Speaker 1: This is Bloomberg Business Wait inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radiog.
Speaker 2: The Bird.
Speaker 3: All right, everybody, we're going to stay with the jobs report.
Speaker 3: As we said, the number coming in certainly non farm
Speaker 3: payroll softer than forecast, the unemployment rate coming in as forecasts,
Speaker 3: but we did see an uptick when it comes to
Speaker 3: average hourly earnings and also average weekly hours work. So
Speaker 3: let's get to it and see what our round table
Speaker 3: has to say. Matt Elena Schaletiev a senior US economist
Speaker 3: at BNP Parrybach. She joins us in our Bloomberg Interactive
Speaker 3: Brokers studio along with our Steve Matthews, Economics reporter Bloomberg News.
Speaker 3: He's out there in Atlanta bureau, Steve.
Speaker 4: Elena.
Speaker 3: Happy Friday, Elena. Great to see you back here at
Speaker 3: Bloomberg headquarters. So talk to us about the report. Let's
Speaker 3: go through today before we start looking forward. How did
Speaker 3: you assess the numbers that we got today?
Speaker 5: Well, this was a classic example of don't change your
Speaker 5: podcast on ADP, right, so that that's the first thing
Speaker 5: that comes off, right, they were off They track, you know,
Speaker 5: things differently. But this report is telling us that things
Speaker 5: are slowing down, they continue to slow down, that nothing
Speaker 5: is urgent, recession is not imminent. But at the same time,
Speaker 5: there was signs of weakness in this report. And Matt,
Speaker 5: you listed a lot of good things. Let me tell you, like,
Speaker 5: there were a few weak things in there as well.
Speaker 2: So what was the weakest thing?
Speaker 6: I mean, if you look Carol's talking about temporary work,
Speaker 6: which I agree, if you look at that chart at
Speaker 6: snow Bueno, but what did you what did you focus?
Speaker 5: In addition to that, you should look at aggregatao's worked
Speaker 5: for the second quarter in aggregate, So if you look
Speaker 5: at that, you see that every getas worked only grew
Speaker 5: zero point one percent quorer on quarter seasonally adjusted annual rate.
Speaker 2: It's because everybody's using AI, we don't have to work
Speaker 2: as hard. That's disappointment.
Speaker 5: Yeah, that's that's a disappointment. That number is correlated really
Speaker 5: well with GDP growth, So that is telling us that
Speaker 5: economic growth is slowing down. So we're at one and
Speaker 5: a half percent in terms of GDP projections for Q two.
Speaker 5: We'll get the number pretty soon actually, and then you
Speaker 5: know what happens in the second quarter. We think that
Speaker 5: we're going to go into a downturn.
Speaker 3: And so when you think a second quarter growth is
Speaker 3: going to show one percent one and a half, which
Speaker 3: is kind of amazing because it doesn't that feels like
Speaker 3: nothing or sounds like nothing, but it doesn't feel like nothing, right, Not.
Speaker 6: One and a half percent is pretty good. I mean
Speaker 6: the first quarter was one point three percent until all
Speaker 6: of a sudden it.
Speaker 5: Was two right well, and especially it's an annualized number
Speaker 5: as well, So you just like divided.
Speaker 6: By Steve, jump in here and tell us what you
Speaker 6: read on this report is with regards to the Federal
Speaker 6: Reserve that you cover so closely.
Speaker 7: Well, the Feds will see this report as basically confirming
Speaker 7: their plans to hike in July. I mean, they had
Speaker 7: been pretty much set to hike. And there's nothing in
Speaker 7: this report that's going to change your mind that you have.
Speaker 7: You know, job there are, as you laya points out,
Speaker 7: there are some weaknesses in the report, but on balance,
Speaker 7: job creation is still running much higher than trend, much
Speaker 7: higher than the trend that they want to see. You
Speaker 7: see the unemployment rate going down, you see wages, average
Speaker 7: hourly earnings, you know, rising hours for this month rising.
Speaker 7: So it's like there are like lots of points where
Speaker 7: you know, the hawks can look at this and say, hey,
Speaker 7: this confirms our view of where the economy is. The
Speaker 7: goal of the Fed right now is to create trend
Speaker 7: growth and that would reduce pricing pressure, and they would
Speaker 7: like to see some small increase in the unemployment rate.
Speaker 7: That's not happening. This report is more consistent with very
Speaker 7: solid growth and a solid labor market. And so July,
Speaker 7: you know, absent there being some shock in the consumer
Speaker 7: price index next week, July is set that they're going
Speaker 7: to hike by a quarter quarter point. And the real
Speaker 7: question is what happens in September and November and December.
Speaker 7: And you know, there's a lot of interest among the
Speaker 7: FMC in hiking at least one more time beyond July.
Speaker 5: I totally agree with Steve that July is right there,
Speaker 5: there's no question about that, and average earlie earnings growth
Speaker 5: totally supports that. The question is about what happens next,
Speaker 5: And I think this Job's report alleviates some pressure that
Speaker 5: they need to absolutely they need to feel they need
Speaker 5: to go in September and or November.
Speaker 8: Is that?
Speaker 3: WHOA?
Speaker 5: So I think.
Speaker 3: Really they I think they will raise rates.
Speaker 5: No, no, no, they alleviate the pressure for them to
Speaker 5: do that. Okay, So I think that you know that
Speaker 5: July hike will be the last one. They will reach
Speaker 5: the terminal rate there and by the time we get
Speaker 5: to the September and November meeting there will there won't
Speaker 5: be any need to do more.
