Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. Well, when we talk about
Speaker 1: content moderation, we often think about companies like Facebook and
Speaker 1: Facebook's Instagram app, and Twitter increasingly. I guess you could
Speaker 1: say TikTok falls into that conversation as well. But what
Speaker 1: about YouTube, the video juggernaut that Google bought for a
Speaker 1: paltry one point six five billion dollars back in two
Speaker 1: thousand six. Well, a new book details YouTube's ongoing struggles
Speaker 1: with the blurry lines of extremist speech. That book written
Speaker 1: by Mark Berg in our colleague here at Bloomberg News.
Speaker 1: He's technology reporter for or Bloomberg News. He joins us
Speaker 1: on the phone from San Francisco. His story is featured
Speaker 1: in the upcoming issue of Business Week magazine. It's an
Speaker 1: excerpt from that book. You can read it now though
Speaker 1: on the Bloomberg terminal and of course online at Bloomberg
Speaker 1: dot com slash business Week. The book coming out, by
Speaker 1: the way on September six. Also joining us this afternoon,
Speaker 1: Joel Webber, the editor of Bloomberg Business Week. He joins
Speaker 1: us from the Bloomberg Interactive Broker studio. Joel, when you
Speaker 1: think about excerpting a book the way you did with
Speaker 1: with Mark's book, how do you choose which part and
Speaker 1: to focus to focus on to actually excerpt in the magazine. Well,
Speaker 1: we read every single page months in advance of the book,
Speaker 1: and then we basically grilled him on, you know, the
Speaker 1: best thing that we could possibly extract. So pretty collaborative. Uh.
Speaker 1: And in this case, I think Mark was the one
Speaker 1: who initially highlighted this and this this particular um excerpt,
Speaker 1: and we we agree with them because boy, there's like
Speaker 1: the central tension that I think this article, which again
Speaker 1: let's hear it up for Mark's forthcoming book, like comment
Speaker 1: subscribe inside YouTube's chaotic rise to world domination. Um. You
Speaker 1: know you tak YouTube is this massive juggernaut. Um. They
Speaker 1: were successful in fighting off terrorism not so long ago,
Speaker 1: but as Mark points out in this excerpt, white nationalism
Speaker 1: has proven to be a different kind of struggle. And
Speaker 1: you know, Mark, I'm just gonna turn it over to you.
Speaker 1: Why why could they attack or combat the terrorism that
Speaker 1: was well, you know, on the platform, Uh, versus what
Speaker 1: we're seeing now with white nationalism? Why can why can
Speaker 1: they do one thing but not necessarily the other? Yeah,
Speaker 1: I mean, you know, thanks for having me. I think
Speaker 1: that this is I thought it was a great story
Speaker 1: because it's it does get at this like very fascinating dilemma.
Speaker 1: But it's not just um YouTube, it's always it, I
Speaker 1: think more than any need a company, just given its size.
Speaker 1: But it's something that it's affected all all major Internet platforms. UM.
Speaker 1: And partly I think there's there's a couple different reasons.
Speaker 1: One is just the nature of the way the government's
Speaker 1: work that there there's been a lot more in Western
Speaker 1: government's pressure and willingness to sort of tackle Island Islamness extremism. Uh.
Speaker 1: And we saw like there are sort of tech collaborations
Speaker 1: that in mind. There are repositories, there are sorry, there
Speaker 1: are lists of like known terrorists that that YouTube uses,
Speaker 1: and they can ban these certain figures. Um, there's YouTube
Speaker 1: is a is a gigantic digital advertising is very responsive
Speaker 1: to its advertisers. The part of the book's opening scene
Speaker 1: is is this is June and when they're in middle
Speaker 1: of this major boycott UM over videos some of which
Speaker 1: were like isis allies that you know, household brands were sponsoring,
Speaker 1: and these advertisers put pressure on YouTube and kind of
Speaker 1: force them to act in a way that they hadn't before. UM.
Speaker 1: And then once they were able to come clean up
Speaker 1: the system to make it a metabal the the these
Speaker 1: ads when like weren't sponsoring videos that UH marketers wanted,
Speaker 1: there was less pressure for them. UM. So I think
Speaker 1: there's a combination where it was very easy politically addressing
Speaker 1: white nationalism is a more complicated, especially in the US
Speaker 1: contemporary politics UM problem in the thread, and there was
Speaker 1: less pressure from regulators and and advertisers at the time. Hey, Mark,
Speaker 1: how do people and machines do this? There's a passage
Speaker 1: from your book, and indeed from this excerpt in the magazine.
