Surveillance: Inflation Pressures With Dutta

of US Economic Research, Renaissance macro research. Neil, you are the king of transitory. Why is six point x per cent inflation transitory? Well, I don't know that I'm the king of transitory yet, Tom. I mean, we have been telling clients that that inflation is going to be getting worse before it gets better, and um, you know, today's inflation data has been so it vindicates that. I mean, I think if you look at this, this is actually

somewhat worse under the surface than it is on the surface. Um, so you know, I'm looking at my Bloomberg obviously shelter, but you know, look, we still got a beat despite no contribution from airfares. Air airline fares were actually a drag. It's hard to see how that keeps up. Considering, um, you know, the travel situation which is beginning to heat up. I mean, if you look at search interests for flights, uh, there's increasing demand for travel. So it's it's unlikely that

that we see a repeat performance on that front going forward. Um. You know, I still think there's a decent amount in the pipeline for use car and truck prices to keep going up. Um. But again, the big, the big story is here is rental inflation, and it's and it's and it's firming. So UM, I do think that the FEDS still has a story to tell. So it's not so much what the lation is doing. Obviously that's important, but really it's what's the FED going to do about it? Um?

And I think Powell, um, it's not ready to do something about it. Yeah to Q one, Nail if you can, Sorry to jump in, but I think this is important when we get to Q one, and as I listen to you, it seems to be getting broader and stickier when we get to Q one. If we're still in this position, and unemployment, as Jim Pallada suggested, could drop to a three handle. How do you think communication evolves around that? From your perspective, you're understanding of the reaction

function of the FED. Well, I think that that will keep the door open for rate hikes starting in the second half of of next year. I mean, remember that the FED is a very slow moving entity, right, and their institutional constraints. I mean, think about what Powell said last week. I mean, you know, you had folks like Waller and soon to depart corals talking about how, well, if the next two inflation prints or firm, we may have to shift the timeline for rate hikes. Um, you know,

maybe even hinting at speeding up the tapering process. Powell, I think effectively put the kabash on on that talk last week. So they've kind of locked themselves in to a steady pace of tapering I think over the first half of next year. So you know, look, we're talking about, you know, potentially substantial acceleration and employment activity between now

and the end of the year. Obviously inflation is firming, so we're seeing an acceleration and nominal growth and guess what the FET is still buying right, So, um, So it just tells you how slow moving the fete is um And look, I mean I think that labor supply is going to come up, and I think the FED will have a good story to tell and they'll they'll, you know, and they'll continue to stick to that. But you know, the risk, of course, is that there's more

of an abrupt shifting policy. Sometime later night, steer Neil. Let's say the data continues to come in like this, and the fact it feels like it needs to hike rates. How high can rates go given where the economy is, given how much debt we've incurred. Well, so that's the issue, right. Li says that if you look at the pricing in the forward market, I mean, the curve is so flat. So basically, if I'm interpreting the market correctly, it's, you know, let's hike twice and then be done, which sort of

raises the question like why hike at all? Like so I don't, um, you know, to me, the back end of the curve looks very misspriced. Um, because there looks to be, at least in my mind, a significant amount of momentum in the in the in the economic situation, I mean, demand is running very very strong, and it still continues to run strong, and you know, you mentioned

about how real wages may slow demand. That's unlikely in my view, because aggregate incomes are surging, right, So it's not just about what people are making on each our work. It's about how many people are working, how long they're working, and also they're hourly earnings. And if you up the some product of those three things, I mean, that's growing like ten percent, So that's a rough proxy annualize, So

that's a rough proxy phenomenal GDP. So now we need to think about what's going to be the distribution of that growth. I mean, is it going to be you know, six percent real real activity and maybe four percent inflation? Is it going to be seven percent real activity and three percent inflation? What I can tell you at a minimum is that the FED is going to be having

to revise up their inflation estimates for next year. And one of the things that we've been seeing is that they've you know, when you look at the median expectations, they've always been sort of just expecting inflation to slow down to two percent, right, So it's just sort of this mark to market exercise. There hasn't been this kind

of capitulation from the FED on the inflation story. And I wouldn't expect that in December, and I wouldn't expect it in March either, because, if anything, the composition of the of the farm C is going to change. I don't think Biden is going to put people in there that are going to adopt a more hawkish response function to the data that's coming in. Neil Love catching up with you, the perfect guest to talk about this with

