WEBVTT - Zuckerberg Declares ‘Year of Efficiency’ 0:00:01.320 --> 0:00:05.680 This is Bloomberg business Week Inside from the reporters and 0:00:05.840 --> 0:00:09.400 editors who bring you America's most trusted business magazine, plus 0:00:09.440 --> 0:00:13.640 global business finance and tech news. The Bloomberg Business Week 0:00:13.680 --> 0:00:18.600 Podcast with Carol Masser and Tim Stinebec from Bloomberg Radio. 0:00:20.760 --> 0:00:24.439 We talked met today. Yeah, it's pretty wild. It's on 0:00:24.480 --> 0:00:26.680 track to post its biggest single day gain in almost 0:00:26.720 --> 0:00:29.560 a decade. This after CTEO Mark Zuckerberg laid up plans 0:00:29.560 --> 0:00:32.760 to make the social media giant leaner, more efficient and 0:00:32.960 --> 0:00:36.000 more decisive. Hey, Carol, it also didn't hurt that the 0:00:36.040 --> 0:00:38.800 first quarter projected revenue is in line with analyst average 0:00:38.880 --> 0:00:41.720 projection and that the company boosted its stock by back 0:00:41.800 --> 0:00:44.040 by a cool forty billion bucks. All right, let's get 0:00:44.080 --> 0:00:46.600 to it. Bloomberg News Big Tech team leader Sarah Fryar 0:00:46.720 --> 0:00:49.320 is with us from our nine sixties studio in San Francisco. Sarah, 0:00:49.320 --> 0:00:51.600 of course, you know, author of No Filter, the inside 0:00:51.600 --> 0:00:56.800 story of Instagram. Sarah, unbelievable and I popping. We saw 0:00:56.920 --> 0:01:01.000 when the company reported last night after the close. Fundamentally, 0:01:02.200 --> 0:01:05.200 do we get something new about Meta and its outlook 0:01:05.280 --> 0:01:09.039 last night? Well, what was really new is just this 0:01:09.160 --> 0:01:12.520 change in tone from Mark Zuckerberg because for the past 0:01:12.600 --> 0:01:16.440 year he's been talking about the road to the metaverse 0:01:16.600 --> 0:01:18.720 and how it's going to take a long time and 0:01:18.760 --> 0:01:21.200 take a lot of investment, but eventually it will be 0:01:21.240 --> 0:01:23.679 worth it for all these investors, and investors were looking 0:01:23.720 --> 0:01:26.920 at that and saying, are you looking at the economy, 0:01:27.040 --> 0:01:29.399 Mr Zuckerberg, Like, do you see that this is not 0:01:29.520 --> 0:01:31.440 the time to be throwing your money at something that 0:01:31.480 --> 0:01:35.480 may not happen um. And it seems like Zuckerberg has 0:01:35.600 --> 0:01:38.800 changed his tone and in this call he mentioned the 0:01:38.840 --> 0:01:42.880 metaverse barely UM, but he was mostly focused on what 0:01:42.920 --> 0:01:46.759 he called the Year of Efficiency on you know, getting 0:01:46.840 --> 0:01:49.960 rid of any sort of blocks to getting work done, 0:01:50.640 --> 0:01:54.360 becoming a leaner organization, getting rid of middle managers, watch 0:01:54.440 --> 0:01:58.920 out middle managers everywhere, um, and and really making sure 0:01:59.480 --> 0:02:02.840 that the a apply artificial intelligence to solve a lot 0:02:02.840 --> 0:02:05.760 of their problems, which I think was also an appealing, 0:02:06.600 --> 0:02:09.600 appealing buzzword from Wall Street. He said that he's going 0:02:09.639 --> 0:02:12.079 to use AI to make engineers more efficient. They're going 0:02:12.120 --> 0:02:16.160 to use AI to improve the targeting of people's content 0:02:16.240 --> 0:02:19.160 and the feeds as well as advertising. UM. To try 0:02:19.160 --> 0:02:22.240 to make up for the losses in their ad market 0:02:22.400 --> 0:02:27.160 from the changes to the privacy settings on iPhones, and 0:02:27.200 --> 0:02:30.040 I think it was just a lot more you know, 0:02:30.320 --> 0:02:33.600 Zuckerberg down to business saying that he's going to create 0:02:33.639 --> 0:02:38.400 a more profitable, successful version of the company as it 0:02:38.480 --> 0:02:42.840 is today. Sarah, should we question his commitment to the metaverse? 0:02:44.320 --> 0:02:48.840 I think that that we should expect that the metaverse 0:02:49.080 --> 0:02:53.040 commitment remains. I think that he's he's pretty obsessed with it, 0:02:53.280 --> 0:02:55.840 but he does need to be walking back from the 0:02:55.880 --> 0:02:59.000 idea that this is going to be some some big 0:02:59.040 --> 0:03:02.120 thing he should be talking about on these earnings calls. 