Speaker 1: UM that includes the phrase use your judgment when talking
Speaker 1: content moderation. I mean that's not a necessarily prescript rule, right, yeah,
Speaker 1: I thought that was. So this was YouTube was really
Speaker 1: uh it's hard for us to appreciate, but this was
Speaker 1: in This was in two dozen six starting towards and
Speaker 1: five does and sixes. And I think when that this
Speaker 1: as they ran like, um, some of their first sort
Speaker 1: of policy frameworks. And this was really before content moderation
Speaker 1: existed at the size and the internet. Uh and and
Speaker 1: YouTube had a problem that that you know, Facebook and
Speaker 1: other sort of text based didn't have, which is they
Speaker 1: have video, and they have moving images, and they have
Speaker 1: like complications and and all that brings and so I
Speaker 1: you know, this was a team that was pretty scrappy
Speaker 1: and sort of inventing this on the fly. UM. Like
Speaker 1: a lot of them were pretty well versed in the
Speaker 1: like weird dark recesses of the internet. UM. And so
Speaker 1: use your judgment, uh was there were at the time
Speaker 1: a lot more of a like human sort of you
Speaker 1: can call it editorial um, perspective and judgment about where
Speaker 1: the lines withdrawal. And this was they sort of viewed
Speaker 1: YouTube as this was a community of users and video
Speaker 1: broadcasters and they sort of wanted videos that within the
Speaker 1: boundaries of that community. You know, fast forward a few
Speaker 1: years that they become this global platform and moderation is
Speaker 1: this very complicated process, and that goes down from like
Speaker 1: decisions and a rule book through you know, teams at
Speaker 1: YouTube and across the globe to these they largely sort
Speaker 1: of outsource to contract employees that will screen footage um
Speaker 1: and you know in the Philippines and India, in Dublin,
Speaker 1: in California. Uh. And so it's a complicated process where
Speaker 1: the company increasingly wants to rely on machine learning systems
Speaker 1: as much as possible, in part because machine learning systems
Speaker 1: can just process so much video better faster than humans. Uh.
Speaker 1: And they're sort of less, They're they're impartial, and they're less.
Speaker 1: You know that Google cannot be accused of by us
Speaker 1: more as if they can point and say, like, listen,
Speaker 1: we have a we have a policy, rule book, and
Speaker 1: we have machine systems. We don't have humans with with
Speaker 1: biases making new sysion decisions. You know that bias uh.
Speaker 1: Part there is a huge element of where this extra
Speaker 1: kind of uh culminates, right because there you know, one
Speaker 1: of one of the things that YouTube Offton says is
Speaker 1: that dealing with the threat of like Islamist extremism on
Speaker 1: the platform proved easier because you know, multiple governments agree
Speaker 1: on those standards, right, whereas with white nationalism there there
Speaker 1: isn't that same unanimity. So I'm I'm wondering where does
Speaker 1: that Where does that leave things? Because it means that
Speaker 1: there's more reliance on AI and the code. You know,
Speaker 1: ultimately the code is what what runs everything here? Uh
Speaker 1: where does that really leave things? As as you know,
Speaker 1: society continues to have these massive flare ups and with
Speaker 1: about thirty seconds, Mark, Yeah, I think, I mean, I
Speaker 1: think that they've made some significant changes and partially because
Speaker 1: of some tragedies that they witnessed. Christi shooting. We talked
Speaker 1: about the story even the most recently Buffalo shooting. Like
Speaker 1: every time there is an incident like this, um that
Speaker 1: is like often sometimes these events are like live stifmen
Speaker 1: live stream on on YouTube. So they have taken action
Speaker 1: because of like pressure from their employee base and from
Speaker 1: politicians and from some of these big moments. Well, it's
Speaker 1: a great read, Mark, It's an important excerpt, and congratulations
Speaker 1: on the book. The book is called Like Comments, Subscribe
Speaker 1: Inside YouTube's Chaotic Rise to World Domination. It comes out
Speaker 1: September six, but read this excerpt now. It's featured in
Speaker 1: the upcoming issue of Bloomberg Business Week magazine. You can
Speaker 1: also read it now on the Bloomberg terminal and at
Speaker 1: Bloomberg dot com Slash business Week. Mark Bergen, technology reporter
Speaker 1: for Bloomberg News, along with Joe Weber, the editor of
Speaker 1: Bloomberg Business Week. You're listening to Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: Twitter shares are lower by more than one point nine
Speaker 1: percent today, this after Elon Musk is asking a Delaware
Speaker 1: judge to let him amend his counterclaims against Twitter, after
Speaker 1: saying earlier that new whistleblower revelations add to his argument
Speaker 1: to walk away from his forty four billion dollar purchase
Speaker 1: of the company. Katie, I don't know about you, but
Speaker 1: my head's kind of spinning thinking of about the ongoing
Speaker 1: saga between Elon Musk and Twitter. We have months of
Speaker 1: content here. Well, I know somebody who's very busy is
Speaker 1: out in the West Coast. We're talking about Kurt Wagner.
