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Boy, the appointments John are coming fast and furious from the Trump group here in terms of his appointments to his cabinet naming some I guess zar is the term for some of these people. But he's certainly wasting no time this time around to setting things up for his team. And if you want to get the inside skinny on kind of what's happening with the Trump group, mister Trump himself, President Like Trump. Tim O'Brien's the best guy, right, I mean, he's senior executive editor Bloomberg Opinion.
He has a very long history with Donald Trump.
You can google that and see the history there, so he knows what he's talking about. President Like Trump has been very busy for the last three or four days filling out his cabinet. What's your takeaway because there's some unusual choices.
Well, you know, the thinking had been during his first visit in the White House that he had this mix of advisors that were people there who were loyalists. There were people there who were public servants who wanted to just fill portin rolls, people like Mattis, for example, and then there were other people who were like hangars on
and in there running their own agenda. But it was a mixed bag, and I think from his view, I think he walked away from his first experience in the Oval Office feeling like not everybody was on board with his agenda. He wasn't sure everyone was loyal to him, and the thinking was coming into this round he would appoint more loyalists and people who were more deft at sort of manipulating the wheels of government in order to
help him push his agenda through. And I think what you've found in this recent spurt of appointments is you certainly have loyalists, there's no doubt. But whether or not they're competent is another matter, and they're certainly controversial. Matt Gates is sort of front and center as an exhibit of he's been named Attorney General. He's someone who has been under investigation by the FBI and the DOJ for sex trafficking by the House Ethics Committee for a similar
range of charges. He is the most unlikely person imaginable for a role like this. Republicans came out strongly against him. Susan Collins said she was shocked by it. He has to go through the vetting process with the Senate, so we may not make it through. But he's not necessarily someone you would put in the Justice Department because he is technically proficient, you know. On the other hand, Marco
Rubio got appointed to be Secretary of State. He has very strong national security credentials, He's got a diplomatic experience. He is a serious person for a role like this. And so you know this array of people, you know, Christy Nomant Homeland Security, Tulsea Gabbard at DNI. Neither of them have any experience that would recommend them to those jobs, particularly management or subject expertise. But the common thread binding all of these people's loyalty to Trump.
Now Congress of course is now Republican controlled, or will be under President Trump. Does anybody there can they still get through the process having Do they still face hurdles in the process?
Yes, I think they do, and I think you know, the interesting sort of barometer of that was the battle to be Senate majority leader. There was a lot of push from the Maga wing of the party to have Rick Scott appointed his majority leader, and it ended up being John Thune, Senator John Thune, and I think he represents the wing of the Senate that prizes the institutional independence of the Senate and the role it plays as
a as a check on presidential power. And there was a big push from Tucker Carlson in that wing of people you have to name Rick Scott the Senate, and it asserted itself. John Thune is in there. And I think some of the commentary you got from Republican members of the Senate yesterday about Matt Gates's appointment, you know, they all said he's still got to get through the nomination process, and so I do think you're going to see some of that.
Tracy Alloway from Bloomberg News just mentioned from some of her sources that maybe one of the strategies of nominating Matt Gates is it will allow President look Trump to see who's with him and who's not with them in the Senate by just looking at the votes.
It's gonna be pup public votes. That kind of makes some sense to me.
It does, and he may get a lesson that even though he got elected president by a healthy margin, not everyone in his party is one hundred percent with him
on his agenda, even within his own party. The other way to interpret what might be going on with Gates is Gates is just sort of a sacrificial lamb, and Trump will put him in there, it will soften the Senate up, and then he'll come back with someone else who maybe even more extreme or more capable, or whatever you want to define it, which is a comment has been a Supreme Court nominee strategy at different times in the past.
There was a movie years ago, I don't know if you remember, with Albert Brooks Broadcast News, and there was a great scene in there where he's talking about his rival. I think he's the devil, not really, but you know, nobody's going to follow somebody with horns and goes. He says, just little by little, that person is somebody who is going to lower our standards. Where are our standards right now with these nominees.
