Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. Let's get to our
Speaker 1: next guest, always a highlight of the week, Vince Cgnerella,
Speaker 1: global macro strategist for Bloomberg News, the master of work
Speaker 1: from Home. So, Vince, we got some retail sales numbers today.
Speaker 1: I think they're pretty good. I got target reporting numbers. Yeah,
Speaker 1: they were really bad as they just kind of throwing
Speaker 1: the kitchen Zinc getting clearing out their inventory. But they
Speaker 1: say the consumers looking good for the back half of
Speaker 1: the year in terms of buying. What did you make
Speaker 1: of some of this retail stuff today and what like
Speaker 1: you said, it wasn't that at all, um. You know,
Speaker 1: any reductions in the retail sales numbers came from gas
Speaker 1: and energy. So as consumers cut back on some driving
Speaker 1: because of the high gas prices, you know that slow
Speaker 1: retail sales. But we're starting to see that shift lower
Speaker 1: once again, you know, from six dollars a gallant to
Speaker 1: you know, just on their fish. UM. So that might
Speaker 1: lift future retail sales. But to me, the the issue
Speaker 1: going forward with retail sales still is on the revolving
Speaker 1: credit side. We've seen revolving credit jump by a third,
Speaker 1: same numbers were reported this morning in the UK. People
Speaker 1: are actually, you know, showing signs of borrowing on their
Speaker 1: credit cards, which is a terrible sign. Uh, and also
Speaker 1: running balances on their credit cards. And of course that
Speaker 1: users interest rates. You wonder how long that could last.
Speaker 1: So the future is going to be very interesting if
Speaker 1: we don't start to see some wage games. I'm not
Speaker 1: sure the consumer can carry us in the fourth quarter
Speaker 1: simply because they're they're borrowing, is they're just going to
Speaker 1: run it hit a wall. And meanwhile, people who think
Speaker 1: the FED needs to keep raising rates are saying, you know,
Speaker 1: five percent average hourly earnings, it's way too steep and
Speaker 1: it indicates a price wage viral. Do you disagree? UM?
Speaker 1: You know, we saw something just came out of biding panel.
Speaker 1: UM did an evaluation and they recommended to what was it?
Speaker 1: I think the freight industry. Let's see the rail bid
Speaker 1: and rail panel recommends a wage hike through two thousand four,
Speaker 1: So clearly, yeah, exactly a lot of work. Um. I
Speaker 1: don't think we'll see the wage price spiral that people
Speaker 1: are talking about, simply because I don't think we're going
Speaker 1: to have earnings to support that. If we if we
Speaker 1: get any kind of increase like that in wages, we're
Speaker 1: gonna see a bigger increase in prices. Companies are not
Speaker 1: going to eat this, They're gonna pass it along. And
Speaker 1: when they pass off those prices, you know, I guess
Speaker 1: that's why people see the wage wage price final They
Speaker 1: think that this is going to be some sort of
Speaker 1: what workers ask for more, So companies have to raise more.
Speaker 1: Companies raise more, so workers have to ask for more.
Speaker 1: I just don't see the economy by being able to
Speaker 1: sustain that. So but if that in fact occurs or
Speaker 1: is occurring, does that not suggest that the Fed has
Speaker 1: to be more aggressive? And I know you have a
Speaker 1: you know a little bit of a problem with our
Speaker 1: Federal Reserve these days. I do because when you look
Speaker 1: at what the Federal Reserve is doing there there are
Speaker 1: basically two areas. The CPI shelter. So the FED can
Speaker 1: in theory manipulate that because by raising interest rates they
Speaker 1: make it more difficult to borrow and and it's its
Speaker 1: stalls housing meains. Yeah, the problem is then those people
Speaker 1: have to rent and that and exactly so you know,
Speaker 1: it's it's a double edged sword when the when the
Speaker 1: FED gets involved that way. And I my concern with
Speaker 1: that is, you know, there's a demand and supply chain story,
Speaker 1: you know, demand and supply or the equilibrium levels if
Speaker 1: it should the FED be trying to curb demand um
Speaker 1: when the real issue was supply and and maybe they're
Speaker 1: just missing missing the mark. And it's my feeling that
Speaker 1: what's causing inflation right now is not something that FED
Speaker 1: can defeat, and they're better off taking their handle off
Speaker 1: the wheel and trying to see if the economy can
Speaker 1: scored itself out. We've already seen, you know, moderation and
Speaker 1: home prices and moderation and inflation because of what the
Speaker 1: FED has done so far. You know, if the FED
Speaker 1: wants to go back to their textbooks, what they should
Speaker 1: be doing is waiting six months to see how this
Speaker 1: works before going again to just keep going. You don't
Speaker 1: really know the effect of that, right, I mean much
Speaker 1: and Vincent in the last hour, Tom Keane was, you know,
Speaker 1: house hunting in Jackson Hole, Wyoming, and he found a
Speaker 1: four bedroom cabin that was assessed for a couple hundred grand,
Speaker 1: that was listed for four point five million dollars um.
Speaker 1: To the extent that the housing market has seen its peak,
Speaker 1: how does that impact this economy and the FED and
Speaker 1: consumers and all that. Well, you know, if there are
Speaker 1: lots of lots of corrections in housing that you know
Speaker 1: go unnoticed that people don't realize because you don't sell
Speaker 1: a house every year and and things like that, so
Speaker 1: you don't really check where your home price is, you know,
Speaker 1: like you look at your your stock portfolio, um, because
Speaker 1: you just don't roll it over as um. But you know,
Speaker 1: as long as that correction is modest, it's it's not
Speaker 1: a huge effect on the economy. It's when you have
Speaker 1: something crippling like two eight that would become insignition. So Vince,
Speaker 1: I gotta ask as a macro strategist or as a trader, um,
Speaker 1: it's more important your forecast about what the FED is
Speaker 1: going to do then what you think the FED should do. Right,
Speaker 1: So if you think the pot the Fed should be
Speaker 1: pausing and waiting six months. They're clearly not going to
Speaker 1: do that. No, absolutely not. They are going to hike
Speaker 1: in September. I think the key question is is a
Speaker 1: fifty or seventy five? Personally, I'd like to see them
Speaker 1: do fifty and send a positive message to the markets
Speaker 1: that you know, they're they're not. They don't have blinders on.
Speaker 1: They see that the data is slowing down and that
Speaker 1: you know, they can maybe take the foot off the
Speaker 1: gas going forward. I would love to see them, you know,
Speaker 1: but they're gonna laise in September. They basically set a period.
Speaker 1: I would love to see them stop after that. I
Speaker 1: think they if the data continues soft and from the
Speaker 1: minute today to where we are today, the data is
Speaker 1: rolled over right now. If it rolls over again, I
Speaker 1: think maybe they stopped all right. Vincegnarella always good to
Speaker 1: chat with you. We try to get Vince on every week,
Speaker 1: get his perspective and spent decades on the street trading currencies,
Speaker 1: trading corporates. Uh, he kind of knows what's going on there.
Speaker 1: He still talks to the traders all the time, so
Speaker 1: it gives us a good view of that market. Vince Signerella,
Speaker 1: a global macro strategist for Bloomberg News, famously phoning it
Speaker 1: in and proudly phoning it in red headline across the
Speaker 1: Bloomberg terminal, Blmot Sacks cuts China GDP forecast to three
Speaker 1: pc from three point three percent. Remember the days when
Speaker 1: it was just a layup to do six or seven
Speaker 1: MDP growth. You can't keep shutting down your economy every
Speaker 1: fifteen minutes. I mean that was was that nominal or
Speaker 1: that that wasn't real GDP growth? Right? That was nominal
Speaker 1: when they were when they were posting those big numbers.
Speaker 1: But nonetheless, Um, this is important because they're supposed to
Speaker 1: do five right according to the Communist Party's forecast at least,
Speaker 1: so they're gonna miss that by a mile. And my
Speaker 1: question every time we have one of these negative stories
Speaker 1: out on China there was one, you know Monday was
Speaker 1: a really bad narrative as well, Um is how long
Speaker 1: does she jing ping last? Does he get his third term?
Speaker 1: That's exactly right, And everybody, you know, we need to
Speaker 1: get Leland Millard trying to beige book on because he
Speaker 1: is my man on the ground or unemployment for kids
Speaker 1: unemployment there, Yeah, how do you get reelected? I don't
Speaker 1: We'll see. All right, let's bring our next guest. We'll
Speaker 1: keep it on the economic call. Jennifer Lee, senior economist
Speaker 1: and managing director for PIMO Capital Markets. Jennifer, we had
Speaker 1: a bunch of retail sales data today. I'm gonna call
Speaker 1: it a little bit better and expected. We had some
Speaker 1: mixed numbers out of the retailers. It seems like they're
Speaker 1: cleaning up their inventory issues. As you look at the
Speaker 1: retail numbers across the board, what's it telling me about
Speaker 1: the consumer here? Well, good morning. I think the numbers
Speaker 1: are sort of telling us that we again we cannot
Speaker 1: completely uh discount the American consumer ever. Um, you know,
Speaker 1: the headline was a bit disappointing obviously, but all of
Speaker 1: it was gas and maybe in a good way because
Speaker 1: gasoline prices are still below the four dollar per gallon
Speaker 1: level for the second week in a row, I believe. So,
Speaker 1: you know, obviously consumers are feeling the pain, you know,
Speaker 1: the pain afford or high inflation that's really hitting home.
Speaker 1: But the positive influences there, like the gas prices, you know,
Speaker 1: is is definitely a good thing and it shows that
Speaker 1: consumers are still buying. There's still going out for lunch,
Speaker 1: there's still going out for a drink. You know, they're
Speaker 1: still buying more electronics and furniture, but just getting less
Speaker 1: bang for their book. We appreciate all of that, but
Speaker 1: are consumers starting to charge this stuff and and not
Speaker 1: pay off their balances? That's what Events was just telling us.
Speaker 1: And I noticed the savings rate is now down to
Speaker 1: five um, you know, well below historical averages, which for
Speaker 1: Americans are already low. Right, So okay, so yes, I
Speaker 1: am definitely getting worried on the on the on the
Speaker 1: part of but charging a lot of their purchases. But
Speaker 1: that's saving rate. We really have to take it with
Speaker 1: a grain of salt. You know. It's it's income versus spending,
Speaker 1: but it doesn't take ato account what your savings have been,
Speaker 1: like what you have stocked way and when you look
Speaker 1: at what Americans have um so far in their in
Speaker 1: their bank accounts, they're checkable deposits of currency. So they
Speaker 1: still have like over four um for four trillion dollars
Speaker 1: still stocked up in there, and a lot of this
Speaker 1: probably um you know, coming off that peak already because
Speaker 1: that's only for the first quarter, but that's still quit
Speaker 1: a bit that stalked away. And you know, if I
Speaker 1: make and I bring like a personal UM example of that. UM,
Speaker 1: I definitely have a negative savings rate so far this year, Yes,
Speaker 1: and negative savings rate. And that's because you know, I
Speaker 1: did man to save my pennies during the pandemic and
Speaker 1: I was working from home. And this year I have
Speaker 1: you know, I'm I'm spending all my kitchen rental, which
Speaker 1: is uh, you know, so I'm definitely spending a heck
Speaker 1: of a lot more than than then I'm you know,
Speaker 1: than than my I've always wondered the savings rate that
Speaker 1: we get from UM. It's the US personal savings rate
Speaker 1: as a percentage of disposable income. UM. I guess we
Speaker 1: get it from the b l S or some subero
Speaker 1: of Economic Analysis or yes, that's right, Burero of Economic Analysis. UM.
Speaker 1: That doesn't count. For example, Paul has a giant walk in, say,
Speaker 1: filled with municipal bonds. That's not counted in his savings rate, right,
Speaker 1: even though those are legit savings. Right, It's like, you know,
Speaker 1: your house could be worth you know, a trillion dollars,
Speaker 1: but you know, that's not gonna be counted in your
Speaker 1: saving rates. So it's it's you know, you have stuff,
Speaker 1: you have your ass It's it's like a balance sheet
Speaker 1: versus your income statement, right, so you know, it's it's
Speaker 1: very interesting obviously to look at the saving rate just
Speaker 1: to see what you know with the trenches, but it
Speaker 1: doesn't take him to account the full picture of the
Speaker 1: health of the U. S. Consumer. All right, Jennifer, we're
Speaker 1: sending Tom Keenan the Bloomberk surveillance team out to Jackson Hole.
Speaker 1: What's the key question they should ask? You know what
Speaker 1: I will be I don't think Jackson Hole is as
Speaker 1: um market moving. I think, but like way back in
Speaker 1: the day during you know, for example, we're sending three
Speaker 1: anchors out there, plus a whole television crew. Let me
Speaker 1: whisper that. Um, you know, I mean I think he
Speaker 1: has said, you know, Feda Powell has has been very clear.
Speaker 1: I mean, as I've said before on your show, I've
Speaker 1: given him, you know, an a in communications. You know
Speaker 1: what you're saying, they're moving expeditiously to bring inflation down there,
Speaker 1: it could be appropriate to slow the piece of increases,
Speaker 1: you know, Uh. Um, amester Can continues to say that
Speaker 1: she wants to see compelling evidence of a of a
Speaker 1: slow down instlation. You know, I don't know what more
Speaker 1: they could say, Um too, you know that's gonna be
Speaker 1: new to to to markets except you know, maybe how
Speaker 1: close they are, you know, But so that's what I
Speaker 1: want to see, like for example, the minutes today. You know, um,
Speaker 1: it'll be interesting to see. You know, what will it take?
Speaker 1: You know, he did say this, it might be appropriate
Speaker 1: to slow the piece of increases at some point when
Speaker 1: we look at how policy is affecting the economy and inflicition.
Speaker 1: But you know exactly what it's gonna take. It is
Speaker 1: gonna take that nine point six percent dive in housing
Speaker 1: starts that we saw in July. You know it's going
Speaker 1: to take a heck of a lot more than that.
Speaker 1: You know, we're you know, yes, last week was all
Speaker 1: you know, confliction chatter. You know, you know it's going
Speaker 1: to take a lot more than one last to get
Speaker 1: the FED to turn around. All right, good stuff, Jennifer Lee.
Speaker 1: Always appreciate getting your thoughts, your perspective. Jennifer Lee. She's
Speaker 1: a senior economist and managing director at BMO Capital markets. BIMO.
Speaker 1: That's the Bank of Montreal for those of us that
Speaker 1: remember that, that was always worth a trip up to
Speaker 1: Montreal to see Bimo. I want to bring in one
Speaker 1: of my b f f's right now, one of my
Speaker 1: dear dear friends, Maria today. I used to be on
Speaker 1: Bloomberg TV, and she's left us for well, it's a hiatus.
Speaker 1: I think she's gone to Bloomberg opinion, Um for a while.
Speaker 1: We do these road atians every once in a while
Speaker 1: to give people experience a different areas, which I think
Speaker 1: is fantastic. But I miss her, sure, don't we all?
Speaker 1: I'd really like her back. Um. She joins us right
Speaker 1: now to talk about, uh, the situation in Europe in general.
Speaker 1: I was gonna say a recent piece, but really she's
Speaker 1: been writing about this for weeks and weeks. Um. The
Speaker 1: situation in Germany is particularly problematic because um, of their
Speaker 1: reliance on Russian gas, and of course we all know
Speaker 1: what's happened there with Putin cutting down the UM pipeline
Speaker 1: flows to about I believe of what they once were. Maria, Uh,
Speaker 1: what's your focus right now? As we see not only
Speaker 1: the problem in Germany but in France. The rivers are
Speaker 1: so warm they can't um run their nuclear plants at
Speaker 1: full and in the UK we have double digit inflation.
Speaker 1: Everywhere across Europe. It seems there is a crisis. Yeah,
Speaker 1: and Matt, I have a date. I know when I'm
Speaker 1: back in TV. I'm not gonna tell you because I
Speaker 1: want to keep it. I want to keep the expectation.
Speaker 1: But I have. Yeah, it's set out and and the
Speaker 1: day you see me back in TV will be like, ah,
Speaker 1: now it makes sense, Um, But you know, to to
Speaker 1: answer your question, I think this week there has been
Speaker 1: some good news but a lot of bad news, and
Speaker 1: I guess our job is to try to figure out
Speaker 1: what's happening in between. The good news is that storage
Speaker 1: is better than expected. Remember the European Union said this
Speaker 1: year you have to take it seriously. You have to
Speaker 1: fill up storage because it can make all the difference
Speaker 1: between having to ration or not going into recession or not.
Speaker 1: Germany had good news on Monday. There's se full. That's
Speaker 1: for gas. They're running two weeks ahead of schedules, so
Speaker 1: that means they're doing it faster. But the reasons for it, Matt,
Speaker 1: they're not good. It means that demand has dropped for
Speaker 1: a lot of consumers because we're concerned about the price
Speaker 1: that coming the bills. Also for the industry, they worry
Speaker 1: about the implications and the costs of this. And then
Speaker 1: also you have the big industry, the big German industry
Speaker 1: that's trying very very fast to switch from gas to
Speaker 1: other fossil fruls, which you could argue is back through
Speaker 1: the planet too, but it's also expensive for them, So
Speaker 1: this is coming at a cost. So in reality, with
Speaker 1: your face now is still the potential of Russia cutting
Speaker 1: off to place, but also the fact that now it
Speaker 1: is becoming clear that the bill for this will be
Speaker 1: very expensive. The question is who's going to pay for it.
Speaker 1: The Germans this week already said we have to let
Speaker 1: that cost be paths through consumers. So that could lead
Speaker 1: to a very shaky social winter in Germany if people
Speaker 1: get furious about the fact that it's cold and they
Speaker 1: have to choose between don't want to fill out the
Speaker 1: car or buy more food. I mean, that's really a
Speaker 1: scenario that we're facing. Well, and you have a story
Speaker 1: on O P I N Go on the Bloomberg terminal
Speaker 1: or Bloomberg dot com, slash opinion, um showing that this uh,
Speaker 1: this problem and the need for a real pality check
Speaker 1: goes so far past Um the German borders into France
Speaker 1: all the way to Spain and in the sort of
Speaker 1: northwest corner of Galifiaia. Where's that? It's well, in the
Speaker 1: northwest corner of Spain. Okay, Um, it's right right below Ovieto.
Speaker 1: You know, have you ever been to Ovieto? No, it's
Speaker 1: amazing if you go down. The next major city is Vigo.
Speaker 1: Never been there? Madrid, dude, that's where the money is.
Speaker 1: We have a little summer place in Cando. I love it.
Speaker 1: But um, how are they dealing with this? And what
Speaker 1: are energy prices? And what's the crisis like in Spain? Yeah?
Speaker 1: And you know the reason why I wrote about this,
Speaker 1: and this is a great thing about opinion is I
Speaker 1: do get to lash out in a way that is
Speaker 1: justifiable because on TV there's a number of things that
Speaker 1: I wish I could say, but of course, you know,
Speaker 1: as a reporter, you always have to pretend to sides
Speaker 1: to the story. Here right on opinion, where I have
Speaker 1: a little bit more freedom, and this is a story
Speaker 1: that to me, when I saw it, I just could
Speaker 1: not believe it, and it made me furious. Um, we
Speaker 1: talked about this idea of a very tough winter for
Speaker 1: consumers for houses that really it could get very ugly
Speaker 1: for a lot of people. And of course, at times
Speaker 1: your privilege because you kind of go, oh, my bills
Speaker 1: are gonna go up, But for a lot of people
Speaker 1: this is a life change in situation. So then I
Speaker 1: go on the Spanish TV, which I have still a
Speaker 1: habit of watching, and I see this mayor who says, well, nonetheless,
Speaker 1: we're still going ahead whether Christmas extravaganza, which means we're
Speaker 1: gonna do like huge Christmas lights. We want to arrival
Speaker 1: New York, and we should do it because Christmas is
Speaker 1: important and the war should not crush the holiday in
Speaker 1: the Christmas spirit. And to me, the whiplash to the
Speaker 1: average person here is so big where you're telling them, yeah,
Speaker 1: this winter is going to be very tough, set money
Speaker 1: aside for your bills, and then you go, but hey,
Speaker 1: let me just plant a Christmas tree like nothing's changed
Speaker 1: this winter. You know, you have to really change your
Speaker 1: tone here and the way that you prep people who
Speaker 1: what could be very very rough winter, and the sooner
Speaker 1: you do it, the better it is going to be,
Speaker 1: because otherwise the whiplash in no Member December could be huge.
Speaker 1: But also you could get a lot of people down
Speaker 1: the street seeing, well, you know, I don't want to
Speaker 1: pay my bills, or why should I listen to anything.
Speaker 1: Politicians tell me they didn't really anticipate any of this.
Speaker 1: So I think it's time to get serious on this.
Speaker 1: I gotta I take issue with one, uh sentence in
Speaker 1: this story, Maria. You wrote that in Spain energy saving
Speaker 1: measures came into force last week, air conditioning will be
Speaker 1: said at twenty seven degrees celsius eighty and a half fahrenheit. Now,
Speaker 1: I have been to the Moto g P and head F.
Speaker 1: I've been to Alhambra twice. I met Zapatero in Madrid.
Speaker 1: I've gone to the Running of the Bulls in Pamplona.
Speaker 1: I'm going to next week. Woman from Spain, let's be
Speaker 1: there is no air traditioning in Spain. This is my point.
Speaker 1: It's not it's not entirely true. You go to any
Speaker 1: shopping center you have it, but I think that uh,
Speaker 1: you know again, this this was another point that to
Speaker 1: me I just kind of went, guys, what are we
Speaker 1: making a big deal about a minimal This is a
Speaker 1: minor change. Plus it's it's it's Spain. I mean every
Speaker 1: summer it's like this. You get to forty five degrees.
Speaker 1: Since you're age twelve fifteen, your mom teaches you how
Speaker 1: to deal with the heat. You know there's some much
Speaker 1: bigger story happening here. You know two degrees is not
Speaker 1: going to change your life. The fact that some of
Speaker 1: the windows stores are gonna go black from ten pm.
Speaker 1: In reality, I understand there may be concerns about this
Speaker 1: is not good for tourism, it's not good perhaps for safety.
Speaker 1: But on the other hand, we're being told this is exceptional.
Speaker 1: I mean, this is just a one winter. Get it done.
Speaker 1: Let's trying to do it in a way that we
Speaker 1: all get the best of a really bad situation, and that,
Speaker 1: of course next year turn up the Christmas lights, blast
Speaker 1: year conditioning. I don't agree with it for the most part.
Speaker 1: You know, it doesn't have to be a freezer. But
Speaker 1: if that's what you want to do, that's great. But
Speaker 1: it needs to be obvious to people that this winter
Speaker 1: is exceptional. The sooner this message gets across, I think,
Speaker 1: the better it will be. I love that the Spaniards
Speaker 1: are worried about turning off the lights in stores at
Speaker 1: ten pm? Is that a thing? Ten pm is dinner
Speaker 1: time in Spain. I know which I think it's it's
Speaker 1: life is still going on. That's that's the thing. And
Speaker 1: I do agree with people who say, well, you know,
Speaker 1: you go to a shopping center at tempt the amberish
Speaker 1: people out. You know those people are just paid, are leaving.
Speaker 1: So that is a third point. But I guess you know,
Speaker 1: something's got to give and they've decided. Well, the temp
Speaker 1: the end, that's what we're gonna do, all right, Maria,
Speaker 1: thank you so much for joining us. We get the
Speaker 1: reporting on the ground in Europe like nobody like Maria
Speaker 1: can provide. Maria Today, Europe reporter for Bloomberg Opinion. I mean,
Speaker 1: I'm in bed at nine or ten. I can't even
Speaker 1: watch the end of the Yankee game. What would I
Speaker 1: do if I lived in Spain A plan? Imagine staying
Speaker 1: up until ten? I mean, but they do. I mean,
Speaker 1: I've been there and it's boy, it's a great lifestyle
Speaker 1: for there, no question about it. And we appreciate getting
Speaker 1: the on the ground reporting from Maria Today. O. G. L. CEO,
Speaker 1: the Global Commodity Price Index. It's a great screen for
Speaker 1: all things commodities. I'm looking at that right now, and
Speaker 1: the number that jumps out of me is this Henry
Speaker 1: hubb Not gas up a hundred and forty year today.
