Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovic. We're here every day bringing
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Speaker 1: Search Bloomberg Global News. You're listening to Bloomberg Business Week.
Speaker 1: Carol Masster, Katie Greifeld in for Tim Stanovic. Hey, Katie.
Speaker 1: Some of the headlines that we saw when it comes
Speaker 1: to COVID today the President President Biden coming out saying
Speaker 1: his administration will double it's order of rapid test to
Speaker 1: send to Americans while also distributing high quality mass to
Speaker 1: help fight a surge of cases of the macron varying. Right.
Speaker 1: That's something I know. Mike and I were just talking
Speaker 1: about the quality of maths. It's a difference. It it matters. Yeah,
Speaker 1: in my life. I mean, I would love to get
Speaker 1: my hands one of those masks, but I'm trying to
Speaker 1: order them off of Amazon, and it's it's you know,
Speaker 1: that's a chunk of change. Yeah, it's a chunk of
Speaker 1: change if you can get them. Hey, let's see what
Speaker 1: he is seeing when it comes to the latest headlines.
Speaker 1: By the way, China detecting O Macron in a second
Speaker 1: major ports city. So we continue to see outbreaks certainly
Speaker 1: around the world, and for them it's tougher ahead of
Speaker 1: those Olympics. Dr Andy Pekosh, she's back with us, Professor
Speaker 1: of Molecular Microbiology and Immunology at Johns Hopkins University, Bloomberg
Speaker 1: School of Public Health, of course, supported by Michael R. Bloomberg, Founder,
Speaker 1: Bloomberg ALP and Bloomberg Philanthropies. He joins us once again
Speaker 1: on the phone from Baltimore. Dr Pekosh, good to have
Speaker 1: you back here on Bloomberg with Katie and myself. How
Speaker 1: are you and what's the latest um from your perspective
Speaker 1: and the headlines that we really need to be paying
Speaker 1: attention to. Well, you can see that the case surges
Speaker 1: with the Macron are still at you know, unfathomably high levels. Um.
Speaker 1: I know there's some parts of the country that are
Speaker 1: hoping to see a plateau, but at the end of
Speaker 1: the day, we are we are at a such a
Speaker 1: high level of Kate says that even if things started
Speaker 1: to go down, we would be at high levels of
Speaker 1: cases for a week or maybe even more. Um. So
Speaker 1: it's really a matter of dealing with the surge that's
Speaker 1: ongoing right now and dealing with it with the lack
Speaker 1: of certain essential things that we need, like you were
Speaker 1: mentioning before testing, and various other things and dr I mean,
Speaker 1: it seems like the narrative around the omicron variant is
Speaker 1: that it's less severe. You know, you're gonna get sick,
Speaker 1: but maybe it's you know, equivalent to the common cold.
Speaker 1: I know that hasn't been the case for everyone, but uh,
Speaker 1: I mean, my dad has been joking for weeks that
Speaker 1: he doesn't want to get a macron. He wants to
Speaker 1: get the variant that comes after a macron because it
Speaker 1: feels like it's been getting less and less severe. But
Speaker 1: does the science actually work that way? I mean, should
Speaker 1: we believe that the next variant that comes along will
Speaker 1: be even milder? Yeah? No, Unfortunately, the science doesn't suggest
Speaker 1: how the how COVID nineteen disease is going to change
Speaker 1: in the future. You know, I think even with all
Speaker 1: macron if you're unvaccinated, I would be very concerned about
Speaker 1: getting infected with a macron if you were unvaccinated, because
Speaker 1: those are the people that are in the hospital right
Speaker 1: now that still represent the majority of people with the
Speaker 1: severe disease um you know, for the rest of the population,
Speaker 1: particularly because of our immunity that we have from vaccines
Speaker 1: um those vaccine induced immunity doesn't protect us from infection,
Speaker 1: but it is preventing lessening disease, severity, lessening symptoms. It's
Speaker 1: very similar to what we talked about on an annual
Speaker 1: basis with influenza vaccines. The vaccines are not not preventing
Speaker 1: infection as efficiently as we maybe would like them, but
Speaker 1: they really are protecting against us against severe disease and
Speaker 1: and and quickening the course of the infection in individuals.
Speaker 1: So when you look into your crystal ball, I'm curious.
Speaker 1: You know, we keep thinking, all right, it does feel
Speaker 1: like certainly better than where we were a year ago,
Speaker 1: but it still is staggering to think we are in
Speaker 1: year three of this, um Dr peckash. I guess I'm
Speaker 1: trying to get my head around that. Well, I always
Speaker 1: probably be living in a world with COVID, but we'll
Speaker 1: get to a point where I look at COVID just
Speaker 1: like a case of the flu. And I shouldn't say
Speaker 1: jas because the common flu every year kills thousands of
Speaker 1: people too. Right, absolutely, But but I think if there
Speaker 1: is a sort of silver lining here, it's clear that
Speaker 1: people who are vaccinated and who have subsequently gotten infected
Speaker 1: have an amazingly strong immune response that's not only very high,
Speaker 1: but it's also broad, meaning that it recognizes lots of
Speaker 1: different variants that have been through the population already. So
Speaker 1: this combination of vaccination and infection is going to put
Speaker 1: us at a place where severe disease for at least
Speaker 1: most of the population is going to be somewhat unlikely.
