182. A miss. Still fishing around for the actual subscriber numbers. You can see the kneejerk reaction, down in after hours trading. Caroline that is what they were pricing and. Paid net change, up 10 million users. The estimate was for 8 million. We have here a coceo being named. This is an interesting move as we see perhaps a movement in terms of the leadership. Romaine that is a big deal. He would presumably be joining Reed Hastings at the helm. He is currently the chief content officer. There was a great story just the other day about all of the money they have been spending to acquire these big budget type of movies that normally would be going to theaters this summer. It will be interesting to see the reaction. The options implied move, updown move of about 12 up or down. We are starting to see some more numbers come in. Caroline i think it is the forwardlooking really putting down with pressure. Net change, 2. 5 million increase. Lets go out to abigail doolittle, who has some background. Abigail a big miss here relative to earnings. We see those shares plunging. The more important miss probably around subscriber ads. It beat the expected number, a little bit above 10 million. The whisper number was close to 10, even 12 million. This stock up nearly a double from the march low. They simply did not put it up even though they beat revenue slightly. Again, earnings down and subscriber number for the Second Quarter missing the highend. In the First Quarter, they put up 15. 8 subscriber ads. There was clearly some pull through. When they put up misses, it is typically in this june quarter. Disruptiono with the at this time of year. Even though there were a greater number going into this quarter, leading for some to believe they would be simply not the case. You were mentioning the fact that the Third Quarter disappointing, 2. 5 million. The street, a little bit below 6 million. Some expectation of a whisper, closer to 7. 5 million. Putting it into the context of the First Quarter, they put up such big numbers. The ultimate stayathome stock. Not so ultimate right now. Looks like the First Quarter pulled through a lot of the subscribers and folks they work expecting to spread out ahead into the Third Quarter. Again, trading at 65 times forward earnings. Ck is clearly taking the bellbefore interrupted us, we were speaking with alicia levine. I know you do not cover netflix specifically but i want to pick up on something abigail said, the idea of something being priced to perfection. We have seen this with a whole slew of stocks. I am wondering, how fragile are some of these names to any sort of bad news given how far they have come over the past few weeks or months. Alicia this will affect the entire sector in tomorrows trade. It missed estimates and a disappointing quarter. Thoseore, when we look at high flyers that pretty much look on kilovolt. When they look on kilovolt and one of them gets killed, they will all have a tough time in the next few weeks. Price has gotten extreme. It has to come in a little bit. I think ultimately, these Business Models are extraordinarily resilient, so they will be fine. But just the extreme price action we have seen has to come in a little bit. Executive change at the top, that surround us to anos to beserr netflixs coceo. Will impact this the rest of the industry the industry . How jittery is the market as we start to get these earnings come through . Alicia this is the bellwether. You will have extraordinary scrutiny now of all of these quarters coming up. As you remember, some of the Larger Companies talked about taking all their earnings into operating expenses for the next few quarters to build business, and the market for gave them. The question, does that kind of move continue . I think we have to go back to the beginning of our conversation, the nasdaq intraday move was really a warning sign, that the top heaviness will probably break in the shortterm and investors should decide whether they are longterm holders or are ready to take profits here . Romaine this is not a disaster by any stretch of the imagination. Even though the Market Reaction is somewhat severe. I am curious, when we talk about the readthrough into some of the other earnings reports, there was a sense that there were Certain Companies like netflix, amazon that were sort of bulletproof in this environment, that people were gravitating to not only because of the pandemic but once the pandemic was over, they would stick with them. Are we being a little bit too presumptuous in reading more into it . Alicia i think it is too soon to think that these stocks will be dumped. The Business Models are very resilient for the kind of autonomy and consumer demand we will have in the next couple of years. To that extent, their Business Models are well placed for what the consumer wants. I just think price got away from itself. When it starts to feel that it is 1999, you should question. When you did not make a mistake for the last few weeks, the price has to come in a little bit. Parabolas are not a great way to invest. Caroline well put. Always great to have you with us, rolling with the punches when it comes to the earnings and