WEBVTT - Expect Continued Volatility: David Katz 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.640 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.759 at Bloomberg dot com Slash podcast. Well, a lot of 0:00:21.760 --> 0:00:24.960 folks in this market, you know, they've been waiting for, 0:00:25.200 --> 0:00:27.920 you know, of a pullback of five, seven, ten percent 0:00:27.960 --> 0:00:29.800 pullback is part of a healthy part of this market, 0:00:29.880 --> 0:00:33.040 maybe saying you know, I'll get in at that point. 0:00:33.080 --> 0:00:35.360 Our next guest says, don't worry about time in the market. 0:00:35.400 --> 0:00:38.360 If you have the time horizons, stay long. David Kat's, 0:00:38.400 --> 0:00:42.560 chief investment officer from Matrix Asset Advisors, joins us. So, David, 0:00:42.600 --> 0:00:44.640 I know, you guys did a survey, you know, taking 0:00:44.680 --> 0:00:48.560 a look at um buying the dips if if, if 0:00:48.600 --> 0:00:52.520 you will, what did your survey kind of show you, guys? So, basically, 0:00:52.560 --> 0:00:56.560 we looked at the period of nree to this summer 0:00:56.600 --> 0:00:58.920 and over that twenty eight and a half year period, 0:00:58.920 --> 0:01:02.080 stocks work about ten point four percent. Within that you 0:01:02.160 --> 0:01:05.440 had thirty four corrections of five percent or more. So 0:01:05.480 --> 0:01:07.520 the moral of the story is the stock market is 0:01:07.520 --> 0:01:10.360 going to correct. Uh. You basically want to ride the 0:01:10.400 --> 0:01:12.839 ups and downs and that's the best way to make money. 0:01:13.080 --> 0:01:16.479 The other thing that's pretty interesting is the recoveries occur 0:01:16.680 --> 0:01:21.319 much faster than anybody imagines or beliefs is possible or likely. 0:01:21.400 --> 0:01:24.880 So thirty one of those thirty four corrections were between 0:01:25.000 --> 0:01:29.399 five and twenty and the average recovery time was two 0:01:29.440 --> 0:01:32.920 point two months. So that means the market sells off 0:01:32.959 --> 0:01:35.959 pretty quickly and then bounces back pretty quickly. And our 0:01:36.000 --> 0:01:38.920 best advices, by the dip, we've already had a five 0:01:38.920 --> 0:01:40.920 percent correction. We think it's a good time to be 0:01:40.920 --> 0:01:43.760 putting money to work. We think the market recovery is 0:01:43.760 --> 0:01:47.039 going to be much quicker than anybody thinks possible. I'm 0:01:47.080 --> 0:01:50.120 wondering what you think the role of the retail trader 0:01:50.200 --> 0:01:51.960 is in all of this, because the narrative for so 0:01:52.000 --> 0:01:54.760 long has been that it is the small time individual 0:01:54.760 --> 0:01:57.240 investor that's really super bullish that has been coming in 0:01:57.720 --> 0:02:00.960 and buying these dips with such big here and there 0:02:00.960 --> 0:02:04.160 are signs that that kind of activity is starting to wane. 0:02:04.200 --> 0:02:07.040 Does that mean by the dip is also going to 0:02:08.240 --> 0:02:10.120 We don't think so. Again, this study goes back to 0:02:11.160 --> 0:02:14.080 three So this is a long time and they're always 0:02:14.120 --> 0:02:16.400 different forces at different points in time. We think one 0:02:16.400 --> 0:02:19.359 of the biggest drivers of the stock recovery this time 0:02:19.480 --> 0:02:22.639 is there's a tremendous amount of liquidity out there. Interest 0:02:22.720 --> 0:02:25.920 rates are still very low. People are looking places to 0:02:25.960 --> 0:02:29.320 put their money, which means that on a dip, money 0:02:29.560 --> 0:02:32.160 is going to likely come into the market. All right, 0:02:32.240 --> 0:02:35.600 So where are you at, Matrix Advisors kind of allocating 0:02:35.600 --> 0:02:38.560 your capital these days? There's a lot of economic concern 0:02:38.639 --> 0:02:41.239 growing out there. Um, you know what the base of 0:02:41.320 --> 0:02:44.760 supply chain challenges, margin pressures, inflation challenges. We've got some 0:02:44.800 --> 0:02:47.280 uncertainty in Washington, d C. Where do you guys see 0:02:47.280 --> 0:02:50.720 the opportunities? So we think if you look at the 