0:03:02.639 --> 0:03:06.840 He's been talking about messaging for almost a decade now, 0:03:07.000 --> 0:03:10.840 I think is when he acquired WhatsApp and spun out 0:03:10.919 --> 0:03:14.360 Messenger into its own app. And it's just now that 0:03:14.400 --> 0:03:17.760 he started to talk about real numbers on messaging. So 0:03:17.760 --> 0:03:21.080 so think about the metaverse in that context. Um. For 0:03:21.440 --> 0:03:24.040 years and years, investors were asking, when are we going 0:03:24.080 --> 0:03:25.680 to see real money out of WhatsApp? When are we 0:03:25.680 --> 0:03:27.800 going to see real money out of Messenger? And he said, 0:03:27.800 --> 0:03:30.359 take your take your time, hold your horses, it's coming. 0:03:30.720 --> 0:03:33.960 It'll be big. Um. Now he said they're at a 0:03:34.000 --> 0:03:37.560 ten billion dollar run rate. Which doesn't mean much when 0:03:37.600 --> 0:03:39.920 anyone says run rate to you. All right, thank you, 0:03:41.120 --> 0:03:43.160 I'm gonna have some fun with you. And uh did 0:03:43.200 --> 0:03:45.280 Mark Zuckerberg go to CEO school and all of a 0:03:45.280 --> 0:03:47.040 sudden say, Hey, I've got to act like a leader 0:03:47.080 --> 0:03:49.560 of a massive company, and I've got to think about 0:03:50.080 --> 0:03:53.080 costs and all those serious things that most heads of 0:03:53.120 --> 0:03:54.960 companies have to think about. And that's kind of how 0:03:55.000 --> 0:03:58.200 he came out. Well, I think I think a little bit. 0:03:58.240 --> 0:04:03.360 I think the economy uh turned down and inflation and 0:04:03.480 --> 0:04:06.720 Ukraine and all those things that affected the AD spending 0:04:07.160 --> 0:04:10.000 last year. I think it's easy if you're somebody like 0:04:10.120 --> 0:04:14.200 Zuckerberg who has mostly led during growth growth, growth, Like 0:04:14.280 --> 0:04:16.599 every time there's a downturn, every time someone says there's 0:04:16.640 --> 0:04:22.279 a downturn, Tech survives, Facebook survives, um Meta survives and 0:04:22.440 --> 0:04:24.960 continue to invest and they have to invest through it. Well, 0:04:25.000 --> 0:04:27.560 I think this is a different scenario. And maybe they 0:04:27.600 --> 0:04:30.320 shouldn't have hired as quickly as they did during the pandemic, 0:04:30.360 --> 0:04:34.200 and maybe they shouldn't have spent willy nilly on things 0:04:34.240 --> 0:04:37.760 that they weren't sure we're going to be uh lucrative 0:04:37.800 --> 0:04:39.520 in the future. So I think they're trying to be 0:04:39.560 --> 0:04:43.599 more disciplined, and he he doesn't really need to go 0:04:43.640 --> 0:04:46.600 to CEO school. He can see the stock drop last year, 0:04:46.960 --> 0:04:49.240 and all his employees can see the stock drop last 0:04:49.279 --> 0:04:53.480 year and and ask each each other, each other and themselves, 0:04:54.080 --> 0:04:56.359 what did we do to deserve this? What can we 0:04:56.400 --> 0:04:59.760 do to fix this? Because that's really the message that 0:05:00.440 --> 0:05:05.040 UM hits home for for that base. How much is 0:05:05.040 --> 0:05:10.440 Mark Zuckerberg looking over his shoulder at TikTok he he really? 0:05:10.600 --> 0:05:13.120 I mean that has been a key driver of a 0:05:13.120 --> 0:05:15.760 lot of the changes at Meta over the last year. 0:05:15.800 --> 0:05:19.680 We've seen them completely change the way that the algorithm 0:05:19.800 --> 0:05:24.520 works on Instagram and Facebook. We've changed the very meaning 0:05:24.680 --> 0:05:27.280 of what kind of content you see on those sites. 