Anticipated so today was cpi, Consumer Price index, and we got 3. 7 yearoveryear, 0. 4 percent month over month. Anna, what do you think about the numbers we got . It does look like the fed could it does have cover to raise rates again if they want to. I think this is not the type of report that could convince the majority of fed officials that rates are sufficiently restrictive. We saw from the fomc minutes yesterday that many think rates are near or at but i think this report shows it is more likely to be near rather than at sufficiently restrictive. Matt so we did see in the dot plot, 12 at a 19 say one more hike for the year, at least that was their expectation for where we would be. They did not know obviously about the situation in the middle east the way that would unfold or the moves having nothing to do with geopolitical events in long term rates p release all them sore last week. The tenure hit 10 year 488. To those two things change the outlook . I think the reason for why the 10 year yield surged since september is important in terms of its implication on whether the fed will have to do more. My explanation it is likely due to the smooth affective of qt and also due to concerns about the fiscal trajectory of the u. S. What that means is it would tighten financial conditions and substitute for some rate hike. You can think of the longterm treasury yields was increases were driven by better economic growth, the fed would actually have to do more but what i think happened is it does substitute for rate hike. However, the hamas and israel conflict does increase a possibility we will see another wave of supply shocks. In Bloomberg Economics we have a model that decomposed drivers of inflation and we saw the pandemic supply drivers have returned to about roughly zero. The remaining inflation is due to demand, so if you have a surge in oil price, i think that would reaccelerate, definitely, the headline cpi and that will cause the fed to either hike more, multiple rates, or higher for longer for sure. Matt Michael Scholl on bloomberg surveillance was saying the fiscal situation, of which the fed has no control and up either does anyone else is problematic in that we are running massive deficits, 1. 5 trillion are on on track for more than that this year and we have a huge debt, 33 trillion almost federally. That was going to eventually necessitate yield curve control from the fed. What do you think about the possibility the bond vigilantes have been awakened and are going to punish the u. S. Government . I think the bond vigilantes have awakened. We examine the driver of the premium in the last couple months because that is driving the 10 year yields increase. My observation that over a period of 40 to 50 years, history is either the feds qt or the u. S. Government fiscal situation that drives premium off and i think persistent upward movement we have seen the last two months fits with this historical pattern of what drives term premium. Looking at the u. S. Fiscal deficit this year, it is likely to be 6 of gdp if there is a mild recession as we foresee around the end of this year, i think at the first half of next year, you may even see the fiscal trajectory widening some because in a typical recession, the fiscal deficit increase by five percentage point of gdp, so i think the problem with the outlook is if we do have a mild recession, fiscal picture will deteriorate some more and while the bond market might want to rally if there is a recession, the fiscal picture will keep that lid on the rally and continue to put upward pressure on 10 year yields. Matt i want to get back to the inflation picture, specifically because i want to show our viewers this tool. I think it is so cool on the bloomberg terminal when you type ecan you get a good picture of the drivers of inflation and you can dig into it on other economic variables. In this case we see services coming down, we see commodities inflation coming down, we see food inflation coming down, Energy Inflation coming down. Even though it was worse than expected, are we on the right trajectory to get back to the fedss 2 target . I think it is important to be looking at the month on month inflation changes rather than yearoveryear. If you look at the month on month, it shows indeed goods inflation is coming down. That is the key driver of disinflation right now. On a monthtomonth basis, rent has accelerated and also many of the sticky categories in Services Sector accelerated such as recreational services, sporting events, apparently in september a lot of people wanted to go watch sporting events and that has pushed ticketing prices up and hotel prices. Keep in mind that beyonce was still running on her full tour in september but that has come to an end. We do see the longer run trend is for goods disinflation to continue due to used cars and services to gum debt come down since we have seen the wage growth has definitely been tapering so far this year. Matt you mentioned beyonce. Obviously everybody wanted to see messy and taylor swift as well. But it seems like may be, even though barbenheimer phenomenon did not bring too many people back into theaters. Target stock released if figure about Movie Theater visits, they have been declining. How do you feel about the consumer right now with moore purchases put on plastic, delinquencies there, and auto loans, student loan repayments coming back online, how does the u. S. Consumer look to you . I think the u. S. Consumer is feeling increasingly stretched financially. I do not personally i disagree with the findings out there that says excess savings is over 1 trillion. I think from the revealed behavior of the poor poorer half of the American Consumers, you see they are increasingly delinquent on loans, putting a lot more spending on credit cards as you said. That tells you that they are running out of excess savings and the bottom half of the American Consumers drive most of the consumption in they arm a multiplier for consumption, much higher than wealthy people. Most of the wealthier people who still have some of the excess savings are also the people