Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller.
Speaker 2: Every business day we bring you interviews from CEOs, market pros,
Speaker 2: and Bloomberg experts, along with essential market moven news.
Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever
Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.
Speaker 3: We've got a good block of time here and we're
Speaker 3: gonna need it.
Speaker 4: Daniel D.
Speaker 1: Martino Booth joins us here on our Bloomberg Interactive Broker's studio.
Speaker 3: You know her, you know her work.
Speaker 1: CEO and chief strategists at QI Research. Daniel, thanks so
Speaker 1: much for joining us here, Boyd. A lot of economic
Speaker 1: data coming out over the last several days. I don't know,
Speaker 1: the economy seems pretty darn strong to me. I'm not
Speaker 1: sure if the recession talk is off the table. What
Speaker 1: does our Federal Reserve do?
Speaker 3: Look at some of the eco data we've seen over
Speaker 3: the last several days.
Speaker 5: Well, you have to bear in mind, I'm of the
Speaker 5: mind that the Federal Reserve wants a reason to keep
Speaker 5: raising rates. Okay, and we follow one metric at QI
Speaker 5: Research the most closely because it's got the least noise
Speaker 5: in it, so not statistically not seasonally adjusted continuing claims.
Speaker 3: Okay, So I'm gonna make this really simple.
Speaker 5: Last September, there were zero states in the United States
Speaker 5: of America that had rising year over year continuing claimants.
Speaker 5: So the number of individuals in zero states in terms
Speaker 5: of rising beneficiaries. Okay, last September, forty six states as
Speaker 5: of this morning's data have rising continuing claimants. That's ninety
Speaker 5: ninety four percent of the population.
Speaker 3: Wow, Okay, so what's that tell you that?
Speaker 5: And it's been gradual, by the way, this is not
Speaker 5: like from September and a light flipped on in July.
Speaker 5: It's a very gradual move. And it tells me that
Speaker 5: even though the data is not fast moving, that seasonality
Speaker 5: is really giving a lot of trouble to a lot
Speaker 5: of these other data sets. And it just tells you
Speaker 5: that there's been a steady, a steady degradation in the
Speaker 5: US economy viewed through the purest prism of people continuing
Speaker 5: to claim jobless benefits. Not initial, they're not they're not applying,
Speaker 5: they're they're collecting.
Speaker 3: What is eighty I don't know what to do with
Speaker 3: ad you.
Speaker 6: Know, you know, what do you do with ADP?
Speaker 3: I tell you what with ADP?
Speaker 5: You go, Look, we've had about four hundred and we've
Speaker 5: we've had about three hundred and forty eight thousand last
Speaker 5: six months NFP non farm payrolls YEP ADPs three hundred
Speaker 5: and sixty three last six months. Okay, fine, it's caught up.
Speaker 5: Moving on some of that. Some of the aberrations in.
Speaker 3: The data are bizarre.
Speaker 5: Leisure in hospitality, mining. Did we discover copper in America?
Speaker 7: Mining?
Speaker 5: Because that was a huge pop in mining. So and
Speaker 5: we've seen the Baylor, We've seen the Baker, Riggs, Hughes,
Speaker 5: rigcount I can't speak this one. I've had too much coffee.
Speaker 5: We've seen rig counts come down. Okay, So there's no
Speaker 5: reason to think that there's a whole bunch of shale
Speaker 5: formation that's pulling people into the energy patch.
Speaker 1: So you think the economy is weaker than some of
Speaker 1: the underlying some of the headline data is showing.
Speaker 5: I think the economy is weaker if you look on
Speaker 5: a grant.
Speaker 3: When I give the Fed some reasons that just to
Speaker 3: pause if not, I.
Speaker 5: Don't think the Fed wants to pause Okay, I think
Speaker 5: the Fed is looking for reasons to keep going. I
Speaker 5: think if you pay attention to how they will not
Speaker 5: discuss the balance sheet. We're not talking about quantitative tightening.
Speaker 5: It's like Voldemort. They won't talk about it. But they
Speaker 5: can't have quantitative tightening. They can't continue to shrink the
Speaker 5: balance sheet. If a discussion is even entered into about
Speaker 5: easing where rates are they have to keep rights high
Speaker 5: to keep shrinking the balance sheet.
Speaker 8: So we're getting all of this labor data ahead of
Speaker 8: tomorrow's important jobs report, and it's interesting. I'm looking at
Speaker 8: Ecogo and the terminal and it looks like the unemployment
Speaker 8: rate it's actually going to tick down from three point
Speaker 8: seven percent through three point six percent based on analysts
Speaker 8: that we're pulling in the terminal. You look at the
Speaker 8: when it comes to non farm payrolls about two hundred
Speaker 8: and twenty five thousand. What is your take on what
Speaker 8: we could see tomorrow and obviously how that could potentially
Speaker 8: relate to how US stocks are moving on the back
Speaker 8: of this type of data that clearly not even just
Speaker 8: the stuf Bock market, but looking what's happening with a
Speaker 8: two year and the.
Speaker 5: Two year really is where it is all at at
Speaker 5: this point, right, you know, I think I can't tell
Speaker 5: you what NFP is going to do tomorrow. I had
Speaker 5: a friend of Mit, Peter Sheher, he's a good friend
Speaker 5: of Bloomberg's, you know, he made the comment, what are
Speaker 5: the statistically speaking, what are the odds that fourteen months
Speaker 5: in a row all the economists missed the estimate?
Speaker 3: And what are the odds?
Speaker 5: I mean, the bls will tell you that forty two
Speaker 5: percent of the jobs created in the last forty two
Speaker 5: months are against a backdrop of the fastest bankruptcy cycle
Speaker 5: since two thousand and nine. So how do we have
Speaker 5: a birth death adjustment that adds forty two percent net
Speaker 5: net of all non farm payroll jobs. Forty two percent
Speaker 5: is not a small number over the last twelve months
Speaker 5: in the aggregate, assuming that this is all berths, when
Speaker 5: you can pull up BCY, go on the terminal and
Speaker 5: see the biggest number since two thousand and nine.
Speaker 8: So when you see the two year at a sixteen
Speaker 8: year high, what do you think the bond market it
Speaker 8: is telling us.
Speaker 5: It's telling you that Fed's going to keep raising rates
Speaker 5: come what may.
Speaker 1: So we've got ninety percent priced in for the next meeting,
Speaker 1: they go again after that, you think it's September.
Speaker 5: I think it really becomes data dependent at that point,
Speaker 5: unless there's going to be an investigation launched to the
Speaker 5: Bureau of Labor Statistics, because they're already questioning the inflation data.
Speaker 5: That's a matter of public knowledge. So I mean, barring that,
Speaker 5: you don't get to forty six states with rising continuing
Speaker 5: claimants without somebody starting to notice that there's a problem
Speaker 5: in the country.
Speaker 1: So what is the I mean, what is your overall
Speaker 1: take of this economy that there is in fact more
Speaker 1: weakness than the I guess the headline data would show.
Speaker 3: But yet they're still going to rate raise rates.
Speaker 5: It's the butt Yet remember the employee Retention credit they
Speaker 5: advertise all the time. It just pumped twenty eight point
Speaker 5: eight billion dollars into the US economy in the month
Speaker 5: of June alone. It's been about twenty billion dollars a
Speaker 5: month now for about eighteen months. There's a massive form
Speaker 5: of COVID fiscal stimulus that continues to make its way
Speaker 5: into this economy. You see it in international travel. But
Speaker 5: his tourist and slack came out in his morning note
Speaker 5: this morning and said the US consumer slowing. I think
Speaker 5: it pained him to say that, But if you look
Speaker 5: beyond the recipients of this employee retention credit, kind of
Speaker 5: the wealthiest, the highest income earners, you're seeing decided signs
Speaker 5: of slowing in consumption.
Speaker 8: So then with this jobs report tomorrow, we have CPI
Speaker 8: on July twelfth, so next week, and then we'll have
Speaker 8: the FED meeting on July twenty fifth and twenty six,
Speaker 8: So those are the last major data points before that.
Speaker 8: Is that enough for them to decide to potentially hike Oh?
Speaker 5: I think it is.
Speaker 9: I really do.
Speaker 3: Again.
Speaker 5: He's focused on an inflation metric of his own design,
Speaker 5: the core CPI net of shelter, and it is a
Speaker 5: slow moving animal. We've gone back and looked at it historically,
Speaker 5: prior to the pandemic, it was usually running at about
Speaker 5: two to three percent, but two percent was a rarity,
Speaker 5: that isolated metric that J. Powell has conceived out of
Speaker 5: thin air. So in that he's looking at that, I
Speaker 5: think that it's very conceivable. We're you know, O Mayr
Speaker 5: Sharif is saying, you know, look for used cars prices
Speaker 5: to come down, you know, look for shelter to continue falling.
Speaker 5: Look for that next CPI print to be very bond
Speaker 5: market friendly unless Ja Powel's just going to look through
Speaker 5: it as you go forty eight hours into blackout right
Speaker 5: before the next for.
Speaker 3: MC, what are one of the many reasons we're like
Speaker 3: speaking to you is you rip out some data points
Speaker 3: that quite frankly, I've never heard of.
Speaker 1: What are some of the data points that you and
Speaker 1: your team are kind of looking at here to get
Speaker 1: a sense that maybe aren't on eco go.
Speaker 3: So we actually.
Speaker 5: Follow weekly data from light Cast. They started tracking the
Speaker 5: data as of January twenty twenty to get a benchmark
Speaker 5: for which types of job openings there are in the nation,
Speaker 5: so jobs with minimal education required, I mean they needed
Speaker 5: a new scale in order to track how many job
Speaker 5: openings there were for lee, your hospitality, bus boys, you
Speaker 5: name it. That's recently through the week of June twenty
Speaker 5: fourth come down to zero, so there are effectively no
Speaker 5: job opening Using a benchmark of January of twenty twenty,
Speaker 5: I follow trueflation very closely truflation. We actually were able
Speaker 5: to get their full data set back to twenty twelve.
Speaker 5: We ran a correlation analysis with the headline CPI last Friday,
Speaker 5: ninety seven percent since twenty twelve. The correlation where it's
Speaker 5: trueflation today two point two percent. Okay, it's thirty million
Speaker 5: real time prices. It's a daily inflation print, but a
Speaker 5: ninety seven percent correlation since twenty twelve. With headline CPI
Speaker 5: tells you exactly where inflation is headed.
Speaker 1: So inflation's headed lower, much lower. And isn't that good
Speaker 1: news for Jpal? And that's what he wants to see.
Speaker 5: Ran, It's not good news for that Jpal That Japal
Speaker 5: wants to continue shrinking that balance sheet, oh Man, and
Speaker 5: he wants a reason to continue shrinking that balance sheet.
Speaker 5: So he's going to focus on job openings remaining high,
Speaker 5: even though work out of the Dallas Fed shows that
Speaker 5: ninety percent of those job openings are written for the
Speaker 5: specific purpose of poaching your closest competitors employees so you
Speaker 5: don't have to spend the money training them. The other
Speaker 5: ten percent actually reflect organic demand in the economy for
Speaker 5: new job openings. That's being reflected in indeed dot com
Speaker 5: as well. You're seeing in d dot com job postings
Speaker 5: have come down tremendously over the last twelve months. That's
Speaker 5: another big one that we follow. And again it's a
Speaker 5: weekly data set and they're speaking to thousands and thousands
Speaker 5: of companies across the country. That's what you want. You
Speaker 5: want people who are speaking to people on the ground.
Speaker 8: And so even though we see the Fed's preferred gauge
Speaker 8: PCE moving in the right direction, to you, that's still
Speaker 8: not enough when you're looking at what's happening with the
Speaker 8: strength on the labor's side.
Speaker 5: And I'm going to quote Powell here, until the job
Speaker 5: is done, yep, until we get to two percent.
Speaker 3: And two percent, what is the two percent number? That
Speaker 3: is the core x.
Speaker 5: He's looking for core PCE to be two percent. That
Speaker 5: is typically the gauge that you're talking about internally.
Speaker 3: Okay, all right, and we're not there yet.
Speaker 10: No, we got no excluding food and energy.
Speaker 5: But he's going to keep you also, like to house weeds,
Speaker 5: we get data out today at just after four o'clock.
Speaker 5: You're going to see a big chunk of quantitative tightening
Speaker 5: when that data hits late after the bill today.
Speaker 1: All right, Danielle Dee Martine Booth, thank you so much
Speaker 1: for joining us. He know, Danielle de Martino Booth, she
Speaker 1: is the CEO, and she is the chief.
Speaker 3: Strategist at QI Research.
Speaker 1: She's also did a stint at the Dallas Federal Reserve,
Speaker 1: so you know about the Dallas Federal Reserve and how
Speaker 1: the central bankers think across the board. So I always
Speaker 1: appreciate getting some of Danielle's thoughts here.
Speaker 11: You're listening to the Team Ken's live program Bloomberg Markets
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Speaker 8: To our next guest, Michael Green, portfolio manager in chief
Speaker 8: Strategists at Simplify Asset Management. Michael, thank you for joining us.
Speaker 8: Before we get more into what you're going to talk about,
Speaker 8: as far as what you like about sectors in the
Speaker 8: S and P five hundred, I have to get your
Speaker 8: take as far as these massive moves in the bond market,
Speaker 8: especially with the two year treasury trading round its highest
Speaker 8: level in about sixteen years.
Speaker 12: Well, I have to confess that I actually see the
Speaker 12: current level of the two year as being remarkably attractive.
Speaker 12: But I have been wrong in thinking that for a
Speaker 12: while now. So you know my general belief is that
Speaker 12: the economy is slowing. The inflation problem is for seeing
Speaker 12: in the ism services today is largely one that's in
Speaker 12: very mirror, and the risk that we're actually creating and
Speaker 12: through interest rate policy is the higher level of interest
Speaker 12: rates themselves are actually now the key risk.
Speaker 7: This is exactly what we saw with the banking system.
Speaker 4: Earlier in here. I think it's working its way.
Speaker 12: Through the corporate sector where we're seeing a dramatic rise
Speaker 12: in bankruptcies.
Speaker 4: The odd thing for me is simply that it's not
Speaker 4: reflected in spreads.
Speaker 7: It doesn't seem to be reflected in.
Speaker 4: Any way in the federal reserves calculations, and candidly, when
Speaker 4: we look at the job.
Speaker 12: Data today, certainly coming from the ADP, I have to
Speaker 12: confess that I'm pot off sides in terms of that strength.
Speaker 4: I cannot reconcile the data.
Speaker 7: If I look.
Speaker 12: At the numbers for twenty twenty three on a non
Speaker 12: seasonally adjusted basis and compare them to the data from
Speaker 12: twenty twenty two, they're lower.
Speaker 4: In every category. So oddly we.
Speaker 12: Have this seasonal adjustment factor that again is raising its
Speaker 12: head and just making me really question whether the data
Speaker 12: that we're receiving is accurate.
Speaker 1: So I guess let's let's look at it the economy
Speaker 1: from a different way.
Speaker 3: Earnings, corporate earnings.
Speaker 1: I'm looking at the you know, the earnings for the
Speaker 1: S and P five hundred consensus of analysts about two
Speaker 1: hundred and twenty two dollars per share for this year.
Speaker 1: How much risk, if any, do you see in that
Speaker 1: earnings number for corporate America.
Speaker 12: Well, I think that there's a remarkable disconnect between the
Speaker 12: expectations data and the actual data that we're experiencing in
Speaker 12: the gap form, right, so they generally accepted accounting principles
Speaker 12: earnings for the S and P or down one seventy nine.
Speaker 12: That's off of a level of about two zho nine
Speaker 12: from last year. It shows no dynamic that would suggests
Speaker 12: that the rebound that analysts are forecasting is in play.
Speaker 4: Much of what I would argue we're seeing is basically.
Speaker 12: An attempt to ignore the one time costs associated with
Speaker 12: either unemployment or layoffs.
Speaker 4: And in many ways, again, it just feels like data is.
Speaker 12: Being created to match a narrative of rising prices with
Speaker 12: the reality of rising prices and stock markets, versus what
Speaker 12: we're actually seeing empirically in the.
Speaker 8: Economy, Michael, the S and P five hundreds trading around,
Speaker 8: it's the lowest level in about a week. Something I
Speaker 8: was curious about when we're looking at some of this
Speaker 8: stronger than expected labor data, is this potentially a reason
Speaker 8: for certain stock investors to sell after what was a
Speaker 8: very strong first half.
Speaker 12: Well, I think that there is very much a focus,
Speaker 12: correctly on what the FED is going to do, and
Speaker 12: so we're.
Speaker 7: Clearly seeing, as you let into the.
Speaker 12: Discussion here, indications that interest rates are moving higher. That
Speaker 12: Lori Logan came out today and said she expects additional
Speaker 12: interest rates going forward. I think, broadly speaking that that
Speaker 12: is really what's powering the market as of this immediate
Speaker 12: sell office, compared to kicking gains or anything else.
Speaker 4: You've seen a fairly significant a balance of.
Speaker 12: Disconnect between the S and P five hundred, which is
Speaker 12: obviously market cap weighted and dominated by the large market
Speaker 12: cap names, and what we've seen in said the Russell
Speaker 12: two thousand, which is not up nearly as much on
Speaker 12: a year today basis, and in fact the equal weighted
Speaker 12: Russell two.
Speaker 4: Thousand is barely up for the year.
Speaker 12: So this has been an environment in which the vast
Speaker 12: majority of stocks have been relatively weak, even as a
Speaker 12: few MEGGA cap names, Apple, Microsoft, and Video et cetera
Speaker 12: have been very strong.
Speaker 4: In my view that that would represent mostly.
Speaker 12: A you know, flow store, effectively money going into AI
Speaker 12: and technology space driving performance as compared to any indication
Speaker 12: of real economics display.
Speaker 1: Mike, I'm sensing a distinct tone of cautiousness in your
Speaker 1: view of the markets and the economy. How are you
Speaker 1: allocating your portfolio these days? Stocks, bonds, what sectors, that
Speaker 1: type of thing.
Speaker 12: Yeah, I know, as I indicated, I absolutely have been
Speaker 12: caught in the wrong positioning on this last move. I
Speaker 12: genuinely look at the two year bond at five plus
Speaker 12: right now and say, I can't believe that we're being
Speaker 12: given this opportunity in an environment in which it seems
Speaker 12: very clear that at least the economy has slowed dramatically.
Speaker 12: Whether it continues to slow it is really the question,
Speaker 12: and I see few opportunities for continued growth and expansion.
Speaker 4: Today's ADP is obviously a wrinkle in that.
Speaker 7: But you know, again, I just think.
Speaker 12: The data that we will receive from ADP today is wrong.
Speaker 12: Can't fully explain it, but that's what it appears to be.
Speaker 7: Where the non.
Speaker 12: Seasonally adjusted data is showing a significant divergence from the
Speaker 12: seasonally adjusted data. That's true for the claims data, that's
Speaker 12: true for the unemployment data, that's true for.
Speaker 7: The ADP data.
