Speaker 1: This is Bloomberg business Week Inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Masser and Tim Stinebec from Bloomberg Radio.
Speaker 1: We talked met today. Yeah, it's pretty wild. It's on
Speaker 1: track to post its biggest single day gain in almost
Speaker 1: a decade. This after CTEO Mark Zuckerberg laid up plans
Speaker 1: to make the social media giant leaner, more efficient and
Speaker 1: more decisive. Hey, Carol, it also didn't hurt that the
Speaker 1: first quarter projected revenue is in line with analyst average
Speaker 1: projection and that the company boosted its stock by back
Speaker 1: by a cool forty billion bucks. All right, let's get
Speaker 1: to it. Bloomberg News Big Tech team leader Sarah Fryar
Speaker 1: is with us from our nine sixties studio in San Francisco. Sarah,
Speaker 1: of course, you know, author of No Filter, the inside
Speaker 1: story of Instagram. Sarah, unbelievable and I popping. We saw
Speaker 1: when the company reported last night after the close. Fundamentally,
Speaker 1: do we get something new about Meta and its outlook
Speaker 1: last night? Well, what was really new is just this
Speaker 1: change in tone from Mark Zuckerberg because for the past
Speaker 1: year he's been talking about the road to the metaverse
Speaker 1: and how it's going to take a long time and
Speaker 1: take a lot of investment, but eventually it will be
Speaker 1: worth it for all these investors, and investors were looking
Speaker 1: at that and saying, are you looking at the economy,
Speaker 1: Mr Zuckerberg, Like, do you see that this is not
Speaker 1: the time to be throwing your money at something that
Speaker 1: may not happen um. And it seems like Zuckerberg has
Speaker 1: changed his tone and in this call he mentioned the
Speaker 1: metaverse barely UM, but he was mostly focused on what
Speaker 1: he called the Year of Efficiency on you know, getting
Speaker 1: rid of any sort of blocks to getting work done,
Speaker 1: becoming a leaner organization, getting rid of middle managers, watch
Speaker 1: out middle managers everywhere, um, and and really making sure
Speaker 1: that the a apply artificial intelligence to solve a lot
Speaker 1: of their problems, which I think was also an appealing,
Speaker 1: appealing buzzword from Wall Street. He said that he's going
Speaker 1: to use AI to make engineers more efficient. They're going
Speaker 1: to use AI to improve the targeting of people's content
Speaker 1: and the feeds as well as advertising. UM. To try
Speaker 1: to make up for the losses in their ad market
Speaker 1: from the changes to the privacy settings on iPhones, and
Speaker 1: I think it was just a lot more you know,
Speaker 1: Zuckerberg down to business saying that he's going to create
Speaker 1: a more profitable, successful version of the company as it
Speaker 1: is today. Sarah, should we question his commitment to the metaverse?
Speaker 1: I think that that we should expect that the metaverse
Speaker 1: commitment remains. I think that he's he's pretty obsessed with it,
Speaker 1: but he does need to be walking back from the
Speaker 1: idea that this is going to be some some big
Speaker 1: thing he should be talking about on these earnings calls.
Speaker 1: He's been talking about messaging for almost a decade now,
Speaker 1: I think is when he acquired WhatsApp and spun out
Speaker 1: Messenger into its own app. And it's just now that
Speaker 1: he started to talk about real numbers on messaging. So
Speaker 1: so think about the metaverse in that context. Um. For
Speaker 1: years and years, investors were asking, when are we going
Speaker 1: to see real money out of WhatsApp? When are we
Speaker 1: going to see real money out of Messenger? And he said,
Speaker 1: take your take your time, hold your horses, it's coming.
Speaker 1: It'll be big. Um. Now he said they're at a
Speaker 1: ten billion dollar run rate. Which doesn't mean much when
Speaker 1: anyone says run rate to you. All right, thank you,
Speaker 1: I'm gonna have some fun with you. And uh did
Speaker 1: Mark Zuckerberg go to CEO school and all of a
Speaker 1: sudden say, Hey, I've got to act like a leader
Speaker 1: of a massive company, and I've got to think about
Speaker 1: costs and all those serious things that most heads of
Speaker 1: companies have to think about. And that's kind of how
Speaker 1: he came out. Well, I think I think a little bit.
Speaker 1: I think the economy uh turned down and inflation and
Speaker 1: Ukraine and all those things that affected the AD spending
Speaker 1: last year. I think it's easy if you're somebody like
Speaker 1: Zuckerberg who has mostly led during growth growth, growth, Like
Speaker 1: every time there's a downturn, every time someone says there's
Speaker 1: a downturn, Tech survives, Facebook survives, um Meta survives and
Speaker 1: continue to invest and they have to invest through it. Well,
Speaker 1: I think this is a different scenario. And maybe they
Speaker 1: shouldn't have hired as quickly as they did during the pandemic,
Speaker 1: and maybe they shouldn't have spent willy nilly on things
Speaker 1: that they weren't sure we're going to be uh lucrative
Speaker 1: in the future. So I think they're trying to be
Speaker 1: more disciplined, and he he doesn't really need to go
Speaker 1: to CEO school. He can see the stock drop last year,
Speaker 1: and all his employees can see the stock drop last
Speaker 1: year and and ask each each other, each other and themselves,
Speaker 1: what did we do to deserve this? What can we
Speaker 1: do to fix this? Because that's really the message that
Speaker 1: UM hits home for for that base. How much is
Speaker 1: Mark Zuckerberg looking over his shoulder at TikTok he he really?
Speaker 1: I mean that has been a key driver of a
Speaker 1: lot of the changes at Meta over the last year.
Speaker 1: We've seen them completely change the way that the algorithm
Speaker 1: works on Instagram and Facebook. We've changed the very meaning
Speaker 1: of what kind of content you see on those sites.
