jonathan: from new york city, for our viewers worldwide, i'm jonathan ferro. bloomberg "real yield" starts right now. coming up, the u.s. payrolls report coming in hot. counting down to another trade deadline, waiting for a phase one deal. twitter showing there is more than enough appetite for high-yield debt. we begin with the big issue, a blowout payrolls report. >> this was a pretty strong report. >> impressive report. >> undoubtably a really strong jobs number. it is almost unfathomable. >> the rebound in economic activity is underway. >> this endorses the fed. >> exactly what the fed is looking for.

>> it is reasonable to expect the fed to kind of be on hold. >> the front end of the curve is selling up more than the back. >> the front end is really attractive. >> the market is saying the fed pause is warranted. it is probably going to remain on pause for a good portion of next year. jonathan: joining me around the table in new york, gershon distenfeld, priya misra, and krishna memani. priya, let's begin with you. what a payrolls report. your thoughts? priya: a good report, no way to look around it. when we take out the gm numbers, still a solid number. but i have to highlight caution a little bit. the labor market is a lagging indicator. is global growth for sure bottoming? there are some signs that it may be. is it about to surge ahead? i am skeptical. we are not getting stimulus out of china, europe.

in our view, global growth probably muddles around. the trade uncertainty, we are so hung up on this trade deal. i don't know even if we get the phase one deal, which is not guaranteed, the fact that the president threatened tariffs on argentina and brazil, that was just a few days ago. we weaponize tariffs now, and uncertainty remains. i think the fed is likely to be on hold. we're not entirely out of the woods for the economy. the labor market may be showing signs of cracking. jonathan: i have to say, two months ago, it feels like a long time ago that we got new steel levies coming through. krishna: priya's point is a good one, that the global economy is definitely bottoming out. if there is a real acceleration unfolding, the consumption part of the economy driven by employment was never really an issue.

it was always about manufacturing. as we see the turnaround, the things to watch, where does pmi end up, where does investment end up? those are the better markers for the magnitude of the growth, rather than focusing on the employment numbers. employment numbers certainly helps, but that is not the case. jonathan: your case of the global economy bottoming out, i did not hear that from priya. she seems to be more worried than you. krishna: the global economy is certainly bottoming out. in the u.s., we are already seeing the signs. we are seeing the same signs overseas on a different magnitude, but the trend is there. gershon: as strong as the number was today, this changes absolutely nothing. we are still getting two different pictures of the market. the equity market is saying everything is all in the clear. the rates market is still saying not. this mirrors the dichotomy we are seeing in economic data. the consumer, everything we are seeing is all clear.

we are not seeing anything. it comes to manufacturing, business investment -- we are not seeing it. what are the equity markets saying? they are basically pricing in as if we are going to get a manufacturing recovery, even though it has not happened yet. the rates market is saying we are going to see a spillover of the consumer. what will ultimately be right? only time will tell. my guess is we will see it seep into to the consumer a little bit, also see manufacturing rebound a little bit. we will also see rates go a little higher. jonathan: people have picked up on what you said, they look at the treasuries market and they say we are up only a couple basis points after that. is that concern still that we are not out of the woods, or is that just a bid for income that is not going anywhere? what is that, gershon? if you had to lean into one versus the other, what would you say? gershon: you don't look at the treasury market as much.

you look at demand for high-yield. that is where you see it, that is consistent with the equity markets, still a tremendous demand for yield. i don't see how that goes away anytime soon until you see the equity market crack. the underlying data, if you believe in the consumer story, says yields should be higher at the long end. do you believe nominal growth over 10 years will be less than 2%? i have news for you. that will not be a pretty environment for the equity market, if that's the case. krishna: as a treasury analyst, what the market is telling you is the fed has truncated the distribution. they are not hiking until we get above 2. when we talk about how high the the treasury rates can go, if you are stuck at 160, can you get the 10-year above 2%? as much as there is a demand for yield, if the fed is not taking back these insurance cuts -- they put insurance in. if they didn't need it, are they taking it out? they are telling us they are not. the reason why treasuries are not reacting as much is the fed

is telling us they are not about to hike anytime soon. krishna: that is the most important point with respect to the rates market. the fed has told you they will not even consider, let alone do a rate increase until inflation gets north of 2%, which is never. if the front end of the market is not going to move, long rates move a lot, i don't think that's in the cards. even if we get economic growth back to 2 and change, even in that environment, the rates will not be 3%, 3.5%, the way they were before. jonathan: this is a quote from cibc. this year, we have had 90 rate cuts across 45 global central banks -- and here is the punchline -- the biggest easing we have had since the financial crisis. every time i read that, i think, has it really been that bad? worse than 2012, worse than 2015, 2016? has this year really warrented that kind of policy response?