Speaker 1: He's technology reporter for Bloomberg News. He joins us this
Speaker 1: afternoon on the phone from San Francisco. Kurt, I don't
Speaker 1: know how you're thinking about this in terms of content,
Speaker 1: but certainly good I think for job security because Elon
Speaker 1: Musk has got you his he's keeping you busy. Um,
Speaker 1: what do we need to know? What does our audience
Speaker 1: need to know? In the latest between Elon Musk and Twitter? Um,
Speaker 1: there were kind of two things that happened today and
Speaker 1: they were both versions of things that have already happened,
Speaker 1: but with new information. The first is that Elon Musk
Speaker 1: asked the judge if he could revise his counterclaims against Twitter.
Speaker 1: So when Twitter sued him, Musk basically sued them back.
Speaker 1: And now he's saying, I want to update and revise
Speaker 1: that lawsuit now that I have more information from this
Speaker 1: whistleblower that I didn't have a month ago, right when
Speaker 1: I when I sent my original counterclaims. So he's asking
Speaker 1: the judge for permission to do that. Secondly, he sent
Speaker 1: a letter to Twitter confirming that he's trying to walk
Speaker 1: away from the deal again. He did that already to
Speaker 1: He did that on July eighth. But this new letter
Speaker 1: he sent, which is again saying I'm walking away from
Speaker 1: this deal, now includes more information from the whistleblower, which
Speaker 1: again he didn't have on July eight. So essentially he's
Speaker 1: trying to bring all the whistle blower information and incorporate
Speaker 1: it into his defense. Um, and he's bringing the whistle
Speaker 1: blower kind of front and center in this whole thing.
Speaker 1: And how good is this for Elon Musk? Because actually,
Speaker 1: Kurt you and I were talking about this on Bloomberg
Speaker 1: Technology yesterday. A few people have made the argument that
Speaker 1: this really bolsters Musk's claims when it comes to those
Speaker 1: bots and those spam accounts. But does that hold water? See,
Speaker 1: I'm less convinced that it actually helps him on the
Speaker 1: bot and spam argument, but I am you know, I
Speaker 1: think I do think that there might be another argument here,
Speaker 1: which is that he's essentially saying, this is a company
Speaker 1: that's you know, hasn't been regular Corry has been compliant
Speaker 1: with regulatory demands, right, they have a constent degree with
Speaker 1: the FTC around privacy related stuff, and the whistle blowers
Speaker 1: saying the company is not following that and they're not
Speaker 1: adhering to that. And so where I think the whistle
Speaker 1: blower's argument doesn't really hold when it comes to the
Speaker 1: box stuff. You know, if he is telling the truth,
Speaker 1: and if and if it's proved out that the claims
Speaker 1: he's making are legit, well then the company could be
Speaker 1: in other types of financial issues, right, that could be
Speaker 1: facing fines, that could be facing regulation. And that's the
Speaker 1: kind of thing that you know, Ellen might say, Hey,
Speaker 1: I'm you know now buying a company. I didn't realize
Speaker 1: there was all this red tape around it. Um, you know,
Speaker 1: this is this is new information that I didn't know,
Speaker 1: and therefore it should let me get out of this deal. Well, Curtis,
Speaker 1: I mean, we can't see the future, but we're gonna
Speaker 1: ask you to look into your crystal ball and you know,
Speaker 1: look a few weeks down the line into what the
Speaker 1: Delawe Delaware Chance to Record is thinking. I mean, I mean,
Speaker 1: how does this end? I'm mean Twitter continues to um
Speaker 1: use quite strong language about their intention, right, which is
Speaker 1: that they have every intention to enforce the original murder agreement.
