Latest / Bloomberg Intelligence / We Won’t Get the Earnings Jolt Like in 2018 (Podcast)

Transcript

We Won’t Get the Earnings Jolt Like in 2018 (Podcast) · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Panel podcast. I'm Paul swing you.
• 0:05
  Speaker 1: Along with my co host Lisa Brahma Waits. Each day
• 0:07
  Speaker 1: we bring you the most noteworthy and useful interviews for
• 0:10
  Speaker 1: you and your money. Whether at the grocery store or
• 0:12
  Speaker 1: the trading floor, find a Bloomberg penl podcast on Apple
• 0:15
  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:17
  Speaker 1: at Bloomberg dot com. People are talking about the big
• 0:22
  Speaker 1: earnings recession. We have, of course, data, particularly having to
• 0:27
  Speaker 1: do with the housing market in the United States, that
• 0:29
  Speaker 1: has been weaker than some people would like to see.
• 0:32
  Speaker 1: The question is does this indicate a broader slowdown or
• 0:36
  Speaker 1: is this just a seasonal blip that will recover later
• 0:41
  Speaker 1: in the year. Joining us now to talk about that,
• 0:43
  Speaker 1: Matt Forrester b and y Melon's Lockwood chief investment Officer.
• 0:46
  Speaker 1: Joining us here in our Bloomberg Intta Active Broker Studios.
• 0:49
  Speaker 1: Matt Wonderful having here as all. So let's start there.
• 0:54
  Speaker 1: It seems like stock markets are looking through a lot
• 0:57
  Speaker 1: of the less positive data. Bond markets maybe not so much. Right, So, uh,
• 1:04
  Speaker 1: we're markets are in this sort of hurry up and
• 1:07
  Speaker 1: wait you a moment. I mean, I know you have
• 1:09
  Speaker 1: small children. I know when I'm trying to get out
• 1:10
  Speaker 1: the house, I've got they've got to go get their socks,
• 1:13
  Speaker 1: they get their shoes, if you get their coat. Markets
• 1:16
  Speaker 1: are markets are, you know, are worried about these things.
• 1:20
  Speaker 1: But we're waiting for decisions around China and whether g
• 1:23
  Speaker 1: and Trump are going to come to an agreement and
• 1:25
  Speaker 1: how substance that agreement will be. We're waiting for a
• 1:29
  Speaker 1: deal on Brexit. We're waiting on a deal in North Korea. UM.
• 1:33
  Speaker 1: We're waiting on the FOMC next week. We're waiting for
• 1:36
  Speaker 1: a mule of report. There's all kinds of things that
• 1:38
  Speaker 1: markets are thinking about, UM, and I think one of
• 1:41
  Speaker 1: the most interesting ones is whether or not we're that's
• 1:44
  Speaker 1: how we're assessing this data that's coming out of the
• 1:46
  Speaker 1: first quarter. And you know what these things look like.
• 1:50
  Speaker 1: So we've seen seasonality. One of your economists wrote about
• 1:54
  Speaker 1: this in a March fourth piece. A couple of weeks ago,
• 1:57
  Speaker 1: Elena Siltate wrote about, Yeah, so let a road about
• 2:00
  Speaker 1: how UM the US GDP data is showing this residual
• 2:05
  Speaker 1: seasonality and sort of a data artifact that seems to
• 2:08
  Speaker 1: have been with us from almost the recession period, the
• 2:13
  Speaker 1: Great Recession, and we're also seeing that in corporate earning statements.
• 2:17
  Speaker 1: So if you look at analysts estimates of what's going
• 2:20
  Speaker 1: to occur, so every first quarter, with the exception of
• 2:24
  Speaker 1: eighteen where we're reacting to a tax cut, for the
• 2:27
  Speaker 1: last number of years, we've seen first quarter tad a
• 2:30
  Speaker 1: really weaken up in terms of analysts expectations for what
• 2:33
  Speaker 1: we're gonna happen, and then as the year went forward,
• 2:35
  Speaker 1: we had, you know, pickups in that as the year
• 2:38
  Speaker 1: went on. So I think those are really interesting and
• 2:41
  Speaker 1: it seems to me like markets are looking through a
• 2:44
  Speaker 1: lot of these things, and of course they're probably also
• 2:46
  Speaker 1: expecting relatively positive results from some of these bigger issues
• 2:51
  Speaker 1: they're facing. The trade deal, for example, I think we've
• 2:54
  Speaker 1: priced in some amount of eventual deal that we think
• 2:57
  Speaker 1: we might get. Whether that's a month or two months, knows,
• 3:00
  Speaker 1: but um, it looks like the markets are thinking rather
• 3:03
  Speaker 1: positively about how these will eventually have outcomes in for markets.
