WEBVTT - Apple Readies Arsenal of New Headset Apps 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:19.239 --> 0:00:21.640 Hey, check out shares of Apple. We'll then hire up 0:00:21.640 --> 0:00:24.040 about nine tens an percent. Up thirty percent though so 0:00:24.120 --> 0:00:27.320 far here in twenty twenty three, company definitely on a radar. 0:00:27.400 --> 0:00:30.760 You got CEO Tim Cook officially opening up Apple's first 0:00:30.760 --> 0:00:33.640 store in India. You had Apple introducing a long promised 0:00:33.640 --> 0:00:37.839 hoy Yield savings account with Goldman, and then a Bloomberg 0:00:37.880 --> 0:00:41.040 exclusive courtesy of our Mark German about Apple's coming arsenal 0:00:41.080 --> 0:00:43.440 of new headset apps. Yep, we knew we wanted to 0:00:43.479 --> 0:00:46.400 learn more. Mark is, of course Bloomberg News technology reporter. 0:00:46.440 --> 0:00:48.680 He joins us on zoom in our La bureau. So 0:00:48.800 --> 0:00:54.520 much going on here, Mark, among the ton of news 0:00:55.000 --> 0:00:59.200 on Apple today, including your exclusive What's first and foremost? 0:01:00.120 --> 0:01:03.000 Yeah, I would say Apple's headset, right, That's on the 0:01:03.040 --> 0:01:05.400 minds of everyone at Apple. That's on the minds of 0:01:05.440 --> 0:01:08.640 everyone watching Apple at this point. This is going to 0:01:08.680 --> 0:01:09.880 be a big deal. 0:01:09.959 --> 0:01:10.119 Right. 0:01:10.160 --> 0:01:14.080 When Apple launches new product categories, all eyes are on 0:01:14.120 --> 0:01:14.679 the company. 0:01:14.840 --> 0:01:15.000 Right. 0:01:15.040 --> 0:01:17.080 The last time they did something like this was the 0:01:17.120 --> 0:01:20.600 Apple Watch at the end of fourteen, ended up releasing 0:01:20.600 --> 0:01:23.880 it in April twenty fifteen. Before that was the iPad, 0:01:23.920 --> 0:01:26.319 and then the phone, and then the iPod and the. 0:01:26.240 --> 0:01:26.959 Mac before that. 0:01:27.080 --> 0:01:31.040 Right, So this Apple headset will join a string of 0:01:31.080 --> 0:01:34.840 major blockbusters at the company is built around, right, and 0:01:34.920 --> 0:01:37.480 so people are clamoring for more info on this device. 0:01:37.800 --> 0:01:39.720 What's it going to do, what's it going to look like, 0:01:39.840 --> 0:01:42.640 how much will it cost? Why would you even want 0:01:42.640 --> 0:01:43.080 this thing? 0:01:43.520 --> 0:01:43.759 Right? 0:01:44.080 --> 0:01:46.440 And so I think the headset is at the forefront 0:01:46.440 --> 0:01:48.280 for me at least. Right now, Mark, talk. 0:01:48.200 --> 0:01:51.559 To us about the motivation behind rolling this out, because, 0:01:51.600 --> 0:01:53.520 like you were mentioning, it's been a while since they've 0:01:53.520 --> 0:01:56.320 had something like this as far as their product categories. 0:01:57.440 --> 0:02:00.240 Yeah, Right, Mixed reality is something that Apple see is 0:02:00.280 --> 0:02:04.560 potentially it's bridge to a post iPhone era or an 0:02:04.560 --> 0:02:07.760 era where the iPhone becomes less important, just like when 0:02:07.800 --> 0:02:10.000 the iPhone came out, the Mac, you know, became a 0:02:10.040 --> 0:02:13.440 bit less important in terms of what consumers are using 0:02:13.840 --> 0:02:16.799 right as their go to tech product, And so This 0:02:16.880 --> 0:02:19.600 is the beginning of what's going to probably be maybe 0:02:19.639 --> 0:02:22.200 a twenty year journey for the company. You know, they'll 0:02:22.280 --> 0:02:24.800 start off with this high end headset, probably called the 0:02:24.800 --> 0:02:27.960 Reality One or the Reality Pro this year, and then 0:02:28.000 --> 0:02:29.640 they'll go to a cheaper model at the end of 0:02:29.639 --> 0:02:31.679 twenty five, as well as a new high end model 0:02:31.680 --> 0:02:34.320 at the end of twenty five. The eventual holy grail, 0:02:34.520 --> 0:02:36.239 which I don't think they're going to get to until 0:02:36.360 --> 0:02:38.680 maybe the end of the decade or even the beginning 0:02:38.720 --> 0:02:42.640 of next decade, will be lightweight augmented reality glasses. And 0:02:42.800 --> 0:02:45.280 that's really where you see you know, mixed reality and 0:02:45.320 --> 0:02:48.880 augmented reality picking up steam and eventually replacing the need 0:02:48.919 --> 0:02:50.480 to have something like a phone. 0:02:50.240 --> 0:02:52.560 And listen, you need to have infrastructure and apps to 0:02:52.560 --> 0:02:55.720 support it, right, I mean, it's great to have, you know, 0:02:55.919 --> 0:02:57.679 a headset, right Mark, which got to be able to 0:02:57.720 --> 0:03:00.400 do stuff with it. And that's what's interesting about your story, 0:03:00.440 --> 0:03:03.520 your exclusive story, that this is what they're getting ready 0:03:03.560 --> 0:03:04.400 to really roll out. 0:03:05.280 --> 0:03:08.160 So the Apple headset's going to take a scattershot approach 0:03:08.560 --> 0:03:11.640 to functionality, similarly to the original Apple Watch. 0:03:11.760 --> 0:03:11.919 Right. 0:03:12.320 --> 0:03:14.160 That means Apple is going to try everything from the 0:03:14.160 --> 0:03:18.239 get go. They're gonna throw everything at this device, right, 0:03:18.320 --> 0:03:21.680 and then over time consumers will you know, show Apple 0:03:21.760 --> 0:03:25.200 and show the market what features they really want out 0:03:25.200 --> 0:03:25.760 of the device. 0:03:26.080 --> 0:03:26.280 Right. 0:03:26.440 --> 0:03:28.600 The Apple Watch was filled with a ton of features 0:03:28.600 --> 0:03:30.920 at the beginning, and they eventually paired that down a 0:03:30.919 --> 0:03:33.280 bit and focused on a few core areas. I think 0:03:33.280 --> 0:03:35.440 Apple's going to do something similar with the headset. So 0:03:35.520 --> 0:03:37.680 if you have an iPad, you're already familiar with what 0:03:37.720 --> 0:03:39.360 an Apple headset is going to be able to do. 0:03:39.480 --> 0:03:41.640 It's gonna have every iPad app you can imagine, from 0:03:42.360 --> 0:03:46.360 notes to pages, to iMovie to the camera to sort 0:03:46.400 --> 0:03:49.560 of FaceTime and zoom on steroids where you'll be able 0:03:49.600 --> 0:03:51.240 to really feel like you're in a meeting room with 0:03:51.280 --> 0:03:55.040 another person in virtual reality. So I think this is 0:03:55.080 --> 0:03:58.360 going to be an astonishingly cool and high tech device. 0:03:59.040 --> 0:04:02.240 The question is do people really want to use these 0:04:02.240 --> 0:04:04.480 types of features that they already have in a new 0:04:04.560 --> 0:04:07.040 environment instead of the environment they're already using them in, 0:04:07.240 --> 0:04:09.200 such as on their iPad or on their phone or mac. 0:04:09.360 --> 0:04:11.600 Well, do we like it? Like right exactly? You know, 0:04:11.640 --> 0:04:13.920 you could have had a laptop and then all of 0:04:13.960 --> 0:04:15.720 a sudden you had an iPad. I mean, Apple is 0:04:15.760 --> 0:04:18.760 incredible about saying you need to kind of continue to 0:04:18.800 --> 0:04:21.880 build out your tech infrastructure with another device to be 0:04:21.920 --> 0:04:25.799 able to use kind of the same apps. Are people saying, 0:04:25.920 --> 0:04:29.760 do they believe that the headset has the potential to 0:04:29.800 --> 0:04:32.480 be I don't know what size of a business for Apple? 0:04:32.560 --> 0:04:34.640 What are they like in it too? That's already at Apple. 0:04:35.560 --> 0:04:38.200 I believe the headset is the computer of the future, right, 0:04:38.279 --> 0:04:40.719 the idea where instead of you're using your laptop or 0:04:40.720 --> 0:04:43.480 instead of using your iPad, you're doing everything you were 0:04:43.480 --> 0:04:45.679 doing already on your face, right, And I think Carol, 0:04:45.680 --> 0:04:49.000 you summed it up perfectly. All these Apple devices, they're 0:04:49.040 --> 0:04:51.599 all a means to the same end. They all do 0:04:51.720 --> 0:04:54.440 the same stuff, right. It's all about running the same 0:04:54.440 --> 0:04:57.440 apps but in different user interfaces and at different moments. Right, 0:04:57.839 --> 0:05:00.760 So maybe you're using your Mac at your desk, but 0:05:00.800 --> 0:05:03.040 you're using your iPad on an airplane or in your 0:05:03.040 --> 0:05:05.400 living room, or your iPhone while you're out and about, 0:05:05.600 --> 0:05:07.120 or your watch when you need to do the same 0:05:07.120 --> 0:05:09.840 thing you could do and all those other devices very quickly. Right, 0:05:10.040 --> 0:05:12.039 they all do the same thing. It's just a different 0:05:12.120 --> 0:05:12.919 user interface. 0:05:13.960 --> 0:05:16.160 Mark something you also had in your story you were 0:05:16.200 --> 0:05:18.680 talking about how Apple is also working on a version 0:05:18.800 --> 0:05:21.760 of its Fitness Plus service for the headset. This was 0:05:21.839 --> 0:05:24.560 something that Meta or Facebook, however you want to call it, 0:05:24.720 --> 0:05:27.120 that they had also tried to get into their VR headsets, 0:05:27.160 --> 0:05:29.640 which that's obviously a big player in this space. How 0:05:29.680 --> 0:05:32.640 do you think Apple could stand out from when you 0:05:32.720 --> 0:05:35.760 have another competitor like Meta trying to already do something 0:05:35.800 --> 0:05:36.040 like that. 0:05:36.800 --> 0:05:38.480 Yeah, I mean the virtual workouts will be a big 0:05:38.520 --> 0:05:40.200 part of the product, and I think Apple has the 0:05:40.200 --> 0:05:42.839 infrastructure there already. Right Fitness Plus launch at the end 0:05:42.880 --> 0:05:46.000 of twenty twenty. They have quite a bit a number 0:05:46.000 --> 0:05:48.719 of users, and they have lots of content already pre 0:05:48.760 --> 0:05:51.040 programmed there. They have lots of content film, lots of 0:05:51.080 --> 0:05:54.000 classes they already have in there. It's just about converting 0:05:54.080 --> 0:05:56.479 it and playing it in virtual reality, right, And so 0:05:56.600 --> 0:05:59.279 given their content library on the fitness front, I think 0:05:59.279 --> 0:06:02.320 they're way headed from day one on anything that Facebook 0:06:02.320 --> 0:06:05.080 could offer, Right, Apple has it all ready to go already. 