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Speaker 2: Well Mark Zuckerberg inspired his latest salvo in the AI wars.
Speaker 2: Just today, Meta Platforms unveiled the largest open source AI
Speaker 2: model ever. It's called Lama three point one. The company
Speaker 2: is also updating its meta AI service, built as a
Speaker 2: rival too chat GPT, and in.
Speaker 3: An exclusive interview with Bloomberg's Emily Chang, the Meta CEO
Speaker 3: and founder opened up about his strategy and why he
Speaker 3: believes it's superior to competitors such as Open ai and Google.
Speaker 3: Bloomberg Original's host and executive producer Emily Chang joining us
Speaker 3: now from our San Francisco bureau.
Speaker 4: Emily spoke to Mark Zuckerberg for the circuit.
Speaker 3: It is a Bloomberg Original series and it's hosted by her,
Speaker 3: where she goes behind the scenes with founders, executives, and innovators.
Speaker 3: Sometimes gets to wear pink high heels, but I'm not
Speaker 3: going to talk about.
Speaker 4: That right now. Good to have you back with us.
Speaker 3: Mark Zuckerberg, Man, when we think about big megacap tech companies,
Speaker 3: that is certainly one of them in a big way.
Speaker 4: AI sounds like it was top of mind for you guys.
Speaker 5: Well, AI is their big news today, and Mark has
Speaker 5: been really excited about this new model, the biggest open
Speaker 5: source model ever. He says, it takes it to another level,
Speaker 5: like you can think about it like a teacher, and
Speaker 5: it will teach all the other models, smaller models below it.
Speaker 5: And so you know, getting to this milestone was a
Speaker 5: really big deal for them. They've obviously invested billions of
Speaker 5: dollars to get here and to try to catch up
Speaker 5: to open Ai and Google. So the interesting thing is
Speaker 5: they're really coming from behind. But what he thinks is
Speaker 5: with by the next update, they're going to completely have
Speaker 5: closed the gap. So you know, it was a really
Speaker 5: rare opportunity to sit down with him and talk about
Speaker 5: out his vision. And you know, I've met him, I've
Speaker 5: interviewed him over the years. I'd also say, you know,
Speaker 5: he seems a lot more comfortable in his own skin
Speaker 5: and just like answering questions more more directly and and
Speaker 5: that was really refreshing. I thought, I thought we got
Speaker 5: to see a more more real, more human.
Speaker 6: Side of him.
Speaker 2: Okay, Emily, I want to talk about Lama. I want
Speaker 2: to talk about Ai, but really what I want to
Speaker 2: talk about. Yeah, so think it's so fun. I mean
Speaker 2: it's like it's it's I think it's easier than regular surfing.
Speaker 2: I don't know if how you felt about it. You
Speaker 2: they talked in the you talked in the program. Got
Speaker 2: how you were from Hawaii? You got you got up
Speaker 2: there and you wakesurf. We're looking at pictures right now.
Speaker 6: You're looking at me wiping out. No, come go wiping
Speaker 6: out again, wiping out again. Yeah, I think we're going
Speaker 6: to show you the climax here.
Speaker 5: So look it was I'm from Hawaii, so I have
Speaker 5: surfed before, but I'm not a surfer. Wakesurfing is a
Speaker 5: totally different thing.
Speaker 6: It was hard.
Speaker 5: But actually Mark and Priscilla joined us as well. Was
Speaker 5: a good teacher and he was super patient with me.
Speaker 6: Which you know, what did.
Speaker 2: You what did you throw to What did you throw
Speaker 2: to him?
Speaker 6: Was it a beer through a lacroix? It was a
Speaker 6: la croix. We were we were non alcoholic on this journey.
Speaker 6: But there, look, I did it.
Speaker 2: Yeah, that's what I'm talking about. That's what I'm talking about.
Speaker 5: And you know it was it was brief, but hey,
Speaker 5: it happened. And and I think the fact that he
Speaker 5: was willing to have us at his home and to
Speaker 5: show us this side of himself, you know, shows a
Speaker 5: lot about his evolution as a leader and sort of
Speaker 5: where he's at and just sort of being you know,
Speaker 5: confident and comfortable in his own skin. But we also
Speaker 5: talked about how all these different side quests, you know,
Speaker 5: as you know, it's not just wake surfing, but he's
Speaker 5: doing Mma and jiu jitsu, and he learned Mandarin, and
Speaker 5: he's growing you know, his own wagu beef cows and
Speaker 5: phoebe the macnuts in Kawhi, but you know, all of
Speaker 5: these other pursuits. He just has a ton of energy,
Speaker 5: at least that's what Priscilla says, and do all of
Speaker 5: these other things enables him to focus. But the thing
Speaker 5: he loves most doing still, he says, is building and
Speaker 5: that means the next generation of AI.