Neil down to that every nice on smacro research. Right now, we will pause, and this is a wonderful interlude into cp I and all that we cover here. Jeanne Plan the CEO of BMP perry Ba USA. He's an acclaimed world class sailor, but far more he has carried forward the heritage of b MP Parry Ba from Roland Garrows almost fifty years ago, where it's safe to say he and his bank brand and own the sport of tennis. John, the only equivalent, see I know, is what Barclays did

in Premier League years ago. Jean, if you have had a bang up year in the branding of tennis, what will b MP Parry BA do in two thousand twenty two? How do you carry for the open in Indian Wells and bring it into your banking business of next year. Well, Tom, John and Lisa, thank you so much for having me on the show. Um and Tom, you definitely follow and

no tennis extremely well. You mentioned Indian Wals, which we managed to you know, really host in one, which we could not do in twenty and it was an amazing way to send the message at work, back back in business, back with clients. And as you said, the bank is has tennis in its DNA and the plan is to having Indian Wells in twenty twenty two in March. This is you know, spring season opener and hopefully this time

full capacity a lot of fans. And you know, the values of tennis fits pretty well the value of the bank going forward. Uh. We you know, it's a it's a global sport. The bank is a global bank. It's all about sportsmanship, you know, personal improvement and really uh, it's a it's it's a sport that you can really you know, develop and and and uh and follow around the world. And this is this is why we like the game, Johnny. If let's pick up on that line

you just mentioned, the bank is back. The bank is back, the employees back at the back on the trading floors, business is usual. Can you help me understand how things are revolving at the moment, how things are normalizing in your business, your bank. We are absolutely, John, we are really you know, uh, asking and more specifically, you know,

incentifizing our staff to come back on premises. You know, we have to acknowledge that the digitalization of our economy during the pandemic, you know, as allower us to stay in business, to stay connected, including today, by the way, I love I love being in the studio. I look forward to being back in person with you hopefully you know, in the months to come. But having said that, nothing replaces the in person relationship and connectivity. It's very complicated

to convey companies values digitally. And this is what we do on the His coast, you know, in the building you know, well here in mid town Manhattan, we now have over thirty percent for staff back on premises on a rotational basis obviously, uh. And we're targeting for by your hand and hopefully early in two. We are trying to make the office attractive or we're designing of frauds

to make the time effective. Um. You know it has We have to provide value for employees to enjoy being back on premises, and management is a refocused on it. They want to be paid more. You know that you can say the bank is back, we will care about this business. I care about this industry. You care about this industry. It's great to see people on trading flaws again. But you know, if something's got lost with this younger generation, they don't want to be a part of it. In

the same way, how are you grappling with that? Does the price get it done well? It's uh, it's one of the major challenges and concerns. There is a tremendous competition for talent. Uh and it's already by the way, within the banking industry. Competition comes from outside of the banking industry. UH. And it's in some very targeted areas you're rightly mentioned, you know, in corporate banking, the juniors. It's in leverage finance as well. Whether it's such a

high demand, I can tell you. It's in some you know, new technology areas as well, such as cyber and AI. And it's in retail. We have a retail bank in the United States. Retail as well is experiencing some tensions in terms of uh, you know, a strong competition for some positions. How do we deal with it? Listen, first and foremost, as you said, you know, it's about remaining

competitive in terms of compensation. That is absolutely critical. But it's not only about compensation, john it's uh, it's working for a company that has a purpose. I believe that the mp PI BAT or focus on CSR on sustainability is quite compelling. It's acknowledging the fact that some of our staff, particularly the younger generation, is looking for flexibility and the new ways of you know, digitizing. The business is probably there, and we have to make the workplace

attractive and people coming back here. It has to be for a real value, Johnny, especially as you expand again in the United States, I do wonder how you compete with the likes of JP Morgan and the oligarchy of US banks at a time when everyone wants a piece of the US dynamism. That's very true. And you know, for a bank like BNP PIPA, which is a leader in the EUBO zone and as you know, Lisa, we have a fairly large platform in the United States. We

have a diversified business model. We have a retail activity or wholesale activity. We have fourteen thousand people in this country, meaning contributing to the workforce here. But to be successful as a US bank owned by a European leader, you have to be very targeted and to get a piece of the dynamism in this country of this, by the way, amazing recovery that we believe will continue into a twenty two. You have to be targeted. You have to really realize