0:06:05.120 --> 0:06:06.839 How big is sports a part of this? And you 0:06:06.839 --> 0:06:08.800 think that's going to really be a reason why people 0:06:08.839 --> 0:06:09.240 are like. 0:06:09.320 --> 0:06:12.240 I'm in I don't think anyone's going to buy it, 0:06:12.360 --> 0:06:14.880 particularly for the sports features. But now you'll be able 0:06:14.920 --> 0:06:17.000 to watch a game, and you know, the idea is 0:06:17.080 --> 0:06:18.919 you can make you feel like you're sitting courtside and 0:06:18.960 --> 0:06:22.360 watching Lebron take over the Grizzlies game. 0:06:22.440 --> 0:06:24.279 All right, Right, I know a few people who would 0:06:24.360 --> 0:06:26.000 like that. Hey, Mark, while we have you there, we'd 0:06:26.040 --> 0:06:28.960 be remiss talk to us about the story that's on 0:06:29.000 --> 0:06:32.280 the Bloomberg about Apple, you know, opening up its first 0:06:32.600 --> 0:06:35.680 retail store in India. You've got that out there. You've 0:06:35.680 --> 0:06:38.560 got Apple and Goldman, this new savings account. I'm just, 0:06:38.640 --> 0:06:40.760 you know, trying to make sense of it all as 0:06:41.040 --> 0:06:44.640 increasingly Apple becomes a bigger and bigger part or at 0:06:44.680 --> 0:06:46.080 least wants to be of our world. 0:06:46.880 --> 0:06:49.240 Yeah, the India situation is interesting because I think the 0:06:49.279 --> 0:06:51.080 retail stores are not going to add much to Apple 0:06:51.120 --> 0:06:53.560 spot of line there. It's only two stores, but it's 0:06:53.640 --> 0:06:56.640 representative of this bigger push. It's representative Apple pudding. It's 0:06:56.680 --> 0:06:59.640 sort of flag in the ground in India. 0:06:59.800 --> 0:07:00.000 Right. 0:07:00.120 --> 0:07:03.200 The real story there is production and diversification and moving 0:07:03.240 --> 0:07:07.240 more iPhone supply out of China into India. So I 0:07:07.240 --> 0:07:10.120 think that's going to be a big deal. Apple's penetration 0:07:10.200 --> 0:07:13.920 in the Indian market is essentially zero. It's a rounding 0:07:13.920 --> 0:07:17.080 era on the larger market, and there's obviously a billion 0:07:17.080 --> 0:07:20.200 plus there in India, right. There is a growing economy 0:07:20.200 --> 0:07:23.640 in India right, a growing middle class, and I think 0:07:23.720 --> 0:07:26.080 that is the growth story for Apple. You're looking for 0:07:26.120 --> 0:07:28.240 places where Apple's going to grow, it's going to be 0:07:28.280 --> 0:07:31.200 India because you know right now they're at zero percent, 0:07:31.600 --> 0:07:34.800 not zero percent a couple percentage points, right, but very slow, 0:07:35.200 --> 0:07:36.800 very low. And you can look at that as a 0:07:36.800 --> 0:07:38.600 bad thing, and it is certainly a bad thing. They've 0:07:38.640 --> 0:07:41.480 done nothing there, but it also is a huge opportunity 0:07:41.520 --> 0:07:43.480 and it shows how much room still Apple has to 0:07:43.520 --> 0:07:46.600 still grow, which I think is appealing to investors. On 0:07:46.680 --> 0:07:49.440 the Goldman situation that was announced a few months ago, 0:07:49.480 --> 0:07:52.200 it's now finally rolling out. People like this new four 0:07:52.240 --> 0:07:55.640 point one percent apy, which is a quarter for percent 0:07:55.720 --> 0:07:57.960 higher than when Goldman offers on Marcus if you were 0:07:57.960 --> 0:08:00.720 to do it online. This is about people stuck to 0:08:00.760 --> 0:08:04.040 their iPhones. If you put fifty grand in your savings 0:08:04.080 --> 0:08:06.160 account on your iPhone, it's going to be a lot 0:08:06.240 --> 0:08:09.880 more difficult for you to switch to a Samsung phone, right, Yeah, 0:08:09.880 --> 0:08:11.440 and so Apple was just wanting to add more and 0:08:11.440 --> 0:08:13.560 more features to keep the iPhone sticky and make the 0:08:13.560 --> 0:08:15.239 iPhone more useful. 0:08:15.480 --> 0:08:17.200 All right, we got to ask you. Just got about 0:08:17.200 --> 0:08:21.440 forty five seconds left here, Microsoft and Vidia, Alphabet, Amazon, 0:08:21.520 --> 0:08:24.240 four of the world's top seven most valuable companies. They 0:08:24.360 --> 0:08:26.880 are all in seemingly so when it comes to chat gibt, 0:08:27.000 --> 0:08:29.640 when does Apple make some news on this front? And again, 0:08:29.680 --> 0:08:31.080 just got about thirty forty seconds. 0:08:31.280 --> 0:08:33.200 You know, Apple's approach to AI is a bit different. 0:08:33.280 --> 0:08:37.520 They're wanting to apply AI to real world problems and 0:08:37.600 --> 0:08:40.720 situations rather than do a chatbot, right, and so you 0:08:40.760 --> 0:08:43.600 see that as their self driving car, that's a very 0:08:43.640 --> 0:08:46.520 AI heavy based products to enable that. Likewise, a lot 0:08:46.520 --> 0:08:48.120 of the futures are going to get on this headset, 0:08:48.160 --> 0:08:50.079 so they look at it a bit differently. But I 0:08:50.120 --> 0:08:51.800 still think there's room for them to do more in 0:08:51.840 --> 0:08:53.600 the chat GPT like style. 0:08:53.760 --> 0:08:55.680 All right, Well, around the Apple world in about nine 0:08:55.679 --> 0:08:57.840 ten minutes. Courtesy of Mark German, as only he can 0:08:57.880 --> 0:09:00.160 do it. Hey Mark, thank you, Thank you Mark. He 0:09:00.240 --> 0:09:03.720 has Bloomberg News Technology Reporter. Check out his exclusive It 0:09:03.800 --> 0:09:06.400 is on the Bloomberg terminal at Bloomberg dot com and 0:09:06.400 --> 0:09:08.720 of course you can check them out on Twitter at 0:09:08.880 --> 0:09:09.760 Mark German. 0:09:10.400 --> 0:09:13.959 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:14.000 --> 0:09:17.320 live weekday afternoons from three to six Eastern Listen on 0:09:17.400 --> 0:09:21.439 Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, 0:09:21.720 --> 0:09:25.079 or watch us live on YouTube. 0:09:25.280 --> 0:09:26.160 I always be. 0:09:32.760 --> 0:09:34.839 All right, books, We're going to stay with Netflix because 0:09:34.920 --> 0:09:38.160 we want to and because we should. Stock is still 0:09:38.160 --> 0:09:41.040 down about six and a half percent down as we 0:09:41.040 --> 0:09:42.920 were just breaking down a little little hectic on as 0:09:42.920 --> 0:09:45.280 we're getting warmed up to doing earning season again. But 0:09:45.320 --> 0:09:48.319 Netflix is certainly a big one. Also tracking it is 0:09:48.400 --> 0:09:52.240 John Erleckman, Bloomberg Markets anchor on Bloomberg Television. Very familiar 0:09:52.280 --> 0:09:55.400 as you know with that tech space. John all right through, 0:09:55.480 --> 0:09:59.319 are just talking about that second quarter revenue outlook, missing estimates. 0:09:59.400 --> 0:10:02.160 Netflixing second quarter revenue eight point twenty four billion, the 0:10:02.280 --> 0:10:05.080 estimate was eight point forty seven billion. We've been obsessed 0:10:05.120 --> 0:10:06.960 a little bit too with that first quarter streaming paid 0:10:07.000 --> 0:10:09.800 net change of one point seventy five million versus an 0:10:10.000 --> 0:10:12.679 estimate that was two point forty one million. Break it 0:10:12.720 --> 0:10:14.280 down for us, what's jumping out for you. 0:10:15.280 --> 0:10:17.720 Well, I think it's expectations, Carol. 0:10:17.840 --> 0:10:22.160 When we last talked about Netflix quarterly results, the first 0:10:22.200 --> 0:10:24.559 set of results this year, the fourth quarter, the final 0:10:24.640 --> 0:10:27.760 quarter for last year, I think there was more skepticism 0:10:27.920 --> 0:10:31.000 in the air, and that was you might recall the 0:10:31.080 --> 0:10:36.400 time when the company announced that the founder of the business, 0:10:36.480 --> 0:10:40.000 Read Hastings, would be shifting out of the co CEO role, 0:10:40.920 --> 0:10:42.920 and it was seen as sort of this new era 0:10:43.040 --> 0:10:45.199 where not only we're going to be watching what was 0:10:45.240 --> 0:10:49.720 happening with subscriber numbers, but with these new initiatives including 0:10:49.760 --> 0:10:55.040 password sharing, crackdowns and the advertising tier, and the fact 0:10:55.080 --> 0:10:59.000 that they had what ended up being expected subscriber numbers. 0:10:59.520 --> 0:11:02.920 Really Wall Street, you might remember we saw in that 0:11:03.040 --> 0:11:06.480 last quarter like an eight percent pop in stock, and 0:11:06.520 --> 0:11:10.280 I think the view on technology stocks more broadly speaking 0:11:10.320 --> 0:11:14.439 coming into earning season was did these names go too. 0:11:14.280 --> 0:11:15.040 Far, too fast? 0:11:15.080 --> 0:11:16.960 So far in twenty twenty three, if there's still some 0:11:17.080 --> 0:11:20.040 uncertainty in the air, now, you're absolutely right. 0:11:20.080 --> 0:11:22.160 I mean, I think the reality is. 0:11:22.120 --> 0:11:25.360 You're just noting a sign of subscriber growth that we 0:11:25.440 --> 0:11:28.880 came to expect with a Netflix, and maybe investors lose 0:11:28.960 --> 0:11:31.800 sight of that when they get excited for these quarterly numbers. 0:11:32.000 --> 0:11:34.080 We'll see what happens in the after our session. 0:11:34.200 --> 0:11:37.480 Overall, but it is really shifting to be a business 0:11:37.520 --> 0:11:42.080 that in many ways has already told us they are transitioning. 0:11:42.440 --> 0:11:46.400 There are cost controls right now. Shutting down their DVD 0:11:46.520 --> 0:11:51.840 by mail business is one example of cost controls. Password 0:11:51.880 --> 0:11:54.760 sharing crackdowns is another. I mean, arguably that could bring 0:11:54.800 --> 0:11:58.480 in more subscribers, but even looking at Bloomberg's breakdown in 0:11:58.679 --> 0:12:01.680 markets like Latin America, maybe that's the kind of development 0:12:01.800 --> 0:12:06.280 that loses you some subscribers. And then that advertising story, 0:12:06.679 --> 0:12:10.160 while interesting to Wall Street, the company has already told 0:12:10.240 --> 0:12:12.600 us it's not really going to be a meaningful story 0:12:12.640 --> 0:12:15.040 for twenty twenty three. So we're kind of lingering through 0:12:15.160 --> 0:12:19.559 here and everything you just highlighted before, Carroll the competitive 0:12:19.640 --> 0:12:22.760 realities right now this has turned out. I think for 0:12:22.880 --> 0:12:26.720 all the other industry players, maybe are rude awakening that 0:12:26.760 --> 0:12:30.240 the streaming business dynamics are not as robust as what 0:12:30.280 --> 0:12:33.760 they had expected. Netflix probably knew that. It's just that 0:12:33.760 --> 0:12:35.679 they've had to deal with all those other competitors in 0:12:35.720 --> 0:12:36.640 the landscape as well. 0:12:36.679 --> 0:12:40.440 These last twelve to twenty four months, and John. 0:12:40.240 --> 0:12:42.840 You're bringing up the competitors. We were just talking about 0:12:42.840 --> 0:12:45.800 how Disney Roku Tho stalks down more than one percent 0:12:46.080 --> 0:12:48.400 in after hours trading. What do you think is the 0:12:48.800 --> 0:12:50.880 sort of broad read through as far as how this 0:12:51.160 --> 0:12:54.000 is going to affect these other giants that are also 0:12:54.000 --> 0:12:57.240 in the streaming space at this point, Well. 0:12:57.280 --> 0:13:01.480 Jess, I mean, it's clearly the kind of thing where 0:13:02.040 --> 0:13:07.720 if Netflix can't satisfy Wall Street, can other players get 0:13:07.720 --> 0:13:11.240 the check mark that they're hoping for now? You know, 0:13:11.280 --> 0:13:15.079 Disney's an interesting one to zero in on because one 0:13:15.160 --> 0:13:18.360 of the things that we've heard and Bloomberg's report pretty 0:13:18.360 --> 0:13:21.480 extensively on this over the last few months is not 0:13:21.600 --> 0:13:25.160 a story of everybody fighting over subscribers, but in many 0:13:25.200 --> 0:13:28.400 ways a return to the movie theater. I mean, Bloomberg's 0:13:28.400 --> 0:13:31.400 own reporting has told us about you know, Amazon doing 0:13:31.480 --> 0:13:36.520 theatrical releases, Apple doing theatrical releases, Disney as that arm. 0:13:37.080 --> 0:13:41.320 But I think even for Disney, cost controls is a 0:13:41.440 --> 0:13:45.240 very front and center focus for them too. So it 0:13:45.320 --> 0:13:49.360 almost tells you that if there's an economic storyline of 0:13:49.440 --> 0:13:52.440 maybe consumers being a little bit more cautious, or whether 0:13:52.480 --> 0:13:55.960 it's just a competitive environment. If you can't, if Netflix 0:13:56.000 --> 0:14:00.280 can't set the tone with big subscriber growth, maybe we're 0:14:00.520 --> 0:14:02.080 going to be in for a bit of a media 0:14:02.160 --> 0:14:03.600 industry reality check. 0:14:03.640 --> 0:14:05.280 As we rolled through running season here. 0:14:05.360 --> 0:14:09.280 Hey, John, you know these two areas the password sharing, 0:14:09.400 --> 0:14:12.520 which they just launched in four territories Canada, New Zealand, 0:14:12.559 --> 0:14:16.360 Spain and I forget the last one Portugal, and then 0:14:16.400 --> 0:14:19.680 the ad tire which made its debut in November, but 0:14:20.120 --> 0:14:23.040 we know yet to contribute a material number of subscribers. 0:14:23.040 --> 0:14:26.880 Companies said both advertising and password sharing will only offer 0:14:26.960 --> 0:14:29.760 modest contribute contributions excuse me, in the first quarter of 0:14:29.760 --> 0:14:31.480 the year, but would pick up in the current period. 0:14:32.760 --> 0:14:34.920 I guess what we want is a little bit more 0:14:34.960 --> 0:14:36.920 of a feel on the analyst call to get an 0:14:36.960 --> 0:14:41.760 idea of could these two areas be significant revenue drivers? 0:14:41.840 --> 0:14:44.320 I mean, does the analyst community, do the investor community 0:14:44.400 --> 0:14:47.760 think that they these two areas could really be drivers 0:14:47.760 --> 0:14:49.760 for the company. And the stock has certainly popped on 0:14:49.960 --> 0:14:51.560 the expectations of such. 0:14:52.640 --> 0:14:56.440 Yeah, I mean they've become these add ons and again 0:14:56.640 --> 0:14:59.680 I think this is we're talking about the maturation of 0:15:00.720 --> 0:15:04.280 and Netflix saw the writing on the wall. It seemed like, 0:15:04.480 --> 0:15:07.760 you know, there would not be endless streaming growth going forward, 0:15:08.040 --> 0:15:11.120 and so start of these some of these business steps 0:15:11.120 --> 0:15:15.280 are starting to take hold. Now on your question about 0:15:15.280 --> 0:15:19.520 the advertising business, I don't think there are any expectations 0:15:19.520 --> 0:15:23.800 inside the company that this can be a huge business 0:15:23.800 --> 0:15:28.840 by comparison of just having all those traditional streaming subscribers. 0:15:28.880 --> 0:15:31.120 But there is a general sense inside the company that 0:15:31.160 --> 0:15:33.240 they can get to let's say ten percent of their 0:15:33.280 --> 0:15:37.640 revenue coming from the ad tier. So you know, could 0:15:37.640 --> 0:15:40.040 that end up being on an annual basis, like a 0:15:40.120 --> 0:15:43.920 three billion dollar revenue business for Netflix. Most of Wall 0:15:43.920 --> 0:15:46.800 Street things that is very much attainable. But again that's 0:15:47.320 --> 0:15:50.400 part of the overall story. You're still constantly looking for 0:15:50.440 --> 0:15:55.280 that growth narrative to the password sharing. You know, look, 0:15:55.320 --> 0:15:59.000 I think that's just the reality of the transition from Hey, 0:15:59.040 --> 0:16:02.600 we're going to not pay attention to that because we've 0:16:02.600 --> 0:16:05.760 got so much subscriber growth too. Well, now we actually 0:16:05.840 --> 0:16:08.400 have to make sure we've got those subscribers accounted for. 0:16:08.600 --> 0:16:12.280 And I think, Carol, this is just going to continue 0:16:12.320 --> 0:16:15.760 to be a transition time for Netflix. What do they 0:16:15.800 --> 0:16:20.600 want to be I mean, aside from business developments like 0:16:20.680 --> 0:16:23.760 an add to your or password crackdowns even with the 0:16:23.840 --> 0:16:28.240 content itself. You know, people see these headlines about live streaming, 0:16:28.480 --> 0:16:30.800 right fliks never used to do live streaming. They had 0:16:30.920 --> 0:16:33.120 kind of a big snapoo with that this week. But 0:16:33.160 --> 0:16:36.480 they're starting to live stream SAG Awards. They're sort of 0:16:36.520 --> 0:16:39.640 testing that. They're testing partnerships with the Lake of Nike 0:16:40.200 --> 0:16:43.280 on training videos. I think you're going to continue to 0:16:43.320 --> 0:16:47.720 see Netflix trying to figure out some on the margin 0:16:47.880 --> 0:16:49.720 changes under their new leadership. 0:16:49.720 --> 0:16:51.720 You've seen it a lot with YouTube channels. We follow 0:16:51.840 --> 0:16:53.480 my husband and I follow a couple of different people, 0:16:53.600 --> 0:16:56.400 and like they do those live channels and it's popular. 0:16:56.480 --> 0:16:59.280 It's fascinating to see that streaming which is all for 0:16:59.480 --> 0:17:03.080 the most part, like taped produced series, thinking about oh wait, 0:17:03.120 --> 0:17:05.560 we have to go back to live destination viewing, which 0:17:05.600 --> 0:17:09.240 is oh wait, that was linear television. It's really kind 0:17:09.240 --> 0:17:12.800 of fascinating. What's the number one ask you think on 0:17:12.840 --> 0:17:15.800 the analys call. 0:17:15.520 --> 0:17:18.600 How optimistic they are and actually, you know, these are 0:17:18.760 --> 0:17:21.640 some of the more robust conference calls. We talked about 0:17:21.640 --> 0:17:26.040 how Reday seems it has sort of moved upstairs and transition. 0:17:25.560 --> 0:17:26.920 Out of the co CEO role. 0:17:27.560 --> 0:17:30.480 To go and apparently buy a ski resort in Utah, 0:17:30.560 --> 0:17:33.800 which he announced this week. But I think that the 0:17:34.320 --> 0:17:39.360 management there, Greg Peters, Ted Sarandos, I mean I think 0:17:39.359 --> 0:17:40.840 they can I can't think they can. 0:17:40.720 --> 0:17:41.560 Help the tone. 0:17:41.680 --> 0:17:44.560 But the numbers themselves tell us that maybe the storyline 0:17:44.560 --> 0:17:46.920 has changed, especially after run of the tech stocks we've 0:17:46.920 --> 0:17:47.480 seen this year. 0:17:47.520 --> 0:17:49.760 All right, John, always good to check in with you, 0:17:49.840 --> 0:17:52.520 and just fyi everybody. Netflix still down, but only down 0:17:52.560 --> 0:17:54.560 about three point four percent, so no longer like a 0:17:54.600 --> 0:17:57.879 ten percent decline which we saw right after the number, 0:17:58.000 --> 0:18:00.520 So you know, investors kind of settling in maybe reading 0:18:00.560 --> 0:18:03.239 through more of the texture, if you will, of that 0:18:03.359 --> 0:18:06.880 quarterly earning's release. John Erlikman, thank you, Bloomberg Markets anchor 0:18:06.920 --> 0:18:11.000 on Bloomberg TV, joining us via zoom from Toronto. So yeah, 0:18:11.040 --> 0:18:12.840 I mean, this is what's interesting about Ernie. You really 0:18:12.840 --> 0:18:14.280 got to go through all the details, right. 0:18:14.280 --> 0:18:16.879 And what John alluded to at the beginning when we 0:18:16.880 --> 0:18:18.920 were talking to him, the pain that Netflix went through 0:18:18.920 --> 0:18:20.280 at the beginning of last year. But if you look 0:18:20.280 --> 0:18:22.600 at stock for the past twelve months, down just one 0:18:22.640 --> 0:18:24.879 percent before we got today's numbers. 0:18:24.640 --> 0:18:29.560 Carol, Yeah, exactly, So something to keep in mind you're. 0:18:29.400 --> 0:18:33.000 Listening to the Bloomberg Business Week podcast. Catch us live 0:18:33.080 --> 0:18:36.880 weekday afternoons from three to six Easter on Bloomberg Radio, 0:18:36.960 --> 0:18:40.240 the Bloomberg Business App and YouTube. You can also listen 0:18:40.359 --> 0:18:43.440 live on Amazon Alexa from our flagship New York station, 0:18:43.880 --> 0:18:46.679 Just say Alexa play Bloomberg eleven thirty. 0:18:48.359 --> 0:18:50.760 It does seem like the stress is starting to ease, 0:18:51.600 --> 0:18:54.119 certainly how investors see it based on what we are 0:18:54.119 --> 0:18:57.679 getting from the big banks and more importantly from those regionals. 0:18:57.720 --> 0:19:00.399 And our next guest knows a lot about stress, writes 0:19:00.440 --> 0:19:03.760 about it in a new book. Karen Dylan is editorial 0:19:03.840 --> 0:19:07.399 director at the Family Business Advisory firm Banyan Global Family 0:19:07.440 --> 0:19:10.800 Business Advisor's former editor of the Harvard Business Review. She 0:19:10.840 --> 0:19:12.959 just got a new book out, The micro Stress Effect, 0:19:13.040 --> 0:19:15.439 How little things pile up and become big problems and 0:19:15.440 --> 0:19:19.000 what to do about it. She is on Zoom in Boston. Karen, 0:19:19.000 --> 0:19:22.200 I feel like it's a timely topic, considering the stress 0:19:22.200 --> 0:19:25.679 that seems to come at investors on a daily basis. 0:19:26.119 --> 0:19:28.320 Having said that, tell us about the book, what are 0:19:28.359 --> 0:19:31.520 micro stresses and some of the research you did specifically 0:19:31.560 --> 0:19:33.520 for to figure it out? And what we can do 0:19:33.600 --> 0:19:34.239 to manage it. 0:19:36.240 --> 0:19:37.760 Sure, I'm glad to be here. 0:19:37.840 --> 0:19:40.080 So even just listening to the pre evil before it 0:19:40.119 --> 0:19:42.479 came on is stressful. There's no question we're all kind 0:19:42.520 --> 0:19:44.520 of swimming in the sea of stress all the time. 0:19:44.800 --> 0:19:46.840 But what we're talking about with our research is something 0:19:46.840 --> 0:19:47.880 a little bit different that. 0:19:47.880 --> 0:19:50.000 Most of us don't notice. We don't even know how 0:19:50.000 --> 0:19:50.679 to talk about it. 0:19:50.720 --> 0:19:53.120 We know how to talk about stock market stress and 0:19:53.480 --> 0:19:55.359 political stress and things like that, but we don't know 0:19:55.359 --> 0:19:58.680 how to talk about what we ended up calling micro stress. 0:19:59.040 --> 0:20:01.399 And this is a pick thing that we observed in 0:20:01.480 --> 0:20:05.320 research with high performers were Originally the research was intended 0:20:05.359 --> 0:20:07.000 to look at what did they do better than the 0:20:07.040 --> 0:20:09.320 rest of us, How do they work more effectively with 0:20:09.400 --> 0:20:12.919 other people? How do they maintain their status as high performers? 0:20:13.200 --> 0:20:16.600 And we interviewed three hundred men and women equal numbers 0:20:16.920 --> 0:20:19.920 who were dubbed high performers by their organizations to try 0:20:19.920 --> 0:20:22.760 to get at those best practices. And then early on 0:20:22.800 --> 0:20:25.240 in our research we started to notice, after a bit 0:20:25.280 --> 0:20:28.159 of the veneer had gone off in the interview, that 0:20:28.240 --> 0:20:31.280 little by little became clear that even these high performers 0:20:31.440 --> 0:20:34.040 were kind of barely hanging on. They were swimming on 0:20:34.119 --> 0:20:37.359 what we ultimately called microstress, things that are so brief 0:20:37.440 --> 0:20:40.160 and so invisible to us that we barely notice them. 0:20:40.400 --> 0:20:42.399 What cumulatively they add up? 0:20:42.640 --> 0:20:45.119 And what specifically, can you give us a few examples, 0:20:45.119 --> 0:20:47.080 how does that sort of permeate in our day to 0:20:47.119 --> 0:20:49.480 day lives? Like what specifically would be an example of 0:20:49.480 --> 0:20:50.280 a microstress? 0:20:51.640 --> 0:20:53.520 Sure, so we put them in three buckets, and I 0:20:53.520 --> 0:20:55.480 think you'll relate to all three of them, but in 0:20:55.520 --> 0:20:59.320 three categories. One are micro stresses that drain your personal capacity, 0:20:59.520 --> 0:21:01.880 your ability to get things done. And a really good 0:21:01.880 --> 0:21:05.840 example of that is having unpredictable behavior from a person 0:21:05.880 --> 0:21:08.440 in authority, a boss or a manager, not a toxic 0:21:08.520 --> 0:21:11.080 boss or a jerk, but maybe a boss who stops 0:21:11.080 --> 0:21:13.240 you in the hallway to say he's got a new idea, 0:21:13.560 --> 0:21:15.399 and are you supposed to be pursuing that or not? 0:21:15.480 --> 0:21:16.960 Are you putting other things aside or not? 0:21:17.119 --> 0:21:20.119 Just not one hundred percent always knowing what's expected of 0:21:20.160 --> 0:21:23.640 you from the person above, or having a surgeon responsibility 0:21:23.640 --> 0:21:26.919 as a worker at home. That's category one personal capacity 0:21:27.480 --> 0:21:29.520 or another one that I think most of us experience 0:21:29.560 --> 0:21:33.199 in some way or microstresses that deplete our emotional reserve. So, 0:21:33.359 --> 0:21:36.639 for example, if you work around people who are just 0:21:36.680 --> 0:21:39.280 always stressed out, even if you're not stressed out, the 0:21:39.400 --> 0:21:42.600 secondhand stress from them is going to affect you. Micro 0:21:42.680 --> 0:21:45.520 Stresses are things that happen in our interactions with other 0:21:45.560 --> 0:21:48.199 people that are so brief and so baked into our 0:21:48.320 --> 0:21:51.560 day that you literally barely remember them. And individually they're 0:21:51.560 --> 0:21:54.480 all manageable, but what happens is they layer up over 0:21:54.520 --> 0:21:56.760 the day, over the week, over the month, and they 0:21:56.800 --> 0:21:58.280 actually take a really big toll on you. 0:21:58.600 --> 0:22:01.240 All Right, So media can be a very stressful world 0:22:01.240 --> 0:22:03.919 because it's just the way it is. So what is 0:22:03.960 --> 0:22:06.639 the connection? And some of us thrive on it? I 0:22:06.720 --> 0:22:08.520 mean I kind of like it when it's fast and furious, 0:22:08.600 --> 0:22:10.640 but not that isn't always the case, and you can't 0:22:10.680 --> 0:22:12.399 do that for one hundred percent of the time otherwise 0:22:12.440 --> 0:22:14.399 you're just going to kind of pass out. But having 0:22:14.440 --> 0:22:18.840 said that, what is the relationship between stress and productivity? 0:22:18.840 --> 0:22:22.000 There's got to be probably this interesting balance, right, because 0:22:22.040 --> 0:22:23.960 a little bit of stress gets the adrenaline going and 0:22:24.000 --> 0:22:27.240 can kind of, in some ways maybe make you more productive. 0:22:27.320 --> 0:22:29.520 But I'm guessing too much and that's not good. 0:22:31.080 --> 0:22:32.800 Too much of that is definitely not good. 0:22:32.800 --> 0:22:35.000 And again we started with high performers, So we started 0:22:35.000 --> 0:22:38.080 with people who were already seen why we seen as being. 0:22:37.920 --> 0:22:39.120 Better than the rest of us. 0:22:39.320 --> 0:22:41.000 They were just really good at doing a lot of work, 0:22:41.000 --> 0:22:43.960 being effective collaborators. But as we started to peel back, 0:22:44.000 --> 0:22:47.239 we realized even they really were almost overwhelmed by all 0:22:47.280 --> 0:22:49.920 this warm micro stress, to the point where it potentially 0:22:50.040 --> 0:22:53.200 threatened to derail their careers. What happens is you're always 0:22:53.240 --> 0:22:55.720 in reactive mode. You're always you know, you open your 0:22:55.720 --> 0:22:57.840 email first thing in the morning, and you're already feeling 0:22:57.880 --> 0:23:00.560 overwhelmed and behind as opposed to any of us trying 0:23:00.600 --> 0:23:02.920 to shape and plant our day, and we're thinking about 0:23:02.960 --> 0:23:05.480 which balls can we get away with dropping, rather than 0:23:05.720 --> 0:23:07.160 how do I do my best work today? 0:23:07.240 --> 0:23:08.800 Or what do I actually want to focus on today? 0:23:08.800 --> 0:23:11.359 It just it makes you in a reactive posture rather 0:23:11.400 --> 0:23:13.919 than a proactive posture, and none of us do our 0:23:13.960 --> 0:23:16.399 best work when we're always trying to figure out again 0:23:16.480 --> 0:23:18.080 which balls can we get away with dropping? 