Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Ley. We bring
Speaker 1: you insight from the best and economics, finance, investment, and
Speaker 1: international relations. Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg
Speaker 1: dot com, and of course on the Bloomberg Terminament. Marvin
Speaker 1: Low joining us Now stay Street, seeing you a global
Speaker 1: market strategist, Marvin, Let's just start with a bond curve.
Speaker 1: Two's out the thirties. As you looked at things yesterday,
Speaker 1: what was the challenge to the Fed? Yeah, it was
Speaker 1: definitely the belly. UM. The auction, like both you and
Speaker 1: Lesa mentioned, was absolutely awful. UM. It really showed that UM,
Speaker 1: the expectation that buyers might come out because you'll te
Speaker 1: backed up so much loomed up being incorrect. So UM.
Speaker 1: I do think that there is a supply and demand
Speaker 1: UM issue. I think after all of the debt sales
Speaker 1: that we've seen over the course of the last year,
Speaker 1: UM and expectations for continued tail going into this year,
Speaker 1: which potentially get bigger UM is something that the FED
Speaker 1: is going to eventually need to address as part of
Speaker 1: UM its credibility, if you will, in keeping yields within
Speaker 1: kind of low framework while the economy reopens. Marven build
Speaker 1: on that for us the FEDS responsible potential response to this,
Speaker 1: how inconsistent the price action of the last week has
Speaker 1: been with the fetch new framework, the very fact that
Speaker 1: real yields have searched higher. Great height expectations are being
Speaker 1: brought in, but inflation expectations have basically done very little
Speaker 1: over the last week. Yeah, it's absolutely a change in
Speaker 1: UM commentary. I believe UM. There's no doubt that we
Speaker 1: we for the most part, have UM given into the
Speaker 1: FED being able to get close to its inflation target.
Speaker 1: That was the first part of the move that took
Speaker 1: us from January and to the beginning of February, and
Speaker 1: all is good. UM risk assets felt good that we
Speaker 1: were reflating the economy and everything was within the FED framework.
Speaker 1: After that, however, the market started to push against UM
Speaker 1: the FED ability ultimately to hold the line, and we
Speaker 1: moved in from I think it was probably late three
Speaker 1: just two weeks ago, to at one point, based on
Speaker 1: your dollar futures at least UM pricing in a late
Speaker 1: two numbers, so you know, within a week within a week,
Speaker 1: week and a half, that's an aggressive move. UM. At
Speaker 1: this point, I think this morning we're still early three,
Speaker 1: but you know, certainly the market is pushing the FED
Speaker 1: as to whether or not it's going to be able
Speaker 1: to hold the line in UM in the vein of
Speaker 1: all of the stimulus sets coming along. Marvin, how much
Speaker 1: are we trying to create a narrative to fit a
Speaker 1: technical move? Yeah, I think I think that's certainly a
Speaker 1: risk to UM. There were there were these massive price
Speaker 1: caps yesterday. UM. I think that there's a lot going
Speaker 1: on behind the scenes, you know, whether it's convexity hedging,
Speaker 1: whether it's UM kind of these potential changes to SLR
Speaker 1: ruled and bank holding the treasuries. UM. I think all
Speaker 1: of that came into play yesterday. And you know, ironically,
Speaker 1: a lot of those type of technical factors come in
Speaker 1: at the worst time. So it was to certain to
Speaker 1: be fuel to a fire that was already that was
Speaker 1: already burning. Is there a larger point, though, to take
Speaker 1: away from the technical move if this was technically driven,
Speaker 1: that this market the biggest, most deep bond market in
Speaker 1: the world, setting key interest rates that affect for an
Speaker 1: exchange rates that infect borrowing costs for companies and individuals,
Speaker 1: that it is fragile, and then it's getting increasingly fragile
Speaker 1: as you have an increasing number of crowded and leverage traits. Yeah,
Speaker 1: the most important number in the entire world is what
Speaker 1: that tenure yield is. So absolutely, and we learned how
Speaker 1: important was last year when we're in the midst of
Speaker 1: the volatility and we had a similar disconnect on the
Speaker 1: liquidity side of things and how much firepower that SHED
Speaker 1: needed to use just to pull that part of the
Speaker 1: market in. Um it is. It is scary to think,
Speaker 1: particularly given all the liquidity that the FED has pumped
Speaker 1: into it, that we still wind find ourselves in this situation.
