This is Bloomberg business Week 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 Masser and Tim Stenebec from Bloomberg Radio.
All right, everybody, we're going to continue with some of what we just talked about in our simulcast Carol Masser along with Katie Greifeld live here on Bloomberg Business Week, on Bloomberg Radio, on YouTube, and on Bloomberg Originals, because, as we said, right, one of the key focal points for the markets for investors this week, Katie is Jay
Powell heading to Capitol Hill two days of testimony. He'll have his statement and then he's going to get a slew questions right from members up on Capitol Hill, and we'll see what he has to say with us with some more thoughts on. This is Janelle Marte. She is Bloomberg News Economics and Federal Reserve reporter, joining us via zoom from New York City. Johannelle, good to have you here with Katie and myself. So we just talked about this with our TV colleague because we've all been over it.
How is it that you guys are thinking about and how you are thinking about it? Specifically about what Jay Powell will be doing over the next couple of days. So Hi there, It's going to be a really important couple of days here that we will hear from how because it's probably going to be his last public remarks before the meeting, right, So I think what we're going to be watching or words expected of How is for him to echo what we've been seeing and hearing from
some of his colleagues on the beat. So the message has really been, first of all, that they're not done raising interest rates. More rate increases to come, and I think some people have also been pointing out that they think interest rates or that they're prepared to take interest rates hire if we continue to see economic data come in really hot. Right, So we have seen really blockbuster
jobs reports and inflation data shoring that it's elevated. And thankfully the Fed will have a few key reports coming in before they make that decision, and that's going to be very key to what they end up doing and also to what they signal in terms of the how high they think rates will have to go. So if we expect to hear from you know, classic Jerome Pal tomorrow, very measured, very thoughtful. I am curious, So what the
bigger risk is here? What is the more likely risk at least you know, from the market's perspective, you know, is there a bigger risk that Jerome Pal accidentally sounds dovish or accidentally sounds hawkish once we actually start getting
some questions. So I think the tone from what we've been getting from FED officials has been more hawkish than dovish, especially in the past month, where you know, maybe we thought six weeks ago that the economy was starting to slow, that inflation was coming down, and actually the last a couple of sense and data reports have shown us that the economy remains really strong, there's still a lot of demand for workers, and inflation is not slowing down at
the pace that people expected. So I think the tone has been hawkish. I think we're likely to see more hawkishness from Howell, but again the message probably being that they're going to look at the data again, these key reports coming in before they make their decision, and what they don't want is for markets to start to believe that inflation is going to always stay this way for
inflation expectations to become an anchor. So that's really the message that they've been trying to deliver is that we're going to do what it needs to have. We're going to do whatever it needs to be done to get inflation back down to our target. All right, So it sounds like, to be fair, it's a little bit more of the same, right, Yeah, we're sticking at that two percent target. We are going to continue to be data depended. We're gonna keep raising rates until we get it right.
So I feel like it's going to be more of the same. Is there anything new that we could get in terms of tone or message, Joannelle from J Powell, Well, we do want to hear to see how he will be interpreting the data that comes in and when they need again in March. You have to remember, they'll be updating their projections for how high they think great rates will have to go. So we will be listening for any indication that the dot plot as it's called, is
going to show higher terminal rates. So I think we're going to be listening for those kinds of clues, and the FED has at this meeting that very important tool. So even if they do decide to stick with twenty five basis points, which is what the market is expecting and what many officials have been saying that they prefer if they suggest that they're prepared to take or it's hire by showing that the dot plot, then they can
still sends a very hot restage to us. Would it be like if they said they could go now back to fifty, that would be it would be huge, right, that would be a different message, like this whole idea of maybe going higher longer, Like I get it, like I feel like it's a sliding scale, right, do you feel like it's a little bit of a sliding scale potentially, Yeah, But if they jumped all of a sudden and said, well we might be able to we might need to do fifty at a meeting like that to me would
be a bit of a shock, I think. So if you think about what's presiden, yeah, it would I mean, it would certainly be a shock. I would say, it's not what the market is effecting, though the market has it priced in a small chance of that happening, and some officials, of course, have said the hockage. Officials have
said that they wanted to be on the table. But again I think it's been clear from what we've heard that this measured approach, this twenty five basis point increment at this level, where where where it's are at this point, is what most of the artificials will prefer. However, I mean I don't think it's been taken off the table completely. And so again we'll be walking to see where we get from the economic data, not really this before this meeting,
but in the coming meetings. So we're talking a lot about interest rates, which makes sense, that is, you know, their primary lever talk to us though about quantitative tightening, because in the background of all of this you do have the Fed's balance sheet shrinking. What is the thinking there, you know, should we expect Powell to get some questions on that dis quantitative tightening? Last three, at the end of twenty twenty three, what's the current thinking around the
balance sheet? That's a really good point. So the FED has been reducing its balance sheet in their background, as they like to say, by up to ninety billion dollars a month, and it seems to be going fairly well. However, reserves the reserves to help at that big banks puld that the FED those reserves have been draining and there's been a lot of liquidity held in the reverse repot facility, which is a program that lets financial firms park some
money with the fat overnight. So there's a little bit of concern among some people in the market that if this money is kind of stays in the reverse repot program, but you know, and reserves continue to drink, that the FED might then have to change course if we see
reserves fall too low. But what we've heard from a BET official so far is that they they're aware of what's going on in the markets, they're watching it, and that they're prepared to make changes if necessary, but that for so far the program seems to be running smoothly. They're continuing with the balance sheet runoff, but they hope it will stay according to Plant. Of course, we could hear from some politicians, not policymakers, politicians on Capitol Hill,
you know, questioning howl about that. And some people are obviously are not huge fans of the fed's big balance sheet because they see that it's been influencing maybe even the housing market in an unfair way, or they don't like the fad having you know so much, you know, snapping up so many assets. So I mean, it's certainly something that you'll get questions about, but for now, the
message chest seemed to be that it's working. Janelle does does the strength in a continued strength, I should say, in the labor market, um plus the bounce back that we've seen in the equity market. Certainly again this month kind of give Jay Powell some breathing room to be
more hawkish. As you guys were talking about earlier. It might so clearly there is some concern that the higher interest rates could hurt the labor market, could cause people to lose their jobs, and that might be something that we or it is something we've heard about the Democrats for example, who are you know, reminding power for example that hey, you also have a maximum employment man dates, So while you're worried about inflation, let's make sure that
we don't cause undue pain to the economy. But if you get those kind of remarks, you'll be coming in and wonder worth you un employment rate it's at three point four percent, And again he said, we're seeing some of our rebound and equity markets, So I think that
works in his favor. In that sense, But I think that he in some other sense that that they're watching wages, they're watching labor markets, and then you know, they are expecting probably some weakness in the labor market to take place before they can get their inflatient targets down to two percent. All right, couldn't leave it on that note.
Joan al Marte Blueberg News Economics and Federal Reserve reporter, joining us via zoom from New York City ahead of Jay Palill getting ready to march up to Capital Hill for two days of testimony. What's kind of front and center for you. I'm interested, of course, to hear his comments on inflation, as we were just talking about. He's probably gonna stick to the script. But if you look at some of the measures of inflation expectations, I like to look at break evens in the bond market, those
market based measures, they've been moving higher. You think about this big sell off that we've had across the treasury curve, A lot of that is coming from the break evens component. So the bond market is once again bracing for higher inflation. It's still very much top of mind. It seems like that immaculate disinflation narrative has sort of died off. So I mean, anytime Jerome Pale speaks, even if it's expected to stick to script, he's expected to say the same thing.
