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Speaker 2: Boeing is John Tucker is just reporting.
Speaker 3: It looks like the leaders of the union and Boeing
Speaker 3: they have an agreement. I think this is the third
Speaker 3: agreement they're going to bring to the rank and file,
Speaker 3: and let's see if the rank and file approves it,
Speaker 3: because they've turned down the last two.
Speaker 2: But it's thirty percent for four years and bonuses.
Speaker 4: I don't know.
Speaker 3: It sounds pretty good to me. Let's check it out
Speaker 3: with Thomas Black. He's a Bloomberg opinion Columnisty covers logistics, manufacturing, aerospace. Thomas,
Speaker 3: it seems like a good deal to me. But what
Speaker 3: do I know what's going on here with Boeing in
Speaker 3: their union these days.
Speaker 5: Yeah, it looks like a quite a rich deal.
Speaker 6: We'll see if the workers want to take it. They
Speaker 6: they started out with a nominal twenty five percent rays
Speaker 6: offer and it's now the thirty eight percent.
Speaker 5: But if you compound that, which is how.
Speaker 6: You should do it, it's a forty four percent raise
Speaker 6: over four years.
Speaker 5: So that's pretty chunky.
Speaker 7: I mean, when we think about these negotiations back and forth,
Speaker 7: does this seem to be lengthy? I mean, I'm thinking
Speaker 7: back to the writer's strike that went on for some time,
Speaker 7: and you have to really hit a middle place to
Speaker 7: where everyone's coming to a compromise. How do we think
Speaker 7: about this with Boeing moving forward and getting production back
Speaker 7: to what it is looking for.
Speaker 6: Well, the workers have all the power right now. They
Speaker 6: really do have quite a bit of leverage, and that's
Speaker 6: why Boeing has taken so much time trying to settle this.
Speaker 6: The Boeing is in bad shape financially, they're losing money.
Speaker 6: They have customers who are climbering for aircraft. They have
Speaker 6: suppliers who are trying to figure out production schedules so
Speaker 6: that they can ramp up their production. So Boeing really
Speaker 6: needs to get its plants started. So the workers know
Speaker 6: this and that's why they've been holding out. And they've
Speaker 6: got a deal on the table. Let's see if they
Speaker 6: take it. If they don't, I think there's a little
Speaker 6: bit of an anger issue maybe there, Maybe the workers
Speaker 6: want to lash out at the company because ten years
Speaker 6: ago they did get a raw deal from the company
Speaker 6: when it had the upper hand.
Speaker 5: So the tables have turned.
Speaker 6: But now we're going to see Monday if they're going
Speaker 6: to accept this deal and get production cranking up.
Speaker 3: So, Thomas, when you talk to people kind of within
Speaker 3: the process on both sides here, what's the feeling. I
Speaker 3: mean at the end of the day, is that it
Speaker 3: just a numbers thing.
Speaker 2: Is it thirty eight percent? No, I want forty two percent?
Speaker 3: Or is there other issues that are out there that
Speaker 3: are challenging here, because it's surprising that they haven't that
Speaker 3: they I guess that it's surprising that the negotiations has
Speaker 3: been so difficult.
Speaker 2: What do you think they're looking for?
Speaker 6: Yeah, I think the workers really wanted to reinstate their
Speaker 6: defined benefit pension plan, which again ten years ago that
Speaker 6: was taken away from them. As you know, those plans
Speaker 6: have been declining over the decades. There are very few
Speaker 6: out there right where you get a certain monthly retirement
Speaker 6: stipen and that lasts for the rest of your life.
Speaker 6: It's now all the four to one K savings plan.
Speaker 6: So they were really trying to bring that back, which
Speaker 6: would be unprecedented. This deal does not do that. So
Speaker 6: we'll see if the pay ray was enough. And there's
Speaker 6: also a twelve thousand dollars signing bonus to sweeten the deals.
Speaker 6: So we'll just see if the workers are willing to
Speaker 6: accept this.
Speaker 7: As you know in your story, there's not one, but
Speaker 7: two issues. Of course, you have the strike here, but additionally,
Speaker 7: on the other end, we have to talk about this
Speaker 7: fragile supply chain environment for the company. When you're talking
Speaker 7: to sources and just research more broadly, what does it
Speaker 7: seem as though it will be the next thing to
Speaker 7: push Boeing forward? I mean this is still a lingering
Speaker 7: issue for them.
Speaker 5: Yeah, well, they Boeing has all kinds of problems in
Speaker 5: its factory floor. They've had quality issues, They've had work
Speaker 5: coming in at different stages that's got them out of sequence,
Speaker 5: and that's caused all kinds of problems. They've had supplier
Speaker 5: quality issues, so that they've got some real problems to tackle.
Speaker 5: Now this is really just the first step is to
Speaker 5: get workers back in the factories. Number one issue for
Speaker 5: Kelly Orkberg, the CEO at Boeing, is to heal the
Speaker 5: rift with the employers.
Speaker 6: They have to get them on board and really change
Speaker 6: the culture on the factory floor so that they're making
Speaker 6: those quality planes and very efficiently.
Speaker 5: On the other side, it's the suppliers. The suppliers have
Speaker 5: been whiplashed quite a bit.
Speaker 6: It was the pandemic that hurt them, and then we
Speaker 6: had the Max grounding because of the fatal crashes there,
Speaker 6: and we had problems with the seven eighty seven aircraft
Speaker 6: that was grounded for a while, so they've really had
Speaker 6: they haven't been able to just produce regularly. They've had
Speaker 6: at all kinds of on and off situations with Boeing,
Speaker 6: so that healing that supplier base is key as well too.
Speaker 6: So the good thing about Boeing is that they don't
Speaker 6: have to worry about the customers.
Speaker 5: The customers want the planes. The planes are on order,
Speaker 5: they have a massive backlog.
Speaker 6: They really just need to get their production up and
Speaker 6: ramp it up and show the regulators the FAA that
Speaker 6: they can make quality planes and then they'll be in
Speaker 6: good shape, all right.
Speaker 2: Thomas Black, thank you so much for joining us.
Speaker 3: Thomas Blanky's a Columnstrom Bloomberg opinion covering all the logistics stuff,
Speaker 3: talking about Boeing.
Speaker 2: Here.
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Speaker 3: Let's get back to the economic data of the day.
Speaker 3: That's the jobs number came in with With the next
Speaker 3: A lot of folks said they get ready for that.
Speaker 2: It was to be.
Speaker 3: Expected with hurricanes and strikes and all that kind of stuff.
Speaker 3: Let's check in with an expert here, Jenny Biley. She's
Speaker 3: a division president at Employe Bridge. Jenny, what did you
Speaker 3: take out of the labor number today?
Speaker 8: Yeah, this was a tough report. Certainly, I kind of
Speaker 8: will refer to it a little bit as maybe this
Speaker 8: was the October surprise that everyone was always waiting for.
Speaker 8: But we know that many of these job cuts, you
Speaker 8: know that are happening. A lot of it came from
Speaker 8: the impacts of the hurricane and the strikes. However, most
Speaker 8: of the job growth that we've discussed this before on
Speaker 8: your program, most of the job growth is really coming
Speaker 8: from the government sector and the healthcare sector. So if
Speaker 8: you look at this private number, we actually lost jobs.
Speaker 8: If you back out the government gain of forty thousand,
Speaker 8: we would have lost jobs. A private sector would have
Speaker 8: lost twenty eight thousand. So this this is a concerning report.
Speaker 8: Even with the hurricane and even with the strikes. You know,
Speaker 8: across the board, many of the sectors are really losing jobs,
Speaker 8: and especially you know, that manufacturing number had a loss
Speaker 8: of I believe forty six thousand jobs. And then the
Speaker 8: sector that I'm in, the temporary help sector, lost almost
Speaker 8: fifty thousand jobs, and so that is concerning as well.
Speaker 8: You can see that companies are still very cautious to hire,
Speaker 8: and they're letting their temporary workers, you know, go first
Speaker 8: as they try to hold on to their permanent payrolls
Speaker 8: and permanent employees.
Speaker 7: I mean, we're just under a week away from the
Speaker 7: next FED meeting, and of course this is going to
Speaker 7: be some data that the Federal Reserve will be parsing.
Speaker 7: How should we be thinking about this in the context
Speaker 7: of the rate cut environment and what trajectory could look
Speaker 7: like at this next meeting and beyond, well, you.
Speaker 8: Know, I think the Fed will really dig into this
Speaker 8: report because it's not just the October numbers that look
Speaker 8: so soft, but they also went back and revised the
Speaker 8: prior two months downward and took another one hundred and
Speaker 8: twelve thousand jobs out of the job market. So I
Speaker 8: think the FED will be looking at this report and saying,
Speaker 8: you know, the job the job market is not as
Speaker 8: strong as maybe we thought it was, and we are
Speaker 8: starting to see even though wages are still up, I
Speaker 8: can tell you wages are starting to soften. They're certainly
Speaker 8: not keeping up, you know, with inflationary costs. So I
Speaker 8: do believe that the FED will look at this report
Speaker 8: and look at these numbers and what's happening with unemployment,
Speaker 8: the participation rate, where the job growth is coming from,
Speaker 8: and realized that, you know, this is this is a
Speaker 8: bit of a challenging job market. And in other reports too,
Speaker 8: we are seeing, you know, increase in layoffs and many sectors,
Speaker 8: I know, the challenger in Gray report came out and
Speaker 8: again showed, you know that layoffs continue to happen. So
Speaker 8: there are certainly some concerns out there in this in
Speaker 8: this job market JO just.
Speaker 3: Thirty seconds left here, the wage inflation or the wage
Speaker 3: four percent seems pretty solid to me, but you see
Speaker 3: some a little bit of concern out there.
Speaker 4: I do.
Speaker 8: I think employers have you know, been increasing wages really
Speaker 8: for quite a few years, and at this point, with
Speaker 8: where the job market is, I think that that's going
Speaker 8: to just flatten off. That's what we're hearing from employers,
Speaker 8: you know, large employers, mid size employers, they're really watching
Speaker 8: their labor costs and they're having to be more conservative.
Speaker 3: Johnny, thank you so much for joining us. We always
Speaker 3: appreciate chatting with you on these important jobs days. Joinny Biley.