what kind of value can provide to clients. And this is what we've done. With our wholesale activities and retail activities. We we can be quite effective with US clients who not only have a business model in the United States, but who are becoming much more international and benefiting from the U s cross but European expansion that we see

happening as well. In one and twenty twenty two, Johnny, if you forgive me, because only have sixty seconds left on the clock, we get some inflation data in American about five minutes. What's your take from the companies you serve you finance, what are you learning understanding? What are

you learning at the moment about the price pressure in America. Well, first and foremost, I'm learning that, you know, they are really very optimistic about you know, the expansion only the recovery we face here, which is carry which will carry you out in a carry on in two. And I see them investing. I see them, uh, you know, positioning

themselves for more capex investment and obviously trying to hire. Uh. Inflation is a concern for sure, but we believe that with um, you know, the supply chain disruptions will we'll probably you know normalize opput in two uh and uh that they should. It's that's not the biggest concern, particularly with such a g D pickles that we're experiencing in in this country. Johnny, thank you, sir. As always it's

going to catch up. A privilege, a pleasure. Johnny philly on there the BNP paraboun USA CEO right now, and this is a joy. He's a gentleman and this is always a joy, and that he's running an airline and actually is familiar with the cockpit. He's a former gentleman from Colorado Springs and outside Dallas, Texas. Scott Kirby joins US now the chief executive officer of United Airlines. I don't want to ask a snirt question, but I think Scott, it goes to the pressure you face with COVID and vaccine.

Could Aaron Rodgers fly out at Green Bay this morning on United Airlines? I have no idea where Aaron Rodgers ploye, but at the moment, uh, there there's we have a requirement frire employee. Uh and we got nine nine point seven percent of employees. Yeah. I'm really glad you have that done. And if you fly international, you've gotta have you got to be vaccinated in most geographies. But what about domestic right now? Are you checking? I mean United

is lead on this, folks. Let's be direct about it. And this is your experience running American and all the other responsibilities you've had. What do you do with passengers right now? Domestically in America? There is not a requirement domestically for vaccines. There is a requirement, of course to wear a mask onboard airplanes. And the airflow on airplane, you know, literally is the best if you're going to

be anywhere indoors. And our view has been on this point at and the administration has already said this, and I agree with them, which is the best way to get people vaccinated is frictional trans transactions every time you go to a restaurant, every time you get on a airplane or a train or a bus or a subway. But to do it through work and then you do it once and you get a high percentage of the population vaccinated. And that's really the most efficient way. And

of course that's what we did at United as well. Scott, how much resistance did you face from your employees to these mandates? Well, you know, we got ninety nine point seven and uh, you know, there's so many of those people, uh started off unvaccinated or did not want UM to to have the mandate. Ironically, a lot of them actually had been vaccinated, but they just didn't They objected to the requirement. But um, But the good news is we

were open, honest, and transparent. We started started talking to our employees about it in January, and so when we did it, it wasn't a surprise. It didn't come out of left field. We were firm. We never waffled about it. It is always about safety, that's what it was. You know, I literally have written a letter to the families of every employee that lost their lives to COVID and when

you do that, you know it feel you feel it. Um. I felt it, and that the second time I started writing a letter again in July, after the delta variant kicking up, you know, I walked around and talk to my wife and call our teams. Said, we're doing it, um, because it's about saving lines. Scott looking ahead to the end of the pandemic, because it does feel like we are getting to a place where we can talk about that.

How much will prices of airfares be higher? Simply because there is such a debt overhang, there is such a lost year, a lost era feels like of travel. Well, you know, ultimately I think prices, you know, by the time we're getting the next summer, I guess I'm guessing we'll be back to two thousand nineteen levels. Uh and and then they'll go up based on kind of our cost input. You know, fuel is a perfect example. When fuel goes up, airline tickets up, and when people goes down,

they tend to come down. Um. And you know, the good but the good news is most airlines and particularly United you know, got much more productive using technology and more efficient, and so our core cost structure. We at United think that we can be ten percent larger than we were before with the same level of employment, and so some of that is gonna is gonna help mitigate any increases. But my guess is we're gonna be getting back to kind of two thousand nineteen levels by this