It's still a big event, absolutely, and this is going to be it then before the next FED meeting in terms of what we hear from him. You know, you also had Libra cracking five percent for the first time, so a big global rate and I just think about the ECB's governing council member Robert Holtzman saying he backs half point interest rate hikes at every meeting through July. So it's a global story. And I think about the global impact of central banks continuing to raise rates. Carol Master,
Katie Greifeld wet our Bloomberg Radio. You're listening to the Bloomberg Business Podcast. Catch us live week days from two to five pm Easter on Bloomberg Radio. The Bloomberg Business a band you two. You can also listen live to our flagship New York station, Just say Alexa play Bloomberg elve and thirty. A lot of news, as you know, we've been talking about it already coming out of China overnight,
most notably China's annual National People's Congress. The first Inspasioning brought an abrupt end to three years of crippling COVID zero restrictions has begun with a modest target for economic growth and few hints of past stimulus extravagance. There's other headlines, but let's get right to our guest. So it's great to have with us to really weed through all of the headlines. Eddie Brown former editorial director of Bloomberg New Economy. He's spent three decades in Asia as both China editor
and calumnist for The Wall Street Journal. He leads the China Hub. He is a partner at Brunswick Group, and he joins us via zoom in New York City. Andy, good to have you here with Katie Greifeld and myself. How are you. I'm doing well, just got back from a trip to Beijing and Shanghai. It's great to be with you, Carol and Katy. Well, great to have you here. So tell us, because there's a bunch of headlines overnight,
you know, putting out a growth forecast. What's front and center, and we'll tell us about your trip and kind of what was the mood and kind of general conversation. Yeah, upbeat. You know, consumption is up. Beijing is chop flo full of cars, impossible to move around the city. The shops are full, the restaurants are doing a roaring business. Shanghai similarly, but the airport pretty much deserted. The external part of the economy has not picked up. Problems with flights, problems
with visas, very few foreigners in Beijing. That's not expected to pick up until sometime around the summer. That's interesting. Yeah, the fact that, you know, there's a lot of movement within the country, but in terms of people coming in and out, maybe not so much. Let's get to some of the numbers that came out overnight, because I feel like that really set the tone for trading both in Europe and at the start of the US session. So we look at the economic growth target around five percent
for the year. I know that was a bit disappointing in terms of, you know, what people were expecting. How surprised were you to see a five percent handle? You know, I wasn't surprised in the slightest. I think it reflects two things. First of all, they wanted to set an undemanding target that they felt confident. They feel confident they can actually meet that's important for credibility, because they missed the growth target last year by a mile because of
zero COVID. That's the first thing that I think. More to the point, it reflects the reality that China faces an awesome set of challenges, really tough, tough problems. I mean, the property market is still in the doll drums. That's twenty five percent of the economy. Local governments are bankrupt because they've spent all of their all of their budget
on COVID testing and COVID quarantines and so on. Exports are drying up because of economic slowdown in the US, Europe, other advanced economies, and of course the US is killing China's high tech economy with these bands on semiconductors and sanctions against literally hundreds of some of China's leading tech companies. So Andy, you know this is a government as you well know that they do kick in the stimulus when needed. As you said, they've spent a lot of money already.
Will they not if things start to come and get into trouble, will they not jump started again with more stimulus? You know that game is over. It's so played out. They're getting less and less bang for their buck. When it comes to infrastructures, China simply doesn't need more infrastruct sure or that much more infrastructure, at least at this
stage of its development. The housing markets, they say, so that's that was the normal playbook, right, I mean, you know, you kind of fire up the furnaces, get the steel mills rolling again, bill bridges and opera houses and highways
and apartment blocks. That doesn't work. It's going to be the consumer that does the heavy lifting this time around, which for the global economy translates something like great for LVMH, great for Diagio, great for all the consumer luxury companies sell and their their business, by the way, is going gangbusters in China right now and cascading down not just the first tier cities, second tier cities, but also now down to the third tier cities. Very strong consumer rebound.
Not so good if you're a HBHP or a VALE. And that I mean the fact that they really want the consumer to drive this. You have to wonder what the inflationary effects are there, the sort of ripple effects of that could look like. But talk to us a little bit about that focus on the consumer. I mean, how does China, how does Beijing actually, you know, make sure it's the consumer that's driving that growth. You know, they have to turn around the drivers. Now it's all
about the consumer. And to do that, they're going to have to retool their whole economy. They're going to have to put basically, put more money in people's pockets, and that is going to mean a redistribution of income away from local governments, away from the state sector, towards the household. Now that could be indirect. It could mean, you know, pumping more money into education, into healthcare, into childcare, or
it could mean outright grants. But one way or another, China has to shift the drivers of growth decisively, you know. And some of the other headlines that came out, Andy, I'm sure you saw them. China looking to boost high end manufacturing, that's one thing, and then also kind of leaning on and putting more pressure on their own private sector to play a bigger role in establishing technology independence. So they are leaning on a lot of different areas
to kind of jump start their economy. Yeah, the private sector, this is the interesting one. And really it's the contradiction that right at the heart of Jimping's plan to revive the economy, and to revive the economy, they have to
revive the confidence of the private sector. These guys create just about all the new jobs in China, and they've been pummeled for the last three years, pommeled by the COVID lockdowns, by the assault on the private sector, on the big tech platforms, on whole industries like after school education, on the real estate sector. Some of the big developers
in an extreme distress. So so that simple. But at the same time, Sijimping wants the party in control of everything, top down control, and that is going to be a big feature of the next five years of Si Jingping's governance. Now, the private sector looking at that and saying, Okay, where do we fit in? Where do we fit in here? They don't believe that the punishment is over. They like the ratterick, this rattering about yeah, we believe in you guys,
private sector. The markets are open and so on, but they're not seeing any action right now, and they're very skeptical. Of course, we've seen a big boom in the reopening trade in the market. What I'm hearing from Chinese fund managers Chinese entrepreneurs from at least some of them is this is an opportunity to sell, and some of them
are telling me it's a lost chance to sell. Wow, Okay, interesting because I was thinking about, all right, you know, we're hearing all these headlines, saw these headlines ever the weekend.
But I think about, you know, the missing you know, top investment banker in China, and I feel like from day to day you can get news out of China that says wait, Chinese you know, officials want more oversight of various industries, and I feel like sometimes it changes from day to day and I don't know quite what
to trust at this point. Bottom line, Andy, I mean the Chinese government, as you said, more oversight, no doubt about it, more oversight more of of course, we haven't talked about the big government reorganization that is going to be under way. This is where C. Jimping gets his
third term as president, a ceremonial title. Really he already has real power through his position as ahead of the party, and of course he got pretty much unlimited tenure in that job at the end of last year, and now he's going to put all of his loyalists in the key positions within the state apparatus. That means the Premier, the Vice executive Vice Premier in charge of the economy, the head of the Central bank, finance, ministry, judiciary, and
so on and so forth. But they're all going to be working very much under this top down party led system. C jimping. The overall direction of travel is very clear. He wants to harden the he wants to build up the country's technological base because he believes there's going to be a long term, arduous struggle against the United States, and he wants the party to be in charge of that. And frankly, the private sector are going to have to get with the program. And I just swim make sure
I heard it right. Did you say people were saying like this is the last time to get out of the market, the Chinese market just quickly. Yeah. People are not convinced that this is sustainable. And what they've all been predicting is sure there's going to be a relief rebound when they finally lift CUP, which they've done lifted COVID zero. But some of the people that I'm talking to as saying, we don't have long term confidence a
market rebound now is a chance to sell. All right, well, we certainly have seen that play out in the Chinese trade. Here of those ADRs in the US coming off some of their highs Andy thank you. As Owey's Andy Brown, partner at Brunswick Group joining us Zoom from New York City, understands the Chinese market. As we said, spent some thirty years in Asia's both China editor and calmness the Wall
Street Journal and former Bloomberg colleague. As former editorial director at Bloomberg New Economy China, I feel like it's a big question mark. This is Bloomberg business Week 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 Stenebec
from Bloomberg Radio. All Right, so, Katie, we've talked about some pretty heavy stuff, just talk crypto, we've talked fed. We thought we'd just kind of take a step back here and take a look into something like the global toy market, because it's massive. It reached early one hundred and seventy one billion in twenty twenty two, so last year and by one forecast by Imark Group forecast to reach two hundred and sixty seven point nine billion by twenty twenty eight, So good voice to talk about it.
Elizabeth Werner is a QVC guesthout, someone who has followed and tracked the global toy industry. She joins us via zoom from Maryland. Elizabeth, good to have you here with Katie and myself. You did just attend Fest West, which I don't know. I wasn't very familiar with it, but it is a massive toy trade show. Tell us a little bit about what you saw, because I feel like it's coming on the heels of a disappointing forecast from Hasbro that we got last month. So tell us about
kind of the mood and what was being talked about. Yeah, so, actually, thank you for having me. First of all, the mood was really great and really festive. It's really been great for us as an industry to get back together in person,
so I think that was part of the excitement. There were over five hundred manufacturers from around the world displaying toys for this year, and we saw some great things, a lot of great trends, whether it be more diversity and inclusivity for our children to learn more about that when they're young. Of course, lots of loads and loads of products that come from movies and television shows teaching our children more about social emotional learning. A lot of
great products for that, of course, collectibles, gaming. So there are a lot of fun things that we saw there and a lot of excitement. It's so interesting for me to have this conversation because I just spent the weekend with my niece who's a year old, and my nephew who is a year and a half old. So I heard a lot about Bluie. I heard a lot about Coco Melon. When you say, you know there's this focus around favorite TV, favorite movie characters, name some names here.
I need to know what's in vogue. Yes, so you name two of the very big ones. But you absolutely cannot forget Paw Patrol for that age as well. Yes, so, Paw Patrols actually celebrating its tenth anniversary. So listen to this. Paw Patrol is airing in one hundred and eighty countries in thirty languages, and is in three hundred and fifty
million homes. So we are talking about popularity not just here, but worldwide, and some of the really fun items that are coming out this year, of course come directly from the show. So the kids watch the episodes and then part of their development imagination is taking those scenes and reenacting them. So one of the items that I brought with me today the Paw Patrol Aqua Pups Whale Patroller. This looks awesomely from the show. Yes, so much fun.
It comes with chase and chases actual vehicle as well, which can be put into this actual larger vehicle. We could push a button and out it will launch right through the front. So the kids are gonna have hours and hours of endless play with this fun item. Totally want it. I'm just gonna put it out there, Elizabeth.
I want to go back there do some kind of bread and butter ideas when it comes to you talked about a lot of enthusiasm out there, and I talked about Hasbro, which came out last month with a gloomy twenty twenty three forecast, and they talked about inflation dragging down demand. They're looking at consumers pocketbook and they're saying, Okay,
they only have so much to spend. So I am curious about some of these big macro ideas, inflation being one, supply chains, which is something that's certainly pinched to supply chains during the pandemic. How did they come up or what's being talked about when you dive into those two areas. Yeah, absolutely so. With inventory, one of the things that we found was, of course there were supply chain issues throughout the pandemic, but once those supply chain issues sort of
fixed themselves, a lot of inventory came in. And at that point when all that inventory came in and the pandemic was slowing down a bit, there was a backup of inventory everywhere, and so all of the various retailers were finding that they had to get rid of this extra inventory before they could bring new inventory in, and so that backup was really a major problem in the industry.
So we are hoping now as that inventory they're going through that inventory, we'll be able to bring new inventory in and see some of these great new items for the upcoming year. And of course inflation has been talked about a lot as well. The one thing that the toy industry is hoping is that families are going to continue to spend more time at home together because of inflation, it's harder to travel, do things out of the house, and hopefully continue to engage in play and a lot
of fun with their families. Let me just ask you about one other thing big geopolitical China US relations. So much is made overseas in Asia, and I just wonder how that is maybe impacting where supply chains are when it comes to the manufacturing of toys. We know so
much has happened over in China and Asia specifically. Yeah, so it's true, and a lot of the toys are made there, but toys are being made all over Southeast Asia, South America, and I think that we'll have to see as we move forward with the tensions with China how that is going to affect our inventory. But right now things are still moving along as planned. And Elizabeth, you mentioned that, you know, one of the focused at Toy f West was collectibles. What are kids collecting these days?