Speaker 3: Well, before we get to that, because we do have
Speaker 3: a clip from the show in your conversation Emily, Why
Speaker 3: do you think he was so open to showing everything?
Speaker 3: As you said, You've had many conversations over the years,
Speaker 3: this was a different side you felt like, or that
Speaker 3: he was much more comfortable in his skin. Why do
Speaker 3: you think he's ready to kind of reveal that. Is
Speaker 3: that just being older and kind of living life a
Speaker 3: little bit more.
Speaker 5: Yeah, I think it's just a matter of time. You know,
Speaker 5: he talked about how when he started the company twenty
Speaker 5: years ago, I mean it was twenty years ago that
Speaker 5: he was sort of thrust into the spotlight. He just said,
Speaker 5: I didn't know anything about running a company, and I
Speaker 5: would totally mess up in interviews, and then when I
Speaker 5: messed up, I would get all this negative feedback, and
Speaker 5: then I would claim up and I just wouldn't want
Speaker 5: to talk to anyone.
Speaker 6: And over time he's just.
Speaker 5: Gotten a lot more comfortable and confident saying what he thinks.
Speaker 5: And he said, if people don't like it, that's fine.
Speaker 6: And if people like it, great, Like you judge for yourself.
Speaker 5: This is who I am. And you know, one of
Speaker 5: the other interesting things is, you know we've talked about
Speaker 5: Jeff Bezos has has left Amazon, Larry and SERGEI have
Speaker 5: left Google's Google there you know, are these other big
Speaker 5: tech founders who have taken a step back. I didn't
Speaker 5: get the sense that that was happening at all. Like
Speaker 5: Mark Zuckerberg is not going anywhere. You know, he just
Speaker 5: turned forty. He seems to have more energy than ever,
Speaker 5: and he's really excited about the next ten to fifteen
Speaker 5: years building out this AI vision, along with the metaverse
Speaker 5: and augmented and virtual reality.
Speaker 6: All of that is still a.
Speaker 5: Thing, but he says in the next ten to fifteen
Speaker 5: years then the next platform will emerge, and building is
Speaker 5: what makes him the most happy.
Speaker 2: Well, speaking of that AI vision, here's Mark Zuckerberg from
Speaker 2: your interview on the Circuit on controlling his AI destiny.
Speaker 2: Check it out.
Speaker 5: Some people see you as an unlikely champion of open
Speaker 5: source today you're laughing.
Speaker 6: Well, I don't know why.
Speaker 7: I mean, I actually think, well, I.
Speaker 6: Get it, but yeah, you understand the word unlikely.
Speaker 7: Yeah, we've actually Meta have been pretty big proponents of
Speaker 7: open source for a while and it's been a really
Speaker 7: good formula for us. So dating back to how we
Speaker 7: design servers, how we design our data centers, we have
Speaker 7: this whole open compute project that kind of standardized a
Speaker 7: lot of the infrastructure for the industry that's going to
Speaker 7: happen with AI too.
Speaker 5: You're really putting a stake in the ground by open
Speaker 5: sourcing your AI in this attempt to build the AI
Speaker 5: rails for the future. How much of this is a
Speaker 5: strategic way to control or own the next technology wave.
Speaker 7: A lot of how we've grown up over the last
Speaker 7: ten or fifteen years was building our apps through phone
Speaker 7: platforms that our competitors controlled. So it's somewhat soul crushing
Speaker 7: to like go build something that you think is going
Speaker 7: to be good and then just get told by Apple
Speaker 7: that you can't ship it because they want to put
Speaker 7: us in a box because they view.
Speaker 6: Us as competitive.
Speaker 7: You know, we're a big enough company now that one
Speaker 7: of the things that I've resolved is that for the
Speaker 7: next generation of technology, I want us to build and
Speaker 7: have more control over the next set of platforms that
Speaker 7: we're going to build. So I think AI is a
Speaker 7: critical one, and I think augmented and virtual reality is
Speaker 7: another critical one. It's kind of the way that we
Speaker 7: can control our own destiny on this and make sure
Speaker 7: that we have access to leading AI is by building
Speaker 7: it and having it become an industry standard, but it
Speaker 7: actually gets stronger by being able to share it and
Speaker 7: have the ecosystem around it.