0:23:18.119 --> 0:23:19.160 Because we can't do it all. 0:23:19.440 --> 0:23:23.320 What are the financial repercussions for letting micro stresses add up. 0:23:25.160 --> 0:23:25.400 Well? 0:23:25.800 --> 0:23:29.680 Financially, it's it's not good for who you are. You're 0:23:29.720 --> 0:23:32.360 not going to be at your best, most effective you are. 0:23:32.560 --> 0:23:35.359 Potentially even one of the micro stresses that we identified 0:23:35.440 --> 0:23:38.000 is pressure to pursue goals that are out of sync 0:23:38.040 --> 0:23:39.280 with your personal value. 0:23:39.200 --> 0:23:41.840 And also career wise work that could be a detriment 0:23:41.960 --> 0:23:42.680 correct career. 0:23:42.480 --> 0:23:45.960 Correct it could indeed, if you are always sort of 0:23:46.000 --> 0:23:49.320 pursuing what someone else's version of success is and it's 0:23:49.359 --> 0:23:51.640 never feeling comfortable to you, or it's never who you are, 0:23:52.080 --> 0:23:53.240 you're never going to thrive. 0:23:53.200 --> 0:23:54.879 Really in the long run. You may you may have 0:23:54.920 --> 0:23:57.000 a good run five or seven years, but at some. 0:23:56.960 --> 0:23:59.080 Point you're going to realize this is not who I 0:23:59.119 --> 0:24:01.000 want to be. So you're not going to be your best. 0:24:01.320 --> 0:24:03.600 You're probably career wise not going to thrive in the 0:24:03.640 --> 0:24:04.600 way that you want to thrive. 0:24:04.800 --> 0:24:05.440 And the most. 0:24:05.240 --> 0:24:07.480 Importantly of all, you're going to you're not gonna like 0:24:07.520 --> 0:24:09.560 who you are. Eventually, it's going to kind of either way, 0:24:09.720 --> 0:24:11.840 you just small ways. So none of us are our 0:24:11.840 --> 0:24:14.320 best when microstress is overwhelming us. 0:24:14.320 --> 0:24:16.440 And I like Karen, how you make the distinction, certainly 0:24:16.480 --> 0:24:20.520 the book between stress, microstress and secondary micro stresses thirty seconds. 0:24:20.800 --> 0:24:22.640 One piece of advice for those folks who are listening 0:24:22.680 --> 0:24:23.040 to this. 0:24:25.200 --> 0:24:27.879 One piece of advice is to actually stop and have 0:24:28.119 --> 0:24:31.280 five minute clarification conversations with the people that you work with. 0:24:31.400 --> 0:24:32.399 So many of us were. 0:24:32.240 --> 0:24:35.359 Moving so quickly, and we're working with ever shifting cast 0:24:35.359 --> 0:24:37.480 of characters, people who are new at colleagues and things 0:24:37.520 --> 0:24:39.320 like that. We don't know how to work together very well, 0:24:39.480 --> 0:24:41.359 and we assume things, and that can lead to all 0:24:41.440 --> 0:24:44.800 kinds of micro stresses, just misalignments or small performance misses. 0:24:44.920 --> 0:24:45.880 So literally take. 0:24:45.720 --> 0:24:49.480 Five minutes at the end of meetings and just clarify who, when, 0:24:49.840 --> 0:24:52.479 what's the next step. Don't that simple step can make 0:24:52.520 --> 0:24:54.200 a really big difference in your work. 0:24:54.240 --> 0:24:56.359 Michrostrogical. We do that sometimes in the newsroom where you're 0:24:56.359 --> 0:24:58.840 having conflicting stories. It's like, hey, everybody, get over here, 0:24:58.880 --> 0:25:02.399 and for three minutes, like set everything straight. Karen Thanks 0:25:02.400 --> 0:25:06.320 in a very timely conversation. Karen Dylan, editorial director and 0:25:06.760 --> 0:25:08.560 the micro stress Effect her book. 0:25:09.760 --> 0:25:14.119 This is Bloomberg Business. Wait inside from the reporters and 0:25:14.320 --> 0:25:17.879 editors who bring you America's most trusted business magazine plus 0:25:17.960 --> 0:25:22.080 global business finance and tech news. The Bloomberg Business Week 0:25:22.119 --> 0:25:35.080 podcast with Karen Messer and Tim Stenebek from Bloomberg Radio. 0:25:35.640 --> 0:25:39.480 Yeah, thank you generative AI and chat ChiPT You've given 0:25:39.560 --> 0:25:42.639 us all a lot to talk about and to talk to. 0:25:42.920 --> 0:25:45.080 I actould say I was actually playing with it this weekend. 0:25:45.720 --> 0:25:49.639 The world definitely all in on AI, specifically generative artificial intelligence, 0:25:49.680 --> 0:25:52.960 you know, AI algorithms that generate new outputs based on 0:25:53.000 --> 0:25:55.240 the data that they have been trained on. That's being 0:25:55.320 --> 0:25:59.280 used to come up with meal plans, create art, write essays, 0:25:59.320 --> 0:26:01.720 term papers, future robots, and as during the upcoming issue 0:26:01.720 --> 0:26:05.040 of Bloomberg BusinessWeek points out for therapy as well. So 0:26:05.119 --> 0:26:07.240 let's get to it. This story in the new issue 0:26:07.520 --> 0:26:09.359 that will be on newstands later on this week, already 0:26:09.359 --> 0:26:12.320 online at Bloomberg dot com, slash BusinessWeek on the Bloomberg terminal. 0:26:12.640 --> 0:26:15.400 Let's get into it. Let's talk therapy entering the era 0:26:15.440 --> 0:26:18.280 of chatbots with us. Is Bloomberg News AI reporter Rachel 0:26:18.320 --> 0:26:21.440 Metz here in studio along with the editor of Bloomberg BusinessWeek, 0:26:21.520 --> 0:26:24.000 Joel Weber. It is every Are you real? Are you 0:26:24.040 --> 0:26:26.320 a chat gp teape? I am? 0:26:26.520 --> 0:26:30.080 I am real as far as I know. But the 0:26:30.160 --> 0:26:34.560 conversations that people are having with chet tvt's also real. 0:26:35.760 --> 0:26:40.240 Would you like that transition? The conversations are real, and 0:26:40.320 --> 0:26:43.360 you can ask it anything, and people are and they're 0:26:43.400 --> 0:26:47.000 making all kinds of stuff, and you know, there's all 0:26:47.119 --> 0:26:50.440 kinds of questions about anxieties of what's going to happen 0:26:50.480 --> 0:26:53.000 to jobs and all kinds of other stuff. But the 0:26:53.040 --> 0:26:55.679 thing that I was really drawn to with Rachel's story, 0:26:55.720 --> 0:26:58.639 which reminded me a little bit of a Ellen Hewitt 0:26:58.680 --> 0:27:01.200 story that we did not so long go, also a 0:27:01.240 --> 0:27:07.200 little bit about what where AI can go unexpected places? 0:27:07.280 --> 0:27:10.200 This was one of those as well. So what's happening 0:27:10.200 --> 0:27:14.280 because people are actually starting to use it in some 0:27:14.520 --> 0:27:16.760 very deeply personal places. 0:27:17.240 --> 0:27:20.560 Yeah, No, it's it's been interesting to watch people are 0:27:20.560 --> 0:27:23.640 finding all kinds of ways to use chat GPT, And 0:27:23.920 --> 0:27:26.080 one thing that some people are trying out right now 0:27:26.280 --> 0:27:29.760 that I started to notice is using it not really 0:27:29.760 --> 0:27:32.760 I haven't seen people really replacing therapy with it, like 0:27:32.760 --> 0:27:35.480 if you're seeing a human therapist, but using it to 0:27:35.560 --> 0:27:39.880 solve occasional problems, or realizing that for them there's something 0:27:39.920 --> 0:27:41.760 about it that seems to be helpful to them, at 0:27:41.840 --> 0:27:43.320 least with the people that I spoke to, which I 0:27:43.359 --> 0:27:44.080 thought was really neat. 0:27:44.600 --> 0:27:50.120 So was this an intended use for what chat gpt 0:27:48.320 --> 0:27:49.080 do this? 0:27:50.480 --> 0:27:52.159 This is not an intended use case. It is a 0:27:52.240 --> 0:27:57.439 general use chatbot. It is not meant for that specifically. 0:27:57.440 --> 0:27:59.680 And in fact, if you look at open aies terms 0:27:59.720 --> 0:28:03.359 of us, they don't want it to be used for 0:28:04.119 --> 0:28:07.119 very specific medical use cases like diagnosing an illness or 0:28:07.160 --> 0:28:07.760 something like that. 0:28:09.280 --> 0:28:11.480 Shame on them. I mean Google doctor, I mean, like 0:28:11.520 --> 0:28:13.320 how many times writes up that goes up? I mean 0:28:13.400 --> 0:28:15.840 they know people are gonna go all these crazy places. 0:28:15.520 --> 0:28:18.480 Right, I mean I think that if you're able to 0:28:18.680 --> 0:28:22.000 use it and find it helpful, that I think that 0:28:22.000 --> 0:28:25.200 that's interesting and that I was actually a little surprised 0:28:25.240 --> 0:28:27.560 because initially my first thought was this sounds like a 0:28:27.640 --> 0:28:31.240 really scary, bad idea, But then as I talked to people, 0:28:32.240 --> 0:28:35.840 it was it's much more nuanced than that did help them. Yeah, 0:28:35.880 --> 0:28:37.960 in a couple cases, although there was one. There's one 0:28:37.960 --> 0:28:40.400 person I spoke to who said, you know, it was 0:28:40.440 --> 0:28:44.360 like saying the right things, but I just couldn't get 0:28:44.360 --> 0:28:46.800 into it because I knew I wasn't talking to a person. 0:28:47.200 --> 0:28:49.560 But I also think it's really important to not think 0:28:49.600 --> 0:28:52.840 of it as an either or situation, Like it's not 0:28:52.920 --> 0:28:55.840 like you might one day have a human therapist or 0:28:55.880 --> 0:28:59.680 a robotherapist. It's possible this could be used, as Margaret 0:28:59.720 --> 0:29:02.240 Mitchell what hockey Face said, Perhaps it could be used 0:29:02.280 --> 0:29:05.040 to help train people that answer phones for crisis lines 0:29:05.480 --> 0:29:09.120 that could help them to help more people at a time, 0:29:09.200 --> 0:29:11.720 And those kinds of people are vital and you could 0:29:11.800 --> 0:29:13.480 totally use more of them. This could be a way 0:29:13.520 --> 0:29:15.960 to make them more able to help people, which I 0:29:16.000 --> 0:29:16.680 thought was kind of cool. 0:29:16.880 --> 0:29:20.040 It feels like the there's like some empathy. It's like 0:29:20.080 --> 0:29:22.160 built into this of like I know what you're going through. 