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- [00:00]
Bloomberg Host
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Bloomberg Host
Bloomberg.
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Sarah Spain
Audio Studios Podcasts Radio News this is.
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Bloomberg Businessweek Daily Announcer
Bloomberg businessweek Daily reporting from the magazine that helps global leaders stay ahead with insight on companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week daily podcast with Carol Massar and Tim Stanweck on Bloomberg Radio.
- [02:11]
Bloomberg Host
It is a Fed Wednesday, not a decision. But we're getting the Fed minutes from that first meeting of 2026 happened on January 28th. You know that's the meeting when the Fed kept rates steady and you had two Fed governors, Chris Waller and Stephen Myron, voting against the decision in favor of lowering rates by a quarter of a point. So we are waiting for them to cross. They will cross any moment from now.
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Bloomberg Reporter
Chair Powell also back then talked up a quote, clear improvement in the US Outlook and said the job market shows sign of steadying, steadying, signaling a cautious optimism.
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Bloomberg Host
All right, let's head to D.C. and outside the Federal Reserve is our own Michael McKee.
- [02:45]
Michael McKee
Mike okay, here's the headline. In a very newsy set of minutes, several participants indicated that they would have supported a two sided description of the committee's future interest rate decisions, reflecting the possibility that upward adjustments could be appropriate. The focus of the January meeting on inflation largely rather than jobs, and concern that bringing it down had stalled. Officials anticipated inflation would move down this year, but the pace and timing remained uncertain. The continuing rise in prices driven by tariffs, the minutes say the effects would likely start to diminish this year and ongoing moderation in housing prices would also help. High productivity growth from technology might also put downward pressure on inflation, and a few participants mentioned that companies were telling them they are automating more operations to try to offset some price increased needs. Most participants, however, cautioned that progress toward the 2% objective might be slower and more uneven than generally expected, and judged that the risk of inflation running persistently above the committee's objective was meaningful. Some cited reports from business contacts expecting to raise prices this year. The labor market, the committee's big concern last year, was less of a concern this year. The vast majority of participants judged, the minutes say, that labor market conditions had been showing some signs of stabilization and that downside risks to the labor market had diminished. Still, most agreed downside risks to the labor market remained in place, particularly as the labor supply diminished. Overall, the economy appeared to be expanding at a solid pace with resilient consumer spending and robust business investment, particularly in technology. Several, though suggested a lot of that was due to spending by higher income consumers. Lower income spending was soft. There was a long discussion of markets with several commenting on high asset valuations and historically low credit spreads. Some saw vulnerabilities in AI, including elevated equity valuations and gains concentrated in a small number of companies. Several highlighted concern about the private credit sector and others commented on risks associated with hedge funds and rising leverage. Finally, the January meeting is when the Open Market Committee elects its officers for the year. Jay Powell again named chair of the committee, but the minutes say until the selection of their successors at the first meeting of 2027.
- [05:28]
Bloomberg Host
Got to say Mike, it sounds like they all had their Wheaties that you meeting right? It sounds like they covered a lot of stuff. Hang on for a second because I want to see what you think is of most important importance to the Bloomberg audience. Having said that just taking a look at equity markets firming up a little bit on the S and P S and P and the Dow, but pretty much NASDAQ 100 staying where it was prior to the Fed meet. Fed minutes coming out. If I look at the treasury curve, you are looking at pretty much the 10 and 5 where they were prior to the release of the minutes. Looking at the shorter end of the yield curve, slight uptick. The two year yield moving from like 345 to 346 kind of back there. So I would say not much market reaction which is kind of interesting. Mike, what is most notable because investors seem to be taking this in stride.
- [06:17]
Michael McKee
Well, this is the first commentary from anybody at the Fed about the possibility of rate increases. Several is refers to only two or three members and we kind of know who those members might be. But the idea that they did put the idea out there is something that we haven't seen in years. And so it does become a significant talking point as we go forward and watch to see what influence inflation does. The emphasis clearly shifting to inflation at this meeting from last year's focus on jobs.
- [06:49]
Bloomberg Reporter
Hey Mike, a couple of the headlines that are worth repeating. Several saw more cuts of inflation declines as expected. Yet most caution disinflation could be slower than expected. What could lead to slower disinflation?
- [07:02]
Michael McKee
Well, they're concerned about tariff price increases and maybe they don't fade out as fast and then additional demand in the economy because we're going to get some stimulus from tax refunds and because of all the spending on a I might also push prices higher. So there's concerns that inflation, while it may not rise significantly, could stabilize at a higher than desired level and that might lead the Fed to have to do something about it.
