Tech, Jobs, Ukraine, and WWE (Podcast)

goodwin there. Man Deep Singh also joining us in studio here. Um, Dan, I know you've been dealing with this issue for all the year. Um what do you say to clients? Because I know as an equity research analyst, your job over the years has been kind of in part, educate your clients on the EV market, on the opportunities, on the investment opportunities, and the test of story had worked for shareholders and your clients so well, and then a lot

of things have turned here into the last twelve months. Yeah, I mean it's been a perfect storm. I mean the first part was the most Twitter circuits were driven, but this last part has been demand words and you look, China's the hearts and loans of the Tesla story. Competition clearly increasing within the country. Domestically, you're seeing price cuts and some cracks in the armor. And I think right now the big worry is you saw the price cut today,

what does that mean for demand? And especially what does that mean for margins. Look, my view is that they've actually have now the scale to expand margins, so they have flexibility. They could cut prices even another four to five percent and margins still, you know, I believe could stay relatively range bound. But it's it's all about the fear of the unknown. You obviously have a key earnings, the key guidance coming around the corner January, and Musk

is the one that started the five alarm fire. He is the only one that could extinguish it. Man deep uh, you know that what caught me off guard was the huge delta between what apparently Chinese consumers pay for a Tesla and what I would pay if I bought one. Here are are these apples to apples? Because that would make me very, very very angry if I were a US consumer knowing that my Chinese counterparts are paying less

for the same product. Well, so one is a cost of manufacturing will differ and because we are talking about geo political landscape where you know, people want to move their supply chains here. You will have a cost differential more and more so this trend is not going away. If you're moving things on shore, you will have higher costs and then that's so cheaper price tag. That's for a made in China test versus a maiden. It's all

about localized manufactur for got it. So, I mean Dave Dan was talking about, you know, some of the challenges they're just a test of fundamentally, but he also mentioned that one of the big challenges for the stock has just been Elon and Twitter. What are you hearing from? I don't know the digital advertising community as it relates to, you know, really the future of Twitter. Has he paid forty four billion dollars for something that may be worth less?

I mean, look at Fidelity, they marked down Twitter's steak by almost fifty So according to them, Twitter should be valued at billion. Then forty four billion you'ren't paid for. So clearly, when you when you're private investors and they're like four or five of them, they're marking down the investment, it tells you something. And look, the ad market isn't gonna get better anytime soon. And Twitter's positioning, I mean, it was all brand advertising and that's the one that

got hit the most in this downturn. So clearly I don't see a way back, you know, anytime soon. This year is going to be awful for most of the digital ad companies, more so for the ones exposed to brand advertising, which is Twitter. So Dan, if if brands want to get away from the Elon Musk brand, because that's what it is, right, Um, do consumers want to get away from the Elon Musk brand because I can't imagine uh, you know, left leaning, progressive, middle class UM

couple wanting to buy a Tesla these days. Well, I think brand deteration has been issue. We've talked about two black eye from Musk, it's a black eye for Tesla. I do think that this can be course corrected. Look, if you look at the broader e V market, it's still Tesla's world. Everyone else paying rent relative to market share. Now competitions increasing. You look into three one three area code, GM four and others, and I believe GM can be very successful on evs. It's a fork in the road.

It's a moment of truth from musk and it all starts gen you guys set realistic expectations to hit not lofty ones. Guy named the CEO to Twitter to start to get some sort of hands off here, and then I believe the stock starts to correct itself. But right now it's it's obviously earnings date for Tesla. Why by the way, stepping back and looking at this over the last ten, twelve, thirteen years, why has it taken and come and automakers so long to get into this business

that was clearly going to grow like gangbusters. I mean, now you see GM and Ford getting into it, Folkswagen obviously going full tilt, but over a decade later and they're still you know, we had a great story about Toyota. They pioneered the space in a sense with the with the what's that little thing called? And and they still gave up on this market. You know, Nissan had the Leaf forever ago and they still haven't invested in what they need to in this market. How come is it?

