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Speaker 2: All right, time to talk about the world of technology
Speaker 2: because this as we had kind of an amazing visual
Speaker 2: yesterday at the White House Meta platforms, Mark Zuckerberg, Apples
Speaker 2: Tim Cook joining tech industry leaders in touting their pledges
Speaker 2: to boot spending in the United States and artificial intelligence.
Speaker 2: It was all during a dater hosted by President Donald
Speaker 2: Trump that highlighted his deepening relationship with Silicon Valley. The
Speaker 2: execs making comments at the dinner, among them Apple's Cook
Speaker 2: here in exchange with President Trump.
Speaker 3: We are all different in some ways, but we all
Speaker 3: believe in the power.
Speaker 4: Of technology to improve people's lives, and that that is
Speaker 4: the thing that binds us all together.
Speaker 5: And Tim, how much money will Apple will be investing
Speaker 5: in the United States? Because I know it's a very
Speaker 5: loud and it's you know, you were elsewhere and now
Speaker 5: you're really coming home in a big way. How much
Speaker 5: money will you be invested? Six hundred billion, six hundred billion.
Speaker 5: We're very proud to do it. That's great, Thank you
Speaker 5: very much, appreciate you, sir.
Speaker 2: All Right, Apple CEO Tim Cook last night at a
Speaker 2: dinner at the White House along with other big tech leaders.
Speaker 2: Of course you heard President Trump there and Tim that
Speaker 2: eye popping image of those CEOs at the dinner. We
Speaker 2: also had eye popping story about Elon Musk as well.
Speaker 6: There's like a lot going on here.
Speaker 7: Yeah.
Speaker 3: Okay, so let's talk about this and with somebody who
Speaker 3: knows all about it. We've got Ed lud Though with us.
Speaker 3: He's co host of Bloomberg Technology on Bloomberg Television and
Speaker 3: Monday through Friday eleven am Wall Street Time check it out.
Speaker 3: Ed joins us from the Bloomberg News bureau in San Francisco.
Speaker 3: First up, add that meeting of tech CEOs. You had
Speaker 3: Tim Cook there, you had Mark Zuckerberg there, Sam Altman,
Speaker 3: Sunder Pachai, Sergei Brin, Satinadella, Bill Gates, even members of
Speaker 3: the Trump administration who previously worked in technology or in
Speaker 3: venture capital David Sachs, for example, what was the image
Speaker 3: that this portrayed of the relationship that Silicon Valley or
Speaker 3: technology or the biggest companies in the world has with
Speaker 3: the White House.
Speaker 8: Well, there was another piece of news that came out
Speaker 8: with it, which is an almost another quid pro quo, right,
Speaker 8: which that in that clip, you heard President Trump asking
Speaker 8: Tim Cook, the Apple CEO.
Speaker 9: How much are you going to invest?
Speaker 10: Tim?
Speaker 8: Oh, six hundred billion, And the same was put to
Speaker 8: Mark Zuckerberg, who also said six hundred billion. But the
Speaker 8: background comment the President had made is that tariffs for
Speaker 8: semiconductors specifically are coming, and it's those that have pledged
Speaker 8: to in in the country that will be spared from them.
Speaker 8: That's why we look at it a little bit like
Speaker 8: a quid pro quo. But AI is at the heart
Speaker 8: of this administration's platform, right, deregulating to allow for faster
Speaker 8: building your data centers. And those people around the table,
Speaker 8: bar a few exceptions, are missing people. You know, those
Speaker 8: are the names they're leading on that front.
Speaker 6: Yeah, it's interesting. You know, it's funny.
Speaker 2: Tim and I were talking kind of before going because
Speaker 2: it's it's kind of a little bit remarkable to see
Speaker 2: these images, and I think there's a time has been
Speaker 2: a love hate relationship between the White House and Silicon Valley.
Speaker 3: What I'm just I was surprised to see Jared Isaacman
Speaker 3: on the list ed because he was supposed to be
Speaker 3: administrator of NASA. He's a shift for appointments, of course,
Speaker 3: somebody you've talked to and you know pretty well, yes,
Speaker 3: what's good?
Speaker 10: You think?
Speaker 3: You know the President pulled his name from the list
Speaker 3: and pulled his nomination. Well, why was he there?
Speaker 8: I think it's important to tell the truth. I don't
Speaker 8: know why he was there, you know, in Changu Jerry recently.
Speaker 8: I don't know that he's worked out what his next
Speaker 8: thing is going to be on social media, which is
Speaker 8: a dangerous place sometimes a lot of people would have
Speaker 8: observed that Elon Musk was not at the table, but
Speaker 8: they would say, oh, who was there representing Elon Musk?
Speaker 8: Surely it was not Jared Isaacman because of the situation.
Speaker 8: He just explained, and there were other people there at
Speaker 8: the table who also have connections to mask. But yeah,
Speaker 8: I promise you that when next I speak to him,
Speaker 8: I will ask him specifically, how'd you end up at
Speaker 8: that table. Given the president's recent handling of your nomination
Speaker 8: on the.
Speaker 3: On the Elon Musk thing. He was asked about this
Speaker 3: on social media. He replied to somebody and said, I'm
Speaker 3: not able to make I'm not able to make it,
Speaker 3: but I will have somebody represent me.
Speaker 8: That's what I'm alluding to, is I mean, I'm looking.
Speaker 3: At the list right now, is that it I don't
Speaker 3: see a representative from Tesla or from SpaceX there.
Speaker 6: Yep.
Speaker 8: I think that we're just going to have to let
Speaker 8: the reporting be done and if we still care, we
Speaker 8: will confirm who Elon's representative at that table was on
Speaker 8: the night, but we don't.
Speaker 2: Know does he really care? Because I don't know. You
Speaker 2: might get a compensation package worth about a trillion dollars.
Speaker 6: So isn't it really that important anymore? What do you
Speaker 6: know about this?
Speaker 9: Yeah?
Speaker 8: I think it's been a very long day reading a
Speaker 8: three hundred page document and there's so much detail in it.
Speaker 8: The simplest way of putting it is, it is one
Speaker 8: trillion dollars after ten years. If a very large number
Speaker 8: and sequenced series of events take place, Tesla and Musk
Speaker 8: have to meet many operational and financial milestones for the full.
Speaker 9: Trillion to be realized.
Speaker 8: And there are many other safeguards and securities from Tesla
Speaker 8: and Tessa shareholder standpoint baked into the proposal that would
Speaker 8: keep Musk focused on the task at hand. We can
Speaker 8: get into them, but for example, in order to access
Speaker 8: the last two trunches of stock, Mosk a has to
Speaker 8: pay for them up front, almost like an options being
Speaker 8: exercised at the price that the shares closed September first.
Speaker 8: But he also has to participate and sign off on
Speaker 8: the succession plan, so he has to like work on
Speaker 8: his own successor in year eight, nine and ten in
Speaker 8: order to get to not just the reward from money, right,
Speaker 8: we're not talking just about conversation, but in his case,
Speaker 8: he wanted the voting rights as well, and they're staggered
Speaker 8: over that ten years.
Speaker 2: So who is this a win win for? And I
Speaker 2: only asked because Tom Maloney has also put out a
Speaker 2: story at Bloomberg News and says that Elon Musk got
Speaker 2: this one trillion dollars with genuine threats to quit Tesla.
Speaker 2: So was the company really worried about losing Elon?
Speaker 6: So was he in the driver's seat on this?
Speaker 2: Because this package sounds like there are some guardrails around
Speaker 2: Elon in a big way.
Speaker 9: Yes.
Speaker 8: Tom Maloney has reported it beautifully. If you don't read
Speaker 8: the full three hundred page proxy, read Tom's report. The
Speaker 8: representing the board met with Elon Musk ten times in
Speaker 8: negotiation of this package. They delayed the annual shareholder meeting
Speaker 8: as they negotiated this package. They hired a number of
Speaker 8: outside firms and advisors to get the package at least
Speaker 8: over line. I say over the line, it still has
Speaker 8: to be voted on by shareholders in November. Musk's point was,
Speaker 8: if you do not give me this voting power of
Speaker 8: twenty five percent or greater, I will go and do
Speaker 8: the things that I'm interested in elsewhere XAI SpaceX et cetera.
Speaker 8: What did the board get in return Section A fifty
Speaker 8: one or page A fifty one of the proxy? Point
Speaker 8: number two, We have got reassurances from Elon Musk that
Speaker 8: he will wind down his political activity. So it's not
Speaker 8: a sort of blanket all going to Elon. You know,
Speaker 8: the board has made including with the operational goals they've
Speaker 8: set forlong like these are really hard. They've got things
Speaker 8: to protect them in making sure Elon Musk is focused
Speaker 8: at the same time.
Speaker 3: Eight point five trillion dollars in market cap from one
Speaker 3: point one trillion dollars today. Ed, how does Tesla get
Speaker 3: there over the next ten years.
Speaker 8: Yes, so Tesla has a market cap today of about trillion,
Speaker 8: and one of the financial milestones for Elon to realize
Speaker 8: the full trillion of comp is for it to get
Speaker 8: to eight point five trillion dollars. It's very interesting when
Speaker 8: you set that against the operational goals. The operational goals
Speaker 8: are very much in line with AI. Grow a robotaxi
Speaker 8: fleet to one million units, robotaxis, one million, taking people
Speaker 8: on ride hail, ride sharing platform, one million humanoid robots.
Speaker 8: But the board also tucked in there a goal for
Speaker 8: Elon Musk to sell twenty million Tesla vehicles total and
Speaker 8: deliver them to consumers. And it shows that the board
Speaker 8: fought to keep Elon Musk focused on Tesla's bread and
Speaker 8: butter business, even in the likelihood that that eight point
Speaker 8: five trillion dollar value in the long run is more
Speaker 8: closely aligned to the big robotics and AI stuff than
Speaker 8: it is in the sort of now, sort of archaic
Speaker 8: business of building vehicles and selling them to comensumers. You know,
Speaker 8: that's kind of how I think the market looks at it.
Speaker 6: Ah, that's massive.
Speaker 2: Are we even crazy to think about an eight and
Speaker 2: a half trillion dollar market cap for Tesla?
Speaker 8: When I first moved to California in twenty eighteen, which
Speaker 8: ain't that long ago, right in video was a company
Speaker 8: that made GPUs that for video game developers and went
Speaker 8: into high end consoles and computers for video games. It
Speaker 8: was a few one hundred billion dollars. It's now a
Speaker 8: four trillion dollar market cap company. It's the easiest example
Speaker 8: for me to cite over a period of less than
Speaker 8: ten years of a company dumping in trillions of dollar
Speaker 8: of value.
Speaker 2: Can I just ask you why all this stuff about
Speaker 2: Elon's compensation is happening now? Is it just that they
Speaker 2: were having meetings and it's all coming out?
Speaker 6: Is there anything at the time or what?
Speaker 8: Well, a proxy needs to be filed in advance of
Speaker 8: an annual shareholder meeting, right, and the annual shareholder meeting
Speaker 8: has to happen at some point. It's happening in November,
Speaker 8: so there's a chronology to it, and the auditors have
Speaker 8: to prepare it.
Speaker 9: That's quite boring.
Speaker 8: But that's part of the answer.
Speaker 2: One of the things we need to ask too, is
Speaker 2: that the shareholders are going to decide to if Tesla
Speaker 2: should invest in his AI startup, XAI significant. I mean,
Speaker 2: it does feel like Eland's rolling everything into one or
Speaker 2: wants to.
Speaker 8: This is a shareholder initiated proposal. Many shareholders tried to
Speaker 8: get the proposal on the docket. In the end they
Speaker 8: went with just one by a single retail shareholder, Xai.
Speaker 4: You could use GROC.