Speaker 8: Something that struck me just looking at the industries within
Speaker 8: the S and P five hundred, more of those cyclically
Speaker 8: related corners of the market are leading to clients when
Speaker 8: you're looking at energy, also materials, technology down a little
Speaker 8: bit under one percent. Also the NAZAQ one hundred down
Speaker 8: more than one percent. But when you think about the
Speaker 8: correlation between bonds and what's happening when it comes to
Speaker 8: technology stocks in particular or growth shares, would you expect
Speaker 8: them to be more pressured given what we're seeing in
Speaker 8: the bond market.
Speaker 13: So I'm not a.
Speaker 12: Huge believer in this idea that growth stocks or large
Speaker 12: cap growth stocks in particular have a quote unquote high duration,
Speaker 12: in other words, a high degree of sensitivity and interest rates.
Speaker 12: I think we've obviously seen that, you know, with the
Speaker 12: strength of the Apples and the Microsoft's on a here
Speaker 12: to day basis, where despite the fact that we have
Speaker 12: much higher interest rates, they continue to push higher. If anything,
Speaker 12: I think that there's an explanation that has much more
Speaker 12: to do a kind of portfolio allocation dynamics than any
Speaker 12: sort of fundamentals around interest rates and valuation.
Speaker 7: Again, you know, I.
Speaker 4: Would just lean towards the direction that what we're worried.
Speaker 12: About at this point is the FED continuing to be
Speaker 12: overly aggressive with the hikes that are already in the system,
Speaker 12: not in any way reflected in the underlying data that
Speaker 12: we're receiving. Yet, as that moves forward, if the FED
Speaker 12: continues to hike for pauses in its response, that creates
Speaker 12: conditions under which.
Speaker 7: A slowdown could actually.
Speaker 12: End up being much more severe than it's currently being
Speaker 12: priced in or versus expectation, and that unfortunately continues to
Speaker 12: be my rising rates case. If the FED is simply
Speaker 12: behind the curve in the opposite direction again, ism prices
Speaker 12: paid data would suggest that the inflation story as well
Speaker 12: behind us.
Speaker 4: We see this in Europe with the CPI the producer
Speaker 4: price indexes turn negative.
Speaker 12: We're just seeing data that they suggest that the inflation
Speaker 12: story is no longer the operative dynamic.
Speaker 4: Doesn't necessarily mean that that's right, though, all right, So.
Speaker 1: Real quick there, Mike, what do you think we're going
Speaker 1: to hear from our feder Reserve at the next meeting
Speaker 1: and maybe even the meeting after that.
Speaker 12: Well, I think it's hard to argue with the market, right, So,
Speaker 12: when the market suggests that they are more than eighty
Speaker 12: five percent probability of going, and historically it's been about
Speaker 12: seventy percent, it's been very rare for the Fed not
Speaker 12: to take advantage of that. I would expect that they'll
Speaker 12: ultimately hike, and that they'll indicate, as the data suggests
Speaker 12: certainly today, that the economy continues to represent strength. I
Speaker 12: don't really think that they're focused on the inflation story
Speaker 12: as much as they are focused on or the direction
Speaker 12: of inflation story, which is clearly downwards, as much as
Speaker 12: they are focused on the idea we've got to get right.
Speaker 12: That is going to be the real question is, you know,
Speaker 12: do they continue to hip until we get to two percent?
Speaker 4: Which right, just that they're going to be way behind
Speaker 4: the curve opposite direction. All right.
Speaker 8: Michael Green, portfolio manager in chief strategist at Simplify Asset Management,
Speaker 8: thank you so much for joining us and getting your
Speaker 8: purview here.
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Speaker 1: Let's get right to our next guest at Mona Mahadgen,
Speaker 1: senior investment strategists at Edward Jones. Mon A crazy, crazy
Speaker 1: day in the markets here. I love to get your
Speaker 1: sense of kind of what the economic data is telling you,
Speaker 1: and what do you think it's telling the Federal Reserve.
Speaker 14: Yeah, great points there, and look, I think there was
Speaker 14: some really market moving data this morning that we think
Speaker 14: highlighted a few trends. First of all, the services part
Speaker 14: of the economy continues to remain remarkably resilient. We saw
Speaker 14: that not only with the ADP jobs report, where we
Speaker 14: were up four hundred and ninety seven thousand jobs when
Speaker 14: we expected just two hundred and twenty five thousand, but
Speaker 14: really what drove that was the services sectors, including areas
Speaker 14: like leisure and hospitality. We also got the Ism services
Speaker 14: data this morning, which continued to show an upward trend
Speaker 14: rather than what many had expected to be a little
Speaker 14: bit more moderation. Now. On the positive side, both the
Speaker 14: ADP and the ISM services data did show some cooling
Speaker 14: in inflation. ADP data wage gains came in at six
Speaker 14: point four percent, still elevated, but following a trend lower
Speaker 14: over the last several months, and similarly, the ISM prices
Speaker 14: paid component came in below expectations. And so hopefully the
Speaker 14: message is that, yes, the economy has remained resilient, but
Speaker 14: the inflation data continues to show of moderation. Now. Of course,
Speaker 14: from a FED perspective, I think this gives them another
Speaker 14: green light to move forward in July at least, and
Speaker 14: we heard a little bit of dissent and debate when
Speaker 14: we got the minutes yesterday. I think this certainly kind
Speaker 14: of adds to the case that they could do one,
Speaker 14: perhaps two more rate hikes ahead, but they are closer
Speaker 14: to a pause than they have been in recent history now.
Speaker 14: I think the other big part of the markets today,
Speaker 14: of course, has been what's happening with yields, and the
Speaker 14: upward moving yields close to now highs for the year
Speaker 14: does put some downward pressure on equity markets, particularly those
Speaker 14: higher valuation parts of the market as well.
Speaker 8: And we've heard from FED chair Pale as well as
Speaker 8: other members of the Central Bank and were referring to
Speaker 8: this as far as at least two more rate increases
Speaker 8: this year. If we do end up seeing another one
Speaker 8: at the end of this month, what would need to
Speaker 8: happen with the data between now and then when we
Speaker 8: have the Federal reserves following meeting in September, after the
Speaker 8: July meeting for them to end up maybe potentially having
Speaker 8: two consecutive rate increases.
Speaker 10: Yeah, it's a good point.
Speaker 14: And look, we do get a lot of data between
Speaker 14: now and September, and of course this month alone, we'll
Speaker 14: get an additional set of CPI and PPI data next week,
Speaker 14: will of course start earning season towards the end of July,
Speaker 14: and we'll have that July rate hike or rate decision
Speaker 14: at the end of July, So the Fed and the
Speaker 14: markets will have to digest quite a bit. Our view
Speaker 14: is that over time we will continue to see inflation
Speaker 14: moderate and so perhaps the one rate hike that the
Speaker 14: markets are pricing in could be a final rate hike
Speaker 14: for the Fed.
Speaker 10: But if the.
Speaker 14: Economy does continue at this pace, especially in the services sectors,
Speaker 14: that could keep services inflation elevated. Keep in mind, the
Speaker 14: FED has broken down inflation into three core buckets, which
Speaker 14: are goods inflation, which have shown signs of rolling, over
Speaker 14: housing shelter inflation, which we do think over time will
Speaker 14: see cooling. That there's a lag there, and real time
Speaker 14: data is showing some cooling and we think that shows
Speaker 14: up over time. But it's really that third bucket, which
Speaker 14: they categorize as non housing services inflation, that has yet
Speaker 14: to show meaningful signs of moderation. So they'll be watching
Speaker 14: that closely. And I think if that continues to show
Speaker 14: signs at least of stabilizing moving lower, we'll have one
Speaker 14: rate hike ahead of us. If not that, the second
Speaker 14: one is on the table.
Speaker 8: So then, as a strategist, what is your outlook for
Speaker 8: the second half of the year after we had such
Speaker 8: a strong first six months?
Speaker 14: Yeah, absolutely, Look, it was a stellar first half of
Speaker 14: the year with the SMP up over fourteen percent. You know,
Speaker 14: keep in mind, there have been some positives and reasons
Speaker 14: for optimism. The economic data is coming out ahead of expectations.
Speaker 14: Inflation as we noted is showing signs of moderation and
Speaker 14: the FED maybe towards the end of its rate hiking cycle.
Speaker 14: But we'd be cautious to extrapolate that strong move higher
Speaker 14: in the first half to a straight line up in
Speaker 14: the second half of the year. Now, history does tell
Speaker 14: us when you are up over ten percent the first half,
Speaker 14: it bodes well for the second half. In our view,
Speaker 14: we do think bouts of volatility maybe likely, especially if
Speaker 14: the economy starts to show signs of cooling. But will
Speaker 14: we get another bear market or meaningful downturn that we
Speaker 14: see is unlikely at this point, and in fact, we
Speaker 14: think those bouts of volatility could be used as opportunities,
Speaker 14: especially as investors look towards twenty twenty four, where you
Speaker 14: could get a meaningful bounce back in earnings, better inflation,
Speaker 14: and have FED that not only is pausing, but they've
Speaker 14: told us they might start thinking about pivoting lower as well.
Speaker 14: So really want to start positioning for what we think
Speaker 14: could be a broader based market rally and participation towards
Speaker 14: the back half of the year, and both in equities
Speaker 14: and in bond markets as well.
Speaker 1: So do I think about small MidCap stocks Mona. They've
Speaker 1: historically lagged some of the bigger cap names, but if
Speaker 1: this thing's going to broaden that a little bit, maybe
Speaker 1: small and midcaps.
Speaker 14: Yeah, it's a good point. And look, small caps have
Speaker 14: meaningful lagged in the first half of the year, so
Speaker 14: we certainly think there is room for catchup now. When
Speaker 14: we look historically, small caps tend to do well when
Speaker 14: the economy is re emerging from any sort of softness
Speaker 14: or downturn. They tend to lead on the way up.
Speaker 10: And so when we think about what we.
Speaker 14: Call a recovery basket, that could certainly include areas like
Speaker 14: small cap stocks, like cyclicals, and we're starting to see
Speaker 14: some strength in industrials, materials, perhaps even financials in that basket.
Speaker 14: International equities tend to do well in that environment. Those
Speaker 14: we think can compliment what we're seeing right now, because
Speaker 14: we do think the story behind AI and growth sectors
Speaker 14: does have a long term secular tailwind behind it, although
Speaker 14: a lot of it has been priced very quickly upfront
Speaker 14: as well, So we think a complement of both the
Speaker 14: growth and the more cyclical parts of the market will
Speaker 14: work better As we head towards twenty twenty four.
Speaker 8: We only have about forty five seconds left. What's the
Speaker 8: top question that you hear from clients?
Speaker 10: Yeah, you know, I think it's still the big one.
Speaker 14: Around recession, we tend to hear a lot more, especially
Speaker 14: now that the Fed is continuing to raise rates. And
Speaker 14: we do think that what we're seeing now is a
Speaker 14: potential for cooling in the economy, but perhaps not your
Speaker 14: typical two back to back quarters of negative GDP growth.
Speaker 14: We think a softness to below trend growth is likely though,
Speaker 14: sometime in the second half of the year.
Speaker 1: All right, Mona, thank you so much for joining us.
Speaker 1: We really appreciate getting some of your time. Mona ma Hodgen.
Speaker 1: She's a senior investment strategist at Edward Jones.
Speaker 11: You're listening to the team Ken's are Live program Bloomberg
Speaker 11: Markets weekdays at ten am Eastern on Bloomberg dot Com,
Speaker 11: the iHeartRadio app and the Bloomberg Business App, or listen
Speaker 11: on demand wherever you get your podcasts.
Speaker 1: Threads is a thing. I'm there for what it's worth starting.
Speaker 1: Let's take a little tech round table here. Let's bring
Speaker 1: in Deep Seing. He covers the tech for Bloomberg Intelligence
Speaker 1: and Ed Ludlow. After a very difficult zoom situation this morning.
Speaker 1: He is our technology guy out in San Francisco, joints
Speaker 1: US as well, so we got it all.
Speaker 3: Covered for you. Mandie. Let's start with you here in
Speaker 3: our studio here.
Speaker 1: What is Metal looking to do here? Is this going
Speaker 1: to be a business for them? Is this a real
Speaker 1: competitor for Twitter? To just give us the business case.
Speaker 6: The business case is they want to add that dimension
Speaker 6: of real time public conversations that are going on related
Speaker 6: to politics, related to breaking news, and that weren't happening
Speaker 6: on Instagram. Probably they were happening on Core Blue app.
Speaker 6: But they've been losing engagement, so it's an engagement play
Speaker 6: for them to keep users on their family of apps,
Speaker 6: and they've done a great job of adding reels content.
Speaker 6: This is another dimension. And look, they don't need to
Speaker 6: focus on monetization right now. If they're able to get
Speaker 6: that engagement in terms of getting the core creators from
Speaker 6: Twitter to threads, that'll be a big win for them.
Speaker 8: And is this likely to be a big player here
Speaker 8: or what kind of hurdles are ahead for it?
Speaker 6: Well, the hurdles is, you know, the interest graph and
Speaker 6: the followers that Twitter has over the course of their
Speaker 6: last fifteen twenty years. You know, people have accumulated their
Speaker 6: followers and they like to see a certain curated feed
Speaker 6: when it comes to the home screen. Well, right now,
Speaker 6: when you go to Threads, they have an AI generated
Speaker 6: feed and there are a lot of brands and I've
Speaker 6: tried to you know, viewed a lot of them. I mean,
Speaker 6: that's not the experience you want to have. And that's
Speaker 6: where scale and network effects is what drives social media
Speaker 6: engagement and early movers have always had an advantage. What
Speaker 6: TikTok did was great in terms of leveraging AI to
Speaker 6: come up with great recommendations. That is the playbook here
Speaker 6: for Meta is to use their user graph as well
Speaker 6: as AI to drive the curated content feed.
Speaker 3: All right, Ed, When I think of cutting edge technology,
Speaker 3: I think of Ed Ludlow.
Speaker 1: I think Silicon Valley is Silicon Valley out there in
Speaker 1: San Francisco. Ed, what's the buzz if anything out there
Speaker 1: in the valley about what our good friends at Facebook
Speaker 1: are trying to do here?
Speaker 15: Yeah, and the adoption has been really interesting to track.
Speaker 15: I was signed up to Threads as us the number
Speaker 15: one hundred and thirty, two thousand and nine. Wow. So
Speaker 15: I made it in in the initial batch. I mean
Speaker 15: it's Bloomberg's tech editor Sarah Fryer was like number two thousand.
Speaker 15: You know, overnight she's a player, and overnight we hit
Speaker 15: the ten million mark. And my understanding is that we're
Speaker 15: closer now to thirty million users on the platform. But
Speaker 15: I find Mandya's commentary really interesting. There are clearly ux
Speaker 15: differences right between what you get on the threads platform
Speaker 15: what you get on Twitter. It's very simplified right now.
Speaker 15: There are a few, you know, there's no sort of
Speaker 15: ad stream on it. The biggest piece of use for
Speaker 15: me in the last twenty four hours was a post
Speaker 15: by Zuckerberg basically suggesting that a billion users is possible,
Speaker 15: and you know, to jump from thirty million to a billion,
Speaker 15: you know, I think a number of SALSIH analysts this
Speaker 15: morning kind of see difficulty in getting to that scale.
Speaker 15: But think about it this way, Facebook, WhatsApp, Instagram, if
Speaker 15: Meta onboarded just one out of every ten users on
Speaker 15: its existing platforms, it would already eclipse what Twitter's monthly
Speaker 15: or installed active user bases. So you can kind of
Speaker 15: see them eclipsing Twitter a billion hard to.
Speaker 8: See men deep something I'm curious about is, especially when
Speaker 8: you think of Meta and the cost cutting efforts that
Speaker 8: it has clearly gone through, and it stocks up more
Speaker 8: than two hundred percent since early November, how much could
Speaker 8: this potentially either support that stock price or is it
Speaker 8: just too early to be seen when you're looking at
Speaker 8: cell side.
Speaker 6: Well, so, in terms of incremental revenue, I think, look,
Speaker 6: this is not going to move the stock a Twitter
Speaker 6: had revenue of you know, around six billion when before
Speaker 6: they went private, and even if they are losing revenue
Speaker 6: and you know, Meta can lier ads over time, You're
Speaker 6: not buying the stock here with the hope that you know,
Speaker 6: this product is going to generate two three billion dollars
Speaker 6: in incremental revenue. But what it can do is drive
Speaker 6: that engagement because ultimately, if you go to Twitter right now,
Speaker 6: their average time spent per user is around twenty seven
Speaker 6: to thirty minutes every day for the daily active users.
Speaker 6: If they can take a share of that, that'll be huge. Again,
Speaker 6: the cumulative effect of social media when you think about
Speaker 6: you know, meta is what people spend their time on
Speaker 6: the core blue app, Instagram and WhatsApp. You add another
Speaker 6: dimension to it. It helps with their AI it helps
Speaker 6: with the overall advertisers, and that is what meta is
Speaker 6: after here.
Speaker 1: All right, So, Ed, what's the feeling in the valley
Speaker 1: about Elon Musk. What's his response going to be? What's
Speaker 1: the future of Twitter? How do you think this plays up?
Speaker 5: You know?
Speaker 1: He Oh, by the way, I just did my first
Speaker 1: post on threads telling people to go to YouTube to
Speaker 1: watch our streaming.
Speaker 3: So I am multidad. I will tasking out.
Speaker 15: I will I will repost that. Just give me a second.
Speaker 15: I'm on air with you right now. Look, I mean
Speaker 15: Elon's tweeted. He said it is infinitely preferable to be
Speaker 15: attacked by strangers on Twitter then indulge in the false
Speaker 15: happiness of hide the pain Instagram. And I think his
Speaker 15: point is that historically Instagram is a photo based app
Speaker 15: where you give the perception that your life is very
Speaker 15: different to reality. I guess from a happiness perspective. Linda Yakarino,
Speaker 15: who is the new Twitter CEO, has tweeted in the
Speaker 15: last thirty minutes. I wouldn't call it cryptic, but I
Speaker 15: would say that she really emphasizes what she feels is
Speaker 15: good about Twitter. She doesn't specifically name or call out threads,
Speaker 15: but you know, they're essentially the same thing. I'm a
Speaker 15: big meme guy, and you guys will have seen that
Speaker 15: Zuckerberg tweeted. He did his first tweet in since twenty twelve,
Speaker 15: eleven years, and it's the classic Spider Man pointing at
Speaker 15: Spider Man. The reference to episode nineteen B at the
Speaker 15: nineteen sixty seven animated series is called double identity. They're
Speaker 15: the same platform, and I you know, Mandy may disagree
Speaker 15: with me, but to all intents and purposes, they're the same.
Speaker 15: And that's probably ahead of the cage match upset, mister Musk.
Speaker 8: So do you think that it's likely that Meadow would
Speaker 8: be able to take a big chunk of users when
Speaker 8: it comes to Twitter? Obviously, as you know, there's been
Speaker 8: problems that Elon has had to go through when it
Speaker 8: comes to the Twitter platform over the past year.