coming summer. If you're just joining us Bloomberg, Greece. Scott Kirby, the chief executive officer of United Airlines, Lisa brand Woodson Tim Kane. Mr Kirby Lansing, Michigan, is looking at Delta in American and not looking at United this morning. I believe you pull out of eleven smaller towns today. Is this some form of reversion to monopsony or monopoly within the airline business that we don't have competition into some

of these smaller towns. Uh, not at all. This is simply the economic reality of Frankly, you know, not enough pilots in the country, and with not enough pilots, you know, flying small regional jets just gets to be impossible in your choices. If you're only gonna have enough pilot do you want to fly to London or do you want to be landing and we're gonna fly to London and and it's as simple as that. Did you do this

in conversation with the other domestic carriers? Was this an organized plan to be sure to two airlines say we're left in each town? Absolutely not. That would have been illegal, but we didn't do it. Now Robert Crandell's listening down in Florida. Question, Scott, I do wonder your conversations with other executives how much you hear about business travel coming back, how much you're adapting airplanes to an era without the kind of business class that you used to have. Well,

you know, I'm in uh. It used to be a year and after it as a minority of one, and it's still a minority today. But there are a lot more people that agree with say, which is I think business travel is gonna come back. Um. We see all kinds of anecdotes, and particularly once people start traveling, they're getting back to traveling. I'm here at right now, and it is so much more impactful being here in person

than it would be doing doom meetings. You know everything that you know, the magic happens at dinners or at a happy hour, meeting someone for a drink, that's where things really happen. You get to know pi where you build relationships, and that is human nature hasn't changed. Technology is great, but just like video conferencing didn't kill business travel back in the eighties when Bob Crandell was worried about it. Uh, it's not gonna kill it now. One

final question. Lisa is really focused in on this s f OO is c d G. She wants to take the seven Dreamliner. How bad are you getting killed on fuel costs for Lisa to go first class s FO to c d G. Yeah, well, you know, fuel prices are up. There are biggest there are biggest cost in but um, but we're glad to be getting back to flying from San France to Paris and all the other markets. Uh.

And love welcoming the customers on board. And I can tell you having phone for International in the last week there, everybody on board is excited, employees, customers. If it's palpable when you get on board of the International fly, do you call Muhammad Larian like at the end of every month and thank him for flying United? Dr Larry and Cambridge. He only flies United. He like literally won't go unless you know he goes there. Well, I I will now

that you told me that. I think one of our other biggest flyers secretary carry last night, because we have we have a lot of those. Uh yeah, Scott Kirby, thank you so much, greatly appreciate it. Right now, the CEO they're ringing a bell for Scott Kirby the the end of the pandemic. Perhaps we are who we are,

David Rubinstein. This is a star football player whose career ended early, and this is someone who was ever framed by the horrific mining accident of Farmington, West Virginia in nineteen Who is Joe Manchin And what do the Washington

elite not understand about him? Well? I think they don't understand that he is in a state that's heavily Republican, and though he's a Democrat and he was Democratic governor as well, the state went for President Trump overwhelmingly, and therefore I just don't think you can expect him to be doing whatever the Democratic Party leadership wants. He is a Democrat and he's not going to switch to being a Republican. But he's very independent and he's not dependent

on the Democratic leadership for his power base. Do you since David, and this is after the election, to be unfair that he is in close conversation with Democratic moderates who are shell shocked. Yes, absolutely, Um, I think he's saying to them, and I think he believes that the election in Virginia showed that you can go too far to the left, and that's what he thinks probably happened in Virginia. So what he's trying to do is to say, we don't need to have some of these policies that

are spending a lot of money. We shouldn't, he believes very strongly, and not giving people more what he would call handouts or more gifts from the government in his view. Uh, and really we should pay for some of the things that we are paying that we're trying to get through legislation, and right now we're not really paying for it. And he doesn't favor increasing taxes either. He would favor not having these programs. But he is a very personable person.