Speaker 3: Hikes, number of talks and pausing, they'll just be done.
Speaker 2: So one and done is You're done.
Speaker 3: That's our focus, Steve, in a market environment and a
Speaker 3: world where I feel like we've been all over the
Speaker 3: map already here in twenty twenty three in terms of
Speaker 3: interest rate expectations.
Speaker 7: You agree with you, Elena, I think that is a
Speaker 7: very reasonable take. And in fact that Eric Rosngren, the
Speaker 7: former head of the Boston FED, who is known as
Speaker 7: a hawk, when he was at the Boston Fed, which
Speaker 7: was only I guess two years ago, he was saying
Speaker 7: one and done. So it's like, you know, that's there
Speaker 7: is definitely a segment of the FED that will be
Speaker 7: on board with that, there are one or two people,
Speaker 7: including Raphael Bostic of the Atlanta FED, who say no
Speaker 7: more hikes. So you know, right now there are pieces
Speaker 7: of the data that you can look at and say,
Speaker 7: you know, the economy is resilient, it's strong, you know,
Speaker 7: you're still seeing a lot of momentum, and then there are,
Speaker 7: as Jolina points out, there are some areas of weakness.
Speaker 7: So you're going to see some splintering between the hawks
Speaker 7: and the doves. It's been amazing that Chair Powell has
Speaker 7: been able to pull off, you know, this big increase
Speaker 7: in rates without there being any descents in recent months,
Speaker 7: and you know you might start to see some splintering
Speaker 7: as you get near the end of this rate cycle.
Speaker 2: And we kind of saw that in the in the
Speaker 2: minutes a little bit, right, absolutely, So maybe.
Speaker 6: I think he's going to want to try and keep
Speaker 6: decisions unanimous, right, even if they don't agree up until
Speaker 6: the point that he convinces them to agree for the
Speaker 6: sake of unanimity, which seems like.
Speaker 2: We know there's crimps to me.
Speaker 6: But Ylene, let me ask you about the Economic Surprise Index,
Speaker 6: and we have obviously on the Bloomberg ECSU, but there
Speaker 6: are other economic surprise indexes, and they're all, you know,
Speaker 6: sky high. I mean, if you take out you know,
Speaker 6: the very beginning of the pandemic, when we just started
Speaker 6: dumping trillions of dollars out of helicopters. We haven't seen
Speaker 6: the economic surprise index this high since twenty seventeen.
Speaker 2: Is that going to turn around?
Speaker 4: Now?
Speaker 2: Is this the moment?
Speaker 5: I think we may be seeing the moment, especially in
Speaker 5: the labor market. I think there are a lot of
Speaker 5: questions about how the data are reported, like in terms
Speaker 5: of seasonality and everything. So one thing we haven't talked
Speaker 5: about is seasonality of payrolls. We have seen significant support
Speaker 5: from seasonal factors in the first half of the year,
Speaker 5: but by definition, if seasonality pushes it up, it should
Speaker 5: push it down in the second half of the year.
Speaker 5: And I think we saw turned intoday's data as the
Speaker 5: seasonal fact is starting to subject a little bit more.
Speaker 5: I think we will see more of that in July,
Speaker 5: in September, and I think we did see you turn
Speaker 5: in the labor market.
Speaker 3: All right, So let's move forward to next week and
Speaker 3: the CPI report. Steve, how important, I know, you know,
Speaker 3: I feel like every FED chief has their favorite Inflation
Speaker 3: Indicator CPI isn't necessarily it, but it's still an important one, right.
Speaker 7: CPI is very important. It's not the official target for
Speaker 7: the FED, but it comes before the PCE index and
Speaker 7: it's super super important. And what's going to be interesting
Speaker 7: next week is the overall the headline number is going
Speaker 7: to come down to maybe if you look at the
Speaker 7: Bloomberg consensus three point one percent. It could be some
Speaker 7: have it as low as three percent. These are the
Speaker 7: lowest numbers in more than two years. The Fed's going
Speaker 7: to be focused on core inflation, excluding food and energy,
Speaker 7: and that has been sticky. The FED has been very
Speaker 7: worried because core inflation has been very slow to come
Speaker 7: down in the first half of the year. So this
Speaker 7: is going to be key in terms of are they
Speaker 7: going to finally see some progress on core inflation. But
Speaker 7: for you know, for most Americans, the overall inflation is
Speaker 7: what matters. And if you get a number that's around
Speaker 7: three percent, that's getting really close to normal for most people.
Speaker 7: And it's like wage gains have been in the area
Speaker 7: of six percent if you look at the Atlanta Fed's
Speaker 7: wage tracker. So people are starting with gas prices coming
Speaker 7: down people are starting to get real wage gains, so
Speaker 7: it's like that should have some kind of impact on
Speaker 7: how people feel about you know, confidence has been really
Speaker 7: bad of late.
Speaker 6: And confidence is key, right, I mean, Yelena, how important
Speaker 6: is the consumer inflation expectation to what the Fed wants
Speaker 6: to do?
Speaker 4: Well?
Speaker 5: It's crucial. So and if the Fed seas inflation expectations
Speaker 5: being contained, that will just help.
Speaker 2: They were down when the U of M number came out, right.
Speaker 5: Yes, and gasoline prices could help if they go down
Speaker 5: a little bit from here. I think what we really
Speaker 5: the crucial point here is the label market. It's you
Speaker 5: know a little bit about inflation, a little bit about
Speaker 5: this and that, but what happens in the label market
Speaker 5: is crucial. You have to keep those you know.