Speaker 1: Um So, yes, expect expect that choppiness because there there
Speaker 1: are structural issues at a time when we've got, you know,
Speaker 1: more and more treasury security is being put into the
Speaker 1: into the world that need to be absorbed. Mom And
Speaker 1: I think it's too early to say with conviction that
Speaker 1: the FETs credibility is being tested, but least I think
Speaker 1: we can start to say that in Europe, in Australia
Speaker 1: that that's been the story of the last twenty four
Speaker 1: hours Australia pushing back, coming in and buying three billion
Speaker 1: dollars of Australian bonds at the front end, trying to
Speaker 1: cap the story at the front end because they have
Speaker 1: yield curve control there and they're struggling to control at
Speaker 1: least on top of that the ECB an executive board
Speaker 1: member out this morning once again pushing back against this move.
Speaker 1: We've seen what it raises. A question which you talked
Speaker 1: about yesterday, which is a good one. At what point
Speaker 1: is j Powell banker to the world. At what point
Speaker 1: is the volatility around the world that they're experiencing, the
Speaker 1: fact that they've got a more simular sance their economies
Speaker 1: because of what he says, going to affect his message,
Speaker 1: and so far people are saying he still is very
Speaker 1: much beggar to the United States. His message statement of confidence,
Speaker 1: Marvin statement of confidence. We've heard from them all through
Speaker 1: the week, Chairman Paler, Vice Check Calorada. Raphael Bostick of
Speaker 1: the Atlantic Atlanta Fed President said the following race still
Speaker 1: very low from a historic perspective. I'm not expecting that
Speaker 1: we will need to respond at this point. That was
Speaker 1: in the middle of this mess. What are you expecting
Speaker 1: to change on the communication side, you know what, they
Speaker 1: put themselves in a in a difficult position, no doubt. UM.
Speaker 1: In a lot of ways, their commentary is a glide
Speaker 1: path for traders to continue to try to push yields higher.
Speaker 1: And I think that's going to happen. Um. You know, certainly,
Speaker 1: while we saw volatility come up for the first time
Speaker 1: this year because of yield um, it didn't necessarily bleed
Speaker 1: into all different parts of the market. Credits still is
Speaker 1: holding in fairly well, you know, high yield deals are
Speaker 1: still are still getting done. I think that gives the
Speaker 1: bed cover for for a little bit of broader financial
Speaker 1: conditions are still you know, at the loosest that you know,
Speaker 1: near the loosest that we've seen since um, since the
Speaker 1: last spring. Once we start seeing that creep up UM
Speaker 1: and more volatile days, well let's hope we don't have
Speaker 1: all the days like yesterday, but but the voltilla that
Speaker 1: we've seen over the last couple of weeks, if that continues,
Speaker 1: those financial conditions will start to tighten. And um, you know,
Speaker 1: one one part of the real economy that has been
Speaker 1: affected by this mortgage rates and and and for me,
Speaker 1: at this point, mortgage rates and credit spreads are almost
Speaker 1: as important, if not more important, then where the equity
Speaker 1: market is for the FED because it affects companies and
Speaker 1: it affects the real economy. Mom and great points A
Speaker 1: great to catch ups? What a twenty four hours martin
Speaker 1: low that state straight seeing a global markets strategists and
Speaker 1: then joining us now being our capital markets head of
Speaker 1: US race strategy and great to catch ups. Let's talk
Speaker 1: about it past duration timing running through it the bond market.
Speaker 1: The last DAO sugged well, we've seen a very significant
Speaker 1: sell off in treasuries and it's the type of repricing
Speaker 1: that has historically been linked with a shifted monetary policy.