who hold stocks and, with stocks currently adjusting, now, once again, i even see that the wealthier people increasingly feel less welloff than they did the last three months. Matt great talking to you as always. And along, our favorite freshwater economist. She was a prison block on a mist at the Federal Reserve and then we hired her for us area did we want to pivot now into the bloomberg screen time event where bloombergs lucas shaw is with netflix coceo ted sarandos. Lets listen in. Stop and texted his wife that there was a shooting and that is the last i heard from him because he was a victim of the terrorist attack. Horrific things happened in the world and our hearts are out of the family and anyone else who may have lost anyones saturday. Thank you for sharing i. He worked on various things that apple. This is your first israeli original . That we produced, yeah. Interesting. Im just curious, i assume then production has shut down on that . Yeah. Yeah. Thank you for indulging that. As with yesterday, there is no seamless way to transition out of that. I will do my best. One of the themes of this event, one of the big things in the industry obviously is we are in a ceaseless moment of change. A lot of that comes from Companies Like you youtube and it is clear streaming has won, or it is slowly replacing television as the dominant way people watch. Ultimately consumers decide with what wins and they say loud and clear that they like the control and choice of streaming. But there remains a skepticism as streaming as a business. Now you guys are profitable, some people would say and we can debate this, that you are less profitable than the most profitable tv networks were, pretty much every other Media Company trying to compete with you is losing money trying to do that. Give me the case for why you think streaming is already a Good Business and will only get better going forward. I think it is a great business and it is in its infancy. We have been streaming in some form for about 16 years. Our original content initiative, we passed our 10th anniversary of our first original show, so if you think about it in that way, you think about the Network Business added for 75 plus years, before that most of those were Radio Networks so they have been at this for a long time, and i think ultimately these consumerdriven things because business to react and reshuffle. I would say consumer driven because we did not just put something on there and say this is how you have to watch, and we started doing this, streaming i would say saved this industry. Because where we were heading at that time, we started this business as streaming, we started licensing content from the networks, and at the time we were licensing, we can only get what was available, which was nothing. So we were licensing from the bottom of the barrel, things with no revenue for anybody. Shows that did not get into syndication, things that were not otherwise sold. Kind of like what to be another services did when they came around and started. We gave it away with the dvd business. You got what you paid for back then. That created a revenue stream for the networks and studios, created a new residual revenue stream for actors and performers who performed in those projects sitting on the shelf, and really got the ball rolling in a way that obviously these things could take decades to build. But with meaningful businesses, that is a good investment. Good business for us, 32 billion dollars of revenue, 6 billion of profit, and we have been going growing business dramatically. Not growing as fast as we want to but we are growing the business. Im curious on that point, you guys in your remarks i think your last Earnings Report talked about how you are still not growing as quickly as you would like to. As a point in time where every year like clockwork netflix would add 25 million to 30 million customers. Postpandemic that has come way down. What are you doing about that and do you think you can get back to the level of growth you are at 30 to 40 three to four years ago . I think the key is growing revenue. For us that is a combination of putting a great product on the board, when you talk about streaming, is it a Good Business, it is if you do it well. The team at netflix in terms of the programming, her team are phenomenal at focusing on what people love. And their Creative Team is great at delivering from what people love. The team that delivers the ui experience, something that happens in netflix that is almost impossible anywhere else and because of our distribution footprint and recommendations you have the ability, if you are telling a story from korea, to be the biggest Television Show in the world. That can only happen on netflix. It is not just taking obscurity and making it big, imagine someone as big as David Beckham who releases his documentary on netflix and in days grossest social media following by half a million people. I think this happens over and over again with the combination of distribution footprint and recommendation. In which i think what destroying ash to stingless is the business. The way you grow that is doing better and better and the opportunity to grow is enormous. We are 10 of screen time when people are watching on their tv at home, about 10 in our most penetrative markets like the u. S. Around the world, significantly smaller. We are about 5 of Consumer Spending in businesses we are in, which is pay television, advertising supportive television, games. As you look at that, and we are in our infancy, 5 in Consumer Spending. A ton of integral revenue and i would say we are pretty underpriced based on 10 of screen time in 5 of revenue. So this play room to grow, as long as we have a high level of satisfaction. Consumers, it is a onebutton easy Cancel Service so if you are the new season of the crown when it comes on november, you jump. So we know we have a constant feedback circle of whether our feedback loop with members that if we are not pleasing them that they jump. You say underpriced, whens the next netflix price increasing coming . [laughter] nothing to announce, our