WEBVTT - US Payrolls Increase by Just 12,000, Hit by Storms and Strikes 0:00:02.920 --> 0:00:07.280 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.560 --> 0:00:12.920 This is Bloomberg Business Wait inside from the reporters and 0:00:13.080 --> 0:00:16.640 editors who bring you America's most trusted business magazine, plus 0:00:16.720 --> 0:00:20.880 global business, finance and tech news. The Bloomberg Business Week 0:00:20.920 --> 0:00:25.840 Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio. 0:00:27.120 --> 0:00:29.680 We do begin with that payroll report, hiring advancing at 0:00:29.720 --> 0:00:32.840 the slowest pace since twenty twenty in October. The unemployment 0:00:32.920 --> 0:00:36.640 rate did remain low. A lot of distortions, though, severe hurricanes, 0:00:36.680 --> 0:00:39.519 that major strike at Boeing weighing on those figures. 0:00:39.560 --> 0:00:40.400 As far as numbers go. 0:00:40.520 --> 0:00:44.000 Non Farm payrolls increasing at twelve thousand last month, hiring 0:00:44.040 --> 0:00:47.000 over the previous two months weaker than previously thought. The 0:00:47.080 --> 0:00:49.800 unemployment rate held steady at four point one percent. Hourly 0:00:49.840 --> 0:00:54.200 earnings ticked up. Acting Labor Secretary Julie Sue commented on 0:00:54.320 --> 0:00:56.520 today's report earlier on Bloomberg TV. 0:00:57.400 --> 0:01:01.160 We don't have granular data about that, but I think it's, 0:01:01.320 --> 0:01:05.520 you know, it's a rational conclusion that the impacts of 0:01:05.520 --> 0:01:08.440 the hurricanes were devastating. I mean they were devastating to 0:01:08.520 --> 0:01:11.720 human life. They were devastating to those communities in the southeast, 0:01:12.000 --> 0:01:14.160 but they also are showing up in the jobs report. 0:01:14.560 --> 0:01:18.840 Having said that, the overall labor force participation rate also remains. 0:01:19.160 --> 0:01:19.920 You know, it's steady. 0:01:20.560 --> 0:01:22.880 I was Acting Labor Secretary Julie Sue earlier on a 0:01:22.920 --> 0:01:25.480 Bloomberg TV. We got Michael McKee with us. He's Bloomberg 0:01:25.480 --> 0:01:28.280 News International Economics and Policy correspondent. He joins us here 0:01:28.280 --> 0:01:31.760 in the Bloomberg BusinessWeek studio, Mike, that headline number coming 0:01:31.760 --> 0:01:35.600 in way below estimates of one hundred thousand. How much 0:01:35.680 --> 0:01:38.319 of this can we attribute to hurricanes and to the 0:01:38.360 --> 0:01:42.080 strike versus an actual slowdown in the economy. 0:01:42.560 --> 0:01:45.600 Well, as Julie Sue said, it's really hard to tell 0:01:45.640 --> 0:01:48.200 because we don't have the granular data. We do know 0:01:48.280 --> 0:01:52.040 that we lost forty six thousand manufacturing jobs and there 0:01:52.040 --> 0:01:56.440 were forty four thousand workers on strike in the manufacturing sector, 0:01:56.520 --> 0:01:59.600 both Boeing and a textra in factory during the month. 0:01:59.680 --> 0:02:03.040 So that's pretty accurate there. You can add those back in, 0:02:03.080 --> 0:02:06.000 at least some thirty eight thousand of them for Boeing, 0:02:06.040 --> 0:02:09.040 because they're back there in theory going to go back 0:02:09.040 --> 0:02:12.440 to work if they approve the contract. The hurricanes is 0:02:12.440 --> 0:02:15.600 the hard part and part of it is that we 0:02:15.639 --> 0:02:19.040 had a very low response rate from companies who might 0:02:19.080 --> 0:02:22.200 have been busy sweeping the water out of their factories 0:02:22.280 --> 0:02:25.280 rather than filling out the form for the Department of Labor, 0:02:25.720 --> 0:02:28.919 and so it's hard to know how accurate these numbers are. 0:02:29.520 --> 0:02:33.200 We do expect a big revision up once companies start 0:02:34.520 --> 0:02:38.119 sending in their accurate numbers, and so for the next 0:02:38.120 --> 0:02:40.480 two months we'll probably see the numbers revised up. 0:02:40.880 --> 0:02:41.720 So you kind of have to. 0:02:41.720 --> 0:02:45.359 Look through the headline number. I know your question is 0:02:45.400 --> 0:02:47.560 going to be what is the FED thing. FED is 0:02:47.600 --> 0:02:49.640 going to think exactly that, but they're going to pay 0:02:49.639 --> 0:02:54.080 attention to the unemployment rate, which on a two decimal 0:02:54.200 --> 0:02:57.400 number was basically unrevised at four point one percent. 