Speaker 8: I used it this morning, a voice assistant based chatbot
Speaker 8: in Tesla vehicles. Bigger picture, Xai has a very different
Speaker 8: model to say Anthropic and open Ai. Despite all the
Speaker 8: headlines about all the money those two AI startups have
Speaker 8: open Ion and Fropic, they basically lease the data center capacity.
Speaker 8: They don't own the assets outright. Xai does. It's committing
Speaker 8: tens of billions of dollars to buy the GPUs and
Speaker 8: put them in a data center. So you know, the
Speaker 8: rationale is that their synergy, that the work Xai is
Speaker 8: doing on software can benefit Tesla owners and Tesla vehicles.
Speaker 8: But it's also a bit of a lifeline. And if
Speaker 8: you allow me to do the plug, I'm going to
Speaker 8: write about this in my newsletter and column on Monday,
Speaker 8: because you know, that's the thing that shareholders also have
Speaker 8: to face. You know, does Xai on paper have the
Speaker 8: ability to stand on its own two feet? Or is
Speaker 8: this going beyond an investment by Tesla? Is it a
Speaker 8: bailout of one Elon must company of another?
Speaker 3: And just in the last forty seconds to push back
Speaker 3: on this a little bit, as Mark Germers told us,
Speaker 3: some of the lms and the tech there's a concern
Speaker 3: that this could be a bit of a commodity.
Speaker 8: Correct, and also the benchmarking figures for GROCK four are
Speaker 8: very good. But again it's a business model based thing.
Speaker 8: Elon Musk is committed to moving super quick, committing capital
Speaker 8: to buying GPUs and the models completely different. Again, it
Speaker 8: is not a binding proposal. It is a shareholder initiated one.
Speaker 8: If it successfully passed in November, then the board needs
Speaker 8: to look at it and decide if it is a
Speaker 8: prudent and beneficial thing to Tesla to make that investment.
Speaker 8: But as I reported earlier in the year, SpaceX has
Speaker 8: put two billion into Xai, right, so why not Tesla?
Speaker 6: Oh and by the way, ed, you can promote anything
Speaker 6: you want on our air. You're ed Ludlow.
Speaker 2: All right, we're looking forward to the newsletters. Shehars a
Speaker 2: Tesla by the way, up almost four percent. Edla the
Speaker 2: co host of Bloomberg Technology.
Speaker 3: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 3: up after this.
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Speaker 2: All right, we want to get to what is really
Speaker 2: our top story on this Friday, and there's a lot
Speaker 2: going on, but we have seen some coolness in the
Speaker 2: US labor market as a result of that data point
Speaker 2: we got at eight thirty one.
Speaker 6: It depends.
Speaker 3: I think we were pretty on time with it. We
Speaker 3: got a notice though, just ahead of that number that
Speaker 3: there were some technical difficulties. That's something that is kind
Speaker 3: of new to me.
Speaker 6: It's definitely new to me as well.
Speaker 3: It's not the only time, but I think this was
Speaker 3: on the government side, by the way, not on the note.
Speaker 6: Not on the Blueberg side of ironic.
Speaker 2: It definitely, though, did mean a new narrative and reset
Speaker 2: when it comes to US rates.
Speaker 6: Let's get to that part of the story.
Speaker 2: Bloomberg Intelligence GUS interest rate strategist Ira Jersey with us
Speaker 2: from New Jersey. Ira, just the whole morning and how
Speaker 2: it played out unusual, Yeah, like was top of mind
Speaker 2: for you there.
Speaker 4: Well, what's kind of funny, right, we got all those
Speaker 4: that information that around ten minutes after eight that hey,
Speaker 4: the number might be delayed. You know, that's happened before.
Speaker 4: It's been a long time, but it has happened before
Speaker 4: that You've had delayed numbers because websites break things like that.
Speaker 4: So I think they were teeing us up for it
Speaker 4: being late, and then we ultimately got it right on time,
Speaker 4: which was a little interesting. But yeah, week numbers across
Speaker 4: the board. You look at the revisions June, we actually
Speaker 4: had job losses in the non farm payroll series, right,
Speaker 4: We haven't had one of those for quite a long time.
Speaker 4: And you know, and you just see job momentum has
Speaker 4: slowed so significantly over the last four or five months
Speaker 4: that it's a foregone conclusion at this point that the
Speaker 4: Fed's going to cut Now. The question is, and you know,
Speaker 4: I keep on reminding myself, you know, last year we
Speaker 4: said the same thing. I said, the Fed's gonna cut rates,
Speaker 4: are probably going to cut one hundred basis points, but
Speaker 4: it's going to be over four meetings wound up. They
Speaker 4: did a fifty basis point cut in September. That's some
Speaker 4: of the talk that I'm hearing from investors right now
Speaker 4: that you know, they're wondering, Hey, is the Fed going
Speaker 4: to cut fifty? I do think personally the bar is
Speaker 4: pretty high for the Fed to cut fifty in September.
Speaker 4: But you know, we will get a week, we get
Speaker 4: a week CPI report, and maybe they do. The chances
Speaker 4: they think of a week CPI reported pretty low though.
Speaker 4: So twenty five base points is done, and now the
Speaker 4: question is October, December, January, March, and then do they
Speaker 4: go more? And that's where I think we need to
Speaker 4: start focusing on. Is that terminal rate? How far are
Speaker 4: they going to cut two? Are they going to go
Speaker 4: to only three percent? Or are they going to go
Speaker 4: to like two and a half percent.
Speaker 3: The criticism from the Trump administration for months on J.
Speaker 3: Powell has been that he has been too late, that
Speaker 3: the Federal Reserve has been too late. Is the President
Speaker 3: vindicated with a report such as this.
Speaker 4: Well, maybe one meeting quite frankly, because if you look
Speaker 4: at the preponderance of data that was coming in the
Speaker 4: first half of the year, right through through the May
Speaker 4: numbers altogether, they really weren't bad, right, and so, and
Speaker 4: inflation still remains stubbornly high and above the fed's two
Speaker 4: percent target. So you know, the question always becomes the
Speaker 4: FED has a dual mandate. Do they care more about
Speaker 4: the employment part of their mandate or do they care
Speaker 4: more about the inflation part of their mandate? And I
Speaker 4: think at this point they can say employment's what's important.
Speaker 4: Because if the employment situation stays where it is so
Speaker 4: very weak but not not disastrous, or weekends further, right,
Speaker 4: so you start to get negative payroll prints, wages start
Speaker 4: to come down. You did see wages. That what worries
Speaker 4: me about this report more than even the payroll number
Speaker 4: was the fact that wages started to moderate. That's been
Speaker 4: that's super important. But the you know, now you're at
Speaker 4: the point where, okay, look, if the job market gets
Speaker 4: really bad, we don't have to worry about inflation because
Speaker 4: prices are going to come down anyway, because consumption is
Speaker 4: going to go down. So I think that the you know,
Speaker 4: now it's clear and obvious that they have to start
Speaker 4: cutting interest rates. Wasn't so clear in June August, you know,
Speaker 4: or the July meeting. You could you could argue maybe
Speaker 4: they could have cut, but I think that that you know,
Speaker 4: if I'm a FED governor, if I were in their seat,
Speaker 4: you know June, I probably wouldn't have been cutting personally.
Speaker 6: Well, one thing they certainly want to avoid is any
Speaker 6: kind of stagflation.
Speaker 2: Constant Hunter is with us as well, chief economists at Yeah,
Speaker 2: you the Economist Intelligence Unit here in our studio, going
Speaker 2: to join in on this. Gout shoud I saw you
Speaker 2: not in your head a couple of times jump in
Speaker 2: on what we got this morning.
Speaker 11: So, I mean, if we look at that headline number,
Speaker 11: twenty two thousand looks really weak when we think about
Speaker 11: what would be replacement rate historically, however, as Powell talked
Speaker 11: about in his Jackson Hole speech, right, we have a
Speaker 11: decline in supply, that is, the decline in the amount
Speaker 11: of people that are in the labor force and a
Speaker 11: decline in demand. So that decline in the supply, which
Speaker 11: is now growing at like two tens of up percent
Speaker 11: year over year, if we sort of smooth it a
Speaker 11: little bit for three months, right. That is the denominator
Speaker 11: in the unemployment rate, and this is really really important.
Speaker 11: We could keep growing at this pace, unemployment rate's going
Speaker 11: to stay about where it is. So the but as
Speaker 11: Ira was saying, consumption's going to weaken because if you
Speaker 11: think about jobs growth, that's one of the things things
Speaker 11: that feeds consumption growth. So there's a feedback loop where
Speaker 11: this slows consumption, slows demand, slows growth. And they're going
Speaker 11: to need to cut just to me, that four point
Speaker 11: two four point three percent unemployment rate, but they probably
Speaker 11: need to cut a lot less than the market is thinking,
Speaker 11: given this shrinkage and supply. And if you ask me,
Speaker 11: that's what caused the big turnaround inequities today. People dug
Speaker 11: into the details of this number and realized, wait a minute,
Speaker 11: because of this shrinking supply, they might not need to
Speaker 11: cut as much.
Speaker 3: So what does that mean to you? Twenty five basis
Speaker 3: points in September and then that's it until twenty twenty six.
Speaker 11: Oh, I think it's hard to know the exact timing.
Speaker 11: We think at least another three cuts over the next
Speaker 11: six months. It's going to depend on how sticky inflation
Speaker 11: is what we've seen in core services that's been remarkably sticky.
Speaker 11: So we're not even talking about the goods sector where
Speaker 11: we're seeing price increases, but everybody anticipates.
Speaker 6: Dare I say it?
Speaker 11: It is going to be transitory but the dirty word
Speaker 11: in economics. But it's that core good stickiness that I
Speaker 11: think if I were a Fed governor or a voter
Speaker 11: on the FOMC, that would keep me up at night.
Speaker 2: Arah, I mean, is J Powell the feeling incredible pressure
Speaker 2: right now?
Speaker 4: I don't, you know, I don't know. I'm not sure
Speaker 4: if he you know, I can't get into his head, right.
Speaker 4: You know, I've met Chair Powell a couple of times,
Speaker 4: but you know, mostly in passing at events. But I
Speaker 4: would imagine that the Federal Reserve is trying to be
Speaker 4: as you know, neutral as they can and trying to
Speaker 4: look past a lot of the rhetoric coming out of
Speaker 4: the White House. I mean, you can't completely ignore it,
Speaker 4: right for sure, But you know, you look at Secretary
Speaker 4: Besson and if you look at his Wall Street Journal
Speaker 4: ed which Mike just talked about with Austin Golsby with Austin, yeah,
Speaker 4: they you know they were talking about in there. There's
Speaker 4: some I think legitimate criticisms of what the Federal Reserve
Speaker 4: has done over the past fifteen years, but it also
Speaker 4: misses some of the reasons why the FED did some
Speaker 4: of those things over the last fifteen years, Like you know, like, yes,
Speaker 4: the government should be you know, doing things from the
Speaker 4: fiscal side that you know, back during two thousand and seven,
Speaker 4: two thousand and eight, we were waiting for Congress to
Speaker 4: do something. Congress didn't do anything, so the FED had
Speaker 4: to step in because there was no action out of Washington.
Speaker 4: Right So, and you know, should the Treasury Secretary be
Speaker 4: more involved? Sure, yeah, absolutely, Congress should maybe give the
Speaker 4: Treasury Secretary additional powers in times of financial emergencies and
Speaker 4: financial shocks to try and stabilize those so the FED
Speaker 4: doesn't have to right So there, and and some of
Speaker 4: those were built into some of the reforms that have
Speaker 4: happened over the last few years.
Speaker 10: So it's not.
Speaker 4: Exactly so I agree with some of what Secretary best
Speaker 4: And said, and then other parts I think are much
Speaker 4: more nuanced. But nonetheless, like FED reform, the Federal Reserve
Speaker 4: has not been seriously reformed for many decades. At this point,
Speaker 4: and the world's changed, right, the financial world's changed, the
Speaker 4: markets have changed, So maybe there needs to be some
Speaker 4: type of you know, a shift now. Should it be
Speaker 4: a complete overhaul? I don't think so, but could there
Speaker 4: be you know, nuanced changes that Congress considers. Sure?
Speaker 2: All right, One thing I want to get to you
Speaker 2: mentioned Secretary Beston. Another member, a key member of the
Speaker 2: President's cabinet, joined Bloomberg Surveillance this morning. We're talking about
Speaker 2: the Commerce Secretary, Howard Lutnik. He addressed reliability of the
Speaker 2: data coming out of the Labor Department. Here's what he
Speaker 2: had to say to our team.
Speaker 7: It makes it grist clear. You should have fired the
Speaker 7: person who was running that group, right. Because it didn't
Speaker 7: fire them two weeks ago, you sure would be firing
Speaker 7: them today. So they need new leadership in BLS, that's
Speaker 7: for sure. They need new tech and BLS, that's for sure.
Speaker 7: And Donald Trump needs to rely upon the numbers. America
Speaker 7: needs to rely upon the numbers. You can't have these
Speaker 7: bent former administration people who have a view and who
Speaker 7: want to harm the president. We need accurate numbers coming
Speaker 7: from BLS. And finally, we'll have new leadership to deliver,
Speaker 7: you fire the person.
Speaker 10: What do you learn?
Speaker 7: You learn that their technology is just a bully, But
Speaker 7: we'll fix.
Speaker 10: It, right.
Speaker 6: That was of course.
Speaker 2: You have Commerce Secretary Howard Neck this morning on Bloomberg Surveillance.
Speaker 2: Mind you, he does not oversee the labor department. He
Speaker 2: is head of the Commerce department. But what we care about,
Speaker 2: constance is US data. Economic data has been the gold standard.
Speaker 2: Is the data coming out of these departments still reliable?
Speaker 11: Yes, I think it is. I think it's going to
Speaker 11: take Yes, it's still reliable. And the person, by the way,
Speaker 11: who is the acting Secretary, Bill wou Rotowski, He has
Speaker 11: been acting secretary in the past. He has been there
Speaker 11: a number of times. This glitch that we had, while
Speaker 11: worrisome and concerning, but is not unusual in a world
Speaker 11: of technology. Who amongst us has not experienced technology glitches.
Speaker 11: I'm not saying it's acceptable or that we need to
Speaker 11: not have a very high standard, but I think that
Speaker 11: is the wrong thing to attach to. And if we
Speaker 11: look at the individual who's currently leading BLS, he has
Speaker 11: had this role in past and there have been no
Speaker 11: problems or complaints. So it is a very robust system
Speaker 11: of the way we collect data. It's very robust in
Speaker 11: how we follow up with revisions and what the reason
Speaker 11: we have the revisions we have is because we want
Speaker 11: a timely read. That timely read is ninety percent directionally correct, right,
Speaker 11: and so it's valuable.
Speaker 2: Yeah, well, and I'm glad you went your revisions. I
Speaker 2: villain got about thirty forty seconds left here. I mean,
Speaker 2: we are going to get a bunch of revisions next week,
Speaker 2: which will what maybe show.
Speaker 6: What about vieus labor market? Will our narrative change again
Speaker 6: just quickly?
Speaker 4: No, it's still going to show some probably some weakness
Speaker 4: because a lot of these revisions tend to be pro cyclical.
Speaker 4: So as as the market turns and the economy turns
Speaker 4: and gets weaker than you wind up with weaker revisions,
Speaker 4: and then vice versus. Well, right, where you get upward
Speaker 4: revisions when the market's turned upward. But I agree, like
Speaker 4: I think, generally speaking, the data that we receive as
Speaker 4: a reasonably high quality. The challenge is is that the
Speaker 4: way that we collect data now has to be different,
Speaker 4: because again the world's changed, and mister Latinik does produce
Speaker 4: his agency does produce a significant amount of data, like
Speaker 4: the Bureau Economic Analysis, GENDE Data, the PC Report. All
Speaker 4: of those types of numbers come out of commerce.
Speaker 6: Let's not forget that, folks. Thank you so much.
Speaker 2: Great great analysis on what we got early this morning
Speaker 2: and still continues to impact the trade.
Speaker 6: Our Jersey chief US Interest.
Speaker 2: Rates Strateges at Bloomberg Intelligence and Constance Hunter joining us
Speaker 2: right here in studio. She, of course, is chief economist
Speaker 2: at the EIU.
Speaker 3: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 3: up after this.
Speaker 1: This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 3: Of course, a lot of focus on the jobs print.
Speaker 3: It's been a lot about the big miss when it
Speaker 3: comes to non farm payrolls increasing just twenty two thousand
Speaker 3: in August. Revisions also showing on the unemployment shrank in
Speaker 3: June for the first time since twenty twenty. Yet a
Speaker 3: deeper look into the stats show that women's participation in
Speaker 3: the labor forces also declining. In fact, as of last
Speaker 3: month heading the lowest since December of twenty twenty three.
Speaker 3: Misty Hageness watches these stats and one's not from the
Speaker 3: BLS very closely. She's Associate professor and Associate Research Science
Speaker 3: Scientist at the Institute for Policy and Social Research at
Speaker 3: the University of Kansas. She's also a former Principal economist
Speaker 3: at the US Census Bureau. She's the author of a
Speaker 3: forthcoming book it's out in January called Swifty Nomics, How
Speaker 3: Women Mastermind and Redefine Our Economy. Professor, good to have
Speaker 3: you on the program. I know you weren't surprised to
Speaker 3: does the participation fall for women, because, as you found,
Speaker 3: working moms with kids are leaving their jobs in this economy.
Speaker 3: It's something we talked a lot about during the pandemic,
Speaker 3: but that seemed to be to reverse in recent years.
Speaker 3: Why is this happening again now?
Speaker 12: Yeah, thanks so much for having me, Tim. You know,
Speaker 12: there's a lot of reasons why it might be happening now.