0:02:50.880 --> 0:02:53.280 market on a longer term basis, you can look through 0:02:53.320 --> 0:02:57.160 a lot of these uncertainties. Washington is dysfunctional and unfortunately 0:02:57.160 --> 0:03:00.000 has been dysfunctional for the last twenty or thirty years, 0:03:00.040 --> 0:03:03.720 if not longer. Ultimately, they're going to get their act together, 0:03:03.760 --> 0:03:05.400 but it's just going to be at the last minute, 0:03:05.400 --> 0:03:07.919 and it's gonna be a lot of noise along the way. 0:03:08.000 --> 0:03:11.080 In terms of the supply disruptions, we think that's going 0:03:11.120 --> 0:03:13.560 to hit a lot of companies in this quarter's earnings. 0:03:13.680 --> 0:03:16.960 Right now, the market is penalizing those companies pretty fiercely. 0:03:17.639 --> 0:03:19.360 We think that one or two things, you want to 0:03:19.360 --> 0:03:21.799 try to buy companies that are not going to be 0:03:21.880 --> 0:03:25.120 impacted by that, or you want to buy companies in 0:03:25.120 --> 0:03:28.440 the aftermath of having a problem. So stock that we 0:03:28.480 --> 0:03:31.440 think is a great opportunity right here is Federal Express. 0:03:31.800 --> 0:03:35.360 They are a good long term secular growth story is 0:03:35.440 --> 0:03:39.200 more people are shopping online, they're shipping more packages. Global 0:03:39.240 --> 0:03:42.280 economies picking up very good for them. They had a 0:03:42.360 --> 0:03:46.600 modestly disappointing quarter and it was driven by logistics UH, 0:03:46.680 --> 0:03:49.880 not being able to get enough employees and inflation. As 0:03:49.880 --> 0:03:52.080 a result, the stock is sold off from three twenty 0:03:52.080 --> 0:03:54.680 to twenty five. We think it's a great entry point 0:03:54.760 --> 0:03:58.080 right here if you can look beyond the short term uncertainty. 0:03:58.360 --> 0:04:01.080 But what happens if some of those uncertainties and or 0:04:01.200 --> 0:04:05.000 supply side pressures proved to be more persistent, how long 0:04:05.440 --> 0:04:07.960 can they last? While you still think that those are 0:04:08.000 --> 0:04:11.400 a quote unquote short term well in terms of Federal 0:04:11.400 --> 0:04:13.920 Express the stocks at eleven times earning, so you know, 0:04:13.920 --> 0:04:16.279 if it takes six months to turn around their nine months, 0:04:16.279 --> 0:04:18.960 we are less concerned because we know the stocks is 0:04:19.000 --> 0:04:22.280 gonna be thirty or higher. In terms of corporate America, 0:04:22.680 --> 0:04:24.960 we think that inflation is picked up. You're gonna see 0:04:24.960 --> 0:04:27.679 it more this quarter. We think it's starting to team 0:04:27.760 --> 0:04:30.560 in certain areas that had at first, like the consumer 0:04:30.640 --> 0:04:33.839 product companies. We're talking about inflation six nine months ago. 0:04:33.960 --> 0:04:38.040 Now that seems to be having peaked and coming down slowly. 0:04:38.720 --> 0:04:40.960 We think they're gonna be supplied disruptions. We think they're 0:04:40.960 --> 0:04:44.240 gonna be chip shortages, but the economy is very strong, 0:04:44.320 --> 0:04:47.000 demand is robust. We think we're gonna get through this. 0:04:47.120 --> 0:04:49.440 And the key is find good businesses that are going 0:04:49.480 --> 0:04:52.080 to do well, you know, through the cycle. So Cisco, 0:04:52.200 --> 0:04:56.480 which is a technology company, they're having supplied disruptions, are 0:04:56.480 --> 0:04:59.440 having to pay more for their chips, but they have 0:04:59.560 --> 0:05:01.799 great to man and they're still learning a lot of money. 0:05:02.080 --> 0:05:03.719 It's at a great price and it's paying you a 0:05:03.720 --> 0:05:06.160 good yield while you wait. So we think as long 0:05:06.200 --> 0:05:09.279 as you're not looking for really healthy, sharp momentum right now, 0:05:09.520 --> 0:05:11.440 you're able to buy good businesses that are going to 0:05:11.520 --> 0:05:13.600 get through this, and the time to buy them is 0:05:13.640 --> 0:05:16.920 when the stock has been discounted, assuming that the problem 0:05:16.960 --> 0:05:21.719 last forever and it's not going to David Facebook, regulatory risk, 0:05:22.160 --> 0:05:25.240 what's your concerned if any we think Facebook is a 0:05:25.279 --> 0:05:29.800 bad corporate citizen. There is regulatory risk. However, Uh, at 0:05:29.800 --> 0:05:32.240 three thirty dollars, we think the stock is a very 0:05:32.240 --> 0:05:35.280 good buying opportunity if you don't mind holding a company 0:05:35.279 --> 0:05:38.040 where you're a little bit less enamored with management. Uh. 0:05:38.080 --> 0:05:40.320 They have an addictive product. That's part of the problem. 