Podcast Summary
Netflix's Q4 2022 Subscriber Growth to Rebound Strongly: Netflix is projected to add 9M new subscribers in Q4 2022, driven by the success of its new ad-supported tier and password sharing crackdown, with most growth coming from international markets.
Netflix's subscriber growth is expected to rebound strongly in Q4 2022, driven by the success of their new ad-supported tier and password sharing crackdown. This growth is expected to be predominantly from international markets, where the company has been focusing on expanding its user base. The upcoming earnings report on Tuesday is highly anticipated, with estimates suggesting Netflix could add around 9 million new subscribers in Q4 2022. This would put the streaming giant back on track towards its pre-pandemic levels of growth. Additionally, the affordability option offered by the ad tier and the elimination of password sharing have addressed key issues in the US market, where growth had stalled. Overall, these initiatives have proven to be successful for Netflix and are contributing significantly to the company's growth prospects.
Netflix sees growth potential in Asian and European markets: Netflix's penetration in Asia is at 20%, leaving room for expansion. In Europe, penetration is around 30%-35%. Local content can travel well globally if authentic and well-made.
Netflix sees significant potential for growth in the Asian and European markets, where penetration rates are much lower than in the US. The streaming giant is producing original content in various regions, including India, Europe, and Asia, which has proven to be successful in appealing to a global audience. In the Asian market, Netflix's penetration is around 20%, leaving ample room for expansion. Similarly, in Europe, penetration is around 30% to 35%. Local content, even if it's produced in different regions, can travel well globally if it's made well and authentic. In the economic news, initial jobless claims fell to the lowest level in over a year, indicating a strong labor market, which could lead to further inflation concerns. The Fed's preferred read on inflation for last month is coming up this week, and there is concern that the consumer price index increase may lead to more aggressive Fed actions.
Surprising Economic Data Suggests Stronger Economy Than Anticipated: Recent economic data, including retail sales and the Atlanta Fed's GDP estimate, indicate a stronger economy than anticipated, potentially pushing back against the idea of imminent rate cuts and signaling higher inflation in 2023
The Fed's decision to raise interest rates may not lead to a recession as expected, as recent economic data suggests the economy is stronger than anticipated. Retail sales surprised to the upside in December, with deflating goods prices and lower gasoline prices boosting consumer spending. The Atlanta Fed's GDP Now estimate for Q4 has also increased, indicating stronger economic growth in the last quarter of the year. These developments could push back against the idea that the Fed will be cutting rates soon, and may set the stage for a stronger economy and higher inflation in 2023.
ECB to Decide on Interest Rate Cuts, Timing Uncertain: ECB will consider interest rate cuts amid geopolitical tensions and varying economic conditions, prioritizing inflation target and maintaining credibility.
The European Central Bank (ECB) is expected to make a decision on interest rate cuts at their upcoming meeting, but the timing is uncertain due to geopolitical tensions and varying economic conditions within the Euro area. ECB President Christine Lagarde emphasized the importance of maintaining credibility and ensuring inflation reaches the 2% medium-term target. She also acknowledged the potential risks of moving too quickly or too slowly on interest rates. The US election was mentioned as a factor adding to the uncertainty in the global economic landscape. Ultimately, the ECB will make decisions based on data and the specific economic conditions within each Euro area country.
ECB signaling potential summer rate cuts: ECB anticipates summer rate cuts due to ongoing inflation above target, but policymakers are cautious about committing to specific timelines
The European Central Bank (ECB) is closely monitoring inflation trends and anticipating potential interest rate cuts as early as the summer of 2023. ECB President Christine Lagarde has signaled this possibility, and several ECB policymakers have echoed the sentiment at recent events. However, the ECB is not yet ready to declare victory over inflation, as price pressures have come down but are still above their target of 2%. The latest projections show headline inflation returning to 2% in the third quarter of 2025, and policymakers are cautious about committing to specific timelines for rate cuts due to the uncertainty surrounding economic conditions. The June or July meeting is a likely candidate for the first rate cut, as it will provide updated economic projections and offer a clearer picture of inflation and economic growth trends. The ECB has historically been reluctant to offer forward guidance, but the consensus among policymakers seems to be coalescing around a summer rate cut.
