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Speaker 1: From Marhart where Innovation, Money and Power Collie in Silicon.

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Speaker 2: Valley, NBN. This is Bloomberg Technology with Caroline Hyde and

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Speaker 2: Ed lud Love.

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Speaker 3: I'm Karine Hyde at Bloomberg's world headquarters in New York.

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Speaker 3: Ed Ludo, who's off today? This is Bloomberg Technology, the

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Speaker 3: UK's antitrust watchdog. It strikes again, this time with an

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Speaker 3: investigation into Amazon and Microsoft's cloud services. Details on yet

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Speaker 3: more concerns that US tech giants could be abusing market

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Speaker 3: power for US. It is day two in the historic

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Speaker 3: FTX fraud trial. A look into the crypto hedge fund

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Speaker 3: at Almedia Research in Caroine Ellison's role.

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Speaker 4: And this hour we have.

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Speaker 3: An exclusive conversation with San Francisco Fair President Mary Daily

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Speaker 3: from the Economics Club of.

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Speaker 4: New York, who do not want to miss it. We're

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Speaker 4: looking at Amazon, also off by one point four percent. Interesting.

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Speaker 3: This is being eyed in the CMA by the UK

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Speaker 3: in terms of its home monopolization. They are potentially worried

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Speaker 3: about of the cloud market. Remember the FTC analyzing Amazon

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Speaker 3: here in the United States about its marketplace. And of

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Speaker 3: course this is all in this atmosphere of more regulation

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Speaker 3: coming towards some of these big tech companies and the

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Speaker 3: worry of the prominence they have. Let's just stick on

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Speaker 3: that particular role of Amazon right now. I want to

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Speaker 3: bring in Bloomberg's Thomas Seal for more. But the CMA

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Speaker 3: is once again trying to show its chops here. They

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Speaker 3: did it with Microsoft and Activision Blizzard, and now they're

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Speaker 3: analyzing Amazon and Microsoft in this case.

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Speaker 5: That's right, it's the next one in the series and

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Speaker 5: Microsoft again in the spotlight for another cloud concern. Microsoft

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Speaker 5: and Amazon between them occupy about seventy to eighty percent

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Speaker 5: of the British cloud computing and storage market. Offcom found

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Speaker 5: after it's been looking at this for a year and

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Speaker 5: it's decided there are concerns and it's given this to

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Speaker 5: the antitrust watchdog, the CMA, which kicks off a huge

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Speaker 5: process again.

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Speaker 3: Amazon itself has come back and said, you know, you're

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Speaker 3: misreading our data.

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Speaker 4: Ultimately, what is the argument of offcom. What are they.

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Speaker 3: Seeing in terms of pricing power that these two players have.

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Speaker 5: Yeah, they really outlined three concerns in the big Offcom study.

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Speaker 5: One of them is this thing called egress fees basically

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Speaker 5: exit fees if you try to take your data out

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Speaker 5: of the cloud, you get charged, especially if it's a

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Speaker 5: big amount of data and more and more people are

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Speaker 5: doing this, this is something that could lock you in.

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Speaker 5: This is what offcom is kind of worrying about. Another

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Speaker 5: thing is interoperability. Lots of big companies want to run

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Speaker 5: more than one cloud, different clouds for different things. That's

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Speaker 5: technically difficult. And the final thing is discounting. For big

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Speaker 5: committed spend, this could incentivize keeping all of your eggs

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Speaker 5: in one basket, and that's not very competitive. That's another

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Speaker 5: worry that the offcome outlined.

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Speaker 3: Amazon has come back and said, look, we just agree

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Speaker 3: with offcomm's findings. Quite bluntly, they say, we're based on

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Speaker 3: a fundamental misconception of how the IT sector functions and

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Speaker 3: the services in discounts that they offer remind us Thomas, like,

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Speaker 3: this is really expensive.

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Speaker 4: To be an offerer of cloud you have to almost

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Speaker 4: be a huge player.

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Speaker 3: How hard is it to have fundamentally a lot of

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Speaker 3: smaller players within this.

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Speaker 5: Yeah, I think Amazon and Microsoft didn't fall into this.

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Speaker 5: They've really built the backbone of the Internet. You know,

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Speaker 5: massive data centers, warehouses, subse cables, increasingly edged data centers

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Speaker 5: which are close to cities so that you get that

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Speaker 5: snappy five G internet that everyone's going to be increasingly needing.

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Speaker 5: So you know, they have put a lot of work

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Speaker 5: into maintaining and building this position. But Offcom and now

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Speaker 5: the CMA are going to be looking into well, can

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Speaker 5: anyone else get into this? Is this going to impact

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Speaker 5: on the kinds of services that we have in the future,

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Speaker 5: and you know, are their potential concerns for what this

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Speaker 5: means for AI, which is going to you know, people

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Speaker 5: think youse if more cloud computing than.

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Speaker 1: We use today.

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Speaker 3: Ultimately we're interested also in just the UK visav the

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Speaker 3: US vis a.

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Speaker 4: V Germany too.

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Speaker 3: I mean, the EU has also been looking into competition

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Speaker 3: within the cloud space. How much is that something that

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Speaker 3: some of the big tech companies are having to navigate.

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Speaker 5: I'm really sorry there, I've lost you. I think you

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Speaker 5: were asking about international comparison.

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Speaker 4: Yes, let's look at Germany for a moment.

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Speaker 5: Yes, I mean it's it's an interesting one for the

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Speaker 5: CMA because post Brexit it's sort of out there alone,

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Speaker 5: whereas before it was part of Europe. Offcom's report does

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Speaker 5: note what's going on in other parts of the world,

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Speaker 5: so notes the FTC looking at this, the EU looking

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Speaker 5: at this, and ultimately maybe the CMA becomes, you know,

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Speaker 5: more of a sideshow as these much bigger regulatory regimes,

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Speaker 5: you know, hone in on this same market, and.

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Speaker 3: Also start to think not just about the impact from

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Speaker 3: well work perspective, social media perspective, but now of course

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Speaker 3: generative AI and foundational model perspective. Thomas Seal, great to

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Speaker 3: have some time with you. Thank you for laying it

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Speaker 3: out when it comes to Amazon. Now let's get back

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Speaker 3: to antitrust here in the US, because Google's trial, well,

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Speaker 3: it's still under way, and in transcripts unsealed by the

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Speaker 3: judge last night, we learned that Apple actually held talks

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Speaker 3: with dot Go to replace Google as a default search

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Speaker 3: engine for the private mode on Apple Safari browser. Ultimately

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Speaker 3: they rejected the idea. Blomberg Sarah Ford and now joins

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Speaker 3: us in Washington. And yet more sort of detail.

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Speaker 4: Coming out here of just how much Apple had.

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Speaker 3: Analyzed other competitive search offerings out there.

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Speaker 6: Yes, and exactly the unsealing of this testimony last night

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Speaker 6: was really quite extraordinary in a very important part of

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Speaker 6: this case. In fact, the judge himself said that he

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Speaker 6: read through the testimony which had been taken in a

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Speaker 6: sealed courtroom. He read through it line by line and

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Speaker 6: felt that that what is being said here by these

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Speaker 6: executives really cuts to the heart of the case against Google.

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Speaker 6: And this has to do with Google's, you know, twelve

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Speaker 6: billion dollar agreement with Apple allows it to be the

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Speaker 6: default search engine on all Apple iPhones and other desktops,

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Speaker 6: So it gives them access to a tremendous amount of data,

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Speaker 6: and we know that data and building scale for a

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Speaker 6: search engine is actually key to sort of keeping that that,

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Speaker 6: you know, those search results high and quality and dominating

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Speaker 6: the market.

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Speaker 4: I mean, the level of detail, as you say, is extraordinary.

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Speaker 3: Duc dot Go CEO, testifying that what he met with

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Speaker 3: Apple twenty meetings in the phone calls with various Apple executives, including.

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Speaker 4: The head of Safari.

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Speaker 3: Does this, though, ultimately paint a picture that yes, they

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Speaker 3: didn't find a better offering out there than what Google

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Speaker 3: currently serves to the market. They're not favorizing Google because

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Speaker 3: of the money. It's just that it's a better search

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Speaker 3: product for the consumer.

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Speaker 6: Well, that is true, and in fact, there was testimony

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Speaker 6: from the Apple executive who negotiated the deal with Google,

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Speaker 6: John John Andrea, and he said ultimately they didn't go

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Speaker 6: for an alternative. He also revealed there had been talks

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Speaker 6: with Being as well in twenty eighteen twenty nineteen, but

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Speaker 6: they ultimately decided that Google was the best. So certainly

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Speaker 6: that's a business case. But I think this testimony is

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Speaker 6: going to be very critical in terms of how the

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Speaker 6: judge ultimately decides about the market issues and the dominance issues.

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Speaker 6: And this is not a jury trial, so the judge

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Speaker 6: will will be the one to decide this case.

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Speaker 3: And is of course earlier this week that the judge

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Speaker 3: had from Satin Nadella, the CEO Microsoft, who was trying

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Speaker 3: to be out there building Being as a competitor. And

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Speaker 3: it's in this moment though, that we feel that there

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Speaker 3: is some competition potentially coming from a being with the

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Speaker 3: partnership that they have with Open Ai, certainly as search

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Speaker 3: perhaps pivots in this generative AI world. From all the

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Speaker 3: testimony thus far, is there any weed that you're getting

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Speaker 3: as to which direction the judge might end up landing here.

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Speaker 6: It's still too soon to say, but certainly the government

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Speaker 6: is putting on the best case that it can. This

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Speaker 6: is a test case in every way. This has never

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Speaker 6: been done before. And this afternoon, actually the expert witness

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Speaker 6: for the Justice Department is going to be testifying about

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Speaker 6: market definition and so that's going to be key information

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Speaker 6: that the judge is going to need in order to

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Speaker 6: make this decision.

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Speaker 3: We'll keep the rest of it with your help, Sarah Fordon,

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Speaker 3: Thank you very much. Indeed, all things regulation at the

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Speaker 3: top of this show. Meanwhile, coming up, we're going to

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Speaker 3: be looking at another trial, but this one well a

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Speaker 3: fraud one Sam Bangwun freed, the disgraced thirty one year

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Speaker 3: old preparing to convince a jury that his crypto empire

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Speaker 3: wasn't a fraud. And let's take a look at quickly

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Speaker 3: it shares as we go to break There's plenty of

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Speaker 3: things on the move when you look at the micro

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Speaker 3: detail today.

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Speaker 4: So apart from the macro.

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Speaker 3: Jobs data, we're looking at individual companies that are currently

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Speaker 3: not on the downside. On a day of selloff, Rivian

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Speaker 3: absolutely tumbling. We saw it as much as nineteen percent.

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Speaker 3: This is the company electric vehicle company. It's actually looking

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Speaker 3: to sell more convertible debt. What does that mean, Well,

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Speaker 3: it could end up booting the supply of shares out there.

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Speaker 3: So we're seeing a depressing force on the stock. We're

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Speaker 3: off by some twenty percent let's call it nineteen dollars

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Speaker 3: is where we trade and also looking.