I've known him for a long time. Uh, he's very intelligent, he's very engaging. He just happens to have a views that are a little more conservative than Democratic Party leadership, and a little bit more conservative then maybe some other people in Washington would like him to be. But he's

reflecting his constituency. Remember it's a constituency does a very Republican and Uh he could probably win as the state if he if he switched to a Republican, which is not going to do, he could probably get elected as a Republican. He's very popular, but he's also trying to reflect the views of his state. David. Does he enjoy his power. I've met very few people that don't enjoy their power in Washington, d C. So I would think he probably does enjoy it. He doesn't run around saying,

look how powerful I am. But when you are as powerful as he as he is, and I don't think I've ever seen a person who's not in the leadership, not the majority leader, a minority leader, have as much power as he has. He has much more power now to affect the outcome of major legislation than anybody I know other than a majority leader or a minority leader or the Speaker of the House. Enormous amount of power, and I think he probably does enjoy it. Why would

he not? Does he plan to use it? Just launch into something else politically? Say President Uh to be realistic about it. I don't think that's that that can happen. I mean, and he wouldn't say that it can happen. Remember, he's now, I think, in his early to mid seventies, and while that's young for some presidents, you might say, Um, he would not be about that attractive to the Democratic Party UH primaries in my view, because he'd probably be too much of a moderate to do when in the primaries,

and I therefore think it's unrealistic. Um, he is not likely to run again for governor in my view. I think he's pretty happy in the Senate, So I think he's going to stay in the Senate. UH. If he runs re election, he will be up in two years, and he hasn't announced yet whether he'll run again. I suspect he will, but he hasn't society yet. David, you have studied and indeed live, the path from Mr Jones to Mr Welch to Mr m l and on to what we have now with Mr Kupp at General Electric.

Your thoughts on the end of GE as we knew it, Well, it's a sad situation for American corp life. You might think about it that way, because this is one of the most powerful companies in the world for a long time, and when Jack Welsh was running it, it seemed to be the most impressive company in America. And now the company is being broken up. Larry Colp is a very

talented executive. He did a terrific job at Danaher and after a couple of years, if his conclusion is the best thing to do is to break it up to unlock value, I think he's probably made the right decision. So it's unfortunate, but you know, time moves on, and no company can stay as big as as g was forever. And it really had to make some change that it didn't make changes quickly enough, and that's why they now

have to do what they're doing. And David, do you think that in ten twenty years we're gonna be saying the same thing about Amazon? There very few companies that stay at the top of the world for as long as the g E did. Amazon could be one of them. But Amazon is still a relatively young company. But there's no doubt that there's gonna be more companies coming along that we haven't heard of that are going to be the dominant companies uh in the world. In a few years.

For example, twenty years ago, who heard of Amazon, tesla Um? Even Apple wasn't that big a deal then, or Netflix. So the world changes. That took one of the great things about capitals, and you can start a company and a few years you can make it a very powerful company. Amazon has in pretty good shape though. I think there'll be around for quite some time though. David Rubin saying thank you so much, greatly appreciating and peer to peer conversations.

Look for that tonight with a timely conversation with the Senator from West Virginia, John on this guest. We've got to start with CPI Wednesday, but there's a whole lot going on that Robbo Bank is truly expert at TAK. There's a ton and I think the overwhelming story still is to try and understand what the incoming data means for the fence next move. Let's start that with Jane

Funny right now, head of FX Strategy at RAMA Bank. Jane, can we begin there what the incoming data CPI this morning, payrolls, last week, the ice M actually mean for the federal's eve gun into next year. Well, to be honest, I think we're going to answer the question of whether or not a transitory is gone des by looking at to today's data. I mean, yes, if it comes in a lot weaker than maybe some of the less inflationary among us are going to just to say, you know what,

this is transitory. But I think more of the answers have got to be in the wage inflation because it's only when we see wage inflation. If we don't see wage inflation, that will be able to tell whether or not there are those second round effects. You know. When One thing that I think it's going to be really quite thematic for for the currency markets certainly going forward over the next over the next six months, or maybe even beyond, is the fact that not all labor markets

are the same. They are very different. You have more flexibility, for instance, in the US probably going to have more wage inflation, and yet that's not going to be a pattern that we see elsewhere, and that is going to be really important in trying to judge interest rate differentials and effects going forward. Jenny's you understand better than most most things are solved in economics with the calendar. Just time,

let it pass. For the Chairman of the Federal Reserve, I wonder how much time is on his side, and how you balance what we're seeing on wages which picked up still below inflation in America, but wages picking up at the same time the participation rate in America is not How do you balance those two things, Jane, Well, that's exactly the problem. In the US. You have a