0:05:40.360 --> 0:05:42.400 The good part is it's an addictive product and as 0:05:42.400 --> 0:05:44.960 a result, their advertising is going to grow for years 0:05:45.000 --> 0:05:47.680 to come. So we think it's a good long term investment, 0:05:47.720 --> 0:05:51.039 but you have to understand you're not buying Uh, the 0:05:51.080 --> 0:05:54.400 best management team in terms of ethics out there, David Cat's, 0:05:54.480 --> 0:06:00.200 chief investment Officer, Matrix Asset Advisors. Interesting call, they're on Facebook. 0:06:00.279 --> 0:06:03.080 Just go where the money is and uh, that's certainly 0:06:03.120 --> 0:06:06.160 where the money is going from an advertising perspective. David Katz, 0:06:06.240 --> 0:06:09.279 Matrix as Advisors. We're got more coming up. This is Bloomberg, 0:06:12.680 --> 0:06:14.719 all right. Tom Keene's not here. So we can talk 0:06:14.760 --> 0:06:21.520 about bitcoin fifty thousand dollars per coin volatility. Okay, the 0:06:21.600 --> 0:06:24.760 question is where does this thing go? And it is big, 0:06:24.839 --> 0:06:28.039 big news here at Bloomberg News Crypto because we're just 0:06:28.080 --> 0:06:30.880 recently Hardy Managing editor for Crypto. That tells me. I 0:06:30.920 --> 0:06:33.560 was like, oh boy, we're all in following this asset 0:06:33.640 --> 0:06:36.880 class as we should be. Station Marie Ishmael, Managing Managing 0:06:37.000 --> 0:06:39.159 editor for Crypto for Bloomberg News, joining us on the 0:06:39.160 --> 0:06:43.760 phone here, Station Marie, again, bitcoin at fifty. It's a 0:06:43.839 --> 0:06:46.760 nice round number, it's a level. What do you take 0:06:46.760 --> 0:06:49.280 away from it, Well, it certainly is a nice round 0:06:49.320 --> 0:06:51.520 number on but you know, one of the things that's 0:06:51.560 --> 0:06:55.400 been interesting about the moves, you know, we were really 0:06:55.400 --> 0:06:57.280 paying attention to kind of the trend over the past 0:06:57.320 --> 0:07:00.279 two months, right, so we're looking at UM says that 0:07:00.320 --> 0:07:03.760 have gone up more than sixty since hitting lows in July, 0:07:04.120 --> 0:07:07.560 and of course the high in April in the sixties 0:07:07.600 --> 0:07:10.840 of thousands. One of the pieces of news that came 0:07:10.840 --> 0:07:12.880 out in the past couple of days, which you know, 0:07:12.960 --> 0:07:14.720 folks in the markets say, has been really driving some 0:07:14.840 --> 0:07:18.160 of this enthusiasm UM is a report from Bank of America, 0:07:19.040 --> 0:07:23.200 they've initiated coverage their hiring crypto team, and the you know, 0:07:23.240 --> 0:07:25.480 the phrase that they used in the in the research 0:07:25.560 --> 0:07:28.200 note was if the bitcoin is too large to ignore, 0:07:28.680 --> 0:07:31.680 And various market participants, who are enthusiastic at the best 0:07:31.680 --> 0:07:34.120 of times, have really taken this as a sign that 0:07:34.960 --> 0:07:37.520 this is a currency and asset class that is really 0:07:37.800 --> 0:07:40.440 around to stay. And the hope of a lot of 0:07:40.440 --> 0:07:42.480 these market participants is that it's going to continue to 0:07:42.520 --> 0:07:48.760 go up for sure. Well, how do technicals maybe help 0:07:48.840 --> 0:07:52.480 us figure out if indeed the trajectory from here is higher. 