Speaker 1: It's it's not just your friends and family and the
Speaker 1: people you've chosen to follow. Meta is making suggestions for you,
Speaker 1: telling you that you might want to watch this or
Speaker 1: that video. In part, that was necessary because the regular
Speaker 1: users aren't sharing quite as much as they used to,
Speaker 1: so Zuckerberg needs to feel fill up that space with
Speaker 1: content that will keep you glued. And it seems to
Speaker 1: be working, becoming TikTok uh. You may not stop TikTok's growth,
Speaker 1: but it will at least help juice Facebook and Instagram
Speaker 1: for the next generation. We're living in interesting times, man.
Speaker 1: I feel like whiplash a little bit. Nobody, nobody in
Speaker 1: my feed on Instagram or people like I actually follow,
Speaker 1: or no anymore, and yet I keep opening it up
Speaker 1: again and again. Carol, you're one of those. Huh, all right,
Speaker 1: I'd like to see the airplanes. Sara Fier, Thank you
Speaker 1: so much, Bloomberg News Big Tech team leader. Checker out
Speaker 1: on Twitter. You're listening and watching Bloomberg Business Week on
Speaker 1: Bloomberg Radio. This is Bloomberg business Week inside from the
Speaker 1: reporters and editors who bring you America's most trusted business magazine,
Speaker 1: plus bloom Business finance and tech news. The Bloomberg Business
Speaker 1: Week Podcast with Carol Masser and Tim stinebec from Bloomberg Radio. Remember,
Speaker 1: on Monday, the White House said that the COVID nineteen
Speaker 1: National Emergency and Public Health Emergency will be extended to
Speaker 1: May eleventh, but then lifted. And it's really a change
Speaker 1: our sign of changing times. It's a milestone in a
Speaker 1: coronavirus response here in the USA, dominating much of the
Speaker 1: early weeks of President Joe Biden's administration. Yeah, but at
Speaker 1: the same time, we're seeing the new variants are showing
Speaker 1: that they have an ability to evade protection provided by vaccines.
Speaker 1: We've got a lot to get to. Very pleased to
Speaker 1: have back with us. Dr Andy Pekosh, Professor of molecular
Speaker 1: microbiology and Immunology at the Johns Hopkins University Bloomberg School
Speaker 1: of Public Health, on the phone from Baltimore, the Bloomberg
Speaker 1: School Public Health that is supported by Michael R. Bloomberg,
Speaker 1: founder of Bloomberg Helpe and Bloomberg Philanthropiest. Good to have
Speaker 1: you with us, Dr Pekosh. Okay, so the National emergency
Speaker 1: ending May eleven, how should we read into that as uh,
Speaker 1: people who are coming out of a pandemic, but also
Speaker 1: as as people who need to understand, okay, well, who's
Speaker 1: gonna pay for COVID tests? Now? Yeah, So there's I
Speaker 1: think two major things that are going to go on here.
Speaker 1: One is, you know, people perhaps don't realize how many
Speaker 1: things the government was paying for to make sure that
Speaker 1: there was equitable distribution of vaccines, testing, treatments, healthcare for
Speaker 1: anybody that was infected with COVID nineteen much of that
Speaker 1: is going to go away when the public health emergency
Speaker 1: isn't in place. Insurance companies will pick that up, UM,
Speaker 1: but it will very much depend on the types of
Speaker 1: insurance that individuals have. UM. I think from the from
Speaker 1: the pandemic point of view, Uh, it's it's really a
Speaker 1: sign that we're moving into a phase that's moving away
Speaker 1: from the emergency responses and trying to put in place
Speaker 1: things to deal with COVID nineteen as a disease that
Speaker 1: we're not going to get rid of, that's going to
Speaker 1: be with us going forward, and that we have to
Speaker 1: readjust our strategies to deal with it as a known,
Speaker 1: constant concern that we'll have to use our public health
Speaker 1: interventions and our medical interventions to try to minimize severe disease.
Speaker 1: Dr Peckash, is it fair to say it's just like
Speaker 1: the common flu. No, you know, we we we have
Speaker 1: a big flu surge this year, and what that really
Speaker 1: showed us is that COVID nineteen is still giving us
Speaker 1: more cases than influence up and COVID nineteen is still
Speaker 1: resulting in more hospitalizations and more deaths on a per
Speaker 1: case basis than influenza. So it's something that is even
Speaker 1: more of a concern than influenza. We are concerned about
Speaker 1: influenza as a as a disease annually. So it's something
Speaker 1: we need to keep our eyes on and we need
Speaker 1: to keep using anti virals, vaccines and public health messaging
Speaker 1: to make sure that people keep their guard up against it.