very flexible labor market. The participation rate has dropped. People have fallen out of the labor market, and therefore you're going to have or we've seen wage pressures as firms scowring around trying to find labor. Now you go to a country like Japan, it's not the same sort of labor market. Firms tend to hoard labor. You don't have firm scowing around trying to find workers because they already

have them. And that's probably a situation more work into what we have in Europe too, So at Legard for instance, that remaining quite davish, expecting that inflation is going to be more transitory. Well, maybe the answer to that maybe the differences in the labor market. Similarly, you can you can see differences in the labor market in Australia too. They haven't had the same reactions in the US. So in the US, yeah, we're potentially going to see an

interest rate hike. We think at the end of next year, maybe around December. Obviously some people thinking it's going to come earlier. But that's not going to be necessarily the same dynamic that you see elsewhere for those of you on radio, and you can see it clearly on TV. Jane folio is at the Rabble Bank London desk. That is a desk of the Netherlands. And what's important here John and Lisa with the inflation argument is Robbo Bank is absolute ground zero for the food industry hedging in

the world. They own it from forward. Jane, you have a view of food inflation like not one single person we talked to. What do you observe it, Robbo Bank about food inflation, hedging and speculation dynamics right now? Well, to be honest, I we take that back into energy and awful lot of food companies like it, well sort of manufacturers have big factories and energy but picularly in Europe parts of Asia has been a real problem this year. So an awful lot of people trying to hedge that energy,

trying not to pass those costs onto the consumer. But they are probably coming. So we are seeing that sort of inflation coming through. And this is this is why, of course central banks or various central banks are going to be going to be cautious, because even if wages go up, if you've got food inflation or energy inflation going up by more of a pace, you're still going to have real wage depreciation. And that's not the sort

of thing that's central banks high interest rates into. So this whole dynamic is really quite complex and really quite fascinating, and I think that's going to be the situation next year. So some more volatility. I think at the short end of the curve Gene, why isn't the dollar stronger given the back draft you just laid out, I think there's

a lot of good news in the price. So for instance, if we go back to June, I think June for me, the done FMC was really interesting because that's when we saw that big movement in the dock plots of various f WEGM seen was relative too much. That's when we began to see this dollar rally. Now, the dollar really has been on the front foot. It's been rallying, you know, since June. It's it's it's it's gained ground. And I think at this point in time, there's a lot of

news in the price. And when you've got a lot of good news in the price and in terms of the fair et cetera, well you know, how much more can the dollar go. You're also looking at a situation where we see risk appetite, certainly for US stocks really benefiting. So you've got the dollar gaining and risk appetite for for stocks gaining too. And I think perhaps that's not a natural dynamic, and perhaps that's something which has has has maybe forced some of the bullishness out of the

US dollar as well. You said it, Jane, what a fascinating moment this is. It's great to explore it with your Jaane Farley There, Ramma Bank, it's a different Disney John and you know, I guess they're waiting for Mandalorian and streaming and a John. Did you watch Mandalorian? I did not. Yeah, it's it's you know, it's cappy. It's like there and we're all waiting for it. Okay, should we talk to an expert? We should probably think we should do that. Michael Michael Nathans and joining a senior

analyst at Marfat Nathans and with Craig mafat Definitive. Here, Michael, I want to talk about Disney on this conference call in the fear they have over the streamers. I've got Apple and Culver City over five hundred thousand square feet, doubling employee count to three thousand something, Netflix with three hundred thousand square feet. They've got a million square feet in l A. How scared is Disney about the new streamers joining them in l A. I don't think Disney

is scared about competition. I think Disney is gonna be focused on how can they accelerate their growth because in the past couple of quarters has been a slowdown at Disney. Plus I don't you know, I think there's enough room for Disney probably to win, and they need to talk to us about what they're seeing, why there's a slowdown, or whether they're gonna do about it. Okay, what are they gonna do about it? I mean Disney is here, They're coming out of a pandemic. They get x thousand

people at Shanghai Disney. You know, COVID and Shine and all that. What does your crystal ball see or is it like a massive opportunity coming out of the pandemic to buy pandemic affected Disney. You know, we're neutral, truly neutral, because I think the stock last year more than compensated for the streaming opportunity in the park recovery, and for the past twelve months or so, it's it's just been trading water. Our thesis is that to spend a lot