Speaker 1: And to me, I don't think you use that language
Speaker 1: unless you really do feel that you have a good
Speaker 1: case here, and so I think from the Twitter side,
Speaker 1: you know, they want to take this to trial. They
Speaker 1: want to they think they have a winning hand, and
Speaker 1: they want to go and prove that out. Um, I
Speaker 1: do think there's a realistic chance that these sides settle.
Speaker 1: I don't have reporting to back that up. I don't
Speaker 1: even know if those types of conversations are happening, But
Speaker 1: I just think about the unknowns of going into a trial, right,
Speaker 1: you're really saying, you're you're putting all of this at
Speaker 1: the decision of one person, And I kind of feel like,
Speaker 1: if you're Twitter or Elon, there's just a lot of
Speaker 1: incentive to kind of hammer out in agreement before you
Speaker 1: get there, so that you're not necessarily going for either
Speaker 1: a forty four billion dollar deal or a zero dollar deal.
Speaker 1: You could, you know, maybe make peace somewhere in the middle.
Speaker 1: And that does seem like a reasonable thing that still
Speaker 1: could happen. It still could happen, But I mean, what
Speaker 1: kind of odds would you place on that. I know
Speaker 1: it's a bit impossible and you don't want to speculate
Speaker 1: too much, but and by the way, Twitter's market cap
Speaker 1: is about thirty billion dollars right now, sorry to jump in, Katie. Yeah,
Speaker 1: and that's probably inflated some right because people are still
Speaker 1: you know, holding the stock thinking that this deal in
Speaker 1: my clothes presumably, so you know, if the full deal
Speaker 1: walked away, maybe Twitter would be worth uh twenty billion.
Speaker 1: I don't know, you know, again, I'm kind of I'm
Speaker 1: kind of guessing here. Um, I'm a little hesitant to
Speaker 1: to put a number on what the settlement might be
Speaker 1: because again I'm just totally totally guessing. But it does
Speaker 1: feel like something that could happen. I don't know, let's
Speaker 1: let's put it at a chance. Again, who knows, But
Speaker 1: it doesn't feel like it's off the table. I guess, k.
Speaker 1: Just in the last thirty seconds that have with you,
Speaker 1: what do we need to be watching for? As the
Speaker 1: drama continues to unfold ahead of the Chancer record hearing, sure,
Speaker 1: I mean, the next um kind of milesome that we
Speaker 1: are aware of is a shareholder vote from Twitter shareholders,
Speaker 1: and that's going to happen on September I believe, the thirteenth.
Speaker 1: And that's essentially you know, Twitter putting forward the initial
Speaker 1: original deal agreement and saying, hey, shareholders should we do this,
Speaker 1: it's expected that it will be approved, and if it is,
Speaker 1: then Twitter can kind of say, hey, we've done everything
Speaker 1: in our power to get this deal done, and that
Speaker 1: kind of paved the way for the trial. In October,
Speaker 1: Kurt Wagner, technology reporter for Bloomberg News, keeping us up
Speaker 1: to date on the latest from San Francisco in the
Speaker 1: Twitter elon musk Saga. You can follow Kurt at Kurt
Speaker 1: Wagner eight on Twitter. This is Bloomberg, This is Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stenovic on Bloomberg Radio. Well as energy costs sore around
Speaker 1: the world, something curious is happening with increasing free quincy
Speaker 1: in power grids in certain corners of the US, prices
Speaker 1: are plunging to zero and below. We're talking about bottlenecks
Speaker 1: that are preventing cheap wind and solar energy from reaching
Speaker 1: high demand areas. Norien Malick writes all about it. She's
Speaker 1: natural gas and power markets reporter for a Bloomberg News.
Speaker 1: She joins us this afternoon on the phone from Brooklyn. Noreen.
Speaker 1: I was talking with Katie about this. It's a little
Speaker 1: hard to wrap our heads around at a time when
Speaker 1: energy prices are so high, how power prices can actually
Speaker 1: be plunging below zero? How does this work? It was
Speaker 1: a surprise for me too to see how frequent it is. Okay,
Speaker 1: that makes me feel better because your natural gas and
Speaker 1: power markets reporter Sole Fee a little bit better about
Speaker 1: my confusion here. Um, So, you know, negative prices have
Speaker 1: been around for a while. You know, when California first started,
Speaker 1: it's big renewable build out, like about a decade ago.
