This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Hey, check out shares of Apple. We'll then hire up about nine tens an percent. Up thirty percent though so far here in twenty twenty three, company definitely on a radar. You got CEO Tim Cook officially opening up Apple's first store in India. You had Apple introducing a long promised hoy Yield savings account with Goldman, and then a Bloomberg exclusive courtesy of our Mark German about Apple's coming arsenal of new headset apps. Yep, we knew we wanted to
learn more. Mark is, of course Bloomberg News technology reporter. He joins us on zoom in our La bureau. So much going on here, Mark, among the ton of news on Apple today, including your exclusive What's first and foremost?
Yeah, I would say Apple's headset, right, That's on the minds of everyone at Apple. That's on the minds of everyone watching Apple at this point. This is going to be a big deal.
Right.
When Apple launches new product categories, all eyes are on the company.
Right.
The last time they did something like this was the Apple Watch at the end of fourteen, ended up releasing it in April twenty fifteen. Before that was the iPad, and then the phone, and then the iPod and the.
Mac before that.
Right, So this Apple headset will join a string of major blockbusters at the company is built around, right, and so people are clamoring for more info on this device. What's it going to do, what's it going to look like, how much will it cost? Why would you even want this thing?
Right?
And so I think the headset is at the forefront for me at least. Right now, Mark, talk.
To us about the motivation behind rolling this out, because, like you were mentioning, it's been a while since they've had something like this as far as their product categories.
Yeah, Right, Mixed reality is something that Apple see is potentially it's bridge to a post iPhone era or an era where the iPhone becomes less important, just like when the iPhone came out, the Mac, you know, became a bit less important in terms of what consumers are using right as their go to tech product, And so This is the beginning of what's going to probably be maybe
a twenty year journey for the company. You know, they'll start off with this high end headset, probably called the Reality One or the Reality Pro this year, and then they'll go to a cheaper model at the end of twenty five, as well as a new high end model at the end of twenty five. The eventual holy grail, which I don't think they're going to get to until maybe the end of the decade or even the beginning
of next decade, will be lightweight augmented reality glasses. And that's really where you see you know, mixed reality and augmented reality picking up steam and eventually replacing the need to have something like a phone.
And listen, you need to have infrastructure and apps to support it, right, I mean, it's great to have, you know, a headset, right Mark, which got to be able to do stuff with it. And that's what's interesting about your story, your exclusive story, that this is what they're getting ready to really roll out.
So the Apple headset's going to take a scattershot approach to functionality, similarly to the original Apple Watch.
Right.
That means Apple is going to try everything from the get go. They're gonna throw everything at this device, right, and then over time consumers will you know, show Apple and show the market what features they really want out of the device.
Right.
The Apple Watch was filled with a ton of features at the beginning, and they eventually paired that down a bit and focused on a few core areas. I think Apple's going to do something similar with the headset. So if you have an iPad, you're already familiar with what an Apple headset is going to be able to do.
It's gonna have every iPad app you can imagine, from notes to pages, to iMovie to the camera to sort of FaceTime and zoom on steroids where you'll be able to really feel like you're in a meeting room with another person in virtual reality. So I think this is going to be an astonishingly cool and high tech device.
The question is do people really want to use these types of features that they already have in a new environment instead of the environment they're already using them in, such as on their iPad or on their phone or mac.
Well, do we like it? Like right exactly? You know, you could have had a laptop and then all of a sudden you had an iPad. I mean, Apple is incredible about saying you need to kind of continue to build out your tech infrastructure with another device to be able to use kind of the same apps. Are people saying, do they believe that the headset has the potential to be I don't know what size of a business for Apple? What are they like in it too? That's already at Apple.
I believe the headset is the computer of the future, right, the idea where instead of you're using your laptop or instead of using your iPad, you're doing everything you were doing already on your face, right, And I think Carol, you summed it up perfectly. All these Apple devices, they're all a means to the same end. They all do the same stuff, right. It's all about running the same
apps but in different user interfaces and at different moments. Right, So maybe you're using your Mac at your desk, but you're using your iPad on an airplane or in your living room, or your iPhone while you're out and about, or your watch when you need to do the same thing you could do and all those other devices very quickly. Right, they all do the same thing. It's just a different user interface.
Mark something you also had in your story you were talking about how Apple is also working on a version of its Fitness Plus service for the headset. This was something that Meta or Facebook, however you want to call it, that they had also tried to get into their VR headsets, which that's obviously a big player in this space. How do you think Apple could stand out from when you have another competitor like Meta trying to already do something like that.
