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Paramount's Hostile Bid, Berkshire's Shakeup & Delistings Soar 12/8/25
00:42:52
Paramount launches an all-cash offer for Warner Bros. Discovery just days after losing to Netflix in the bidding war. A look into Berkshire's next chapter as Buffett's CEO tenure comes to a close. Plus, sellers are taking their homes off the market at a record rate.
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You're listening to the Exchange. Here's today's show. We've got a big plot twist for Netflix, a big shakeup at Berkshire and the case for boring stocks today. Welcome to the Exchange. I'm Kelly Evans and we'll get a quick check on the markets where you can see the Russell is the only major average in the green right now. It's up about a third of a percent and it's outperforming once again, which is a trend we saw last week. Tech stocks, meanwhile, under some pressure as Netflix falls more than 4%. Bond yields are also higher ahead of the Fed meeting on Wednesday, the 10 year for 18 now. So we've continued to see a climb throughout the session and that perhaps putting some pressure on Bitcoin, which is hovering just around 90k and keeps trying to break back below it. But we begin with the headline straight out of a movie script, Paramount Skydance launching a hostile bid to buy Warner Brothers Discovery just days after Netflix announced they would buy the company except for the TV biz, for $72 billion. Paramount now says it'll go straight to WBD shareholders with an all cash $30 a share offer, which is the same $109 billion bid that WBD rejected just last week. Keep in mind Paramount, they want to buy the company as a whole. Netflix would just purchase their film and streaming assets. Paramount CEO David Ellison telling CNBC earlier today why he thinks his company has the better offer.
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A
Our deal is pro consumer. It's pro creative talent. It's, it's, it's pro competition. And we believe that when you actually, to further contextualize, there are $30 in cash or sorry, $30 a share is basically $17.6 billion in cash, more than the $20, $23 in share they signed up.
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C
It's also worth Noting Paramount had to line up $54 billion in financing for this deal. Let's bring in Rich Greenfield, he's partner and co founder of LightShed Partners. Rich, it's great to see you. Who's got the superior offer here?
- [02:50]
A
Well, look, first of all, the board of Warner Brothers has already determined that Kelly. I mean, assuming the board honored its fiduciary duty to shareholders, the board of Warner Brothers deliberated and decided that the bid from Netflix was worth more than $30. Somewhere probably between 30 and a half and 3150. But that's already been done. So, you know, the reality is I don't expect much to change over the course of the next 10 days. I think the question really will become, assuming the Warner Brothers board comes out and says, you know, thanks for the $30 offer, but we've already deemed this insufficient relative to Netflix, then the question will be, does Paramount want to raise its bid even higher? They could certainly try to go direct to shareholders, but again, tendering directly to shareholders, in this case, they would first have to get Kelly regulatory approval. So that would be a 12 or 15 months away before they would have all of those approvals. So it's not like you can tender tomorrow. They can't start building a position like this would still take a of time. And my guess is that probably isn't the right way to go. And so my guess is the question will come down to, you know, do they want to raise this bid further? They're already taking a lot of the money from, you know, they've syndicated out a lot of this transaction, you know, 12 billion coming or around 12 billion coming from the Ellison's. It sounds like 24 billion or more is actually coming from three, you know, middle east countries. And so we'll see the capacity to go further and put even more leverage on the combined company. It's already getting up there leverage wise.
- [04:24]
C
The ball is in whose court right now? In Zaslav's and Warner Brothers discovery. Where is the ball?
- [04:33]
A
The ball right now, it goes back to the WBD board. So the WBD board will obviously evaluate this offer again since they've already evaluated as one. So I would suspect we get a similar conclusion. I can't imagine, you know, they quote, unquote, made a mistake. So I believe that they will look at this and say Netflix is offering in total between. Remember, because they're not bidding on the same assets as you pointed out in that infographic a minute ago, they are bidding on one, the whole company versus just a piece of the company. But I think when you put the totals are, you're going to end up with a value of Netflix's offer being above. Obviously, we can debate the regulatory certainty of both offers that each are going to take a long time. But the only outside question, honestly, Kelly, is does Netflix, in the interim to try to extinguish this, come out and raise their bid? I doubt it. My guess is they stand pat and wait for Paramount to raise their offer if in fact they do raise their offer.
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C
So in the meantime, a lot of people in Hollywood are upset because they think this would be anti competitive. What would your thought on that be? What would, what is your thought on market share across the industry right now and how you'd measure that?
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A
I mean, look, it's, it's really complicated. I mean, first of all, Disney bought Fox. Fox has largely disappeared after Disney bought it. You were looking at Paramount buying Warner Brothers. You were looking at NBC Universal, you know, buying Warner Brothers. That would have combined two large studios. Netflix doesn't have a massive studio in the way that Warner Brothers does. You know, what will happen to that ending company? I mean, look, HBO is actually a relatively small producer of content. You know, we think you and I probably love HBO content. I'm a huge White Lotus fan. I love Last of Us. But, but the reality is there aren't that many shows on net on HBO each year. And so market share wise, if you were purely looking at streaming, this actually doesn't move Netflix's sort of share of TV time spent. If you look at it on a subscriber basis, it's obviously a very different story because they obviously have the largest subscriber company in the world. So there's just many ways of looking at this. Can you isolate it to linear TV, right, or to streaming and not look at linear TV? Do you have to look at YouTube? I mean, when I ask somebody where do you watch Sunday Ticket? They say they watch it on YouTube, of course, you know, or YouTube TV. And so can you not include that? When you compare it to what, you know, it just, it becomes very messy. And I think any court, forget about whether Trump sues or whether the doj, you know, under Trump sues this transaction. Action. Action. Action. Action. Action.
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Action, action, action.
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C
Going to see if we can sort that out. We appreciate it. Rachel, bring you back in just a moment. Again, Rich Greenfield arguing this could still be a long road and David Ellison noting that Netflix owning Warner Brothers would be bad news for the folks in Hollywood. Take a listen.
- [07:35]
A
You are handing Netflix unprecedented Market power, which is anti competitive in every single measure, every single metric. And we think that is bad again, that's bad for the consumer, it's bad for the creative community. This deal, if it is allowed to move forward, will actually be the death of the theatrical movie business in Hollywood. We're sitting here today trying to save it.
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C
The death of the theatrical movie business in Hollywood. Let's ask our next guest who says any merger should be evaluated on its impact on competition and employment. She would know she's got a unique perspective on this as a movie producer turned politician. Let's bring in Congresswoman Laura Friedman of California. Congresswoman, it's good to see you. Welcome.
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B
Thanks for having me.
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C
Could Netflix buying Warner Brothers be the death of Hollywood as we know it?
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B
Well, I don't know about the death of Hollywood, but it's been the death of a thousand cuts for many years now with these consolidations. Your previous speaker brought up one that happened several years ago. And every time we see a consolidation, whether it's in the film industry or in the grocery business or in telecom or anything else, we see thousands of job losses. We see less competitiveness, we see prices go up for consumers. These are all a concern. But right now in Hollywood, people are already struggling. We have a major depression in the film industry with shooting going overseas, with less competition between studios, less productions being made, with less people going to the box office. And this is just one more thing that's making people wonder if this industry will survive.
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D
Right.
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C
But in other words, they're already at a point of weakness. This is not an industry that's thriving. That Netflix is coming in to say, you know, we're going to take it and now find, you know, synergies or cost savings or something super scary. I mean, if the industry is already struggling on its own, is Netflix more of a potential savior than a threat?
- [09:19]
B
I would love to see these plan, the plans for both of these entities in terms of job retention, production capability. Are they. Is this an attempt to gobble up other streaming services and intellectual property libraries, or is this a real attempt to be able to do more production in house for these streamers? This is what everyone wants to know. What does this mean for jobs in Hollywood and. And what does it mean for consumers? You know, I'm working on a national film tax credit right now to try to help bring jobs and production shoots back to the United States from overseas competition. So there's a lot of worry in Hollywood. And I'd like to know how these different companies specifically are going to help bring the industry back home. Sure.
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C
And Paramount shares are rising as they look like they might yet be in the mix for these assets, but to the point that Rich just made as well. I mean, they're leaning on a lot of external financing, including overseas financing, to make an acquisition happen. So is Hollywood pleased that they might become. I know they're more familiar with Skydance, obviously that's a much more of an ally, but do they have the wherewithal, the financial heft and wherewithal to make sure that this industry is going to thrive?
- [10:27]
B
Look, I'm not a financial analyst. I'm a former film producer. I can tell you from the creative side that there is a lot of angst right now in Hollywood over the prospect of either of these companies purchasing Warner Brothers. They each bring unique challenges to the table. There's also, I will tell you, concern behind the scenes about whether or not Donald Trump's close relationship with the Ellisons, the owners of Paramount, are going to make this. Truly, the decisions that the regulators make be based on what's best for the industry, best for the American consumer, or best for a friend of Donald Trump. I'm not saying that's the case, but we have to make sure that whatever is done, whatever choice regulators make, that they do it impartially and fairly. And that is also a concern of mine and of many others.
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C
Yeah, I don't know if it's exactly the same one that Jane Fonda wrote about last week, but her concern was about free speech and this putting a chilling effect on perhaps the kinds of movies that this studio would make were it to be owned by a Netflix or I think in that case, especially, she meant a Paramount and David Ellison.
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B
Look, these are business decisions. They shouldn't be made on the basis of any kind of quid pro quo with the Trump administration, whether it's about content, whether it's about what they do with cbs, which is also one of the assets that's under consideration here. We need freedom of expression. We need creatives to be able to. And journalists, for that matter, to be able to express themselves without feeling that the Trump administration is going to come in and punish the parent industry that they have, as we saw with the Jimmy Crimmel show recently. So that's certainly a concern that continues in Hollywood. And there's concerns just about financial consolidation and the collapsing of the film industry. And that's something that is very real here in Los Angeles that's trying to recover from devastating fires and from years of productions leaving Hollywood.
