Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg Global News. Over the summer, the blockchain
Speaker 1: ecosystem Topple raising fifteen million dollars in a series a
Speaker 1: funding round that's on top of a five million dollar
Speaker 1: seed round which happened back in so we want to
Speaker 1: talk a little about the business and what they're up to.
Speaker 1: Chris Georgia and the founder and managing director of Topple,
Speaker 1: joining us from Houston, Texas. Chris, how are you? You're great?
Speaker 1: It's happy to be on today. Yeah, thanks so much
Speaker 1: for joining us. I I coinker a show called Crypto
Speaker 1: I r L and I still think there's so much
Speaker 1: confusion over what exactly the blockchain is is and what
Speaker 1: it can do. And in a recent episode actually talked
Speaker 1: about this. I said that, you know, we've been hearing
Speaker 1: about the promises the blockchain for over a decade at
Speaker 1: this point, and consumers have yet to see a point
Speaker 1: in their lives it has actually gotten better as a
Speaker 1: result of this technology. Uh would you disagree with that
Speaker 1: or would you agree with that? Well, I would definitely
Speaker 1: agree with that. Um, you know, for a lot of people,
Speaker 1: it hasn't become apparent yet. You know, we're starting to
Speaker 1: have some small use cases, you know, supply chain traceability,
Speaker 1: carbon credits, you know, starting to be tracked this way.
Speaker 1: But I think we all need to remember that blockchain
Speaker 1: came onto the scene from a retail perspective very early
Speaker 1: in its lifespan. You know, a I got started in
Speaker 1: the sixties, but I think none of us really heard
Speaker 1: about it until fifteen years ago. So blockchain is kind
Speaker 1: of had its coming out party in a very public way.
Speaker 1: So remind our world, Chris, what you are doing specifically,
Speaker 1: and what kind of companies are you working with, and
Speaker 1: maybe who are your biggest partners or customers. Is at
Speaker 1: this point absolutely. So the way that we think about
Speaker 1: TOPPLE is we think of it as blockchain for sustainability,
Speaker 1: for positive impact or you know, to use an acronym
Speaker 1: for for e s G. And what that means is
Speaker 1: we're doing everything from tracking and tracing conflict free diamonds
Speaker 1: moving around the world or fair wage agriculture. We work
Speaker 1: with energy companies and you know, big project developers to issue, track,
Speaker 1: buy and sell carbon credits. So we do a lot
Speaker 1: with powering the energy transition, and we do a lot
Speaker 1: to help clean up supply chains, you know, making sure
Speaker 1: that they're properly environmentally sustainable and also you know, following
Speaker 1: good labor practices as well. So dig a little bit deeper.
Speaker 1: How do you do that? Because the big part, you know,
Speaker 1: you say es G and kind of the hairs in
Speaker 1: my neck perk up because I think we keep saying,
Speaker 1: or I certainly keep saying that E s G feels
Speaker 1: like it's going through a reckoning after years and years
Speaker 1: of good performance in an upbeat market, a bullush market. Um,
Speaker 1: it's going through a reckoning where people want visibility, transparency
Speaker 1: and at our understanding, uh, and so tell us, how
Speaker 1: what are you what's your proprietary technology that helps customers
Speaker 1: make sure that they are complying by real E s
Speaker 1: G means if you will, absolutely, And the way that
Speaker 1: we think about how blockchain fits into this is blockchain
Speaker 1: can be open, blockchain can be decentralized. And really one
Speaker 1: of the biggest problems with a lot of E s
Speaker 1: G claims is they're being assembled after the fact that
Speaker 1: a main corporate office months after something supposedly or hopefully
Speaker 1: happened somewhere out in a plant or out in the field. Well,
Speaker 1: blockchain technology and what we're able to do is get
Speaker 1: data directly from when it's happening. So maybe that's taking
Speaker 1: inputs directly from SMS information from that what's SMS text
Speaker 1: messages for everyone, um, so you know, maybe farmers are
Speaker 1: text interacting with the system, or there's IoT or satellite
Speaker 1: information that's being fed directly into technology. So you don't
Speaker 1: have kind of like an after the fact report being assembled,
Speaker 1: but you've got data being sourced directly from on the
Speaker 1: ground or where that impact is supposed to be happening,
Speaker 1: and that's being able to you know, relay direct to
Speaker 1: investors get more transparent access to it, or consumers get
Speaker 1: more transparent access to it. Chris, this conversation reminds me
Speaker 1: of the way that we've seen Google Glass develop and
Speaker 1: the technology and heads up displays develop over the last
Speaker 1: well only in the sense of, you know, when this
Speaker 1: came out that Google had this video of you know,
Speaker 1: everyday people wearing these glasses and you know, a heads
Speaker 1: up display saying, you know, walking down a subway into
Speaker 1: a into a subway station underground and it's like, oh,
Speaker 1: you know something pops up, subways closed, better go use
Speaker 1: another one, that sort of thing. But what ended up
Speaker 1: happening was, you know, consumers didn't want that type of technology,
Speaker 1: didn't like the way that they interacted with it. The
Speaker 1: technology was then used in warehouses and it's like caught
Speaker 1: up on the industrial side of things. Do you see
Speaker 1: that happening with with blockchain, Like, you know, something was
Speaker 1: promised to consumers, but it's actually more applica bull in
Speaker 1: an industrial in an industrial space. I think the earliest
Speaker 1: use cases absolutely, you know, will fall into that pattern.