Yeah, I mean the virtual workouts will be a big part of the product, and I think Apple has the infrastructure there already. Right Fitness Plus launch at the end of twenty twenty. They have quite a bit a number of users, and they have lots of content already pre programmed there. They have lots of content film, lots of
classes they already have in there. It's just about converting it and playing it in virtual reality, right, And so given their content library on the fitness front, I think they're way headed from day one on anything that Facebook could offer, Right, Apple has it all ready to go already.
How big is sports a part of this? And you think that's going to really be a reason why people are like.
I'm in I don't think anyone's going to buy it, particularly for the sports features. But now you'll be able to watch a game, and you know, the idea is you can make you feel like you're sitting courtside and watching Lebron take over the Grizzlies game.
All right, Right, I know a few people who would like that. Hey, Mark, while we have you there, we'd be remiss talk to us about the story that's on the Bloomberg about Apple, you know, opening up its first retail store in India. You've got that out there. You've got Apple and Goldman, this new savings account. I'm just, you know, trying to make sense of it all as increasingly Apple becomes a bigger and bigger part or at least wants to be of our world.
Yeah, the India situation is interesting because I think the retail stores are not going to add much to Apple spot of line there. It's only two stores, but it's representative of this bigger push. It's representative Apple pudding. It's sort of flag in the ground in India.
Right.
The real story there is production and diversification and moving more iPhone supply out of China into India. So I think that's going to be a big deal. Apple's penetration in the Indian market is essentially zero. It's a rounding era on the larger market, and there's obviously a billion plus there in India, right. There is a growing economy in India right, a growing middle class, and I think
that is the growth story for Apple. You're looking for places where Apple's going to grow, it's going to be India because you know right now they're at zero percent, not zero percent a couple percentage points, right, but very slow, very low. And you can look at that as a bad thing, and it is certainly a bad thing. They've done nothing there, but it also is a huge opportunity and it shows how much room still Apple has to
still grow, which I think is appealing to investors. On the Goldman situation that was announced a few months ago, it's now finally rolling out. People like this new four point one percent apy, which is a quarter for percent higher than when Goldman offers on Marcus if you were to do it online. This is about people stuck to
their iPhones. If you put fifty grand in your savings account on your iPhone, it's going to be a lot more difficult for you to switch to a Samsung phone, right, Yeah, and so Apple was just wanting to add more and more features to keep the iPhone sticky and make the iPhone more useful.
All right, we got to ask you. Just got about forty five seconds left here, Microsoft and Vidia, Alphabet, Amazon, four of the world's top seven most valuable companies. They are all in seemingly so when it comes to chat gibt, when does Apple make some news on this front? And again, just got about thirty forty seconds.
You know, Apple's approach to AI is a bit different. They're wanting to apply AI to real world problems and situations rather than do a chatbot, right, and so you see that as their self driving car, that's a very AI heavy based products to enable that. Likewise, a lot of the futures are going to get on this headset, so they look at it a bit differently. But I still think there's room for them to do more in the chat GPT like style.
All right, Well, around the Apple world in about nine ten minutes. Courtesy of Mark German, as only he can do it. Hey Mark, thank you, Thank you Mark. He has Bloomberg News Technology Reporter. Check out his exclusive It is on the Bloomberg terminal at Bloomberg dot com and of course you can check them out on Twitter at Mark German.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, or watch us live on YouTube.
I always be.
All right, books, We're going to stay with Netflix because we want to and because we should. Stock is still down about six and a half percent down as we were just breaking down a little little hectic on as we're getting warmed up to doing earning season again. But Netflix is certainly a big one. Also tracking it is John Erleckman, Bloomberg Markets anchor on Bloomberg Television. Very familiar
as you know with that tech space. John all right through, are just talking about that second quarter revenue outlook, missing estimates. Netflixing second quarter revenue eight point twenty four billion, the estimate was eight point forty seven billion. We've been obsessed a little bit too with that first quarter streaming paid net change of one point seventy five million versus an estimate that was two point forty one million. Break it down for us, what's jumping out for you.
Well, I think it's expectations, Carol.
When we last talked about Netflix quarterly results, the first set of results this year, the fourth quarter, the final quarter for last year, I think there was more skepticism in the air, and that was you might recall the time when the company announced that the founder of the business, Read Hastings, would be shifting out of the co CEO role, and it was seen as sort of this new era where not only we're going to be watching what was
happening with subscriber numbers, but with these new initiatives including password sharing, crackdowns and the advertising tier, and the fact that they had what ended up being expected subscriber numbers. Really Wall Street, you might remember we saw in that last quarter like an eight percent pop in stock, and I think the view on technology stocks more broadly speaking coming into earning season was did these names go too.
Far, too fast?
So far in twenty twenty three, if there's still some uncertainty in the air, now, you're absolutely right.
I mean, I think the reality is.
You're just noting a sign of subscriber growth that we came to expect with a Netflix, and maybe investors lose sight of that when they get excited for these quarterly numbers.
We'll see what happens in the after our session.
Overall, but it is really shifting to be a business that in many ways has already told us they are transitioning. There are cost controls right now. Shutting down their DVD by mail business is one example of cost controls. Password sharing crackdowns is another. I mean, arguably that could bring in more subscribers, but even looking at Bloomberg's breakdown in markets like Latin America, maybe that's the kind of development
that loses you some subscribers. And then that advertising story, while interesting to Wall Street, the company has already told us it's not really going to be a meaningful story for twenty twenty three. So we're kind of lingering through here and everything you just highlighted before, Carroll the competitive realities right now this has turned out. I think for all the other industry players, maybe are rude awakening that the streaming business dynamics are not as robust as what
they had expected. Netflix probably knew that. It's just that they've had to deal with all those other competitors in the landscape as well.
These last twelve to twenty four months, and John.
You're bringing up the competitors. We were just talking about how Disney Roku Tho stalks down more than one percent in after hours trading. What do you think is the sort of broad read through as far as how this is going to affect these other giants that are also in the streaming space at this point, Well.
Jess, I mean, it's clearly the kind of thing where if Netflix can't satisfy Wall Street, can other players get the check mark that they're hoping for now? You know, Disney's an interesting one to zero in on because one of the things that we've heard and Bloomberg's report pretty extensively on this over the last few months is not a story of everybody fighting over subscribers, but in many
ways a return to the movie theater. I mean, Bloomberg's own reporting has told us about you know, Amazon doing theatrical releases, Apple doing theatrical releases, Disney as that arm. But I think even for Disney, cost controls is a very front and center focus for them too. So it almost tells you that if there's an economic storyline of maybe consumers being a little bit more cautious, or whether
it's just a competitive environment. If you can't, if Netflix can't set the tone with big subscriber growth, maybe we're going to be in for a bit of a media industry reality check.
As we rolled through running season here.
Hey, John, you know these two areas the password sharing, which they just launched in four territories Canada, New Zealand, Spain and I forget the last one Portugal, and then the ad tire which made its debut in November, but we know yet to contribute a material number of subscribers. Companies said both advertising and password sharing will only offer modest contribute contributions excuse me, in the first quarter of the year, but would pick up in the current period.
I guess what we want is a little bit more of a feel on the analyst call to get an idea of could these two areas be significant revenue drivers? I mean, does the analyst community, do the investor community think that they these two areas could really be drivers for the company. And the stock has certainly popped on the expectations of such.
Yeah, I mean they've become these add ons and again I think this is we're talking about the maturation of and Netflix saw the writing on the wall. It seemed like, you know, there would not be endless streaming growth going forward, and so start of these some of these business steps
are starting to take hold. Now on your question about the advertising business, I don't think there are any expectations inside the company that this can be a huge business by comparison of just having all those traditional streaming subscribers. But there is a general sense inside the company that they can get to let's say ten percent of their revenue coming from the ad tier. So you know, could that end up being on an annual basis, like a
three billion dollar revenue business for Netflix. Most of Wall Street things that is very much attainable. But again that's part of the overall story. You're still constantly looking for that growth narrative to the password sharing. You know, look, I think that's just the reality of the transition from Hey, we're going to not pay attention to that because we've got so much subscriber growth too. Well, now we actually have to make sure we've got those subscribers accounted for.
And I think, Carol, this is just going to continue to be a transition time for Netflix. What do they want to be I mean, aside from business developments like an add to your or password crackdowns even with the content itself. You know, people see these headlines about live streaming, right fliks never used to do live streaming. They had kind of a big snapoo with that this week. But they're starting to live stream SAG Awards. They're sort of
testing that. They're testing partnerships with the Lake of Nike on training videos. I think you're going to continue to see Netflix trying to figure out some on the margin changes under their new leadership.
You've seen it a lot with YouTube channels. We follow my husband and I follow a couple of different people, and like they do those live channels and it's popular. It's fascinating to see that streaming which is all for the most part, like taped produced series, thinking about oh wait, we have to go back to live destination viewing, which is oh wait, that was linear television. It's really kind of fascinating. What's the number one ask you think on the analys call.
How optimistic they are and actually, you know, these are some of the more robust conference calls. We talked about how Reday seems it has sort of moved upstairs and transition.
Out of the co CEO role.
To go and apparently buy a ski resort in Utah, which he announced this week. But I think that the management there, Greg Peters, Ted Sarandos, I mean I think they can I can't think they can.
Help the tone.
But the numbers themselves tell us that maybe the storyline has changed, especially after run of the tech stocks we've seen this year.
All right, John, always good to check in with you, and just fyi everybody. Netflix still down, but only down about three point four percent, so no longer like a ten percent decline which we saw right after the number, So you know, investors kind of settling in maybe reading through more of the texture, if you will, of that quarterly earning's release. John Erlikman, thank you, Bloomberg Markets anchor on Bloomberg TV, joining us via zoom from Toronto. So yeah,
I mean, this is what's interesting about Ernie. You really got to go through all the details, right.
And what John alluded to at the beginning when we were talking to him, the pain that Netflix went through at the beginning of last year. But if you look at stock for the past twelve months, down just one percent before we got today's numbers.
Carol, Yeah, exactly, So something to keep in mind you're.
Listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business App and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty.
It does seem like the stress is starting to ease, certainly how investors see it based on what we are getting from the big banks and more importantly from those regionals. And our next guest knows a lot about stress, writes about it in a new book. Karen Dylan is editorial director at the Family Business Advisory firm Banyan Global Family
Business Advisor's former editor of the Harvard Business Review. She just got a new book out, The micro Stress Effect, How little things pile up and become big problems and what to do about it. She is on Zoom in Boston. Karen, I feel like it's a timely topic, considering the stress that seems to come at investors on a daily basis. Having said that, tell us about the book, what are micro stresses and some of the research you did specifically for to figure it out? And what we can do to manage it.
Sure, I'm glad to be here.
So even just listening to the pre evil before it came on is stressful. There's no question we're all kind of swimming in the sea of stress all the time. But what we're talking about with our research is something a little bit different that.
Most of us don't notice. We don't even know how to talk about it.
We know how to talk about stock market stress and political stress and things like that, but we don't know how to talk about what we ended up calling micro stress. And this is a pick thing that we observed in research with high performers were Originally the research was intended to look at what did they do better than the rest of us, How do they work more effectively with other people? How do they maintain their status as high performers?
And we interviewed three hundred men and women equal numbers who were dubbed high performers by their organizations to try to get at those best practices. And then early on in our research we started to notice, after a bit of the veneer had gone off in the interview, that little by little became clear that even these high performers
were kind of barely hanging on. They were swimming on what we ultimately called microstress, things that are so brief and so invisible to us that we barely notice them. What cumulatively they add up?
And what specifically, can you give us a few examples, how does that sort of permeate in our day to day lives? Like what specifically would be an example of a microstress?
Sure, so we put them in three buckets, and I think you'll relate to all three of them, but in three categories. One are micro stresses that drain your personal capacity, your ability to get things done. And a really good example of that is having unpredictable behavior from a person in authority, a boss or a manager, not a toxic boss or a jerk, but maybe a boss who stops you in the hallway to say he's got a new idea, and are you supposed to be pursuing that or not?
Are you putting other things aside or not?
Just not one hundred percent always knowing what's expected of you from the person above, or having a surgeon responsibility as a worker at home. That's category one personal capacity or another one that I think most of us experience in some way or microstresses that deplete our emotional reserve. So, for example, if you work around people who are just always stressed out, even if you're not stressed out, the
secondhand stress from them is going to affect you. Micro Stresses are things that happen in our interactions with other people that are so brief and so baked into our day that you literally barely remember them. And individually they're all manageable, but what happens is they layer up over the day, over the week, over the month, and they actually take a really big toll on you.
All Right, So media can be a very stressful world because it's just the way it is. So what is the connection? And some of us thrive on it? I mean I kind of like it when it's fast and furious, but not that isn't always the case, and you can't do that for one hundred percent of the time otherwise you're just going to kind of pass out. But having said that, what is the relationship between stress and productivity?
There's got to be probably this interesting balance, right, because a little bit of stress gets the adrenaline going and can kind of, in some ways maybe make you more productive. But I'm guessing too much and that's not good.
Too much of that is definitely not good.
And again we started with high performers, So we started with people who were already seen why we seen as being.
Better than the rest of us.
They were just really good at doing a lot of work, being effective collaborators. But as we started to peel back, we realized even they really were almost overwhelmed by all this warm micro stress, to the point where it potentially threatened to derail their careers. What happens is you're always
in reactive mode. You're always you know, you open your email first thing in the morning, and you're already feeling overwhelmed and behind as opposed to any of us trying to shape and plant our day, and we're thinking about which balls can we get away with dropping, rather than how do I do my best work today?
Or what do I actually want to focus on today?
It just it makes you in a reactive posture rather than a proactive posture, and none of us do our best work when we're always trying to figure out again which balls can we get away with dropping?
Because we can't do it all.
What are the financial repercussions for letting micro stresses add up.
Well?