0:02:57.520 --> 0:03:00.880 So it doesn't look like the labor market it's getting any. 0:03:00.720 --> 0:03:03.640 Worse, So especially when you have next week, of course, 0:03:03.680 --> 0:03:06.240 we have the US election just a few days before 0:03:06.240 --> 0:03:08.200 the FED decision. So how much does this number end 0:03:08.280 --> 0:03:10.360 up being political? And if it does, what do people 0:03:10.400 --> 0:03:11.200 need to keep in mind? 0:03:11.560 --> 0:03:13.200 It's going to be interesting to see if it has 0:03:13.240 --> 0:03:16.320 any political impact. It took about ten seconds for the 0:03:16.320 --> 0:03:19.840 Trump campaign to send out their first negative comments on it, 0:03:19.919 --> 0:03:23.160 and they've been doing that all day, and we don't 0:03:23.200 --> 0:03:26.600 know how that's going to affect Americans. 0:03:26.680 --> 0:03:29.680 In part, it'll depend on how the media play this. 0:03:29.880 --> 0:03:33.000 If they play up the idea that we lost a 0:03:33.040 --> 0:03:36.240 lot of jobs, it plays into the Republican narrative. If 0:03:36.240 --> 0:03:40.440 they say hurricanes cost a lot of jobs, then it 0:03:40.520 --> 0:03:44.400 may not really resonate with people. Obviously, if they lead 0:03:44.440 --> 0:03:46.840 with the unemployment rate, it won't have much of an 0:03:46.840 --> 0:03:47.520 effect at all. 0:03:47.560 --> 0:03:49.560 But that's I mean, that's politics. 0:03:50.120 --> 0:03:53.680 You're going to have people always trying to accentuate the negative. 0:03:53.840 --> 0:03:55.680 Well, that's what I wanted to focus on, actually, because 0:03:55.760 --> 0:03:57.840 last month you were sitting in the studio with us 0:03:57.920 --> 0:04:00.160 and I had you weigh in on a tweet from 0:04:00.400 --> 0:04:03.200 a post on x from Marco Rubio, Senator of Florida, 0:04:03.480 --> 0:04:06.080 a state that was severely affected by hurricanes in the 0:04:06.160 --> 0:04:09.440 last month. He called the September jobs numbers a fake 0:04:09.520 --> 0:04:12.080 jobs report. He got a lot of pushback from a 0:04:12.080 --> 0:04:15.560 lot of professional economists who and people within the government, 0:04:15.600 --> 0:04:19.599 people who understand where this data comes from. He posted 0:04:19.600 --> 0:04:23.080 that they revised the estimated job gains in both August 0:04:23.080 --> 0:04:25.839 and September by a combined one hundred and twelve thousand, 0:04:26.240 --> 0:04:29.800 and he reiterated the idea that the jobs report he 0:04:29.800 --> 0:04:32.200 calls it the Biden Harris Jobs Report were fakes used 0:04:32.200 --> 0:04:34.599 by the media to give them positive headlines, saying I 0:04:34.680 --> 0:04:37.960 told you so. He obviously didn't learn his lesson. But 0:04:38.040 --> 0:04:39.480 what do you make of What do you make of 0:04:39.520 --> 0:04:41.480 what he said and what he's saying, because a lot 0:04:41.520 --> 0:04:42.360 of people point to these. 0:04:42.320 --> 0:04:46.719 Backwards revisions, Well, he either doesn't understand statistics or he's 0:04:46.720 --> 0:04:49.279 a politician, and a far be it for me to 0:04:49.320 --> 0:04:53.800 say that politicians would not tell the absolute truth or 0:04:53.880 --> 0:04:57.880 explain things in nuanced to people. But the number for 0:04:57.920 --> 0:05:00.760 September originally was two fifty four, came out at two 0:05:00.800 --> 0:05:05.839 twenty three. So if that's a significantly terrible change, I'm 0:05:05.920 --> 0:05:09.680 not sure people are going to see it quite the 0:05:09.720 --> 0:05:13.279 same way. The Bureau of Labor Statistics does the absolute 0:05:13.320 --> 0:05:14.200 best with what they can. 0:05:14.279 --> 0:05:16.000 They are not biased at all. 0:05:16.200 --> 0:05:19.440 This comes up every so often where somebody will say 0:05:19.720 --> 0:05:22.919 that they're manipulating the statistics to help one side or 0:05:22.920 --> 0:05:25.800 the other. But if you look, if people want to 0:05:25.800 --> 0:05:30.640 go to my ex account economy. 0:05:32.000 --> 0:05:34.880 On X, I just posted a short time. 0:05:34.800 --> 0:05:39.039 Ago a graph that shows the revisions during the Biden years, 0:05:39.320 --> 0:05:42.280 and sometimes they're up and sometimes there down, and. 0:05:42.240 --> 0:05:43.520 There's no pattern to it. 0:05:44.040 --> 0:05:48.200 So at this point you have to say, why are 0:05:48.240 --> 0:05:51.920 you doing that other than you're just trying to confuse people. 0:05:52.560 --> 0:05:54.960 Of course, next week we're not going to have DOP 0:05:55.000 --> 0:05:57.680 plots or the economic projections from the FED statement just 0:05:57.720 --> 0:05:59.960 given that they are quarterly, So we'll get those again 0:06:00.000 --> 0:06:01.839 in December, as you knew. But what do you expect 0:06:01.960 --> 0:06:04.560 FED Chair Pow to say in that statement as far 0:06:04.600 --> 0:06:06.599 as when it comes to that forward guidance, and especially 0:06:06.680 --> 0:06:09.280 once a tricky week, because we rarely do see a 0:06:09.279 --> 0:06:12.440 FED decision happen the same week as a US presidential election. 0:06:12.560 --> 0:06:14.839 Well, he will dodge all the questions of the presidential 0:06:14.880 --> 0:06:18.080 election because the FED doesn't know. First of all, we 0:06:18.160 --> 0:06:20.960 may not know who won, and second of all, they 0:06:20.960 --> 0:06:25.200 don't know what policies will actually be enacted. The candidates 0:06:25.560 --> 0:06:29.040 make their pledges, but as they say, the President proposes, 0:06:29.120 --> 0:06:32.039 Congress disposes, so we aren't going to know for a 0:06:32.040 --> 0:06:34.000 while what the actual policies are going to be. So 0:06:34.000 --> 0:06:36.119 if they can't do anything about it, so he'll pass 0:06:36.200 --> 0:06:39.719 on that kind of question. But in terms of trying 0:06:39.720 --> 0:06:43.120 to deal with this employment report. He'll say, we're going 0:06:43.160 --> 0:06:45.880 to look past the headline number because of the distortions. 0:06:45.920 --> 0:06:48.320 We'll look at the unemployment rate, we look at average 0:06:48.360 --> 0:06:52.120 hourly earnings, which were not terrible, and we're looking at 0:06:52.160 --> 0:06:54.360 a lot of data. We're looking at the GDP report, 0:06:54.400 --> 0:06:58.480 which was very strong. We're looking at the Employment Cost Index, 0:06:58.520 --> 0:07:01.880 which showed no real inflation worries. We're looking at the 0:07:01.880 --> 0:07:04.720 PCE inflation numbers, which weren't a real problem. We're looking 0:07:04.720 --> 0:07:09.200 at the fact that consumer spending went up strongly last month, 0:07:09.440 --> 0:07:11.960 and they'll say, it doesn't appear to us that the 0:07:11.960 --> 0:07:15.600 economy has really changed. So we were looking at under 0:07:15.640 --> 0:07:18.200 these circumstances at twenty five basis point cut, and I 0:07:18.240 --> 0:07:20.400 think that's what we get. And he'll say, so, that's 0:07:20.400 --> 0:07:24.040 what we did. We'll wait and see on what we're 0:07:24.040 --> 0:07:27.720 going to do for December, to see what the spending 0:07:27.800 --> 0:07:31.320 and growth and inflation numbers are, and we get another 0:07:31.320 --> 0:07:33.360 employment report before the next FED meeting. 0:07:33.760 --> 0:07:36.600 Okay, before the next FED meeting, we have an election. 