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C
Sure, can you just explain again? You know, I'm over on the east coast, so I'm not, I don't have a front row seat to this. But I, I do understand and hear that there are these struggles in the movie business traditionally and obviously we see it reflected in the share prices there. On the other hand, Netflix's deep pockets have meant they're bidding up prices for all sorts of content over the past couple of years. And I remember all the articles written about writers getting hundred million dollar paydays and things like that. How can both of those things be true at the same time?
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B
Well, we have, because the ecosystem in Hollywood has been one where traditionally you had a lot of different producers who were able to survive making content for networks and for screens. And over time the production companies and the studios have gobbled up the independent studios and they've also made it to where, yes, people get paid, but they don't own their own content. And that's radically changed the landscape and the amount of people who can make films in Hollywood. At the same time, a lot of productions moved out of Los Angeles and into neighboring states. But more concerning, a lot of it's moved overseas as this has become more of a global business. And that means that productions leave and maybe a few creatives get brought along, but all of those people who make the props, who do the makeup, who do the catering no longer have those productions to, to, to give them work and to power their companies. And so we've seen business after business close in Los Angeles has as productions have left. And we've seen less and less competition for creative work, less studio deals for producers and talent. And that's made a huge difference for people like myself who was a studio executive to be able to, to do their work.
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C
Yeah, I'm not sure how a bid by Netflix or Paramount, frankly changes any of that. I mean, sounds like, not tariffs, but what you're describing is like the classic hollowing out of American industry that we've been talking about in the manufacturing side for decades, very similar.
- [14:10]
B
And people who have seen this happen in, let's say in the grocery business with consolidation leading to job loss, will see the same thing here. It's even more profound because if you've got studios that have duplicative jobs, people who are doing sales, people who are doing marketing, people who are producing films, maybe you need half of those now if you consolidate an industry. And so that's the fear here that what does this mean in terms of layoffs to these companies? What does it mean in terms of studio operations, do they continue? Do they do twice as much production or do they consolidate now and continue as they were and just sort of gobble up some of these assets? That's the worry. And on the consumer side, if you have less choice in streamer, if now HBO is just part of Netflix, for example, right, that could mean that the prices go up and maybe you can't choose between two streamers now. Now you only have the one. And we've seen after large mergers that, that consumers get the worst of it. Prices tend to rise. It's rare that you see a merger where all of a sudden prices come down for the consumers. Even though that's always the promise, it's not the way that it plays out in real life.
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C
Listen, Netflix was a deal when it didn't used to be like 499amonth or something. I mean, I'm going back like 20 years, maybe $10. It's clearly heading higher, especially with this. If this deal happens, we'll leave it there. Congresswoman, thanks for joining us today.
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B
Thanks for having me.
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C
Laura friedman, Meantime, shares of Nvidia are moving higher today on a report that the Commerce Department will soon allow the chip maker to export its H200 chips to China, resulting in about a 3% pop. Intraday. This is according to Semaphore, citing a person with knowledge of the plan. We'll stay on top of the story and bring you any more detail as we get it. And coming up, we're just about 48 hours until the Fed's decision on interest rates. But just as important could be what they decide to do with their balance sheet going forward.
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Forward.
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C
We'll dig into those details next. Plus, tech stocks have led the way since January, but will 2026 be the year that boring is beautiful? We'll debate ahead on the exchange, the.
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Heaviest metal credit card of all time, rumored to be one of only 18 in existence, plated with the very same tungsten that forged the International Space Station.
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And wielded at business dinners like a samurai sword.
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C
The markets are dipping toward a session low as you just saw there. With the Dow down a half percent today. That makes it the laggard down to 43. Nasdaq about unchanged though after those in video shares just moved to an intraday high on a report about their H200 chips. And meantime, the 10 year yield about 417. Broadcom is hitting a new all time high as Microsoft is reportedly in talks of moving its custom chips business from Marvell to Broadcom that has the shares up 3%. Marvell, meanwhile, having its worst day since August, down about 8%. Some of the other names hitting record highs today include Goldman Sachs, Fox, Fox, A, believe it or not, Ross and Electronic Arts, although that's now fractionally lower. EA is up 40% since January and on pace for its best year in a decade. On the flip side, General Mills is near a seven year low. McCormick and P and G are at their lowest levels in over two years. In fact, the Staples sector as a whole is only up 1% since January, trying to avoid its third negative year in four. Talk more about that and we will talk boring stocks in a little bit. The big event this week will be the rate decision by the Fed on Wednesday, a cut all but guaranteed at this point. There's lots of intrigue about what they'll do with the balance sheet as well. And as our Steve Liesman proposed earlier today, somewhat tongue in cheek, somewhat not. Should they delay the meeting until they get the full data from the months that were delayed because of the shutdown? Ask David Wessel. He's the senior fellow in economic studies at Brookings. David, it's great to see you.