Speaker 15: Oh thank goodness. I thought you were going to ask,
Speaker 15: is it likely that Muskan Zuckerberg actually like each other
Speaker 15: in a cage? You know, I think that what I
Speaker 15: noticed anecdotally. I was on it for hours yesterday. It
Speaker 15: was a bit cringe fair. I sent many threads. I
Speaker 15: really engaged with people. A lot of what people were
Speaker 15: talking about is that they wanted the tone of Threads
Speaker 15: to be a pleasant place, a nice place, and many
Speaker 15: of them explicitly referenced the idea that they felt that
Speaker 15: Twitter was not that way. And so you know, this
Speaker 15: is also playing out on Twitter in parallel, by the way,
Speaker 15: the irony lots of people on Twitter are talking about
Speaker 15: you're only going to threads as a vote against Musk
Speaker 15: himself because you don't like him or his personality. I don't.
Speaker 15: It's how can any of us quantify what kind of
Speaker 15: driver that will be for Thread's growth. I think Mandy's
Speaker 15: points on the future of the content on the on
Speaker 15: the Threads platform is the key bit.
Speaker 1: Hey, let's just quick change gears here. I know you
Speaker 1: spoke with the CEO of Rivian yesterday, Ed, what's the
Speaker 1: key takeaway there?
Speaker 15: Yeah, I mean two pieces of news. One, the court
Speaker 15: has just gone is the first time the supply chains normalized,
Speaker 15: and that was evidence by their output. They've made some
Speaker 15: tech fixes and they're really starting to ramp now and
Speaker 15: they basically suggested that they will outperform their guidance, which
Speaker 15: would be interesting. Professor's The other is there that he
Speaker 15: told me they're trying to negotiate with Amazon to get
Speaker 15: out of the Amazon's exclusivity to buy the commercial vans
Speaker 15: from Ribbean. So they say that those talks are going
Speaker 15: well and that if there's a successful Ribbean can start
Speaker 15: selling these electric delivery bands that other players and and
Speaker 15: as we know from this program, right, electrifying last mail
Speaker 15: delivery in the logistics space is a big market opportunity.
Speaker 15: So that was a really good takeaway. Check it out
Speaker 15: on Bloomberg dot com.
Speaker 1: All right, great stuff at Ed Ludlow doing all the
Speaker 1: tech stuff for Bloomberg Technology and Bloomberg News out there
Speaker 1: in San Francisco. Man, you've seen, of course senior technology
Speaker 1: channels for Bloomberg Intelligence.
Speaker 11: You're listening to the tape catch are live program Bloomberg
Speaker 11: Markets weekdays at ten am Eastern on Bloomberg Radio, the
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Speaker 11: flagship New York station. Just say Alexa, play Bloomberg eleven thirty.
Speaker 1: This is not necessarily tech, but you think about the
Speaker 1: tech enabled boxes that end up on your front door
Speaker 1: every single day, and everybody knows what I'm talking about
Speaker 1: let's get a sense of like the business of the
Speaker 1: box business, Ryan Fox. He covers a carrogated market for
Speaker 1: Bloomberg Intelligence. So Ryan, give us a sense of just
Speaker 1: kind of the stuff you covered, DoD Me just give
Speaker 1: us a sense of the industry that we all touch
Speaker 1: every day because it lands on our doorstep every day.
Speaker 16: Yeah, so the average American is going to call it
Speaker 16: a cardboard box. In the industry, we call it a
Speaker 16: corrugated box, nice anadetically, like ninety five percent of consumer
Speaker 16: goods right in these boxes every day. So it's a
Speaker 16: very good indicator of what's going on in the economy.
Speaker 16: And well, for the last year, we've seen a gradual
Speaker 16: decline in box shipments by producers of those boxes going
Speaker 16: to brands who.
Speaker 8: Are the main players in that space.
Speaker 16: Yeah, many players are going to be International Paper West
Speaker 16: Rock Packaging Corp. At least domestically here in the US.
Speaker 8: And you mentioned a slow down. What was the catalyst
Speaker 8: to that in what would that also mean for the
Speaker 8: trajectory of the economy.
Speaker 16: Yeah, So initially the slowdown, it was linked to these
Speaker 16: the de stocking narrative that's been going on for about
Speaker 16: the last year. Most of the producers are saying their
Speaker 16: customers were pushing back, that they had plenty of inventory.
Speaker 16: Things weren't moving very quickly, and some of it we
Speaker 16: saw in our data. We saw that first quarter of
Speaker 16: twenty twenty two, lead times to get boxes went out
Speaker 16: on average like four and five weeks, And this was
Speaker 16: a huge departure from the norm. The average lead time
Speaker 16: to get boxes is like three to five business days,
Speaker 16: so to have something about five weeks on average was
Speaker 16: just astronomical. So when you think about a manufacturer and
Speaker 16: how they have to place their orders, this caused them
Speaker 16: to change their ordering. Some manufacturers during the pandemic had
Speaker 16: even gone to AI platforms that were initiating automatic orders
Speaker 16: even when they maybe didn't need them, and so at
Speaker 16: some point in the second quarter they found themselves sitting
Speaker 16: on a lot of boxes that they didn't really need.
Speaker 16: And so producers saw that slowdown at the end of
Speaker 16: the second quarter going into the midyear, and it really
Speaker 16: just slowed down from there.
Speaker 1: All right, but where are we now versus pre pandemic.
Speaker 1: There's a lot more boxes out there, right, Uh, well,
Speaker 1: I'm getting so many a day.
Speaker 13: All right.
Speaker 3: Here's my thing. I'm really good at breaking down the
Speaker 3: box as soon as it comes in and we empty it.
Speaker 1: I'm breaking that box down. I'm the opposite, and I'm
Speaker 1: putting it in recycling. But really it's got to be
Speaker 1: like way higher than pre pandemic.
Speaker 16: No, So we're actually after the first quarter we were
Speaker 16: tracking with twenty seventeen as far as the volume of
Speaker 16: boxes it was going out. Our data indicates that through
Speaker 16: the second quarter we're probably still on that pace, maybe
Speaker 16: even a little bit behind there, and it's not looking
Speaker 16: good going in the second half.
Speaker 1: Really, wow, I never would have guessed that, Hey, go
Speaker 1: following up on that, because I'm a big recycler, and
Speaker 1: I think this is every time I break down a
Speaker 1: box and put it into recycond I feel like I
Speaker 1: might be part of a scam here that it doesn't
Speaker 1: want to work. Tell us how the industry recycles boxes
Speaker 1: and stuff.
Speaker 16: Sure, So, first of all, about over ninety percent of
Speaker 16: all of the recycled boxes that we get, and really
Speaker 16: all recycled commodities are going to come from commercial and
Speaker 16: industrial sectors. So we're going to be thinking about Walmart's
Speaker 16: and Kroger's and Albertson's and big retailers like that. That's
Speaker 16: where most of the old what we call old quirdated
Speaker 16: cartons or OCC, that's where they come from. Curbside recycling
Speaker 16: is really not great. It's about seven to eight percent
Speaker 16: of the total, and it represents about two million tons
Speaker 16: a year. Americans just aren't great at recycling.
Speaker 3: I'm really good at it, but I just so does
Speaker 3: International Paper take my box and then redo it and
Speaker 3: send it back out to me?
Speaker 8: That's what I was curious about, because do they do that?
Speaker 8: Or also are there renewable basic materials that go into
Speaker 8: tissues and other personal care products?
Speaker 16: Yeah, so OCC is a very highly sought commodity. It's
Speaker 16: we export about ten million tons a year of to
Speaker 16: other countries, but internally, we consume about twenty five million
Speaker 16: tons of old corgated boxes every single year, and we
Speaker 16: make new boxes out of them.
Speaker 3: Do I play these stocks? Do? I? I mean, do
Speaker 3: I play it on? I mean, if I'm Mike, is
Speaker 3: my call on International Paper? Just how much stuff is
Speaker 3: getting shipped around the world.
Speaker 16: That's a great question. I mean, I don't know, I
Speaker 16: don't know the right answer to that. They're they're traditionally
Speaker 16: very very stable companies. I mean, like I said, with
Speaker 16: ninety five percent of the world's goods that consumers buy
Speaker 16: riding in these boxes. It's it's not like they're going
Speaker 16: to go away anytime soon.
Speaker 3: Yeah, I mean, I don't know just about my household.
Speaker 1: It just seems like, you know, Tom Keane's always complaining
Speaker 1: about you know, his doormans.
Speaker 13: What are you getting delivery?
Speaker 3: I don't know. It's it's shampoo comes. I mean, you
Speaker 3: don't go to the store anymore. You just click. It's crazy.
Speaker 3: So I don't know what's.
Speaker 16: Going on, all right, So we did some math on
Speaker 16: it and the average America. So if we were to
Speaker 16: take the volume of boxes that are made in average year,
Speaker 16: divided equally across everybody in the country, it's about twelve
Speaker 16: hundred square feet per person per year.
Speaker 1: So there, Well, I'm telling you all right, Ryan, thanks
Speaker 1: so much for joining us, Ryan Fox, he is thanks.
Speaker 1: Corgated market analysts with Bloomberg Intelligence.
Speaker 3: Learned a lot there. But I don't know. I feel
Speaker 3: like I'm a good recycler, but you know, Ryan's telling
Speaker 3: me that I'm just it's not that big a deal.
Speaker 8: Think I'm ordering I'm Juney boxes.
Speaker 3: I'm not moving the needle. But anyway, good stuff. To
Speaker 3: catch up on that part of the business.
Speaker 11: You're listening to the tape Cat's are Live program Bloomberg
Speaker 11: Markets weekdays at ten am Eastern on Bloomberg Radio, the
Speaker 11: tune in app, Bloomberg dot Com.
Speaker 13: And the Bloomberg Business App.
Speaker 11: You can also listen live on Amazon Alexa from our
Speaker 11: flagship New York station Just Say Alexa, playing Bloomberg eleven thirty.
