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Speaker 2: Area Pollock, chief e commerce at zip Recruiter, joins us
Speaker 2: Julia talk to us about how you're looking at the
Speaker 2: labor market here in the US. Has it changed over
Speaker 2: the last several months.
Speaker 3: Yes, but it hasn't changed along the margin that people
Speaker 3: were most worried about, So we haven't really seen layoffs
Speaker 3: take up, and initial claims have been remarkably stable, even
Speaker 3: in Washington, DC, Virginia and Maryland, the areas where federal
Speaker 3: workers are most heavily concentrated. We haven't seen the impact
Speaker 3: public layoffs on the rest of the economy yet. The
Speaker 3: unemployment rate seems like it's pretty stable too, and there
Speaker 3: are a couple of reasons for that. One is that
Speaker 3: many of these workers are still on administrative leave, they're
Speaker 3: still on payrolls. The other what we're seeing at zip
Speaker 3: recruiter is that when these federal workers, even those who
Speaker 3: haven't been cut yet, just those who anticipate possibly being
Speaker 3: cut in the future go out and look for jobs.
Speaker 3: They're actually faring better than the rest of the workforce.
Speaker 3: So among those government workers who were just hired by
Speaker 3: a new job in the last few months, seventy six
Speaker 3: percent said the job search went well, compared to sixty
Speaker 3: percent of the workforce overall. And among those who are
Speaker 3: still searching, thirty two percent say their job search is
Speaker 3: going well. That doesn't seem like a big number, but
Speaker 3: it's three times higher than what we see among other
Speaker 3: job seekers, only thirteen percent say their job search is
Speaker 3: going well well.
Speaker 4: That's interesting because I thought with the jobs the A.
Speaker 4: Jolts number that we heard is that job switchers don't
Speaker 4: have the upper hand anymore, definitely in terms of salary,
Speaker 4: and that maybe job switching has to come down at
Speaker 4: that quick rate, not necessarily as high. That's not what
Speaker 4: you're seeing.
Speaker 3: We are seeing that overall, but government workers are doing
Speaker 3: better than most. And it is true though that a
Speaker 3: pretty large share, about forty percent, are taking a pay
Speaker 3: cut when they get that new job. We often hear
Speaker 3: about federal workers being paid so much less than they
Speaker 3: could make elsewhere, and they're sacrificing and to do public service.
Speaker 3: It's not always exactly true. Public sector wages are fairly high. Actually,
Speaker 3: they're not necessarily lower than what people can get in
Speaker 3: the private sector, especially when you factor in total compensation,
Speaker 3: benefits and the sort of value of job security. So
Speaker 3: people are taking a pay cut in much higher numbers
Speaker 3: than is ordinarily the case for job switches.
Speaker 2: Julia, what is the ZIP Recruiter Job seekert Confidence Index
Speaker 2: and what is it telling you that now?
Speaker 3: So we measure job seecret confidence using a battery of
Speaker 3: ten confidence questions, and then we also ask job seekers
Speaker 3: every quarter about everything else that involved that job search
Speaker 3: entails and how they're experiencing the labor market, what they
Speaker 3: expected to get, what they're actually finding jobs at. Your
Speaker 3: confidence is almost back at some of the lowest we've
Speaker 3: ever measured. All of the soft data has gone south recently.
Speaker 3: There was a brief surge of optimism in the fourth quarter,
Speaker 3: but the first quarter data is fairly weak. There's a
Speaker 3: tremendous amount of anxiety because there is just so much
Speaker 3: uncertainty in this economy. And then, of course, you know
Speaker 3: the labor market has slowed over over two years. Hiring
Speaker 3: is very slow, and so it's a pretty good labor
Speaker 3: market if you have a job that you love. If
Speaker 3: you don't and you want to make a change, it's
Speaker 3: a pretty tough one.
Speaker 4: We take a look at, say, some of the confidence
Speaker 4: data that we got earlier this week, Julia, and you're
Speaker 4: starting to see some people worried about their jobs, worried
Speaker 4: about the future, worried about their pay. Is that justified
Speaker 4: from what you see?
Speaker 3: So, I think that's a continuation of what we've seen
Speaker 3: over the last two years, where the lame market has
Speaker 3: cooled along multiple dimensions. First, hiring slowed and narrowed. So
Speaker 3: if you're in healthcare or local government, you know there's
Speaker 3: a pretty strong demand for what you can do. But elsewhere,
Speaker 3: professional business services have added no jobs of the last
Speaker 3: two years. Tech has added no jobs over the last
Speaker 3: two years. And that's at a time when more and
Speaker 3: more Americans have actually entered these occupations and trained for them.
Speaker 3: We have more and more college graduates, We have more
Speaker 3: and more of those college graduates majoring in computer science,
Speaker 3: and so the lame market's not absorbing these new people
Speaker 3: into the roles where they want to be. About fifty
Speaker 3: percent are having to switch industries to roles they didn't
Speaker 3: want in order to get hired. And then we're seeing
Speaker 3: hours being cut too. So people aren't losing jobs, but
Speaker 3: they're losing hours. The work week is just thirty four
Speaker 3: four point one hours. That's a level we usually see
Speaker 3: in recessions in good times, that usually harvers between thirty
Speaker 3: four point three and thirty four point six hours. And
Speaker 3: we're seeing it have effects. We're seeing it cause the
Speaker 3: share of workers who are part time for economic reasons
Speaker 3: to hit the highest level since January twenty nineteen. And
Speaker 3: also we're seeing the highest number of workers working multiple
Speaker 3: jobs and they're not making bus This is not just
Speaker 3: opportunity driven. Yes, we have a very flexible labor market
Speaker 3: where people are able to cobble together multiple gigs, but
Speaker 3: it's not people doing that to earn more than they
Speaker 3: would in one job. They're only coming out just as well.
Speaker 3: According to a study by the Fed.
Speaker 2: Julia, for the longest time, really over the last several years,
Speaker 2: it just seems like employers have had a hard time
Speaker 2: finding and retaining workers. We even talked about hoarding of employees.
Speaker 2: Is that still a thing?
Speaker 3: So the pendulum has swung back to employers, and most
Speaker 3: employers now are saying that that's not their biggest struggle.
Speaker 3: They are especially for for most roles, we actually see
Speaker 3: pretty large numbers of applications for posting. If you're posting
Speaker 3: a job for either an HR or for a receptionist
Speaker 3: or for a PR manager, you are going to get
Speaker 3: possibly hundreds of applications. There are a few industries where
Speaker 3: employers are starved for talent. Those are sort of healthcare fields,
Speaker 3: physical therapists, occupational therapists, speech and language pathologists, nurses. Those
Speaker 3: roles are very hard to fill. And then the skilled
Speaker 3: traits plumbers, electricians, carpenters, those are also very difficult. Fortunately,
Speaker 3: we're seeing wages go up fastest in those sectors in
Speaker 3: healthcare and manufacturing right now, and that is that that
Speaker 3: information is actually getting through to job seekers. We're seeing
Speaker 3: more and more people in role in vocational training programs
Speaker 3: and more and more people enroll in nursing programs.
Speaker 4: All right, we really appreciate Julia. Thank you so very much.
Speaker 4: Julia Pollock, chief economist at ZIP Recruiter.
Speaker 1: This is the Bloomberg Survey. Alen's podcast. Listen live each
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Speaker 2: Wendy Schulder joins it. She's a professor at Brown University.
Speaker 2: If we love checking in with Wendy Shielder, get a
Speaker 2: lay of the land on all things happening down in DC.
Speaker 2: So when we look at these tariffs here, they're certainly
Speaker 2: front center here for us on Global Wall Street. How
Speaker 2: did the folks in Washington, DC think about this growing
Speaker 2: trade war that seemingly is being ginned up by this
Speaker 2: administration across a number of countries and a number of
Speaker 2: different industries.
Speaker 5: Well, I mean, I think the troministration has announced.
Speaker 6: Really big tariffs and then pulled back or implemented them
Speaker 6: for a day or two and pulled back, and so
Speaker 6: far it sort of looks like a negotiating game.
Speaker 5: What can we get? But this is a deeper issue
Speaker 5: for the trumpministration.
Speaker 6: In the first Trump administration, there was a promise to
Speaker 6: make America great again and bring back jobs that had
Speaker 6: been lost from really thirty years more than thirty years
Speaker 6: of free trade policy.
Speaker 5: You know, manufacturing plants.
Speaker 6: Closed and relocated, primarily in this case to Mexico to
Speaker 6: some extent to Canada. So you've got a situation where
Speaker 6: the physical plant is gone or shut down. And you know,
Speaker 6: Trump did not bring back manufacturing jobs in his first term,
Speaker 6: so there seems to be a commitment to put a
Speaker 6: lot of pressure to bring those back. But it takes
Speaker 6: a very long time to build a new plant or
Speaker 6: get an old plant up and running again, and it's
Speaker 6: cost prohibitive right now and in a global market. So
Speaker 6: how they do the second part of this is the
Speaker 6: big question mark slapping tariffs on cost.
Speaker 5: Consumers money in the short run.
Speaker 6: The argument is the long run, it'll bring back jobs
Speaker 6: to America, but there doesn't even be a plan.
Speaker 5: To do that right now.
Speaker 3: So that's a great question.
Speaker 4: That's a great point because I was asking that at
Speaker 4: Hugh Johnson just a few moments ago, and I was saying, look,
Speaker 4: the move away from say a government support or aemy
Speaker 4: supported by fiscal spend to an economy supported by private spend,
Speaker 4: is that in general something that is realistic? And what
Speaker 4: support do you think we need to see to then
Speaker 4: help those companies and help the private money.
Speaker 6: Well, Alex, something I think you can make an argument
Speaker 6: that we could reduce the size and scope and footprint
Speaker 6: of the federal government financially, in terms of people, in
Speaker 6: terms of regulation. You can make that sound argument, and
Speaker 6: you could actually try to implement that in a way
Speaker 6: that's gradual. You can't, you know, it's like weaning off
Speaker 6: anything else. You've got a full supply of this for
Speaker 6: so long. People are quite used to it, and they
Speaker 6: make decisions based on consumers, households, businesses make decisions about
Speaker 6: the flow continue on the flow of federal money and
Speaker 6: free trade. So you take both of those away at
Speaker 6: the same time, I think you really bring the economy,
Speaker 6: you know, not to a halt, but certainly do a
Speaker 6: lot of damage not only to current spending but future planning.
Speaker 6: And we're seeing consumer sentiment going down. We're seeing people
Speaker 6: pull back. Now, if you want to buy a new car,
Speaker 6: if these if these terrif fold, then it will be
Speaker 6: more expensive or mind people of the supply chain issues
Speaker 6: under COVID, when cars cost anywhere from three to six
Speaker 6: thousand dollars more than they should have, that will slow
Speaker 6: down consumer spending. And as you say, Alex, consumer spending
Speaker 6: is still a big engine that drives a US economy.
Speaker 2: Wendy, I'm thinking about where the president's support is here,
Speaker 2: where maybe some of the Democratic support might be. And
Speaker 2: I think we've got something coming up in Wisconsin next week,
Speaker 2: an election for the state Supreme Court. I know Elon
Speaker 2: Musk has spent a lot of money in there for
Speaker 2: the GOP candidate. Are you looking to this state Supreme
Speaker 2: court kind of situation in Wisconsin next week? Is that
Speaker 2: any kind of referendum on where the president's support might be.
Speaker 5: Well, this is a great question.
Speaker 6: Democrats are trying to really rally their base and they
Speaker 6: haven't really had anything to latch onto that's hit everybody right.
Speaker 5: There hasn't been a massive national impact on some of
Speaker 5: these policies yet. But these small elections.
Speaker 6: There's one in Pennsylvania for state Senate Democrat won in
Speaker 6: a Republican district.
Speaker 5: Florida there's two congressional seats.
Speaker 6: Those polls are looking much tighter than anybody would expect
Speaker 6: in Republican leaning districts. So this Supreme Court race is
Speaker 6: getting a lot of attention. If a Democrat or a
Speaker 6: Liberal wins, then the court stays a little more liberal.
Speaker 6: If the conservative wins, it reverts back to being more conservative.
Speaker 6: So it's a benchmark, But there were lots of these
Speaker 6: benchmarks leading into twenty four and the president won easily.
Speaker 6: So I don't think it's a big harbinger of national trends.
Speaker 6: But I do think that if it starts to build
Speaker 6: pressure at the local level in states like Wisconsin and
Speaker 6: Pennsylvania on Republican members of Congress, particularly Republicans in the House,
Speaker 6: then signals get sent to the White House that maybe
Speaker 6: they need to change some of the things that they're doing.
Speaker 5: But we're a long way from.
Speaker 4: That, a long way from that. And also we're sort
Speaker 4: of moving towards a phase two, right, So you get
Speaker 4: the tariffs first and then hopefully the tax cuts and deregulation.
Speaker 4: How soon do we have to get that phase two
Speaker 4: to calm any sort of underlying chaos.
Speaker 6: Well, I mean, the tax cuts are something that people
Speaker 6: talk about and they get sort of encouraged about. But
Speaker 6: remember that's a long process too. When they come in,
Speaker 6: that's a complicated process. The House and Senate are going
Speaker 6: to come in very different in their packages. On the
Speaker 6: tax bill, there's lots of different things, earned income tax
Speaker 6: credit for example, people who are poor or people who.
Speaker 5: Are low income. You know, is that going to still exist?
Speaker 6: There are things that will affect all levels of the economy,
Speaker 6: and so it's not clear that it will be a
Speaker 6: win for the Republicans just to pass the bill. It
Speaker 6: very much depends obviously what's in the bill and who
Speaker 6: it's hitting and who it's helping.
Speaker 5: So I think those.
Speaker 6: Effects don't happen really until next year in terms of
Speaker 6: the psyche of America.
Speaker 5: But you know, the Biden.
Speaker 6: Administration left Trump with high inflation, we can all agree
Speaker 6: on that, but a relatively robust economy, and now that
Speaker 6: economy is starting to look very shaky.
Speaker 5: And that's the big question more for the Republicans in
Speaker 5: the Congress.
Speaker 6: Do you want to wait till that actually happens and
Speaker 6: you're looking at twenty twenty six right in front of you,
Speaker 6: or do you want to try to forestall that with
Speaker 6: the Trump administration now be wedy?
Speaker 2: Is this signal chat situation for this administration?
Speaker 6: You know, I on Tuesday morning, I was talking about it,
Speaker 6: and I thought, well, people make mistakes, people use apps,
Speaker 6: they add people by mistake, and I didn't see the
Speaker 6: Republicans sort of getting riled up about it. But the
Speaker 6: Senate Republicans in particular Republican senators are very unhappy about this,
Speaker 6: and Republican hardliners in the House on foreign policy are
Speaker 6: unhappy about it, and they do.
Speaker 5: Have seemed to have come together to say, clean up
Speaker 5: your act.
Speaker 6: You know, Trump will not get rid of anybody tomorrow,
Speaker 6: but Trump will get rid of people if they are
Speaker 6: not serving him well. And I think this is sort
Speaker 6: of a signal literally no pun intended, you know, make
Speaker 6: sure that this doesn't happen again. If it happens again,
Speaker 6: then people start to think, Okay, we don't have any
Speaker 6: confidence in the Pentagon or the leadership of the Pentagon
Speaker 6: and the national security team that affects US worldwide. I
Speaker 6: think that's something Trump would have to pay attention to.
Speaker 4: When we take a look, say at foreign policy, we
Speaker 4: just broaden that out then for a moment significant and
Speaker 4: kind of where are we in the talks between US
Speaker 4: and Russia about Ukraine? When can we really expect more
Speaker 4: movement here?
Speaker 5: Well?
Speaker 6: You know, I think I think Trump is basically indicated putin, look,
Speaker 6: you're gonna walk away. You could walk away with some
Speaker 6: victory here, you know, if you end it. Then we
Speaker 6: stop sending the arms, we stop aiding Ukraine, and you know,
Speaker 6: you walk away with some territory and you're not getting
Speaker 6: all your people killed, Like this is a good deal
Speaker 6: for you, and we will get some mineral rights, or
Speaker 6: we get some natural resource rights, We'll get some steak
Speaker 6: in Ukraine. I mean, that's the ideal situation, frankly, for
Speaker 6: all the parties involved. The United States gets a steak,
Speaker 6: Ukraine still has the United States on its side, and
Speaker 6: Russia gets out of a difficult and expensive war. But
Speaker 6: so far Putin's not biting I think the way that
Speaker 6: Trump had hoped. But I do think that's a consistent
Speaker 6: position the United States can maintain. There's enough support in
Speaker 6: Congress for continued a Ukraine, so Trump wants to keep
Speaker 6: that going. He can get that permission and that aid
Speaker 6: from Congress. It's Trump that's been saying it's not a
Speaker 6: good deal for the United States. So I think in
Speaker 6: that way, they're sort of waiting for Russia to decide
Speaker 6: this is the best they're going to do, and so
Speaker 6: far we're not getting the signal that Putin thinks that
Speaker 6: it is the best that he can do.
Speaker 2: Wendy thank you so much for joining us. We always
Speaker 2: appreciate getting a few minutes of your time. Wendy Schuller,
Speaker 2: She's a professor at a Brown University.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
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Speaker 2: Let's talk about TMT here. I want to talk about
Speaker 2: technology stocks. I'm we got the NASTAC It's down ten
Speaker 2: percent year today. That's a correction, kids. I don't know.
Speaker 2: And if you need the tech market to lead this
Speaker 2: market higher like it has forever, do we have a
Speaker 2: problem for this market? Melissa Auto joins it. She's head
Speaker 2: of TMT research for S and P Global Visible Alpha. Melissa,
Speaker 2: when you talked to your clients, are you positive about
Speaker 2: tech these days or not? Has it played itself out
Speaker 2: at least for the near term?
Speaker 7: Good morning, Great to be here.
Speaker 6: It is.
Speaker 7: Tech is a bit all over the place at the moment.
Speaker 7: I think there are there's an overhang of uncertainty for
Speaker 7: companies that have China exposure. There is shifting of tides
Speaker 7: as companies are moving toward different aspects of AI, and
Speaker 7: then there are there's a bit of slowing, you know,
Speaker 7: as companies are more exposed to the consumer. So I
Speaker 7: think it's you know, it's a tale of multiple aspects there.
Speaker 4: And what I found is so interesting about the MAG
Speaker 4: seven slide yesterday down three percent is that some of
Speaker 4: the individual stories for within the MAG seven we're all
Speaker 4: kind of different, right Like Tdcowan had a note out
Speaker 4: about Microsoft canceling some data center projects, Tesla was cut
Speaker 4: to hold, Nvidia might have some issues within China energy
Speaker 4: rules for chip imports. Google said that maybe extually mean
Speaker 4: Millennium said that Google could lose younger users to open
Speaker 4: AI search like there were different things. That wasn't a
Speaker 4: theme which is the biggest stresser for these guys right now.
Speaker 7: The biggest stressor right now, I think is whether or
Speaker 7: not we're going to really see inferencing its scale, and
Speaker 7: what that means is that there's been so much infrastructure spent.
Speaker 7: I mean, I've been on this show talking about the
Speaker 7: billions and billions and billions of dollars in CAPEX that
Speaker 7: we've seen from the cloud service providers that have gone
Speaker 7: into data centers and what is that ultimately going to
Speaker 7: net what's going to be the ROI of that for
Speaker 7: all of the companies that are leveraging and using that compute.
Speaker 7: And I think that's where we really haven't seen a
Speaker 7: viable business model for generative AI, where companies are leveling
Speaker 7: this and then the output of it still remains somewhat dicey,
Speaker 7: especially for more complex anything that's got a little bit
Speaker 7: of complexity around it is still not seeing the accuracy
Speaker 7: that it requires.
Speaker 2: In video, I mean it's down fifteen percent year to date.
Speaker 2: I kind of and I think a lot of people
Speaker 2: who don't traffic in this stuff every day, we kind
Speaker 2: of look at M Video's kind of my litmus for
Speaker 2: all things AI. It's down fifteen percent year to date.
Speaker 2: What does that tell you?
Speaker 7: Yeah, that's an interesting one. I mean, they had their
Speaker 7: big GtC conference last week. Jensen gave his two hour
Speaker 7: plus keynote. One of the interesting things though from that
Speaker 7: is that Blackwell is continuing to see really strong demand
Speaker 7: and it is Yes, it's really a solution. It's chip
Speaker 7: plus software and some other stuff in there that essentially
Speaker 7: enhances the compute, lowers the energy, makes it a lot
Speaker 7: more cost efficient. The critical thing coming out of that
Speaker 7: is what's been happening to estimates. We've seen Blackwell B
Speaker 7: series two hundred be two hundred B three hundred expectations
Speaker 7: come up fifteen percent for Q one, which tells me that, okay,
Speaker 7: expectations are getting a little bit more positive coming into
Speaker 7: next quarter and that maybe we're starting to see a
Speaker 7: bit of momentum.
Speaker 4: Okay. The other interesting side of this is the infrastructure
Speaker 4: build out, which leads me to crowd weave and it's IPO.
Speaker 3: What did you Yeah?
Speaker 4: Okay, so I've had a lot of tutorials with ANURAG
Speaker 4: because I'm like, I got to understand like all the
Speaker 4: differentiation here, So what do you make about this potential
Speaker 4: IPO and sort of where it's going to price at?
Speaker 4: Like what is that going to tell us about the
Speaker 4: thirst for AI infrastructure?
Speaker 7: Yeah, I mean the valuation is going to be critical,
Speaker 7: what sort of multiple they come in at? And uh,
Speaker 7: it's just going to be a temperature check for sure.
Speaker 4: Does that but in terms of what, like is it
Speaker 4: in terms of how the big guys are spending? Is
Speaker 4: it in terms of like the inferencing versus the LMS
Speaker 4: and and training of it. What's it going to tell
Speaker 4: us all of that?
Speaker 7: I mean, I think right now there's so much uncertainty.
Speaker 7: There's such an overhang in the market of everybody just
Speaker 7: shrugging their shoulders and saying, can we get a bit
Speaker 7: of clarity, Can we have a benchmark? Can we have
Speaker 7: something out there in the market that's going to give
Speaker 7: us an anchor? And that IPO may be one of those.
Speaker 2: So what's single best idea right now?
Speaker 7: Single best idea? Wow, that's a good question.
Speaker 2: What I mean, do we just I just you know,
Speaker 2: when I asked a tech person, I can say if
Speaker 2: somebody asked me that Microsoft, you know, I mean, I.
Speaker 7: Mean, I will say coming out of GtC And I
Speaker 7: feel like I said this last year to Alex and
Speaker 7: ed and the Tech Show, is that Jensen continues to
Speaker 7: talk about Dell, and you know, we're continuing to see
Speaker 7: a lot of you know, like closeness in relationship between
Speaker 7: Dell and Nvidia, Dell and Nvidia, and I feel like
Speaker 7: that end to end solution at the edge may be
Speaker 7: something that could be a catalyst for the next upgrade cycle.
Speaker 7: And the market's been waiting for this upgrade cycle for
Speaker 7: like nine months, and maybe we're gonna start to see
Speaker 7: it in the second half of the year, and that's
Speaker 7: not really priced in yet.
Speaker 2: All right, good stuff, Melissa Auto, thank you so much.
Speaker 8: Appreciate that.
Speaker 2: As always Melissa Auto, She's had of TMT Research s
Speaker 2: and p Global Visible Alpha.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 4: Joining us now is Leslie Palty Guzman, Senior non Resident
Speaker 4: Fellow over at CSIS, which is Center for Strategic and
Speaker 4: International Studies at NYU University SPS Center for Global Affairs,
Speaker 4: where I sit. The gas question is quite important. Europe
Speaker 4: is still buying some Russian gas. If there is a
Speaker 4: resolution to the war, does it ramp up again to
Speaker 4: the kind of levels that we saw pre twenty twenty two.
Speaker 9: That's the question. So for me, Russia has been playing
Speaker 9: the long game all along and has been hoping potentially
Speaker 9: for the return of more of its commodities, and Europe
Speaker 9: didn't wait for the US and Russia to start a resets.
Speaker 9: Some European business interests had already in mind potentially a
Speaker 9: return of more of Russian gas, especially because of the
Speaker 9: competitiveness lack of competitiveness right now in Europe. I think
Speaker 9: some pro Russian parties in Europe Extreme Ride had already
Speaker 9: mentioned that we were starting already to see some discussion
Speaker 9: around it. I think there will be nothing before peace agreement,
Speaker 9: so it remains very preliminary. But I think utilities in
Speaker 9: Europe without vocally screaming that they will be happy to
Speaker 9: get some Russian molecules that are less potentially less expensive
Speaker 9: and will bring down the prices in Europe has.
Speaker 2: But Europe seems to have done a good job. Les
Speaker 2: we kind of getting by without the Russian energy sources.
Speaker 2: Is this something that can be a longer term play.
Speaker 2: Do they want to not go back to Russia for
Speaker 2: any reason?
Speaker 6: Excit question?
Speaker 9: Yeah, I think the trust has been broken. It will
Speaker 9: never come back to the forty percent of market share
Speaker 9: that Russia had in the European imports of gas, but
Speaker 9: I think twenty percent is a possibility, and twenty twenty
Speaker 9: four it was actually a ten percent. Both pipeline and
Speaker 9: energy imports from Russia, and now it's way down because
Speaker 9: there is a line via Ukraine that is completely out
Speaker 9: of serve election. There is no more molecule going through
Speaker 9: this line. But the trucks train is still running and
Speaker 9: the Arctic energy, I mean, the Yama and Chicago are
Speaker 9: still coming into Europe. So we still have some flows
Speaker 9: they never left and they could ramp up a little
Speaker 9: bit more. But again there are many not resolved issues. First,
Speaker 9: there is a question of trust. Gas Prom has many
Speaker 9: penalties it needs to sort out with the European utilities.
Speaker 9: So the gas Prom owes a lot of money to
Speaker 9: this company. I don't think they will sign again long
Speaker 9: term contracts like they did before. I don't know what
Speaker 9: kind of arrangement can be found, but it's very preliminary
Speaker 9: and it's going to take time.
Speaker 4: And that's what's so cool about commodities. It'll sort itself out. Right,
Speaker 4: Like if more gas does come on the market, Europe
Speaker 4: may not buy it, but it also means that it'll
Speaker 4: you'll ship the flows around in terms of where are
Speaker 4: all that energy and gas goes.
Speaker 9: Yeah, and to your question, I think Europe doesn't need
Speaker 9: the Russian gas, especially twenty twenty six two twenty seven,
Speaker 9: when we see a much better well supplied global gas market,
Speaker 9: we have much more supply coming online. So this Russian
Speaker 9: gas can actually be displaced by other sources. And this
Speaker 9: is one of the contradictions from the Trump administration is
Speaker 9: that the baby Drill agenda doesn't go along with bringing
Speaker 9: back more Russian molecule into Europe because it's going to
Speaker 9: displace potentially US energy.
Speaker 4: Before we let you go, I want to talk about
Speaker 4: the crisis and the Red Sea, which basically when you
Speaker 4: have vessels into detour around the Cape of Good Hope,
Speaker 4: that just makes it crazy for freight rates. It makes
Speaker 4: everything very difficult. Could we see a world where things
Speaker 4: come down and the Red Sea and things can be
Speaker 4: shipped through and how do we get there?
Speaker 9: Yeah, so I think twenty twenty five it's not out
Speaker 9: of the question that we could see a restoration of
Speaker 9: the of the Red Sea route. However, you know, the
Speaker 9: who need to be deterred again and the US need
Speaker 9: to remain very convinced that freedom of navigation is in
Speaker 9: the interests of the United States but also the rest
Speaker 9: of the world. And there are many other positive externalities
Speaker 9: for restoring the roots. You know, for all the goods
Speaker 9: from the US to Asia, they would really benefit from
Speaker 9: the shorter route. And we need to remember that the
Speaker 9: Panama Canal is also less much less use because of
Speaker 9: the draw So we have two roots right now that
Speaker 9: are not at their full potential, the Panama Canal and
Speaker 9: the Swiss Canal slash Right Sea. So we cannot believe
Speaker 9: that we're in a better place without this route. And
Speaker 9: also I think Washington is sending a message to China
Speaker 9: and to Iran by being aggressive there because China is
Speaker 9: watching and it's you know, China is looking for itself.
Speaker 9: What's going on in the sas China Sea and if
Speaker 9: the US would be strong there.
Speaker 2: Yeah, I'm Google mapping the Red Sea as we speak.
Speaker 2: It's important. It looks to me as it relates to
Speaker 2: the SUSS global trade. So I'm learning a little bit
Speaker 2: here as about the Red Seat. Leslie, thank you so
Speaker 2: much for joining us. Leslie Paulty Guzman, Senior non Resident
Speaker 2: Fellow at the Center First Strategic and International Studies and
Speaker 2: NYU SPS Center, talking little geopolitics as it relates to
Speaker 2: global trade.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple, Colarckplay, and Android
Speaker 1: Auto with the Bloomberg Business app. You can also watch
Speaker 1: us live every weekday on YouTube and always on the
Speaker 1: Bloomberg terminal.
Speaker 2: Ben Millen joins us. He's the CIO of IX Advisors,
Speaker 2: joining us live here in our Bloomberg Interactive Brokers studio
Speaker 2: up from Tampa, Florida, the winter home of the New
Speaker 2: York Yankees. Opening day here at the stadium, three o'clock,
Speaker 2: first pitch, so there'd be lots of folks running around
Speaker 2: the city in their Yankee uniforms. Ben, what are you
Speaker 2: looking at in this marketplace? How do you seeing kind
Speaker 2: of what's unfolding here? It's been a tough start to
Speaker 2: twenty twenty five.
Speaker 8: It has, I mean, you know, like you said, market
Speaker 8: sat and certainty, this is finance one on one and
Speaker 8: we're seeing it play out in real time, and you
Speaker 8: know it's take My big takeaway is kind of the
Speaker 8: big reversals that we've seen, you know, depending on the headlines.
Speaker 8: In fact, I think Bloomberg actually broke a story yesterday
Speaker 8: that some of the auto tariffs might hit, you know,
Speaker 8: yesterday afternoon and we saw this huge reversal from up
Speaker 8: in the day to you know down big, and that's
Speaker 8: just a continuation. And so we're looking very closely at
Speaker 8: kind of the engine of the economy, so GDP and
Speaker 8: the consumer. And this is kind of the conundrum we've seen.
Speaker 8: You know, the hard data is looking pretty good, the
Speaker 8: sentiment data not so much. So you know, we're kind
Speaker 8: of peeling back the layers. And where we want to
Speaker 8: understand is that sentiment data potentially an early precursor of
Speaker 8: stuff that's going to show up in the hard data.
Speaker 4: So aside from that, which is the sort of the
Speaker 4: macro thesis, what do you make of the decline that
Speaker 4: we've seen in tech and particularly the AI traits?
Speaker 8: What are you telling clients, Well, that's I mean, I
Speaker 8: think you hit the nail on the head. Is this
Speaker 8: is you know, part of the the hype coming off,
Speaker 8: you know, and we saw this. I'm old must to
Speaker 8: remember the dot com bubble where it's like, you know,
Speaker 8: you put pets dot com and all of a sudden
Speaker 8: it's this you know, mega billion dollar company. And then
Speaker 8: you know, people starting to realize, well, all right, a
Speaker 8: lot of growth is being you know built into that assumption.
Speaker 8: And you know, if we have interest rates back up
Speaker 8: or god forbidter recession, even a mild one, that can
Speaker 8: really take a lot of that valuation out of the
Speaker 8: growth trade. So I think that's what we're saying. I
Speaker 8: think that's also why we're seeing a bid for treasuries too,
Speaker 8: is just kind of a flight to safety as people
Speaker 8: reassess how much they want to pay for growth.
Speaker 2: Look at this, I mean, you're look at in a
Speaker 2: world of hurt out there. Gold up another sixteen bucks.
Speaker 4: Yeah, that's live.
Speaker 2: I mean the Golden Sex call of a month and
Speaker 2: a half ago with thirty one hundred gold. Boy, that
Speaker 2: looks good. Is that something you talk to folks about?
Speaker 8: Yes, gold is probably you know, there's it's hard to
Speaker 8: put conviction in the market like this, especially when you've
Speaker 8: got you know, kind of different headlines and a lot
Speaker 8: of what I would call exogronous risk factors. Gold is
Speaker 8: probably one of the highest conviction that's out there. We think,
Speaker 8: and in a lot of our client portfolios, you know,
Speaker 8: putting in positions in gold or telling people they should
Speaker 8: think about this. And I've been surprised, to be perfectly candid,
Speaker 8: a lot of our institutional clients. You know, gold has
Speaker 8: really not been on their radar. And you know, when
Speaker 8: you look at the big structural threats out there, not
Speaker 8: just this year, I'm talking you know, three, four, five,
Speaker 8: ten years out, you know, gold is really good hedge.
Speaker 8: And then let's not forget the least not the least
Speaker 8: of which is all the central bank buying, you know, China, India,
Speaker 8: now even some of the emerging market central banks are
Speaker 8: literally selling treasuries and buying gold. China's even going so
Speaker 8: far as to kind of obfuscate their buying, to hide
Speaker 8: it from the marketplace. So that's not a trend we
Speaker 8: see reversing anytime soon. And we think, you know, we
Speaker 8: think gold is going to set all time highs, you know,
Speaker 8: every year for the next few years.
Speaker 4: Is JP Morgan had a great note out on this
Speaker 4: thatch a look yesterday that looks through the different cycles
Speaker 4: of gold buying and how what drove gold, say in
Speaker 4: the last ten years. So it really yields, for example,
Speaker 4: and the dollar is not necessarily driving it anymore, and
Speaker 4: driving it more because countries want that gold because of
Speaker 4: the sort of renationalization and the geopolitical strife and needing
Speaker 4: to make sure like the money's in the country kind
Speaker 4: of thing.
Speaker 8: Oh absolutely, yeah. And you know, if you go back
Speaker 8: ten fifteen years, you know, kind of the biggest marginal
Speaker 8: buyer of gold was jewelry, you know, especially in countries
Speaker 8: like India, and then all of sudden the ETFs, you know,
Speaker 8: started getting more traction and now central banks. I mean,
Speaker 8: if you look at their gold purchases, it's basically you know,
Speaker 8: it's up orders of magnitude just really since COVID. And
Speaker 8: you made a good point about real yields. Ironically, you know,
Speaker 8: we're fundamentally a quad shop and we had a real
Speaker 8: yield gold model that just you know, worked perfectly right
Speaker 8: up until COVID and then it just you know, the
Speaker 8: world changed. As Boonlog said, we're in a new normal,
Speaker 8: and you know you can't price off that anymore.
Speaker 2: Fiction income. What are you doing in the bond market
Speaker 2: these as are sitting in to your treasury at two percent?
Speaker 2: Are you taking some credit risk?
Speaker 8: We're a little bit of both. So we've got you know,
Speaker 8: we've got different products depending on client preferences, but generally speaking,
Speaker 8: sitting in the short end of the curve. If you're
Speaker 8: going to take credit risk do it and things that
Speaker 8: are you know, senior secured, some you know, some good
Speaker 8: We're big fans of ETFs out there just because of
Speaker 8: the liquid that they provide. There's some good you know,
Speaker 8: triple A clo ETFs short duration credit. But yeah, I
Speaker 8: mean spreads are starting to widen, and you know, once
Speaker 8: credit spreads start to widen, you know that's not a
Speaker 8: highly mean reverting series like something like the vics that
Speaker 8: can come back down quickly. You know, that's generally indicative
Speaker 8: of you know, forward looking you know, clouds on the horizon,
Speaker 8: so to speak. And so we're generally, you know, taking
Speaker 8: a very cautious approach to approach to credit if at all.
Speaker 4: Interesting, because I feel like that's an area where many
Speaker 4: say it could be a lot worse. So we want
Speaker 4: to take that risk to get the yield well.
Speaker 8: And people are stretching for yield. I mean, that's part
Speaker 8: and that's part of it, and that's part of the
Speaker 8: client conversations too, is you know, don't necessarily go out
Speaker 8: on the duration curve. I mean, often, to be candid,
Speaker 8: we're having more of those conversations about not stretching on
Speaker 8: duration for yield. But people are really reaching for the
Speaker 8: credit yield. And so that's another thing when you know
Speaker 8: we're kind of looking at, you know, kind of you know,
Speaker 8: the two different outcomes. Do we have a soft landing
Speaker 8: you you know, or do we have a productivity you know,
Speaker 8: growth pull out of this? You know, you really this
Speaker 8: is where you really, we think, want to be very
Speaker 8: mindful of the risks you're taking, especially in credit, and
Speaker 8: then keeping an eye on the tenure. Actually, on Yesterdays show,
Speaker 8: you had a woman I think from Sockchen who made
Speaker 8: a very compelling case for ten ure yields going down
Speaker 8: to three point five. You know, there's a lot of
Speaker 8: compelling cases why they could go up five. And I
Speaker 8: think that's emblematic where we are. You know, it's just
Speaker 8: there's there's it could go either way with kind of
Speaker 8: equal probabilities. And so you just got to, you know,
Speaker 8: really watch the till so to speak.
Speaker 2: Ben, thanks so much for joining us. Really appreciate it,
Speaker 2: Ben McMillan, he says, CIO at id X, at Visor.
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