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Speaker 2: People were like, who is Claudius Sam? Like who is she?
Speaker 2: Who is that one? Dennison University was some time in
Speaker 2: Dresden and then the clouds parted? What was it like
Speaker 2: Claudia Sam in two thousand and one to walk into
Speaker 2: the inflation and nalysh Combine at Michigan of Shapiro and Kimball.
Speaker 2: They were at the top of their game at that time,
Speaker 2: weren't they.
Speaker 3: It was really great to be a student at Michigan.
Speaker 3: It was great to have Matthews my advisor. Miles was
Speaker 3: on my committee. That really was a great education in
Speaker 3: macro and for academics. They're really interested in the real
Speaker 3: world exactly, micro policies exactly.
Speaker 2: You knew right where I wanted to go. These were
Speaker 2: real world academics trying to study real world people off
Speaker 2: this jobs report. You say, the newly minted chairman way
Speaker 2: different than Claudia Sam needs to listen to normal people discuss.
Speaker 4: Right well.
Speaker 3: Also part of my education at Michigan, even doing macro,
Speaker 3: was you know, if the data aren't there, you need
Speaker 3: go collect some data, run surveys, design survey. I mean
Speaker 3: that's a big part of my education and my research.
Speaker 3: And I think one thing that the FED has is
Speaker 3: just a wealth of qualitative data talking to business leaders,
Speaker 3: talking to people workers, and putting together in terms of analysis.
Speaker 3: We spend a lot of times on the arrogant numbers.
Speaker 3: We're going to do that here in just a few minutes,
Speaker 3: and it is super important, but those kind of more qualitative,
Speaker 3: the structured interviews, it can help you get a sense
Speaker 3: of the mechanisms, a sense of what's you know how
Speaker 3: happening beneath the numbers, and you know these that voice
Speaker 3: that those voices are missing on the task forces. There's
Speaker 3: no FED lessons like less framework reviews, and but the
Speaker 3: information is there. So my Bloomberg opinion piece this week
Speaker 3: kind of showcased a lot of that kind of data
Speaker 3: the FED does collect and also showed how it can
Speaker 3: really help inform what are we thinking about the economy.
Speaker 5: Claudia, we have perils In three minutes from now. But
Speaker 5: you know, I just have to bring this up. You
Speaker 5: highlighted the Fed's worker Perspective report, as you know, workers
Speaker 5: describing their work lives at survival rather than stable. You know,
Speaker 5: So does that mean that today's report is a nothing
Speaker 5: burger and we should be looking through the next week's
Speaker 5: inflation plant?
Speaker 4: I mean, is that kind of what matters most?
Speaker 6: Here?
Speaker 3: To the data we get today are important. Whatever they
Speaker 3: tell us, there's going to be some lessons for us.
Speaker 3: The thing that I was really trying to draw out
Speaker 3: with the worker perspective is we're going to talk a
Speaker 3: lot about you know, the labor market looks pretty stable
Speaker 3: or it's balanced, and I think with the aggregate data
Speaker 3: we might get some surprises. But in general that's been
Speaker 3: a good description of it. But stable doesn't always feel
Speaker 3: good in a lived experience because stable can mean yeah,
Speaker 3: you got a job, you're thankful for that, but you
Speaker 3: need a better job out there right now.
Speaker 2: So what Damien brought up in what you're mentioning right now,
Speaker 2: I can't emphasize enough, folks. That's what my touch with
Speaker 2: people is, emails, anecdotes, people in restaurants. There's a whole
Speaker 2: part of America out there struggling Claudia paycheck to paycheck?
Speaker 2: Does the FED know that?
Speaker 3: I think the reserve bank presidents are a lot more
Speaker 3: in touch with this very much. A part of their
Speaker 3: day job is out in their districts, and the community
Speaker 3: development function out in the reserve banks is really strong.
Speaker 3: They're the ones that collect the Beige Book. They do
Speaker 3: a lot. Now network is being done at the board too,
Speaker 3: and I don't want to discount what they're doing, but
Speaker 3: it's so in the fiber of what the reserve banks
Speaker 3: are doing, and so then I think it makes a
Speaker 3: lot of sense. It's not surprising that we're hearing some
Speaker 3: of the descents, some of the distinctive voices coming out
Speaker 3: of the reserve banks because they really are at the
Speaker 3: pulse of what's going on.
Speaker 2: We're going to pick up this theme here with Claudia Sam.
Speaker 2: We are just so honored that she attends to us
Speaker 2: at eight thirty each and every jobs Day, Dot sm
Speaker 2: with us, and then Constant Hunter will join us in Christina.
Speaker 2: Campmeny as well will be with us here. We're commercial
Speaker 2: free across America for this next half hour. On the
Speaker 2: data front, it is a continued lift to the equity
Speaker 2: markets and the vix's I said finally broke down yesterday
Speaker 2: sixteen seventeen. For days closing up to fifteen level. We
Speaker 2: may get to a fourteen year with any kind of
Speaker 2: green on the screen. That's a bullmarket. Fifteen point one
Speaker 2: point three right now on the VICS, I really need
Speaker 2: to mention Brand eighty two twenty nine full circle in
Speaker 2: the quiet of the Eastern Mediterranean. For America, it is
Speaker 2: Job's Day.
Speaker 7: And the July jobs report crossing the Bloomberg terminal right now,
Speaker 7: and it shows is that the US economy actually lost
Speaker 7: twenty three thousand jobs in the month of July. This
Speaker 7: is a lot less than the eighty thousand we were
Speaker 7: expecting to be added. We added fifty seven thousand in
Speaker 7: the month of June. Moving to the unemployment rate, it
Speaker 7: dipped to four point one percent versus the prior month's
Speaker 7: four point two percent. The expectation was for four point
Speaker 7: two percent. Labor force participation rate coming in at sixty
Speaker 7: one point four percent the month before it was sixty
Speaker 7: one and a half percent, and that's a bit lower
Speaker 7: than the expectation. Want to move over to the wage
Speaker 7: component here, which provides more clues on inflation. Average hourly
Speaker 7: earnings a month over month up just a tenth of
Speaker 7: a percent, a scant tenth of a percent. Average hourly
Speaker 7: earnings year over year up three point two percent. The
Speaker 7: expectation was for three and a half percent, So again
Speaker 7: a big surprise to the downside, the economy losing twenty
Speaker 7: three thousand jobs of the month of July. The expectation
Speaker 7: was for an addition of eighty thousand. Want to take
Speaker 7: a quick look at how the market is reacting here
Speaker 7: looks like futures, guys, at least for the moment, hanging
Speaker 7: on to those earlier games.
Speaker 2: Back over to you, a alexis, thank you so much.
Speaker 2: The markets movie as you can imagine, equities lift here,
Speaker 2: thinking free money will be out there in a lower
Speaker 2: rate environment. The yield space is the most elastic, and
Speaker 2: you see it in the two year yield in a
Speaker 2: solid nine basis points four point one six percent, basically
Speaker 2: halfway back to that coveted three point ninety nine thirty
Speaker 2: year bond. Doesn't come in as much as you'd expect,
Speaker 2: but nevertheless from a five point twenty two into five
Speaker 2: point one to nine percent. Damien your thoughts on the
Speaker 2: set of numbers here, the revisions.
Speaker 5: Extraordinary, Yeah, yeah, no, I mean exactly. We have a
Speaker 5: revised down for the last print of twenty thousand from
Speaker 5: fifty seven, and this negative twenty three print. You would
Speaker 5: think we'll get some people's attention. But to let's see
Speaker 5: this point, it looks like equities are kind of looking
Speaker 5: through it for the minute. And I don't want to
Speaker 5: call this a nothing burger by any stretch. I mean, Klaudia,
Speaker 5: I mean you know that this this I wonder if
Speaker 5: it's going to move markets.
Speaker 2: We'll have to see her, Claudia Summer, letting her digest
Speaker 2: the data here a little bit. I do want to
Speaker 2: with the ECO screen that we have at Bloomberg. The
Speaker 2: change in non firm payrolls was negative twenty three versus
Speaker 2: a survey of eighty some people were there, but the
Speaker 2: two month payroll adjustment and negative one to OZHO three,
Speaker 2: that's combined negative one hundred twenty six. I think we've
Speaker 2: given her enough time. Claudia sum joins us here to
Speaker 2: provide perspective. Claudia, this must change the debate at the FED.
Speaker 3: So first, does this remind you of anything? I mean
Speaker 3: a year ago, exactly, this employment report was when we
Speaker 3: had the very large downward revision, the downside surprise, the
Speaker 3: downward revisions, and the BLS commissioner lost her job. Right,
Speaker 3: So now just looking quickly and I can't, you know,
Speaker 3: do all the details of this government education. Government education
Speaker 3: was a big decline and one of the things that
Speaker 3: happens in the summer. It can be really tough with
Speaker 3: like the school calendars, and if things slip a little
Speaker 3: bit with the seasonal adjustment, you can get some kind
Speaker 3: of squirrely numbers in terms of the education. That certainly
Speaker 3: is at play for the downside miss today. That was
Speaker 3: something that was very clear in last year's numbers as well,
Speaker 3: So I don't want to, you know, dismiss this. And
Speaker 3: of course that was a shift from we'd had a
Speaker 3: strong labor market to like, whoa, maybe it's not so strong.
Speaker 3: So I do think there is signal here. There's probably
Speaker 3: a fair bit of noise and some seasonal issues that'll
Speaker 3: look through. The unemployment rate did tick down, right. I
Speaker 3: think the one thing that for the FED that maybe
Speaker 3: of most interest is wages coming in soft.
Speaker 2: I'm getting out my HP twelve C calculator because Constance Hunter,
Speaker 2: I wouldn't do this for Claudia. The constance hunter jumped in,
Speaker 2: here's we can we do this in the control? Can
Speaker 2: we rip up the script and have Claudia and constants together?
Speaker 2: Is that? Did you check with their people?
Speaker 4: Yes, and they say it's okay.
Speaker 2: Concerts under getting wired up right now, getting folks futures
Speaker 2: up there too. The advanced Nasdaq lifts double up eight
Speaker 2: tenths of a percent here, and the yield again, the
Speaker 2: two year yield is the most elastic in it of
Speaker 2: four point one six percent. Damian ask a smart question
Speaker 2: to doctor some Well, I figure out the three months
Speaker 2: moving average on my HP twelve C.
Speaker 5: Well, doctor Salm, I mean average hourly earning is down
Speaker 5: zero point one percent month over month. I mean, you
Speaker 5: know you mentioned the Beige Book before the break, right,
Speaker 5: and you know what did the Beige Book show us?
Speaker 5: The consumers are adjusting by taking on more debt, buying less,
Speaker 5: but shopping more frequently, trading down to cheaper alternatives. Is
Speaker 5: this really wearing on them now? I mean, what does
Speaker 5: this all mean for the consumer?
Speaker 3: So certainly on the consumer side, this this is not
Speaker 3: good news. I mean, paychecks are such a key driver
Speaker 3: of consumers, but I'm not the only driver, but this
Speaker 3: this is a soft, soft reading. I think the one
Speaker 3: where you know, the implications maybe come out the strongest.
Speaker 3: For this is on the FED side, you know, the
Speaker 3: thing that would get the Fed moving towards rate hikes
Speaker 3: the fastest. Where if there was any sign of overheated
Speaker 3: in the labor market, this is exactly the opposite of overheating.
Speaker 3: We hadn't seen wage growth really picking up, but we
Speaker 3: really hadn't seen it slowing down much. And so this
Speaker 3: really takes like the labor market isn't pushing up inflation,
Speaker 3: and frankly, if it softens it it might help hold
Speaker 3: down some of that inflation.
Speaker 2: We are so advantaged. Claudia Somnu's Century Advisors and joining
Speaker 2: us now Constance Hunter chief Economists EIU. The two of
Speaker 2: them together commercial free across America in this half hour
Speaker 2: on yield. Christina cat Menu of Investco will join us
Speaker 2: here and a Constants Hunter. You're over there working on
Speaker 2: the terminal looking at the numbers. I got a ninety
Speaker 2: day average, a three months moving average subject to revision
Speaker 2: of twenty thousand per month on jobs. You can give
Speaker 2: me all your academics, Claudia samac I don't care politically
Speaker 2: in America in defense of the president. That's an unacceptable
Speaker 2: statistic for America to see it three months moving average
Speaker 2: of twenty thousand jobs per month. It doesn't get it done.
Speaker 8: Well, we don't think it gets it done. I'm gonna
Speaker 8: take off my headphones.
Speaker 4: Please please take it.
Speaker 8: I'm echoing in there. Put them back on to here, Claudia.
Speaker 8: But in any case, you know last year when we
Speaker 8: had changes to immigration, when we were deporting a number
Speaker 8: of people, there was widespread spread speculation that actually the
Speaker 8: monthly requirement had fallen. This year, what we saw with jobs,
Speaker 8: with payroll numbers increasing monthly, but the unemployment really not
Speaker 8: coming down significantly.
Speaker 9: Is that well, maybe it's higher this year.
Speaker 8: This twenty thousand over the last three months, and then
Speaker 8: that fall in the the unemployment rate that is not
Speaker 8: That is not a good look for the president. You're right,
Speaker 8: and it bolsters his case to cut rates. He's going
Speaker 8: to keep beating that drum. I think this bolster is
Speaker 8: our call for a hold. This is this is definitely
Speaker 8: a warrants a hold.
Speaker 2: Claudia, does does this study that we're seeing right now,
Speaker 2: can government officials in the fed get out front, or
Speaker 2: are they colossally ex post where they just have to
Speaker 2: wait for the data before they go flat or cut rates.
Speaker 3: So, I mean policymakers never have a full picture of
Speaker 3: the economy when they make a decision. It just it
Speaker 3: takes too long. And there's always always want one more
Speaker 3: piece of data, one more piece of information. But when
Speaker 3: you have enough questions or you have enough tension, that
Speaker 3: can that certainly can be you know, a reason to
Speaker 3: move a little more slowly until you get a decisive signal.
Speaker 3: I mean, I don't I don't think today's data are
Speaker 3: decisive and in reshaping that we've had a largely balanced
Speaker 3: labor market so far this year, but they raise some
Speaker 3: concerns and we'll, you know, get more on inflation. We'll
Speaker 3: see if the dissiplation is sticking or not. So you
Speaker 3: get what you have and you have to make a decision.
Speaker 2: Did that she did? She's such a problem. Today's data
Speaker 2: wasn't decisive. Is there ever an economist who's ever said
Speaker 2: that today's data is the Damien Sasauwer with constants Hunter
Speaker 2: and Claudius Constants.
Speaker 5: I mean, I'm just looking at so for futures here,
Speaker 5: I mean, I see whites up a tick to a
Speaker 5: tick and a half, Reds are up two and a half,
Speaker 5: three ticks. I mean, so you know, obviously what we're
Speaker 5: seeing here yields down, price up? And is that the
Speaker 5: right you know? Is that the right reaction to this?
Speaker 5: And just how much do you think the market's going
Speaker 5: to rush to price September out of the equation? Is
Speaker 5: that what we're looking at here?
Speaker 8: I think the market will begin to price September out
Speaker 8: of the equation. I think Claudia is right time. I
Speaker 8: was almost going to say, you never look at just
Speaker 8: one number, and of course you don't, but you preface
Speaker 8: your question on the three month moving average, right, And
Speaker 8: I think that's what we're talking about here. One piece
Speaker 8: of concern, right is you saw the unemployment rate fall on.
Speaker 9: For bad reasons, not good reasons.
Speaker 10: Participation felt, people funk exams.
Speaker 2: Who would that be, folks? Because of that? Where the
Speaker 2: unemployment rates goes down for bad reasons discuss doctor Hunter.
Speaker 8: Well, certainly, if you see that participation rate decline, it's
Speaker 8: only one tenth, but it's an off that we saw
Speaker 8: this load growth of jobs and we saw the unemployment
Speaker 8: rate fall.
Speaker 9: It suggests to you that either there's low supply.
Speaker 8: Along with load demand that is not a robust labor
Speaker 8: market situation. And you know, I was looking before I
Speaker 8: came on last night. I was I got buried in
Speaker 8: data as I as I sometimes do. And if you
Speaker 8: look at the FEDS Financial Conditions Index, it suggests it
Speaker 8: suggests that we have tailwinds. Now those tailwinds are diminishing,
Speaker 8: but it suggests that monetary policy is loose here. And
Speaker 8: if we have loose monetary policy and a budget deficit
Speaker 8: of six percent and this is the best we can do,
Speaker 8: I think it begs asking some questions about the underlying economy.
Speaker 5: Yeah, I mean, look, Constance, and the equity market agrees
Speaker 5: with you. I mean it is rallying here. I mean
Speaker 5: they see exactly what you see. This is an excuse
Speaker 5: for them to price out rate hikes, to basically get dubvish.
Speaker 4: And that is great for high for for risky assets.
Speaker 5: And so you know, shifting to you, I mean, Klaudia
Speaker 5: just talked to us a little bit more about what's
Speaker 5: the thought. I mean, does this take some of the
Speaker 5: balance out of what next week's inflation print is going
Speaker 5: to look like? I mean, what are you looking for
Speaker 5: next what's the next big figure that you're going to
Speaker 5: lean into data wise?
Speaker 3: Well, absolutely, the inflation data are front and center, right,
Speaker 3: and you want to see we got a very soft
Speaker 3: inflation read for June. We don't expect that to show
Speaker 3: up again in July exactly that way, but you want
Speaker 3: to see some softness or at least getting back to
Speaker 3: something that's consistent with target, right, and so there'll be
Speaker 3: a lot of attention to the CPI, the PPI, the
Speaker 3: import prices. I mean, inflation is still front and center
Speaker 3: because inflation is still very far from the Fed's target,
Speaker 3: and you need and if nothing else, you want to
Speaker 3: see it moving in the right direction. Today we're seeing
Speaker 3: employment move and not the right direction. Maybe next week
Speaker 3: we'll get some better news on inflation, but I don't
Speaker 3: think this takes any pressure off of the CPI. And
Speaker 3: before the Fed meets again, we're gonna get one more
Speaker 3: payroll and we've got next week's CPI and another one,
Speaker 3: so there's a lot of data.
Speaker 2: To come across America together. Claudia Sam with us today
Speaker 2: from New Century Advisors and Constance Hunter of EIU. Off
Speaker 2: the Shock report, we're up futures up thirty nine. Now
Speaker 2: Nasdaq is up a solid stick one percent on the
Speaker 2: Nasdick futures. So even Bitcoin vaults up seven hundred dollars
Speaker 2: constance demand that I quote Pelly winners there and over
Speaker 2: one fifty seven on Brench crude right now in the
Speaker 2: most elastic yield a two year of four point one
Speaker 2: five percent in a solid nine basis points. I'm going
Speaker 2: to call that a ginormous movement. Even the ten uere
Speaker 2: in seven basis points. I want to go to your
Speaker 2: two wheelhouses, Claudia, let me begin with you, with all
Speaker 2: of your deserved acclaim over recession. We've had a pop
Speaker 2: phenomenal GDP. John writing over Breen notes consumption and investment
Speaker 2: eighth percent like a banana republic. Do you just assume
Speaker 2: that if we have a tepa job economy and we
Speaker 2: don't cut rates fast enough, that nominal the animal spirit
Speaker 2: comes down to a more lower normal rate.
Speaker 3: So I am concerned if the labor market isn't firing
Speaker 3: on all cylinders, and certainly if it weakens, that would
Speaker 3: be an issue. And we've seen we've got recent data again,
Speaker 3: I mean the labor share continues to drop like the
Speaker 3: share of the income and the economy going to workers.
Speaker 3: That does not feel like a good situation. And I
Speaker 3: think to Constance's point, I worry more right now about
Speaker 3: the structure underpinning the economy than maybe the cyclical the
Speaker 3: boom bus the research. It's like things are moving under
Speaker 3: the hood of the labor market, and I think that's
Speaker 3: the labor force growth, population, aging, what's happening with AI.
Speaker 3: So there's some really big themes that I think we
Speaker 3: should pay attention to, and maybe less to the boom
Speaker 3: bus cycle, right, because I'm not sure that's the biggest
Speaker 3: thing happening right now.
Speaker 2: I Constance, the EIU remit is a wonder full global remit.
Speaker 2: What does this job report signal to other central banks?
Speaker 2: I mean, it simply takes away the effervescence, doesn't it.
Speaker 6: You know?
Speaker 8: I would say other central banks are going to look
Speaker 8: much more closely at CPI data next week than they
Speaker 8: are the jobs to data. But of course it does
Speaker 8: to Claudia's point, right, it's what's going on under the
Speaker 8: hood here, and we have an aging labor market, or
Speaker 8: we have an aging population. We're seeing people age out
Speaker 8: of the labor market. That is not a unique problem.
Speaker 8: To the United States. Right, we see this around the world.
Speaker 8: This is a challenge for central banks. And what could
Speaker 8: argue that is the biggest challenge for Japan and one
Speaker 8: of the reasons why we have the situation in Japan
Speaker 8: where they have a very high budget deficit or debt
Speaker 8: to GDP ratio, right, and there's concern about that fiscal
Speaker 8: situation and it was getting expressed in the currency, and
Speaker 8: we had the intervention that we had last week.
Speaker 9: So this theme of.
Speaker 8: You know what, how do you grow an economy with
Speaker 8: an age population? Does AI help or hinder that These
Speaker 8: are as existential questions. I think that all economists, central
Speaker 8: bankers are not are looking at when they're looking at
Speaker 8: economies right now.
Speaker 5: And yet there's a diet, a desire to keep financial
Speaker 5: conditions loose here in the US, like you rightly point out,
Speaker 5: I mean, talk to us about what you learned from
Speaker 5: yesterday's refunding announcement. I mean they just in my mind,
Speaker 5: kick the can down the road, again, right, I mean, like, so,
Speaker 5: you know, your right to focus on fundamentals like debt
Speaker 5: to GDP or in the US, but the market has
Speaker 5: not paid attention to that for so long. You know,
Speaker 5: at what time, you know, the things at least start
Speaker 5: to flash amber to you constantly.
Speaker 8: So worsh has his task forces, we have our task forces.
Speaker 8: So there's a few things we're looking at that we
Speaker 8: felt we had to really do deep dive. And to
Speaker 8: your point, Tom, across country comparison right up there is
Speaker 8: is what is fiscal space? What constitutes fiscal space? When
Speaker 8: does it get tricky?
Speaker 9: Who who?
Speaker 2: You know?
Speaker 8: Obviously we see it's not uniform across countries, and so
Speaker 8: I think one of the things we have to think
Speaker 8: about here is what are what is expected in fression
Speaker 8: and how does that feed into term premia and then
Speaker 8: what's that back loop to funding the government.
Speaker 2: Christina Campmenian does her people are quite upset, you know,
Speaker 2: I mean she needs more air time, Claudia, some last
Speaker 2: question to you, with immense respect for your academics, and
Speaker 2: it's just simply your launching forward. I guess in the
Speaker 2: end of August, Jackson Hole and into September as well,
Speaker 2: it's still to America's the political reality. Kevin Hassett with
Speaker 2: Bloomberg in the ten o'clock Our folks, Michael McKee and
Speaker 2: Danny Berger. I'm sorry, Claudia, and in economics on a
Speaker 2: job's day, it's two distinct Americas, isn't it.
Speaker 3: There's a lot there's a lot of division in the
Speaker 3: labor market. I mean the division I like to focus
Speaker 3: on is this low higher, low fire economy. Right for
Speaker 3: workers who have a job, like their job, it's a
Speaker 3: good job. This is this still is a pretty good
Speaker 3: labor market. Today's number is notwithstanding for people trying to
Speaker 3: get back in, trying to get him for the first time.
Speaker 3: This is tough. And this wage growth is not keeping
Speaker 3: up with the price growth, and that's a bigger that's
Speaker 3: a bigger problem. So yeah, there's a lot of divisions here.
Speaker 2: I love the wage growth idea. This is a this
Speaker 2: is why we do this. This is good. Thank you
Speaker 2: so much for the doctor, Sam, Thank you so much
Speaker 2: New Century Advisor, both of them very active on LinkedIn.
Speaker 2: Look for their publishing out here today we have also,
Speaker 2: you know, I love it when world class talent calls
Speaker 2: it and says me, me, me, me, me, can I
Speaker 2: get on? We are tentatives. Stephanie Roth schedule to be
Speaker 2: with us and from City Group Andrew Holland ors who
Speaker 2: nailed this call. We're trying to line them up right now,
Speaker 2: we have to go through a I mean, I mean
Speaker 2: hollan Ors is like great, you just call a cell phone. There,
Speaker 2: Stephanie Roth, You've got to go through like six layers
Speaker 2: of compliance. It's like worse than Christina CAMPMANI joining us
Speaker 2: right now, So let me do this first. And of
Speaker 2: course always the support of Interactive Brokers. So Bloomberg Surveillance
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Speaker 2: the past three years, Interactive Brokers individual clients average twenty
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Speaker 2: everything we do. Christina, thank us for being patient off
Speaker 2: the shock economics. How does this economics play into a
Speaker 2: two year full faith and credit market?
Speaker 11: Look, I mean, the market is sitting here and we've
Speaker 11: been all trying to understand what is the new reaction
Speaker 11: function of the FED. Chair of the Fed Committee under.
Speaker 2: Wars and he wants it to be data.
Speaker 11: I don't know if we know what he wants it
Speaker 11: to be. Quite yet. I think the jury is still
Speaker 11: out there, and I think July was very different than June,
Speaker 11: so we'll see. But the market is grappling with all
Speaker 11: of these data prints, and we've taken out certainly pricing
Speaker 11: for September year pricing now what just about one full
Speaker 11: hike only by December.
Speaker 5: So I mean, I know you guys are short duration
Speaker 5: over there at Investment. I know you, like Steve NAR's
Speaker 5: talked to us about how does this change the the
Speaker 5: you know, your outlook at all over the near term.
Speaker 11: Look, I think there are a few things. Again, if
Speaker 11: we go back to this new regime from the Fed
Speaker 11: and talking about letting the market do the work, I
Speaker 11: think that introduces a lot more volatility, and especially in
Speaker 11: the back end of the curve. So I think that
Speaker 11: still means that you are looking for higher yields, higher
Speaker 11: yields out the curve and steeper curve. We haven't broadly
Speaker 11: this year, You've seen a lot of flattening of the curves,
Speaker 11: so I think that that still holds. And the tremendous
Speaker 11: amount of AI and hyperscaler issuance weighs on that too.
Speaker 11: And I know you guys have been talking about that
Speaker 11: today and it's been a theme. But you have these
Speaker 11: companies that are issuing the size of government bond deals
Speaker 11: weighing on the market. So I think we are still warranting,
Speaker 11: needing higher yields out the curve.
Speaker 5: So Christina, you know, I'm an emerging market fixing guy.
Speaker 5: I look at em credit, I look at the basis
Speaker 5: to investment grade spreads and I look at it and
Speaker 5: I say, wow, ten basis points. Wow, that is as
Speaker 5: tight as I have ever ever seen it. And I
Speaker 5: think you're absolutely right to hit on that. I think
Speaker 5: you're to date what three hundred billion in hyper scale.
Speaker 5: We call it AI issuance. Going forward, I mean it's
Speaker 5: not going to go away, right, I mean they just
Speaker 5: roll this over, add to it. I mean, at what
Speaker 5: point do you see the crowding out effect that many
Speaker 5: many strategists and analysts are calling for here.
Speaker 4: So we have been again.
Speaker 11: When we look at our portfolios and we manage global portfolios,
Speaker 11: we have the three lovers of rates, credit and FX.
Speaker 11: Credit is where we've leaned on the least just because
Speaker 11: of how tight spreads are. And I know that's kind
Speaker 11: of been unpopular opinion, and corporates have continued to perform
Speaker 11: well and stay tight. But I think that's where there's
Speaker 11: the most kind of jump risk and concern. And I
Speaker 11: think it's been supported by this appetite for all in
Speaker 11: yields just given levels. But like you have to take
Speaker 11: a step back and say, A, you have this changing regimes,
Speaker 11: which should mean higher even government bonds. You are it's
Speaker 11: not the end of issuance out of visa sure, So
Speaker 11: there's more to come. And we've been at such compressed
Speaker 11: yield levels for so long, So talking about can a
Speaker 11: tenure be at five and a quarter?
Speaker 10: Sure?
Speaker 11: Is that in the potential?
Speaker 5: So you know, we talk about the different factors which
Speaker 5: drive total returns and fixed income. You've got duration, you've
Speaker 5: got spread, you've got coupon income, you have FX, right,
Speaker 5: so talk to us about you know exactly what you
Speaker 5: do if you if you don't like duration and you
Speaker 5: don't like spreads, does that mean you're shifting and you're
Speaker 5: kind of leaning into currency risk here?
Speaker 11: So currency risk has definitely been kind of top of mind,
Speaker 11: i'd say, of the last two years. It's certainly I
Speaker 11: know something Tom and I have been talking about of
Speaker 11: like Asia is so mispriced, Asia so much price, and
Speaker 11: it's that kind of what has been most miss Price
Speaker 11: has been frustrating and obviously has gotten more play in
Speaker 11: the last week and a half with official EN intervention
Speaker 11: in the Korea move. But yeah, I think we are
Speaker 11: sitting in an environment where people, even coming out of
Speaker 11: the July meeting say, okay, from an FX person, we're
Speaker 11: in this multipolar world. There are different things driving in.
Speaker 11: So can we lean into Amcerrey and at least until
Speaker 11: we get music to my kind of to the to
Speaker 11: the next FED meeting, we have this holding period, We
Speaker 11: have a lot of data. This is obviously a shift,
Speaker 11: but like let's take a step back to and say,
Speaker 11: when we came to the beginning of the year, people
Speaker 11: were talking about is breaking van payrolls zero twenty five fifty.
Speaker 11: So yes, this is a big reset from where we
Speaker 11: were running the first three months of the year. But
Speaker 11: maybe that thesis actually hasn't changed, so it's not as robust.
Speaker 7: But this is not This is.
Speaker 2: Just wonderful force, Claudia. So I'm with this consense hunter
Speaker 2: to Christina Campmany who looks at yield with their global reach,
Speaker 2: and we've got scheduled Stephanie Roth and Andrew Hollan Orst
Speaker 2: we're working on right now. It's City group. I want
Speaker 2: you to take the yield shop here, get too many
Speaker 2: economists lined up. We got to get some real conversation
Speaker 2: and which Christina camp Many as well. Do you have
Speaker 2: an underlying disinflation and real GDP growth vectors that are
Speaker 2: lower that will support a lower yield environment.
Speaker 11: Look, I think that there are disinflationary trends that were
Speaker 11: in place at the beginning of the year. Again, if
Speaker 11: you zoom back to where we were in January, before
Speaker 11: middle East situation kind of became front and center. That
Speaker 11: was the thesis Housing to come down, like a lot
Speaker 11: of these things to come down. Again, We're back in
Speaker 11: the world with a lot of uncertainty. We don't know
Speaker 11: what the situation in the Middle East is. We don't
Speaker 11: know where oil will end up. It has been shoppy,
Speaker 11: it has come down. I think at Frood, sitting at
Speaker 11: eighty is something that the economy can sustain. At one twenty,
Speaker 11: that's very different. And I think what the FED is
Speaker 11: trying to weed through in all of us, in the
Speaker 11: markets and all the economists are what is most concerning,
Speaker 11: most likely for the FED is the kind of COVID
Speaker 11: style rollover that you're seeing it into wages and into
Speaker 11: pricing power in the economy and that which we haven't
Speaker 11: seen yet. But it's something that people are concerned about, is.
Speaker 2: What it's my scientific analysis. Christina KEMMANI thank us so
Speaker 2: much with Invesco with great perspective. There again that benchmark
Speaker 2: two year yield four point one seven percent now in
Speaker 2: eight basis points. Stay with us. More from Bloomberg Surveillance
Speaker 2: coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Apple Karplay and Android Otto with the Bloomberg Business app,
Speaker 1: or watch us live on YouTube.
Speaker 2: Okay, this is totally different. Nicole showed she invented there
Speaker 2: sort of the hipster digital economy. She was a Zillo
Speaker 2: as a young kid, and she's just built and built
Speaker 2: and built up a different knowledge than Wall Street now
Speaker 2: was Zipper recruiter, they're chief economists. Nicole was showed to
Speaker 2: piece it together for us this morning. What's different differ
Speaker 2: that you see in the modern hipster Seattle digital economy,
Speaker 2: Nicole than what we hear from Global Wall Street.
Speaker 6: What we're seeing right now is people across the board
Speaker 6: are really responding to different macroeconomic influences, but we're kind
Speaker 6: of all in the same realm here. There's a lot
Speaker 6: of stagnation in the labor market right now, hesitation from
Speaker 6: employers and from workers, people on the sidelines. Everybody's kind
Speaker 6: of afraid to make a move because there's so much
Speaker 6: volatility happening in the market right now.
Speaker 3: It's really difficult.
Speaker 6: To see on the horizon, you know, when there's going
Speaker 6: to be clarity and when people can really commit to
Speaker 6: that next step.
Speaker 2: Do you believe the data? I do?
Speaker 12: You know?
Speaker 6: We're seeing this response to really high volatility in prices.
Speaker 6: Inflation is bouncing around pretty wildly the last couple of months,
Speaker 6: and we're seeing the response coming from both employers and
Speaker 6: from workers. This simultaneous pullback in supply and demand for
Speaker 6: jobs is leading to this really unique environment we're in
Speaker 6: right now. You know, unemployment is dropping at the same
Speaker 6: time that job growth is slowing, but that's because there
Speaker 6: are fewer.
Speaker 3: People who were still looking for work.
Speaker 6: As we see these labor force dynamic changes, that's really
Speaker 6: going to shape what the labor market looks like going
Speaker 6: forward and what jobs and how many jobs we actually
Speaker 6: need to have a stable economy.
Speaker 5: Nicole, the ZIP Recruiter job seecret Confidence index was at
Speaker 5: like its highest since twenty twenty two in the first
Speaker 5: quarter of this year. Are things changing right now? I mean,
Speaker 5: what's your take? How are things on the ground.
Speaker 6: Yeah, yeah, we're We're getting our next round of the
Speaker 6: job Secer Confidence Survey back just this week, and you know,
Speaker 6: we're still seeing that job seekers are remaining confident. And
Speaker 6: I think that you know, the confidence in the market
Speaker 6: and the availability of jobs, those things are are kind
Speaker 6: of different. You know, job seekers are a resilient They're
Speaker 6: utilizing the resources that are available to them. Job Seekers
Speaker 6: who tap into AI tools and resources are seeing better
Speaker 6: results in their job searches and are having more confident searches.
Speaker 6: So people who are really you know, taking advantage of
Speaker 6: every opportunity and resource they have, that's who we're really
Speaker 6: seeing benefit in this.
Speaker 2: Market, Jamien says or Nicole Bashaw chief Economists a ZIP
Speaker 2: Recruiter can't sit enough about it, folks. Stacey Vinnix with
Speaker 2: is on deck as well. There's been a sighting. Of course,
Speaker 2: we'll continue with Nicole Nicole.
Speaker 5: I have a son who's going to be a senior
Speaker 5: in good and my question for you is, are you
Speaker 5: seeing anything in the demographics. I mean, what do you
Speaker 5: envisage for you know, first time entrance into the labor market.
Speaker 5: Are things more or less difficult for them?
Speaker 6: Things are really challenging for new entrants to the labor
Speaker 6: market right now. What we found in our spring grad
Speaker 6: report a couple of months ago is people who had
Speaker 6: or these new grads who had work experience on their
Speaker 6: resume from some type of job during school. We're more
Speaker 6: than twice as likely to land employment post graduation than
Speaker 6: there are peers who didn't have any work experience. So
Speaker 6: finding a way to take any opportunity, whether that's being
Speaker 6: a teaching assistant or you know, doing some sort of
Speaker 6: volunteer program, putting that on a resume on paper and
Speaker 6: highlighting the skills and how that translates to the workplace.
Speaker 6: That's what employers are looking for from these young feoks.
Speaker 2: So what have you learned from say Amazon and the
Speaker 2: kind of person they're laying off. They're still hiring everybody
Speaker 2: on Third Avenue unloading boxes. I get it. They're still
Speaker 2: hiring all the AI E I EIO people. I get it.
Speaker 2: But you know what the knowledge tells me is they're
Speaker 2: unloading middle managers. Where are those people going to get jobs? Nicle.
Speaker 6: What we're seeing, especially with the impacts of how AI
Speaker 6: is reshaping the labor marketing jobs, is the skills needed
Speaker 6: within jobs are turning over really rapidly. So somebody who
Speaker 6: is is, say a software engineer, needs a different skill
Speaker 6: set today than they did five years ago, the same
Speaker 6: way that somebody is, like a clerical assistant, needs a
Speaker 6: different skill set. So we're going to see more turnover
Speaker 6: within jobs as that starts to play out. Job seekers
Speaker 6: who are able to be more well rounded, who are
Speaker 6: really upskilling themselves on how to use AI and how
Speaker 6: to market that skill. That's who's really going to win
Speaker 6: out in this environment, and that's what employers are looking
Speaker 6: for right now.
Speaker 2: Thank you so much, Nicolby Shoulder. This chief Economist ZIP
Speaker 2: recruiter out on Seattle. Stay with us. More from Bloomberg
Speaker 2: Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app or
Speaker 1: watch us live on YouTube and.
Speaker 2: Chris cross the Pacific from San Diego up to Vancouver.
Speaker 2: There's just so much that we do cover being here
Speaker 2: on the far and distant shore. Geens Soroca owns the
Speaker 2: high ground here driving all of the Los Angeles port technology.
Speaker 2: It's been doing it for twelve fourteen years. We're thrilled.
Speaker 2: We love when he comes in because he just gives
Speaker 2: us a flavor thumb up or thumb down. Right now
Speaker 2: on Pacific transport, given a war thumbs up.
Speaker 10: We've seen a lot of fits and starts because of
Speaker 10: trade policy, the warner around. There are five conflicts happening
Speaker 10: in the Middle East right now. The Sewiz Canal effectively
Speaker 10: has been running at ten to twenty percent efficiency for
Speaker 10: four years. So cargo has really started to move into
Speaker 10: that southern California gateway over this time because it didn't
Speaker 10: have that many options. But you know, Tom, compared to
Speaker 10: COVID nineteen when we saw those ships backed up and
Speaker 10: the pilots of cargo, things.
Speaker 2: Are moving normal.
Speaker 10: We've moved more cargo during this time period than we
Speaker 10: did during the peak of the peak then, and not
Speaker 10: one ship is the back.
Speaker 2: Onion members happy? Are they working triple overtime? Kind of bait.
Speaker 10: I see some of these guys at the Elks Club
Speaker 10: for happy Hour. They're getting a lot of hours on
Speaker 10: the job. They're working, they're throwing the cargo, they're hustling. Yeah,
Speaker 10: they're the best in the business.
Speaker 2: Like, yeah, it's like overtime.
Speaker 5: Why teens making comparisons to with what the market was
Speaker 5: like at the height of the pandemic and how improved,
Speaker 5: how much more efficient it's running. I mean, talk to
Speaker 5: us a little bit about those lessons you learn from
Speaker 5: the pandemic. Are they paying off?
Speaker 10: Yeah, Damien. Two things. Number One, we had to be humble,
Speaker 10: lean on each other, kind of open up the books
Speaker 10: a little bit and see where it went wrong. And
Speaker 10: it was probably a little bit of communication laps, folks
Speaker 10: doing things on their own. Nobody trying to do anything sinister,
Speaker 10: but everybody was out there just trying to edge ahead
Speaker 10: for themselves. Second, the advent of technology, whether it's the
Speaker 10: truck reservation system, being able to see cargo forty days
Speaker 10: before it lands on the shore of Los Angeles, all
Speaker 10: of that makes us smarter. Leaning on each other made
Speaker 10: us better.
Speaker 5: You know, Tom, this is amazing because you know, if
Speaker 5: you look at JP Morgan, a lot of these people
Speaker 5: and what they're talking about. What they got wrong here
Speaker 5: about the impact of inflation, of horror moves of Iran
Speaker 5: on inflation here in the US is that the demand
Speaker 5: destruction is real, like the way that the consumer has
Speaker 5: adjusted their demand patterns in order to adjust to the supply.
Speaker 5: Shop talk to us about what else you're seeing from
Speaker 5: the perspective of the consumer. Are you seeing volumes still
Speaker 5: continuing to expand, are they, you know, kind of getting
Speaker 5: a little constrained here?
Speaker 4: What are your thoughts?
Speaker 10: Yeah, Daman, the example is happening right now. We saw
Speaker 10: small to middle sized importers bringing in their cargo a
Speaker 10: little bit earlier than a traditional peak season. Two main reasons. One,
Speaker 10: the temporary tariffs were expiring on July twenty fourth. I
Speaker 10: know my price, I've got a window. I've got to
Speaker 10: speed the cargo to market. And then second, the fuel
Speaker 10: adjustment factors in the shipping industry lag by about three months,
Speaker 10: so they saw a day when that price was going
Speaker 10: to spike. Let me average my cost down, get as
Speaker 10: much product in as I can.
