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Speaker 2: Podcast with Carol Masser and Tim Stenovek on Bloomberg Radio,
Speaker 2: so focal.
Speaker 3: Point for investors and the Fed.
Speaker 1: Tomorrow morning's monthly jobs report, we'll have that at eight
Speaker 1: thirty am Wall Street time. The expected upcoming annual January
Speaker 1: revision to US job growth will be substantial, but probably
Speaker 1: not as bad as initially estimated, underscoring tim a labor
Speaker 1: market that is gradually cooling.
Speaker 4: With more on what's to watch for, We've got a
Speaker 4: Bloomberg News Bloomberg Economics US economist start Paul joining us
Speaker 4: here in the studio along with Bloomberg's Vince Signerella to
Speaker 4: connect the dots between the data and the markets. Really
Speaker 4: please to have both of them here in the studio
Speaker 4: with Stuart. I do want to start with you, what
Speaker 4: is the number expected tomorrow consensus versus what Bloomberg Economics
Speaker 4: expects for payrolls.
Speaker 5: We're expecting two hundred and fifteen thousand jobs. In January,
Speaker 5: consensus is closer to around one seventy. But if you
Speaker 5: listen to the whispers on Wall Street, folks are really
Speaker 5: inching up towards that two hundred thousand mark. There were
Speaker 5: strong economic fundamentals throughout the month. We saw hiring accelerating
Speaker 5: as reported in pmis adp surprise to the upside. Also,
Speaker 5: we also do have to take account of the fact
Speaker 5: that there was a polar vortex in that lower forty
Speaker 5: eight states, and we also had wildfires in Los Angeles,
Speaker 5: shaving a few thousand jobs off the January report.
Speaker 1: So in other words, they actually the job market might
Speaker 1: be stronger than we think because of those special instances.
Speaker 5: Well, so the amount of hiring in January was relatively robust.
Speaker 5: But if we think about all those revisions that you
Speaker 5: are mentioning, it's going to were the base against which
Speaker 5: we're measuring January payroll growth. As you mentioned, through March
Speaker 5: of twenty twenty four, we're going to get a downward
Speaker 5: revision we think of about seven hundred thousand jobs, less
Speaker 5: than the eight hundred and eighteen thousand originally estimated. Then
Speaker 5: we get revisions of the birth death model through the
Speaker 5: end of twenty twenty four, that's going to shave off.
Speaker 5: We think about another two hundred and thirty five thousand jobs,
Speaker 5: bringing total payrolls at the end of twenty twenty four
Speaker 5: down by about nine hundred and thirty five thousand jobs.
Speaker 5: Adding two hundred and fifteen thousand in January is great,
Speaker 5: but it doesn't mean that we're breaching where that high
Speaker 5: water mark that we thought we had already set.
Speaker 1: All right, So Vince, you know you watch the ins
Speaker 1: and outs of the market. I mean, do traders care
Speaker 1: about these kind of revisions?
Speaker 6: They didn't last year for whatever reason, might they this year?
Speaker 7: They might?
Speaker 8: And it might be more of a political hint of
Speaker 8: things than anything else, especially with all the stuff that's
Speaker 8: going on and rumors with Doge and all this stuff
Speaker 8: that maybe things aren't as up and up, if you will.
Speaker 8: But to serious point, traders are looking for a number
Speaker 8: closer to two hundred thousand tomorrow. So I think I
Speaker 8: agree with him. I think the asymmetric risk is we
Speaker 8: see a higher number tomorrow, which is definitely going to
Speaker 8: probably weigh on treasury yields and maybe even on equities
Speaker 8: at least for the short run.
Speaker 4: Evin's how does they contrast to it sort of in
Speaker 4: weight of importance to I mean, Carol said, it feels
Speaker 4: like Friday.
Speaker 9: Because it's quite a week.
Speaker 4: But which where we focused early in early in the week,
Speaker 4: that was all anyone could talk about. Yeah, what's the
Speaker 4: distinction there between what traders are focused on, the eco data,
Speaker 4: what comes out of the White House when it comes
Speaker 4: to tariff's and trade.
Speaker 9: How do you make sense? So it flipped.
Speaker 8: I mean, no one cared about jobs when the tariff
Speaker 8: news was out. When you were looking at twenty five
Speaker 8: percent tariffs on both Canada and Mexico, ten percent going
Speaker 8: out to China, that was the big deal. When that
Speaker 8: was on pause, Bang, back to economic data, back to earnings.
Speaker 7: That's now the focus.
Speaker 8: A couple of weeks from now, three weeks from now,
Speaker 8: whenever this pause ends, if we go back to tariff's again,
Speaker 8: we're going to flip again. It'll be tariff news that weighs.
Speaker 8: And I said what best and said today in market's
Speaker 8: not picking up on He basically said, China is going
Speaker 8: to be the ones eating the cost of these tariffs.
Speaker 8: That means the tariffs and China are going anywhere and
Speaker 8: could possibly be increased so that may sort of even
Speaker 8: things out with both data and tariffs come back into
Speaker 8: the nature.
Speaker 4: Do you agree Stuart, that China is going to be
Speaker 4: the ones eating the tariffs?
Speaker 5: I think when it comes to prices, I do expect
Speaker 5: China to eat a large chunk of of the tariffs.
Speaker 5: There are too many margins along which prices can adjust
Speaker 5: before it gets before consumer goods get to the shell
Speaker 5: cut field.
Speaker 3: Reduce prices ahead of the tariff.
Speaker 5: So China can lower trying to can lower their prices
Speaker 5: as they're heading out of the port. You can end
Speaker 5: up seeing further dollar appreciation that helps to office at
Speaker 5: the effect of tariffs. When it comes to consumer prices.
Speaker 5: When you look within the federal government data and you
Speaker 5: look at corporate profits, at least in the aggregate, there
Speaker 5: is room for a compression there. So there are all
Speaker 5: these margins again against which prices can adjust before get
Speaker 5: to the shelves for consumers. So who's gonna end up
Speaker 5: feeling the pain Probably China a bit more than US
Speaker 5: consumers for that specific set of goods.
Speaker 1: So you're saying, like a manufacturer who manufactures over in China,
Speaker 1: even though it might be an American company, the manufacturer
Speaker 1: in China is going to say, we're going to cut
Speaker 1: your costs, so we're going to eat some of that
Speaker 1: over there, So that once the tariff has put it
Speaker 1: on the American consumer, it doesn't feel.
Speaker 5: You have manufacturers, you have importers, you have wholesalers, and
Speaker 5: then you have retailers all along that chain. You have
Speaker 5: room for compression before consumers feel the pain.
Speaker 1: Vince, What is it like though, Like in this environment,
Speaker 1: like we've seen Donald Trump in the White House before,
Speaker 1: it does feel a little bit different. But there is
Speaker 1: a lot coming out investors and trying to figure out
Speaker 1: what's the sticky stuff. What's the stuff that really sticks around?