Well, they're Donald Trump's standards right now. And I think I think the moment that we're in now is where is that balance between the thing he wants as an individual and what our institutions and our laws and our democracy needs in a nonpartisan way to simply function in a healthy and constructive way. And I think it's really you know, the Republicans control Congress. Now, Trump has a tri fact that he has an unusual amount of power.
And.
I think it's really going to be on the members of his own party to check his behavior for the time being. If it goes beyond that, it may go to the courts. But right now it's really in Congress's hands, and we'll have to see. I'm you know, I don't have a crystal ball, so I'm not sure how that's going to play out. I do think there's going to be pushback against Gates, for example. I think there will
be pushed back against Christino. I think they will be pushed back against Tulsey Gabbert, like she has no intelligence experience. She was a member of the Waiian National Guard. And you know, the thing to remember though, is Trump thinks cinematically about himself and he likes surrounding himself with people he as he's always said, look like they're out of central casting and they look like they play the part. Square chins, flowing locks. They look good on the poster.
That doesn't necessarily mean they're good at management. As we all know from any organizations we've been in over the years, good looking people often that doesn't equate with great management or great expertise.
We were talking about Elon must before, and I think you mentioned in your column is he getting too taking too much attention away from Donald Trump? And how's that going to play out?
Well, that's a really interesting observation because it's injuring to watch jd Vance, I think, who has very much presented himself as the number two following mister Trump's lead. He phrases everything that way. Elon is a force of nature and and loves the spotlight as much as Trump does. And historically Trump doesn't share the spotlight very long with anyone.
You may remember the first term, I don't know how many weeks, and I think it was weeks after Steve Bannon appeared on the cover of Time magazine, as you know, the sort of wise man puppeteer guiding Trump along, and boom, in short order, he was gone. You know, Trump understands the value of having Elon Musk the world's richest man with him. You know, that was a big factor I
think in how his candidacy was perceived. You Knowltra ultra mail, ultra successful, ultra capable, and Trump likes to live in that glow. But the second people start saying that Elon Musk is telling Donald Trump what to do, Alon is probably have to pack up and go back to Austin.
Is president? Like Trump? Is he a lane duck president today?
Like that's like, why do you ask that? That's an interesting question, Like what suggests that to you? I mean, you know it's I would say no, but I don't. I don't know.
I kind of feel like he can't run for another term.
So I kind of feel like, unless he repeals the twenty second Amendment, well okay, and maybe you can factor that in.
But if I'm a senator, I'm like, do I have to really worry about this guy? I know it's four years, but it's just four years.
Yeah, I mean, I do think there's a strong faction in the Senate that's that are They are traditional conservative Republicans, they're not maga, and they're worried about the own future of the party. It's it's character, what it stands for, what kind of a force it is in US politics?
And I think they see Trump as a useful blunt force to win an election, to dismantle parts of the administrative state, bring taxes down, uh, you know, revisit some other Republican policies that are familiar from years and while also dispensing with all of the cartoonish, buffoonish and dangerous things. Trump also likes to stick his feet in more often than.
Not in the election, sort of the post mortem. One aspect, I was thinking, did people go into the polls and say, I can vote number one on the economy and number two, there's a state ballot initiative on reproductive rights, and I can vote on that. Separate, Keep those two things separate. Is that kind of what happened in some cases?
Well, I certainly think that was truth. With white women. Yeah, you know, the three cohorts that you see in exit polls, and we got to wait for more data to come in. These are not highly exact, but I think I think I think he moved Trump moved up like four or five percentage points with white women between twenty sixteen and twenty twenty four. He moved up something like I think eight points with black men, and with Latino men it was more than twenty points, and with Latino women it
was substantial. I think Latino men there's a huge Catholic cohort there. They are anti abortion. I think that informed their vote. I think you know what you're asking, Michael about the splitting the abortion ballot. I do think there was a number of women who were turned up by Trump's history as a sexual predator. He had been convicted of sexual assault, were found liabel for sexual assault, and
it was anti abortion. But they felt they were traditional Republicans and they wanted to stay in the party, and ballot measures gave their ability to split their vote.
YEP, fascinating, fascinating days we live in here again to President elect Trump nominating or putting up a lot of folks for to fill out his cabinets. So we'll see how that plays out over the next couple of days. Tim O'Brien's senior executive editor for Bloomberg Opinion.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am me staring on applecar Play and Android Auto with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa playing Bloomberg eleven thirty.