Financially, it's it's not good for who you are. You're not going to be at your best, most effective you are. Potentially even one of the micro stresses that we identified is pressure to pursue goals that are out of sync with your personal value.
And also career wise work that could be a detriment correct career.
Correct it could indeed, if you are always sort of pursuing what someone else's version of success is and it's never feeling comfortable to you, or it's never who you are, you're never going to thrive.
Really in the long run. You may you may have a good run five or seven years, but at some.
Point you're going to realize this is not who I want to be. So you're not going to be your best. You're probably career wise not going to thrive in the way that you want to thrive.
And the most.
Importantly of all, you're going to you're not gonna like who you are. Eventually, it's going to kind of either way, you just small ways. So none of us are our best when microstress is overwhelming us.
And I like Karen, how you make the distinction, certainly the book between stress, microstress and secondary micro stresses thirty seconds. One piece of advice for those folks who are listening to this.
One piece of advice is to actually stop and have five minute clarification conversations with the people that you work with.
So many of us were.
Moving so quickly, and we're working with ever shifting cast of characters, people who are new at colleagues and things like that. We don't know how to work together very well, and we assume things, and that can lead to all kinds of micro stresses, just misalignments or small performance misses.
So literally take.
Five minutes at the end of meetings and just clarify who, when, what's the next step. Don't that simple step can make a really big difference in your work.
Michrostrogical. We do that sometimes in the newsroom where you're having conflicting stories. It's like, hey, everybody, get over here, and for three minutes, like set everything straight. Karen Thanks in a very timely conversation. Karen Dylan, editorial director and the micro stress Effect her book.
This is Bloomberg Business. Wait inside from the reporters and editors who bring you America's most trusted business magazine plus global business finance and tech news. The Bloomberg Business Week podcast with Karen Messer and Tim Stenebek from Bloomberg Radio.
Yeah, thank you generative AI and chat ChiPT You've given us all a lot to talk about and to talk to. I actould say I was actually playing with it this weekend. The world definitely all in on AI, specifically generative artificial intelligence, you know, AI algorithms that generate new outputs based on the data that they have been trained on. That's being used to come up with meal plans, create art, write essays, term papers, future robots, and as during the upcoming issue
of Bloomberg BusinessWeek points out for therapy as well. So let's get to it. This story in the new issue that will be on newstands later on this week, already online at Bloomberg dot com, slash BusinessWeek on the Bloomberg terminal. Let's get into it. Let's talk therapy entering the era of chatbots with us. Is Bloomberg News AI reporter Rachel Metz here in studio along with the editor of Bloomberg BusinessWeek, Joel Weber. It is every Are you real? Are you a chat gp teape? I am?
I am real as far as I know. But the conversations that people are having with chet tvt's also real. Would you like that transition? The conversations are real, and you can ask it anything, and people are and they're making all kinds of stuff, and you know, there's all kinds of questions about anxieties of what's going to happen
to jobs and all kinds of other stuff. But the thing that I was really drawn to with Rachel's story, which reminded me a little bit of a Ellen Hewitt story that we did not so long go, also a little bit about what where AI can go unexpected places? This was one of those as well. So what's happening because people are actually starting to use it in some very deeply personal places.
Yeah, No, it's it's been interesting to watch people are finding all kinds of ways to use chat GPT, And one thing that some people are trying out right now that I started to notice is using it not really I haven't seen people really replacing therapy with it, like if you're seeing a human therapist, but using it to solve occasional problems, or realizing that for them there's something about it that seems to be helpful to them, at least with the people that I spoke to, which I
thought was really neat.
So was this an intended use for what chat gpt do this?
This is not an intended use case. It is a general use chatbot. It is not meant for that specifically. And in fact, if you look at open aies terms of us, they don't want it to be used for very specific medical use cases like diagnosing an illness or something like that.
Shame on them. I mean Google doctor, I mean, like how many times writes up that goes up? I mean they know people are gonna go all these crazy places.
Right, I mean I think that if you're able to use it and find it helpful, that I think that that's interesting and that I was actually a little surprised because initially my first thought was this sounds like a really scary, bad idea, But then as I talked to people, it was it's much more nuanced than that did help them. Yeah,
in a couple cases, although there was one. There's one person I spoke to who said, you know, it was like saying the right things, but I just couldn't get into it because I knew I wasn't talking to a person. But I also think it's really important to not think of it as an either or situation, Like it's not like you might one day have a human therapist or
a robotherapist. It's possible this could be used, as Margaret Mitchell what hockey Face said, Perhaps it could be used to help train people that answer phones for crisis lines that could help them to help more people at a time, And those kinds of people are vital and you could totally use more of them. This could be a way to make them more able to help people, which I thought was kind of cool.