Speaker 1: To what extent do we need to be keeping our
Speaker 1: guard up against it? And I asked this in the
Speaker 1: context of our conversation that we had with Amish Adulgia,
Speaker 1: your colleague at the Bloomberg School of Public Health, just
Speaker 1: a few weeks ago, and he really surprised me with
Speaker 1: his answer to my question about boosters, essentially saying that
Speaker 1: you know, for many people, um, he wouldn't suggest a booster. Yeah. Well,
Speaker 1: you know, we are seeing that the severe disease is
Speaker 1: coming through in the populations we expect, the elderly, those
Speaker 1: with secondary medical conditions, those continue to be the at
Speaker 1: risk populations. UM. I think we run the risk of
Speaker 1: thinking about vaccinations against COVID like we do against seasonal influenza,
Speaker 1: and they're still very different diseases, so we still have
Speaker 1: a little bit to learn about how to best use
Speaker 1: these boosters, use these vaccines but I'll also understand that
Speaker 1: the virus is going to constantly be changing, and the
Speaker 1: boosters may not be as effective as we want them
Speaker 1: to be, nor will they be exact effect over the
Speaker 1: over the course of the year. What do you mean
Speaker 1: by that that we're we run the risk of treating
Speaker 1: it in the same way. Is that you know in
Speaker 1: the comparison is we're given the recommendation to get a
Speaker 1: flu shot every year, but perhaps we don't need to
Speaker 1: get a COVID booster every year. Uh, I think we
Speaker 1: probably will. The question is at what time of year
Speaker 1: do we get that booster. UM. COVID really hasn't shown
Speaker 1: the seasonality that we see with flu. So with flu,
Speaker 1: we get our vaccines in the fall because we know
Speaker 1: that in the late fall and winter we're going to
Speaker 1: see a surge of cases. Um, we still haven't seen
Speaker 1: that pattern with COVID nineteen, so we may need to
Speaker 1: adjust the booster time depending on when we see surges
Speaker 1: of cases. Okay, So it is kind of interesting because
Speaker 1: I do think I'm thinking about like what kind of
Speaker 1: community immunity immunity have we built up so far? Do
Speaker 1: you have any idea on that? Yeah, we've we've built
Speaker 1: up a lot of the immunity and the population that
Speaker 1: immunity seems to be protecting more against severe disease than
Speaker 1: it's protecting against infection. So that's a little bit of
Speaker 1: a surprise, I think for us UM and I think
Speaker 1: it's it brings up what we're going to have to
Speaker 1: be dealing with, is we're going to be have to
Speaker 1: dealing with these cases that are going to be occurring,
Speaker 1: perhaps across the entire year, and really paying attention to
Speaker 1: when the situation merits a booster because we're seeing surges
Speaker 1: in in cases, particularly in populations that are highly vulnerable. Okay,
Speaker 1: so we're does it leave in terms where does it
Speaker 1: leave us in terms of variants? Are we going to
Speaker 1: see variants develop that are continuing to be perhaps I
Speaker 1: don't know, more evasive for vaccines, but at the same time, uh,
Speaker 1: not have the strength that earlier variants had. Yeah. I
Speaker 1: think one of the things that we're seeing the signs
Speaker 1: of right now is that the COVID variants that are
Speaker 1: emerging now have some ability to to evade vaccine induced immunity.
Speaker 1: But that's but not a lot. And we think the
Speaker 1: virus is now sort of maybe moving in this little
Speaker 1: area where it's going to be responding a bit to
Speaker 1: the population immunity, but it's not going to make the
Speaker 1: major jumps like we saw when O. Macron first emerged
Speaker 1: a little bit over a year ago. So signs are
Speaker 1: looking good that we're settling into a stage where the
Speaker 1: virus will be mutating, but we'll be able to adjust
Speaker 1: our responses in terms of vaccines and and no strategy
Speaker 1: because we're not seeing major jumps in how the virus
Speaker 1: is behaving like we did during the first two years
Speaker 1: of the pandemic. Is there possibility that at some point
Speaker 1: in the future there could be a variant out there?
Speaker 1: I mean, I mean anything is possible. I guess we
Speaker 1: know that, but are you guys talking about it? You
Speaker 1: know a lot that they could be the possibility of
Speaker 1: once again a variant that shuts kind of society down again,
Speaker 1: or or do we have a sufficient enough playbook that
Speaker 1: we can manage our way through. Well, we are concerned
Speaker 1: about certain populations UM for instance, I you know, compromise
Speaker 1: people who may be able to generate variants that are
Speaker 1: even more evasive or transmissible. UM. A lot of efforts
Speaker 1: are being done to monitor those populations to look for
Speaker 1: those signs. I think the positive sign is that we
Speaker 1: know antivirals are working and we know how to update
Speaker 1: the vaccine. So even if a new variant emerges, the
Speaker 1: response in terms of treatments and vaccines will be much
Speaker 1: much faster now that we know so much about how
Speaker 1: to deal with co B. Still, oftentimes, often days we
Speaker 1: see hundreds of people dying. When will when will that stop? Yeah,
Speaker 1: and that's the big question that we don't have an
Speaker 1: answer to right now. It is important to note that
Speaker 1: we're having lots of people getting infected and dying constantly
Speaker 1: over the year, and that's something we haven't seen with
Speaker 1: the respiratory infection. All other respiratory infections come in waves.
Speaker 1: Um they're gone for long periods of time, and then
Speaker 1: they come and surge back and then they leave. We
Speaker 1: haven't seen that pattern with COVID nineteen. And that's really
Speaker 1: the big variable that is going to impact UM. As
Speaker 1: we mentioned before, boosters and treatments and all those interventions
Speaker 1: that we have. Wow, it's an interesting time. It does
Speaker 1: feel better, but yeah, certainly something that we know we
Speaker 1: have to continue to keep on our rater and we
Speaker 1: do actually when we think about China in terms of
Speaker 1: the reopening of its economy. Dr Andy Pekosh, thank you
Speaker 1: as always, Professor of Molecular Microbiology and Immunology at Johns
Speaker 1: Hopkins University, Bloomberg School of Public Health, of course, supported
Speaker 1: by Michael R. Bloomberg, founder of Bloomberg Help and Bloomberg Philanthropies.
Speaker 1: Joining us on the phone from Baltimore, you're listening to
Speaker 1: the Bloomberg Business Week Podcast. Catch us live week days
Speaker 1: from two to five pm Eastern on Bloomberg Radio, the
Speaker 1: Bloomberg Business Band you Doo. You can also listen live
Speaker 1: to our flagship New York station Just Say Alexa Play,
Speaker 1: Bloomberg e Love and Verdi us Dox. Adding to yesterday's
Speaker 1: Gained a spark by speculation, the FEDS tightening cycle and
Speaker 1: maybe nearing its peak. You know when we were hearing
Speaker 1: from Charlie talking about what's going on the ECB and
Speaker 1: Bank of England constantly global central bankers reminding us, hey, folks,
Speaker 1: is more to come. We still got a fight to
Speaker 1: bring inflation down. Well, it's perfect timing for this week's
Speaker 1: domestic cover story. The story written by Bloomberg New Senior
Speaker 1: Markets reporter Katie Greifeld and Bloomberg News chief correspondent for
Speaker 1: Global macro Markets Liz McCormick. Liz joins us now via
Speaker 1: zoom in New York City along with Bloomberg Business Week
Speaker 1: editor Joel Webber here in our Bloomberg Interactive Broker's studio.