Speaker 12: I was just looking at the numbers that came out
Speaker 12: in August for women age twenty plus and this you know,
Speaker 12: past August we had two million fewer women age twenty
Speaker 12: plus in the labor force compared to August of the
Speaker 12: previous year. So there's a lot going on with women
Speaker 12: where it's becoming very challenging for them to stay engaged
Speaker 12: in the labor market, to continue working. When you think
Speaker 12: about the environment that we're in in twenty twenty five,
Speaker 12: you know, all of the return to office, all of
Speaker 12: the federal government riffs, all of those types of policy
Speaker 12: decisions that we made early on in twenty twenty five
Speaker 12: appear to be negatively affecting women.
Speaker 6: Why is this happening now?
Speaker 9: Yeah, I mean it's a great question.
Speaker 12: And you know, again, I think we need to think
Speaker 12: just about policies in general, you know, across is institutions.
Speaker 12: We need to look at how employers are engaging with employees,
Speaker 12: the type of you know, protections out they're offering employees.
Speaker 12: When you know, the environment at work becomes really inhospitable
Speaker 12: to the way in which we live our lives today,
Speaker 12: there are a lot of caregivers who are just going
Speaker 12: to leave the labor market, either out of force because
Speaker 12: they can't make it work, or out of choice because
Speaker 12: it's just too exhausting.
Speaker 3: What are the specific policies that are pushing women out
Speaker 3: of the labor force. Is it policies at offices like
Speaker 3: return five days a week for example, or clamp down
Speaker 3: on hybrid work, or is it coming from the government.
Speaker 3: What can you cite specifically here?
Speaker 12: Well, I mean, the one thing that I'll say is
Speaker 12: the government is a leader generally, and so businesses usually
Speaker 12: look to the way in which the government is structuring
Speaker 12: it's policies around you know, it's hr policies and policies
Speaker 12: around employment. And so when the government requires everybody to
Speaker 12: come back to work five days a week, you know,
Speaker 12: private business employers follow suit, and you know, a lot
Speaker 12: of the rhetoric in early twenty twenty five was really
Speaker 12: focused on telling employees that they were going to have
Speaker 12: to return to office. There's still a lot of businesses
Speaker 12: who haven't actually fully started that process. But just the
Speaker 12: fear of knowing that it's coming and your employer telling
Speaker 12: you that it's coming, you know, means that there's a
Speaker 12: lot of women out there and a lot of caregivers
Speaker 12: who are going to adjust even before it actually comes
Speaker 12: into full effect.
Speaker 2: The sad part is, well, we did feel like we
Speaker 2: had some gains coming off of COVID. We did have
Speaker 2: some gains coming off of COVID. It does feel like
Speaker 2: these are problems that we have been talking about for
Speaker 2: a really long time.
Speaker 6: Misty and I.
Speaker 2: Just I don't know, it's a bigger rethink in our
Speaker 2: society to value women childcare.
Speaker 6: There's like a bigger thing that it feels like needs
Speaker 6: to be at play here.
Speaker 9: One hundred percent.
Speaker 12: You know, one of the things that gives me hope
Speaker 12: in all of this environment is we actually know now
Speaker 12: what it takes to really, you know, get women back
Speaker 12: into the labor market. I think the pandemic really showed
Speaker 12: us that when we do you know that employers, you know,
Speaker 12: it is possible for employers to allow for flexibility and
Speaker 12: you know the roof is going to cave in. They
Speaker 12: will still be productive, they will still be able to produce,
Speaker 12: you know, the goods and services that they're they're producing, and.
Speaker 9: Now it's just a matter of choice.
Speaker 12: So we intentionally in early twenty twenty five made a
Speaker 12: choice that we were going to restrict a lot of
Speaker 12: these flexibilities and we have seen now what has happened.
Speaker 12: And you know, the flip side of that, which maybe
Speaker 12: could give us some sort of positive reframing is that
Speaker 12: we know how to fix it.
Speaker 9: So if we want women's.
Speaker 12: You know, labor first participation to go up again, we
Speaker 12: need to look seriously at, you know, providing a work
Speaker 12: environment that isn't hostile to family life.
Speaker 3: So yeah, well, I'm wondering about the book that you
Speaker 3: have coming out in a few months and the research
Speaker 3: that you did for the book, specifically the type of
Speaker 3: work that's not necessarily measured by official data, the stuff
Speaker 3: that does disproportionately fall on women. I mean we're talking childcare,
Speaker 3: household work oftentimes falling on women in the house. How
Speaker 3: do you quantify that?
Speaker 9: Yeah, So, you know, the book is coming out in January.
Speaker 12: And also I've developed a dashboard of statistics of economic
Speaker 12: statistics all around care and caregiving's you can find it
Speaker 12: at thecareboard dot org. And the statistics that we've developed there,
Speaker 12: we basically said, okay, if we went back to nineteen
Speaker 12: forties and instead of having you know, older white men
Speaker 12: who tend to have lots of care privilege, and by
Speaker 12: care privilege, I mean they have other people cooking their
Speaker 12: meals for them, ironing their clothes, et cetera. If instead,
Speaker 12: in nineteen forties economic statistics had been developed by caregivers,
Speaker 12: what would they look like. And that's what the careboard is,
Speaker 12: and it's incorporating the amount of time caregivers spend in
Speaker 12: unpaid domestic load and domestic activities for their families. So
Speaker 12: cooking meals, washing clothes, all of these type of activities.
Speaker 12: We count up all the hours that caregivers spend in
Speaker 12: those activities and then we put a price tag on it,
Speaker 12: and then we fold that in to some of the
Speaker 12: economic statistics that we all are very familiar with, like
Speaker 12: labor force participation.
Speaker 9: Right, I mean, it's etc.
Speaker 6: It's so funny.
Speaker 2: I was talking to somebody about the growth of economics
Speaker 2: and business news and just like this concept that there
Speaker 2: really is a monetary value to everything that goes on
Speaker 2: in our world and it's how we value things. And
Speaker 2: it just shows how much we don't really necessary value caregivers.