Speaker 3: She's a chief workforce analyst at employee Bridge, joining us
Speaker 3: via zoom here again, the nonfarm payroll came in at
Speaker 3: twelve thousand. The consensus essmenate was for one hundred thousand.
Speaker 3: Last month was two hundred and fifty four thousand. A
Speaker 3: lot of economs to say, you know, there's hurricane effects,
Speaker 3: there's layoff effects, so got to take that into account.
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Speaker 3: Let's stay on the labor front here and get a
Speaker 3: sense of kind of where we are in terms of DEI.
Speaker 7: Diversity, equity and inclusion.
Speaker 2: Equity and inclusion.
Speaker 3: Thank you very much. It seems I'm not sure it's
Speaker 3: waxing or waning, and some companies are backing away from it.
Speaker 3: Someone companies continue to lean into it. Alan Schwyer joins us.
Speaker 3: He is a principal researcher of human capital at the
Speaker 3: Conference Board.
Speaker 2: Alan, thanks so much for joining us here.
Speaker 3: As we think about DEI, we've seen some fairly high profile,
Speaker 3: publicly traded companies kind of back away a little bit
Speaker 3: from that. Can you give us a sense kind of
Speaker 3: where we are on diversity, equity and inclusion in corporate America?
Speaker 9: Yeah, sure, you know, I think there are a lot
Speaker 9: of reports of organizations moving away from DEI or backing off,
Speaker 9: if not canceling DEI, but they're they're very much the minority.
Speaker 9: Our research over the past year and those that of
Speaker 9: others really shows that about eighty to ninety percent of
Speaker 9: organizations are holding the course or expanding their DEI programs.
Speaker 9: So we think it's maybe gets a little more attention
Speaker 9: when when someone you know quits their d I programs,
Speaker 9: but the great majority are holding firm.
Speaker 7: I mean, what have been the effects? I mean, of course,
Speaker 7: we know last year the Supreme Court did reverse affirmative action.
Speaker 7: The ruling there has that had an impact at all
Speaker 7: when we think about hiring in the corporate America space.
Speaker 9: Yeah, it has. You know, technically the Supreme Court ruling
Speaker 9: because this IDOL six does not have an impact on
Speaker 9: the workforce, but we know that it has a chilling
Speaker 9: effect on DEI programs. In fact, our most recent research
Speaker 9: shows that more than two thirds of executives say that
Speaker 9: it is putting a negative having a negative effect on
Speaker 9: their DEI programs. So yeah, I mean, the Supreme Court
Speaker 9: decision has certainly made an impact.
Speaker 3: What are you seeing from workers themselves? What are workers
Speaker 3: looking for? Are they embracing DEI? Is this something they
Speaker 3: feel has value within their workplace?
Speaker 1: Yeah.
Speaker 9: We just surveyed the US workforce. We had a big sample,
Speaker 9: almost fourteen hundred workers, managers and up to the director level,
Speaker 9: and workers are saying they want DEI. In fact, the
Speaker 9: majorities say they would not work or would only reluctantly
Speaker 9: work in an organization that does not take DEI seriously.
Speaker 9: So that's a powerful signal, and it differs between groups
Speaker 9: at work, but over all, the majority of workers do
Speaker 9: want to see DEI initiatives and want to work in
Speaker 9: diverse organizations, according to our research.
Speaker 7: So from an investor perspective, of course, people are really
Speaker 7: thinking about returns. Have there has there been any data
Speaker 7: to show that this actually impacts returns from companies.
Speaker 9: No, it's a good question, and it's very hard to
Speaker 9: link DEI programs directly to financial incomes, but we know
Speaker 9: that it does drive engagement. In fact, our survey respondents
Speaker 9: tell us that it improves engagement, improves belonging, improves inclusion,
Speaker 9: and improves retention. And if it does those things, then
Speaker 9: you know, naturally there's a there's a link, but it's
Speaker 9: not a direct link to financial performance.
Speaker 3: So Dan, what's the Are there certain industries within corporate
Speaker 3: America that are more on board with DEI versus maybe
Speaker 3: some others.
Speaker 9: Yeah, in this research, we found that the services sector
Speaker 9: is you know, the responses from employees in the services
Speaker 9: sector are certainly stronger than in the core manufacturing type
Speaker 9: industries and not unexpected. But again, overall, the workers want
Speaker 9: to see more D. But you're right in certain industries
Speaker 9: there is a stronger preference for more DEI programs than
Speaker 9: in others.
Speaker 7: Can you also speak to particular age demographics. Is there
Speaker 7: any difference in terms of which generations are embracing the push?
Speaker 9: Yeah, and this is really important, I think too, because
Speaker 9: I don't think anyone will be really surprised to hear
Speaker 9: that the younger generations, millennials and Gen Z are more
Speaker 9: in favor, more demand, more DEI expect more than older generations.
Speaker 9: And we know that those generations will form sixty percent
Speaker 9: or more of the workforce by twenty thirty. You know,
Speaker 9: I may the same is true for women and minorities.
Speaker 9: Women and minorities are already the majority of the workforce
Speaker 9: and have much greater expectation in demand for D in
Speaker 9: the workforce. So we think, you know, demographics are destiny.
Speaker 9: This is happening very quickly. In an organization that really
Speaker 9: actively resists this will probably struggle to survive, I mean,
Speaker 9: from finding talent and even finding customers.
Speaker 7: With about thirty seconds, I am looking at this story
Speaker 7: that says Boeing dismantles DEI team as pressure builds on
Speaker 7: the new CEO. Have you seen a shift of corporate
Speaker 7: different companies actually push moving away from DEI and not
Speaker 7: really seeing it as a priority.
Speaker 1: Yeah.
Speaker 9: I think more are moving away from the terms. They
Speaker 9: can be a lightning rod, and they're focusing on the
Speaker 9: work more than the words.
Speaker 10: For sure.
Speaker 9: Some are backing away, you know, more comprehensively. Most are
Speaker 9: changing how they describe it, continuing with the work.
Speaker 3: All right, We'll see how it plays out. Certainly a
Speaker 3: big part of the culture here at Bloomberg. Alan Schwier,
Speaker 3: Principal researcher of Human Capital at the Conference Board, joining
Speaker 3: us from Charleston, South Carolina.
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Speaker 1: Say Alexa playing Bloomberg eleven thirty.
Speaker 3: David Weady joins us. He's one of the reporters on
Speaker 3: that story. He's an energy reporter for Bloomberg News. This
Speaker 3: is our big take story, and we love the big
Speaker 3: take stories on Bloomberg. Here, David, how is the oil
Speaker 3: and gas industry becoming more productive at in the field.
Speaker 11: Yeah, this was something that really surprised us in the
Speaker 11: oil industry for how far it spanned beyond just the
Speaker 11: industry itself into other parts of the ECONO. They're doing
Speaker 11: it just through little ways.
Speaker 2: You know.
Speaker 11: Your first guess, you might think, oh, it's artificial intelligence
Speaker 11: of what doing it, But really it's not even that
Speaker 11: we've barely scratched the surface on using AI. It's just
Speaker 11: a bunch of little things where on their own wouldn't
Speaker 11: move the needle, but you add them all up and
Speaker 11: it's making a big difference. It's little things like you know,
Speaker 11: incentives to the workers to drill faster, you know, catered
Speaker 11: barbecue lunches out of the rigsite, remodeling their living quarters.
Speaker 11: It's drilling in a unique pattern in a U shape
Speaker 11: where you couldn't figure out a way to get all
Speaker 11: the rest of the oil out of the ground and
Speaker 11: you have a small footprint. So instead what you do
Speaker 11: is you drill down sideways and then you turn and
Speaker 11: go one hundred degrees the other direction to capture the
Speaker 11: rest of that oil. That was a concept that could
Speaker 11: never even be thought about earlier in the years as
Speaker 11: we just sort of kept playing around with ways to
Speaker 11: drill underground. We figured out a way to do that
Speaker 11: and to do it correctly. You know, it's also to
Speaker 11: figure out how to frack two wells at one time,
Speaker 11: and that not only reduces the friction in one well,
Speaker 11: it saves on the manpower because you use one crew
Speaker 11: to now complete two wills at the same time. So
Speaker 11: it's all these little just sort of small efficiency gains
Speaker 11: where it's allowed us to get a lot faster at
Speaker 11: producing at less manpower. And what it really boils down
Speaker 11: to is you've got about a third of the rigs
Speaker 11: is which you've had ten years ago, and yet you've
Speaker 11: got record production. So a dramatic decrease in the amount
Speaker 11: of equipment and then the people to run them while
Speaker 11: maintaining enormous amounts of output. And that's a lot of
Speaker 11: the energy is free to surpass all of their sectors
Speaker 11: in the economy.
Speaker 7: So when we're thinking about productivity, of course, one thing
Speaker 7: that you need to be thinking about is, you know,
Speaker 7: governmental legislation that will support this. And I see here
Speaker 7: in the piece you all speak a bit about you know,
Speaker 7: this upcoming election. You say that Kamala Harris has repeatedly
Speaker 7: said that she won't be fracking, which is a walk
Speaker 7: back of comments that she made in twenty nineteen. How
Speaker 7: much does the government and different policies play a role
Speaker 7: in the ability for these companies to excel.
Speaker 11: It's a good question because sometimes it can be misunderstood.
Speaker 11: Chevron actually talked about it a little bit earlier, and
Speaker 11: they're doing earnings this morning, and on some of the
Speaker 11: different interviews, Mike Worth talked about how ultimately the US
Speaker 11: shale is there and it's not really being restricted by
Speaker 11: the US government. You know, people talk about whether you
Speaker 11: can go on federal lands or not. Really where they're
Speaker 11: doing a lot of the drilling is on private, independent
Speaker 11: land that the US government does not own, So really
Speaker 11: that's not very restrictive to these drillers. Where it kind
Speaker 11: of comes down to more is permitting for things like pipelines.
Speaker 11: So you drill, you produce, but you got to send
Speaker 11: it off to market, you got to send it down
Speaker 11: to the refineries, and so getting timely approvals for the
Speaker 11: permits to build new pipelines to send more oil and
Speaker 11: natural gas away from the oil fields is key. So
Speaker 11: that's kind of one sticking point for policy on any
Speaker 11: type of administration. Is where the oil industry is going
Speaker 11: to care.
Speaker 3: David, you're down there in Houston. That's you know, obviously
Speaker 3: that the center the US energy business. What's the feeling
Speaker 3: just a broadly define about the business of energy, because
Speaker 3: you know, as recently as ten years ago, fifteen years ago,
Speaker 3: they were talking about peak oil and all that kind
Speaker 3: of stuff. I don't hear about that as much anymore.
Speaker 11: Yeah, you don't really hear about it. I think partly
Speaker 11: because there was this kind of you know, ESU movement
Speaker 11: and you know, green energy technologies and let's try to
Speaker 11: do both at the same time. And maybe kind of
Speaker 11: you saw investors pivot away from investing in oil and gas,
Speaker 11: and what it kind of led to was a decrease
Speaker 11: in spending in oil and gas, and so you've had
Speaker 11: less push to really grow supplies. So it's kind of
Speaker 11: tightened the picture a little bit, and so there's sort
Speaker 11: of less concern of maybe this thing is going away
Speaker 11: and more about let's make sure we have enough supply
Speaker 11: out there so the prices don't go crazy above one
Speaker 11: hundred dollars a barrel and really sort of raise red
Speaker 11: flags on the industry. So I think they're trying to
Speaker 11: kind of fly below the radar and not too much
Speaker 11: attention on energy prices that are too high, while still
Speaker 11: trying to maximize profit and have high enough oil prices
Speaker 11: that eclipse their sort of break even price and give
Speaker 11: them a decent amount of profit. So I mean that
Speaker 11: the mood around here is, you know, I think if
Speaker 11: you're in the oil industry, you sort of feel like
Speaker 11: you're not appreciated enough that the politicians don't you know,
Speaker 11: appreciate you. But otherwise outside of the industry, it sort
Speaker 11: of is a view of you know, it looks like
Speaker 11: it's pretty healthy and still productive and profitable and growing.
Speaker 7: I mean, as we think about just digging a bit
Speaker 7: deeper into the ESG movement and where we are today,
Speaker 7: as we think about ESG and just investor sentiments surrounding
Speaker 7: this sector, have you seen it all pullback in backlash
Speaker 7: in the space.
Speaker 11: Yes, I think the backlash is diminished. I mean, there's
Speaker 11: still going to be the environmental groups out there that
Speaker 11: are raising concerns and you know, and we're hearing from them.
Speaker 11: But I think that the broader you know, just push
Speaker 11: to really kind of drive down this industry. I think
Speaker 11: you're just seeing a lot less. It's sort of just
Speaker 11: abated a little bit. And because I think the view
Speaker 11: is we still need supplies for a while of oil
Speaker 11: and natural gas, and you know, we can't have electricity
Speaker 11: shortages even here in Texas of all places. So yeah,
Speaker 11: it seems like it's kind of dialed back.
Speaker 3: You've got your own grid. That's how you guys do
Speaker 3: things down in Texas.
Speaker 2: We understand that.
Speaker 3: David Weady, he's an energy reporter for Bloomberg News and
Speaker 3: he is based fittingly in Houston, Texas. Again, the story,
Speaker 3: the Big Takes story, is about the productivity in the
Speaker 3: oil business, the energy business, and thank John Tucker for
Speaker 3: flagging that for us. That's our Big Take story today
Speaker 3: on the Bloomberg triml where you can find at the
Speaker 3: Bloomberg Turminal and on Bloomberg dot com slash Big Take.
Speaker 2: Check it out there.
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Speaker 1: playing Bloomberg eleven thirty, getting.
Speaker 3: Back to the marketsas John Tucker was just reporting strong
Speaker 3: day in the equity markets. Here, let's break it down
Speaker 3: a little bit with Sarah Ponzik. She's the first vice
Speaker 3: president of wealth management at UBS Private Wealth Management.
Speaker 2: Coming to us Life from.
Speaker 3: Del Boca Vista in the Boca Raton, Florida area. Sarah,
Speaker 3: thanks so much for joining us. A lot of earnings
Speaker 3: this week, a lot of economic data this week. What
Speaker 3: are you telling your clients these days as they finish
Speaker 3: up the year and think about next year.
Speaker 4: Yeah, it's been a bit of a marathon between this
Speaker 4: week and next week. Think about the amount of earnings
Speaker 4: that we've received, not just from any companies, but the
Speaker 4: largest companies in the stock market and in our economy.
Speaker 4: Also some economic data. Of course, Jobs Day was today.
Speaker 4: I know, I'm sure you've discussed it at length already.
Speaker 4: Then we've got an election next week and the Federal Reserve,
Speaker 4: so you know, we're going to just jam it in
Speaker 4: to two weeks.
Speaker 10: But at the end of the day, we're talking to clients,
Speaker 10: you know, the picture really hasn't changed.
Speaker 4: Yes, there's a lot of data, and to be sure,
Speaker 4: the data's even messy as you know, you know, the
Speaker 4: job zdata that we receive today is burdened by storms
Speaker 4: and strikes, and the data itself is messy.
