Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Abramowitz. Daily we bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg Terminal. It is a
Speaker 1: time of change and all as we readjust to the
Speaker 1: end of the year and maybe readjust after the election.
Speaker 1: Joining us now, someone with terrific respect on this, Alan Ruskin,
Speaker 1: chief international strategist at Deutsche Bank, is well Ellen, I
Speaker 1: want to go to the path from ultra accommodative Stanley
Speaker 1: Fisher to accommodative, to an unmeasurable neutrality and to a
Speaker 1: Domini constant over at Missoo calls super restrictive, which is
Speaker 1: basically disinflation even with oil, even with ants. How close
Speaker 1: are we to restrictive? How close are we two super restrictive?
Speaker 1: Great question, Tom, because I think you canscious look at
Speaker 1: this in terms of monetary policy. You have to look
Speaker 1: at it in terms of fiscal policy as well. And
Speaker 1: I think the most underrated element in terms of the
Speaker 1: policy stance is that fiscal policy from one was really
Speaker 1: the most stimulus we've ever had by Quantum's Yeah, I
Speaker 1: think it's a temper center GDP stimulus at that point
Speaker 1: for over those two years, about five times what a
Speaker 1: large stimulus is. That's still reverberating, that's still showing up
Speaker 1: in excess savings, that still buffering the consumer, and to me,
Speaker 1: that is creating the underlying resilience. That means that interest
Speaker 1: rates can be much higher than they would otherwise be,
Speaker 1: and that interest rates look like they're much tighter than
Speaker 1: they are. An arch theme of your colleague David Folker's Lenda,
Speaker 1: who has been there will be for school stimulus clearly
Speaker 1: in Europe to rebuild Europe after an horrific or as well.
Speaker 1: Do you see fiscal leveling, fiscal stimulus, or maybe even
Speaker 1: some form of dropped down in fiscal spending in America? Look,
Speaker 1: I think an it's gonna hinge on Tuesday and the
Speaker 1: events thereof, I think the anticipation is that fiscal policy
Speaker 1: is going to be a lot tighter going forward. I
Speaker 1: think the question there again is what are we going
Speaker 1: to see in terms of front loading from the lame
Speaker 1: dark section the session? In terms of you know, the
Speaker 1: death seeling. How much constraint is that going to impose?
Speaker 1: But I think the anticipation will be that we will
Speaker 1: see tightening. But again, want to emphasize the fact that
Speaker 1: the lagged fiscal stimulus from twenty twenty and twenty one
Speaker 1: is still going to act as a buffer for three
Speaker 1: and four, so it's still going to be substantive. And
Speaker 1: I'm not that worried about the tightening on the school side. Okay,
Speaker 1: but there's a very strange confluence of bad news is
Speaker 1: good news for markets right now. And we can put
Speaker 1: fiscal spending in there. It's good we get bad data
Speaker 1: because that means heilds will go down. It's good when
Speaker 1: we get less fiscal spending because it means bond yields
Speaker 1: will go down and perhaps ill cap inflation. At what
Speaker 1: point does that run out and people start to think, okay,
Speaker 1: wait a second, this isn't going to support the economy,
Speaker 1: and that is negative broadly for the dollar and for
Speaker 1: risk asses. Yeah, at Lisa, I think if you look
Speaker 1: at the past patterns whereby we've had a Democrat president
Speaker 1: with a divided Congress, you've seen as you might expect
Speaker 1: that fiscal deficits tend to come down. You see bond
Speaker 1: heels well supported, but you also see equities and I
Speaker 1: tend to underperform, and you see the underlying economy the
Speaker 1: GDP numbers tend to be weaker. So um, I think
Speaker 1: you asked the right question there, that it does tend
Speaker 1: to add to underlying weakness, and that good news for
Speaker 1: the bond market is only going to fill to through
Speaker 1: to some extent. As far as the economy is concerned.