0:05:27.400 --> 0:05:30.159 It's it's not just your friends and family and the 0:05:30.200 --> 0:05:34.560 people you've chosen to follow. Meta is making suggestions for you, 0:05:34.720 --> 0:05:36.680 telling you that you might want to watch this or 0:05:36.720 --> 0:05:41.159 that video. In part, that was necessary because the regular 0:05:41.279 --> 0:05:44.680 users aren't sharing quite as much as they used to, 0:05:44.880 --> 0:05:48.400 so Zuckerberg needs to feel fill up that space with 0:05:48.640 --> 0:05:50.800 content that will keep you glued. And it seems to 0:05:50.839 --> 0:05:56.000 be working, becoming TikTok uh. You may not stop TikTok's growth, 0:05:56.360 --> 0:05:59.840 but it will at least help juice Facebook and Instagram 0:05:59.839 --> 0:06:03.000 for the next generation. We're living in interesting times, man. 0:06:03.080 --> 0:06:05.479 I feel like whiplash a little bit. Nobody, nobody in 0:06:05.520 --> 0:06:07.719 my feed on Instagram or people like I actually follow, 0:06:07.800 --> 0:06:10.240 or no anymore, and yet I keep opening it up 0:06:10.600 --> 0:06:14.240 again and again. Carol, you're one of those. Huh, all right, 0:06:14.240 --> 0:06:16.280 I'd like to see the airplanes. Sara Fier, Thank you 0:06:16.360 --> 0:06:18.640 so much, Bloomberg News Big Tech team leader. Checker out 0:06:18.640 --> 0:06:21.520 on Twitter. You're listening and watching Bloomberg Business Week on 0:06:21.600 --> 0:06:27.560 Bloomberg Radio. This is Bloomberg business Week inside from the 0:06:27.600 --> 0:06:31.680 reporters and editors who bring you America's most trusted business magazine, 0:06:31.760 --> 0:06:36.080 plus bloom Business finance and tech news. The Bloomberg Business 0:06:36.080 --> 0:06:43.919 Week Podcast with Carol Masser and Tim stinebec from Bloomberg Radio. Remember, 0:06:43.920 --> 0:06:46.719 on Monday, the White House said that the COVID nineteen 0:06:46.760 --> 0:06:49.680 National Emergency and Public Health Emergency will be extended to 0:06:49.720 --> 0:06:53.440 May eleventh, but then lifted. And it's really a change 0:06:53.600 --> 0:06:56.240 our sign of changing times. It's a milestone in a 0:06:56.320 --> 0:06:59.240 coronavirus response here in the USA, dominating much of the 0:06:59.279 --> 0:07:01.960 early weeks of President Joe Biden's administration. Yeah, but at 0:07:02.000 --> 0:07:03.800 the same time, we're seeing the new variants are showing 0:07:03.839 --> 0:07:06.960 that they have an ability to evade protection provided by vaccines. 0:07:06.960 --> 0:07:08.640 We've got a lot to get to. Very pleased to 0:07:08.680 --> 0:07:11.600 have back with us. Dr Andy Pekosh, Professor of molecular 0:07:11.720 --> 0:07:16.160 microbiology and Immunology at the Johns Hopkins University Bloomberg School 0:07:16.160 --> 0:07:18.560 of Public Health, on the phone from Baltimore, the Bloomberg 0:07:18.600 --> 0:07:20.880 School Public Health that is supported by Michael R. Bloomberg, 0:07:20.880 --> 0:07:24.200 founder of Bloomberg Helpe and Bloomberg Philanthropiest. Good to have 0:07:24.240 --> 0:07:27.680 you with us, Dr Pekosh. Okay, so the National emergency 0:07:27.880 --> 0:07:33.440 ending May eleven, how should we read into that as uh, 0:07:33.640 --> 0:07:35.920 people who are coming out of a pandemic, but also 0:07:36.000 --> 0:07:38.280 as as people who need to understand, okay, well, who's 0:07:38.280 --> 0:07:41.280 gonna pay for COVID tests? Now? Yeah, So there's I 0:07:41.320 --> 0:07:43.560 think two major things that are going to go on here. 0:07:44.120 --> 0:07:48.360 One is, you know, people perhaps don't realize how many 0:07:48.400 --> 0:07:51.160 things the government was paying for to make sure that 0:07:51.480 --> 0:07:57.400 there was equitable distribution of vaccines, testing, treatments, healthcare for 0:07:57.480 --> 0:08:01.720 anybody that was infected with COVID nineteen much of that 0:08:01.800 --> 0:08:04.560 is going to go away when the public health emergency 0:08:04.760 --> 0:08:08.559 isn't in place. Insurance companies will pick that up, UM, 0:08:08.600 --> 0:08:10.640 but it will very much depend on the types of 0:08:10.680 --> 0:08:14.920 insurance that individuals have. UM. I think from the from 0:08:14.960 --> 0:08:18.160 the pandemic point of view, Uh, it's it's really a 0:08:18.200 --> 0:08:22.280 sign that we're moving into a phase that's moving away 0:08:22.280 --> 0:08:25.840 from the emergency responses and trying to put in place 0:08:25.920 --> 0:08:29.400 things to deal with COVID nineteen as a disease that 0:08:29.440 --> 0:08:30.880 we're not going to get rid of, that's going to 0:08:31.000 --> 0:08:33.360 be with us going forward, and that we have to 0:08:33.400 --> 0:08:36.400 readjust our strategies to deal with it as a known, 0:08:37.080 --> 0:08:41.520 constant concern that we'll have to use our public health 0:08:41.640 --> 0:08:45.600 interventions and our medical interventions to try to minimize severe disease. 