0:07:52.480 --> 0:07:54.200 I feel like that's all you really can rely on 0:07:54.240 --> 0:07:56.640 when it comes to crypto, because you know, there's not 0:07:56.680 --> 0:08:00.200 that many fundamentals. Well, I think there are are a 0:08:00.280 --> 0:08:03.080 few technical conditions that folks are looking at. One is 0:08:03.480 --> 0:08:07.920 UM fifty hundred, which is a minor resistance number that 0:08:08.000 --> 0:08:11.120 some folks are paying attention to, and the suspicion is 0:08:11.400 --> 0:08:13.800 that if there is you know, if we hit above 0:08:13.880 --> 0:08:16.280 that number, then we're looking to potentially have a breakout, 0:08:16.520 --> 0:08:19.560 which might see us hit those sixty five prices again. 0:08:20.680 --> 0:08:23.040 So Station Maria, a lot of folks and even some 0:08:23.080 --> 0:08:25.160 folks I think that the big New York banks are 0:08:25.320 --> 0:08:32.000 still not buying into this crypto thing. Majig um. You know, 0:08:32.679 --> 0:08:35.160 what do you think is the next event that needs 0:08:35.200 --> 0:08:38.600 to happen for legitimacy for those folks that are kind 0:08:38.600 --> 0:08:42.520 of naysayers. Is it something like a G twenty country 0:08:42.880 --> 0:08:45.480 adopting bitcoin in some way? What do you think are 0:08:45.480 --> 0:08:49.280 the next big milestones for this space? Well, I think 0:08:49.320 --> 0:08:50.960 one of the things that I've really been listening to, 0:08:51.520 --> 0:08:53.280 you know, we you know, here at Bloomberg, we've had 0:08:53.280 --> 0:08:55.360 a lot of folks on TV and at our events 0:08:55.360 --> 0:08:57.920 and on radio of course, talking about what it would 0:08:57.920 --> 0:09:01.000 take for them to either be personally or professionally invested 0:09:01.240 --> 0:09:05.479 in crypto. And we had Ken Griffin say just yesterday 0:09:05.480 --> 0:09:08.400 that whatever his initial crypto skepticisms and his long standing 0:09:08.400 --> 0:09:11.680 cryptoscopticism is, actually he would be more interested from a 0:09:11.679 --> 0:09:15.480 citadel perspective if there was more clarity around regulation. And 0:09:15.640 --> 0:09:19.840 that's certainly been something I've heard echoed by other market participants. 0:09:19.880 --> 0:09:22.240 You mentioned having kind of a G twenty country. Take 0:09:22.280 --> 0:09:25.839 this seriously, obviously, folks are looking at the experiments in 0:09:25.880 --> 0:09:29.640 a Salvador with making bitcoin acceptable as legal tender. As 0:09:29.960 --> 0:09:33.240 you know, perhaps something that other countries might follow. Um, 0:09:33.280 --> 0:09:36.320 I think there's a tremendous amount of potential institutional interest 0:09:36.360 --> 0:09:39.680 in what would happen if bitcoin ets. Actually it was 0:09:39.760 --> 0:09:42.800 just about to say, do we think it's I mean, 0:09:42.960 --> 0:09:45.600 the Gary Gensler sec I feel like remains a mystery 0:09:45.720 --> 0:09:47.959 on its crypto policy. It seems like it's not as 0:09:48.000 --> 0:09:51.320 friendly as people maybe thought initially. Do we have any 0:09:51.400 --> 0:09:53.800 kind of idea when and if we will actually get 0:09:53.840 --> 0:09:56.079 some kind of bitcoin ets approved? Well, I think far 0:09:56.120 --> 0:09:58.240 be it from me to speculate, but I would say 0:09:58.240 --> 0:10:03.120 that market participants are optimistic that E t F at 0:10:03.200 --> 0:10:05.880 least one, and you know, per your point about Gensler, 0:10:06.240 --> 0:10:08.160 that it would likely be a futures back to E 0:10:08.240 --> 0:10:10.800 t F. UM, I think there is a you know, 0:10:10.880 --> 0:10:13.640 folks are predicting that there will be at least one 0:10:13.640 --> 0:10:15.840 in the market by the end of the year. It's 0:10:15.880 --> 0:10:20.080 interesting I see one of the top top analysts on 0:10:20.160 --> 0:10:23.319 all of Wall Street, Jessica reef Erlik, who has been 0:10:23.360 --> 0:10:26.839 a number top rated media analys for probably thirty years 0:10:26.880 --> 0:10:28.319 on Wall Street at Mary Lynch and now Bank of 0:10:28.360 --> 0:10:32.760 American Marylynch. She is now a strategist focusing on crypto 0:10:32.960 --> 0:10:35.520 so there's another example of a big, big bank saying 0:10:35.520 --> 0:10:39.040 we're putting some research, We're putting some assets, some resources 0:10:39.080 --> 0:10:43.280 behind this asset class. Um, are we starting to see 0:10:43.280 --> 0:10:45.000 that more and more, Stacy, Marie, As you as you 0:10:45.040 --> 0:10:47.680 think about the the by side, the cell side, the 0:10:47.679 --> 0:10:50.240 whole kind of Wall Street support of crypto, are you're 0:10:50.240 --> 0:10:53.480 seeing what's what's the level of engagement and resources that 0:10:53.480 --> 0:10:55.719 you think are being allocated to this asset class. Well, 0:10:55.760 --> 0:10:57.040 to your point, there are a couple of ways that 0:10:57.080 --> 0:10:58.520 we are trying to keep an eye on this right. 