• 3:07
  Speaker 1: So going forward into the second quarter, just to begin there, um,
• 3:12
  Speaker 1: looking through seasonality is great when the trend continues to hold,
• 3:17
  Speaker 1: So essentially markets hoping that this trend continues. As we
• 3:21
  Speaker 1: approach the second quarter, second half of the year, things
• 3:24
  Speaker 1: will resume pick up again, even without like the tax
• 3:26
  Speaker 1: cuts we had in two thousand eighteen, and and markets
• 3:29
  Speaker 1: will again really right. So I think we you know,
• 3:32
  Speaker 1: as you look throughout the year, it's clear that analysts
• 3:35
  Speaker 1: estimates are rising as the year progresses. We're also seeing
• 3:38
  Speaker 1: relatively strong top line growth. So we had almost six
• 3:41
  Speaker 1: percent in a revenue growth in the SMP five for
• 3:43
  Speaker 1: the fourth quarter. So some of this does seem to
• 3:46
  Speaker 1: be some amount of earnings estimates. It was pretty clear
• 3:49
  Speaker 1: that you could see we were not going to get
• 3:51
  Speaker 1: the type of earnings jolt that we got from ten.
• 3:55
  Speaker 1: That would be crazy to expect that again. Um, and
• 3:58
  Speaker 1: we've also had twenty dollars about off with w t I.
• 4:01
  Speaker 1: So remember what we went through this a little bit ine.
• 4:05
  Speaker 1: We had a much bigger decline in energy prices, but
• 4:08
  Speaker 1: the energy component of the SP five and earnings is
• 4:11
  Speaker 1: also declining, you know, and that's enough to cause you know,
• 4:14
  Speaker 1: a temporary slowdown in the earnings estimates. I have to wonder, Okay,
• 4:17
  Speaker 1: so you're talking about the equity markets looking through some
• 4:19
  Speaker 1: of the weaker than expected data, holding in. That's why
• 4:22
  Speaker 1: we're seeing this rally that is continuing. My question is
• 4:26
  Speaker 1: where do bonds fit into that picture, given the fact
• 4:29
  Speaker 1: that yields are now retracing any gains that we saw
• 4:32
  Speaker 1: in and you have some people saying that the federal
• 4:35
  Speaker 1: reserves next move will be a rate cut. Do you
• 4:38
  Speaker 1: think they are wrong? Do you think that stocks are
• 4:41
  Speaker 1: right and bonds are wrong? Right now? Um? Yes, so
• 4:43
  Speaker 1: I I think that's still up in the card. So
• 4:46
  Speaker 1: I think the question for us has been whether or
• 4:48
  Speaker 1: not the FED is actually changing policy or whether they're
• 4:52
  Speaker 1: changing communications strategy. The policy of being patient really hasn't
• 4:56
  Speaker 1: changed very much. The question is when is the FED
• 4:59
  Speaker 1: going to be in aition again and will that actually
• 5:02
  Speaker 1: occur in this cycle? And I think that's still relatively
• 5:04
  Speaker 1: an open question. Again, we're waiting, like the FED in
• 5:07
  Speaker 1: this data dependent mode, and I don't think we're gonna
• 5:10
  Speaker 1: know for a while. And I think the FED is
• 5:12
  Speaker 1: very aware of these data seasonality, data artifacts from UH
• 5:17
  Speaker 1: from the crisis and these last number of years, and
• 5:19
  Speaker 1: so they may take more time to assess whether or
• 5:23
  Speaker 1: not they're actually going to change policy at all. And
• 5:26
  Speaker 1: like always, you have to watch what the central banks do, uh,
• 5:29
  Speaker 1: and not what they say, you know, so you can
• 5:32
  Speaker 1: listen to them, but they're talking about a lot of
• 5:34
  Speaker 1: things that are helping them support markets and policy. Uh,
• 5:38
  Speaker 1: you know, the questions about how they're going to deal
• 5:40
  Speaker 1: with the balance sheet, how they might deal with an
• 5:43
  Speaker 1: inflation target going forward. All this is news to the
• 5:46
  Speaker 1: market because it sounds like there could be additional stimulus
• 5:50
  Speaker 1: coming to the markets at some point in time, and
• 5:52
  Speaker 1: they like that. Um, but uh, you know, you have
• 5:55
  Speaker 1: to watch again what they're actually doing and what policies
• 5:58
  Speaker 1: are actually being implemented in that has an Then do
• 6:00
  Speaker 1: you think that like markets are looking for additional stimulus
• 6:02
  Speaker 1: of the day to get strong, we could actually see
• 6:04
  Speaker 1: the other side. They flipped very quickly from hawk to dovish,
• 6:07
  Speaker 1: if you will. If they flip in that same sort
• 6:10
  Speaker 1: of pattern again, if the data really comes in strong,
• 6:13
  Speaker 1: bad news for markets. I agree that's gonna be a
• 6:15
  Speaker 1: risk for for equity markets if we get into that place.
• 6:18
  Speaker 1: And the question again would be how many I mean,
• 6:19
  Speaker 1: if it's a rate hike or two, which I think
• 6:22
  Speaker 1: would be the kind of consensus estimate or where we're
• 6:24
  Speaker 1: going now. I mean that I mean one later in
• 6:28
  Speaker 1: maybe one. I don't know that that's a giant deal,
• 6:31
  Speaker 1: but I think the overall question of whether the fete
• 6:34
  Speaker 1: is actually done here is going to be a real
• 6:36
  Speaker 1: question as we go forward. In Matt Forrester, we love
• 6:39
  Speaker 1: having you, Thank you so much for being here. Matt
• 6:42
  Speaker 1: Forrester is at B and Y Melon's Lockwood, chief investment officer,
• 6:46
  Speaker 1: talking about that weaker data that frankly stock investors are
• 6:51
  Speaker 1: looking through. Lisa Abram woids here. Paul Sweeney, my coast
• 7:09
  Speaker 1: and colleague off today. I am joined by the great
• 7:12
  Speaker 1: Vince Signarella, a resident trader, storyteller and extraordinary market watcher
• 7:19
  Speaker 1: here at Bloomberg LP very much onto the forefront of
• 7:22
  Speaker 1: people's minds. This week has been Boeing shares down another
• 7:26
  Speaker 1: one and a half percent after the f a A
• 7:28
  Speaker 1: joined in with all of the other nations around the
• 7:31
  Speaker 1: world that have ordered a stop to the seven thirty
• 7:35
  Speaker 1: seven Max jet and saying to Boeing, you know, honestly, no,
• 7:39
  Speaker 1: these needs to be taken out a circulation while we
• 7:41
  Speaker 1: figure out what to do about the problem. Joining us
• 7:45
  Speaker 1: now Benedict Cambell. He is Bloomberg Senior editor covering company
• 7:49
  Speaker 1: news and Benedict, can you just give us the latest
• 7:52
  Speaker 1: with respect to the investigation into the second fatal crash
• 7:55
  Speaker 1: of the seventh thirty seven jet. So there is a
• 7:58
  Speaker 1: picture that is emerging thanks to some of the data
• 8:00
  Speaker 1: that's becoming available. In principle, we now have the black boxes,
• 8:05
  Speaker 1: the flight record and the and the UM and the
• 8:08
  Speaker 1: voice recorder that are in Paris being read out. We
• 8:11
  Speaker 1: don't have the results of those yet, but that will
• 8:13
  Speaker 1: give us arguably the most conclusive evidence. But we have
• 8:17
  Speaker 1: a couple of other pieces that are starting to put
• 8:20
  Speaker 1: together a picture. We heard overnight that authorities on the ground,
• 8:25
  Speaker 1: the sort of such and rescued recovery crew on the
• 8:28
  Speaker 1: ground found a small device essentially no bigger than a screw.