Speaker 2: I look at this Jane and wrapped around it is.
Speaker 2: I think it's eighty different cities in Los Angeles, and
Speaker 2: Los Angeles is like big than Rhode Island.
Speaker 10: That's right, in eighty eight cities in LA County.
Speaker 2: What's the state? You're such a great voice for an
Speaker 2: LA down trodden billionaire's text. Everybody's moving to Austin, Texas,
Speaker 2: or they're moving up to the Central Valley, et cetera,
Speaker 2: et cetera. What's the real story of LA right now
Speaker 2: that you see one.
Speaker 10: In fifteen working Angelinos have a job related to this
Speaker 10: port complex and supply chain. Wow, that's super powerful. We've
Speaker 10: got twenty million people that live in southern California, so
Speaker 10: when we do all these imports, we got a lot
Speaker 10: of mouths to feed. We've got a lot of consumers.
Speaker 10: We also have the largest manufacturing base of employment in
Speaker 10: the country, four hundred thousand jobs in LA County. A
Speaker 10: lot of manufacturing, knows.
Speaker 2: My father used to lecture me on this, like McDonald
Speaker 2: Douglas and the rest of the way back Aerospace and.
Speaker 10: All it's aerospace saving events is one hundreds in Atlanta Richfield.
Speaker 2: You know, you're not even old enough to remember Atlanta Richfield,
Speaker 2: but The bottom line is, did you just say it's
Speaker 2: the largest manufacturing base.
Speaker 10: Of employment in the country in La County.
Speaker 5: You know, I have to ask you this, Gina, and
Speaker 5: I'm sorry to shift gears, but you know, I haven't
Speaker 5: heard much about the rebuilts into the wildfires hit Malibu
Speaker 5: in La County. I mean, can you give us a
Speaker 5: little bit of insight as a local there? I mean,
Speaker 5: are we seeing people, you know, move back into the area.
Speaker 5: Are people building there again? Talk to us a little
Speaker 5: bit about that.
Speaker 10: The progress and the resolver two different things. Folks absolutely
Speaker 10: want to get back into Alta Dina to Pacific Palisades
Speaker 10: and even the edges of Malibu that were burned so badly.
Speaker 10: But one thing that's real are the international and tariff policies.
Speaker 10: Softwood lumber that comes out of Canada. Appliances that are
Speaker 10: made in the Makuiladora areas of Mexico steal with fifty
Speaker 10: percent tariffs. Furniture and footwear are up ten percent or
Speaker 10: more over last year. It's more expensive to rebuild. And then,
Speaker 10: of course, as you guys have reported, there's a gap
Speaker 10: between the insurance coverage and the rebuild cost, exacerbated by terriffs,
Speaker 10: Jeez Ruca.
Speaker 2: Where there's from Los Angeles driving all over the port there.
Speaker 2: Love having them in with the flavor of Southern California.
Speaker 2: You grew up in New Orleans. You're in school in
Speaker 2: New Orleans, which is humidity and heat. Now you're out
Speaker 2: in Southern California, which is I guess dry and heat,
Speaker 2: and it's getting a hotter. Discuss climate change. Is it
Speaker 2: affects your staff, the customers of your operation. It's getting
Speaker 2: hotter out in Phoenix over to La, isn't it?
Speaker 6: It?
Speaker 10: Sure is? Tom feel it. I feel it. And the
Speaker 10: thing that we look at the most is in that
Speaker 10: harbor enclave at the Port of LA. We've got two
Speaker 10: hundred and sixty thousand residents in San Pedro, Wilmington, Harbor City,
Speaker 10: Harbor Gateway, and Watts. There are millions more that live
Speaker 10: along these key commerce corridors. We believe it's our job
Speaker 10: to bring that health risk down through reduction and pollution.
Speaker 10: We've reduced diesel particulate matter tailpipe pollution by ninety one
Speaker 10: percent since we started our clean Air Action plan in
Speaker 10: two thousand and six.
Speaker 2: Did Jamie once again a month I got to get
Speaker 2: this one question and Damien takeover. Gee, how do you
Speaker 2: respond to forty five tankers stuck in the Persian Gulf?
Speaker 10: Having lived and worked in the Middle East for five years, Tom,
Speaker 10: I'm keeping up with my business contacts and lifelong friends
Speaker 10: that I made during my time stationed in Dubai. This
Speaker 10: is really tough because it's the crew members that are
Speaker 10: on these vessels that have been stranded. Now we're in
Speaker 10: our six month of this war, and there are other
Speaker 10: conflicts happening throughout the region that have put an unbelievable
Speaker 10: amount of stress on these people that guide the ships
Speaker 10: and the supply chains they support. There's an adage in
Speaker 10: our industry. If your port gets shut down for a day,
Speaker 10: whether whatever the case may be, it takes about three
Speaker 10: days to catch up. We're now six months into this war,
Speaker 10: straight of horror, moves closed, open, really closed. It's going
Speaker 10: to take a long time not only to get these
Speaker 10: ships back into rotation, but to repair the damage that's
Speaker 10: been done through this war torn region and future proof it.
Speaker 5: You know, I'd love to ask him about why the
Speaker 5: Dodgers have just lost six in row, whether or not
Speaker 5: you're worried about it. But Gene, what I really will
Speaker 5: ask he was about on Nino and how you expect
Speaker 5: the port to adapt, you know, to climate change rightly
Speaker 5: point out, I mean, Tom, I think he hit the
Speaker 5: nail on the head here. You know, there's going to
Speaker 5: be some interesting dynamics. What are you expecting through the
Speaker 5: second half of this yearfl Nino really does continue and
Speaker 5: it starts to even you know, get stronger here.
Speaker 10: Well, this is not meant to be to the detriment
Speaker 10: of any other port. Ricardo Vasquez who my friend Katin,
Speaker 10: who runs the Panama Canal Authority, good friend, great businessman.
Speaker 10: He's now faced with some issues. Yeah, what we're doing
Speaker 10: is not taking his cargo. We're planning in the event
Speaker 10: he can't move as much product through his three locks
Speaker 10: in the canal. How do we prepare in Los Angeles
Speaker 10: to get ready? I see that just on the drawing
Speaker 10: board here probably a five percent up ticking cargo because
Speaker 10: some of it will move to avoid any type of
Speaker 10: concerns in the supply chain. We're working with our Harbor
Speaker 10: Trucking Association Robert Loyer, are terminal operators, our rail partners,
Speaker 10: and longshore labor to make sure guys down the pipe.
Speaker 10: We see a little bit of an uptick. Let's get
Speaker 10: ready with our skilled labor, land and machinery to take
Speaker 10: that on. And if it doesn't happen, there's no shame
Speaker 10: in that. But we've got to have the preparedness based
Speaker 10: on these changes in supply chain patterns.
Speaker 2: We welcome all of you across America and of course
Speaker 2: early morning Pacific rim as well, from San Diego up
Speaker 2: to Vancouver farther north through good Morning Whistler where I
Speaker 2: think it's almost sixty degrees Robbie, nice sir, the way
Speaker 2: you choose to listen to us, Thank you so much
Speaker 2: on Serious XM, and of course Good Morning ninety two
Speaker 2: nine FM, Boston, ninety nine one FM, Nathan Hager Radio
Speaker 2: Washington in Bloomberg eleven three to zero Jobs Day and
Speaker 2: about I'm doing the math fifteen sixteen minutes with a
Speaker 2: great lineup. But this is just a joy on a
Speaker 2: summer Friday to talk to Jeene Soroka about the pulse
Speaker 2: going north from the port. We have stereotypes here, but
Speaker 2: as you go up to San Francisco up to Portland, Oregon,
Speaker 2: all the Carnie and Canada is doing on their west coast.
Speaker 2: It's basically a booming. How many miles I'm going to
Speaker 2: say one thousand miles? Am I guessing pretty close? It's
Speaker 2: booming right absolutely, and so are we.
Speaker 10: This Port of Los Angeles is in a period of
Speaker 10: time right now, Tom, where we've really lined up our
Speaker 10: commercial business. The relationships run deep across the supply chain,
Speaker 10: and the financial setting that we're in right now has
Speaker 10: never been better. We've got one hundred and sixty capital
Speaker 10: improvement projects on our dashtar.
Speaker 12: Give us an.
Speaker 2: Example of that. Give us a capital improvement.
Speaker 10: One of the reasons I'm in New York this week.
Speaker 10: We just signed an agreement with the Newsom administration California
Speaker 10: Governor Gavin Newsom's administration to build a new bridge that
Speaker 10: traverses from the residential areas in San Pedro to Terminal Island.
Speaker 10: I'm here seeing banks and financial constitutions so to work
Speaker 10: on a P three concept that's never been unbefel We're
Speaker 10: really excited about this. We're also building a new cruise
Speaker 10: terminal that's being helped out by a number in the industry,
Speaker 10: including Carricks and SSA, And for the first time in
Speaker 10: a generation, we've got bids due in December for a
Speaker 10: brand new container to the investment at the Port of
Speaker 10: la is off the time.
Speaker 2: I'm sorry. The bridge has got to be the true
Speaker 2: Scooball Bridge.
Speaker 4: Oh my god, it's got to be.
Speaker 5: But you know, I just thought Gen was in town
Speaker 5: basically meeting with colleagues at the Port of New York
Speaker 5: and New Jersey, you know, like going golfing and outside
Speaker 5: of port of list.
Speaker 2: Of ports here from three thousand miles away. Yeah, it's
Speaker 2: quick to the state of the ports here.
Speaker 10: Beth Rooney runs the Port of New York and New Jersey.
Speaker 10: She is one of the best in the business. And
Speaker 10: these guys mean so much. You're within drive time of
Speaker 10: two thirds of the American population with cargo coming in
Speaker 10: and out of this gateway. It is essential for the
Speaker 10: American economy.
Speaker 5: I mean, do you regularly interact obviously with the Port
Speaker 5: of New York, New Jersey, but Port of Savannah, you
Speaker 5: know all these I mean, do you guys kind of
Speaker 5: you know, like, like you rightly point out, I go
Speaker 5: preparing for some you know, some sort of something happened
Speaker 5: with the Panama Canals. You guys kind of all work together.
Speaker 5: Make sure that logistically speaking, you guys are on the
Speaker 5: same page.
Speaker 10: Yeah, and contrary to popular opinion, we all get along
Speaker 10: extremely well. The pockets of cargo, the people that we serve,
Speaker 10: and the jobs that we have to do every day
Speaker 10: are so important to this country and our local communities.
Speaker 10: It is a really good band of folks that we
Speaker 10: have working together at ports in the US today.
Speaker 2: He has never said anything negative.
Speaker 4: She has the gift. It's unbelievable.
Speaker 2: What's along shoreman make?
Speaker 10: It depends. These guys out on the West coast do
Speaker 10: really well. But this is one of the most dangerous things.
Speaker 2: You didn't answer my question. They're popping big six figures, right.
Speaker 10: Yeah, they make a good middle class wage. Now you've
Speaker 10: got registered Launchhorman about nine thousand.
Speaker 2: They make the middle class wage if this America was
Speaker 2: build on after World War Two. These are guys making
Speaker 2: a legit middle class.
Speaker 10: Wage on average north of two hundred thousand.
Speaker 2: It's why is it evaporated from America? Why have we
Speaker 2: lost the jobs that were middle class in Detroit, the
Speaker 2: jobs in New Jersey that were middle class, the ones
Speaker 2: you're living right now at the port.
Speaker 10: Again, we look at Detroit. We do about thirty billion
Speaker 10: dollars worth of business with the OEMs and Detroit and
Speaker 10: the tiered suppliers throughout the Ohio Valley. I've been impressed
Speaker 10: by what Michigan has done to modernize around the industry.
Speaker 10: You got four miles of electrical cable and cars. Now
Speaker 10: the price being at fifty thousand dollars for a new
Speaker 10: vehicle is problematic and it is symptomatic of what we've
Speaker 10: talked about with respects to inflation and trade policies. But
Speaker 10: the state of Michigan is behind its automotive industry.
Speaker 5: I mean, I mean, you know, if you're going to
Speaker 5: let me, I mean, I'm happy to ask you, Geane,
Speaker 5: what outside of you know, meeting with banks and finance
Speaker 5: types and trying to get you know, funding for you know,
Speaker 5: you for what our hopefully great investments talk to us about,
Speaker 5: you know, demand for those meetings, demand for infrastructure, demand
Speaker 5: for infrastructure investments. Are you seeing you know, people you
Speaker 5: know willing to put their hands in their pockets in
Speaker 5: this enom environment with yields where they are to to
Speaker 5: to lend to you over the long term.
Speaker 12: I do, and this.
Speaker 10: Week in New York it's been super encouraging the way
Speaker 10: folks look at it is and for agencies like ours,
Speaker 10: we have to invest through budget cycles, economic cycles, and
Speaker 10: even election cycles. Now. To build this new bridge from
Speaker 10: Stem to Stern will be about seven to ten years.
Speaker 10: So we can't get to the point where we're wringing
Speaker 10: our hands today because things don't look exactly perfect. And
Speaker 10: that's what the big thinkers here in Manhattan we're telling
Speaker 10: me this week.
Speaker 2: The K Scooble Bridge. Do you know the Dodgers have
Speaker 2: lost six in a row and they're still playing.
Speaker 5: They ran into a buzz so they ran into the
Speaker 5: Red Sox, right, and then I think the Cubs just
Speaker 5: got them.
Speaker 2: The Cuts got them.
Speaker 10: Yeah, they got swept two series in a row, one
Speaker 10: at home, one on the road.
Speaker 2: Crisis.
Speaker 4: Yes, no, I'm kidding.
Speaker 10: It's one hundred and sixty two game season. You're gonna
Speaker 10: go through bumps, Okay, back to back World Series champs.
Speaker 10: I'm not gonna count them out.
Speaker 2: Okay. Thank god Detroit named it the Gordy Howbridge, now
Speaker 2: the Terrek School Bridge. James Soroka, thank you so much.
Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live
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Speaker 2: What we're gonna do here. We're going to get the
Speaker 2: market open here in six minutes and helping out right now.
Speaker 2: Or see if wolf Associates is Bruce wolf Well actually
Speaker 2: worries about like retirement systems. This is off of his
Speaker 2: service at Blackrock, and we're thrilled he could join us
Speaker 2: today four oh one case. They've been on fire here,
Speaker 2: nobody remembers when they went down. They went down. Give
Speaker 2: us where we're going to be on our four to
Speaker 2: oh one k planning one year out, five years out.
Speaker 13: Yeah, it's a great point because it's I think affecting
Speaker 13: people's behavior quite a bit that they're like, oh, the
Speaker 13: markets are just going to keep going up. And one
Speaker 13: of the areas that I focus on is when individuals
Speaker 13: actually move into retirement and now are going to start
Speaker 13: to spend down their money, And in my view is
Speaker 13: that it's a different problem when you're thinking about individuals
Speaker 13: accumulating assets versus spending down their assets. And we've spent
Speaker 13: the last forty years, I think doing a very good
Speaker 13: job of helping individuals save for retirement. But I don't
Speaker 13: think we've spent nearly as much time and effort and
Speaker 13: helping individuals as they draw down. And the key point
Speaker 13: there is we're solving for a different problem, right, Helping
Speaker 13: people save for retirement is very different than helping them
Speaker 13: live in retirement.
Speaker 5: Bruce is you know, we live in a country that
Speaker 5: is very bifurcated just in terms of haves and the
Speaker 5: have not. Sure big take article this weekend was just
Speaker 5: an unbelievably scathing one. I mean, I have to say it,
Speaker 5: it's an amazing article. I read the whole thing. It's
Speaker 5: a tax strategy for the rich, built by the world's
Speaker 5: largest hedge fund, and they're talking about fastness, AQR and
Speaker 5: tax loss harvesting. For our audience, can you just give
Speaker 5: us a quick one thousand to few of what tax
Speaker 5: loss harvesting is and how important a role it's now
Speaker 5: playing in retirement portfolios for the rich?
Speaker 12: Sure?
Speaker 13: So, for you know, as we know, as you just
Speaker 13: was alluded to, assets have gone up dramatically, right, so
Speaker 13: you have a high level of capital gains associated with
Speaker 13: a lot of the underlying stocks. And so the idea
Speaker 13: is with tax loss harvesting is trying to find a
Speaker 13: way in essence to offset losses that you may have
Speaker 13: in your portfolio with gains and as a result, you'll
Speaker 13: net out and mitigate the amount of taxes that an
Speaker 13: individual may incur when they're selling out of a position
Speaker 13: right right, And that's clearly has become increasingly important over time.