Speaker 1: And you know that's really the pattern that we're following
Speaker 1: as well. You know, it's it's right now, it's behind
Speaker 1: the scenes technology, it's powering applications and platforms that are
Speaker 1: all being built on top of it. UM. There's still
Speaker 1: probably a long way that innovation that can go. And
Speaker 1: so you know, just like we might see Google lots
Speaker 1: or you know, a competitor make a reemergence once the
Speaker 1: technology is you know, ready to come back out of industry.
Speaker 1: You know, i'd say in the next two to four years,
Speaker 1: we'll see that on the consumer side or the blockchain
Speaker 1: as well. Hey listen, just get about forty five seconds
Speaker 1: left here, R Bloomberg. We care about this kind of stuff.
Speaker 1: You guys are raising money from investors, So what's been
Speaker 1: the growth in your business top line? And I'm assuming
Speaker 1: you're not profitable yet, but you can clarify so some
Speaker 1: of this is kind of uh, you know still you know,
Speaker 1: private information. But you know, over the last year, we've
Speaker 1: on boarded about thirty different projects UM all across the
Speaker 1: world onto the platform. I think we're active with projects
Speaker 1: across five continents right now. Team is growing healthily. I
Speaker 1: think we've just on boarded our thirty five person UM.
Speaker 1: So it's also a great time to be hiring in
Speaker 1: the tech space. So I've been really enjoying that as well.
Speaker 1: All right, Well, no slowdown? So that is it like
Speaker 1: double did you grass? Yeah? I didn't hear it? Pretty
Speaker 1: close that okay, well listen, good to know and uh,
Speaker 1: it's definitely a world that we're interested. Tim is all
Speaker 1: over it on his shoe. Watch our new show Crypto
Speaker 1: I r L Tonight eight thirty Bloomberg TV. Little Little Love.
Speaker 1: I like that. That's the that's the like fifth of
Speaker 1: more plugs. Okay, I love it. Um our. Thanks to
Speaker 1: Chris of Course, founder imaging director of Topple here on Bloomberg.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes. Tim Stinovic on Bloomberg Radio. Do you want
Speaker 1: to get back to something we just talked about with
Speaker 1: our Mike mckeean. We're talking about this morning's jobs report.
Speaker 1: Just a reminder the US labor markets staying strong. In September,
Speaker 1: the unemployment rate unexpectedly returned to an historic low, leaving
Speaker 1: the Fed on course to deliver yet another aggressive interest
Speaker 1: rate hike. Non Farm payrolls increased two hundred sixty three
Speaker 1: thousand in September after three gain in August. Unemployment rate
Speaker 1: dropped to three and a half percent. That matched a
Speaker 1: five decade low average. Really earnings rising firmly. Tim Well,
Speaker 1: we like to turn to on days like this. Becky
Speaker 1: frank Witz, chief commercial Officer, President North America for Manpower Group.
Speaker 1: Becky joining us this afternoon on the phone from Chicago.
Speaker 1: Manpower Group, of course, a placement firm that works around
Speaker 1: the globe and has a really good understanding of what
Speaker 1: exactly is happening when it comes to jobs in this
Speaker 1: economy and more. Becky, good, good to have you back
Speaker 1: with us. How are you hi, Tim Well? Thank you good? Good? So. Um,
Speaker 1: any surprises in the jobs report that we got, we
Speaker 1: know for the equity market, it's another good news is
Speaker 1: bad news scenario. Yes, I'd say, you know, first, we
Speaker 1: saw some softening, gradual softening month over month, which is
Speaker 1: actually good for employers. Tim. I know it sounds cow
Speaker 1: are intuitive, but a little bit of release of pressure
Speaker 1: in this really tight labor market is actually encouraging because
Speaker 1: employers are hoping they can actually you know, fill some roles. Now. Um,
Speaker 1: A surprise earlier in the week is it quit rates.
Speaker 1: Quit rates prove that your job openings, you know, haven't
Speaker 1: dissuaded people from resigning. Um, even if we go into
Speaker 1: this holiday. So I would say that was a surprise
Speaker 1: at bit earlier in the week, and I think that
Speaker 1: you know, the no news is the news around wages.
Speaker 1: UM also was clear in the reports this morning. So
Speaker 1: what are you guys seeing at Manpower Group when it
Speaker 1: comes to what companies need? Are they finding their need?
Speaker 1: Give us some color behind these numbers that we got
Speaker 1: from the government and what you guys are seeing in
Speaker 1: real time. Yeah, Carol, I'm so glad you asked that,
Speaker 1: because you know, the job's report is is a backward
Speaker 1: looking view. And so if you say, hey, what's going
Speaker 1: on today, Banky, what's going on the labor market today?
Speaker 1: I would say two big headlines. One is hybrid holiday.
Speaker 1: So we are seeing retailers start to hire for what
Speaker 1: I call hybrid and my kids make fun of me
Speaker 1: because I said, it's it's I R L, you know,
Speaker 1: in real life. So we're seeing people want to shop
Speaker 1: in store, and therefore we're seeing roles associated store managers,
Speaker 1: service people in the inside retail. We're starting to see
Speaker 1: some some pick up there as well as continuing growth
Speaker 1: around you know, logistics, delivery drivers, etcetera, which really didn't
Speaker 1: show up in the report today, and so it's a
Speaker 1: it's a bit more delayed. Um, so that would be
Speaker 1: one big thing that we're seeing. And the second thing
Speaker 1: we're seeing that it wasn't the report today is tech hiring.
Speaker 1: Carroll continues to robust, aggressive and apparently slow down proof.
Speaker 1: Really that's so weird because okay, because we get so
Speaker 1: much anecdotal evidence, whether that's you know, Meta platforms, the
Speaker 1: parent company of Facebook, or you know, you just go
Speaker 1: and type in what ni job cuts in the Bloomberg
Speaker 1: terminal and there's headline after headlines, so much of them
Speaker 1: based in Silicon Valley. Are are you just using the
Speaker 1: term tech differently? Is more a more encompassing term. Well,
Speaker 1: it's about tech skills, it's not about tech companies. And
Speaker 1: so you're absolutely right. The headlines are front of the
Speaker 1: big tech companies. Yet every company today is in some
Speaker 1: part of tech company, and so anything anyone who might
Speaker 1: have been impacted by Silicon Valley layoffs was rapidly picked
Speaker 1: up in either another industry or in a smaller company.
Speaker 1: And tchech Unemployment is still under one percent in our country,
Speaker 1: under one percent. You know, it's interesting. What was the
Speaker 1: thing of labor hoarding. We were talking about where companies
Speaker 1: are afraid to let go of workers even if they're
Speaker 1: a little nervous about the outlook, because they just maybe
Speaker 1: they don't think they if we get a recession, it
Speaker 1: won't be deep. And so they don't want to let
Speaker 1: go of workers because they know how tight the labor
Speaker 1: market is and they don't want to have to scramble
Speaker 1: on the other side of it. What what can you
Speaker 1: tell us about what you are seeing when it comes
Speaker 1: to companies and doing labor labor hoarding. Yeah, so, so
Speaker 1: I'd say that we're still in a post pandemic labor recovery.
Speaker 1: And I know, you know, we like to think the
Speaker 1: pandemic is roll over. Just now, supply chains are normalizing.