0:10:58.559 --> 0:11:00.599 One is just the sheer volume of CRYP dimensions and 0:11:00.679 --> 0:11:03.600 existing research notes from different teams. Crypto is something that 0:11:03.960 --> 0:11:06.400 such as lots of different asset classes, and so you 0:11:06.440 --> 0:11:09.360 have you know, our own UM analysts and strategist that 0:11:09.440 --> 0:11:12.400 b I for example, will regularly contextualize this in terms 0:11:12.440 --> 0:11:13.920 of like what's happening with gold and how is that 0:11:13.960 --> 0:11:17.520 affecting bitcoin? So we are really paying attention to how 0:11:17.720 --> 0:11:21.360 folked with that macro perspective are considering or mentioning crypto 0:11:21.440 --> 0:11:24.480 or even in some cases, um, you know, other coins. 0:11:25.240 --> 0:11:27.839 That's one. The second is hiring, so both at the 0:11:27.840 --> 0:11:30.200 Wall Street level and on the buy side on the 0:11:30.200 --> 0:11:32.200 south side. But also you know, we're looking at like 0:11:32.200 --> 0:11:34.439 pension funds who are saying we might be interesting and 0:11:34.520 --> 0:11:38.160 understanding how bitcoin would make sense in our portfolio. Um 0:11:38.320 --> 0:11:40.719 Us Bank came out with a statement today saying that 0:11:40.760 --> 0:11:44.120 they are going to start offering custodial services for cryptocurrencies 0:11:44.400 --> 0:11:46.599 and so like, that's kind of the level of institutional 0:11:46.640 --> 0:11:49.440 normalization that we're paying attention to, in addition to just 0:11:49.559 --> 0:11:52.640 you know, pure fund flows. Yeah, just it extraorderateds. It 0:11:52.800 --> 0:11:56.240 kind of watch, uh and study the growth of this market. 0:11:56.280 --> 0:11:59.920 It's really fascinating. Stationary Ishmael. She's a managing editor cover 0:12:00.120 --> 0:12:04.120 all things crypto for Bloomberg. Let's call her our crypto czar. 0:12:04.240 --> 0:12:09.080 If you um this is radio. We're trying to make 0:12:09.120 --> 0:12:11.160 the feet of the mind, all right, so she joins 0:12:11.200 --> 0:12:16.520 from Bloomberg News. Thanks so much, Stacy, We really appreciate it. Well. 0:12:16.559 --> 0:12:20.160 Big tech has increasingly come under I think the attention 0:12:20.440 --> 0:12:25.040 of Washington lawmakers, regulators, and no company it seems more 0:12:25.120 --> 0:12:29.960 so than Facebook, and Facebook recently had a whistleblower speak 0:12:30.000 --> 0:12:33.640 out against the some of the harms that the company perpetuates. 0:12:33.840 --> 0:12:37.200 The former employee Francis Hoggan went on sixty minutes this 0:12:37.280 --> 0:12:41.040 past weekend speaking today testifying at a Senate hearing on 0:12:41.240 --> 0:12:44.800 kids safety. So some big issues for Facebook. And then 0:12:44.800 --> 0:12:47.360 I looked down the stock. It's up year to date, 0:12:47.480 --> 0:12:49.120 a little bit off of its all time high, So 0:12:49.160 --> 0:12:50.840 it doesn't seem to be that big of an issue, 0:12:50.880 --> 0:12:54.360 at least for the stock price. Naomi Nick's corporate influence 0:12:54.480 --> 0:12:57.760 reporter for Bloomberg News, joins us on the phone from Washington. So, 0:12:57.880 --> 0:13:00.280 Naomi by, it just seems like there's a lot lots 0:13:00.320 --> 0:13:05.640 of fundamental problems overhanging Facebook. How do you think this 0:13:06.160 --> 0:13:08.440 plays out? Is this a big problem for the company? 