Speaker 1: I don't think it's going to be sufficient, for example,
Speaker 1: to stop a recession, say by the time the end
Speaker 1: of three. We had been later on earlier in the show,
Speaker 1: earlier in this hour, and he was saying that he
Speaker 1: thinks that there is going to be a very big
Speaker 1: move up in risk assets because that there will be
Speaker 1: cutting of interest rates by the Federal Reserve, and we'll
Speaker 1: go back not to the same extent, but to a
Speaker 1: similar playbook as the one that we've come accustomed to.
Speaker 1: Do you think that that is likely? Is that something
Speaker 1: that people can count on in the next twelve months
Speaker 1: or perhaps even eighteen months, even if it doesn't seem
Speaker 1: like it's on the horizon now, I think that's a
Speaker 1: very optimistic view. I think, you know, we're trying to
Speaker 1: establish all the things that Pal highlighted, which is where
Speaker 1: is the peak and what is the shape of the
Speaker 1: rate cycle at the peak? And increasingly that peaks just
Speaker 1: seems to drift up. You know, we're now at a
Speaker 1: five percent handle. It's possible, and I think the stew
Speaker 1: is still to the top side of that. We're thinking
Speaker 1: in terms of the shape, and people felt the higher
Speaker 1: we got, the quicker rates would actually come down. In fact,
Speaker 1: now increasingly there's a feeling that rates won't come down quickly,
Speaker 1: that it's more like an inverted l at the top
Speaker 1: of of of the cycle. So to me, none of
Speaker 1: that is that optimistic from a necessary from a growth
Speaker 1: cycle standpoint. Well, and if we dash to a hundred
Speaker 1: dollar brand again, is the hundred dollar a barrel brand?
Speaker 1: If we see it now at ninety eight dollars, is
Speaker 1: it the same is a hundred dollars the last time around?
Speaker 1: I think you've always got to, you know, just assess
Speaker 1: what the overall backdrop, you know, macro backdrop is. I mean,
Speaker 1: I think it would be upsetting from a sort of
Speaker 1: a stagflation standpoint if we started to see oil prices
Speaker 1: move in the you know, in the so called a
Speaker 1: wrong direction from a stagflation standpoint, I think, you know,
Speaker 1: falling on a weakening economy. One would argue that perhaps
Speaker 1: to have even more negative effect, and it would have
Speaker 1: had in prior last two quarters. A general questionnaire, let's
Speaker 1: call it econ one oh one this morning, I believe
Speaker 1: there are fourteen core CPI measurements in each country. Is
Speaker 1: there a value of looking at headline inflation now? Or
Speaker 1: do each of us have to find a core series
Speaker 1: we're comfortable with? And I think CORE was seen as
Speaker 1: helpful in terms of telling you what the underlying picture was,
Speaker 1: you know, where the natural gravitation would be over say
Speaker 1: a twelve month period when food and energy prices erratic
Speaker 1: food and energy prices work their way out. But I
Speaker 1: think if you're asking questions about, you know, what is
Speaker 1: inflation doing for the average man in the street, then
Speaker 1: skip the CORE. I mean, you've really got to focus
Speaker 1: on the total inflation and uh, you know, it would
Speaker 1: be a travesty ready to start removing food and energy
Speaker 1: from those kind of measures. But I think CORE for
Speaker 1: the economists trying to look say twelve months out, is
Speaker 1: still reasonable, and you've got his search country by country
Speaker 1: on the fraid time when you look country to country.
Speaker 1: I just want to wrap it up with this question
Speaker 1: about Europe. And we've been talking a lot about the
Speaker 1: US and the CYSCAL spending in the US and how
Speaker 1: we're going to see the dollar progress. But at what
Speaker 1: point does Europe become attractive again considering how much it
Speaker 1: sold off, but also considering that it faces a much
Speaker 1: bleaker picture in many ways than the United States. Yeah.