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Speaker 4: At Lucid Group.

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Speaker 3: Now interestingly this could be falling in sympathy, but also

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Speaker 3: the ev maker actually offering.

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Speaker 4: A new, perhaps cheaper model.

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Speaker 3: Investors may be reading the worry about whether that's really

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Speaker 3: a price cut in this current environment. This sounds on

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Speaker 3: nine percent one of the worst performers on the NASAK

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Speaker 3: one hundred a day.

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Speaker 4: This is a Bloomberg technology.

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Speaker 3: We've got to get you up to speed with the

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Speaker 3: latest on the trial of former FTX head Sirm Magmund Freed.

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Speaker 3: Please to say, not at the courthouse, but here in

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Speaker 3: the New York studio is Shnali Bassak, but really keeping

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Speaker 3: the context broad here of now, who else is going

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Speaker 3: to be giving evidence? What shocking revelations we could hear

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Speaker 3: from it?

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Speaker 7: Yeah, and I must say it's interesting. I love being

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Speaker 7: on set next to you, but that courthouse right now

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Speaker 7: is just also fascinating. You have the witnesses one by

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Speaker 7: one starting to come up, including a developer at FTX

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Speaker 7: who has been speaking about his long friendship with Sam

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Speaker 7: Megmin fried since mit.

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Speaker 4: As well as what he was told while.

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Speaker 7: He was working at the company in the safety and

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Speaker 7: security of the firm while he was there. More interestingly,

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Speaker 7: you have Gary Wang, who was the former technology officer

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Speaker 7: of co founder of FTX, expected to testify as early

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Speaker 7: as today. Remember Gary Wang was one of the people

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Speaker 7: who had pled guilty and is a cooperating witness for

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Speaker 7: the trial. One of three very important key figures from

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Speaker 7: the very inner workings of FTX. As we know, the

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Speaker 7: prosecution has drawn out that really there were only a

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Speaker 7: few people that knew the extent to which this was

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Speaker 7: allegedly this fraud was carried out.

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Speaker 3: And one of the key people is Caroline Evison Allison,

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Speaker 3: who of course was heading up Alameda Research, which Ultimate

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Speaker 3: was attested to be sharing and co mingling funds from

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Speaker 3: Alari day.

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Speaker 7: The Caroline Ellison part of this is just becoming more

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Speaker 7: and more pronounced as this trial goes on. She was

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Speaker 7: brought up both in the prosecution's opening arguments as well

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Speaker 7: as the defense for the prosecution. Remember that in her

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Speaker 7: circle I was talking about, they were talking about bringing

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Speaker 7: her to the fore along with some of the other

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Speaker 7: co founders for them to explain their interactions with Sam

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Speaker 7: bankman Fried alongside the evidence that will be presented, the

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Speaker 7: prosecution really defines two ways that Alameda had taken money

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Speaker 7: through FTX by means of both cash as well as

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Speaker 7: through its digital wallets. So they will be using Caroline

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Speaker 7: Ellison to show how that exactly had happened and when

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Speaker 7: and what Sam bankman Fried knew and what he had

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Speaker 7: actually directed. Now, in the defense part of the argument,

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Speaker 7: they have said that Caroline Ellison was the one that

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Speaker 7: was running Alameda. They had made the case in the

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Speaker 7: defense that one person cannot be not one person, that

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Speaker 7: one CEO can be at all places at all times,

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Speaker 7: and as a shareholder of Alameda, had directed Caroline Ellison

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Speaker 7: to do things like hedge the portfolio ahead of the

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Speaker 7: crash that had led to the ultimate bankruptcy of FTX,

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Speaker 7: despite the alleged co mingling of the funds. So remember

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Speaker 7: this is Sam Ingmanfrey's former girlfriend we are talking about,

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Speaker 7: who had a lot of details about how Sam operated himself.

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Speaker 7: It will be up to the jury to decide whether

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Speaker 7: that defense will be sufficient enough to really pin a

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Speaker 7: lot of the blame not just on Sam but his

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Speaker 7: colleagues who have already played guilty.

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Speaker 4: By the way, fascinating.

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Speaker 3: Thanks for keeping us up to speed on it, Shannadi

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Speaker 3: bus like there with all things FTX. But let's go

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Speaker 3: macro now, let's go to the Economic Club new or

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Speaker 3: one piece of say our own Lisa Bromowitz A sitting down,

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Speaker 3: none of them in the San Francisco Fed President, it's

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Speaker 3: very daily listening.

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Speaker 8: If it doesn't need to hike again again, I'm going

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Speaker 8: to remind everybody my views are my own, and I

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Speaker 8: don't speak for anyone on the committee, but that's exactly

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Speaker 8: how I think about it. So just instead of that,

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Speaker 8: let's go back to the June SEP where, if you

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Speaker 8: remember or maybe you don't, I'll remind in the June

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Speaker 8: summary efcconomic projections there were two more rate hikes projected

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Speaker 8: for this year. Then in July we took one of

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Speaker 8: those rate hikes and another one in the September SEP

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Speaker 8: was the median outlook. But the bond market has tightened

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Speaker 8: quite considerably over about thirty six basis points since we

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Speaker 8: met in September. Well, that is equivalent to about a

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Speaker 8: rate hike, right, and so then the need to do

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Speaker 8: tightening additionally is not there? So from my own perspective,

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Speaker 8: that's what I look at my job as I see it.

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Speaker 1: Our job, as I see it.

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Speaker 8: Is not to tighten, just do our part. It's to

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Speaker 8: watch financial conditions. Because monetary policy works, We raise the

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Speaker 8: funds rate and it moves through all the other interest rates.

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Speaker 8: If financial conditions are sufficiently tight, our work is not necessary.

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Speaker 1: Because we don't need to boost them more.

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Speaker 9: Yeah, because that makes sense absolutely and reach clared I

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Speaker 9: said today that the rise and yields actually does the

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Speaker 9: Fed's job for it.

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Speaker 1: Would you agree with that?

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Speaker 8: Would you sympathize that kind of sentiment, that is actually

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Speaker 8: how it works, right, if financial conditions tightened. I mean,

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Speaker 8: one of the things that's happened in the last ninety

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Speaker 8: days and certainly in the last few weeks, is that

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Speaker 8: financial markets have collectively seem to take on board a

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Speaker 8: variety of things. But one of the things that I

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Speaker 8: heard from many commentators and many of the market outreach

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Speaker 8: I do is that they have a general understanding now

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Speaker 8: that we are committed at the FMC to keeping rates

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Speaker 8: higher for longer in an effort to bring inflation fully

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Speaker 8: back down to two percent, And that recognition, along with

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Speaker 8: all the other factors we could put in a list

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Speaker 8: about why bond yields have risen are affecting certainly the

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Speaker 8: financial conditions and the tightening. And I see that as

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Speaker 8: a positive outcome that we would have tighter financial conditions,

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Speaker 8: because then we can really get the job done of

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Speaker 8: putting inflation back to rest.

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Speaker 9: When is a sell off something that's welcome from a

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Speaker 9: perspective of finding the market is coming to terms with

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Speaker 9: what the FED has been saying, and when is it

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Speaker 9: disorderly to disruptive on a level that causes concern.

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Speaker 8: So you always want an orderly repricing over a disorderly repricing.

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Speaker 8: And so far, what I see is this, you know,

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Speaker 8: and this is why we watch it so carefully. But

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Speaker 8: here's how I'm seeing it is that what we're having,

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Speaker 8: what is happening is financial markets. They are actually trying

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Speaker 8: to find their footing in the right price for things,

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Speaker 8: and they've got to digest a lot of information. One

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Speaker 8: is the supply and demand changes in the treasury space

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Speaker 8: right so supply is going up and demand is going down,

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Speaker 8: especially from foreign buyers. So that is a one factor

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Speaker 8: to digest. Another factor to diest is FED policy, and

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Speaker 8: for guidance in the SEP. A third factor to digest

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Speaker 8: is this increasing conversation people are having about whether the

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Speaker 8: real neutral rate of interest is actually risen. So we

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Speaker 8: came into the pandemic or with it at about point five,

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Speaker 8: which means nominal neutral about two point five. And when

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Speaker 8: people say, oh, the neutral rate might have risen for

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Speaker 8: variety of factors, I'm hearing everything from meybe it's five

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Speaker 8: to something that I would seem more likely, which is

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Speaker 8: between two five and three for the nominal neutral.

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Speaker 1: You know, probably there is. We don't know if it's risen.

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Speaker 8: Frankly, I don't think anybody really knows, but certainly we

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Speaker 8: should have those conversations. But then markets try to price

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Speaker 8: that in. So all of those factors, and there's lots

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Speaker 8: of uncertainty in the economy and geopolitical risk and you know,

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Speaker 8: our own fiscal risk, and so that's what markets do.

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Speaker 8: They digest a lot of information and try to find

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Speaker 8: their footing on it.

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Speaker 1: And I think that's what we're seeing.

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Speaker 8: But so far it hasn't spilled over into disorderly so far.

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Speaker 8: Even today when the job's claims came up and it

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Speaker 8: was sort of I don't know what to make of it, right.

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Speaker 1: So that's what the market serve ad it.

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Speaker 8: You didn't see things shaking up in a wild or

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Speaker 8: disorderly fashion.

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Speaker 1: So so far, so good.

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Speaker 9: Here bond quote of the day, four seventy on the

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Speaker 9: tenure I just checked.

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Speaker 1: So that's it.

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Speaker 9: Seems like yields are coming in as we speak to

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Speaker 9: her point about it not being disorderly. Back in March,

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Speaker 9: when there was this concern about the banking situation, yields

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Speaker 9: were at the low of March. We're about one hundred

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Speaker 9: and fifty bases points lower than where they are now.

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Speaker 9: Are you seeing the same type of financial distress today

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Speaker 9: that you did back then?

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Speaker 1: Even on the peripherez?

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Speaker 9: How do you rationalize why it hasn't materialized in the

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Speaker 9: same kind of way.

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Speaker 8: So March was a unique situation, and we want to

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Speaker 8: learn from that unique situation.

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Speaker 1: But it was an unique situation in this way.

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Speaker 8: We had a bank run, an old, very old fashioned

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Speaker 8: but true bank run, where the bank's liquidity was completely

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Speaker 8: squeezed and it went, it dissolved in a period that

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Speaker 8: was it was short, rapid period of dissolution, and then

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Speaker 8: that's filled over to two other banks and that was

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Speaker 8: the extent. Now, one of the things I always remind

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Speaker 8: people of is we have over four thousand banks in

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Speaker 8: the country and three failed and all other banks that

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Speaker 8: even felt the stresses, and there were a large number

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Speaker 8: that felt stresses because they were near neighbors in sort

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Speaker 8: of size and balance sheet distribution composition. They felt stresses,

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Speaker 8: but they managed those stresses because in part they had

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Speaker 8: been a little more effective at edging their risks. And

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Speaker 8: then the FED and the Treasure with the Treasury support

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Speaker 8: came in with the BTFP, and that produced a lot

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Speaker 8: of calmness in the water. So since that time, banking

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Speaker 8: stresses have really not been something that when you ask

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Speaker 8: people in the community or the business leaders what do

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Speaker 8: you top of your worries, that is not something they list.

