1 00:00:00,040 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordert. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify, or 8 00:00:31,320 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:35,840 Speaker 2: Terminal and the Bloomberg Business app. 10 00:00:36,440 --> 00:00:37,600 Speaker 3: So here's the latest this morning. 11 00:00:37,640 --> 00:00:40,559 Speaker 2: The President remaining positive on negotiations, as Tehran says there 12 00:00:40,560 --> 00:00:43,880 Speaker 2: has been no tangible progress. Overnight, clashes between Israel and 13 00:00:43,960 --> 00:00:47,360 Speaker 2: Hesbel are complicating talks, as Lebanon's president says a ceasefire 14 00:00:47,360 --> 00:00:50,199 Speaker 2: with Israel could begin within twenty four hours. Joining us 15 00:00:50,200 --> 00:00:53,640 Speaker 2: now round the table, the State Department spokesperson Temmy Figure. Tommy, 16 00:00:53,640 --> 00:00:55,840 Speaker 2: you're the man this morning. Good morning to you. Tell 17 00:00:55,920 --> 00:00:57,960 Speaker 2: us we're making some progress, because I can tell you 18 00:00:58,000 --> 00:01:00,120 Speaker 2: on Wall Street this is the number one story that 19 00:01:00,160 --> 00:01:02,279 Speaker 2: people don't want to talk about right now. Are we 20 00:01:02,320 --> 00:01:03,080 Speaker 2: moving forward? 21 00:01:03,280 --> 00:01:05,720 Speaker 4: Well, look, we're moving forward. And achieving the President's objective. 22 00:01:05,760 --> 00:01:07,880 Speaker 4: I mean, you started saying mixed messaging on Iran, but 23 00:01:08,160 --> 00:01:10,679 Speaker 4: the President's been clear from the beginning what is primary 24 00:01:10,680 --> 00:01:12,959 Speaker 4: objective is here the Ranian regime can't have a nuclear weapon. 25 00:01:13,040 --> 00:01:16,200 Speaker 4: So we saw Operation Epic Fury, the decisive outcomes from that. 26 00:01:16,520 --> 00:01:19,119 Speaker 4: We're seeing in Lebanon and Israel, those talks being separate 27 00:01:19,120 --> 00:01:21,080 Speaker 4: from these talks regard in the nuclear issue, but the 28 00:01:21,160 --> 00:01:24,280 Speaker 4: highest level talks since nineteen ninety three. Progress being made there. 29 00:01:24,680 --> 00:01:26,880 Speaker 4: The President's not going to be rushed into a bad deal. 30 00:01:26,959 --> 00:01:28,640 Speaker 4: He's going to make a good deal for the American people, 31 00:01:28,640 --> 00:01:30,640 Speaker 4: and he's indicated we're seeing some movement here from the 32 00:01:30,640 --> 00:01:31,319 Speaker 4: Iranian side. 33 00:01:31,360 --> 00:01:34,280 Speaker 5: The President yesterday talked about a ceasefire. We talked about 34 00:01:34,280 --> 00:01:36,759 Speaker 5: this a little bit earlier, saying that that basically means 35 00:01:36,800 --> 00:01:40,000 Speaker 5: shooting in a more moderate manner. That's what the ceasefire is. 36 00:01:40,000 --> 00:01:42,360 Speaker 5: What would it take for this administration to say the 37 00:01:42,360 --> 00:01:43,200 Speaker 5: ceasefire is off. 38 00:01:43,480 --> 00:01:45,840 Speaker 4: Well, look, I think what we're seeing here regarding this 39 00:01:45,959 --> 00:01:49,360 Speaker 4: is defensive actions. Of course, saw Operation Epic Fury, decimation 40 00:01:49,880 --> 00:01:53,120 Speaker 4: of their defense industrial complex, their missile complex, their navy, 41 00:01:53,120 --> 00:01:55,680 Speaker 4: for example. But of course We're going to take defensive 42 00:01:55,680 --> 00:01:58,640 Speaker 4: action to protect US interest in US troops. That's a 43 00:01:58,680 --> 00:02:02,480 Speaker 4: common sense approach. We also have in this context economic 44 00:02:02,560 --> 00:02:04,600 Speaker 4: theory that are a blockade, that we have a raniing 45 00:02:04,640 --> 00:02:06,680 Speaker 4: hips are Ragni imports, So there's leverage the president has. 46 00:02:06,680 --> 00:02:08,440 Speaker 3: He has all the cards here and what. 47 00:02:08,400 --> 00:02:10,880 Speaker 4: We saw the Secretary describe before Congress, as we are 48 00:02:10,880 --> 00:02:13,240 Speaker 4: seeing the Iranian regime talk about many of the things 49 00:02:13,240 --> 00:02:15,680 Speaker 4: that they refuse to talk about for months, but the 50 00:02:15,680 --> 00:02:17,800 Speaker 4: President also being clear he's going to see the subjective 51 00:02:17,800 --> 00:02:18,839 Speaker 4: be fulfilled one way or another. 52 00:02:18,919 --> 00:02:20,560 Speaker 3: The Ranian regime cannot have a nucular weapon. 