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E
Good to see you, Kelly.
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C
Let's I guess go piece by piece here on the rate cut itself. There will be those like Moran, I assume, pushing for a half point cut. But when you look at the backup in bond yields, you think that's this is probably not going to be the moment for that, right?
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E
I think that's right. He'll make his stand. Maybe he's still running for chair or something. And we know that there'll be dissents on the other side, probably Jeffrey Schmidt The President of the Kansas City Fed will vote against a rate cut and he might be joined by one or two others. So it'll be an unusual meeting. Right.
- [19:13]
C
And in that case, we go, okay, probably shakes out with a quarter point cut. Then we have the question of who becomes the next Fed chair. Let's play some sound from the possibly next Fed chair. Who was on our air this morning? Kevin Hassett. Here's what he told Squawk Box this morning about why he's one of many qualified candidates.
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E
The point is that the President doesn't.
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A
Have a tough choice. He's got a guaranteed good choice, and if I happen to be that choice, I'll be pleased to help him serve.
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C
How much does speculation, David, over Powell successor kind of overshadow the meeting, or does it?
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E
I think it does a little bit. I think it gives Fed chair Jay Powell just a little less clout than he would have had six months or a year ago. I think, you see, he'll probably be able to get some people who are uneasy about a rate cut to go along just to stand behind him. But I do think the Fed bank presidents are trying to send a signal that they're not going to be a pushover for Kevin Hachette or Scott Bessen or whoever else takes Powell's job.
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C
Yeah. And you say you wouldn't count Bessen out?
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E
I don't count Bessen out. I think it's a long shot, but you never know. And we're talking about Donald Trump here, and I'm pretty confident about predicting what the FOMC is going to do, predicting what Donald Trump's going to be. That's way beyond my capacity.
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C
And he likes to do the most out of consensus thing. A lot of times I do think.
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E
That the fact that they've encouraged people to think that HACC is the choice and the bond markets haven't rebelled, is one thing in Kevin Hassen's favor. There are all these whispers that some people in the bond market don't like him. But the yields don't suggest there's any panic of a Fed chair. Kevin Hassett.
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C
Absolutely. And I think that brings us to the balance sheet. You know who I hear the most about the balance sheet from is the crypto crowd. And I wonder if it's because they, you know, and I hear this narrative going around where it says, you know, kind of don't let them fool you. The Fed's about to start easing again. They're going to expand the balance sheet. QE is back and it's kind of this surreptitious argument for liquidity coming into a system that really, you know, can't handle its withdrawal. Whether or not that supports crypto, who knows? Is the balance sheet likely to start expanding again?
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E
I think the Fed has indicated that the period of kutty is over and the balance sheet will expand as the economy and the supply of currency expands. I don't think it'll be QE and hundreds of billions of dollars, but I think. And it won't, probably won't grow as a share of gdp, but in nominal terms, yes, it's likely to grow, probably begin again sometime next year from what they've said.
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C
Do you have any intellectual problem with that?
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E
Me personally? No. I mean, look, they're running a regime of what they call ample reserves. They're going to, they're going to try and run the system with interest on reserves as their primary mechanism for controlling the Fed funds rate. I think it's a complete there are some downsides to it and we see tensions from time to time. But I don't, I'm not one of these people who's worried that somehow the Fed is the Bigfoot that's destroying the economy because they have a big balance sheet. After all, this regime is quite similar to what other central banks around the world do.
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D
Yeah.
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C
And Zervos has reminded us around 20% of GDP, which is kind of where we are now, is not that unusual from historical means, just that all the numbers are so big these days, you know. David that's right. We'll leave it there. We'll see what they come down with on Wednesday. Appreciate your time.
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E
You're welcome. And so good to see you, Kelly.
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C
You too. Brookings. David Wessel, we mentioned that breaking news on Nvidia. Let's bring in Christina Parts and Evilis with more details on the story. Christina? Hi, Kelly.
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D
So I can confirm through a source that yes, indeed, the Commerce Department has approved the sale of H200 chips. These are Nvidia chips going to China. But I have to say that perhaps the uptick in the stock price may be a little bit premature. Why do I say that? Because China has previously blocked H20 chips. These are, let's call them watered down versions of the ones just approved. China has said that there's been security issues with said H20 chips. They're concerned about or I guess everybody being hooked on Cuda software. So Even though these H200 chips have been approved, the roadblock isn't Washington necessarily. The roadblock is Beijing. They may not believe that these chips are even better in terms of security. These chips first shipped in 2023, so they're considered a little bit less cutting edge than the Blackwell architecture. And there are some Chinese media over the weekend and the end of last week commenting saying that this is just a way for Nvidia to get rid of excess inventory and that it's a sugar coated bullet. It was a quote from one of the media outlets. So perhaps this two and a half percent uptick is pointing to a market that has been closed for quite some time with Jensen Huang calling it roughly $50 billion. But I would like to remind our audience that Beijing can still block the sale of these H200 chips even though they've been approved on the American side.