Speaker 10: So when we look at the overall outlook going out from.
Speaker 4: Here, nothing that we've seen over the past week, and
Speaker 4: really nothing that we expect even next week changes the outlook,
Speaker 4: which is still optimistic and positive from here.
Speaker 7: So earning season, we just got some mixed reports from
Speaker 7: these big tech names. I see that you're also keeping
Speaker 7: an eye on the tech selloff. Talk to me about
Speaker 7: what's going on there, especially given the fact that people
Speaker 7: are really depending on this sector for the markets gains.
Speaker 4: Right, we call it a tech selloff, But nowadays tech
Speaker 4: sell offs are really just blips. You know, A couple
Speaker 4: of percentage points is hardly anything when you look at
Speaker 4: the run that we've seen in tech stocks this year
Speaker 4: and last year, coming off the volatility of twent two
Speaker 4: and look, you're absolutely right. At the end of the day,
Speaker 4: these companies are so so important, largely because they make
Speaker 4: up such a heavy weight of the indexes. So if
Speaker 4: you're an investor and you're either comparing yourself to an
Speaker 4: index like the S and P five hundred or the
Speaker 4: NASAC or you're invested in an index like the SMP
Speaker 4: five hundred, Well, these large tech companies are the ones
Speaker 4: that are really leading the way. And at the end
Speaker 4: of the day, yes, we saw some volatility post earnings. Yes,
Speaker 4: these companies are spending so much money on capex or
Speaker 4: capital expenditures when it comes to AI, but at the
Speaker 4: end of the day, we do believe that this spending
Speaker 4: is going to pay off. These large megacap companies are
Speaker 4: at the forefront of this AI boom that we're going
Speaker 4: to see in the years to come.
Speaker 10: And it's really amazing when you look at the big
Speaker 10: four tech companies, and I'll just lay them out.
Speaker 4: You know, Microsoft Alphabet parent or Google parent, Alphabet AMZ
Speaker 4: on Meta. Those four companies alone account for almost half
Speaker 4: of spending on artificial intelligence.
Speaker 10: We've seen it laid out in their earnings.
Speaker 4: But at the end of the day, they're spending on
Speaker 4: what they believe is the future and what we too
Speaker 4: believe is going to be a trend that's not only
Speaker 4: a trend, but is going to turn into revenue and
Speaker 4: earnings in the future as well.
Speaker 3: Sir, what kind of phone calls are getting from your
Speaker 3: clients about this election. Are investors trying to position around it?
Speaker 3: Are they trying to just trade through it? Ignore it?
Speaker 9: It?
Speaker 2: Kind of what kind of discussions are you having?
Speaker 4: So people got a bit emotional, and you know, for
Speaker 4: good reason before and around an election. Not just recently,
Speaker 4: but I would tell you that over the past couple
Speaker 4: of months, I think it's a little telling. I've gotten
Speaker 4: calls from clients on both sides of the spectrum, so
Speaker 4: Democrats and Republicans saying, Okay, if X person wins the
Speaker 4: election and I want to leave the country, what does
Speaker 4: that mean for my portfolio?
Speaker 10: And can we still work together?
Speaker 4: So emotions, emotions run high, you know, surrounding political elections.
Speaker 4: But at the end of the day, you know, politics
Speaker 4: really don't have as big an effect on markets as
Speaker 4: some people tend to believe they do. If you look
Speaker 4: at any which scenario over history, a blue sweep, a
Speaker 4: red sweep, ridlock you know, ex party in office with
Speaker 4: the other, you know, controlling Congress and the Senate, there's
Speaker 4: really no statistically significant outcome. When you try to compare
Speaker 4: different you know, representations of DC and the government to
Speaker 4: stock market returns.
Speaker 10: It really doesn't matter all that much.
Speaker 4: Really, what matters is the federal reserve and interest rates
Speaker 4: and the economy, which frankly, the president doesn't have as
Speaker 4: much control as many people like to believe it to.
Speaker 4: We actually had an event this this.
Speaker 12: Week where you know, the question was posed to the attendees,
Speaker 12: who do you think had you know, the worst market
Speaker 12: returns during their presidency and who had the best.
Speaker 4: I don't know if you want to take a crack
Speaker 4: at it, but most people didn't know the answer.
Speaker 7: Yeah, I mean I think just goes God. As you're
Speaker 7: thinking about this election and pushing forward. I mean, you're
Speaker 7: in private wealth management. This is a very important space.
Speaker 7: What is your island right now? If you all are
Speaker 7: kind of not focusing as much on the election to
Speaker 7: determine returns.
Speaker 4: So so love when it comes to planning surrounding policy. Yes,
Speaker 4: in the private wealth space, when you're working with high
Speaker 4: net worth individuals, family offices, there are potential policy changes
Speaker 4: that could pose.
Speaker 10: You know, significant change for clients.
Speaker 4: So when it comes to the estate tax, for example,
Speaker 4: right now, the way the law is right and is
Speaker 4: at the end of next year, the current law is
Speaker 4: going to sunset, and the estate tax the exemption amount
Speaker 4: is going to be half.
Speaker 10: Going to be cut in half.
Speaker 4: So yes, we're seeing We're doing a lot of planning
Speaker 4: surrounding that, working with our.