giving all of her top conversations. That does it from the closing bell. Whatd you miss . Is next, where we will be taking a deeper dive into those netflix earnings and a change at the top. This is bloomberg. Caroline from bloomberg will nurse in new york, i am bloombergs World Headquarters in new york, i am caroline hyde. The market closing in the red on the nasdaq. Move hours trading, a big in netflix, down as much as 12 as Third Quarter look add misses expectations. Courtropean unions top blocks a Data Partnership with the u. S. Over fears of potential surveillance. The fingernada point at russia saying that they are behind a data hack aimed at swiping vaccine data. We discussed with Michael Daniels. All that and much more coming up. Romaine netflix is the news of the hour. Looking forward at the q3. Orecast for the company the bloomberg consensus, 5. 12 million. A good reason you are seeing the shares down 11 . Probably the headline out of the day, a new ceo, or i should say coceo from the company. Caroline that being none other than theodore sarandos, or ted, as he goes by. Paul sweeney, you know ms cohost of bloomberg surveillance. Paul, they are about the same age, Reed Hastings founded the tedness not long before sarandos joined it. I think it is kind of a reward for ted sarandos. The real focus has been on the programming side of the business. You think about all the it shows that have been produced by netflix, all the great programs they have licensed from other providers. You think about the real strength of netflix, it really is the programming. A big part of that growth is definitely from him. I think it will be well received longterm by investors. Romaine there does seem to be concerned about the streaming numbers that came in today. Relatively mature company, spent a ton of money to keep that Subscriber Base up. It has been obviously an extraordinary ride for shareholders. I think what youre seeing are a couple of things. First and foremost, the first two quarters, they added 25 million subscribers. They have never remotely done anything like that. What that reflected was a global pandemic. Subscriber numbers went right through the roof. They warned last quarter that the surgeon in the first that the surge in the first half of the year would rob some of the growth in the second half of the year. That is something people really focus on. That is a big art of it, pulling a lot of demand from the back half of the year. Second, the competitive environment, streaming wars are alive and well. Peacockhad hbo max, just in the last couple of months. Of course, other players out there, most notably disney plus. The question, how much is the increased Competitive Landscape denting their growth . Caroline we see the reaction with roku and like, amazon as well, falling. Too muchuilt in euphoria around these . Priced to stock perfection and perhaps just a little bit had to come out of the market . 10 , 15 moves in the stocks almost every quarter when they report. It tends to move very aggressively on the day that they report earnings. Theink the issue here, pandemic has really kind of accelerated the trends we had been experiencing over the last 4, 5 years, and the way people consume media. We saw the Walt Disney Company is in the midst of making a huge pivot toward streaming. Netflix plays the dominant, leading role. The question is how competitive will this market get, how many providers can this market support . 5 . It 3, 4, we dont know yet. There is a shakeout likely taking place. I think many feel that flexs position is extremely strong. Caroline paul sweeney, we thank you. Cohost of bloomberg surveillance. The eus top court issues a major ruling that could affect thousands of companies, including facebook. This is bloomberg. When joe biden puts a plan out like the one that he did, we understand that this is about the future of our state, our country, about the strength of our economy, about good paying, longterm jobs that will raise out of poverty and into the middle class where they can prosper. At a time where right now the white house is focused on tearing down their own Public Health experts and selling goya beans, this is a man that is really putting on a plan for the there, thinking about problems we have been confronting that have been. Xposed time covid19 the president talks about trade policies as a key part of his economic vision. Trade policies are so crucial to. Our state how would the Biden Administration handle not just usmca but also negotiating with xi jinping to make sure the American Worker is put first . Joad joe biden is not new to the world stage. Strongs how to draw a line when it is about prosperity and Homeland Security. Twitter haslicy via been one of the most damaging things we have seen over the last 3. 