Speaker 3: Dollars coming in you have a job.
Speaker 5: If you don't have a job, you know, that's it.
Speaker 5: You're not gonna continue spending. And things we will see
Speaker 5: will well, they will come.
Speaker 6: I can't get I mean, it can't get much better, right,
Speaker 6: so they can only get worse. But they have to
Speaker 6: get much worse to really make a difference. I mean,
Speaker 6: three point six percent on employment.
Speaker 3: I'm just gonna say, Barbie would already have it at
Speaker 3: two percent inflation.
Speaker 2: Yeah you think I don't know the Barbie story.
Speaker 3: But Steve Matthews, thank you, thank you. Have a great weekend.
Speaker 3: JOLNISCHELETTI have us so great to have you in studio again.
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Speaker 3: Right now that we want to stay with the US
Speaker 3: labor picture because the Temporary Helps Service.
Speaker 6: Payroll, well, yes, should I just round up what we
Speaker 6: saw in terms of the numbers today, because I think
Speaker 6: it was still a pretty amazing number. We had a
Speaker 6: change in non farm payrolls. It was a gain of
Speaker 6: two hundred and nine thousand, which normally you know, that's
Speaker 6: big game. We were looking for two hundred and thirty.
Speaker 6: That was the survey. And remember that we'd beaten in
Speaker 6: the last fourteen months. The number beat the survey, so
Speaker 6: obviously people continue to up their numbers for the survey,
Speaker 6: and now we finally missed.
Speaker 3: And the Temporary Help Service payroll though declined again. It
Speaker 3: is considered as a leading indicator for the unemployment rate.
Speaker 3: So let's get some thoughts on that, because with us.
Speaker 3: Back with us is Richard Walcust He's president CEO of
Speaker 3: American Staffing Association, a trade association representing the American staffing industry,
Speaker 3: and he jes us on zoom from Alexandria, Virginia. Richard,
Speaker 3: good to have you here with Matt and myself. So
Speaker 3: remind us of your members and then what you guys
Speaker 3: are seeing when it comes to the US labor market.
Speaker 9: Sure, hello Carol, Hello Matt. So our members are sourcing
Speaker 9: talent into every industry in the United States, including mgos,
Speaker 9: and a big piece of the business for the industry
Speaker 9: is in the government sector. The industry literally sources talent
Speaker 9: into every occupation in the United States. And you're exactly right, Carol,
Speaker 9: people take a look at our industry because we are
Speaker 9: a leading employment indicator, which is to say that traditionally,
Speaker 9: and of course every economic cycle is a little bit different,
Speaker 9: and this one's been very much different. But traditionally, temporary
Speaker 9: help is a leading indicator when when the economy is
Speaker 9: beginning to heat back up again and employer confidence is
Speaker 9: picking back up again. We're a leading indicator as we
Speaker 9: see economic uncertainty, and so what we've been seeing over
Speaker 9: the past several months, very typical of this kind of
Speaker 9: a segment in the economic cycle, is employers have been
Speaker 9: dialing back on their use of flexible talent as a
Speaker 9: first tier strategy. Is they're kind of taking a good
Speaker 9: hard look at what might be ahead. At the same time,
Speaker 9: we continue to hear reports that they are adding to
Speaker 9: their talent benches, and that reflects, I think confidence in
Speaker 9: what's ahead, whether we've got a bit of a soft landing,
Speaker 9: a short and shallow recession, they're confident. They want to
Speaker 9: hang onto the talent that they've.
Speaker 3: Got right, so they're pulling back. I'm a little confused
Speaker 3: they're holding on or they're pulling back.
Speaker 9: They're pulling back, so they're dialing back on that flexible
Speaker 9: outer ring of talent. So these are temporary and contract workers,
Speaker 9: and so they're they're dialing back on that. At the
Speaker 9: same time, we're talking to CEOs that say they still
Speaker 9: continue to get orders for full time talent. I think
Speaker 9: that the job numbers reflect the fact that we've got
Speaker 9: job openings in America. The Jolts numbers indicate we've got
Speaker 9: one point six job openings for every unemployed job seeker.
Speaker 9: But here's the other thing, Matt and Carroll. Not everyone
Speaker 9: that's seeking a job has got the skills that employers
Speaker 9: currently need. So I'm hearing from our members that the
Speaker 9: talent is still a scarce commodity in terms of certain
Speaker 9: skill sets in certain industries.
Speaker 6: Are you hearing that people are coming back in the
Speaker 6: labor force who had been sitting it out during the pandemic.
Speaker 6: Elena Shiliyev was just with us from BNP Perrybond. She
Speaker 6: was saying, you know, women especially are starting to come
Speaker 6: back into the labor force.
Speaker 2: Now.
Speaker 9: Women have actually been the winners Matt over the last
Speaker 9: couple of the BLS reports, we're seeing uptick in terms
Speaker 9: of number of women that are part of the labor force.
Speaker 9: Labor force participation rates are stagnant. I mean they haven't
Speaker 9: really moved much in the last several months, and they
Speaker 9: continue to be well below the levels that we saw
Speaker 9: pre pandemic, roughly running in the levels we saw in
Speaker 9: the nineteen seventies. In fact, matters a lot of people
Speaker 9: have left the labor force. If we were running the
Speaker 9: same labor force participation rate as we were pre pandemic,
Speaker 9: we'd have another two million workers in the labor force
Speaker 9: or actively seeking work. So, yes, women have been a
Speaker 9: winner here. Employment amongst the minorities, especially Black Americans is
Speaker 9: ticked down.