Speaker 1: Is it tariffs? Is it tax cuts? Is it I
Speaker 1: don't know? Or is it like what is it?
Speaker 9: So?
Speaker 3: How do you make sense?
Speaker 8: I think we have to think the tariffs are going
Speaker 8: to be here? He ran on tariffs. He's thinking about
Speaker 8: putting across the board tariffs which nobody's talking about of
Speaker 8: two and a half percent or higher. It's in the background.
Speaker 8: He's not even brought it up too much, but it
Speaker 8: is in the conversation in the White House that two
Speaker 8: and a half percent to maybe five percent tariffs could
Speaker 8: come out across the board on every product. We're not
Speaker 8: seeing that yet. That may not come forward, but they're
Speaker 8: they're talking in the White House and it's not practical,
Speaker 8: but that they're thinking in the White House that they
Speaker 8: can use tariffs to either reduce or eliminate the income tax. Now,
Speaker 8: US consumer would obviously love that we'll pay You don't
Speaker 8: pay a tax unless you buy something. Probably, I mean,
Speaker 8: realistically not going to happen that it can compensate. But
Speaker 8: I believe they think that they can do some form
Speaker 8: of tariffs to raise some revenue along with the cutting
Speaker 8: of expenses, that they can cut taxes to appease the
Speaker 8: voter base, and to just to promise to deliver on
Speaker 8: what he promised.
Speaker 3: You know, I think about what.
Speaker 1: You just said, Stuart, because as an economist, you know,
Speaker 1: you have to figure out again how long these tariffs
Speaker 1: stick around. If there's more that are put on. I
Speaker 1: understand that China can eat some of it, perhaps, but
Speaker 1: there's got to be ultimately an impact on some US
Speaker 1: companies too.
Speaker 5: Sure there are an impact on US companies and.
Speaker 3: Growth ultimately maybe here in the US and.
Speaker 5: Growth, that's right. So the first element that you have
Speaker 5: to deal with on the growth when it comes to
Speaker 5: growth is that before tariffs are implement that you have
Speaker 5: a surge in imports, and that starts the way on growth.
Speaker 5: With the implementation of tariffs on Canada and Mexico delayed
Speaker 5: until March, again, expect to see as much importing of
Speaker 5: goods from those two trading partners in advance of announced
Speaker 5: tariffs or any sort of agreement during the first quarter.
Speaker 5: So that's going to weigh on growth immediately. Then the
Speaker 5: growing pains that come with reorienting supply chains does weigh
Speaker 5: on growth as well. So I'm certainly not dismissing those
Speaker 5: as a geopolitical tool, though in sort of trying to
Speaker 5: position the US visa China, it makes sense that Trump
Speaker 5: would look to keep those tariffs in place where it
Speaker 5: gets to be a little bit simpler of a relationship,
Speaker 5: let's say, with the US and Canada. It doesn't make
Speaker 5: as much sense to be as harsh with tariffs on Canada,
Speaker 5: for example, and because most of the net exports that
Speaker 5: Canada is sending our way are energy products, and Trump
Speaker 5: isn't going to want to deal with higher energy prices,
Speaker 5: especially if that does ripple through to.
Speaker 7: The gas pump.
Speaker 4: If I want to give you the last word on
Speaker 4: the trade. When you say that the market's not picking
Speaker 4: up on what you think the president has communicated with
Speaker 4: regard to tariffs, what exactly do you mean? What do
Speaker 4: you think where do you think prices should be?
Speaker 8: Well, I don't think they're taking it seriously that tariffs
Speaker 8: are coming. I mean, let's not forget we already have
Speaker 8: tariffs in China that he imposed in his first term.
Speaker 8: They're still on the Biden administrations and takes them off,
Speaker 8: so it's not like he's opposed to doing this. I
Speaker 8: think what the tariffs and the situation with Canada and Mexico,
Speaker 8: the thought process on the street was if I'll slap
Speaker 8: my friends around, imagine what I could do to you
Speaker 8: China and Europe.
Speaker 7: And let's not forget Europe.
Speaker 8: He really has the hots for putting tariffs on Europe
Speaker 8: and they're coming.
Speaker 7: They will be coming.
Speaker 8: So I think he's going to like counter in Mexico
Speaker 8: off easy with maybe some minor tariffs just to just
Speaker 8: because of the fentantal situation until that comes under control
Speaker 8: of immigration. But I think China and Europe are going
Speaker 8: to pay the price of this, and the UK eventually
Speaker 8: as well.
Speaker 1: All right, well we're going to be on tariff watch,
Speaker 1: that's for sure. All right, guys, thank you so much.
Speaker 1: Vince Nurella here in studio, global macro strategist at Bloomberg News,
Speaker 1: and of course our Stuart paul Us economist at Bloomberg Economics.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 1: Let's get to our latest on Elon and his work
Speaker 1: there at the US government the Washington Post. We do
Speaker 1: want to point out reports that representatives from Elon Musk's
Speaker 1: DOGE have fed sensitive data from across the Education Department
Speaker 1: into AI software to probe the agency's programs and spending.
Speaker 1: This according to two people with knowledge of the DOSE
Speaker 1: team's actions. Again, this is coming from the Washington Post.
Speaker 1: All of this coming on the back of Elon Musk's
Speaker 1: efforts into the US Treasury, which came to.
Speaker 3: Light this past week.
Speaker 1: We've been talking about a lot here at Bloomberg, and
Speaker 1: it brings us to what is the most read story
Speaker 1: on the Bloomberg today about how Elon and his efficiency team,
Speaker 1: who have gained access to the Treasury Department's computer network,
Speaker 1: have caused alarm and sparked a stand up between bureaucrats
Speaker 1: and President Trump's administration with more. We welcome in Ted Man.
Speaker 1: He's Bloomberg News, Money and Influence reporter. He's out there
Speaker 1: in our DC bureau. Ted a lot of places to go,
Speaker 1: and we know we heard from the US Treasury Secretary
Speaker 1: on that. We'll get to that in a moment, but
Speaker 1: give us an update update in terms of the work
Speaker 1: that Elon Musk and the Dosee team have been doing
Speaker 1: specifically at the Treasury and the type of back and
Speaker 1: forth we've been seeing.
Speaker 10: Well, thanks for having me. The work that they're doing
Speaker 10: is primary, rarely focused on the information systems that flow
Speaker 10: through the Treasury. That's information on all the payments that
Speaker 10: the US government makes, all the identifications of programs and individuals,
Speaker 10: and all of the stores of information that are contained
Speaker 10: inside that agency. The fact that this team of relative
Speaker 10: unknowns were able to so quickly get access to that
Speaker 10: information alarmed members of both parties in Congress, even Republicans.
Speaker 10: We reported this morning that five or six Republican senators
Speaker 10: have privately lodged objections to the White House when that
Speaker 10: became clear, because it's really unprecedented to have relative newcomers
Speaker 10: crawling through the very most secret forms of information contained
Speaker 10: within the Treasury Department.
Speaker 4: What did the GOP senators take issue with? According to
Speaker 4: your reporting, the.
Speaker 10: Best that we have been able to understand is that
Speaker 10: there was a feeling that this was a little bit
Speaker 10: too big brother. That's how one person put it, that
Speaker 10: this is going deep into personally identifiable information. There was
Speaker 10: in the some of the early reporting this sense that
Speaker 10: the government that these staffers were really getting a very
Speaker 10: up close and personal view of what individual information was
Speaker 10: within the Treasury Department, and they were lodging objection to that,
Speaker 10: saying that it was, you know, the sort of thing
Speaker 10: that bothered them as being overly invasive and really uncontrolled.
Speaker 10: We don't really have any sort of precedent for this
Speaker 10: kind of behavior.
Speaker 3: Who is on the Doze team?
Speaker 1: And we're gonna hear a little bit later on this
Speaker 1: hour and about twenty minutes time or so the Treasury
Speaker 1: Secretary dressing some of those officials.
Speaker 3: But what do we know about who is the DOGE team?
Speaker 3: And the qualifications well, in.
Speaker 10: Terms of people at Treasury, one thing that we reported
Speaker 10: this morning, which the Secretary confirmed later on in his
Speaker 10: Bloomberg interview is Tom Krause, who's one of those DOGE
Speaker 10: officials and is now at Treasury, is someone that's Scott
Speaker 10: Besson interviewed in December when he was putting together his team,
Speaker 10: and that in that conversation they discussed this very level
Speaker 10: of perusal of the forms and systems within the Treasury
Speaker 10: Department that is now underway. And what that shows is
Speaker 10: that while you have Republicans on the Hill being a
Speaker 10: little unnerved not having expected this to happen, Scott Besson
Speaker 10: himself is much more on board with this than a
Speaker 10: lot of people may have previously assumed.
Speaker 4: I'm curious what you know. We've learned quite a bit
Speaker 4: from Scott Bessen thanks to Silia Mosen's interview with him
Speaker 4: a little earlier today. He did say that he personally
Speaker 4: vetted Treasury employees and that they only have read only
Speaker 4: access to federal payment data and there's been no tinkering
Speaker 4: with the department's payment systems. Does your reporting align.
Speaker 10: With that, Yeah, that's been the biggest question, and certainly
Speaker 10: on the Democratic side of the aisle, there was great
Speaker 10: alarm at this notion that they were getting in there
Speaker 10: in these systems and potentially altering code, doing things that
Speaker 10: went beyond simply looking at this information, which is unusual enough,
Speaker 10: but actually changing what was in there. So this is
Speaker 10: the first time we've had the Treasury Secretary saying no,
Speaker 10: that was not occurring. They had previously sent a letter
Speaker 10: to the Hill in response to some lawmakers, including Senator
Speaker 10: Ron Wyden, but even the letter itself seemed to say
Speaker 10: that they didn't currently have anything that went beyond read
Speaker 10: only access. What Besin said today was that no, they
Speaker 10: had not changed anything or tinkered with those systems about
Speaker 10: how money flows.
Speaker 1: Hey, Ted, my understanding too, is a federal judge temporary
Speaker 1: limited access to the Treasury payment system.
Speaker 3: A group of.
Speaker 1: Unions accused the agency of illegally sharing members information with
Speaker 1: Musk's team, and this is that order that allows only
Speaker 1: read only access to those two Musk associates, including Kraus.
Speaker 3: What's interesting is.
Speaker 1: It does sound like the legal system is kicking in,
Speaker 1: so who in general are bringing suits and might bring
Speaker 1: more suits to kind of maybe prevent elon Musk and his.
Speaker 3: Team, the DOSE team from doing more at Treasury.
Speaker 10: Well, in particular, I think you're going to see legal
Speaker 10: efforts that originate with organized labor because to the extent
Speaker 10: that DOGE has sort of signaled its ultimate intentions, one
Speaker 10: of them clearly is to reduce the number of federal employees.
Speaker 10: And so the unions who defend those workers' rights are
Speaker 10: starting to agitate essentially to slow this effort down until
Speaker 10: they can understand what's going on.
Speaker 11: That is the most likely.
Speaker 10: Initial wave I think of legal action.
Speaker 9: I'm curious.
Speaker 4: I'm wondering about the potential conflicts of interest here and
Speaker 4: the concerns about somebody such as Elon Musk with varied
Speaker 4: business interests competing with companies such as Boeing companies that
Speaker 4: are Internet service providers with Starlink of course, competing against
Speaker 4: other NASA contractors with SpaceX. What type of data, even
Speaker 4: if it's read only, he could have access to that
Speaker 4: has folks concerned.
Speaker 7: Sure.
Speaker 10: Sources we've talked to, including former members of the Trump
Speaker 10: administration first time around and other officials, have pointed to
Speaker 10: exactly that if you were a businessman with the breadth
Speaker 10: of interests that Musk has, and you had unfettered access
Speaker 10: to all of the information in the United States Treasury
Speaker 10: about what about your competitors' finances, about payments and payment
Speaker 10: schedules of the US government to them for the contracts
Speaker 10: that they hold.
Speaker 9: We don't know.
Speaker 10: To what extent they have or plan to or will look.
Speaker 7: Into tax data.
Speaker 10: You might want to know a lot more about the
Speaker 10: taxes of your biggest rivals, you know, the other ev manufacturers.
Speaker 10: All of that is on the table. And since we've
Speaker 10: been told that Musk himself will be the one deciding
Speaker 10: if he has a conflict of interest in what he's
Speaker 10: up to, the government and the press and the public
Speaker 10: don't have a lot of assurances that he's not looking
Speaker 10: at these these stores of information as a way to
Speaker 10: improve his business propositions.
Speaker 1: And that's the important distinction, this conflict of interest or
Speaker 1: potential conflict of interest, right, ted, I mean Musks classified
Speaker 1: as this special government employee. This temporary designation limits his
Speaker 1: term of service one hundred and thirty days out of
Speaker 1: the year. He doesn't have to provide those financial disclosures
Speaker 1: and other ethics requirements. So the classification is there because
Speaker 1: other administrations have brought in outside help, maybe just for
Speaker 1: a short term period. The difference is, many would argue,
Speaker 1: is that you're bringing in a CEO of a publicly
Speaker 1: held company and companies that you know, in particular SpaceX,
Speaker 1: you know, have billions of dollars in government contracts with
Speaker 1: the United States.
Speaker 9: That's right.
Speaker 10: It's the definition of a conflict of interest to be
Speaker 10: in the position that he is in right now with
Speaker 10: continued personal involvement in for profit companies that do business
Speaker 10: with the government that he's helping to advise and advice.
Speaker 10: Seems a little like he's going much farther than advising,
Speaker 10: it seems like to us from what little they've said. So, yeah,
Speaker 10: this is an unprecedented situation for someone to have the
Speaker 10: financial interest he has in his companies while simultaneously dictating
Speaker 10: the operations of the government.
Speaker 6: TED.