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C
That's excellent context. Is there anything else you'd add? I mean the shares are up about 2, a little bit more than 2%. Christina. So perhaps this was awaited, anticipated to some extent. Still significant, but not as big of a deal, you say as if they were talking about Blackwell or the more leading edge production.
- [24:19]
D
Yeah, it's a big deal just in Washington D.C. because you have a lot of lawmakers that are opposed to even chips from 2023 being sold to China. But from a tech perspective and from all of the hyperscalers and smaller startups in China, they want the latest and greatest. And that may not necessarily be the H200 chips that are again from a few years ago the Chinese government complained about these H20s. So again the watered down version I'm using watered down but it's just lower memory, etc. So it's maybe poor choice of words, but they were concerned about a security backdoor ability on these chips. And so these H200 chips are from the same family. And so I'm sure those concerns about the security issues are going to apply to this H200. Don't forget that Nvidia is being accused of anti monopoly, anti monopolistic behavior in specifically with its mellanox acquisition in 2020. And then there's also environmental concerns. There's still three little roadblocks that Nvidia has to deal with with China directly, not necessarily the U.S. government. So this is definitely a win for Nvidia, but it doesn't necessarily mean that the floodgates are going to come and then all of a sudden all of these chips are going to flow into China.
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C
Great points Christina. Thanks for jumping in front of the camera for us. We appreciate it. Christina. Parts and evolis the market may be betting on a rate cut as you just heard us talking about with David Wessel there. But our next guest says be careful what you wish for. Let's bring in Rich Bernstein. He's the CEO and Chief Investment officer at Richard Bernstein Advisors. What do you mean by that? Rich, welcome.
- [25:46]
G
Well, Kelly, good to see you. Welcome back. I think, look, I think people have forgotten why the Fed cuts rates to begin with and how the Fed is the central bank and you know, when they cut rates, they do so to lower the cost of funding to the banking system because the banking system isn't lending. And the Fed hopes that by cutting rates, lending will pick up and they hope in turn that that pickup in lending will stimulate the economy. So the question we should all be asking right now is where's the hiccup in the financial sector that is stymieing lending, which in turn is stymieing growth. But I think it'd be very hard pressed to find that right now are.
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C
High rates themselves the stymie? You know, I've heard, I think if I'm saying it correctly, Barry Knapp's case on this is that they should have cut much more a long time ago. And that's why we're resulting in this K shaped economy where money is too expensive, kind of for the broad consumers out there, broad lending, and it's really only because of the strong stock market that people have done well.
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G
Well, Kelly, look, if the K shaped economy is a reality, and I get that, and I'm not being cold at all, please don't misunderstand what I'm about to say, but lower rates will not encourage lending to riskier entities. If rates come down, if their cost of funding comes down, they will keep lending rates the same to entities that are riskier. To automatically assume that rates throughout the economy will come down. That just doesn't make any sense. We already have credit spreads about the most narrow in my career, how much more narrow are they going to get? So that's an issue for the fiscal side more than the monetary side, which of course nobody wants to talk about these days because of the deficit and everything else. But realistically, the Fed is very limited in what they can actually do. And the question, look, even today, your big story today is about a big merger. Are those entities having any trouble getting financing for this merger?
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C
Right, but that's exactly the point is that, you know, big business, those who are using corporate bond markets, they're all doing, they have cheaper capital, that's fine. But what about those who are relying, you know, people say, look at the people falling behind on car loans or the cost of car, obviously the mortgage is the big one hanging out there. So. So in that sense, I think you and I would agree that the goal is to bring those rates down, but it seems like rate cuts right now. I don't know why the bond market is kind of puking this week to. Sorry for the choice of words.
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G
Yeah. But the risk, you see, the risk is, Kelly, that if you just lower rates and there's no hiccup in the financial sector that ultimately that spurs inflation.
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A
Right.
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G
You get the misallocation of capital, the hurdle rates in the economy are too low and you get this misappropriation of capital in the economy. We could argue that that's actually happening already. Right. When you think about the K shaped economy, maybe the investment isn't going where it's supposed to be. I'm not sure lowering rates is going to encourage lending to riskier entities. That's going to close that case. Shape. I don't think that's the way you want to handle this. I think that's a fiscal issue, not a monetary issue.
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C
I appreciate the 2 cents because obviously this is the debate of the week and I'm curious how this fits in with your overall view on the markets. Rich. A lot of people have come out with very bullish price targets for next year. You know, bottoms up earnings estimates of 13% and rising. So it's looking positive and even like we could get some broadening. But I note that you're kind of saying maybe it's time to stick with, you know, consumer staples are down for the third year and four. So I don't know if you'd go there, but that you're saying maybe next year is a year to go with more of the boring parts of the market.