Is it a conspiracy with the oil producers or what's the deal? It's historic as in, like they'll study this from decades and decades. It's a historic miss for the traditional automakers, and ultimately Musk, you know, from an innovation perspective, was really the one that drove Tessa to basically think the box and create something that other automakers almost laughed at the time. Now, obviously they're following where Tesla is and then it comes down to like us two and

a half percent autos were reviews. So we're still in the early days. But ultimately Musk has done what new competitor can do. He's created this sort of feel like there's got to be some conspiracy. I feel like there has to be CEOs were I'm dead with Big Oil because at the I p O, at the test I p O, we all said, oh no, when the competition comes in, they're screwed. And it's been over a decade. Okay, we'll give him over a decade head start. No one

says that. In the business answer per Kevin Tyne and the auto analysts for Bloomberg Intelligence, he says that GM four they're not in the car business. They're in the profitable car business. When they can make a profit on a car I either demanded at a certain level and the costs at a certain level, that's when they're going to get into the market. Elon Musk was a visionary for the technology, but he can't make a lot of cars, and so now you've got FOURD and GM's and Volkswagen

your car company. They're like, okay, now I can make it profitable, and I can, and we're gonna be all in the battery technology got to that point where that goes to my question to Dan, like, from a Tesla perspective, you got Volkswagen coming in at Jim, where is Tesla's I guess niche in the market? Where's the position in the market. Yes, they were the first, but now if I've got a Porsche, I've got a Mercedes, if I've

got a four I don't know. Well that's well, that's right now the quagmire because you start to go back to you got to get a sub thirty k vehicle in terms out there to compete. Right from a massive perspective, they obviously reviewed as the brand leader, the premium one, but now competition come from all angles. And that's why two thousand twenty three it is a huge inflection point year for them. How they navigate it. And you're saying, it's like Man's talking about as you see a reflecting

the stock. This is really for the first time after Cinderella Ride, they got their back against the wall. Can I add just one more thing? So Tesla was valued as a tech company last year. Now it's being valued as an auto company. Suddenly the tech premiums being valued as three or four were auto companies, right, because it still has a bigger market GM plus Ford plus Toyota, which is by the way, the biggest automaker in the world. So it's still towers over the biggest automaker in the world.

And the reason it was valued as a tech companies because they have their autonomous driving you know inside. I mean basically, they were capturing a lot of data, they

were making a lot of progress. Suddenly no one seems to care about it, and obviously the focus seems to have shifted to Twitter when it comes to Musk and it's no more you know, a tech company, even though I would argue and I agree with Damn that you know, Tesla's miles ahead of GM and Wolkswagen and all the competitors when it comes to the data and the autonomous side of things because they have built this system. It's a full stack similar to Apple it's an ecosystem, and

that's an advantage that's not going of anything. Dan, Do you really think we're gonna see legit competition this year? Man? I know there's a Porsche Ticon if I want to spend two hundred grand I know there's a Ford Lightning if I want to wait two years on a on a way list. Um. But you know, it just seems like either I'm getting a bolt right, or I'm on a waiting list, or I'm spending like my kids college tuition. Yeah,

I think the real competitions in China right now. I mean that's where where Neo x ping b y, That's where the real competition in the US look. I think you obviously have a lot of automakers going to have that GM. I do believe it's the real deal. I believe that they have a number of vehicles from Cadoact that you know some of the other driven in. It's not they've done where where marian Tea have done. Is is really game changing. But ultimately it's Tesla's market to lose.

And that's why right now Musk he needs to be the pilot on the plane. Can't have a ted Striker movement that's for the kids. That's an airplane recerplane reference. Go google it. So, Dann, do we have any sense that he's gotten that message that it's going to happen. I haven't really heard a lot a lot from him. Reason. I think that's in ten. I think for the first time he's I think behind the scenes, he's trying to strategize reading the room, and I think he recognizes Look

has been deep talks about Twitter. It's not just the forty four billion dollar mistake. I'd argue it's a seven billion dollar mistake because of the mark Ap ultimately taking off of Tesla. That's really taken. So that's why this is. This is just the pivotal earnings, probably the most important earnings for Musk maybe. Ever, Man, do you do you expect serious competition for Tesla in the West? I mean I saw a story that Mercedes is going to lead the charge with a new UM you know, like a

supercharger network. But Tesla has had it for a decade, and I think a lot of consumers that's one of their main concerns. There's just you don't want to get stuck UM and it's so hard to find a charging station I mean, anytime you're selling a sixty thousand dollar vehicle, you have to think what is the potential in the average EV starts at sixty dollars and so what is the potential installed bates? How many cars can you sell