Speaker 1: What is up about that? I know they have an
Speaker 1: issue over there in Europe, in Europe, but what's going
Speaker 1: on here in States? Mike McLane, he does this commodity
Speaker 1: stuff for a living, purportedly from Miami, Florida, which is
Speaker 1: a scam in and of itself for Bloomberg Intelligence. Mike,
Speaker 1: what's going on with that gas here? You always start
Speaker 1: me out laughing ball, So I'll try to try to
Speaker 1: lead on that. The key thing is, like you mentioned,
Speaker 1: so al, a European problem. And then number one thing
Speaker 1: to remember about USNADCAST is where the world's largest ellendy
Speaker 1: ellengy exporter. But we can't really export more than third
Speaker 1: keen percent of our total production. We're still a massive
Speaker 1: oversupplied market. Now. It's not showing up in prices up
Speaker 1: a hu this year, but the market's price for pretty
Speaker 1: extreme bad winter. It's price for doing everything we can
Speaker 1: to help out Europe. And the big issue is can
Speaker 1: Europe get through the winter. And I think we're at
Speaker 1: the point now in natural gass is how much worse
Speaker 1: is going to get for prices? So the kee thing
Speaker 1: remember about that gas is a price on the screen
Speaker 1: right now. Nine is about three times the US cost
Speaker 1: of production, and there's an ocean of natural gas once
Speaker 1: they want to do it to bring it on. The
Speaker 1: lesson I've learned as every time prices go up they
Speaker 1: don't last long. The key thing is it's only August,
Speaker 1: so typically they peak in January or December. So right now,
Speaker 1: which is the question how much we can get through
Speaker 1: this period before that supply comes back? Alright, So but
Speaker 1: you think, um, the supply is going to come back
Speaker 1: on for us in Europe, it's going to be a
Speaker 1: different story, right, So we're gonna have a real discrepancy
Speaker 1: in UH in the contract prices. Yeah, well certainly, I
Speaker 1: don't know how many excess it is now for European
Speaker 1: allergy versus U s ban. But one thing that's really
Speaker 1: happening is there there pointing in lergy from all over
Speaker 1: the world. You know, the highest price wins. So they're
Speaker 1: gonna get plenty of nat gas for the winter. I mean,
Speaker 1: getting through this winter will be kind of that simple.
Speaker 1: I mean, when I was over there, everybody was talking
Speaker 1: about the need to build terminals in order to be
Speaker 1: able to import the l en G. And if you
Speaker 1: don't have those terminals built, you can't bring it in,
Speaker 1: no matter how much you're willing to pay. It's definitely
Speaker 1: not that simple. But what was happening in the demand instruction,
Speaker 1: We're going to get a complete recession in that continent
Speaker 1: We're having. Demand is just going to collapse only because
Speaker 1: the prices, and then of course they're trying to cut
Speaker 1: back on on the use, and so it's the classic
Speaker 1: elast dissy is going to kick in. The question is,
Speaker 1: right now, how much higher does it go before it collapses? Um?
Speaker 1: And from a U S standpoint, the key thing to
Speaker 1: remember about most broad indices like the Bloomberg, COMMANI Knicks
Speaker 1: and sm P g S I have U S nat
Speaker 1: gass in, which is a global benchmark. So there's a
Speaker 1: bit of a difference. But in Europe you're gonna get
Speaker 1: a full complete recession and energy as a key driver. Alright.
Speaker 1: So sticking with the energy play here, w t I
Speaker 1: Crude oil eighty seven dollars a barrel, certainly a long
Speaker 1: way from that one twenty we were at. Drop dropped
Speaker 1: down to a six month low. What's your I mean
Speaker 1: you were pretty bearished. I think the last time we
Speaker 1: really talked w T I crude. You know, maybe it
Speaker 1: hit fifty dollars before it hits one fifty? What are
Speaker 1: you thinking? Still thinking that? But have to admit and
Speaker 1: sometimes you have to take the pain before the game.
Speaker 1: I was too early and wrong initially natural gas, I
Speaker 1: didn't think you'd get I'm sorry, and crude, I didn't
Speaker 1: think you can get this high. But there's a key
Speaker 1: lesson in Crewe oil. It spiked at the highest velocity
Speaker 1: ever on a hundred week moving average basis. It's very
Speaker 1: some of their golf, and it's probably going to do
Speaker 1: the same where it's going to make a high that
Speaker 1: will might last for fourteen years like it did last
Speaker 1: time and drop. So I see crudel first stop is
Speaker 1: really getting back to seventy five, which is changed on
Speaker 1: the that's just simply following copper and cotton and cotton
Speaker 1: and wheat and things like that. But the key thing
Speaker 1: is what happens after that. I think it's unlikely stags
Speaker 1: above one. What does that mean? Global recession? Seventy five
Speaker 1: normal reversion. But if you really go back to the
Speaker 1: average prices two thousand fourteen where it's when it really collapsed,
Speaker 1: it's around fifty bucks. I gotta ask you about stable coins.
Speaker 1: Something we talked about a lot, and that the most
Speaker 1: traded cryptocurrencies is UM. You often remind us there is
Speaker 1: a lot of talk about legislation that's going to force UM,
Speaker 1: operators of Tether and USDC and other stable coins to
Speaker 1: actually show what they're what they're holding to back up
Speaker 1: these one to one U s dollar stable coins. Do
Speaker 1: you think they can do that? I mean does is
Speaker 1: there enough actual collateral to back up Tether? Oh? Yeah?
Speaker 1: Well Tether has been controversial, but the key thing remember
Speaker 1: tether to day right now it's six and seven billion dollars,
Speaker 1: So you think the people that tether have sixty seven
Speaker 1: billion dollars in like bearer bonds. I need to point
Speaker 1: out the facts about tether, Matt. The lesson I've learned
Speaker 1: is every time think people push back on it, it
Speaker 1: keeps going higher in market. Captain, though it's peaked a
Speaker 1: little bit, but USDC is pretty solid. The key thing
Speaker 1: is the New York Attorney General came down in Tether
Speaker 1: and they do have to file quarterly reports and they've
Speaker 1: had to for a well to be audited. So the
Speaker 1: key thing is also we remember why is Tether on
Speaker 1: the top despite the fact I've been hearing the same
Speaker 1: thing for almost five years, but we still haven't seen
Speaker 1: real transparency. Though it's revolutionary technology does something the whole
Speaker 1: world wants, it gives well. The key thing is people
Speaker 1: keep saying that, but if the hiding anything, that money
Speaker 1: is going to U S d C. And it's then
Speaker 1: going to a dozen other Tether wannabes. And that's the
Speaker 1: key point is tokenization of assets is unstoppable. The dollars
Speaker 1: number one, what's next? Maybe treasuries, stock, It's just the
Speaker 1: better technology. I just feel like, you know, money markets,
Speaker 1: they have to show you what they're holding, right, I
Speaker 1: would love to know exactly what they're holding, and it's
Speaker 1: gonna probably get The key point I like to point
Speaker 1: out about Tether is despite all these discrepancies and issues,
Speaker 1: it's still winning on the global stage. The point is
Speaker 1: because the technology is overwhelming for people to get access
Speaker 1: to the book. Most Americans who are used to kind
Speaker 1: of you know, for Americans our currencies like water is
Speaker 1: to a fish, but not for the rest of the world.
Speaker 1: I think of China that yuan looks like it's ready
Speaker 1: to collapse. Yields in to your yields in China collapsing
Speaker 1: versus US two yields. All right, Mike, awesome stuff as
Speaker 1: always a lot of it. I don't understand, but I
Speaker 1: know Matt though, So that's all we need here. Mike mclogan,
Speaker 1: senior commodity strategist for Bloomberg and Intelligence. He used to
Speaker 1: do orange juice and pork bellis, now he does bitcoin.
Speaker 1: We've been parching through a lot of retail sales data
Speaker 1: this week, including today's macro data. We also had lots
Speaker 1: of the big box retailers reporting some numbers, generally some
Speaker 1: pretty good outlooks onto the consumer that goes to the
Speaker 1: labor market, which has been pretty pretty solid with record
Speaker 1: low unemployment, wage growth a little bit north of five percent.
Speaker 1: Let's dig deep into the details of this labor market.
Speaker 1: We can do that today with Ian Segel. He's a
Speaker 1: CEO and co founder of zip Recruiter New York stock
Speaker 1: exchange stock z I P as a ticker. You can
Speaker 1: enter into your Bloomberg Professional terminal to get all the
Speaker 1: stuff you need there. Ian, thanks so much for joining
Speaker 1: us here. I love from your perspective. You kind of
Speaker 1: see the big picture here. The labor market looks darn good.
Speaker 1: What are your thoughts as to how this might develop
Speaker 1: going forward? Yeah, well, we certainly had a labor market
Speaker 1: at call of me that was barreling along all the
Speaker 1: way through Q two. It's a big part of the
Speaker 1: reason why the recruiter was able to beat them both
Speaker 1: top and bottom line. Again, however, when you look at
Speaker 1: the last two weeks of the quarter, you saw the
Speaker 1: beginning for the first time and basically a year and
Speaker 1: a half of a reduction in the number of open jobs.
Speaker 1: And when you ask yourself, why is that happening, Well,
Speaker 1: look at the unemployment number. Suddenly we're down to three
Speaker 1: and a half percent unemployment. The twenty million people who
Speaker 1: lost their jobs during COVID have all managed to find
Speaker 1: work or they've left the workforce, And so you find
Speaker 1: the employers find themselves in a situation where for every
Speaker 1: open job that was posted, um, there was basically less
Speaker 1: than a candidate available who was actively looking for work.
Speaker 1: And so employers are now adjusting and they're changing their
Speaker 1: strategy and rather than continuing to fruitlessly recruit, they're trying
Speaker 1: to figure out how to do more with what they have.
Speaker 1: And what that means for the labor market is there's
Speaker 1: going to be less open jobs, so that for the
Speaker 1: jobs that are open, there's going to be increased competition
Speaker 1: going forward. Well, and especially in tech, right, I mean, um,
Speaker 1: it seems to me just from reading the stories every day,
Speaker 1: that tech is having a much bigger problem than everybody
Speaker 1: else in terms of headcount that's too high. You're seeing
Speaker 1: reductions or at least hiring freezes on the West Coast
Speaker 1: that you aren't seeing out here. Yeah, I mean, there's
Speaker 1: some really interesting headlines that I think potentially are confusing
Speaker 1: the issues somewhat of who's slowing down hiring the most.
Speaker 1: Because yes, tech has definitely both made headlines with hiring
Speaker 1: freezes and even staff reductions, which is novel for tech. However,
Speaker 1: when you look at the overall labor market, what you
Speaker 1: see is that SMBs have slowed down hiring a lot
Speaker 1: faster than enterprises have, and there still is pretty substantial
Speaker 1: hiring amongst larger companies and that's that's even reflected in
Speaker 1: the Zippercritter numbers. And if you look at Q two
Speaker 1: large businesses, the percentage of our revenue that comes from
Speaker 1: these large businesses screw six percent in the quarters. So
Speaker 1: there's still aggressively hiring. But smaller businesses are definitely definitely
Speaker 1: starting to scratch their heads and try to figure out
Speaker 1: a new way to deal with the dearth of talent
Speaker 1: that's available for the jobs they had posted, and a
Speaker 1: lot of them are are actually engaging with their current workforces.
Speaker 1: You're seeing a lot of really novel perks and it's
Speaker 1: everything from more flexible schedules to mental health benefits that previously, um,
Speaker 1: we're unheard of. So you are seeing employers adapt, you
Speaker 1: are seeing a slowdown in the labor market. But let's
Speaker 1: be clear, there's still ten million open jobs in America.
Speaker 1: Pre COVID, when we thought we were at peak employment,
Speaker 1: there were six million open jobs. So this is still
Speaker 1: a froththy, frofthy market for job seekers. And my advice
Speaker 1: to job seekers out there is, look, this is peak
Speaker 1: leverage for you. This is the moment that if you
Speaker 1: were thinking about changing jobs, trying to get a new
Speaker 1: situation trying to make more money. There will never be
Speaker 1: a better labor market probably in your life. It's time
Speaker 1: to go get a better situation than right now. Where
Speaker 1: should be? Where should people search? Yeah, exactly, Well, I
Speaker 1: definitely think ZIP recruiters the way to go there you
Speaker 1: go transitions. Yeah, well, the the you know, the really
Speaker 1: the big change that's happening in the world of recruiting
Speaker 1: is if you look at people who have been hired
Speaker 1: in two thousand and twenty two, thirty seven percent of
Speaker 1: them were recruited to their current position, and you contrast
Speaker 1: that was two years ago, it was only eight So
Speaker 1: employers have adapted, they've they've gravitated to tools but allow
Speaker 1: them to proactively reach out to people before they've actually
Speaker 1: applied to their jobs to try and induce them to apply.
Speaker 1: This is one of the key differentiating features of ZIP
Speaker 1: recruder actually, and to put this into a sense of
Speaker 1: scale for you, employers invited more than a million candidates
Speaker 1: to directly apply to their jobs. They recruited over a
Speaker 1: million people last quarters, and those are the employers who
Speaker 1: had the most success hiring. So that's a big change
Speaker 1: in the labor market. Employers are going to go first.
Speaker 1: But we do see still some big job cut headlines,
Speaker 1: right Google, Um is apparently telling employees this quarters numbers
Speaker 1: better be good, or layoffs are coming. Apple Late laying
Speaker 1: off recruiters, companies, smaller companies like Peloton or hoot suite,
Speaker 1: you know, firing eight or six hundred people UM, Microsoft
Speaker 1: slowing hiring in some groups, Shopify laying off ten percent
Speaker 1: of its workforce, Rivian is cutting its workforce, robin Hood
Speaker 1: reducing head count UM, even Walmart laying off hundreds of
Speaker 1: corporate workers. So this seems to me like it's a
Speaker 1: brewing story. I mean, there's definitely a looming recession. We
Speaker 1: I there's a lot of discussion about the variety of
Speaker 1: factors that are impacting the economy, and that definitely has
Speaker 1: a fallover effect into the labor market. But I would
Speaker 1: also say this is a byproduct of the post covid
Speaker 1: UH work reality, which is that the majority of corporate
Speaker 1: jobs that can be done remotely are doing either partial
Speaker 1: or fully remote work. And that's creating a novel challenge
Speaker 1: for the managers of those businesses, because how do you
Speaker 1: keep the productivity high when you have such a large workforce.
Speaker 1: It's just human nature that some percentage of your workforce
Speaker 1: is not going to contribute at the same level they
Speaker 1: did previously. And so when you look at the stories
Speaker 1: about Google and you look at the stories about Apple,
Speaker 1: I mean those in particular are talking about effectively the
Speaker 1: output per employee and they're trying to get their arms
Speaker 1: around it. And I think what you're seeing right now
Speaker 1: is a reset where these large companies who aren't getting
Speaker 1: as much done as they want to, are scratching their
Speaker 1: heads and trying to say, like, how are we going
Speaker 1: to create accountability when people are not face to face
Speaker 1: with each other. And I don't think this is, for
Speaker 1: the record, a widespread problem. There's multiple economists who are
Speaker 1: doing research on it, this guy named Nick bloom Over
Speaker 1: at Stanford. Basically, the on average, employers are getting a
Speaker 1: half hour more work out of employees because those employees
Speaker 1: are saving seventy minutes a day in commuting and interestingly
Speaker 1: enough grooming, they're giving a half hour more to their employers. However,
Speaker 1: uh there is a cohort of employees who are either
Speaker 1: what's called soft quitting or are dialing it down, and
Speaker 1: probably in the work life balance equation UH over balancing
Speaker 1: to life, and so I think what you're seeing is
Speaker 1: a logical refract. Work life balance is a term that
Speaker 1: Paul doesn't recognize exactly. That's not how I was raised.
Speaker 1: All right, Ian, thank you so much in single CEO
Speaker 1: and co founder of Zip Recruiter talking to us about
Speaker 1: the labor market today. Still tight from Siegel's perspective. Thanks
Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
Speaker 1: and listen to interviews of Apple Podcasts or whatever podcast
Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
Speaker 1: Matt Miller nineteen seventy three and on false Sweeney I'm
Speaker 1: on Twitter at p T Sweeney. Before the podcast. You
Speaker 1: can always catch us worldwide at Bloomberg Radio.