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That's pretty amazing how quickly and how dramatically sentiment shifted.
Romaine.
Yesterday we were talking about the buy everything rally, and now, as you say at the top of the show, everything that has a risk profile is being sold right now, a.
Bit of a sell everything rally. In fact, we're hitting fresh session lows as we speak. And I just want to pin at Katie. I mean, we talk about the superlatives in this market for most of the major indices. We're talking about the biggest drop one day drop since well April, yeah, which of course is right around the Liberation Day.
O juitah.
That sort of bubbled up and then it just seemed like the last few months it just kind of people forgot about tariffs, or they say we're comfortable with where the tariffs were, until we got a truth social post earlier this morning.
That's the thing.
The noise had definitely been turned down when it came to the tariff conversation. Now, of course coming back in a big way. You have the truth social post from President Trump there right now basically saying that he's not even sure if you there's a reason to meet with President g in two weeks, and a lot of hopes had been pinned to that conversation.
Yeah, and in fairness to the President, I mean, as you know, he does fire off these missives kind of on a whim. But we should point out that China has actually taken a lot of measures over the last few days. I mean, in fact the last few hours, including more restrictions on the export of rare earth, potential investigation, anti trust investigation into Qualcomm, and.
A couple other things that I'm forgetting.
So there's been some concern here. The China itself has kind of ratcheted up the pressure, and maybe that's why Trump felt the need to do it. You know, I had his chance to sit down with John Rogers.
I heard about that.
Yeah, he runs an era, co founded Aerial Investments, and I actually had a chance to talk to him about a wide range of things, including his thoughts here on the terror picture.
Take a listen as to what he had to say.
We're still finding ideas in small value space.
You know, they really have been ignored.
They're kind of the ugly ducklings when you compare it to Nvidia and Apple and all these jobs and exciting growth stories.
You know, the little mundane.
Businesses that we've invested in for forty two years just seem particularly orphaned these days. So we're seeing great ideas and excited to be doing the research and think there's real opportunity for small value.
Do you see a broader future for investment in that sort of entertainment space? And I guess it's more given what the sphere in MSU do. It's just a little bit more of a hybrid entertainment space. But I am curious as to what additional value you find there.
Well, everywhere we.
Go, we talk to as many experts as we can as part of our regular research and due diligence, and everyone is saying, you know, post COVID, it's really is sticking that the next generation of citizens here, particularly in America, love experiences.
They want to go.
Out and be together to watch a ballgame, watch a movie, go to a concert, go to an outsdoor stadium to see music. It's something that is really I think here to stay. The moment mentum is continuing to hold, and so places like the sphere that has this you know, magical IP people want to come and experience it together. And I think it's really special. I think the Wizard of Oz is just scratching the surface. It's absolutely amazing and exciting to go to. But there will be other exciting,
amazing things. Everyone speculates, well maybe one day, you know, it could be Star Wars, maybe it could be Harry Potter.
You never know what could be next. But those are the kind of things.
That people want to come and appreciate in a live audience.
You're no stranger to investing in the entertainment space, and at least prior to the tie up with Paramount sky Dance, you were one of the largest shareholders in Paramount. Now that that deal is done, now that David Ellison has laid out his vision for what he wants to do with that company, I am curious as to whether you think that it can be not just profitable, but also a growth story.
Again, well, that's still an open question. You know, it's been a torture experience. I still think for sure there's a lot of value there. You know, Paramount Studio is valuable, CBS is valuable, they're you know, still number one year after year with their content. You look at all the different things, and of course Paramount Plus and Pluto. They have these extraordinary assets, and so the stock I think
is still you know, significantly undervalued. Now whether they can get the growth they hope To your question, that's a that's still an open question because you're, you know, you're competing with Netflix, You're competing with all the big guys, Apple and Amazon, et cetera. And whether you can grow in that environment is something that's really still an open question.
I think mister Ellison has the right idea of you know, building scale, you know, building ip, making these acquisitions that can really add value and hopefully potentially add significant growth from revenue and profitability.
To that point on scale, does a deal like one for Warner Brothers Discovery, should that actually come to fruition? Does that se smart to you in terms of the cost and what it would actually bring to paramount?
Well, I've been reading a lawful a lot about it and talking again to as many experts as possible. I think that acquisition makes a lot of sense. It brings scale, as you suggest, it'll make them one of the major players that will be there forever. And at the same time, there's huge synergies, you know, huge cost cuts that are available. You have two major studios. Maybe you could sell one of the studios and the studio a lot and all
the real estate value that's there. But also just again an extraordinary amount of synergies that are there, extraordinary amount of cost cutting that's there, and we put it all together, I think there's this real potential of immergier like that would happen.
I do just have to ask you just about the political climate, because that's sort of driving some of those divisions these days. And I know in the past you've said that you're still hopeful for America, still hopeful for our economy and our markets. But when you look at what's going on, particularly in the city where you sit, where Aerial sits in Chicago, which has been the subject of some of the ire out of the White House, what do you make of it?
I just think it doesn't make any sense at all. You know, the city has never been more beautiful, it's never been you know, the safety issues are drifting away.
The violence is going down.
You know, we've had extraordinary leaders here who've worked to build our city back from times where it was somewhat troubled. But we know Mayor Johnson's done a great job.
JB. Pritzker has done a great job. You know.
Former Secretary of Education Arnie Duncan with his CRED program, the Anti Violence Initiative have made a major difference in our business community. Our civic committee headed up by Derek Douglass. Everyone's come together and we're fully online together. We have the same perspective that our city is really on the way back.
Things are great.
We got additional headlines out of the White House with regards to tariffs, potentially more tariffs on China, largely because the President says that he doesn't think Jijiping is cooperating
enough in the negotiations. Being a small and mid cap investor, particularly with some names that I would assume would have tariff exposure like Mattel, does it give you a little bit of concern that we still have not sort of, I guess, reached some sort of resolution on where we're actually going with these tariffs, what they will be, and what we can count on them to be.
Well, none of us that are work in the Marcus day to day like to see We don't like to see the volatility. We don't like to see the surprises. You know, we're looking for stability, and this is kind of a fragile atmosphere with what ever's going on around the world all.
The challenges that we face.
Having these challenges domestically around the tariffs is something I think is really problematic.
We've also seen a revival in deal making, John that we didn't necessarily see definitely coming out of last year, and at the start of this year. You are Ariel and your funds are investors in names like Carlisle, Lazard and a few others. I am curious as to whether you think the current uptick that we've seen in deal making is actually going to continue and even potentially expand.
I think it will continue, and I think it will expand. As we've had a chance to talk to the management teams at both Carlisle and Wizard, do you feel like the momentum is building. This regulatory environment is so much more friendly or for acquisitions and mergers. I was talking to a great a leader yesterday, a big brokerage firm, and they were just saying how this is gonna be a great time for more and more deals to happen.
I just can't overemphasize that. When you see the opportunities both for companies to make strategic acquisitions that it's not going to be questioned by the Justice Department or the SEC or the other regulators are out there, the FTC and the rest. I think you're gonna see one deal after another.
John Rodgers, the founder and chairman of Aerial Investments, wide ranging conversation about his investments in the small and mid cap space, the state of the economy, the state of Chicago, and the state of those trade tariffs.