Speaker 1: In Texas, you know, you would you would have like
Speaker 1: solar and wind come on faster than you can build
Speaker 1: transmission lines, like in West Texas or like sub Droll
Speaker 1: part of California. So in those areas, when you'd have
Speaker 1: like a really you know, bright and sunny day or
Speaker 1: a windy day, you'd see like those like wind turbines
Speaker 1: like turning at mac speed and like solar panels producing
Speaker 1: at max quantity more than the transmission lines can take away.
Speaker 1: So you'd have an excess of supply. So anytime you
Speaker 1: have stranded power that can't get where it needs to
Speaker 1: or can't get out of it's like little community. It
Speaker 1: sends prices to negative levels and it's meant to be
Speaker 1: a signal like from the grid to these you know
Speaker 1: power suppliers, Hey, back off, we have too much supply.
Speaker 1: And you know, renewables can keep running at like minus
Speaker 1: thirty or minus forty five dollars because they get these
Speaker 1: tax credits and so. But what's remarkable now is that
Speaker 1: you are seeing such a gloot of supply and these
Speaker 1: gluts can last five minutes or sometimes they can last hours. Um,
Speaker 1: but these gluts can send prices to minus five dollars,
Speaker 1: my a thousand dollars or you know, sixteen thous dollars,
Speaker 1: as there was a case in California, um for a
Speaker 1: moment earlier this year. So is anyone trading this? I
Speaker 1: mean I hear this and coming from you know, the
Speaker 1: traditional stock and bond market, sounds like a great sort
Speaker 1: of arbitrage trade. But does the power market not work
Speaker 1: that way? No, it does exactly. You hit it on
Speaker 1: the nail. It's just that, um, the nail on the head.
Speaker 1: But like just that the group of people that know
Speaker 1: the nuances of the power market, like you know, across
Speaker 1: the US, there's more than like basically ramped in and
Speaker 1: off the grid. These are like places where like wind
Speaker 1: farms are supplying the grid or gas plants, and people
Speaker 1: are taking it off. So you kind of have to
Speaker 1: like know like how to play those like local markets.
Speaker 1: You have to like look at things like weather and everything.
Speaker 1: But but you're exactly right, like people have noticed this
Speaker 1: trend and you are seeing um like mattery like developers
Speaker 1: trying to find those spots where prices are really negative
Speaker 1: and they would get paid when prices are negative, they
Speaker 1: would get paid to fill their storage and then they
Speaker 1: could resell that power in the middle of the day
Speaker 1: for like hundreds or thousands of dollars. So that's the
Speaker 1: ultimate ARB right now, and that is super beneficial to
Speaker 1: the grid. Like that could help, you know, make sure
Speaker 1: that we can have a way to store all this
Speaker 1: excess solar and wind and get it to consumers typically
Speaker 1: when prices are high, so that in the long run
Speaker 1: will help them. So should we be thinking about the
Speaker 1: grid in a different way based on this, because I mean, look,
Speaker 1: we look at what happened in Texas last year and
Speaker 1: then even this summer when the state asked bitcoin miners
Speaker 1: to stop mining bitcoin because they were concerned about this
Speaker 1: heat wave and the grid being able to withstand that,
Speaker 1: what does the story tell us about the resilience of
Speaker 1: the grid and updates needed to the grid across the US.
Speaker 1: I mean, this is definitely a sign of dress that
Speaker 1: the grid is um needs to be upgraded or changed
Speaker 1: because for basically a hundred plus years, the grid has
Speaker 1: been set up to take power from these large power
Speaker 1: plants like whole nuclear gas and just ship them one
Speaker 1: way to consumers. But with with renewables, you have thousands
Speaker 1: and thousands of more sites, so there's more like like
Speaker 1: the generation is dispersed, it's spread out over bigger geographic regions.
Speaker 1: And on top of that, you're having like homeowners and
Speaker 1: businesses becoming like suppliers themselves, like they're producing their own
Speaker 1: power by putting rooftop solar and battery, and you're gonna
Speaker 1: have e v s and so every so you're gonna
Speaker 1: have power moving from homes onto grids. So everything is
Speaker 1: becoming more dynamic. And when you have these negative prices,
Speaker 1: it shows you the real like limitation of like power
Speaker 1: getting stranded. And and you know, this is the big
Speaker 1: debate right now is how do you solve those negative
Speaker 1: p races? Do we spend billions and billions of dollars
Speaker 1: on you transmission or like local microgrids. Right. Hey, this
Speaker 1: is a great story and it also speaks to what
Speaker 1: we're speaking about in just about an hour's time, when
Speaker 1: Catherine Blunt, the Wall Street Journal reporter, has her new
Speaker 1: book out today, California Burning, The Fall of p G
Speaker 1: and E and what it means for America's power grids.