Speaker 1: The cover of this is perfect, Joel. It's clearly a
Speaker 1: FED chair J Powell daring down a bull, and I
Speaker 1: gotta tell you it seems like today and yesterday that
Speaker 1: bull has the upper hand. Yeah, well that was why
Speaker 1: we wanted to do it as a cover story. Um.
Speaker 1: When I think about this year and sort of the
Speaker 1: big stories of the year, this really does feel like
Speaker 1: it's going to be one of the big ones. Is Look,
Speaker 1: we've had the FED that it has been intent on
Speaker 1: continuing to raise rates. Wall Street really wants that cut
Speaker 1: at some point. Uh When and how that all plays
Speaker 1: out is gonna probably impact what the markets do all
Speaker 1: all year long. Um. So, Liz, like we we wrote
Speaker 1: it as a walk up and then yesterday unfolded. What
Speaker 1: do we know now that we didn't know going in?
Speaker 1: And how do you feel about how our cover stories
Speaker 1: hold up? Well? I think the story holds up and
Speaker 1: like Tim said, as of yesterday, the market still kind
Speaker 1: of feels like they have the upper hand. Like chair Pal,
Speaker 1: whether he meant to or not, he didn't kind of
Speaker 1: push back hard enough to kind of break the animal
Speaker 1: spirits that are out there. But I think, like you said,
Speaker 1: this is like all year story, like we're not going
Speaker 1: to know until let's just say the second half. If
Speaker 1: you know, the markets will have capitulated, if if they
Speaker 1: kind of remain strong and inflation is sticky and the
Speaker 1: FED is making clear they are definitely not cutting, or
Speaker 1: if the world changes and we do get a full
Speaker 1: fudge recession and the FED starts leaning, so we're not
Speaker 1: gonna know for a while. So, like you can say,
Speaker 1: round one market, Fed didn't push back, but I just
Speaker 1: think this is gonna be going on for a while
Speaker 1: and right now, I mean maybe Chap wanted just to
Speaker 1: leave the kind of options open, but it was, you know,
Speaker 1: definitely interesting, especially in Europe, like the Charlie was mentioning
Speaker 1: what's happening in the European Central Bank and stuff. The
Speaker 1: bond market rallied even after that, with Leguard saying another
Speaker 1: fifties coming. So the bond market just has this kind
Speaker 1: of bulls taking over what It's interesting, Liz because you
Speaker 1: and Katie included a comment in this from Neil cash Kari,
Speaker 1: of course, the president of the Minneapolis FED, and he
Speaker 1: basically said he's been around long enough to understand that
Speaker 1: there's this optimism when it comes to Wall Street, and
Speaker 1: it seems like optimism is is what is what's driving this.
Speaker 1: But then you include this other part of this, of
Speaker 1: his quote that he gave to the New York Times,
Speaker 1: he said, quote, they are going to lose the game
Speaker 1: of chicken. I can tell you that this is a
Speaker 1: guy who has been known as a dove uh and
Speaker 1: is now coming out increasingly ino and this year hawk ish. Yeah,
Speaker 1: and it's interesting. Our FED team and d C did
Speaker 1: a story a bit back saying, just like you're saying, Kashgari,
Speaker 1: who was the biggest dove, is like become the biggest hawk.
Speaker 1: And I was like curious, Oh, I'd love to call him.
Speaker 1: See what did you think of what your pal said yesterday,
Speaker 1: because you know it didn't kind of embolden the chicken
Speaker 1: fight of the FED winning. But but yeah, I think
Speaker 1: it's pretty telling. And um, I just think that I
Speaker 1: guess the market is supposed to see ahead, especially the
Speaker 1: bond market. Um, sometimes they get it right, sometimes they
Speaker 1: get it wrong. They've been kind of all over the place.
Speaker 1: But I mean the market to seize the pivot. And
Speaker 1: we all know bonds got brutalized last year, as did stock,
Speaker 1: so people felt like, oh, higher yields if they they
Speaker 1: want to get ahead of it. But you know, who
Speaker 1: knows at the end of the year, you know who's
Speaker 1: in the red or who's in the green. Well, what
Speaker 1: I love about the story, you know, Lizz, is I
Speaker 1: feel like it's just a reminder that there's been some
Speaker 1: head fakes before guys, and we got a little bit
Speaker 1: of exuberances, certainly into financial assets, only to be disappointed
Speaker 1: with the FED coming out and reminding us, hey, guys,
Speaker 1: you know we're still raising rates, were still have to
Speaker 1: bring down inflation. Having said that, Liz, when is the
Speaker 1: point you know when investors they're forward looking, right, you know,
Speaker 1: they're discounting, they're looking ahead. Is that the trade that
Speaker 1: we're seeing today or do you think based on kind
Speaker 1: of where we are and what we heard from J.
Speaker 1: Powell and Company yesterday, they're getting too ahead of themselves,
Speaker 1: meaning financial markets getting too ahead of themselves. Well, I
Speaker 1: will tell you after yesterday, I scoured and read everything.