0:07:37.160 --> 0:07:40.520 Forgive me for harping on this, but I'm going to 0:07:40.560 --> 0:07:45.040 throw a curveball at you. Mike We've heard from Donald 0:07:45.040 --> 0:07:49.760 Trump and Elon Musk about the idea of cutting government programs, 0:07:49.800 --> 0:07:53.040 cutting spending in the government if Trump does win. One 0:07:53.040 --> 0:07:54.560 thing that I haven't heard a lot about, though, is 0:07:54.560 --> 0:07:58.600 how cutting several trillion dollars from the budget might affect employment, 0:07:59.080 --> 0:08:01.640 given that the federal govern is such a big employer 0:08:02.040 --> 0:08:02.880 of Americans. 0:08:03.120 --> 0:08:04.480 Well, it depends on how they do it. 0:08:04.800 --> 0:08:05.640 That's what I was going to ask you. 0:08:06.000 --> 0:08:09.360 And much of what happens in Washington in terms of 0:08:09.360 --> 0:08:14.400 the budget is sort of just moving pieces around. It 0:08:14.760 --> 0:08:19.080 doesn't really have an impact, probably doesn't mean that much. 0:08:19.280 --> 0:08:21.160 I'll give you a caveat in just a second. 0:08:22.120 --> 0:08:25.880 Interestingly enough, the Bureau Labor Statistics was going to cut 0:08:25.920 --> 0:08:29.400 back on the sample size for the Household Survey, the 0:08:30.680 --> 0:08:35.199 Unemployment Report survey, and in the Continuing Resolution, the government 0:08:35.240 --> 0:08:37.080 put more money back into it. So now they don't 0:08:37.120 --> 0:08:40.559 have to cut back, so they will in terms of 0:08:40.600 --> 0:08:42.040 the statistics for the economy. 0:08:42.080 --> 0:08:42.920 That's good news. 0:08:43.120 --> 0:08:46.040 Now, if you're cutting back on spending, are you cutting 0:08:46.080 --> 0:08:50.760 back on contracts for work done for the federal government 0:08:50.840 --> 0:08:54.680 or airplanes built or things like that that will be 0:08:54.760 --> 0:08:58.280 in the future. Right now, it probably doesn't have as 0:08:58.360 --> 0:09:01.160 much to do with it. If you did start cutting significantly, 0:09:01.200 --> 0:09:05.319 then over time it would have an effect on jobs. Now, 0:09:05.360 --> 0:09:09.199 the big effect on jobs might be if Donald Trump 0:09:09.280 --> 0:09:13.040 is elected and he tries to reinstate Schedule F which 0:09:13.160 --> 0:09:17.239 changes a significant portion of the civil service into immediately 0:09:17.360 --> 0:09:22.520 fireable positions, and he immediately fires them, then you could 0:09:22.559 --> 0:09:27.319 lose thirty or fifty thousand employees from the government payrolls. 0:09:27.160 --> 0:09:29.400 And that would have an immediate effect. 0:09:29.440 --> 0:09:33.160 But we don't know that a he will do that, 0:09:33.320 --> 0:09:37.200 and b how that would be received. And obviously you 0:09:37.240 --> 0:09:40.920 know the federal unions would take that to court, et cetera. 0:09:41.360 --> 0:09:42.600 All right, we're gonna have to leave it there. 0:09:42.640 --> 0:09:46.240 Michael McKee international economics and policy correspondent for Bloomberg and 0:09:46.400 --> 0:09:49.920 is giving us an overview of the data, the big 0:09:49.960 --> 0:09:53.480 picture to understand how companies are hiring or not hiring 0:09:53.520 --> 0:09:56.240 in this environment. Let's bring in Martha Heller. She's founder 0:09:56.240 --> 0:09:58.800 in CEO of Heller Search and it's an executive search 0:09:58.840 --> 0:10:02.160 firm that specialized this is in leadership roles in technology. 0:10:02.200 --> 0:10:04.960 She joins us from Massachusetts. Martha, good to have you 0:10:05.000 --> 0:10:08.320 back on the program. There's no single category in the 0:10:08.360 --> 0:10:10.800 BLS data that says tech workers. But we did see 0:10:10.800 --> 0:10:14.040 a decline of two thousand jobs and telecommunications in addition 0:10:14.080 --> 0:10:17.360 of about fourteen hundred jobs and information services and computing 0:10:17.400 --> 0:10:19.199 infrastructure providers in. 0:10:19.160 --> 0:10:21.800 The month of October. What are you seeing on your end? 0:10:23.200 --> 0:10:26.600 You know, on our end, we're seeing a lot of 0:10:26.720 --> 0:10:30.680 change happening in executive technology leadership positions. 0:10:30.720 --> 0:10:33.600 And whenever that happens, there's a lot of hiring. 