less and get some advertising. But even then they've cut the advertising way back, So Disney shows down four point seven percent, a pretty

fierce response to the disappointing earnings. I'm just wondering, and just to give you a sense, at one point that was the biggest drop in the in the share since two thousand and fifteen. Porter, I guess what is going to uh sort of turn around the impression here because it seems like the disappointment was in the revenues. But you know with the package that they offered, if the bundling services of a bunch of different things, that seems

really competitive. I mean, the whole Netflix killer story is still on the table. So Disney is not a Netflix killer. Netflix is going to be around, thank you very much. The economic model is not sustainable, and someone at some point in the game is going when the when the share price comes down to a reasonable level, is going to pick them up. There there's no shortage of of content less buyers waiting right now. You have CBS, veh Coom coming together today or tomorrow. Um for Eizen wanted

them a year ago. They're going to be first in line knocking the doors down. People don't talk about it, but Microsoft needs content. They have eighty million Xbox, Uh, Internet connections and just games on the Xbox. But why can't they show all of the content that movies and television can create? Then then Apple, Oprah and Steven Spielberg are not enough to carry Apple into the streaming wars and do it, do it well, and do it successfully,

so there's there's no shortage of buyers. Um Disney, unfortunately for the rest of them, has almost no cost of content because they have such a spectacular archive and they're putting the igor Is announced that they're putting all of their brand new movies, the The Avengers, the new Star Wars movie this Christmas, the new Frozen. Uh, those are blockbusters that cost them nothing to put on the streamings. So before you mentioned the costs associated with streaming and

the company's disclose that won't break even. I guess until fiscal still several years away. Do you think investors are gonna be that patient? Well, and it's a building business. We're seeing a cataclysmic transition of media from legacy media cable and satellite to streaming and people who want to get in. You have to realize Disney. Disney is up

twenty seven percent since January. They dropped four percent yesterday and today, but there's still a lot of latitude there, and investors realized that the assets that they have are almost untouchable in the entertainment world. Certainly, if you have a child, I'll just say that. But Portabb, thank you so much for being with us. Portabb, Managing partner at

Media Tech Capital Partners. It is time to check in with Bloomberg Opinion, and luckily for us, we've got a Bloomberg Opinion contributor who is stellar when it comes to all things in markets, but particularly fixed income, Jim Bianco, President and founder of Bianco Research, coming to us from Chicago. Jim, the real story today, this week, this year, for the past ten years, has been bonds and bond yields heading to record loads today around the world, near record lows

in the United States. When you look at the thirty year yield, and I'm wondering, why is this now causing concern rather than support for risk assets? You know, you're right that we are very close to We're like five basis points away from a record low now in the thirty year. And I think that the concern is in a unique situation that I don't remember ever seeing we've had one rate cut, the market over the next year is pricing in four more rate cuts, a total of

five rate cuts. I can't find a single economist or a Federal Reserve official that thinks that the FED should or the FED should cut rates five times between the last one and four more coming. So the market itself is an outlier. The market is seeing problems down the road.

It is trying to communicate that through the inverted yield curve, through the plunge in yields, and it seems like the economic community in the FETE is not listening, and it's getting worried that since they're not listening, I have to not price in an even worse outcome. And we're caught in this spiral now with interest rates falling and falling and falling. So, Jim, how surprised were you to wake up this morning and see that we had rake cuts

coming out of New Zealand and Indian and Thailand. Surprised and that all three of them were more than expected. There was an expectation that there'd be a cut in India, but it was larger than expected. There was not a for Thailand, and they did cut as well in New Zealand cut by fifty basis points, which is only done during the global financial crisis in the christ Church earthquake, So those were big deals, so it was very surprising.

Do you think that this is signaling that there is more of a real possibility of a near term recession globally and in the US, because that certainly seems to be the indication of yield curves around the world. Yeah, I think so. Um, if you look at the data that is coming out of Europe, especially today one of the big wirehouses UH describe some of the German data that came out today if disastrous. It's been such a bad number, and we it matters global growth is slowing down.

It matters for the US. We cannot ignore it, and that is weighing on us as well too. It's obviously weighing on the rest of the world, which is why we're now approaching outside of the US half of the sovereign bonds in the world are now negative outside of the US. So, Jim, you mentioned that the FED or the markets are discounting four more rate cuts by the FED, although the data UH may not support that. What do you actually think the FED is going to do? They are,

in fact, you know, as they say, data dependent. Yeah, I think they're going to cut rates in September. The problem is is that they think that they're pretty sure that they're going to cut by twenty five, and there's some argument that maybe, you know, there might be something that comes along that they don't cut. The market's pretty sure they're gonna cut by fifty because it's now almost at a chance the way it's priced in that there will be a fifty basis point cut. So this will

be the game will play. The Fed will follow you, we'll give you great cuts, but the market will be screaming, no, you're gonna give us more than you think and faster than you think. So we're all headed in the same direction. It's just the speed at which the market thinks to fet should go in which the Fed wants to go. At Jim, here's what I'm really struggling with. I'm looking at break even rates, sort of a gauge of inflation over the next five to ten years, or at least