• 8:33
  Speaker 1: But it was an interesting component because it showed that
• 8:36
  Speaker 1: the trim on the plane had been raised to lower
• 8:39
  Speaker 1: the plane's nose, and that showed that it was actually
• 8:42
  Speaker 1: at the wrong angle. Again note of caution, this is
• 8:45
  Speaker 1: a plane that came down an incredibly high speeds, so
• 8:48
  Speaker 1: it could have been somehow caused by the impact. But
• 8:52
  Speaker 1: again that is one piece of evidence that shows that
• 8:55
  Speaker 1: principally everything went wrong with this flight. Very early on,
• 8:58
  Speaker 1: there was a report over night as well that a
• 9:01
  Speaker 1: panicky voice from the cockpit showed that the pilot struggled
• 9:04
  Speaker 1: to keep the plane under control. So there is this picture,
• 9:07
  Speaker 1: as I said, emerging of a of a trip that
• 9:11
  Speaker 1: really went horribly wrong early on, and that is part
• 9:14
  Speaker 1: of the evidence that prompted the f a A to
• 9:16
  Speaker 1: finally respond late this week. Benedict, does this take um
• 9:21
  Speaker 1: or is this part of the story or does this
• 9:23
  Speaker 1: take the software conversation off the table? Are they moving
• 9:26
  Speaker 1: in a different direction. I don't think it takes the
• 9:28
  Speaker 1: software conversation off the table. Just to remind people, there
• 9:31
  Speaker 1: is that piece of software in this plane that helps
• 9:34
  Speaker 1: stabilize the aircraft. Has to do with the new engines
• 9:38
  Speaker 1: on the plane that are slightly bigger, slightly heavy, and
• 9:41
  Speaker 1: that changed sort of the the center of gravity of
• 9:43
  Speaker 1: the jets. So to counter that, they introduced the software.
• 9:46
  Speaker 1: But there seems to be a case where the software
• 9:49
  Speaker 1: and the pilot didn't sort of interact perfectly. So this
• 9:52
  Speaker 1: is still something that is being investigated at the moment,
• 9:55
  Speaker 1: certainly not off the table. Whatever happens. Boeing has a
• 9:59
  Speaker 1: very a keen interest in finding as much evidence as
• 10:02
  Speaker 1: quickly as possible, because the last thing they want is
• 10:04
  Speaker 1: some sort of inconclusive evidence or no evidence whatsoever, and
• 10:08
  Speaker 1: that's where the flight recorder will be helpful. We have
• 10:11
  Speaker 1: a first image of this flight recorder. It looks badly mangled,
• 10:15
  Speaker 1: but broadly intact. These are very sort of fortified UM
• 10:19
  Speaker 1: devices and hopefully the b e A, which is the
• 10:22
  Speaker 1: French authority, they will be able to give a read out.
• 10:25
  Speaker 1: They've managed to do this under very difficult circumstances of
• 10:29
  Speaker 1: recorders that have been submerged in some cases for years,
• 10:32
  Speaker 1: and they still manage to get the full data. So
• 10:35
  Speaker 1: hopes so high they'll be able to do the same
• 10:36
  Speaker 1: thing here Benedict twenty Here, I'm just wondering, have Airbus
• 10:40
  Speaker 1: and the big Chinese aircraft manufacturer have they really been
• 10:45
  Speaker 1: aggressively trying to pursue business and get away, uh some
• 10:48
  Speaker 1: some sort of competitive advantage from Boeing here. The short
• 10:52
  Speaker 1: answer is no, aggressive is probably not sort of what
• 10:55
  Speaker 1: they're trying to be right now. There's sort of this
• 10:56
  Speaker 1: unwritten rule in aviation that if if there is a
• 10:59
  Speaker 1: tragedy on on one company, the others try to sort
• 11:03
  Speaker 1: of keep a very low profile UM. But you can
• 11:06
  Speaker 1: imagine that behind the scenes they will probably start to
• 11:10
  Speaker 1: position themselves. We have had some airlines say we're not
• 11:13
  Speaker 1: sure about this order book anymore. How they will wiggle
• 11:16
  Speaker 1: out of it as another question, but that might potentially
• 11:18
  Speaker 1: open some business for US and the Chinese, which will
• 11:21
  Speaker 1: create a very interesting dynamic. Benedict Cambell, thank you so
• 11:24
  Speaker 1: much for being with us. Benedicto Cambell, Senior Bloomberg Senior
• 11:27
  Speaker 1: editor for Company News, joining us with Boeing shares down
• 11:32
  Speaker 1: one and a half percent, Lisa brom woids here. Vince
• 11:50
  Speaker 1: Signarella joining me today. Paul Sweeney is on a well
• 11:53
  Speaker 1: deserved vacation. The pound is gaining a little of versus
• 11:58
  Speaker 1: the dollar today after sinking yesterday. It has been Brexit week,
• 12:02
  Speaker 1: and joining us to discuss is none other than Marian Harkin,
• 12:05
  Speaker 1: a European Union parliament member representing Ireland. UH. She joins
• 12:10
  Speaker 1: us here in our Bloombergadder Active Broker Studios in New York. Marian,
• 12:13
  Speaker 1: thank you so much for being with us here today.