Speaker 1: You know, we'll need boosters periodically to maintain that. Um
Speaker 1: My real worry though, is, you know, we really don't
Speaker 1: know a about the high risk population. So we know
Speaker 1: the elderly are more predisposed as severe disease. We know
Speaker 1: there's certain medical conditions that make you predisposed as severe disease.
Speaker 1: Those are the populations were really going to have to
Speaker 1: keep an eye on as we go forward, because we
Speaker 1: want to make sure that we're protecting them as well
Speaker 1: as as much as we're protecting the healthy part of
Speaker 1: the population. And after we don't have much time left.
Speaker 1: But I would love to hear your perspective on tests
Speaker 1: because I mean, just in my own personal life, I've
Speaker 1: heard some mistrust about rapid tests, that you know, they're
Speaker 1: kind of faulty, that the PCRs the gold standard, that's
Speaker 1: what you've got to get. What do you think rapid
Speaker 1: tests work, particularly when you're showing symptoms, and so they'll
Speaker 1: help you know if you're infected with COVID nineteen or
Speaker 1: if with something else. UM. Given the test shortage, though,
Speaker 1: I think a simple thing to remind people of is
Speaker 1: if you've got some sort of respiratory symptoms, stay home period.
Speaker 1: If you're infected. You may be infected with COVID, you
Speaker 1: may be infected with flu, you may be infected with something.
Speaker 1: So if you don't have access to a test, just
Speaker 1: keep the simple basic principles of it. If you're feeling ill,
Speaker 1: stay away. UM use the rapid anagen tests if you
Speaker 1: have them. When you're symptomatic and then always with a
Speaker 1: positive rapid anagin tests confirmed that with a PCR test,
Speaker 1: because that means you have uh covid and you need
Speaker 1: to get your numbers into the public health monitoring system.
Speaker 1: All right, We always appreciate time with you, Dr Andy Pekash.
Speaker 1: She's professor of molecular microbiology and EMIL immunology at Johns
Speaker 1: Hopkins University, Bloomberg School of Public Health. And of course,
Speaker 1: as we mentioned, it is supported by Michael or Bloomberg,
Speaker 1: founder of Bloomberg LP and Bloomberg philanthropist Katie. But quickly,
Speaker 1: you can call your dad Hopie was listening, because that
Speaker 1: was some good information there. We're gonna send him the podcast.
Speaker 1: You're listening to Bloomberg Business Week and this is Bloomberg Radio.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. H Katie, we
Speaker 1: talked about it. There's a bunch of Goldman stories on
Speaker 1: the Bloomberg that are catching people's attention. I love the
Speaker 1: headline about the Goldman trading death. We haven't got their
Speaker 1: earnings yet, but they're giving us a little bit of
Speaker 1: a preview. I think, yeah, absolutely, And this is interesting
Speaker 1: because it's about commodities, which I know we're about to
Speaker 1: get into. But it feels like the bright spot for
Speaker 1: so long has been fixed income. But I don't know,
Speaker 1: we'll see maybe the leadership is changing. Yeah, that's a really,
Speaker 1: really good point. We're gonna get into that with our
Speaker 1: own tree. Not AAJ and his financial porter at Bloomberg News.
Speaker 1: He's on the phone in New York City. UM, shree,
Speaker 1: great to have you here with us. We mentioned a
Speaker 1: most read it's a Bloomberg exclusive about their trading death,
Speaker 1: their commodities trading death. What's going on again? It's truly
Speaker 1: a window into the kind of success that Waltz trading
Speaker 1: operations have seen in the last two years. The Goldman
Speaker 1: commodities business is expected to post the best performance in
Speaker 1: over the decade, and that mirror is the kind of
Speaker 1: excessive successive seen a Goldman Sex and other banks. But
Speaker 1: it is a little more special than that. At Goldman
Speaker 1: Sex commodities business does have pride of place. It was
Speaker 1: the business from which you had senior leaders went on
Speaker 1: to run Trading Investment Management HR, and even all of
Speaker 1: the film including president and CEO, Lloyd Blankfine and Gary
Speaker 1: Cone all came through the commodities business, and in twenty
Speaker 1: seventeen through seventeen eighteen, there was a room worried that
Speaker 1: the business wasn't serious decline mirroring the what people felt
Speaker 1: was a secular decline in trading across Wall Street. But
Speaker 1: much like everything else that these businesses have touched since
Speaker 1: the onset of the pandemic, you have seen a remarkable
Speaker 1: done around the fortune, and the commodities is just a
Speaker 1: microcosm of that. And so I love, I love the
Speaker 1: headline that this trading death the Commodities says it dodged
Speaker 1: the Acts, minting billions again. But I mean it feels
Speaker 1: very fickle that. Obviously we've seen a ton of just
Speaker 1: chaos almost in the energy markets. But I mean, could
Speaker 1: the Acts come again when things inevitably slow down or
Speaker 1: does this the fact that they are so profitable right
Speaker 1: now does not buy them time. Kittie, You're absolutely right
Speaker 1: about the whole idea of it being fickled, because remember
Speaker 1: when it was at its lowest point in twenty seventeen,
Speaker 1: the business was pulling in revenue that was less than
Speaker 1: ten percent of what it would normally do in its
Speaker 1: best years, they would say this worries and at that
Speaker 1: time the film like Goldman, Fax was also having a
Speaker 1: leadership transition where when s the traiders rule the firm,
Speaker 1: you had a bunch of advisory bank or suddenly rising
Speaker 1: to the tops. And when those people look at a
Speaker 1: business like a commodities trading desk, basically something that's scary,
Speaker 1: complicated and volatiles that sucks up way too much capital,
Speaker 1: paltry revenues and return when equities that would antagonize and
Speaker 1: scare away a lot of shareholder, but those who wanted
Speaker 1: to stick it out and those who wanted to keep
Speaker 1: the business make the point that it is counterslick, circlical
Speaker 1: in nature. It has its best years and moments of turbulence.