Speaker 4: We should note there are quite a few supporters of
Speaker 4: Elon Musk and what he's doing. Look no further than
Speaker 4: the replies to what he posts on his own social
Speaker 4: media platform, X. What are you hearing publicly from folks
Speaker 4: inside and outside the government about? Yeah, the government maybe
Speaker 4: is spending too much money, Maybe there does need to
Speaker 4: be some controls, Maybe there needs to be some modernization
Speaker 4: of these systems.
Speaker 9: What are we hearing there?
Speaker 10: I mean, those are all conventional platitudes of American politics.
Speaker 10: Everyone always says they're for the government spending less money
Speaker 10: on things they don't like, and for the government to
Speaker 10: be more modern and to operate more efficiently, and to
Speaker 10: spend taxpayer dollars. Wisely, these are not new sentiments, and
Speaker 10: certainly he's getting I think a lot of support from
Speaker 10: people who feel like maybe this is the way to
Speaker 10: all to the government in ways that it has not
Speaker 10: been shaken up.
Speaker 11: So roughly in the past.
Speaker 10: So there is support for that, and even some of
Speaker 10: the Republican lawmakers who have privately been a little leery
Speaker 10: of some of the ways they've been going about their
Speaker 10: business over the past couple of weeks, are still sticking
Speaker 10: by Musk. Personally, no one is registering any objections either
Speaker 10: to Musk or to Trump with some of these early actions,
Speaker 10: not on the Republican side, so certainly they are acting
Speaker 10: as if they have a mandate. And on the Republican side,
Speaker 10: there has not been a lot of nothing really in
Speaker 10: the way of public resistance to this, only some private concerns.
Speaker 1: Ted after you and the team doing the reporting on
Speaker 1: this and what's going on at US Treasury and listening
Speaker 1: to the Treasury secretary talk with Seleia of Bloomberg's lah
Speaker 1: Mosen in her interview and what he had to say
Speaker 1: about the dose involvement. Do you have more questions that
Speaker 1: do you feel like that, ultimately, if the Treasury Secretary
Speaker 1: said Nope, you can't.
Speaker 3: Do that, that that would be it.
Speaker 1: Or do you feel like it's more of a collaborative
Speaker 1: question where the President might weigh in or Elon certainly
Speaker 1: wields a fair amount of power right now.
Speaker 10: Taking the Secretary at his word, I don't think we
Speaker 10: really know the answer to that question because we don't
Speaker 10: know what request for access or our abilities to change
Speaker 10: things might come from Musk or Doze or someone working
Speaker 10: for him today, tomorrow, or next week. We haven't gotten
Speaker 10: there yet. We don't know who will have to say
Speaker 10: no to him. We don't know if they will say
Speaker 10: no to him. And ultimately, if Musk appeals to President
Speaker 10: Trump because someone has not given him what he wanted,
Speaker 10: we don't know what Trump would do. So that is
Speaker 10: a dynamic that remains unknown. Despite what Bessant has said
Speaker 10: about not allowing them to tinker with the payment system.
Speaker 10: Yet I would also note that in Besson's interview today
Speaker 10: with Silea, what he said was that this DOGE operation
Speaker 10: is a purely operational review, that it's not ideological, and
Speaker 10: that's just totally contradicted by the things that Musk is
Speaker 10: saying publicly. He's saying he's referred to USA IDEA as
Speaker 10: a criminal organization, and he's bragged about feeding it into
Speaker 10: the wood chippers. So those are two different accounts of
Speaker 10: what they're up to, and we don't really know what
Speaker 10: the truth is yet.
Speaker 3: All right, Ted Man, thank you so much.
Speaker 1: Bloomberg News, Money and influencer reporter, joining us from our
Speaker 1: Bloomberg News bureau in Washington, DC.
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Speaker 2: New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 1: We are watching shares of Hilton worldwide, the stock ralling
Speaker 1: to a record intran day right now, just up under
Speaker 1: just under five percent. The hotel company did report fourth
Speaker 1: quarter earnings. The company's forecast for full year just at
Speaker 1: EPs did miss analyst estimates, but they were encouraged by
Speaker 1: the outlook for revenue per available room growth. We're talking
Speaker 1: about RevPAR as. It highlights Hilton's plans to expand to
Speaker 1: new markets. The news I should point outlifting others in
Speaker 1: the hotel group, including Merritt and Hyatt. Shares of Hilton,
Speaker 1: by the way, up about ten percent year to date.
Speaker 1: They were up about thirty five percent in twenty twenty four.
Speaker 4: It's great to have the president and CFO of Hilton
Speaker 4: joining us, Kevin Jacobs joining us from McLean Virginia.
Speaker 9: Kevin, good to have you with us. Talk to us
Speaker 9: about growth.
Speaker 4: Because you've added one hundred and seventy one properties to
Speaker 4: your global network.
Speaker 9: How much more are you planning to do?
Speaker 11: Yeah?
Speaker 12: First of all, Tim and Carol, thanks for having me again.
Speaker 12: It's great to be on with you. Look, I think
Speaker 12: how much more is a difficult question to answer. We
Speaker 12: actually added, you know, almost one hundred thousand rooms to
Speaker 12: our system just in twenty twenty four, but we signed
Speaker 12: over one hundred and fifty thousand new rooms into our
Speaker 12: development pipeline. Our development pipeline is now just about half
Speaker 12: a million rooms, with just about half of that of
Speaker 12: those half.
Speaker 11: A million rooms under construction.
Speaker 12: We grew net units seven point three percent in twenty
Speaker 12: twenty four, and we've gave guidance that we would grow
Speaker 12: six to seven percent in twenty twenty five. And so
Speaker 12: and we think that growth trajectory can continue. So I think,
Speaker 12: you know, there's a great fundamental setup for travel around
Speaker 12: the world with a rapidly growing middle class that has shown,
Speaker 12: you know, time and time again that they want to travel.
Speaker 11: And if people have the ability to travel, build travel.
Speaker 12: So we, you know, grow our system in response to
Speaker 12: travel demand around the world, and in partnership with our owners,
Speaker 12: our hotel owners and developers who are allocating their capital
Speaker 12: to accommodate that growth. And so I don't want to
Speaker 12: use a lot of hyperbole and say the guy's the limit.
Speaker 11: But you know, we're very excited about our growth trajectory.
Speaker 3: But you want to say the sky's the limit?
Speaker 11: No, actually, and I did.
Speaker 3: So there you go, Kevin, What I want to ask you?
Speaker 3: What really?
Speaker 1: Tim and I both perked up when you said middle class,
Speaker 1: you know, demand, because we constantly talk about there is
Speaker 1: no middle class or the middle class feel strained at
Speaker 1: this point. We talked with is that, the head of Travago,
Speaker 1: and they talked about, I think more higher end travel
Speaker 1: that's going on. Tell us about that sector of your business,
Speaker 1: what you are seeing and what do you mean by
Speaker 1: middle class? What are the rooms that they are looking for,
Speaker 1: the types of destinations they are looking for.