- [29:23]
G
Right. I think our theme for 2026 is boring is beautiful. And it's not a bearish comment. You know, these days if you're not the biggest bull on the max seven, everybody says you're bearish. And I'm not sure I understand that. Because if you like 493 stocks and you don't like 7, why are you so bearish? That doesn't make any sense to me. Rather, what we're saying is that there's a broad spectrum out there of opportunities. What's boring? How many people come on your show these days and talk about dividends? Probably not very many, but dividends are one of the key parts to building wealth through time. The compounding of dividends is amazingly important. Reinvesting when you get speculative kind of heady periods like we're in right now, people forget that. Non US Quality, Kelly, I think is the biggest bargain out there. It's now got a growth rate that is faster than that of the Mag 7. Faster than the Mag 7, non us the dividend yield and 30 to 40%.
- [30:19]
C
Cheaper are those, are these kind of European, Asian names? What would be some examples of that?
- [30:23]
G
Yeah, predominantly developed markets, but predominantly that would be Europe. And I think, you know, everybody said, oh, we love Europe forever in a day. But that was mostly based on just valuation. That's why I started with the notion that non US Quality now has a growth rate that is faster than the Mag 7. There's a growth story to now accompany that undervaluation.
- [30:43]
C
I know we have to go, but what drives that? I don't look at Europe and think, wow, look at the growth story.
- [30:48]
G
I don't think it's necessarily. No, it's not the European economy. We're talking about these high quality companies. One has to remember the growth rate for the Max seven is actually decelerating. So the relative earnings of a lot of other entities, if they just stay stable, their relative earnings are going up. I think people have forgotten the MAX7's earnings growth has peaked and is actually decelerating.
- [31:10]
C
How dare you come on this show.
- [31:12]
G
Oh, I know, I know. Heresy. Heresy.
- [31:15]
C
Thank you for your time, Rich. We appreciate it. Richard Bernstein, Richard Bernstein Advisors. Coming up, the details Behind Tiger Global's $2 to $3 billion new fund and the warning they have for Silver Silicon Valley. Sounds like we're just talking about a little bit. We'll be right back.
- [31:31]
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- [33:02]
C
An update from Warner Bros. Discovery on Paramount's hostile bid for the company. Warner Brothers confirms they've received an unsolicited offer from Paramount Skydance and say the Warner Bros. Board will review the offer and provide its recommendation to shareholders within 10 business days. Warner Brothers says the board is not modifying its recommendation on its agreement with Netflix is what you just heard us talking about with Rich off the top of the program. Nevertheless, Paramount shares still moving to the upside up 7% Netflix down 4% WBD up 3. Meanwhile, Tiger Global is announcing the launch of its 17th venture capital fund to raise about $2 billion. Deirdre Diabosa has the details in Tech Check. What are the targets now?
- [33:41]
H
Deirdre so Kelly, this is essentially a strategic reset. You could think of it like that. Tiger has been one of the biggest forces in the startup ecosyste over the last half decade, but the last few years have been marked by heavy markdowns and slower deployment. Now, according to the letter and an investor call audio that I obtained, the new strategy is fewer investments, bigger bets, much more concentration. In the letter, Tiger says that its most recent fund, PIP16, puts 70% of its capital into just 25 companies and that the top 10 holdings make up more than 3/4 of the fund. Two of them, Waymo and OpenAI, have become the anchor positions. And that is really a contrast. What we saw in 2020 and 21, where it was the spray and pray strategy, as many bets across as many different fields as you could do. Now the larger context here is a shift across all of venture investing. In the age of AI mega caps like Microsoft, Nvidia, Google, Amazon, they're now writing the billion dollar rounds that traditionally would have been led by firms like Tiger and that has really forced VCs to refine their edge. And what we're seeing is that speed matters less and proximity to winners matters more. In many cases, the more powerful lever is doubling down on, as Tiger puts it in the letter, the ones in a consumer tech market that is winner take most indeed.
- [34:58]
C
We always keep an eye on them, Deirdre. They're always savvy, trying to pick up on the changing times. Thank you very much, Deirdre Bosa. Let's get to Bertha Coombs for the news update. Hi, Bertha.
- [35:08]
B
Hi, Kelly. Luigi Mangioni, the man accused of murdering United Healthcare CEO Brian Thompson a year ago in Manhattan, is back in court for a fourth day today for a key pretrial hearing on evidence in his case. His legal team is arguing police conducted an illegal warrantless search of his backpack when they encountered him on one in Pennsylvania. And they say anything found inside, including the alleged murder weapon, should be excluded. Japan downgraded its tsunami warning to a tsunami advisory after a powerful 7.5 earthquake hit the country's northeast today. Meteorologists say there is a possibility that stronger earthquakes could occur over the next several days. And the Education Department will reportedly warn students if a school they're applying to has a low earnings outcome, meaning the college's graduates on average earn less than the average high school graduate. According to the Hill, the department says the change will help prospective students make data driven decisions before they're saddled with debt. Before they and their parents often are saddled with debt.