Speaker 1: I mean, obviously a lot turns on the politics. So
Speaker 1: you had somewhat optimistic mentions of the US touching base
Speaker 1: with the Russians, which is you know, I think an
Speaker 1: egg people to think in terms of some sort of
Speaker 1: Ukraine peace deal eventually. Um, that's not obviously an optimistic
Speaker 1: view of things. Um, so that's going to be crucial
Speaker 1: I think in terms of, you know, how you think
Speaker 1: about Europe going forward. Um. That being said, I think
Speaker 1: there's some built in resilience that we're starting to see
Speaker 1: from the economies. You are seeing uh an ability to
Speaker 1: navigate some of the energy shocks. So I don't think
Speaker 1: it's all pessimism really in a way. But I think
Speaker 1: he's still gonna have to just wait for that political
Speaker 1: signal before it's a real buying opptuesing allan thank you
Speaker 1: as old white body. I appreciate your time and I'm
Speaker 1: resking that of Deutsche Bank right now and this is
Speaker 1: a joy. We truly begin our coverage with the Wendy Shiller,
Speaker 1: director of the tub and Center for American Politics and
Speaker 1: Policy at Brown University, with Greg Valier just a foundation
Speaker 1: of what surveillance does on politics. Professor Schiller, I want
Speaker 1: you to address, as in your memo, the mid term
Speaker 1: messaging that has led us in the last forty eight
Speaker 1: hours to indeterminate polling. Give us the messaging dynamic red
Speaker 1: and blue versus the polling shock that we're going nowhere
Speaker 1: in the last two days. Well, it's interesting and sort
Speaker 1: of a very late shift by the Democrats. We've talked
Speaker 1: about this before to the economy and also attacking Republicans
Speaker 1: on social security and medicare the problem with that charge
Speaker 1: of the Democrats as many people who are over the
Speaker 1: age of sixty five already voted. That's the biggest bulk
Speaker 1: of people who vote by mail, and also people being
Speaker 1: the age of sixty five, A lot of that early
Speaker 1: voting is coming from them. They care about the economy.
Speaker 1: It's just a little bit too late, I think. And
Speaker 1: uh you know, they misplayed the abortion issue by over
Speaker 1: emphasizing it nationally and not being strategic about that. They
Speaker 1: did some redistricting decisions that we could talk about, we
Speaker 1: don't have time. In twenty we have that case in
Speaker 1: Rhode Island where they over districted, in other words, put
Speaker 1: too many Democrats in one district and left the end
Speaker 1: on their district vulnerable. So now we've got a potential
Speaker 1: for a Republican to be elected in Rhode Island for
Speaker 1: the Congress. That hasn't happened in a long time. Uh So,
Speaker 1: I think. On the other hand, the Democrats had a
Speaker 1: lot of losses in the House, so you know, the
Speaker 1: damage actually might be mitigated and other problems can pick
Speaker 1: up a lot of seats and win control, but it
Speaker 1: won't necessarily look like eleven or twenty. Where are we
Speaker 1: on the tipping point where the mail and voting, the
Speaker 1: pre voting becomes more important than the Tuesday voting. That's
Speaker 1: a really great question. Place like Pennsylvania, for example, we're
Speaker 1: all watching that states Senate race in particular. They start
Speaker 1: counting Tuesday morning, so you may not have that kind
Speaker 1: of blue wave red wave kind of thing going on.
Speaker 1: May take them a long time. There's about I think
Speaker 1: five and fifty thousand or six hundred thousand early votes
Speaker 1: by mail, but they start counting at least on Tuesday.
Speaker 1: It's some other states, like Ohio, they accept mail and
Speaker 1: ballots for another ten days, So you know, if it's
Speaker 1: really tight in some of these states, it could be
Speaker 1: a while before we know the answers. But midterm elections
Speaker 1: are about a referendum on the party in power in
Speaker 1: the White House. Most of the time that party loses seats.
