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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: I want to get right to the economic data of

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Speaker 2: the day. It is Jobs Day and the change of

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Speaker 2: non farm payroll came in one hundred and seventy seven thousand.

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Speaker 2: Consensus was one thirty eight, so a beat there. The

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Speaker 2: prior period was revised down sharply from two hundred and

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Speaker 2: twenty eight thousand to one and eighty five, so some

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Speaker 2: cross currents there. Let's break it down. Tom Gimball, Vice

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Speaker 2: chairman American Staffing Association and founder of LaSalle Networks. Hey, Tom,

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Speaker 2: what do you take away from today's non farm payroll data?

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Speaker 3: I think it shows that the US economy is resilient.

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Speaker 4: I think that the tariff hubbabaloo for lack of a

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Speaker 4: better word, hasn't hit yet.

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Speaker 3: Companies didn't know.

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Speaker 4: What to do following the announcement the first week in April,

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Speaker 4: so we have some time to show up on that.

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Speaker 4: And I think the real message is small and medium

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Speaker 4: sized businesses always drive the jobs numbers more than anything else,

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Speaker 4: and so if big companies do layoffs, small companies can

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Speaker 4: now afford to hire some talent they couldn't before, and

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Speaker 4: that's where you see a lot.

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Speaker 3: Of the hiring.

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Speaker 5: So since you run one of the leading staffing and

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Speaker 5: recruiting firms in the country, who's staffing and recruiting.

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Speaker 3: Well, I think that that.

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Speaker 4: The companies that are hiring are small and medium sized companies.

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Speaker 3: You're not.

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Speaker 4: You know, when you see the announcements that a company

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Speaker 4: like Starbucks is doing layoffs or what have you, is

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Speaker 4: that you see that big companies have to cut overhead.

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Speaker 4: But when you have small companies, you know, the two

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Speaker 4: sectors that I see a lot continue to be our

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Speaker 4: healthcare and you're going to have techn service firms, and

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Speaker 4: service firms are going to continue to be doing consulting work.

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Speaker 4: There's technology bases, things along those lines that aren't as

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Speaker 4: directly affected by lack of inventory and trade tariffs of

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Speaker 4: importing products from other countries.

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Speaker 2: Tom some economists are concerned that tariffs and just economic

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Speaker 2: uncertainty resulting from tariff discussions could hit small and midsized

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Speaker 2: businesses harder because maybe they don't have the same profit

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Speaker 2: margins and resources as some of the bigger companies. What

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Speaker 2: are your respondents in your surveys telling you.

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Speaker 4: I think there's no doubt about that that I'm talking

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Speaker 4: to leader CEOs of businesses every week, and there's obviously

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Speaker 4: a concern due to the uncertainty of what's going on

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Speaker 4: geopolitically and the tariffs. However, at the same time is

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Speaker 4: that labor for the most part, can be scaled up

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Speaker 4: and scaled down and companies right now have to focus

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Speaker 4: on where the opportunities lie. And so what we see

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Speaker 4: right now is there is a fear, there is an uncertainty. However,

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Speaker 4: there's also companies, small and medium sized companies. Again, I

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Speaker 4: want to repeat, if you're a small manufacturing company, you've

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Speaker 4: got real challenges. If you're a small distribution company, you've

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Speaker 4: got real challenges. But if you're a consulting firm, if

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Speaker 4: you're a services business, if you're a technology app development company,

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Speaker 4: there's still opportunity because companies have to figure out workarounds

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Speaker 4: to the situation, and those are usually going to be

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Speaker 4: technologically based solutions.

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Speaker 5: To the other side of it, those small, medium sized

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Speaker 5: businesses that are geared towards the consumer is selling stuff

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Speaker 5: and products and manufacturing, et cetera. Are they laying off

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Speaker 5: people or are they just not hiring?

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Speaker 4: No, I think you're seeing both. Listen, companies are laying

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Speaker 4: off in good economies, companies lay people off. What you

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Speaker 4: have is in a situation like this, companies have to

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Speaker 4: look at their infrastructure. It's the same thing with unloading

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Speaker 4: real estate during the COVID situation. They might not have

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Speaker 4: needed it all along, but it gives them an excuse

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Speaker 4: to do that. And so, you know, for lack of

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Speaker 4: a better phrase, are companies pruning some talent right now?

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Speaker 3: They absolutely are.