Speaker 11: Well, the second part. First, look, we have a growing
Speaker 11: luxury business.
Speaker 12: Right Our Walder Conrad brands you know, continue do really
Speaker 12: well broadly in luxury lifestyle. Half of our signings last
Speaker 12: year we're in that segment. So we serve the upper
Speaker 12: end really well. But if you think about the addressable
Speaker 12: market for travel, it's broadly, you know, the middle classes
Speaker 12: around the world to travel, and we have brands that
Speaker 12: you know, starting with Waldorf, but going all the way
Speaker 12: down to spark Our, our premium economy conversion brand, True
Speaker 12: is our new new build you know, mid scale brand
Speaker 12: and and and everywhere in between and so our you know,
Speaker 12: our overarching strategies we want to accommodate you know, any
Speaker 12: traveler anywhere they want to be in the world for
Speaker 12: any travel need they have, and that goes up and
Speaker 12: down the spectrum of price points but it's really if
Speaker 12: you think about the addressable market for travel, it is
Speaker 12: it is, broadly speaking, the number of middle class people on.
Speaker 4: The planet geographically. Where are you seeing strength and where
Speaker 4: you seeing weakness?
Speaker 11: I mean, in terms of growth or fundamentals? Are both?
Speaker 9: I want to know fundamentals.
Speaker 11: I mean, we're not really seeing weakness.
Speaker 12: You know, our fourth quarter exceeded our expectations were we
Speaker 12: grew revpart, which is our metric for same store sales,
Speaker 12: three and a half percent, two point seven percent growth
Speaker 12: for the year. We're in a situation where capacity editions
Speaker 12: are relatively constrained.
Speaker 11: You know, is measured in the US, it's about one percent.
Speaker 12: A little bit harder to track globally, but broadly speaking,
Speaker 12: you know, call it one percent growth. Around the world,
Speaker 12: demand is probably growing a little bit better than that too,
Speaker 12: or better. So that gives you a little bit of
Speaker 12: pricing power. And then with inflation, you're willing to you're
Speaker 12: able to take some price and so our guidance for
Speaker 12: a system wide for the year is two to three percent.
Speaker 12: The US probably at the lower end of that range,
Speaker 12: China probably at the lower end of that range, and
Speaker 12: then other parts of the world like Europe, the Middle East,
Speaker 12: and Asia Pacific ex China, you know, sort of growing
Speaker 12: at the at the higher end of that range, if
Speaker 12: not higher mid single digit growth. Hey, ken really not
Speaker 12: weakness and fundamentals anywhere.
Speaker 11: In the world.
Speaker 1: Interesting in the US though, specifically any difference between business
Speaker 1: versus leisure travel demand and how that's trending and what
Speaker 1: that might mean for profitability.
Speaker 12: Yeah, I mean quarter over quarter, you know, coming out
Speaker 12: of COVID obviously saw a lot you know, a little
Speaker 12: bit of a mix shift or actually in COVID like
Speaker 12: a big mixshift, but then coming out of COVID a
Speaker 12: little bit of a mixshift, call it four or five
Speaker 12: points of mix of our business to levels of leisure
Speaker 12: travel that were historically higher than they had been. That's
Speaker 12: sort of normalizing it did. It varies quarter over quarter,
Speaker 12: but all of our segments were strong in the fourth quarter.
Speaker 12: So leisure leisure transient grew four percent in the fourth quarter,
Speaker 12: Business transient grew three and group business grew three.
Speaker 11: We think that.
Speaker 12: Business transient as it continues to recover, and particularly group
Speaker 12: which is on a lag because you know, the bigger
Speaker 12: the group and bigger the meeting, the longer it takes
Speaker 12: to plan, and so group business tends to be on
Speaker 12: a lag, and so we think group and business transient
Speaker 12: will lead the way with leisure being a little bit softer.
Speaker 12: But that's not because it's really softening per se, but
Speaker 12: it's more just kind of tougher comps.
Speaker 1: Hey, listen, you also when you were kind of going
Speaker 1: through geographies, you mentioned China in particular. We've been wondering,
Speaker 1: you know, any indication that the domestic hotel bookings, that
Speaker 1: the weakness that you guys have seen in China last
Speaker 1: year has ameliorated with some sign of improvement, any more
Speaker 1: color you can give us around the business there.
Speaker 12: Yeah, I mean our expectation is that it will grow
Speaker 12: this year. You mentioned you know, you're right, the comps
Speaker 12: are easier, right, We were down about five percent last year.
Speaker 11: We do think will be up a little bit this year.
Speaker 12: The other thing you're seeing in China that you have
Speaker 12: to think about in those numbers is yet you know, yeah,
Speaker 12: their consumer is a little bit weaker than it's been
Speaker 12: in the past, but they're now they've now opened up
Speaker 12: cross border travel, right, So some of the reason that
Speaker 12: domestic China is a little bit softer is because you
Speaker 12: have a portion of Chinese travelers who are going outside
Speaker 12: of China, which is benefiting our business just broadly in
Speaker 12: Japan and the rest of and the rest of the
Speaker 12: APEC outside of.
Speaker 1: China, everybody's going to Japan. That's the whole thing we
Speaker 1: keep hearing, Kenvin.
Speaker 4: We're asking everybody we talked to about how Washington is
Speaker 4: affecting their business and the transition there. In your view,
Speaker 4: how has US business sentiment changed since the presidential election?
Speaker 4: How does that make you think about Hilton's twenty twenty
Speaker 4: five room price and occupants, the outlook in the wake
Speaker 4: of tariffs, a potential trade war, and just overall sentiment.
Speaker 12: Yeah, Look, I think I think start with overall sentiment
Speaker 12: is generally more positive, right, I mean, I think about
Speaker 12: for whatever your views are on all these various issues,
Speaker 12: I think you know, broadly, the expectations for the environment
Speaker 12: around regulatory issues, taxation, you know, fiscal policy, et cetera,
Speaker 12: are that it's going to be supportive of economic growth.
Speaker 12: There are some other things. Yeah, trade wars and tariffs
Speaker 12: you know, tend to be can be tricky. But I
Speaker 12: think all that's it's early days to know what's going
Speaker 12: to happen for all that stuff, and you know, bakes
Speaker 12: into our guidance that I you know that I won't repeat.
Speaker 11: Because I said it earlier.
Speaker 12: Is our best thinking on that, which is just look generally.
Speaker 12: I think we think, generally speaking, if you look at
Speaker 12: survey data, if you talk to customers, if you talk
Speaker 12: to people that run businesses around the country, I think
Speaker 12: people are generally more optimistic since the election, and we
Speaker 12: suspect in the near term that that's going to continue
Speaker 12: to support fundamentals. What happens, you know, specifically around certain
Speaker 12: policy decisions, I think, you know, some of them could
Speaker 12: be head when some of them could be tailwinds. But again,
Speaker 12: the broadly the fundamental setup in our business with capacity
Speaker 12: editions in check, demand growth. Yeah, the picture for demand
Speaker 12: growth and the prospects for a recession seem pretty low.