All right, we got John Tucker here in for Alex steel On. Paul Sweeney. You're live here in our Bloomberg Interactive Brokers studio. We're streaming live on YouTube as well. YouTube dot Com. Just search Bloomberg Podcast and that's where you'll find us. That's where the advertisers going. Advertisers are going to advertise. The digital media. Think Facebook, think, you know, Google, think even YouTube is huge business in terms of advertising spend. And we're there, which is good things.
So let's just daring to know. What counts as innovation in the airs space these days is the short term videos that the videos that I see.
I think that better targeting. That's kind of always the holy grail. So you want to be you want somebody advertising grills to a guy like you, right, you're the grill guy.
And or videos where the most effect for me the things that I'm interested like woodworking, where it's a show and they're using a piece of equipment and giving it the run through, and I'm like.
You know what, I gotta have that I gotta have that. That's how it works.
Marked August, president and CEO of Mountain. He joins us from Miami via zoom thing. Hey, Mark, we actually had a really interesting data point on the global media, global advertising space today last night with Disney. Their streaming business is turning profitable and like really profitable. What do you take away from the Disney numbers.
Well, I'm not surprised. I think what you're seeing happen is the second half of twenty twenty four and now going into twenty twenty five, essentially all of the streaming networks have reached the largely reached the tipping point of being like streaming first, Like that's where they're all a sales effort is focused, they're focused and advertising as you guys were mentioning the innovation and things like that, And I think Disney is right there at the you know,
head of that pack, really focusing a business on streaming and advertisers are responding and basically the growth and profitability that's resulting from it is a direct result of that. So they're at the head of the pack right now in terms of that kind of growth.
Mark, are they hanging on to linear TV? To satisfy old people like me.
Yeah, I mean, obviously they still own the assets. But I every conversation I have with every streaming network, they just want to talk about streaming. I think they see linear is obviously it's a revenue stream for it, but it's not it's not the meetings they're having as to
how do they better monetize linear. It's all about, you know, audience first, which you know, the what we're taking AI to help identify the right consumers and making all of that available to brands and doing it on the biggest screen, on fifty five in screen, sixty five in screen as opposed to a phone, which is like a five point five industry.
You know, it's interesting.
I was reading some research on the Walt Disney Company this morning from Lar Martinette Needham and Company. What she does, and she says, investors just think this way. It's just kind of mushed together the digital streaming UH business as with their linear And what's going to happen over time is the digital business is going become a bigger, bigger, bigger percentage of that you know, streaming of that business
of the video business. And you can see the growth rates just accelerate over time as linear gets smaller and smaller. Who else out there, Mark, do you think is going to be a really viable player out there? I'm not sure everybody who's out there in the marketplace can survive here. How do you think it's going to shake out in the streaming wars?
Yeah, I mean we've talked about this before. I mean it's really easy to figure out who's gonna survive and thrive, which is you just play a game where you know, one person names the network and another person tells you why they would go there and watch. So I say ESPN and you say sports. If I say Netflix, you would say, you know, comedy documentaries, new shows every Tuesday. If you know, if I say CBS, there's probably applause
in the conversation. Doesn't mean CBS is going to go away, but it's certainly going to be more challenging for them and their number of networks like that. And so I mean, the people with a brand with a clear reason to want to go and watch content there and be entertained there are going to thrive, and the others are going to be challenged and probably ultimately become part of some of those other brands, and I think in terms of
the advertise and extend the question there. I think Netflix is I don't think people fully realize how big a backlog they're building right now. So half of all new subs are for their cheapest package, which is ad supported, but in they're not really serving that many ads relative
to the number of subscribers. So they're building a huge revenue backlog that's going to get unlocked as they get as good as everyone else and monetizing, and I think that's going to you know, like like I'm super long on Netflix right now, meaning like if there was any stock I would want to invest in, it would be Netflix. And I'm not that far behind on Disney, although you know, Disney has parks and other things that make it a bit harder to you know, bet on the future.
Can you close out real quick? What is the state of the digital ad business right now for your perspective.