where people are pricing it in. It's come down, but it's not at the lowest point since the financial crisis. The way that bond that that that the yield curves are and I'm struggling to understand what the implication here is. Real yields just are going to continue to go lower even if growth grinds along. I mean, is that the main takeaway here? Yes, and there is a nuance we need to put into those market measures of inflation expectation

to break even rates. If you go back over the last several years and look at all of the times that it was lower, you know, February of two thousand sixteen, two thousand twelve and example, and you look at crude oil, crude oil was down or more off of its high. Crude oil is down, but nowhere near that right now. So what's driving these break evens lower, these expectations of lower inflation is not the energy market falling apart, but a belief that non energy inflation, which is core inflation,

is coming down. That's what I think is really worrisome. This is not two thousand and sixteen when the break even s fell a lot more because crude I went from a hundred dollars to twenty six dollars and just wiped out the energy part of the equation. This is everything else that seems to be falling. Jim Bianco, thank you so very much. Jim, as president and founder of Bianco Research, is also a contributor to Blue or Opinion.

You can read more on this and other stories from Bloomberg Opinion at Bloomberg dot com, slash Opinion or on the terminal by typing O P I n go. President Trump coming out yet again against the Federal Reserve, basically saying the problems in the US not China. We are stronger than ever. Money is pouring into the US, while China is losing companies by the thousands to other countries

and their currencies under siege. Our problem is a federal Reserve that is too proud to admit their mistake of acting too fast and tightening too much, and that I was right. And it goes on. There is a three tweet tweet storm joining us now to talk about what this implies for markets and how it's being interpreted and frankly, what is the FEDS conundrum is going forward? Tom Or, like chief economist for Bloomberg Economics, I'm just wondering what

your impression is of these tweets? Is Trump right? So? I think there's certainly a consensus that the Federal Reserve was too aggressive um at the end of two thousand and eighteen, UM, and that that rate hike misjudged the state of the economy, misjudged the mood in the markets, and now they're having to undo some of the damage which that did. UM. Where he's wrong, I think is on the idea. Firstly, that politicians should be intervening in

monetary policy. We have independent central banks for a good reason. The White House weighing in UM before breakfast, lunch, and dinner doesn't make their job any easier. UM. Secondly, is monetary policy effective against trade tariffs? Can you cut interest rates to offset the drag caused by Trump's trade war? Um?

I think the answer to that probably no. Businesses see lower rates as an incentive to invest, But when they're so worried about supply chains being broken, about access to markets being blocked, they're not going to make that investment. So Tom, it's the market is pricing in, you know, as much as four more rate cuts over the next year or so. What is the market seeing that? Maybe? Um, The Federal Reserve is not so. I think the markets are forward looking. The Federal Reserve is looking at the

data and the data is telling us about the past. Um, So the market is anticipating an escalating trade war, chilling US exports, breaking US supply chains, hitting the US consumer in the pocket book, and a federal reserve which is being forced to respond to that. The risk, I think, is that we have a spiral of higher tariffs and lower rates, and in a year's time, the economy is on the cusp of a very serious downturn, and the Federal Reserve has not enough firepower left to deal with it.

So it's not just a federal reserve. We've got central banks around the world that are cutting rates more than people have expected. We got the three rate cuts from three three different central banks in Asia overnight, and I'm just wondering, I mean, do you think that basically the Fed is given a green light to central banks around the world to go into an easing cycle, perhaps prematurely. I think there's two things going on, Lisa. So the first thing is that central banks are all responding to

the same threat. The trade war isn't just a problem for China and the US. It's a problem for most other major economies in the world, and that's why we're seeing so many central banks responding to it. The second point, and I think this is where your comment is is completely on point, is the FED easing enables other central banks to ease. If the U his lowering rates, other central banks can and do lower rates without concerns about

currency weakness and capitaliite flows. And that's why we're seeing Thailand and other emerging markets taking advantage of that opportunity. So, Tom, you lived and worked in Beijing for many years, you have a good sense of the economic situation there. What do you think the Chinese are really looking to achieve from a trade deal, if anything, and what is kind of the timing that you think that they might be under.

So I don't have a window into China's leadership compound Jong Nan high Um, but my sense is that the Chinese view on negotiations with Trump has changed in the last few months. UM. We had that move at the beginning of the summer to hike tariffs from ten unexpected. We had that surprise threat of tariffs against mex Acho after the US had negotiated noon after UM, and now we have the teen per cent tariffs on three billion

dollars and the move to label China currency manipulator. I think all of these things are convincing Beijing that actually the chances of a wind wind deal with Trump on trade are pretty low, and so I think what they're doing is buckling down the hatches and trying to last three to November twenty twenty, when they hope that they'll have someone else in the White House who they find it easier to talk to. Tom Can the tariffs and what we've seen so far with the trade wars and