Speaker 10: Clients and state attorneys to make sure that they're prepared.
Speaker 4: But at the end of the day, what we're really
Speaker 4: focused on is technolology, which we discussed, you know, doing
Speaker 4: tax planning a head ahead of your end and then
Speaker 4: just when it comes to markets, looking at the economic.
Speaker 10: Data, looking at the trend for interest rates.
Speaker 4: Look, we're going to get a Federal Reserve meeting next week,
Speaker 4: but our economists expect that we'll see another fifty basis
Speaker 4: points of cuts by the end of the year, another
Speaker 4: one hundred based points of cuts next year. So if
Speaker 4: we know cash rates are coming down, interest rates are
Speaker 4: coming down, making sure that you know our clients aren't
Speaker 4: sitting in cash or just short dated treasury bonds for example,
Speaker 4: because at the end of the day, reinvestment risk is
Speaker 4: an issue right now.
Speaker 2: Sarah, thank you so much for joining us. Always appreciate
Speaker 2: chatting with you.
Speaker 3: Sarah Ponsek, she's the first vice president of wealth management
Speaker 3: at UBS Private Wealth Management. She's located in Bolca Raton, Florida.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 3: It's good to Washington because we've got an election next
Speaker 3: week and there aren't many people in Washington I want
Speaker 3: to talk to.
Speaker 2: One of them is Nathan Dean. He knows what's going on.
Speaker 3: Then we always get the straight poop from Nathan. Nathan's
Speaker 3: Bloomberg Intelligence senior policy analyst. So Nathan, you're down there,
Speaker 3: You're hip deep and all that Washington stuff and all
Speaker 3: the you know, the Innundia and all the talk and
Speaker 3: all the back talk, back office talk and all the
Speaker 3: type of thing. What's the feeling in DC about how
Speaker 3: this thing may break on Tuesday?
Speaker 13: Yeah, So, you know, I don't think anybody really has
Speaker 13: any good prediction of how things are going to break
Speaker 13: outside of the Senate race. And the reason why we're
Speaker 13: saying the Senate races is because you know, this is
Speaker 13: a very difficult race for the Democrats that are defending
Speaker 13: twenty three of the thirty four seats that are open
Speaker 13: at the moment, and a lot of those are in
Speaker 13: purple states or in Trump's states. So if you're a
Speaker 13: Senator Shery Brown, who's the Senate Banking chairman, or Senator
Speaker 13: John Tester in Ohio and then Montana, those are races
Speaker 13: that the Democrats have to win if they want to
Speaker 13: keep the Senate. Now why do we care about the Senate? Well,
Speaker 13: the Senate obviously gets you confirmation of judges, but also
Speaker 13: regulatory leaders So if the Republicans take the Senate and
Speaker 13: Kamala Harris wins, they can effectively block and jam a
Speaker 13: lot of the new regulatory leadership that she wants to
Speaker 13: put in place. So this could mean that Lena Khan
Speaker 13: at the Federal Training Commissioner, Gary Ginzler at the SEC
Speaker 13: sticks around for a little bit longer. If President Trump wins,
Speaker 13: then a deregulatory effort can move much quicker. So outside
Speaker 13: of the Senate race, everything else is too close to tell.
Speaker 7: What's the latest on swing states?
Speaker 13: So obviously I think you know what we're telling everybody
Speaker 13: is that it comes down to Pennsylvania. I mean, if
Speaker 13: Kamala Harris doesn't win Pennsylvania, the odds of her winning
Speaker 13: the presidency is very slim. So you know, we've been
Speaker 13: working with some European clients, for example, and as they
Speaker 13: come into the office, say eight or nine am, you know,
Speaker 13: central European time, look for the results in Philadelphia and
Speaker 13: Pittsburgh to really try and give you an indication of
Speaker 13: who's going to be winning this election. But I will
Speaker 13: say is that, you know, the general thought here is
Speaker 13: is that you know, there's this idea that the election
Speaker 13: could go you know, for weeks. We just don't know.
Speaker 13: But I also think there's a lot of folks out
Speaker 13: there that are thinking that this at least we could
Speaker 13: get an indication of who the president is, maybe not
Speaker 13: officially and maybe not called by the agencies and so
Speaker 13: forth the news organizations, but we could at least get
Speaker 13: an indication of who the president is going to be
Speaker 13: on Wednesday and Thursday. So you know, from a market perspective,
Speaker 13: we're going to be looking to see for when those
Speaker 13: state results start coming in. And obviously it's the one
Speaker 13: hundred thousand folks in Pennsylvania, North Carolina, Arizona and Nevada
Speaker 13: and Michigan and so forth that are ultimately going to
Speaker 13: decide who.
Speaker 2: The president is.
Speaker 7: Speaking of election calls, what is the expectation for how
Speaker 7: long it could potentially take this election to be called?