Yeah, it's very healthy. I think overall the best part of digital advertising is the long tail, mid size and small companies that you know my own company, that's what we focus on is bringing long those small, mid sized advertisers into the streaming television world. Advertising for the first time, I think all these streaming networks have really woken up to how that's an opportunity. I always like to say, it's really easy. The two ways to grow a business.
You can grow the number of customers or the revenue per customer, and the TV industry for a lot of years in neither of those things. And so now I think they're waking up. They've woken up to we need to grow the number of customers, and in streaming there actually are some ways to grow the revenue for customers. So that's why I think it's media world is actually getting reinvigorated with growth right now.
Mark, thanks so much for joining us. Always appreciate getting a few minutes of your time. Mark Douglas, President and CEO of Mountain. He's based in California, but he's done in Miami. How come all the smart young folks are down in Miami, John and they're not in Sheboygan.
They're in Miami. Either in LA and He'll.
Be are stuck in a hermetically sealed both with each other.
Exactly right.
That's what the smart people do, Mike mclowan. They're all done. And I guess Florida that's where the smart kids are. John, thank you so much for sitting yesterday.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple car Playing and Broun Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
John Tucker sitting in for Alex Steel on Paul Sweeney We live here on our Bloomberg Interactive Broker Studio, or
streaming live on YouTube as well. John Lisa was just talking about, you know, some technicals on yes ANDP five hundred, So I type in S and P five hundred, you know, SPX index, and then it hit our SI for relative Strength index, and it kind of says, you know, it got a nice little chart there, and it shows you, you know, when you're at an indext level of seventy, maybe it's a little overbought, and if it's down at thirty,
maybe a little bit over sold. We're sitting here at sixty four point five and we bounced or it came off of that seventy level just a few days ago. So from a technical perspective, maybe a little bit in the short term, a little bit expensive.
But also twenty three times projected earnings at this point.
Maybe that's the photography sold out that Magne it was in seven it's only you know, eighteen times.
So let's see what the professionals are doing there.
Margie Pttel joins that she's the senior portfolio manager at All Spring Global Investments. She's up there in Boston. Margie, you woke up a week ago today a Republican in the White House, Republican in the Senate, and now we learned today Republican control of the house. Here, your folks at All Springs, you change your outlook at all for think about allocating capital?
No, I think we're still looking for continued economic growth, maybe more modest, say one and a half to two and a half percent in real growth. And we'll have to see if any of these plans Republicans have announced, how soon they will actually be enacted, how much of a positive they'll go to the real economy. The market's like it so far, but we'll have to see. So we're leaking more towards modest growth, same themes as we've had all year.
Well, stocks don't operate in a bubble. How closely should we follow what's happening in the bond market as we look at equities.
Well, I think it's interesting because you've actually had the bond market, looking at treasuries actually move up. You know, the FED made a cut of fifty basis points in the funds er eate and instead of bringing yields down, we had the ten year treasury actually go up by six to five basis points. Today is even higher, say
around four point four percent. But I think with inflation, say two and a half three percent, I don't think a four and a half is percent yield on treasuries is really enough to be a negative or slow down
economic growth. I think it's really a neutral factor. And maybe it says more we have a huge supply of treasuries, and so that is really dragging down the relative relationships between say treasuries and stocks or high yield bonds or corporate bonds, making traderes look relatively cheap just because there's too much supply.
Argue on in the equity side of the business here, if you believe the Republicans they are going to be pro growth, pro economy, do I does that suggest I can invest along those lines? Maybe think about more economically sensitive stock speed industrials or maybe even energy yea.
And actually industrials have been leading the market all year, which to me has been telegraphing that the market is not worried about economic growth or even the scene. A sector like industrials besides tech, be so strong. And we've actually seen an energy look like it says it's filing on a little bit of life here. Whether that's in reaction to growth or prospective new rules relating to US exploration and development left to see, but I think those
are continuations. Industrials are one of the best sectors year to date. They look like that's going to continue next year.
Is any of this priced in right now, like a proposed fifteen percent corporate tax rate.
No.