Speaker 1: You know, when you have such division, you're gonna switch
Speaker 1: control the chambers a lot more frequently. Years ago, we
Speaker 1: didn't have as much division, and so you know, it's
Speaker 1: harder to flip control. But it is typical for the
Speaker 1: party in the White House to lose seats in a
Speaker 1: mid from election. Wendy's a referendum on this administration or
Speaker 1: is it a larger referendum. There is a story in
Speaker 1: Axios basically talking about how leading Democratic voices are saying
Speaker 1: the party has seen as too extreme and that this
Speaker 1: basically is a big clarion call for a rethink in
Speaker 1: some of the messaging. More broadly, do you agree that
Speaker 1: that is the conclusion if the Democrats do face some
Speaker 1: pretty severe losses uh this particular week, Lisa, I think
Speaker 1: it's just so much more complicated than that. I would
Speaker 1: be cautious of overinterpreting the results of this particular election.
Speaker 1: People are concerned about inflation. It's still hard to get
Speaker 1: a new car. There's ridiculous inflation markups on new cars
Speaker 1: for example. I mean people's people feel it. They feel
Speaker 1: it every day. This could just be a big example
Speaker 1: of bad campaigning by the Democratic Party. In terms of messaging.
Speaker 1: They had tons of money, Uh, and did they not
Speaker 1: emphasize what they should have emphasized, sort of average campaign
Speaker 1: one oh one. And in terms of democracy, if we
Speaker 1: have turned out, you know, we already have more early
Speaker 1: voting than we had in twenty eighteen, you know, by
Speaker 1: about a million votes already, and we don't even know
Speaker 1: the folk than the burling voting. So if we have
Speaker 1: really big turnout and you say democracy is dying, that's
Speaker 1: a conflicting message. Again, So the Democrats have to be cautious.
Speaker 1: Everybody has to be cautious about interpreting the results of
Speaker 1: this particular election, but it is true that the Democrats
Speaker 1: did a lot that they say they did for a
Speaker 1: lot of the people who are not voting for the
Speaker 1: Democratic Party in November. And where is that mismatch most acute?
Speaker 1: And how do they have to localize their messaging as
Speaker 1: they move forward? Well, especially when it comes to crime.
Speaker 1: And I say this living in New York City and
Speaker 1: living in New York and we have seen this become
Speaker 1: a huge campaign issue that actually makes this highly blue
Speaker 1: state suddenly on the ballot when it comes to the
Speaker 1: governor race. What's your interpretation of that? And I understand
Speaker 1: that there are single idiosyncratic messages, but is this just
Speaker 1: a messaging issue or is this a policy issue? Well,
Speaker 1: I mean, you know, in terms of crime, you know,
Speaker 1: the irony for the Democrats are the frustration of the
Speaker 1: Democrats is that part of the violent nature of crime
Speaker 1: is that more people of guns. You know, it's just
Speaker 1: easier to get a gun and many more people have guns.
Speaker 1: That's dude to basically Republican slash n R a opposition
Speaker 1: to gun safety ledges slation. But the Democrats has lost
Speaker 1: that message entirely. Uh. And it's true people want to
Speaker 1: be safe when they go into a supermarket or a
Speaker 1: movie theater or the subway, wherever they are, they want
Speaker 1: to be safe. And it's been typical that the Republicans
Speaker 1: have taken advantage of that in electoral terms. And there
Speaker 1: is also sort of a racial coded message in criminal
Speaker 1: sort of focusing on crime in some areas as well.