- [36:24]
C
Absolutely. Even more important, Bertha, thanks. Bertha Coombs. Coming up, leaving Buffett for diamond. Berkshire Hathaway down one and a half percent after announcing its investment manager is stepping down to join jpm. We'll ask one longtime shareholder if he's worried about what's next with Berkshire lagging the S and P and Buffett's last year as CEO, or is it a buying opportunity? We'll be right back.
- [36:48]
Berkshire Hathaway announcing a number of structural changes just weeks before Warren Buffett officially steps aside as CEO. Among them is the departure of investment manager and Geico CEO Todd Combs, who's headed to JP Morgan. He joined Berkshire in 2010 and won as one of just two investment managers under Buffett. Berkshire shares are under pressure today, down about 2% and underperforming the broader market this year. Joining us is longtime Berkshire shareholder Bill Stone. He's the chief investment officer at Glenview Trust. Bill, do you buy Berkshire here because you rarely get a chance after it's had a weaker year? Or do you say this is not the company Warren and Charlie built and you walk away?
- [37:27]
I
I still love the company over the long run. Again, it's not going to be, I don't think it's going to be the moonshot that it was because how can it possibly be? You're the 10th largest company in the SB 500. So you've traded what is an opportunity for perhaps some, some exceptional growth under, you know, the greatest to, you know, capital allocators that we know in our lifetimes for an extremely stable business that is not likely to see any sort of massive downdraft. So if you're looking for a company that I think can. Can keep up with the S and P, maybe beat it over a long time period, not by how much they did in the past, but it's likely not going to keep up in really good years. But I think it's going to save you in really difficult times.
- [38:12]
C
That's an interesting way of putting it because I would say if we're not sure if it's going to outperform anymore, why own it? I could see the argument for owning it actually maybe more of an A share, you know, if you could do an A shares or. But like is diversification away from the S and P. Right. If you thought, you know, there's a bubble in the index and I just want to own something index like. But that's a little bit different. I don't know. You say though, it's more like could it be more defensive in down markets and still, you know, consistent with or even outperform the market in strong markets or does this year show there's a chance that it underperforms in strong markets markets it's almost more utility.
- [38:45]
I
Like yeah, it's hard because, you know, in a market like we're in now, I think it makes sense that it's underperforming. Right? Because what's being really benefited is the technology wave, etc. And they're, you know, as, you know, significantly underweight in terms of relative in artificial intelligence and those kind of exposures, they don't really have any other than perhaps if you think maybe Apple underneath something there. But even Apple's not really in the air. Arms race, which again may be a good thing. Right. Because we've got so many bets on, on most of the biggest companies of that kind of arms race that it is kind of a nice diversifier away from that.
- [39:25]
C
Right. And that said, here is a look at their top holdings. I've got Amex, still B of a Coca Cola class, Chevron. So Bill, I think a bottom line is what do all of these changes tell you? It's one thing if Buffett says I'm stepping Aside as CEO, I mean, there are a lot of different pieces moving here.
- [39:44]
I
Yes. And I think you've got two, two major pieces. One is whenever you see a change in leadership, you, as you know, you tend to see people also move, whether it's like a Todd Combs that I think decided that maybe there was a better opportunity somewhere else because he wasn't going to get a shot at the top job, those kind of things. I don't know for sure, but I'm guessing that's some, some part of it. Not going to get to work directly with Warren Buffett, even though you know Buffett's going to come into the office for five days, he's not, quote, unquote, going to run it every day. So things have changed. And then you also have a lot of people that stuck around, I think like the cfo, probably because Buffett was still around. You know, the guy, 76 years old, the CFO, Mark Hamburg. And so, you know, he's retirement age. Right. You know, so it isn't like he's necessarily leaving for somewhere else. He's, he's retiring. And I think you're going to see that, too.
- [40:35]
C
Yeah, fair enough, Bill. No major concerns I'm hearing from you there. But we all know it's kind of a sign of a changing time, claims, put it that way.
- [40:42]
J
Yes.
- [40:42]
C
Bill, thanks very much. Bill Stone with Glenview Trust.
- [40:45]
I
Thank you.
- [40:45]
C
Coming up, we were just talking Apple 2026 could be a big year for the company. You could say they failed to meet the AI moment this year, but the stock has still done well. Executives are leaving in droves, though. So can the tech giant deliver? We'll dig into all this turnover next.
- [41:01]
Shares of Apple are outperforming the Mag 7 over the past month, despite those outsized gains in Alphabet. But can the positive momentum continue as Apple experiences an executive brain drain? Steve Kovac has the answer to that.
- [41:13]
H
Steve?