Speaker 1: The best performances for that desk was it's sort of
Speaker 1: in the two thousand, seven, eight nine ten period when
Speaker 1: not a lot of other things were going great in finance,
Speaker 1: and now since on set of the pandemic, when you
Speaker 1: have negative oil prices and then shooting back up to
Speaker 1: eighty dollars, you have a power grid failures in the US,
Speaker 1: frenzy price action in the European gas and power market.
Speaker 1: When you have a business that is able to participate
Speaker 1: in all those price moves, they will come out and
Speaker 1: looking good. And that's where Goldman's acts will come UM.
Speaker 1: One of the longer term implications of this tree in
Speaker 1: terms of I'm thinking of other firms who are looking
Speaker 1: at this UM, I mean, I don't know what changes
Speaker 1: of anything. Much like we talked about how the commodities
Speaker 1: business is a microcosm what was happening across all of training,
Speaker 1: it's also a window into what the commodities business itself
Speaker 1: is looking like. Goldman's in house animalst Jeff Curry widely
Speaker 1: followed Voice and Energy Markets came out and said that
Speaker 1: you know, we're entering another supercycle that could last another decade.
Speaker 1: Jeff Curry for rose to prominence in the mid two
Speaker 1: thousand when he called a bullmarket that was going to
Speaker 1: be in place and lost for a while because of
Speaker 1: the China driven boom, and he forecast all prices going
Speaker 1: above hundred dollars. Peoples Right ultimately went up to about
Speaker 1: hundred and forty dollars. And when he says that this
Speaker 1: period of a lot of interesting price action will continue
Speaker 1: to take place for over a decade. You will be
Speaker 1: surprised if suddenly a lot of other banks are thinking
Speaker 1: about beefing up their trading operations, trying to become more visible.
Speaker 1: You have to be committed, and you have to be
Speaker 1: certain you want to take the plans because there will
Speaker 1: be a lot of courts associated with the business and
Speaker 1: a lot of capital charges, so you better be prepared
Speaker 1: to guts it out. But the rewards can be plenty
Speaker 1: and pretty if you end up on top of the plan.
Speaker 1: And sure, we have just about forty seconds. But I
Speaker 1: am curious now. I mentioned fixed income trading that had
Speaker 1: been the bright spot, it felt like, through the pandemic.
Speaker 1: But we got those Jefferies results yesterday. You saw a
Speaker 1: big drop off there, at least for this quarter. I mean,
Speaker 1: are are the energy traders expected to be the all stars?
Speaker 1: Look the energy trading this sits within six income. And
Speaker 1: when the Jeffreyes six income numbers came through, you saw
Speaker 1: what happened. They posted a slowdown in the sick business
Speaker 1: and the shares at one point put down ten prevents
Speaker 1: for the day. So when the bank's report on and
Speaker 1: over the next week, it will be a tale of
Speaker 1: two hubs. Everyone will look at a rear ru mirror
Speaker 1: and will be very pleased with how they performed. They
Speaker 1: will be extremely keen to hear their forecasts and predictions
Speaker 1: for what lies ahead, because that's what is really going
Speaker 1: to say the stop price movement. They want to see
Speaker 1: if that brilliant action that we've seen over the last
Speaker 1: two months canned, They in place or we're a waiting
Speaker 1: a soda. Alright, good stuff. Um. As I mentioned, there's
Speaker 1: like three stories among the top ten on the bloom
Speaker 1: Park among the most right, UH, and that includes Shere's
Speaker 1: exclusive and financial port Bloomberg News with the latest and
Speaker 1: comment sack Stock up about half a percent today. You're
Speaker 1: senaing to Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio Katie. The Bloomberg
Speaker 1: Business Week Your Head issue. It's out. They are looking
Speaker 1: at the trends, the companies, the movements, so things are
Speaker 1: really going to watch out for UH this year, and
Speaker 1: that includes a story on Hollywood heading back to theaters
Speaker 1: and really hoping that movie goers end up following That.