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Speaker 8: They list inflation, uncertainty, etc. So I think one of

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Speaker 8: the reasons that we are seeing this yield rising not

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Speaker 8: spilling back over is that essentially we know what's going

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Speaker 8: on in the banking sector. Investor letters have been published

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Speaker 8: for months saying here's what this balance sheet looks like.

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Speaker 1: Here's what this balance sheet looks like. So there's not

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Speaker 1: a surprise.

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Speaker 8: And the second is because the banking system is safe, sound,

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Speaker 8: and resilient, and we have remedies in place that solved

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Speaker 8: parts of the of the crisis and the stresses. So

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Speaker 8: I think we're coming in. It's the same thing when

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Speaker 8: you have the rise in yields. We're doing it against

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Speaker 8: a strong economy. We're doing it against a strong, a

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Speaker 8: solid banking system.

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Speaker 1: So that just means that the.

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Speaker 8: Ripple effects are not going to be tipping things over.

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Speaker 8: The fragility is not there, right, it's a sound system,

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Speaker 8: and then you have this and so then you have

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Speaker 8: it able to absorb the tension points.

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Speaker 1: One thing that there's.

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Speaker 9: Been a huge debate around is the long and variable lags,

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Speaker 9: And this really speaks to this question of all of

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Speaker 9: a sudden, if you think that ten year yields are

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Speaker 9: five percent rather than four percent or three and a

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Speaker 9: half percent, that changes what implication there is into different

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Speaker 9: business models. How much does it change the business model

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Speaker 9: of commercial real estate owners of different residential real estate

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Speaker 9: owners of some of the constituents for you speak to

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Speaker 9: on a regular basis.

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Speaker 8: So I'm going to separate that's a terrific question, but

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Speaker 8: I'm going to unpack it into two parts. If you

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Speaker 8: don't mind the long and variable lags and the how

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Speaker 8: are people reacting to that? And I just met with

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Speaker 8: a variety of commercial real estate CEOs with national footprints

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Speaker 8: on Monday, so I can bring some of that to

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Speaker 8: this conversation. But we start with the long and variable

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Speaker 8: lags part. So definitely there's always a debate. If you

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Speaker 8: want to really get in debate, get a PhD in economics,

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Speaker 8: and you know, spend a lot of time if you're

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Speaker 8: in macro debating long and variable lags of monetary policy.

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Speaker 1: So here's what we can all agree on.

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Speaker 8: There are lags and they're variable, and then people even

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Speaker 8: debate about long how long are they? But I go

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Speaker 8: with long and variable lags, and the question is we

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Speaker 8: know that from the FEDS communications to financial markets went quickly,

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Speaker 8: and then the question is how long does it take

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Speaker 8: to get through the economy. I'm of the view that

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Speaker 8: we're still seeing the effects of that. We saw it

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Speaker 8: initially in housing, then we started seeing it in investment.

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Speaker 8: Now we're starting to see it in the labor market

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Speaker 8: and inflation, etc. And so it's absolutely happening and we

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Speaker 8: want to continue to watch that. Because we were with

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Speaker 8: the risks were balanced on the economy, we could easily

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Speaker 8: I think at this point overcorrect than undercorrect, and that's

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Speaker 8: why taking the time to do it right is sort

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Speaker 8: of where I think we need to be now. On

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Speaker 8: what I'm hearing in these was rising yields. They're less

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Speaker 8: concerned about. They have been less concerned at least my

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Speaker 8: commercial real estate roundtable, less concerned about the lags in

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Speaker 8: monetary policy as much as this there is this time

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Speaker 8: when people were in one of men, just one person

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Speaker 8: described it as sort of it's almost like a foot race, right,

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Speaker 8: but it's really just like a I have to see

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Speaker 8: if the FED will cut rates before I have to

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Speaker 8: refinance my properties, And so you're in a look ahead

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Speaker 8: and you're saying, well, if the Fed cuts rates like

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Speaker 8: the markets suggest they will markets suggested six months ago,

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Speaker 8: early in twenty twenty four, or at least by the

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Speaker 8: middle of twenty twenty four, then by the time I refinance,

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Speaker 8: I'm golden. But that equation changes if we're higher for

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Speaker 8: longer to get inflation down, or if the nominal if

441
00:21:58,160 --> 00:22:00,320
Speaker 8: the yields are just going to be higher, well, then

442
00:22:00,400 --> 00:22:04,119
Speaker 8: projects that penciled out at near zero interest rates or

443
00:22:04,280 --> 00:22:06,800
Speaker 8: something much lower, they don't pencil out at five and

444
00:22:06,840 --> 00:22:10,040
Speaker 8: so I think one of the things that we think

445
00:22:10,080 --> 00:22:14,680
Speaker 8: a lot about is what's the switch point for commercial

446
00:22:14,720 --> 00:22:16,880
Speaker 8: real estate, because you really want that to be an

447
00:22:16,960 --> 00:22:20,199
Speaker 8: orderly repricing, and so far it has been rather than

448
00:22:20,200 --> 00:22:21,480
Speaker 8: a disorderly one.

449
00:22:21,680 --> 00:22:23,159
Speaker 1: But I think that's something that's a.

450
00:22:23,240 --> 00:22:26,439
Speaker 8: Risk worth watching, is that these higher yields change the

451
00:22:26,480 --> 00:22:29,680
Speaker 8: psychology of what's possible for people and they start making

452
00:22:29,720 --> 00:22:34,680
Speaker 8: those adjustments immediately, as opposed to a timeline that goes

453
00:22:34,720 --> 00:22:35,760
Speaker 8: with the REFI schedule.

454
00:22:36,080 --> 00:22:39,000
Speaker 9: Just to build on that, this idea of five percent

455
00:22:39,200 --> 00:22:41,520
Speaker 9: or four point eight or four point seven percent of

456
00:22:41,640 --> 00:22:45,400
Speaker 9: long term rates that's being increasingly priced into markets, how

457
00:22:45,480 --> 00:22:49,920
Speaker 9: much does that imply a significantly greater degree of distress

458
00:22:50,280 --> 00:22:53,480
Speaker 9: in some of these areas like real estate, commercial real

459
00:22:53,600 --> 00:22:56,879
Speaker 9: estate that rely on this idea of refinancing five ten

460
00:22:56,960 --> 00:22:58,000
Speaker 9: years down the line.

461
00:22:58,240 --> 00:23:00,240
Speaker 8: You know, it's I think we have to and this

462
00:23:00,280 --> 00:23:01,399
Speaker 8: is one of the things we're going to have to

463
00:23:01,440 --> 00:23:05,760
Speaker 8: do just as a nation, is if we're in a

464
00:23:06,000 --> 00:23:09,760
Speaker 8: low higher interest rate environment in general, and I can't

465
00:23:09,880 --> 00:23:11,919
Speaker 8: I don't think we should jump to the conclusion that

466
00:23:11,920 --> 00:23:13,720
Speaker 8: that's where we are. I think we should have a

467
00:23:13,760 --> 00:23:16,880
Speaker 8: conversation is it going to be the low interest rate environment,

468
00:23:16,920 --> 00:23:19,040
Speaker 8: or we're going to have a dominal neutral of two

469
00:23:19,080 --> 00:23:20,959
Speaker 8: point five or is it going to be something higher?

470
00:23:21,400 --> 00:23:23,480
Speaker 8: Is are we going to be fighting inflation from above

471
00:23:23,520 --> 00:23:26,399
Speaker 8: our target now for a persistent amount of time, or

472
00:23:26,440 --> 00:23:28,800
Speaker 8: is it going to go back to fighting our target.

473
00:23:29,000 --> 00:23:31,040
Speaker 8: We don't know the answers yet, So I think what

474
00:23:31,160 --> 00:23:34,480
Speaker 8: I'm what I was really important is commercial real estate

475
00:23:34,600 --> 00:23:37,919
Speaker 8: owners and purchasers and things they have to be willing

476
00:23:37,920 --> 00:23:40,159
Speaker 8: to tip to play the longer game. Right, what's the

477
00:23:40,200 --> 00:23:42,080
Speaker 8: longer game look like? And how do I get to

478
00:23:42,119 --> 00:23:45,080
Speaker 8: the longer game? And I'm hearing this in the San

479
00:23:45,119 --> 00:23:48,119
Speaker 8: Francisco CEO round table, and now again these folks have

480
00:23:48,160 --> 00:23:50,760
Speaker 8: a national footprint, but I'll share what I learned is

481
00:23:50,800 --> 00:23:53,720
Speaker 8: that you know they're already trunching their properties. If you've

482
00:23:53,720 --> 00:23:57,600
Speaker 8: got really high quality stuff, you're putting all your work

483
00:23:57,600 --> 00:24:00,840
Speaker 8: in terms of leasing into that property deals to be had,

484
00:24:01,080 --> 00:24:05,600
Speaker 8: so people with income to use they're buying those properties

485
00:24:05,680 --> 00:24:09,120
Speaker 8: up because property ultimately and buildings are valuable down the road.

486
00:24:09,560 --> 00:24:10,280
Speaker 1: If you have.

487
00:24:10,240 --> 00:24:13,119
Speaker 8: Property that you think isn't just in the world of

488
00:24:13,400 --> 00:24:18,919
Speaker 8: higher interest rates and lower in office work, then you

489
00:24:19,080 --> 00:24:20,800
Speaker 8: just say well, okay, I'm going to go back to

490
00:24:20,920 --> 00:24:23,880
Speaker 8: land value, and I'm going to not try to spend

491
00:24:23,920 --> 00:24:26,480
Speaker 8: a lot of time releasing that property or wait it out,

492
00:24:26,560 --> 00:24:29,560
Speaker 8: because and I think that's the repricing we're going to

493
00:24:29,640 --> 00:24:31,600
Speaker 8: need to see. We are just going to need to

494
00:24:31,640 --> 00:24:36,160
Speaker 8: digest some of those losses and position for the new world.

495
00:24:35,880 --> 00:24:40,520
Speaker 8: The yields going up, I think it's just it doesn't

496
00:24:40,600 --> 00:24:44,840
Speaker 8: change that dynamic. It just brings people awareness sharply to

497
00:24:45,000 --> 00:24:47,760
Speaker 8: the problem. Right You could have seen the problem coming,

498
00:24:47,800 --> 00:24:50,560
Speaker 8: and I think many did, which is why I'm not

499
00:24:51,640 --> 00:24:54,359
Speaker 8: I don't have alarm bells ringing commercial real estate people.