priya: if you look at financial conditions, you would say no. if you look at the headwinds and monetary policy sort of running out of ammunition, that tells you why policymakers seem to have panicked. why have they changed their reaction function? they don't have that much ammunition left, so they have set the bar lower for us to ease. there has been a global slowdown, the u.s. has outperformed, but the fed also looked at global factors and said they had to ease. it depends on which market you are looking at. the headwinds have been heavy. gershon: i disagree slightly with priya on this. no question, central banks, not just the fed, no one is hiking rates soon. but this notion in the market that inflation is dead forever, and that is just not going to be the case. it was only 15 months ago that we were closing in on 3.25% on the 10-year. that is a long time. 30 is even longer.

we should get curve steepness as soon as we get inflation. real rates are still essentially negative at the long part of the curve. i don't believe that will be the case in the long run. jonathan: people are looking at this labor market, seeing a jobs print north of 200,000 and say there is more slack. if there is more slack, we can turn out payrolls growth north of that, i will not worry about inflation. this story has a long way to run. is that your take? krishna: absolutely. i think i disagree with gershon, which is not the first time. jonathan: we still got 20 minutes. krishna: the point is, inflation really has not picked up since the financial crisis. the rate increase that gershon was talking about, higher level of rates, was driven by what the fed was going to do. that is not going to be -- the fed learned its lesson in 2018. the policy tightening they implemented was a policy disaster, was not warranted, and they are regretting it today.

when we talk about the rate cuts on a global basis, two different drivers. in the u.s., it was unwind of an unwarranted policy tightening by the fed. overseas, things have actually slowed down meaningfully. if you look at the growth rate relative to trend in emerging markets, europe, things were significantly worse. those were warranted, here it was not. the tightening was unwarranted, so it is an unwinding of that tightening. jonathan: you made one of the best calls of 2019. you said the most important thing will be the calls on policy. to underline that, you could have got the economic call right in germany on the brink of recession and the market call wrong. the dax ended up surging about 25%. the policy response we have had, they say it is not qe. there are so many people who look at this balance sheet and say, it's expanding, it looks

like qe. for me, that looks like qe, i will trade it as it is. krishna: you can call it what you want. at the end of the day, it's an expansion of the balance sheet of the fed, and a meaningful expansion. if you look at three things that would qualify it as qe, is the balance sheet expanding? yes. is the term premium going down -- it was already low, so it cannot go down a lot. third, what is that telling you from a forward guidance standpoint? especially after powell came out and said what he said about tightening, that is not happening. call it whatever you want, protest as much as you like, it is qe. markets are not fooled. they will assume it as such and act accordingly. jonathan: priya, there will be people screaming at the tv, saying i agree with chairman powell, it is not qe. what is it, and does it matter what we call it?

priya: this is a communication challenge for the fed. they are trying to put reserves in the system. they should not have let the portfolio run off as long as they did. they are trying to unwind that. if the equity market is here because of this so-called qe, then it's a mistake. run for the hills. if the equity market is here because the consumer is resilient, then there is some merit to it. we are in this inflection point. is the consumer going to stay resilient? that should be the call for equity, not this qe balance sheet. krishna: that's an interesting point, but from an investor perspective, what matters? what matters is, are rates going to be relatively low for the foreseeable future? that is the bottom line. if that is the case -- jonathan: we are out of time. coming up, twitter borrowing at some of the lowest costs ever in high-yield. that conversation is coming up. this is bloomberg "real yield." ♪

jonathan: i'm jonathan ferro. this is bloomberg "real yield." i want to head to the auction block and begin in asia where dollar bond sales from the continent remain steady this week. the market chalking up a new full-year record for issuance. in the u.s., investment-grade debt sales remain subdued this week, almost $15 billion, almost eclipsed the entire month of december 2018. in high-yield, twitter is offering its inaugural bond issue, yielding 3.875%, the

lowest security in eight years or more of the u.s. junk market. sticking with high yield, michael collins on whether it is time to start buying ccc debt. >> ccc spreads are 200 basis points wider. it's a weird relationship we have not seen. unless we are going into recession, there may be value emerging in the lower quality tears of the credit market. -- tiers of the credit market. 's.re are 160 ccc if you can find 20 or 30 of them that have been thrown out with the bathwater, i think there is value in that part of the market. jonathan: there is a big debate. weighing in is gershon distenfeld, priya misra, krishna memani. gershon, your take on whether it is time to rotate from some of the winners to the losers in high-yield? gershon: you're going to hear that a lot from high-yield managers. they are in a difficult situation. we have 33 years of high-yield data. 23 of the 30 years, it has beaten treasuries. in 21 of those 23 years, ccc's have been the outperformer. two exceptions, 2005, 2019.

this has been an abnormal year but very good year for managers. managers can buy anything without taking risk and outperform. that is changing. that is a joke, twitter is high-yield with a three handle? that is low yield. that is indicative of the market. the math does not work. the only way you'll make money on that is if that goes to 2.5%. that won't happen. what are you forced to do? the only way you can promise investors to make even 7%, 8%, 9%, let alone 12% this year, is to say ccc's are cheap. i think it is a trap. if you can pick the right 20 or 30, i agree. the question is, how smart can you get that hit rate? that's a tricky thing. krishna: i like the line, that is not high-yield, that is low yield. three handle calling it high-yield, that is kind of -- jonathan: you could still call it junk if you want, just not high-yield. krishna: the other point gershon

makes is a good one, there is no alternative. the one issue i would make with the statement is the day of reckoning is going to arrive. that is not a 2020 issue anymore. the employment number to some extent proves that. the underlying economic growth has bottomed out. it is reaccelerating. the lower part of the market that was left behind because we were worried about recession now it has an opportunity to come back. is that a good trade over the next 10 years? i don't know. i'm focused on what will work in 2020. gershon: we have been talking a lot about this bifurcation of the market. i think it's become more than that. i think there are other parts of the market. it is not just ccc's versus these sleep at night credits. there are parts of the market that are going through secular changes. take the health care market. whatever your political leanings are, neither side of the aisle has a plan. one side has a plan and got no

way to pay for it, and the other side has no plan. when you have sectors like that, you want to play the equity market because there will be winners and losers. then you have the u.s. energy sector. we talk about how we are still late cycle? we are now in the second downturn in a four-year period. high-yield managers are sitting there in a predicament they created themselves. they financed these companies in 2013, 2014, refinanced them again in 2017, 2018, and now are realizing that these companies don't generate cash, even in the best of times, and now they are stuck with them. if i owned none of them and somehow oil goes to 90, i will underperform. managers don't know what to do, so they are saying, let me buy these other ccc's. the economy is still pretty good. that is the only way i can get double-digit returns. high-yield managers don't know what to do.

jonathan: does this trouble you, when gershon is pointing out these risks, and then krishna is saying there is no other alternative? for a lot of people, that's the case. priya: 3% is high-yield if your treasury alternative is 1.75 then that is high-yield. gershon: all relative high-yield. priya: when you live in this relative world, bund yields are still negative. the problem is default risk is extremely low-priced. maybe if the economy is ok, that's fine. you should have a hedge for that. i would argue liquidity risk. just a year ago, we went through a liquidity scare in the fourth quarter. what if you have any year-end funding issues? is credit, particularly the riskiest part of credit, more susceptible? having some hedge, treasuries are cheap as a hedge or against any risk asset. jonathan: there is a cycle that keeps on coming up.

krishna, you think four more years now. you seem more conservative on this, priya, about what is happening in the cycle at the moment. gershon, i'm struggling to get my hands around where you think we are in the cycle. where do you think we are? gershon: i don't believe in cycles. it is too simplistic a way of looking at the world. you look at some of the industrials in asia, latin america, i would argue they are early cycle. you look at the industrials in the u.s., we are later cycle, at least from a metric perspective. you have health care and retail going through secular changes. i don't like the whole cyclical talk. i think you have to decompose the parts of the economy. jonathan: you are all sticking with me. still ahead, the week ahead featuring an fomc rate decision, and another news conference from chairman jay powell. that is coming up next. this is bloomberg "real yield." ♪

jonathan: i'm jonathan ferro. this is bloomberg "real yield." time for the final spread. coming up over the next week, what a week we have coming up. saudi aramco starts trading wednesday. u.s. cpi and an fomc rate decision. thursday, the ecb and the swiss national bank making their own decisions. and the u.k. heading for its general election. friday, the consumer back in focus with u.s. retail sales. final round of thoughts with priya misra, krishna memani, gershon distenfeld. within the space of 24 hours, the federal reserve and the ecb, and a big consensus forming going into 2020, the rest of the world outperforms the u.s. where do you stand on that debate? priya: the rest of the world probably muddles along. we think the u.s. underperforms.

we struggle to see, where is the growth engine for the rest of the world? the extent of this deceleration will slow down, so you can flatline. this has big implications for the dollar. if you get this convergence in global growth -- we have certainly seen it in global yields -- but how much can the dollar weaken? you need the fed to capitulate. the fed needs to say this is a material reassessment and we need to start cutting. only then will the dollar start to fall. gershon: you have to look at a couple of factors. one is the sensitivity to trade, how all that turns out. second is just a policy response. you look at europe, how much ammunition is left? even china has a lot more that they could do, should weakness emerge. krishna: i think for the overseas economies, for them to do better, basically, the dollar has to weaken. that means, as priya was indicating, the reacceleration overseas has to be far more

substantial than in the u.s. there is a case to be made. it is unclear today whether that will be the case or not. if it is unclear today, what that means is expecting the dollar to weaken may be something we have to think about a little bit. jonathan: one of the big debates going into 2020, let's get to the rapidfire round. more 2020 calls. double-digit returns in investment-grade credit in the united states through 2019, next year, either flat to negative, mid single-digit returns, or double-digit returns in 2020. what are you looking for? priya: negative. krishna: low single digits. gershon: i hate to agree with krishna, low single digits. jonathan: the 10-year this year, 2.18, the low, 2.14. do we test the highs this year or test the lows this year next year? do we test the highs or lows in 2020?

gershon: both. krishna: highs. priya: lows. jonathan: i think we did the whole program not talking about trade. december 15, does a round of tariffs go into place or delayed and suspended? into place or delayed and suspended? priya: delayed. gershon: delayed. krishna: delayed and suspended. jonathan: great to catch up with you all. gershon distenfeld, priya misra, krishna memani. that does it for us. this was bloomberg "real yield." this is bloomberg tv. ♪ ♪

caroline: the challenges of 2020, what are you prioritizing? sheryl: we think the election is a massive test for us. and it should be. elections have changed, we have changed as a company. if you look back to 2016, of course we were prepared for state actors. but what they really did was take information. this new, more insidious stuff. we were totally unprepared. we missed it.

everyone missed it. now we really work hard to find what we think of as coordinated and authentic behavior. state actors, groups of people that are trying to do fake stuff. in 2016, we had never heard of this. in 2017, we took down one. in the last two, we took out 50. which of down seven in the last month alone. we are in a very different place. we are going after fake accounts. every single thing that happened in 2016 was done through our -- a fake account. we are now able to take down millions every day, most before anyone sees them. misinformation, we did not have a fact checking program at all in 2016. now if something is marked false by our third-party fact checkers, we can reduce this tribute show in and show related articles so everyone sees the other side of the story, and some really good independent studies have reported that fake news on facebook is definitely on the decline. i think the stanford study said it went down by more than half since 2016. and transparency.

this is really important. in 2016, you can only see any ad on facebook targeted at you. when you went to a page, you didn't know who was behind that page. now, we have an ad library so you can see anything anyone is showing anyone in terms of political ads. caroline: people are using that? sheryl: they are, and journalists are using them. we are running a team operations. we have a red team trying to get ahead of it. this is a major test for us. we are building on some success. 2018, the midterms were very focused. eu parliamentary elections. we have had a lot of elections since then, but we know this is a big one and this is the highest priority for next year. caroline: you have not been afraid of dancing with controversy, for what mark has spoken very passionately about,

ensuring the discord is there for people to discuss. talk to us about political ads and why you have chosen not to take them off facebook, but actually still allow them to run, even if they may not be completely correct? sheryl: this is a really complicated issue. it is hard, and there are a lot of strong opinions on all sides. i think they are trying to be very thoughtful on this. in the debate, i think there are facts getting lost. one of them is there are a bunch of people who believe that ads were only running on facebook. that's not true. they are running on google, youtube, across the networks. i think people think we are doing this for the money. mark said last week in earnings, we expect this to be half a percent of our revenue. the controversy is not worth that. -- half acent