Speaker 8: A little bit.
Speaker 3: Well yeah, actually, you know, we had some stories that
Speaker 3: black workers accounting for ninety percent of the recent US
Speaker 3: unemployment jump. So you know, once again we're seeing as
Speaker 3: things maybe get changed a little bit, or we start
Speaker 3: to maybe potentially be at a transitional point, potentially maybe
Speaker 3: in the labor force that once again, you know, some
Speaker 3: of the minority groups being hit the hardest. So, Richard,
Speaker 3: the reason we like talking with folks like you is
Speaker 3: you have these industry members and so you get a
Speaker 3: good cross sampling of what's going on. So do your
Speaker 3: members talk a lot about recession? Just trying to figure
Speaker 3: out kind of where As we had a SoundBite from
Speaker 3: the head of Marathon Asset Management saying that you typically
Speaker 3: don't see the unemployment rate go up until after we
Speaker 3: are in a recession. So I'm just curious, are they
Speaker 3: talking about recession? Are they concerned about it? Just curious.
Speaker 9: So the level of concern always concerned about a downturn
Speaker 9: that turns into an absolute recession. But the level of
Speaker 9: confidence in the state of the economy has gone up,
Speaker 9: I think exponentially, Caroll, over the last eighteen months, people
Speaker 9: have been talking about that recession. It's going to happen
Speaker 9: six months from now, six months from now. But between
Speaker 9: labor markets and consumers spending stubbornly, pieces of the economy
Speaker 9: just aren't cooperating with some of the forecasts. Back to
Speaker 9: the labor of force participation rate, I think what's most
Speaker 9: encouraging is that in the twenty five to fifty four
Speaker 9: year old segment considered to be prime workers, that labor
Speaker 9: force participation rate has actually gone up. But around the
Speaker 9: people that are on the sidelines, younger workers and older workers.
Speaker 9: Way too many of them on the sidelines, and I
Speaker 9: think that should be a priority for both the public
Speaker 9: sector and the private sector to find ways to bring
Speaker 9: these folks back. In regarding minority employees, well.
Speaker 3: We had a great piece on the Bloomberg yesterday, the
Speaker 3: Bloomberg Big Take, I believe it was, and it was
Speaker 3: just talking about all the factories that are being built
Speaker 3: in the United States, but that the technical skills you
Speaker 3: know that there are workers that you know that they're
Speaker 3: going to be needed in those factories, but they're not
Speaker 3: going to have the technical skills to take on those jobs.
Speaker 3: And I'm just is that part of what you guys
Speaker 3: are working on.
Speaker 9: Or absolutely a very big way. So the upskilling and
Speaker 9: the reskilling the retraining of America has become a priority
Speaker 9: in most sectors, and our industry is working both with
Speaker 9: the clients and with government to find ways to make
Speaker 9: it really a reality. We've given lip service to lifelong
Speaker 9: learning for as long as we've been part of the
Speaker 9: labor for us, but we have never seen so many
Speaker 9: changes within occupations. And the big change is now that
Speaker 9: employers are really focusing on skills, not so much job descriptions,
Speaker 9: not so much degrees that have long been associated with
Speaker 9: kind of entry level requirements to get a foot in
Speaker 9: the door, really focusing on skills and within the skill sets,
Speaker 9: then going in and saying, look, we're going to have
Speaker 9: to do some upscilling here. In terms of the impact
Speaker 9: that technology is having on now we believe, you know,
Speaker 9: some thirty five percent of jobs, It's going to impact
Speaker 9: some sixty five percent of jobs over the next few
Speaker 9: years and it's got to be an absolute priority, all right.
Speaker 3: Could I leave it on that note, Richard, have a
Speaker 3: good week. And Richard Walquist he is President and chief
Speaker 3: executive officer of American Staffing Association on zoom in Virginia.
Speaker 3: You know, Matt, you know, we'll see what happens. I
Speaker 3: feel like, you know, companies have been afraid to let
Speaker 3: go of workers, right, We've talked about worker hoarding and
Speaker 3: so and so overk because they're wried about being able to
Speaker 3: replace those workers. But we'll see. Thinks you to slow down.
Speaker 6: Well, the interesting thing I think is hours worked, as
Speaker 6: Julena Shuley gave it pointed out. Once she did, I
Speaker 6: started digging a little bit deeper into it. It just
Speaker 6: haven't hasn't expanded in the second quarter. And I made
Speaker 6: a little bit of a joke about AI kind of
Speaker 6: taking some of the productivity away. But that's what you're
Speaker 6: going to start seeing in yea probably the not too
Speaker 6: distant future. You know.
Speaker 3: I'm also thinking about I was at a store yesterday
Speaker 3: here in New York City and I checked myself out
Speaker 3: and it was a clothing retailer that I've never done
Speaker 3: that before. But it's just I think you have more
Speaker 3: and more places that just can't find workers, and so
Speaker 3: they're automating.
Speaker 2: Stuff right where they want to do it that way, right.
Speaker 3: Yeah, or they want to do it that way exactly.
Speaker 3: And I thought that was pretty wild.
Speaker 2: That is what the clothing store.
Speaker 3: I'm not going to tell you.
Speaker 2: Oh come on, I'm not going to tell you. All right, well,
Speaker 2: maybe you'll tell you.