Speaker 6: And so on and so forth.
Speaker 2: And until that changes and we put a value on it,
Speaker 2: it's hard to get policy to change. Listen, I don't
Speaker 2: know what's the government's role that needs to be maybe
Speaker 2: more aggressive in this to help us out.
Speaker 12: Yeah, I mean I think it would be great if
Speaker 12: you know, the government were to you know, create some
Speaker 12: sort of official statistics around economic productivity and growth that
Speaker 12: incorporated the value of.
Speaker 9: Some of these activities.
Speaker 12: You know, the the VEA does produce a satellite GDP
Speaker 12: estimate which incorporates household production like cooking meals at home.
Speaker 12: So we're moving in the right direction, but we still, uh,
Speaker 12: there needs to be more awareness. We need to you know,
Speaker 12: really start thinking seriously about this. And one of the
Speaker 12: other reasons why we need to start thinking seriously about
Speaker 12: this is just because of the high levels of educational
Speaker 12: attainment that women have these days. High levels of education
Speaker 12: of education, I mean that women are focused more on
Speaker 12: having a career versus having a job, and that you know,
Speaker 12: ties in more strongly to personal identity. It makes it
Speaker 12: more difficult when women are trying to think about, you know,
Speaker 12: do I start a family or do I continue down
Speaker 12: my career path. And if we can't figure this out
Speaker 12: of how to make the work force is less you know,
Speaker 12: hostile to this idea of wanting to have a career
Speaker 12: and having a family. You know, it's only employers, it's
Speaker 12: only the economy. It's only all of us at large
Speaker 12: who are going to lose out from that.
Speaker 6: We're just not going to get married and have kids.
Speaker 3: That's it, guy, that's bad for that's that's bad for
Speaker 3: the just in ten seconds. Is there a country that's
Speaker 3: doing this really well around the world in your view?
Speaker 12: Well, I think a lot of the Scandinavian countries do
Speaker 12: actually have quite a robust system of social policies that
Speaker 12: you know, provide affordable and high quality daycare. You know
Speaker 12: that encouraged fathers to also take you know, parental leave.
Speaker 12: So there are there are examples in some of the
Speaker 12: Nordic countries.
Speaker 6: All right, gotta run, Misty, Thanks so much.
Speaker 2: Misty Higginess Associate Professor and Associate Research Scientist, Institute for
Speaker 2: Policy and Social Research at the University of Kansas. She's
Speaker 2: got a new book coming out comes out in January, Swiftynomics.
Speaker 6: Love It, Love It.
Speaker 3: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 3: up after this.
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Speaker 10: Mac.
Speaker 9: How about you let me drive? Oh no, no, no, no,
Speaker 9: this is not a toy.
Speaker 10: Alright, please, I'll travel.
Speaker 9: Excuse great, I want to drive. It's a good question.
Speaker 4: Good.
Speaker 6: This is the drive to the clothes punks.
Speaker 1: The music well.
Speaker 6: On Bloomberg Radio. All right, everybody TikTok.
Speaker 2: Just about eighteen minutes ago until we wrap up the
Speaker 2: trade for the Friday session, also.
Speaker 6: The week overall, it was a short holiday week. I
Speaker 6: didn't feel that way I did it.
Speaker 3: No, it wasn't yet a shortened holiday week. It is
Speaker 3: still a sure and holiday week because we are still
Speaker 3: here my Friday.
Speaker 6: We are we are all right.
Speaker 2: So too is Louis Navalier back with us chairman, founder,
Speaker 2: CEO of Navalier and associates joining us from Manhalapan, Florida.
Speaker 6: How are you good? Good, short and sweet.
Speaker 4: That's it.
Speaker 3: That's all the time we have for you today, Louis.
Speaker 2: Listen, we saw stocks actually moving up earlier, but they've
Speaker 2: been down for most of the day. Our investors more
Speaker 2: worried about an economic slow down rather than being enthused,
Speaker 2: perhaps about rate cuts.
Speaker 13: No, I just think it's a Friday and people like
Speaker 13: to clean out their inventory before the weekend. You know,
Speaker 13: Fridays are seasonally weak, especially in the late hours, especially
Speaker 13: if the weather's gout, everybody else to go to the
Speaker 13: US Open or something like that.
Speaker 10: You know, get it?
Speaker 6: Is it that simple?
Speaker 5: Really?
Speaker 2: You're thinking that it's just that it's just clearing out
Speaker 2: on a Friday, pretty much.
Speaker 3: Alcaraz is up two to one over Djokovic, but Djokovic
Speaker 3: is up advantage all.
Speaker 6: No, I knewhere your focal points are.
Speaker 3: I'm just hey, Louis brought it up. I got to
Speaker 3: mention the score.
Speaker 2: Well, Louis, to some extent, would you not be making
Speaker 2: any big bets until we get through the FED meeting
Speaker 2: or do the jobs report? Did that kind of clinch
Speaker 2: it for you? Help help me out here.
Speaker 10: Oh, it more than clinched it.
Speaker 13: I mean it's obviously the vega to cut in June
Speaker 13: and that downward revision to genda a negative number for
Speaker 13: the first time in four years was a big deal.
Speaker 13: Unemployment being at the highest rate in four years is
Speaker 13: a big deal, even though I think four hundred and
Speaker 13: twenty six of the workforce. So yeah, it was. It
Speaker 13: was a week payroll. We were all rooting for a
Speaker 13: week payroll because we want the Fed to cut and
Speaker 13: hurry up and catch up with market rates. Market rates,
Speaker 13: of course, have come down dramatically this week. Of course,
Speaker 13: they spiked longbond spiked early in the week. But yeah,
Speaker 13: we're going to get a right cut. I guess the
Speaker 13: only question next week is inflation. Now PPI I'm sure
Speaker 13: will be fun. The month before it wasn't because of
Speaker 13: higher wholesale diesel costs. That was a freak thing, mostly
Speaker 13: do to the West Coast. And you know, I spent
Speaker 13: a lot of time in California. They want green diesel
Speaker 13: out there. They don't like diesel from oil, so it's
Speaker 13: very complicated. They're shutting a couple of refineries down, so
Speaker 13: that's California's problem. But it showed up in the numbers,
Speaker 13: and then of course the CPI. We just hope and
Speaker 13: pray that all the weak real estate and everything finally
Speaker 13: shows up in owner's equivalent rent even though it only
Speaker 13: shows up in rentolds, but there is a lot of rentals,
Speaker 13: and hopefully we'll get some relief and we'll be boarding
Speaker 13: on deflation because we've got falling crude oil prices.