percent. i think this is important that some of the voices most concern about this are coming from a place where they are worried that president trump is going to use this in a way that no one else can, and that he is massively outspending everyone else. that is not true. the dems are outspending president trump by a considerable margin. we believe political ads are really important. they are part of political discourse. they are particularly important in local elections, in smaller elections, and this is important for people who are challenging incumbents. reese stefanik, who was elected to congress, a republican from new york, the youngest female member of congress at the time, she posted in the last week and said, i was able to challenge an incumbent because of facebook ads. i cannot afford tv ads. that is why we are being thoughtful here and really trying to make sure that we allow this dialogue to continue. caroline: and willing to reassess? sheryl: we will always reassess.

there is nothing we are not looking at, making sure it is working as intended. and really in this case, very focused on the transparency that transparency and talking of another focus for 2020 is your work on capitol hill, the ongoing dialogue happening. the scrutiny upon you in terms of antitrust, in terms of competition, how do you feel you have thus far been able to relate your story, be fully transparent and offer up answers as quickly as politicians would like them? sheryl: definitely working on offering up those answers. i think you are right that the anticompetitive narrative and the competitive narrative are one that people are focused on, and that is because there is real concern about the size and power of tech companies. of us, google, apple, amazon. there is real concern there. antitrust legal policy has been really important in the history

of america in protecting consumers from price gouging with no choice. it is hard to argue that there is anything but robust choice. if i want electricity, i have one provider. if i want to post a video of you and i on this stage, i can do that on facebook or instagram, but i can also do that to youtube, to snapchat. my daughter would put it on tiktok. if i want to send somebody a message after this talk, i could do it on whatsapp, but i could also do i message. on we chat. when i joined facebook, people thought myspace was a monopoly. they did. and you look at aol, yahoo. these things looked formidable and unshakable. consumer choice in our industry

is pretty deep because the products are broadly available. the cost of getting our products is zero, and that is a really important thing. i think there are real concerns that do take legislation and regulation. people worried about privacy, election security. i think breaking us up would decrease our ability to deal with those issues because of the size and scope. but we believe there should be federal privacy legislation. we believe it would be helpful for consumers, but we are not waiting for that regulation. the ad transparency, that is the honest ads act. it never passed, but we built it anyway. caroline: you think you will be able to convince that your business model is not that? sheryl: we are going to make the case. it is hard not to look at this and say tiktok has had 1.5 billion downloads in three

years. they are growing faster than we ever grew. america has de facto run of the internet, and they are based on american values because the companies were american. if that shifts to china, we will have a very different internet. ♪

♪ sheryl: 10 years ago, the top 10 companies were american. today, six of the top 10 are chinese. this is about what kind of internet we want. do we want an internet that is based on the values of free expression, or where the government gets to decide what is allowed to be said? do we want an internet where individuals are the players, or where the government itself is a major player? do we want an internet where we don't hand over user data to

even our government without lawful subpoenas, and we are very narrow on what we provide? that is not the case with any chinese product. america has de facto run of the internet, and it is based on american values because the companies were american. if that shifts to china, we will have a very different internet. i think people have not thought that through. i realize that is aligned with what facebook wants, but it is also true in the sense that what comes behind breaking up the u.s. tech companies is not another u.s. tech company right now. what clearly comes behind, if you look at the numbers and usage and the support they have, are chinese companies, and that is the decision we have to make as a society. caroline: one has been so fascinating, despite the media, our fixation on the antitrust issues, on the scrutiny issues, on the privacy issues, on enjoying some of the negative

headlines that have been thrown your direction, facebook resolutely insists on growing, in terms of growth, in terms of share price. i have a chart using the bloomberg that will show you how much you have continued to see an increase. in terms of monthly active users, you are now at 2.4 billion? sheryl: 2.8 billion. caroline: talk to us about your growth. talk to us about why this continues to happen, despite the backlash and the anti-tech wave that seems to be coming from media and those in the talking circles. sheryl: i think one of the big questions about us right now is with all the concerns and challenges we face, can we invest billions of dollars? and a lot of my time and focus is in confronting these challenges and still growth. we released earnings last quarter. i got on tv with you and talked