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Speaker 4: And at the same same time, you see that if

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Speaker 4: you go and look and search any job board, you're

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Speaker 4: going to see that companies are also hiring weeks after

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Speaker 4: they do layoffs because they're different skill sets, different positions,

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Speaker 4: and so you know, the word hiring freeze is usually

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Speaker 4: for new positions, but ones that are deemed to be

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Speaker 4: necessary to the business, Companies are always going to be

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Speaker 4: hiring in those spots.

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Speaker 2: Labor hoarding, that's a term I learned during a pandemic.

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Speaker 2: I've never heard that before. Is that still a thing?

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Speaker 3: Tom, No, I don't think so.

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Speaker 4: You know, during the pandemic, when people were afraid that

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Speaker 4: there was going to be a boom coming out and

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Speaker 4: there ended up being one at the end of twenty

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Speaker 4: and all of twenty one and summ of twenty.

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Speaker 3: Two, that made sense.

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Speaker 4: But right now companies are more sitting here saying what

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Speaker 4: puts us in the strongest position to compete no matter

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Speaker 4: what the economic climate. And if you're a big company,

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Speaker 4: you do have excess labor, and so it's easy to

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Speaker 4: cut that back.

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Speaker 3: If you're a small company, you.

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Speaker 4: Couldn't always compete against big companies because you can't pay

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Speaker 4: the same wage. Well, when those big companies prune and

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Speaker 4: late p people off, now you can get some of

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Speaker 4: that talent for a little bit lower price. And at

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Speaker 4: the same time those people are a little bit burned

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Speaker 4: feel burned by the big companies. So you get a

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Speaker 4: more engaged employee who really appreciates the quality of life

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Speaker 4: at a smaller, medium sized company.

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Speaker 6: All right, we.

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Speaker 5: Appreciate it, Tom, Always good to get your perspective. Thank

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Speaker 5: you so very much. Tom Gimbal, Vice chairman American Staffing

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Speaker 5: Association and founder of LASAL Network, really helping understand the

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Speaker 5: difference of the big large companies and the smaller medium

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Speaker 5: sized businesses. I never thought that, like, if you get

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Speaker 5: fired in a large firm that the small medium sized

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Speaker 5: firm benefits.

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Speaker 6: That actually makes sense.

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Speaker 2: Good, Yeah, I guess in certain industries, yeah, certain areas.

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Speaker 2: So I'll have to see.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten a m. Eastern on Apple, Cocklay and

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Speaker 1: Android Auto with the Bloomberg Business App. Listen on demand

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Speaker 1: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 5: Kelex still here alongside Paul Sweeney. This is Bloomberg Intelligence Radio.

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Speaker 5: We bring you all the top news and business, economics

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Speaker 5: and finance through our lens of our Oomberg Intelligence folks.

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Speaker 5: They cover two thousand companies and one hundred and thirty

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Speaker 5: industries all around the world.

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Speaker 6: We also have an amazing bench of reporters as.

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Speaker 5: Well as bureau chiefs that we like to tap as well.

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Speaker 5: We're going to go to one of them now, brook Sutherland.

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Speaker 5: She is the Boston bureau chief, one of my favorite people,

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Speaker 5: one of the smartest people that I've ever met. So

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Speaker 5: the headline for Boston is that President Trump is announced

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Speaker 5: that Harvard University would lose its tax exempt status and

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Speaker 5: that threatens to revoke the school's financial benefits. Brook, what's

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Speaker 5: the vibe in Boston right now.

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Speaker 7: I mean, I think the vibe is not great. I

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Speaker 7: think there's a lot of concern about not just what

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Speaker 7: happens with Harvard, but what happens with some of the

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Speaker 7: other funding cuts, specifically around the NIH. I mean, this

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Speaker 7: is an economy that really thrives off of its higher

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Speaker 7: education institutions, its top tier hospitals, and its research facilities.

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Speaker 7: And these organizations support a much broader ecosystem that is

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Speaker 7: very linked to Massachusetts employment and the other overall health

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Speaker 7: of the state economy. And so this is an issue

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Speaker 7: that state politicians have really, you know, rallied around Harvard

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Speaker 7: for you know, in terms of just really pushing back

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Speaker 7: on this and trying to protect those interests that are

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Speaker 7: key to their economy. We've even seen, you know, the

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Speaker 7: Republican candidate for governor coming out and advocating for the

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Speaker 7: funding that goes to some of these institutions in the

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Speaker 7: important role that they play in the Massachusetts economy.

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Speaker 2: What's the feeling a Brook as to the legality of

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Speaker 2: such a move. Does the President have the legal authority

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Speaker 2: to do so.

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Speaker 7: It's still not clear at this point whether or not

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Speaker 7: his comments this morning about revoking Harvard's tax exempt status

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Speaker 7: actually came in conjunction with the directive from the I R.

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Speaker 7: S or from him in particular. It's it's not clear

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Speaker 7: exactly sort of what steps are being taken or where

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Speaker 7: we might be in any kind of process.

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Speaker 8: Now.

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Speaker 7: Typically the IRS standards prevent the President from interfering with

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Speaker 7: federal tax agency decisions, and so this is undoubtedly something

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Speaker 7: that if you know, the administration were to proceed with

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Speaker 7: revoking targets Harvard's tax exempt status, that you would likely

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Speaker 7: see the university challenge that, and it's a process that

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Speaker 7: would take years to play out between appeals and you know,

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Speaker 7: negotiations over what might happen here.

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Speaker 5: So the dum dums like me are going to be like,

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Speaker 5: what's the big deal. They have a big endowment, they

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Speaker 5: charge a lot to tuition, Like why do they need

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Speaker 5: the status and what's the actual argument.

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Speaker 7: So the endowment is helpful, but you can't really use

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Speaker 7: it like an ATM or you know, a piggy bank.

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Speaker 7: The funds that are in there are mostly earmarked for

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Speaker 7: certain programs, you know, scholarships, certain schools, and so they

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Speaker 7: can't just use that money as they wish to plug

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Speaker 7: whatever gaps that they might have. And you know, Harvard

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Speaker 7: is certainly in a better position to weather this storm

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Speaker 7: than a lot of institutions. It's one of the oldest

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Speaker 7: in the country and also the richest. But you know,

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Speaker 7: I still think the financial toll of this can be

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Speaker 7: really significant, and it can affect how the university dolls

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Speaker 7: out financial aid. If they're not tax exept, they would

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Speaker 7: also have to pay property taxes. They have a lot

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Speaker 7: of real estate, not just in Cambridge, but also in

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Speaker 7: Boston proper, and that bill alone would be extremely substantial.

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Speaker 2: And stripping Harvard's taxes and status would deal a significant

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Speaker 2: financial blow to the university. This is in Bloomberg reporting,

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Speaker 2: which receives an estimated foreigner and sixty five million dollars

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Speaker 2: in tax benefits annually. And it's not just Harvard again, Brooke,

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Speaker 2: looking at your report here, some seventeen hundred private colleges

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Speaker 2: operate as nonprofits. Given their contributions to society, they receive

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Speaker 2: that benefit part of a section of the Internal Revenue

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Speaker 2: Service tax Code, which specifically mentions education as being a

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Speaker 2: purpose that can receive the exemption. So I'm guessing pretty

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Speaker 2: much every private college and the university around the country

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Speaker 2: brook is looking to this Harvard case.

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Speaker 7: I think they definitely are. I mean, I think there's

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Speaker 7: a question of whether, you know, the administration is particularly

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Speaker 7: targeting Harvard because it is so well known and so

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Speaker 7: prestigious in terms of trying to effectuate some of the

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Speaker 7: change that it wants to see on college campuses. You know,

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Speaker 7: it's sort of making a model out of Harvard versus

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Speaker 7: some of the other universities in the country. But certainly,

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Speaker 7: I think they are watching this very carefully. And if

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Speaker 7: they're not, you know, directly connected to this particular fighter

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Speaker 7: going to see their own tax exempt status called into question,

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Speaker 7: they're likely feeling the pressure of the funding cuts because

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Speaker 7: NIH funding does not just go to the Harvards and

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Speaker 7: the Mits of the world. It also goes to a

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Speaker 7: number of other universities spread out all across the country

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Speaker 7: that are doing, you know, very important work to advance

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Speaker 7: US competitiveness and things that we've decided our national priorities,

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Speaker 7: you know, things around national security, around medical advancements, semiconductor research,

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Speaker 7: I mean, this all takes money, and historically that's a

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Speaker 7: role that the government has played in supporting that research

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Speaker 7: and innovation.

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Speaker 5: Uh Brook, before we let you go, also touted your

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Speaker 5: expertise in the industrial industry. You've covered the industrial industry

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Speaker 5: for a very long time. You have a weekly newsletter

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Speaker 5: that sort of picks up on all the little details

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Speaker 5: happening within that very important space. And in your piece

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Speaker 5: today you talked about toothpaste versus which is like basically

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Speaker 5: factory orders. Can you give me the takeaway from that?

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Speaker 5: I thought it was quite interesting, is how we're looking

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Speaker 5: at the economy.

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Speaker 7: Sure, I mean, I think there was a lot of

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Speaker 7: concern heading into this earning season about what we might

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Speaker 7: see from the manufacturing economy, the thinking being that that

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Speaker 7: was sort of the front lines of where tariffs would hit.

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Speaker 7: And these companies are certainly, you know, expecting an impact,

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Speaker 7: but by and large, they're mostly doing okay. I mean,

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Speaker 7: the demand in the first quarter was very strong, and

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Speaker 7: so far companies really aren't flagging any kind of material

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Speaker 7: step back or you know, some sort of serious pause

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Speaker 7: in projects. It's a very different story on the consumer

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Speaker 7: side of the economy though. I mean, you've seen airlines

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Speaker 7: pull their guidance because of a pullback and travel demand,

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Speaker 7: the concerns about consumer confidence. You've seen companies like Colgate

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Speaker 7: palm Olive, which makes toothpaste, with sales dropped about three

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Speaker 7: percent and the first quarter in part because customers are

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Speaker 7: trading down from premium toothpaste options to sort of middle

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Speaker 7: tier options, and that trade down effect is manifesting, you know,

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Speaker 7: in a number of different places across the consumer economy,

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Speaker 7: and I think, you know, it's just interesting. There was

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Speaker 7: an argument a few years ago about could you see

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Speaker 7: sort of a decoupling of the manufacturing sector from the

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Speaker 7: rest of the economy because there are sort of secular

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Speaker 7: reasons driving construction of new factories, whether it's reshoring or

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Speaker 7: you know, some of the energy initiatives that we've had,

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Speaker 7: all of the government stimulus around infrastructure and semiconductors that

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Speaker 7: didn't happen, And I think it would be extremely difficult

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Speaker 7: for that to happen again in an environment if we

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Speaker 7: do see tariffs really damp and consumer confidence and really

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Speaker 7: cause that consumer to pull back on spending. It's hard

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Speaker 7: to keep industrial equipment orders going along at a role

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Speaker 7: place when people can't afford sort of basic needs.

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Speaker 6: All right, Brooke, we really appreciate it. Thank you so

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Speaker 6: very much.

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Speaker 5: Brooks Sutherland, Boston Bureau Chief in Industrials expert.

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Speaker 6: Right here at.

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Speaker 1: Bloomberg, you're listening to the Bloomberg Intelligence podcast. Catch us

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Speaker 1: live weekdays at ten am Eastern on Applecarclay, and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 6: For a recap.

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Speaker 5: Chevron made a bid Dubai, Hess has accepted, and then

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Speaker 5: Exon came in and said, no, we have rite a

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Speaker 5: first refusal to Hess's project in Guyana, which is a

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Speaker 5: prolific oil region, and they've been an arbitration for quite

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Speaker 5: a long time on that. We may get final result

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Speaker 5: later on in this year. Vince Piazza heads up all

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Speaker 5: our oil and industry coverage for Bloomberg Intelligence and joins me, Now, Vincent,

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Speaker 5: what do you think of the answer that Nope, they

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Speaker 5: got complete confidence.

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Speaker 6: If Chevron doesn't get Hess.

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Speaker 8: What happens, well, look is, if Sevron doesn't get Hess,

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Speaker 8: someone of size would need to make a move on Hess, right,

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Speaker 8: and you.

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Speaker 9: Know Exon suggests that it has these preemptive rights, and

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Speaker 9: so if the arbitration goes in its favor, there would

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Speaker 9: be a decision that needs to be made about that

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Speaker 9: value and what that value is. And I would suggest

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Speaker 9: to you that because of Hesse's size, the number of

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Speaker 9: suitors for hes whether it's the asset or the entire entity,

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Speaker 9: is quite limited, and you need someone that has the heft,

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Speaker 9: the balance sheet, the flexibility, the financial flexibility of an

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Speaker 9: Exon mobile and so I think both entities have a

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Speaker 9: solid case to be made. I've never heard of an

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Speaker 9: acquisition being held up because of a shared asset, but

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Speaker 9: you know, a lot of strange things that happened in

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Speaker 9: the world in the last year or so, so we'll

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Speaker 9: see what happens. But I think if you take a

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Speaker 9: look at just the earnings from today, guys, I think

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Speaker 9: it's obvious that Exon is pulling away both operationally and financially.

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Speaker 9: And I think that if you were to take a

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Speaker 9: look at this a year from now, you would see

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Speaker 9: the ongoing strength of the Exon operations and Exon's financial health.

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Speaker 9: Financial health.

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Speaker 2: Right, So, hey, Vince, you've been covering these big oil

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Speaker 2: companies integrated oil companies for years. Here what are they

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Speaker 2: telling you with about life at blows sixty dollars a

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Speaker 2: borrower around sixty dollars a borrower for WTI crud.

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Speaker 9: You know, life is sustainable when you have solid balance

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Speaker 9: sheet and you have the financial strength. And in this

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Speaker 9: case you have Exon Mobile, which paid back roughly five

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Speaker 9: billion of debt. Balance sheet leverage is very, very manageable.

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Speaker 9: They have the financial flexibility to push forward financially. They

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Speaker 9: threw off about nine billion of free castulow eight point

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Speaker 9: eight to be exact. The cadence of buybacks remains the same,

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Speaker 9: the dividend pace remains the same. So there is strength

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Speaker 9: there in their confidence in their decision to maintain those levels.

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Speaker 9: Contrast that with what you heard from Stevron. And when

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Speaker 9: you're throwing off roughly a billion dollars of free castlow

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Speaker 9: and you're trying to pay out dividends of three and

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Speaker 9: do buybacks of another four, the math doesn't compute right,

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Speaker 9: and so that pretends the decision to scale back the

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Speaker 9: buy backs closer to what two and a half or

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Speaker 9: three billion four to twenty twenty five. Hey, look, you know, operationally,

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Speaker 9: Exon's in a strong position, especially in Guiana, especially in

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Speaker 9: the Permian. You have a yellow tail likely coming on

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Speaker 9: sooner than expected, most likely in three Q. That's two

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Speaker 9: hundred and fifty thousand barrels a day of growth capacity

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Speaker 9: on a resource that has potential of well in excess

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Speaker 9: of six billion dollars. So you could understand the attraction

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Speaker 9: for both Exon and for Devron, and you know Exon's

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Speaker 9: and a driver feet there. You have also for Exon

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Speaker 9: the pioneer acquisition the Permium basin, which remains a strong,

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Speaker 9: low cost avenue for growth. So I'm not really concerned

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Speaker 9: here if this dips below the sixty six dollars Bollol range,

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Speaker 9: especially when you have the balance sheet strength to push

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Speaker 9: through that. Now, fifteen twenty years ago, the economics were different,

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Speaker 9: right leverage was a bigger thwart and also a bigger

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Speaker 9: thwart of pain for these organizations as well. But for

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Speaker 9: the most part, a lot of these names have gotten

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Speaker 9: their balance beats, and the right size and the right

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Speaker 9: gape maturities are quite manageable in twenty five and twenty six,

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Speaker 9: so I don't see the pain coming from any type

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Speaker 9: of balance sheet event. And for the most part, what

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Speaker 9: we're telling the operators is, let's manage that production. We

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Speaker 9: want to see the free cashulow being thrown off. We

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Speaker 9: don't want this excessive accelerated growth that we saw during

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Speaker 9: a one point zero. We're in a different situation here.

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Speaker 9: It's a mature industry. What we do want to see

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Speaker 9: is much more capital discipline. It's fine if you want

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Speaker 9: to go out there and pay for an asset using

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Speaker 9: your currency, using you for equity, because your equity is

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Speaker 9: valued higher than what a private equity sponsored company may be,

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Speaker 9: and you can consolidate, integrate and actually increase recash flow

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Speaker 9: going forward as well.

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Speaker 6: All Right, Ben, thanks a lot. We really appreciate it.

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Speaker 5: Vincent Piazza, he covers Boom, all the oil companies E

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Speaker 5: ANDPS as well as the big guys for Bloomberg Intelligence.

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Speaker 6: We appreciate all of that insight. Shameless Plug.

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Speaker 5: You can check out my full cheve On interview on

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Speaker 5: the Bloomberg podcast page on YouTube. It's also available on

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Speaker 5: Bloomberg dot com, and you can also check it out

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Speaker 5: on the terminal as well.

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Speaker 6: Shameless plug, I did it.

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