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.
And we've been talking about this morning's Labor Department report mixed in terms of non farm payrolls coming in really strong, but the unemployment employment rate excuse me, rising to three point seven percent. Wage growth also was Gosha, Yeah, why did my notes I don't know. For some reason, my notes were weird. I mean it was a lot of it was a lot of moving parts that didn't necessarily yes, it can take for your picture.
It was I think Julia Cornado called it a squirrely report, right that a few of those, as we've been talking about, the household survey and the establishment survey go in completely different directions. So it's hard to really get a grasp on what is.
Happening with this labor market.
Is it just bursting at the seams with growth or is it starting to finally shrivel up under intense interest rate hikes.
Which is why we rely on people like Julia Pollock exactly. She's chief economis at zip Recruiter. She's on Zoom from a Los Angeles Julia. Hey, good to have you back with us. Yeah, it is a little bit confusing, safe to say. And as Matt said, you know, he's been talking about the two different surveys, and we've gotten different reports from that monthly labor report.
And even anecdotally.
You know, we hear about big We hear about big tech companies firing people all the time. I know a ton of twenty something year old kids that are looking for a job and they say it's not easy. We had a story about a Harvard grad who sent out one hundred resumes before she got a job.
Correct.
So you know, at the same time, fourteen months in a row, we've beaten the estimate with non farm payrolls.
So what is going on?
Well, first the good the establishment survey was strong. Job growth was very, very broad based, and the economy seems to be adding not just low wage leading hospitality jobs, but high wage jobs in professional and business services. There were even job gains in the most unlikely places like construction, which we know has been hit hard by the housing downturn and high interest rates, and in transportation and warehousing,
where recently businesses are reporting a freight recession. They're calling it truckers can't find loads to drive. So that was sort of the surprising positive in this report. That was extraordinarily positive even within dis establishment survey, though there are some warning signs.
So I'm sorry, I interrupted, Please continue.
No, I'll just say that not even the establishment survey is not a slam dunk. Wage growth cooled, working hours shrank, And then the two sectors that we know are having the most troubble, information and manufacturing continued to post job losses and I don't think we're at the end of those yet. The manufacturing reports that came out this week showed a steep drop in new orders, and that suggests that further job losses are coming down the pike because new activity is slowing up.
So okay, So it was an extraordinarily strong report, but with some weakness in it. And then when you look at the household survey, three hundred and thirteen thousand jobless claims and four hundred and forty thousand job seekers and an unemployment rate that rose from three point four percent
to three point seven percent, even worse. If you look at, for example, black employment was at a record love I think four point seven percent and has or four point six percent has risen to five point seven percent.
That seems to be worrying.
It is worrying. And what past research shows is that the household survey tends to be more sensitive when the economy is entering a downturn at sort of turning points. The Establishment Survey can get it wrong because its birth and death model doesn't sort of capture the fact that businesses are closing. The household survey, those ratios, the lake force participation ratio, and the employment rates for different population groups,
those don't typically change. They're very sort of revealing, and that increase in the unemployment rate is very large. It puts it in the sort of top ten percent of any increases we've ever seen. It is concerning, and it's not just driven by good news for good reasons like increased participation that maybe explains about thirty percent of the increase. It's also driven by bad news, by an uptick in job losses.
So is there any kind of net takeaway from this morning's release.
I think the net takeaway is that the truth is probably softer than these blockbuster top line numbers would suggest. Many lave market indicators have come all the way back to their pre pandemic levels. Job switching is all the way back, according to the household survey. The quits rate and the jolt support also came pretty much all the way back to where it was before the pandemic. That's not really consistent with more than ten million job openings
and continued blockbuster job gains like this. It's more consistent with sort of the kinds of gains we saw before the pandemic one hundred and hundred and ninety thousand jobs a month, and that's probably where we're headed, you know, if we managed to avoid a steeper downturn in tech and manufacturing and the cascading downturn.
You mentioned information as one of the sectors that is losing.
I guess do you mean it?
Information technology is that you know, the Microsofts and the facebooks of the world.
So the information sector contains a bunch of things in it tech, so software publishing, but also the media, and often the two go together because the tech sector uses advertising to expand its sales, which really depend on network effects and the all of the industries that rely on advertising spending then get hit when when tech is a bit of in the crosshairs.
No, but you can see if you can see from the household sector essentially that we're at a turning point, that we're ahead of a downturn. Can you see also from the data, which industries are going to be, you know, losing the most jobs.
Where are we going to see the most firings.
So that's hard to know now because this downturn is so different from what we usually see. This is more of a white collar recession than past downturns have been, to the extent that there was a slow down. Right, this is still a very very strong labor market, but the weakness is not popping up where it usually does.
That said, the interest rates sensitive industries are very vulnerable, and unless mortgage rates come down and there's an uptick in housing, we will likely see a downturn in constructor in construction employment soon, and manufacturing could still have quite
a long way to go. Many retailers have reported in their earnings calls the last few weeks that they've seen much more softening in demand in the first few months of the year than they had expected, and that that is going to reduce their orders going forward.
Hey, Jillie, you just got about a minute and a half or so left here. One of the reasons we like to talk with you is, you know, we get data points, certainly from private firms, we get it from the government. You guys are an employment marketplace, right, so you are seeing things in real time. Tell us what you are seeing on the platform in terms terms of demand for jobs openings and what it tells you.
Right, So we see that job postings are still above their pre pandemic level, but that they've softened a lot more than the official job openings report from the Labor Department suggests job openings of down sixteen percent from their peak in the jaults report from the Labor Department, but about thirty six percent down from their peak online across the web. And job seekers are noticing a change in the dynamics and they're starting to feel a bit more nervous about the album.
So what does that mean that people are probably less likely leaving jobs for new jobs? Are they more willing to go into the office rather than work from home? I'm just curious what that means.
Right, And so one reason for the discrepancy between the payroll number and the employment level number is because the household survey kepture his gig employment and gig workers have been losing jobs the last few months or shifting from gigwork into payroll work. So there does seem to be a shift happening where workers are prioritizing security increasingly over flexibility.
All right, we're gonna leave it on that note, Julia, Thank you so much. Julia Pollack, she's chief economist ever at zip recruiter on Zoom from Los Angeles, breaking down what they are seeing on their platform and how it kind of meshes with what we're seeing in the monthly jobs report. You seem worked out.
I well, no, I feel like I've found an answer. Essentially. I was worried about the discrepancy all day, or I was thinking about it and talking about it all day. But I think Julie's explanation is great that before turn a downturn, for example, the household survey is more sensitive and shows you what's happening. It kind of shines the light in the right direction.
You have to kind of look at the cycles and kind of where we are.
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 saw this Mattic interesting story. It was about cran based Global, which is the largest used digital asset exchange, saying the intersection of AI, artificial intelligence and crypto represents an important opportunity for entrepreneurs, including helping to prevent some of the excesses cited by critics of the technology. That to me is interesting.
Yeah.
No, I think it's absolutely fascinating. The intersection between blockchain technology or distributed letter of technology and artificial intelligence is something that we focus on on Bloomberg Crypto, which is every Tuesday at one pm on Bloomberg Television.
Shameless problem. Yeah, but all right, so let's get into it with our guests. Jack o'holleran is co founder and ceof Scale Labs. He joins us on Zoom from San Francisco. Jack also co founder of Actana I hope I'm saying it correctly, co founder of incent a Line, and has held some executive positions at companies like Good Technology, and Motorola.
Jack.
Nice to have you here talk to us about blockchain and AI. What's the potential?
Yeah, pleasure to be here today. So I think we're at the very early stages of what will be perhaps the most transformational technology movement of the last twenty years. We're already seeing impact today and I think, you know, we're still in the early days.
Well, what do you mean specifically that's big and broad.
Yeah, yeah, So diving in a little deeper, I think the headlines are always about this amazing intersection where we have artificially intelligent bots that are making purchase decisions for us, that are managing our wallets, that are you know, this fully connected AI and blockchain ecosystem. But today what's happening is the first immediate impact is that applications are actually being developed Web three applications in particular, at an alarmingly
fast rate with the help of AI. So it's actually AI is playing a role in blockchain development at the application level, at the infrastructure level, at the QA level. So blockchain devs are using AI to build applications faster. So we're probably my sense of what I'm seeing is we'll have at least a ten x growth and applications built in the web three space thanks to the support and help of AI. So that's the first piece and happy to kind of go into the other pieces as well.
Well.
I just wonder, you know, who's using these applications because I was looking, for example, recently at the Solana phone and it's got all of these you know, decentralized apps on it. But I just don't know what I would do with all this stuff. It's like, we have this
technology looking for a problem to solve. I get what you can do with with cryptocurrency, and I love the idea of trustless decentralized currency, but I just don't understand, you know, who's using the applications the other applications that we put on the blockchain yet.
Yeah, and you know what you're calling out the That is the elephant in room. That is the problem that we at Scale are working on solving every single day. And for example, I worked in mobile back in two thousand and five, six seven, two thousand and eight, and I have to tell you the amount of applications utilized was just you know, sparse, no one. The device speeds were horrible, the UX was horrible, the battery, live, the
compute power. All of a sudden in twenty ten, millions of people simultaneously playing each other in games across the world unmobile, And we're at one of those moments, I believe in Web three where right now there's there's some phenomenal use cases out there, but the UX is horrible, the transaction costs are high, the access points and accessibility you have to be an engineer to use a lot of these applications, and so within the Ethereum ecosystem in particular,
there's just been some I think some amazing pushes on the UX level. They're going to make these apps easier to use because to your point, we are not seeing the actual throughput in users and and it's in large part the similar gating issue we had in mobile.
By the way, talk to us for a moment about scale, because what you guys are doing is addressing a real problem in the Theorium ecosystem, which is gas fees that are out of control.
Right, yeah, exactly, And I think it kind of like it goes back to your point earlier, where if you build applications with really cool use cases, but they're incredibly cumbersome to use, they're incredibly expensive to use.
Who's going to use them?
Well, the answer is the same people that use out Web three apps today and it's probably like ten thousand developers. And so Scales set out to build a it's almost a Web two like business model where application developers are able to pay in advance for the gas fees and then take the burden off the end user for the fees. It also creates better unit economics and also creates for
you know, faster processing, faster blockchain execution. So our goal at the end of the day is to open up Web three to normal users and help application developers actually fulfill these big promises and hype that we've been reading about.
So is it all developers that are using that are on scale at this point? Who who is using it and who's on it?
So the largest use case, which is probably not a surprise to people in terms of actual end users, are games. So game are a phenomenal early use case for any technology. I mentioned earlier mobile and you know, the first you know, you know, and I worked at Good Technology and we had ninety two of the top one hundred Fortune one hundred companies as customers. And you know what the only application anyone even used was email, and everyone remembers those days.
But we're going through a similar thing here in blockchain, where games are the leading frontier because it makes a lot of sense and they can operate on the back end. It fits the profile and the social demographics of the users. And the next phase from I believe my view is our web three social applications that are disrupting this whole creator economy space and content space, and we're just seeing
a lot of growth there as well. But the developers utilize scale to your question, to create applications and to run applications faster. But at the end of the day, we all want to service the end user.
It's funny.
I don't know, Jack, if you're familiar with the Bloomberg terminal, but you can do so much it's mine boggling what you can do with this terminal. And the most used function, of course is message. Like email is the killer app here.
Let's talk.
Let's get back to AI for a minute, because I think it's really interesting that we see open AI doing well and there's clearly going to be a battle between the biggest players to see whose.
Model can learn the most.
And but you are looking forward to a decentralized AI model, and I wonder if that somehow takes the danger out of it.
You know.
Alex Karp from Pallenteer the other day said, man, the products we make are so powerful, I don't even know if we should be selling.
Them, which I thought was pretty interesting.
Is a decentralized AI going to solve a lot of those issues?
You know it is, But my personal feeling is that we're going to see the actual trustless decentralization come later, and the first piece will be, you know, seeing Web three applications where we actually have the power and benefits of AI and terms of automation and help and writing and recommendations and conversation, connecting with you know, NFT gating and in programmable currencies and smart contracts, and then you know, eventually we're going to get to this point where people
are saying, hey, well, why are we again trusting the world's three largest companies to essentially make ninety percent of the decisions that are made on the Internet. And that's when you're going to start seeing those models start living in a more open source, transparent, trustless manner and seeing that that kind of like ultimate nirvana blockchain and AI synergy. But it's still always often rightly.
You know, I'm thinking of people me who are listening and just you know, normal people, regular people who maybe aren't as meshed in this world or the you know, blockchain world. So how does it, you know, practically impact us potentially the stuff that you're talking about the integration of AI and blockchain.
Yeah, so let's look at it. I think a good use case. Let's look at music for example. So let's say there's a decentralized music platform and right now, artists that put music on iTunes or Spotify get a very low fraction of return and there's lots of you know, middleman hands in the way. There are these decentralized music platforms that are popping up where actually artists directly submit music.
People pay in still small increments, but instead of ten percent of their payment going to artists, ninety some percent is going and the other piece is going to the community. Well that's a cool Web three application. But the way I AI would intersect is all of a sudden, you're getting conversational input in terms of you know, what you should listen to, how you should listen to, artists are creating music faster, better, more specific, more tailored to certain audiences.
And ai is is really a creation tool, and so you're going to see you know, both artists and and it's a creation and creation tool. So you're gonna start seeing the kind of I guess symphony of these end results come together where people are going to start. You know, we're gonna start creating more things, faster and more and for more specific audiences and with programmable money without less middleman.
That's that's one example.
Of where you know, and hopefully you don't need an engineering degree to use that application, which is where we need to.
Get to go today.
I was coming to work and I was asked Apple Music to play me a radio station that was centered around Black Sabbath. So I wanted to hear stuff that wasn't Black Sabbaths. I've heard all of it a million times, but like Black Sabbath. And then I realized that Apple Music is just selling me with this radio station what it wants me to hear that's like Black Sabbath. So I've had something decentralized. I could hear true Black Sabbath esque metal.
Yeah, And and you look at all the drama. And you know our Twitter feeds and our social feeds, and who's in control of those algorithms. Well, eventually those are going to be all large language model algorithms that are super smart and intelligent. But you know who's in control, who's managing my political view? You know, get what you will to and yeah, we.
Got to run. Jack, Thank you so much of a great weekend. Jack o'holler and co founder CEO of Scale Lab.
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.
All right, everybody, if you're feeling sluggish at work, unmotivated, overworked, and with no real work life balance, enter the Ketamine Retreat. Gating popularity among those ambitious professionals who want to show up both for themselves and their families. This story online at Bloomberg dot com, Slash BusinessWeek, and of course, on the Bloomberg terminal. Bloomberg News startup supporter Ellen Hewitt row.
It wrote it, excuse me on zoom from San Francisco Theater at Bloomberg businesswektil Weber here in our Bloomberg Interactive Broker studio. Okay, I want to know the pitch here. Come to you and say what you know?
Sometimes you just don't know.
Uh.
Brilliance comes from.
When I take you to a retreat.
Yeah, brilliance come from many places. It started with, Hey, BusinessWeek is going to do a camp package special, uh thing that we're going to do. What do you want to contribute? And then Ellen was like, Hey, this ketamine thing. Camp Ketamine is a thing. So so Ellen, why don't you tell us a little bit more about ketamine and what this looks like.
Yeah.
I had been writing different stories last year about ketamine and that was the first time I when I was interviewing, you know, kedemine experts, that was the first time I heard someone mentioned the term meditation, which is a mix of portmanteau, if you will, of ketamine and meditation. And it was the first my ears perked up. I was like,
I have to write a story about this. And so basically it's you know, ketamine has been an anesthetics since the sixties, in the nineties, and more recently it's been you know, snorted as a party drug, and then in the last decade it's been more and more frequently prescribed for depression and anxiety. But now we have people because it's kind of the first legal psychedelic, people are using it for peak performance and it's becoming more and more.
So it's legal. I wasn't aware of that.
You know, I'm a child of the nineties, so I hung around the limelight a lot, and I may or may not.
Have this is where all the good stuff comes up of ketamine.
But I didn't know it was legal. So this is something that you're allowed to do.
It's legal with a prescription, so it needs to be you know, administered by a doctor or with a prescription, so it's it's legal in some senses. But and some people also don't consider it a true psychedelic. But largely speaking, you can see ketamine as the first legal psychedelic. It's something that people see as having a role in the psychedelic revolution that is currently accessible pretty easily in the US,
you know, in a legal way. So you know, maybe you would have wanted to try ayahuasca for better understanding yourself and peak performance and all that. But like, look, it's complicated to do ayahuasca. You either have to go out of the country or find a place that's a little under the radar, and it's messy. I don't know.
You might not come back when you drop acid, you know. But acid was the thing, it was, right Ellen.
Acid was the thing for the San Francisco tech CEOs to be microdosing back in the day.
Now they're doing special k This.
Is kind of the new microdosing. It's because it's it's a little bit more legal. It doesn't last as long. Acid takes hours, you know, sometimes twelve hours. Keta means over in one hour, maybe even forty five minutes. You have these visions on these experiences of kind of going deep inside yourself, feeling clarity, feeling focused. Obviously there are some risks as well, but people say that it really gives them this jolt of neuroplasticity. That's what everyone is
kind of looking for these days. That's what psilocybin promises, that's what some of these other psychedelics promise. But keta means the one available now.
So take me on a retreat.
What happens meditation, right, take you.
To a caditation. So I went and observed one. It was in Santa Cruz. It was in a private home, and there was a group of seven women and eight so seven women, one man, and a facilitator and an osteopathic doctor. And they gathered in this Sunday afternoon. They gathered this beautiful sunny room. Everyone lay down on their little blanket with an eyemask and pillows, and the doctor goes around and injects your arm with one hundred milligrams
of ketamine. And then honestly, you trip for like an hour, and they play soothing music and most people are quiet, and I just kind of sat there with my notebook and watched. And then afterwards people talked about the things
that they saw, visions, experiences that they had. And then you know, if you talk to executive coaches who are now recommending that some of their clients try this, they say that, you know, sure, the experience can be meaningful, but even beyond that, it's a couple of days afterward in which you have this extra neuroplasticity in which you might be able to build new habits or see things a different way.
What kind of prompts are they giving you on the on the meditation, on the meditation.
During and afterward.
So during it it's largely quiet, but they have you set intentions ahead of time. So most of these were mid career professionals. There was a chemist, there was a nonprofit director, a midwife, a pilot. You know, these were people who just wanted to better have a better understanding of their work life balance what you know, their professional life meant to them, how to balance this with their family.
They had intentions like, you know, having better clarity on what's important to them, having better self compassion, being able
to communicate more directly as to what they want. And then yeah, the prompts are to kind of go inside yourself, to let go, to kind of surrender to the experience, because you know, it feels like it just feels like your body is sort of floating away as people are closing their eyes and having thoughts, and it's a dissociative, so you end up feeling like you don't have a body. And a lot of people described feeling like a little Adam or a spec buzzing through their brain or through
the universe, or being a part of a school of fish. This, you know, a small part of a larger hole. A lot of people compared it to Avatar.
Yeah, how often do customers come back for more meditation?
So these are being pitched as kind of a one off. And I also talk to people who do group meditations with their leadership team. I talked to a startup founder who has brought in, you know, doctors to oversee group meditations with his leadership team of four or five people. So sometimes people are doing it together. Often they're doing it alone for their own self reflection.
I want to caditate, but maybe not with my boss.
That's just.
Well if your bosses.
If your boss is running Doctor Bronner's Magic Soap, I think you can.
Yeah, those guys are definitely on acid. Listen.
I have a listener Ellen writing in and you are fantastic reporter. I've read a number of your stories. But this Bloomberg client is wondering, why on earth did you not do it yourself?
I mean, isn't that I believe that's Matt wondering. But go Alan, we just have a beout that I will say.
I asked, and I was I was recommended that that would not be appropriate. So look I talked to a lot of people who did the experience. I feel like I have a good sense of what it's like. I think next time I'll have this reader try to ask Bloomberg Standards if they can, if they can get me to expense.
That'll be part two. That'll be part two. Really fascinating and interesting and a lot of observations by the people who did it. So I highly recommend everybody head to the Bloomberg or check it out at Bloomberg dot com, slash BusinessWeek. Ellen hewittt thank you have a great weekend. Start ups reporter at Bloomberg News on Zoom from San Francisco, and our thanks to Jill Weber, editor of Bloomberg Business Week. Ready for a caditation, Jill, no come, no coming coming, Matt,
never again, never again. This is Bloomberg.
Brom Journal.
How about you let me drive?
Oh no, no, no, no, who's gone to drive?
Honey?
Please?
I'll Gravelt's wait, I want to drive.
It's a question that try.
This is the drive to the Clothes dot com.
Pick well, bry around on Bluebirg Radio.
All right, everybody, just about eighteen minutes, seventeen minutes or so until the closing bell rings on Wall Street. We are all so ready to get this over, time for the drive to the clothes.
Really, you're just done with this week?
Huh?
I am? Aren't you with you? I'm with you.
I'm kind of like done.
It was an exciting day, though.
It was an exciting day, and I think our next guest is kind of done with this week too. We welcome back Brendo O'Connor wannas. She is Senior VP and financial advisor at EBS Global Wealth Management, back in our Bloomberg Interactive Brokers studio. It is really great to have you back. We kidd it because you were never talking before we got going. But it's been kind of another pack week. For just four days of trading, ratlely makes
sense to you. I mean we certainly have seen it broadened out in a big way.
Right, So, I mean, look at these jobs numbers. I don't think anyone was expecting something with a three handle, so you know, the markets were certainly surprised. But look at what the markets did, right. It wasn't concerned with that headline number, nor was it as concerned with the ten million openings from the earlier this week. It was all the numbers that are nuanced under the hood. So you know, wage growth, the unemployment number went up to
three point seven, you have fewer people quitting. I also look at the fact that you know, not too long ago, there were two job openings for every unemployed American. That's come down to one point six. So I think the market is really paying attention to those nuanced numbers.
I would also say this, the nuances matter exactly.
Here's the other thing, though, the Fed has done an incredibly good job in prepping the market this week. They have really informed draw the market in a way to let them know that June is going to be paused. And so I think investors looking at today's payrolls numbers were less interested in knowing what the June guidance was going to because the FED did its own communicating.
So the CPI number doesn't matter as much.
Yeah, so help us understand this, because if your data dependent, I would.
Think something like that would matter to the FED. Right, Okay, so let's take a step back and look at the FED. You know, it wasn't that long ago that the market was pricing in a pause in June and four rate cuts into the back half of the year. I think that scenario has been wiped off the board. I think, really realistically, we're going to look at a pause in June, a hike.
The market pricing, and I think some cuts still.
Yeah, and maybe one hike. I think if we're lucky to at the end of the year. And again it's it's all the other data. You know, you have a PC annualizing at five percent, you have personal spending up, you have housings starting to stabilize. So I think the bottom line here is that the calculus for the FED is not as clear as it was, you know, two three, five weeks ago. I think that you know that's for us anyways, is supporting our positioning of more conservative fixed income over equities.
You wouldn't buy into this rally.
I wouldn't buy into this rally. And I think that there are certain things that you can do on the periphery, you know, look at what tech is doing, Look at what the Nasdaq has done twenty seven percent this year. I think that tactically you could kind of rewait that, take some cash off the table, move into more value oriented parts of the of the tech market. But with my marginal dollar, I wouldn't be going into US equities. I may look at non US equities, but not US equities.
So let me just quickly ask about the market pricing of hikes and cuts because we rely so much on the World interst Rate Probability screen on the Bloomberg terminal, which shows what swaps traders are doing. But you don't really believe that the FED is going to cut twice by the year end.
That's what That's what the screen shows me.
Yeah, I mean for us, we think that there's probably one hike towards the end of the year.
I obviously hike.
I'm one cut. Sorry, my filly is one cut towards the end of the year. I think that you just have to I think the market's trying to be hopeful, you know. I think the.
Market we have to be in a pretty bad place for Jerome Powell to cut rates. I mean, this is a guy who seems fixated on not repeating the Arthur Burns mistakes, who wants to be kind of the new Paul Volker. If he has to cut rates, that means something big has broken in an irreparable maybe way.
Right, But look at the other dad, like GDPs that one percent. We are not that far away from having a really soft economy where you're at flat or slightly negative numbers. So I don't think that that's far away. But I do think that the market is grappling and trying to hold onto this narrative where the market will heat up as inflation cools, and we just have not seen that yet.
So Brenda, what do you see you when it comes to earnings and earnings projections? Because I feel like when it comes down to it, we could, you know, debate Fed policy forever and ever and ever, and ultimately the Fed's going to do what it's going to do. But when you look get what companies are saying coming off of the earning season and what we're expecting for earnings, that's real stuff that we can potentially grab onto.
Right and you know, no one expected this earning season to be as strong as it was. I think going forward, what we're looking towards is the fact that you know that tightening lending standards is going to work its way through the earnings. So we think that in terms of EPs, we're going to come in at two ten towards the end of the year. Our core scenario is still thirty eight hundred on the SMP, which is really far from where we are, especially on today.
So well, what do you make of us? We went what below forty two? Then we're back up above it. We're what almost matt twenty percent off that mid October twenty twenty two low, so above it? Yeah, I mean, forgive me twenty percent above it? So significant? Yeah.
I mean our ambitious scenario on the SMP based on our UBS data is forty four hundred. We're basically there. So I think this is a really stretch market. You have eighteen point three times forward pees on the SMP. Do not see that those kinds of valuations unless you are expecting aggressive growth or a two year under two percent, And frankly, we're just not there.
I look at I look at Bloomberg Intelligence to see consensus for earnings, and we had we were off three percent for the S and P in Q one, which isn't so bad as you as you point out, we are looking for a drop of eight percent in Q two, which is going to be a little bit more harsh for this kind of market to deal with, especially at these highs. I mean, we're almost back to the August twenty twenty two.
High right, and again that's reflected in what our EPs target is towards the end of the year. So whether I don't think what we're seeing in the green on the screen today is again necessarily the narrative that we can extend out to the back half of the year. Look SMP's at ten, we have eleven. You know, Nazak is at twenty seven. I just have a really difficult time transporting this incredibly bullish narrative into the back half of the year.
You're definitely not alone in it. There are a lot of people skeptical of what's going on here. Brenda, thank you so much. Thank you really appreciate. Brenda O'Connor wantas a senior vice president and financial advisor at UBS Global
Wealth Management. Back here in our Bloomberg Interactive Brokers studio and Matt, we've just got what about eleven minutes to go here, but we're holding onto our highs of this session, so you know, any and I doubt that we're going to see any kind of selling as we go into the clothes.
Pretty fascinating because you would think that people would want to take some profits off the table due to the weekend.
But I think I think Brenda's point is right. The BED has guided so.
Well that nobody is worried and they're ready to hold at risk assets into Saturday.
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