Speaker 1: New issue is out on newsstands online at Bloomberg dot com.
Speaker 1: Backslash business Week and also on the Bloomberg terminal. Let's
Speaker 1: bring in Bloomberg business Week at or Joel Webber. He's
Speaker 1: on the Access line in Brooklyn along with Bloomberg News
Speaker 1: reporter Brian Eckhouse on the phone in l A. Joel,
Speaker 1: have you been back to a movie theater? I have,
Speaker 1: and it was like, uh, one of my favorite moments
Speaker 1: in that pandemic. It was like, you know, you know,
Speaker 1: I wanted to make sure that I saw done on
Speaker 1: a big screen and it was totally worth it. I
Speaker 1: love doing it, um and you know, if it weren't
Speaker 1: for Oh Macron, I would be there like every week,
Speaker 1: I think, um so, so I'm bullish on on movie
Speaker 1: theaters in general. I think it's a it's a thing
Speaker 1: that people love doing and I want to be doing
Speaker 1: it again. And I think Hollywood feels the same, right Brian, Yeah,
Speaker 1: they do. Uh. It's definitely a big push to get
Speaker 1: big films established film names that Batman coming in March
Speaker 1: and others to write trying to make a event and
Speaker 1: experience again. June was available on HBO Max. That's right,
Speaker 1: saw it. It was beautiful that didn't have the sweep
Speaker 1: that you would have seen on a big screen that
Speaker 1: Joel had. Okay, I'm curious to hear you haven't been,
Speaker 1: have you? I have not been. The last movie I
Speaker 1: saw in theaters January, cats have not been back since
Speaker 1: I heard that. Fitting I could have guessed that's what
Speaker 1: you saw. Unfortunately I have a very defined brand. But
Speaker 1: in any case, Brian talked to me about, you know,
Speaker 1: the theater exclusivity, because you have sort of seen this
Speaker 1: trend emerge where Okay, a movie will get released in theaters,
Speaker 1: it's exclusive to theaters for forty five days. I think
Speaker 1: it's stat I saw, and then it's available online on
Speaker 1: streaming services. I mean, is that the way of the future.
Speaker 1: Our theater is trying to change that? Well, it's the
Speaker 1: way of right now for the pandemic. You know, we
Speaker 1: would see films come out on streaming services three months
Speaker 1: after it hits theaters. Before then, it was a lot
Speaker 1: longer of a time period. Last year, some of the studios,
Speaker 1: including Warner Brothers, they put films simultaneously in theaters and
Speaker 1: on services like HBO Max. Uh. Theaters didn't like that.
Speaker 1: It really crimp their there were seats, so sort of
Speaker 1: a compromise and experiment going forward to doing that forty
Speaker 1: five days thing you're talking about really have films and
Speaker 1: theaters if it hits theaters for you know, a month
Speaker 1: and a half, and then it'll hit HBO Max, it'll
Speaker 1: hit Peacock, Paramount Plus and others. So Brian talk to
Speaker 1: us about what it's going to take for you to
Speaker 1: get into a theater. Is it gonna be Tom Cruise
Speaker 1: and is it gonna be Tom top Gun or is
Speaker 1: it gonna be Tom Cruise Mission impossible? That's the question
Speaker 1: before a macron. I was looking forward to seeing Lucorice Pizza,
Speaker 1: which is the theaters right now, the latest all tom
Speaker 1: Aul Thomas Anderson movie. I haven't seen it yet, looking
Speaker 1: forward to seeing it. I think The Batman in March
Speaker 1: might be what gets me out next. And what about Hollywood?
Speaker 1: Like the first movie that we're really going to see
Speaker 1: this strategy come to bear on is going to be Ambulance, Right,
Speaker 1: that's one of the first coming out Peacock's film and
Speaker 1: sorry it's the universal film that will hit theaters in
Speaker 1: April and then four ane days later it will be
Speaker 1: on Peacock. Um. I think we're to see a film
Speaker 1: mcannel last week from Universal. Very similar will be on
Speaker 1: Peacock probably in late February. You know, I do wonder
Speaker 1: too about the increased competition just for talent and content, right,
Speaker 1: the streaming services are still going to be competing for
Speaker 1: lots of stuff. Um, you know, what does this do
Speaker 1: to the price of things, especially as we kind of
Speaker 1: increasingly move towards normal any indications, I mean, it sounds
Speaker 1: like box office receipts are still going to be a
Speaker 1: little bit down once we get back to a little
Speaker 1: bit more normal. Yeah, I mean, we'll see receipts be
Speaker 1: below where they were before the pandemic, although it'll almost
Speaker 1: certainly do nearly double what it was last year, So
Speaker 1: theaters are gonna see a bit of a return, not
Speaker 1: what it was, you know, pre covid. Uh. In terms
Speaker 1: of streaming sites, you know, they're focusing really heavily, and
Speaker 1: you said on driving new subscriptions, on growth, and for
Speaker 1: a lot of the studios, they're focused increasingly on these services,
Speaker 1: even more so in some cases than when they put
Speaker 1: in theaters. And Brian, you mentioned simultaneous releases, you know,
Speaker 1: putting big films out online and in theaters at the
Speaker 1: same time. There's I get it. They didn't like that model.