pricing philosophy has not changed. We had to add more value to consumer and then pay little blower pass them to pay more forward if they agree. It has been a successful formula. On that point, what does your research tell you about the upper limit of what people would pay before they start to question the value of netflix . We really dont spend that much time on trying to figure out how much we will get you to pay because i think it is a fluid thing. If you are delivering, you have to to continue to deliver so it is all a hypothetical. I dont want to come in and someone say i will pay anything because im in the middle of the new season of Stranger Things and we have to come back but we do it every week. A lot of services out there, they get a couple hours of engagement a month. We get a couple hours a day. That to me is all this mystery around what is success in streaming, it is engagement, it is how much people time spent on the service because that tells you how much they will pay and how long they stick around. You mentioned success which is in a subject of a lot of discussion over the years with regard to streaming more broadly as it feels people have less visibility to what works and are not sure what you guys think matter. What are the metrics for netflix most important when evaluating a show . Or movie . You take us to task on this transparency issue. It is relative to peers, we are in incredibly transparent and completely transparent with producers so they know the viewing data. Then we are going through things like the top 10 and things like republish the viewing hours of the top shows and we are definitely heading towards a more transparent time in business. The streaming itself is not exotic anymore and every other segment of the business does have nielsen ratings or Box Office Reports and neo times bestseller list. We are heading towards that for sure. To a time where we are fully transparent on data. So that will demystify this for a lot of people, which is what they care about the most, relative to what it costs on the air, are people watching . And when they push play, do they stay . If they push play and dropout on the second or third episode, that is completion right. So these things matter but they add up to the same thing, engagement. All of the data is there. You might have to triangulate a little bit to get to it but the data is there. What was the toughest cancellation decision you had recently . They are all tough because i think people have got a real fandom, they really love these. Some people really love all of these shows. Even if the rest of the world does not agree with them. For them, that is why you see sometimes these obscure shows and loud campaigns about stopped cancellations because they have such an intense relationship with her. That is why i love this business. I relate to it a lot of times my personal taste is far outside of the norm and what i have been decent at over the years and pick people who do this but when i look at it i say some of it was programmed to my taste we would be small. Were trying to program to the worlds taste but they are all difficult decisions to make because people love the shows so much. Some things are just scratch your head but relative to what it costs to put on the air, did we pick a good show, execute on it well, and they the right price to make it . You talked about the worlds taste and that has i think as neff licks expanded, your approach to programming has evolved as well. You also mentioned you started programming about 10 years. Would you say since when you started, that is when people talked about the golden age of tv, coming out of mad men, breaking bad, some other shows. Then we got ushered into the area of peak tv where there was more and more made. Do you think the film and tv made now is better or worse than when you started . Better because theres more of it at a high quality. There is more to choose from. I think there is something really romantic about prestige tv, that is why we do a lot of it too. This year you see the new season of the grounds, probably the most ambitious youve seen on television and maybe in the history of television. I think there is part of that that is important. I love to take shows that are incredibly well executed, critically acclaimed, awardwinning, and popular. I think things like beef, im really excited about beef because one of their critics wrote it is the most popular piece of art of the decade. That is a great place to be. It is something people really love and admire and i think about critics and a constituency, a group of influencers, and what they like is important and so is what the audience likes and that is what drives us. But i do think every once in a while you think what is going on with tv and something fantastic lands every time. I think the more times, more shots on goal you get at it, the more likely you will get something that breaks through. Sometimes it is unintuitive. Squid game did nothing to be a global show, it is made for korea, it is pure korean cinema in the form of a tv series and it is the mostwatched show on netflix history and likely the history of television. You still program more than anyone else basically to your point, you put on multiple new piece of content every week, others do not, but you have leveled that off. I think we showed the chart earlier where you hit like 17 billion to 18 billion and said that is a good amount. Its a good amount for now. We continue to accelerate revenue. If its growth, we will continue to add that too. As you see some peers pull back a little bit, especially overseas, do you think that is a mistake . It is hard for people to remember we are a Global Company so two thirds of subscribers are outside of the u. S. And i think one thing we first started doing is i thought it was an unusual figure that about 80 of Television Viewing around the world was u. S. Content and we are 5 of the population. I figured a probably isnt the taste thing, it is a distribution thing, people didnt have access or certain markets may not have had the scale to produce the way japan did or korea did wh