Speaker 1: So the pushback by the Democrats against that messaging hasn't
Speaker 1: been exactly the right mix of messaging about security versus
Speaker 1: being you know, cautious on on using racist or stereotypical
Speaker 1: tropes on crime. So I think the Democrats have some
Speaker 1: work to do on messaging. They also have to pick
Speaker 1: up who's gonna run their party. They have people who
Speaker 1: are you know, no offense, people in their seventies and eighties,
Speaker 1: you know, all good, but they have a fairly old bench,
Speaker 1: and the Republicans have a fairly younger bench, with the
Speaker 1: exception of Donald Trump, who who still has a lot
Speaker 1: of vitality, but nonetheless you had the governor of Virginia,
Speaker 1: you know, relatively young guy, probably has a future in
Speaker 1: national politics. The Democrats have a befaired who is there
Speaker 1: who are their spokespeople and what age group are they
Speaker 1: are they picking from? And that's that's a big rethink
Speaker 1: for them, and they better do it fast. Wendy, thank
Speaker 1: you when they share that of Brandy Universtity, I think
Speaker 1: you missed at the end, Tom perhaps for the best. Wendy,
Speaker 1: thank you very much. We are thrilled to bring you. Dana,
Speaker 1: I've senior equity research director at Wedbush. Daniel and I
Speaker 1: were talking about this, any clarity on sales the two
Speaker 1: fancy phones, with the phone war that's out there, T
Speaker 1: Mobile and all that. Am I right that the Pro
Speaker 1: and the Pro Max are selling like hotcakes? Look, I
Speaker 1: think demand on Pro has been unprecedented relative to what
Speaker 1: we're seeing in this macro. And I think you saw
Speaker 1: that with September results and even the guidance, and you
Speaker 1: see that even come out in China. But for apples,
Speaker 1: we saw last night the issues not the man. It's
Speaker 1: the supply and oxous to the zero COVID in China.
Speaker 1: That's the gut punch that we're dealing with this morning. Okay,
Speaker 1: so wait, there on a scale and I don't mean
Speaker 1: to get Matthew here, Dan, but I think we do
Speaker 1: with the Bloomberg reporting. What percent of this is a
Speaker 1: about China lockdown? What percentages about demand of the phones
Speaker 1: underneath the pro in the pro Max. Yeah, so let's
Speaker 1: break that down in terms of the Bloomberg report. That's
Speaker 1: really time. When you look at the iPhone fourteen class,
Speaker 1: I mean, that's really been a strikeout for Apple coming
Speaker 1: out of the gate. It s that's where you're seeing
Speaker 1: the lower production in terms of coming out of Asia.
Speaker 1: But but on the other side, the strength is coming
Speaker 1: out from fourteen pro. A typical mix is about sixty
Speaker 1: sixty five percent. We think it's closer to eight this quarter.
Speaker 1: That's bullets that's positive for a sp is positive from margins,
Speaker 1: and that's really what the streets focused on here. So, Dan,
Speaker 1: I guess that you're rejecting this idea that this could
Speaker 1: be demand driven reduction in production. Is that correct that
Speaker 1: you think that that's uh, perhaps not a correct interpretation
Speaker 1: of Apple's announcement. Well, I mean if you look at
Speaker 1: just off the quarter, I mean when Cook gave guidance,
Speaker 1: and I think across big the last four or five years,
Speaker 1: no one's in better in terms of forecasting. They're seeing
Speaker 1: strength and I believe the iPhones would still be up
Speaker 1: year of the year, but obviously in terms of the
Speaker 1: zero COVID shut then we think that probably takes off
Speaker 1: to potentially three percent iPhone unit demands. Issue it continues
Speaker 1: to be supply and I think that's are of the
Speaker 1: frustration for Cupertino in terms of what they're dealing with
Speaker 1: in China. Although you're not necessarily seeing people expect bigger margins.
Speaker 1: In other words, we're not hearing that perhaps Apple will
Speaker 1: raise the price of the iPhone fourteen in response to
Speaker 1: the lack of supply. So does this mean that Apple
Speaker 1: and a lot of companies kind of reached the end
Speaker 1: of how much they can offset some of these these
Speaker 1: pressures with higher prices. Yeah, it's a great point. I
Speaker 1: also think it speaks to why within the four walls
Speaker 1: of Cupertino, why it's so important from a chip and
Speaker 1: own their own ecosystem, and I think that's what Apple
Speaker 1: has done. It gives them more flexibility on the supply
Speaker 1: chain and from a margin perspective, and that's something that's
Speaker 1: playing out more and more. But I think really the
Speaker 1: narrative is that iPhone four team pro despite opposite dark
Speaker 1: storm clouds is seeing strength despite what we see what
Speaker 1: I'd call it almost a nightmare. We have a large
Speaker 1: cap tech enemy season Dan, in the hallways of all
Speaker 1: these fancy tech people with their egos and their business
Speaker 1: beliefs and all that. What's the difference between a hiring
Speaker 1: freeze and outright firings? Explain that body language, not company
Speaker 1: to company, but within the industry, within the culture you
Speaker 1: follow well in the valley, especially intact the last I
Speaker 1: call it sevent eight years. I mean a lot of
Speaker 1: these companies were hiring fifteen, twenty, sometimes thirty percent more
Speaker 1: employees per year. So in terms of a freeze, they
Speaker 1: were just used it. You need ten more engineers and
Speaker 1: a project, you get it. Now, what you're starting to
Speaker 1: see clearly a slowing down. You're starting to finally see
Speaker 1: these culturalities come to just spending like ninety rock stars.
Speaker 1: But you're starting to see now cuts across the board
Speaker 1: because they really want to make sure that they get ahead.
Speaker 1: It's on margin perspective. I still don't be with his ominous.
Speaker 1: It's still more between a freeze and slight cuts. If
Speaker 1: it continued, then it becomes a dark winner. Hey Dan,
Speaker 1: thank you, Dan, I said wet Bush still looking for
Speaker 1: two on Apple Jayler Richardson with his chief economists at
Speaker 1: ADP Research. And she's fabulous because not only working with
Speaker 1: a DP with a thumb and the pulse of American wages,
Speaker 1: but also her work on government economics. Thank you so
Speaker 1: much for joining today, Thanks for having you walked in
Speaker 1: and said, hey, stupid, this is what matters in the media,
Speaker 1: and this is no it's says it's Monday. It's stupid
Speaker 1: Monday for me. But the media over weights technology because
Speaker 1: we've got technology in the brain and you're saying layoffs,
Speaker 1: it Lift or Apple wherever, it's not that big a deal. Well,
Speaker 1: it's a big a deal for the tech sector. It's
Speaker 1: a big deal for tech employees. But in terms of
Speaker 1: the overall workforce, tech information sector is about two. So
Speaker 1: when you so when you're talking about what's really the
Speaker 1: heavy hitters in the labor force, its services. Services is
Speaker 1: when it comes to consumer facing services like leisure in hospitality,
Speaker 1: which no suffered the most during the pandemic, retail sector,
Speaker 1: that's important. Professional business services to all your accountants out there,
Speaker 1: that's important. Tech is mark what is this what is
Speaker 1: this service dynamic into this election coming off the ADP report,
Speaker 1: coming off the full employment reports on Friday. What's a
Speaker 1: service dynamic right now? It's all about wages and it's
Speaker 1: all about leisure in hospitality really because it's that has
Speaker 1: been the big growth sector. Is interesting. In January of
Speaker 1: T one, wage growth and leisure and hospitality was the
Speaker 1: lowest of any sector we track. Now it's the highest,
Speaker 1: and it's been at double dudgets since the summer for
Speaker 1: a very long time. It's what's driving up wage growth.