- [41:13]
J
Yeah, it's been quite a few days over at Apple and lots of big shots out there in Cupertino. They're getting new careers for the holidays. Now, we saw several changes in just the last seven days on top of several departures over the last few months. Now, someone not leaving, Kelly, that would be Chip boss Johnny Scruje. Bloomberg kind of set up some red flags over the weekend with reports. Report that said Scruji told CEO Tim Cook he wants to step down from his position. But this morning in a memo to staff, Surrogy told them he's not leaving anytime soon. That would have been a massive loss over there at Apple, Surgery is instrumental in ditching intel chips and putting them in the Mac. You can kind of think of him as the jony I've of chip designs. Now some of these shake ups we've been seeing have been to meet the AI moment. The world has, has been changing around Apple the last few years, but it kept things mostly the same. Next year though, that's going to be monumental for Apple after it failed to deliver on AI this year there's going to be that AI Siri update in the spring and they have to get that one right. That's why last week we saw AI boss John Gianna Andreas step down and the AI teams that he was overseeing, they were reorganized to other executives. And that needs to all happen before for launching other AI powered products like those rumored eye glasses and some smart home products also coming next year. Speaking of next year, it's going to be Apple's 50th birthday in April. And on the negative side, you got that looming antitrust trial that could start next year as well. Now look, some cases, some of these changes rather are there to meet the moment in AI and all these other problems. But a lot of these recent departures, Kelly are also leaving voluntarily. I want to point to one more thing. Look at the board here. There's a 75 age limit over at the board and a couple of people already there or over it and others are getting closer to that. So it could be some new changes at the top of the board as well. As soon as next year at Apple we're going to find out though if this team is the right team to get things on the right track, at least when it comes to AI.
- [43:15]
C
Evercore also had a piece today where raising their price target to 325 and they called it the AI tollbooth.
- [43:21]
J
Right. Meaning the iPhone I guess.
- [43:24]
C
I mean if that's. There's many ways to look, this is what I've said for a long time. I use ChatGPT or Gemini on my iPhone.
- [43:31]
J
Right.
- [43:31]
C
I'm sure there's a more direct way for Apple to monetize AI but that's not a terrible one.
- [43:34]
J
Yeah, and that's the. Well here's the. Here's the other thing. They're likely going to give this away for free. But the value proposition is whereas Google and yes ChatGPT live on your phone, you can open the app and use an A of time. Apple is saying, well we're going to be able to dig deeply into the personal data on your phone in a private world.
- [43:51]
C
We've been waiting for that for 10 years.
- [43:53]
J
We've been waiting for. Exactly. And that's why the pressure is enormous because they said they're going to do it.
- [43:56]
C
This is never going to happen. There's, I know there's no way that.
- [43:59]
J
Will be a huge. And if they can't get that to happen, those other products I mentioned won't be able to launch because they're going to rely on that system in order. So that's why they're probably partnering with Gemini, with Google, with, with Anthropic, with one of these other players.
- [44:11]
C
Honestly, I deeply hope it does happen. I just, I understand how hard it would be.
- [44:14]
J
No, I would be skeptical too. It's been 2011 that Siri launched. Fourteen years later, everyone's kind of blown them away, move way past them, especially three years ago with ChatGPT.
- [44:25]
C
So that would be a fun prediction for 2026 is like the year of.
- [44:28]
J
Come back if it actually happens. Well, look, if you read Dan Ives note this morning, he thinks that they're on the cusp of doing it and but of course he said that last year too.
- [44:36]
C
We got to get him on. I haven't seen him yet. Thanks very much, Steve Kobach. Coming up, Redfin CEO Glenn Kelman told us two weeks ago that housing is shifting, shifting to a buyer's market for the first time in a decade. A rising trend could further paralyze the already stagnant market though. And we will explain that next.
- [44:54]
The housing market could be headed for a real freeze this winter. Diana Olek is here to explain. Diana?
- [45:00]
H
Well, Kelly, that's because we're seeing a lot of delistings now. So when a seller takes their home off the market, it's called a delisting and they're happening at an unusually high rate. Delisting in October, which are reported with a one month lag, were up 45 and a half percent year to date and up nearly 38% from October of last year. That according to a new report from realtor.com this is the highest delisting year since they began tracking it in 2022. Now delistings began to rise in June and have remained elevated for five straight months. About 6% of active listings have been coming off the market each month, which is typically only seen in the dead of winter. Why is it happening? Well, uncertainty in the economy, stagnant and still high mortgage rates and a still pricey housing market. So locally, Miami, Denver and Houston are seeing the highest ratio of delistings compared with new listings. Those are also the markets that saw some of the biggest price gains in recent years, so no surprise there. In addition, and because of that, more potential buyers are heading to what realtor.com has called refuge markets. That means they're just more affordable. So Grand Rapids, Michigan, St. Louis, Cleveland, Milwaukee and Pittsburgh are all seeing much bigger price gains now than the rest of the country because demand there is suddenly surging. These are markets that did not see the big gains during the last five years that much of the nation did. Now, inventory overall had been building, but this is going to cut into that growth.
- [46:23]
C
KELLY maybe finally high mortgage rates will take their toll on prices. DIANA we'll see. Diana Olek, you've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place.
- [46:38]
F
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