5 years. We know that the Auto Industry and Agricultural Industry have suffered because of a couple of tweets that come out of the white house at 7 00 in the morning. The fact is, we need a president who has a longterm, thoughtful strategy, how we protect american jobs, american industry, that we draw a hard line when it comes to foreign competition, and we do everything we can to support the American Worker. That is when joe biden has always done throughout his career and what he will do as president. Here in washington for so much of the debate is focused on the next round of economic stimulus. With governor larry hogan, a republican from maryland, earlier this week in annapolis. He made the case that he wants to see states getting some more funds in the next round of stimulus so that federal and state employees dont have to be furloughed or, worse, laid off. Larry hogan is the head of the nga, i am on the executive board, we have gotten to work very closely together. It is democratic and Republican Leaders who understand that covid19 has ravaged our economies. The only area we have any discretion over in our budgets are areas that impact Public Health, Public Safety, and public education, arguably the three most important things in the middle of a pandemic. While larry has been on the front lines, advocating for this, Governor Cuomo and i, governor dewine, we need to recognize that this is the moment where congress has to deliver, support the states, give us the flexibility and resources we need. It would be a crying shame if after all of the bungling around covid19 and the price we are paying, that we did not have the toources we need to learn, address the skills gaps, ensure that our Public Safety is not compromised and certainly not compromising access to health care. These are the things we will do with these types of dollars. Every state in the nation is counting on congress and the president to get it done. Romaine the governor of michigan, gretchen whitmer, speaking earlier. A market where google and others are able to transfer to transfer information from the eu to the u. S. Now there is a court ruling that basically struck down the mechanism by which that data is transferred. Writing is, bloombergs senior legal editor for privacy and security, dan stoler. Explainlain exec exactly what the companies were using to transfer data. This is more than downloading videos. This is transferring payroll records, transferring Consumer Information that companies need, right . That is correct. A lot of these companies, they use the Privacy Shield to transfer that hr data, other data they want to use, and really to be able to leverage that eu digital market and use that data in the u. S. They also use something called standard clauses. The whole feature of data transfers at this point seem to be a little murky. Caroline a little murky. The leader of this particular case was saying that now it is up to the u. S. To change surveillance rules to enforce any sort of change. How do we get a political . Greement here in the short term, the political agreement will be some sort of shortterm window. They will not just shut down International Transfers tomorrow. But in the long term, they will have to set up some sort of surveillance deal or National Comprehensive privacy regime. But both seem far off at this point. In surveillance, they have had some recent discussions to make changes, but not the wholesale surveillance reforms that the eu would want. Romaine one thing that i thought was interesting about this case was all of it sort of ties back to the Edward Snowden hendal in 2013 or so when exposed some of the nsa spying on a variety of people. I wonder why this was not resolved in a shorter amount of time. It seemed there had been deals in place including the one that got struck down. I am not sure i understand the legal or political dynamics of how we got to this point . They had the last deal, called the safe harbor, and they had the similar conclusion that it did not give adequate safe harbor. The passed a law called judicial redress act, that would suew european citizens to in u. S. Courts. That got challenged. Finally, because the process took so long, that same case was focused on standard contractual clauses and the Privacy Shield. Caroline great to get your insight and expert analysis. Now, lets get you some breaking news because we are all talking about how the market hinges on fiscal stimulus and President Trump is currently insisting on a payroll tax cut to be within the next stimulus. The clock has been taking and it has really been the Republican Party putting the blockers on it. Romaine he has basically called for it publicly, back when the previous bills were being negotiated with regard to the u. S. Stimulus. Not really popular with either democrats or republicans. Caroline we will see how that continues to go through the senate and whether or not we will see any agreement anytime soon. Next up, we talk blank check companies. This is bloomberg. Earnings didlix cross the wire a little earlier. Shares moved a little bit lower in afterhours trading. The q2 numbers did pretty much beat expectations but the company made a forecast for the Third Quarter that came in well below expectations, about half of what the street was expecting. The other big news out of this was ted sarandos, chief content officer, will be moving into the role of coceo with Reed Hastings. Caroline we were hearing from paul sweeney that this is more congratulations for ted sarandos , and the fact that he is basically coleading this business anyway as chief of content. Reed hastings talked about this being a long process of succession planning. He said, we have a longestablished culture. Committed to netflix for the long term, so we are not to read into this that Reed Hastings is heading anywhere anytime soon. Romaine something we dont always Pay Attention to, the rare earth space. A company worked with value acquisitions to merge with mt materials, the only u. S. Producer of rare earth minerals. Aboutmpany now valued at 1. 