0:13:09.360 --> 0:13:11.840 It could be now. Look, on the one hand, Facebook 0:13:11.880 --> 0:13:15.400 has weathered a number of politic crises in the past. 0:13:15.520 --> 0:13:18.000 It was just you know, three years ago when it 0:13:18.160 --> 0:13:21.959 was UM handling Cabridge Analytica, uh, and there was a 0:13:21.960 --> 0:13:24.840 lot of blowback for the company. But ultimately it's still 0:13:25.000 --> 0:13:30.880 built this very powerful, very profitable um advertising behemoth UM. 0:13:30.960 --> 0:13:34.480 And it actually, you know, Washington never passed a national 0:13:34.520 --> 0:13:37.600 privacy law to address that breach. Where again, in one 0:13:37.600 --> 0:13:41.400 of those kinds of major crisy moments where Facebook is 0:13:41.400 --> 0:13:45.160 grappling with criticism, for wimmakers and advocates that it's been 0:13:45.559 --> 0:13:49.480 hiding its internal research showing some of the negative effects 0:13:49.559 --> 0:13:54.120 of its platform. And so the question is, well, Washington act, Uh, 0:13:54.360 --> 0:13:57.840 will Facebook be forced to change its ways? I think 0:13:57.840 --> 0:14:00.679 that's still an open question. Well, on the whole kind 0:14:00.720 --> 0:14:04.480 of basis of this testimony from the whistleblower centers around 0:14:04.480 --> 0:14:08.560 the idea that the company prioritize profits over people. How 0:14:08.679 --> 0:14:13.040 much can regulators really fault a company for prioritizing profit? 0:14:13.320 --> 0:14:17.880 Isn't that what companies do? And that's exactly right, UM, 0:14:18.080 --> 0:14:22.880 But remember that that refrain from the whistleblower, she was 0:14:22.920 --> 0:14:28.560 really talking about specific areas and specific types of practices 0:14:28.600 --> 0:14:31.200 that the company was engaging in in which she saw 0:14:31.280 --> 0:14:34.480 that that to be the case. So, for instance, UM, 0:14:34.600 --> 0:14:37.240 one of the revelations that came from the documents was 0:14:37.600 --> 0:14:42.640 that Facebook U had essentially been UM making some very 0:14:42.680 --> 0:14:47.120 powerful celebrities and politicians and journalists essentially immune from their 0:14:47.160 --> 0:14:51.360 content enforcement decisions. And they had previously said, oh, that 0:14:51.440 --> 0:14:54.120 just affects a small number of users, when in fact 0:14:54.240 --> 0:14:59.440 that group that receives a form of immunity or difference 0:14:59.440 --> 0:15:03.400 in treatment numbers in the millions. UM. You know, there 0:15:03.400 --> 0:15:07.280 were revelations about kind of you know. Facebook often deflected 0:15:07.360 --> 0:15:12.160 to conflicting mix of outside studies about the mental health 0:15:12.280 --> 0:15:16.960 impact of Instagram on its youngest users, when in fact 0:15:16.960 --> 0:15:20.240 it actually knew far more that, particularly for some vulnerable 0:15:20.320 --> 0:15:23.200 teams who are already feeling bad about their bodies, that 0:15:23.320 --> 0:15:27.800 Instagram has a very negative role in their lives. UM 0:15:27.920 --> 0:15:30.880 and so like those are specific kind of issues that 0:15:30.920 --> 0:15:34.120 regulators could try to get at. There's been some proposals 0:15:34.120 --> 0:15:38.600 in this today's hearing around UM, you know, enhancing privacy 0:15:38.640 --> 0:15:43.160 protections or women in targeted advertising, or pairing back UM 0:15:43.200 --> 0:15:46.480 a legal shield known as Section to thirty that protects 0:15:46.480 --> 0:15:48.920 tech companies here. We've heard that one floated a few 0:15:48.920 --> 0:15:54.200 times before. So, Naomi, I've even heard lawmakers equate Facebook 0:15:54.720 --> 0:15:59.000 with big tobacco, I e. They had internal information knowing 0:15:59.040 --> 0:16:03.840 that their product at negative effects, yet they withheld it 0:16:03.840 --> 0:16:06.920 and kept promoting their product. Is that taking it too far? 0:16:06.960 --> 0:16:09.760 Do you think? I'm not sure for this taking it 0:16:09.800 --> 0:16:13.280 too far? There's certainly some parallels um so for decades, right, 0:16:13.280 --> 0:16:18.400 big tobacco companies essentially argued that wow, the research linking 0:16:19.000 --> 0:16:23.480 UM cigarettes to UH to having CANCERUS effects or to 0:16:23.600 --> 0:16:26.360 being addictive is a little bit mixed and more research 0:16:26.440 --> 0:16:30.560 is needed. Facebook when it came to UM, when it 0:16:30.640 --> 