Because when I was a child, it was beanie babies, maybe some tomagachis as well. What's what's really popular right now? That's right. We also had crazy Bones. I don't know if you remember those, but they look like you know, little tiny oval friends. And we had Pokemon cards. Well, right now, the collectibles are all miniature in size, not all, but a large large majority of them. Kids are collecting normal things that they would see in everyday life, but
in mini form. And one of those I have right here. Actually this is the MGA mini Verse. Now, MGA has a load of very popular brands, l Ol Surprise, Brats, little types. Well, they've taken all of those and they put them into miniature form, little tiny pieces, some of them about the size of a quarter. What's exciting about this line. Several of them have lots of fun accessories. But the make it any food is a huge trend.
So I don't know if you've seen on social media, but people making little tiny food is something that has been followed. Well. Now our kids and yes adults are actually making little tiny food. Now this food is inedible, but it will come with all the components. You're going to make the food, whether it might be donuts or cupcakes or pie, maybe a shake, you're actually going to create that food. And this is something that the kids
are collecting. They want all of it, and it's something that we're really looking forward to this year sixty seven on Lol Surprise, the official store and just found it online. Elizabeth fun Stuff. Thank you so much. Be well, Elizabeth Warrener. She's QBC guest host, toy industry follower, knows so much about it. Joining Sva Zoom from Maryland. Carol Masser Allow with Katie Greifeld, And this is Bloomberg Radio. You're listening to the Bloomberg Business Week Podcast. Catch us live weekdays
from two to five pm. Easter Bomberg Radio, the Bloomberg Business app band you too. You can also listen live to our flagship New York station Just Say Alexa play Bloomberg e Love and Dirty block a journal Now. But you let me drive? Oh no, no, no no no, who's going to drive? Honey? Please? I'll do the riding gravels. Let me. I want to drive. It's good question. Drive. This is the Drive to the clothes Well Brier up,
jog down on Bloomberg Radio. All right, everybody, just about seventeen and a half minutes left in today's trading session. Carol Master along Katie Grifled live here on Bloomberg Business Week in our Interactor Broker studio on YouTube on Bloomberger Originals and Katie bouncing around way off our highs of the session, in fact, just off our lows when it comes to the equity trade, and certainly watching what's going on in treasuries, we're bouncing up higher as well that
two years Charlie mentioned four eighty eight. We are so close to four percent really across the curve. You look at the SMP five hundred though, like you mentioned, up just a tenth of a percent. It's really hanging onto gains there as Yeah, seventeen minutes from the bell, let's get some more on the action with Mark Barrabou. He is head of Global Equity over at Jennison Associates. He joined us now on Zoom from Massachusetts. Mark, it's great to have you with us at the start of what's
expected to be a pretty big week. We have Jerome Pal tomorrow, we have the jobs report on Friday. What are you looking for? Is there anything that could happen this week that would change the needle for you? I don't think so. I mean, we have a pretty state environment, pretty steady state environment right now. Right I think the market agrees that Fed's going to gradually move rates from here,
probably not that much. The economy has been really strong over the last six months, job growth here to Day's d it's a thousand. So it's a pretty good environment fundamentally, although things are slowing at the margin in certain places. So I think we all just have to be patient.
And so I was saying a little bit earlier about the jobs report on Friday, I think this is the first jobs report where I've been more excited to see the revision than I am to see the actual number, Because you remember what we got in January's report, half a million jobs out of I don't know, felt like nowhere. What are you looking for in Friday's payrolls print? Are you like me? Are you not too excited about the headline? Yeah?