Speaker 1: You've seen the headlines around freight costs going down, containers
Speaker 1: you know, now being readily available, lumber going down, and
Speaker 1: so we're still in this post pandemic recovery. And in employers,
Speaker 1: memories are long and they remember for the last eighteen
Speaker 1: months they've not been able to find talent. And so, yes, Carrol,
Speaker 1: we are seeing I love that term, by the way,
Speaker 1: labor hoarding. Um, we are seeing labor hoarding in some
Speaker 1: places because you know, employers are afraid if I let
Speaker 1: these people go, I may not be able to get
Speaker 1: them back in a few months when we all hope
Speaker 1: the economy rebounds. Uh, can you give us some indication
Speaker 1: on I don't know how you're looking forward a little
Speaker 1: bit becky to understand what comes during the fourth quarter
Speaker 1: of the year and in Q one, because the excuse
Speaker 1: me him getting a little ahead of myself. The FED
Speaker 1: is certainly trying to figure out what happens there, and
Speaker 1: investors are as well. Yes, so I would say, you know,
Speaker 1: holiday hiring is the weather vane. It's going to tell
Speaker 1: us what we're going to see for the rest of
Speaker 1: you know, at least the rest of this year, and
Speaker 1: also into the very first part of three. So that
Speaker 1: would be one, you know, one thing. So if we
Speaker 1: see so okay, so let me just make sure I
Speaker 1: understand this. If we see softness when it comes to
Speaker 1: holiday hiring, that could be a bad sign. It could
Speaker 1: be a concern. You know, so far we're seeing I
Speaker 1: know you saw Amazon just announcer hiring a hundred and
Speaker 1: fifty people for the holl Day and so you know
Speaker 1: we'd see early signs of promise. But it's still early
Speaker 1: in the season, but that that is the weather vein
Speaker 1: that we should all keep our our eyes on. Um.
Speaker 1: I think the other is, you know, just the FED
Speaker 1: take action again and what impact does that have on
Speaker 1: the job market? And that's well outside of you know,
Speaker 1: my control. Are you concerned the Fed over does it.
Speaker 1: They've talked about where the unemployment rate needs to be
Speaker 1: potentially in order to bring down inflationary pressures. Are you
Speaker 1: concerned that we will see maybe it's six months from now,
Speaker 1: maybe it's twelve months, maybe it's three months that we
Speaker 1: will see those unemployment claims to hire and a significant
Speaker 1: amount of people might be out of work. And just
Speaker 1: got about thirty seconds, Becky, Yeah, so I would say, Carol,
Speaker 1: I hope it's not significant. The labor market traditionally lags
Speaker 1: the economy. It's lagging it a bit more. So I'm
Speaker 1: hoping the economy rebounds and the labor market has a
Speaker 1: short and shallow decline. Okay, I'm gonna leave it there. Hey, listen, Becky,
Speaker 1: have a great weekend. Good to check in with you,
Speaker 1: Becky Frankoments. She's Chief commercial Officer, President of Manpower Group
Speaker 1: North America and of Chris johan Elsa, she typically does
Speaker 1: on these monthly jobs data days, joining us on the
Speaker 1: phone from Chicago. You know it's funny. I just I
Speaker 1: was looking at an eye job cuts and there's just
Speaker 1: so many stories. It's like, wait a minute, I don't understand. Um,
Speaker 1: the job market is so good. Why does so many
Speaker 1: people talk about layoffs? But the distinction that Becky made
Speaker 1: is so important? Right, tech jobs versus tech companies? Yes, yes,
Speaker 1: really important. Yeah. I think that could be a quick
Speaker 1: take video. Sounds good, you want to do it. You're
Speaker 1: listening to Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. Let's get to
Speaker 1: Julia Pollock, chief economists for Zipp recruiter. She joins us
Speaker 1: once again on the phone from Los Angeles. We like
Speaker 1: checking in with her at least once a month when
Speaker 1: it comes to what she's seeing on her platform. Julia,
Speaker 1: how are you very well? Thanks? And how are you
Speaker 1: We're doing okay. It's good to have you with us
Speaker 1: once again this afternoon. So when you saw these numbers
Speaker 1: this morning, wasn't any surprise to you? After all, you
Speaker 1: see what recruiters are looking for, and you see what
Speaker 1: job seekers are looking for on ZIP recruiters, so you
Speaker 1: have a good, you know, good idea of what's how
Speaker 1: opening in the economy. Was this a surprise to you?
Speaker 1: Not at all. This is right in line with what
Speaker 1: economists we're expecting, and vice line with what we've been
Speaker 1: seeing on our website. While employers are becoming a little
Speaker 1: bit concerned about the future, outlook a bit more cautious,
Speaker 1: a bit more conservative, and they're hirings while they're reducing
Speaker 1: job openings somewhat, they are still hiring when push comes
Speaker 1: to shove because business conditions are still good and the
Speaker 1: consumer is still spending. So how do you cross this
Speaker 1: with um all of the talk about recession. Obviously, the
Speaker 1: financial markets tell a very different story. Uh. And we
Speaker 1: did have a market guest who joined us earlier about
Speaker 1: I think what's going on in terms of corporate earnings
Speaker 1: that we've already had a corporate earnings recession, but we
Speaker 1: haven't had necessarily, yes, an economic recession. So companies who
Speaker 1: have had to maybe cost because of inflationary pressures are
Speaker 1: shown and so forth. You're saying they're reducing job openings,
Speaker 1: but they're not letting folks go. Bottom line, that's that's
Speaker 1: what it's going to be, UM, and we'll continue to
Speaker 1: be that way. Yes, because though companies are reducing headcount
Speaker 1: growth but not reducing headcount, and that is sort of
Speaker 1: exactly I think what the said would like to see.
Speaker 1: They want to see that gap between job openings, the
Speaker 1: number of unemployed people seeking them close. It was more
Speaker 1: than five million a month ago. It's uh, it's shrank
Speaker 1: to four million in the most recent ULTS report earlier
Speaker 1: this this week. Uh. And if that gap narrows, you
Speaker 1: will see people becoming a bit more reluctant to quit
Speaker 1: their jobs, a little bit less confident in the availability
Speaker 1: of alternatives, and that will reduce wage growth pressure a
Speaker 1: little bit and also with its equation. UM. Want to
Speaker 1: ask you, though, do we get to a point where
Speaker 1: it's not just about reducing headcount growth but actually you
Speaker 1: say they're not reducing headcount now, but do we get
Speaker 1: to a point where companies are reducing headcount in your conversations,
Speaker 1: do we start to see that? Well? We I mean,
Speaker 1: we are seeing the lave market split into two groups now,
Speaker 1: one group that's still adding jobs very rapidly and another
Speaker 1: group set of industries that are disproportionately affected by high
Speaker 1: interest rates. Uh. Those are industries like finance and insurance
Speaker 1: that lost thirteen thousand jobs in this report. UM building,
Speaker 1: material and garden supply stores lost six thousand jobs. Car
Speaker 1: dealerships lost almost two thousand jobs. You know, the US
Speaker 1: consumers are not able to tap into their houses and
Speaker 1: use them as tiggy banks anymore the way they were
Speaker 1: last year. They can't just refinance their house to buy
Speaker 1: a new car or do some renovations on their home
Speaker 1: because they're they're two thirds of US mortgages are now
Speaker 1: below four percent, and two percent of mortgages only two
Speaker 1: percent are adjustable rate mortgages. No one wants to jump
Speaker 1: out of that into a much much much higher mortgage rate,
Speaker 1: which we're a and we're seeing that play out in
Speaker 1: the housing market, Like you don't want to leave that
Speaker 1: that mortgage rate that sub four percent to buy something new.
Speaker 1: So it's essentially at a standstill right now. Hey, Julia,
Speaker 1: help us understand what this looks like in Q one
Speaker 1: three and what it looks like for the year the
Speaker 1: new year. You know, and typically in situations like this,
Speaker 1: like how should we expect things to start looking when
Speaker 1: it comes to the layment front. Sure, so this job
Speaker 1: gain that we just saw two sixty three thousand is
Speaker 1: about five times what we would need to keep pace
Speaker 1: with population growth right now. So we uh could see
Speaker 1: job gains slow gradually and continue to slow a little
Speaker 1: bit while the economy continues to add jobs across a
Speaker 1: broad set of industries and not just you know, low
Speaker 1: wage jobs, not just minimum wage jobs, but good jobs
Speaker 1: as well. Um, we will see some sexual pain. I
Speaker 1: mean there there are parts of the economies that are
Speaker 1: hard hit by rising interest rates and low stock prices
Speaker 1: and a very strong dollar. Big tech, major enterprise companies, UM,
Speaker 1: many of them earn the majority of their revenue abroad,
Speaker 1: and so uh those non dollar denominated sales are hurting
Speaker 1: their margins. UM. But you know, the typical like main
Speaker 1: street business that buys inputs from abroad cheaply now and
Speaker 1: is getting all of its revenue here at home. Those
Speaker 1: companies are still, by and large doing quite well. So, Julie,
Speaker 1: if I go to your website, I have the option
Speaker 1: of saying, there's a question what brings you here today?
Speaker 1: I'm looking for a job right now, I'm looking for
Speaker 1: a job, but no, Rush, I'm just browsing. Next. What
Speaker 1: do most people hit? Do you know? Yes? So, Um,
Speaker 1: you know, about half of people are looking for a
Speaker 1: job right away and they know exactly what they want
Speaker 1: to look for. But there is a huge set of
Speaker 1: people who come to the website and don't know what
Speaker 1: they're looking for. They're they're just looking for a job,
Speaker 1: and that's why they come to us, because we can
Speaker 1: help match them two jobs that match their skills and
Speaker 1: experience levels. Um. Many people have no idea. Um. Uh,
Speaker 1: you know, the most common search on our website is
Speaker 1: a blank search and that that is exactly I think.
Speaker 1: Why mean a blank search where they just hit search
Speaker 1: but they don't fill anything in. They don't they don't
Speaker 1: know what job titles they're looking for. Um, they're looking
Speaker 1: for a job, but they don't even know what's out there.
Speaker 1: They don't know the possibilities. Uh. You know, no one
Speaker 1: trains you to to search for a job. It's something
Speaker 1: you don't learn school. Many people also leave learning about
Speaker 1: looking at the lave market until it's kind of too
Speaker 1: late to match to get the skills that they would
Speaker 1: actually need to get a great job. Julia, When we
Speaker 1: have twenty seconds left here. But what about employers are
Speaker 1: they are not looking for jobs to the same extent
Speaker 1: that they were, you know, just six months ago. Employers
Speaker 1: are are worried about the future outlooks. But business is
Speaker 1: still good and so they're still hiring and uh and
Speaker 1: that means they're great opportunity still. This is where we
Speaker 1: scratched our heads. It's just a crazy environment. Hey, Julia,
Speaker 1: thanks so much, Julia Pollock. She's chief economists ZIP recruiter
Speaker 1: with us on the phone from Los Angeles. You get
Speaker 1: a job, you get a job, You get a job.
Speaker 1: That's what it feels like. I'm row a journal. Yeah,
Speaker 1: I bet you let me drive. Oh no, no, no no, no, please,
Speaker 1: I want to drive. It's a good question. Drive. This
Speaker 1: is good. Drive to the clothes on blue Bird Radio.
Speaker 1: All right, everybody, just about eleven minutes left in today's
Speaker 1: trading session, getting ready to wrap up what has been
Speaker 1: a wild, vaulatile week here in the trade. Having said that,
Speaker 1: I do want to point out, as we see stock
Speaker 1: selling off in a big way today, we're off our
Speaker 1: worst levels of the session, and we are still up
Speaker 1: nearly two percent on the Dow Jones Industrial average this week,
Speaker 1: up about one point three percent for the SNP for
Speaker 1: the week overall, and just holding onto about a six
Speaker 1: tenths of one percent gain in the past five days,
Speaker 1: but again seeing some significant selling in today's session, and
Speaker 1: I will say that one reduced volume I think in
Speaker 1: particular for the SNP. Let's get into it with Brian Jacobson,
Speaker 1: senior investment strategies at all Spring Global Investments. They've got
Speaker 1: a little bit shy of five billion dollars in assets
Speaker 1: under management. Brian joins us once again on the phone
Speaker 1: from Milwaukee. Brian, how you doing? I have ye better
Speaker 1: than the markets. Okay, that's good that we don't tie
Speaker 1: you know how you're doing to markets, because that can be,
Speaker 1: as we all know, a fool's errand um. But but
Speaker 1: how do you weigh in on what's going on here?
Speaker 1: Because at the start of the week we saw the
Speaker 1: two day rally that you know, it was the biggest
Speaker 1: two day rally that we've seen in two years, leading
Speaker 1: many to say, wait a second, Perhaps there was some
Speaker 1: short covering there, but also echoes of maybe a FED pivot.