• 12:15
  Speaker 1: To be here happy Patrick's today. UM, I wanted to
• 12:19
  Speaker 1: start with why is it so difficult for Teresa May
• 12:23
  Speaker 1: to get through her plan? Well? The withdrawal agreement has
• 12:27
  Speaker 1: three parts, citizens rights, the divorce settlement, the money and
• 12:32
  Speaker 1: the big issue, the Irish backstop. Now what is the
• 12:36
  Speaker 1: Irish backstop? The Irish backstop? It's that the all of
• 12:42
  Speaker 1: the UK, including Northern Ireland, would remain in a customs
• 12:47
  Speaker 1: union with the EU, but that furthermore, the North violent
• 12:53
  Speaker 1: would have regulatory alignment with the South. So that me
• 13:01
  Speaker 1: that that will be in place until a trade deal
• 13:05
  Speaker 1: is done, which would negage the need for any such agreement.
• 13:10
  Speaker 1: But of course what the British are afraid of is
• 13:13
  Speaker 1: that maybe that trade deal won't be done, maybe it
• 13:17
  Speaker 1: won't be sufficient, that the backstop will never be needed.
• 13:21
  Speaker 1: The backstop is merely an insurance policy. Nobody wants to
• 13:24
  Speaker 1: use it, not the EU, not the UK, not Ireland,
• 13:29
  Speaker 1: but it's there to preserve the Good Friday Agreement and
• 13:33
  Speaker 1: no hardening of the arch border. And that's the difficulty
• 13:37
  Speaker 1: Trees and May has. But as you say, it's in
• 13:41
  Speaker 1: everyone's best interest to get a trade deal through. It
• 13:45
  Speaker 1: seems unrealistic that the backs that would be there indefinitely
• 13:48
  Speaker 1: that that this, It seems that the fear of never
• 13:51
  Speaker 1: having a trade deal, or or an acceptable trade deal
• 13:54
  Speaker 1: is superfluous. I mean, I agree. Now, a trade deal
• 14:00
  Speaker 1: is never easy and it takes time, and that's one
• 14:03
  Speaker 1: of the issues because the withdrawal agreement is in place
• 14:07
  Speaker 1: until the end of December, so it's not a lot
• 14:11
  Speaker 1: of time. But of course there could be an extension
• 14:14
  Speaker 1: if it's needed. But there is this fear that it
• 14:17
  Speaker 1: may not be sufficient. But everybody is intent on ensuring
• 14:21
  Speaker 1: it's sufficient. But these things are never simple, and therefore
• 14:27
  Speaker 1: many of the hard Brexiteers do not want to find
• 14:30
  Speaker 1: themselves in this position. Are we closer today to a
• 14:35
  Speaker 1: second referendum on Brexit than we were a week ago?
• 14:40
  Speaker 1: I don't think so, and I'll tell you why. I
• 14:43
  Speaker 1: think Theresa May might just get her deal true next week.
• 14:48
  Speaker 1: I think there's a real possibility there because people's backs
• 14:52
  Speaker 1: are to the wall a second referendum. Labor is will
• 14:57
  Speaker 1: he won't he want a yes another day No? And
• 15:01
  Speaker 1: instinctively Jeremy Corbyn does not want a second referendum. He's
• 15:06
  Speaker 1: a Brexit here really. So there's the Conservatives are split
• 15:12
  Speaker 1: and it's I think it's going to be very difficult,
• 15:14
  Speaker 1: if not impossible, to get sufficient people in the House
• 15:18
  Speaker 1: of Commons to vote for that. A lot of people
• 15:21
  Speaker 1: want it, but we're not looking at a majority. And
• 15:25
  Speaker 1: to me, the best chance at this stage is that
• 15:28
  Speaker 1: May's deal might squeak at next week, So walk us
• 15:32
  Speaker 1: through that a little bit, suppose, and then that's penciled
• 15:35
  Speaker 1: in for Tuesday. I should save this vote. If the
• 15:38
  Speaker 1: vote gets through, if you go third times a charm
• 15:41
  Speaker 1: and gets her deal through, what's the next step, Well,
• 15:44
  Speaker 1: just how I should get through the Attorney General Jeffrey Cox,
• 15:49
  Speaker 1: whose advice really led to her deal in thrown out
• 15:54
  Speaker 1: this week, is looking at it again. The d u
• 15:58
  Speaker 1: P I believe are around London this weekend. A lot
• 16:02
  Speaker 1: of people are talking and remember this the heart Brexit
• 16:06
  Speaker 1: hears know that if May's deal is not accepted next
• 16:11
  Speaker 1: week then they are looking at perhaps an indefinite suspension
• 16:17
  Speaker 1: of Article fifty, and that's the last thing they want.
• 16:22
  Speaker 1: They may be prepared to accept this brexit. It's not
• 16:26
  Speaker 1: what they want, but it might be the least worst option.
• 16:30
  Speaker 1: And people's backs are to the wall on this, and
• 16:33
  Speaker 1: for those who really want Brexit, this may be their
• 16:37
  Speaker 1: last opportunity to guarantee it, so they might take it
• 16:41
  Speaker 1: despite the fact that they have said time and time
• 16:44
  Speaker 1: again it's not acceptable right now. Do you get the
• 16:47
  Speaker 1: sense that Brussels that the European Commission wants to be
• 16:50
  Speaker 1: dealing with Theresa May and only Theresa May, and not
• 16:53
  Speaker 1: a potential successor here? I think so, um, I think Brussels.
• 16:59
  Speaker 1: I was air this week in Strasbourg. A lot of
• 17:04
  Speaker 1: speeches were made and people were putting their positions forward.
• 17:08
  Speaker 1: There's a certain level of impatience that's probably heading towards frustration,
• 17:13
  Speaker 1: but nonetheless there's a lid on't and I think people
• 17:17
  Speaker 1: still hope that Treesa May can finally do this. But
• 17:22
  Speaker 1: Barney was very clear this week he said the negotiations
• 17:26
  Speaker 1: are over, it's done, and talking about any extension of
• 17:30
  Speaker 1: the deal again, it was very clear from senior figures
• 17:34
  Speaker 1: that only if the British have a plan will the
• 17:40
  Speaker 1: EU consider an extension. But perhaps to me, the statement
• 17:45
  Speaker 1: from the European Commission that really says where it's at
• 17:49
  Speaker 1: at the moment is this, And they've said there are
• 17:53
  Speaker 1: two ways for the UK to leave the European Union,
• 17:58
  Speaker 1: with a deal or with actually deal. The European Commission
• 18:02
  Speaker 1: is ready for either. So that tells you where the
• 18:05
  Speaker 1: EU is at at the moment. So the EU is
• 18:08
  Speaker 1: very prepared for a hard Brexit if if this deal
• 18:11
  Speaker 1: perhaps should fall by the way side. Look, nobody can
• 18:14
  Speaker 1: be prepared for a hard Brexit as such. I mean
• 18:17
  Speaker 1: this week, for example, we put through a lot of
• 18:20
  Speaker 1: contingency legislation. I put through legislation on the fact that
• 18:25
  Speaker 1: if people have moved from the UK to Europe or
• 18:28
  Speaker 1: vice versa, that their social security coordination is in order
• 18:33
  Speaker 1: that citizens won't close out. There was contingency legislation put
• 18:37
  Speaker 1: through on aviation, on many many other issues. But that's
• 18:44
  Speaker 1: that's bottom that's bottom line stuff that is not anything extra,
• 18:49
  Speaker 1: and definitely business and markets would react with horror if
• 18:55
  Speaker 1: if there was a hard Brexit. So we're as prepared
• 18:58
  Speaker 1: as we can be. Arian Harkin, thank you so much
• 19:01
  Speaker 1: for being with us, and again, happy St Patrick's Day.
• 19:04
  Speaker 1: I imagine that your trip here will be a bit
• 19:06
  Speaker 1: of a reprieve from the Brexit experience, if not for
• 19:10
  Speaker 1: just maybe a couple of hours. Yes, at least you
• 19:12
  Speaker 1: can talk to taxi drivers here and they don't talk
• 19:14
  Speaker 1: ramatically ask you about Brexitt. We're trying to change that.
• 19:18
  Speaker 1: Marian Harkin, European Union Parliament member representing Ireland. Joining us
• 19:22
  Speaker 1: here in our eleven three OH studios in New York,
• 19:39
  Speaker 1: the tragedy in New Zealand has rocked the world. At
• 19:42
  Speaker 1: least forty nine people massacred at a mosque by a
• 19:47
  Speaker 1: gunman with extreme views, white supremacist views. Of course, this
• 19:53
  Speaker 1: is absolutely a humanitarian tragedy. There is a business side
• 19:57
  Speaker 1: to it. We are going to dig into it. There
• 19:59
  Speaker 1: is no good transition and from human tragedy to the
• 20:02
  Speaker 1: business base case. And yet we do want to focus
• 20:06
  Speaker 1: on Facebook and its role as the perpetrator live streamed
• 20:11
  Speaker 1: this horrible tragedy on Facebook and YouTube. Facebook shares down
• 20:16
  Speaker 1: nearly three percent. Joining us here in our eleven three
• 20:19
  Speaker 1: OH Studios is Garrett to Vank, who covers technology for
• 20:22
  Speaker 1: us at Bloomberg. Garrett, can you give us a sense
• 20:24
  Speaker 1: of how much of Facebook's share decline is due to
• 20:28
  Speaker 1: their ability or lack thereof, of monitoring and quickly responding
• 20:33
  Speaker 1: to something as horrific as this versus some of the
• 20:36
  Speaker 1: turnover that we've seen just into the upper management there. Yeah,
• 20:39
  Speaker 1: I mean, I think when you're seen with attacks such
• 20:41
  Speaker 1: as this one, I mean Facebook, YouTube, other Internet platforms,
• 20:44
  Speaker 1: they're intrinsically part of how these things happen nowadays. This
• 20:48
  Speaker 1: attacker clearly had what you know, what is probably best
• 20:51
  Speaker 1: called a social media's outreach strategy, right They had been
• 20:54
  Speaker 1: posting a little bit on Twitter hinting about some of
• 20:57
  Speaker 1: these actions, and then when they went out and did it,
• 21:00
  Speaker 1: they went and posted in certain you know, alt right,
• 21:02
  Speaker 1: far right communities around the world to sort of, you know,
• 21:05
  Speaker 1: gain traction, gain support. There was a manifesto that very
• 21:09
  Speaker 1: clearly was focused on, you know, had had a lot
• 21:12
  Speaker 1: of information to sort of you know, get out there
• 21:15
  Speaker 1: for people to kind of be talking about it, to
• 21:17
  Speaker 1: be sharing these ideas and memes, trying to analyze them.
• 21:20
  Speaker 1: That's the whole point of what happened here. And then
• 21:22
  Speaker 1: at the end of the day when they actually went
• 21:24
  Speaker 1: to do the attack, they went live on Facebook. And
• 21:27
  Speaker 1: so I think the share reaction is because there might
• 21:29
  Speaker 1: be some concern from the investor community that you know,
• 21:32
  Speaker 1: either through regulation or through self regulation, the companies will
• 21:35
  Speaker 1: stop allowing live streaming, which is a product that they
• 21:38
  Speaker 1: have had for a couple of years now and has
• 21:40
  Speaker 1: been you know, a big sorce of engagement and and
• 21:43
  Speaker 1: and and from Facebook's perspective important part of future growth.
• 21:48
  Speaker 1: You mentioned regulation. I mean this has been a big
• 21:50
  Speaker 1: push for some presidential candidates, Elizabeth Warrant specifically wanting to
• 21:55
  Speaker 1: break up some technology companies. You see, Yes, you think
• 21:57
  Speaker 1: you see a spillover from this from Facebook into other
• 22:00
  Speaker 1: other places of technology. Yeah, And I want to I
• 22:03
  Speaker 1: know we're talking about Facebook, but I do want to
• 22:04
  Speaker 1: say that, you know, YouTube also is a big part
• 22:07
  Speaker 1: of what happened here. Because the video was live on Facebook,
• 22:10
  Speaker 1: it was quickly taken down, you know, not immediately, but
• 22:13
  Speaker 1: still quite quickly, I think after about seventeen or eighteen
• 22:16
  Speaker 1: minutes or so, but it had been recorded by other
• 22:19
  Speaker 1: people and then started being reposted on YouTube, and so
• 22:22
  Speaker 1: YouTube is kind of the distribution method for a lot
• 22:25
  Speaker 1: of this content. When it comes to regulation, I mean
• 22:27
  Speaker 1: I have to sort of say that as a reporter
• 22:30
  Speaker 1: covering this for the last couple of years, I've become
• 22:31
  Speaker 1: a little bit cynical because we've been talking about regulation
• 22:34
  Speaker 1: time and time again. And although some countries do have
• 22:37
  Speaker 1: some regulation, For example, in Germany, there are rules about
• 22:39
  Speaker 1: what you can and can't post about you know, Holocaust
• 22:42
  Speaker 1: related content and you know, anti Semitic related content in
• 22:45
  Speaker 1: the US and other sort of you know, major major
• 22:48
  Speaker 1: places where these companies are actually based. We haven't seen
• 22:50
  Speaker 1: any strict regulation changes. I guess that there's a question
• 22:54
  Speaker 1: of what is the correct approach to regulating some of
• 22:57
  Speaker 1: this type of behavior. Because Facebook has uh deployed a
• 23:01
  Speaker 1: thousand plus person team to try to figure this out,
• 23:05
  Speaker 1: I just have to wonder. I mean, could it be
• 23:08
  Speaker 1: the other way around that that Facebook and other tech
• 23:11
  Speaker 1: giants cooperate with local authorities to pin down people who
• 23:15
  Speaker 1: are trying to use these as you know, these platforms
• 23:18
  Speaker 1: with social media strategies to perpetuate hate and violence. I mean,
• 23:22
  Speaker 1: I think that Facebook and the other platforms are already
• 23:25
  Speaker 1: doing that. I mean they they have had instance in
• 23:28
  Speaker 1: the past where people say they're going to go and
• 23:30
  Speaker 1: do something, and then they went and did it, and
• 23:32
  Speaker 1: people say, why didn't you tell anyone about this? Why
• 23:34
  Speaker 1: didn't you report this? And there are places, you know,
• 23:38
  Speaker 1: there are times where Facebook will report things. They'll even
• 23:41
  Speaker 1: report um, you know, if someone is threatening to harm
• 23:43
  Speaker 1: themselves or to kill themselves. They will report that to
• 23:46
  Speaker 1: local law enforcement, which obviously opens up a whole new
• 23:49
  Speaker 1: bag of questions about this tech company's private company, you know,
• 23:52
  Speaker 1: a a corporation's role in society and safety and health
• 23:57
  Speaker 1: and law enforcement that brings in the big brother. I mean,
• 24:00
  Speaker 1: is it Is it possible, though, that the technology is
• 24:04
  Speaker 1: just not there to monitor this technology? I mean, you know,
• 24:08
  Speaker 1: we we in this business have editors, generally speaking, before
• 24:11
  Speaker 1: we can publish something. When you're talking about live streaming,
• 24:14
  Speaker 1: it's it's out there as soon as somebody wants it
• 24:16
  Speaker 1: out there. There's no no filter. So live streaming, the
• 24:19
  Speaker 1: question is should we just ban it or not? Because
• 24:22
  Speaker 1: at the end of the day, if you're gonna have it,
• 24:23
  Speaker 1: it's going to go out there and no filter, there's
• 24:25
  Speaker 1: not really any great way to stop it. But what
• 24:28
  Speaker 1: I think is a major question that I'm asking today
• 24:31
  Speaker 1: is why was this video continually allowed to be reposted?
• 24:34
  Speaker 1: Even now? A colleague of Mindset, they were able to
• 24:36
  Speaker 1: find it on YouTube through a few minutes of searching,
• 24:38
  Speaker 1: and that's because people are constantly trying to repost it
• 24:41
  Speaker 1: and it's being taken down. But Google has thrown more
• 24:44
  Speaker 1: than one thousand people, thousands of people I think the
• 24:47
  Speaker 1: last number was ten thousand people that they've hired to
• 24:49
  Speaker 1: moderate content. They have the greatest minds in the business
• 24:52
  Speaker 1: when it comes to algorithms and recognizing videos like this,
• 24:55
  Speaker 1: and they have been able to do a pretty good
• 24:57
  Speaker 1: job of keeping copyrighted copyright in fringe videos from even
• 25:01
  Speaker 1: finding their way onto the platform. If I want to
• 25:03
  Speaker 1: post a popular song, they don't even let me upload it.
• 25:05
  Speaker 1: The algorithm recognize it before it even gets the public.
• 25:08
  Speaker 1: So why in this case, when we all knew what
• 25:10
  Speaker 1: the video was, have they not been able to stop
• 25:12
  Speaker 1: it from being uploaded in the first place. Garrett Devink,
• 25:15
  Speaker 1: thank you so much for being with us. Garrett Devink
• 25:17
  Speaker 1: covers technology at Bloomberg, joining us at our in our
• 25:20
  Speaker 1: interactive broker studios. Thanks for listening to the Bloomberg P
• 25:24
  Speaker 1: and L podcast. You can subscribe and listen to interviews
• 25:27
  Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney,
• 25:30
  Speaker 1: I'm on Twitter at pt Sweeney. I'm Lisa abram Woy.
• 25:33
  Speaker 1: It's I'm on Twitter at Lisa abram Woyits one before
• 25:36
  Speaker 1: the podcast. You can always catch us worldwide on Bloomberg Radio.