Speaker 12: A little bit of inflation around the world, and then US,
Speaker 12: you know, continuing to take share, both in terms of
Speaker 12: accommodating customers and then in terms of our share of
Speaker 12: the development pipeline. You know, we're nearly twenty percent of
Speaker 12: the rooms under construction around the world and five percent
Speaker 12: of the in place supplies.
Speaker 1: So Kevin, we got to run so glad we got
Speaker 1: some time with you, Kevin Jacobs, President CEO CFO, I
Speaker 1: should say of Hilton joining us on Business Week.
Speaker 2: You are listening to the Bloomberg Business Week podcast. Catch
Speaker 2: us live weekday afternoons from two to five pm Eastern.
Speaker 2: Listen on Apple CarPlay and Android Auto with the Bloomberg
Speaker 2: Business app, or watch us live on YouTube.
Speaker 1: We got a snapshot of what's going on in big
Speaker 1: pharma thanks to results from two big players. Pfizer reported
Speaker 1: on Tuesday, Eli Lilly reporting results this morning. You know
Speaker 1: you've got that going on, and then you've also got
Speaker 1: Robert F. Kennedy Junior clearing a Senate panel, making his
Speaker 1: way toward confirmation next week. It's something certainly big pharma
Speaker 1: has been watching Tim for more.
Speaker 4: We're joined by Jeff Meacham, Managing director and global head
Speaker 4: of Healthcare over at City Bank. Shares of Lily hire
Speaker 4: right now by just about three percent. The earnings forecast
Speaker 4: came in line with analyst estimates. Jeff, there was some
Speaker 4: discussion on the call about whether Lily is it all
Speaker 4: concerned about demand given the weird supply chain dynamics that
Speaker 4: have led to two consecutive sales misses. Lily brushed off
Speaker 4: those concerns. Are investors right to be concerned?
Speaker 13: Yeah, it's a great question, Tim, And by the way,
Speaker 13: thank thanks for having me. You know, demand is is
Speaker 13: by far, I think one of the bigger, you know,
Speaker 13: bigger picture concerns for Lily. If you don't have demand,
Speaker 13: just the stock really is not going to work. But
Speaker 13: I'd say three Q and four Q the disappointments that
Speaker 13: we saw, I think we're mostly related to inventories and
Speaker 13: we've done physician checks, You've done looking at all the
Speaker 13: the you know, the competitors, including Novo. Demand is is
Speaker 13: unequivocally strong for you know, for obesity, and it's still
Speaker 13: very very strong for.
Speaker 7: Diabetes as well. So I feel very good about the picture.
Speaker 13: I'd say it's that day's move when the stock is
Speaker 13: really a bit of a relief that there's now a
Speaker 13: beatable bar on top and bottom line and that there's
Speaker 13: less I think anxiety right over over trying to beat bigger,
Speaker 13: you know, numbers that are really kind of outsize, I mean.
Speaker 1: And going you know, just staying with the obesity market, Jeff,
Speaker 1: I mean, you know, what are the latest numbers in
Speaker 1: terms of the potential for this market, and are these
Speaker 1: numbers do they continue to go up?
Speaker 13: Yeah, A good question, Carl, Yeah, I mean, I think
Speaker 13: if you look at the end of the decade, clearly
Speaker 13: we're talking about this being well more than one hundred
Speaker 13: billion dollar market. Diabetes should be a very big component
Speaker 13: of that. But obesity, I think is you know, is
Speaker 13: obviously in its you know, hyper growth phase. No one's
Speaker 13: talking about obesity being a twenty five thirty percent penetration
Speaker 13: kind of market, you know, even being one hundred billion
Speaker 13: dollars potential for GLB ones or more, we're talking about
Speaker 13: still a ten p ten fifty percent penetration in obesity.
Speaker 13: So there's a lot of room to go. Even if
Speaker 13: pricing collapses, you still have I think much stronger likelihood
Speaker 13: that you know, people want to go on the drugs.
Speaker 13: But the other thing that that's not really talked about
Speaker 13: is that you have a bunch of other indications sleep
Speaker 13: that in the heart failure or chronic kitting disease. Literally
Speaker 13: just announced hypertension with their new oral or foglypron So
Speaker 13: the totality of indications that could address you know, you know,
Speaker 13: it probably could be multiples right of the current you know,
Speaker 13: diabetes market, there's a lot of these indications that are
Speaker 13: obviously related.
Speaker 1: Is this likely to be this class of drugs the largest,
Speaker 1: you know, kind of drug group ever in the pharmaceutical industry.
Speaker 13: I think so it's and it's not that you know
Speaker 13: there we're just talking about a simple weight loss drug
Speaker 13: in obesity or HbA once see kind of management and diabetes.
Speaker 13: I mean, these drugs reduce you know, risk of death
Speaker 13: of cardiovascuar disease. You know, they lower lipids, they lower
Speaker 13: blood pressure. So the totality of the benefit is very dramatic.
Speaker 13: And I think if you look at the ven diagram
Speaker 13: of overlapping indications, you know, certainly any diabetes and obesity
Speaker 13: are at the core, but there's a ton of other
Speaker 13: indications that you know, Lily and Novo haven't even talked about,
Speaker 13: but still could easily be addressed.
Speaker 1: But it's all basically right, lose weight. I'm not trying
Speaker 1: to be silly about it or stupid about it, but
Speaker 1: it's the concept of you know, obesity and the problems
Speaker 1: that that creates on an individual, but that you you know,
Speaker 1: courtesy of a drug, lose weight, and.
Speaker 3: Then so many other health ailments go away.
Speaker 13: So that you're you're you're right that losing weight is
Speaker 13: by far the biggest, biggest component of it, but we
Speaker 13: also see in a lot of these trial readouts, you know,
Speaker 13: things like changes in behavior reduction and compulsive behaviors.
Speaker 7: So it's more than just the weight.
Speaker 13: There is sort of the gut brain access, you know,
Speaker 13: a piece of it which is still have yet to
Speaker 13: be fully you know, vetted out, but certainly you know,
Speaker 13: there are other mechanisms in place besides just sort of
Speaker 13: reducing for example, the time that you know food goes
Speaker 13: through the gut and that is.
Speaker 7: A direct result of losing weight.
Speaker 13: There's you know, probably I don't know, pap a dozen
Speaker 13: you know, sort of mechanisms that are in play kind
Speaker 13: of in the background that I think we haven't really
Speaker 13: fully vetted yet.
Speaker 4: And we've got to talk about RFK Junior and what
Speaker 4: he could mean for drug makers or vaccine makers. Do
Speaker 4: you think he'll be more focused on food? Do you
Speaker 4: think he'll be more focused on pharmaceutical companies. During the
Speaker 4: early parts of his hearing, there was a lot of
Speaker 4: focus on pharmaceutical companies and funding. How are you viewing
Speaker 4: his likely confirmation?
Speaker 13: Yep, Yeah, I'd say overall, I think there's very high
Speaker 13: probability that he is ultimately confirmed. I think food is
Speaker 13: less controversial, you know, for sure. I think the only
Speaker 13: thing really here is, you know, how strong is the
Speaker 13: food lobbying group as sort of pushing back on some
Speaker 13: of the changes. But in the in the pharma world though,
Speaker 13: you know, no one's talking about and he's not talking
Speaker 13: about pulling vaccines from the market. All really is is
Speaker 13: maybe recommendations coming down from for example CDC or FDA.
Speaker 13: I think it's just transparency is the main objective there.
Speaker 13: The other debates really are IRA discounting, you know, is
Speaker 13: it going to be still a direct negotiation between CMS
Speaker 13: and drug companies or is it going to be another
Speaker 13: mechanism like you know, lowest price in the G twenty,
Speaker 13: most favored nation discounting.
Speaker 7: You know, we'll see.
Speaker 13: But there's only a couple of hot button issues really.
Speaker 7: That that you know that we have.
Speaker 13: But I would say his his his hearing though, I
Speaker 13: think really validated the fact that you know, he's not
Speaker 13: going to govern with the same kind of, you know,
Speaker 13: off the cuff kind of commentary that that he had
Speaker 13: on podcasts for example, prior to the election.
Speaker 1: Interesting well, and it's interesting and just you know, got
Speaker 1: about a minute left to your Fizer also came out
Speaker 1: with their earnings.
Speaker 3: That was on February fourth, so a couple of days ago.
Speaker 3: Stock was traded lower.
Speaker 1: The CEO Albert Borla talking about having I believe dinner
Speaker 1: with Robert F.
Speaker 3: Kennedy Junior.
Speaker 1: I think the President, he said, had introduced him, and
Speaker 1: also saying I feel cautiously optimistic that they will be very,
Speaker 1: very prudent with everything that they do, referring to Kennedy
Speaker 1: and the Trump administration. Good that they're having a conversation,
Speaker 1: expectations too in terms of policy, and just got about
Speaker 1: thirty forty seconds here.
Speaker 7: Yeah, yeah, yeah, for sure.
Speaker 13: I would say the main thing coming from Trump and
Speaker 13: the public commentary is really that no matter what, the
Speaker 13: biotech and pharma industries are one of the more innovative
Speaker 13: sectors that we have in the US, and I think
Speaker 13: if you have aggressive discounting mechanisms, if you reduce access
Speaker 13: to the drugs, I think you're going to mute the
Speaker 13: impact of that. And so I think there has to
Speaker 13: be a bit of a balance. And Bobby Kennedy and
Speaker 13: Trump and a lot of the other folks working with
Speaker 13: RFKJ across healthcare that you're going to help with that.
Speaker 7: But but it is, it is.
Speaker 13: It's good to recognize though that the sort of the
Speaker 13: innovation and the access to novel drugs is really kind
Speaker 13: of at the at the forefront of a lot of
Speaker 13: the policies.
Speaker 1: Great staff, Jeff already looking forward to next time. Jeff Meachen,
Speaker 1: Managing director of Global head of Healthcare at City Bank.
Speaker 1: Shares of Eli Lilly up about thirteen percent this year,
Speaker 1: Pfizer down about three percent here to date.
Speaker 3: This is Bloomberg.
Speaker 7: Mac.
Speaker 1: I'll bet you let me drive.
Speaker 7: Oh no, no, no no, this is not a twenty Who's.
Speaker 2: Going to drug a please?
Speaker 14: I'll do.
Speaker 2: Let's wat I want to drive.
Speaker 4: It's a good question.
Speaker 9: This is the drive to the clothes.
Speaker 7: Plums for me? Effect well driver Jona Don.
Speaker 2: On Bloomberg Radio.
Speaker 1: All right, TikTok, everybody, Just about eighteen nineteen minutes left
Speaker 1: in today's trading session before we get to the clothes
Speaker 1: on this Thursday, and then some big earnings. We keep
Speaker 1: talking about Amazon, but that's not the only one reporting.
Speaker 1: Take to Expedia, microchip Technology, ELF beauty, Pinterest affirm so
Speaker 1: just a few companies that are coming out after the clothes,
Speaker 1: We're going to be busy.
Speaker 9: Which one are you most excited about?
Speaker 3: Come on, Amazon?
Speaker 9: No, I thought you're going to say you have no
Speaker 9: favorite children.
Speaker 3: You mean when it comes to earning. I don't know.
Speaker 3: Amazon will be an interesting one.
Speaker 1: Just because of the size of it, the mic, the cloud,
Speaker 1: the AI, the you know, all of it.
Speaker 3: WS.
Speaker 4: I'm curious what Jim Smigel is focused on, his chief
Speaker 4: investment officer over at SI. I see, I's got about
Speaker 4: four undred and seventy six billion dollars in assets under management.
Speaker 4: Back with us from Oaks, Pennsylvania, Jim, how are you?
Speaker 14: I'm doing well, suburban Philadelphia. I'm focused on Go Birds
Speaker 14: this week?
Speaker 9: Okay, I bet you are. You're busy.
Speaker 4: Hey, are you going to have a chance to actually
Speaker 4: watch the game or are you going to be focused
Speaker 4: on what we hear from the White House when it
Speaker 4: comes to tariffs or any other breaking news?
Speaker 14: I will, I will cut out Sunday evening and block
Speaker 14: everything out.
Speaker 6: And he's only focused on the big easy for sure.
Speaker 7: Okay.
Speaker 4: The reason I ask is because that's certainly what I
Speaker 4: think a lot of folks did last Sunday when they
Speaker 4: were hearing from the White House about reports of tariffs
Speaker 4: and the news that we did get.
Speaker 3: How are you watching the Grammys? Is that what you
Speaker 3: were saying?
Speaker 4: No, were you watching the gull Okay? I was like
Speaker 4: trying to read up on tariffs. You know there was
Speaker 4: stuff that yes, Trade representative website, are those sorts of things?
Speaker 4: How are you looking at the uncertainty there?
Speaker 14: You know, we are, like most, I think, trying to
Speaker 14: take a little bit of a longer term view. I
Speaker 14: mean these initial kind of forays, particularly when it relates
Speaker 14: to Mexico and Canada. I think President Trump did kind
Speaker 14: of attach enough of a border and fentanyl issue to
Speaker 14: those tariffs that we weren't overly surprised that they kind
Speaker 14: of came off, or were at least that can was
Speaker 14: kicked down the road for for thirty days.
Speaker 4: I think, well, just to jump in, just to jump in,
Speaker 4: I think that for a lot of people, that may
Speaker 4: make sense for Mexico, but there's been concern about, well,
Speaker 4: what's the actual measuring stick? If only you know, sub
Speaker 4: fifty pounds of fetanyl came into the US from Canada
Speaker 4: last year.
Speaker 6: Yeah, if you dig into that a little bit more.