I'm not too excited about the headline. I think we've been in a very strong job market for quite some time now. Employers are looking for people everywhere, seemingly but Silicon Valley. So it's a pretty good environment out there, right, I'm not too excited about it one way or the other. All right, Okay, So that's an interesting perspective. Having said that, you manage the PGIM Jenison Global Opportunities fun it's beating nearly all of its peers are the past five years
returning annually on average almost nine percent. You're also involved in the management of the International Opportunities Fund. Also at performing over the past five years, you definitely take You also are involved in the emerging markets equity funds. So a global perspective, an international perspective. When you look at the markets right now, where do you want to commit new money? Is it outside the United States or inside the United States? Oh, I think it's a collection of everything.
We really we don't look at it regionally because I think that's very dangerous. Then you're relying on top down macro things and I don't think those really matter today. What really matters today is unique demand drivers for individual companies. That's what strives our investment decision making, and I think that's what's going to drive the markets this year. So that's our focus. What are unique demand drive verse mark Well, there's a few today that are pretty exciting. Let's start
with number one. This huge transformational move in mobility that's both the move to electric vehicles and artificial I mean autonomous driving. That's going to be the biggest transformation we see in the next five years worldwide for any big industry. And of course the leaders here in the US Tesla. So there you get leadership here, and so all of a sudden you're making a US investment. But it's because it's they're they're the driver of the big change. So
there's two interesting things there that you said. First of all, that you know, this isn't about macro, but it feels like this has been such a macro driven market over
the past few months. Yeah, Tesla, Let's talk about Tesla because I don't know, it feels like if you compare it to other automakers, it's so expensive, it's so richly valued, and I mean your point is taken on the fact that it's the leader, but how do you sort of reconcile the fundamentals with where the stock is actually trading forward? Looking what PEO and Tesla, I've almost forty nine. You look at something like a GM, it's not quite seven. It's a lot of daylight there, not apples to apples.
We can put that out there anyway, go ahead, March. Well, yeah, no, that's fine. If GM could grow their sales and earnings seventy percent in the next two years, they would have a high multiple too. But it can so you know, that's what the market's looking at I'm just looking at consensus numbers and it's thirty five times next year's earnings, so not too bad and sixty three percent growth in top line so over those two years, so that's pretty
good and it's very profitable. As you know, the key thing for Tesla is it has the capacity, the battery capacity to meet demand today in the marketplace for electric vehicles, and the others are all playing catchup, and some of them have some very good products on the market, but they can't make enough of them to make a difference. So we think, for example, like the model why this year will challenge the Toyota Corolla for being the number one selling vehicle in the world, never mind electric It
was number four last year. So that kind of demand inflection is very unique where we're at that big curve of adoption swing where you get consumers all of a sudden clamoring for these products. And of course Tesla has slash pricing, which is why the stock one of the reasons it did so poorly in the fourth quarter. But as a result, demand is responding, So you kind of want to be positioning companies that are going to deliver very strong top line regardless of what the Fed's doing.
Nobody buying an EV cares what the Fed's doing. All right, Yeah, so you like Tesla. We're going to actually talk with our Doanna Hall about who covers elon and all things. Tessa just real quickly, got twenty second and video. It's been on a tear. It's at more than sixty percent. It's the AI craze. You're buying into AI. Just quickly, Oh yeah, we're buying into AI. Um. You know this may go November of last year when chat GDPGPT hit the market in such a big way, it may go
down in history as the iPhone momentum. So we think artificial intelligence, you know this, this generative AI uh from these large scale language processors like like open AI. Yeah, are going to lead to huge innovations and software applications and consumer applications going forward. But it's accelerating now. It's not futuristic. It's like the metaverse, which you know who cares, right, Mark, we gotta run Mark Barrabou, he's head of Global Equity
at Jennison Associates. Joining us via Zoom from Massachusetts, Carol Master, Katie Greifeld. This is Blomberg Radio. This is the Bloomberg Business Week Podcast, Apple, Spotify, and anywhere else you get your podcast. Listen live each weekday starting at two pm 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 terminal