Speaker 3: I want to hit on the data, specifically the BLS
Speaker 3: data we did hear from Commerce Secretary Howard Lutnik on
Speaker 3: Bloomberg surveillance earlier today, and a reminder he runs commerce
Speaker 3: not so he's you know, so he's not running labor here.
Speaker 3: But he did weigh in on the data. He said,
Speaker 3: Donald Trump needs to rely on number of the numbers.
Speaker 3: America needs to rely on the numbers. We need accurate
Speaker 3: numbers coming from BLS. Do we have accurate numbers from BLS?
Speaker 9: Not?
Speaker 13: When they do the wild seasonal adjustments. I mean, I
Speaker 13: think the worst month is January where they automatically increase
Speaker 13: in six hundred thousand or seasonal adjustment. I hope they're
Speaker 13: going to stop doing that because that was you know,
Speaker 13: the holiday shopping and all that stuff. So I really
Speaker 13: hope they start just giving us the real numbers, not
Speaker 13: the seasonally adjusted numbers.
Speaker 3: But you can, but do you have any reason to
Speaker 3: believe that the numbers that are provided to us by
Speaker 3: the government right now when it comes to non farm
Speaker 3: payrolls in this country are incorrect in some way that
Speaker 3: they weren't during a previous administration, as has been alleged.
Speaker 10: I don't think it has anything to do with administrations.
Speaker 13: I think it has to do with the seasonal adjustments,
Speaker 13: and I think we just have to get have fewer
Speaker 13: seasonal adjustments and then we'll go on. But yeah, I mean,
Speaker 13: I remember when the June payroll came out. We were
Speaker 13: suspicious because they were all teaching jobs. But teachers get
Speaker 13: laid off in the summer months. Maybe it was just
Speaker 13: a line number, but we were all suspicious of it, like, no,
Speaker 13: that's not right. Those people get laid off for a
Speaker 13: couple of months. So that's the kind of thing that
Speaker 13: freaks us out. We just want raw data, you know.
Speaker 13: We get it from ADP. I don't know why we
Speaker 13: can't get it from the labor One of.
Speaker 2: The things I want to ask you because you think
Speaker 2: it's already the Fed has been too late in terms
Speaker 2: of cutting rates, and you talk about what we're seeing
Speaker 2: in the labor market. Having said that, at the end
Speaker 2: of the month, you know, Bloomberg reporting others how US
Speaker 2: consumer spending rose in July by the most in four months,
Speaker 2: and so we were seeing resilient demand still among consumers
Speaker 2: in the face of stubborn inflation. And then there's the
Speaker 2: concern that the President's tariffs, that that is ultimately going
Speaker 2: to impact something. It's either going to be a mayor
Speaker 2: is paying more for things or companies continuing to kind
Speaker 2: of eat it, and that's going to buy into you know,
Speaker 2: kind of eat into their earnings.
Speaker 6: So I'm just I'm just.
Speaker 2: Curious how you factor that in the resiliency that we've
Speaker 2: seen in consumers and that maybe the economy isn't as
Speaker 2: bad as everybody thinks.
Speaker 10: No, it's not as bad as everybody thinks.
Speaker 13: But there's no doubt that the trade numbers are distorting
Speaker 13: the GDP numbers, and we got to get rid of
Speaker 13: those distortions. Obviously, we had a preliminary trade number this
Speaker 13: week that that's going to impact GDP and.
Speaker 10: To the downside actually, So.
Speaker 13: I just think that the dollars should be appreciating here
Speaker 13: sooner than later. We hope the dollars appreciation is going
Speaker 13: to largely offset the baseline ten percent tariffs. As far
Speaker 13: as they were simplical tit for tat tariffs, there's no
Speaker 13: doubt that they're still haggling as a dollar going.
Speaker 6: To appreciate, Louis if we're cutting rates.
Speaker 13: Because we've were the last Europe's cut eight times last
Speaker 13: I look, the other thing is America is not shrinking
Speaker 13: like Northern Europe is or Asia is because of a
Speaker 13: lack of household formation. You know, Japan has the highest
Speaker 13: birth rate in Asia and they're still shrinking. Okay, and
Speaker 13: so we're still pro family in the South, We're still
Speaker 13: pro family. In the Mountain West. We're still younger than
Speaker 13: everybody else. And we do assimilator immigrants. I realize that
Speaker 13: President Trump is wants, you know, the legal ones. The
Speaker 13: rate on the battery factory I think is pretty controversial.
Speaker 13: Those people were working. You think they could just get extensions,
Speaker 13: so you know, I think, you know, it creates an
Speaker 13: interesting tone. But the bottom line is we assimilate immigrants
Speaker 13: in America and we welcome them.
Speaker 10: We need them.
Speaker 4: Yeah, so.
Speaker 13: We're just going to grow faster than everybody else, but
Speaker 13: our rates are going to be higher than they are
Speaker 13: in Europe and worthy waste that you don't want to
Speaker 13: go to China. I mean, I'm gonnas the rachel below Japan,
Speaker 13: and they're going to have a currency devaluation soon.
Speaker 10: So yeah, we're in the plate.
Speaker 6: We're going to wrap it up on that one, all right, Louis,
Speaker 6: thanks so much.
Speaker 2: Louis Navalier, chairman, founder CIO of Navalier and Associates joining
Speaker 2: us from Florida.
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