It feels like the there's like some empathy. It's like built into this of like I know what you're going through. Like there's got to be like a chat GBT training course in terms of just like making sure people feel like they're being heard. Right, But so, what did you hear from the people that you spoke to, and like what led them to hear And are they doing it instead of humans or in addition to real therapy.
Not instead of the One of the people that I spoke to, Milo has a therapist, happened to miss a therapy appointment and had seen somebody on Twitter saying it was really helpful to them, and Milo was like, hey, I'll just give this a try, and then found it really helpful and has used it repeatedly since then. Not everybody will I feel that way, obviously.
I love in your story that you talked to us tell us about that one of the earliest chatbots, Eliza. Right, so this takes us back to what the nineteen sixties.
This was new to me. I did not have this.
I didn't know.
Oh so Eliza was a supposed to mimic like a Rogerian style therapy, which is like, I guess, very like self reflective you know who, why do you think that? Or you know those kinds of like reflective questions. That was a much much simpler style of chatbot, which you would you would say something and it would be looking at or you would type something in that case and it would be looking specifically for keywords that could be tied to certain types of answers.
You know what makes me That's the other thing. Like nineteen sixties, we keep thinking this chatbot is kind of this whole big new thing, and I keep googling and trying like origins of artificial intelligence, like I want to know more because I'm trying to Rachel get my head around, like, why all of a sudden, are we just this is such an explosion, right, Because it doesn't sound like it's totally new.
It's not new. I think some of what's new is the style. You can think of AI as having like different kinds of architecture. I think of it, and architecture is a word you'll see a lot in a lot of academic papers. So architecture with buildings, there's all different
kinds of buildings, right. Similarly, in AI, you have different styles of putting these AI systems together, and this generative style is newer, and being able to do that is a newer thing, and it gets us closer to it makes it makes these systems better at mimicking human speech, right, But it doesn't it's not actually, you know, it isn't
human in any way. It's essentially using math in a way that gets you to look at it the answer and say, oh, you know that looks like something a person could say.
Kind of close.
Yeah, man, that's the creepy part of it.
Another thing that I learned in this story is that there are chatbots that focus on mental health, yes, as opposed to chat gibt that can can do whatever it does, right, but so wobot weissa, what are those and what are they doing?
Those do exist, they've been out for a while in this space, and people can pay for them, and that those can potentially also be helpful to people. So it is kind of interesting, right that those things already exist, but people are saying, let me try this. I mean, this is very easy to access. It's exciting in many
ways because it's new. So I think it's going to be like a lot of different applications of chat cheept where we kind of have to see how the dust settles and if people actually are using it for this and other things.
Carol brought up the nineteen sixties. It made me also think of in the nineteen nineties with ask Jeeves, which was obviously right, people kind of forget about that.
But it was sort of this whole don't forget about it.
People don't forget about Jeeves. But interesting during these other time periods where we've seen different things like this, when we think this is like something very new but interesting, that we've kind of had different irradiations in a way, and in the past, Yeah, I mean, I think people like to personalize and anthropomorphize technology and sometimes sometimes that can be totally fine.
Sometimes that can go a little bit awry, like Rumba for instance, Like people treat them a little bit like pets perhaps, you know, and that's.
Obviously it is a pet part of the family. I have one that has a name, so you we're not all crazy, no, But it is interesting about you know this. I am curious how effective or what are the medical community, like are people weighing in about because I just think that there's some very serious illnesses out there and I'm just wondering, can a chat g BT pick up some of the nuances of somebody who obviously needs some serious help.
I talked to a professor who is also a clinical psychologist. He can he can imagine a future in which this might be useful for helping people along with human therapy. Right now, he was like, no, no, like this. You know, this is not for somebody who's got a serious mental health condition. This is not the way to go like solo. But he also but at the same time he was saying that he could understand why people would find it helpful to talk to or at least or pleasant. I can't remember.
Exactly what he's working right potentially.
Well unless, I mean it depends. If you want to talk to a chatbot like GPT four, you're gonna have to pay for it.
And that's true, right business.
So are you only curious about some of the privacy implications here, because I would think if I were letting my chatbot talk to people, I'd want to know how that chatbot was doing in a situation like this. And and also you know, obviously that opens up a can of worms for what the privacy implications looks like on the AI front as well. So has anybody been talking about or looking into.
Any of that?
Yeah, I mean I think that one of the people I spoke with, Margaret Mitchell also, she's from Hugging Face. That was something that she mentioned to me. And it's something that as like as a reporter, but also as a human who likes to use a lot of different technology products. I also think about a lot when I use chat GBT myself, I try to avoid giving it any kinds of personally identifying information, and I think I've told many people the same. I just I don't feel
comfortable doing that. I know that open AI reviews users conversations. You can delete your account if you don't want them to have your data, but that can take up to four weeks according to their terms of service.