at that price point? And I think that's where the market will get saturated unless you bring down the price. So that's where I see competition, good stuff. Tesla January, Okay, that's the line. That's the date. Will focus on Mandy seeing senior technology analyst for Bloomberg Intelligence, and Dan I've senior equity Annalyso what Bush Securities? Both joining us here in our Bloomberg interactor Brooker Studio breaking down the story

that is Tesla. That is Elon musk Uh stock down seven zero over the prior twelve months, so a tough another three percent today, another three percent, a tough ride for the shareholders of Tesla. Matt, you know it's c e S this week Consumer Electronic Show, but let's be honest, it's really the auto show with some gadgets around it. Uh. Lots of announcements coming out of Vegas here and CS including Mercedes Benz partnering partnering with Charge point in North

America for charging network. And this goes to one of the issues I have as I trying to get smart on this whole e V businesses. Do we need it like as many charging stations as we have gas stations today? I don't know how that plays out, but unfortunately we got someone who's really in charge of the stuff right on the point of a Pasquality romano. He's a CEO and president of charge Point, in charge point of Courses and your stock Exchange listed company c HPT as a

taker you can load into your Bloomberg terminal. Pasquality. Thanks so much for joining us here. Tell us about you deal with Mercedes Benz. Well, it's a it's a I think government for drivers everywhere in the United States and Canada. Um, what we're doing with them is effectively curating a network aligned with the thirty minute retail economy. Um. We really believe the drivers need uh, not only charging when they were on a road trip, but they need something to do.

They needed safety, they need um um, they need you know, the the usual locoutrements that you would act when you're on a road trip. And uh, you know, we're very excited that premium brand like Mercedes poses um really dove into this and willing to partner with us to really

curate a great experience for the drivers. So I see um a graphic rendering of a Mercedes Benz charging hub in Bloomberg Story which looks um, you know, elegant, But I can't see the retail um, you know, extravaganza that I'm hoping for as a as a died in the wool consumer. What should I be looking for at a at a charge point experience? Well, I think, uh well, what stuff can I get? Look for is what they want? Well, it's what they it's it's what drivers really want to do.

So we're going to align this with brands that exist. Uh so, So imagine locating the types of chargers that you see on the graphic, aligning those with good brands that people want to use when they are on a road trip. So this is not about Mercedes Benz developing their own food service brands, of their own retail brands. It is them sponsoring the placement of stations like that at locations that drivers already enjoy frequenting. So like the shop,

right are we talking about here? Kind Yeah? Well, well I think I think there's some place for communions stores. But I think uh, you know, uh everything from food, you know, food services to coffee to potentially retail. It's aligned with something that you can do over about thirty minutes,

thirty minutes. It's it's it's again, anything that that twenty thirty minute retail economy um uh you know can can afford you on a and something that's aligned with what you want to do on a road trip is where we where we're going to place these things. It's gotta be like an Apple store. That's must be the number one umer destination, right for a thirty minute stop? Yeah, you know, I don't. I you know, I think I think we already have too many gadgets, But that would

be a good one. Pasquald helped me understand because I've driven exactly one e V in my life and it was a good one for def um, it was awesome. But how should I think about the rollout of a network of charging system stations around this country? Just help me put into perspectives. You know, I think about gas stations one on every corner, that kind of thing. How do I How should I think about the charging system infrastructure? Yeah?

So charging is a lot. Driving any of the is a lot different than driving a gas car, and if you pattern match on gas stations, I think you get head fake to bit um. The the the charging experience for for most of your fuel, most of your electricity that's going to take you around where you need to go, is going to come in at home, at work, around town. You're gonna top it up, kind of like your piece

of consumer electronics. It's fitting that it was announced to see yes because cars are behaving from refueling perspective more like your cell phone than they are the gasoline cars of old. Now for gas stations, the ones that are placed around uh, you know that everyday use for your everyday fuel, those really don't have that much reason to exist in the long term. In the e V world.