500
00:24:54,400 --> 00:24:55,760
Speaker 8: They just tell me this all the time, and I

501
00:24:55,800 --> 00:24:59,040
Speaker 8: have learned to believe them. You really have to have

502
00:24:59,080 --> 00:25:02,280
Speaker 8: a strong constitution to be in commercial real estate because

503
00:25:02,280 --> 00:25:06,000
Speaker 8: it goes through cycles. And the way the successful ones

504
00:25:06,119 --> 00:25:10,600
Speaker 8: persist is they recognize that the downpoint isn't forever, nor

505
00:25:10,720 --> 00:25:12,600
Speaker 8: is the high point, so they get used to it,

506
00:25:12,640 --> 00:25:15,400
Speaker 8: and they stockpile, and they refi early when they see

507
00:25:15,400 --> 00:25:17,480
Speaker 8: interest rates going up. They're trying to put stuff into

508
00:25:17,520 --> 00:25:20,000
Speaker 8: longer maturity so that they can not have to refly

509
00:25:20,080 --> 00:25:21,680
Speaker 8: at the higher interest rates right away.

510
00:25:22,560 --> 00:25:23,640
Speaker 1: So I think that's going on.

511
00:25:23,840 --> 00:25:25,480
Speaker 8: But that is a sector to watch, as all of

512
00:25:25,560 --> 00:25:29,480
Speaker 8: us know, and this will be just another piece. The

513
00:25:29,560 --> 00:25:32,240
Speaker 8: higher bond yields will be another piece that makes the

514
00:25:32,280 --> 00:25:34,120
Speaker 8: scrutiny have to be more intense.

515
00:25:34,320 --> 00:25:36,920
Speaker 9: To connect that to the idea of financial distress, people

516
00:25:37,000 --> 00:25:39,200
Speaker 9: talk about a FED put How high is the bar

517
00:25:39,280 --> 00:25:41,320
Speaker 9: for the FED put How high is the bar for

518
00:25:41,400 --> 00:25:44,080
Speaker 9: financial distress for the FED Reserve to come in and

519
00:25:44,119 --> 00:25:47,760
Speaker 9: to cut rates and to take actions to add liquidity

520
00:25:47,800 --> 00:25:51,679
Speaker 9: to the system. How much higher is the bar at

521
00:25:51,720 --> 00:25:52,960
Speaker 9: a time where inflation is.

522
00:25:52,960 --> 00:25:54,560
Speaker 1: Still running at the level so that it's running.

523
00:25:54,600 --> 00:25:56,640
Speaker 8: So I'm going to separate these two things. I think

524
00:25:56,640 --> 00:25:58,880
Speaker 8: they get pushed together all the time in a way

525
00:25:58,880 --> 00:26:01,440
Speaker 8: that I don't think about, so I want to separate them.

526
00:26:01,640 --> 00:26:05,359
Speaker 8: So there's monetary policy that's about the two goals that

527
00:26:05,400 --> 00:26:09,240
Speaker 8: Congress gave us full employment, price stability, and we raise

528
00:26:09,280 --> 00:26:11,960
Speaker 8: and lower the funds rate to do those types that work.

529
00:26:12,040 --> 00:26:15,639
Speaker 8: And because it's made this is all gets conflated more

530
00:26:15,680 --> 00:26:18,080
Speaker 8: easily because we have a balance sheet policy. So we

531
00:26:18,160 --> 00:26:22,800
Speaker 8: use the asset purchases for two functions, market dysfunction and

532
00:26:23,240 --> 00:26:28,280
Speaker 8: quantitative easing. Right to put additional policy accommodation.

533
00:26:27,760 --> 00:26:31,359
Speaker 1: In when we hit the ZLB. So we have both, but.

534
00:26:31,760 --> 00:26:36,080
Speaker 8: They can't actually persist separately. So let's take the BTFP.

535
00:26:36,720 --> 00:26:40,040
Speaker 8: The BTFP didn't change monetary policy. We went in, we

536
00:26:40,080 --> 00:26:42,680
Speaker 8: saw some stress in the banking sector. With the help

537
00:26:42,760 --> 00:26:45,679
Speaker 8: with the backstop from the treasury open to the BTFP

538
00:26:45,800 --> 00:26:49,959
Speaker 8: facility helped calm the banking stresses, and monetary policy went on.

539
00:26:50,440 --> 00:26:53,040
Speaker 8: And I think that's the way you should think about it.

540
00:26:53,080 --> 00:26:55,600
Speaker 8: So I unpack those things. I hear a lot about the.

541
00:26:55,560 --> 00:26:58,040
Speaker 1: FED put in this. What I really would do is.

542
00:26:58,280 --> 00:27:02,280
Speaker 8: We have tools that can be used, and the tools

543
00:27:02,359 --> 00:27:08,320
Speaker 8: we use for financial location are different than the tools

544
00:27:08,359 --> 00:27:11,399
Speaker 8: we use for monetary policy, and both can occur. So

545
00:27:11,600 --> 00:27:14,040
Speaker 8: we shouldn't have to give up our promise to the

546
00:27:14,040 --> 00:27:17,479
Speaker 8: American people, our commitment to achieve our mandated goals and

547
00:27:17,560 --> 00:27:21,160
Speaker 8: bring inflation back down to price stability, because we have

548
00:27:21,200 --> 00:27:22,760
Speaker 8: some dysfunction in the markets.

549
00:27:22,920 --> 00:27:24,800
Speaker 1: But I right now don't see dysfunction.

550
00:27:24,920 --> 00:27:28,040
Speaker 8: What I see is prices have gone up for bond yields,

551
00:27:28,080 --> 00:27:28,880
Speaker 8: prices have gone down.

552
00:27:28,960 --> 00:27:30,440
Speaker 1: Yields have gone up for bonds.

553
00:27:30,800 --> 00:27:34,800
Speaker 8: The ten year now and other rates look similar to

554
00:27:35,480 --> 00:27:37,399
Speaker 8: what you know. We might have penciled in in a

555
00:27:37,600 --> 00:27:39,800
Speaker 8: sep for how much we were going to hold rates

556
00:27:39,880 --> 00:27:43,200
Speaker 8: higher for longer because of the inflation. And I think

557
00:27:43,200 --> 00:27:46,479
Speaker 8: they'll respond as the data come in to I think

558
00:27:46,640 --> 00:27:49,560
Speaker 8: markets have a better sense now, although you know, I can't.

559
00:27:49,320 --> 00:27:50,919
Speaker 1: Be sure this. I don't want to.

560
00:27:50,920 --> 00:27:53,119
Speaker 8: Say things that I don't have certainty about, but it

561
00:27:53,160 --> 00:27:56,040
Speaker 8: seems there's a more more of an understanding.

562
00:27:55,560 --> 00:27:57,160
Speaker 1: About the fedch reaction function now.

563
00:27:57,480 --> 00:28:01,399
Speaker 8: And big part of the reaction function understanding that seemed

564
00:28:01,400 --> 00:28:03,480
Speaker 8: to be missing was that we want to get inflation

565
00:28:03,560 --> 00:28:06,440
Speaker 8: down to two percent, and in our forecast we don't

566
00:28:06,480 --> 00:28:09,119
Speaker 8: see it coming down to two percent like that, And

567
00:28:09,160 --> 00:28:11,040
Speaker 8: in order to keep it coming down to two percent,

568
00:28:11,080 --> 00:28:14,040
Speaker 8: we have to keep rates restrictive in order to bring

569
00:28:14,040 --> 00:28:17,120
Speaker 8: the economy more into balance, the labor market into balance,

570
00:28:17,160 --> 00:28:18,320
Speaker 8: and inflation down to two.

571
00:28:18,640 --> 00:28:21,520
Speaker 9: You talked about vigilance, and you talked about agility, and

572
00:28:21,600 --> 00:28:24,040
Speaker 9: with respect to agility, you wanted to be able to

573
00:28:24,080 --> 00:28:27,320
Speaker 9: teak policy according to what you're seeing in markets.

574
00:28:27,359 --> 00:28:29,680
Speaker 1: And one thing that people have been speculating.

575
00:28:29,720 --> 00:28:31,520
Speaker 9: And I'm sure this is sort of one of these

576
00:28:31,520 --> 00:28:33,200
Speaker 9: theoreticals that make you roll your eyes.

577
00:28:33,280 --> 00:28:34,720
Speaker 1: My goodness, I never roll my eyes.

578
00:28:35,480 --> 00:28:38,760
Speaker 9: Well, I will say, uh, when people talk about what

579
00:28:38,800 --> 00:28:43,040
Speaker 9: you said in your speech, which is that as inflation

580
00:28:43,160 --> 00:28:47,040
Speaker 9: falls and as growth slows, that the policy rate, even

581
00:28:47,280 --> 00:28:50,440
Speaker 9: by not moving, by keeping it steady, is a policy action,

582
00:28:50,520 --> 00:28:54,920
Speaker 9: and it is actually tightening policy at that point, How

583
00:28:55,000 --> 00:28:57,920
Speaker 9: agile should the FED be to make adjustments to the

584
00:28:58,000 --> 00:29:00,120
Speaker 9: rate so that the restrictive.

585
00:28:59,640 --> 00:29:00,440
Speaker 1: Level is the same.

586
00:29:00,640 --> 00:29:03,800
Speaker 9: That might be lowering rates, but not because of financial distress,

587
00:29:03,960 --> 00:29:06,560
Speaker 9: not because of some sort of recession, not because of weakness.

588
00:29:07,000 --> 00:29:08,720
Speaker 1: So that's a terrific question.

589
00:29:08,840 --> 00:29:12,160
Speaker 8: And I would argue that we're now entering into the

590
00:29:12,200 --> 00:29:14,920
Speaker 8: hardest phases of policy making, right, the hardest part. So

591
00:29:15,200 --> 00:29:19,000
Speaker 8: I think if phase one is the one we just complete,

592
00:29:19,040 --> 00:29:21,760
Speaker 8: the one we completed, we completed it earlier this year,

593
00:29:22,280 --> 00:29:25,800
Speaker 8: rates are too low, inflation's too high. There's only one

594
00:29:25,880 --> 00:29:30,760
Speaker 8: direction north, So everybody can agree, there's no nobody's confused.

595
00:29:30,840 --> 00:29:32,760
Speaker 8: It's just a matter of how quickly can you get

596
00:29:32,800 --> 00:29:37,960
Speaker 8: to restrictive territory and without causing any concerning disruptions.

597
00:29:38,080 --> 00:29:39,760
Speaker 1: So we've accomplished that phase one.

598
00:29:39,840 --> 00:29:41,800
Speaker 8: Phase one was an easy phase. You just have to

599
00:29:41,840 --> 00:29:44,440
Speaker 8: communicate we're going that way. Inflation will come down. The

600
00:29:44,480 --> 00:29:47,320
Speaker 8: biggest concern that I had during that phase one, well,

601
00:29:47,320 --> 00:29:51,440
Speaker 8: I had two, how fast can we go without distressing things?

602
00:29:51,560 --> 00:29:58,600
Speaker 1: And two? Oh, how will we communicate that we're doing that? Right?

603
00:29:58,760 --> 00:30:00,479
Speaker 8: Those are the two things I was worrying about. How

604
00:30:00,680 --> 00:30:03,360
Speaker 8: fast can we go? And how can we communicate that

605
00:30:03,600 --> 00:30:05,040
Speaker 8: so that we don't lose credibility?