Speaker 1: Just met and Paul sween here in a Bloomberg Interactive
Speaker 1: Brokers studio. This week, the Supreme Court struck down the
Speaker 1: Biden administration's student loan forgiveness plan, which would have done
Speaker 1: away with it as much as twenty thousand dollars per borrower.
Speaker 1: And remember, House also used the deal to raise the
Speaker 1: nation's debt sailing to force borrowers to start paying back
Speaker 1: their loans in October, which is sooner than planned. So
Speaker 1: it's really tough on that student loan forgiveness front. Let's
Speaker 1: get the latest on what that could beat economically. We
Speaker 1: welcome Claudia Sam, founder of Some Consulting, former senior economist
Speaker 1: at the White House Council of Economic Advisors, so she
Speaker 1: knows about this policy stuff.
Speaker 3: Laudia, thanks so much for joining us here.
Speaker 1: Give us your view of what kind of we saw
Speaker 1: from the Supreme Court and from Congress over the last
Speaker 1: couple of weeks as it relates to student debt and
Speaker 1: loan forgiveness and that type of thing.
Speaker 17: Student loan forgiveness not making it through the Supreme Court.
Speaker 17: I don't think that should be a surprise to anyone
Speaker 17: using executive powers to do four hundred billion in spending,
Speaker 17: and yet it came. This was the second of two
Speaker 17: blows to student borrowers this uh that week, and you
Speaker 17: mentioned in the repayments start sooner and for a lot
Speaker 17: of people that is going to be a hardship, right,
Speaker 17: like for you know, the time that they've not been paying.
Speaker 9: That really eased up some space.
Speaker 17: It's coming back somewhat sooner than the administration said it
Speaker 17: was going to end too. But this is this is earlier,
Speaker 17: so you're not getting this the forgiveness to help smooth
Speaker 17: over the period of adjusting, and you are getting your
Speaker 17: payments back sooner. So there's you know, it was not
Speaker 17: a good couple of weeks for people with student loans.
Speaker 8: So with interest beginning to accrue in August and then
Speaker 8: those payments needing to be paid in October. How does
Speaker 8: that affect consumer spending? And obviously the trajectory of the economy.
Speaker 17: Right, So it's clearly not good for the for the economy.
Speaker 17: It is the case that you know, the people themselves
Speaker 17: who are in these situations have student loans. This deeply
Speaker 17: affects them. And yet the amount of money we're talking about,
Speaker 17: like the new payments, it's really not the kind of
Speaker 17: magnitudes that really move the needle on GDP, like in
Speaker 17: the sense that oh, this would or demand and make
Speaker 17: it like, oh, the Fed doesn't have to do as
Speaker 17: much because these payments are expiring. So I think with
Speaker 17: this policy, the macro lens is less important than the
Speaker 17: people side of it.
Speaker 1: Isn't there already something along the lines of the Public
Speaker 1: Service Loan Forgiveness program? Can you tell us with that
Speaker 1: is how that works and how that might you know,
Speaker 1: help more people kind of deal with their student debt.
Speaker 17: You know, In my piece I made the point is like, look,
Speaker 17: we're at a time where you've got a moment of
Speaker 17: reflection and how you go forward. President Biden said he's
Speaker 17: going to try and keep figuring out how to do this,
Speaker 17: and it's also a time where they could take stock
Speaker 17: and say, hey, let's look at some other forgiveness programs,
Speaker 17: what didn't go well, what did go well? And the
Speaker 17: one example that I talk about are these the debt
Speaker 17: forgiveness to people who work in a public service of
Speaker 17: any form.
Speaker 9: You can think of.
Speaker 17: As teachers, doctors, firefighters, right, any like, there's a pretty
Speaker 17: there's a big group. And in fact, the group that
Speaker 17: would qualify for these loans is big in terms of
Speaker 17: jobs of the economy. It can almost be twenty five
Speaker 17: percent of jobs. That's not to say all those people
Speaker 17: are eligible and they have student loan debt, but this
Speaker 17: is not a trivial subset. And one of the things
Speaker 17: that they have really struggled with that the Biden did
Speaker 17: not is setting up a plan where people actually get
Speaker 17: the benefit at the end. Right, they have a low
Speaker 17: take up rate and they have a low success rate.
Speaker 17: But it's a complicated program. You got to pay back
Speaker 17: ten years, you know. So there are things there that
Speaker 17: but the Biden's forgiveness plan, sign up for it was
Speaker 17: so fast and massive, so there's lessons to be learned there.
Speaker 17: And I mean there are functional parts of that student
Speaker 17: loan setup.
Speaker 9: So that could also. I think there could be.
Speaker 17: A real exchange of ideas that would be fruit full,
Speaker 17: both for the forgiveness plan we actually have and the
Speaker 17: thinking about what would be next for a student loan forgiveness.
Speaker 8: When it comes to the inflation front, there were concerns
Speaker 8: about macroeconomists about how the potential forgiveness could potentially spur
Speaker 8: a spark in inflation. What do you think this means
Speaker 8: when we're looking on the inflation front moving forward.
Speaker 17: We're talking about basis points, right, like, you know, yes,
Speaker 17: it will probably have an effect. Yes, it probably did
Speaker 17: allow spending to be a little higher as the you know,
Speaker 17: you didn't have to do the payments with.
Speaker 9: A student loan debt.
Speaker 17: That's forgiveness. That's even less applical because it's spread out
Speaker 17: over ten years like the whole process. And it's yes,
Speaker 17: it will have an effect on demand, depending if it's
Speaker 17: there or it's taken away. And yet this is not
Speaker 17: that's not the argument that should bring down a program
Speaker 17: like this is the inflationary effects.
Speaker 1: So, Claudie, we have received a lot of economic data,
Speaker 1: including today that's just this economy perhaps is stronger than
Speaker 1: people think that perhaps the recession is not right around
Speaker 1: the corner. I would love to get your recession outlook,
Speaker 1: maybe talk talk to us about something called the Psalm rule.
Speaker 9: Yeah, what's that? Yeah.
Speaker 17: So I've said several times last year when when the
Speaker 17: recession talk was really getting going, and it's like, we
Speaker 17: need to we need to hope that that labor market
Speaker 17: is as strong as the FED keeps complaining that it
Speaker 17: is right, because if it's strong enough, it can buffer
Speaker 17: and you know, slowly, there are other things related to
Speaker 17: the pandemic, to the war in Ukraine that as those
Speaker 17: work through, we could have inflation come down without the
Speaker 17: FED doing more and more and more. But they're going
Speaker 17: to keep pushing. So the labor market being strong is
Speaker 17: good for people without a doubt, but it also can
Speaker 17: just buffer us so that we slowly rebounce, we slowly
Speaker 17: get inflation back down, as opposed to you know, bam,
Speaker 17: there's a recession and everything falls, including inflation. So I
Speaker 17: think it's the labor market is extremely important in that regard,
Speaker 17: And in terms of my recession outlook, I really am
Speaker 17: kind of on the fence right. For a long time,
Speaker 17: I was optimistic that we could have of soft landing
Speaker 17: in some maybe softish type landing. When we had the
Speaker 17: disruptions in the banking sector, I think that caused more
Speaker 17: concern that, you know, we may really not pull this
Speaker 17: off because there's the FED has put a lot into
Speaker 17: the system in terms of raid hikes, and they have
Speaker 17: bank failures putting more in.
Speaker 9: So it's kind but I agree with you.
Speaker 17: As the latest data on the economy comes in, it
Speaker 17: looks pretty good.
Speaker 8: And especially on the back of that ADP data that
Speaker 8: we got this morning Jolts, and then ahead of tomorrow's
Speaker 8: jobs report, what's surview as far as the drink of
Speaker 8: the labor marketing and what it can mean for the
Speaker 8: Fed's decision later this month.
Speaker 17: So I think we're going to continue to see an
Speaker 17: expanding labor market. I mean no, not every month, right,
Speaker 17: we could have a big downside surprise this time, because
Speaker 17: you know we've had upside. But I think you know,
Speaker 17: when you look broadbrushed and you look like recent months,
Speaker 17: not just like today and you know tomorrow kind of picture,
Speaker 17: I think we're seeing what the FED said it wanted
Speaker 17: to see, which an economy slow it just like people
Speaker 17: not spending so much, not you know, people coming back
Speaker 17: to work so they don't have to pay the wages
Speaker 17: quite so.
Speaker 9: Much, so we'll know more.
Speaker 17: We're going to know a lot more about the labor
Speaker 17: market by Friday.
Speaker 9: But at the end of the day, the Fed is
Speaker 9: going to look at at inflation.
Speaker 17: Are they get one more CPI before their meeting, and
Speaker 17: that is going to take precedent over anything else that
Speaker 17: they're learning because inflation is too high.
Speaker 1: So, I mean a lot of folks will say. We
Speaker 1: had Danielle Di Martino Booth from QI Research Consulting in
Speaker 1: here earlier today and she was saying she thinks the
Speaker 1: economy is much slower than the headline data is suggesting.
Speaker 1: Some of the data that she looks at. Is your
Speaker 1: sense at the economy is in fact slowing down and
Speaker 1: is it material?
Speaker 17: Well, if you think about the increase in perils this
Speaker 17: year compared to last year, they have slowed down. They're
Speaker 17: still really good, you know, in terms of relative to
Speaker 17: before the pandemic. So I mean getting two hundred thousand
Speaker 17: jobs a month, that was that was pretty standard before
Speaker 17: the pandemic.
Speaker 9: So we need to get and I.
Speaker 17: Think we're moving this way. There's enough rebalancing that we're
Speaker 17: starting to see things get kind.
Speaker 9: Of back to quote unquote normal.