I just think that if you look at how much the market has moved since the election, maybe we really need a breather. Plus, we pretty much finished with third quarter earnings, which once again we're pretty good say earnings or up say average average about nine percent, So that certainly supports higher stock levels through the fourth quarter. And really December is always a good month for stock so it looks like we may have some short term modeling here and then have a strong finish to the year.
Fixing comes actually back in the green here, just broadly defined MARGIE and best performing sector and fixed that come has been US corporate high yield like really outperforming. Where do you see opportunities in the credit markets.
Well, you know that's been the trend. High yield was the best performer in twenty two when the had began grates twenty three and so far year to date, and in fact, the yield spreads have actually narrowed as treasures have backed up, so highield bond prices have held firm, yields have held firm while treasuries went up. So that's for example, double bs now yield less than two percentage points over the same maturity treasury. So that says to
me the market is not worried about defaults. In fact, corporate defaults in high yield next year twenty five should probably be under two percent. So basically you actually could see yield spreads narrow even from these historic narrow levels.
And what's the panther head for the FED twenty five at the December meeting and maybe appalls in January.
Well that's what's priced in, but you know you can see it really the Fed's actions at the margin, haven't had a lot of influence on the equity markets or frankly on the economy as a whole. The economy is chugged along, and so I don't think the market will react to another twenty five basis point. It's pretty much a big deal, I think for the outlook. And then and then said, taking a.
Pause, MARKI thank you so much for joining us. Really appreciate it, always getting a chance to chat with you. Margy Pateel, She's a senior portfolio managered all Spring Global Investments up there in Boston.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
Our good friends Meta find seven hundred and ninety eight million euros eight hundred and forty million US dollars by the European Union over classified ads dominance.
I look at the stock unched on the day, no real change.
It's up sixty percent year to date, so I'm kind of thinking it's not that big a deal. But let's go to an expert on that, Man Deep saying, senior tech analysts for Bloomberg Intelligence Joints is here in our Bloomberg Interactive Broker studio because he remembers the way to New York City, unlike his managers. Man Deep, thank you so much for joining us here. What does it mean for Meta here?
I mean this could be a harbinger of more fines simply because even though this particular fine is like a zero point five percent of their total revenue, so really not a big deal. But in the grand scheme of things, what the EU is doing is saying their Digital Markets Act, which really prevents the gatekeeper companies, and Meta is deemed as a gatekeeper along with Alphabet and Microsoft and Amazon and Apple. These companies can give preferential treatment to their services.
So in this case, Meta was fine because they show you ads on Facebook marketplace when people are browsing their social media platform. And one could argue, you know, I mean, they do it because they have this marketplace. It fits well, it improves the user experience. But clearly EU doesn't want that to happen, especially with these gatekeeper platforms and the same logic applies, you know, with Apple giving preference to their Safari browser or their maps, or Alphabet giving preference
to their maps or flights product. So that's the kind of the really the focus that EU regulations have when it comes to these gatekeeper companies. And we'll probably see more finds in our view.
How many regulatory speed bumps are there out there for this the digital ad business. It just seems to generate all this work for regulators.
I mean, there are two ways to look at it. One is clearly there are you know, so many kind of regulations that are focused on these companies the ad businesses that generates you know, one hundred and fifty billion dollars plus in the case of Meta, in the case of Alphabet over two hundred billion dollars. So clearly the
focus is on the scale here. But the other side of it is it actually prevents more competition because why would an Oracle or some other tech company get into an ads business where you are at the risk of paying over a billion dollar fines, Like, it's just not worth it anymore, you know, because of the scale of fines, I mean eight hundred and forty million dollars. It's it's a lot of money, but it's an It's not a lot for a company that's generating over one hundred and
fifty billion dollars in revenue. So that's where I do think it has an unintended consequence in terms of limiting competition. But at the same time, I mean, it's very clear what the EU wants to do is they want more third party products. Apple can't just say you have to use Safari browser. They want more choice screens. So that's the same concept that's applicable to all these gatekeeper companies.
I don't know.
I was back in the day when Microsoft is getting fined by the opinion twenty five years ago.
How did that work out?