606
00:30:05,400 --> 00:30:07,840
Speaker 1: Right? Because I was worried about the inflation expectation. So

607
00:30:07,880 --> 00:30:08,320
Speaker 1: that's down.

608
00:30:08,480 --> 00:30:12,600
Speaker 8: Phase two is fine tuning where we maintain the p grate,

609
00:30:12,880 --> 00:30:15,400
Speaker 8: and then phase three is trying to bring it down

610
00:30:15,440 --> 00:30:17,680
Speaker 8: to two percent. And so right now, the way it's

611
00:30:17,720 --> 00:30:21,840
Speaker 8: penciled in in the SEP, if the inflation forecast holds

612
00:30:22,040 --> 00:30:24,520
Speaker 8: and the inflation forecast you see more generally policy is

613
00:30:24,560 --> 00:30:27,600
Speaker 8: growing more restrictive. So you might ask, well why, Well,

614
00:30:27,600 --> 00:30:30,920
Speaker 8: I think it's because it's challenging to get that super

615
00:30:31,000 --> 00:30:34,640
Speaker 8: core inflation down. We've got the easy ones behind us, right.

616
00:30:34,720 --> 00:30:38,040
Speaker 8: Goods inflation has already come down a lot. Housing inflation

617
00:30:38,160 --> 00:30:40,640
Speaker 8: is in train. We have to keep watching it. But

618
00:30:40,680 --> 00:30:44,400
Speaker 8: that supercore is going to need persistent work. But if

619
00:30:44,800 --> 00:30:47,360
Speaker 8: we saw and the labor market strong, we're doing this

620
00:30:47,440 --> 00:30:50,560
Speaker 8: against a very strong labor market. We'll see tomorrow effe persist.

621
00:30:50,640 --> 00:30:54,720
Speaker 8: But so far, pretty strong, solid labor market, good consumer spending,

622
00:30:54,800 --> 00:30:58,160
Speaker 8: good GDP growth. I mean, there's nothing about the economy

623
00:30:58,160 --> 00:31:01,920
Speaker 8: that's faltering. If that should change, well, then of course

624
00:31:02,000 --> 00:31:04,560
Speaker 8: we could adjust rates so that we keep a level

625
00:31:04,560 --> 00:31:07,960
Speaker 8: of restriction right for the economy we have. I don't

626
00:31:08,360 --> 00:31:10,680
Speaker 8: really want to try to tell you what that's going

627
00:31:10,760 --> 00:31:13,600
Speaker 8: to be, because honestly, that's what the whole speech about

628
00:31:13,880 --> 00:31:17,480
Speaker 8: is about. We have to tolerate our uncertainty of not

629
00:31:17,600 --> 00:31:19,840
Speaker 8: knowing what is going to do next year, but to

630
00:31:19,920 --> 00:31:22,600
Speaker 8: know what elements we have and how would we react

631
00:31:22,640 --> 00:31:26,680
Speaker 8: to whatever situation unfolds. That's ultimately humans hate this and

632
00:31:26,720 --> 00:31:30,840
Speaker 8: markets hate it more. Nobody likes uncertainty, right. They want

633
00:31:30,840 --> 00:31:33,120
Speaker 8: to know people, We all want to know exactly what's.

634
00:31:32,960 --> 00:31:33,480
Speaker 1: Going to happen.

635
00:31:33,760 --> 00:31:38,560
Speaker 8: But I think right now, projecting to confidently what will

636
00:31:38,600 --> 00:31:43,719
Speaker 8: happen is actually a policy mistake because then you end

637
00:31:43,800 --> 00:31:46,240
Speaker 8: up with surprising people and things. So I just I

638
00:31:46,240 --> 00:31:48,560
Speaker 8: think it's really important that we stick to conveying our

639
00:31:48,600 --> 00:31:52,200
Speaker 8: reaction function, conveying how we treat often balance things, how

640
00:31:52,240 --> 00:31:55,800
Speaker 8: we approach the uncertainties, and then as we get more information,

641
00:31:55,920 --> 00:31:58,320
Speaker 8: as everybody does, then we'll of course see what to

642
00:31:58,320 --> 00:31:59,440
Speaker 8: do next with.

643
00:31:59,320 --> 00:32:02,200
Speaker 9: Respect that economy and what's going on and what you

644
00:32:02,280 --> 00:32:05,560
Speaker 9: see going on there. You talk about the labor market

645
00:32:05,560 --> 00:32:07,160
Speaker 9: and how strong the labor market is, and I know

646
00:32:07,200 --> 00:32:10,880
Speaker 9: you've done an incredible amount of research in economic inequality

647
00:32:11,160 --> 00:32:14,520
Speaker 9: and the worker and the labor market through that lens.

648
00:32:14,960 --> 00:32:17,560
Speaker 9: How do you view some of the labor strikes, what's

649
00:32:17,600 --> 00:32:20,280
Speaker 9: going on in Detroit, what's going on with respect to

650
00:32:20,320 --> 00:32:23,400
Speaker 9: the Kaiser health systems, what's going on with just the

651
00:32:23,440 --> 00:32:25,320
Speaker 9: Hollywood strikes which are sort of resolved but.

652
00:32:25,440 --> 00:32:27,120
Speaker 1: Maybe not so.

653
00:32:27,640 --> 00:32:29,720
Speaker 8: I think, you know, the picture of the labor market

654
00:32:29,880 --> 00:32:32,400
Speaker 8: is broader than just the strikes. I think the strikes

655
00:32:32,400 --> 00:32:34,960
Speaker 8: get a lot of because they're big labor actions, But

656
00:32:35,480 --> 00:32:41,800
Speaker 8: in general, we've seen a rebalancing of the labor relationships

657
00:32:41,840 --> 00:32:46,560
Speaker 8: with firms. That is a very common occurrence in an

658
00:32:46,600 --> 00:32:50,320
Speaker 8: extremely tight labor market. Right there, demand for workers is

659
00:32:50,320 --> 00:32:53,320
Speaker 8: outstrip supply of workers. That means that workers would have

660
00:32:53,360 --> 00:32:56,240
Speaker 8: more power to say, I want to live here, do

661
00:32:56,320 --> 00:32:59,520
Speaker 8: this have this other thing? So workers who aren't in

662
00:32:59,600 --> 00:33:04,600
Speaker 8: union and don't have regularly scheduled negotiated contracts, well they

663
00:33:05,240 --> 00:33:09,080
Speaker 8: can make those adjustments more continuously. Right, So a lot

664
00:33:09,320 --> 00:33:12,800
Speaker 8: I'm sure you've experienced this too, But if you're an

665
00:33:12,840 --> 00:33:17,160
Speaker 8: employer in twenty two and even late twenty one, you

666
00:33:17,320 --> 00:33:23,120
Speaker 8: really saw wage demands rise special circumstances. I want to

667
00:33:23,120 --> 00:33:25,640
Speaker 8: live in here and work in there, and I don't

668
00:33:25,680 --> 00:33:26,760
Speaker 8: want to come back to the office.

669
00:33:26,800 --> 00:33:28,000
Speaker 1: A lot of changes in.

670
00:33:27,960 --> 00:33:31,160
Speaker 8: How workers were relating to their employers, and there was

671
00:33:31,200 --> 00:33:35,760
Speaker 8: also a relative demand shock for low wage workers that

672
00:33:36,880 --> 00:33:41,320
Speaker 8: moved restaurant workers to hotel workers, to delivery drivers and

673
00:33:41,360 --> 00:33:46,400
Speaker 8: other things, so that whole work situation was changed. I

674
00:33:46,480 --> 00:33:50,800
Speaker 8: see the labor actions that have been taken recently as

675
00:33:50,840 --> 00:33:54,760
Speaker 8: they're on regularly negotiated contract schedules, and those schedules came

676
00:33:54,880 --> 00:33:57,320
Speaker 8: up and they say, well, we've got to A lot's

677
00:33:57,440 --> 00:34:02,120
Speaker 8: changed since we negotiated the last contract. Pandemic wage rates

678
00:34:02,120 --> 00:34:05,680
Speaker 8: have risen. We have not been in continuous negotiations with you,

679
00:34:05,840 --> 00:34:08,400
Speaker 8: and we want to get in a better negotiation with

680
00:34:08,440 --> 00:34:13,040
Speaker 8: you to ensure that we have some shared responsibility for

681
00:34:13,080 --> 00:34:17,120
Speaker 8: the rapidly rising inflation and rapidly rising changes in the

682
00:34:17,160 --> 00:34:19,759
Speaker 8: contours of the labor market. So I think this is

683
00:34:20,040 --> 00:34:23,319
Speaker 8: so to answer your question, I think this is completely

684
00:34:24,200 --> 00:34:28,640
Speaker 8: predictable given the imbalance we've had between demand and supply

685
00:34:28,760 --> 00:34:32,480
Speaker 8: for workers, and there are going to be some renegotiations,

686
00:34:32,560 --> 00:34:35,560
Speaker 8: either in continuous space like we have been seeing, or

687
00:34:35,600 --> 00:34:39,640
Speaker 8: when contracts become up for negotiation you have to renegotiate

688
00:34:39,680 --> 00:34:40,800
Speaker 8: the terms of employment.

689
00:34:41,120 --> 00:34:44,920
Speaker 9: What's the difference between renegotiating the terms of your employment

690
00:34:44,960 --> 00:34:46,040
Speaker 9: and a wage price spirral.

691
00:34:46,520 --> 00:34:49,160
Speaker 1: Oh, that's a huge difference. So let me I love

692
00:34:49,200 --> 00:34:54,560
Speaker 1: that kind of question. Fantastic. Okay, So that's straight.

693
00:34:55,480 --> 00:35:00,000
Speaker 8: Labor renegotiations are I'm looking at you know what I've

694
00:35:00,000 --> 00:35:01,680
Speaker 8: we had to put up, what I've had to deal with.

695
00:35:01,560 --> 00:35:02,400
Speaker 1: As an employee.

696
00:35:02,440 --> 00:35:04,920
Speaker 8: A lot of it is I've got this wage and

697
00:35:04,920 --> 00:35:07,280
Speaker 8: the inflation's going up this so my real wages falling.

698
00:35:07,520 --> 00:35:09,799
Speaker 8: That's something that was commonly happening in twenty two in

699
00:35:09,840 --> 00:35:12,439
Speaker 8: the United States. Real wages we're falling for many, many

700
00:35:12,480 --> 00:35:16,320
Speaker 8: groups of workers, many tiers of wages. And that's something

701
00:35:16,320 --> 00:35:19,479
Speaker 8: people workers recognize, right, they recognize when they're real wages

702
00:35:19,520 --> 00:35:21,920
Speaker 8: are falling, they're losing purchasing power, they're falling behind even

703
00:35:21,960 --> 00:35:25,719
Speaker 8: though they're earning. So that is what a labor negotiation is.