5 billion. Joining us Company Chairman and ceo of mt materials. Of mp materials. The general structure of you coming to market, acquisition vehicles here that you use to come to market. Explain why you chose to take that route. It is really just a quicker way to get public. We believe that we are one of the first and hopefully of the many forms of Capital Formation to get companies focused, in our case, in on shoring to market. We sit at the crossroads really of two very powerful themes in the market. Decoupling the supply chain from china and the overall global decarbonization in the electric vehicle, wind turbines, drones, etc. We believed it was a great opportunity to get to market quickly, tell our story, and get moving on our mission. We ran a pretty extensive process including a lot of strategic relationships, extensively in ipo. For a number of reasons, fortress is a great partner to us. That has been consistent throughout the way. It has been helpful to our business. Romaine part of that business is rare earth minerals, something that came into the public conversation during the trade war between the u. S. And china, the idea that almost all of these minerals right now are sourced from china. Key components in a lot of the Electronic Devices out there. I guess the question is, what is the market now for you as a u. S. Based producer, to increase production to a level that would maybe compensate for anything from the relationship with china. Right now, that market is almost completely in china. There is one site outside of china. And they are essentially in the sphere of influence of china. Lets just take the electric vehicle even though there are so many applications. The electric vehicle is approximately 2 penetrated globally. There is no western supply chain for this. As we rise, and who knows the ultimate speed with which it will happen, but my belief and i think the belief of most Market Participants is that we will go somewhere north of 90 in the coming decades. Regardless of the speed, the idea that this supply chain will be wholly reliant on a chinese supply chain order any single point of failure is really not acceptable, i think, to global industry. So the opportunity for our company is we have this unique worldclass asset, we have the ability to provide these materials that will ultimately go into the motors. Intoaterials get made magnets and we ultimately will produce those magnets that go into the motors. You hear a lot about battery chemistry is evolving, people trying to get supplies of lithium and cobalt. The key thing with our company is we provide the materials that go into the motor, which is wellsettled. We dont have the Technology Risk that frankly a tesla, nikola will have. We are essentially the only western hemisphere option for all of those. Caroline why are you the only western hemisphere option . The challenge with rare earth mining and processing, it is really a chemical process. You have to have the rare earth of enough concentration to begin with. Which we have at our site. We have a worldclass site which is very rare pun intended. We have to have the processing expertise. 1. 7 billion of investor capital. If there is going to be a company that can do this in the western hemisphere, you are talking about five plus years and billions of dollars of investment, if they can even find the resource. We are in this unique position where the western supply chain really needs our company to exist and thrive. The United States government has five president ial determinations on the need for a rare earth magnet supply chain. So our company is really heating the call to fulfill that mission. We think we can do that very profitably as well as environmentally friendly. I think the one other key component of this, within our site, we operate significantly more environmentally friendly. Versus our chinese and other competitors. So we think that the western supply chain will really appreciate a company that can give them some sense of reliability and security over the supply chain as well as doing so in a sustainable way. Uniquek that is a really opportunity. Caroline mp materials ceo, thank you. Lets get the first word. House Speaker Nancy Pelosi says that she is confident that congress can pass another virus relief plan in the coming weeks. The speaker tells bloomberg she believes republicans will ultimately agree to spending levels closer to the 3. 