about it. our numbers show we clearly can. more are using us than ever before. importantly, that includes strong growth in core facebook in the u.s. globally, 66% of the people who use facebook every month come back every single day. every day, and that is because it is part of their daily lives. if you look at our revenue growth, which has been really strong, it is the story of small business and large business, but largely, importantly, and less understood, small business. we have 140 small businesses using our free products, 7 million advertisers. and what they can do is reach audiences, have tools that only big businesses could. there is a woman i met last year. she wanted to start an arcade. like an arcade where you go to play video games. caroline: going back to the 1980's. sheryl: they started with a $20 ad buy on facebook, because she

said that was the only place where they could serve an ad to within a 10 mile radius to her arcade. she now spends 100% of her marketing budget on facebook. she just opened her second location. and tons ofmployees local people having a great time in a pretty old-fashioned, off-line way at the arcade. our growth is fueled by the growth of small businesses. we have surveyed our small businesses over and over, and about 50% of them say they are growing because of the growth they achieve on facebook. this is a pretty important part of what is the job for the story going on in our country. caroline: is that also the upside of targeted ads? sheryl: absolutely. i think the targeted ads model is so important for people to understand, and i don't think we have done a good job at this. if i want to show an ad to , let's say, middle-aged women -- i am definitely that, i just turned 50 -- middle-aged women

in northern california, we take the ad, show it to me and all the people my age and gender, and we get that aggregate statistic. the ability to do targeted advertising allows businesses to reach audiences they otherwise would not have reached. really important because the big companies can afford to buy ads to all of california, but others can't. more than half of job growth in this country comes from small business. this is how it is happening in these online platforms. caroline: how are you thinking about those that you are responsible for? you talk quite passionately about business owners as unique. you also have to balance the wills and wants of the investor base, and also your user base. i feel this has become the focus point of 2019 because of shock and horror. how do you see it as the coo of facebook?

sheryl: we have never run our company only for investors, and i think that is really important. we care about our shareholders, and we have a responsibility to give them returns, but that is not our only focus. if you listen to the last eight quarters, mark and i have seen earnings. we are talking abut the massive investments we are making on safety and security, which costs a lot of money, but definitely we think are the right thing to do for a broader audience. importantly, it is not new for us. one example, i think we have run our company like this from the beginning. the environment. data centers are a huge use of energy. huge use of energy. and at facebook and in our industry, it was long considered a competitive cost advantage to run your data center more efficiently. if you run more efficiently, you lose less energy, it is better for the environment, but you also save a lot of money, and that is a cost advantage. until facebook, everyone hoarded that ability. they would get cheaper and

cheaper and not share. we found a way to make our data center 38% more energy efficient. in 2011, we open sourced our data center. here, everyone else take this. we knew we were handing a cost advantage to our competitors, but it was good for the environment, and that is a stakeholder we really care about. we set a goal that we would be 100% renewable energy by 2020, and we are going to hit it. we are still open sourcing all those plans and we are bringing our industry along with us. that is not good for shareholders strictly. it is good for the environment, but that matters just as much. i don't think we ran our company 10 years ago focused enough on preventing the harms, particularly the ones we did not foresee. ♪

caroline: facebook employees have been willing to give you and mark their open feedback. how are you finding your interaction with employees? sheryl: we have amazing employees, and they are passionate and engaged and loud and have strong views that they express, and that is what we want. we are systematically trying to hire people who believe in our mission and are going to bring all their energy and passion to it. and i feel lucky to work with such a talented employee base that is building such great products that people clearly want to use everyday. caroline: talk to us about the products and what you are optimistic about. we have talked a lot about the challenges. what is going to come next? what is exciting for 2020? what is getting the oxygen sucked out of it at the moment? sheryl: i hope we are not getting the oxygen sucked out of it, but we are making important investments, and we are doing it

learning the lessons of the past. part of this conference is about ai. that is something that is really exciting, but we also have to be very careful. we have learned that when you build technology, you have to invest in preventing harm upfront, and i think that is something we did do well enough with our core products. we all know that we have biases, every single one of us, and those can get built into these very powerful systems. right from the beginning, we are working with emphasis, outside researchers. we are outsourcing a lot of what we do to make sure bias is not built in. but think about exciting developments. ai is amazing. ai is why visually impaired people can use facebook. it reads the photos to the third -- to them. we are doing a project with nyu to speed up the ability to process m.r.i.'s. that means that little kids -- my brother is a doctor who works with little kids -- are going to be able to have m.r.i.'s that are better quality, because it is hard for little kids to stay still that long.