Speaker 1: I made a million phone calls because it's it's the question, right, Carol, Like,
Speaker 1: and I think a lot of people there's there's people
Speaker 1: in both camps, even in the market saying this has
Speaker 1: gone way too far. Um, some saying yeah, bond markets
Speaker 1: supposed to get ahead, and but there are people warning
Speaker 1: in stocks like, well if the Fed, even if they
Speaker 1: just stop one more hike, they're worried about earning slowing down,
Speaker 1: and that both things can't go up, stocks and bonds.
Speaker 1: So I don't know. I mean March that we have
Speaker 1: a new set of dot plots, you know, where the
Speaker 1: Fed gives their forecast for the policy rate. That's going
Speaker 1: to be interesting to see. Like they were at five
Speaker 1: point one in the median for the end of this
Speaker 1: year in the December dots. If that holds again, which
Speaker 1: shows them saying no cuts, can the market keep going?
Speaker 1: You know, that's the big question. So like, um, one
Speaker 1: of our folks and forgetting names now wrote a great
Speaker 1: piece saying like you can keep the dance party going,
Speaker 1: but maybe only till March. You know, Let's see what happens,
Speaker 1: then there's there's a lot more data between now and then,
Speaker 1: So let's talk about those duck pluts because that that
Speaker 1: will be kind of the next moment that um, I
Speaker 1: think the the you know, people are going to be
Speaker 1: all over all over this. And not to say Jip
Speaker 1: Tob might not need to talk again to cool down
Speaker 1: these spirits a little bit. But but Liz, what do
Speaker 1: you what do you think the market will be especially
Speaker 1: looking for in that next round with the fit. Yeah,
Speaker 1: I think it's if that median dot moves down from
Speaker 1: five point one, um, which means they could do another
Speaker 1: hike and then maybe be cutting that those dots could
Speaker 1: show And and that was one thing that happened yesterday
Speaker 1: in the press conference. He was asked about that, like basically,
Speaker 1: do you stand by those December dots? And he was like, well,
Speaker 1: you know, and then the market didn't like that. He
Speaker 1: just didn't say, yes, we do. He said, you know,
Speaker 1: that's what we put at the time where we'll revisit
Speaker 1: the data, which is fair and you know, so some
Speaker 1: people didn't like that, but I will add that he
Speaker 1: did say and if things change, those dots could go higher.
Speaker 1: So it wasn't that he said they're going to go lower.
Speaker 1: So I think, you know, sometimes people in the market
Speaker 1: grab what they want to hear and a little bit
Speaker 1: of like a roor track test, you know. So what still,
Speaker 1: what's stayed with me was that he's like, we're still
Speaker 1: we we're gonna bring it down to inflation. We're at
Speaker 1: the Fed funds and we're gonna get inflation back down
Speaker 1: to two per soon. We heard that from e C
Speaker 1: B two right, seems real. Like I was like, man,
Speaker 1: maybe it's four percent, maybe three pers No, No, it's
Speaker 1: gonna be too exactly. So that was pretty clear. Um.
Speaker 1: Great masses, great story, great cover story of Bloomberg Business Week,
Speaker 1: so relevant to uh this week's news. Liz McCormick, chief
Speaker 1: correspondent for Global Macro Markets at Bloomberg News, writing it
Speaker 1: with Bloomberg's Katie Greifeld, and our thanks, of course to
Speaker 1: Joe Weber, editor of Bloomberg Business Week. This is Bloomberg
Speaker 1: business Week inside from the reporters and editors who bring
Speaker 1: you America's most trusted business magazine, plus bloom all business,
Speaker 1: finance and tech news. The Bloomberg Business Week Podcast with
Speaker 1: Carol Masser and Tim Stinebec from Bloomberg Radio. All Right, everybody,
Speaker 1: we are focused certainly on this rally. We're focused on
Speaker 1: the tech earnings after the closing bail. But you know,
Speaker 1: as we talked with our Mike McKee earlier, we did
Speaker 1: get some economic reports earlier this morning, including reads on
Speaker 1: nonfarm productivity that was good, a rise in productivity that
Speaker 1: helps the Fed to bring down inflation. But we also
Speaker 1: did get a read on the labor market. Tim Yeah, well,
Speaker 1: let's tomorrow. We got a big labor number team taming.
Speaker 1: So the question is does it show softness, that softness
Speaker 1: that the Fed wants to see. Let's get into with
Speaker 1: Julia Pollock, chief economist and ZIP recruiter with a job's
Speaker 1: report preview and a survey of recently hired workers. She
Speaker 1: joins us via zoom from Los Angeles. Julia, always good
Speaker 1: to have you with us. We've spoken to you in
Speaker 1: the past, and you and the other folks and ZIP
Speaker 1: recruiter have used the term that that workers have been
Speaker 1: in the last couple of years in the driver's seat.
Speaker 1: I want to go back to that comment. Are they
Speaker 1: still in the driver's seat? So the interesting thing about
Speaker 1: labor market data the last couple of months is that
Speaker 1: it's been like a roller coaster ride with one month suggesting,
Speaker 1: you know, an imminent downturn and uh, and the next
Speaker 1: pretty rosy. So uh, this week things are looking up
Speaker 1: for the for the US job seeker. We had productivity
Speaker 1: data show a big increase. We had job openings urge
Speaker 1: six thousand to eleven million again, so there are one
Speaker 1: pot nine job openings for every unemployed American. We we
Speaker 1: also saw you know, the stock market pick up, consumer
Speaker 1: confidence increase, European economy is doing better than expected. And
Speaker 1: so right now it looks like perhaps the labor market
Speaker 1: is it's still very tight. It's not softening, it's not slackening,
Speaker 1: and the employers are going to get a route awakening
Speaker 1: if they hope that the bosses are back in town
Speaker 1: and that they'll be calling the shops. LA give us
Speaker 1: perspective there, are we back to levels pre pandemic or
Speaker 1: we like, give me a little perspective here. So some
Speaker 1: labor market indicators are tilting back to normal, for example,
Speaker 1: working hours and temp help services. So at the start
Speaker 1: of the pandemic, when there were these really acute labor shortages,
Speaker 1: employers were short staffed, and they have to squeeze as
Speaker 1: much productivity as possible out of each individual worker and
Speaker 1: excessively relied on contract workers, temp help workers, and overtime
Speaker 1: time hours that led to burn out, to a work
Speaker 1: life balance crisis and a retention crisis. Now we see
Speaker 1: that you know, work week has fallen back down from
Speaker 1: thirty six hours to thirty four point three hours, at
Speaker 1: the bottom range of of what's good at normal times.