Speaker 1: But as that dynamic changes, you might see wages start
Speaker 1: to peter out in terms of acceleration, but still remain
Speaker 1: high at these elevated levels. We're all waiting for this
Speaker 1: supply side response, any sign of it whatsoever. Well, yeah,
Speaker 1: a little bit here and there, just the hint of it,
Speaker 1: walk us through it in pocket. I mean, there was
Speaker 1: a little bit of movement, and I'm talking about labor
Speaker 1: supply of course. Yeah, hopefully we're one. We we did
Speaker 1: see someone so many supply issues here, but we did
Speaker 1: see some people move back into the labor market. In
Speaker 1: the fall. We had the promise of a normal school
Speaker 1: season and so that was helpful. But if you look
Speaker 1: at that labor force participation rate. It's still stubborn, and
Speaker 1: it retreated last month. That is an issue you because
Speaker 1: that suggests a bit more permanence to the fact that
Speaker 1: the work working age supply has, you know, shrunk, And
Speaker 1: what does that mean for growth going forward, not just
Speaker 1: when we get through this inflation cycle, but in the
Speaker 1: years ahead. Well, this is the inflation cycle I wanted
Speaker 1: to talk about. So on the way up, inflation kick
Speaker 1: tie really really quickly. Do you consider it to be
Speaker 1: stickier on the way down? Is that the way this
Speaker 1: usually works out, It's stickier, and I think it's going
Speaker 1: to be more persistent. The Fed's already admitted that the
Speaker 1: persistence is much more than it has been in previous cycles,
Speaker 1: That the supply shortages, those dynamics globalization, you know, automation
Speaker 1: that we're pushing inflation down, aren't. They don't have the
Speaker 1: same power they used to, And the demographic changes are
Speaker 1: not having the same power it used to to keep
Speaker 1: inflation low. So it's not it's not only likely that
Speaker 1: this inflation cycle is stickier, that it's also likely that
Speaker 1: future levels of inflation are more persistent than we've seen historically.
Speaker 1: You guys were talking about the supply issue in terms
Speaker 1: of workers coming back into the workforce, How can we
Speaker 1: understand the fact that the participation rate has not creeped up,
Speaker 1: that it is still actually going lower on a month
Speaker 1: to month basis if you look at the latest read
Speaker 1: why you know we all talk about economics that we
Speaker 1: forget that there's a huge psychological factor under undergrading this
Speaker 1: entire labor market. This was not just a supply shock,
Speaker 1: this was a people shock. And people over the last
Speaker 1: two years are making different decisions. They're giving up that
Speaker 1: second job, they're deciding to live on one income, they're
Speaker 1: switching industries, and we've seen that in the quits rate.
Speaker 1: So in in combination, all these different decisions at the
Speaker 1: household level means that the workforce has become smaller, and
Speaker 1: so how do you get the workforce back up. Well,
Speaker 1: that you might have to rescale workers for different jobs,
Speaker 1: jobs that make it worth it to get off the sidelines.
Speaker 1: So what does that mean in terms of inflation and
Speaker 1: how quickly it can really come down? We were talking
Speaker 1: about how, at least on the product side, we're seeing
Speaker 1: some some reasons to be optimistic about disinflationary forces, but
Speaker 1: not so much on the other side, based on what
Speaker 1: you're talking about, when do we get back to two Well,
Speaker 1: productivity is the fly in the appointment of the labor market.
Speaker 1: We need more productivity and we haven't seen it. It's
Speaker 1: productivity that grows you out of this inflation stasis, right
Speaker 1: It's when more workers are more productive, creating more output.
Speaker 1: Right now we have more workers with the same output
Speaker 1: or producing less output. And that's not the way you
Speaker 1: grow out of inflation. That's really the issue. Friday out
Speaker 1: to Chad Jones, giant out it's at Stanford on productivity.
Speaker 1: And let me ask you, because you're you're you're weaning this.
Speaker 1: I mean, it's what you've done for years, Neila, And
Speaker 1: that is how do you measure productivity of the new
Speaker 1: economy of work from home? I get that from a
Speaker 1: big corporation like ADP work from home is maybe countable.
Speaker 1: But other than that, are we flying blind in this
Speaker 1: vaunted productivity and analysis. You know, you've made a really
Speaker 1: interesting and really important point because over the last two
Speaker 1: years the economy has become even more digitized um and
Speaker 1: so the standard measures of productivity may not hold. And
Speaker 1: maybe there's some good news on this side that we're
Speaker 1: actually more productive than we think. We're just not counting
Speaker 1: it right. But if that's the case, we should see
Speaker 1: that show up in GDP growth, right, And we haven't surveillance.
Speaker 1: We know we're more productive than you know analysis and
Speaker 1: they don't give us credit for we're just the hyperad.