Doesn't this feel like all the tech CEOs are like, yeah, no, my kids, I don't let them play with computers. Rachel says that, yeah, I don't do this. What's interesting too, though, in terms of data though, right, because if you put anything personal down there, that's how this all works, right, uses the data to kind of get smarter and smarter if you will.
Yeah, your data is helping could help train future iterations of this.
Sure, so you have to remember it's in there.
It's sticky, sticky, you could describe it.
I actually did use it myself, like a week ago to I haven't I haven't told anyone in my family this. I used it to to sort of talk through an argument, and I didn't give it any personally identifying details. I feel like you can if you spend a minute thinking about it, you can totally do that.
Or is it helpful?
Yeah?
Actually it was.
I mean in the way that can.
I help you reason with a seven year old?
No, I haven't tried it with anything about my kids.
That's like you write it in and then like you don't get a response we don't have enough data on that's.
Yeah, it was helpful to be reflective, but you know what Eliza might have been able to be similarly help me be similarly reflective.
I don't know right.
When the answer is, when did you go let it down?
Yeah?
Why do you think that?
You know, I have to I feel like this has been an interesting week. There are sixty minutes to another couple of pieces, and they were really leaning into and obviously talking to the head of Alphabet Sundar Pichai about what they are doing. And it's interesting, Like on Twitter, I was getting you know, I put out those pieces and people are like, wait, you know, everybody's like, oh
my god, it's the end of the world. How do you, as somebody who is obviously in a whole other plane when it comes to AI understanding talking to the voices who are in it, how do you see it? Because it does feel like headlines are coming out as fast and furiously, whether it's on therapy, whether it's on something else.
I try to remember to take a deep breath and like, honestly, like just kind of okay, and let's kind of look at the reality of what these things can do. On the one hand, we have AI systems that are increasingly powerful and can do some really interesting things, or perhaps in the near future, could do some really interesting things. Various cool medical applications like helping detect certain kinds of cancer. Things like that I think many people can agree are great.
On the other hand, there's a lot of things we need to keep an eye out for, and some harms that are already here. I don't think that this is agi artificial general intelligence. We are not there. And also a lot of these things aren't an inevitability. I think we have artificial.
General intelligence like creating up stuff like creating another Jeel, creating another me kind of thing.
No, that's not happening.
Well, okay, okay, that's okay, okay.
No.
I think I think a lot of it is trying to keep into perspective where are we which is it's still this is still early days, even though AI in various forms has existed for many decades.
At this point, where else are you interested in watching chat GBT go into and sort of you know, maybe let's say disrupt That word.
Disrupt interesting, I mean it has it has a bit of a honesty problem. We we need systems like this that can be a little bit more reliable as far as you ask it a question and you get an answer that you then don't have to spend a really long time like confirming checking. Yeah, and that gets harder as it's funning, right, Yeah, well yeah, if you're googling, and if you're asking a complicated question, you might have a whole bunch of different things. Then that you're like, okay.
If you're asking it for like a list of things, for instance, then you're like, okay, I have to run down everything on this list to make sure you know it's all accurate. So if we can get in that direction, I think it could be really interesting for maybe there's some interesting finance applications.
I love that it lies. It's sometimes that's useful.
Though you can things.
I am just a simple a.
It's a fascinating world and we are all obsessed with it and obsessed with you and really your take on it and reporting. So thank you so much, Rachel Mettz. She's aar reporter here at Bloomberg News in our interactive Brokers studio along with the editor of Bloomberg business Week, Jill Weber. This story talk therapy entering the era of chatbots. It's going to be the new issue of Bloomberg Business Week, add on newsstands, online already at Bloomer dot Cosage business
Week and of course on the Bloomberg terminal. Check it out. This is Bloomberg.
Unbrotherly mark a.
Journal.
Now about you.
Let me drive?
No, no, no, no, drive honey please, how did the rider gravels?
Let's mate, I want to drive.
It's a good question times.
This is the drive to the Globe dot com for me.
I think we'll buy around yelling.
I'm on Bloomberg Radio.
All right, everybody, just about seventeen and a half minutes left in today's trading day. Taking a look. As Charlie mentioned, you've got a bit of a mixed market, but kind of tight range, certainly on the equity side of things and the treasury trade as we heard still with that to your about four point ten year note with the yield of three point fifty seven, So just a little
bit of a set up here. Let's get to it though, with our market guests, our drive to the closed guest on this Tuesday, Jeanette Garrity, Principal and Managing director and chief Economist over at the San Francisco based Robertson Stevens. She's on the phone in Chicago, Jeanette. Great to have you here with Jess Manton and myself. First of all, before we get into some of the big macro think about our market environment, I want to ask you about
the San Francisco area. Roberts and Stevens definitely known, certainly because it's based in San Francisco, understanding kind of the tech community, the entrepreneurial community. What are you hearing from your colleagues that are based there.