Speaker 1: Usually a decline in working hours is a bad thing.
Speaker 1: It shows that the economy is losing steam, that employers
Speaker 1: are cutting hours of workers and will cut actual headcount later.
Speaker 1: But this time a decline may actually be good. It
Speaker 1: may show that the economy is recovering normal staffing, the
Speaker 1: companies are back at full steam and able to sort
Speaker 1: of restore normal practices again. So so far, most of
Speaker 1: the indicators that have been negative, that have been falling,
Speaker 1: actually show signs of renormalization rebalancing. The question is how
Speaker 1: far further they'll fall. Well, all of this sounds pretty
Speaker 1: great if you're an American worker, of which there are
Speaker 1: tens of millions of those you know who. It doesn't
Speaker 1: sound great too, is anyone on the federal reserve, Because
Speaker 1: if you're seeing jolts. Data we saw yesterday that shows
Speaker 1: that for everyone looking for a job here in the US,
Speaker 1: there are one point nine positions open. That means that
Speaker 1: there could be concerns about a wage price spiral. What
Speaker 1: do you make of it? Well, so far in recent months, UH,
Speaker 1: inflation has come down quickly, and it's come down more
Speaker 1: quickly than wages, but wage growth has also moderated UH,
Speaker 1: and so that suggests that they're a wage price spiral
Speaker 1: hasn't set. In that said, we now have a situation
Speaker 1: where in the last five of six months U S
Speaker 1: workers have actually seen real wage gains because wages are
Speaker 1: growing faster than than inflation than prices, and so perhaps
Speaker 1: they all now feel confident again and ready to go
Speaker 1: out and buy Bye Bye, and that could drive prices up.
Speaker 1: So it's a delicate balance and news that's good news
Speaker 1: for workers may be good news in the short term,
Speaker 1: but bad news in the long run if it fuels
Speaker 1: further inflation and forces the said to raise rates higher
Speaker 1: and keep them higher for longer. Yeah, that's exactly where
Speaker 1: we are. We can each make the side of the argument.
Speaker 1: It's a tricky point. Although markets certainly leading in in
Speaker 1: a big way in the last day or so in
Speaker 1: terms of risk on and believing things are going to
Speaker 1: get easier and the economy will be okay. Um Jelia,
Speaker 1: what are some of the interesting trendsuessing when it comes
Speaker 1: to job postings on your on your guys site. So,
Speaker 1: one thing we found very interesting was that new hires,
Speaker 1: people who just got hired in the last six months
Speaker 1: got a better deal than those hired in the first
Speaker 1: half of the year. And not surprising because there are
Speaker 1: so many indicators that the lay of the market has
Speaker 1: softened a little bit. Well, it doesn't seem to be
Speaker 1: the case. When you look at new hires. UH. Thirty
Speaker 1: six percent of them got recruited to their jobs. They
Speaker 1: didn't have to go out and look for a job.
Speaker 1: The job found them. About of them got signing bonuses.
Speaker 1: That's very large historically. UH. Then a huge share of
Speaker 1: them managed to migrate out of in person jobs and
Speaker 1: into remote or hybrid jobs. Thirty percent got a hybrid job.
Speaker 1: Only eight percent we're working in a hybrid situation before,
Speaker 1: eighteen percent or fully remote. Only twelve percent were fully
Speaker 1: remote before. UH. And those who are going into the
Speaker 1: office have managed to cut their commutes substantially from thirty
Speaker 1: minutes on average to twenty three minutes, and so it
Speaker 1: seems like all around, workers are getting a better deal.
Speaker 1: They're getting a better deal. But I'm wondering if they're
Speaker 1: always going to be getting a better deal. I'm wondering
Speaker 1: if this is going to be a fundamental shift in
Speaker 1: the way that Americans have a relationship with work. Even
Speaker 1: in a downturn, do you still see employees having the
Speaker 1: leverage of saying, Okay, I only want to come into
Speaker 1: the office two or three days a week. So you
Speaker 1: do see a backlash among some companies. There are several
Speaker 1: companies in recent weeks that have announced return to the
Speaker 1: office five days a week mandates whenever this happens, though
Speaker 1: many companies very soon have to backtrack because of such
Speaker 1: a huge backlash among workers. Overall, we're still seeing the
Speaker 1: share of remote postings within high remote potential industries like
Speaker 1: tech and finance go up. Companies are increasingly shifting from
Speaker 1: taking over two floors in an office building to taking
Speaker 1: just one. UH from uh letting people work remotely on
Speaker 1: a case by case basis to to sort of classifying
Speaker 1: the job as remote from the get go. And so
Speaker 1: they're making the kinds of investments and policy changes that
Speaker 1: support long term remote work. Uh. But you know, it
Speaker 1: is a difficult issue, and they're also dealing with some
Speaker 1: of the challenges there for company culture and productivity and collaboration.