the global economy into recession. So global recession is a big call. Um, Let's start with the US. So US recession is a big call as well. Unemployment is a fifty years Luxemburg. Luxembourg's much smaller, But unfortunately I haven't flown over it recently. So per the economists rule that you can't make a judgment on an economy you haven't flown over, I can't make a judgment. Um. But let's

come back to the US. UM. Yes, the trade war is a very serious threat to growth, not just because of what the tariffs are doing, but because of the chilling impact of uncertainty on business and consumer confidence and financial markets. UM. At the same time, we have unemployment at a fifty year low UH and wage growth running at more than three. The consumer is the main driver of you of the U S economy. UM, So yes,

we're concerned. Yes, we're looking at UM some indications of some weakness coming into the labor market, but we'd want to see more signs of the labor market crumbling before we made a big call like that, Tom, or like, thank you very much time as a chief economist for Bloomberg Economics, joining us live here in our Bloomberg Interactive Broker studio. Well, what I thought was some very interesting

news coming out of FedEx. The company announced that the ground delivery contract with Amazon won't be renewed when it expires at the end of this month, the company said in a statement. To get the latest on this and what it means for FedEx and the transportation industry, we welcome Satista Jendle, president of s J Consulting, and Thomas Black,

transportation reporter for a Bloomberg UH. Tom's let's start with you kind of just give us the background here on what FedEx is doing with one of the biggest strippers in the world. They're pulling back. We knew this was coming. They announced in June that they were no longer going

to do the next day air service for Amazon. So, uh, this is an incremental step in that and they're pulling back on on the ground and they it's a signal that they see Amazon more as a competitor as it builds out its network, and they're gonna try to scoop up other customers for e commerce as it grows. Situation. President of j Consulting, come in in here, because I'm wondering how much this bet is a good one on FedEx's part. How big of an infrastructure does Amazon dot

Com have right now? And it is fed X going to be in a better position than Amazon as a result of this move, you know, this is Uh. The termination of the contract first is really an academic because based on a lot of data we have, fed X was not handling any packages because Amazon has cut them off completely. They give them zero packages, So it is academic. The only relevance of terminating that contract is that during peak time, Amazon will not be able to rely on

fed X for any volume. But Amazon has built its own network of last mile delivery to such a point that today they are delivering over four million packages a day with their own drivers, and they're continuing to ramp that up. So and they've got the post aft that they've got ups and they've got up the private small cave here to deliver for them. And this is no

headache for Amazon. They will not miss a heartbeat not having fed X. Instead, fed X is going to have to work hard to replace that capacity and that volume with others. That doesn't come easy. Yeah, Thomas, I want to follow up on that point. It seems like when I think about Amazon, I would think that would just be a huge, huge customer for fed X, and you know, I think about a fixed cost system like uh, you

know FedEx has how will they make up that lost volume? Well, they talked about the volume with Amazon being about one point three of their total sales, which if you do just to back it of the envelope, calculations around nine million. So it seems a lot. But it's a company that does almost seventy billion in sales per year, so it can handle the hit um ups on. On the other it probably does more business with Amazon and that partnership is continuing, so it's going to be interesting to see

how that plays out over time. If this is more of a cosmetic type of move on the part of fed X or a pr kind of I don't want to call it a stunt, but something to sort of make a statement more than anything else. What are they

hoping happens from it? I think this is a wait for them to embrace themselves with Walmart and get Walmart to realize that they are, uh not working with Walmart's biggest competitor, and that to have Walmart make FedEx their primary career and give them more business than and to what whatever they're giving to ups to FedEx other than that, If I'm a shipper, it doesn't make a difference to me that I would rather do business with fed X. If they're not doing business with Amazon that never happens,

then this is a more negative for FedEx than for Amazon in my view. So, Thomas, I know that, uh, the fed X is kind of saying it's in a transition year and their forecasting earnings to decline. What's really problem, what's really creating the problems there at FedEx? Well, they have some problems in their European business. They acquired a company called T n T Express and that was back in May of when they close that deal and they

still are grappling with the integration of that company. That's that's been a a drag on on fed X and UH. They're also seeing the international business weekend a little bit with some of the trade spat that's going on. So those those are two main things that are weighing on. Who is Walmart relying on now, I mean in terms of who I mean who who is who is uh? Who is FedEx going to sort of take business away from?

See that again, Well, you said that Walmart could be the biggest winner from the fed X or basically that FedEx is trying to win over Walmart's business. I'm wondering who Aalmart is doing shipping business with right now. They are doing a big amount of business with FedEx, but they're also giving to UPS and this is effort by them to try and have some of that business going to others, including upsp devoted to FedEx. Thank you so much for being with us at Gendel, President of SJA Consulting.

Thomas Black, transportation reporter for Bloomberg News. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts. Or whatever podcast platform you prefer. I'm Paul Sweeney. I'm on Twitter at pt Sweeney. I'm Lisa A. Bram Woy. It's I'm on Twitter at Lisa Bramwoit's one before the podcast. You can always catch us worldwide. I'm Bloomberg Radio