53 00:02:20,600 --> 00:02:22,840 Speaker 5: The Wall Street Journal reporting overnight that Trump told his 54 00:02:22,919 --> 00:02:24,840 Speaker 5: aide that he won't resume in all at war with 55 00:02:24,840 --> 00:02:27,880 Speaker 5: Iran unless US troops are killed. Is that going to 56 00:02:27,880 --> 00:02:30,919 Speaker 5: be the line where potentially we could see more offensive attacks. 57 00:02:31,000 --> 00:02:32,800 Speaker 4: Well, look as the President saying again, we're going to 58 00:02:32,800 --> 00:02:36,160 Speaker 4: take defensive action to protect US troops, US soldiers. I'm 59 00:02:36,160 --> 00:02:38,360 Speaker 4: not here to predict the future about what the President 60 00:02:38,400 --> 00:02:40,520 Speaker 4: may decide, but of course we're going to take that 61 00:02:40,520 --> 00:02:41,160 Speaker 4: defensive action. 62 00:02:41,440 --> 00:02:42,160 Speaker 3: Of course we are. 63 00:02:42,200 --> 00:02:44,519 Speaker 4: That's a common sense approach if we see threats against 64 00:02:44,639 --> 00:02:47,360 Speaker 4: US interests US troops. We're going to be acting and 65 00:02:47,400 --> 00:02:49,280 Speaker 4: the President the DOW has done just that. 66 00:02:49,720 --> 00:02:53,080 Speaker 6: Why isn't the International Atomic Energy Agency involved in these talks? 67 00:02:53,360 --> 00:02:55,079 Speaker 4: Well, I mean we see the President talking about a 68 00:02:55,160 --> 00:02:58,080 Speaker 4: role for the IAEA in terms of the destruction of 69 00:02:58,080 --> 00:03:01,480 Speaker 4: the nuclear dust. The President this has been a longstanding 70 00:03:01,639 --> 00:03:03,960 Speaker 4: concern for the entire world, the threat that the Ranian 71 00:03:03,960 --> 00:03:06,080 Speaker 4: regime having the new the weapon could have. It's the 72 00:03:06,120 --> 00:03:08,600 Speaker 4: President who has taken action to actually address this. 73 00:03:08,919 --> 00:03:12,280 Speaker 6: Well, the IEA came out overnight with a report where 74 00:03:12,280 --> 00:03:15,480 Speaker 6: they said that the risk of Iran developing a nuclear 75 00:03:15,520 --> 00:03:17,840 Speaker 6: weapon right now is higher than it was a number. 76 00:03:17,600 --> 00:03:18,240 Speaker 3: Of months ago. 77 00:03:18,400 --> 00:03:21,079 Speaker 6: We're raising concerns that they don't have access to oversight 78 00:03:21,160 --> 00:03:22,919 Speaker 6: and saying that they would like to be more involved 79 00:03:23,200 --> 00:03:26,600 Speaker 6: in these negotiations. Do you have any understanding of where 80 00:03:26,639 --> 00:03:28,440 Speaker 6: they are in this and the urgency to get them 81 00:03:28,480 --> 00:03:30,680 Speaker 6: in to be able to surveil what's going on. 82 00:03:30,919 --> 00:03:32,880 Speaker 4: Well, again, part of the discussions we're having here, as 83 00:03:32,880 --> 00:03:36,080 Speaker 4: the President has indicated publicly, is regarding the destruction of 84 00:03:36,120 --> 00:03:38,839 Speaker 4: the enriched uranium uranium that was enriched beyond the point 85 00:03:38,880 --> 00:03:41,160 Speaker 4: of any sort of peaceful purpose. The IEA the President 86 00:03:41,200 --> 00:03:43,880 Speaker 4: indicating would play a role within that regarding where the 87 00:03:43,960 --> 00:03:46,560 Speaker 4: Ranian regime is. As the Secretary discussed before Congress, they 88 00:03:46,560 --> 00:03:49,520 Speaker 4: were attempting to develop a conventional weapon shield which they 89 00:03:49,560 --> 00:03:52,880 Speaker 4: could act with basically impunity to develop a nuclear weapon. 90 00:03:52,960 --> 00:03:56,400 Speaker 4: The President taking clear, concrete action to decimate that conventional 91 00:03:56,400 --> 00:03:59,400 Speaker 4: military shield. So the President taking action to prevent the 92 00:03:59,480 --> 00:04:02,680 Speaker 4: Ranium regime from having a nuclear weapon consistently from the 93 00:04:02,680 --> 00:04:03,600 Speaker 4: beginning of this administration. 94 00:04:03,640 --> 00:04:05,000 Speaker 3: How afective is the blockhite Bean. 95 00:04:05,320 --> 00:04:07,720 Speaker 2: We've had this blinking contest for a while trying to 96 00:04:07,760 --> 00:04:10,400 Speaker 2: work out at what point will we breach storage capacity 97 00:04:10,880 --> 00:04:12,960 Speaker 2: in Iran. Have you got anything to share with this 98 00:04:13,080 --> 00:04:14,920 Speaker 2: morning about how effective that blockchite is been. 99 00:04:15,000 --> 00:04:17,560 Speaker 4: Well, it's been incredibly effective in terms of blocking revenue 100 00:04:17,600 --> 00:04:19,719 Speaker 4: from going to the Iranian regime. Hundreds of millions of 101 00:04:19,720 --> 00:04:22,680 Speaker 4: dollars a day being blocked from the Iranian regime. This 102 00:04:22,760 --> 00:04:25,560 Speaker 4: is also the broader context of that maximum pressure policy. 103 00:04:25,640 --> 00:04:27,719 Speaker 4: We're actually continuing to take action at the State Department 104 00:04:27,760 --> 00:04:30,839 Speaker 4: of Treasury Department to target entities that are trying to 105 00:04:30,880 --> 00:04:33,560 Speaker 4: evade US sanctions that are designed to deny the regime 106 00:04:33,760 --> 00:04:35,640 Speaker 4: the funds they need for their Malian activities. We saw 107 00:04:35,680 --> 00:04:38,800 Speaker 4: actions as recently either yesterday or earlier this week. Those 108 00:04:38,839 --> 00:04:41,720 Speaker 4: actions have continuing, so this economic fury is continuing. We're 109 00:04:41,720 --> 00:04:44,039 Speaker 4: seeing in terms of the effect hundreds of millions of 110 00:04:44,040 --> 00:04:45,559 Speaker 4: dollars being denied to the Iranian regime. 111 00:04:45,640 --> 00:04:48,040 Speaker 5: Secretary Rubio was in front of the Senate for Our 112 00:04:48,080 --> 00:04:49,960 Speaker 5: Relations to committee as well this week, and he said 113 00:04:49,960 --> 00:04:53,200 Speaker 5: that Iran has laid very large parts straight overmosse with 114 00:04:53,320 --> 00:04:56,240 Speaker 5: minds have any of them been cleared? How much of 115 00:04:56,279 --> 00:04:57,440 Speaker 5: the strait is still mined? 116 00:04:57,600 --> 00:04:57,760 Speaker 3: Well? 117 00:04:57,760 --> 00:05:00,560 Speaker 4: The President indicating that we're taking operations to see that 118 00:05:00,640 --> 00:05:03,559 Speaker 4: d mining of the strait. I think this also shows 119 00:05:03,560 --> 00:05:05,919 Speaker 4: the difference here the Ranian regime trying to close the 120 00:05:05,920 --> 00:05:07,400 Speaker 4: Straight of Horm Moves and say that we should be 121 00:05:07,400 --> 00:05:09,279 Speaker 4: able to control who goes to the Straight of Horm Moves. 122 00:05:09,440 --> 00:05:11,400 Speaker 4: That's why we saw this blockade of our Rani and 123 00:05:11,400 --> 00:05:13,120 Speaker 4: ships in Iranian ports. We're not going to be in 124 00:05:13,160 --> 00:05:16,640 Speaker 4: a situation where we're going to accept a country deciding, 125 00:05:17,000 --> 00:05:19,400 Speaker 4: you know, laterally who gets to use an international waterway. 126 00:05:19,520 --> 00:05:21,600 Speaker 4: That's not going to happen. The President and the Secretary 127 00:05:21,640 --> 00:05:22,640 Speaker 4: both indicating. 128 00:05:22,240 --> 00:05:24,160 Speaker 2: That Tomy, can you see why people on Wall Street 129 00:05:24,200 --> 00:05:26,520 Speaker 2: right now are slightly frustrangted with some of the communication 130 00:05:26,600 --> 00:05:28,600 Speaker 2: coming from the White House. And I give an example. 131 00:05:28,880 --> 00:05:31,000 Speaker 2: The President sent the straint with reopen back on eight 132 00:05:31,000 --> 00:05:34,159 Speaker 2: posse seventeenth. The strength did not reopen. It feels like 133 00:05:34,200 --> 00:05:37,400 Speaker 2: we get in the same headlines recinncled every week. Can 134 00:05:37,440 --> 00:05:39,240 Speaker 2: you see the frustrangtion right now for people on Wall 135 00:05:39,279 --> 00:05:40,279 Speaker 2: Street track in this story? 136 00:05:40,360 --> 00:05:42,680 Speaker 4: Well, look, I think fundamentally the president's a deal maker. 137 00:05:42,720 --> 00:05:44,279 Speaker 4: We saw the action he takes, the action he needs 138 00:05:44,279 --> 00:05:46,440 Speaker 4: to take. We saw it with Operation midn at Hammer. 139 00:05:46,440 --> 00:05:48,479 Speaker 4: We saw it with He's not making the day lit See. 140 00:05:48,520 --> 00:05:49,880 Speaker 3: Well, I think he's working on that deal. 141 00:05:49,920 --> 00:05:51,920 Speaker 4: I mean we're seeing him make more progress than anyone's 142 00:05:51,920 --> 00:05:54,400 Speaker 4: ever made in terms of this addressing this issue, in 143 00:05:54,480 --> 00:05:56,800 Speaker 4: terms of the real results we've seen from these operations. 144 00:05:57,120 --> 00:06:00,360 Speaker 4: The President wants that diplomatic approach, but fundamentally they're regime 145 00:06:00,400 --> 00:06:02,599 Speaker 4: Canada of nuclear weapon that would have been an untenable 146 00:06:02,640 --> 00:06:04,800 Speaker 4: threat to the region, the entire world. 147 00:06:04,960 --> 00:06:06,640 Speaker 3: That was being address. That has been addressed. That has 148 00:06:06,640 --> 00:06:07,240 Speaker 3: been addressed. 149 00:06:07,720 --> 00:06:11,240 Speaker 2: Stay with us more Bloomberg surveillance coming up after this 150 00:06:20,320 --> 00:06:23,039 Speaker 2: House for investors bracing for the May payrolls report you 151 00:06:23,120 --> 00:06:26,839 Speaker 2: out tomorrow. The Dallas FED president Lori Logan, signating optimism 152 00:06:26,839 --> 00:06:29,040 Speaker 2: that AI will boost labor demand. 153 00:06:30,279 --> 00:06:33,279 Speaker 7: There are a number of data centers that are either 154 00:06:34,839 --> 00:06:38,080 Speaker 7: in the planning stage or in the construction stage, and 155 00:06:38,160 --> 00:06:42,960 Speaker 7: that's creating significant demand for labor. We're seeing wage growth 156 00:06:43,360 --> 00:06:44,919 Speaker 7: in those particular areas. 157 00:06:45,240 --> 00:06:47,560 Speaker 2: Joining us now to discuss Bessie Stevenson of the Ford 158 00:06:47,600 --> 00:06:51,320 Speaker 2: School of Public Policy at Michigan University, Betsy, welcome back 159 00:06:51,360 --> 00:06:53,200 Speaker 2: to the program. So it's good to hear from you. 160 00:06:53,240 --> 00:06:55,640 Speaker 2: There's a great debate on the future of this labor 161 00:06:55,720 --> 00:06:59,360 Speaker 2: market given the technological revolution we're working through right now. Betsy, 162 00:06:59,400 --> 00:07:01,479 Speaker 2: how are your thoughts evolving on that mat. 163 00:07:01,279 --> 00:07:03,920 Speaker 1: Set well, I mean, I think what we've just heard 164 00:07:03,960 --> 00:07:05,800 Speaker 1: her say is we're going to see a lot of 165 00:07:05,800 --> 00:07:09,440 Speaker 1: construction workers as we build data centers, but that's not 166 00:07:09,560 --> 00:07:14,200 Speaker 1: a solution to the challenges for white collar workers as 167 00:07:14,680 --> 00:07:18,760 Speaker 1: AI starts to increase efficiency. I mean, I think what 168 00:07:18,760 --> 00:07:20,680 Speaker 1: we're seeing right now is a lot of companies that 169 00:07:21,080 --> 00:07:24,320 Speaker 1: are still doing really well and able to grow, and 170 00:07:24,320 --> 00:07:26,840 Speaker 1: that's why we're not seeing a lot of layoffs. But 171 00:07:26,880 --> 00:07:29,440 Speaker 1: we're also not seeing a lot of hiring and so 172 00:07:29,520 --> 00:07:32,280 Speaker 1: what they're doing is they're trying to take these gains 173 00:07:32,320 --> 00:07:35,000 Speaker 1: in terms of increased productivity so that they can increase 174 00:07:35,000 --> 00:07:40,080 Speaker 1: their output, but they can do it without hiring workers. 175 00:07:40,520 --> 00:07:43,600 Speaker 1: And that I think is I think that's the best 176 00:07:43,640 --> 00:07:46,840 Speaker 1: way for technology to work through the labor market is 177 00:07:46,880 --> 00:07:49,920 Speaker 1: to do it in a period of growth, so that 178 00:07:50,360 --> 00:07:53,240 Speaker 1: people don't lose jobs, but the people who have jobs 179 00:07:53,280 --> 00:07:56,520 Speaker 1: become more productive. The challenge for the US right now 180 00:07:56,720 --> 00:08:00,640 Speaker 1: is that it is such a low higher, low fire 181 00:08:00,800 --> 00:08:04,400 Speaker 1: environment that the people who do need to enter the 182 00:08:04,480 --> 00:08:07,160 Speaker 1: labor market, either they lose a job or they've been 183 00:08:07,200 --> 00:08:09,240 Speaker 1: out of the labor market and need to re enter. 184 00:08:09,720 --> 00:08:12,680 Speaker 1: They're the ones struggling, and that's why we're seeing the 185 00:08:12,800 --> 00:08:15,280 Speaker 1: rate of long term unemployed increasing. 186 00:08:15,560 --> 00:08:17,680 Speaker 2: Betsy's really hard for us to judge at the moment 187 00:08:17,800 --> 00:08:20,120 Speaker 2: just how tight this labor market actually is. As you 188 00:08:20,200 --> 00:08:23,680 Speaker 2: reflect on there, we've had this negative supply shock to 189 00:08:23,720 --> 00:08:26,640 Speaker 2: the labor market. We haven't had the entrance come into 190 00:08:26,680 --> 00:08:29,080 Speaker 2: the supply polls, so to speak, because of these tights 191 00:08:29,080 --> 00:08:33,760 Speaker 2: of regulations around immigration and the enforcement of the southern border. Betsy, 192 00:08:33,840 --> 00:08:36,679 Speaker 2: with that in mind, how do you gauge how loose 193 00:08:36,720 --> 00:08:39,920 Speaker 2: source supply how loose or tight this labor market actually 194 00:08:40,000 --> 00:08:40,480 Speaker 2: is right. 195 00:08:40,320 --> 00:08:43,200 Speaker 1: Now, you know, I think it's actually a labor market 196 00:08:43,240 --> 00:08:46,200 Speaker 1: where we want to look at the particular skills that 197 00:08:46,280 --> 00:08:49,880 Speaker 1: workers have to think about whether it's loose or tight 198 00:08:50,040 --> 00:08:52,839 Speaker 1: is going to depend on exactly the market that you're 199 00:08:52,880 --> 00:08:53,280 Speaker 1: in and. 200 00:08:53,240 --> 00:08:54,120 Speaker 3: The skills that you have. 201 00:08:54,400 --> 00:08:57,120 Speaker 1: So I think of it as a time of great reshuffling. 202 00:08:57,679 --> 00:09:00,439 Speaker 1: You might find that you're in actually quite wee labor 203 00:09:00,480 --> 00:09:03,680 Speaker 1: market given your skills and where you're at, and that 204 00:09:03,760 --> 00:09:05,679 Speaker 1: might mean that you need to skill up with something 205 00:09:05,679 --> 00:09:11,280 Speaker 1: different or relocate. So that's part of why I think 206 00:09:11,320 --> 00:09:13,920 Speaker 1: we see it as both. Wait, it's a weak labor market. No, 207 00:09:14,040 --> 00:09:17,080 Speaker 1: it's a tight labor market. I think it's because it's both, 208 00:09:17,360 --> 00:09:20,480 Speaker 1: and it really depends on exactly where you are and what. 209 00:09:20,520 --> 00:09:21,360 Speaker 3: Set of skills you have. 210 00:09:21,480 --> 00:09:23,960 Speaker 6: Betsy, where are we in what you referred to before 211 00:09:23,960 --> 00:09:25,280 Speaker 6: as the white collar recession? 212 00:09:27,080 --> 00:09:30,239 Speaker 1: Well, I don't think we're in a white collar recession, 213 00:09:30,320 --> 00:09:34,920 Speaker 1: but I do think that we're not really prepared for 214 00:09:35,040 --> 00:09:37,320 Speaker 1: a lot of white collar workers to need to make 215 00:09:37,720 --> 00:09:42,360 Speaker 1: some transitions. Now, there are some good things. One is 216 00:09:42,360 --> 00:09:46,280 Speaker 1: that white collar workers have developed a lot of skills 217 00:09:46,320 --> 00:09:49,160 Speaker 1: around how to learn and develop new skills. So that 218 00:09:49,240 --> 00:09:53,520 Speaker 1: makes them actually really well positioned to make changes as 219 00:09:53,559 --> 00:09:56,000 Speaker 1: their company says, hey, I don't need you to do 220 00:09:56,040 --> 00:09:58,080 Speaker 1: this anymore, but we might need you to do this 221 00:09:58,240 --> 00:10:01,120 Speaker 1: other set of tasks. Learn how to do them, can 222 00:10:01,160 --> 00:10:04,679 Speaker 1: you scale up? And I think historically we have seen 223 00:10:05,200 --> 00:10:09,120 Speaker 1: that many workers are able to do this. And you know, 224 00:10:09,200 --> 00:10:11,720 Speaker 1: one of the other things with AI is that it 225 00:10:11,840 --> 00:10:17,360 Speaker 1: is disproportionately going to impact women's jobs. Jobs held by women, 226 00:10:17,640 --> 00:10:21,920 Speaker 1: and women have historically been a bit more flexible around 227 00:10:22,120 --> 00:10:24,240 Speaker 1: WHOA I need to change what I'm doing because my 228 00:10:24,320 --> 00:10:26,679 Speaker 1: old job isn't there anymore. So I have a lot 229 00:10:26,679 --> 00:10:29,280 Speaker 1: of optimism that we're going to have a lot of 230 00:10:29,440 --> 00:10:33,480 Speaker 1: ongoing demand for human workers, and we have workers who 231 00:10:33,520 --> 00:10:36,640 Speaker 1: are able to have the flexibility needed to make changes. 232 00:10:37,160 --> 00:10:41,080 Speaker 1: But I think we should understand that any period where 233 00:10:41,080 --> 00:10:44,400 Speaker 1: people are having to make changes, where there's uncertainty, is 234 00:10:44,440 --> 00:10:48,200 Speaker 1: going to be a period of weaker consumer confidence and 235 00:10:48,320 --> 00:10:51,720 Speaker 1: anxiety around for the public. 236 00:10:52,040 --> 00:10:55,120 Speaker 6: So if you push this through the FEDES response mechanism, 237 00:10:55,160 --> 00:10:56,480 Speaker 6: A lot of people are looking at the Lave of 238 00:10:56,520 --> 00:10:59,640 Speaker 6: Market report tomorrow as a guide to whether the lave 239 00:10:59,679 --> 00:11:02,880 Speaker 6: of mark it can be some sort of indication of 240 00:11:02,960 --> 00:11:05,800 Speaker 6: weakness that could leave the FED on hold and definitely 241 00:11:05,880 --> 00:11:08,920 Speaker 6: or even remaining with an easing bias. Do you think 242 00:11:08,960 --> 00:11:11,800 Speaker 6: it's an appropriate stance for the FED to be a 243 00:11:11,800 --> 00:11:14,520 Speaker 6: bit more dubvish with this type of backdrop, or do 244 00:11:14,559 --> 00:11:17,520 Speaker 6: you think that they should prioritize inflation because of the 245 00:11:17,600 --> 00:11:19,440 Speaker 6: uncertainties around the labor backdrop. 246 00:11:20,400 --> 00:11:22,760 Speaker 1: Look, inflation isn't good for workers either. 247 00:11:23,160 --> 00:11:24,040 Speaker 3: I think you know. 248 00:11:24,840 --> 00:11:28,200 Speaker 1: Jerome pal said that a few press conferences ago, and 249 00:11:28,200 --> 00:11:31,520 Speaker 1: it really stuck with me because I think it's important 250 00:11:31,520 --> 00:11:36,400 Speaker 1: to remember that workers don't want unemployment, but they also 251 00:11:36,480 --> 00:11:40,120 Speaker 1: don't want inflation, and so then what the FED has 252 00:11:40,200 --> 00:11:43,240 Speaker 1: to do is look at what can they be more 253 00:11:43,280 --> 00:11:47,280 Speaker 1: certain about right now. Unfortunately, they can be more certain 254 00:11:47,520 --> 00:11:52,199 Speaker 1: about inflationary pressure than they can about a weak economy. 255 00:11:52,400 --> 00:11:55,920 Speaker 1: Right we still see a GDP now forecast for Q 256 00:11:56,000 --> 00:12:00,600 Speaker 1: two of three percent, where we saw jolt job openings 257 00:12:00,640 --> 00:12:02,400 Speaker 1: actually rise in April. 258 00:12:02,720 --> 00:12:04,000 Speaker 3: I don't think we. 259 00:12:03,920 --> 00:12:08,400 Speaker 1: Should overinterpret those as the economy is really strong, but 260 00:12:08,679 --> 00:12:11,719 Speaker 1: I do think that they make it hard for the 261 00:12:11,720 --> 00:12:15,120 Speaker 1: FED to justify cutting rates at this moment. 262 00:12:15,200 --> 00:12:18,439 Speaker 5: But Betsy, this inflationary pressure is coming from a conflict 263 00:12:18,520 --> 00:12:22,679 Speaker 5: and its energy driven. Isn't the FED historically haven't they 264 00:12:22,679 --> 00:12:23,800 Speaker 5: been taught to look through this? 265 00:12:25,400 --> 00:12:27,400 Speaker 1: I really I love this. I feel like I was 266 00:12:27,400 --> 00:12:30,280 Speaker 1: like in my econ macro class and a student was like, Hey, 267 00:12:30,280 --> 00:12:32,760 Speaker 1: we're supposed to look through this. You're one hundred percent right. 268 00:12:33,600 --> 00:12:37,760 Speaker 1: But there's one problem. We had high inflation in twenty 269 00:12:37,800 --> 00:12:41,120 Speaker 1: twenty one, and we have a public that is on 270 00:12:41,679 --> 00:12:45,720 Speaker 1: tender hooks worried about inflation. What that means is that 271 00:12:45,760 --> 00:12:49,960 Speaker 1: inflation expectations may not be as well anchored as we 272 00:12:50,080 --> 00:12:52,360 Speaker 1: need them to be in order to look through a 273 00:12:52,400 --> 00:12:55,800 Speaker 1: brief period of inflation. So what the FED has to 274 00:12:55,840 --> 00:12:58,920 Speaker 1: be looking at is you're absolutely right, not what is 275 00:12:58,960 --> 00:13:02,400 Speaker 1: the transitory inflation that's going to pass through very quickly, 276 00:13:02,760 --> 00:13:06,440 Speaker 1: but what's the potential for that transitory inflation to become sticky, 277 00:13:06,880 --> 00:13:09,559 Speaker 1: either because it takes the conflict a while to resolve, 278 00:13:10,160 --> 00:13:13,000 Speaker 1: or because inflation expectations are not well anchored. 279 00:13:13,640 --> 00:13:17,160 Speaker 2: Stay with us. More Bloomberg Surveillance coming up after this. 280 00:13:26,320 --> 00:13:28,680 Speaker 2: We begin this now with stock setting lower after broadcome 281 00:13:28,720 --> 00:13:31,920 Speaker 2: results call off the record breaking run for chip makers. 282 00:13:32,080 --> 00:13:34,520 Speaker 2: Tracyman Miller of wels Farco with a year end target 283 00:13:34,600 --> 00:13:37,000 Speaker 2: on the S and P of seventy five hundred, expecting 284 00:13:37,040 --> 00:13:40,439 Speaker 2: no fed rate moves, a better economy, and increased M 285 00:13:40,520 --> 00:13:43,840 Speaker 2: and A activity through to year end. Tracy joins us 286 00:13:43,840 --> 00:13:46,200 Speaker 2: now for more Tracy a rinkle this morning, and good 287 00:13:46,200 --> 00:13:48,800 Speaker 2: to see you, and that wrinkle comes from Broadcome. What's 288 00:13:48,800 --> 00:13:51,000 Speaker 2: the lesson from the price section this morning? 