Speaker 1: What do you think is the biggest factor or what
Speaker 1: do you want focusing on in terms of maybe seeing
Speaker 1: a different trend line when it comes to the labor market,
Speaker 1: you have pretty enthusiastic I've got to say, so, what
Speaker 1: would what would change that dramatically? Are you concerned about
Speaker 1: the FED overdoing it here? I'm very much concerned about
Speaker 1: the FED overdoing it because we already see that it's
Speaker 1: had a large negative effect on business investment, on housing
Speaker 1: market activity. Uh, and if that continues, there will almost
Speaker 1: certainly be an effect unemployment. Uh. You know, So the
Speaker 1: question is, you know, how how far the FED will
Speaker 1: have to go? For now, what the Fed has done
Speaker 1: has sort of almost miraculously, immaculately uh, taken sort of
Speaker 1: froth out of the market, you know, uh, destroy it
Speaker 1: almost twelve trillion dollars worth of value in the stock
Speaker 1: market and in crypto without causing real damage to the
Speaker 1: real economy into main street that's pretty remarkable. It's sort
Speaker 1: of almost a best case scenario. UH. And the question
Speaker 1: is just along that can last. So I spoke about
Speaker 1: the idea of fundamental shifts in the way Americans work,
Speaker 1: What about when it comes to hybrid work and the
Speaker 1: idea that you know, Americans are now in an environment
Speaker 1: where it's likely that many jobs are going to allow
Speaker 1: you to come into the office. Sometimes they're going to
Speaker 1: allow you to work from home, and they're only going
Speaker 1: to require a few days a week. I'm wondering, you know,
Speaker 1: if you see that in an environment with layoffs, I
Speaker 1: have to go back to this once again. If you
Speaker 1: see that, um, that same mentality continuing absolutely so. Right now,
Speaker 1: layoffs are still so low by historical standards. I mean
Speaker 1: they're down two below what was normal before the pandemic.
Speaker 1: There are only three sectors where that is not the case,
Speaker 1: and those are transportation warehousing. Because of the shift back
Speaker 1: to services from goods UH information because of the way
Speaker 1: the tech sector has been hit by by FED rate
Speaker 1: increases UH and UH financial services or banking dealmaking I
Speaker 1: p o s of all have been put on pause
Speaker 1: while the FED is raising rights and sort of financial
Speaker 1: conditions are uncertain. Uh, even in those industries, though, remote
Speaker 1: work is is here to stay because it saves workers
Speaker 1: time and money, and it saves companies money as well.
Speaker 1: Just real quick. Does it also give companies an opportunity
Speaker 1: to hire people who they in past wouldn't have been
Speaker 1: able to hire? Is it more efficiently? Well? So many
Speaker 1: of our clients have converted jobs from fully in person
Speaker 1: jobs to remote jobs or hybrid jobs, and they've seen
Speaker 1: recruitment expand dramatically. Their retention has increased, and wage growth
Speaker 1: pressures have fallen because they can now recruit across the
Speaker 1: country in lower cost places, so they have gain access
Speaker 1: to better talent at a lower price. All right, listen,
Speaker 1: we appreciate your time today. Julia Pollock. She is chief
Speaker 1: economist or ZIP recruiter, joining us via Zoom from Los Angeles.
Speaker 1: Of course, when we did get weekly jobless claims, we
Speaker 1: have been getting Challenger ADP data and of course we
Speaker 1: get the monthly jobs read from the government tomorrow, which
Speaker 1: markets are certainly uh focusing on in a week that
Speaker 1: has just been full of so much. And we've seen
Speaker 1: a lot more positive sentiment come back into the financial
Speaker 1: Law one eighty three thousand is the number expected tomorrow
Speaker 1: by economist survey by Bloomberg. That's down, Carroll, only three
Speaker 1: thousand from the last month of six thousand. We'll see
Speaker 1: if there are revisions though, yeah, exactly. It's a good point,
Speaker 1: and we'll see what's going on with wages and the
Speaker 1: cost of wage increases. All right, this is Bloomberg. You're
Speaker 1: listening to the Bloomberg Business Week podcast. Catch us live
Speaker 1: weekdays from two to five pm Easter on Bloomberg Radio.
Speaker 1: The Bloomberg Business a band you doo. You can also
Speaker 1: listen live to our flagship New York station, Just say
Speaker 1: Alexa play Bloomberg e Love and Dirty. Alright. We are
Speaker 1: keeping a watch on the markets, no doubt about equity
Speaker 1: markets surging. They're off their best levels of the session,
Speaker 1: but we're seeing another leg up. Uh. This is investors
Speaker 1: wager that rate hike cycles on both sides of the
Speaker 1: Atlantic are nearing an end. We've of course heard from
Speaker 1: fair Fed chair J Powell. We've also heard from ECB
Speaker 1: president Christine Legard, also Christine Legard, excuse me, and also
Speaker 1: from the Bank of England. We've got big tech earnings.
Speaker 1: There's a lot going on, no doubt about it, and
Speaker 1: for more on where we are at least technically, We've
Speaker 1: got Randy Watts. He's chief investment strategist at O'Neil Global Advisers.
Speaker 1: Randy tim joins via zoom in Miami. Hey Randy, good
Speaker 1: to have you with us. How are you. It's good
Speaker 1: to hear from you, guys. I hope all as well
Speaker 1: In New York it is it is um so technicals.
Speaker 1: On a day like today, in a week like today,
Speaker 1: in a week like this week, in a year so
Speaker 1: far where the Nasdaq Composit is up, what are the
Speaker 1: technicals telling you about this rally? The market's tone has
Speaker 1: dramatically changed this year. It is a much broader market.
Speaker 1: Some of the growth sectors are starting to re reassert themselves.
Speaker 1: You know, the Russell two thousand is up over twelve
Speaker 1: percent this year. This is all very, very positive and
Speaker 1: while it's too too early to say that a new
Speaker 1: bull market is started, these are the kind of things
Speaker 1: you see at the beginning of a big bull leg.
Speaker 1: So I think you have to interpret the data positively.