Speaker 1: So have this power theme this afternoon. A big thank
Speaker 1: you to Noreen Malick, natural gas and power markets reporter
Speaker 1: for Bloomberg News. She joins us on the phone this
Speaker 1: afternoon from Brooklyn. Follow her on Twitter at Notorious Journal. Yeah,
Speaker 1: but you let me drive? Oh no, no, no, no,
Speaker 1: W's all right? Please revels I don't want to drive.
Speaker 1: It's a good question. Drive this Drive to the Cloth
Speaker 1: on Blutberg Radio. Well, we are already there. We got
Speaker 1: less than ten minutes to go until the close of
Speaker 1: trading on this Tuesday, August. Let's drive to the clothes
Speaker 1: with Amanda Gotti, chief investment officer at p n C
Speaker 1: Asset Management Group. Amanda joins us once again on the
Speaker 1: phone from Philadelphia. Amanda, good to have you back with us.
Speaker 1: How are you. I'm doing great? Thanks so much. For
Speaker 1: having me. I'm delighted to be here. Well, it's great
Speaker 1: to have you with us this afternoon. Help us make
Speaker 1: sense of what's going on here, because Katie and I've
Speaker 1: been talking about it for the past few days. We
Speaker 1: talked about it ahead of Jackson Hole. But it certainly
Speaker 1: seems like equity markets and bon bond market as well
Speaker 1: got kind of the wrong idea of what FED your
Speaker 1: Powell was going to do after that latest FED meeting. Yeah,
Speaker 1: it's it's been sort of a progression in terms of
Speaker 1: markets like you here in the last few weeks and
Speaker 1: leading up to and following the jackson Hole meeting. I
Speaker 1: have joked on a couple of calls with clients recently
Speaker 1: that we went from a nothing burger to some burger
Speaker 1: too seriously, an impossible burger. There's definitely a pun or
Speaker 1: a metaphor in there, and I thought a bison burger, well,
Speaker 1: not quite that would even that would that would make
Speaker 1: sense too, I think. But I think it speaks to
Speaker 1: the challenge the chair Powell finds themselves in as it
Speaker 1: relates to messaging and forward guidance and how to keep
Speaker 1: all of the market constituents and participants happy and content,
Speaker 1: it's really an impossible task at the moment, and so
Speaker 1: market definitely took away a much more hawkish tone from
Speaker 1: Powell on Friday, and I think these last couple of days,
Speaker 1: certainly the hangover effect from that is really taking control
Speaker 1: of the narrative. Here. She said it, Katie, she said hangover.
Speaker 1: She said hangover, that tired feeling was it was a
Speaker 1: hangover Amanda. I do have a question, though, how do
Speaker 1: you invest around that now that markets maybe getting on
Speaker 1: the same page as what we've heard from Powell, what
Speaker 1: we've heard from other FED governors, does that mean it's
Speaker 1: time to fade this move? Well, we definitely felt like
Speaker 1: even pre Jackson Hole, that this rally from the mid
Speaker 1: June bottom was kind of exhausting itself, that it was
Speaker 1: a bit far and a bit too fast, given you know,
Speaker 1: one maybe two data points coming out of July c
Speaker 1: p I and p p I that suggested that inflation
Speaker 1: maybe was taking a pause or at least starting to peak.