Speaker 5: You're continuing to improve meta AI across all of your products,
Speaker 5: but also as a standalone chatbot. Why should we use
Speaker 5: meta over chat GPT?
Speaker 7: Well, there's a bunch of things where it's better, you know.
Speaker 7: One of the things that we're rolling out soon is
Speaker 7: the ability to just like imagine stuff. You're typing something
Speaker 7: in real time. I do this with my daughters all
Speaker 7: the time, and as you're kind of typing and entering
Speaker 7: the query, it's just generating the images as you enter.
Speaker 6: The key strokes.
Speaker 7: It's just really cool. My goal for the medai launch,
Speaker 7: which I mean it's only really a few months old
Speaker 7: at this point, was to by the end of the
Speaker 7: year have met aai'd be the most used AI assistant
Speaker 7: in the world. And I think we're basically on track
Speaker 7: for that. I mean, there's hundreds of millions of people
Speaker 7: who are at the end of this year, yeah, and
Speaker 7: I think we're going to be there before the end
Speaker 7: of the year.
Speaker 2: That's Mark Zuckerberg with Emily Chang on the Circuit Bloomberg
Speaker 2: original series that goes behind the scenes with founders, executives,
Speaker 2: and innovators. Emily, I have to tell you the Mark
Speaker 2: Zuckerberg that we just heard in that clip, he sounds
Speaker 2: different than the Mark Zuckerberg we've heard on stage at
Speaker 2: the Developers conference that we've heard in other interviews. He
Speaker 2: sounded so much more relaxed.
Speaker 6: I completely agree.
Speaker 5: I mean, that question that you saw me ask about
Speaker 5: being the unlikely Champion was basically the first or maybe
Speaker 5: the second question in the interview.
Speaker 6: And just the fact that he kind of laughed.
Speaker 5: And pushed back a little but then acknowledged that he understood.
Speaker 5: I just thought it was such a great moment. You know,
Speaker 5: he was a lot more direct in this interview than
Speaker 5: I've seen him before. I mean, and look, this is
Speaker 5: still his strategy is highly scrutinized. He's still one of
Speaker 5: the most scrutinized people, and Meta is one of the
Speaker 5: most scrutiny scrutinized companies in the world, and they deserve
Speaker 5: that scrutiny because they are hugely, hugely influential. It just
Speaker 5: seems like he's really grown into this role. And uh,
Speaker 5: you know, I'm glad that he is. He's now showing
Speaker 5: a bit of that side of himself to us so
Speaker 5: that we can better understand how he thinks and how
Speaker 5: he leads, and then we can judge for ourselves well.
Speaker 3: Speaking of influence and showing himself on a day where
Speaker 3: we've been focused on Kamala Harris her first campaign rally,
Speaker 3: we were just covering it moments ago.
Speaker 4: You did talk politics with Mark Zuckerberg.
Speaker 6: We did, and.
Speaker 5: He said more than I expected that he would say.
Speaker 5: He you know, you know, first obviously talked about Facebook's
Speaker 5: role in elections and and one of the things that
Speaker 5: they're doing at Facebook is trying to recommend less political
Speaker 5: content in feeds. He said, the number one thing I
Speaker 5: hear from people is that they don't want to see
Speaker 5: political content, and we're gonna we're listening to that. So
Speaker 5: I think Facebook will be playing less of a role
Speaker 5: in the election going forward. But of course he went
Speaker 5: on to talk about Donald Trump and the appeal that
Speaker 5: Trump has, and he did not endorse either candidate, by
Speaker 5: the way, but he did say that he found former
Speaker 5: President Trump's response to the assassination, that that famous picture
Speaker 5: of him pumping his.
Speaker 6: Fist that we all now know so well. He thought
Speaker 6: that was pretty inspiring.
Speaker 5: In fact, he used the word badass to describe Trump's
Speaker 5: reaction to the assassination attempt, and he was like, I
Speaker 5: can see why people like the guy. It's a crazy
Speaker 5: time in America. And the role that I want to
Speaker 5: play is help letting people express themselves but in a
Speaker 5: safe and healthy way, and we're going to try to
Speaker 5: evolve the platform to make that happen.
Speaker 3: Well, incredible stuff. Another incredible episode and interview, Emily, Thanks
Speaker 3: so much, so glad we could catch up with you. You
Speaker 3: can watch The Circuit with Emily Chang tonight at six
Speaker 3: thirty pm Wall Street Time on Bloomberg Television. Also streaming
Speaker 3: at eight thirty pm Wall Street Time Bloomberg Originals. Emily,
Speaker 3: of course, is the host and executive producer of the
Speaker 3: Circuit from Bloomberg Originals.