Speaker 1: And as you said a second ago, if you look
Speaker 1: at where the bond market is right now, it's dialing
Speaker 1: in a chance of a rate increase in March, only
Speaker 1: a chance of a rate increase in May. If you
Speaker 1: listen to what Powell said yesterday, he kind of talked
Speaker 1: about two more raises. If we get to the middle
Speaker 1: of the year and we're done with the FED tightening cycle,
Speaker 1: I think the outlook for equities can be pretty positive. Interesting.
Speaker 1: So Randy NASAQ one hundred, we've been talking about it
Speaker 1: throughout the day, Um, looking from bottom to top here
Speaker 1: up about here? Um, what more do you need to see?
Speaker 1: Just seeing it alone isn't enough to say a new
Speaker 1: bullmarket is uh is underway in tech. I mean, I
Speaker 1: think what we'd like to see here is maybe a
Speaker 1: little bit of consolidation, either sideways moving or a slight
Speaker 1: pull back. But we want to see these averages both
Speaker 1: the SMP and the NASTICS stay above their two hundred
Speaker 1: day that's about five lower for each. But on the SMP,
Speaker 1: if you look at it technically, if you're getting a
Speaker 1: positive cross of the twenty one day in the fifty
Speaker 1: day through the two hundred. That hasn't happened yet in
Speaker 1: the NASTAC, but we're hopeful that can happen over the
Speaker 1: next couple of months. So again we're pretty positively inclined
Speaker 1: that O'Neil, and we're seeing a lot of you know,
Speaker 1: positive action. And then finally, earnings, while coming in lower
Speaker 1: year to year, are not coming in dramatically worse than expected,
Speaker 1: so I think that's giving some strength to investors as well.
Speaker 1: The bar was very low. They're coming in about down
Speaker 1: about minus two point three. People were expecting down about
Speaker 1: three percent, so it is down, but it's sort of
Speaker 1: less bad than feared, and if we can go through
Speaker 1: this year. But by the way, people are now essentially
Speaker 1: expecting flat earnings for the year for the SMP, so
Speaker 1: that bar has come down very low. I think everyone
Speaker 1: on the by side expects it to be a down
Speaker 1: year for earnings. So as long as earnings don't absolutely crater,
Speaker 1: I think you're setting up for a very positive kind
Speaker 1: of second half of the year story for equities. But
Speaker 1: it's not hard to to find companies that are saying, hey,
Speaker 1: things out there are not so great. I mean, look
Speaker 1: at Haines Brands today, shares are falling the most ever
Speaker 1: after the company said it expects muted consumer demand given
Speaker 1: macro economic uncertainty. We're gonna hear from qual calm after
Speaker 1: the bell. Analysts are expecting a revenue decline of about
Speaker 1: ten percent because of a worldwide slowdown in phone sales.
Speaker 1: Consumers are feeling the pain, so they're not, you know,
Speaker 1: buying expensive things like phones. There are some red flags
Speaker 1: out there. It's just a question of to me how
Speaker 1: far ahead the market is looking. There. There are some
Speaker 1: red flags, but I don't think anyone expects this to
Speaker 1: be a good year for the economy or a good
Speaker 1: year for earnings. So the markets a discounting mechanisms. So
Speaker 1: the question is, as we move through the year, is
Speaker 1: it going to come in worse or better than than
Speaker 1: what's expected. I think importantly with the economy, the jobs
Speaker 1: picture is hanging in there. We're gonna get unemployment tomorrow.
Speaker 1: The last unemployment read was three point five. People are
Speaker 1: looking for three point six. While the economy is slowing,
Speaker 1: jobs are hanging in and that means consumer spending is
Speaker 1: not totally tanking. If we can get through this rate
Speaker 1: cycle without jobs unemployment falling apart, then in the second
Speaker 1: half of the year you could be talking about a
Speaker 1: better economy in four The market looks you know, six
Speaker 1: to twelve months ahead, So I think there's a lot
Speaker 1: of things that could happen over the next six months
Speaker 1: that could make you feel a lot better about the future.
Speaker 1: And that's very different than where we were a year ago,
Speaker 1: where we were thinking about what was ahead of us
Speaker 1: and was all negative things. But we've had we've had
Speaker 1: some head fakes the cover of the domestic issue of
Speaker 1: Bluebark Business because this whole idea of how investors at
Speaker 1: some point Randy have thought that the FED was done.
Speaker 1: We saw that last year, only to be surprised that
Speaker 1: the FED again wasn't done and was sticking to what
Speaker 1: it was saying. Um, is that Why is it different
Speaker 1: maybe than what we saw last year? Well, I think
Speaker 1: if you listen to Powell's commentary yesterday, he gave an
Speaker 1: indication that they think they're much closer to the end
Speaker 1: than they were. Second, some of the important inflation numbers
Speaker 1: are starting to come down. CPI is decelerating, pc is decelerating,
Speaker 1: and importantly today, labor costs are decelerating. Labor costs last
Speaker 1: month were up one point one per cent. The expectation
Speaker 1: was that number was gonna be one point five and
Speaker 1: a month ago that number was two. So of labor
Speaker 1: costs can cool a little bit without having unemployment really spike,
Speaker 1: and that takes some pressure off the FED to keep raising.
Speaker 1: And again, if we continue to see the trend where
Speaker 1: we've seen in CPI, which is deceleration, that I think
Speaker 1: we're on the right path and I think the FED
Speaker 1: is a lot closer to being done. I'm pretty optimistic
Speaker 1: the FED tightening cycle is going to end this year,
Speaker 1: and it's it's likely to end by midyear, which is
Speaker 1: which is really not that far a lament. All right, Randy,
Speaker 1: thank you so much. Always appreciate it. Randy Wattsy's chief
Speaker 1: investment strategists at O'Neil Global Advisors, joining us via zoom
Speaker 1: in Miami. This is the Bloomberg Business Week podcast, available
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