704
00:35:25,719 --> 00:35:28,959
Speaker 8: It also could be like in healthcare and things, hours work,

705
00:35:29,120 --> 00:35:32,720
Speaker 8: terms of trade, you know, schedules, et cetera. A wage

706
00:35:32,760 --> 00:35:37,360
Speaker 8: price spiral is that people get wage growth and then

707
00:35:37,560 --> 00:35:40,720
Speaker 8: producers I mean you know, firm selling, passed that along

708
00:35:40,719 --> 00:35:43,799
Speaker 8: to consumers. That causes inflation to go up, and then

709
00:35:43,840 --> 00:35:46,120
Speaker 8: they see that inflation and they ask for wage growth

710
00:35:46,239 --> 00:35:49,239
Speaker 8: and you see this high correlation, A fact that's worth

711
00:35:49,360 --> 00:35:52,279
Speaker 8: looking at. It's a very cool plot because it tells

712
00:35:52,280 --> 00:35:54,560
Speaker 8: you why we're not in a wage price spiral right now.

713
00:35:54,920 --> 00:35:58,640
Speaker 8: Is prior to eighty five, the correlation between wage growth

714
00:35:58,680 --> 00:36:02,480
Speaker 8: and price growth was like point eight five. That broke

715
00:36:02,520 --> 00:36:05,600
Speaker 8: down after the vulgar disinflation, and it really is now

716
00:36:05,640 --> 00:36:09,239
Speaker 8: like point two five point three, et cetera. So you

717
00:36:09,320 --> 00:36:12,320
Speaker 8: don't have that one for one pass through of wages

718
00:36:12,320 --> 00:36:14,960
Speaker 8: to prices, prices to wages. It just doesn't work that way.

719
00:36:15,200 --> 00:36:18,200
Speaker 8: And even now you see wage growth moderate rating. And

720
00:36:18,239 --> 00:36:20,920
Speaker 8: I also look at short run inflation expectations. Short run

721
00:36:20,920 --> 00:36:24,440
Speaker 8: inflation expectations are coming down as they come down. Research

722
00:36:24,480 --> 00:36:26,720
Speaker 8: out of the San Francisco FED is shown and others

723
00:36:26,719 --> 00:36:31,279
Speaker 8: have confirmed this that short run inflation expectations are what

724
00:36:31,400 --> 00:36:34,680
Speaker 8: people are using when they go into negotiate wages, and

725
00:36:34,760 --> 00:36:37,200
Speaker 8: so as those come down, you get release of wage pressure.

726
00:36:37,320 --> 00:36:40,520
Speaker 8: So we are the worries about wage price viral. You know,

727
00:36:40,560 --> 00:36:43,200
Speaker 8: people were worried about it in twenty two, and I

728
00:36:43,719 --> 00:36:45,280
Speaker 8: really we took that very seriously.

729
00:36:45,320 --> 00:36:48,000
Speaker 1: We asked how that was going. At this point, those.

730
00:36:47,760 --> 00:36:50,399
Speaker 8: Are really abated, and now we're really at a point

731
00:36:50,440 --> 00:36:54,200
Speaker 8: about getting the wage growth rate to be balanced in

732
00:36:54,239 --> 00:36:57,840
Speaker 8: the economy, bringing the labor market into balance, adding the

733
00:36:57,920 --> 00:36:59,879
Speaker 8: kinds that thout. You know, you knew about a hundred

734
00:36:59,920 --> 00:37:03,040
Speaker 8: that jobs per month to keep pace with the labor

735
00:37:03,080 --> 00:37:05,279
Speaker 8: force growth. At the last call, we were at one

736
00:37:05,360 --> 00:37:08,080
Speaker 8: hundred and fifty. So tomorrow's labor market report will tell

737
00:37:08,160 --> 00:37:10,400
Speaker 8: us whether we've made more progress on that space or

738
00:37:10,719 --> 00:37:13,200
Speaker 8: just sort of in that same place we've been in.

739
00:37:13,719 --> 00:37:16,719
Speaker 8: But that's how it's different. They're completely different. One keeps

740
00:37:16,800 --> 00:37:18,960
Speaker 8: me up at night. One is just a natural part

741
00:37:18,960 --> 00:37:19,640
Speaker 8: of an economy.

742
00:37:19,920 --> 00:37:20,520
Speaker 1: So I love that.

743
00:37:20,640 --> 00:37:23,280
Speaker 9: When we were speaking ahead of this, we were talking

744
00:37:23,320 --> 00:37:25,279
Speaker 9: about anecdotal data, and I said, you know, I love

745
00:37:25,320 --> 00:37:28,319
Speaker 9: that to study the sociology of markets and anecdotes are

746
00:37:28,320 --> 00:37:30,759
Speaker 9: really important, and she said, I don't view them as anecdotes.

747
00:37:30,920 --> 00:37:33,319
Speaker 1: They're qualitative data. I think I said it that way.

748
00:37:33,400 --> 00:37:35,840
Speaker 1: You did, and you corrected me, you said, absolutely not.

749
00:37:35,960 --> 00:37:38,440
Speaker 1: I wouldn't call it anecdotes. It is qualitative data.

750
00:37:38,520 --> 00:37:42,800
Speaker 9: What is the qualitative data or the anecdotes that Here's why.

751
00:37:42,640 --> 00:37:44,840
Speaker 8: I do call the anecdotes, because anecdotes are like I

752
00:37:44,960 --> 00:37:47,400
Speaker 8: talk to Bob in the grocery store and then I

753
00:37:47,440 --> 00:37:51,200
Speaker 8: now I know everything. And that's what people trade anecdotes

754
00:37:51,239 --> 00:37:53,360
Speaker 8: all the time because they heard one person to people,

755
00:37:53,560 --> 00:37:57,360
Speaker 8: four people at a party, say at the FED, the

756
00:37:57,400 --> 00:37:59,640
Speaker 8: regional thread presidents in particular, I think it's one of

757
00:37:59,680 --> 00:38:02,040
Speaker 8: the big benefits of having a regional FED. When the

758
00:38:02,239 --> 00:38:04,440
Speaker 8: when the folks who set this up set it up,

759
00:38:04,480 --> 00:38:06,560
Speaker 8: I think they they thought this would happen, and it

760
00:38:06,600 --> 00:38:09,040
Speaker 8: does happen. Is the regional fed presidents and the entire

761
00:38:09,080 --> 00:38:14,880
Speaker 8: regional FED teams. We're in our districts collecting qualitative information

762
00:38:15,000 --> 00:38:17,719
Speaker 8: by talking to many people like you, having roundtables, et cetera.

763
00:38:17,800 --> 00:38:18,839
Speaker 1: But then we write it up.

764
00:38:19,120 --> 00:38:21,880
Speaker 8: And so the difference in an anecdote and qualitative information

765
00:38:22,040 --> 00:38:25,800
Speaker 8: is we we quantify the qualitative information. If one person

766
00:38:25,840 --> 00:38:29,359
Speaker 8: says it, it does not mean it's the thing we should.

767
00:38:29,200 --> 00:38:30,120
Speaker 1: Take on is fact.

768
00:38:30,120 --> 00:38:32,960
Speaker 8: But if fifty people say the same thing, well, that's

769
00:38:33,000 --> 00:38:36,759
Speaker 8: an early warning sign or a some flavor that helps us,

770
00:38:36,840 --> 00:38:40,480
Speaker 8: you know, push flesh out what the what the what

771
00:38:40,560 --> 00:38:43,160
Speaker 8: the aggregate data are telling it and what the qualitative

772
00:38:43,239 --> 00:38:45,920
Speaker 8: data are telling me or really ill, there's many things,

773
00:38:45,920 --> 00:38:48,520
Speaker 8: but I'll tell you a few. So at the beginning

774
00:38:48,520 --> 00:38:52,000
Speaker 8: of this year, I'd say most of my conversations, when

775
00:38:52,040 --> 00:38:53,600
Speaker 8: I asked them what's your biggest concern?

776
00:38:53,960 --> 00:38:58,160
Speaker 1: They said recession. Then it switched to stagflation.

777
00:38:59,160 --> 00:39:01,719
Speaker 8: They thought we're gonna have high inflation forever, just low

778
00:39:01,760 --> 00:39:05,680
Speaker 8: growth like we did before the pandemic. And now I say,

779
00:39:05,680 --> 00:39:09,080
Speaker 8: what's your biggest worry? And this is really remarkable. They say, well,

780
00:39:09,120 --> 00:39:13,040
Speaker 8: I'm really worried about generative AI and how it changes

781
00:39:13,080 --> 00:39:14,480
Speaker 8: my business in ten years.

782
00:39:14,800 --> 00:39:16,120
Speaker 1: I'm really worried we're not.

783
00:39:16,160 --> 00:39:19,200
Speaker 8: Educating our population enough to keep pace with the jobs

784
00:39:19,200 --> 00:39:20,040
Speaker 8: we are creating.

785
00:39:20,440 --> 00:39:22,319
Speaker 1: So why am I focusing on those?

786
00:39:22,360 --> 00:39:26,640
Speaker 8: Because those are longer term concerns, which means the anxiety

787
00:39:26,680 --> 00:39:29,600
Speaker 8: they have about their short term business has gone down

788
00:39:29,840 --> 00:39:32,000
Speaker 8: and it is being replaced with the things that really

789
00:39:32,000 --> 00:39:34,960
Speaker 8: should keep business leaders up at night, right is how

790
00:39:35,000 --> 00:39:36,800
Speaker 8: is this going to transform my business?

791
00:39:36,920 --> 00:39:39,319
Speaker 1: Do I have the workforce I need? Not? Today? But

792
00:39:39,400 --> 00:39:41,480
Speaker 1: five years from now, ten years from now, what.

793
00:39:41,520 --> 00:39:44,040
Speaker 8: Do I need to do in my communities to ensure

794
00:39:44,080 --> 00:39:44,880
Speaker 8: that we're durable.

795
00:39:45,280 --> 00:39:46,880
Speaker 1: So that has been a ce change.

796
00:39:47,000 --> 00:39:48,719
Speaker 8: And then when you meet, when you drill down, like

797
00:39:48,719 --> 00:39:52,319
Speaker 8: with commercial real estate leaders, of course they're thinking hard

798
00:39:52,360 --> 00:39:56,920
Speaker 8: about Okay, I've got this property, what's the future? But

799
00:39:56,960 --> 00:40:01,319
Speaker 8: their attitude it was really interesting. The board doesn't matter

800
00:40:01,320 --> 00:40:04,279
Speaker 8: what position they're holding, as they say, they're going to

801
00:40:04,280 --> 00:40:07,759
Speaker 8: be losses, but they're going to be opportunities. And what

802
00:40:07,840 --> 00:40:09,680
Speaker 8: I'm trying to do in my business when I went

803
00:40:09,719 --> 00:40:12,720
Speaker 8: around to each of them, is say I'm trying to

804
00:40:12,760 --> 00:40:15,880
Speaker 8: minimize the losses and maximize my ability to see and

805
00:40:15,920 --> 00:40:19,480
Speaker 8: take the opportunities. And so I see that as a

806
00:40:19,520 --> 00:40:23,240
Speaker 8: positive change in the environment we're in. And it's why

807
00:40:23,880 --> 00:40:26,759
Speaker 8: I said in this in the speech that the recession

808
00:40:26,760 --> 00:40:29,960
Speaker 8: fears are being replaced by soft landing. Soft landing is

809
00:40:30,440 --> 00:40:33,760
Speaker 8: just in their description, something that happens that doesn't break

810
00:40:33,760 --> 00:40:36,120
Speaker 8: the economy and bring all their attention to how do

811
00:40:36,200 --> 00:40:39,920
Speaker 8: I manage through a significant downturn? And I am not

812
00:40:40,000 --> 00:40:43,120
Speaker 8: seeing that in there when I take the temperature on that,

813
00:40:43,320 --> 00:40:45,600
Speaker 8: I'm seeing Instead they're talking about these longer term issues

814
00:40:45,640 --> 00:40:46,520
Speaker 8: that they're grappling with.

815
00:40:46,680 --> 00:40:50,680
Speaker 9: Does that mean that they're hoarding labor reluctant to cut

816
00:40:50,760 --> 00:40:53,600
Speaker 9: jobs because they do have this expectation that even if

817
00:40:53,640 --> 00:40:55,919
Speaker 9: there is some sort of slow down, there is going

818
00:40:56,000 --> 00:40:58,759
Speaker 9: to be a brighter future ahead with not as many

819
00:40:58,800 --> 00:41:01,560
Speaker 9: qualified UH employees is available to do the jobs that

820
00:41:01,640 --> 00:41:02,360
Speaker 9: need to get done.

821
00:41:02,440 --> 00:41:05,160
Speaker 8: So I'm gonna I have the benefit of having done

822
00:41:05,200 --> 00:41:07,319
Speaker 8: this work for a while. I was at the FED

823
00:41:07,360 --> 00:41:09,279
Speaker 8: long before I became the president, and I've been a

824
00:41:09,320 --> 00:41:12,640
Speaker 8: labor economist in my whole career. So I would like

825
00:41:12,680 --> 00:41:15,640
Speaker 8: to broaden that that part out just to tad. So,

826
00:41:16,480 --> 00:41:20,880
Speaker 8: it is very common when employers go through big shocks

827
00:41:21,719 --> 00:41:24,560
Speaker 8: that that carries over into their behavior. So let's go

828
00:41:24,680 --> 00:41:29,600
Speaker 8: to the fact that in the financial crisis, employers had

829
00:41:29,640 --> 00:41:34,520
Speaker 8: to cut nominal wages. They hate cutting nominal wages. They

830
00:41:34,560 --> 00:41:37,240
Speaker 8: they because it demoralizes employees, et cetera.

831
00:41:37,680 --> 00:41:39,920
Speaker 1: So that had a long tail. They had to.

832
00:41:39,880 --> 00:41:42,200
Speaker 8: Fire a lot of workers, right, they had to let

833
00:41:42,200 --> 00:41:44,680
Speaker 8: go and they you know, for a lot of employers,

834
00:41:44,680 --> 00:41:46,800
Speaker 8: if you're not the very largest employers in our country,

835
00:41:46,800 --> 00:41:49,440
Speaker 8: you're you're letting go of people. You know, each and

836
00:41:49,480 --> 00:41:51,560
Speaker 8: every member of your team, and you had to let

837
00:41:51,600 --> 00:41:54,160
Speaker 8: those workers go, and then you had to cut nominal wages.

838
00:41:54,200 --> 00:41:58,520
Speaker 8: It's extremely painful. So then they hired extraordinarily slowly and

839
00:41:58,680 --> 00:42:02,319
Speaker 8: kept working people over time and other things, just so

840
00:42:02,360 --> 00:42:04,480
Speaker 8: they didn't have to be in a situation where they

841
00:42:04,520 --> 00:42:06,879
Speaker 8: would have to let go of workers should another shot come.

842
00:42:07,360 --> 00:42:09,399
Speaker 8: So now what I'm seeing is the opposite of this.

843
00:42:09,719 --> 00:42:13,400
Speaker 8: In the pandemic, people lost workers because they were afraid

844
00:42:13,440 --> 00:42:15,719
Speaker 8: to come to work, or they just they decided to

845
00:42:15,719 --> 00:42:18,560
Speaker 8: take early retirement, or they moved away. And so now

846
00:42:18,600 --> 00:42:22,080
Speaker 8: employers are like, oh, gosh, I better keep people. So

847
00:42:22,239 --> 00:42:24,520
Speaker 8: I think we have to put certain amount of this

848
00:42:24,640 --> 00:42:28,040
Speaker 8: behavior we're seeing to that. But the other part is,

849
00:42:28,400 --> 00:42:30,319
Speaker 8: and this is another benefit of doing this for a while,

850
00:42:30,360 --> 00:42:32,480
Speaker 8: I think is another part is that the way it

851
00:42:32,560 --> 00:42:35,839
Speaker 8: works in most cycles is that the very first thing

852
00:42:35,840 --> 00:42:39,200
Speaker 8: that happens is hiring slows. The second thing that happens

853
00:42:39,280 --> 00:42:41,600
Speaker 8: is layoffs occur. You don't have a lot of firms

854
00:42:41,760 --> 00:42:44,879
Speaker 8: laying people off before they slowed their hiring. So when

855
00:42:44,880 --> 00:42:46,800
Speaker 8: I'm looking at metrics for what I think is happening

856
00:42:46,840 --> 00:42:49,759
Speaker 8: to the labor market, I'm looking at hiring statistics, job

857
00:42:49,840 --> 00:42:52,200
Speaker 8: filling rates, you might have postings out there, but you're

858
00:42:52,200 --> 00:42:55,160
Speaker 8: not filling. And what I'm seeing is a general slowdown,

859
00:42:55,239 --> 00:42:58,000
Speaker 8: but not a cliff. But you know, obviously if there

860
00:42:58,040 --> 00:43:01,800
Speaker 8: was a significant downturn then and businesses have to resize,

861
00:43:01,880 --> 00:43:04,160
Speaker 8: but we're not seeing that yet. Even the layoffs we've

862
00:43:04,200 --> 00:43:06,960
Speaker 8: seen have come in the tech sector where they got

863
00:43:07,000 --> 00:43:09,200
Speaker 8: a little bit ahead of themselves on growth and then

864
00:43:09,239 --> 00:43:13,919
Speaker 8: had to rebalance their workforce to meet the actual growth

865
00:43:13,960 --> 00:43:16,600
Speaker 8: they were going to have. So I don't see anything

866
00:43:16,680 --> 00:43:20,480
Speaker 8: out there that is ringing an alarm bell about the workforce.

867
00:43:20,520 --> 00:43:22,920
Speaker 8: And people say labor hoarding, I kind of think of

868
00:43:22,960 --> 00:43:25,399
Speaker 8: it as we're just always fighting the last war.

869
00:43:25,880 --> 00:43:28,160
Speaker 1: And you fight the last war of we had to

870
00:43:28,200 --> 00:43:30,120
Speaker 1: lay off a lot of people. You don't want anybody new.

871
00:43:30,440 --> 00:43:32,160
Speaker 1: You fight the last war of oh my gosh, I

872
00:43:32,200 --> 00:43:34,319
Speaker 1: lost a lot of people. You hang on tight. We're

873
00:43:34,320 --> 00:43:35,800
Speaker 1: also in a very tight labor market.

874
00:43:35,800 --> 00:43:40,640
Speaker 8: From the employer's perspective, it's loosening, but from an employer's perspective,

875
00:43:40,680 --> 00:43:42,360
Speaker 8: they still have to spend a lot of their time

876
00:43:42,760 --> 00:43:46,279
Speaker 8: finding workers to replace workers you leave, or if they

877
00:43:46,320 --> 00:43:49,719
Speaker 8: want to open a new slot, that's expensive, so they

878
00:43:49,760 --> 00:43:51,960
Speaker 8: definitely want to hang on to as many people as possible.

879
00:43:52,040 --> 00:43:53,920
Speaker 9: I have to open it up to questions in a second,

880
00:43:53,960 --> 00:43:55,520
Speaker 9: but I do want to just ask you this before

881
00:43:55,520 --> 00:43:58,080
Speaker 9: I do that. What do you think right now is

882
00:43:58,120 --> 00:43:59,399
Speaker 9: the biggest misconception.

883
00:44:00,040 --> 00:44:03,280
Speaker 3: We're going to leave Lisa Ramowitz there with San Francisco

884
00:44:03,400 --> 00:44:06,080
Speaker 3: FED President Mary Daily talking about the job cuts and

885
00:44:06,120 --> 00:44:09,080
Speaker 3: the tech sector, talking about the implications of generative AI,

886
00:44:09,480 --> 00:44:12,399
Speaker 3: talking about some of the labor relationships that we've seen

887
00:44:12,719 --> 00:44:16,719
Speaker 3: overall in Hollywood. Much more on Live Go if you

888
00:44:16,760 --> 00:44:19,640
Speaker 3: want to be keep on listening in to that macro perspective,

889
00:44:19,880 --> 00:44:22,040
Speaker 3: but stay with us on Broomberg Technology or with that

890
00:44:22,200 --> 00:44:24,560
Speaker 3: with much more to do with the labor market and

891
00:44:24,640 --> 00:44:36,399
Speaker 3: women within it. It is in Bloomberg Technology. So we've

892
00:44:36,440 --> 00:44:39,040
Speaker 3: just been hearing from Mary Daily about the labor market.

893
00:44:39,160 --> 00:44:41,520
Speaker 3: Let's talk about women's presence within it. Because Chief it's

894
00:44:41,560 --> 00:44:44,319
Speaker 3: the private membership network designed to connect and support women

895
00:44:44,400 --> 00:44:49,000
Speaker 3: executive leaders. It's hosting chief X first conference in Palm Springs,

896
00:44:49,000 --> 00:44:52,279
Speaker 3: bringing hundreds of members together in person, thousands virtually. We

897
00:44:52,360 --> 00:44:54,200
Speaker 3: want to check in on really what's being said by

898
00:44:54,200 --> 00:44:56,200
Speaker 3: some of the key speakers they've had across the tech world.

899
00:44:56,200 --> 00:44:58,440
Speaker 3: They've had was the CEO of Slack. There, for example,

900
00:44:58,880 --> 00:45:02,160
Speaker 3: we welcome Chief CEO and co founder Karen Childers. Now,

901
00:45:02,800 --> 00:45:05,480
Speaker 3: I'm pretty sure always great to be in person. What

902
00:45:05,600 --> 00:45:08,600
Speaker 3: is the atmosphere like, how much resilience and optimism is

903
00:45:08,640 --> 00:45:11,280
Speaker 3: there among women in executive roles right now?

904
00:45:12,719 --> 00:45:14,520
Speaker 2: Yeah, well thanks for having us.

905
00:45:14,600 --> 00:45:18,320
Speaker 10: It's really exciting to join from Chief X our first

906
00:45:18,440 --> 00:45:21,600
Speaker 10: ever conference for CHIEF here in Palm.