- [07:29]
Bloomberg Host
Hey Mike, a lot going on. Obviously there's Fed minutes. We had some economic news today as well. We also had Kevin Hassett out there on a New York Fed tariff study and I got to ask you about that. He is of course President Trump's NEC director and he says that a New York Fed study showed that the US Companies bearing most of the tariff burden is an embarrassment and the people associated with it should be disciplined. He spoke about this earlier on cnbc. Here's exactly what he had to say. He said what they've done is they put out a conclusion which has created a lot of news that's highly partisan based on an analysis that wouldn't be accepted in a first semester econ class. I've been in that first semester econ class so, Mike, fed researchers found nearly 90% of the economic burden from tariffs last year were borne by US companies and consumers. What say you, Mike McKee and the folks that you talk to? The economic community who really bears the.
- [08:25]
Michael McKee
Cost of those tariffs, companies and consumers in the United States? Mr. Hassett's comments seem to have adopted the attack dog language of the Trump administration much more than even Kevin had done before, maybe because he's not a candidate for Fed chair at this point. But you got to point out that the New York by saying 90% is picked up by Americans is the outlier here because a study by the University of Chicago found 99%. Study by the CBO found 95%. The Kiel Institute in Germany found 94%. So all of these people found that Americans are buying 90% or more are paying 90% or more of the tariffs. So I think Mr. Hassett has looked at it the wrong way and obviously Trump administration doesn't like criticism.
- [09:18]
Bloomberg Reporter
Okay, good to have that on on the program. Mike, just before we let you go, the jobless boom. A most read story on the Bloomberg Terminal about the unprecedented jobless boom in the U.S. how economists are warning that the U.S. economy is vulnerable to shocks because the labor market is not growing. Some are predicting that economic growth will slow due to stagnant labor markets. Can't productivity increase as a result, well, productivity of technology. Excuse me, as a result of technology.
- [09:45]
Michael McKee
Well, that can happen. The question is how fast does the technology get adopted and how quickly and how deeply does it get adopted to drive productivity significantly higher? The concern about the labor market and the jobless recovery is reflected in these minutes. And members of the Open Market Committee did talk about that as a possibility, a possible risk to the economy, although as I said, inflation was sort of their number one concern this time.
- [10:12]
Bloomberg Host
All right, so appreciate it as always. Our own Michael McKee down there outside the Federal Reserve or actually inside the Federal Reserve because it's kind of still cold outside, I think. Mike, thank you so much. Safe travels back.
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Bloomberg Reporter
Stay with us. More from Bloomberg businessweek Daily coming up after this.
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Sarah Spain
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- [12:04]
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- [13:03]
Bloomberg Businessweek Daily Announcer
You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [13:18]
Bloomberg Host
Hey listen investors definitely keeping a watch on economic data fed expectations for what else is a top of mind is someone who's been looking at the recent volatility in the markets. He says it's typical of a major investment cycle and that some dynamics politics around the fear of AI disruption are contradictory. It is the view of our next guest. He is Mike Wilson of Morgan Stanley. He was among the rare forecasters who held onto A bullish view last April even as stocks sank in the aftermath of sweeping US Tariffs. His conviction proved correct with the S and P as you know, rebounding to a record as President Trump dialed down his trade war. He does see the S and P rallying I think about 16% this year. But that was his call. In mid November we'll see if he has an update. We welcome Mike Wilson. He's chief U.S. equity strategist, chief investment officer for Morgan Stanley. He's in New York City. Mike, good to have you here. And someone who has followed Mike's call and writes calls I should say, and writes about him a lot is our own Alex Semen over. She's Bloomberg News equities reporter. She's here in studio. We want to talk about the markets. Mike, are we in the midst of a new bull market and earnings cycle, especially for many of the lagging areas of the index? That was your call in mid November. Is that a call you still stick to?
- [14:34]
Michael McKee
Yeah.
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Mike Wilson
Well, good afternoon. First of all, I would say yes. I mean, you know the story we actually started writing about in May of last year, which is a mid year update, was exactly that. I think, I think our view still remains out of consensus around this idea that Liberation Day marked the end of what we call a rolling recession. So we're actually not only in a new earnings cycle, we're in a new economic cycle and that's why we're seeing the broadening out now because there have been many parts of the economy that have been sort of mired in a recession for the last three years or so and they're just now starting to emerge. Areas like consumer goods, some of the financial sector, industrials obviously, which is getting a boost from Capex, but also getting a boost from, you know, basically under spending for the last several years. Parts of technology are still doing quite well. And so that broadening out is, is the real story. And we doubled down on that in November because the evidence was coming through and you know, in May we didn't know but now we know, I mean that the earnings growth for the median stock and the Russell 3000 is now running double digit growth year over year. That's the first time we've seen that in four years. So, so it's happening. The question, you know, the question now is how long can it last? You know, what could derail that and you know, what do you pay for? I mean those are always the questions. But the first part of your question is resounding yes, we are in a new earnings and economic cycle, and the market has figured it out.
- [15:59]
Sarah Spain
Hey, Meg, it's been pretty remarkable to see that we've gotten this tremendous stock volatility at the single stock level, also at the sector level. But when you look at the s and P500, it actually hasn't really done much this year. What is it going to take to break us out of this range? And what could be the catalyst to get us to past that elusive 7,000 level that everyone's waiting for?
- [16:19]
Mike Wilson
Yeah, that seems to be the question. I mean, obviously stock investors don't mean if you can make money in other areas, that's fine. I think that's the real main message is that the market is not going anywhere at the S and P level. But there are many sectors that are doing well, and that's the name of the game. Now, to your question. I think what's going to break us out ultimately are two things. Number one, there is some uncertainty around the AI CapEx cycle and the disruption that perhaps it could cause in the labor market and other areas. So I think we're in one of those testing periods now. We heard about that this week. We think that ultimately it's a little bit premature to kind of throw a cold blanket on the cycle. It's just getting going, you know, from our standpoint. And then secondarily, I think we have a new Fed chair nominee with Kevin Warsh, and, and the market always tests the new Fed chair, whoever it is, when they come into. Into power or office. And so first we have to go through the, you know, the nominate the confirmation hearings, and then we got to learn a little bit more about what he really intends to do so that, you know, that could lead to this, you know, the market kind of struggling for another month or two. And then ultimately, we think once he takes office, we think that'll, that'll be another catalyst for why the market can have a really good second half. And we stand by our $7800 price target for the S and P by the end of this year.
- [17:37]
Bloomberg Reporter
Okay, so those are all the reasons and more that you think we could see a 16% increase in the S&P 500 this year. What changes your mind, Mike? What could happen between now and the end of the year that could cause you to go back and sharpen the pencils, break out the Excel and say, wait a second, we got to recalculate this.
- [17:55]
Mike Wilson
Yeah, well, we do that every week anyways, because we have to. But, but I would say, you know, what would change our view is probably the Things that are going right now. So, for example, if we would see the earnings cycle start to deteriorate and that could happen. It's not our center forecast, but if the earnings revisions were to start to narrow again or start to really break down, that would be clearly something that would change our view. The second would be that, you know, that the fear around Kevin was being kind of a balance sheet hawk where, you know, he's going to maybe shrink the balance sheet and we're going to have a little bit of a liquidity problem potentially that would cause multiple multiples to come down. We don't think that's going to be the case this year. That might be a story for 2027. We'll think about it then. But, but maybe we're wrong on that. The other one, of course, is yet another exogenous shock of some kind. And I think, you know, the one I mentioned earlier is starting to weigh on stocks here in the short term, which is this concern that, you know, AI is happening so fast and it's, you know, it's migrating now into the corporate world that we're going to see a big labor cycle. That's not our view, but it could happen. And so there are. Those would be the top three, I would say, that could derail our positive view for this year.
- [19:08]
Sarah Spain
We've heard time and time again that big Tech's profits are going to slow, that it's time to rotate. And anyone who said that for the last few years has been wrong on that. Do you think that this year is different? And when you think about the end of 2026, when we close out, who are going to be the new winners?
- [19:23]
Bloomberg Host
And I love that you went there because, Mike, it feels like the last three years people have said get away from big tech, diversify. And yet that's where we've seen so much of the gains. It's a great, it's a great.
- [19:33]
Mike Wilson
Well, I mean, I think a lot of people also made the other side of the call, which is to kind of upgrade small caps or the equal weighted S and P. We didn't do that. You know, we don't get everything right, but we waited until November to make that call because our, our view is not that tech earnings are going to collapse, it's that the rest of the market's earnings are going to improve. And that's what usually drives relative performance. So it's, it's really the spread between sort of the Mag 7 or, you know, large cap growth, stock earnings growth, and the other 493 stocks or the other equal weighted index, whatever you want to call it, and that spread is narrowing. And so the areas that we have been recommending is based on where that earnings growth is accelerating the most. That would be things like consumer goods or financials, some of the industrial segments, some of the small mid cap areas. And we stand by that, that that's what we're seeing and that's what we think is going to continue for the rest of this year. And, and that's really the story. It's not a, it's not an anti tech or anti large cap growth call. It's more of a, just a bullish call on all these parts of the economy in the market that have been under earning because of this rolling recession.
- [20:41]
Sarah Spain
So is it fair, Mike, to say that you like the equal weighted version of the s and P500 more than the main index?
- [20:47]
Mike Wilson
Absolutely. That was our, one of our lead calls in the November outlook and that has worked so far. So knock on wood, hopefully that continues. And based on what we've seen so far this year in the earnings and what we see kind of in this, you know, the economy itself, which I think quite frankly is booming at the moment because you have capital spending increasing and consumer spending holding up, that that's a much better environment for the average company.
- [21:11]
Bloomberg Host
Hey Mike, two things I just real quickly I'm curious about. Do you think the White House is, is still a risk to financial markets or with midterms looming, do you think that the president and his team are going to be very careful about unsettling things in the financial markets? Many have said he certainly keeps an eye on it. Maybe that's the checks and balances on the White House. And secondly, Kevin Warsh, if indeed he does become Fed chair, will he be an independent Fed?
- [21:40]
Mike Wilson
Yeah, no, I think, I mean, look, I think that this administration and the President, you know, specifically has shown that, you know, they're going to, he's going to kind of operate at his speed. And so I don't anticipate that we're going to see, for example, you know, this administration trying to lose momentum in what they're trying to achieve, which, which means more of the same, quite frankly. It's going to be, you know, it's going to be active and that creates, you know, periods of volatility, uncertainty, whatever you want to call it. But I mean, I think the mission, what they're trying to accomplish is now crystal clear. They're trying to rebalance the economy on three different planes at the same Time, I think they're having some success with that. That's why we're seeing productivity increase already. We're seeing GDP increase, we're seeing earnings broaden out. And so as long as you're seeing results like that, I think they're going to stay the course. With respect to the Fed independence, I mean, I probably had a bit different view here. I mean, as far as I can tell, I mean the said independence has been sort of fading for the better part of 20 years really, since the financial crisis. And when I say independent, I don't mean they're under the thumb of the White House. I mean, is it, they have to play ball in terms of their role to help the government fund itself. Okay. And we saw that after the financial crisis. We saw that in 2012. We saw that, you know, when we had a regional banking stress in 2023. So the Fed is obligated to help financial markets operate. I mean it's their third mandate, even call it that. So, so that to me is where the Fed independence has been challenged for better part of two decades. And I think that's going to continue. I think the Fed and Treasury are going to work closer together similar to the 2000 World War II period. And that's a good thing because that means they're going to figure it out.
- [23:26]
Bloomberg Host
All right, well, we all want you back here, so feel free to stop by our studio anytime. Mike Wilson, chief U.S. equity strategist, chief Investment Officer over at Morgan Stanley and of course our Alex Semenova.
- [23:37]
Bloomberg Businessweek Daily Announcer
This is the Bloomberg Businessweek Daily Podcast. Listen live each weekday starting at 2pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg 11:30.
- [23:56]
Bloomberg Host
So U.S. treasury yields we did see move up today earlier on some strong economic data including reports on housing. New residential construction in the US rose to a five month high in the month of December that as homebuilders boosted production to take advantage of lower borrowing costs that were out there. The advance we should point out, was broad based both single family home starts and apartment projects projects rising at year's end. The number of 1 family homes started was tim the highest since the month of February.
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Bloomberg Reporter
The stronger construction numbers suggest that builders were growing more confident at year's end even as they continue to sell off a bloated inventory of new houses. For the full year though starts notched a fourth straight annual decline. For more on the US housing market, we're joined by Kamini Lane, President and CEO of Coldwell Banker Realty. It's got nearly 49,000 affiliated real estate agents doing business in more than 55 markets across the United States. She joins us from Los Angeles. It's good to have you on the program. The spring buying season is about to get underway. You have agents all over the country who are giving you real time feedback about what things are looking. This is not a monolithic market. I hear that location, location, location is everything. What can you tell us about the state of the real estate industry in.
- [25:06]
Sarah Spain
The U.S. yeah, you know, we have seen some really good indicators at the end of last year, both in terms of housing starts and in terms of, of new construction. And, you know, inventory really is sort of the issue to tackle in the housing market right now. We know that, you know, more than 85% of people believe that home ownership is central to the American dream. So that aspiration has not gone away. However, we need inventory. We, we need inventory to get people into those homes. So, you know, it is location, location, location, but it really is inventory, inventory, inventory. And we see sort of mixed inventory across the country. You know, if you look at sort of the, the Midwest and the Northeast, we still have really tight inventory, whereas in other markets we do see loosening of inventory, which is causing more price stability.
- [25:55]
Bloomberg Reporter
Is there anything that, that gets inventory to increase without actually just building more homes? Would lower mortgage rates, increase inventory?
- [26:05]
Sarah Spain
Absolutely. I think, you know, we've talked a lot about that lock in effect that started occurring because of the historically low interest rates, you know, around post Covid era where we saw sellers that were really locked into their homes because they didn't want to give up that 3 or 4% interest rates. So with a loosening of that lock in lock, in effect, we're going to see sellers who are more willing to put their homes on the market, who are a little bit more realistic about prices. Right. Because we're not seeing the double digit, year over year price increases that we saw kind of, you know, four or five years ago. And so when we get more sellers to release that lock, in effect, when we get sellers to get realistic about pricing, that's really going to be the other factor. In addition, obviously to new building that gets more inventory on the market.
- [26:48]
Bloomberg Host
Comedy. That lock, in effect, where people, you know, have a low rate and they don't want to move, is it, is it everybody or is it largely an older population who may be retired around Covid or made some decisions and, and you know, it's just more to do with demographics than people who locked in lower rates, or is it a little bit of both?
- [27:08]
Sarah Spain
It's, you know, it's everybody. I mean, who doesn't love, you know, a 3% interest rate, right. But I think that what folks are starting to realize is that those were historical lows for a reason. And now, now we are, you know, mortgage rates are about 6% hundred basis points lower than last year and very much in line with US historical averages. So I think this idea, idea of just holding on to an interest rate is starting to loosen across all demographics and people are realizing that there are other reasons to move. Now you couple that with the increase in home equity and the increase in wage earning over the last couple of years, and folks are, are really loosening the fact, loosening to the idea that that low interest rate is the only thing holding them in their home. They're starting to realize that if they do put their home on the market, they can take advantage of some of those equity gains from price increases, you know, and just being more realistic about what rates are in line with historical averages.
- [28:06]
Bloomberg Host
You mentioned earlier that I think there's tighter inventory in the northeast. Other areas are looser. Walk us around the country and what you're seeing and be more specific in terms of markets.
- [28:15]
Sarah Spain
Yeah, sure. So, you know, Texas is one market, Austin in particular, where we are seeing year over year prices decreases because we've got a lot of inventory there. Florida actually has more inventory this, that this time this year than it did last year, which is sort of an interesting and unexpected dynamic. And you know, one market that I think is fascinating right now is the city of San Francisco. We saw year over year price declines around the COVID era in the city of San Francisco. And now because of the AI boom, we're seeing a really strong price increase in the city of San Francisco, both in terms of rent and in terms of single family homes. And I think that that's going to continue to increase. So price increases in that city, you know, but, but not a lot of, not a lot of inventory. I live in Los Angeles and we're actually seeing sort of a steadying of the market in Los Angeles. We had historical highs in terms of year over year price increases a few years ago. And now we see prices are really steadying out in Los Angeles and supply and demand are starting to even out.
- [29:15]
Bloomberg Reporter
A little bit in Los Angeles. Did the devastating fires last year affect the. The way that people think about living in an environment such as that?
- [29:24]
Sarah Spain
You know, Los Angeles is, is always going to be a really attractive city. Just the combination of, you know, the weather, the proximity to the beach, the ocean, you know, mountains, the entertainment industry. The fires certainly had a devastating, devastating effect on specific communities. But we actually saw particularly in the high end that that demand that was in the Palisades and Malibu communities that were devastated by the fires transferred almost one to one into neighboring communities like Beverly Hills, Bel Air, Santa Monica, Brentwood. And so I don't think that the demand to live in Los Angeles has changed at all because of the, because of the fires. We're just seeing a sort of a rebalancing in where folks have moved.
- [30:07]
Bloomberg Host
You know, I'm curious to what sellers are having to do. So is it more of a seller's market or buyer's market or again, depends on the, on the market. And I am curious about when it's new versus previously owned homes, what you're seeing. And I bring that up because Toll Brothers reported after the close yesterday our own in house Intelligence intelligence team writing the post first quarter earnings outlook. First quarter orders are flat 5% below consensus. It did keep its full year guidance when it comes to deliveries management saying January has gotten off to a promising start, with most customer metrics modestly higher than last year. Though caution that it's still early in the spring season. I mean, the spring season is an important one. And I am curious if sellers, particularly new homes, are having to incent buyers throwing in different things to, to get sales going or is that not the case?
- [31:02]
Sarah Spain
You know, so, so, you know, for new constructions, for new construction, incentives have not actually changed. And so we're not seeing, you know, a major shift in the sort of buyer's market or seller's market dynamic with regards to new construction. But to your point, you know, whether it's a buyer's market or seller's market really does differ around the country. And it really is just dictated by inventory because the macroeconomic factors around the country are steady, right? In terms of wage increases, in terms of mortgage rates. And so it really is dependent on inventory. So when you look at a market like New England, for example, where we still have very, very tight inventory, you know, that's going to dictate that sellers have a little bit more power than buyers do. However, in a market like Texas, and you know, Texas is very broad, but I'll talk to Austin in particular, we've got a lot of inventory in Austin and so prices are down year over year, about 6%. So that indicates that it's more of a, of a buyer's market. Where buyers have a little bit more power at that negotiating table. So, you know, again, inventory really is the thing that's dictating market dynamics across the country. And it very much is region specific.
- [32:10]
Bloomberg Reporter
You know, I'm wondering about compensation for the agents that, that you have, that you oversee. And, you know, if we think about the industry, this is one where they're essentially private contractors, right? They're not employed by you. They work for themselves. They. They eat what they kill. The. The commissions have been under scrutiny for quite a bit of time. There was the big settlement in, in recent years. What are commissions looking like in different markets? And is there pressure on commissions as a result of that?
- [32:39]
Sarah Spain
Yeah, great question. So at Coldwell Banker Realty, we have about 49,000 affiliated agents, all independent contractors. And you know, what we're actually seeing is that on the, on the sell, on the list side, commissions have gone up a little bit. And I think that is because after the massive conversation and the news cycle around commissions, our agents got better at talking about the value that they provide. So at that kitchen table, when you're negotiating with an agent to decide who is going to list your home, which, you know, by the way, the vast majority of Americans have the vast majority of their wealth tied up in the equity of their home. So that is an incredibly important decision. Who is going to help you with the most important financial transaction of your life? Those agents are better able to articulate their value and consumers are recognizing that and they're willing to pay for it, and that that is what the commission is and it's compensation for the incredible value that the real estate professional is providing. So contrary to what a lot of people assume, we actually have not seen commissions decline in the last year or so. They're actually going up. And I think it really is because of that value that the real estate professional is providing, particularly at a firm like Coldwell Banker Realty.
- [33:54]
Bloomberg Host
Comedy. One thing we have to ask you about is AI the impact. Fortune has a story out from Zillow citing Zillow CTO Chief Technology Officer. And he is saying that is reinventing every step of the home buying process, making it easier for shoppers to search for a home and complete a transaction. We've recently seen the AI scare trade impact some of the residential, or not residential, but real estate servicing companies. AI in your world. Just got about 40 seconds left here. How is it impacting it so far and how might it.
- [34:26]
Sarah Spain
Yeah, I think, I think artificial intelligence is an amazing tool. Tool to help our real estate professionals use their time more effectively and efficiently. At the end of the day, real estate really is about relationships. It's the most personal transaction that most people are ever going to encounter in their lives. And so that really does require a human at the center. However, AI can make that human more powerful, use their time more efficiently, use data more efficiently, and be more effective in that transaction.
- [34:54]
Bloomberg Host
So real quickly, it's an aid. It's not going to wipe out what you guys do or your agents do.
- [35:00]
Sarah Spain
It is an aid. It is, is an empowerment tool. But real estate is fundamentally human.
- [35:06]
Bloomberg Host
All right, can leave it there. Comedy Lane, thank you so much. President CEO of Coldwell Banker Realty joining us.
- [35:13]
Bloomberg Reporter
Stay with us. More from Bloomberg businessweek Daily coming up after this.
- [35:20]
Sarah Spain
Can you grab one more thing?
- [35:21]
Michael McKee
I'll come back up for you.
- [35:23]
Sarah Spain
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Odoo Advertiser
Really?
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Mike Wilson
I'm gonna have another one.
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Sarah Spain
Amica Empathy is our best policy. Visit amica.com and get a quote today.
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Odoo Advertiser
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- [37:52]
Bloomberg Businessweek Daily Announcer
You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg business app or watch us live on YouTube.
- [38:06]
Bloomberg Host
There's another thing we've been keeping track of. It happened out on the west Coast. It involved one of the largest market cap companies out there and a major player in social media. We are talking about meta.
- [38:16]
Bloomberg Reporter
Yeah. Mark Zuckerberg testifying that it's, quote, very difficult to enforce Instagram's age limits. He sought to defend the platform during a landmark trial over social media addiction. He was sharply questioned on the witness stand today about whether he and other leaders are aware of the volume of children under age 13 who use the photo sharing app. Kurt Wagner is senior technology reporter. He covers social media. He's also the author, author of Battle for the Bird, Jack Dorsey, Elon Musk in the $44 billion fight for Twitter soul. He joins us from Denver. Kurt, there's so many directions we want to go here. I mean, there are some out there who are comparing this to what happened with tobacco company executives on the stand. You know, when, when we were kids and, and the way that, that changed the, the public health view of cigarettes and the way that that has looked back on historically. What's at stake here?
- [39:07]
Kurt Wagner
Yeah, I mean, this is, to your point, sort of in the same general vein as those, those cigarette tobacco industry trials, opioid industry trials. Like this is a question of whether these social networks specifically are built, you know, with the intention of addicting users, especially particularly addicting young people, teenagers, to their products. And so this is a real, you know, signature moment, I would say, for this industry to kind of be challenged with these allegations. And, you know, in Mark Zuckerberg's case, to defend himself and his company against these accusations. And so it's been highly watched, highly anticipated. And this is just really the first of more than 1,000 potential trials that we could see. There's thousands of lawsuits in the same vein. And so we're paying particularly close attention to this one because the outcome of this could sort of signal what we might see from. From a lot of these other lawsuits that have yet to be tried.
- [40:07]
Bloomberg Reporter
How do you differentiate, or how does a judge or how do lawyers differentiate on whether something is addictive, meant to be addictive to kids, or just it's addictive in nature? So it doesn't matter if the, the person who's using it is 12 years old or, or.
- [40:23]
Mike Wilson
Or.
- [40:23]
Bloomberg Reporter
Or 25 years old?
- [40:25]
Kurt Wagner
Yeah, I mean, this is why it's such a challenging question. I don't know is the short answer the answer to this? But I can tell you that what plaintiffs lawyers were doing this morning with Mark Zuckerberg on the stand was they were trying to show two things. The first was they were challenging him over Meta's enforcement of its age restrictions, basically saying, are you actually enforcing this idea that those under 13 should not be on the platform? And if so, are you doing everything possible to. To actually do that? And I feel like that's really been. Maybe the main argument that's been happening is that they haven't really enforced their own policies on that. Mark Zuckerberg has admitted, hey, this is a difficult thing for us to do. And you may recall, like, this actually ties into a broader tech industry discussion we've had over the last couple of years where Meta has said, hey, this should be the job of the app stores. This should be an Apple and Google thing. And Apple and Google are saying, no, no, no, no, no. This is your responsibility. Better, you know, you have to determine who, how old the users are on your platform. And so this sort of plays into a discussion we've really heard more broadly across the industry for the last couple of years.
- [41:33]
Bloomberg Host
What's so fascinating, Kurt? It's happening on a day when we've talked about CBS and what's happened on Stephen Colbert's show in terms of one specific Texas politician who is running for now, a federal, state, federal Senate seat. But I mean, just the rules and oversight. And it's just fascinating that when, you know, traditional airwaves came out, there was oversight, right? There was, you know, rules about what could be on air. And now most of us are getting information from social media, right? It's not your linear broadcast and so on. So you do wonder, like, when does the oversight come from all of this? And as you write in your story, I mean, this is one case. You have 3,000 cases brought by children, adolescents and young adults through their parents. You've got school districts, you've got, I mean, so much going on. It's not. So how important is this first case? Because it sounds like there's a lot more legal overhang from Mehta and others.
- [42:39]
Kurt Wagner
I think it's really important. I mean, we had some time with Meta's lawyers a few weeks ago, their legal team, and what they told us was, you know, each case is different, each trial is different, each jury is different. So getting a verdict in their favor one way or the other on this first case, you know, isn't a huge deal. But I think for those watching on the outside, I mean, this is going to signal do these cases have merit? Do these cases. Cases have legs? Certainly it's going to be hard for lawyers in other cases not to look here and say, okay, what worked and what didn't work in terms of arguments and lines of questioning. So I think it's very important. It could also be the kind of thing, if Meta loses a case early on, do they choose to start to settle some of these cases down the line to avoid having to go through the actual jury process every time? And so, so I think this is important. It certainly will signal or set sort of the expectation for things to come. Even though it is true, I think that each, each case will have its own nuances and details to flush out. So this will kind of serve as a bellwether.
- [43:44]
Bloomberg Host
Listen, this is not a US issue, as you well know, Kurt. It's a global issue. And I'm looking at a story that was on the Bloomberg yesterday, India discussing age based social media curbs according to, to one of its ministers. You've got countries, right Tim, around the world that are taking steps to crack down on use. Australia, the first country to implement a legal ban, which included Meta, Meta's Instagram and Facebook, Snap, Elon Musk's X TikTok and Google's YouTube tube. Ireland, like, you know, it is going across Europe. So like we are seeing so many different things go on.
- [44:21]
Bloomberg Reporter
Yeah, Kerr, what. What do public health officials, not just in the US but in public health observers say about these platforms in general and kids?
- [44:35]
Kurt Wagner
Well, I mean there's been research for years that these platforms can be very divisive. You know, it's easy to for misinformation, for example, to run rampant on these platforms. We've all certainly witnessed that. I think it was in the US where they wanted to apply sort of similar warnings that you would get on cigarettes, right. Like smoking labels, essentially, but for social media. And so there's been a lot of talk about this. I think what's interesting about these bans or these restrictions for teens is that they are. You know, everyone's watching. Australia, you mentioned India. There's other. Several other countries in Europe that are considering similar restrictions. But there's also states in the US that are trying to get this done as well to try and sort of limit social media use for teens. And it'll be interesting to see if, like, there's a snowball effect at some point. Right. Because right now it's limited. It's a lot of chatter. But, you know, a year from now, two years from now, are we going to look up and say, hey, this is now the norm, right, that those under 16 just can't use social media? And I think that's. That's certainly possible.
- [45:38]
Bloomberg Host
I mean, it's wild. I mean, Ireland, right? Home to kind of the EU tech hub. It's considering plans to introduce age restrictions on social media platforms as part of a broader AI strategy. And they've talked about this. Do you feel like, Kurt, you follow this world, that we are getting to a moment of reckoning when it comes to social media? There's a great story by Max Chaffkin about dumb phones. Dumb phones rather than, I mean, every.
- [46:05]
Bloomberg Reporter
Parent in the newsroom. We were talking about this today. We're all like, yeah, what is the solution for our kids?
- [46:10]
Bloomberg Host
Like, like parents are stepping in because they just don't want this. So are we at a, at maybe a. A turning point or. I don't know, like, what do you. What do you think? We've just got about 30 seconds here.
- [46:21]
Kurt Wagner
Yeah, I can say, I can tell you that it's a massive theme that we're following on our sort of social media pod here at Bloomberg.
- [46:28]
Bloomberg Host
Yeah.
- [46:28]
Kurt Wagner
Because it's not just this trial in LA. We mentioned the thousands of others. There's state AGs that are suing, school districts that are suing. Like, this is not a. A storyline that's going to go away. And I think the ban or the restrictions, excuse me, in Australia and potentially in Europe are just adding to that. So certainly can't remember a time when it's been talked about this much before.
- [46:47]
Bloomberg Host
Great stuff, as always, Kurt Wagner. Thank you so much. Senior technology reporter, covers social media. Check out his book, Battle for the Bird.
- [46:54]
Bloomberg Businessweek Daily Announcer
This is the Bloomberg Business Week daily podcast, available on Apple, Spotify and anywhere else you get your podcasts listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg terminal.
- [47:25]
Sarah Spain
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Bloomberg Host
About breast cancer risk.
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Sarah Spain
Come on now, pay the girls some attention and take the time to find.
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Bloomberg Host
Out your breast cancer risk@yourattentionplease.com Trust me.
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Sarah Spain
Your future self will thank you A.
- [48:01]
Michael McKee
KFC tale in the pursuit of flavor the colonel made his $10 Tuesday bucket so full with eight pieces of juicy, crispy chicken or tenders that it might just last you till Wednesday. If you've got that kind of self control.
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Mike Wilson
I mean, some people want leftovers, others.
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Michael McKee
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Sarah Spain
Prices and participation may vary.
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Kurt Wagner
Tips and fees extra.
- [48:31]
Bloomberg Businessweek Daily Announcer
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