that means these very busy centers will be able to process more patients. we are working on the technology with nyu researchers. caroline: i feel 2019 is the year we really let loose on technology, that we decided to voice our concern, and a lot of it for good reason. 2018 brought the worries about privacy, the worries about ethics. do you worry about that? do you think people are realizing technology is not good enough anymore? are we completely useless? sheryl: i think there are real concerns. there are real mistakes we made we are working hard to address. i don't think we ran our company 10 years ago well enough at focusing the harms we did not foresee, and all of that is different. i do think this pattern of being worried about new technology has certainly happened before. i give speeches, i know a lot of people in this audience give speeches.

sometimes when i do, i will look at someone and say, get me a quote. and they will give me a quote, and it sounds something like this. i did the m.i.t. commencement year and a half ago. it said something like this. this new technology is changing everything about our lives. people are not speaking one-on-one anymore. now anyone can say anything to anyone, and it doesn't even have to be true. the world has ever been more polarized. our society is falling apart. that sounds like people are talking about facebook, and those are very legitimate concerns. that same quote has also been written about the printing press, the radio, the television. i am not saying that to minimize the concerns. technology spreads so much more quickly online. but the fundamental pattern that technology comes, everyone sees the good, then harms happen and

everyone sees the bad, then we settle into what is more a nuanced view of what are complicated technologies. i think our whole team, all of those amazing employees at facebook, we have a deep responsibility to get this right and fix the issues. i think in the end when the smoke clears, people will see technology can and has been used to do harm, and always has been. as we speak, somebody has posted on facebook something we don't want and we have not yet found. but overwhelmingly, people's experience is still positive, and that is why 2.8 billion people are using these products, because it makes their lives better. caroline: you can't talk about 2020 without talking about what you do outside of facebook. your family foundation started with you and your late husband. focus on lean in, in particular. talk to us about diversity,

because this has become a hot topic in 2019 and continues to be in 2020. you have been partnering with others to highlight new data on whether we are winning the battle. are we? sheryl: it's tough. women have 7% of the fortune 500 ceo jobs in this country. 7%. there is one black woman who is a fortune 500 ceo. so lean in, we put out the largest study of its kind every year, and what that data shows is where we really need to focus is the broken rung. it is the first step up to manager. we are hiring or promoting 100 men -- every 100 men, we are hiring or promoting 72 women. for black women, it is 58. a lot of our diversity efforts are focused on getting women at the top. the problem is if you have 100

men and 72 women at the first manager level, you have basically lost the battle at the top from right there, because those are the people you can pick from to get promoted to director. as much as we need to focus on top leadership, we have to start earlier in their careers and focus on that broken step. caroline: leave us with one thing you are optimistic about in 2020. you have been quite tough talking about the challenges. one thing that excites you. sheryl: i do realize the challenges and how worried people are about democracy and election integrity and fake news, and those are responsibilities mark and i take hugely seriously every single day. we are determined. people ask me why i stay. i am staying because i have a responsibility to help fix these problems and make sure we are on the right path. i also stay because i really believe in our products. i get up every morning and i look at facebook and instagram,

and here is what i see. i see a young colleague of mine at facebook, her very young friend, with a very young child, who was diagnosed with breast cancer. or i see people's halloween costumes or retro throwback photos. or i see the fires that have been raging in california, and a long-standing fundraiser. i see the food bank from sonoma county where undocumented immigrants are having trouble getting food, and they are raising money. people are jumping into help with these fires. i am a believer that technology makes our lives better, that communications, technology, along with every problem it causes, makes things better. that is where i get my drive, my determination, and a lot of optimism.

i still think the future will be brighter than the past. ♪

alix: a moment of truth for saudi aramco. the highly anticipated ipo prices as opec faces questions on compliance, demand, and too much supply. prices in chile. the plummeting peso pushes local copper prices to an all-time high. potato famine. it is a race to stockpile french fries as potatoes are hit with bad weather, tightening supplies. ♪ alix: i'm alix steel. welcome to bloomberg "commodites edge," 30 minutes focus on the companies, the physical assets, and trading behind the hottest commodities with the smartest voices in the business. first, we kick it off with spot on, our analyst and in