Speaker 1: And so you know, market ran with that one or
Speaker 1: two data points and saying, all right, we're gonna claim
Speaker 1: victory here that the FED is effectively done or basically
Speaker 1: the past that we're on is the path that it's
Speaker 1: going to be, and so I think you're seeing the
Speaker 1: market kind of give back some of that, especially given
Speaker 1: Powell's contents around We're gonna have to be forceful and
Speaker 1: there's gonna have to be some pain. Markets hate that
Speaker 1: in the short run, we're not making meaningful changes to
Speaker 1: portfolio allocations. We bent down the hatches a couple of
Speaker 1: times in the first quarter and then early in the
Speaker 1: second quarter to try to position for what just continues
Speaker 1: to be a really high volatility regime. But we're not
Speaker 1: making any notable changes as a function of what's going
Speaker 1: on these last few days, because I actually think that
Speaker 1: we're going to start to see more confirmation and evidence
Speaker 1: of inflation rolling over. And while the Fed you know,
Speaker 1: only has a few data points to go on here
Speaker 1: so far, I think the market has already adjusted on
Speaker 1: the equity side in terms of evaluations, but also on
Speaker 1: the bond market side in terms of you know, futures,
Speaker 1: probability of rate hikes and where interest rates have moved to. Like,
Speaker 1: the markets really already there, and so to the extent
Speaker 1: that the Fed stays the course here, I think that
Speaker 1: the market can you know, live with it in air
Speaker 1: quotes relative to you know, some of the fears that
Speaker 1: are looming larger out there. I think the market is
Speaker 1: already priced for the past. That's the head To the
Speaker 1: extent that the dot plot changes meaningfully in the terminal
Speaker 1: rate moves meaningfully higher from where we are to to day,
Speaker 1: that's going to be a challenge for markets, for sure.
Speaker 1: But we already have a number of rate hikes baked in,
Speaker 1: and so it's not so much about what happens in
Speaker 1: September per se. It's really that final destination that matters
Speaker 1: for markets. Well, speaking of markets, a headline here that
Speaker 1: I want to get to. Goldman Sachs will lift all
Speaker 1: COVID protocols that have kept some workers away. This, according
Speaker 1: to The New York Post. Memo sent today obtained by
Speaker 1: the Post, says that the company will no longer require
Speaker 1: COVID testing or masks or vaccines as well, Katie, A
Speaker 1: real sign of the times. We're definitely going to I
Speaker 1: have COVID right now. It's not over. Yeah, you're a
Speaker 1: little late to the game, but it did find you.
Speaker 1: But in any case, let's go back to the markets, Amanda,
Speaker 1: because I'm curious about the cross asset signals and this
Speaker 1: concept of fighting the FED socks maybe getting on the
Speaker 1: same page as some of the FED officials. But we've
Speaker 1: been talking a bit about the credit markets. If you
Speaker 1: look at investment grade and high yield spreads, they're pretty contained,
Speaker 1: well below their peaks from earlier in the summer. And
Speaker 1: I love the chart of the spreads because it almost
Speaker 1: feels like an ink blot test. Whether that is bearish
Speaker 1: or bullish for equities, whether you know, we could see
Speaker 1: spreads crack and start to rise from here, or maybe
Speaker 1: the fact that they are contained is that bullish for
Speaker 1: equities that maybe it's not so bad. I'll take the
Speaker 1: optimistic side of that trade and say that because we
Speaker 1: haven't seen spreads, you know, blowout in a really concerning way.
Speaker 1: I mean, sure they are up on a year over
Speaker 1: your basis relative to the all time you know, easy
Speaker 1: or said, they're a little bit differently tight, uh spread levels.
Speaker 1: We don't see anything that's like meaningfully concerning in terms
Speaker 1: of spreads right now. And I think that's reflective of
Speaker 1: even though everybody's really concerned about, you know, what comes
Speaker 1: next in terms of this economic cycle, we're not in
Speaker 1: and of itself in a recession, We're in a slowing
Speaker 1: expansion phase of growth. There's a lot of policy levers
Speaker 1: being pulled around that that's adjusting the trajectory of growth.
Speaker 1: But the canary in the coal mine is usually stress
Speaker 1: in in spreads and so we're not seeing that. So
Speaker 1: I think that just reinforces that we're still in a
Speaker 1: slowing growth path, not you know, on the edge of recession.
Speaker 1: And Amanda, before we let you go, just in the
Speaker 1: last thirty seconds that we have with you, the lows
Speaker 1: of June um, are we going to retest those lows
Speaker 1: in the declines that we're seeing right now. I don't
Speaker 1: think that we'll retest the lows. No. I think we
Speaker 1: had such depressed sentiment back in mid June, and we've
Speaker 1: actually seen some positive reading since then. You have Michigan
Speaker 1: Survey sentiment went off, we had confidence conference board today
Speaker 1: that went off. We had inflation expectations coming down. So
Speaker 1: I think from a sentiment perspective, that's going to keep
Speaker 1: us from retesting lows alright. Amanda Gotti, chief investment officer
Speaker 1: at p n Csset Management Group, joining us once again
Speaker 1: this afternoon from Philadelphia. You can follow her on Twitter
Speaker 1: at Amanda Agatti, p n C. Thanks for listening to
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