A great question, and it's noticeable, I think for those of us located in the San Francisco Bay area. The impact of some of the tech layoffs that everybody's read about, as well as just probably a general slowdown in the expansion of that sector. That is what really drove the downtown San Francisco economy in particular. That's where it's most noticeable, and we see it coming back, and there's many there's a lot of talk in the community about how that
business community, that localized business community, goes forward. Given that a lot of jobs have been lost. You can get outside of San Francisco, there's not much of a slow down just yet showing up the shopping center, parking lots are all full, and nightlife in San Francisco is robust. So it's a little bit of a mixed bag.
And something that has stood out to me just kind of more broadly, when we're thinking about the economy. If you look in the terminal, there's a function ECFC that looks at the economic forecast, and as of now, when we came into this year, there was this expectation we'd see growth contract in the second third quarters. You're not
necessarily seeing that now. So can you kind of break down to us as far as the forecast for the economy moving forward and why we're beginning to see a sh shift there when we have so many people who are debating whether or not we're going to have a recession in the coming quarters.
Yeah.
Yeah, it's sort of like if you if you forecast it long enough, I guess you know, somebody will be right here. And I've actually just recently gone into the camp of saying that I would advise preparing for a downturn in the third and fourth quarter of this year. I think things are kind of coming together in that way. Watching the labor market watching what the impact is on
the financial sector, of the banking sector in particular. Things have settled down there, but clearly their costs of operation that have risen, and there's going to be an impact from that. But you are absolutely right that right now there's not much of a slowdown, and I think Gee's first quarter economic growth is likely to come in at two percent, maybe even a little bit above two percent.
It is not normal for the US economy to go into a recession, you know, hitting a brick wall going sixty five miles per hour or ninety miles per hour. So what everybody's looking at this quarter is to see whether economic growth, economic activity will slow down more into the one percent range, which would certainly set up a situation where we could get a mild recession driven by a slowdown in consumer spending and a rise in the unemployment rate, kind of classic behavior for the US economy.
Well, that's what I wanted to ask you, right So, April three point five percent for the unemployment rate. Are you assuming that by the third quarter or fourth quarter that wear well above that or could we get a slowdown? Could we get a recession, which is a part of our narrative right now, Jeanette, and I think this is why, you know, the financial markets are trying are having a tough time figuring out what kind of environment do we
truly have in the second half of this year. Could we have a recession with a tight labor market?
Well, I think the answer to that is yes. But let's talk about the numbers. There was a time that a tight labor market was defined by an unemployment rate of four and a half percent, not necessarily fore and a half percent. But I don't think we're going to get that recession without the unemployment rate going up and
the impact that that would have on consumer spending. Can we get a mild economic recession that the FED might choose to cause call a soft landing, albeit with an unemployment rate of four point one, four point two something like that. Maybe you get it a little bit higher than even that by the end of the year. Yeah, I think that could come together, can I as it very much will depend on the service sector.
By the way, Meildetta emailing of Renaissance macro weighing in and he says, take a look at homebuilders today. Ask people about this because the S and P supercomposite or Composite fifteen hundred home building index is up almost three percent in today's session. Some of our write through is because at least our team is saying, that's because you got the ten year yield falling back to three point
five to eight percent. How can we how do you explain that if we're going to move into a recessionary environment, does the market I mean home builders are up like twenty five percent year today, Yeah.
You know, there's there's a timing issue here. At the same time, then the number you didn't bring up is that also building permits they'll sell more fell to a level lower level, fell to a lower level than was expected in today's numbers. So you know what's what's happening there. Well, I think the major builders, my sense has been that
for quite some time they're looking long term. They're saying, we need to have land, we need to have developments in progress, if you will, so that we can be there to supply what is a still a chronically undersupplied demand for housing in the knife stay.
Right, because those housing starts multi family dropped almost six percent. Single family home building increased two point seven percent to a three month high. So it's really the multi and I know in my neighborhood it's an urban environment. There's been so many apartment buildings and multi family units that have gone up. I'm not surprised that there might be a little bit of a slowdown. Would you buy home building stocks? Just got five seconds.
I am married to a home builder.
I would have.
Well said well, said Jenet Carrety over at Robertson Steven Chief Economist and more right here on Bloomberg BusinessWeek.
Jenett.
Thanks.
This is the Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else you get your podcast. Listen live weekday afternoons from three to six Eastern on Bloomberg dot Com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminale.