1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,600 Speaker 1: at Bloomberg dot com slash podcast. A change in non 7 00:00:22,640 --> 00:00:24,800 Speaker 1: farm payrolls for the month of June came in at 8 00:00:24,800 --> 00:00:27,440 Speaker 1: three seventy two thousand. It's better than the consensus of 9 00:00:27,480 --> 00:00:29,920 Speaker 1: two and sixty five thousand, and it's a good news. 10 00:00:29,920 --> 00:00:32,840 Speaker 1: Of bad news is it's less than uh the month 11 00:00:33,040 --> 00:00:35,360 Speaker 1: before and several months before. Let let's break it down 12 00:00:35,360 --> 00:00:37,680 Speaker 1: with Jay Brice, and he's a managing director and chief 13 00:00:37,680 --> 00:00:40,320 Speaker 1: economists at Wells Fargo. I think he's also a multi 14 00:00:40,440 --> 00:00:45,000 Speaker 1: time graduate of some small college or university in Chapel Hill, 15 00:00:45,040 --> 00:00:47,520 Speaker 1: North Carolina, or something along those lines, but we'll bear 16 00:00:47,560 --> 00:00:50,839 Speaker 1: with that. Jay, Thanks for joining us. We really appreciate it. 17 00:00:50,920 --> 00:00:52,800 Speaker 1: Would you make of the job's number here today? When 18 00:00:53,040 --> 00:00:56,720 Speaker 1: kind of what's your take forward move? Yeah? So apaulogist, 19 00:00:56,760 --> 00:01:02,000 Speaker 1: you know, go heels um uh, But yeah, so as 20 00:01:02,120 --> 00:01:04,720 Speaker 1: as you just noted. So the good news is we 21 00:01:04,880 --> 00:01:08,360 Speaker 1: created a lot of jobs in soon. You know, this 22 00:01:08,440 --> 00:01:10,440 Speaker 1: is one of these good news is bad news sort 23 00:01:10,480 --> 00:01:12,959 Speaker 1: of deals. I mean, I still kind of seals the 24 00:01:13,000 --> 00:01:16,240 Speaker 1: case for the FED going in another seventy five UM 25 00:01:16,280 --> 00:01:19,280 Speaker 1: at its meeting later this this week or later the 26 00:01:19,319 --> 00:01:22,200 Speaker 1: sponsor rather so. UM. And that's you know, kind of 27 00:01:22,200 --> 00:01:24,800 Speaker 1: why markets are you know, the stock market is off 28 00:01:24,880 --> 00:01:28,119 Speaker 1: right now. Suddenly you know, recession fears are back if 29 00:01:28,160 --> 00:01:32,320 Speaker 1: the Fed, you know, it gets really aggressive. So do 30 00:01:32,400 --> 00:01:36,160 Speaker 1: we expect the Fed to get really aggressive? Um? Are 31 00:01:36,160 --> 00:01:40,560 Speaker 1: you in the seventy five or the fifty camp for July? Yeah? 32 00:01:40,720 --> 00:01:43,520 Speaker 1: So before this, before this number prints today, we were 33 00:01:43,600 --> 00:01:47,280 Speaker 1: seven D five And I think there's just reinforces um 34 00:01:47,400 --> 00:01:49,560 Speaker 1: to our belief that they're gonna go seventy five. I mean, 35 00:01:49,640 --> 00:01:52,120 Speaker 1: I think the wheels would just have to come completely 36 00:01:52,200 --> 00:01:54,120 Speaker 1: off between now and the end of the month. But 37 00:01:54,240 --> 00:01:56,440 Speaker 1: I'm not to go seventy five, And then I think 38 00:01:56,440 --> 00:01:58,680 Speaker 1: it's gonna be interesting where do they go from there? 39 00:01:58,840 --> 00:02:00,720 Speaker 1: You know, if they get if they goes seventy five, 40 00:02:00,800 --> 00:02:04,040 Speaker 1: then you're at a fit funds rate roughly two and 41 00:02:04,120 --> 00:02:06,920 Speaker 1: a quarter that's starting to move into the range where 42 00:02:07,000 --> 00:02:09,520 Speaker 1: most people in the f O m C would say, 43 00:02:09,680 --> 00:02:13,839 Speaker 1: we're quote at neutral at that point, and so that's 44 00:02:13,880 --> 00:02:16,120 Speaker 1: what they seem to want to be getting to where 45 00:02:16,240 --> 00:02:20,200 Speaker 1: policy isn't stimulating the economy anymore. Some of the jay, 46 00:02:20,240 --> 00:02:22,000 Speaker 1: how do you measure that? By the way, I mean, 47 00:02:22,040 --> 00:02:25,240 Speaker 1: I know that it's not an exact science, but where 48 00:02:25,280 --> 00:02:27,760 Speaker 1: where do you do you use the tailor rule or 49 00:02:27,840 --> 00:02:32,480 Speaker 1: what do you do to what we do? Yeah, So 50 00:02:32,560 --> 00:02:34,520 Speaker 1: what we do is we you know, we kind of say, 51 00:02:34,680 --> 00:02:37,000 Speaker 1: so what do we think the uh, you know, the 52 00:02:37,040 --> 00:02:40,840 Speaker 1: underlying real rate of the economy is, So that's probably 53 00:02:40,919 --> 00:02:43,560 Speaker 1: somewhere where the real rate of the economy can kind 54 00:02:43,560 --> 00:02:46,680 Speaker 1: of grow. That's probably somewhere around one and a half 55 00:02:46,720 --> 00:02:49,239 Speaker 1: to two percent. Now, you don't want to real Fed 56 00:02:49,280 --> 00:02:51,840 Speaker 1: funds rate at that high because you know, the yield 57 00:02:51,840 --> 00:02:55,360 Speaker 1: curve is kind of upward sloping, so generally, so you know, 58 00:02:55,520 --> 00:02:58,880 Speaker 1: we would put it somewhere around you know, two and 59 00:02:58,919 --> 00:03:02,320 Speaker 1: a half to maybe three would be in nominal terms 60 00:03:02,360 --> 00:03:05,120 Speaker 1: that we would think the neutral rate would be. But 61 00:03:05,160 --> 00:03:07,000 Speaker 1: you know, as you just know, it's not it's certainly 62 00:03:07,000 --> 00:03:08,880 Speaker 1: not an exact sort of sort of science. I'm just 63 00:03:08,919 --> 00:03:11,440 Speaker 1: trying to on my Bloomberg I have t a y 64 00:03:11,680 --> 00:03:13,400 Speaker 1: l go at the Taylor rule and you've got to 65 00:03:13,400 --> 00:03:18,000 Speaker 1: plug in your own neutral rate. Um, no matter what 66 00:03:18,080 --> 00:03:22,079 Speaker 1: I do, it seems like the estimate is way higher 67 00:03:22,120 --> 00:03:26,680 Speaker 1: than anybody else's terminal rate expectation. Yeah, and you know 68 00:03:26,720 --> 00:03:29,560 Speaker 1: the Taylor rule was, you know, John Taylor estimated that, 69 00:03:29,639 --> 00:03:32,400 Speaker 1: you know, years ago, and the economy has has has 70 00:03:32,480 --> 00:03:36,720 Speaker 1: changed over time, and so um, you know, I think 71 00:03:36,760 --> 00:03:39,040 Speaker 1: it would be It's probably not as high as what 72 00:03:39,320 --> 00:03:41,320 Speaker 1: you know, many people would would think it to be 73 00:03:41,400 --> 00:03:44,120 Speaker 1: at this point. And terminal terminal rate, what do you 74 00:03:44,120 --> 00:03:46,720 Speaker 1: think we get we get to here? Because with eight 75 00:03:46,720 --> 00:03:50,640 Speaker 1: percent inflation, a terminal rate of four wouldn't be out 76 00:03:50,680 --> 00:03:53,760 Speaker 1: of this world, would it. Order. I think you're looking 77 00:03:53,840 --> 00:03:55,800 Speaker 1: kind of around four. And I think what's going to 78 00:03:55,920 --> 00:03:59,160 Speaker 1: happen as we go forward here is that the inflation, 79 00:03:59,200 --> 00:04:01,840 Speaker 1: your all inflation rate in the space is the rate 80 00:04:01,880 --> 00:04:04,240 Speaker 1: that it's going to plant. Next week for June is 81 00:04:04,280 --> 00:04:07,560 Speaker 1: going to be another ugly print. But going forward you 82 00:04:07,600 --> 00:04:10,360 Speaker 1: should see the rates start to come down. You know 83 00:04:10,440 --> 00:04:12,280 Speaker 1: what what are the you know, we're looking at commodity 84 00:04:12,280 --> 00:04:17,080 Speaker 1: prices down pretty significantly. That will eventually feed into goods prices. 85 00:04:17,400 --> 00:04:19,880 Speaker 1: You know, the wage number that we saw today average 86 00:04:19,880 --> 00:04:23,520 Speaker 1: hourly earnings only zero point three percent, So we're getting 87 00:04:23,560 --> 00:04:26,960 Speaker 1: some deceleration in terms of wages that will feed into 88 00:04:27,240 --> 00:04:30,120 Speaker 1: service sector sort of employment. So by the end of 89 00:04:30,120 --> 00:04:33,400 Speaker 1: this year, if you have the terminal rates roughly around 90 00:04:33,400 --> 00:04:37,240 Speaker 1: four percent and the inflation rate, it's still gonna be 91 00:04:37,320 --> 00:04:39,920 Speaker 1: higher than that. But as we move into next year, 92 00:04:40,560 --> 00:04:44,400 Speaker 1: you should start to see a positive real Fed funds rate. 93 00:04:44,760 --> 00:04:47,000 Speaker 1: And with all the other tightening that you're seeing in 94 00:04:47,080 --> 00:04:51,360 Speaker 1: financial markets, credit spreads widened, the dollar stronger, stock bar 95 00:04:51,600 --> 00:04:56,119 Speaker 1: stock indussees moving lower, that's all financial tightening. All those 96 00:04:56,160 --> 00:04:59,640 Speaker 1: things put more headwinds on the economy, and we're afraid 97 00:04:59,640 --> 00:05:02,039 Speaker 1: to lead to a modest sort of recession, you know, 98 00:05:02,120 --> 00:05:05,360 Speaker 1: either late this year or early next year. So is 99 00:05:05,640 --> 00:05:07,920 Speaker 1: that really the risk here, Ja, because we again, as 100 00:05:07,920 --> 00:05:10,200 Speaker 1: you mentioned, we do have some inflation metrics to are 101 00:05:10,200 --> 00:05:13,120 Speaker 1: in fact coming back down. So it appears that maybe 102 00:05:13,160 --> 00:05:15,400 Speaker 1: that issue can be put on backburn. A little bit 103 00:05:15,480 --> 00:05:18,320 Speaker 1: of a recession still on the table. I think I 104 00:05:18,320 --> 00:05:21,400 Speaker 1: think it is. I just think it's it's becoming less 105 00:05:21,520 --> 00:05:24,320 Speaker 1: credible to expect the SAIED to be able to engineer 106 00:05:24,480 --> 00:05:26,800 Speaker 1: a you know, a soft landing here. And I'm not 107 00:05:26,800 --> 00:05:29,160 Speaker 1: saying that's not important, is that that's impossible. I mean 108 00:05:29,200 --> 00:05:33,239 Speaker 1: that certainly could happen. But whereas before we saw these 109 00:05:33,400 --> 00:05:36,280 Speaker 1: nasty inflation prints starting, you know, about a month or 110 00:05:36,320 --> 00:05:39,000 Speaker 1: two ago, you know, we would say the probability of 111 00:05:39,040 --> 00:05:43,840 Speaker 1: recession or probability of a soft landing was, I think 112 00:05:43,880 --> 00:05:46,760 Speaker 1: it's more like now, and so the probability of a 113 00:05:47,200 --> 00:05:50,320 Speaker 1: modest recession next year is kind of like, you know, 114 00:05:50,720 --> 00:05:53,000 Speaker 1: in the sixty sort of range. I think that's kind 115 00:05:53,000 --> 00:05:55,440 Speaker 1: of what we're looking at. Just you know, given the 116 00:05:55,480 --> 00:06:00,120 Speaker 1: defends aggressive here, given the amount of financial type mean 117 00:06:00,200 --> 00:06:02,919 Speaker 1: that we're seeing, and the slowdowns in the rest of 118 00:06:02,920 --> 00:06:05,880 Speaker 1: the world, all those things pause. Um, you know, growth 119 00:06:05,920 --> 00:06:09,320 Speaker 1: shers too slow significantly, And I think the turn you know, 120 00:06:09,440 --> 00:06:12,000 Speaker 1: negative on on a on a you know a few 121 00:06:12,080 --> 00:06:14,800 Speaker 1: quarter sort of basis alright, good stuff. More importantly, I 122 00:06:14,800 --> 00:06:19,880 Speaker 1: think you're looking at negative um employment prints. All right, Jay, 123 00:06:19,920 --> 00:06:21,960 Speaker 1: good good stuff. You appreciate you taking the time on 124 00:06:22,000 --> 00:06:24,640 Speaker 1: this job today. J Bryson, managing director and chief economist 125 00:06:25,279 --> 00:06:28,760 Speaker 1: at Wells Fargo and a proud graduate of the University 126 00:06:28,760 --> 00:06:32,440 Speaker 1: of North kind of former economist at Federal Reserve. Yeah, 127 00:06:32,560 --> 00:06:35,039 Speaker 1: I know, these guys get around and then they got 128 00:06:35,080 --> 00:06:38,240 Speaker 1: a strong resume. Does Yeah, very good. We love having 129 00:06:38,320 --> 00:06:43,800 Speaker 1: him on. I don't know where you go in terms of, 130 00:06:43,920 --> 00:06:48,679 Speaker 1: you know, a nice uh down middle market investor. Stocks 131 00:06:48,720 --> 00:06:51,919 Speaker 1: down over so far in the first half of the year, Bonds, 132 00:06:52,000 --> 00:06:55,440 Speaker 1: double digit declines pretty much everywhere you look, including treasuries. 133 00:06:55,760 --> 00:06:57,480 Speaker 1: What do you do from here? Are we at a 134 00:06:57,640 --> 00:07:01,239 Speaker 1: near a bottom? David Katz, President and Chief investment Officer 135 00:07:01,400 --> 00:07:05,400 Speaker 1: Matrix Asset Advisors, David, what are you telling your clients 136 00:07:05,480 --> 00:07:08,760 Speaker 1: here about where we go from here? Giving that brutal 137 00:07:08,839 --> 00:07:13,120 Speaker 1: first half and both stocks and bonds after a miserable 138 00:07:13,200 --> 00:07:17,000 Speaker 1: first half, we're pretty upbeat, surely in the stock market 139 00:07:17,040 --> 00:07:19,240 Speaker 1: for the second half. Since nineteen thirty, there have been 140 00:07:19,440 --> 00:07:23,000 Speaker 1: five periods where the market has opened down more than 141 00:07:23,040 --> 00:07:25,440 Speaker 1: fifteen percent in the first six months, and five out 142 00:07:25,440 --> 00:07:28,440 Speaker 1: of five the market was up in the following six months, 143 00:07:28,440 --> 00:07:30,840 Speaker 1: and that was more than fifteen percent in most cases. 144 00:07:31,120 --> 00:07:33,080 Speaker 1: So we're feeling pretty good about stocks and when we 145 00:07:33,120 --> 00:07:34,520 Speaker 1: can go into that in a little bit, because there 146 00:07:34,560 --> 00:07:36,560 Speaker 1: are a lot of other indicators that are pretty bullish 147 00:07:37,080 --> 00:07:40,000 Speaker 1: on the bond side, after a very poor start of 148 00:07:40,000 --> 00:07:43,440 Speaker 1: the year. We're still cautious about intermediate and long term 149 00:07:43,440 --> 00:07:46,200 Speaker 1: bonds because we think that rates can move higher still. 150 00:07:46,680 --> 00:07:49,000 Speaker 1: But for the first time in a long time, we 151 00:07:49,040 --> 00:07:52,640 Speaker 1: are very positive on six months to two and three 152 00:07:52,720 --> 00:07:55,080 Speaker 1: year bonds because you're getting about a three percent return. 153 00:07:55,760 --> 00:07:57,720 Speaker 1: We don't think rates are going to move up that sharply. 154 00:07:57,760 --> 00:08:00,840 Speaker 1: So you're finally getting rewarded, uh for we're owning bonds, 155 00:08:00,920 --> 00:08:04,520 Speaker 1: whereas a year ago you were getting point two by 156 00:08:04,520 --> 00:08:08,560 Speaker 1: the way. Uh So, today we had this good news 157 00:08:09,320 --> 00:08:11,600 Speaker 1: on on the job at least better than expected news 158 00:08:11,680 --> 00:08:14,360 Speaker 1: on the jobs front, and I guess the market then 159 00:08:14,520 --> 00:08:17,560 Speaker 1: thinks the Fed can get more aggressive. Does that affect 160 00:08:17,600 --> 00:08:20,600 Speaker 1: your outlook for stocks? I mean, if the Fed goes 161 00:08:20,920 --> 00:08:24,600 Speaker 1: seventy five and then you know, fifty and fifty, does 162 00:08:24,640 --> 00:08:28,680 Speaker 1: that hurt your outlook for stocks? If the Fed has 163 00:08:28,760 --> 00:08:31,960 Speaker 1: to keep raising its seventy five and fifties, and definitely absolutely, 164 00:08:32,000 --> 00:08:33,760 Speaker 1: but we don't think that's going to be the case. 165 00:08:33,800 --> 00:08:36,320 Speaker 1: We are starting to see signs that inflation is breaking. 166 00:08:36,360 --> 00:08:39,600 Speaker 1: You just ran that story about San Francisco housing prices 167 00:08:39,679 --> 00:08:44,440 Speaker 1: or apartments coming down. We're seeing lower labor pressure. What 168 00:08:44,520 --> 00:08:46,960 Speaker 1: you saw today the walmarts and the targets of the 169 00:08:46,960 --> 00:08:52,079 Speaker 1: world are discounting because they're overstocked in apparel and home goods. 170 00:08:52,360 --> 00:08:54,959 Speaker 1: So there you're starting to see some signs that inflation breaking. 171 00:08:55,000 --> 00:09:00,120 Speaker 1: Commodity prices copper steel have sold off very significant. The 172 00:09:00,520 --> 00:09:03,000 Speaker 1: we think if inflation comes down, it's going to allow 173 00:09:03,040 --> 00:09:06,280 Speaker 1: the feed to be less aggressive in three For the moment, 174 00:09:06,280 --> 00:09:08,520 Speaker 1: they've got to talk a very hawkish game, but we 175 00:09:08,559 --> 00:09:10,680 Speaker 1: think they're going to be less hawkish next year. That's 176 00:09:10,720 --> 00:09:13,920 Speaker 1: bullish for stocks, all right. So if we want to start, 177 00:09:14,440 --> 00:09:16,559 Speaker 1: you know, maybe dipping our toe into this market, if 178 00:09:16,559 --> 00:09:19,000 Speaker 1: we think most of the bear market maybe behind us, 179 00:09:19,000 --> 00:09:21,240 Speaker 1: what are some of the sectors that you and your 180 00:09:21,240 --> 00:09:23,960 Speaker 1: team are are kind of looking at. So we like 181 00:09:24,040 --> 00:09:26,480 Speaker 1: a lot of things that have been beaten up this year, 182 00:09:26,640 --> 00:09:29,200 Speaker 1: but we wouldn't be buying stocks just because they're beating up. 183 00:09:29,240 --> 00:09:31,840 Speaker 1: But the sectors that we like most right now, or financials, 184 00:09:31,840 --> 00:09:37,359 Speaker 1: consumer discretionary, we like select technology, communications services, medical technology 185 00:09:37,400 --> 00:09:40,720 Speaker 1: and products, and some industrial, so pretty broad based. The 186 00:09:40,760 --> 00:09:43,280 Speaker 1: one area that we're a little bit less enthusiastic has 187 00:09:43,280 --> 00:09:46,360 Speaker 1: been consumers staples right now, and we've owned a lot 188 00:09:46,400 --> 00:09:49,080 Speaker 1: of consumer staples going into the year. As they have 189 00:09:49,200 --> 00:09:51,120 Speaker 1: done their job, as they have gone up when the 190 00:09:51,160 --> 00:09:53,840 Speaker 1: market has gone down a lot, we've been scaling back 191 00:09:53,880 --> 00:09:56,280 Speaker 1: on them and we think that at this point they're 192 00:09:56,360 --> 00:09:59,280 Speaker 1: all about fully priced. We'd be taking that consumer staple 193 00:09:59,360 --> 00:10:01,560 Speaker 1: money off the tap able putting it into the areas 194 00:10:01,559 --> 00:10:04,760 Speaker 1: that I just highlighted. What about UM you know, the 195 00:10:04,840 --> 00:10:06,880 Speaker 1: last couple of days and this is I guess this 196 00:10:06,960 --> 00:10:09,520 Speaker 1: may be out of your universe, but we've seen Samsung 197 00:10:10,280 --> 00:10:13,800 Speaker 1: UM beat on the revenue side, still margin pressure, t 198 00:10:14,040 --> 00:10:17,120 Speaker 1: SMC beat on the revenue side, still margin pressure. Are 199 00:10:17,120 --> 00:10:18,840 Speaker 1: we going to see that this earning season in the 200 00:10:18,960 --> 00:10:22,760 Speaker 1: US texts as well? Well? You might continue to see 201 00:10:22,800 --> 00:10:24,959 Speaker 1: some margin pressure, But the real key is going to 202 00:10:25,080 --> 00:10:28,319 Speaker 1: be are they able to get their inputs and are 203 00:10:28,360 --> 00:10:30,960 Speaker 1: they able to produce their product? And is their demand 204 00:10:31,360 --> 00:10:33,080 Speaker 1: and if you can get through this quarter with a 205 00:10:33,160 --> 00:10:36,000 Speaker 1: reasonable demand outlook, we think a lot of semiconductors that 206 00:10:36,040 --> 00:10:39,480 Speaker 1: have been battered over the last six months are poised 207 00:10:39,480 --> 00:10:42,000 Speaker 1: to do a lot better. So we like Qualcom. They 208 00:10:42,080 --> 00:10:45,080 Speaker 1: just rebounded about twelve dollars in the last few days, 209 00:10:45,080 --> 00:10:47,240 Speaker 1: so I wouldn't chase it today, but we think that's 210 00:10:47,280 --> 00:10:49,720 Speaker 1: not goes a lot higher. Same thing with Texas Instruments. 211 00:10:49,720 --> 00:10:52,120 Speaker 1: We think it's a hundred and eighty to two hundred 212 00:10:52,160 --> 00:10:54,520 Speaker 1: dollar stock. You're getting a three percent yield. You're buying 213 00:10:54,520 --> 00:10:58,360 Speaker 1: it at about a hundred and fifty so and we 214 00:10:58,400 --> 00:11:00,600 Speaker 1: do like Cisco that that one has not moved yet, 215 00:11:00,640 --> 00:11:02,560 Speaker 1: and we think it really is well positioned for the 216 00:11:02,600 --> 00:11:05,640 Speaker 1: next twelve to eighteen months. It's a very inexpensive stock, 217 00:11:05,720 --> 00:11:08,959 Speaker 1: has a good yield. We think management is very much 218 00:11:09,000 --> 00:11:11,760 Speaker 1: on the ball in terms of maximizing shareholder value. And 219 00:11:11,800 --> 00:11:14,839 Speaker 1: we think they demand is pretty good. And as all 220 00:11:14,840 --> 00:11:17,560 Speaker 1: of a sudden their input costs come under control, which 221 00:11:17,559 --> 00:11:20,280 Speaker 1: we're expecting to happen in the next three to six months, 222 00:11:20,360 --> 00:11:22,200 Speaker 1: and they get more product and they're gonna be able 223 00:11:22,240 --> 00:11:24,319 Speaker 1: to ship out and meet that demand. Uh. And it's 224 00:11:24,320 --> 00:11:27,079 Speaker 1: at a really inexpensive price at about fourteen times earnings. 225 00:11:27,160 --> 00:11:29,760 Speaker 1: And David, you've gotten Meta on your list as well, 226 00:11:29,760 --> 00:11:32,559 Speaker 1: formerly known as Facebook. So much noise around that name. 227 00:11:32,600 --> 00:11:35,640 Speaker 1: How do you get comfortable with that? Well that that's 228 00:11:35,679 --> 00:11:39,040 Speaker 1: a great point. So we do not like Meta management. 229 00:11:39,080 --> 00:11:41,440 Speaker 1: We don't think Ziggerberger is a particularly good guy. We 230 00:11:41,480 --> 00:11:45,679 Speaker 1: don't like their uh ethics. However, it is one of 231 00:11:45,720 --> 00:11:48,520 Speaker 1: the most powerful brands in the world. You know, half 232 00:11:48,559 --> 00:11:51,600 Speaker 1: the population uses it every month. They have a great 233 00:11:51,640 --> 00:11:55,040 Speaker 1: advertising model. They also have a lot of levers to 234 00:11:55,120 --> 00:11:58,560 Speaker 1: control costs. Is advertising slows down this period and and 235 00:11:58,640 --> 00:12:01,400 Speaker 1: this is you know, the most critical factor. It tells 236 00:12:01,400 --> 00:12:03,720 Speaker 1: it about twelve times this year's earnings and that those 237 00:12:03,720 --> 00:12:07,320 Speaker 1: earnings that we think are understated. So powerful franchise, good 238 00:12:07,400 --> 00:12:10,520 Speaker 1: long term prospects at a great price. Uh, and we're 239 00:12:10,520 --> 00:12:12,440 Speaker 1: willing to put up with management that were a little 240 00:12:12,440 --> 00:12:15,559 Speaker 1: bit less enamored with that's uh. That's certainly a call 241 00:12:15,640 --> 00:12:17,880 Speaker 1: from some of the folks that are looking at that name. 242 00:12:18,360 --> 00:12:21,880 Speaker 1: David Kat's president and chief investment officer of Matrix Asset 243 00:12:21,920 --> 00:12:27,199 Speaker 1: Advisers that joins us. Well, the world, at least in 244 00:12:27,200 --> 00:12:30,800 Speaker 1: the Western world awoke to news of the horrific assassination 245 00:12:30,920 --> 00:12:35,400 Speaker 1: of former Japanese Prime Minister Shinzo abe Um, and I 246 00:12:35,440 --> 00:12:36,840 Speaker 1: think the market is trying to get a sense here 247 00:12:37,040 --> 00:12:40,439 Speaker 1: of what, if any, are the implications for Japanese policies, 248 00:12:41,000 --> 00:12:44,360 Speaker 1: politics and markets, and get some perspective there. We welcome 249 00:12:44,400 --> 00:12:49,839 Speaker 1: Ben Emmons Medley Global Advisors, Managing Director of Global macro strategy. Ben, 250 00:12:49,920 --> 00:12:53,280 Speaker 1: you're out with the note this morning after the news 251 00:12:53,320 --> 00:12:56,640 Speaker 1: became public. What are your thoughts there's relates to Japan 252 00:12:56,679 --> 00:13:01,160 Speaker 1: and its policies and politics. Hey, Paul, thanks for having me. Uh, 253 00:13:01,440 --> 00:13:03,800 Speaker 1: first of all, it's obviously an horrific event and it's 254 00:13:03,960 --> 00:13:07,400 Speaker 1: something that you don't wishue anyone to happen. Right, So 255 00:13:07,840 --> 00:13:11,520 Speaker 1: created Javan being in a major morning this today is 256 00:13:11,679 --> 00:13:13,920 Speaker 1: is you know, really a shock for that nation that 257 00:13:14,000 --> 00:13:16,760 Speaker 1: that that happens, because that doesn't as I actually had 258 00:13:16,840 --> 00:13:20,280 Speaker 1: happened at all or rare this this sort of event. 259 00:13:20,760 --> 00:13:24,240 Speaker 1: But yeah, there are implications, um, you know in in 260 00:13:24,400 --> 00:13:28,680 Speaker 1: Japanese politics, Abby was obviously significant influential of last decade. 261 00:13:29,080 --> 00:13:32,560 Speaker 1: His three arrows policy was really trying to move the 262 00:13:32,559 --> 00:13:36,200 Speaker 1: country out of the moon term slump of deflation with 263 00:13:36,320 --> 00:13:39,599 Speaker 1: some success, you know, because they actually are out of deflation. 264 00:13:39,960 --> 00:13:43,680 Speaker 1: But I think as as this unfortunate passing has happened, Um, 265 00:13:43,720 --> 00:13:45,880 Speaker 1: you know, you could at least think that Kashia, the 266 00:13:46,000 --> 00:13:50,200 Speaker 1: current Prime Minister, has more leeway within within this government 267 00:13:50,360 --> 00:13:54,360 Speaker 1: also towards the Little Democratic Party. What did they clash on, Ben? 268 00:13:54,840 --> 00:13:58,160 Speaker 1: What what did which direction did Kashida want to go 269 00:13:58,400 --> 00:14:02,120 Speaker 1: that Abbe was kind of hearing him away from Yeah, 270 00:14:02,160 --> 00:14:05,160 Speaker 1: I think it was all about like pro growth policies 271 00:14:05,200 --> 00:14:09,640 Speaker 1: and and versus redistribution of wealth. That that was the clashing. 272 00:14:09,800 --> 00:14:12,800 Speaker 1: And most of all that of course you have really 273 00:14:12,840 --> 00:14:15,959 Speaker 1: up lose mounetary and fiscal policy on the Abbe and 274 00:14:15,960 --> 00:14:19,880 Speaker 1: on the Koshibashi Kashida. That's say, could potentially be a 275 00:14:19,920 --> 00:14:24,640 Speaker 1: different tone, a different shift there in terms of like direction, 276 00:14:24,760 --> 00:14:28,120 Speaker 1: because there's a lot of disaffection now with with inflation 277 00:14:28,200 --> 00:14:32,120 Speaker 1: and the weekend in Japan. So will will she that 278 00:14:32,160 --> 00:14:35,840 Speaker 1: could uh be successful now and you know moving to 279 00:14:35,880 --> 00:14:38,200 Speaker 1: the Bank of Chipan and Ministry Finance into different directions 280 00:14:38,800 --> 00:14:40,960 Speaker 1: that's to be seeing because they do have policy discretion, 281 00:14:41,080 --> 00:14:44,720 Speaker 1: but that the influence will become greater now because you 282 00:14:44,760 --> 00:14:48,440 Speaker 1: know that still had too much rely on Abby's political 283 00:14:48,480 --> 00:14:51,520 Speaker 1: support for what he was doing. And that's I think clear. 284 00:14:51,600 --> 00:14:55,880 Speaker 1: So the end yesterday did rally on that that unfortunate 285 00:14:55,920 --> 00:14:59,640 Speaker 1: news somewhat of in the small indication of yes, there's 286 00:14:59,680 --> 00:15:03,680 Speaker 1: going to at some point a real policy effort here 287 00:15:03,680 --> 00:15:06,640 Speaker 1: to get not let the end get so weak that 288 00:15:06,680 --> 00:15:10,160 Speaker 1: it would lead to inspiring inflation in Japan. So what 289 00:15:10,560 --> 00:15:14,200 Speaker 1: is the economic outlook ben for UM Japan we've seen 290 00:15:14,240 --> 00:15:16,920 Speaker 1: just obviously you called out the weakness in the end 291 00:15:16,960 --> 00:15:19,080 Speaker 1: that that we've all seen here. I mean, is there 292 00:15:19,200 --> 00:15:21,600 Speaker 1: what are the growth prospects for the Japanese economy over 293 00:15:21,600 --> 00:15:25,440 Speaker 1: the next several years. It's it's not a good prospect 294 00:15:25,480 --> 00:15:29,120 Speaker 1: because Japan is dealing with what we say in terms 295 00:15:29,120 --> 00:15:32,360 Speaker 1: of trade shock, because of the energy situation and the 296 00:15:32,360 --> 00:15:35,840 Speaker 1: weakness of the end. Right, you're getting important inflation plus 297 00:15:35,960 --> 00:15:40,520 Speaker 1: high energy, and in addition to that within Japan there's 298 00:15:40,840 --> 00:15:44,080 Speaker 1: a natural caution, right, and particularly prices start to rise. 299 00:15:44,840 --> 00:15:47,960 Speaker 1: So I think it's it's a very modest outlook, if 300 00:15:47,960 --> 00:15:52,760 Speaker 1: not negative outlook. And therefore this and then if you're 301 00:15:52,760 --> 00:15:55,680 Speaker 1: going towards the direction that you're going to restrain fiscal 302 00:15:55,720 --> 00:15:58,760 Speaker 1: policy over time, then it's going to be a weak, 303 00:15:58,920 --> 00:16:02,520 Speaker 1: weak growth outlook, which could lead to return of disflation 304 00:16:02,560 --> 00:16:06,880 Speaker 1: in Japan. One of the key questions that investors probably 305 00:16:06,920 --> 00:16:10,280 Speaker 1: have is will the Bank of Japan stick to zero 306 00:16:10,360 --> 00:16:14,040 Speaker 1: point to five um? You know, because we've seen a 307 00:16:14,080 --> 00:16:17,280 Speaker 1: lot of shorting of the yen and of jgbs to 308 00:16:17,360 --> 00:16:20,360 Speaker 1: try and push the Bank of Japan. Maybe the betting 309 00:16:20,400 --> 00:16:24,200 Speaker 1: that they can't hold, what do you think. Yeah, so 310 00:16:24,320 --> 00:16:27,640 Speaker 1: far they have been able to uh keep that twenty 311 00:16:27,640 --> 00:16:30,960 Speaker 1: five basis points right where it is because of that 312 00:16:31,040 --> 00:16:35,080 Speaker 1: unlimited operation that the market doesn't seem to be able 313 00:16:35,120 --> 00:16:39,640 Speaker 1: to really conquer that Rsian. They can't fight as and 314 00:16:39,720 --> 00:16:42,400 Speaker 1: not with enough fire power which as yet. But it 315 00:16:42,480 --> 00:16:45,800 Speaker 1: comes down to Matt that that s c EN continues 316 00:16:45,840 --> 00:16:49,560 Speaker 1: to weaken because they haven't drawn any red line at 317 00:16:50,320 --> 00:16:52,640 Speaker 1: five and the en maybe not even a one forty 318 00:16:52,640 --> 00:16:56,200 Speaker 1: two to the yen two dollar. It could lead eventually 319 00:16:56,200 --> 00:16:59,560 Speaker 1: that yen to the dollars. You really should change on 320 00:16:59,600 --> 00:17:02,200 Speaker 1: the bank event policy that they're going to change yoko 321 00:17:02,320 --> 00:17:04,960 Speaker 1: control or does it mean likely means the midpoint of 322 00:17:05,000 --> 00:17:08,080 Speaker 1: that range will shift to a positive number and as 323 00:17:08,119 --> 00:17:11,800 Speaker 1: a result, they're going to let that band maybe wide 324 00:17:11,880 --> 00:17:15,240 Speaker 1: into and then you get that change. I don't expect 325 00:17:15,240 --> 00:17:16,919 Speaker 1: that they will do what the Swiss Central Bank did 326 00:17:16,960 --> 00:17:20,080 Speaker 1: in twenty fifteen. Suddenly you know that that the your 327 00:17:20,160 --> 00:17:23,720 Speaker 1: Swiss back the couple, right, It's not like that that 328 00:17:23,760 --> 00:17:26,800 Speaker 1: they're more cautious. So it does take us to a 329 00:17:26,800 --> 00:17:30,520 Speaker 1: weak again to altoly get a change in BUJ policy. 330 00:17:30,880 --> 00:17:33,600 Speaker 1: It's just that this political change is maybe happening as 331 00:17:33,640 --> 00:17:38,320 Speaker 1: a result of the horrific event good potentially influence that 332 00:17:38,320 --> 00:17:40,320 Speaker 1: that path to to that change of the Bank of 333 00:17:40,400 --> 00:17:43,600 Speaker 1: Javan policy of Yoko control. And then let's switch gears 334 00:17:43,800 --> 00:17:47,200 Speaker 1: to the US had some job numbers out today better 335 00:17:47,880 --> 00:17:51,480 Speaker 1: than expected in non farm payrolls, although showing the client 336 00:17:51,520 --> 00:17:54,520 Speaker 1: from the prior month. What's your takeaway and and what 337 00:17:54,640 --> 00:17:59,760 Speaker 1: it might mean how the Federal Reserve might interpret these numbers? Yeah, this, 338 00:17:59,760 --> 00:18:02,439 Speaker 1: this means all that the fact must go on, right, 339 00:18:02,480 --> 00:18:05,520 Speaker 1: There's no reason to think of any pause or any 340 00:18:05,520 --> 00:18:09,600 Speaker 1: downshifting and tightening whatsoever. Definitely not between now and September. 341 00:18:09,880 --> 00:18:13,480 Speaker 1: And if anything, the wage pressures in in this report 342 00:18:13,600 --> 00:18:15,960 Speaker 1: are solid, right, and if it continues to be confirmed 343 00:18:15,960 --> 00:18:17,800 Speaker 1: by employment costs in the action on the measures that 344 00:18:18,119 --> 00:18:22,040 Speaker 1: they're off, then the possibility of even a larger hike 345 00:18:22,119 --> 00:18:27,680 Speaker 1: in September is there, right, The market is carefully pricing that. Um. 346 00:18:27,720 --> 00:18:30,560 Speaker 1: It also means that they, as they minute is outlined 347 00:18:30,600 --> 00:18:33,280 Speaker 1: that they could move to even more restrictive stands if 348 00:18:33,359 --> 00:18:37,359 Speaker 1: it warranted. So having strong payballs allows them to do that. Right, 349 00:18:37,640 --> 00:18:40,240 Speaker 1: We're not actually in the stagflation environment, so to speak. 350 00:18:40,400 --> 00:18:43,200 Speaker 1: Like from the seventies, we're more in environment of yeah, 351 00:18:43,400 --> 00:18:46,399 Speaker 1: economy cooling off and high inflation, but pay all strong, 352 00:18:47,000 --> 00:18:50,560 Speaker 1: so not a session therefore enough room to putie with 353 00:18:50,640 --> 00:18:53,000 Speaker 1: these large rate highs of seven by base points. So 354 00:18:53,240 --> 00:18:56,280 Speaker 1: the cements July seven by base points certainly fifty base 355 00:18:56,320 --> 00:19:00,479 Speaker 1: points in September or perhaps more given that at you know, 356 00:19:00,960 --> 00:19:03,639 Speaker 1: the momentum the label markets in Mainstrem, how far do 357 00:19:03,680 --> 00:19:06,399 Speaker 1: you think they're gonna go? Ben and uh, you know, 358 00:19:06,440 --> 00:19:09,000 Speaker 1: could they turn around and be headed back down by 359 00:19:09,040 --> 00:19:12,120 Speaker 1: the end of next year. That's what the market tries 360 00:19:12,160 --> 00:19:14,760 Speaker 1: to price. But I think that's actually a technical reason. 361 00:19:14,840 --> 00:19:17,920 Speaker 1: It's more like the markets actually priced in complete front 362 00:19:17,920 --> 00:19:20,080 Speaker 1: loading of this fat policy that we're in right now, 363 00:19:20,160 --> 00:19:22,560 Speaker 1: meaning we're bringing up the funds rate as fast as 364 00:19:22,560 --> 00:19:25,560 Speaker 1: possible to three three and a half percent um, and 365 00:19:25,600 --> 00:19:28,119 Speaker 1: therefore you seeing that mechanicals slide down in the EU 366 00:19:28,200 --> 00:19:30,719 Speaker 1: at all the futures. So I think it's more that 367 00:19:30,760 --> 00:19:32,520 Speaker 1: we have to get to three three and a half percent. 368 00:19:32,560 --> 00:19:35,680 Speaker 1: That's what they have indicated a few is restrictive policy. 369 00:19:36,119 --> 00:19:38,560 Speaker 1: From there, it would be that even more restrictive as 370 00:19:38,560 --> 00:19:41,160 Speaker 1: the minutes outline, would that be four percent? That's still 371 00:19:41,160 --> 00:19:43,840 Speaker 1: a bit open question, but they're keeping that clearly on 372 00:19:43,880 --> 00:19:45,360 Speaker 1: the table. So I think three three and a half 373 00:19:45,359 --> 00:19:48,720 Speaker 1: per cent is your initial target, which maybe as early 374 00:19:48,720 --> 00:19:51,080 Speaker 1: as September, right, if we're going to stay in this 375 00:19:51,200 --> 00:19:54,720 Speaker 1: strong labor market. All right, Ben, great stuff. Really appreciate 376 00:19:54,720 --> 00:19:58,800 Speaker 1: getting your perspective there. Ben Emmons Medally Global Advisors. He's 377 00:19:58,800 --> 00:20:05,840 Speaker 1: a managing director of a global macro strategy. All I 378 00:20:05,840 --> 00:20:07,840 Speaker 1: want to get back to this news coming out of Japan, 379 00:20:07,960 --> 00:20:14,800 Speaker 1: the assassination of Prime Minister Shinzo Abe. Andrew Monaghan, he's 380 00:20:14,840 --> 00:20:19,040 Speaker 1: the Asia Credit Managing editor for Bloomberg News. He's based 381 00:20:19,080 --> 00:20:21,280 Speaker 1: in Hong Kong. Andrew, thanks so much for taking the 382 00:20:21,320 --> 00:20:24,080 Speaker 1: time to join us here. I just give us our 383 00:20:24,119 --> 00:20:26,440 Speaker 1: listeners here in the US and around the world a 384 00:20:26,800 --> 00:20:32,520 Speaker 1: sense of how profound this event is in Japan. Sure, 385 00:20:32,640 --> 00:20:36,560 Speaker 1: good morning there. I happened to be in Tokyo this week, 386 00:20:36,760 --> 00:20:39,879 Speaker 1: and it's really a tragedy that's all the more striking 387 00:20:39,960 --> 00:20:43,760 Speaker 1: because of the rarity of this kind of violence here. 388 00:20:44,359 --> 00:20:46,960 Speaker 1: I think that's the first thing that stands out so 389 00:20:47,119 --> 00:20:50,800 Speaker 1: much to so many people in Japan. Gun violence and 390 00:20:50,840 --> 00:20:55,160 Speaker 1: political violence is exceedingly rare. There were no gun related 391 00:20:55,200 --> 00:20:59,680 Speaker 1: injuries or deaths in Tokyo last year, which is really 392 00:20:59,680 --> 00:21:04,120 Speaker 1: strike zero. I mean, that's that bears repeating. There were 393 00:21:04,200 --> 00:21:08,240 Speaker 1: no gun deaths in Tokyo last year. UM, And I 394 00:21:08,240 --> 00:21:12,439 Speaker 1: don't know how it is nationwide, but I think you 395 00:21:12,440 --> 00:21:15,719 Speaker 1: could still count them on one hand. And meanwhile, in 396 00:21:15,720 --> 00:21:19,040 Speaker 1: this country, and obviously we have a history of um, 397 00:21:19,080 --> 00:21:21,439 Speaker 1: you know, gun violence, but we're looking at something like 398 00:21:21,520 --> 00:21:30,840 Speaker 1: forty five thousand. Yeah, it's just really unbelievable. And there 399 00:21:30,960 --> 00:21:35,399 Speaker 1: was no assassination attempt that killed the Japanese prime minister 400 00:21:35,600 --> 00:21:38,520 Speaker 1: since World War Two as well, So all these things 401 00:21:38,560 --> 00:21:41,760 Speaker 1: together made it really something that no one could What 402 00:21:41,800 --> 00:21:46,720 Speaker 1: about whatever happened here? What about um the man himself, Andrew. 403 00:21:46,760 --> 00:21:50,439 Speaker 1: I mean, I know you're a credit guy, so you're not, 404 00:21:50,600 --> 00:21:54,680 Speaker 1: you know, a political scientist, but this the Hobby family 405 00:21:54,800 --> 00:21:58,320 Speaker 1: and his maternal grandfather I think was prime minister as well, 406 00:21:58,720 --> 00:22:06,399 Speaker 1: they're just a dynasty in terms of politics and his 407 00:22:06,400 --> 00:22:10,399 Speaker 1: his specifically Shinzo Abe's policy. Larry Summers said, we're going 408 00:22:10,440 --> 00:22:14,200 Speaker 1: to be studying this for for years, um in terms 409 00:22:14,359 --> 00:22:18,919 Speaker 1: of you know, just cutting edge, trying out something new, um, 410 00:22:18,960 --> 00:22:23,040 Speaker 1: and the amazing effects that it had. Yeah, he really 411 00:22:23,080 --> 00:22:31,120 Speaker 1: had a vision that was singular. He was a a 412 00:22:31,200 --> 00:22:35,280 Speaker 1: security hawk. But I think what he'll be remembered even 413 00:22:35,320 --> 00:22:38,960 Speaker 1: more for is the fact that it was a fiscal dove. 414 00:22:39,960 --> 00:22:46,159 Speaker 1: He had his policy Albonomics, which relied on massive fiscal 415 00:22:46,240 --> 00:22:52,160 Speaker 1: spending and very cheap money that the micro Japan was 416 00:22:52,160 --> 00:22:56,800 Speaker 1: was able to provide after the appointment of Colvoda, and 417 00:22:58,200 --> 00:23:02,040 Speaker 1: you know, it just was a a real epic change 418 00:23:02,080 --> 00:23:06,640 Speaker 1: for Japan after two decades of stagnation economically. The Bank 419 00:23:06,720 --> 00:23:09,919 Speaker 1: of Japan had been trying to achieve to percent inflation, 420 00:23:10,040 --> 00:23:15,399 Speaker 1: which in the context of two sounds almost quaint in 421 00:23:15,400 --> 00:23:18,479 Speaker 1: a sense, but it was so hard in Japan for 422 00:23:18,520 --> 00:23:21,439 Speaker 1: so long because prices had been following it was the 423 00:23:21,480 --> 00:23:27,200 Speaker 1: opposite problem, and they really wanted to have companies raise wages. 424 00:23:27,920 --> 00:23:31,560 Speaker 1: That's something that even though he did achieve some measures 425 00:23:31,600 --> 00:23:35,879 Speaker 1: of success stimulating the economy, the wage growth never was 426 00:23:36,000 --> 00:23:40,760 Speaker 1: quite there. But the you know, the lasting political influence 427 00:23:41,200 --> 00:23:43,719 Speaker 1: itself that he has as the leader of the largest 428 00:23:43,760 --> 00:23:49,320 Speaker 1: faction of the ruling LDP party meant that he continued 429 00:23:49,359 --> 00:23:52,359 Speaker 1: to exert a lot of influence politically even after he 430 00:23:52,440 --> 00:23:56,800 Speaker 1: stepped down. Do we expect or does the region expect 431 00:23:56,840 --> 00:24:01,439 Speaker 1: any change in Japanese policies at an AMICA. Otherwise with 432 00:24:01,560 --> 00:24:05,679 Speaker 1: this event, it's hard to say. I think people are 433 00:24:05,720 --> 00:24:09,240 Speaker 1: still digesting the tragedy first of all, but you know, 434 00:24:09,359 --> 00:24:11,960 Speaker 1: as as traders are looking at what they're going to 435 00:24:12,040 --> 00:24:14,280 Speaker 1: do next week and in the week at weeks ahead, 436 00:24:14,680 --> 00:24:19,679 Speaker 1: there's a camp that seems to think that in the 437 00:24:19,760 --> 00:24:22,480 Speaker 1: loss of this voice, it was such a huge supporter 438 00:24:22,680 --> 00:24:27,320 Speaker 1: for the super easy monetary policy, could have some effect 439 00:24:27,760 --> 00:24:30,480 Speaker 1: in an error in which inflation globally is such a 440 00:24:30,520 --> 00:24:34,320 Speaker 1: serious problem in central banks are getting increasingly forced to 441 00:24:34,440 --> 00:24:37,360 Speaker 1: raise rates. The Bank of Japan has been a kind 442 00:24:37,359 --> 00:24:40,880 Speaker 1: of hold out, and that's called the huge turbulence here 443 00:24:40,880 --> 00:24:44,320 Speaker 1: in the financial markets in recent months, with a lot 444 00:24:44,400 --> 00:24:46,960 Speaker 1: of traders betting that the Bank of Japan won't be 445 00:24:47,000 --> 00:24:50,760 Speaker 1: able to hold out too much longer. And so one 446 00:24:51,200 --> 00:24:56,840 Speaker 1: view is that with a sadly gone that the Bank 447 00:24:56,840 --> 00:24:59,199 Speaker 1: of Japan could could say it's a little bit more 448 00:24:59,200 --> 00:25:04,640 Speaker 1: pressure now. There is another view, though, and this assassination 449 00:25:04,720 --> 00:25:08,440 Speaker 1: came before the Upper House elections this weekend. He thought 450 00:25:08,440 --> 00:25:11,520 Speaker 1: they was out campaigning for them, in fact, and that 451 00:25:11,840 --> 00:25:14,320 Speaker 1: is that there could be a kind of sympathy vote 452 00:25:14,359 --> 00:25:17,560 Speaker 1: for the party that already been expected to women the 453 00:25:17,640 --> 00:25:20,879 Speaker 1: Upper House anyway, and if that should happen, then the 454 00:25:21,000 --> 00:25:24,960 Speaker 1: view that that, you know, the Abanatics style of policy 455 00:25:25,040 --> 00:25:28,400 Speaker 1: could continue particually as it pretends the monetary policy could 456 00:25:28,480 --> 00:25:31,840 Speaker 1: hold sway. Sure. I mean, look, after Kennedy was assassinated, 457 00:25:32,520 --> 00:25:35,600 Speaker 1: LBJ pushed through the Civil Rights Act that was so 458 00:25:35,640 --> 00:25:40,399 Speaker 1: important to JFK. And but we had yachm Fell's on 459 00:25:40,640 --> 00:25:46,200 Speaker 1: earlier Andrew from from HIMCO and he said it wouldn't be. Uh, 460 00:25:47,119 --> 00:25:49,880 Speaker 1: it is a possibility that the Central Bank, at least 461 00:25:49,880 --> 00:25:52,080 Speaker 1: the b o J lets the they have a twenty 462 00:25:52,119 --> 00:25:55,639 Speaker 1: five basis point cap and they let it rise to fifty. 463 00:25:56,080 --> 00:25:59,240 Speaker 1: That wouldn't be I'm hearing from so many people today 464 00:25:59,280 --> 00:26:02,960 Speaker 1: as sort of earth shattering as when the s n 465 00:26:03,040 --> 00:26:07,640 Speaker 1: B let their pegs slip. Do you agree that's right? Yeah? 466 00:26:07,680 --> 00:26:10,719 Speaker 1: I think there has been a lot of sense among 467 00:26:11,320 --> 00:26:15,040 Speaker 1: bond traders in particular in the past few months that 468 00:26:15,119 --> 00:26:20,320 Speaker 1: this would be coming at some point. Um, so you know, 469 00:26:20,440 --> 00:26:25,399 Speaker 1: the sequence of events I guess is is that you know, 470 00:26:25,480 --> 00:26:28,440 Speaker 1: the market has kind of been preparing itself at least 471 00:26:28,440 --> 00:26:31,679 Speaker 1: in pockets or something like this, or the possibility of it. 472 00:26:31,840 --> 00:26:33,800 Speaker 1: And if you you are as a view that the 473 00:26:33,880 --> 00:26:40,000 Speaker 1: said turn of events, they could increase the chances that 474 00:26:40,920 --> 00:26:43,399 Speaker 1: then you know, you may be expecting that the end 475 00:26:43,600 --> 00:26:47,160 Speaker 1: would bounce back that the end has has fallen dramatically 476 00:26:47,840 --> 00:26:53,119 Speaker 1: in recent months in this year, and for you know, 477 00:26:53,160 --> 00:26:55,600 Speaker 1: for an expert driven economy, obviously that has a lot 478 00:26:55,640 --> 00:27:00,720 Speaker 1: of consequences. All right, right now, let's appreciate it. Andrew Monahan, Asia, 479 00:27:00,760 --> 00:27:04,520 Speaker 1: Credit Managing Editor, Bloomberg News journing us giving us the latest. 480 00:27:08,760 --> 00:27:10,800 Speaker 1: I want to kind of get back to this job 481 00:27:10,960 --> 00:27:13,800 Speaker 1: number because again better than expected, although showing some some 482 00:27:13,880 --> 00:27:18,760 Speaker 1: slowness since prior numbers. Joanie Bailey, chief workforce analyst at 483 00:27:18,760 --> 00:27:22,640 Speaker 1: Employee Bridge Joint looks pretty good, still pretty good, let's 484 00:27:22,680 --> 00:27:25,040 Speaker 1: be fair. I mean, if I type in, I usually 485 00:27:25,080 --> 00:27:27,919 Speaker 1: do ECO US or type W E C O and 486 00:27:27,960 --> 00:27:31,280 Speaker 1: just punch up the American flag. Um, we were looking 487 00:27:31,480 --> 00:27:35,240 Speaker 1: at three seventy two thousand jobs added, Joanie. That's way 488 00:27:35,240 --> 00:27:37,840 Speaker 1: better than the two sixty five and the survey and 489 00:27:37,840 --> 00:27:40,560 Speaker 1: the whisper number was even lower. But it's only a 490 00:27:40,680 --> 00:27:43,920 Speaker 1: little bit off from the three ninety that we had 491 00:27:44,080 --> 00:27:47,200 Speaker 1: in the previous month. UM, and that was revised up, 492 00:27:47,240 --> 00:27:50,280 Speaker 1: so How does it look to you? I think this 493 00:27:50,480 --> 00:27:53,879 Speaker 1: was a really strong report. You know, the labor market 494 00:27:54,119 --> 00:27:58,200 Speaker 1: continues to be the right spot in the economy. That 495 00:27:58,320 --> 00:28:02,560 Speaker 1: demand is so strong for workers. Um. You know, eleven 496 00:28:02,600 --> 00:28:07,040 Speaker 1: point three million open jobs in the United States, so 497 00:28:07,119 --> 00:28:10,440 Speaker 1: there's really like two jobs for every one person that's 498 00:28:10,440 --> 00:28:13,600 Speaker 1: out there looking. But we have a challenge. We have 499 00:28:13,640 --> 00:28:17,720 Speaker 1: a big challenge that we can't get people back to work. UM, 500 00:28:17,760 --> 00:28:21,359 Speaker 1: and I think that will flow us down. UM is 501 00:28:21,400 --> 00:28:24,920 Speaker 1: the labor participation rate we continue to just cover at 502 00:28:24,960 --> 00:28:29,560 Speaker 1: that sixty two. We're really not seeing much movement in 503 00:28:29,680 --> 00:28:33,199 Speaker 1: that area, and that's a big challenge. How about that 504 00:28:33,280 --> 00:28:36,239 Speaker 1: five point one percent wage year a year number? How 505 00:28:36,240 --> 00:28:39,200 Speaker 1: did you What did you make of that? Yeah, you know, 506 00:28:39,280 --> 00:28:42,960 Speaker 1: I think we've seen that kind of as a steady mark. 507 00:28:43,720 --> 00:28:46,400 Speaker 1: Uh in recent reports. You know that we're looking at 508 00:28:46,400 --> 00:28:49,880 Speaker 1: five percent year every year. Uh. The challenges is that 509 00:28:49,960 --> 00:28:55,400 Speaker 1: wages are still lagging, you know, consumer inflation. However, I 510 00:28:55,480 --> 00:28:58,600 Speaker 1: don't think we're going to see much movement with wages. 511 00:28:59,400 --> 00:29:03,720 Speaker 1: Companies are certainly focused on their earnings, even though they 512 00:29:03,760 --> 00:29:07,480 Speaker 1: have job openings and they're trying to recruit talent. We're 513 00:29:07,560 --> 00:29:11,920 Speaker 1: not seeing a lot of upward movement in wages right now. 514 00:29:12,200 --> 00:29:15,640 Speaker 1: So my prediction would be that we'll just continue to 515 00:29:15,760 --> 00:29:20,120 Speaker 1: see wage growth kind of stay at these levels, um, 516 00:29:20,160 --> 00:29:25,760 Speaker 1: just due to the uncertainty in the economic um, you know, 517 00:29:25,920 --> 00:29:30,080 Speaker 1: conditions with the market and um, you know, just everything 518 00:29:30,080 --> 00:29:32,640 Speaker 1: else that's going on even in our world. UM, that 519 00:29:32,680 --> 00:29:35,320 Speaker 1: does create some uncertainty for employers. So I don't think 520 00:29:35,320 --> 00:29:38,000 Speaker 1: we're going to see a lot more movement in that area. 521 00:29:38,240 --> 00:29:41,320 Speaker 1: So not keeping up though with inflation, right, I mean, 522 00:29:41,360 --> 00:29:44,080 Speaker 1: we we've seen decent gains five percent, but we're looking 523 00:29:44,080 --> 00:29:49,280 Speaker 1: at eight nine percent inflation right. Definitely not keeping up. 524 00:29:49,280 --> 00:29:52,680 Speaker 1: And I think that's a real challenge for workers, UM 525 00:29:52,840 --> 00:29:55,680 Speaker 1: is that they are feeling it, you know, at the 526 00:29:55,720 --> 00:29:59,600 Speaker 1: gas pumps, at the grocery store, you know, going out 527 00:29:59,720 --> 00:30:02,800 Speaker 1: to eat or grab something. Everything is costing more, so 528 00:30:02,880 --> 00:30:07,800 Speaker 1: their dollar isn't going as far. And UM, I guess 529 00:30:07,800 --> 00:30:10,920 Speaker 1: that leads me to the point of questioning why we're 530 00:30:10,920 --> 00:30:15,040 Speaker 1: not seeing more people enter back into the workforce. I 531 00:30:15,080 --> 00:30:18,040 Speaker 1: would think that that would be a trend to watch 532 00:30:18,120 --> 00:30:21,080 Speaker 1: for in future reports. If wages kind of stay the 533 00:30:21,120 --> 00:30:25,640 Speaker 1: same but inflation continues to climb, I would expect that 534 00:30:26,800 --> 00:30:29,880 Speaker 1: I would participate in the labor force and actually want 535 00:30:29,920 --> 00:30:32,800 Speaker 1: to catch work. So that's something I'm going to be 536 00:30:32,840 --> 00:30:37,160 Speaker 1: paying attention to in in future reports. But right now 537 00:30:37,200 --> 00:30:39,959 Speaker 1: that remains a pretty big challenge for us. So we're 538 00:30:40,000 --> 00:30:43,760 Speaker 1: gonna have a company earnings and started in earnest next week, 539 00:30:43,840 --> 00:30:45,960 Speaker 1: Joy And I wonder if we're going to still hear 540 00:30:46,640 --> 00:30:51,360 Speaker 1: CEOs lament the fact that they can't hire, attract, and 541 00:30:51,400 --> 00:30:55,000 Speaker 1: retain the workforce that they need. Is that still a 542 00:30:56,240 --> 00:30:59,880 Speaker 1: big big issue for the companies you talk to? Yeah, 543 00:31:00,160 --> 00:31:03,920 Speaker 1: definitely is UM. There is a strong demand really in 544 00:31:04,000 --> 00:31:08,440 Speaker 1: all sectors UM. Though we have heard over the last 545 00:31:08,440 --> 00:31:12,200 Speaker 1: thirty days. You know, certainly some rumblings about layoffs in 546 00:31:12,240 --> 00:31:16,920 Speaker 1: the tech sector, UM or automotives, but I think those 547 00:31:17,640 --> 00:31:22,479 Speaker 1: UM are unique and you know, unique circumstances across the board. 