Speaker 2: Parents does eight pages last week on annuities. I think
Speaker 2: you're dead on that. The entire thing was successfully to
Speaker 2: build up a pot and now we've got to figure
Speaker 2: out what to do with our annuities. Efficacious is a
Speaker 2: way to structure income outflow of a retirement.
Speaker 12: They are one for sure.
Speaker 13: They are one way to do it, and they're very
Speaker 13: simple annuities that you can use. And the point that
Speaker 13: I would make is when you're thinking about moving into retirement,
Speaker 13: basically I'd create two buckets. I have one bucket that's
Speaker 13: associated with delivering cash flows, so maybe your required expenses
Speaker 13: or necessities, and then you have another bucket for discretionary
Speaker 13: spend and for that bucket that's associated with it requireds.
Speaker 13: I think you want to look towards solutions, and there
Speaker 13: are interesting investment solutions as well. Aside from annuities that
Speaker 13: will deliver those cash flows, right and give you that
Speaker 13: level of certainty, right, and then for the rest of
Speaker 13: your portfolio you basically can go ahead and you can
Speaker 13: invest that more aggressively.
Speaker 2: Is your math? Four percent is still the bogie on
Speaker 2: retirement because there's a whole industry out there saying you
Speaker 2: can go higher.
Speaker 13: So I have a fundamental view that I think the
Speaker 13: four percent rule is something that is an interesting of thumb,
Speaker 13: but for some reason has become the retirement strategy for
Speaker 13: many people out there, and I don't think that's correct.
Speaker 5: Right.
Speaker 13: The four percent rule, if you go back to how
Speaker 13: it was designed, does not really reflect the realities and
Speaker 13: the complexities of people moving into retalks.
Speaker 4: One last question here.
Speaker 5: Every single guest, every single guest we've had on today,
Speaker 5: is talking about shorting duration, shorting the long end of
Speaker 5: the old curve. Yet that is critical part of the
Speaker 5: yild curve for insurers for pensions. Talk to us about
Speaker 5: what this all means. If people stop buying long dated paper,
Speaker 5: long dated treasury paper here in the US, how is
Speaker 5: it going to impact the pension market?
Speaker 13: Yeah so, as relates to yeah so buying lesson too,
Speaker 13: the market obviously is going to to drive upbraids.
Speaker 12: It's what we're seeing now, is right.
Speaker 13: I mean rates are up, which makes annuities attractive, more
Speaker 13: attractive than they were, you know five years ago.
Speaker 12: For example, who was holding.
Speaker 4: Those annuities that were five years ago?
Speaker 13: That's no problem, right, Yeah, And that's why I don't
Speaker 13: think you want to think about buying annuities as that's
Speaker 13: going to be the be all for you know, in
Speaker 13: terms of a strategy for you, it should be a component.
Speaker 13: And I would actually say the most effective way to
Speaker 13: think about annuities is around protecting against longevity.
Speaker 2: Can you stay round? Of course, don't move, Bruce Wolf,
Speaker 2: We're going to come back here. These are top topics
Speaker 2: I should mention. Bloomberg Money today at twelve noon, Meredith
Speaker 2: Whitney with us on charge Cards and Consumption and the
Speaker 2: David Kelly of JP Morgan will join us as well.
Speaker 2: We've got a special golf guest as well, because Damien
Speaker 2: said he won't watch Bloomberg Money unless we do more golf.
Speaker 4: Quite true.
Speaker 2: Seriously, at the head of the PGA, come on undred
Speaker 2: days if it's good. What a morning it has been
Speaker 2: saving us. Alexis Pistophorus and Tom Mack.
Speaker 7: Softer then expected July job support gave futures a nice lift,
Speaker 7: and that is translating into regular trading. So on this Friday,
Speaker 7: We've got the S and P five hundred starting the
Speaker 7: day off up about twenty six points, or a third
Speaker 7: of a percent, Dow Jones industrial leverage up about seventy
Speaker 7: points or a tenth of a percent. Both are on
Speaker 7: pace for their biggest weekly gained since April. We've got
Speaker 7: the Nasdaq up one hundred and ninety five points, looking
Speaker 7: at its best week since early May. Also Nasdaq one
Speaker 7: hundred up two hundred and forty three part points to
Speaker 7: start this Friday morning. The Bloomberg Dollars Spot Index down
Speaker 7: four tenths of a percent at twelve hundred point thirty.
Speaker 7: The Japanese yen up six tenths of a percent at
Speaker 7: one fifty seven forty two against the US dollar. Yields
Speaker 7: lower across the board after that weaker than expected jobs report,
Speaker 7: the two year yield four point seventeen percent, down six
Speaker 7: basis points, the ten year down five basis points at
Speaker 7: four point six two percent. We have got Bigcoin up
Speaker 7: more than one percent, now just above sixty five one
Speaker 7: hundred dollars, and spot gold is up nearly three percent
Speaker 7: at forty three fifty five the ounce, and taking a
Speaker 7: look at some stock movers, under Armor is a big
Speaker 7: loser here in the early going down about nine percent
Speaker 7: after it forecasts a bigger than expected revenue decline in
Speaker 7: the current quarter. That is your Bloomberg opening bell, Tom
Speaker 7: and Davian, thanks.
Speaker 2: So much, Alexis. Drew Mattis just publishes a met life,
Speaker 2: a blistering note on a fed on hold. He says,
Speaker 2: unemployment dips. That's the unemployment rate, but also so does
Speaker 2: participation dips, which leads to a soggy economy. SNP right
Speaker 2: the Dow up twenty two points, Nastick up eight tens
Speaker 2: of a percent. We continue with Bruce Wolf founder CS
Speaker 2: Wolf and Associates on our fractured retirement system money question
Speaker 2: Erisa nineteen seventy four. Were we better off with the
Speaker 2: defined benefit architecture than this modern everyone for themself architecture?
Speaker 12: Sure?
Speaker 13: Yeah, I mean I think if you could go back
Speaker 13: in time and ask individuals do they want to define
Speaker 13: contribution program or a defined benefit program? You would clearly,
Speaker 13: I think hear from individuals that they prefer to have
Speaker 13: a defined benefit program. And if you really think about
Speaker 13: the direction of travel with the DC structure, it's moving
Speaker 13: more and more towards trying to replicate as much as possibility.
Speaker 2: Yeah.
Speaker 13: Right, So it's a little bit of back to the
Speaker 13: future in terms of the structure. And be it within
Speaker 13: a four to one K or even through the wealth
Speaker 13: management side of the house, it's the same deal.
Speaker 5: Well, talk to us about the hedging that insurers have
Speaker 5: to do in order to match their liabilities, right, And
Speaker 5: I mean I come back to this thought that you know,
Speaker 5: doctor Crowz was talking about earlier that you know, the
Speaker 5: participation of leveraged funds, of hedge funds in the US
Speaker 5: treasury market, especially at the long end, and how volatile
Speaker 5: that's starting to get. You know, what does that mean
Speaker 5: when you're inside one of these very sophisticated, long dated
Speaker 5: perpetual insurers and you have to kind of match your
Speaker 5: liabilities to this. I mean, like, does it become more expensive?
Speaker 4: Does it be?
Speaker 5: I mean, at what point does the rubber meet meet
Speaker 5: the road here?
Speaker 2: Yeah?
Speaker 12: Sure, absolutely become more expensive.
Speaker 13: Yeah, you know, there's no question and the and you know,
Speaker 13: and then kind of coming back to for individuals, right,
Speaker 13: because this is the idea that if individuals are going
Speaker 13: to be more and more either automatically put into annuity
Speaker 13: like for example, we've seen trends with target day funds.
Speaker 13: That's right, right, where an annuity is now attached to
Speaker 13: that either you automatically put into it or you know,
Speaker 13: be able to actively move into it.
Speaker 12: You know.
Speaker 13: I think the annuity market is going to become more
Speaker 13: and more kind of democratized in a sense that more
Speaker 13: and more people are going to be taking on an
Speaker 13: annuity as a portion, right. And the key point there
Speaker 13: is as a portion of the income. And you think
Speaker 13: about it at the end of the day, what's the
Speaker 13: objective when you're in retirement.
Speaker 2: Well, we're gonna have to leave it there. Bruce Will,
Speaker 2: thank This has been perfectly time. Bruce Will, thank you
Speaker 2: so much. I may see us Wolf and associates.
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