Speaker 1: That's why we're asking the questions, LA, I need to
Speaker 1: talk about policy then policy going forward from here? We
Speaker 1: aren't restrictive and how restrictive and how the how do
Speaker 1: we not? Great question? Um, we're restrictive in pockets. You
Speaker 1: can definitely see. Let's just put it this way. Where
Speaker 1: supply has been chronically short like in housing, the policy works.
Speaker 1: But the policy only works because there's not that many
Speaker 1: houses to be agen with and prices for skyrocketing already.
Speaker 1: If there was a greater supply of housing, even a
Speaker 1: seven percent mortgage rate wouldn't keep the tail wind of
Speaker 1: demographics at Bay. But it's because that housing is chronically
Speaker 1: undersupplied that the rate is actually in is having an effect.
Speaker 1: So where you have supply shortages and a higher borrowing costs,
Speaker 1: you're seeing an effect. It's not happening in the labor
Speaker 1: market though, And now unfair question for Monday. You don't
Speaker 1: the answers you want, but all of global Wall Street,
Speaker 1: watching us, listening on radio as well, want your update
Speaker 1: on the new ADP report. You know the pinion of
Speaker 1: this has been acted doctors, Andy and all. What's the
Speaker 1: knowledge base you have about the quality of your new
Speaker 1: improved ADP report. It's a different approach. We start with
Speaker 1: over million workers and we do something that is a
Speaker 1: pivot instead of forecasting the Friday number on a Wednesday. Yes,
Speaker 1: we provide an independent measure based on ADP gliant base.
Speaker 1: And this is the future of data. This is how
Speaker 1: much timeline do you need? How much statistical and you
Speaker 1: need where you can say this has veracity. I think
Speaker 1: we're in that moment now. Really, we have a very
Speaker 1: expansive labor market. ADP pays one in six of US
Speaker 1: workers in the United to turn us into a commercial
Speaker 1: But I'm not trying to. But you asked me, and
Speaker 1: this is this is how broadened because the corporate sector
Speaker 1: is delivering with high frequency data. We don't just get
Speaker 1: a read every month, we don't just get it once
Speaker 1: a month. We get it every day. And I think
Speaker 1: ADP is not alone with other companies that are getting
Speaker 1: reads on inflation, on productivity, and so when it comes
Speaker 1: to the future of data, it's not just going to
Speaker 1: be with government statistics. Go to the government as well,
Speaker 1: corporate sector as well. I could sense the frustration. Does
Speaker 1: it frustrate you that if Wednesday doesn't forecast Friday, people
Speaker 1: just think it's useless. You know, I have lots of frustrations. Honestly,
Speaker 1: the data, Um, that's not it. Because what I can
Speaker 1: say when I have an independent metric is look, it's
Speaker 1: one of many. It's a supplement. Don't say this is
Speaker 1: a substitute. It's not, it will never be. But it's
Speaker 1: another read on the economy. And at a time when
Speaker 1: the economy has become more complex, more affected by rate
Speaker 1: sensitivity and government debt and fragmentation globally, you need as
Speaker 1: many credible resources as you can get. And so we
Speaker 1: offer this to Wall Street. Take a look, disagree, like it,
Speaker 1: don't like it, figure out when it works for you.
Speaker 1: But it is another data point for you to look at,
Speaker 1: like you clip this and push yeah, exactly, doing a
Speaker 1: fabulous Don't worry, we probably will thank you for coming
Speaker 1: in to thank It's going to see you in pest
Speaker 1: and Native Richards and that this is the Bloomberg Surveillance Podcast.
Speaker 1: Thanks for listening. Join us live weekdays from seven to
Speaker 1: ten am Eastern on Bloomberg Radio and on Bloomberg Television
Speaker 1: each day from six to nine am for insight from
Speaker 1: the best in economics, finance, investment, and international relations. And
Speaker 1: subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg
Speaker 1: dot com, and of course on the terminal. I'm Tom Keene,
Speaker 1: and this is Bloomberg