Speaker 1: Did anyone like it? Though? How did those films actually perform?
Speaker 1: A lot of the films had old box office receipts
Speaker 1: um King Richard was on HBO Acts in November around
Speaker 1: Thanksgiving simultaneous release. It was pretty well viewed online. It
Speaker 1: didn't get a great box office. Um, we've seen that
Speaker 1: in other cases as well. Matrix did okay last month,
Speaker 1: but again it had that release at home. In the
Speaker 1: case of June, again, I saw that at home. I
Speaker 1: didn't see that in theaters. Um, it may adult. You know.
Speaker 1: The box office for seats or grows for these films
Speaker 1: was a particularly interesting case study, Brian, because it was like,
Speaker 1: you know, one of the things that I jumped out
Speaker 1: to me as we're looking at this lineup where you've got,
Speaker 1: you know, a Batman movie and Tom Cruise movies like
Speaker 1: these are like Avatar to which we haven't even mentioned,
Speaker 1: Like we've got we've got known entities and Hollywood always
Speaker 1: loves the sure thing. At the same time, it's like
Speaker 1: I kind of want to go to a theater and
Speaker 1: just see a big, awesome movie that isn't a thing
Speaker 1: I've seen before, you know, Jurassic World being uh, yet
Speaker 1: another thing that's coming out. So it's so Carol. Katie,
Speaker 1: here's my question for you. Are you more inclined to
Speaker 1: go see something that's all, you know, a known entity,
Speaker 1: or do you want to see something that's totally new
Speaker 1: from Hollywood in the theater. And what's the thing that
Speaker 1: brings you back? About you, Katy, I want to see
Speaker 1: my dinosaurs up on the big screen, just totally, but
Speaker 1: I think a known entity, I'm willing to be like, Okay,
Speaker 1: I know that's something I want to see on the
Speaker 1: big screen. What about you, Katie? Yeah, you know I
Speaker 1: would go in for cats too, but in terms like
Speaker 1: to get me into the theater again, I mean I
Speaker 1: was I'm I'm terrible at watching movies. I just fall
Speaker 1: asleep anyway, so I'm probably not the target audience that
Speaker 1: these theaters are worried about. Anyway. What about you, Joel, Well,
Speaker 1: I'll go back, you know the moment that um, I
Speaker 1: can go into Date to Night and not you know,
Speaker 1: be worried about Omicron Like, I will take that option, please, Brian. Yeah,
Speaker 1: I mean I think what's really good for Hollywood this
Speaker 1: year is because of the postponment from COVID. You had
Speaker 1: this really a strong slate of big movies. Uh, this
Speaker 1: is really gonna test whether people want to come out
Speaker 1: those theaters are not because you have such a robust
Speaker 1: lineup of well known content. Yeah, I'm missing those big,
Speaker 1: cushy seats. You now, you kick back if you go up,
Speaker 1: And I'm just gonna say, um, alright, guys, fingers crossed,
Speaker 1: we can get back to those uh movie theaters more
Speaker 1: so in Joe Weber, Editor Bloomberg business Week and Brian
Speaker 1: Nett Cass, reporter at Bloomberg News. Catch the year ahead
Speaker 1: issue of Bloomberg Business Week on newsstands, online at Bloomberg
Speaker 1: dot com and also on the Bloomberg terminal. This is
Speaker 1: Bloomberg Radio. This is Bloomberg Business Week with Carol Masser
Speaker 1: and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. This
Speaker 1: definitely shut up on our radar today. It's about the
Speaker 1: many scandals over at metaformally known of course, is Facebook
Speaker 1: and Katie how some of this may be a bit
Speaker 1: demoralizing for employees. Um when you think it's the case,
Speaker 1: especially as they're trying to recruit folks in it like what,
Speaker 1: I would think that's a pretty difficult on their recruiting
Speaker 1: team to catch my eye that it didn't seem like
Speaker 1: a lot of the disfaction had to do with COVID,
Speaker 1: which I feel like when we hear about employee morale
Speaker 1: has to do more with COVID than anything else. But
Speaker 1: now with Meta, Yeah, it's a really good point. Hey,
Speaker 1: let's get all the details that Bloomberg News tech reporter
Speaker 1: Kurt Wagner, he put it out there on the Bloomberg
Speaker 1: He is on the phone from our San Francisco bureau. So, Kurt,
Speaker 1: what's exactly going on here? And what what's what's everything
Speaker 1: that's got so many of those Meta employees down? Yeah? Well,
Speaker 1: I mean this has been a couple of years in
Speaker 1: the making, as I'm sure you both know. I mean
Speaker 1: you've seen stories, right. First of all, I think the
Speaker 1: most obvious is there's just a lot more leaks coming
Speaker 1: from Meta formerly Facebook these days. You know, that's usually
Speaker 1: find employees aren't super happy. I think a year and
Speaker 1: a half ago or so, we saw an actual walk
Speaker 1: out from employees who were not happy with how the
Speaker 1: company handled President Trump's post. And then this week, you
Speaker 1: know what, what kind of prompted this. I wrote this
Speaker 1: in our newsletters and when we prompted this was blast
Speaker 1: door does this ranking of the best places to work,
Speaker 1: and Facebook is usually in the top ten. In fact,
Speaker 1: three times it's been the number one place in the
Speaker 1: world to work, and this year it was forty seven.
