Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: search Bloomberg Global News. The US job growth in September
Speaker 1: slowest this year, signaling a tempering of the labor market recovery,
Speaker 1: really complicating that FED decision, that next FED decision when
Speaker 1: it comes to scaling back monetary support before the year
Speaker 1: under the little many still think the FED will kind
Speaker 1: of continue ahead. Here at the front row seat on
Speaker 1: the US labor market and hiring trends and metrics, we
Speaker 1: have a perfect gas. We do. Peter Quigley, as president
Speaker 1: and CEO at Kelly, joins us on the phone from Michigan. Peter,
Speaker 1: it's great to talk to you, again, you haven't really
Speaker 1: interesting role because your firm has really its finger on
Speaker 1: the pulse of what's happening when it comes to labor
Speaker 1: because you provide staffing solutions in many parts of the country.
Speaker 1: So I'm wondering if this report was a surprise to
Speaker 1: you or if you were expecting something that was really
Speaker 1: going to miss and at this magnitude. Well, I think
Speaker 1: the jobs report was disappointing to those that expected a
Speaker 1: bounce due to the expiration of the enhanced unemployment benefits
Speaker 1: and schools reopening, but that didn't materialize. UM. But I
Speaker 1: tend to think of this as these three months July,
Speaker 1: August and September is the UH delta variant book ends.
Speaker 1: So in July we had outstanding jobs report, but the
Speaker 1: survey was taken before this spike, and in September the converse,
Speaker 1: where we had a really disappointing report. Um. But it
Speaker 1: was also at the beginning of September when we were
Speaker 1: in the midst of the spike. So I was encouraged
Speaker 1: by the private sector. Seventeen thousand not overwhelming, but but
Speaker 1: decent um because the big drag was in government payrolls.
Speaker 1: Local education was a big drag um. And this wasn't
Speaker 1: surprising to us because we've seen major talent challenges in uh.
Speaker 1: You know, we support fifteen thousand schools across forty five states,
Speaker 1: and not only there shortages of teachers, but the entire
Speaker 1: education ecosystem, so food service workers, custodians, bus drivers, para educators, um.
Speaker 1: So all of that led us to believe that there
Speaker 1: was going to be some some depression. UM. Okay. So
Speaker 1: one of the things that we discussed, Peter, is that
Speaker 1: the second half of September, at least anecdotally, people have
Speaker 1: talked about that which is not reflected in the Job's
Speaker 1: report this morning, that you are seeing signs of more
Speaker 1: people going into jobs. What are you seeing in the
Speaker 1: leader or what did you see in the later half
Speaker 1: of September. Well, the first thing I would say is
Speaker 1: there is no change in the demand. So that's the
Speaker 1: good news from the economy standpoint. Demand is strong across
Speaker 1: all of the industries we served. We didn't see a
Speaker 1: I would say, a significant uptick in the availability of
Speaker 1: talent in the back half of September. Um, it's it's anecdotal,
Speaker 1: but um, we probably saw greater inflows of talent in
Speaker 1: areas where schools were fully reopened and not under some
Speaker 1: kind of temporary lockdown UM, and that I think just
Speaker 1: speaks to the importance of UM allowing UM parents to
Speaker 1: get back to work. If anything was concerning about the
Speaker 1: job's report, it was the labor force participation rate dropping
Speaker 1: because so many women and it was all women that
Speaker 1: are leaving the workforce in UH in droves. Yeah, that
Speaker 1: among among the parts that certainly got our attention. Peter,
Speaker 1: I'm wondering what you think this means for the remainder
Speaker 1: of the year and what you can tell us right now,
Speaker 1: because you do have this unique insight into what's happening
Speaker 1: real time when it comes to your clients all over
Speaker 1: the United States. What can you tell us about what
Speaker 1: you're seeing in October as we do get past the
Speaker 1: delta variant. Well, I think the UH the expected bounds
Speaker 1: due to the reopening of schools and and the UM
Speaker 1: exploration of employment benefits, we'll likely see that UM materialized
Speaker 1: later in the year. Whether it's October or November, I
Speaker 1: think remains to be seen. UM. But as well, the UM,
Speaker 1: the supply chain issues that we're having, especially around microchips,
Speaker 1: UM as those begin to be sorted out, I expect
Speaker 1: that there will be UM an improving jobs picture. So
Speaker 1: you're saying, Peter, that people shouldn't hold their breath too
Speaker 1: much for even next month's jobs report because we still
Speaker 1: could see the effect of the expanded unemployment insurance as
Speaker 1: well as people kids going back to school. Yeah, my
Speaker 1: sense is it's gonna be coppy for probably the remainder
Speaker 1: of the year. I think until we get past the UH,
Speaker 1: the delta variant and and you know, other issues surrounding COVID.
Speaker 1: I think it's going to be a little bit uncertain
Speaker 1: in the labor markets because we don't really understand why
Speaker 1: so many people are staying on the sidelines as as
Speaker 1: opposed to coming back to UH the plethora of jobs
Speaker 1: as as you know, record number of jobs across industries. UM.
Speaker 1: So I think it's gonna be um period of time
Speaker 1: probably into two before we see some stabilization. Peter just
Speaker 1: got about fifty seconds left here. You talked about women,
Speaker 1: and we two noticed UH labor participation, women really leaving,
Speaker 1: and we really thought the beginning of pandemic flexibility and
Speaker 1: working was going to be helpful for women. We've learned
Speaker 1: that's not the case. Um. What are you hearing on
Speaker 1: the front that women are leaving the workforce and they
Speaker 1: are not coming back. Yeah, we're hearing that. Um. And
Speaker 1: and largely it's due to childcare or elder care responsibilities. Um.
Speaker 1: You know, if kids don't go to school or if
Speaker 1: they're at home schooling. Um, parents don't go to work
Speaker 1: if they can't work remotely. And even then it adds
Speaker 1: to a level of stress that makes work intolerable at
Speaker 1: some point. So I think this is a really serious
Speaker 1: issue that we need to focus on to ensure that
Speaker 1: we get more women back into the labor force. Right.
Speaker 1: It really speaks to the heart of your organization, really
Speaker 1: the creation of it way back when, Um, Peter, thank
Speaker 1: you so much, Peter, quickly he's president. Cef Kelly, I
Speaker 1: have to say, my sister got a college degree years
Speaker 1: and years ago, um, to get a job, how to
Speaker 1: get some secretarial skills, went to Kelly, got a job
Speaker 1: in the city, uh, and ended up getting your masters
Speaker 1: and doing really really well. So I can understand that path.
Speaker 1: How it it helps. Look, it was called the Kelly
Speaker 1: Girl Company at nineties and nineteen fifties. You're listening to
Speaker 1: Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes
Speaker 1: too Stovic on Bloomberg Radio. We've been talking about Mark
Speaker 1: and their experimental pill for COVID nineteen should be accompanied
Speaker 1: by other treatments as soon as they're available to cut
Speaker 1: the risk of drug resistance that would limit its effectiveness.
Speaker 1: Welcome Foundation director Jeremy far saying that, Yeah, this is
Speaker 1: a story that caught our attention because of all the
Speaker 1: attention that Mark's experimental pill for COVID nineteen got over
Speaker 1: the last week. We saw mark stock rise starting Friday
Speaker 1: as a result of it. Riley Griffin is US healthcare
Speaker 1: reporter for Bloomberg News, and she joins us now on
Speaker 1: the phone from New York City. So, so let's start
Speaker 1: with with where things stand with regulators and Mark's pill.
Speaker 1: What is it and what is the well. I don't
Speaker 1: want to say promise because it hasn't been fully approved
Speaker 1: by regulators rally, but what's it supposed to do? Yeah,
Speaker 1: Mark's pill is really important because what we don't have today,
Speaker 1: um TIM, is a cheap and effective pill that can
Speaker 1: be prescribed to people who have contracted COVID. Right now,
Speaker 1: the treatment landscape is rather barren. You can get the
Speaker 1: mono quota antibodies which are in an a few shin,
Speaker 1: or if you proceed to the hospitalized setting, you might
Speaker 1: get dexa meta zone, a steroid or rem deservie. But
Speaker 1: what we really want is something like Tamma bloo, something
Speaker 1: that you can take from home, you don't have to
Speaker 1: venture too far, and it will stop COVID in its tracks,
Speaker 1: stop that replication process. We've been following Mark's pill four
Speaker 1: months now. Actually had a feature in Business Week back
Speaker 1: in spring about this very concept um and now we've
Speaker 1: got the data and it looks fairly promising. But the
Speaker 1: question at hand um that the director of the Welcome
Speaker 1: Foundation is posing, is is it going to face drug
Speaker 1: resistance like we've seen with some of those monoquona antibodies.
Speaker 1: In the backtrack for a second, what is drug resistance
Speaker 1: that occurs when the virus and bacteria evolved to blunt
Speaker 1: or defeat a drug mechanism of attack, which is what
Speaker 1: we don't want to have happened, right And this is
Speaker 1: what's fearful right now. I feel like we're in that
Speaker 1: Netherlands right now of right to people who have had
Speaker 1: vaccines or waiting, not all of his supply, you know,
Speaker 1: can get boosters, and you're just wondering, am I still safe?
Speaker 1: Is there going to be a Okay, we're kind of dealing.
Speaker 1: We are dealing with the delta variant, But is there
Speaker 1: going to be a variant that all of a sudden
Speaker 1: is going to be like, yeah, fiser moderna vaccine J
Speaker 1: and J vaccine not a problem. Yeah, And and people
Speaker 1: are following that with vaccines. But viruses are really wildly things.
Speaker 1: They mutate to survive and we've always seen this with
Speaker 1: anti virals in particular um and so that's a question here.
Speaker 1: But Mark I spoke with them just yesterday, one of
Speaker 1: the leaders of developing this pill, and he says the
Speaker 1: bar for resistance with mona peer of year the COVID
Speaker 1: pill is rather high. He sees it as different from
Speaker 1: other anti virunts in the past. Can can it be
Speaker 1: changed in real time the way that other treatments or
Speaker 1: vaccines have been. At least the hope has been that
Speaker 1: they can be changed and tweaked with two help attack.
Speaker 1: Some of these are potentially resistance. So typically how companies
Speaker 1: do this is they actually combine one anti viral with another.
Speaker 1: You might have heard the term cocktail to describe a
Speaker 1: silly term, right, But it really means you're combining more
Speaker 1: than one thing, and together, Um, you're combating resistance, and
Speaker 1: you might also be encouraging greater levels of efficacy. But
Speaker 1: that's not what Mark is claiming here. To get a
Speaker 1: little wonky with you, guys, Um, I like wanky too,
Speaker 1: he had said to me. Nick Kurt Sunis, the senior
Speaker 1: vice president of clinical research for infectious Diseases and Vaccines
Speaker 1: at Mark, that earlier experiments with other viruses showed that
Speaker 1: the evolution of resistant mutations was really rare with mulipure beer.
Speaker 1: And another thing, the course of treatment is short, meaning
Speaker 1: that viruses get very few chances to evolve into resistant
Speaker 1: forms during that course. UM. And then the last reason
Speaker 1: he shared with us was the drugs met kind of
Speaker 1: mechanism of action. To put it in as simple terms
Speaker 1: as I can, the way manipeer of your works is
Speaker 1: by inducing errors into the coronavirus's genetic material. Those errors
Speaker 1: are then replicated until the virus is practically defunct. And
Speaker 1: what Marcus found is that by UM inducing those errors,
Speaker 1: they're actually spread more or less randomly throughout the viral genome,
Speaker 1: which again means that the virus has fewer opportunities to
Speaker 1: develop those mutant forms that will overcome those errors, and
Speaker 1: that in and of itself, he said, makes resistance to
Speaker 1: manopere of your a tufting. Only time will tell you know.
Speaker 1: That's that's marks perspective right now. Um, And they're not
Speaker 1: actively pursuing combinations. But should we c say Fiser's oral
Speaker 1: anti viral proved successful as well, I'd be asking could
Speaker 1: they combine the two together? Aren't two better than one?
Speaker 1: Maybe we've certainly seen that in meta history and treatment
Speaker 1: history before. Um. Riley, thank you so much, really clarified
Speaker 1: a lot on that. Roley Griffin Cheese u S healthcare
Speaker 1: report at Bloomberg News. Joining us on the phone in
Speaker 1: New York City. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio.
Speaker 1: We do want to just rehash a former Win Resorts
Speaker 1: executive and a private equity investor found guilty in the
Speaker 1: first trial of parents accused of cheating to get their
Speaker 1: children into elite US universities. We're talking about varsity blues.
Speaker 1: Uh and UH it looks like the two of them
Speaker 1: are potentially facing some jail time. Um. Yeah, and you
Speaker 1: know what, it actually is a perfect segue into our
Speaker 1: next story that talks a lot about wealthy parents and
Speaker 1: what wealthy parents are doing to help their kids, uh
Speaker 1: afford homes, specifically in New York City that weren't necessarily
Speaker 1: meant for them exactly. It's in the new issue of
Speaker 1: Bloomberg Business Week magazine. It's among the most right. We're
Speaker 1: not saying, I think illegals being done, that there's no parallel.
Speaker 1: I don't want to apply a parallel that there is
Speaker 1: anything illegal. But it's time just working on my segway, Carol.
Speaker 1: It's among our most read on the Bloomberg Today's story
Speaker 1: about New York City's real estate tax breaks that, as
Speaker 1: Tim mentioned, have turned out to be a loophole for
Speaker 1: rich kids. That tale and reality. Let's get to it
Speaker 1: with Bloomberg News Financial Investigations reporter Caleb Melby. He is
Speaker 1: on the phone, he's hard working, he's in St. Louis. Caleb,
Speaker 1: interesting story. First of all, tell us about this tax
Speaker 1: break and how that's become a loophole for some Yeah. Absolutely,
Speaker 1: this is a program uh called the HDFC cooperative program
Speaker 1: here in New York that stands for Housing Development Funded Corporation,
Speaker 1: a whole elpha bit soup of a name. And what
Speaker 1: happened in the in the nineties seventies was, of course,
Speaker 1: you had white flight out of New York, you had
Speaker 1: the financial crisis in New York City, and you had
Speaker 1: the slum lords who both stopped making repairs to their
Speaker 1: buildings and stopped paying taxes. UH. The government eventually sees
Speaker 1: those buildings runpaid taxes, but didn't want them to go
Speaker 1: back to the same landlords for fear that the same
Speaker 1: thing would happen all over again. So they looked to
Speaker 1: this um UH state law that allowed them to create
Speaker 1: UH cooperatives designed to be low for low income people,
Speaker 1: to provide income for low income people. They turned these
Speaker 1: buildings over to the former renters for two hundred fifty
Speaker 1: dollars a unit um UH, and it was kind of
Speaker 1: historic transfer of wealth and property in New York City. UM.
Speaker 1: But a lot of those people didn't have money to
Speaker 1: repair their buildings either, so the government created this tax
Speaker 1: break to try to help them out in but throughout time,
Speaker 1: nobody has really created any stringent rules about um what
Speaker 1: these units can go for UM or how much how
Speaker 1: much you can have in way of assets to buy them.
Speaker 1: So they have these income limits on them, but no
Speaker 1: asset limits. And UH, that actually means there's kind of
Speaker 1: a perfect buyer out there and the sort of person
Speaker 1: who would love to live in Manhattan where a lot
Speaker 1: of these a are uh, low income, high asset Uh
Speaker 1: you know, children of the affluent who are moving here
Speaker 1: to the city. Okay, so let's say you are an
Speaker 1: aspiring you know, fill in the blank, uh, and you
Speaker 1: moved to New York City after graduating from college. You're
Speaker 1: making you know, between thirty thousand and fifty thousand dollars
Speaker 1: a year, scraping by in a lot of cases, but
Speaker 1: not really because you perhaps have access to half a
Speaker 1: million dollars from parents, from wealthy relatives like you lay
Speaker 1: out in your story, you're kind of the perfect fit
Speaker 1: to actually buy one of these homes, and you're getting
Speaker 1: it at a huge discount compared to uh a house
Speaker 1: that doesn't have the limits. That's exactly right, Timm, And
Speaker 1: you raise another good point, which is that because some
Speaker 1: of these buildings still have some level of financial distress,
Speaker 1: banks won't lend to them. They can still be beautiful,
Speaker 1: you know, lovely buildings, um that have a little bit
Speaker 1: of debt on the books. But that means you do
Speaker 1: need to have all cash, and they will sometimes advertise
Speaker 1: themselves as all cash all. So you can't take a
Speaker 1: mortgage out to get one of these. Well, for for
Speaker 1: the more stabilized ones, you can, but in a lot
Speaker 1: of cases you can't. And that's where you'll see them advertised.
Speaker 1: You must make, as you say, something like less than
Speaker 1: sixty dollars, but also have five dollars cash or more
Speaker 1: on hand. It's, um, it's quite an absurd situation. Um
Speaker 1: as as this is unfolded through history to our present moment.
Speaker 1: So how many are taking advantage of you know, to
Speaker 1: some extent gaming the system? Not illegal, but it's certainly
Speaker 1: not getting to the population that it was intended for.
Speaker 1: I mean, right, this is for to help out those
Speaker 1: that are lower income. Um. How how how much has
Speaker 1: it been being gamed? Basically? Yeah, So, so the universe
Speaker 1: of these buildings is about a thousand UM with about
Speaker 1: seventeen or eighteen thousand units in them. Uh, to give
Speaker 1: you an idea that I mean, that's roughly twice the
Speaker 1: size of Stevenson Town Peter Cooper Village for our listeners
Speaker 1: in the New York area, very big multi block complex
Speaker 1: in the city, a lot of units, but because they
Speaker 1: do offer such tremendous protection against rising costs in the city,
Speaker 1: even better than a rent stabilized apartment, people do hold
Speaker 1: onto them for a very very long time, and so
Speaker 1: they do trade infrequently. But kind of like how whenever
Speaker 1: home cells and an up and coming neighborhood, and it
Speaker 1: always tends to go in one direction, up and up
Speaker 1: and up. Um, these buildings are doing the same. Uh.
Speaker 1: And we're seeing that again and again that even though
Speaker 1: these units trade infrequently, for the ones on the Upper
Speaker 1: West Side or Central Harlem or the East Village, these
Speaker 1: neighborhoods that in the seventies and eighties weren't places everybody
Speaker 1: wanted to be, but are now much more desirable places
Speaker 1: to be. You're seeing more and more of these deals.
Speaker 1: So what did the parents say, who did you talk to?
Speaker 1: I'm curious about that, right, because that's who you really
Speaker 1: wanted to talk to. Yeah, yeah, I mean, um, I
Speaker 1: I talked to it to one parent who um you know,
Speaker 1: she she had been a lawyer herself. Her husband had
Speaker 1: been a partner and engineering firm, and they had a
Speaker 1: daughter who was a musician, and they were worried about
Speaker 1: her having an even income being in the city, but
Speaker 1: wanting to be in the city, so they you know,
Speaker 1: the daughter was able to pay four hundred thousand dollars
Speaker 1: cash for a one bedroom on the fr West Side
Speaker 1: where she can have rehearsals away from her roommates, any roommates,
Speaker 1: and also not worry about, you know, the very burdensome
Speaker 1: housing costs that exist for most renters or even owners
Speaker 1: in in New York. Um and I also talked to
Speaker 1: a lot of musicians who have since become adults, a
Speaker 1: couple of them that have actually transitioned from being musicians
Speaker 1: into real estate brokers specializing in exactly these kinds of units.
Speaker 1: That one was a bass guitar player, one was a
Speaker 1: jazz flutist. Um and uh and talk to them about
Speaker 1: you know, how this pro graham has unspooled in a
Speaker 1: way that the city definitely didn't didn't help well. Also
Speaker 1: seems like the rules aren't hard and fast. I mean,
Speaker 1: you do share the example of anecdotes of people printing
Speaker 1: out you know, turbo tax tax returns that potentially might
Speaker 1: not reflect a real income for somebody. Yeah, and that's
Speaker 1: exactly right. So, and every diminishing number of these buildings
Speaker 1: has formal regulatory agreements with the city. They may require
Speaker 1: that they actually file documentation around the stuff, but the
Speaker 1: vast majority of them, especially the more expensive ones, no
Speaker 1: longer have any sort of regulatory agreement, and the city
Speaker 1: has basically thrown up its hand to try and regulate
Speaker 1: these at all. So so to the extent that there
Speaker 1: are even income caps on a lot of these these days,
Speaker 1: they're essentially functioning on an honor system. So it will continue.
Speaker 1: So it's going to just continue. Twenty seconds left here. Um,
Speaker 1: it's gonna be very hard to put this one back
Speaker 1: in the bottle. You try, you try to put price
Speaker 1: caps on these when there wasn't them before, you're going
Speaker 1: to get law suits. And it's not clear that the
Speaker 1: city wanted to do that. All right, Well, a very
Speaker 1: interesting story in terms of what's going on. Hey, Caleb,
Speaker 1: thank you. Caleb Melby, financial investigations reporter of Bloomberg News
Speaker 1: on the road in St. Louis, And uh what I
Speaker 1: opened up my Twitter feed this morning? And this was
Speaker 1: like the story that everybody was talking about a lot
Speaker 1: of rage tweeting, was there. Yeah, yeah, well understandably. So
Speaker 1: this is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. So you are
Speaker 1: listening to Bloomberg Business Week on this Friday, and this
Speaker 1: happens to be also among one of our most read
Speaker 1: on the Bloomberg. We were all talking about it, certainly
Speaker 1: in our call It's a Store by Bloomberg. Simon Kennedy
Speaker 1: and Timid notes that the US were already in a
Speaker 1: recession based on consumer sentiment, which is based on a
Speaker 1: new study co authored by former Bank of England policymaker
Speaker 1: Danny blanche Flower. He is professor of economics at Dartmouth College,
Speaker 1: and he joins us on the phone from Hanover, New Hampshire. Danny,
Speaker 1: nice to have you back. How are you are. I'm
Speaker 1: actually teaching class again. It's great. I know you're on campus.
Speaker 1: It's great. I'm looking out of my office windows. Great. Um,
Speaker 1: so what's going on here? We're already in a recession? Well? Um.
Speaker 1: I called this earlier in the week with my co
Speaker 1: author Alex Bryson Um. I mean the issue here is
Speaker 1: what actually can you use to say something about a
Speaker 1: recession coming before it hits. So the NBR dating group
Speaker 1: tells you six to eight months to a year later,
Speaker 1: the labor market data tells you pretty much at the
Speaker 1: point that you turn what can you use to predict
Speaker 1: it common? And it turns out we can success now
Speaker 1: and the new paper we show we successfully predict every
Speaker 1: one of the last six recessions beforehand. And essentially what
Speaker 1: we're seeing today is almost identical to what we saw
Speaker 1: in two thousand seven across the whole economy and particularly
Speaker 1: across the eight biggest states. These measures of sentiment what
Speaker 1: do people think is happening? Turned around May, and that
Speaker 1: suggests that recession will probably start around Christmas time. So
Speaker 1: the predictors are almost exactly as they were in two
Speaker 1: thousand seven. And this is how you can predict every
Speaker 1: prior recession to it. So these this prediction came well before,
Speaker 1: obviously a couple of days before the non farm perils,
Speaker 1: which didn't surprise me, and I expect to see nonfarm
Speaker 1: payrolls declining and probably going negatives by negative by the
Speaker 1: end of the year. Wow. That's certainly yeah. I mean
Speaker 1: that that's the problem is obviously the labor market data
Speaker 1: isn't giving us a very good deer, but people don't
Speaker 1: seem to understand what's going on. There's base and composition effect.