0:08:45.800 --> 0:08:47.800 Dr Peckash, is it fair to say it's just like 0:08:47.880 --> 0:08:51.360 the common flu. No, you know, we we we have 0:08:51.480 --> 0:08:55.480 a big flu surge this year, and what that really 0:08:55.520 --> 0:08:58.480 showed us is that COVID nineteen is still giving us 0:08:58.559 --> 0:09:02.240 more cases than influence up and COVID nineteen is still 0:09:02.280 --> 0:09:05.800 resulting in more hospitalizations and more deaths on a per 0:09:05.800 --> 0:09:10.680 case basis than influenza. So it's something that is even 0:09:10.760 --> 0:09:13.280 more of a concern than influenza. We are concerned about 0:09:13.280 --> 0:09:17.400 influenza as a as a disease annually. So it's something 0:09:17.440 --> 0:09:19.000 we need to keep our eyes on and we need 0:09:19.040 --> 0:09:22.640 to keep using anti virals, vaccines and public health messaging 0:09:22.920 --> 0:09:25.680 to make sure that people keep their guard up against it. 0:09:26.160 --> 0:09:27.720 To what extent do we need to be keeping our 0:09:27.760 --> 0:09:29.120 guard up against it? And I asked this in the 0:09:29.160 --> 0:09:31.400 context of our conversation that we had with Amish Adulgia, 0:09:31.440 --> 0:09:33.360 your colleague at the Bloomberg School of Public Health, just 0:09:33.400 --> 0:09:36.600 a few weeks ago, and he really surprised me with 0:09:36.679 --> 0:09:40.680 his answer to my question about boosters, essentially saying that 0:09:40.800 --> 0:09:46.520 you know, for many people, um, he wouldn't suggest a booster. Yeah. Well, 0:09:46.559 --> 0:09:50.600 you know, we are seeing that the severe disease is 0:09:50.679 --> 0:09:54.760 coming through in the populations we expect, the elderly, those 0:09:54.760 --> 0:09:57.960 with secondary medical conditions, those continue to be the at 0:09:58.040 --> 0:10:02.360 risk populations. UM. I think we run the risk of 0:10:02.480 --> 0:10:08.199 thinking about vaccinations against COVID like we do against seasonal influenza, 0:10:08.280 --> 0:10:11.240 and they're still very different diseases, so we still have 0:10:11.280 --> 0:10:13.680 a little bit to learn about how to best use 0:10:13.760 --> 0:10:17.760 these boosters, use these vaccines but I'll also understand that 0:10:17.800 --> 0:10:20.400 the virus is going to constantly be changing, and the 0:10:20.440 --> 0:10:23.120 boosters may not be as effective as we want them 0:10:23.120 --> 0:10:25.600 to be, nor will they be exact effect over the 0:10:25.640 --> 0:10:27.120 over the course of the year. What do you mean 0:10:27.160 --> 0:10:29.440 by that that we're we run the risk of treating 0:10:29.480 --> 0:10:31.800 it in the same way. Is that you know in 0:10:31.800 --> 0:10:37.440 the comparison is we're given the recommendation to get a 0:10:37.480 --> 0:10:40.240 flu shot every year, but perhaps we don't need to 0:10:40.240 --> 0:10:43.920 get a COVID booster every year. Uh, I think we 0:10:44.040 --> 0:10:46.719 probably will. The question is at what time of year 0:10:46.760 --> 0:10:50.520 do we get that booster. UM. COVID really hasn't shown 0:10:50.880 --> 0:10:53.960 the seasonality that we see with flu. So with flu, 0:10:54.040 --> 0:10:56.080 we get our vaccines in the fall because we know 0:10:56.160 --> 0:10:57.880 that in the late fall and winter we're going to 0:10:57.920 --> 0:11:01.320 see a surge of cases. Um, we still haven't seen 0:11:01.400 --> 0:11:05.320 that pattern with COVID nineteen, so we may need to 0:11:05.400 --> 0:11:08.440 adjust the booster time depending on when we see surges 0:11:08.440 --> 0:11:12.920 of cases. Okay, So it is kind of interesting because 0:11:12.960 --> 0:11:15.360 