I mean beast Yeah, Well, all these companies have to make some remedies. That's what Microsoft did. Is you can't just bundle, you know, Internet Explorer with everything and be able to get away with it. So I think there are some things that they can do on their own, but clearly when it comes to paying these fines, and the finds could range anywhere from you know, low single digit to high single digit off their global revenue. So in the case of Meta, the finds could be as
big as you know, ten billion dollars. I wouldn't be surprised if if it keeps happening and EU thinks they're not in compliance, we're talking about potentially a ten billion dollar fine here.
The regulatory lineup is changing in your rank the faces and in the United States, does it matter that we're going might be going toward regulatory light.
I don't know for Meta and Alphabet it will be regulatory light given a lot of these anti trust cases were started in Trump's first term, so and there is no indication whatsoever that says you know, these companies are likely to get away with it. I mean, we know the stance of Vice President Electate events in terms of what he thinks about the big tech companies. So I don't think the regulatory scrutiny is going away anytime.
But here's the big wildcard I think, which is Elon Musk. We had Dan I haves on from what bust security is on and he says as rites to electric vehicles, he thinks this could really accelerate electric vehicles adoption.
But it's you know, the conflict of interests. Who knows they'll figure it out a guess, but he could be positive for big tech.
It could be I think on the electric vehicle side or robotaxis, probably lesser regulation. But when it comes to these giant AD businesses, I think that's where every regulator kind of agrees upon the fact that these companies have too much power when it comes to the AD revenue and the dollars they generate.
I know this is just tangential, but Tim O'Brien's coming up, and I want to ask him that question about Elon Musk. Elon generates right now a little more attention than is good, buddy the president of the elect and you've got to wonder how that's going to play into the dynamics go.
That it's going to be amazing.
What are the tech Have the tech companies said anything about this election? Here? Have you heard anything from the tim Cooks of the world or anybody else there about this election?
I think again our view is out of the mag seven. Probably Alphabet and Meta will have to contend with more scrutiny than the rest of the mag seven, simply because I think Apple has done a good job and it comes to building the relationship with Trump and Amazon as well. So in this case, clearly you're going to see more pressure on alphabet and Meta.
What's the big story that you're following right now? What really captures your attention?
I've spoke you know when it comes to the Trump administration.
Tariffs is a big deal.
You know of what sort of export restrictions will come into play given everyone is so focused on AI and what impact does that have on the development and the pace of AI. That to me is the biggest thing out there.
Man Deep sing one of the best. We appreciated man Deep Singh. He's a senior technology analyst.
He kind of runs all of our technology research on a global scale because technology is a global business. Obviously, Asia is a huge part of that, and we have a big team in Asia covering the companies there. We've got folks in Europe as well, but it's kind of run right out of here from New York with Mandeep Singh anarag Rana doing it all. And so technology big
big issue here again. Meta fined by the European Union seven hundred ninety eight million euros about eight hundred and forty million US dollars over the classified ADS dominance that it has. So I have to see how these companies navigated.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
All right, we got John Tucker sitting at Fralex Steel on Paul Swhen. You're live here in our Bloomberg Interactive Broker studio or streaming live on YouTube as well ashead over YouTube dot com search Bloomberg Podcast and that's where you find us Joe Wisenthal, Tracy Alloway, Odd Lots podcast host there in our studio. John, you should talk with Joe and Tracy. Big, big weighty issues today. This is this could be big waity chickens the chicken industry. Do you think of the chicken industry often?
John?
I love chicken.
I love chicken.
Everyone loves chicken. It's so good.
But I give the chicken roasters at the food town.
Do you there?
You go?
You know what? It ain't cheap.
It ain't cheap.
Didn't you know it's a big business behind here, Tracy Jia, thanks so much for joining us here in our studio, Tracy talk to us about how you guys look at the US economy through the medium of chicken.
Yeah, that's right. So we're releasing a three part series called Beat Capitalism, and it's all about chicken and what it says about the structure and nature of the US economy and things like consumer demand and inflation, also the labor market and how we structure that, and then finally how we think about the power of companies more broadly.
And the weird thing about this series is, I guess it sounds a little bit random for us to be doing a whole thing on chicken, but like eighty percent of the guests that we have on in this series have already been on all blots before talking, so it seemed like a natural fit for us to do.