Speaker 17: And that, and I think the labor market has behaved
Speaker 17: much more in that way than inflation has been a
Speaker 17: lot harder for people to square the data.
Speaker 1: All right, Claudia, thank you so much for joining a
Speaker 1: Claudia Salm founder and independent economists, some consulting, former sector
Speaker 1: chief at the Federal Reserve Board, former senior economists at
Speaker 1: the Council of Economic Advisors at the White House, so
Speaker 1: lots of experience.
Speaker 11: You're listening to catch a live program Bloomberg Markets weekdays
Speaker 11: at ten am Eastern on Bloomberg Radio, the tune in app,
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Speaker 3: It's Thursday. Let's get to our good friend, Barry Ridholts.
Speaker 1: Always well dressed, always carries himself very well. He's a
Speaker 1: host of Masters in Business on Bloomberg Radio. Has also
Speaker 1: got a day job Chairman and chief investment Officer Reholts
Speaker 1: Wealth Management. Barry, I have no idea what to talk
Speaker 1: about today, so I'm gonna throw out a word and
Speaker 1: you just kind of react inflation? What's going on out there?
Speaker 1: How should we think about it?
Speaker 18: It peaked over a year ago, it's coming down, and
Speaker 18: the areas that are not coming down. You could blame
Speaker 18: the FED for causing a shortage of homes for sale
Speaker 18: and higher apartment rentals. Other than that, everywhere we look
Speaker 18: we see either falling prices. Look no further than the
Speaker 18: used car wholesale market, and use car price market has
Speaker 18: come down to luxury goods. The index that Bloomberg tracks
Speaker 18: of luxury watches have peaked and fallen twenty twenty five percent.
Speaker 18: So wherever we look, inflation is rolling over. The three
Speaker 18: sticking points are labor and I don't see how higher
Speaker 18: rates are magically going to make a million more workers
Speaker 18: uppear in the United States, semiconductors same and housing. And
Speaker 18: housing is where the Fed is actually making the situation worse. Perversely,
Speaker 18: the FED is causing higher inflation, and the sooner they
Speaker 18: realize that.
Speaker 3: How are they doing that, we'll all be what do
Speaker 3: you mean by that? How are they doing that?
Speaker 4: All? Right?
Speaker 18: Two major ways. The first is owner's equivalent rent is
Speaker 18: the largest part of CPI. What is it? It's effectively what
Speaker 18: it costs to rent your house if you wanted to
Speaker 18: rent it out. And when mortgage breaks go higher and
Speaker 18: there's an insufficient supply of single family homes and home
Speaker 18: prices go up, guess what happens to rental units. They
Speaker 18: go up also, second, there would be many more homes
Speaker 18: for sale. Perhaps he's in the price pressure we've seen
Speaker 18: both in purchase and rentals. If people didn't feel locked
Speaker 18: in to Hey, I have a three and a half
Speaker 18: four percent mortgage. If I go out and get a
Speaker 18: new mortgage at six and a half seven percent, it's
Speaker 18: going to cost me a whole lot more for not
Speaker 18: a whole lot more house. We're better off staying where
Speaker 18: we are, says so many homeowners. And Hey, we'll add
Speaker 18: a pool, we'll redo the kitchen, we'll we'll just do
Speaker 18: some renovation, which, by the way, indirectly contributes to all
Speaker 18: these rising prices for contractors. So many people have been
Speaker 18: doing that over the past couple of years. They're making
Speaker 18: that more expensive. If you want lower inflation, not only
Speaker 18: should the FED stop raising rates, they need to think
Speaker 18: about sliding back a cut or two in order to
Speaker 18: stabilize the rental market, which they are directly disrupting.
Speaker 8: And your latest column on the terminal is about how
Speaker 8: more inflation expectations silliness that you're writing about. So you're
Speaker 8: thinking that we aren't going to see higher inflation. But
Speaker 8: given what you were just talking about when it comes
Speaker 8: to especially shelter in housing, how you have different components
Speaker 8: when you're looking at inflation metrics, especially with CPI right,
Speaker 8: because shelter is more like around a third of the waiting,
Speaker 8: very different than say when you look at PCE right,
Speaker 8: which is a very different waiting there.
Speaker 18: That's exactly right. So first, forget expectations. When we look
Speaker 18: at goods prices, not only have they stopped going up,
Speaker 18: many of them have come down in price, and quite
Speaker 18: a few have fallen to levels that were pre pandemic.
Speaker 18: When we look at lumber, when we look at a
Speaker 18: number of industrial metals, when we look you know, pretty
Speaker 18: much across the board, even energy, where are we sixty
Speaker 18: eight seventy two a barrel? That's what it was in
Speaker 18: two thousand and six. So I'm okay with oil being
Speaker 18: the same price for twenty years. Yeah, it fell, it spiked,
Speaker 18: it collapsed again, but it's hard to say that we're
Speaker 18: really paying way too much for energy prices, natural gas
Speaker 18: prices can continue to drift lower despite the Russian invasion
Speaker 18: of Ukraine. So when we look at what's actually happening,
Speaker 18: prices are either no longer going up, or going up
Speaker 18: much more slowly, or actually coming down. But the Fed
Speaker 18: likes to do this thing called inflation expectations. They survey
Speaker 18: a few thousand people and they say, where do you
Speaker 18: think inflation will be in five years? And there really
Speaker 18: is one honest answer to that, How the hell do
Speaker 18: I know anything else besides that is a lie. So
Speaker 18: when people say we think inflation is going to be
Speaker 18: appreciably higher in five years, all they're really revealing is
Speaker 18: their experience the past three to six months, and human
Speaker 18: psychology is that's on a leg. It took people a
Speaker 18: little while to recognize while why inflation it's order to
Speaker 18: tick up, which is why inflation expectations throughout the first
Speaker 18: half of twenty twenty one were like, yeah, we're inflation's fine,
Speaker 18: just as it was spiking upwards, and then last summer,
Speaker 18: when it had peaked and reversed, people maintained their same,
Speaker 18: much higher inflation expectations for a few years. Humans are
Speaker 18: terrible at predicting and random people telling you what CPI
Speaker 18: will be five years from now. I know there's been
Speaker 18: a lot of medical experiment with psilocybin and magic mushrooms.
Speaker 18: I didn't know it had actually reached the FMC research
Speaker 18: department because that's the only explanation for this sort of survey.
Speaker 1: All right, Barry, we're getting to the dog days of summer.
Speaker 1: What are you driving these days?
Speaker 18: So in the last year, I picked up it's funny
Speaker 18: to talk about this without matter around.
Speaker 13: I know.
Speaker 3: I picked up an old.
Speaker 18: Nine to eleven or nineteen eighty eight Cabrio that the
Speaker 18: previous owner had just beaten the hell out of They
Speaker 18: had been racing it, and they had modified it. So
Speaker 18: I was able to pick it up for really deep
Speaker 18: down inside, I'm a value investor, so anytime I get
Speaker 18: a chance to pick up a Cabrio cheap, I did that,
Speaker 18: and I've slowly been bringing it back to stock. And
Speaker 18: as we're working on the car, by dumb luck, it
Speaker 18: turns out that it's the M four ninety one Special Edition,
Speaker 18: which is the nine to eleven Turbo. It has everything
Speaker 18: the turbo has minus the turbo, so the whale tail,
Speaker 18: the fat fenders, the big tires, beefed up, suspension and breaks.
Speaker 18: It's just the turbos were known as widow makers. They
Speaker 18: were notoriously dangerous. So this is everything minus that, and
Speaker 18: I actually just brought it in. The last things I'm
Speaker 18: having done is the suspension return to normal. And that's
Speaker 18: kind of my fun summer driver. You could pick up.
Speaker 18: Everybody looks at these expensive cars if.
Speaker 3: You do get them at a decent price.
Speaker 1: All right, Barry, thanks so much, Barry Ridults there getting
Speaker 1: us the car talk.
Speaker 11: You're listening to the tape. Can's are live program Bloomberg
Speaker 11: Markets weekdays at ten am Eastern on Bloomberg Radio, the
Speaker 11: tune in app, Bloomberg dot Com.
Speaker 13: And the Bloomberg Business App.
Speaker 11: You can also listen live on Amazon Alexa from our
Speaker 11: flagship New York station. Just say Alexa play Bloomberg eleven thirty.
Speaker 1: All right, here is a story that I've been sending
Speaker 1: to all of my Harvard buddies. They're not happy for
Speaker 1: a variety of reasons, and I'm blaming our next guest,
Speaker 1: Janet Lauren. Janet Lauren, higher education financi reporter for Bloomberg News.
Speaker 1: Harvard targeted by Massachusetts Bill on legacy admissions. Janet, give
Speaker 1: us a back story here, what's going on.
Speaker 9: So this bill.
Speaker 10: Has been introduced, it's been there was a committee last week.
Speaker 10: But the question is is it going to have an impact?
Speaker 10: So the question is does the state the state would
Speaker 10: like to tax schools based on their endowment pur student,
Speaker 10: and we know that there's a school with a quite
Speaker 10: large endowment in Massachusetts. It's a big target. And this
Speaker 10: would give schools, community colleges money based on formula foreign
Speaker 10: Downman per student if they have legacy admissions. And that
Speaker 10: means if your parent went to school there, do you
Speaker 10: get a preference? And also early decision and why does
Speaker 10: early decision make a difference. Typically students who apply earlier
Speaker 10: tend to be wealthier. They're not necessarily waiting to compare
Speaker 10: financial aid packages when they get them in March. So
Speaker 10: the question is Harvard again is always a big target.
Speaker 10: There's been legislation in Massachusetts before to try to TAXI
Speaker 10: ing down and also at Yale to tech and they
Speaker 10: have not been successful. There are huge drivers of money
Speaker 10: universities and the Higher Ed Association in Massachusetts said, look,
Speaker 10: if this goes through our students, our citizens are unfairly
Speaker 10: targeted because these policies potentially could go away.
Speaker 8: What historically has been the catalyst to prevent those types
Speaker 8: of policies from actually going through.
Speaker 10: Well, you know, firmative action in the Supreme Court decision
Speaker 10: has really prompted this. If the Supreme Court says you
Speaker 10: can't give a preference for race, why should you have
Speaker 10: a preference for wealthier applications? Is what is what this
Speaker 10: is is bringing.
Speaker 1: Out interesting I noticed in your reporting that the Massachusetts
Speaker 1: bill or the second richest college in the state, Massachusetts
Speaker 1: Institute of Technology MIT, wouldn't pay anything because it doesn't
Speaker 1: use binding early decision policies or legacy preferences.
Speaker 10: Yeah, I didn't know that. Yes, that is true. MIT
Speaker 10: has long had a policy not having legacies. But you know,
Speaker 10: MIT was one of the first schools to actually bring
Speaker 10: back the SAT and MIT is a Yes, they're pretty
Speaker 10: different because you kind of have to do the work,
Speaker 10: so it doesn't really matter if your parent went there.
Speaker 10: They're looking for kids who can excel in math and
Speaker 10: science and that's not going to be just anybody. And
Speaker 10: they also many of the schools do not have binding
Speaker 10: early decision policies. Harvard Yale, Princeton stand at MIT. You
Speaker 10: know that was done more than a decade ago to
Speaker 10: take out that advantage. In fact, several years ago schools
Speaker 10: actually abolished early decision like Princeton and a few schools
Speaker 10: followed that, and they said that they were actually losing
Speaker 10: kids because they do like to shore up where they're
Speaker 10: going to school as early as possible.
Speaker 8: How have these poor community colleges been impacted in the
Speaker 8: past when these policies haven't gone through.
Speaker 10: Well, community colleges are really quite underfunded. You know, I
Speaker 10: was talking to one bunker Hill Community College in Massachusetts
Speaker 10: where they have more than ten thousand students, and you know,
Speaker 10: their goal is to get kids to graduate associate's degree,
Speaker 10: ideally transfer to a four year college. And you know,
Speaker 10: the worst scenario is when you have some college you've
Speaker 10: taken on some loans and then you don't finish and
Speaker 10: they are, you know, traditionally quite underfunded.
Speaker 3: It's interesting because we're just talking to John Talker about this.
Speaker 1: You know, going to a community college for a couple
Speaker 1: of years and you can transfer all your credits to
Speaker 1: stay in the state of New Jersey to Rutgers, which
Speaker 1: is a state universe of New Jersey Sunday. And then
Speaker 1: you can graduate with a Rutgers degree with only really
Speaker 1: two years of a Rutgers tuition.
Speaker 9: Yes.
Speaker 10: Well, and really the biggest issue when you're talking about
Speaker 10: student loans is when you have some college you and
Speaker 10: you don't have the degree, but you're carrying this loan
Speaker 10: burden for a long time. And certainly people think about
Speaker 10: community college is an alternative to having a couple of
Speaker 10: years of less expensive school, and as you said, transfering,
Speaker 10: you're still having the Rutgers degree. And plus you know,
Speaker 10: real experience.
Speaker 8: As far as putting into perspective just how challenging is
Speaker 8: it and how many students end up not actually being
Speaker 8: able to accept and go to a university like Harvard
Speaker 8: just because of the increasing cost, Like say, if you
Speaker 8: don't have that kind of connection there where you're part
Speaker 8: of a family and an alumni group like that.
Speaker 10: Well, Harvard for a long time has been trying to
Speaker 10: increase its financial aid and targeted to lower income students.
Speaker 10: So our story last week talked about the incoming class
Speaker 10: twenty five percent have incomes of eighty five thousand or less,
Speaker 10: and that's something that they've been particularly trying to target
Speaker 10: in the last several years.
Speaker 1: How important are the legacy programs to the universities. I mean,
Speaker 1: it's a broad discussion point, but it seems like they're
Speaker 1: quite important for just I don't know, support and all
Speaker 1: that type of thing.
Speaker 10: Well, the University of Pennsylvania used to say, look, if
Speaker 10: your kid wants to go here, you went here. You
Speaker 10: have to apply early, and that that's the only place
Speaker 10: where you're going to have an advantage in the early
Speaker 10: decision process. But colleges like to you know, preserve their communities,
Speaker 10: They like to encourage alumni to donate, and you know,
Speaker 10: you may we had a comment in one of the
Speaker 10: stories earlier this week that legacy programs do encourage people
Speaker 10: to donate. You know, you're giving to your college for
Speaker 10: thirty years with the hopes that your kid might get in.
Speaker 10: That's you know, that is some revenue that schools don't
Speaker 10: want to curtail. And certainly we're also talking about wealthy
Speaker 10: donors too.
Speaker 8: Right, And what's the likelihood that when we're talking about
Speaker 8: these admission policies that they would actually.
Speaker 10: Likely go through time around? I mean, that's that's a
Speaker 10: good question. You talk to the higher ed lobby, you
Speaker 10: talk to observers, and they say, well, it's not that
Speaker 10: they have zero chance. Maybe they're you know, but before
Speaker 10: they had zero chance. Maybe it sounds a little bit
Speaker 10: more interesting with the Supreme Court. But you have to
Speaker 10: understand that colleges in massachuse there's a lot of rich
Speaker 10: colleges in Massachusetts, and you cannot undermine the power of lobbyists.
Speaker 10: Colleges for a long time resisted the federal tax on endowments.
Speaker 10: It's something that a lot of Congressmen were interested because
Speaker 10: you know, Harvard has fifty billion dollars, Yelle has forty
Speaker 10: one billion dollars. You know, these are these are massive
Speaker 10: asset allocations and they're a rich target. But ultimately, you know,
Speaker 10: except for the federal endowment tax that went through in
Speaker 10: the Trump tax cuts of twenty seventeen, they've never been successful.
Speaker 1: Talk to those about another topic that I know you're
Speaker 1: familiar with, which is we're seeing here the rich get richer,
Speaker 1: whether it's endowment or students or and maybe you know,
Speaker 1: the poor get poor in terms of some of these
Speaker 1: underfunded schools, under endowed schools literally going out of business.
Speaker 1: How's the playing field these days? What's happening out there
Speaker 1: what a higher education folks think is going to be
Speaker 1: the trend.
Speaker 10: Well, there are a couple of trends. The first one
Speaker 10: is you had a pandemic money that certainly helped gave
Speaker 10: a huge lifeline to colleges for several years, and that's
Speaker 10: going away. You have what we've been writing about for
Speaker 10: a decade, demographic shifts. There are just fewer eighteen year
Speaker 10: olds out there, there's fewer kids to go to college,
Speaker 10: and kids tend to go two hundred miles away from
Speaker 10: their homes, and there's a lot of colleges and areas
Speaker 10: that are constrained, such as the Midwest and the Northeast.
Speaker 10: So you have all these issues converging at the same time.
Speaker 10: With the prices expensive, our people making different decisions not
Speaker 10: to go to college. So you know when the price
Speaker 10: tag could be seventy eighty thousand dollars. Now, keep in
Speaker 10: mind that's not actually what most families pay because most
Speaker 10: of the smaller liberal arts colleges they do they do
Speaker 10: offer aid, so the sticker price is really not what
Speaker 10: they're paying. But it's a good question. We're starting to see.
Speaker 10: There was a college in New Jersey that has now
Speaker 10: since merged with Montclair State. Bloommen was Bloomfield College, Right,
Speaker 10: So I think you're starting to see more of that,
Speaker 10: and you know, as you see schools looking for debt
Speaker 10: and their ratings are constrained.
Speaker 8: Yeah, right, especially when you think of just in the
Speaker 8: context of COVID as well, what you were mentioning the
Speaker 8: haves and the have nots and how that can exacerbate that.
Speaker 15: Well.
Speaker 8: Great, Well, thanks so much for taking the time to
Speaker 8: speak with us. Janet Lauren, higher education finance reporter at
Speaker 8: Bloomberg News, talking to us about obviously this was a
Speaker 8: big topic you were looking forward to speaking to Paul
Speaker 8: as far as how Harvard is targeting this Massachusetts bill
Speaker 8: on legacy admissions and what that could mean obviously for endowments,
Speaker 8: but then also on the poor side of things, we
Speaker 8: were talking about community colleges.
Speaker 1: Yeah, and I just I kind of feel like the
Speaker 1: well resourced families will find a way around whatever blockades
Speaker 1: or you know, kind of challenge to put up by colleges.
Speaker 3: And clearly some of these things.
Speaker 8: Right, they have historically done in the lobbying efforts.
Speaker 3: Yeah, but you know, we thought about the Supreme Court
Speaker 3: case coming down people somebody said wrote in being a
Speaker 3: really good essay writer is not going to become even
Speaker 3: more important because you want to say, you know, as
Speaker 3: a you know, as an underprivileged blah blah blah blah,
Speaker 3: I overcame these and that's kind of the way to But.
Speaker 8: Then you also have to kind of think about the
Speaker 8: haves and.
Speaker 10: The have notz.
Speaker 3: Yep, Absolutely, it's been a big, big issue.
Speaker 1: But again, the community college schools have been such a
Speaker 1: great route for so many people over so many years.
Speaker 3: You'd like to see that continue.
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can
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Speaker 3: I'm Matt Miller.
Speaker 2: I'm on Twitter at Matt Miller nineteen seventy three and
Speaker 2: on Fall.
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Speaker 1: you can always catch us worldwide at Bloomberg Radio.