I do think I'm thinking about like what kind of 0:11:15.640 --> 0:11:19.840 community immunity immunity have we built up so far? Do 0:11:19.880 --> 0:11:22.960 you have any idea on that? Yeah, we've we've built 0:11:23.040 --> 0:11:26.440 up a lot of the immunity and the population that 0:11:26.559 --> 0:11:30.760 immunity seems to be protecting more against severe disease than 0:11:30.800 --> 0:11:33.920 it's protecting against infection. So that's a little bit of 0:11:33.920 --> 0:11:37.079 a surprise, I think for us UM and I think 0:11:37.120 --> 0:11:39.280 it's it brings up what we're going to have to 0:11:39.320 --> 0:11:41.000 be dealing with, is we're going to be have to 0:11:41.080 --> 0:11:43.920 dealing with these cases that are going to be occurring, 0:11:44.440 --> 0:11:48.840 perhaps across the entire year, and really paying attention to 0:11:48.920 --> 0:11:54.199 when the situation merits a booster because we're seeing surges 0:11:54.240 --> 0:11:59.200 in in cases, particularly in populations that are highly vulnerable. Okay, 0:11:59.280 --> 0:12:01.520 so we're does it leave in terms where does it 0:12:01.559 --> 0:12:04.760 leave us in terms of variants? Are we going to 0:12:04.800 --> 0:12:11.320 see variants develop that are continuing to be perhaps I 0:12:11.320 --> 0:12:17.520 don't know, more evasive for vaccines, but at the same time, uh, 0:12:17.720 --> 0:12:21.320 not have the strength that earlier variants had. Yeah. I 0:12:21.360 --> 0:12:24.920 think one of the things that we're seeing the signs 0:12:24.920 --> 0:12:28.080 of right now is that the COVID variants that are 0:12:28.080 --> 0:12:33.640 emerging now have some ability to to evade vaccine induced immunity. 0:12:34.120 --> 0:12:36.599 But that's but not a lot. And we think the 0:12:36.679 --> 0:12:39.040 virus is now sort of maybe moving in this little 0:12:39.080 --> 0:12:41.960 area where it's going to be responding a bit to 0:12:42.080 --> 0:12:44.680 the population immunity, but it's not going to make the 0:12:44.760 --> 0:12:47.720 major jumps like we saw when O. Macron first emerged 0:12:47.760 --> 0:12:50.640 a little bit over a year ago. So signs are 0:12:50.679 --> 0:12:53.000 looking good that we're settling into a stage where the 0:12:53.080 --> 0:12:56.360 virus will be mutating, but we'll be able to adjust 0:12:56.360 --> 0:12:59.920 our responses in terms of vaccines and and no strategy 0:13:00.800 --> 0:13:04.160 because we're not seeing major jumps in how the virus 0:13:04.240 --> 0:13:06.760 is behaving like we did during the first two years 0:13:06.760 --> 0:13:09.760 of the pandemic. Is there possibility that at some point 0:13:09.800 --> 0:13:11.560 in the future there could be a variant out there? 0:13:11.600 --> 0:13:13.320 I mean, I mean anything is possible. I guess we 0:13:13.400 --> 0:13:16.480 know that, but are you guys talking about it? You 0:13:16.520 --> 0:13:20.160 know a lot that they could be the possibility of 0:13:20.160 --> 0:13:23.800 once again a variant that shuts kind of society down again, 0:13:23.880 --> 0:13:26.080 or or do we have a sufficient enough playbook that 0:13:26.120 --> 0:13:29.439 we can manage our way through. Well, we are concerned 0:13:29.480 --> 0:13:33.520 about certain populations UM for instance, I you know, compromise 0:13:33.600 --> 0:13:37.959 people who may be able to generate variants that are 0:13:38.040 --> 0:13:42.320 even more evasive or transmissible. UM. A lot of efforts 0:13:42.320 --> 0:13:44.760 are being done to monitor those populations to look for 0:13:44.800 --> 0:13:47.360 those signs. I think the positive sign is that we 0:13:47.400 --> 0:13:50.200 know antivirals are working and we know how to update 0:13:50.240 --> 0:13:53.440 the vaccine. So even if a new variant emerges, the 0:13:53.559 --> 0:13:57.120 response in terms of treatments and vaccines will be much 0:13:57.200 --> 0:13:59.320 much faster now that we know so much about how 0:13:59.360 --> 0:14:02.960 to deal with co B. Still, oftentimes, often days we 0:14:03.000 --> 0:14:07.120 see hundreds of people dying. When will when will that stop? Yeah, 0:14:07.200 --> 0:14:09.120 and that's the big question that we don't have an 0:14:09.160 --> 0:14:11.920 answer to right now. It is important to note that 0:14:12.240 --> 0:14:16.080 we're having lots of people getting infected and dying constantly 0:14:16.160 --> 0:14:19.120 over the year, and that's something we haven't seen with 0:14:19.200 --> 0:14:23.320 the respiratory infection. All other respiratory infections come in waves. 