0:10:33.800 --> 0:10:37.600 So you know, some companies are laying off technology people. 0:10:37.679 --> 0:10:41.800 But the overall story is a story about an investment 0:10:41.920 --> 0:10:45.520 in AI. And in order for us to recoup our 0:10:46.640 --> 0:10:50.800 tremendous investment that all of our companies are making in AI, ironically, 0:10:51.440 --> 0:10:54.720 we need people. We must hire people who can make 0:10:54.800 --> 0:10:58.640 all of our AI dreams come true. Now, so far, 0:10:59.040 --> 0:11:03.520 we're seeing some disappointing results from our AI investments. Microsoft 0:11:04.000 --> 0:11:07.560 is reporting disappointing sales and pro Pilot. We're hearing this 0:11:07.679 --> 0:11:11.400 fun term called productivity leakage where we initially got some 0:11:11.520 --> 0:11:14.079 gains from AI, but now we seem to be losing them. 0:11:14.640 --> 0:11:18.200 And then finally, eighty percent of most AI projects are 0:11:18.240 --> 0:11:22.320 still in testing things. So if we are able to 0:11:22.400 --> 0:11:25.960 get a return on our AI investment. We are promised 0:11:26.240 --> 0:11:29.679 lots of technology hiring in the future, but if we 0:11:29.800 --> 0:11:32.920 don't and some of our AI investments wind up not 0:11:33.080 --> 0:11:36.040 paying off at all, then we have a much larger 0:11:36.840 --> 0:11:40.840 hiring situation, a challenge on our hands because we're going 0:11:40.880 --> 0:11:41.400 to wind. 0:11:41.280 --> 0:11:43.520 Up in a bust situation. 0:11:43.760 --> 0:11:48.080 So I think there's hurricanes, there's elections, But to me, 0:11:48.200 --> 0:11:52.000 the big story in technology hiring is AI investment. The 0:11:52.120 --> 0:11:55.040 people we need to invest in to give us the return, 0:11:55.360 --> 0:11:57.480 and whether or not we're going to get that return. 0:11:57.679 --> 0:12:00.600 To me, that's what's happening in technology. 0:12:00.760 --> 0:12:03.120 I'm glad you brought up some of those technology companies 0:12:03.160 --> 0:12:05.280 because we did get earnings reports from a number from 0:12:05.280 --> 0:12:07.760 them as you know this week, including Meta and Microsoft, 0:12:07.840 --> 0:12:10.200 and of course they're still boosting spinning when it comes 0:12:10.200 --> 0:12:13.600 to artificial intelligence. So when you're looking toward when it 0:12:13.640 --> 0:12:16.600 comes to acquiring types of skills for AI, when you're 0:12:16.640 --> 0:12:19.520 talking with your clients, how does one acquire skills? What 0:12:19.559 --> 0:12:22.160 are those typical industries that you would go to for that? 0:12:23.480 --> 0:12:28.240 So to get what's interesting is AI skills are strategic thinking, 0:12:28.520 --> 0:12:33.679 their processed expertise, their innovation, they are technical, they are development. 0:12:33.840 --> 0:12:36.640 So there's a whole range of AI skills. 0:12:37.240 --> 0:12:39.480 Or if you want to go work in high tech 0:12:39.520 --> 0:12:43.679 developing AI solutions, you are likely going to get most 0:12:43.679 --> 0:12:46.480 of your training on the job. What companies like Microsoft 0:12:46.480 --> 0:12:48.760 and Meta like to do is they like to hire 0:12:48.800 --> 0:12:51.600 the athletes. They're not necessarily worried about who's got the 0:12:51.679 --> 0:12:53.920 top PhD in computer science. 0:12:53.960 --> 0:12:55.720 What they want to hire are people who. 0:12:55.640 --> 0:12:58.760 Are innovative, they can think they can collaborate because AI 0:12:58.880 --> 0:13:02.600 is less about technology, ironically than it is about capabilities 0:13:02.600 --> 0:13:06.280 and efficiencies and processes and people. So it depends on 0:13:06.320 --> 0:13:09.680 the skills you can learn, you know, development languages in 0:13:09.720 --> 0:13:12.719 computer science programs, but it's really more about how does 0:13:12.800 --> 0:13:15.960 your company work and how can you use AI to 0:13:16.080 --> 0:13:16.800 do that better. 0:13:16.880 --> 0:13:18.640 It's usually on the job train. 0:13:19.720 --> 0:13:24.720 Remind everyone, Martha, where where in sort of the ecosystem 0:13:25.559 --> 0:13:30.880 the executives you find in place are geographically salary wise, 0:13:31.440 --> 0:13:35.080 because we're not talking you know, you're you're going after 0:13:35.160 --> 0:13:38.480 the folks who are making significant amount of money and 0:13:38.640 --> 0:13:41.400 the positions they have are kind of few and far between. 0:13:42.720 --> 0:13:43.240 That's right. 0:13:43.280 --> 0:13:47.640 So the population that we focus on our technology executives 0:13:47.760 --> 0:13:53.080 across all industries. So insurance in retail and airlines and 0:13:53.679 --> 0:13:57.079 what is happening in those companies. So those technology executives 0:13:57.320 --> 0:14:00.880 are starting to run their businesses more like soil companies, 0:14:00.960 --> 0:14:04.679 more like Microsoft, more like Meta. Because in order to 0:14:04.720 --> 0:14:07.040 make use of AI, we need the culture, we need 0:14:07.080 --> 0:14:09.240 the technologies, we need the talent that we have in 0:14:09.240 --> 0:14:12.120 some of these high tech companies. So the challenge is, 0:14:12.160 --> 0:14:15.520 how do you a head of technology an insurance company 0:14:16.080 --> 0:14:19.680 find the AI skills that you need when you're competing 0:14:19.720 --> 0:14:20.680 with Microsoft. 0:14:21.120 --> 0:14:22.640 That is the real challenge. 0:14:22.680 --> 0:14:26.520 So our senior technology executives are really across every industry, 0:14:26.880 --> 0:14:29.520 but the talent that they need is actually not from 0:14:29.560 --> 0:14:30.480 their own industry. 0:14:30.560 --> 0:14:32.120 It's from the high tech companies. 0:14:33.480 --> 0:14:36.600 And especially when you're thinking about moving ahead and looking 0:14:36.680 --> 0:14:39.280 at how when you are acquiring the skills that you 0:14:39.320 --> 0:14:42.040 were talking about earlier. Speaking to us more broadly, just quickly, 0:14:42.080 --> 0:14:43.680 because we only have about a minute left when you're 0:14:43.680 --> 0:14:45.760 looking at the outlook as we head into twenty twenty 0:14:45.800 --> 0:14:47.560 five when it comes to these positions. 0:14:48.720 --> 0:14:52.400 Sure, so the outlook is there is much more demand 0:14:52.600 --> 0:14:56.760 than there is supply. We are not training our people 0:14:56.880 --> 0:15:01.040 in AI skills. So I would say broadly for divided companies, 0:15:01.080 --> 0:15:04.920 still to still invest in as heavily an AI as 0:15:04.920 --> 0:15:07.680 they've done in twenty twenty four. We're going to see 0:15:07.760 --> 0:15:12.200 a upward pressure on companies to hire these people. So broadly, 0:15:12.280 --> 0:15:14.920 I think we're going to have a supply demand problem 0:15:14.960 --> 0:15:18.080 where we are going to need more tech skills than 0:15:18.120 --> 0:15:19.680 we currently have on the market. 0:15:19.760 --> 0:15:22.840 That's really going to be a CEOs challenge going forward. 0:15:23.400 --> 0:15:26.680 Martha, just ten seconds left. What's the meat of the 0:15:26.720 --> 0:15:29.000 conversation we have with you a month from now if 0:15:29.040 --> 0:15:31.080 you join us. 0:15:31.280 --> 0:15:34.800 A meet of the conversation is now that the election 0:15:35.160 --> 0:15:38.720 is behind us and we know who our president is. 0:15:38.760 --> 0:15:43.000 The analysis paralysis that keeps people from making keeps companies 0:15:43.040 --> 0:15:47.120 from making real investment decisions, particularly in growth, will be 0:15:47.120 --> 0:15:49.680 behind us, and I predict that we are all going 0:15:49.760 --> 0:15:52.960 to be looking forward to a very busy first quarter 0:15:53.160 --> 0:15:53.840 with hiring. 0:15:54.040 --> 0:15:56.000 Okay, so not a repeat of two thousand and when 0:15:56.240 --> 0:15:58.760 we didn't know for many weeks when the who the 0:15:58.760 --> 0:16:01.280 winner was of that electtion from Martha Heller, founder and 0:16:01.320 --> 0:16:04.440 CEO of Heller Search, the executive search firm. 0:16:05.200 --> 0:16:08.720 You're listening to the Bloomberg Business Week podcast. Catch us 0:16:08.760 --> 0:16:12.000 live weekday afternoons from two to five pm Eastern listen 0:16:12.040 --> 0:16:14.200 on Apple card play and then brought auto with a 0:16:14.200 --> 0:16:17.280 Bloomberg Business app or wants us live on YouTube. 0:16:18.440 --> 0:16:21.360 The Apple shares down about one point six percent, not 0:16:21.440 --> 0:16:25.120 taking part in that relatively broad rally, the company sparking 0:16:25.120 --> 0:16:28.200 fresh concerns about revenue growth and lingering weakness in an 0:16:28.240 --> 0:16:31.920 intensely competitive China market. We got Mark German with us. 0:16:31.920 --> 0:16:34.640 He's a Bloomberg News Chief technology correspondent. He joins us 0:16:34.640 --> 0:16:37.440 from La Mark. We heard yesterday from Apple the company 0:16:37.440 --> 0:16:39.680 expects total sales in the current quarter will rise by 0:16:40.080 --> 0:16:43.360 a percentage in the low to middle single digits. Analysts 0:16:43.400 --> 0:16:46.000 wanted to see seven percent. We also saw a decline 0:16:46.000 --> 0:16:49.040 in China revenue last quarter that fell short of estimates. 0:16:49.520 --> 0:16:52.200 Help us make sense of how weakness in China is 0:16:52.240 --> 0:16:53.760 linked to weakness and total sales. 0:16:55.840 --> 0:16:59.280 When they said the guidance for the first quarter on 0:16:59.320 --> 0:17:01.720 the earnings call, I did a double take. I wasn't 0:17:02.040 --> 0:17:06.240 exactly sure that I heard it correctly. Low single digits 0:17:06.320 --> 0:17:10.560 is below expectations, especially all the hype that they're pushing 0:17:10.600 --> 0:17:14.040 for AI and this latest iPhone, all the new products 0:17:14.040 --> 0:17:16.159 they've rolled out that seemed really low, but that is 0:17:16.200 --> 0:17:20.159 the reality sometimes they guide under. But you know, they 0:17:20.160 --> 0:17:22.840 said last quarter it would be a five percent increase 0:17:23.000 --> 0:17:25.520 in revenue y earvery year, and this quarter ended up 0:17:25.520 --> 0:17:28.080 being a six percent year of year increase. So they're 0:17:28.119 --> 0:17:31.320 pretty much lately at least on the money with their guidance. 0:17:31.359 --> 0:17:33.639 So yeah, it'll probably be in the in the you know, 0:17:33.760 --> 0:17:37.199 round five percent or less range for Q one in 0:17:37.280 --> 0:17:40.879 terms of how China plays into this. So China has 0:17:40.920 --> 0:17:42.960 skipped again, right for the fourth quarter. It was a 0:17:43.040 --> 0:17:46.119 year of a year decline, but that decline has improved. 0:17:46.160 --> 0:17:48.399 It's not as bad as it was. We were getting 0:17:48.480 --> 0:17:50.240 used to two three billion dollar a year year of 0:17:50.240 --> 0:17:53.600 the year shortfalls. Right now we're in the half a 0:17:53.600 --> 0:17:56.200 billion dollar range, so you are seeing some improvement there. 0:17:56.680 --> 0:17:59.159 Apple is trying to imply to the street that the 0:17:59.200 --> 0:18:01.600 issues in China are not related to the iPhone, but 0:18:02.400 --> 0:18:05.160 everything that we've seen and heard indicates that the iPhone 0:18:05.400 --> 0:18:07.680 is probably not doing as well as Apple would want. 0:18:07.760 --> 0:18:10.320 In Greater China, you're seeing a lot of new competition 0:18:10.400 --> 0:18:13.239 from Shao Mii and Huawei. More importantly, you're seeing some 0:18:13.280 --> 0:18:16.480 of these other smartphone makers trying new things. Right, I'm 0:18:16.480 --> 0:18:19.160 not saying they're selling well, I'm not saying that they're 0:18:19.280 --> 0:18:22.679 extraordinarily feasible, but at least they're trying new things, whereas 0:18:22.720 --> 0:18:25.440 Apple is sticking to the same formula, the same design, 0:18:25.840 --> 0:18:27.520 many of the same features that they've had for a 0:18:27.600 --> 0:18:29.280 number of years now. And I think that's why you're 0:18:29.280 --> 0:18:31.720 seeing a little bit of softness in China in addition 0:18:31.880 --> 0:18:34.600 to people wanting to buy homegrown products. 