Speaker 1: And it was just kind of a reminder that this
Speaker 1: company that has historically been, you know, the dream job
Speaker 1: for a lot of people, is not really the case anymore.
Speaker 1: And I think, you know, it's just proof that a
Speaker 1: lot of the drama and scandals they dealt with over
Speaker 1: the last couple of years is actually having an impact.
Speaker 1: And Kurt, that's exactly what leaped out to me that.
Speaker 1: I mean, Meta formerly known as Facebook, it was the
Speaker 1: number one company three times, to slip to forty seven.
Speaker 1: I mean, what happened? Is it just that, you know,
Speaker 1: Facebook now Meta is just a bigger, more publicly out
Speaker 1: there company. But I mean it's just an incredible drop.
Speaker 1: How do you explain it? Well, I think imagine, you
Speaker 1: know what it's like to work there, and kind of
Speaker 1: every two months or so, it feels like you are
Speaker 1: dealing with some kind of scandal that you know, questions
Speaker 1: like am I doing good in the world, right, Like
Speaker 1: that is the question that a lot of employees have
Speaker 1: to ask themselves regularly, and I think that came to
Speaker 1: ahead this year with some of the Facebook papers. You know,
Speaker 1: we had the whistle Facebook whistleblower who came out and
Speaker 1: released all kinds of internal documents, and you know, the
Speaker 1: CEO is often testifying before Congress, and it's just like
Speaker 1: a lot of heavy, heavy stuff to think about on
Speaker 1: a day to day basis when you're trying to do
Speaker 1: your job, and not a lot of jobs have that.
Speaker 1: And you know, to Facebook's credit, it's because it's very
Speaker 1: influential and that's why a lot of people like to
Speaker 1: work there. They can they can have huge impact. But
Speaker 1: at the same time, with that impact comes a lot
Speaker 1: of questions about what that impact is. And I think
Speaker 1: people struggle with that well. And I also think about,
Speaker 1: you know, losing employees costs a company something, right, you
Speaker 1: you lose an employee who might have been pretty productive
Speaker 1: that led to top and bottom lines gains at the company.
Speaker 1: It costs a company to recruit, train, and all that
Speaker 1: good stuff. They're also those some workers, like I think
Speaker 1: about engineers. We've talked about the tightness in the market.
Speaker 1: Everybody needs, you know, programmers, engineers. I do think about
Speaker 1: how that might ultimately impact if they can't get engineers.
Speaker 1: Do they care as much engineers about what's going on
Speaker 1: in terms of morale um and if so, how that
Speaker 1: might impact at his bottom line or the ability to
Speaker 1: produce new products. Yeah, I mean certainly, if you can't
Speaker 1: hire engineers, it's gonna be hard to grow, right, I
Speaker 1: think that's pretty obvious. And I think stereotypically, you you
Speaker 1: often think like, well, engineering department, probably more than any
Speaker 1: other team at a at a tech company, is a
Speaker 1: little bit more heads down, right, like they're just building.
Speaker 1: They're they're focused on the code, and there may be
Speaker 1: less impacted by some of the cultural things that happen.
Speaker 1: But at the same time, I mean that's that's the
Speaker 1: stereotype and and and it's not going to be relevant
Speaker 1: to every every person who's there. And if you have
Speaker 1: a chance to go build something cool at a company
Speaker 1: that also aligns your vision, of course you're going to
Speaker 1: go do that. And um, I think that's part of
Speaker 1: the reason we're seeing Facebook lean so heavily into this
Speaker 1: idea of a metaverse, right. It's something exciting. That's something
Speaker 1: future is stick and if you're an engineer and you
Speaker 1: want to be building, um, you know, products that are
Speaker 1: on the cutting edge. While Facebook made a pretty public
Speaker 1: stand here's what we're building, you know, come join us.
Speaker 1: And I have to imagine recruiting with a huge part
Speaker 1: of that. And so Kurt employees a lot of discontent.
Speaker 1: They're a lot of existential questions there. But what about advertisers?