It's the ones that are road trip position you know, in positions between metro areas that you're typically going to drive on a road trip when you're going beyond your battery range. Those are the ones that are likely to develop into EV charging sites. With the proviso that there's enough parking, there has to be enough parking. It takes four to six times the number of parking spaces because you're there longer than you would be at a gas station,

so you need the real estate. So it's really a combination of the gas station locations that are the fueling locations that are road trip position, and enough parking. Alright, So bottom line, you want to build or Mercedes wants to build ten ultra fast chargers, how many is that um equate to in the US? And when are you When are we going to see like enough that Paul feels comfortable, you know, buying an e q V or

whatever they're called. Well, I mean you can, first of all, you can, Uh, we've already got a partnership with Mercedes Benz where we're powering the in dash navigation and the Mercedes ME charging experience. So you already have access globally through Mercedes Benz to about a million charging stations around the world. Um and and and so there's there's a

lot of charging that's already out there. This overlay network is essentially a highly curated Mercedes Benz kind of certified experience, and uh, you know there's there's there's going to be at least twenty four hundred stations. That means ports parking spaces at at least four hundred plus sites across the United States to enable this right for long haul driving,

and that's at least. We're going to try to leverage other funding from some of the federal and state programs that you see that have already launched, and we're trying to get businesses, frankly to also subsidize this as well and and potentially contribute some funding to stretch the sites even further so we can potentially even go beyond four hundred sites. Pass quality give us a sense of where we are with the evolution of charging batteries. Are we are where we're gonna be for a while or is

there a continuous evolution uh improvement here? Well, the chargers themselves are capable of delivering more than today's batteries can take. So if you've driven in an electric vehicle, which you'll notice is that they start out charging um at a at a fairly high rate if the charger can provide the energy, and then the charge rate uh drops over as the battery gets um more full, the charge rate begins to drop, and you're gonna see that behavior um extent.

So you're gonna see batteries as as battery technology matures, and as battery management matures, you're gonna see batteries be able to take that higher charge rate for longer periods of time, and that will start to really shorten the charge cycle. We think that you know technology uh you know that's available today that will start showing up in in vehicles will get you from a ten percent battery

level to an eight percent battery level in about eighteen minutes. Okay, that's interesting, all right, pascually great stuff, great announcement with the Mercedes Benz there Pasquality Romano CEO and president of charge Point HPT. Is a ticket to put into your Bloomberg professional terminal. Uh. You know, it's just gonna be a I guess not a slow build of building out this network of charging stations and uh, but it's something that I think, you know, it has to happened. Will happen.

Is the latest on what's going on in work in the Ukraine. I guess some of the latest news is that Putin calls a surprise thirty six hour Ukraine ceasefire. But no one buys that. Nobody buys that. And you know, but that's supposedly today and tomorrow, so we'll have to see how that plays out. But let's get the latest on what's going on over there and how this may play out. Mick mulroy, co founder of the Lobo Institute.

But that's just the beginning. Senior fellow at the Middle East Institute, Marine Officer CIA all this kind of craziness, but he joins this year, Hey, Mick, what do you make of this? Uh? This putin call for a ceasefire. Again, as Matt was suggesting, not many people are buying it. Yeah, so great to be with you, guys. I am one

of those people that doesn't buy it. Essentially, I think what they were trying to do was to have a ceasefar of which the Ukrainians would I would agree to what they didn't, so that they could then resupply their troops in the front line, which they're having a very difficult time doing. So that was essentially, in my opinion, why they were doing it. It was never agreed to, so it essentially wasn't a ceasefire, and Russia has been engaging on the battlefield just like Ukrainians, so it is

essentially a no go. Does anybody bias cease fires? I mean since the Ted offensive is it? Uh? Just something that no one really does anymore. So it's increasingly difficult, partly because nobody's rest our Russian I mean, they violate, They make an agreement and one day and violated the next. It's not just in Ukraine, you see that another areas of the world. If you might remember all the issues when it came to get grain out of the port of Odessa, uh, and they just continuously made an agreement

and then broke it. So it's that does not bode well for how this could end. If there's any kind of peace agreement, I think the Ukrainians will be very skeptical that any of their efforts would actually amount to anything. What are the likely scenarior areas for how this ends? Mick? What do you think the options are? So from the Ukrainian perspective, they have to essentially keep winning. And what