0:16:34.160 was facing questions around what you know, is social media 0:16:34.320 --> 0:16:39.480 good for young kids often also deflected to outside research, 0:16:39.560 --> 0:16:43.280 which was conflicting. But in fact, Facebook is the organization 0:16:43.360 --> 0:16:47.440 that's the best position to conduct the most thorough research 0:16:47.520 --> 0:16:50.800 on this topic, and they had a lot more concrete 0:16:50.840 --> 0:16:55.480 evidence that for some kids it is actually uh not, 0:16:55.800 --> 0:16:59.320 doesn't play a good role in their lives. And so, 0:16:59.760 --> 0:17:03.520 you know, the question is, will will Congress bring Facebook 0:17:03.520 --> 0:17:06.080 to account in the same way that UM the government 0:17:06.080 --> 0:17:08.720 brought big tobacco company's to account. I don't know well, 0:17:08.760 --> 0:17:10.919 And the question is how difficult bringing them to account 0:17:10.960 --> 0:17:13.480 really is, because I mean, obviously it's not just the 0:17:13.520 --> 0:17:16.200 whistleblower that has given Facebook a headache. Over the last 0:17:16.240 --> 0:17:18.639 couple of days. They had a huge outage yesterday and 0:17:18.720 --> 0:17:21.840 me and everybody I know basically cease to function because 0:17:21.880 --> 0:17:25.160 Instagram wasn't working, WhatsApp wasn't working. So that just goes 0:17:25.200 --> 0:17:29.120 to show you how massive the influence of this company 0:17:29.160 --> 0:17:30.960 is in the amount of people that reaches. How do 0:17:31.000 --> 0:17:35.920 you even go about reining in a company that large. Well, 0:17:35.960 --> 0:17:38.480 it's a good question, right, because any laws that Congress 0:17:38.480 --> 0:17:42.560 would try to pass um would likely not just affect Facebook, right, 0:17:42.600 --> 0:17:46.640 it would affect other tech platforms who um, maybe you're 0:17:46.640 --> 0:17:50.040 doing similar things but don't have some more problems um. 0:17:50.080 --> 0:17:53.120 And so getting that regislation right in a way that's 0:17:53.160 --> 0:17:57.040 precise would be tricky. I think one area of vulnerability 0:17:57.080 --> 0:18:00.520 that Facebook is facing is on the antitrust front. Um. 0:18:00.560 --> 0:18:04.480 It's obviously at least seeing some critiques um from the 0:18:04.480 --> 0:18:08.760 Federal Trade Commission and states on that level. UM. You know, 0:18:09.760 --> 0:18:13.840 going as far as seeking to unwind Facebook from its 0:18:14.000 --> 0:18:19.280 Instagram and WhatsApp acquisitions. That would have a very sort 0:18:19.320 --> 0:18:24.800 of catastrophic effect on the company's future. UM. But I 0:18:24.840 --> 0:18:29.000 think regulating these areas get really tricky, and that's part 0:18:29.000 --> 0:18:33.200 of the reason why we haven't seen some progress. Uh Naomi, 0:18:33.400 --> 0:18:36.520 How well do you think or how is Facebook performing 0:18:36.520 --> 0:18:40.040 in terms of defending itself? I mean it, Mark Zuckerberg, 0:18:40.080 --> 0:18:42.280 the face of Facebook. Is that a good thing? How 0:18:42.280 --> 0:18:43.879 do you think the company is doing and dealing with 0:18:43.920 --> 0:18:48.560 all these issues? Facebook has has really launched an aggressive 0:18:48.600 --> 0:18:52.440 defense campaign against some of the allegations. It went as 0:18:52.440 --> 0:18:55.280 far as to release a point by point rebuttal to 0:18:55.320 --> 0:18:58.360 the Wall Street Journal It's reporting and characterization of its 0:18:58.359 --> 0:19:02.000 own research. It said the used paper was downplaying some 0:19:02.160 --> 0:19:06.120 of the evidence that shows that social media, and particularly 0:19:06.119 --> 0:19:10.440 its own social networks, play a positive role in teenagers lives. 0:19:10.880 --> 0:19:14.240 Um it has you know, we've seen Nick clegg Um, 0:19:14.280 --> 0:19:18.200 you know, participated interview with Mike Allen. We've seen um. 0:19:18.400 --> 0:19:21.720 The company had went as far as to release additional 0:19:21.800 --> 0:19:25.560 slides to show context to the Wall Street journalists reporting. 