0:14:24.000 --> 0:14:27.000 Um they're gone for long periods of time, and then 0:14:27.040 --> 0:14:29.120 they come and surge back and then they leave. We 0:14:29.200 --> 0:14:31.560 haven't seen that pattern with COVID nineteen. And that's really 0:14:31.600 --> 0:14:35.880 the big variable that is going to impact UM. As 0:14:35.920 --> 0:14:39.120 we mentioned before, boosters and treatments and all those interventions 0:14:39.160 --> 0:14:41.680 that we have. Wow, it's an interesting time. It does 0:14:41.760 --> 0:14:44.000 feel better, but yeah, certainly something that we know we 0:14:44.040 --> 0:14:45.800 have to continue to keep on our rater and we 0:14:45.840 --> 0:14:47.920 do actually when we think about China in terms of 0:14:47.920 --> 0:14:51.040 the reopening of its economy. Dr Andy Pekosh, thank you 0:14:51.080 --> 0:14:54.920 as always, Professor of Molecular Microbiology and Immunology at Johns 0:14:54.960 --> 0:14:58.160 Hopkins University, Bloomberg School of Public Health, of course, supported 0:14:58.160 --> 0:15:01.200 by Michael R. Bloomberg, founder of Bloomberg Help and Bloomberg Philanthropies. 0:15:01.320 --> 0:15:05.120 Joining us on the phone from Baltimore, you're listening to 0:15:05.160 --> 0:15:08.840 the Bloomberg Business Week Podcast. Catch us live week days 0:15:08.880 --> 0:15:11.920 from two to five pm Eastern on Bloomberg Radio, the 0:15:11.920 --> 0:15:15.440 Bloomberg Business Band you Doo. You can also listen live 0:15:15.560 --> 0:15:19.200 to our flagship New York station Just Say Alexa Play, 0:15:19.240 --> 0:15:24.240 Bloomberg e Love and Verdi us Dox. Adding to yesterday's 0:15:24.280 --> 0:15:27.200 Gained a spark by speculation, the FEDS tightening cycle and 0:15:27.240 --> 0:15:29.640 maybe nearing its peak. You know when we were hearing 0:15:29.680 --> 0:15:32.040 from Charlie talking about what's going on the ECB and 0:15:32.080 --> 0:15:35.280 Bank of England constantly global central bankers reminding us, hey, folks, 0:15:35.360 --> 0:15:37.280 is more to come. We still got a fight to 0:15:37.320 --> 0:15:40.520 bring inflation down. Well, it's perfect timing for this week's 0:15:40.560 --> 0:15:42.960 domestic cover story. The story written by Bloomberg New Senior 0:15:43.000 --> 0:15:46.200 Markets reporter Katie Greifeld and Bloomberg News chief correspondent for 0:15:46.240 --> 0:15:49.600 Global macro Markets Liz McCormick. Liz joins us now via 0:15:49.680 --> 0:15:51.800 zoom in New York City along with Bloomberg Business Week 0:15:51.880 --> 0:15:54.920 editor Joel Webber here in our Bloomberg Interactive Broker's studio. 0:15:55.200 --> 0:15:57.920 The cover of this is perfect, Joel. It's clearly a 0:15:58.400 --> 0:16:01.840 FED chair J Powell daring down a bull, and I 0:16:01.880 --> 0:16:05.000 gotta tell you it seems like today and yesterday that 0:16:05.040 --> 0:16:07.280 bull has the upper hand. Yeah, well that was why 0:16:07.360 --> 0:16:10.200 we wanted to do it as a cover story. Um. 0:16:10.560 --> 0:16:13.400 When I think about this year and sort of the 0:16:13.440 --> 0:16:16.000 big stories of the year, this really does feel like 0:16:16.120 --> 0:16:19.000 it's going to be one of the big ones. Is Look, 0:16:19.040 --> 0:16:21.400 we've had the FED that it has been intent on 0:16:21.520 --> 0:16:25.760 continuing to raise rates. Wall Street really wants that cut 0:16:25.800 --> 0:16:29.240 at some point. Uh When and how that all plays 0:16:29.280 --> 0:16:32.600 out is gonna probably impact what the markets do all 0:16:32.640 --> 0:16:35.720 all year long. Um. So, Liz, like we we wrote 0:16:35.760 --> 0:16:38.040 it as a walk up and then yesterday unfolded. What 0:16:38.360 --> 0:16:40.760 