I mean is the Russians only stand might uh. And let's just be specific to President Putin, he only understands might. So they have to hit the spring after hopefully getting a lot of the equipment that we'll get over there and they'll be trained on hard and just start pushing the Russians out of the territory that they occupied. They've already came about the territory since February, since the Russians

took their too back. So if the Russians realized that just they're just gonna lose, uh, that is potentially how they could come to the negotiation table. It's gonna be through force, quite preply, you know, Mick. We we heard recently from Adamal James Travitis that, you know, the Ukrainians have proven that they can in fact win and be successful on the ground, but now somehow they have to win the air um. How do you think they do that? So one way is to get this integrated air missile

defense system. And what I mean by that integrated it's you know what, it could be a drone that shot at your cruise. Missis a little hypersonic missile. They have to have all the systems that can identify the threat and engages in the best possible manner. So Patriot is going to be a big part of that. That's really one of the best systems on Earth. Takes a little while to trade on it, but once they get that, you get multiple batteries. It will help them can test

the air space. The other thing they gotta do is the drones that are coming from Roan they're about twenty dollars, but right now the only thing they have to shoot it down is around five hundred thousand dollars. So even if they're successfully shooting these things down, eventually they just keep launching sheat and you're in. You deplete your resources. So that integration of air defense I think is going

to be key. So so um, in that case, Um, it seems like this is just going to drag on and on because you know, we've seen conflicts like this. The US was involved in one ourselves in the sixties and seventies, right that, you know, where the big power doesn't get the message until it's been a decade. Is that what what we're looking at here? Possibly? Unfortunately, it is possible, like at least in our case, we were democracy, so the people will have to say, um, they're not.

They're an autocracy and they and it's really up to one man unless they depose him. Let's they kick him out, which is I mean, I don't want to hope for that. I mean, but you know, that would be the best case scenario in my opinion, But there was I mean, he spent a lot of time ensuring that doesn't happen. So because of the that situation, this could last for decades and it's going to be very difficult to keep

all the allies together. But it's the right thing to do, not only like morally, but for NATO, for the United States national security interest to support Ukraine to the end. Exactly what I was just thinking, Mick. I mean, as we watched this new Congress struggle to even pick a speaker, what's the possibility that they wimp out in terms of support for Ukraine pretty quickly? So I I, you know, I'm not on the political side of this, but I think from what I've seen that they will continue to

have support. There's a small handful that whatever reason, I would like to see that cut. But what I would tell them is we spent about the equivalent about five percent of our national security budget on Ukraine, and they've depleted or destroyed of Russian combat power. So even if you're looking at it from the U s. National security interest alone, that's a pretty good ratio. It's a really

good ratio. Right, So, um, it's it isn't charity. Just like President Zelinsky said when he came to visit us. It isn't charity. We are actually they are taking on our second most significant adversary and they're winning. Mick, second

most significant adversary yep, after the Chinese. I guess, so, Mick, talk to us about you know, as we think about the spring fighting season, there's an announcement that Germany and the US are sending you know, Bradley vehicles and the comparable German vehicle um and that how that will have a significant impact. Is there a scenario where when spring rolls around that this Ukrainian military will be able to have pushed for the remaining of territory that they lost.

Can they have that type of rapid success? I think it's possible, And certainly they've already shown that they're capable soldiers and officers in in in maneuver warfare quite brightly, the most modern version of warfare. We're getting them the things that they like. For example, you just brought up

the Bradley. It is not as effective as a tank, but it can kill tags, and it's faster and have longer range, and it will be a significant factor when it comes to their ability to who troops around the battlefield. To envelop the Russian forces and to not get basically caught a corner by the Russian forces. You've got our US setting them, We've got the French setting them, and

the Germans. And I think if once that's done and they show how effectively they can use them, the next step would be to give a main battle tank like the M one. How about how about the any aircraft? Because there's a scenario where NATO or the US provides aircraft. Do you think I think there is a scenario the longer this, uh, this m constant plays out and in the US and NATO are gonna want to see any this come to an end, and so it's going to

be that determination of whether an advanced fighter or aircraft. Obviously, I think we'll put caveats that can't be used to strike inside Russia, which is a handicap in the Ukrainians pretty significant. But we don't want to see this turn into a broader war that that would push I think the decision makers in the United States to to look

at our fighter bar my aircraft, um, I think. But I think it's going to be in stages like fighting vehicle's, main battle tanks, and then potentially more significant advanged uh by aircraft in terms of uh Jack Ryan, I was wondering what you what you thought, Mick. I mean, we've got all these great um new pieces out. Obviously Tom Clancy is as older, but you've got Jack Carr right now with the Terminal List. I've read all of those books.

