Consolidation, AI Shifts, and Economic Uncertainty Drive Markets

Key Quotes

"Netflix is buying Warner Brothers for 72 billion. It's the latest in the long string of the soap opera that is the Warner history. In 2018 it was bought by AT&T and then 2022 merged with Discovery and now being purchased by Netflix. I was joking with Kim that it's kind of the Liz Taylor of companies, you know, just gets married eight times and keeps keeps on going."

Brian Stewart uses the analogy of Elizabeth Taylor to illustrate the tumultuous and repeatedly changing ownership of Warner Brothers. This highlights the long and complex history of the company's mergers and acquisitions, suggesting a pattern of instability. Stewart implies that this latest acquisition by Netflix continues this trend.

"So we'll see what happens from here. If you're bullish on the deal, it gives Netflix an edge in the streaming wars. They're adding HBO Max. Kind of remains to be seen how they're going to handle that, whether they're going to have the two apps going simultaneously or whether they're going to try and integrate the HBO content into Netflix proper."

Brian Stewart outlines the potential benefits for Netflix if the acquisition of Warner Brothers is successful. He suggests that integrating HBO Max content could strengthen Netflix's position in the competitive streaming market. Stewart also points out the strategic decision Netflix faces regarding how to manage or combine its existing platform with the newly acquired HBO Max.

"Historically, people have kind of clowned on the AOL Time Warner deal, so, like, consensus is that's an F. I actually have a different perspective on it. You know, AOL took its inflated stock price and turned it into a real asset by buying Time Warner. So if you look at it from a Time Warner perspective, that probably wasn't the best merger, like, if you look at the stock price before and after of the combined company, it doesn't look too good. But if you're AOL and you turned inflated currency into a real asset that has value, so it was it was probably the way you should do it."

Brian Stewart offers a nuanced view on the AOL Time Warner merger, challenging the common negative consensus. He argues that from AOL's perspective, the deal was strategically sound as it converted inflated stock value into tangible assets. Stewart acknowledges that for Time Warner shareholders, the outcome was less favorable based on stock performance.

"The general thesis coming out of the earnings report is that inflation fatigue is driving consumers into the lower price bracket. So places like Dollar General and Dollar Tree and Walmart, Walmart we already saw was benefiting from this. So you're seeing people kind of search for deals. This is an interesting data point headed into the holiday season."

Brian Stewart explains the underlying economic trend suggested by Dollar General's earnings report. He posits that consumers, experiencing "inflation fatigue," are increasingly seeking out lower-priced retailers. Stewart identifies this consumer behavior as a significant indicator for the upcoming holiday shopping season.

"One of the things that a lot of the analysts coming out of it flagged was its Agentforce products, which seems as a catalyst. That's the AI-powered product. It had ARR growth of 114%. If you're bearish on the stock, which a lot of people have been so far this year, the ARR for its Agentforce and Data 360 products, which are the sort of AI package, are currently at $1.4 billion, that's compared to total revenue of $41.5 billion in 2026."

Brian Stewart discusses Salesforce's performance, highlighting the growth of its AI-powered Agentforce products. He notes a significant 114% growth in Annual Recurring Revenue (ARR) for these AI offerings. However, Stewart also provides context by comparing this AI revenue to the company's overall projected revenue, indicating that AI is currently a small fraction of Salesforce's total business.

"Meanwhile, it was at 90% in late October, so you see it flopping around a lot. So as it stands, the general consensus is pretty solid in favor of there's going to be a rate cut at the next meeting, but as you point out and as I'm sure Steve gave, you know, excellent description of it's hard to say whether that's going to hold."

Brian Stewart describes the fluctuating market expectations regarding a potential interest rate cut by the Federal Reserve. He notes that the probability assigned to a rate cut has varied significantly in recent weeks. Stewart concludes that while the current consensus favors a cut, the uncertainty surrounding economic data makes it difficult to predict with certainty.