5 trillion democrats are looking for. Without it. Go home because of the Unemployment Insurance expiring, the rest of that, we have to have the legislation. It has been two months. More people have died, more people have gone unemployed, and more people have been infected. Mark you can see the rest of that interview with speaker pelosi. David westin interviewed her. That is coming up. Republicans have agreed at least 1 trillion in relief is needed. Both sides are set to begin negotiations on further stimulus next week. Dr. Anthony fauci sounds like he has had enough. The Infectious Diseases chief fired back at critics in the white house. He told the atlantic that what he calls the bizarre behavior there only hurts President Trump. He called the attacks on him as nonsense and completely wrong. Florida announced another single day record with 156 virus deaths and nearly 14,000 new infections. The committee the Republican National committee will hold scaled down version of its Convention Next month in jacksonville. That was originally scheduled for charlotte, north carolina, but it after limits on crowd size. Looking for whoever is responsible for hacking the twitter accounts of people including joe biden and jeff bezos. The bitcoins to cam bitcoin scam raised over 130,000 of spoils. Twitter says there is no evidence hackers access to passwords. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. A great deal of what we have in the heroes act is essential. Dont do that, the recession will only get worse. The virus will even spread unhappiness, the suffering of the American People will intensify. We need the equipment to do it. The president can, with a stroke of the pen, call upon the defense production act, call upon businesses to focus on the equipment, the judging, the results of those tests. You said they, the republicans, will come around. Mitch mcconnell and the Republican Leadership on the senate side. What is your level of confidence that we will have legislation out within the next two weeks . Levy just say this. We cant go home without it. Because of the Unemployment Insurance expiring, the rest of that, we have to have the legislation. It has been two months. More people have died, more people have gone unemployed, more people have been infected. What is the value of waiting . Some people say it is too much money. As i have said to you before, what we are doing for state and local government is one half of what the republicans added to the National Debt in order to pass their tax scam which gave 83 of the benefits to the top 1 . We have to make sure that we , ae, as we recognize consumer economy. That people have, to spend money into the economy, create jobs. Anyway, we feel pretty confident about it. There is a lot of enthusiasm because much of the injustice of it all, whether there is economic health, education, coronavirus. It impacts people of color in a very disproportionate way. We must address that and especially now when there is a threat to peoples lives, livelihood, and the lives of our democracy. That that some of the least fortunate in the country have been hit the hardest by the coronavirus itself and the aftermath. How can we be sure that money gets to those people . Rep. Pelosi direct payments gets directly to them and Unemployment Insurance does. Ppp, paycheckthe Protection Program for small businesses, it did reach a lot of people. It had collateral benefit to those who should not have benefited from it. That was unfortunate. We have to be very specific in how legislation is written and not just assume people do the right thing or the fair thing. I think what happened with george floyd and the hundreds of thousands of people who come in , not justd week out policing but also the coronavirus was part of that enthusiasm and exuberance, so people expect to see justice done, including environmental justice. That is why we are moving forward legislation to include so much of green technologies, because communities of color suffer disproportionately from environmental injustice. Clean air, clean water, the list goes on. Caroline that was house Speaker Nancy Pelosi speaking with david westin. Twitterlk about the accounts of prominent u. S. Business and political leaders packed yesterday in an effort of a bitcoin scam. Formere earlier with Homeland Security secretary. With respect to twitter, the concern is, are they adequately double checking the identity of the people posting on a regular basis . And also, to get to the bottom of how somebody on the inside turned over the keys to the kingdom . Caroline Michael Daniel is with us. He served as special assistant to president obama and coordinator on the National Security council. Perfect voice for what is a whole raft of news, whether it be from russia, from twitter. We are really focusing on data breaches today. Twitter breachhe and your theory of what was behind it. I think, when you look at this, it appears to very much be associated with criminal activity. This sort of way that it was put and has, it feels like the hallmarks more of criminal activity. That thereo shows was some internal weaknesses inside twitter because it is very very unlike caroline can you hear me, michael . We will have to redial him. Romaine i think we may have lost him. We should point out, twitter has responded to this on a couple of different levels. Most recently, they did tweet out, we have no evidence that the hackers acquired passwords and they dont believe that resetting your password is necessary. We also heard from the fbi little bit earlier, saying they are also investigating this as well. Caroline Michael Daniel does think this is bad actors at play. Able to take away about 100,000. Romaine obviously a lot of concern here about the election process and how safe it is going to be given the predominance of social media and politicians getting their word out, and how much can we believe that those tweets are coming from the politicians themselves . There is some news out of washington involving President Donald Trump in his proposal here for a payroll tax cut. Trump has been banging this drum for a while. April of last year, march of this year, again in may. An idea that congress has been relatively lukewarm to but the white house here saying that the next stimulus bill must include a payroll tax cut. Caroline more on that any moment, let us get back to Michael Daniels. You were just telling us that you do think it is bad actors at play here. Our question is how twitter responds in particular and can give confidence once again that the tweeter in chief could get hacked and weep real damage. Michael the honest truth is that no one can give a 100 guarantee. But there are things that twitter can do to increase our confidence in their internal controls, including concepts from, for example, separation of duties, not allowing administrative accounts inside twitter to have access to the actual content posting. Other internal controls to show that they have logging in place to detect anomalous activity. There are certainly steps twitter could take to increase peoples confidence in the overall system and decrease the likelihood of a repeat of this in the future. Romaine what is the governments role here . You go back, years ago, during the obama administration, there was concern about him using social media particularly on his phone. We have to believe that when we see the president s tweets, that those are the words coming out of his mouth, not someone elses . Uponel it is incumbent anybody who is using social media platforms to also be monitoring your accounts to make sure they are not compromised, whether you are talking about facebook, twitter, and of the any of the social media platforms. You can never have a 100 guarantee. Speaks to the need for us to be smart consumers of social media information. If it seems out of character for the persons normal way of behaving, then it might well be, and you should take that with a grain of salt. Romaine we will have to leave it there. Michael daniel, Cyber Threat Alliance ceo. This is bloomberg. Romaine back to whatd you miss . Lets get you caught up with what has been happening with netflix. Shares down in after hours trading after the company said it expects to add 2. 5 million subscribers in the Third Quarter , well short of wall street expectations, for an add of 5 million new customers. Overshadowing what was a relatively good Second Quarter. The other big headline, ted sarandos, the chief content officer, being named coceo. Caroline Reed Hastings saying this was a long process of succession planning but saying he is committed to netflix for the long term. Romaine you know who is on the line . Joe weisenthal. Thanks for being here. We got jobless claims numbers today. I know you keep a close eye on the u. S. Jobs data. It was not necessarily good. Were still above one million on the weekly claims. Drop a lot of people were expecting did not materialize. Peak,very week since the we have improved from the week before. It was sequential improvement. But it is stalling out. Revised 1. 3 one million jobless claims. This week, 1. 3. That is the tiniest decline throughout the crisis. It seems like, between the rising virus cases and also maybe some other causes of the notdown, we are really making any progress anymore on the labor market, at least by this measure, and it raises the question of, when we get the july report, whether we will even see improvement. Caroline it points to the concern that if we dont get any further fiscal stimulus, what that means for those still out of work and what that means for consumer spending. At retail sales are now prepandemic levels. Spending, you would not think we were at depression levels, rates of on employment. Fiscal spending has significant leak closed that gap to the point where even high unemployment is supporting retail sales. Nine days since the last expanded check comes out. Then there could be major income hits after that. And we know how d. C. Moves. Not fast. Caroline not in nine days. That is all from whatd you miss . Romaine Bloomberg Technology his next. This is bloomberg. Hike Simon Pagenaud takes the lead at the indy 500 coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. Touchdown only mahomes. The big events are back and xfinity is your home for the return of live sports. Welcome to Bloomberg Technology. Netflix leading the stoxx out of the gate with turning shares down. In an otherwise strong quarter. Contentenders, chief officer becoming coceo. Aerall, stocks snapping twoday rally with investors continuing to rotate out of this years top performers. Like technology and