They're pretty awesome, although he's incredibly political and it kind of as a turn off. Um, You've got Admiral Travities with four, which I thought was amazing and hopefully um not too prescient. What do you think about this stuff? This fiction? Does any of it appeal to you as someone who's been in the biz himself? So A, man,

I don't. I don't watch the Jack Ryan stuff. But four who is the admiral and a friend of mine Elliot Ackerman Um who was former Range silverl Star recipients, So I would definitely give credits, but for both of those guys on on that work. And I'm a fan of that. And I'm a real big fan of looking ahead because YEA, oftentimes we just focus on the current conflict,

and that's important. We have to have a lot of people doing that, but we always have to have people looking for the future because we don't want it to be a surprise, because that is one of the elements of warfare that you don't want to get wrong. And I think so out of those, I would definitely uh, I would definitely point to with that. All right, good stuff, Hey McK thanks so much for joining us. Really appreciate taking your time. You give us some good insight there

and what's happening on the ground there in Ukraine. Mcmlroy he is the co founder of the Lobo Institute. Former US marine c i A. He's he's done it all on seeing it also, we appreciate getting his perspective. All right, let's switch gears. Let's pivot hard to w w E. World Wrestling Entertainment. Looks like Mr McVan I'm sorry, McMahon is coming back. The founder Jerry Smith, he covers all

this media stuff, this sports stuff for Bloomberg News. He joins us on the phone here, Jerry, what's going on at w w E. Yeah, it's been a big shake up, um, you know this morning, Um Vince McMahon. Uh. W w E pad a statement saying that Vince would be returning to the board and as well as two former w w E executives and Vince would be removing three other board members from the board. So this is a big

shake up Vince. To back up a little, Vince retired from w w E last year, UM amid allegations of infidelity and payments that he had made that um you know, the company has been investigating. UM. So now he is uh isn't that par for the course in w w E. Well, so this is a big moment for the company though, because Vince has come act and he can do this because he is a controlling shareholder of the company. So

essentially what he says goes. And he wants to come back because this is a big moment where w w E is trying to renew its media deals. Uh. It's matches are broadcast on USA, which is part of Comcast and BC Universal as well as on Friday nights on Fox and UM you know, there's Uh. He wants to be back. He wants to be part of those negotiations. And he also said in a statement yesterday he thinks that these discussions about a media rights deal could also

coincide with the potential sale of the company. Um you know, And he pointed out that the demand for live events has never been greater in the TV business right now, and a lot of media companies see value in owning the content that they're putting on their station. Is so he sees this as an opportunity to potentially negotiate a sale of the company, UM, perhaps with NBCUniversal or Fox or or maybe some other UM company that is interested. So Jerry on that front, I mean that's kind of

what got my attention as a former banker. I started going through, uh, the digital equivalent of the rolodex scene. Who would be a potential buyer here? And and as you suggested, there's can I think it's a pretty long list here because this is some pretty compelling content that's shown over a long period of time that you know, incredibly loyal fan base, strong support from the sponsors. It seems I could be you know, really something that a

lot of people would kick the tires on. Yeah. I mean it has built up an entertainment empire that is really quite impressive over the decades. UM. You know, Endeavor could be another company, uh that that might be interested in ww E. They they own UFC UM you know NBC actually by ball the w w E streaming service and put it on the NBC streaming service Peacock a few years ago. So there's already a deep relationship between those two companies. Any sense of when of timing here,

like how quickly could this whole process move here? Because it seems like Vince McMahon is someone is something. If he wants to get something done, he can get it done. He controls the company. If he wants to sell the company, seems like it could happen sooner rather than later. I don't know, Yeah, I mean things are already moving fast. I mean the report. You know, they put out a statement yesterday where Vince said that he would like to come back to the board and um, you know, add

a few board members, um that he's close with. And then today a day later, he's on the board and those board members that he wanted are are there. So yeah, he really um w W E's is fairly unique in the media landscape where one man really controls calls all the shots and um you know, so, uh, it's hard

to say exactly what the timing will be. Um, he he wants to coincide, Uh, these media rights discussions with NBC and Fox about a potential sale Um, but yeah, Vince is the he's he calls the shots at w w E and how quickly he wants things to move along is really up to him. Is it still a big draw? I mean it was when I was a kid for some people. Um has it? Has it continued

to be as strong? Uh? Property? Yeah? I mean the ratings are are are are still very strong, and I mean this is um, you know, just to step back, I mean, the whole television landscape now is really um. You know, people are cutting the cord. They're getting a lot of their dramas and their comedies on streaming services like Netflix. But you know, the cable bundle is really about five sports and w w E is is an attractive property for media companies for that very reason. All right, Jerry,

