Netflix's strong quarter and future growth, analyzing the financial performance of Disney's Sports TV Network, trust in technology and Tesla's Q3 results, Elon Musk's slump, carbon emissions solutions, AI power, and ABBA's song, the rise of interest rates and its implications, analyzing the impact of rising interest rates and the challenges for Silicon Valley projects.
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Quick takeaways
Netflix's growth runway and ability to create originals and engage viewers improves its pricing power.
The era of falling interest rates is over, and borrowing costs will remain elevated in the coming years due to various factors.
Deep dives
1. The shift in interest rates: From decades of falling interest rates, the world is experiencing a transition to higher borrowing costs and a higher price of money.
The balance of supply and demand for money is driving this shift, with less saving and more investment causing interest rates to rise. Demographic changes, government deficits, reduced foreign buying of US treasuries, and the need for climate change investment all contribute to this trend.
2. Impact on asset prices: Rising interest rates will have an impact on asset prices, including real estate and equities. The higher opportunity cost of investing in these assets will create downward pressure on their prices.
For individuals counting on the appreciation of their homes and stocks to fund their retirement, this shift may disrupt their plans and lower the value of these assets.
3. Changing investment landscape: Higher interest rates will affect investment decisions, with projects that require long-term investment and delayed profitability becoming more challenging to finance.
Entrepreneurs and businesses may need to reassess the feasibility of long-term projects, while speculative investments in bubbles may become less attractive in a higher interest rate environment.
4. Factors driving higher rates: Structural forces, such as government deficits, changing demographics, and the need for investment in climate change initiatives, will contribute to keeping interest rates high in the medium to long term.
These factors, combined with continued government borrowing and reduced demand from foreign investors, indicate that the era of falling interest rates is over and that borrowing costs will remain elevated in the coming years.
Bloomberg Intelligence Technology and Media Analyst Geetha Ranganathan explains why Netflix's mojo is back thanks to a good growth runway, with a track record of creating originals and building engagement that improves pricing power. Bloomberg News Senior Technology Reporter Dana Hull talks about Elon Musk dialing back expectations for Tesla as years of rapid expansion collide with rising interest rates and a more cost-conscious consumer. And Bloomberg Economics Chief Economist Tom Orlik talks about his Businessweek Magazine story The Price of Money Is Going Up, and It’s Not Because of the Fed. Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan.