Zuckerberg Declares ‘Year of Efficiency’

more decisive. Hey, Carol, it also didn't hurt that the first quarter projected revenue is in line with analyst average projection and that the company boosted its stock by back by a cool forty billion bucks. All right, let's get to it. Bloomberg News Big Tech team leader Sarah Fryar is with us from our nine sixties studio in San Francisco. Sarah, of course, you know, author of No Filter, the inside story of Instagram. Sarah, unbelievable and I popping. We saw

when the company reported last night after the close. Fundamentally, do we get something new about Meta and its outlook

last night? Well, what was really new is just this change in tone from Mark Zuckerberg because for the past year he's been talking about the road to the metaverse and how it's going to take a long time and take a lot of investment, but eventually it will be worth it for all these investors, and investors were looking at that and saying, are you looking at the economy, Mr Zuckerberg, Like, do you see that this is not the time to be throwing your money at something that

may not happen um. And it seems like Zuckerberg has changed his tone and in this call he mentioned the metaverse barely UM, but he was mostly focused on what he called the Year of Efficiency on you know, getting rid of any sort of blocks to getting work done, becoming a leaner organization, getting rid of middle managers, watch out middle managers everywhere, um, and and really making sure that the a apply artificial intelligence to solve a lot

of their problems, which I think was also an appealing, appealing buzzword from Wall Street. He said that he's going to use AI to make engineers more efficient. They're going to use AI to improve the targeting of people's content

and the feeds as well as advertising. UM. To try to make up for the losses in their ad market from the changes to the privacy settings on iPhones, and I think it was just a lot more you know, Zuckerberg down to business saying that he's going to create a more profitable, successful version of the company as it is today. Sarah, should we question his commitment to the metaverse? I think that that we should expect that the metaverse

commitment remains. I think that he's he's pretty obsessed with it, but he does need to be walking back from the idea that this is going to be some some big thing he should be talking about on these earnings calls. He's been talking about messaging for almost a decade now, I think is when he acquired WhatsApp and spun out Messenger into its own app. And it's just now that he started to talk about real numbers on messaging. So

so think about the metaverse in that context. Um. For years and years, investors were asking, when are we going to see real money out of WhatsApp? When are we going to see real money out of Messenger? And he said, take your take your time, hold your horses, it's coming. It'll be big. Um. Now he said they're at a ten billion dollar run rate. Which doesn't mean much when anyone says run rate to you. All right, thank you,

I'm gonna have some fun with you. And uh did Mark Zuckerberg go to CEO school and all of a sudden say, Hey, I've got to act like a leader of a massive company, and I've got to think about costs and all those serious things that most heads of companies have to think about. And that's kind of how he came out. Well, I think I think a little bit. I think the economy uh turned down and inflation and Ukraine and all those things that affected the AD spending

last year. I think it's easy if you're somebody like Zuckerberg who has mostly led during growth growth, growth, Like every time there's a downturn, every time someone says there's a downturn, Tech survives, Facebook survives, um Meta survives and continue to invest and they have to invest through it. Well,

I think this is a different scenario. And maybe they shouldn't have hired as quickly as they did during the pandemic, and maybe they shouldn't have spent willy nilly on things that they weren't sure we're going to be uh lucrative in the future. So I think they're trying to be more disciplined, and he he doesn't really need to go to CEO school. He can see the stock drop last year, and all his employees can see the stock drop last year and and ask each each other, each other and themselves,

what did we do to deserve this? What can we do to fix this? Because that's really the message that UM hits home for for that base. How much is Mark Zuckerberg looking over his shoulder at TikTok he he really? I mean that has been a key driver of a lot of the changes at Meta over the last year. We've seen them completely change the way that the algorithm works on Instagram and Facebook. We've changed the very meaning of what kind of content you see on those sites.

It's it's not just your friends and family and the people you've chosen to follow. Meta is making suggestions for you, telling you that you might want to watch this or that video. In part, that was necessary because the regular users aren't sharing quite as much as they used to, so Zuckerberg needs to feel fill up that space with content that will keep you glued. And it seems to

be working, becoming TikTok uh. You may not stop TikTok's growth, but it will at least help juice Facebook and Instagram for the next generation. We're living in interesting times, man. I feel like whiplash a little bit. Nobody, nobody in my feed on Instagram or people like I actually follow, or no anymore, and yet I keep opening it up again and again. Carol, you're one of those. Huh, all right, I'd like to see the airplanes. Sara Fier, Thank you

so much, Bloomberg News Big Tech team leader. Checker out on Twitter. You're listening and watching Bloomberg Business Week on Bloomberg Radio. This is Bloomberg business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus bloom Business finance and tech news. The Bloomberg Business

Week Podcast with Carol Masser and Tim stinebec from Bloomberg Radio. Remember, on Monday, the White House said that the COVID nineteen National Emergency and Public Health Emergency will be extended to May eleventh, but then lifted. And it's really a change our sign of changing times. It's a milestone in a coronavirus response here in the USA, dominating much of the

early weeks of President Joe Biden's administration. Yeah, but at the same time, we're seeing the new variants are showing that they have an ability to evade protection provided by vaccines. We've got a lot to get to. Very pleased to have back with us. Dr Andy Pekosh, Professor of molecular microbiology and Immunology at the Johns Hopkins University Bloomberg School of Public Health, on the phone from Baltimore, the Bloomberg School Public Health that is supported by Michael R. Bloomberg,

founder of Bloomberg Helpe and Bloomberg Philanthropiest. Good to have you with us, Dr Pekosh. Okay, so the National emergency ending May eleven, how should we read into that as uh, people who are coming out of a pandemic, but also as as people who need to understand, okay, well, who's gonna pay for COVID tests? Now? Yeah, So there's I think two major things that are going to go on here.

One is, you know, people perhaps don't realize how many things the government was paying for to make sure that there was equitable distribution of vaccines, testing, treatments, healthcare for anybody that was infected with COVID nineteen much of that is going to go away when the public health emergency isn't in place. Insurance companies will pick that up, UM, but it will very much depend on the types of

insurance that individuals have. UM. I think from the from the pandemic point of view, Uh, it's it's really a sign that we're moving into a phase that's moving away from the emergency responses and trying to put in place things to deal with COVID nineteen as a disease that we're not going to get rid of, that's going to be with us going forward, and that we have to readjust our strategies to deal with it as a known, constant concern that we'll have to use our public health

interventions and our medical interventions to try to minimize severe disease. Dr Peckash, is it fair to say it's just like the common flu. No, you know, we we we have a big flu surge this year, and what that really showed us is that COVID nineteen is still giving us more cases than influence up and COVID nineteen is still resulting in more hospitalizations and more deaths on a per case basis than influenza. So it's something that is even more of a concern than influenza. We are concerned about

influenza as a as a disease annually. So it's something we need to keep our eyes on and we need to keep using anti virals, vaccines and public health messaging to make sure that people keep their guard up against it. To what extent do we need to be keeping our

guard up against it? And I asked this in the context of our conversation that we had with Amish Adulgia, your colleague at the Bloomberg School of Public Health, just a few weeks ago, and he really surprised me with his answer to my question about boosters, essentially saying that

you know, for many people, um, he wouldn't suggest a booster. Yeah. Well, you know, we are seeing that the severe disease is coming through in the populations we expect, the elderly, those with secondary medical conditions, those continue to be the at

risk populations. UM. I think we run the risk of thinking about vaccinations against COVID like we do against seasonal influenza, and they're still very different diseases, so we still have a little bit to learn about how to best use these boosters, use these vaccines but I'll also understand that the virus is going to constantly be changing, and the boosters may not be as effective as we want them to be, nor will they be exact effect over the

over the course of the year. What do you mean by that that we're we run the risk of treating it in the same way. Is that you know in the comparison is we're given the recommendation to get a flu shot every year, but perhaps we don't need to get a COVID booster every year. Uh, I think we probably will. The question is at what time of year do we get that booster. UM. COVID really hasn't shown

the seasonality that we see with flu. So with flu, we get our vaccines in the fall because we know that in the late fall and winter we're going to see a surge of cases. Um, we still haven't seen that pattern with COVID nineteen, so we may need to adjust the booster time depending on when we see surges of cases. Okay, So it is kind of interesting because I do think I'm thinking about like what kind of community immunity immunity have we built up so far? Do

you have any idea on that? Yeah, we've we've built up a lot of the immunity and the population that immunity seems to be protecting more against severe disease than

it's protecting against infection. So that's a little bit of a surprise, I think for us UM and I think it's it brings up what we're going to have to be dealing with, is we're going to be have to dealing with these cases that are going to be occurring, perhaps across the entire year, and really paying attention to when the situation merits a booster because we're seeing surges in in cases, particularly in populations that are highly vulnerable. Okay, so we're does it leave in terms where does it

leave us in terms of variants? Are we going to see variants develop that are continuing to be perhaps I don't know, more evasive for vaccines, but at the same time, uh, not have the strength that earlier variants had. Yeah. I think one of the things that we're seeing the signs of right now is that the COVID variants that are emerging now have some ability to to evade vaccine induced immunity.

But that's but not a lot. And we think the virus is now sort of maybe moving in this little area where it's going to be responding a bit to the population immunity, but it's not going to make the major jumps like we saw when O. Macron first emerged

a little bit over a year ago. So signs are looking good that we're settling into a stage where the virus will be mutating, but we'll be able to adjust our responses in terms of vaccines and and no strategy because we're not seeing major jumps in how the virus is behaving like we did during the first two years of the pandemic. Is there possibility that at some point in the future there could be a variant out there? I mean, I mean anything is possible. I guess we

know that, but are you guys talking about it? You know a lot that they could be the possibility of once again a variant that shuts kind of society down again, or or do we have a sufficient enough playbook that we can manage our way through. Well, we are concerned about certain populations UM for instance, I you know, compromise people who may be able to generate variants that are even more evasive or transmissible. UM. A lot of efforts are being done to monitor those populations to look for

those signs. I think the positive sign is that we know antivirals are working and we know how to update the vaccine. So even if a new variant emerges, the response in terms of treatments and vaccines will be much much faster now that we know so much about how to deal with co B. Still, oftentimes, often days we see hundreds of people dying. When will when will that stop? Yeah, and that's the big question that we don't have an

answer to right now. It is important to note that we're having lots of people getting infected and dying constantly over the year, and that's something we haven't seen with the respiratory infection. All other respiratory infections come in waves. Um they're gone for long periods of time, and then they come and surge back and then they leave. We haven't seen that pattern with COVID nineteen. And that's really

the big variable that is going to impact UM. As we mentioned before, boosters and treatments and all those interventions that we have. Wow, it's an interesting time. It does feel better, but yeah, certainly something that we know we have to continue to keep on our rater and we do actually when we think about China in terms of

the reopening of its economy. Dr Andy Pekosh, thank you as always, Professor of Molecular Microbiology and Immunology at Johns Hopkins University, Bloomberg School of Public Health, of course, supported by Michael R. Bloomberg, founder of Bloomberg Help and Bloomberg Philanthropies. Joining us on the phone from Baltimore, you're listening to the Bloomberg Business Week Podcast. Catch us live week days from two to five pm Eastern on Bloomberg Radio, the

Bloomberg Business Band you Doo. You can also listen live to our flagship New York station Just Say Alexa Play, Bloomberg e Love and Verdi us Dox. Adding to yesterday's Gained a spark by speculation, the FEDS tightening cycle and maybe nearing its peak. You know when we were hearing from Charlie talking about what's going on the ECB and Bank of England constantly global central bankers reminding us, hey, folks, is more to come. We still got a fight to

bring inflation down. Well, it's perfect timing for this week's domestic cover story. The story written by Bloomberg New Senior Markets reporter Katie Greifeld and Bloomberg News chief correspondent for Global macro Markets Liz McCormick. Liz joins us now via zoom in New York City along with Bloomberg Business Week editor Joel Webber here in our Bloomberg Interactive Broker's studio.

The cover of this is perfect, Joel. It's clearly a FED chair J Powell daring down a bull, and I gotta tell you it seems like today and yesterday that bull has the upper hand. Yeah, well that was why we wanted to do it as a cover story. Um. When I think about this year and sort of the big stories of the year, this really does feel like it's going to be one of the big ones. Is Look, we've had the FED that it has been intent on continuing to raise rates. Wall Street really wants that cut

at some point. Uh When and how that all plays out is gonna probably impact what the markets do all all year long. Um. So, Liz, like we we wrote it as a walk up and then yesterday unfolded. What do we know now that we didn't know going in? And how do you feel about how our cover stories hold up? Well? I think the story holds up and like Tim said, as of yesterday, the market still kind

of feels like they have the upper hand. Like chair Pal, whether he meant to or not, he didn't kind of push back hard enough to kind of break the animal spirits that are out there. But I think, like you said, this is like all year story, like we're not going

to know until let's just say the second half. If you know, the markets will have capitulated, if if they kind of remain strong and inflation is sticky and the FED is making clear they are definitely not cutting, or if the world changes and we do get a full fudge recession and the FED starts leaning, so we're not

gonna know for a while. So, like you can say, round one market, Fed didn't push back, but I just think this is gonna be going on for a while and right now, I mean maybe Chap wanted just to leave the kind of options open, but it was, you know, definitely interesting, especially in Europe, like the Charlie was mentioning what's happening in the European Central Bank and stuff. The bond market rallied even after that, with Leguard saying another

fifties coming. So the bond market just has this kind of bulls taking over what It's interesting, Liz because you and Katie included a comment in this from Neil cash Kari, of course, the president of the Minneapolis FED, and he basically said he's been around long enough to understand that there's this optimism when it comes to Wall Street, and it seems like optimism is is what is what's driving this.

But then you include this other part of this, of his quote that he gave to the New York Times, he said, quote, they are going to lose the game of chicken. I can tell you that this is a guy who has been known as a dove uh and is now coming out increasingly ino and this year hawk ish. Yeah, and it's interesting. Our FED team and d C did a story a bit back saying, just like you're saying, Kashgari, who was the biggest dove, is like become the biggest hawk.

And I was like curious, Oh, I'd love to call him. See what did you think of what your pal said yesterday, because you know it didn't kind of embolden the chicken fight of the FED winning. But but yeah, I think it's pretty telling. And um, I just think that I guess the market is supposed to see ahead, especially the bond market. Um, sometimes they get it right, sometimes they get it wrong. They've been kind of all over the place.

But I mean the market to seize the pivot. And we all know bonds got brutalized last year, as did stock, so people felt like, oh, higher yields if they they want to get ahead of it. But you know, who knows at the end of the year, you know who's

in the red or who's in the green. Well, what I love about the story, you know, Lizz, is I feel like it's just a reminder that there's been some head fakes before guys, and we got a little bit of exuberances, certainly into financial assets, only to be disappointed with the FED coming out and reminding us, hey, guys, you know we're still raising rates, were still have to

bring down inflation. Having said that, Liz, when is the point you know when investors they're forward looking, right, you know, they're discounting, they're looking ahead. Is that the trade that we're seeing today or do you think based on kind of where we are and what we heard from J. Powell and Company yesterday, they're getting too ahead of themselves, meaning financial markets getting too ahead of themselves. Well, I will tell you after yesterday, I scoured and read everything.

I made a million phone calls because it's it's the question, right, Carol, Like, and I think a lot of people there's there's people in both camps, even in the market saying this has gone way too far. Um, some saying yeah, bond markets supposed to get ahead, and but there are people warning in stocks like, well if the Fed, even if they just stop one more hike, they're worried about earning slowing down, and that both things can't go up, stocks and bonds.

So I don't know. I mean March that we have a new set of dot plots, you know, where the Fed gives their forecast for the policy rate. That's going to be interesting to see. Like they were at five point one in the median for the end of this year in the December dots. If that holds again, which shows them saying no cuts, can the market keep going?

You know, that's the big question. So like, um, one of our folks and forgetting names now wrote a great piece saying like you can keep the dance party going, but maybe only till March. You know, Let's see what happens, then there's there's a lot more data between now and then, So let's talk about those duck pluts because that that will be kind of the next moment that um, I think the the you know, people are going to be

all over all over this. And not to say Jip Tob might not need to talk again to cool down these spirits a little bit. But but Liz, what do you what do you think the market will be especially looking for in that next round with the fit. Yeah, I think it's if that median dot moves down from five point one, um, which means they could do another hike and then maybe be cutting that those dots could show And and that was one thing that happened yesterday

in the press conference. He was asked about that, like basically, do you stand by those December dots? And he was like, well, you know, and then the market didn't like that. He just didn't say, yes, we do. He said, you know, that's what we put at the time where we'll revisit the data, which is fair and you know, so some people didn't like that, but I will add that he did say and if things change, those dots could go higher. So it wasn't that he said they're going to go lower.

So I think, you know, sometimes people in the market grab what they want to hear and a little bit of like a roor track test, you know. So what still, what's stayed with me was that he's like, we're still we we're gonna bring it down to inflation. We're at the Fed funds and we're gonna get inflation back down to two per soon. We heard that from e C B two right, seems real. Like I was like, man, maybe it's four percent, maybe three pers No, No, it's

gonna be too exactly. So that was pretty clear. Um. Great masses, great story, great cover story of Bloomberg Business Week, so relevant to uh this week's news. Liz McCormick, chief correspondent for Global Macro Markets at Bloomberg News, writing it with Bloomberg's Katie Greifeld, and our thanks, of course to

Joe Weber, editor of Bloomberg Business Week. This is Bloomberg business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus bloom all business, finance and tech news. The Bloomberg Business Week Podcast with Carol Masser and Tim Stinebec from Bloomberg Radio. All Right, everybody, we are focused certainly on this rally. We're focused on

the tech earnings after the closing bail. But you know, as we talked with our Mike McKee earlier, we did get some economic reports earlier this morning, including reads on nonfarm productivity that was good, a rise in productivity that helps the Fed to bring down inflation. But we also did get a read on the labor market. Tim Yeah, well, let's tomorrow. We got a big labor number team taming. So the question is does it show softness, that softness

that the Fed wants to see. Let's get into with Julia Pollock, chief economist and ZIP recruiter with a job's report preview and a survey of recently hired workers. She joins us via zoom from Los Angeles. Julia, always good to have you with us. We've spoken to you in the past, and you and the other folks and ZIP recruiter have used the term that that workers have been in the last couple of years in the driver's seat. I want to go back to that comment. Are they

still in the driver's seat? So the interesting thing about labor market data the last couple of months is that it's been like a roller coaster ride with one month suggesting, you know, an imminent downturn and uh, and the next pretty rosy. So uh, this week things are looking up for the for the US job seeker. We had productivity data show a big increase. We had job openings urge six thousand to eleven million again, so there are one

pot nine job openings for every unemployed American. We we also saw you know, the stock market pick up, consumer confidence increase, European economy is doing better than expected. And so right now it looks like perhaps the labor market is it's still very tight. It's not softening, it's not slackening, and the employers are going to get a route awakening if they hope that the bosses are back in town

and that they'll be calling the shops. LA give us perspective there, are we back to levels pre pandemic or we like, give me a little perspective here. So some labor market indicators are tilting back to normal, for example,

working hours and temp help services. So at the start of the pandemic, when there were these really acute labor shortages, employers were short staffed, and they have to squeeze as much productivity as possible out of each individual worker and excessively relied on contract workers, temp help workers, and overtime time hours that led to burn out, to a work

life balance crisis and a retention crisis. Now we see that you know, work week has fallen back down from thirty six hours to thirty four point three hours, at the bottom range of of what's good at normal times. Usually a decline in working hours is a bad thing. It shows that the economy is losing steam, that employers are cutting hours of workers and will cut actual headcount later.

But this time a decline may actually be good. It may show that the economy is recovering normal staffing, the companies are back at full steam and able to sort of restore normal practices again. So so far, most of the indicators that have been negative, that have been falling, actually show signs of renormalization rebalancing. The question is how far further they'll fall. Well, all of this sounds pretty great if you're an American worker, of which there are

tens of millions of those you know who. It doesn't sound great too, is anyone on the federal reserve, Because if you're seeing jolts. Data we saw yesterday that shows that for everyone looking for a job here in the US, there are one point nine positions open. That means that there could be concerns about a wage price spiral. What

do you make of it? Well, so far in recent months, UH, inflation has come down quickly, and it's come down more quickly than wages, but wage growth has also moderated UH, and so that suggests that they're a wage price spiral

hasn't set. In that said, we now have a situation where in the last five of six months U S workers have actually seen real wage gains because wages are growing faster than than inflation than prices, and so perhaps they all now feel confident again and ready to go out and buy Bye Bye, and that could drive prices up.

So it's a delicate balance and news that's good news for workers may be good news in the short term, but bad news in the long run if it fuels further inflation and forces the said to raise rates higher and keep them higher for longer. Yeah, that's exactly where we are. We can each make the side of the argument. It's a tricky point. Although markets certainly leading in in a big way in the last day or so in terms of risk on and believing things are going to

get easier and the economy will be okay. Um Jelia, what are some of the interesting trendsuessing when it comes to job postings on your on your guys site. So, one thing we found very interesting was that new hires, people who just got hired in the last six months got a better deal than those hired in the first half of the year. And not surprising because there are so many indicators that the lay of the market has softened a little bit. Well, it doesn't seem to be

the case. When you look at new hires. UH. Thirty six percent of them got recruited to their jobs. They didn't have to go out and look for a job. The job found them. About of them got signing bonuses. That's very large historically. UH. Then a huge share of them managed to migrate out of in person jobs and into remote or hybrid jobs. Thirty percent got a hybrid job. Only eight percent we're working in a hybrid situation before, eighteen percent or fully remote. Only twelve percent were fully

remote before. UH. And those who are going into the office have managed to cut their commutes substantially from thirty minutes on average to twenty three minutes, and so it seems like all around, workers are getting a better deal. They're getting a better deal. But I'm wondering if they're always going to be getting a better deal. I'm wondering if this is going to be a fundamental shift in

the way that Americans have a relationship with work. Even in a downturn, do you still see employees having the leverage of saying, Okay, I only want to come into the office two or three days a week. So you do see a backlash among some companies. There are several companies in recent weeks that have announced return to the office five days a week mandates whenever this happens, though many companies very soon have to backtrack because of such

a huge backlash among workers. Overall, we're still seeing the share of remote postings within high remote potential industries like tech and finance go up. Companies are increasingly shifting from taking over two floors in an office building to taking just one. UH from uh letting people work remotely on a case by case basis to to sort of classifying the job as remote from the get go. And so they're making the kinds of investments and policy changes that

support long term remote work. Uh. But you know, it is a difficult issue, and they're also dealing with some of the challenges there for company culture and productivity and collaboration. What do you think is the biggest factor or what do you want focusing on in terms of maybe seeing a different trend line when it comes to the labor market, you have pretty enthusiastic I've got to say, so, what would what would change that dramatically? Are you concerned about

the FED overdoing it here? I'm very much concerned about the FED overdoing it because we already see that it's had a large negative effect on business investment, on housing market activity. Uh, and if that continues, there will almost certainly be an effect unemployment. Uh. You know, So the question is, you know, how how far the FED will

have to go? For now, what the Fed has done has sort of almost miraculously, immaculately uh, taken sort of froth out of the market, you know, uh, destroy it almost twelve trillion dollars worth of value in the stock market and in crypto without causing real damage to the real economy into main street that's pretty remarkable. It's sort of almost a best case scenario. UH. And the question

is just along that can last. So I spoke about the idea of fundamental shifts in the way Americans work, What about when it comes to hybrid work and the idea that you know, Americans are now in an environment where it's likely that many jobs are going to allow you to come into the office. Sometimes they're going to allow you to work from home, and they're only going to require a few days a week. I'm wondering, you know, if you see that in an environment with layoffs, I

have to go back to this once again. If you see that, um, that same mentality continuing absolutely so. Right now, layoffs are still so low by historical standards. I mean they're down two below what was normal before the pandemic. There are only three sectors where that is not the case,

and those are transportation warehousing. Because of the shift back to services from goods UH information because of the way the tech sector has been hit by by FED rate increases UH and UH financial services or banking dealmaking I p o s of all have been put on pause while the FED is raising rights and sort of financial conditions are uncertain. Uh, even in those industries, though, remote work is is here to stay because it saves workers time and money, and it saves companies money as well.

Just real quick. Does it also give companies an opportunity to hire people who they in past wouldn't have been able to hire? Is it more efficiently? Well? So many of our clients have converted jobs from fully in person jobs to remote jobs or hybrid jobs, and they've seen recruitment expand dramatically. Their retention has increased, and wage growth pressures have fallen because they can now recruit across the country in lower cost places, so they have gain access

to better talent at a lower price. All right, listen, we appreciate your time today. Julia Pollock. She is chief economist or ZIP recruiter, joining us via Zoom from Los Angeles. Of course, when we did get weekly jobless claims, we have been getting Challenger ADP data and of course we get the monthly jobs read from the government tomorrow, which markets are certainly uh focusing on in a week that

has just been full of so much. And we've seen a lot more positive sentiment come back into the financial Law one eighty three thousand is the number expected tomorrow by economist survey by Bloomberg. That's down, Carroll, only three thousand from the last month of six thousand. We'll see if there are revisions though, yeah, exactly. It's a good point, and we'll see what's going on with wages and the cost of wage increases. All right, this is Bloomberg. You're

listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Easter on Bloomberg Radio. The Bloomberg Business a band you doo. You can also listen live to our flagship New York station, Just say Alexa play Bloomberg e Love and Dirty. Alright. We are keeping a watch on the markets, no doubt about equity markets surging. They're off their best levels of the session,

but we're seeing another leg up. Uh. This is investors wager that rate hike cycles on both sides of the Atlantic are nearing an end. We've of course heard from fair Fed chair J Powell. We've also heard from ECB president Christine Legard, also Christine Legard, excuse me, and also from the Bank of England. We've got big tech earnings. There's a lot going on, no doubt about it, and for more on where we are at least technically, We've

got Randy Watts. He's chief investment strategist at O'Neil Global Advisers. Randy tim joins via zoom in Miami. Hey Randy, good to have you with us. How are you. It's good to hear from you, guys. I hope all as well In New York it is it is um so technicals. On a day like today, in a week like today, in a week like this week, in a year so far where the Nasdaq Composit is up, what are the technicals telling you about this rally? The market's tone has

dramatically changed this year. It is a much broader market. Some of the growth sectors are starting to re reassert themselves. You know, the Russell two thousand is up over twelve percent this year. This is all very, very positive and while it's too too early to say that a new bull market is started, these are the kind of things you see at the beginning of a big bull leg. So I think you have to interpret the data positively.

And as you said a second ago, if you look at where the bond market is right now, it's dialing in a chance of a rate increase in March, only a chance of a rate increase in May. If you listen to what Powell said yesterday, he kind of talked about two more raises. If we get to the middle of the year and we're done with the FED tightening cycle, I think the outlook for equities can be pretty positive. Interesting.

So Randy NASAQ one hundred, we've been talking about it throughout the day, Um, looking from bottom to top here up about here? Um, what more do you need to see? Just seeing it alone isn't enough to say a new bullmarket is uh is underway in tech. I mean, I think what we'd like to see here is maybe a little bit of consolidation, either sideways moving or a slight pull back. But we want to see these averages both the SMP and the NASTICS stay above their two hundred

day that's about five lower for each. But on the SMP, if you look at it technically, if you're getting a positive cross of the twenty one day in the fifty day through the two hundred. That hasn't happened yet in the NASTAC, but we're hopeful that can happen over the next couple of months. So again we're pretty positively inclined that O'Neil, and we're seeing a lot of you know,

positive action. And then finally, earnings, while coming in lower year to year, are not coming in dramatically worse than expected, so I think that's giving some strength to investors as well. The bar was very low. They're coming in about down about minus two point three. People were expecting down about three percent, so it is down, but it's sort of less bad than feared, and if we can go through

this year. But by the way, people are now essentially expecting flat earnings for the year for the SMP, so that bar has come down very low. I think everyone on the by side expects it to be a down year for earnings. So as long as earnings don't absolutely crater, I think you're setting up for a very positive kind of second half of the year story for equities. But it's not hard to to find companies that are saying, hey,

things out there are not so great. I mean, look at Haines Brands today, shares are falling the most ever after the company said it expects muted consumer demand given macro economic uncertainty. We're gonna hear from qual calm after the bell. Analysts are expecting a revenue decline of about ten percent because of a worldwide slowdown in phone sales. Consumers are feeling the pain, so they're not, you know, buying expensive things like phones. There are some red flags

out there. It's just a question of to me how far ahead the market is looking. There. There are some red flags, but I don't think anyone expects this to be a good year for the economy or a good year for earnings. So the markets a discounting mechanisms. So the question is, as we move through the year, is it going to come in worse or better than than what's expected. I think importantly with the economy, the jobs picture is hanging in there. We're gonna get unemployment tomorrow.

The last unemployment read was three point five. People are looking for three point six. While the economy is slowing, jobs are hanging in and that means consumer spending is

not totally tanking. If we can get through this rate cycle without jobs unemployment falling apart, then in the second half of the year you could be talking about a better economy in four The market looks you know, six to twelve months ahead, So I think there's a lot of things that could happen over the next six months that could make you feel a lot better about the future. And that's very different than where we were a year ago, where we were thinking about what was ahead of us

and was all negative things. But we've had we've had some head fakes the cover of the domestic issue of Bluebark Business because this whole idea of how investors at some point Randy have thought that the FED was done. We saw that last year, only to be surprised that the FED again wasn't done and was sticking to what it was saying. Um, is that Why is it different

maybe than what we saw last year? Well, I think if you listen to Powell's commentary yesterday, he gave an indication that they think they're much closer to the end than they were. Second, some of the important inflation numbers are starting to come down. CPI is decelerating, pc is decelerating, and importantly today, labor costs are decelerating. Labor costs last month were up one point one per cent. The expectation was that number was gonna be one point five and

a month ago that number was two. So of labor costs can cool a little bit without having unemployment really spike, and that takes some pressure off the FED to keep raising. And again, if we continue to see the trend where we've seen in CPI, which is deceleration, that I think we're on the right path and I think the FED is a lot closer to being done. I'm pretty optimistic the FED tightening cycle is going to end this year, and it's it's likely to end by midyear, which is

which is really not that far a lament. All right, Randy, thank you so much. Always appreciate it. Randy Wattsy's chief investment strategists at O'Neil Global Advisors, joining us via zoom in Miami. This is the Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else you get your podcast. Listen live each weekday starting at two pm Eastern on Bloomberg dot Com, the I Heart Radio app, tune In,

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