great stuff. Really appreciate it. Jerry Smith. He's a media reporter for Bloomberg News. Looking at World Ward Wrestling a w w E up today, fifty two week high stocks up over the trailing twelve months. How about that. You had the Eco data today. Jobs numbers came out. I thought they were really good. MAT's a little bit not so well. No, they were good. I mean we added two hundred and twenty three thousand jobs in the month

and record unemployment at a record low. That's good from from a social perspective, right, I'm just saying from a market's perspective, from a FED perspective, market, if they want to fight inflation, I think they have to get unemployment close to the non accelerating inflation rate of unemployment, and three and a half percent can't be there ages wage growth. Let's just go to some professionals who cares what we

think had a fixed income for New Edge. Well, if he joined us the show in studio today in Jeffrey Cleveland, chief US economists of Paidon and Regal, joining us via a zoom. Jeff, let's start with you, how did how did you take this job's number report? Well, I think Matt is correct in that the whole goal that the

FED is operated on their engineering. They're attempting to engineer arise in the unemployment rate to get nominal wage growth to slow, and then that's supposed to damp in inflation pressure. That's the whole point of all of these rate hikes. That that's it, and then boom you you open the UH Employment Situation Report at five thirty here on the West Coast and the unemployee rate fell, so it's it's

not working in that sense, right. However, I do think it is interesting to consider that it's possible the FED is wrong about that inflation story, that inflation was I for all sorts of let's we can't use a transitory but you know, pandemic specific or two specific reasons, and then inflation does fade. And that's your soft landing scenario that I think cannot be ruled out we even had.

I mean, Cloudy Assam has been writing for a while about how she thinks the Phillips curve is BS in at least some sense, and what she doesn't want is for the FED to fight inflation through, you know, destroying American lives. And I thought it was interesting. Rag Aram Rajan was on Bloomberg Television yesterday and he has come out and said he of the r b I and um where where he was chief economist at the ruh NO and he ran the rb I, and he was chief economist at like the I m F or something

I can't remember, the World Bank, something big. Anyway, he's at the Boost Goal in Chicago now and he said, you know, the FED has to be ready for inflation to come down quickly to you know, low inflation territory or even disinflation. Um Ben Emmons, what do you think about the situation that FED finds itself in now? Do they have to raise unemployment to get inflation down or is it coming down naturally? It is coming down naturally

through the good side of the economy. And I guess the dropping energy prices that is consistent now is really helping the cause. And that obviously is a one hand supportive for real income. On the other hand, it is a factor in the economy that leads them to lower inflation expectations and therefore the FED gets quicker to the goal of two percent inflation over time. But if you read the minutes, they're having a heated debate, though I think it felt to me I could heat a debate

about how far to go with tightening or overtightening. And if you listen to Ballard yesterday, although his projection is coming down a little bit, it's still really high and he seems to be really driving the debata. So it seems that they with this Goldilocks quoteunquote goldilocks jobs supports vindicates a few like yes, moderating wages, maybe someone slowing and inflation with strong jobs report should allow us to raise rates here at least to restrictive level. And they

was sure that inflation comes back to tust. So, Jeff, how do you think the Federal Reserve behaves over the next couple of meetings? What are you looking for again? And you know maybe this jobs data impacts that outlook. Well, I think it's difficult. You know, I always tell clients you have to take off your your investor hat, you have to put on the Fed hat. You have to

see the world the way they see the world. And I think has been pointed out there is this very strong line throughout the Fed minutes that they by large the committee thinks that if the unemployment rate stays low, the labor market remains tight, that will feed through into nominal wage growth, and that will feed through into the

non housing services component of core inflation. So goods prices may fall, rents may distilerate, but it's that non housing component which will still be eli because of the labor market story. So they've definitely view inflation through the labor

market lens. I think you have to keep that in mind as an investor, because I think, as we see this morning, three and a half percent unemployment, right, you're looking at the world through that labor market lens, right or wrong, You're going to think we need to remain restrictive now, maybe that they don't need to keep hiking, maybe they pause in the second quarter, sort of our expectation. But do you cut with the unemployment rate of three