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Speaker 2: Cheryl, how many times do you keep heard that AI
Speaker 2: is going to make.
Speaker 1: Their lives easier?
Speaker 4: What in the last sixty seconds.
Speaker 2: Yeah, right, it's going to do the busy work for
Speaker 2: us so we can get to the stuff that really matters.
Speaker 2: Even though I was actually typing this in Google Docs
Speaker 2: and like the automation was trying to fill it in,
Speaker 2: that's kind of what I'm actually trying to say. So
Speaker 2: it's a little impressive.
Speaker 4: I like it when it finishes your sentences or my sentences.
Speaker 2: Okay, So there's this new study out from the freelancing
Speaker 2: platform upwork that actually found that full time employees say
Speaker 2: that AI has added to their workload and then it's
Speaker 2: even contributing to burnout.
Speaker 4: Wait, added to your work?
Speaker 2: Yeah, it's not making things easier, all right.
Speaker 4: So what's going on?
Speaker 3: Kelly Monahan is managing director at the Epwork Research Institute.
Speaker 3: They focus on the future of work, which includes a
Speaker 3: lot of conversations I'm assuming about AI, She joins us
Speaker 3: from Chicago.
Speaker 4: Kelly, what the heck is going on?
Speaker 3: I thought this is supposed to make our life easier
Speaker 3: for us up to do the things that really matter.
Speaker 8: Absolutely. I think what we're seeing right now is the
Speaker 8: classic productivity paradox where we've seen many times before with
Speaker 8: other technologies. You saw on our study ninety six percent
Speaker 8: of global leaders are saying generative AI should be making
Speaker 8: the workforce more productive, but the reality is seventy seven
Speaker 8: percent said is actually adding to their workload. And then
Speaker 8: I think, maybe even more alarming, forty four percent said
Speaker 8: they don't even know how to get these productivity gains,
Speaker 8: and that's resulting in one in three employees looking to
Speaker 8: exit the organization because they're feeling so overwhelmed by their
Speaker 8: job today.
Speaker 2: Wow, so what's going on here?
Speaker 1: Like?
Speaker 2: Why where is the failure happening?
Speaker 8: Yeah? Great question. So a couple of things going on. One,
Speaker 8: this is still a very new technology and we are
Speaker 8: still in net learning phase. I think the mindset shift
Speaker 8: that needs to take place is leaders are looking for
Speaker 8: this to drive efficiency and that's how they're measuring it,
Speaker 8: and that's where they're putting the pressure in their workforce,
Speaker 8: when in reality is there's so much unknowns and this
Speaker 8: is a frontier and so what really needs to be
Speaker 8: taking place is employees thinking of this through an R
Speaker 8: and D lens. What do I need to be learning?
Speaker 8: How do I drive innovation? How do I rethink what
Speaker 8: I'm doing? But instead, what they're feeling is that leaders
Speaker 8: are asking them to do more of the same but
Speaker 8: faster and cheaper, and that right now is just a
Speaker 8: big disconnect because that's not where we are from a
Speaker 8: technology perspective.
Speaker 3: I want to understand, though, exactly what you guys looked
Speaker 3: into in terms of and how what were employees doing
Speaker 3: with AI as they try to figure out how it
Speaker 3: can either help or is just adding to their workload?
Speaker 3: Like what did you exactly look into the research study
Speaker 3: or was it just a case of questioning, you know, employees,
Speaker 3: because I'm curious about who these workers are and what
Speaker 3: they how they were using AI.
Speaker 8: Yeah, so our study is based on knowledge workers and
Speaker 8: this was a global study, so we have representation in
Speaker 8: the US, Australia, Canada, in Europe. And so what we
Speaker 8: really focused on were those workers who are already using
Speaker 8: computer technologies to do their job and so they had
Speaker 8: to have some level of exposure to even understanding AI.
Speaker 8: And what we found was, but they're actually spending a
Speaker 8: lot of their time on right now is auditing the
Speaker 8: AI content that's coming out. They're then having to train
Speaker 8: the AI content because a lot of these are large
Speaker 8: language models that need to be fine tuned and trained.
Speaker 8: And the real disconnect that we're seeing is the majority
Speaker 8: of these individuals are self teaching themselves. There is no
Speaker 8: formal structure with an organization that's helping them upskill and
Speaker 8: actually learn how to do these things, which is why
Speaker 8: I think there's so much friction today.
Speaker 2: Is there any sort of parallel that we can draw
Speaker 2: in recent history where we've seen a technology that in
Speaker 2: your view, actually will be this just has been this
Speaker 2: disruptive and companies have had to upscale their workforce.
Speaker 8: Yeah, so we've seen this, I think in a few
Speaker 8: different times. And now AI has been around since the
Speaker 8: nineteen fifties and I know it's gone through periods of
Speaker 8: winters where it's been overhyped. And now we're in a
Speaker 8: period summer period where there's a lot of investment and
Speaker 8: there's a lot of hype and what this can cause.
Speaker 8: And I think this is a good thing, but the
Speaker 8: reality is all technologies before it have gone through this.
Speaker 8: A lot of people compared this to internet computing, so
Speaker 8: when businesses were mostly done on site and then everyone
Speaker 8: had to quickly become a digital some version of e
Speaker 8: commerce business in order to reach customers. I think over
Speaker 8: time we're going to see that being a pretty good
Speaker 8: comparison and fundamental shift. We're pretty soon you're going to
Speaker 8: hear the conversation around all businesses have to be AI
Speaker 8: powered to some degree. We've seen that with cloud computing.
Speaker 8: I think the problem is right now, this is just
Speaker 8: happening so fast, and we're not giving people enough time
Speaker 8: and enough runway to really make this pivot and change,
Speaker 8: and we're expecting too much too soon.
Speaker 4: Why do you think it's important that we have this
Speaker 4: conversation right now?
Speaker 8: I think right now there's so much pressure of business leaders.
Speaker 8: I mean, they're managing such great macrock. I'm a concerns
Speaker 8: whether it's rising inflation, whether it's global turbulence, and I
Speaker 8: think right now the workforce is looking for something to
Speaker 8: grasp onto to help make their work lives easier. They've
Speaker 8: been through a lot as we think about coming out
Speaker 8: of the pandemic. And what my concern is and why
Speaker 8: I think this conversation is so important is this is
Speaker 8: a human plus machine conversation. There's so much headlines about
Speaker 8: dis generative AI and how it's going to save the day,
Speaker 8: but in reality, humans are going to help save the day,
Speaker 8: and we really need a new model of leadership and
Speaker 8: talent and work mix in order to get this right.
Speaker 8: And I think we're at a critical cross point that
Speaker 8: if we have too much technology investment without enough human
Speaker 8: development investment, we may be leaving people behind.
Speaker 2: So I want to get to some takeaways here before
Speaker 2: we let you go. Takeaways for knowledge workers who are
Speaker 2: out there dealing with this brave new world, people like
Speaker 2: us who are trying to understand and incorporate AI into
Speaker 2: our lives. What should we be doing.
Speaker 8: Yeah, there's two things that I think are critical that
Speaker 8: our research found that where people were using AI and
Speaker 8: it wasn't burning them out and they felt more productive.
Speaker 8: The very first thing is seeking outside help. I mean,
Speaker 8: this is, to your point, a brave new world. And
Speaker 8: there's other people who are much further ahead of this.
Speaker 8: We've seen this in the answer community. They are much
Speaker 8: more likely to be adopting AI incorporate it into their workflows.
Speaker 8: I mean, their livelihood depends on staying on top of
Speaker 8: the skills, and so this is a great community to
Speaker 8: go after to really seek the outside help to both
Speaker 8: educate and understand how you can be incorporating AI. And
Speaker 8: then the second thing, and this is a little bit
Speaker 8: more called to like a business leader perspective, is how
Speaker 8: we actually begin to measure productivity. I worry if we're
Speaker 8: purely looking at efficiency, hours worked, output, we're missing the
Speaker 8: big conversation that we should be having instead. When we
Speaker 8: saw on our research people want to be measured against creativity, innovation,
Speaker 8: how they're adapting to change their contributions to the company strategy.
Speaker 8: And that's the conversation I want to see Jenai play in.
Speaker 4: Yeah, it's interesting, you know, and I do wonder.
Speaker 3: I thought what was interesting also that one in three
Speaker 3: full time employees saying they will likely quit their job
Speaker 3: in the next six months because of the strain that
Speaker 3: they are feeling from rising productivity demand. And I don't
Speaker 3: know what that says maybe more strongly, more significantly about
Speaker 3: kind of the job market, the economic outlook right now.
Speaker 3: If we don't get this right, then what Because I
Speaker 3: just do wonder if it's just I mean, this is
Speaker 3: the you know, typical strain. I feel like when we
Speaker 3: all were starting to embrace the internet, right and figure
Speaker 3: that out, that there's always this disconnect as we find
Speaker 3: our way through some you know, advancements in technology. As
Speaker 3: you say, AI is not a new thing. But this
Speaker 3: is certainly a different level.
Speaker 4: Is this just kind of a normal transition period.
Speaker 8: Yeah, I think, you know, history tends to repeat itself,
Speaker 8: and we've seen this before. I think what's probably unprecedented
Speaker 8: is just the speed and pace of change, and I
Speaker 8: think leaders don't want to be left behind. If we
Speaker 8: go back to cloud computing, there were early adopters, and
Speaker 8: I think people who are able to get ahead and
Speaker 8: find efficiencies and win in their industry. And I think
Speaker 8: there's that sense of urgency today because this is such
Speaker 8: a fast moving technology, and again it is still a
Speaker 8: fairly strong labor market. People want to work for some
Speaker 8: of the best companies who are leading edge, and so
Speaker 8: I do think there's this urgency to win this game
Speaker 8: and win this AI race. But I do think we
Speaker 8: have to have patients, and I think people are feeling it.
Speaker 8: And that's why the call here is slow down, bringing
Speaker 8: outside help and really think about what's the business problem
Speaker 8: and how are you driving creativity and innovation and not
Speaker 8: just efficiency.
Speaker 2: Here, Hey, Kelly, upwork it's a publicly traded company. How
Speaker 2: does this change the way that you guys are doing
Speaker 2: business at upwork?
Speaker 1: Yeah?
Speaker 8: So, I mean AI, you know, we are focused on
Speaker 8: AI making our platform and product experience even better for
Speaker 8: our freelancers and our clients who are coming into search
Speaker 8: really just having a much more intelligent experience from a
Speaker 8: freelancer perspective. We continue to see this being our fastest
Speaker 8: growing category on our platform. Freelancers who are using AI
Speaker 8: are getting higher value work, They're earning more than their peers,
Speaker 8: and so I think this has been a real game
Speaker 8: changer for the freelancer community.
Speaker 4: All Right, we're going to leave it there.
Speaker 3: Hey, listen, thank you so much. Certainly something to think about.
Speaker 3: And you know, we just heard from Emily Emily Chang
Speaker 3: talking with Mark Zuckerberg about what they are doing, certainly
Speaker 3: with AI.
Speaker 4: So this is kind of our world that.
Speaker 3: Continues to be Kelly Monahan, she's managing to Rectord Atwork
Speaker 3: Research Institute, joining us from Chicago on this Tuesday.
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Speaker 1: Immaco a journal.
Speaker 6: How about you let me drive?
Speaker 1: Oh no, no, no, no, honey, please, I'll do the travels.
Speaker 6: I want to drive.
Speaker 9: It's good question.
Speaker 1: This please the drive to the.
Speaker 2: Clothes dot Com.
Speaker 1: Well bunch old down on Bloomberg Radio.
Speaker 2: What do you say, Carol, TikTok.
Speaker 4: Ready, I'm just looking ahead.
Speaker 3: I'm thinking a lot about some of the earnings after
Speaker 3: the closing bell.
Speaker 2: This is starting Tesla alphabet. What's the plan?
Speaker 4: Yeah, I mean yes, yes, yes, and yes.
Speaker 3: But it's just what we're talking about. A third of
Speaker 3: the S and P market cap this week expected to report.
Speaker 3: And I just think you know, Gina Martin Adamsho, we
Speaker 3: talked to you yesterday. I said, so far early in
Speaker 3: the game, the numbers have been coming in really strong.
Speaker 2: Don't forget about Texas instruments too.
Speaker 3: Texas Instruments, yep, going to be on it. The chip
Speaker 3: sector always so important, different aspects to it. But having
Speaker 3: said that, we're early in the game. So what these
Speaker 3: big megacap tech names have to say really really important.
Speaker 2: Let's see what Jimmy Lee has to say about that.
Speaker 2: He's founder and chief executive officer at the Wealth Consulting Group.
Speaker 2: They got more than five billion dollars in assets under management.
Speaker 2: Usually usually he's in Las Vegas, but he's here greasing
Speaker 2: us with his presence in New York City in the
Speaker 2: Bloomberg Interactive Brokers studio. Sorry about the rain today, It's okay.
Speaker 2: Sometimes happens, Okay, sometimes that happens. I know it doesn't
Speaker 2: hapen Las Vegas, but sometimes it happens here in New York.
Speaker 2: Let's start with big tech. How are you watching what
Speaker 2: we hear from a third of the market cap of
Speaker 2: the S and P five hundred this week too? Sort
Speaker 2: of define this part of the summer.
Speaker 9: Well, you know, as we've talked about before this year,
Speaker 9: we've been bullish on tech going into rate cuts, and
Speaker 9: I could not have predicted that we're going to have
Speaker 9: the run in the Max seven and some of the
Speaker 9: big tech stocks that we've seen, you know, so far
Speaker 9: this year. So it's been a huge run. But we've
Speaker 9: started to see now, as in the last ten days,
Speaker 9: a little bit of a rotation right out of the
Speaker 9: big tech trade and into other areas of the market
Speaker 9: that really haven't participated as much, such as small cap stocks,
Speaker 9: even oversea stocks, some of the more cyclical sectors that
Speaker 9: are going to benefit maybe from a lower interest rate environment,
Speaker 9: which is how we're positioned.
Speaker 4: And so you've been moving into these other areas.
Speaker 9: Yes, in April when we did our rebounds, we added
Speaker 9: duration to our fixed income portfolios, Carol, so that we
Speaker 9: can benefit from a lowering ten year yield. We think
Speaker 9: that investors would be positioned for more of a three
Speaker 9: and a half percent type treasury at some point, not
Speaker 9: five and a half as people were fearing back then,
Speaker 9: and cyclical sector. So we're long on financials industrials still
Speaker 9: like tech, but I think that investors are going to
Speaker 9: feel as with fresh cash that's a little expensive to
Speaker 9: go into some of these names now.
Speaker 3: So okay, so what if like Alphabet comes out and
Speaker 3: they blow away the numbers?
Speaker 4: Do you rethink it again?
Speaker 3: Which I feel like we've had this scenario over and
Speaker 3: over again where everybody says enough with kind of the
Speaker 3: big tech names, look elsewhere, only for them to kind
Speaker 3: of outperform.
Speaker 9: Well, I would say that big tech is actually backed
Speaker 9: it up with big earnings, right, So most of the
Speaker 9: earnings came in the first quarter from those big companies,
Speaker 9: but that's supposed to be different in the second half
Speaker 9: of this year. So it's supposed to broaden out the
Speaker 9: earnings expectations of the marketplace, and I think that's what's
Speaker 9: going to happen. So do you go back into tech
Speaker 9: on the dips maybe on some of these cellos and.
Speaker 3: The Nasdaq one hundred down four percent last week? Would
Speaker 3: you have been buying on that pullback?
Speaker 9: Well, people were buying. I think naturally those companies get
Speaker 9: a bid just because of all the money going into
Speaker 9: systematic investment programs and all the index products. So they're
Speaker 9: going to get their fair share of buying regardless. But
Speaker 9: that being said, I think investors actually need to be cautious.
Speaker 9: I mean, think about twenty twenty two, those group of
Speaker 9: companies went down a lot as a percentage, and I
Speaker 9: think that's one of the reasons why they've come up
Speaker 9: so much since the loads of October twenty twenty two.
Speaker 9: But one of the statistics that we follow is how
Speaker 9: much money is going into the different acid classes, equities,
Speaker 9: fixed income, in cash, and since October of twenty two
Speaker 9: and the low more money has come out of stocks,
Speaker 9: out of equities, in mutual funds and ETFs than gone in,
Speaker 9: which is fascinating. Right, So all the statistics that we
Speaker 9: always talk about as advisors, the average investor always getting
Speaker 9: a small fraction of the return of the actual investments
Speaker 9: that they own. It's because of market timing or fear
Speaker 9: or panic, and this happened again so twenty twenty three
Speaker 9: and so far this year has been a huge bowl
Speaker 9: market that many investors have not participated in.
Speaker 2: What would you say to those investors haven't participated, time
Speaker 2: to get off the sidelines?
Speaker 9: Well, I mean again, I think they miss I think
Speaker 9: diversification is important, so I wouldn't say go chase right. So,
Speaker 9: I know a lot of a lot of us as
Speaker 9: advisors get a lot of phone calls about why don't
Speaker 9: we have more Navidio or certain companies are in the news.
Speaker 2: I've gone up so much, But I.
Speaker 9: Think investors really need to be cautious at this point.
Speaker 9: So if you've been invested, or even if you're out
Speaker 9: of the market and you're trying to get back in,
Speaker 9: I don't think it's a smart idea to try to
Speaker 9: chase these returns of the ones that have gone up
Speaker 9: the most, still being diversified and maybe a little bit
Speaker 9: more boring if you're going to participate in equities, is
Speaker 9: the way to go. I think an easier trade to
Speaker 9: actually is fixed income. So, as I said, with what
Speaker 9: we think is going to happen with interest rates, you
Speaker 9: can get a nice yield on a fixed income portfolio
Speaker 9: and maybe some of the money back that you've lost
Speaker 9: in the last several years on the nin acid values
Speaker 9: of the bonds.
Speaker 4: Is that a smart play or a cautious play.
Speaker 9: I think it's actually a pretty smart play because of
Speaker 9: the way the market's rallied so much this year already
Speaker 9: that we could go a little sideways, could get volatility
Speaker 9: with the election and with geopolitics, and who knows what's
Speaker 9: going to happen, And so if I think that there's
Speaker 9: probably as much upside in fixed income probably as there
Speaker 9: might be inequities right now for the main of the year.
Speaker 2: Okay, before we let you go, we got to talk
Speaker 2: politics here, because there's been a huge shake up in
Speaker 2: the race for president in the last forty eight hours,
Speaker 2: with Kamala Harris now likely to be at the top
Speaker 2: of the ticket. Does that change your outlook at all
Speaker 2: when it comes to how you're deploying money or how
Speaker 2: you're invested.
Speaker 9: You know, our view is to not try to make
Speaker 9: two big of bets on who you think is going
Speaker 9: to be in the White House next time, and so
Speaker 9: I think the investors should be cautious on that. It
Speaker 9: doesn't always play out anyways. And so of course, you know,
Speaker 9: with a Trump presidency, we know what he's been talking about.
Speaker 9: He's been there before, so I think, you know, less regulation,
Speaker 9: lower taxes, you can kind of count on that. I
Speaker 9: think one thing to taxes for some, Yeah, for some.
Speaker 9: I think one area to be cautious though for everybody
Speaker 9: is is both sides of the parties are against China,
Speaker 9: and so I think you have to be very careful
Speaker 9: about your overseas investments in China, especially with Trump as
Speaker 9: he talks about the you know, higher tariffs that he
Speaker 9: may want to try to employ, and we remember what
Speaker 9: that was like when those first happened. In hindsight, maybe
Speaker 9: it was a good thing as we sit here today,
Speaker 9: but I think that could cost some volatility too.
Speaker 4: So if someone's got new money, you're saying go fixed income.
Speaker 9: Well, I think diversification, and I know, yeah, so at
Speaker 9: the top of the list, I just think it's maybe
Speaker 9: a probably less volatile trade. But you know, diversification I
Speaker 9: think is very important. Another one is just three months ago.
Speaker 3: But if diversification is there all the time, right all
Speaker 3: you guys, right, I get it. Are you saying though,
Speaker 3: if you're going to overweight somewhere, you would say overweight
Speaker 3: fixed income now.
Speaker 6: A little bit?
Speaker 9: And I think especially for the nervous nelly investors that
Speaker 9: maybe got out of their long term investments in twenty
Speaker 9: twenty two when the market was going down and moved
Speaker 9: into cash for the what I call the sucker bed
Speaker 9: of four or five percent, and missed out on the
Speaker 9: long term retterms of equities since the low you know,
Speaker 9: love twenty twenty two. I think if you're cautious to
Speaker 9: get back in, you don't want to get whip sealed again,
Speaker 9: fixed income might be a better way to play it.
Speaker 9: As you're trying to get back in the market.
Speaker 2: We just got ten seconds left fixed income for how long?
Speaker 1: You know?
Speaker 9: I think at least in until we see the treasure
Speaker 9: tenure maybe closer to about ten to three and a
Speaker 9: half percent.
Speaker 3: Yeah, so a little bit of a ways to go,
Speaker 3: but a couple of rate cuts would certainly help us move.
Speaker 3: I'm just taking a look at the tenure right now,
Speaker 3: four twenty four, so a little bit of the ways.
Speaker 9: One last dat if I can just give it a
Speaker 9: real quick Three months ago, Russell two thousand and forty
Speaker 9: percent of the Russell two thousand companies were above their
Speaker 9: two day moving average. Now it's over seventy percent.
Speaker 4: So we're seeing quite a move up there. Great to
Speaker 4: have you here in studio.
Speaker 3: You will Jimmy Lee, founder and chief executive officer at
Speaker 3: the Wealth Consulting Group, joining us here in our studio.
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