Speaker 1: We can throw that out the window now, right, Yeah,
Speaker 1: I think the FED pivot that's not going to happen
Speaker 1: until they take the blinders off, right, and I don't
Speaker 1: think that they really want to even contemplate changing their
Speaker 1: tune until they get the four and a half percent
Speaker 1: with the FED funds rate. So here at all spring
Speaker 1: my Systematic Edge multi asset team. We had our one
Speaker 1: of our many tactical calls this morning discussing kind of
Speaker 1: doing a little debrief about what was going on. And
Speaker 1: I think that you know, Ned Davis was famous for
Speaker 1: a lot of his wisdom, the trend is your friend,
Speaker 1: and don't fight the Fed. But now you can kind
Speaker 1: of paraphrase that by saying, don't fight the trend because
Speaker 1: the Fed isn't your friend and the trend, unfortunately, is
Speaker 1: towards weakness. Okay, in terms of the meeting you talked
Speaker 1: about having with your team, how much did coming how
Speaker 1: much did finding a bottom kind of come up in
Speaker 1: that discussion or nearing a bottom because the market was very,
Speaker 1: very oversold prior to the rally earlier this week. Yeah,
Speaker 1: and we agree that there was generally over sold in
Speaker 1: we're expecting some bear market bounces. One of the challenges
Speaker 1: is just looking back at history and recognizing that most
Speaker 1: bear markets don't really end until recessions begin, right, And
Speaker 1: you know that's just been the history going back to
Speaker 1: the eleven bearer markets that we've had around recessions, and
Speaker 1: they typically and within a month or two of the
Speaker 1: recession starting now, I think you could look at earning
Speaker 1: season and quarterly earnings. We've actually had two sequential quarters
Speaker 1: in a row of declines in SMP as reported an
Speaker 1: opera the in earnings. So maybe we already have a
Speaker 1: profit recession in the books. But the problem is is
Speaker 1: that we probably don't have the economic recession but broader
Speaker 1: one until some time in two thousand twenty three. So
Speaker 1: you're saying probably already an earnings recession, but not necessarily
Speaker 1: an economic recession yet exactly. And we think that maybe
Speaker 1: this that's kind of what makes this time somewhat unique,
Speaker 1: is that the earnings recession maybe happened before the economic recession.
Speaker 1: And so then the question for us becomes one of
Speaker 1: how do you build a portfolio that's most resilient to
Speaker 1: an economic recession. And that's where there's all sorts of
Speaker 1: wonderful divergences within the market, small cat and value Emerging
Speaker 1: markets from a valuation perspective look like they've already experienced
Speaker 1: those recessionary conditions, whereas other parts maybe not so much.
Speaker 1: And let me ask you, so, if it's an earnings
Speaker 1: recession already, why aren't companies letting go of more workers
Speaker 1: that ultimately would show up in the labor numbers. Yeah,
Speaker 1: you know, I think the guys of how challenging it
Speaker 1: was to fill those vacancies, they might be a little
Speaker 1: hesitant to let them out exactly. So it's kind of
Speaker 1: the economic theory of labor hoarding, where it's one of
Speaker 1: the reasons why the labor market is a lagging economic indicator.
Speaker 1: You don't you really look at it for an indicator
Speaker 1: about where the economy is going, because you know it's
Speaker 1: costly to find someone trained them, and companies, you know,
Speaker 1: they don't necessarily just want to let those people go. Um.
Speaker 1: And it's one of the reasons why it's a little
Speaker 1: uncomfortable to hear the FED talks so much about wanting
Speaker 1: to see more labor market weakness, because you're not going
Speaker 1: to see the labor market weakness until it's too late
Speaker 1: for the rest of the economy. That just means that
Speaker 1: you're already in the midst of the draw down of
Speaker 1: broader economic activity. What kind of scenario Brian is priced
Speaker 1: into equity markets right now? You know, the way that
Speaker 1: we're looking at it is that the market is pricing
Speaker 1: in a fairly mile recession, one where maybe you know,
Speaker 1: there's a little bit more downside. Uh, We're expecting to
Speaker 1: see some more bear market rallies, some choppy trading, probably
Speaker 1: until the FED actually does begin to pivot, which isn't
Speaker 1: likely going to be until maybe third quarter of two
Speaker 1: thousand twenty three. So perhaps for the full next year
Speaker 1: we can expect to have this type of choppy trading
Speaker 1: ahead of US. UH. And so we think that the
Speaker 1: market is well choppy all year. It's been tabu a year.