289 00:13:52,400 --> 00:13:56,199 Speaker 8: Good morning, John. So the lesson is that after such 290 00:13:56,760 --> 00:14:02,240 Speaker 8: an amazing run like we've seen in the AI names, 291 00:14:02,520 --> 00:14:07,200 Speaker 8: there is still some room for disappointment. So we have 292 00:14:07,480 --> 00:14:12,000 Speaker 8: overweighted information technology, but we're telling investors not to chase 293 00:14:12,559 --> 00:14:16,480 Speaker 8: those names at these prices right now, and that there 294 00:14:16,520 --> 00:14:22,000 Speaker 8: are probably better opportunities in some other sectors like industrials 295 00:14:22,160 --> 00:14:24,440 Speaker 8: or utilities or even financials. 296 00:14:24,520 --> 00:14:27,080 Speaker 2: We've liked financials. That's been a high conviction coll and 297 00:14:27,120 --> 00:14:29,600 Speaker 2: Tracy hasn't been working. Why hasn't it been working a 298 00:14:29,600 --> 00:14:30,520 Speaker 2: while with that change. 299 00:14:31,320 --> 00:14:34,760 Speaker 8: Yeah, so it hasn't been working because of the steepening 300 00:14:35,000 --> 00:14:40,080 Speaker 8: yield I'm sorry, the flattening yield curve and the private 301 00:14:40,160 --> 00:14:44,080 Speaker 8: credit issues. And we think that going forward we are 302 00:14:44,160 --> 00:14:46,640 Speaker 8: going to start to see that yield curve steep in 303 00:14:46,800 --> 00:14:51,440 Speaker 8: some Right now, there are a couple of price rate 304 00:14:51,560 --> 00:14:54,480 Speaker 8: hikes priced into the markets. We think those are going 305 00:14:54,560 --> 00:14:57,040 Speaker 8: to come out by the end of the year, and 306 00:14:57,080 --> 00:15:01,440 Speaker 8: we also see some additional potent upside and rates on 307 00:15:01,480 --> 00:15:04,800 Speaker 8: the long end. M and A activity You mentioned that 308 00:15:05,000 --> 00:15:09,760 Speaker 8: as well IPO activity both really good for investment banking. 309 00:15:09,920 --> 00:15:13,360 Speaker 8: So all of those things we think support financials. 310 00:15:13,440 --> 00:15:16,080 Speaker 6: We were talking about concerns around private credit. We're getting 311 00:15:16,080 --> 00:15:19,640 Speaker 6: another headline this morning the Blackstone Private Credit fund plants 312 00:15:19,640 --> 00:15:22,920 Speaker 6: of cap investor redemptions at five percent. This comes amid 313 00:15:23,040 --> 00:15:25,240 Speaker 6: a slew of different information that we've been hearing and 314 00:15:25,760 --> 00:15:28,600 Speaker 6: including from the Swiss Partners Capital we were talking about 315 00:15:28,600 --> 00:15:31,480 Speaker 6: earlier this morning. Does this give you pause or do 316 00:15:31,520 --> 00:15:35,320 Speaker 6: you think that this is noise given a duration mismatch, 317 00:15:35,560 --> 00:15:38,360 Speaker 6: and not necessarily a broader signal about the market. 318 00:15:38,960 --> 00:15:42,360 Speaker 8: Yeah, so we think that that is not necessarily a 319 00:15:42,440 --> 00:15:47,040 Speaker 8: broader signal about the market. We're watching spreads in the 320 00:15:47,080 --> 00:15:52,840 Speaker 8: public markets that are at near record tights, and so 321 00:15:52,920 --> 00:15:57,040 Speaker 8: we don't see broad concern in the fixed income markets. 322 00:15:57,200 --> 00:16:00,760 Speaker 8: That said, there are some pockets in the private credit 323 00:16:00,840 --> 00:16:05,040 Speaker 8: market that obviously investors are starting to worry about, and 324 00:16:05,360 --> 00:16:09,600 Speaker 8: so we would tell investors that it's important to keep 325 00:16:09,720 --> 00:16:14,440 Speaker 8: that diversification within a fixed income portfolio, with some potentially 326 00:16:14,480 --> 00:16:17,960 Speaker 8: in private credit if that fits their risk profile. But 327 00:16:18,520 --> 00:16:21,680 Speaker 8: in the public markets we are just not seeing that strained. 328 00:16:22,240 --> 00:16:25,720 Speaker 6: There's also an issue of consumer spending with their wages 329 00:16:25,800 --> 00:16:28,800 Speaker 6: not really keeping pace. We just saw credit card balances 330 00:16:29,160 --> 00:16:32,120 Speaker 6: hit a record one point two eight trillion dollars. On 331 00:16:32,160 --> 00:16:34,280 Speaker 6: the margins delinquencies picking up. 332 00:16:34,600 --> 00:16:35,240 Speaker 3: Do you see. 333 00:16:35,120 --> 00:16:36,800 Speaker 6: Signs that consumer is getting tired? 334 00:16:36,840 --> 00:16:37,880 Speaker 3: Does that give you pause? 335 00:16:39,200 --> 00:16:44,040 Speaker 8: Yeah, so definitely there is a component, a segment of 336 00:16:44,120 --> 00:16:48,400 Speaker 8: the consumer that is starting to get stretched, get tired, 337 00:16:48,760 --> 00:16:51,240 Speaker 8: if you will. We've talked about, you know, the higher 338 00:16:51,320 --> 00:16:55,960 Speaker 8: prices that they are experiencing, and so they continue to spend, 339 00:16:56,280 --> 00:16:58,960 Speaker 8: but some of that spending is now coming from saving, 340 00:16:59,120 --> 00:17:02,880 Speaker 8: some of it's going onto credit cards. And I think 341 00:17:03,000 --> 00:17:07,880 Speaker 8: the positive here is that it's not all consumers, and 342 00:17:08,200 --> 00:17:12,199 Speaker 8: we are continuing to see you know, some firming in 343 00:17:12,240 --> 00:17:15,639 Speaker 8: the labor markets. And as long as consumers have jobs, 344 00:17:15,800 --> 00:17:20,240 Speaker 8: they can continue to spend. And really all we're expecting 345 00:17:20,359 --> 00:17:23,600 Speaker 8: from the consumption part of GDP this year is maybe 346 00:17:23,680 --> 00:17:28,240 Speaker 8: a modest improvement because most of our GDP expectation is 347 00:17:28,280 --> 00:17:29,439 Speaker 8: coming from cafets. 348 00:17:30,240 --> 00:17:32,160 Speaker 5: Christy, what do you think about the energy space right now. 349 00:17:32,200 --> 00:17:33,639 Speaker 5: I notice in your note you said you want your 350 00:17:33,640 --> 00:17:36,480 Speaker 5: investor's portfolios to trim energy equities and commodities. But we 351 00:17:36,720 --> 00:17:39,400 Speaker 5: just heard from almost Hawkstein who basically said, we're living 352 00:17:39,480 --> 00:17:42,400 Speaker 5: right now globally on a buffer, and when that dries up, 353 00:17:42,520 --> 00:17:45,400 Speaker 5: you know, we could see tremendous upside when it comes 354 00:17:45,400 --> 00:17:46,400 Speaker 5: to energy prices. 355 00:17:47,640 --> 00:17:50,960 Speaker 8: Yeah, so we are telling our investors that it is 356 00:17:51,000 --> 00:17:54,159 Speaker 8: a source of funds for some other areas of the 357 00:17:54,200 --> 00:17:59,520 Speaker 8: market where we see better valuation. So we're not necessarily 358 00:18:00,400 --> 00:18:04,440 Speaker 8: the fact that almost a billion barrels of oil have 359 00:18:04,560 --> 00:18:07,439 Speaker 8: been lost through this conflict, and that there are going 360 00:18:07,520 --> 00:18:10,680 Speaker 8: to be some pockets of the global economy that are 361 00:18:10,680 --> 00:18:14,159 Speaker 8: going to start to experience severe shortages if we don't 362 00:18:14,240 --> 00:18:20,040 Speaker 8: get oil flowing again. That said, though, we do think 363 00:18:20,119 --> 00:18:23,840 Speaker 8: that when oil spikes that it is an opportunity for 364 00:18:23,960 --> 00:18:27,280 Speaker 8: investors to reposition because we don't think this is a 365 00:18:27,520 --> 00:18:31,399 Speaker 8: long term supply issue. It's a supply shock. 366 00:18:32,040 --> 00:18:35,960 Speaker 5: Is this basically investors needing some capital to allocate elsewhere 367 00:18:36,040 --> 00:18:39,160 Speaker 5: maybe with some upcoming IPOs? Where else do you see 368 00:18:39,160 --> 00:18:41,600 Speaker 5: investors moving money around to make sure that they are 369 00:18:41,600 --> 00:18:43,200 Speaker 5: getting in on that AI race. 370 00:18:44,359 --> 00:18:48,520 Speaker 8: Yeah, so we definitely think we see that happening. We 371 00:18:48,680 --> 00:18:52,400 Speaker 8: have seen the mag seven starting to underperform, we've seen 372 00:18:52,440 --> 00:18:55,600 Speaker 8: crypto underperforming, and so we think it's some of those 373 00:18:55,680 --> 00:19:00,480 Speaker 8: higher beta areas of the market where investors are pulling funds, 374 00:19:00,560 --> 00:19:04,400 Speaker 8: raising cash, so they will have us that cash available 375 00:19:04,880 --> 00:19:08,359 Speaker 8: as these big IPOs come to market through the summer. 376 00:19:09,160 --> 00:19:12,680 Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best 377 00:19:12,760 --> 00:19:16,080 Speaker 2: in markets, economics, a geopolitics. You can watch the show 378 00:19:16,119 --> 00:19:19,080 Speaker 2: live on Bloomberg TV weekday mornings from six am to 379 00:19:19,200 --> 00:19:22,960 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 380 00:19:23,119 --> 00:19:25,320 Speaker 2: or anywhere else you listen, and as always, on the 381 00:19:25,359 --> 00:19:27,800 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.