do we know now that we didn't know going in? 0:16:40.880 --> 0:16:43.000 And how do you feel about how our cover stories 0:16:43.040 --> 0:16:45.960 hold up? Well? I think the story holds up and 0:16:46.000 --> 0:16:48.800 like Tim said, as of yesterday, the market still kind 0:16:48.800 --> 0:16:51.080 of feels like they have the upper hand. Like chair Pal, 0:16:51.560 --> 0:16:53.600 whether he meant to or not, he didn't kind of 0:16:53.640 --> 0:16:56.480 push back hard enough to kind of break the animal 0:16:56.520 --> 0:16:58.840 spirits that are out there. But I think, like you said, 0:16:58.880 --> 0:17:01.440 this is like all year story, like we're not going 0:17:01.480 --> 0:17:05.560 to know until let's just say the second half. If 0:17:05.800 --> 0:17:08.400 you know, the markets will have capitulated, if if they 0:17:08.480 --> 0:17:11.119 kind of remain strong and inflation is sticky and the 0:17:11.119 --> 0:17:14.280 FED is making clear they are definitely not cutting, or 0:17:14.320 --> 0:17:16.600 if the world changes and we do get a full 0:17:16.640 --> 0:17:19.680 fudge recession and the FED starts leaning, so we're not 0:17:19.720 --> 0:17:22.040 gonna know for a while. So, like you can say, 0:17:22.119 --> 0:17:25.679 round one market, Fed didn't push back, but I just 0:17:25.720 --> 0:17:28.359 think this is gonna be going on for a while 0:17:28.680 --> 0:17:31.680 and right now, I mean maybe Chap wanted just to 0:17:31.760 --> 0:17:35.639 leave the kind of options open, but it was, you know, 0:17:35.720 --> 0:17:39.400 definitely interesting, especially in Europe, like the Charlie was mentioning 0:17:39.440 --> 0:17:42.280 what's happening in the European Central Bank and stuff. The 0:17:42.320 --> 0:17:45.200 bond market rallied even after that, with Leguard saying another 0:17:45.240 --> 0:17:47.840 fifties coming. So the bond market just has this kind 0:17:47.840 --> 0:17:52.080 of bulls taking over what It's interesting, Liz because you 0:17:52.080 --> 0:17:55.560 and Katie included a comment in this from Neil cash Kari, 0:17:55.720 --> 0:17:58.679 of course, the president of the Minneapolis FED, and he 0:17:58.800 --> 0:18:02.080 basically said he's been around long enough to understand that 0:18:02.720 --> 0:18:05.280 there's this optimism when it comes to Wall Street, and 0:18:05.400 --> 0:18:10.920 it seems like optimism is is what is what's driving this. 0:18:11.200 --> 0:18:13.159 But then you include this other part of this, of 0:18:13.160 --> 0:18:14.480 his quote that he gave to the New York Times, 0:18:14.480 --> 0:18:16.680 he said, quote, they are going to lose the game 0:18:16.720 --> 0:18:18.960 of chicken. I can tell you that this is a 0:18:19.000 --> 0:18:21.639 guy who has been known as a dove uh and 0:18:21.800 --> 0:18:27.320 is now coming out increasingly ino and this year hawk ish. Yeah, 0:18:27.320 --> 0:18:30.160 and it's interesting. Our FED team and d C did 0:18:30.160 --> 0:18:33.240 a story a bit back saying, just like you're saying, Kashgari, 0:18:33.280 --> 0:18:35.480 who was the biggest dove, is like become the biggest hawk. 0:18:35.800 --> 0:18:37.840 And I was like curious, Oh, I'd love to call him. 0:18:37.840 --> 0:18:40.320 See what did you think of what your pal said yesterday, 0:18:40.359 --> 0:18:43.800 because you know it didn't kind of embolden the chicken 0:18:43.840 --> 0:18:46.760 fight of the FED winning. But but yeah, I think 0:18:46.760 --> 0:18:50.919 it's pretty telling. And um, I just think that I 0:18:50.960 --> 0:18:53.280 guess the market is supposed to see ahead, especially the 0:18:53.320 --> 0:18:56.359 bond market. Um, sometimes they get it right, sometimes they 0:18:56.400 --> 0:18:58.520 get it wrong. They've been kind of all over the place. 