Speaker 1: But how much chopping this happens though? As again you
Speaker 1: try to find a bottom. And I guess I keep
Speaker 1: pushing this a little bit because if I look at
Speaker 1: you know, we're still on track for the best weekend stocks.
Speaker 1: If I look at the spire in the past month,
Speaker 1: is that a significant trade? Essentially? Yeah? Isn't that interesting
Speaker 1: that it's one of the best weeks but also one
Speaker 1: of the worst days? And yeah, And and that is
Speaker 1: I think one of the characteristics of the finding a bottom,
Speaker 1: but it doesn't Just because you find a bottom doesn't
Speaker 1: mean that you have to rise from that bottom. And
Speaker 1: I think that's the position that we're in right now. Okay,
Speaker 1: that's interesting towards that bottom, and it's just going to
Speaker 1: be that choppy trading until we do get a whiff
Speaker 1: of a FED pivot, which isn't likely going to happen
Speaker 1: until you know, they get up to four and a
Speaker 1: half percent and hold it for a while, in which
Speaker 1: you know is good for active traders and active managers
Speaker 1: like on my team, we do a lot of tactical
Speaker 1: traits and so it's a fun way to try to
Speaker 1: add value, but it's not necessarily the most comfortable ride
Speaker 1: for strategic one term investors. So when do we start
Speaker 1: to see uh? I mean, it's it's interesting because it's
Speaker 1: if you say that, you know, if the FED pivot
Speaker 1: could be unlikely until we get up to four point
Speaker 1: five percent, when do we get there? Because as Mike
Speaker 1: McKie has talked about on our air a lot, it's
Speaker 1: you know, as important as how long it stays at
Speaker 1: you know, the terminal rate true exactly, it's the entire
Speaker 1: contour of the path of rate Hypes and I think
Speaker 1: that's why the market maybe got a little excited on
Speaker 1: Monday and Tuesday, the idea that oh maybe we can
Speaker 1: only have to go up to four and a quarter
Speaker 1: and maybe they can begin to pivot mid two thousand
Speaker 1: twenty three. But looking at FED funds futures today, now
Speaker 1: it's pricing in well, then maybe they want to get
Speaker 1: up to an upper end of about four point seven five, right,
Speaker 1: and hold it until towards the end of two thousand
Speaker 1: twenty three, And that seems reasonable. And it's that change
Speaker 1: in the expectation which you might see that as far
Speaker 1: as some more descents from some of the more devish
Speaker 1: members of the FED that maybe they've pushed things too far,
Speaker 1: too fast and they really need to take a little breather.
Speaker 1: Just got about forty seconds left here, so you we
Speaker 1: can talk all the macro that we want, but ultimately
Speaker 1: the end of the day, right, you've got to do
Speaker 1: something for your investors, and they don't always love to
Speaker 1: just throw things in cash, although in this environment we
Speaker 1: know cash has been more interesting than as of late.
Speaker 1: So what do we do with money right now? Brian? Yeah, well,
Speaker 1: cash is a wonderful investments as far as what the
Speaker 1: yield that you can get on it, and so our
Speaker 1: short duration strategies are doing quite well as a result
Speaker 1: of this increase in yields. But we're finding some really
Speaker 1: good opportunities longer term consumer staples, small camp value, emerging markets,
Speaker 1: especially those on the emerging market side with the focus
Speaker 1: on equity income. Uh and even just adding some of them.
Speaker 1: Are worried about the strong dollar on the emerging markets
Speaker 1: just quickly, Uh, not really all that worried about it,
Speaker 1: because maybe we might be closer to the peak of
Speaker 1: the dollar as opposed to the trough for the dollars.
Speaker 1: So a lot of the pain is hopefully mostly behind us.
Speaker 1: All Right, we gotta run. Hey, listen, have a great weekend.
Speaker 1: Brian Jacobson, he's senior investment Strategies at all Spring Global Investments,
Speaker 1: four seventies six billion dollars in assets under management, on
Speaker 1: the phone from Milwaukee. Thanks for listening to Bloomberg Business Week.
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