Speaker 1: Are they asking the same questions? And uh, have we
Speaker 1: seen any pullback in spending? We have not. And that's
Speaker 1: part of the reason why I thought this UM kind
Speaker 1: of angle or this anecdote about the glass door ranking
Speaker 1: was notable. Was you know, for years, we have not
Speaker 1: really seen a whole lot of anything changed with Facebook
Speaker 1: because of all the stuff going on. Right you keep thinking, well,
Speaker 1: certainly advertisers are going to pull back, right um, or
Speaker 1: business is going to slow down as users lead the service.
Speaker 1: But that hasn't really happened, right Um, despite all the
Speaker 1: bad things that have gone on around Facebook, And so
Speaker 1: the fact that you know, employees might be the one
Speaker 1: area where it's actually having an impact, I think was
Speaker 1: pretty notable, and that I should point out. I mean, Facebook,
Speaker 1: our Meta is huge. It has sixty eight thousand employees.
Speaker 1: It's not as if nobody wants to work there, right,
Speaker 1: It's just that at a certain point it becomes harder
Speaker 1: and harder to recruit. Hey, Kurt, just real quickly, twonds here,
Speaker 1: does the internal management, the senior managers that they care,
Speaker 1: they looking to make it better? Just quickly? Yeah? Absolutely.
Speaker 1: I mean a bunch of people actually left last year,
Speaker 1: a bunch of high ranking folks. But this has been
Speaker 1: the fact that you can't hire engineers has been a
Speaker 1: big issue for Mark Zuckerberger for the last couple of years.
Speaker 1: So this matters to them immentally. I'm sure all right,
Speaker 1: we're gonna leave it there. Hey, um, Kurt, thank you
Speaker 1: so much, really appreciate a Bloomberg News tech reporter Kurt
Speaker 1: Wagner on the phone from our San Francisco bureau. Shares
Speaker 1: of Meta uh down about one point six percent in
Speaker 1: today's session, but we've seen a lot of big tech
Speaker 1: under pressure stocks down about two and a half percent
Speaker 1: so far in this new year. You're listening to Bloomberg
Speaker 1: Business Week on Bloomberg Radio. Row. Yeah, but you let
Speaker 1: me drive Oh no, no, no no, no, all right, please
Speaker 1: album of Bridey Gravels. I want to drive. It's a
Speaker 1: good question. This is good ride to be closed on radio.
Speaker 1: All right, just got a app not in a half
Speaker 1: minutes left in today's trading session, and we are seeing
Speaker 1: those major equity averages dive, just talking about them a
Speaker 1: few moments ago. They are at their loads of the session,
Speaker 1: so down about two and a half percent on the NAZAC.
Speaker 1: Really feeling the under performance among those three major equity averages,
Speaker 1: but the SMP also down about one and a half percent.
Speaker 1: This is ahead of course of tomorrow's big bank starting
Speaker 1: to report earnings, will hear from JP Morgan City, so
Speaker 1: that will certainly help impact the tone of the trade.
Speaker 1: Let's get to the drive to the close. Kate Fettus
Speaker 1: is with us. She is president, chief investment officer at
Speaker 1: Grace Capital. They're a Boston based registered investment advisor. She
Speaker 1: joins us on the phone from Boston. Kate, nice to
Speaker 1: have you here with Katie Greifeld and myself. So the
Speaker 1: market trade, I don't know it's a all to one
Speaker 1: safety say. We've seen some losses, we've seen some rallies.
Speaker 1: What do you think fundamentally might be the tone of
Speaker 1: the markets as we just get ready to kick off
Speaker 1: that earning season. I think, fundamentally, thank you for having me,
Speaker 1: Carol and twenty, But fundamentally the market is looking to
Speaker 1: take a pause. It's looking to take a pause because
Speaker 1: we've had three very strong years. Last year, the market
Speaker 1: was up twenty nine percent. And what's fascinating about it
Speaker 1: is if you look at how it happened, the market
Speaker 1: was up. It did better than the Russell one thousand
Speaker 1: growth and better than the one Russell one thousand value,
Speaker 1: So that tells you that it was a very narrow market.
Speaker 1: The top ten companies uh playing an outside performance in
Speaker 1: the market. At the same time, even though the market
Speaker 1: is little worried, they're like, oh, we had a big year.
Speaker 1: We gotta calm down. If you think about it, strifically,
Speaker 1: looking at the facts, the smp UM multiple declined from
Speaker 1: forty one times a year ago to eight times currently,
Speaker 1: So the earnings in the spire actually grew last year,
Speaker 1: so things are not quite as dire as if you
Speaker 1: look at what's going on today, it would appear so okay.
Speaker 1: To your point, you know, we've had three big years.
Speaker 1: For stop the stock market looking to take a pause.
Speaker 1: Now we're also cruising into the federal reserves lift off
Speaker 1: from zero, potentially the first interest rate hikes. Since how
Speaker 1: do you position in that environment? What are you expecting?
Speaker 1: How how is that going to play out? You know,
Speaker 1: I think it's hard to guess what the Fed is
Speaker 1: going to do in a in a general sense. Um,
Speaker 1: So I am not someone who likes to make a
Speaker 1: lot of macobetts. Having said this clearly, I think the
Speaker 1: Fed directionally has been very clear with what they want
Speaker 1: to do in a general sense. You know, the the
Speaker 1: the logic is, well, the head's gonna raise rates, therefore
Speaker 1: you should, you know, buy the banks and sell the
Speaker 1: text stocks. Bed's gonna raise rates, therefore the market is
Speaker 1: going to go down. Not necessarily in a general sense,
Speaker 1: the FAED has proven itself to be quite dubbish. I think, um,
Speaker 1: if you really look at the way it behaves, it's
Speaker 1: clear that it's not so much about its mandate of
Speaker 1: full employment and to percent inflation as much as keeping
Speaker 1: the markets buoyant. So any time they do anything and
Speaker 1: the market looks like it's going to react negatively, they
Speaker 1: back down. At the same time, it's not clear that
Speaker 1: raising rates will be bad for the market general yelling
Speaker 1: raise rates from actually zero to about one five beginning
Speaker 1: in and the Dow Jones went up did extremely well.
Speaker 1: Only person with a better record was Greenspan, because what
Speaker 1: happens when you raise rates in the US. It's a
Speaker 1: global market. You're gonna track inflows from Europe and Japan. Okay,
Speaker 1: I want to go back to something you said at
Speaker 1: the top to Katie and me, and you said performance.
Speaker 1: And I'm looking at some of the notes to you
Speaker 1: shared with our team and our producer um performance. You
Speaker 1: said so concentrated that the sp performance bested both the
Speaker 1: rust of one thousand growth and one thousand value industries
Speaker 1: you're talking about last year in particular. I just want
Speaker 1: to confirm that. And then are you saying that that
Speaker 1: shows that there's a lot more room for gains by
Speaker 1: other equity plays, maybe not those big cap names, to
Speaker 1: continue the momentum there. There is a lot more room
Speaker 1: to continue the momentum at the same time, because remember
Speaker 1: at this point, more than half of the market is
Speaker 1: being invested passively, people just putting their money blindly into
Speaker 1: the index funds. So that creates some vulnerability because you say, oh,
Speaker 1: I'm going to be diverse FI and I'm just gonna
Speaker 1: buy the SMP five hundred, not going to use the
Speaker 1: stock picker. And you don't understand really how vulnerable you
Speaker 1: are that thirty. You know, percent of your performance is
Speaker 1: being controlled by handful of stocks. So if that handful
Speaker 1: of stocks stumble, an in a passive index investor in
Speaker 1: the SMP could will stumble along with it. An active
Speaker 1: manager like what we do, where you're actually picking stocks,
Speaker 1: you could actually have a very good year despite the
Speaker 1: market in an aggregate sense doing poorly. And so kate,
Speaker 1: as an active manager, where do you see the most
Speaker 1: opportunity right now? You know, on the single stock level,
Speaker 1: but also on a sector level. What looks most attractive
Speaker 1: in a I'm going to answer that in sort of
Speaker 1: a long term and near term and you know, I'm
Speaker 1: going to contradict myself a little bit from what I
Speaker 1: said not that long ago, but hey, that's that's life.
Speaker 1: On a long term basis, technology is clearly the place
Speaker 1: to be. If you look at the market, it's very
Speaker 1: dominated by the big tech players. And actually we ran
Speaker 1: this for our annual report of the s and P
Speaker 1: five hundred has its headquarters in California, another eleven percent
Speaker 1: in the Washington State. So technology is an outsize um
Speaker 1: part of the economy global economy, and that will continue
Speaker 1: in the near term. However, I think SECT energy is
Speaker 1: actually interesting. We are also E s G investors, so
Speaker 1: in the general sense we shy away from most energy,
Speaker 1: not all energy, and the overall market is very E
Speaker 1: s G centric right now, and as a result, you're
Speaker 1: having an under investment in traditional energy. So when you
Speaker 1: have an under investment with the same level of demand
Speaker 1: you've always had in the end, globally we have a
Speaker 1: growing population India, Africa, right, you know, we got growing
Speaker 1: so energy. I think it's very interesting. We've got a
Speaker 1: couple of names that we really like. Um just quickly,
Speaker 1: just got about twenty seconds, Kate, Oh okay, I'll go out, sir.
Speaker 1: I like Sneer Energy. A yields five and a half percent.
Speaker 1: What we like about it's take or pay contracts. They
Speaker 1: felt that you gotta go, Yeah, we gotta go. That
Speaker 1: means we're just gonna have to come and have you
Speaker 1: back because we do like talking names. Um, Kate, do
Speaker 1: have a good rest of the week. In a good
Speaker 1: week in ka Fatas She's president, chief investment officer of
Speaker 1: A Grace Capital on the phone from Boston. Thanks for
Speaker 1: listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
Speaker 1: or Bloomberg dot com, and you can also listen to
Speaker 1: our radio show at two pm Eastern on Bloomberg Radio
Speaker 1: or watch us on YouTube. Search to Bloomberg Global News.