548 00:31:23,400 --> 00:31:28,160 Speaker 1: The demand for workers is very strong and they're continued. 549 00:31:28,560 --> 00:31:31,800 Speaker 1: You know, employers are really continuing to have challenges with 550 00:31:31,960 --> 00:31:36,280 Speaker 1: finding workers and retaining their current staff. You know that 551 00:31:36,520 --> 00:31:40,240 Speaker 1: the actual quits rate is still at a pretty all 552 00:31:40,320 --> 00:31:42,880 Speaker 1: time high. People realize there are a lot of jobs 553 00:31:42,920 --> 00:31:45,560 Speaker 1: out there, thinking the grass might be greener, maybe they 554 00:31:45,600 --> 00:31:47,959 Speaker 1: could go somewhere else, make a little bit more money. 555 00:31:48,200 --> 00:31:50,760 Speaker 1: They're not afraid to quit their job because there's there's 556 00:31:50,800 --> 00:31:54,320 Speaker 1: a lot of opportunity. But but there's still a disconnect 557 00:31:54,400 --> 00:31:58,400 Speaker 1: to with the skills gap in our country. Many of 558 00:31:58,440 --> 00:32:05,240 Speaker 1: the jobs that exist today require specific education, skills training, UM, 559 00:32:05,320 --> 00:32:08,840 Speaker 1: and that's something that we need to get workers, you know, 560 00:32:08,960 --> 00:32:11,920 Speaker 1: up to speed with in order to meet that demand. UM, 561 00:32:12,000 --> 00:32:14,560 Speaker 1: not only for today but certainly in the future. Johnny, 562 00:32:14,600 --> 00:32:18,160 Speaker 1: where the biggest where the biggest holes when you look 563 00:32:18,160 --> 00:32:23,440 Speaker 1: out there at UM what employers want and what employees 564 00:32:23,480 --> 00:32:27,560 Speaker 1: potential employees don't have. I mean I look for example, 565 00:32:27,640 --> 00:32:30,880 Speaker 1: at UM you know, job sites, and see that coders 566 00:32:30,920 --> 00:32:34,560 Speaker 1: are making four hundred, five hundred thousand dollars a year 567 00:32:34,560 --> 00:32:40,040 Speaker 1: and they're not even bosses. UM. But obviously I can't code, 568 00:32:40,520 --> 00:32:43,120 Speaker 1: but you could learn how to code. There's lots of opportunities, 569 00:32:44,560 --> 00:32:47,840 Speaker 1: old chick up a new skill. Coding is a great 570 00:32:47,880 --> 00:32:50,040 Speaker 1: field to get into. I I spend some of my 571 00:32:50,120 --> 00:32:54,760 Speaker 1: time talking to high school students and college students and 572 00:32:54,760 --> 00:32:57,240 Speaker 1: giving them advice on you know, what fields are going 573 00:32:57,280 --> 00:32:59,000 Speaker 1: to be good. Of course it needs to align with 574 00:32:59,040 --> 00:33:02,200 Speaker 1: your interests. But voting UM anything really in the I 575 00:33:02,400 --> 00:33:05,760 Speaker 1: T or the STEM field. My interests are getting paid 576 00:33:05,840 --> 00:33:10,080 Speaker 1: for dollars a year for typing all day. That's an 577 00:33:10,080 --> 00:33:12,680 Speaker 1: interest of mine. But but you might never have that 578 00:33:12,760 --> 00:33:15,320 Speaker 1: job satisfaction if you don't love to do it. So 579 00:33:15,360 --> 00:33:19,200 Speaker 1: you've got to find that combination right of both. Um, 580 00:33:19,240 --> 00:33:22,720 Speaker 1: But there's a you know there are there isn't demand 581 00:33:23,080 --> 00:33:26,800 Speaker 1: in so many sectors. You know, truck drivers, they're making 582 00:33:27,760 --> 00:33:32,520 Speaker 1: very good earnings and income, and we can't find enough 583 00:33:32,520 --> 00:33:38,720 Speaker 1: truck drivers. UM, trade and transportation, that sector has two 584 00:33:38,800 --> 00:33:42,440 Speaker 1: million open jobs. I mean truck truck driving literally aligns 585 00:33:42,480 --> 00:33:46,400 Speaker 1: with my interests. But again it's not as easy as 586 00:33:46,400 --> 00:33:49,719 Speaker 1: it sounds. I mean, getting a commercial driver's license is 587 00:33:50,400 --> 00:33:52,960 Speaker 1: and driving a truck around with a big trailer is 588 00:33:53,000 --> 00:33:57,240 Speaker 1: hard work. I can't even tew a lawnmower. Yes, it 589 00:33:57,360 --> 00:34:00,840 Speaker 1: might be challenging, but there are opportunities. There is training 590 00:34:01,240 --> 00:34:05,480 Speaker 1: health care. Again you need specific training, education, experience. But 591 00:34:05,720 --> 00:34:09,719 Speaker 1: such a great field to be in and obviously not 592 00:34:09,840 --> 00:34:14,080 Speaker 1: going away. UM as we have an aging population. Um, 593 00:34:14,120 --> 00:34:17,480 Speaker 1: you know, the construction jobs have been picking up. I 594 00:34:17,520 --> 00:34:20,960 Speaker 1: was looking at the data on construction jobs and there 595 00:34:20,960 --> 00:34:25,680 Speaker 1: are more construction jobs today than there were this time 596 00:34:25,800 --> 00:34:30,440 Speaker 1: last year. So um, really it's all across the board. 597 00:34:30,520 --> 00:34:34,800 Speaker 1: The professional and business sector obviously has a tremendous amount 598 00:34:34,800 --> 00:34:37,920 Speaker 1: of opportunity, but there are also jobs, you know, the 599 00:34:38,000 --> 00:34:41,480 Speaker 1: hourly jobs and leisure and hospitality, retail. You're not going 600 00:34:41,560 --> 00:34:44,720 Speaker 1: to make five hundred thousand a year in those roles, 601 00:34:45,160 --> 00:34:47,600 Speaker 1: but there are opportunities out there that don't require a 602 00:34:47,640 --> 00:34:50,200 Speaker 1: lot of skills and can get you back to work too, 603 00:34:50,320 --> 00:34:54,600 Speaker 1: so um, you know, just tremendous opportunity. We really need 604 00:34:54,640 --> 00:34:57,880 Speaker 1: the workers absolutely, all right, Jonny, thank you so much. 605 00:34:57,920 --> 00:35:02,040 Speaker 1: We really appreciated. Johny Vilely, chief workforce Analysts at employ Bridge, 606 00:35:04,200 --> 00:35:07,319 Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can 607 00:35:07,360 --> 00:35:11,160 Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever 608 00:35:11,239 --> 00:35:14,880 Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 609 00:35:15,160 --> 00:35:18,960 Speaker 1: at Matt Miller at on Ball Sweeney I'm on Twitter 610 00:35:19,040 --> 00:35:21,879 Speaker 1: at pt Sweeney. Before the podcast, you can always catch 611 00:35:21,960 --> 00:35:23,479 Speaker 1: us worldwide at Bloomberg Radio.