0:29:22.280 --> 0:29:26.320 Like there's got to be like a chat GBT training 0:29:26.360 --> 0:29:28.880 course in terms of just like making sure people feel 0:29:28.920 --> 0:29:31.800 like they're being heard. Right, But so, what did you 0:29:31.840 --> 0:29:34.040 hear from the people that you spoke to, and like 0:29:34.200 --> 0:29:37.040 what led them to hear And are they doing it 0:29:37.080 --> 0:29:40.840 instead of humans or in addition to real therapy. 0:29:40.640 --> 0:29:43.240 Not instead of the One of the people that I 0:29:43.240 --> 0:29:46.200 spoke to, Milo has a therapist, happened to miss a 0:29:46.240 --> 0:29:49.880 therapy appointment and had seen somebody on Twitter saying it 0:29:50.000 --> 0:29:52.480 was really helpful to them, and Milo was like, hey, 0:29:52.520 --> 0:29:55.200 I'll just give this a try, and then found it 0:29:55.240 --> 0:29:59.440 really helpful and has used it repeatedly since then. Not 0:29:59.480 --> 0:30:01.040 everybody will I feel that way, obviously. 0:30:01.200 --> 0:30:02.640 I love in your story that you talked to us 0:30:02.880 --> 0:30:05.280 tell us about that one of the earliest chatbots, Eliza. Right, 0:30:05.320 --> 0:30:07.360 so this takes us back to what the nineteen sixties. 0:30:07.760 --> 0:30:09.160 This was new to me. I did not have this. 0:30:09.280 --> 0:30:09.640 I didn't know. 0:30:09.640 --> 0:30:14.440 Oh so Eliza was a supposed to mimic like a 0:30:14.560 --> 0:30:17.880 Rogerian style therapy, which is like, I guess, very like 0:30:18.360 --> 0:30:21.560 self reflective you know who, why do you think that? 0:30:21.720 --> 0:30:25.400 Or you know those kinds of like reflective questions. That 0:30:25.520 --> 0:30:29.560 was a much much simpler style of chatbot, which you 0:30:29.560 --> 0:30:33.320 would you would say something and it would be looking 0:30:33.320 --> 0:30:35.320 at or you would type something in that case and 0:30:35.400 --> 0:30:38.120 it would be looking specifically for keywords that could be 0:30:38.200 --> 0:30:41.480 tied to certain types of answers. 0:30:41.840 --> 0:30:43.880 You know what makes me That's the other thing. Like 0:30:44.040 --> 0:30:46.280 nineteen sixties, we keep thinking this chatbot is kind of 0:30:46.360 --> 0:30:48.960 this whole big new thing, and I keep googling and 0:30:49.000 --> 0:30:51.840 trying like origins of artificial intelligence, like I want to 0:30:51.880 --> 0:30:54.720 know more because I'm trying to Rachel get my head around, like, 0:30:54.720 --> 0:30:56.840 why all of a sudden, are we just this is 0:30:56.880 --> 0:30:59.920 such an explosion, right, Because it doesn't sound like it's 0:31:00.120 --> 0:31:00.840 totally new. 0:31:00.960 --> 0:31:03.720 It's not new. I think some of what's new is 0:31:04.120 --> 0:31:06.840 the style. You can think of AI as having like 0:31:06.880 --> 0:31:09.720 different kinds of architecture. I think of it, and architecture 0:31:09.760 --> 0:31:11.280 is a word you'll see a lot in a lot 0:31:11.320 --> 0:31:14.560 of academic papers. So architecture with buildings, there's all different 0:31:14.600 --> 0:31:17.480 kinds of buildings, right. Similarly, in AI, you have different 0:31:17.480 --> 0:31:21.240 styles of putting these AI systems together, and this generative 0:31:22.000 --> 0:31:25.440 style is newer, and being able to do that is 0:31:25.720 --> 0:31:28.320 a newer thing, and it gets us closer to it 0:31:28.360 --> 0:31:31.800 makes it makes these systems better at mimicking human speech, right, 0:31:31.920 --> 0:31:34.440 But it doesn't it's not actually, you know, it isn't 0:31:34.520 --> 0:31:38.120 human in any way. It's essentially using math in a 0:31:38.160 --> 0:31:41.040 way that gets you to look at it the answer 0:31:41.080 --> 0:31:43.160 and say, oh, you know that looks like something a 0:31:43.160 --> 0:31:44.120 person could say. 0:31:44.000 --> 0:31:44.520 Kind of close. 0:31:44.600 --> 0:31:47.080 Yeah, man, that's the creepy part of it. 0:31:47.320 --> 0:31:50.080 Another thing that I learned in this story is that 0:31:50.120 --> 0:31:54.200 there are chatbots that focus on mental health, yes, as 0:31:54.200 --> 0:31:58.720 opposed to chat gibt that can can do whatever it does, right, 0:31:58.760 --> 0:32:02.959 but so wobot weissa, what are those and what are 0:32:02.960 --> 0:32:03.320 they doing? 0:32:03.880 --> 0:32:07.040 Those do exist, they've been out for a while in 0:32:07.040 --> 0:32:11.480 this space, and people can pay for them, and that 0:32:11.560 --> 0:32:15.920 those can potentially also be helpful to people. So it 0:32:16.000 --> 0:32:18.160 is kind of interesting, right that those things already exist, 0:32:18.240 --> 0:32:20.280 but people are saying, let me try this. I mean, 0:32:20.280 --> 0:32:23.280 this is very easy to access. It's exciting in many 0:32:23.280 --> 0:32:26.040 ways because it's new. So I think it's going to 0:32:26.080 --> 0:32:28.000 be like a lot of different applications of chat cheept 0:32:28.160 --> 0:32:30.760 where we kind of have to see how the dust 0:32:30.800 --> 0:32:33.800 settles and if people actually are using it for this 0:32:33.840 --> 0:32:34.440 and other things. 0:32:35.160 --> 0:32:37.280 Carol brought up the nineteen sixties. It made me also 0:32:37.280 --> 0:32:40.120 think of in the nineteen nineties with ask Jeeves, which 0:32:40.240 --> 0:32:43.080 was obviously right, people kind of forget about that. 0:32:43.000 --> 0:32:45.040 But it was sort of this whole don't forget about it. 0:32:45.040 --> 0:32:48.680 People don't forget about Jeeves. But interesting during these other 0:32:49.000 --> 0:32:51.680 time periods where we've seen different things like this, when 0:32:51.760 --> 0:32:54.560 we think this is like something very new but interesting, 0:32:54.600 --> 0:32:57.920 that we've kind of had different irradiations in a way, 0:32:58.000 --> 0:33:00.400 and in the past, Yeah, I mean, I think people 0:33:00.560 --> 0:33:07.200 like to personalize and anthropomorphize technology and sometimes sometimes that 0:33:07.240 --> 0:33:08.520 can be totally fine. 0:33:09.280 --> 0:33:12.320 Sometimes that can go a little bit awry, like Rumba 0:33:12.400 --> 0:33:14.960 for instance, Like people treat them a little bit like 0:33:14.960 --> 0:33:16.560 pets perhaps, you know, and that's. 0:33:16.640 --> 0:33:24.960 Obviously it is a pet part of the family. I 0:33:25.000 --> 0:33:27.080 have one that has a name, so you we're not 0:33:27.120 --> 0:33:30.120 all crazy, no, But it is interesting about you know this. 0:33:30.520 --> 0:33:34.080 I am curious how effective or what are the medical community, 0:33:34.120 --> 0:33:36.240 like are people weighing in about because I just think 0:33:36.320 --> 0:33:40.120 that there's some very serious illnesses out there and I'm 0:33:40.160 --> 0:33:42.880 just wondering, can a chat g BT pick up some 0:33:42.880 --> 0:33:45.720 of the nuances of somebody who obviously needs some serious help. 0:33:46.280 --> 0:33:50.640 I talked to a professor who is also a clinical psychologist. 0:33:51.760 --> 0:33:55.320 He can he can imagine a future in which this 0:33:55.440 --> 0:33:59.560 might be useful for helping people along with human therapy. 0:34:00.600 --> 0:34:03.360 Right now, he was like, no, no, like this. You know, 0:34:03.400 --> 0:34:06.720 this is not for somebody who's got a serious mental 0:34:06.760 --> 0:34:10.320 health condition. This is not the way to go like solo. 0:34:10.680 --> 0:34:13.640 But he also but at the same time he was 0:34:13.680 --> 0:34:17.200 saying that he could understand why people would find it 0:34:17.239 --> 0:34:19.560 helpful to talk to or at least or pleasant. I 0:34:19.560 --> 0:34:20.320 can't remember. 0:34:20.040 --> 0:34:23.040 Exactly what he's working right potentially. 0:34:23.000 --> 0:34:25.759 Well unless, I mean it depends. If you want to 0:34:25.800 --> 0:34:29.279 talk to a chatbot like GPT four, you're gonna have 0:34:29.280 --> 0:34:29.680 to pay for it. 0:34:29.719 --> 0:34:32.560 And that's true, right business. 0:34:35.000 --> 0:34:38.480 So are you only curious about some of the privacy 0:34:38.480 --> 0:34:42.840 implications here, because I would think if I were letting 0:34:43.080 --> 0:34:45.719 my chatbot talk to people, I'd want to know how 0:34:45.760 --> 0:34:48.640 that chatbot was doing in a situation like this. And 0:34:48.640 --> 0:34:51.160 and also you know, obviously that opens up a can 0:34:51.200 --> 0:34:53.719 of worms for what the privacy implications looks like on 0:34:53.760 --> 0:34:56.319 the AI front as well. So has anybody been talking 0:34:56.320 --> 0:34:57.360 about or looking into. 0:34:57.200 --> 0:34:57.560 Any of that? 0:34:58.120 --> 0:35:00.439 Yeah, I mean I think that one of the people 0:35:00.480 --> 0:35:03.480 I spoke with, Margaret Mitchell also, she's from Hugging Face. 0:35:04.280 --> 0:35:06.200 That was something that she mentioned to me. And it's 0:35:06.200 --> 0:35:09.280 something that as like as a reporter, but also as 0:35:09.320 --> 0:35:11.160 a human who likes to use a lot of different 0:35:11.160 --> 0:35:14.279 technology products. I also think about a lot when I 0:35:14.400 --> 0:35:18.520 use chat GBT myself, I try to avoid giving it 0:35:18.560 --> 0:35:22.759 any kinds of personally identifying information, and I think I've 0:35:22.800 --> 0:35:25.719 told many people the same. I just I don't feel 0:35:25.719 --> 0:35:29.760 comfortable doing that. I know that open AI reviews users conversations. 