ECB policymakers divided on summer interest rate cuts: Some ECB policymakers favor summer interest rate cuts, while others express skepticism due to economic uncertainties
There is a split among European Central Bank (ECB) policymakers regarding the possibility of interest rate cuts this summer. While some, like Joakim Nagel, are open to the idea, others, such as Robert Holtzman from Austria, are skeptical and believe that rate cuts may not even come this year due to uncertainties around wages, geopolitics, and energy prices. This divide was highlighted during recent discussions within the governing council room. While most policymakers seem to favor summer as a potential time for the debate, there are a few outliers like Holtzman who express concerns about various economic factors and their potential impact on the decision-making process. This detail underscores the complexity and nuance of the situation, and the importance of staying informed about these ongoing discussions.
BOJ monitoring inflation trends for wage growth and economic cycle: The BOJ is closely watching wage growth and the economic cycle before considering interest rate hikes. Recent wage increases for large companies are encouraging, but they're waiting for wider wage growth and a positive cycle.
The Bank of Japan (BOJ) is closely monitoring inflation trends, particularly the distinction between cost push and demand pull inflation, before making a decision on interest rate hikes. The BOJ is looking for evidence of sustained wage growth and a positive economic cycle before taking action. Recent wage negotiation results, including higher wage increases for large companies, are encouraging signs for the BOJ. However, they are waiting for wider wage increases, especially among smaller companies, before making a move. The annual wage negotiation results, known as the shunto, are expected to be released on March 15th, and a significant increase could prompt the BOJ to act in April, the start of the new financial year. The first step is expected to be verbal signaling from the governor, indicating that they are getting closer to their target, followed by potential adjustments to yield curve control or the removal of negative interest rates.
BOJ to Decide on Interest Rates in April, Focus on Negative Rate Reaching 0: The BOJ is expected to make a decision on interest rates in April, with the main focus on the negative rate reaching 0. They may wait to see wage increases and inflation before making a decision in July. The strength of the US dollar and weakness of the Japanese yen could impact their thinking.
The Bank of Japan (BOJ) is expected to make a decision on their interest rates, including the potential elimination of yield curve control, in April 2023. However, the main focus is on the negative interest rate, which is likely to reach 0 in April. The BOJ might wait to see wage increases and inflation before making a decision in July. The strength of the US dollar and weakness of the Japanese yen could impact the BOJ's thinking, but more yen weakness might be needed before it becomes a concern. In Tokyo, consumers are feeling the impact of rising prices, with confusion and concern about inflation. The BOJ's meeting this week will provide more insight into their decision-making process. Additionally, the focus is on the next phase of AI adoption, with companies like Snap, Xbox, Open AI, and others set to discuss the industry's burning questions at the Bloomberg Tech conference in San Francisco on May 9th.
New Hampshire Primary: Make or Break for Haley and DeSantis: Nikki Haley and Ron DeSantis face challenges in New Hampshire primary as Trump's dominance makes it difficult for them to gain significant ground. Haley targets moderates, while DeSantis focuses on South Carolina. Trump's strong performance in New Hampshire could wrap up the nomination by mid-March.
The New Hampshire primary on Tuesday could be a make or break contest for Nikki Haley and Ron DeSantis in their bids for the 2024 Republican presidential nomination. While Haley is targeting moderate, centrist Republicans, independents, and Democrats to expand the GOP base, her ability to make inroads into Trump's stronghold remains a challenge. Trump's dominance in the polls, particularly in New Hampshire and South Carolina, where Haley was once governor, makes it difficult for her to gain significant ground. DeSantis, who came in second in Iowa, is focusing his efforts on South Carolina, where he has stronger appeal, and New Hampshire is not considered his scene. If Trump performs well in New Hampshire, he could potentially have the nomination wrapped up by mid-March after Super Tuesday.
New Hampshire voters prefer Trump over DeSantis: Despite DeSantis's strong performance in other states, his lack of appeal in New Hampshire could limit his chances of securing the Republican nomination due to his stance on abortion and low support among voters.
Former President Donald Trump remains a popular figure among New Hampshire voters, while Florida Governor Ron DeSantis does not resonate with the majority of them. DeSantis signed a 6-week abortion ban in Florida, a policy that is not well-received by New Hampshire voters. According to the latest polls, DeSantis trails behind Trump, who has over 50% support in the state. As the focus shifts to the upcoming primary elections, it's clear that DeSantis faces an uphill battle in New Hampshire. Kaylee Lines, co-host of Bloomberg Balance of Power, reported on this disparity in voter sentiment between the two Republican figures. While DeSantis may be a formidable contender in other states, his lack of appeal in New Hampshire could limit his chances of securing the nomination.