Speaker 1: There's a couple of measures. If you go and look
Speaker 1: at total compensation, that's up by one point nine percent,
Speaker 1: and on the last month it's flat. And if you
Speaker 1: go to hourly earnings using the current population survey, that's
Speaker 1: down one two percent if you take Q to two
Speaker 1: thousand twenty one to Q two. So there's a lot
Speaker 1: of indicators people have not been looking at. And and
Speaker 1: the question is you know what happened in two thousand
Speaker 1: seven and the previous five and the answers these measures
Speaker 1: told you six or nine months before it was coming
Speaker 1: that this was happening in it and people should look
Speaker 1: in our paper. It's remarkable how comparable is compared to
Speaker 1: and it's and in fact there's a set of services
Speaker 1: and it's really about women. It turns out that since
Speaker 1: the turn women people in the Grants Thaunton service says
Speaker 1: if they're forced to go back to the office, they
Speaker 1: won't go, they'll quit. So for people in the conference board.
Speaker 1: They say women say, especially that they're very fearful of
Speaker 1: going back to work. So I think that's what turns
Speaker 1: the delta variants turn people so Danny for people who
Speaker 1: don't follow this as closely as you do, tell us
Speaker 1: the connection between how people feel about sentiment, what what
Speaker 1: sentiment is about the economy, and how that translates into
Speaker 1: economic growth or spending. Yes, so we've done a lot
Speaker 1: of work on this. The sentiment is about you ask
Speaker 1: people what do you think is going on? What do
Speaker 1: you think is going on in your economy? Me, do
Speaker 1: you think that the jobs are good? Do you think
Speaker 1: the economic situation is good? And what do you expect
Speaker 1: to happen? And so what we see in these data
Speaker 1: from around the spring is that anxiety in the United
Speaker 1: States rises. People get more and more fearful, as I'd say,
Speaker 1: particularly about delta. And the way to think of this
Speaker 1: is if people are anxious, if people fear that flowing
Speaker 1: is coming, flowing is going to come, If people think
Speaker 1: that's a recession coming, then a recession comes. So these
Speaker 1: days are really crucial. And every time this has happened before,
Speaker 1: that's what followed it. And it appears to be that
Speaker 1: the delta various and the thought that people might have
Speaker 1: to go back to work has made them incredibly anxious.
Speaker 1: And I think they're spending patterns are going to change,
Speaker 1: and unless we see some big change that the fear
Speaker 1: of going back to work is a big deal. And
Speaker 1: people say, well, I'll quit my job if I have to,
Speaker 1: or our retire and that's what we're seeing in the data.
Speaker 1: And you think that stays with us much longer or
Speaker 1: or does it? At some point? Danny right at itself.
Speaker 1: I mean, at some point we get beyond this fear.
Speaker 1: I mean, I guess what I'm asking you is this
Speaker 1: going to be a protracted recession or is this going
Speaker 1: to be kind of a hit? Yeah? What a great question.
Speaker 1: I don't know. I mean, obviously that the issue in
Speaker 1: each of these cases is when do you go into it,
Speaker 1: how long is it going to last? And how quickly
Speaker 1: are you going to be able to persuade those fears.
Speaker 1: So I think the answer is that if you can't,
Speaker 1: it's going to go on for quite a long time.
Speaker 1: If you can, and people become confident that you know,
Speaker 1: the virus has been been solved, it's ever everything's okay,
Speaker 1: that's fine that it's appears in these days where people
Speaker 1: are very worried about having to go back to the work,
Speaker 1: having to stop doing remote work. And I think that's
Speaker 1: the really big thing. I mean, the other thing is
Speaker 1: we're talking. I mean, people have been talking about the
Speaker 1: FED bit going to taper big era. Should we not
Speaker 1: be doing that. That's exactly mistake they made in a
Speaker 1: great recession. Didn't spot it well? We know in these
Speaker 1: days they told us in July oh seven they were
Speaker 1: forecasting recession coming in December seventh, and the FED even
Speaker 1: by September eight havn't worked it out. So we should
Speaker 1: be very fearful that the Fed will make an error again.
Speaker 1: It's absolutely clear in these days the last thing they
Speaker 1: should be doing is even thinking about taking so nothing
Speaker 1: and nothing for what any of the meetings this year
Speaker 1: in your view, Oh, absolutely nothing. They should be thinking
Speaker 1: about whether necessary, what they can do about further stimulus. Yeah,
Speaker 1: I'm trying to think we've had We've had a discussion
Speaker 1: with somebody else who said it's not going to be
Speaker 1: a case of pulling back, but you know, reigniting some
Speaker 1: of the stimulative measures. So Danny, if the FED does
Speaker 1: indeed go through with its taper measures later this year,
Speaker 1: and we are indeed in a recession already. Help us
Speaker 1: paying a picture for for what the U. S economy
Speaker 1: looks like in a year. Well, again, it's a very
Speaker 1: good question. I mean, in a way, we're pretty good
Speaker 1: at getting to the start. I mean, it's going to
Speaker 1: take a while to get out of it. It's going
Speaker 1: to take a while for the economy to pick back up.
Speaker 1: I mean, I certainly think we're going to start to
Speaker 1: see unemployment rates rising. Um that that's the big story
Speaker 1: I think, and people being you know, wages are going
Speaker 1: to be certainly going to wage grow. It is certainly
Speaker 1: going to come down, and we're going to have to
Speaker 1: start to think about something obviously, the impact of the steamulus,
Speaker 1: the measures being discussed in Congress. If you can get
Speaker 1: these infrastructure builds and spending builds in place, that will
Speaker 1: that will help to asuade this this negative shots coming.
Speaker 1: I think you've got to persuade people that they can
Speaker 1: go back to work safely. Otherwise they're going to stop,
Speaker 1: they're gonna stop spending. They're not going to go back
Speaker 1: to work, They're going to quit. And that's the big deal.
Speaker 1: People are frightened, and that's what's true in the data.
Speaker 1: People are frightened. You do, dofully see that that people
Speaker 1: are having a hard time, you know, making sense of
Speaker 1: and clearly explaining what's going on the labor market. Danny,
Speaker 1: thank you so much. I'm glad you're back at campus,
Speaker 1: Stay safe, and so glad to check in with you.
Speaker 1: Danny blanche Flower, professor of economics at Dartmouth College and
Speaker 1: former Bank of England policymaker. That story you can find
Speaker 1: it too at Bloomberg dot com. This is Bloomberg Business
Speaker 1: Week with Carol Master and Bloomberg Quick Takes. Tim Stenovich
Speaker 1: from Bloomberg Radio. Well, let's talk more crypto and joining
Speaker 1: us now to do that as Eric Irvin, the co
Speaker 1: founder and chief investment officer of on Ramp invest. Eric
Speaker 1: joins us on the phone from Sandy go. On Rap
Speaker 1: Invest is a fintech company. What does is it provides
Speaker 1: education and access to people about crypto assets for financial planners. Eric,
Speaker 1: I've I've been talking a lot. We we do talk
Speaker 1: a lot about crypto. I've been talking a lot about
Speaker 1: crypto on Quick Take stock or or quick Take show
Speaker 1: that there's each day at noon Eastern time. And one
Speaker 1: thing that I keep coming back to is the idea
Speaker 1: that there is so much confusion about what a cryptocurrency is,
Speaker 1: what is bitcoin versus blockchain, what ether versus ethereum is?
Speaker 1: And I still think there's so much room for the
Speaker 1: general consumer to actually understand more about the space. What
Speaker 1: are you guys doing at on ramp invest to to
Speaker 1: raise awareness? Yeah, and and it's funny that you mentioned
Speaker 1: that when I first got got involved, that we call
Speaker 1: it the rabbit hole where you know, first you you
Speaker 1: start to dig in, and first you dismiss it, and
Speaker 1: and then later on you kick yourself for for dismissing it.
Speaker 1: But but as you go deeper and deeper into the
Speaker 1: rabbit hole, it's a completely new financial system, right, And
Speaker 1: and so you can't just take the conventional framework of
Speaker 1: of what we know as as an asset class and
Speaker 1: then just apply it here, So you have to almost
Speaker 1: like learn everything from scratch. So um, So that's exactly
Speaker 1: what Invests is doing is is just starting with the education.
Speaker 1: We're educating financial advisors so they can educate their clients
Speaker 1: about what is a crypto asset, what's the cryptocurrency? Like
Speaker 1: you say, what's about big B bitcoin versus little B bitcoin,
Speaker 1: the blockchain itself, the network versus the token, the trades
Speaker 1: on that network, and and then just starting there and
Speaker 1: then starting to open their eyes towards sorry, how does
Speaker 1: it behave in a portfolio? And how can your clients
Speaker 1: invest in? And what about the state planning issues and
Speaker 1: all of those different assets. When clients can actually own
Speaker 1: an asset entirely themselves, they don't have to necessarily have
Speaker 1: it at a custodian so um so yeah, really, that's
Speaker 1: that's the the idea behind un ramp a cat to me.
Speaker 1: And then there's the platform which gives people access so
Speaker 1: that they can invest in the asset class themselves or
Speaker 1: through I have to jump in because I do find
Speaker 1: it interesting that even people who have been writing stories,
Speaker 1: doing lots of research, or you know, my colleagues who
Speaker 1: are super smart and just people you know, smart investors,
Speaker 1: are still like, I don't quite get the scripto thing.
Speaker 1: So there is a lot of education that needs to
Speaker 1: be here. What seems to be the biggest thing, especially
Speaker 1: when it comes to you know, our I as who
Speaker 1: have been so used to you know, asset classes that
Speaker 1: you know, we pretty much understand how this works. For
Speaker 1: the most part, um what seems to be, you know,
Speaker 1: the typical training and the things that they need to
Speaker 1: truly understand so that they can represent it well to
Speaker 1: their clients, especially in an environment where still regulators are
Speaker 1: trying to figure it out. Yeah, and and this is
Speaker 1: probably the first sset class. I used to be a
Speaker 1: finance advisor many years ago, and this is probably the
Speaker 1: first st class that I can think of. The clients
Speaker 1: know more about it than the advisors. So the clients
Speaker 1: are coming to the advisor asking them questions. And it's
Speaker 1: not necessarily about the advisor getting educated so that they
Speaker 1: can present why why crypto makes sense or why um
Speaker 1: it doesn't or you know, this asset person is that
Speaker 1: it's really just what, you know, how do they handle
Speaker 1: themselves as their clients are bringing questions to the table.
Speaker 1: And so that's that's one of the most interesting pieces
Speaker 1: of this is, you know, this entire ecosystem grew up
Speaker 1: outside of the traditional financial system and and no one
Speaker 1: ever thought that it could become this two trillion dollar
Speaker 1: asset class and now here we are. But everything had
Speaker 1: to grow up outside and so there's there's this chasm
Speaker 1: in between stock exchange and the crypto asthetic exchanges. Hence
Speaker 1: that you know, like the demand for any ts go
Speaker 1: go get that bitcoin, wrap it up and bring it
Speaker 1: onto this exchange so I can talk about it and
Speaker 1: I can buy it. And that's um. That's really kind
Speaker 1: of like the unique piece here is it's more than
Speaker 1: an investment vehicle. It's a whole tool we can use. Yeah,
Speaker 1: we'll put on your financial advisor hat, put it back
Speaker 1: on for a second, grab it off the off the rack,
Speaker 1: and throw it back on. Because earlier this week, our
Speaker 1: colleague Eric Shatzker here spoke with Don Fitzpatrick, the chief
Speaker 1: investment officer for George Soros's family office. She said that
Speaker 1: crypto has quote gone mainstream, and Eric came on our
Speaker 1: show and made the point that institutional investors are not
Speaker 1: ignoring crypto anymore, and they're allocating a small portion, whether
Speaker 1: it's two percent or five percent, what have you to
Speaker 1: cryptocurrency translate that for the normal person and the normal
Speaker 1: person's portfolio. Do you suggest that everybody have a sliver
Speaker 1: of their assets in crypto? Yeah, I do, I personally do,
Speaker 1: and I and I think the mass kind of bears
Speaker 1: it out as well. It is. You know it's I
Speaker 1: kind of talk about this rule of three where you
Speaker 1: know no more than if you've never invested in it
Speaker 1: and you don't understand it, then no more than three
Speaker 1: percent of your kind of investible net worth should to
Speaker 1: go into this and this is probably like your liquid
Speaker 1: investible networth. And then commit to three years, like, don't
Speaker 1: touch it for three years before before you do anything.
Speaker 1: And then if you can, because it's so dang volatile
Speaker 1: dollar cost average, so three percent of your discretionary income
Speaker 1: that you can apply to it. And if you can
Speaker 1: do that, then you'll probably end up with a pretty
Speaker 1: good outcome. But even if you don't, if you take
Speaker 1: take more of a like kind of an institutional approach,
Speaker 1: a smaller allocation like that because it is not correlated,
Speaker 1: has meaningful benefits, especially if you're rebalancing on a regular
Speaker 1: basis because it's so volatile. Hey, listen, we gotta run, Eric,
Speaker 1: Thank you so much and look forward to checking with
Speaker 1: you again. Eric Irvin uh Heaths, co founder, chief investment
Speaker 1: officer at on Ramp invest with us from San Diego.
Speaker 1: You're listening to Bloomberg. Mo. Yeah, but you let me drive?
Speaker 1: Oh no, no, no, no, this is not ain. Please,
Speaker 1: I want to drive. It's a good question. Good drive.
Speaker 1: This is the Drive to the Globes on Bluebird Radio.
Speaker 1: So just about ten minutes left U in today's trading session.
Speaker 1: It is time for the Drive to the clothes. Let's
Speaker 1: get to it with Alan Lance, a friend of the show,
Speaker 1: research director at Lance Global dot com, President of allenby
Speaker 1: Lance and Associates. He's back with us on the phone
Speaker 1: from Toledo. You're gonna explain the wackiness that we've seen
Speaker 1: in the markets as of late. I'm counting on you, Allen.
Speaker 1: How are you it's been I'm doing well, thank you.
Speaker 1: Uh yeah, it's been an amazing market. I mean what
Speaker 1: we've seen is, you know, a select group of bubbles
Speaker 1: that have formed and and been popped and and and
Speaker 1: then resurrected. You saw that in the beginning of the year,
Speaker 1: you know, with um the Spack in the Spack Arena,
Speaker 1: and then the I P. O craze and and uh
Speaker 1: we have the mega tech name, the growth oriented names
Speaker 1: that last month finally fall from grace and and I
Speaker 1: think that's what we're going to see in this type market.
Speaker 1: You know, big Bitcoin collapse and now it's you know,
Speaker 1: pushing back up and and you know it's good for
Speaker 1: the investor, you know, I like these rotational corrections. Um.
Speaker 1: You know, we expected more volatility the second half of one,
Speaker 1: and that's what we're getting, even a greater variety than
Speaker 1: than we even expected. Well, it's interesting that you mentioned bitcoin,
Speaker 1: and we definitely have seen a big move up this
Speaker 1: this week, and it continued to trend higher. I mean,
Speaker 1: we went back up above fifty thousand, just crossing the bloomberg.
Speaker 1: The Body Administration weighing an executive order executive order on
Speaker 1: cryptocurrencies as part of an effort to set up the
Speaker 1: government wide approach to the white hat classet classes. According
Speaker 1: to people in the know, the proposed directive would charge
Speaker 1: federal agencies to study and offer recommendations on relevant areas
Speaker 1: of crypto, touching on financial regulation, economic innovation, and national security.
Speaker 1: According to those in the know, So it does feel
Speaker 1: like Alan, and I know we tend to talk about
Speaker 1: much more traditional assets, but it does feel like um,
Speaker 1: whether it's the SEC and Gary Ginsler, whether it's j
Speaker 1: Powell in a recent recent testimony up on Capitol Hill,
Speaker 1: we do see like regulators those we look to for
Speaker 1: guidance increasingly kind of stepping up and giving us some clarity,
Speaker 1: and they're not going to ban it, and they're thinking about, Okay,
Speaker 1: how do we regulate it? Yeah, I think it's legitimizes
Speaker 1: the asset and you know that's positive for the long
Speaker 1: term and and that's why you see it moving up.
Speaker 1: So you'll you'll still have the volatility. I mean a
Speaker 1: lot of this even with natural gas prices. It's short
Speaker 1: covering and what's going on you know overseas, you know,
Speaker 1: so so it's really hard to anticipate these swings, especially
Speaker 1: the magnitude of them. But well, do you do you
Speaker 1: invest in crypto? Um? No, No, we really haven't. Um,
Speaker 1: you know, we've had some clients that wanted to get
Speaker 1: involved and we bought for them, you know, in the weakness,
Speaker 1: Uh don't don't really chase. So we use our uh
Speaker 1: you know, long term um, you know, defensive type strategies
Speaker 1: into that. But for our our average client, now we
Speaker 1: we we really haven't. I'd rather buy indirectly and in
Speaker 1: ways that we think, you know, like the video and
Speaker 1: what have you that can benefit but not you know,
Speaker 1: betting solely on you know, bitcoin or you know, one
Speaker 1: one atht amongst amongst that that that that whole vertical
Speaker 1: the so called if you will pitch pitch for our
Speaker 1: picks and shovels right of of of the cryptocurrency boom. Hey, alan, um,
Speaker 1: help us make sense of today's jobs report because it's
Speaker 1: pretty much ahead scratch or a huge miss coming in
Speaker 1: and under two hundred thousand when economist survey by Bloomberg
Speaker 1: expected five hundred thousand, the market not really knowing what
Speaker 1: to make of it. It does it change things for
Speaker 1: the Fed? Um? You know I think it it might
Speaker 1: uh delay, you know, it looked like that, you know,
Speaker 1: they might do something, you know, more quickly than what
Speaker 1: they're talking up the beginning of a year, you know,
Speaker 1: with the latest FED meetings and and you know it
Speaker 1: might get delayed. Obviously they're gonna wait for more data
Speaker 1: coming in. So you know, if that is a trend, obviously,
Speaker 1: I I think it will change. But you know it's
Speaker 1: been again so volatile, just like the stock market that um,
Speaker 1: you know, we'll have to wait and see. Yesterday's lumbers
Speaker 1: weren't weren't bad, and then today's were you know totally um,
Speaker 1: you know, the opposite, so so it's a matter of
Speaker 1: I think they're gonna wait for more evidence, all right.
Speaker 1: So it's tricky if I look at the SNP five
Speaker 1: hundred names lower higher, this is just some basic stats
Speaker 1: on the market to unchanged. So we are seeing increasingly
Speaker 1: a risk off trade. We've talked about that fifty day
Speaker 1: moving average on the SNP five hundred, that trend line
Speaker 1: moving lower. Even though we kind of moved uh not
Speaker 1: kind of, we did move back above it. Um people
Speaker 1: are making investment bets. There are stocks that are gaining,
Speaker 1: their stocks that are losing. Where would you be putting
Speaker 1: money right now? Allan, I still think it's it's a
Speaker 1: matter of being you know, just selecting the right companies,
Speaker 1: companies that have a catalyst that it's not yet recognized
Speaker 1: on Wall Street, you know. And this way you can
Speaker 1: outpace the market, you know, whether it's down or flat.
Speaker 1: I think it is going to be challenging. So I know,
Speaker 1: last time we talked about Ball Corp. And that's moved up,
Speaker 1: and and we bought some tech Resources, which is a
Speaker 1: copper play, and and I like um real assets. We
Speaker 1: bought Murk near its lows and it's moved up, you know.
Speaker 1: With with a catalyst. So I like the biotech special situations. Um,
Speaker 1: you know, I like uh Tutor Parny, which is uh TPC.
Speaker 1: Uh it's an infrastructure play. But also I think they're
Speaker 1: turning around some some problems they had. So so if
Speaker 1: you get the infrastructure, you've got that catalyst. If you don't,
Speaker 1: I think the company specifically can can be a special situation.
Speaker 1: And I think those are the areas you really got
Speaker 1: to concentrate in instead of just playing you know, the
Speaker 1: broad market, which I think it's gonna be difficult the
Speaker 1: second half the year and and uh, you know it's
Speaker 1: gonna be flat flat the down and you're going to
Speaker 1: see more days like today where you just have to
Speaker 1: be in the right areas. So are you staying in
Speaker 1: the right areas? Are you using this as an opportunity
Speaker 1: to pull back your own hold things, build a little
Speaker 1: bit of cash and wait for the market to move
Speaker 1: even lower. Yeah, we've been raising cash this summer into
Speaker 1: the strength, so we have used some of that for
Speaker 1: September sell off. And and if the market you know,
Speaker 1: continue to advance and touch on new highs, you know,
Speaker 1: we'd be pruning, especially areas that have done you know,
Speaker 1: so well, and that's really paid off in the long run,
Speaker 1: and I think it will continue to just reduce risk
Speaker 1: when the markets are high and and then uh, you
Speaker 1: know when there's panic selling trying to accumulate quality. Hey
Speaker 1: just quickly, just got about thirty seconds out. And there's
Speaker 1: still though we've got some clarity at a d C.
Speaker 1: But again we're we've got a new clock ticking down
Speaker 1: to December. So it does feel like in terms of
Speaker 1: those things that can create some uncertainty in the market,
Speaker 1: there's still a bunch out there for investors to have
Speaker 1: to deal with. Incredible number of things out there, Carol.
Speaker 1: You know, you've got rising interest rates, You've got you
Speaker 1: know the situation which China, You've got supply chain items.
Speaker 1: I mean, it is a long list. And that's why
Speaker 1: you know, the second half the year we said we're
Speaker 1: gonna see volatility in both directions and just you know,
Speaker 1: all but down and that you know, it's time to
Speaker 1: really be selective and and take take some profits. And
Speaker 1: and I don't think it's going to be an error
Speaker 1: to raise cash in any strength. I don't expect this
Speaker 1: to be a two thousand, you know, eight nine, or
Speaker 1: but I do expect it a difficult market, alright. Listen.
Speaker 1: Always good to check in with you. Allen Lance. He
Speaker 1: is Research director at Lance Global dot com, President of
Speaker 1: allenby Lance and Associates. Thanks for listening to Bloomberg Business Week.
Speaker 1: Download the podcast on iTunes, SoundCloud, or Bloomberg dot com,
Speaker 1: and you can also listen to our radio show at
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Speaker 1: Search to Bloomberg Global News