0:18:34.880 --> 0:18:37.080 Mark When it comes to other big tech companies, obviously 0:18:37.240 --> 0:18:40.679 Microsoft and Meta is still facing sort of wary investors 0:18:41.000 --> 0:18:43.520 after reporting that rising in AI spending, but it seems 0:18:43.520 --> 0:18:45.320 like Apple's been a bit more cautious when it comes 0:18:45.359 --> 0:18:47.080 to spinning when it comes to AI. Where does it 0:18:47.200 --> 0:18:47.919 stand on this? 0:18:49.359 --> 0:18:52.400 Yeah, I'm not sure that they've been cautious on spending 0:18:53.680 --> 0:18:56.840 on AI because they are trying to be conservative. 0:18:56.880 --> 0:18:58.000 I think that's part of it. 0:18:58.040 --> 0:19:01.160 I think the other component is there's not a ton 0:19:01.200 --> 0:19:03.400 that they need to be spending on AI right now 0:19:03.480 --> 0:19:06.760 because they just don't have the feature set that requires 0:19:06.800 --> 0:19:12.399 the big spending Microsoft, OpenAI, Google, Amazon, They're requiring a 0:19:12.440 --> 0:19:15.320 lot more spend than Apple and artificial intelligence because they 0:19:15.359 --> 0:19:17.080 have a lot more to offer. 0:19:17.080 --> 0:19:18.479 Right That's one part of it. 0:19:18.520 --> 0:19:20.960 The other part of it is, as opposed to all 0:19:20.960 --> 0:19:25.080 these other providers of AI technologies, Apple does a lot 0:19:25.160 --> 0:19:28.320 on device. Their large language model, for the most part, 0:19:28.400 --> 0:19:30.639 can do a lot on the phone itself. It doesn't 0:19:30.680 --> 0:19:33.760 require as much movement to the cloud as some of 0:19:33.800 --> 0:19:36.000 these other providers. So I think it's a mix of that, 0:19:36.280 --> 0:19:39.000 trying to be conservative, not having as much to offer, 0:19:39.359 --> 0:19:42.639 not as much as server centric capabilities. And then the 0:19:42.640 --> 0:19:44.159 third thing, because they're actually able to do a lot 0:19:44.200 --> 0:19:46.320 on the phone itself, which is great from a privacy 0:19:46.680 --> 0:19:48.560 and actually a performing standpoint. 0:19:48.680 --> 0:19:50.040 So it's a mixture there. 0:19:50.359 --> 0:19:53.360 Hey, Mark, iPhone revenue coming in at forty six point 0:19:53.440 --> 0:19:56.840 two billion dollars. It beat estimates of forty five billion dollars. 0:19:57.520 --> 0:20:00.720 How do we know how well the iPhone's sixty is 0:20:00.800 --> 0:20:01.520 selling China? 0:20:01.600 --> 0:20:06.480 Notwithstanding we wait until the end of January or early 0:20:06.520 --> 0:20:10.840 February when Apple announces its first quarter numbers. Don't forget 0:20:11.040 --> 0:20:13.840 a large portion or the majority portion of that forty 0:20:13.840 --> 0:20:17.159 six billion is going to be non iPhone sixteens. You know, 0:20:17.200 --> 0:20:18.840 the quarter is three months long, and you only had 0:20:18.880 --> 0:20:20.760 about a week and a half of sales of those 0:20:20.880 --> 0:20:24.160 latest iPhones, including pre orders as well from the prior 0:20:24.200 --> 0:20:26.960 way to that in the fourth quarter window. So I 0:20:26.960 --> 0:20:29.880 think we need to wait until the first quarter results 0:20:29.920 --> 0:20:32.240 are presented for us to really have a strong idea 0:20:32.520 --> 0:20:35.760 on how the iPhone sixteen is doing. I don't think 0:20:35.800 --> 0:20:38.320 there's going to be a supercycle. What I'm seeing is 0:20:38.320 --> 0:20:41.120 that things are going to be about the same, if 0:20:41.160 --> 0:20:43.200 not a little bit better than the iPhone fifteen Pro. 0:20:43.840 --> 0:20:45.680 And I don't really think a lot of that has 0:20:45.720 --> 0:20:48.200 to do with Apple Intelligence. I think consumers are seeing 0:20:48.320 --> 0:20:52.200 through the marketing engine that Apple is pushing right now 0:20:52.240 --> 0:20:54.479 for Apple Intelligence. I think a lot of it has 0:20:54.520 --> 0:20:56.399