Speaker 3: But I actually had to take off the security sense
Speaker 3: like it was crazy.
Speaker 2: That's nuts.
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Speaker 3: All right, well today, JP Morgan out doubting that a
Speaker 3: US bitcoin ETF would be a game changer, Matt. They
Speaker 3: noted that such funds have existed in Canada and Europe
Speaker 3: for years already, and that bitcoin funds overall have attracted
Speaker 3: little investor interest.
Speaker 6: And yet, yes, well you know what, there were a
Speaker 6: ton of inflows to crypto ETFs last month, over five
Speaker 6: hundred million dollars which doesn't sound like that much, granted,
Speaker 6: but there were outflows in the year before that, so
Speaker 6: it's turned around, even if it's not a titanic size yet.
Speaker 3: All right, But what they're saying that these things have
Speaker 3: been around overseas bitcoin ETFs and not a ton of
Speaker 3: fun a ton of yelo exactly.
Speaker 2: I mean, it's not huge, but I'm just saying.
Speaker 6: You can see a change in direction. And after Blackrock
Speaker 6: and others started filing ETF application.
Speaker 3: Which is what we want to talk about. We've got
Speaker 3: a great guest for our weekly look at the World
Speaker 3: of Crypto with US is Swan Bitcoin Managing director Terrence
Speaker 3: Yang on Zoom from La Terrence, Hey, nice to have
Speaker 3: you here with Matt and me. So what do you
Speaker 3: think of bitcoin ETF and moves by Blackrock and Fidelity
Speaker 3: and others when it comes to a spot bitcoin and
Speaker 3: tf ARC has definitely been out there for a long
Speaker 3: time on that, so.
Speaker 4: Thanks for having me. Great to be here.
Speaker 8: I think that the JP Morgan's of the world may
Speaker 8: be underestimating.
Speaker 4: How bullish this is.
Speaker 8: Why because even though gold dtfs did not cause a
Speaker 8: big that big of a jump in the gold market cap,
Speaker 8: when the gold dtfs arrived and Bitcoin with So the
Speaker 8: argument is the Bitcoin great scale trust.
Speaker 4: Right, GBT already.
Speaker 8: Has a big market cap and so therefore, if you
Speaker 8: look at the gold ETFs and compare what Blackrock and
Speaker 8: Fidelity and Invesco are doing and others, that maybe there's
Speaker 8: not much room for Bitcoin to grow. I think that's incorrect.
Speaker 8: Why because gold has been around for thousands of years,
Speaker 8: It's globally accepted by the time the gold etf came out.
Speaker 8: For Bitcoin to have this kind of institutional support from
Speaker 8: the top trad five players Blackrock, Fidelity, Invesco and others
Speaker 8: is massive.
Speaker 4: This comes, by the way, in the face of the SEC.
Speaker 8: Going back to back against Coinbates and Finance a month ago.
Speaker 2: But not for Bitcoin, right.
Speaker 6: I mean, the SEC is after those operators for what
Speaker 6: they consider to be securities, and I can imagine I
Speaker 6: can see that point of view. Even if you argue
Speaker 6: their commodities, you have to admit that they could look
Speaker 6: like securities, and a lot of them are just blatant securities. Bitcoin, however,
Speaker 6: the SEC has been very clear about it is not
Speaker 6: a security, and I can't understand any reason they would
Speaker 6: have to fight against a bitcoin ETF unless they think
Speaker 6: that the price of the underlying commodity is being manipulated,
Speaker 6: and that is.
Speaker 4: The core of the issue.
Speaker 8: Bitcoin is a commodity, It does not meet the elements
Speaker 8: of how we test it's decentralized.
Speaker 4: Even Larry Fink.
Speaker 8: Who five years ago, the CEO of Blackrock, five years
Speaker 8: ago said bitcoin was basically garbage, has now come around
Speaker 8: and said Bitcoin is digitizing goal and is a global
Speaker 8: commodity or global asset. On your point about the market manipulation,
Speaker 8: the SEC Division of Markets and Trading does need to
Speaker 8: get comfortable that these surveillance sharing agreements that Black Croc,
Speaker 8: Fidelity and all the others including ARC and Kathy Woods,
Speaker 8: all their ETF applications, new submissions, resubmissions, they all have
Speaker 8: these surveillance sharing agreements where they're looking at coin dates,
Speaker 8: they're looking at Nasdaq to make sure that there's no
Speaker 8: price manipulation.
Speaker 4: Here's the question, is the SEC going.
Speaker 8: To prove this in light of the fact that Chinese exchanges,
Speaker 8: I hate to say it, including Binance, okay Coin, and Hoby,
Speaker 8: continue to do what looks like significant wash trading and
Speaker 8: price manipulation.
Speaker 4: We'll see.
Speaker 8: So I think it's an open question as to whether
Speaker 8: or not the spot bitcoin ETF gets approved soon. It
Speaker 8: will eventually happen. But yeah, the key issue is the
Speaker 8: market manipulation.
Speaker 2: So do you think, Terrence, that those.
Speaker 6: Organizations you just mentioned are actively men manipulating the price
Speaker 6: of bitcoin, you know, anymore than some giant banks may
Speaker 6: actively manipulate the price of silver and gold.
Speaker 8: Possibly more so because even though, for example, JP Morgan
Speaker 8: has been caught manipulating certain precious metals and fined heavily,
Speaker 8: these are non US entities that use a lot of.
Speaker 4: Tricks and ways to avoid.
Speaker 6: We should point out that these are these are allegations.
Speaker 6: It's not there, they are not uncommon.
Speaker 2: I would say, I don't conspiracy theory. I don't. I
Speaker 2: mean that sort of paints it with a nasty brush theory.
Speaker 6: But I'm just saying that they're they're allegations because we
Speaker 6: can't say that, you know, you can't make.
Speaker 4: Them for sure.
Speaker 8: But if I were a betting man, and I am,
Speaker 8: I would bet a lot of money that the Chinese
Speaker 8: exchanges are manipulating the bitcoin price.
Speaker 4: It's it's very hard to prove, right, but fight a bet.
Speaker 2: Yeah, But so do you think.
Speaker 3: Now people went were convicted and like, I mean.
Speaker 2: Yes, yeah, for sure. So yeah, you're talking about the
Speaker 2: JP Morgan or Silver Ye.
Speaker 8: Yeah.
Speaker 6: But but in terms of the surveillance agreements, do you
Speaker 6: think that they're gonna be Is surveillance gonna do much here?
Speaker 6: I mean, if if we can't really pinpoint what's happening
Speaker 6: in terms of potential or alleged market manipulation, is coinbased
Speaker 6: surveillance gonna be able to do any better?
Speaker 3: Especially since US Chinese relationships are so good right now?
Speaker 3: Sarcasm I'm sorry, yeah, a little sarcasm.
Speaker 8: They can help, right, So the argument is that if
Speaker 8: you have a surveillance agreement sharing agreement with a big
Speaker 8: enough exchange such as coinbase having significant market share the
Speaker 8: bitcoin market, maybe that's enough. I personally think the SEC
Speaker 8: made is they have an inconsistency right where they approved
Speaker 8: futures US futures Bitcoin ETFs but not spot, arguing that
Speaker 8: the futures bitcoin prices were regulated on the CME and
Speaker 8: so forth. But at the end of the day, they
Speaker 8: all link back to bitcoin, and the price if it's
Speaker 8: manipulated in one sector, does impact another sector. So I
Speaker 8: think it's going to be short term bullish until the
Speaker 8: market maybe figures out that a spot bitcoin ETF maybe
Speaker 8: a little bit further away than people think.
Speaker 2: Can I ask your expectation for the price?
Speaker 6: I mean, I know it's a silly parlor game, but
Speaker 6: you did made a very good point. You did make
Speaker 6: a very good point, Terrence. You know, if if all
Speaker 6: of the bullish money right now is already in GBTC,
Speaker 6: you know, then why would someone is massive, a behemoth
Speaker 6: like Blackrock want a file for an ETF. They must
Speaker 6: think that thirty thousand is not the limit.
Speaker 8: That there's one possibility, a very rational basis for doing so.
Speaker 8: Another possibility that I think is more probable is Blackrock
Speaker 8: and the others are betting on the fact the non
Speaker 8: zero chance a significant risk that the SEC will lose,
Speaker 8: including on appeal the litigation with Grayscale and GBDC. Right, so,
Speaker 8: Greyscale is suing the SEC saying we want to be
Speaker 8: able to have a spot bitcoin ETF, you should let
Speaker 8: us convert, and the SEC is saying no.
Speaker 4: So we'll see what the courts says.
Speaker 8: So if the court's rule in favor of Grayscale, that
Speaker 8: is going to open the floodgates for Blackrock and Fidelity
Speaker 8: and others to be like, hey, we're much more credible.
Speaker 8: We've been around longer than Grayscale and very sober and
Speaker 8: his shenanigans arguable allegedly, And we want our bitcoin ETF.
Speaker 4: SPOTYTF approved as well.
Speaker 8: Why because they see opportunity, why not file or refile?
Speaker 3: Well, like you said about the credibility of something like
Speaker 3: a black Rock or Fidelity and just got about thirty
Speaker 3: thirty five seconds. But I do think about those folks
Speaker 3: going down to DC with their deep pockets and lobbying efforts,
Speaker 3: I mean, and a lot more influence.
Speaker 4: Correct, yes, a lot more influence.
Speaker 8: However, I don't expect a spot bitcoin ETF to be
Speaker 8: approved for anybody, black Rock or otherwise by your end.
Speaker 8: But eventually, within two years, absolutely it will be approved.
Speaker 3: So just a timing issue in my opinion.
Speaker 6: Hey listen, great, Yeah, Well I was going to say,
Speaker 6: great to have you on the program, Terrence, and I
Speaker 6: hope you'll come on my Bloomberg Crypto show as well.
Speaker 4: I'd love to thank you.
Speaker 6: That that is weekly Tuesdays at one pm on Bloomberg Television.
Speaker 3: Hashtag shameless plug.
Speaker 2: Thank you, but we love it. Terrence Yang.
Speaker 3: You are great managing director at Swan Bitcoin, joining us
Speaker 3: on Zoom from Los Angeles, California. No, really smart conversation, right,
Speaker 3: and very specific in terms of what's going on on there.
Speaker 3: Brother Mark.
Speaker 6: A journal how about you let me drive?
Speaker 2: No, no, no, no, who's going to drive?
Speaker 6: Honey?
Speaker 2: Please, I'll do the riding gravels.
Speaker 9: Let's mate, I want to try it. It's a good question.
Speaker 2: This is the drive to the globe dot com commute.
Speaker 1: We'll buy around on Bluebirg Radio.
Speaker 3: All right, everybody, just under eighteen minutes left in today's
Speaker 3: trading session, getting ready to wrap up the Friday trade
Speaker 3: as well as the shortened holiday, shortened trading week, and
Speaker 3: we've had Ecuy's kind of bouncing around here, and same
Speaker 3: thing for the treasury trade coming off of that monthly
Speaker 3: jobs report. We've got a great market guest and looking
Speaker 3: forward to see what he has to say and joining
Speaker 3: with us. Joining us right now, I should say, is
Speaker 3: Vance Howard. He's chief executive officer and portfolio manager at
Speaker 3: the registered investment advisor Howard Capital Management Management on Zoom.
Speaker 3: It is a Friday on Zoom from Texas fans. Good
Speaker 3: to have you back with us, and I should point
Speaker 3: out several of your funds, the tactical growth ninetieth percent
Speaker 3: all over the past three years, the income plus fund
Speaker 3: and the ninety eighth percentile year to date the HCM
Speaker 3: dividends sector plus ninety six percent all of the past
Speaker 3: five years. So some really outstanding performance.
Speaker 2: You're killing it.
Speaker 3: We like to see performers. We like that real numbers.
Speaker 3: How's this environment? How do you describe it? Right now?
Speaker 10: I think you've reached a new bull market. You know,
Speaker 10: the trend went higher in January. We're one hundred percent invested.
Speaker 1: Now.
Speaker 10: I'm bullish, and I'm pretty optimistic about the outcome for
Speaker 10: the next two quarters.
Speaker 4: Of the year.
Speaker 10: You know, whenever you have the market up ten percent
Speaker 10: or more in the first two quarters of the year,
Speaker 10: the odds are very very hot that the last two
Speaker 10: quarters will be hiringy from eight to ten to twelve percent.
Speaker 10: There's a lot of reasons for this, but we're bullish.
Speaker 10: We'ree hundred percent invested. Now that we're invested, we're starting
Speaker 10: to rotate our money to different sectors that we think
Speaker 10: will out perform, are different stocks, and we're very optimistic.
Speaker 6: So, I mean, the S and P has already had
Speaker 6: had a pretty killer year, right, Can it really get
Speaker 6: much better? Or do you expect, you know, the narrow
Speaker 6: breadth to simply broaden out.
Speaker 10: I think the narrow break going to start to broaden out.
Speaker 10: I mean, clearly it's been led by five or six stocks,
Speaker 10: but you could start to see that starting to broaden
Speaker 10: out now. And you look at you know, breakouts like
Speaker 10: Visa and other, you know, Boise Cascade broke out in
Speaker 10: the construction area, and some of those stocks are looking
Speaker 10: very attractive to us. I think it's going to broaden out.
Speaker 10: I think I think there's five point five trillion of
Speaker 10: cash on the sidelines. You've got enough cash to fuel
Speaker 10: this thing much much higher than what it is now.
Speaker 10: I think there's more cash on the sidelines than they're
Speaker 10: war in two thousand and eight, and coming out of
Speaker 10: two thousand and eight, you almost had a decade long bullmarket.
Speaker 3: Well, let me ask you something, avounce. You know, when
Speaker 3: you've got a ten year at four oh six, a
Speaker 3: two year at four nine, so just below five percent,
Speaker 3: you know, that starts to look kind of interesting, you know,
Speaker 3: for an equity investor, and maybe without some of the
Speaker 3: you know, problematic concerns about higher rates and what it
Speaker 3: does for acid valuation. So what's your argument, you know,
Speaker 3: income versus the equity play.
Speaker 10: Well argument, I mean, I know, I know we've got
Speaker 10: an inverted deal, Kurt, I see it just like everybody
Speaker 10: else does, and we may end up having a mild procession.
Speaker 10: I know, I don't know. Nobody can really predict that.
Speaker 10: Everybody's trying to gain that right now. But you've got
Speaker 10: to trade what's actually happening in the market. This is
Speaker 10: one of the biggest mistakes I think fund managers investors
Speaker 10: make is they want to predict instead of looking at
Speaker 10: what's happening right this minute, because that's all we know. Well,
Speaker 10: right this minute, the trend's up. You got to be
Speaker 10: in until the trend changes, you know. Stick with that
Speaker 10: thesis and I think you'll make a whole lot of
Speaker 10: money going forward.
Speaker 6: So what's the best strategy. You run a number of
Speaker 6: different strategies. But what do you like right now?
Speaker 2: For uh?
Speaker 6: Are you looking for games you know, capital appreciation here
Speaker 6: or are you looking to conserve?
Speaker 2: You like dividends? What? What? What? What's most interesting to you?
Speaker 10: Well, we don't have a lot of high dividend paying
Speaker 10: stocks or value stocks, right now because they're just not
Speaker 10: working as well. They worked well last year in the
Speaker 10: nasty bear market, but right now you've got to play
Speaker 10: what's working and that that's that's megacap, that's tech, and
Speaker 10: you've got to stay right there until that that changes
Speaker 10: some of the sectors that are working a little bit
Speaker 10: over the past handfull of days. Not that we own
Speaker 10: that much of energy, but again, trade what's work and
Speaker 10: do more what's working less and what's not and you know,
Speaker 10: make a CAP's work and text working. And you know,
Speaker 10: everybody's always trying to find the next silver bullet here,
Speaker 10: but sometimes the obvious is where you need to be.
Speaker 10: And that's the obvious.
Speaker 3: So why do you need to be in Monster Beverage
Speaker 3: right now?
Speaker 6: You know?
Speaker 10: I like the little stock. I think that it did
Speaker 10: reasonably well. It's had a couple of acquisitions. I think
Speaker 10: it's a little bit of one of those stocks that
Speaker 10: appears to be broadening out. I like the technicals on it.
Speaker 10: And you know, how long will we own it, whether
Speaker 10: we own it a week, a year, you know, who knows.
Speaker 10: We'll see what it happened, what happens with that topic.
Speaker 3: But you own it now?
Speaker 2: Right we have a little piece ships, So you like that,
Speaker 2: you like Visa. What was the other stock you mentioned, Bioten.
Speaker 10: You know, I really like Boise Cascades, Bois cast Cad,
Speaker 10: little company with you know, symbols, BCC, but it broke
Speaker 10: out of a nice fifty two week of high. Now
Speaker 10: I love fifty two week highs, guys, I love them.
Speaker 4: I love them. I love them.
Speaker 10: Let me tell you why you cannot double your money
Speaker 10: without a stock breaking out to new fifty two week
Speaker 10: high all the times. It's pretty pretty hard to do.
Speaker 10: But they're a construction company. They sell construction supplies. They've
Speaker 10: got a great balance sheet, well managed. I think construction
Speaker 10: is going to do well even if we hit a
Speaker 10: recession ary environment. What happens with building materials, Well, people
Speaker 10: have to fix their own homes. They've got to go
Speaker 10: out and buy different two by fours and paint and calk,
Speaker 10: and these are the kind of things that they sell.
Speaker 3: So it's really interesting because you know, we spend so
Speaker 3: much time talking about Macro. It kind of makes me
Speaker 3: a little crazy because who the heck knows ultimately how
Speaker 3: it's going to play out. But what you're saying is,
Speaker 3: look at the technical is look at the fundamentals of
Speaker 3: some of these names, and I am curious, do you
Speaker 3: think earnings this earning season is potentially going to be
Speaker 3: something that can provide some momentum upside downside, because we're
Speaker 3: going to start getting some more specifics on each of
Speaker 3: these companies.
Speaker 10: That's a great question too. And I think that the
Speaker 10: earnings came out really quite well over the past couple
Speaker 10: of months, past couple of quarters, and they do not
Speaker 10: seem to be slowing down. You know, you had a strong,
Speaker 10: strong jobs market, so that means plenty of people have
Speaker 10: jobs out there. There's plenty of money being made, a
Speaker 10: lot of cash on the sidelines. I don't see that
Speaker 10: their interest rate being risen the way that it is
Speaker 10: is affecting earnings at all. I think that these companies
Speaker 10: are making money hand over fist, and I think people
Speaker 10: need to really focus in on that, and I think
Speaker 10: they really need to try to stay away from the
Speaker 10: negative and look at the positive, because if we are
Speaker 10: in a new bull market, the best gains are in
Speaker 10: the beginning phases of a new bull market.
Speaker 2: I got it.
Speaker 6: Speaking of bulls, I got to ask you about cattle.
Speaker 6: We have seen a lot of well the hottest month
Speaker 6: on record in June. Right, we've seen a lot of
Speaker 6: farmers rotate out of soy in the cork corn so
Speaker 6: feed is more expensive, the herds are smaller, and you have.
Speaker 2: Some cattle yourself. Right, We've seen the prices just soar
Speaker 2: this year, beef prices. Have you have a take on that?
Speaker 10: I do have a take. I just had four baby
Speaker 10: longhorns about two weeks ago. So I've got four baby
Speaker 10: long horns on the ground right now. And yeah, yeah,
Speaker 10: have prices are doing well cattle. You know, it is
Speaker 10: hot here in Texas, but you know, cattle new fine
Speaker 10: in hot weather. We're fine with that.
Speaker 6: I was just wondering about because we we look at
Speaker 6: the price increases, not just for beef but also for pork.
Speaker 6: It's done really well. Everybody's trying to switch over to
Speaker 6: chicken right now. They're a lot easier to raise. But
Speaker 6: I just think this is something that's getting a lot
Speaker 6: more attention than it typically does on Wall Street.
Speaker 10: Well, that's an interesting question. Usually people don't ask me
Speaker 10: about the ranch.
Speaker 3: I could say that's why we love Matt Hey Vance
Speaker 3: Real quickly, I'm looking at your tactical growth fund. I
Speaker 3: get it. There's a lot of tech in there, the
Speaker 3: qqqs and Vidia Meta. I mean, you're really all in
Speaker 3: on technology, aren't you.
Speaker 10: And it's working. It's working this year. You know, we
Speaker 10: got our first boss signal in January, so we started
Speaker 10: moving back into the market. We were heavy into cash
Speaker 10: last year. Last year was a very challenging market to
Speaker 10: trade do the volatility, and we did our best to
Speaker 10: trade through it. That did a fairly decent job. But
Speaker 10: when you look at the relative strength, you've got to
Speaker 10: go into tech. You've got to go into a m D.
Speaker 10: You know, I've been telling people about a video back
Speaker 10: when there was a one hundred and forty a share.
Speaker 3: Yeah, Microsoft, Apple, these are all in that fun Hey listen,
Speaker 3: I'm always fun to catch up with you and talk tech,
Speaker 3: her talk cattle. It's always they, I know, Van Howard
Speaker 3: of Howard Capital Management while joining us on Zoom and Texas.
Speaker 3: This is Bloomberg BusinessWeek.
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