0:35:31.040 --> 0:35:32.960 You can delete your account if you don't want them 0:35:33.000 --> 0:35:34.360 to have your data, but that can take up to 0:35:34.400 --> 0:35:36.200 four weeks according to their terms of service. 0:35:36.280 --> 0:35:38.400 Doesn't this feel like all the tech CEOs are like, yeah, no, 0:35:38.520 --> 0:35:41.879 my kids, I don't let them play with computers. Rachel 0:35:41.880 --> 0:35:45.240 says that, yeah, I don't do this. What's interesting too, though, 0:35:45.320 --> 0:35:47.640 in terms of data though, right, because if you put 0:35:47.800 --> 0:35:51.279 anything personal down there, that's how this all works, right, 0:35:51.600 --> 0:35:54.240 uses the data to kind of get smarter and smarter 0:35:54.320 --> 0:35:54.839 if you will. 0:35:55.320 --> 0:35:59.759 Yeah, your data is helping could help train future iterations 0:35:59.760 --> 0:35:59.920 of this. 0:36:00.120 --> 0:36:01.799 Sure, so you have to remember it's in there. 0:36:03.440 --> 0:36:07.000 It's sticky, sticky, you could describe it. 0:36:07.040 --> 0:36:09.279 I actually did use it myself, like a week ago 0:36:09.400 --> 0:36:12.239 to I haven't I haven't told anyone in my family this. 0:36:12.320 --> 0:36:16.360 I used it to to sort of talk through an argument, 0:36:17.160 --> 0:36:20.320 and I didn't give it any personally identifying details. I 0:36:20.320 --> 0:36:22.000 feel like you can if you spend a minute thinking 0:36:22.040 --> 0:36:24.279 about it, you can totally do that. 0:36:24.480 --> 0:36:25.280 Or is it helpful? 0:36:26.440 --> 0:36:26.640 Yeah? 0:36:26.680 --> 0:36:27.400 Actually it was. 0:36:27.800 --> 0:36:29.399 I mean in the way that can. 0:36:29.320 --> 0:36:30.759 I help you reason with a seven year old? 0:36:31.320 --> 0:36:34.279 No, I haven't tried it with anything about my kids. 0:36:34.320 --> 0:36:35.600 That's like you write it in and then like you 0:36:35.640 --> 0:36:39.239 don't get a response we don't have enough data on that's. 0:36:39.320 --> 0:36:41.600 Yeah, it was helpful to be reflective, but you know 0:36:41.640 --> 0:36:44.319 what Eliza might have been able to be similarly help 0:36:44.360 --> 0:36:45.600 me be similarly reflective. 0:36:45.600 --> 0:36:46.479 I don't know right. 0:36:48.880 --> 0:36:50.520 When the answer is, when did you go let it down? 0:36:50.880 --> 0:36:51.080 Yeah? 0:36:51.640 --> 0:36:52.640 Why do you think that? 0:36:53.360 --> 0:36:54.759 You know, I have to I feel like this has 0:36:54.800 --> 0:36:56.759 been an interesting week. There are sixty minutes to another 0:36:56.800 --> 0:36:58.759 couple of pieces, and they were really leaning into and 0:36:58.760 --> 0:37:02.239 obviously talking to the head of Alphabet Sundar Pichai about 0:37:02.239 --> 0:37:05.080 what they are doing. And it's interesting, Like on Twitter, 0:37:05.120 --> 0:37:06.880 I was getting you know, I put out those pieces 0:37:06.920 --> 0:37:08.879 and people are like, wait, you know, everybody's like, oh 0:37:08.880 --> 0:37:11.200 my god, it's the end of the world. How do you, 0:37:11.239 --> 0:37:13.720 as somebody who is obviously in a whole other plane 0:37:13.719 --> 0:37:16.040 when it comes to AI understanding talking to the voices 0:37:16.040 --> 0:37:18.600 who are in it, how do you see it? Because 0:37:18.640 --> 0:37:20.359 it does feel like headlines are coming out as fast 0:37:20.400 --> 0:37:23.400 and furiously, whether it's on therapy, whether it's on something else. 0:37:24.000 --> 0:37:28.600 I try to remember to take a deep breath and like, honestly, 0:37:28.719 --> 0:37:32.000 like just kind of okay, and let's kind of look 0:37:32.040 --> 0:37:35.360 at the reality of what these things can do. On 0:37:35.400 --> 0:37:39.319 the one hand, we have AI systems that are increasingly 0:37:39.520 --> 0:37:43.160 powerful and can do some really interesting things, or perhaps 0:37:43.320 --> 0:37:45.360 in the near future, could do some really interesting things. 0:37:46.160 --> 0:37:49.520 Various cool medical applications like helping detect certain kinds of cancer. 0:37:50.400 --> 0:37:53.160 Things like that I think many people can agree are great. 0:37:53.760 --> 0:37:55.279 On the other hand, there's a lot of things we 0:37:55.360 --> 0:37:57.560 need to keep an eye out for, and some harms 0:37:57.560 --> 0:38:01.480 that are already here. I don't think that this is 0:38:02.400 --> 0:38:07.600 agi artificial general intelligence. We are not there. And also 0:38:07.719 --> 0:38:09.640 a lot of these things aren't an inevitability. I think 0:38:09.640 --> 0:38:10.840 we have artificial. 0:38:10.480 --> 0:38:13.919 General intelligence like creating up stuff like creating another Jeel, 0:38:13.960 --> 0:38:15.040 creating another me kind of thing. 0:38:15.080 --> 0:38:15.800 No, that's not happening. 0:38:15.800 --> 0:38:18.640 Well, okay, okay, that's okay, okay. 0:38:18.680 --> 0:38:18.759 No. 0:38:18.840 --> 0:38:20.239 I think I think a lot of it is trying 0:38:20.239 --> 0:38:23.399 to keep into perspective where are we which is it's 0:38:23.440 --> 0:38:26.279 still this is still early days, even though AI in 0:38:26.400 --> 0:38:28.800 various forms has existed for many decades. 0:38:28.840 --> 0:38:33.000 At this point, where else are you interested in watching 0:38:33.680 --> 0:38:37.719 chat GBT go into and sort of you know, maybe 0:38:37.800 --> 0:38:40.560 let's say disrupt That word. 0:38:41.000 --> 0:38:44.399 Disrupt interesting, I mean it has it has a bit 0:38:44.480 --> 0:38:49.560 of a honesty problem. We we need systems like this 0:38:49.760 --> 0:38:52.439 that can be a little bit more reliable as far 0:38:52.640 --> 0:38:55.920 as you ask it a question and you get an 0:38:55.920 --> 0:38:57.919 answer that you then don't have to spend a really 0:38:57.960 --> 0:39:01.760 long time like confirming checking. Yeah, and that gets harder 0:39:01.800 --> 0:39:04.440 as it's funning, right, Yeah, well yeah, if you're googling, 0:39:04.560 --> 0:39:06.880 and if you're asking a complicated question, you might have 0:39:06.920 --> 0:39:09.120 a whole bunch of different things. Then that you're like, okay. 0:39:09.280 --> 0:39:10.960 If you're asking it for like a list of things, 0:39:10.960 --> 0:39:12.359 for instance, then you're like, okay, I have to run 0:39:12.400 --> 0:39:14.239 down everything on this list to make sure you know 0:39:14.280 --> 0:39:18.680 it's all accurate. So if we can get in that direction, 0:39:18.800 --> 0:39:22.560 I think it could be really interesting for maybe there's 0:39:22.600 --> 0:39:24.440 some interesting finance applications. 0:39:24.920 --> 0:39:28.520 I love that it lies. It's sometimes that's useful. 0:39:28.200 --> 0:39:29.719 Though you can things. 0:39:34.440 --> 0:39:35.719 I am just a simple a. 0:39:37.880 --> 0:39:40.319 It's a fascinating world and we are all obsessed with 0:39:40.360 --> 0:39:42.799 it and obsessed with you and really your take on 0:39:42.880 --> 0:39:45.200 it and reporting. So thank you so much, Rachel Mettz. 0:39:45.440 --> 0:39:48.080 She's aar reporter here at Bloomberg News in our interactive 0:39:48.080 --> 0:39:50.759 Brokers studio along with the editor of Bloomberg business Week, 0:39:50.800 --> 0:39:54.520 Jill Weber. This story talk therapy entering the era of chatbots. 0:39:54.560 --> 0:39:56.560 It's going to be the new issue of Bloomberg Business Week, 0:39:56.840 --> 0:39:59.839 add on newsstands, online already at Bloomer dot Cosage business 0:39:59.840 --> 0:40:02.879 Week and of course on the Bloomberg terminal. Check it out. 0:40:03.120 --> 0:40:04.719 This is Bloomberg. 0:40:08.840 --> 0:40:10.480 Unbrotherly mark a. 0:40:12.640 --> 0:40:13.080 Journal. 0:40:14.080 --> 0:40:14.480 Now about you. 0:40:14.560 --> 0:40:15.080 Let me drive? 0:40:15.600 --> 0:40:20.839 No, no, no, no, drive honey please, how did the rider gravels? 0:40:21.239 --> 0:40:22.640 Let's mate, I want to drive. 0:40:24.880 --> 0:40:26.840 It's a good question times. 0:40:29.600 --> 0:40:32.480 This is the drive to the Globe dot com for me. 0:40:32.560 --> 0:40:34.120 I think we'll buy around yelling. 0:40:34.480 --> 0:40:36.000 I'm on Bloomberg Radio. 0:40:36.440 --> 0:40:39.480 All right, everybody, just about seventeen and a half minutes 0:40:39.560 --> 0:40:43.960 left in today's trading day. Taking a look. As Charlie mentioned, 0:40:44.320 --> 0:40:46.279 you've got a bit of a mixed market, but kind 0:40:46.280 --> 0:40:48.240 of tight range, certainly on the equity side of things 0:40:48.320 --> 0:40:52.600 and the treasury trade as we heard still with that 0:40:52.600 --> 0:40:55.120 to your about four point ten year note with the 0:40:55.160 --> 0:40:57.719 yield of three point fifty seven, So just a little 0:40:57.760 --> 0:40:59.359 bit of a set up here. Let's get to it though, 0:40:59.360 --> 0:41:01.799 with our market guests, our drive to the closed guest 0:41:01.880 --> 0:41:04.800 on this Tuesday, Jeanette Garrity, Principal and Managing director and 0:41:04.840 --> 0:41:07.719 chief Economist over at the San Francisco based Robertson Stevens. 0:41:08.200 --> 0:41:11.520 She's on the phone in Chicago, Jeanette. Great to have 0:41:11.600 --> 0:41:15.160 you here with Jess Manton and myself. First of all, 0:41:15.200 --> 0:41:17.680 before we get into some of the big macro think 0:41:17.880 --> 0:41:20.000 about our market environment, I want to ask you about 0:41:20.000 --> 0:41:23.520 the San Francisco area. Roberts and Stevens definitely known, certainly 0:41:23.560 --> 0:41:26.160 because it's based in San Francisco, understanding kind of the 0:41:26.200 --> 0:41:30.200 tech community, the entrepreneurial community. What are you hearing from 0:41:30.200 --> 0:41:31.600 your colleagues that are based there. 