907
00:45:21,320 --> 00:45:24,880
Speaker 2: Springs, and the energy has just been really magical.

908
00:45:25,560 --> 00:45:29,920
Speaker 10: So CHIEF is the most powerful network of senior executive

909
00:45:29,920 --> 00:45:32,759
Speaker 10: women and we really built CHIEF under the mission of

910
00:45:33,239 --> 00:45:36,560
Speaker 10: changing the face of leadership. And we do that by

911
00:45:36,920 --> 00:45:40,520
Speaker 10: building a great community that can come together and support

912
00:45:40,600 --> 00:45:42,920
Speaker 10: each other and build the connections that are needed to

913
00:45:42,960 --> 00:45:47,480
Speaker 10: really tackle the loneliness and challenges that can come with

914
00:45:47,600 --> 00:45:51,359
Speaker 10: senior executive leadership. And it's been really exciting to have

915
00:45:51,400 --> 00:45:54,480
Speaker 10: a new experience of Chief X of being able to

916
00:45:54,520 --> 00:45:58,480
Speaker 10: bring women from all over the US, in UK here

917
00:45:58,520 --> 00:46:02,560
Speaker 10: in Palm Springs to be to really deepen those relationships

918
00:46:02,600 --> 00:46:06,399
Speaker 10: and have even more inspirational conversations, give us.

919
00:46:06,320 --> 00:46:08,799
Speaker 3: The context the backdrop though with which some of these

920
00:46:08,840 --> 00:46:12,920
Speaker 3: executives find themselves because look, we are saying actually record

921
00:46:12,920 --> 00:46:15,240
Speaker 3: participation rate of women in the labor force.

922
00:46:15,520 --> 00:46:17,000
Speaker 4: But then there's nuance to it, and.

923
00:46:17,000 --> 00:46:18,880
Speaker 3: There's been studies I think just announced the last day

924
00:46:18,960 --> 00:46:22,880
Speaker 3: or so McKenzie lean in and Foundation of course Cheryl Samberg's.

925
00:46:22,560 --> 00:46:26,560
Speaker 4: Looking at how perhaps women aren't managing to break into

926
00:46:26,600 --> 00:46:27,600
Speaker 4: managerial roles.

927
00:46:27,640 --> 00:46:31,279
Speaker 3: We're actually seeing more executive levels c suite, but not

928
00:46:31,400 --> 00:46:33,799
Speaker 3: at the lower sort of funneling points. How are you

929
00:46:33,880 --> 00:46:34,680
Speaker 3: talking about that?

930
00:46:36,120 --> 00:46:39,520
Speaker 10: Yeah, so, I mean Chief is focused on senior executive women.

931
00:46:39,640 --> 00:46:43,120
Speaker 10: Over forty percent of our membership are actually C suite

932
00:46:43,160 --> 00:46:44,839
Speaker 10: and that's where you're actually starting to.

933
00:46:44,880 --> 00:46:46,840
Speaker 2: See some shifts.

934
00:46:47,440 --> 00:46:50,799
Speaker 10: So we've moved from twenty five percent to twenty eight

935
00:46:50,920 --> 00:46:56,160
Speaker 10: percent of C suite positions being held by women, but importantly,

936
00:46:56,200 --> 00:47:00,360
Speaker 10: even within c suite, women of color or only six percent,

937
00:47:00,520 --> 00:47:03,280
Speaker 10: and we have not seen any changes in those numbers.

938
00:47:04,040 --> 00:47:06,600
Speaker 10: And then, as I think you are pointing to, there

939
00:47:06,640 --> 00:47:10,040
Speaker 10: is still very much this broken rung. So even as

940
00:47:10,080 --> 00:47:12,480
Speaker 10: we're starting to see some progress in the c suite,

941
00:47:12,600 --> 00:47:15,600
Speaker 10: that advancement is going to be really challenged when we're

942
00:47:15,680 --> 00:47:21,080
Speaker 10: still seeing a lack of progress in that middle management level.

943
00:47:21,840 --> 00:47:26,560
Speaker 10: And that's where even though you also see that ambition

944
00:47:27,280 --> 00:47:30,880
Speaker 10: is so much greater women are more interested in participating

945
00:47:30,960 --> 00:47:35,120
Speaker 10: in the workplace, People have greater ambition of wanting to

946
00:47:35,160 --> 00:47:36,480
Speaker 10: go up the corporate ladder.

947
00:47:37,000 --> 00:47:39,160
Speaker 2: One of the things that is really highly pointed to.

948
00:47:39,560 --> 00:47:44,600
Speaker 10: Is flexibility being such a key part of allowing for

949
00:47:44,640 --> 00:47:46,680
Speaker 10: that ambition to become reality.

950
00:47:46,920 --> 00:47:49,160
Speaker 4: And what about it in text, You're really fazing right.

951
00:47:49,080 --> 00:47:51,680
Speaker 10: Now as companies that are pulling people back into the

952
00:47:51,719 --> 00:47:54,839
Speaker 10: workplace and removing some of that flexibility, and that's going

953
00:47:54,880 --> 00:47:56,480
Speaker 10: to be a real challenge for us to continue to

954
00:47:56,480 --> 00:47:57,200
Speaker 10: push these numbers.

955
00:47:57,320 --> 00:47:59,640
Speaker 3: Yeah, Carolyn Dwelling on that, because you're a leader in

956
00:47:59,640 --> 00:48:03,040
Speaker 3: the text, how much you seeing a lack of flexibility

957
00:48:03,120 --> 00:48:04,799
Speaker 3: or more in the sector than which we work.

958
00:48:06,200 --> 00:48:07,880
Speaker 10: Yeah, I mean, I think that you are seeing that

959
00:48:09,000 --> 00:48:11,640
Speaker 10: a lot of companies are starting to pull back on

960
00:48:11,760 --> 00:48:14,520
Speaker 10: a lot on those policies. And I think some of

961
00:48:14,560 --> 00:48:18,360
Speaker 10: that has to do with both the economy in a

962
00:48:18,400 --> 00:48:21,920
Speaker 10: way of somewhat reducing their workforce by saying like some

963
00:48:21,920 --> 00:48:23,920
Speaker 10: people will opt out of that and that will actually

964
00:48:23,960 --> 00:48:26,719
Speaker 10: help them as they go through workplace reductions. But I

965
00:48:26,719 --> 00:48:28,920
Speaker 10: think what that people aren't keeping in mind is that

966
00:48:28,960 --> 00:48:31,800
Speaker 10: the people who need the flexibility the most are women

967
00:48:32,239 --> 00:48:36,280
Speaker 10: and underrepresented minorities. Those are the people who have found

968
00:48:36,760 --> 00:48:40,399
Speaker 10: the most benefit from the flexibility that has come into

969
00:48:40,440 --> 00:48:42,799
Speaker 10: the workplace over the last several years. So all of

970
00:48:42,800 --> 00:48:45,840
Speaker 10: these companies who have also had these commitments to DEI,

971
00:48:46,520 --> 00:48:49,279
Speaker 10: that's really going to challenge them as they really pull

972
00:48:49,400 --> 00:48:51,320
Speaker 10: back on the flexibility in the workplace.

973
00:48:51,480 --> 00:48:55,640
Speaker 3: Important message, and it's interesting how some of this focus

974
00:48:55,680 --> 00:49:00,279
Speaker 3: on DEI moves with all the economic economic realities which

975
00:49:00,320 --> 00:49:01,160
Speaker 3: we face as well.

976
00:49:01,360 --> 00:49:02,760
Speaker 4: I'm interested in your own.

977
00:49:02,680 --> 00:49:06,120
Speaker 3: Realities because I mean Chief is a unicorn. From last

978
00:49:06,160 --> 00:49:08,799
Speaker 3: time we counted and you were raising money March twenty

979
00:49:08,840 --> 00:49:11,000
Speaker 3: twenty two, you raised one hundred million, you were one

980
00:49:11,040 --> 00:49:14,560
Speaker 3: point one billion dollar valuation. Is that still standing and

981
00:49:14,640 --> 00:49:16,200
Speaker 3: how is your business growing?

982
00:49:17,480 --> 00:49:17,840
Speaker 2: Yeah?

983
00:49:17,880 --> 00:49:22,799
Speaker 10: Well, we are twenty thousand members strong at CHIEF. It

984
00:49:22,840 --> 00:49:25,120
Speaker 10: has been just phenomenal to see that growth over the

985
00:49:25,160 --> 00:49:28,719
Speaker 10: last several years. But there's still five million women in

986
00:49:28,760 --> 00:49:30,880
Speaker 10: the US alone who are VP level and above.

987
00:49:31,160 --> 00:49:34,239
Speaker 2: So the opportunity is for CHIEF to become an even.

988
00:49:34,000 --> 00:49:38,279
Speaker 10: More powerful community, a powerful network, to really be able

989
00:49:38,320 --> 00:49:40,960
Speaker 10: to create the support and the change that is needed

990
00:49:41,719 --> 00:49:43,440
Speaker 10: to change the face of leadership.

991
00:49:43,520 --> 00:49:45,880
Speaker 2: There's still so much opportunity for us.

992
00:49:46,719 --> 00:49:51,640
Speaker 10: And while I think there is this pressure across the

993
00:49:51,680 --> 00:49:54,680
Speaker 10: ecosystem where companies are pulling back on their commitments to

994
00:49:54,760 --> 00:49:57,600
Speaker 10: DEI and they are pulling back on their commitments to ESG.

995
00:49:59,280 --> 00:50:02,279
Speaker 10: What is needed more than ever are good leaders, regardless

996
00:50:02,360 --> 00:50:06,720
Speaker 10: of gender, regardless of race. And there's still an investment

997
00:50:06,719 --> 00:50:08,320
Speaker 10: that needs to be had there and there's still a

998
00:50:08,360 --> 00:50:12,400
Speaker 10: place for chief to play that role while also really

999
00:50:12,440 --> 00:50:15,920
Speaker 10: continuing to push companies who you know, they made the

1000
00:50:15,920 --> 00:50:18,200
Speaker 10: commitments when it was easy, and how do you make

1001
00:50:18,200 --> 00:50:21,640
Speaker 10: sure that people are really still holding to those statements

1002
00:50:21,680 --> 00:50:26,200
Speaker 10: and the importance and the benefits we all have grown

1003
00:50:26,239 --> 00:50:30,000
Speaker 10: to recognize exist for companies who have great diversity in

1004
00:50:30,040 --> 00:50:30,600
Speaker 10: their workforce.

1005
00:50:30,680 --> 00:50:33,920
Speaker 3: Carolyn Child as Chief, CEO, co founder, we thank you

1006
00:50:33,960 --> 00:50:36,800
Speaker 3: for your time that does it for this ad division.

1007
00:50:36,480 --> 00:50:37,800
Speaker 4: Of Bloomberg Technology.

1008
00:50:38,120 --> 00:50:39,760
Speaker 3: Check out our podcast when you Go at the Moment,

1009
00:50:39,960 --> 00:50:40,719
Speaker 3: This is Bloomberg