Speaker 14: There was a there was a huge British Columbia bust
Speaker 14: of a fentantal lab. You know that when you hear
Speaker 14: the fifty pound numbers, that's what gets caught, you know.
Speaker 14: I think the reality is is it's a very long
Speaker 14: forest border to the north, and I would imagine that
Speaker 14: those in the Justice Department are where that that is
Speaker 14: a bit more. That is a bit more than what
Speaker 14: maybe the headlines of fifty pounds wouldn't suggest.
Speaker 1: That's a good point, all right, So a lot coming
Speaker 1: at us earnings. You've got whatever comes out of Washington
Speaker 1: in terms of policy or changes.
Speaker 3: You know, it was interesting.
Speaker 1: We've been kicking around story that has come out on
Speaker 1: the Bloombergers want to pull it up here, and this
Speaker 1: has to do with what President Trump might do in
Speaker 1: terms of as he moves on to one of his
Speaker 1: next priorities, tax priorities, and outlining some of them in
Speaker 1: a meeting with Republican lawmakers, including ending perhaps the carried
Speaker 1: interest tax break, expanding the state and local tax deduction.
Speaker 3: Yeah. I live in a high so yeah that'll make
Speaker 3: me happy.
Speaker 1: But having said that, tax policy is going to play
Speaker 1: into certainly the amount of money that potentially is out
Speaker 1: there in the economy also could play into the inflationary pressure.
Speaker 1: So how do you roll into how that might mean
Speaker 1: investors might want to think about their portfolio at this point.
Speaker 3: Maybe it's true.
Speaker 14: So yeah, I think there's a little bit of that, right,
Speaker 14: we're seeing that with a bit of the tarirists, because
Speaker 14: that's what twenty twenty five is, particularly this first six
Speaker 14: months is going to be this big balancing act. You know, one,
Speaker 14: are the positives that we're going to see from deregulation,
Speaker 14: from lower taxes, from a physical stimulus perspective. Are we
Speaker 14: going to balance that out from potential inflationary pressures coming
Speaker 14: from tariffs? I mean, this is this is really what
Speaker 14: we're all faced with, and and you know, as this
Speaker 14: administration is prone to there's going to be a lot
Speaker 14: of headlines before there's actually action.
Speaker 6: So the only really way for.
Speaker 14: The investor to kind of handle this is take a
Speaker 14: slightly longer term view.
Speaker 6: We think that balancing act.
Speaker 14: Does leave us positive risk assets here in the short term,
Speaker 14: but you know, we're keeping our eye on yet ro
Speaker 14: on rates.
Speaker 6: We're keeping our eye on that magical five percent level.
Speaker 14: That's kind of our guide for twenty five to see
Speaker 14: when things start, we start getting a bit nervous, and
Speaker 14: perhaps investors should get a bit nervous as well. You know, tomorrow,
Speaker 14: excuse me, the employment report very very important.
Speaker 6: Terrh Palell kind of.
Speaker 14: Really blew off that part of the FEDS mandate at
Speaker 14: the last press conference, saying, look, we think we think
Speaker 14: the employment situation is perfect right now. There's a chance
Speaker 14: the whisper number being one seventy. We also get revisions tomorrow,
Speaker 14: which is very very important. That's something that can actually
Speaker 14: be a market moving event if that tilts this kind
Speaker 14: of Goldilock.
Speaker 6: Scenario with the employment situation one way or the other.
Speaker 3: We talked about that earlier.
Speaker 7: Paul.
Speaker 4: Yeah, Hey, Jim, in your view, was the FED chair Uh?
Speaker 4: Was he right to sort of shrug off the concerns
Speaker 4: about labor. I mean, it was just a few months
Speaker 4: ago that labor was it seemed to be more of
Speaker 4: a priority when it came to that duel mandate. Do
Speaker 4: you think he's right here?
Speaker 14: I think he's a little too confident because you went
Speaker 14: back to my notion of this balancing act with regulation
Speaker 14: and tax cuts on one side, tariffs and immigration reform
Speaker 14: on the other.
Speaker 6: It kind of comes down to this wage pressure issue.
Speaker 6: Is there a chance that as we get through the first.
Speaker 14: Quarter and into the second quarter, we see some wage
Speaker 14: pressures building that could make things a bit more difficult
Speaker 14: for the Fed And the story that they can look
Speaker 14: past employment and focus on inflation is kind of their
Speaker 14: real real problem.
Speaker 3: Child. Hey, one thing I wanted to ask you.
Speaker 1: There was a story out there on this coming from
Speaker 1: JP Morgan's global quantitative and derivative strategist, that investor sentiment
Speaker 1: across the so called mom and pop traders reaching the
Speaker 1: highest level on records. So we're talking about retail traders.
Speaker 1: Is that a positive sign in your view?
Speaker 14: It's a positive sign in one way, and that what's
Speaker 14: really been working in the market for the last twelve
Speaker 14: months is momentum, and that's kind of a bit of
Speaker 14: a sign that that momentum is probably going to continue
Speaker 14: in the near term. From a timing perspective, when you've
Speaker 14: got to kind of get that massive amount of optimism,
Speaker 14: you're always asking yourself in the back of your mind,
Speaker 14: there are we getting closed or calling you top? We
Speaker 14: have all these earnings coming out. That's really what twenty
Speaker 14: twenty five is going to be Ken earnings deliver. We
Speaker 14: don't see a lot of multiple expansion from here. Not surprisingly,
Speaker 14: we do see and I think this was mentioned a
Speaker 14: bit earlier. Financials actually are having a great year. That
Speaker 14: broadening out of equity performance. It's something we do back
Speaker 14: to continue and that could actually make the mom and
Speaker 14: pop trade one that is correct, It's just not going
Speaker 14: to be driven from the same concentrated players as we've
Speaker 14: been seeing.
Speaker 3: All Right, we're gonna leave it on that note.
Speaker 1: Really appreciate the overview, Jim, take care of have a
Speaker 1: great weekend.
Speaker 3: Good luck on the big game.
Speaker 1: Although I am kind of ye Kansas City Chefs fan,
Speaker 1: so I'm a Giants fan, So I can't is that
Speaker 1: what it is?
Speaker 9: Is that it is?
Speaker 3: It has nothing to do with you don't want to
Speaker 3: wear a Giant.
Speaker 9: It's like anything else, Philadelphia, What nothing to do with
Speaker 9: anything else?
Speaker 3: Like, No, it's not the tailor thing. Yeah, which is
Speaker 3: it's kind of interesting.
Speaker 1: I don't know.
Speaker 9: It was, you know, interesting in last year.
Speaker 4: What everyone was talking about it last year nobody were right, Yeah,
Speaker 4: nobody really.
Speaker 3: Cares keep track?
Speaker 10: Okay, I don't know.
Speaker 3: Welcome to Bloomberg Business Week. The People magazine.
Speaker 4: Version Elizabeth says, fly Eagles Fly Yeah Boo on you.
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