0:41:32.719 --> 0:41:38.520 A great question, and it's noticeable, I think for those 0:41:38.560 --> 0:41:42.360 of us located in the San Francisco Bay area. The 0:41:42.840 --> 0:41:46.120 impact of some of the tech layoffs that everybody's read about, 0:41:46.800 --> 0:41:50.719 as well as just probably a general slowdown in the 0:41:51.360 --> 0:41:57.839 expansion of that sector. That is what really drove the 0:41:57.920 --> 0:42:02.920 downtown San Francisco economy in particular. That's where it's most noticeable, 0:42:03.640 --> 0:42:07.439 and we see it coming back, and there's many there's 0:42:07.480 --> 0:42:12.600 a lot of talk in the community about how that 0:42:12.680 --> 0:42:16.279 business community, that localized business community, goes forward. Given that 0:42:16.360 --> 0:42:19.160 a lot of jobs have been lost. You can get 0:42:19.200 --> 0:42:23.000 outside of San Francisco, there's not much of a slow 0:42:23.080 --> 0:42:27.280 down just yet showing up the shopping center, parking lots 0:42:27.320 --> 0:42:32.920 are all full, and nightlife in San Francisco is robust. 0:42:33.160 --> 0:42:34.600 So it's a little bit of a mixed bag. 0:42:36.239 --> 0:42:39.200 And something that has stood out to me just kind 0:42:39.239 --> 0:42:41.640 of more broadly, when we're thinking about the economy. If 0:42:41.680 --> 0:42:44.560 you look in the terminal, there's a function ECFC that 0:42:44.560 --> 0:42:47.160 looks at the economic forecast, and as of now, when 0:42:47.200 --> 0:42:49.680 we came into this year, there was this expectation we'd 0:42:49.680 --> 0:42:52.239 see growth contract in the second third quarters. You're not 0:42:52.360 --> 0:42:54.879 necessarily seeing that now. So can you kind of break 0:42:54.920 --> 0:42:57.440 down to us as far as the forecast for the 0:42:57.480 --> 0:42:59.840 economy moving forward and why we're beginning to see a 0:42:59.840 --> 0:43:02.080 sh shift there when we have so many people who 0:43:02.080 --> 0:43:04.000 are debating whether or not we're going to have a 0:43:04.040 --> 0:43:06.040 recession in the coming quarters. 0:43:07.040 --> 0:43:07.279 Yeah. 0:43:07.440 --> 0:43:10.080 Yeah, it's sort of like if you if you forecast 0:43:10.120 --> 0:43:12.360 it long enough, I guess you know, somebody will be 0:43:12.480 --> 0:43:18.840 right here. And I've actually just recently gone into the 0:43:18.960 --> 0:43:26.400 camp of saying that I would advise preparing for a 0:43:26.600 --> 0:43:29.640 downturn in the third and fourth quarter of this year. 0:43:29.719 --> 0:43:32.080 I think things are kind of coming together in that way. 0:43:32.680 --> 0:43:37.239 Watching the labor market watching what the impact is on 0:43:37.719 --> 0:43:41.319 the financial sector, of the banking sector in particular. Things 0:43:41.360 --> 0:43:45.279 have settled down there, but clearly their costs of operation 0:43:45.440 --> 0:43:47.440 that have risen, and there's going to be an impact 0:43:47.440 --> 0:43:52.840 from that. But you are absolutely right that right now 0:43:52.960 --> 0:43:57.400 there's not much of a slowdown, and I think Gee's 0:43:57.520 --> 0:44:00.919 first quarter economic growth is likely to come in at 0:44:01.000 --> 0:44:03.920 two percent, maybe even a little bit above two percent. 0:44:04.600 --> 0:44:07.960 It is not normal for the US economy to go 0:44:08.040 --> 0:44:12.640 into a recession, you know, hitting a brick wall going 0:44:12.840 --> 0:44:15.879 sixty five miles per hour or ninety miles per hour. 0:44:16.680 --> 0:44:22.360 So what everybody's looking at this quarter is to see 0:44:22.520 --> 0:44:27.520 whether economic growth, economic activity will slow down more into 0:44:27.640 --> 0:44:32.239 the one percent range, which would certainly set up a 0:44:32.320 --> 0:44:36.399 situation where we could get a mild recession driven by 0:44:36.560 --> 0:44:39.880 a slowdown in consumer spending and a rise in the 0:44:39.960 --> 0:44:43.400 unemployment rate, kind of classic behavior for the US economy. 0:44:43.440 --> 0:44:44.960 Well, that's what I wanted to ask you, right So, 0:44:45.040 --> 0:44:47.520 April three point five percent for the unemployment rate. Are 0:44:47.560 --> 0:44:50.600 you assuming that by the third quarter or fourth quarter 0:44:50.680 --> 0:44:55.160 that wear well above that or could we get a slowdown? 0:44:55.280 --> 0:44:57.560 Could we get a recession, which is a part of 0:44:57.560 --> 0:44:59.879 our narrative right now, Jeanette, and I think this is why, 0:45:00.400 --> 0:45:02.400 you know, the financial markets are trying are having a 0:45:02.480 --> 0:45:04.680 tough time figuring out what kind of environment do we 0:45:04.800 --> 0:45:07.720 truly have in the second half of this year. Could 0:45:07.760 --> 0:45:12.280 we have a recession with a tight labor market? 0:45:14.520 --> 0:45:17.520 Well, I think the answer to that is yes. But 0:45:18.160 --> 0:45:22.680 let's talk about the numbers. There was a time that 0:45:22.840 --> 0:45:27.279 a tight labor market was defined by an unemployment rate 0:45:27.320 --> 0:45:29.759 of four and a half percent, not necessarily fore and 0:45:29.800 --> 0:45:34.680 a half percent. But I don't think we're going to 0:45:34.760 --> 0:45:41.759 get that recession without the unemployment rate going up and 0:45:42.280 --> 0:45:46.800 the impact that that would have on consumer spending. Can 0:45:46.840 --> 0:45:52.000 we get a mild economic recession that the FED might 0:45:52.080 --> 0:45:57.319 choose to cause call a soft landing, albeit with an 0:45:57.400 --> 0:46:02.440 unemployment rate of four point one, four point two something 0:46:02.560 --> 0:46:04.359 like that. Maybe you get it a little bit higher 0:46:04.440 --> 0:46:06.280 than even that by the end of the year. Yeah, 0:46:06.320 --> 0:46:09.560 I think that could come together, can I as it 0:46:10.000 --> 0:46:11.800 very much will depend on the service sector. 0:46:11.880 --> 0:46:16.160 By the way, Meildetta emailing of Renaissance macro weighing in 0:46:16.280 --> 0:46:18.640 and he says, take a look at homebuilders today. Ask 0:46:18.760 --> 0:46:22.239 people about this because the S and P supercomposite or 0:46:22.239 --> 0:46:24.799 Composite fifteen hundred home building index is up almost three 0:46:24.840 --> 0:46:28.200 percent in today's session. Some of our write through is 0:46:28.239 --> 0:46:31.200 because at least our team is saying, that's because you 0:46:31.239 --> 0:46:33.239 got the ten year yield falling back to three point 0:46:33.280 --> 0:46:37.440 five to eight percent. How can we how do you 0:46:37.480 --> 0:46:40.560 explain that if we're going to move into a recessionary environment, 0:46:40.600 --> 0:46:43.200 does the market I mean home builders are up like 0:46:43.280 --> 0:46:46.720 twenty five percent year today, Yeah. 0:46:46.640 --> 0:46:49.239 You know, there's there's a timing issue here. At the 0:46:49.280 --> 0:46:51.480 same time, then the number you didn't bring up is 0:46:52.000 --> 0:46:56.920 that also building permits they'll sell more fell to a 0:46:57.000 --> 0:47:00.400 level lower level, fell to a lower level than was 0:47:00.640 --> 0:47:06.880 expected in today's numbers. So you know what's what's happening there. Well, 0:47:07.320 --> 0:47:10.640 I think the major builders, my sense has been that 0:47:10.760 --> 0:47:14.440 for quite some time they're looking long term. They're saying, 0:47:15.400 --> 0:47:20.080 we need to have land, we need to have developments 0:47:20.120 --> 0:47:22.400 in progress, if you will, so that we can be 0:47:22.480 --> 0:47:27.320 there to supply what is a still a chronically undersupplied 0:47:27.760 --> 0:47:29.680 demand for housing in the knife stay. 0:47:29.640 --> 0:47:33.120 Right, because those housing starts multi family dropped almost six percent. 0:47:33.200 --> 0:47:35.560 Single family home building increased two point seven percent to 0:47:35.560 --> 0:47:37.600 a three month high. So it's really the multi and 0:47:37.680 --> 0:47:40.880 I know in my neighborhood it's an urban environment. There's 0:47:40.880 --> 0:47:43.440 been so many apartment buildings and multi family units that 0:47:43.440 --> 0:47:45.279 have gone up. I'm not surprised that there might be 0:47:45.760 --> 0:47:47.440 a little bit of a slowdown. Would you buy home 0:47:47.440 --> 0:47:49.600 building stocks? Just got five seconds. 0:47:51.600 --> 0:47:54.280 I am married to a home builder. 0:47:54.360 --> 0:47:54.839 I would have. 0:47:57.040 --> 0:48:00.520 Well said well, said Jenet Carrety over at Robertson Steven 0:48:00.640 --> 0:48:03.760 Chief Economist and more right here on Bloomberg BusinessWeek. 0:48:03.800 --> 0:48:04.120 Jenett. 0:48:04.120 --> 0:48:04.440 Thanks. 0:48:05.560 --> 0:48:10.200 This is the Bloomberg Business Week podcast, available on Apple, Spotify, 0:48:10.360 --> 0:48:14.080 and anywhere else you get your podcast. Listen live weekday 0:48:14.080 --> 0:48:17.680 afternoons from three to six Eastern on Bloomberg dot Com, 0:48:17.760 --> 0:48:21.040 the iHeartRadio app, tune In, and the Bloomberg Business App. 0:48:21.120 --> 0:48:24.160 You can also watch us live every weekday on YouTube 0:48:24.280 --> 0:48:26.520 and always on the Bloomberg Terminale.