0:19:26.000 --> 0:19:29.640 The Wall Street Journal then responded and released Stephen Moore slides. UM, 0:19:29.680 --> 0:19:31.520 And so they're they're definitely aggressive, and there's a good 0:19:31.520 --> 0:19:34.240 reason for that. They need to be able to attract 0:19:34.320 --> 0:19:37.440 young users to remain competitive. All Right, Naomi, thank you 0:19:37.480 --> 0:19:39.560 so much for joining us. Really really good to get 0:19:39.600 --> 0:19:43.439 your perspective. And you're reporting. Naomi Nick's corporate influence reporter 0:19:43.480 --> 0:19:45.520 for Bloomberg News on the phone from Washington, d C. 0:19:49.359 --> 0:19:55.159 Looking at my become Bloomberg Commodities index chart for the 0:19:55.200 --> 0:19:57.960 trailing twelve months. Boy, it is up and to the 0:19:58.080 --> 0:20:01.200 right in a big way, uh, showing the commodity inflation 0:20:01.240 --> 0:20:03.399 out there. Let's check in with Will Ryant he's founder 0:20:03.400 --> 0:20:05.360 and sea of Granted Chairs. They have about one point 0:20:05.440 --> 0:20:08.600 five billion dollars in assets under management. So Bill, as 0:20:08.640 --> 0:20:11.719 we step back and take a thirty foot view of 0:20:11.760 --> 0:20:13.439 what a lot of folks are concerned about, which is 0:20:13.480 --> 0:20:18.760 inflation in this economy sparked in part by rising commodity prices. 0:20:19.240 --> 0:20:23.680 How are you viewing the commodity uh asset class, if 0:20:23.720 --> 0:20:27.240 you will, what's really driving it here? Yeah, that's a 0:20:27.280 --> 0:20:31.159 great question. Um, I think that now we live in 0:20:31.200 --> 0:20:35.240 a complicated world where the the interconnectedness of you know, 0:20:35.280 --> 0:20:39.119 not just the commodity markets, but global markets more broadly 0:20:39.440 --> 0:20:42.080 means that, you know, there's not one sort of simple 0:20:42.240 --> 0:20:46.399 answer to what we're experiencing at the moment. You know, 0:20:46.560 --> 0:20:50.320 part of it is the COVID recovery. Part of it 0:20:50.520 --> 0:20:53.199 is the fact that we have a huge amount of 0:20:53.240 --> 0:20:57.320 demand right now, but we don't have the supplies to 0:20:57.400 --> 0:21:00.879 meet that demand. Part of it at also due to COVID, 0:21:01.000 --> 0:21:02.960 is the fact that, you know, in terms of the 0:21:03.000 --> 0:21:05.480 supply chain, we have still a lot of restrictions in 0:21:05.560 --> 0:21:10.160 place around moving goods, et cetera around the world due 0:21:10.160 --> 0:21:13.760 to COVID. And then we have also factors such as 0:21:13.800 --> 0:21:19.480 you know, the transition to renewable energy, that decarbonization efforts 0:21:19.520 --> 0:21:22.719 that major economies are taking, and you know, some of that, 0:21:22.760 --> 0:21:26.040 particularly relevant to Europe at the moment, has meant that 0:21:26.080 --> 0:21:29.520 we've perhaps jumped a little bit too quickly to a 0:21:29.560 --> 0:21:34.280 scenario whereby we don't now have enough energy to meet 0:21:34.359 --> 0:21:37.639 these immediate needs and hence the prices of skyrocketing. You 0:21:37.680 --> 0:21:40.080 have the China effect as well in terms of what's 0:21:40.119 --> 0:21:42.600 going on in the Chinese economy. Is very important always 0:21:42.600 --> 0:21:46.080 the global commodity prices, but I think that we're looking 0:21:46.119 --> 0:21:49.280 a situation now where rising commodity prices across the board 0:21:50.320 --> 0:21:52.480 it's largely due to the fact that you know, we 0:21:52.520 --> 0:21:56.040 have more demand than we have supply at the moment. Yeah, 0:21:56.080 --> 0:21:59.919 the whole renewable energy green energy transition is really interesting 0:22:00.000 --> 0:22:03.320 when we think about the current power crisis, because you 0:22:03.400 --> 0:22:07.800 have a lot of investment in new renewable energy sources wind, solar, 0:22:07.920 --> 0:22:11.000 and you're seeing a pullback and investment of those more 0:22:11.080 --> 0:22:14.040 legacy energy sources like coal and oil, and that leaves you, 0:22:14.080 --> 0:22:16.600 obviously with this huge gap we're seeing in storage. Of course, 0:22:16.680 --> 0:22:19.240 is a big problem when you're thinking about the impact 0:22:19.720 --> 0:22:22.320