0:18:58.560 --> 0:19:01.359 But I mean the market to seize the pivot. And 0:19:01.440 --> 0:19:04.760 we all know bonds got brutalized last year, as did stock, 0:19:04.840 --> 0:19:07.399 so people felt like, oh, higher yields if they they 0:19:07.400 --> 0:19:09.640 want to get ahead of it. But you know, who 0:19:09.640 --> 0:19:11.399 knows at the end of the year, you know who's 0:19:11.440 --> 0:19:13.480 in the red or who's in the green. Well, what 0:19:13.520 --> 0:19:15.080 I love about the story, you know, Lizz, is I 0:19:15.080 --> 0:19:16.919 feel like it's just a reminder that there's been some 0:19:16.960 --> 0:19:19.919 head fakes before guys, and we got a little bit 0:19:19.920 --> 0:19:24.800 of exuberances, certainly into financial assets, only to be disappointed 0:19:24.880 --> 0:19:26.960 with the FED coming out and reminding us, hey, guys, 0:19:27.320 --> 0:19:29.439 you know we're still raising rates, were still have to 0:19:29.480 --> 0:19:32.439 bring down inflation. Having said that, Liz, when is the 0:19:32.480 --> 0:19:36.119 point you know when investors they're forward looking, right, you know, 0:19:36.320 --> 0:19:40.359 they're discounting, they're looking ahead. Is that the trade that 0:19:40.359 --> 0:19:42.760 we're seeing today or do you think based on kind 0:19:42.760 --> 0:19:44.040 of where we are and what we heard from J. 0:19:44.119 --> 0:19:47.040 Powell and Company yesterday, they're getting too ahead of themselves, 0:19:47.080 --> 0:19:50.480 meaning financial markets getting too ahead of themselves. Well, I 0:19:50.480 --> 0:19:53.399 will tell you after yesterday, I scoured and read everything. 0:19:53.440 --> 0:19:56.960 I made a million phone calls because it's it's the question, right, Carol, Like, 0:19:57.400 --> 0:19:59.680 and I think a lot of people there's there's people 0:19:59.680 --> 0:20:01.879 in both camps, even in the market saying this has 0:20:01.920 --> 0:20:05.320 gone way too far. Um, some saying yeah, bond markets 0:20:05.320 --> 0:20:07.959 supposed to get ahead, and but there are people warning 0:20:08.000 --> 0:20:10.440 in stocks like, well if the Fed, even if they 0:20:10.480 --> 0:20:15.000 just stop one more hike, they're worried about earning slowing down, 0:20:15.160 --> 0:20:17.439 and that both things can't go up, stocks and bonds. 0:20:17.520 --> 0:20:19.960 So I don't know. I mean March that we have 0:20:20.000 --> 0:20:21.879 a new set of dot plots, you know, where the 0:20:21.880 --> 0:20:25.560 Fed gives their forecast for the policy rate. That's going 0:20:25.600 --> 0:20:28.040 to be interesting to see. Like they were at five 0:20:28.080 --> 0:20:29.959 point one in the median for the end of this 0:20:30.040 --> 0:20:34.000 year in the December dots. If that holds again, which 0:20:34.040 --> 0:20:37.440 shows them saying no cuts, can the market keep going? 0:20:37.560 --> 0:20:40.280 You know, that's the big question. So like, um, one 0:20:40.320 --> 0:20:42.360 of our folks and forgetting names now wrote a great 0:20:42.359 --> 0:20:45.040 piece saying like you can keep the dance party going, 0:20:45.080 --> 0:20:47.920 but maybe only till March. You know, Let's see what happens, 0:20:47.920 --> 0:20:50.640 then there's there's a lot more data between now and then, 0:20:51.320 --> 0:20:54.280 So let's talk about those duck pluts because that that 0:20:54.359 --> 0:20:56.960 will be kind of the next moment that um, I 0:20:57.000 --> 0:20:59.000 think the the you know, people are going to be 0:20:59.040 --> 0:21:01.480 all over all over this. And not to say Jip 0:21:01.520 --> 0:21:04.479 Tob might not need to talk again to cool down 0:21:04.520 --> 0:21:06.359 these spirits a little bit. But but Liz, what do 0:21:06.440 --> 0:21:09.400 you what do you think the market will be especially 0:21:09.440 --> 0:21:12.520 looking for in that next round with the fit. Yeah, 0:21:12.560 --> 0:21:16.000 I think it's if that median dot moves down from 0:21:16.040 --> 0:21:18.800 five point one, um, which means they could do another 0:21:18.880 --> 0:21:21.080 hike and then maybe be cutting that those dots could 0:21:21.119 --> 0:21:23.600 show And and that was one thing that happened yesterday 0:21:23.640 --> 0:21:26.480 in the press conference. He was asked about that, like basically, 0:21:26.520 --> 0:21:31.639 do you stand by those December dots? And he was like, well, 0:21:32.080 --> 0:21:34.000 you know, and then the market didn't like that. He 0:21:34.080 --> 0:21:36.840