Speaker 13: Well, look it really, you know, this is the challenge
Speaker 13: of the American voter system is that each state has
Speaker 13: their own processes and procedures. I mean, certain states can't
Speaker 13: start counting your early ballots until the polls close, for example,
Speaker 13: and so we just don't know how long it's going
Speaker 13: to take. However, what we can say is is that,
Speaker 13: you know, we should get an indication of how things
Speaker 13: are going. And when you look at the swing states
Speaker 13: in particular, you know you have a good mix of
Speaker 13: those that are on the East coast and those are
Speaker 13: on the west coast Pennsylvania, North Carolina, Arizona and Nevada
Speaker 13: and so forth like that. Put just going back to
Speaker 13: what I said earlier, for Vice President Kamala Harris, it
Speaker 13: comes down to Pennsylvania. If she can't win Pennsylvania, then
Speaker 13: chances are of Michigan and Wisconsin are in play and
Speaker 13: she loses the presidency. So again we would just we're
Speaker 13: really paying attention to Philadelphia and Pittsburgh these days.
Speaker 3: Nathan, I say this affectionately a policy geek, a wonk
Speaker 3: You've got some great research out there that says, hey,
Speaker 3: here's what happens to a couple of key industries from
Speaker 3: a regulatory perspective, if Harris wins or Trump wins, what
Speaker 3: are the two one, or two or three things that
Speaker 3: you're really looking at or could be in play depending
Speaker 3: upon who gets in office.
Speaker 2: Yeah, So if you're.
Speaker 13: Trying to think of like catalyst industries, meaning that the
Speaker 13: election means one substantial catalyst or the other, the investment
Speaker 13: banks are the perfect thing to come into mind because
Speaker 13: there's this rule out there called the Bosle three end game. Now,
Speaker 13: if Kamala Harris wins, banks are going to look around
Speaker 13: a nine percent capital increase starting in probably twenty twenty six.
Speaker 13: If President Trump wins, that rule, I think effect goes away.
Speaker 13: Renewables is certain. Is another thing because Eric, you know,
Speaker 13: in the prior segment mentioned that taxes could go up
Speaker 13: next year. The Trump Air tax cuts expire for individuals
Speaker 13: at the end of twenty twenty five, and Congress and
Speaker 13: the President is going to have to figure out how
Speaker 13: to pay over four trillion dollars to keep those tax
Speaker 13: cuts going. And so is the Inflation Reduction Act at play.
Speaker 13: That's very important to the renewable industry, so something to
Speaker 13: keep in mind. And finally, big tech. You know, there's
Speaker 13: this stereotypical idea out there that Republicans equal good for
Speaker 13: big business, and so if President Trump wins, you know,
Speaker 13: big tech in particular could be it could be a
Speaker 13: positive in terms of ease of regulation and enforcement. But
Speaker 13: there's this idea of economic populism going through the Republican
Speaker 13: Party right now and a lot of scrutiny on big
Speaker 13: tech that could also be in play. So if you're
Speaker 13: in the big tech space, you know, and the Federal
Speaker 13: Trade Commission in the DOJ is investigating you, there could
Speaker 13: be some pretty tough investigations coming, no matter whom mens
Speaker 13: the presidency.
Speaker 7: Hey, Nathan, I know we're on our first day of November,
Speaker 7: but there's always talk about the October surprise. Is that
Speaker 7: something that we saw.
Speaker 2: I don't think so.
Speaker 13: I mean, you know, one thing that we've been leaning
Speaker 13: on is that there's not many people out there who
Speaker 13: are undecided. If you looked at the charts, these charts
Speaker 13: are on the terminal, you know, you're looking at somewhere
Speaker 13: between point five and one percent of the undecided popular
Speaker 13: or the independent population out there, they're still undecided. And
Speaker 13: so this race, in our opinion, has always been about,
Speaker 13: you know, Vice President kam Haaris versus President Trump versus
Speaker 13: the couch. And if people get off the couch and
Speaker 13: they vote, then Vice President most likely wins. If people
Speaker 13: stay on the couch and they don't vote, then President
Speaker 13: Trump could win. So it's more more about a turnout
Speaker 13: rather than an October surprise.
Speaker 2: And I really don't.
Speaker 13: Think we've seen anything that a really changed voters' minds
Speaker 13: in October. But for the question is was there an
Speaker 13: October surprise that we keep people from voting?
Speaker 2: We just still don't know yet.
Speaker 3: All Right, Nathan, thank you so much for joining us.
Speaker 3: As always, Nathan Deane, he's the senior policy annost for
Speaker 3: Bloomberg Intelligence. He's down in Washington, DC. You can see
Speaker 3: his research just go to b I go and he's
Speaker 3: got a lot of great research out there about the
Speaker 3: different scenarios under each type of election scenario, Harris versus
Speaker 3: Trump versus split Congress.
Speaker 2: And he's got got a lot of great researchers.
Speaker 3: About which industries might be impact us to take a
Speaker 3: look at that. All right, folks, speaking of the election,
Speaker 3: join US for complete coverage of US election results Tuesday night.
Speaker 3: It kicks off a five pm Eastern with a special
Speaker 3: two hour edition of Balance of Power, followed by Coast
Speaker 3: to Coast Team Bloomberg Team coverage at seven pm. Get
Speaker 3: live election results and analysis with context Tuesday night on
Speaker 3: Bloomberg Radio, Television and the Bloomberg Podcast YouTube channel.
Speaker 2: So we got you covered there.
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