and a half percent. No, I don't think so. Why on earth wouldn't you take advantage of a three and a half percent unemployment even if you're not fighting inflation, um, just to build up dry powder. And I know a lot of people been are against that argument, but if it were me, I would say, let me save up some basis points here. If I get unemployment at three point five percent, I'm raising fifty again in February. It's

exactly through the fast ends. Like this is actually ideal scenario for them to say, look our rate heights and not the railing the rate the labor market and anyway, it's not in any recession. There's not any recession happening as we speak. There's slowdown happening, but that's you know, natural as you get from a major boom of this pandemic that we have, so you can continue to move

this rate higher. Only they've decided on the slower basis may be appropriate because if you do continue with seventy five base points at the time on you know, let's say are not a three four meetings, that way, you probably get more of all. They gotta go fifty at the next meeting right then, because if they don't, if they only go twenty five, and then inflation comes roaring back, then Jerome Pale is Arthur Burns and all bets are off.

So there's a great question, Matt, that that is the toss up here still of twenty five or fifty base on list report. As you see the market rallying today, it says no, will be twenty five, but there's actually a fifty base point rate hikes. What this report is, say, Jeffrey, what's the paidon in regal kind of recession call for? Well, we look at the yield curve, we look at rate hikes, we look at housing. Housing historically is the business cycle.

So when housing rolls over, you generally have a recession that follows housing exactly. So it can happen with the lag. I mean you you probably remember very well. Housing to meet peaked in summer of oh five or arguably early oh six. The recession didn't officially begin until December of oh seven, so there can be lags. So we've been saying, hey, it might be that the economy skates by without a

recession in twenty three. Maybe that's a story. The jobs report today, certainly, I think, uh talking bolsters that argument. The other thing I was gonna say, though, is the bondmarket seems to conclude the supporting that maybe there's only gonna be a twenty five basis point high, or maybe that FED is close to being done, but they hate

to be the bear of bad news. We still have CPI uh coming up next Thursday, I believe, and then the FED prefers the employment cost Index over average generally learning. So e c I. E c I is coming out January thirty one, so right before the next FED meetings. So I think there's still uh, this narrative could still shift back, you know, if we get a stronger than expected course c p I, for example, which is coming out. Wait, isn't CPI coming out next week? Is that the specific? Yeah?

And that's right. I do agree with Jeff, there, like, look at the European data today, right, so we peaked there were falling off with headline face shows. Yeah, I guess prices pomited, but the core rate is pretty sticky there. It's not really moving, right, So yeah, we have we have somewhat similar here too. And to Jeff's point, like this core PC ex housing that's been highlighted by Powell not put in the minutes to that's really the number

to watch. It has come off a little bit in the last week reading, but it's way over four percent. So is that the four point six percent number set four? Yeah, exactly, So it's just too far above target. It's not like the official target, but it's like the number of the

Jeff says, it's it's a wage linked number. And that's what we see is traditionally there go to number they're preferred, and I never know if they like, uh, they they've had They have specified in a number of papers that PC is their preferred measure, but they haven't specified if it's headline or core or core x housing. Um, I

guess they don't want to let us in. No, that that's the fat watching game here and it keeps us all, you know, engaged, and but you know to to that is that I actually think that if you if you take headline is the broadest measure of inflation, and you could need to see negative month to month prints from here on, then that's definitely an indication inflation coming down faster. So I do think you need to watch that, and

if you also watch jobless claims every week. I was thought of these two measures as you're you know, real time gauge on where we are with the economy in terms of inflation pressure. Hey, Jeff, you're based in l A thirty seconds, how's the economy there? How's the outlook there? What are you here when you're a day to day Well, we just endured, you know, several days of rain, which never rarely happens there. They've got four inches of rain in my neighborhood here, so that has been that has

certainly been the top of the town. I think. Second to that, the thing everyone talks about is still the labor shortage that companies don't, you know, there's they have demand for labor, they can't find enough people who are willing or able or that wanted to fill those positions.

So that's that's pretty dominant um weakness in the housing market, though, we are seeing pretty pretty substantial slowdown in activity, sales and prices of decilerated so it will probably be the top things that are being discussed here on the West Coast. Good stuff the moment, all right, Jeff, Great stuff, Jeff Cleveland, chief US economist, Payden and Regal and Ben Emmon's head of fixing come at New Edge Wealth joining us here.

Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews of Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller, three peat on false Sweeney, I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.