more money on content. Maybe that's to your Appling and Netflix point, that there's so much great content available that the only way you get stub to this point is by spending more money and content building awareness, trying to have a breakthrough head. Disney has done a great job gang in this level. In order to grow further, they need a lot more content. Um, you know, they have to have a flywheel spinning faster. They don't then they've

done so far. They've also got to consolidate what they own. And Michael, now you're focused on this, how did they leverage Huluk? What do you make spanking them to do in the coming months? Courts Okay, so Hulu is a JV between them and Comcast. In two years, they have the right to buy it back. Rethink they'd be smart to buy back sooner and try to create a more unified Disney bundle. You know Who's on its own Apple

Island and Disney Plus has allen. You put him together, um, and you create one single application where you can get Who and Disney Plus UM and basically try to push more people to the bundle than's Disney and Who plus Disney Plus and Who. They have to buy it from Comcast UM. I'm sure they're talking to them now about it. It's not going to be cheap to do it, but they need to. Basically, we've find we've had the research is at Disney Plus has done. It's not well penetrated

amongst older viewers. It's done a great job among kids, families and fans of their content. But for the older viewer that's not a Disney Disney fan that wants gen entertainment content need to do more and putting it together with Hulu more closely probably could drive penetration. So we're expecting something in the next two years before actually the timetables up to try to consolidate the position. It is this for a biggest slice for Bigger Pie or Michael.

Could that be in a hate this term the Netflix killer, but could that be something that hurts Netflix if the likes of Disney can diversify the content slate beyond that narrow demographic you described. Yeah, So our our view is like Netflix is a base a based consumer choice, but as time goes on, what you're seeing is more people

are adding more services on top of Netflix. Our Netflix nesis you know we've been running on the stock is that content is not monopoly, that it's impossible to have a monopoly position and content and the competition and Tom talked about you're talking about to us impacts Netflix is the time spent in Netflix, Netflix, the price and power, maybe the cost of doing business. So ultimately more competition I would think would have some negative packed on Netflix's

ability to raise prices and to compete. But in the past twelve to fifty months, the pandemic has really slowed down the ability to compete because you can't. You had a good two months slowdown with no content is produced, and Netflix had a massive advantage. So for us, the next one to two years will be a catch up on spending for all these companies that couldn't compete during

the pandemic. Michael, when you talk about the fact that Disney Plus hasn't really penetrated the older individuals, the older households. Are they fully penetrated with the younger households with those that have children? Lisa, obviously no. You know, Netflix is about penetrated across the board. Disney added best penetration rates about so there's room to go amongst you know, the

core demo, So there's definitely room to go. But then as we show, it drops off dramatically, So yeah, there's upside going to the core, and then they have to expand past the corn. That's what we want to hear about, you know, and there is cultivate endings a little bit later, Mark, before you go, what was meta about? We haven't spoken since then? What was that about? What are you telling? What is that? Exactly? By the way, we have a

buying Facebook right exactlete. What's meta about? Meta is about a world in which Facebook could, um try to have more control live or not over the world they have now right where it's it's it's a it's a universe where there will be commerce, they'll be communication, um, there'll be games, and Facebook's trying to basically have a leading position in that world. We've done some Mark on this

recovery the gaming industry. We think gaming will lead, and I'm not sure that Facebook actually have a position they want to have in this business. The other thing, Jonathan, is it was a way to take the turn of investment dollars, classify it and we can now separate that from the core Facebook earnings number, and we can say to you and everyone else, look how cheap Facebook is. It's meta. If you ever met a no value at all, which we do, the core business is actually a lot

more properly you think. But yeah, we'll talk to you in three to five to ten years about meta um and we don't evaluate at all. But it's helped us, you know, clarify the valuation. I look forward to it. It's a world Tom where regulates us like us politicians. I want to sit around a table with us in sharra drink. Michael Nathan said thank you, sir. Michael Niceton said a muffit next and said thank you very much.

This is the Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays from seven to ten am Eastern on Bloomberg Radio and on Bloomberg Television each day from six to nine am for insight from the best in economics, finance, investment, and international relations. And subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com, and of course, on the terminal. I'm Tom Keene, and this is Bloomberg.