There's so much there in terms of looking at one thing that people consume in myriad ways, chicken, and then going back and figuring out how many interesting I guess I would say macro questions that you can start to pick at from looking at how you get from an egg to a bird. So you know, there's the question of just how pricing power works at the retail level.
There's obviously, as tracers talk about market competition and the degree to which a handful of large, massive poultry companies are this huge, you know, dominant player in the supply chain. There's labor issues, which is, you know, we think of like uber and we think about gig workers. A lot of chicken is essentially grown the same way technically independent
contractors growing birds in their own farms, et cetera. There's the pandemic and the health related issues when thinking about bird flu and the effect that that had on egg prices which were so salient, and then egg prices had a effect on how people perceived inflation. So there's almost no topic in the US economy over the last several years that on some level can't be understood by this one specific supply chain.
And it's not that the small producers were taken over by the big guys. They just couldn't afford to compete all anymore.
Yeah, what it is, it's actually really interesting the chicken labor market. So you have these sort of small scale chicken producers, but they're all contracted out to big they call them integrators. So think about companies like Tyson or Purdue, and Tyson will give you the baby chicks, then you
are responsible for raising them. But Tyson also gives you the food, they give you the medicines, They tell you exactly how you have to raise your chickens, but you, as the farmer, are taking on basically all the risk of actually doing that. So if Tyson says we want a better barn for those chickens, you have to build it,
and that's pretty costly. And it kind of fits into a broader criticism of the economy right now, which is we have these really large, powerful companies that are dictating terms not just on the pricing side, but potentially on the labor side as well. And we also have more and more money being made by intermediaries. And we spoke to one person from the DOJ. She calls it the tear any of the intermediary in this economy.
I'm going at Tyson's the stock. This is a big company. It's twenty three billion dollars a market cap, nearly stocks up eighteen percent a year to date. Joe, is the chicken business a good business?
Yeah?
I mean, so you look at Tyson, but you know, look at a stock like Wingstop, Okay, and that's I don't know, what it's done over the last few months. I haven't pulled it up in a while, but I mean, that's one of the most extraordinary long term stocks you'll see on the market. It's a it's a fantastic business.
You know.
One of the things that we get into as well on this episode is you know the McNugget, Right, it's just this like chunk. They're delicious. They are various versions of some sort of part of the chicken meat than deep fried everybody loves it and sandwiches, but like, this is the emergence of an industrial process that emerged over time, right because at some point, as you know, chickens were grown in the backyard and the meat wasn't really that good,
et cetera. And then signs came to the rescue, made the big birds bigger, made them fatter, made them juicier, made them tastier. It found ways to process that meat such that we can get a chicken tender or a chicken finger or a McNugget, et cetera. So there's also this sort of long term march of science story as the chicken has become a more wonderful food to eat in various forms and flavors a real quick trace.
I thought we had regulators who watched over this thing and made sure there's competition. Especially, but the small business owner guy raised with chickens wasn't going to get crushed.
That's an excellent point. They've done some stuff. So they have done some things to sort of crack down on the integrators and the terms that they can dictate to small scale farmers. So, for instance, if you are a small scale farmer and you want to switch your integrator, you want to work with another big company, they used to punish you. They could penalize you for doing that, you know, charge you money. The DJ has cracked down
on that. But you know, there's clearly a lot more to do here, and it's interesting one of the approaches the DOJ is taking now again going back to that intermediary point, they're not necessarily looking at Tyson and Purdue, although they tried previously, but they're looking at a company like Agrostats. Have you ever heard of that one?
Never?
But I'm sure it controls my life and.
Some Yeah, yeah, yes.
It's a pricing database for groceries basically, so if you are selling a grocery product, this company will tell you what it thinks you can sell that for and you can guess what effect that has on the market. So there's currently a suit going through on agrostats.
Hi Tracy Great Stuff, Great Story, Tracy Alloy, Joe Wisenthal, Odd Lots podcast host.
Joining us here in our Bloomberg and Active Broker.
They've got a three part podcast coming out, Beak b Eak Beak Capitalism, talking about the looking at some of the issues in the US economy through the medium of chicken and who doesn't like a good chicken sandwich.
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