Speaker 1: The FED needs to say something and whether it's simply
Speaker 1: job owning comparable to what the ECB has done, or
Speaker 1: if there is some action to be taken. The market
Speaker 1: is waiting to hear, and there aren't any scheduled FED
Speaker 1: speakers immediately on the horizon, but that doesn't mean that
Speaker 1: we might not hear something by the the in the today,
Speaker 1: if not into next week. And so we're worried about
Speaker 1: is the FED comfortable with the paste the backup in
Speaker 1: rates and as you pointed out earlier. It really comes
Speaker 1: down to real rates. Ten year tips will yield much
Speaker 1: higher at this point in the cycle than I think
Speaker 1: that the third would want them to be. So here's
Speaker 1: the Fed speak next week. I went through this a
Speaker 1: little bit earlier. I'll do it again. Williams coming up
Speaker 1: on Monday, alongside Bostex, Massa Kashkari later in the week,
Speaker 1: Brainard Daily, then Harker Evans and then chair Pal closing
Speaker 1: out things on Thursday, just before pay rolls Friday. How
Speaker 1: do you think the script is going to change for
Speaker 1: Chairman Paullion, given that we've heard from him literally a
Speaker 1: couple of days ago as this bond market move was developing. Well,
Speaker 1: if he doesn't change the mantra from we're comfortable with
Speaker 1: us backup in nominal rates to we're monitoring and watching
Speaker 1: what's going on in real rates, then the move is
Speaker 1: going to extend because the market will take that as
Speaker 1: a signal that they can push this trade. And keep
Speaker 1: in mind, the one trade was cheaper and steeper, and
Speaker 1: so if we get the endorsement from policy makers to
Speaker 1: let it run, I don't see what will stop ten
Speaker 1: year yields from taking another shot in nominal space at
Speaker 1: one sixty maybe up to the biggest limiting factor is
Speaker 1: going to be the response in equities. If we see
Speaker 1: additional wobbles in the equity market comparable to what we've
Speaker 1: already started to see, that's going to be the feedback
Speaker 1: loop into tighter financial conditions that ultimately gets the market
Speaker 1: concerned that the FET will need to do something. I've
Speaker 1: been amazed, frankly at Powell's uh large indifference toward this
Speaker 1: back up so far. Let's just be clear. I mean, yes,
Speaker 1: we've got a little bit of a sell off, but
Speaker 1: stocks were near record highs or at record highs. We've
Speaker 1: seen an incredible run. I mean, at a certain point,
Speaker 1: how much is this apparent having a very bad job
Speaker 1: controlling a toddler in the sense that, yes, you see
Speaker 1: rates normalizing gas you might not lose as much money
Speaker 1: on the real rate basis if you go into bonds,
Speaker 1: but it doesn't seem like it's actually causing a disruption
Speaker 1: and risk acids. I mean, it isn't a bit premature
Speaker 1: for the Fed to come out now. I would say
Speaker 1: that we would. The Fed has done a very good
Speaker 1: job of getting in front of potential shifts in sentiment,
Speaker 1: and that's the risk. The risk is you're right, it's
Speaker 1: not a ten percent correction in stocks. It's not correction
Speaker 1: in stocks. But if the said waits until the smp
Speaker 1: it is off of the highs, they're going to have
Speaker 1: a much harder job to do in getting the sentiment
Speaker 1: back into risk ass So Ian, what does this mean
Speaker 1: about the Fed's balance sheet? I mean, if it's at
Speaker 1: seven point six trillion dollars and they have to come
Speaker 1: in with at least job owning, if not actual bond buying,
Speaker 1: if there is any wobble whatsoever in markets that seem
Speaker 1: increasingly fragile, does that mean that the FED is going
Speaker 1: to keep a balance sheet that's at seven point six
Speaker 1: trillion dollars or much more for the foreseeable future. Because
Speaker 1: they now are a controlling agent in a more ongoing way,
Speaker 1: I think it's safe to say that the Fed's balance
Speaker 1: sheet is going to continue to expand keep in mind
Speaker 1: that they're actively buying one and twenty billion dollars in
Speaker 1: bonds between treasuries and mortgages every month and that's expected
Speaker 1: to continue into the end of the year before tapering,
Speaker 1: and tapering will take somewhere between six and nine months,
Speaker 1: let's call. And then that gets us in a position
Speaker 1: where the FED will have a very large balance sheet,
Speaker 1: but they will continue to run it like that. Recall
Speaker 1: before the pandemic, when the FED tried to normalize its
Speaker 1: balance sheet, we saw reserve scarcity that stopped that process.
Speaker 1: So I think it's very safe to say the third
Speaker 1: is going to have a large balance sheet for the
Speaker 1: foreseeable future. And I think the question you're raising is
Speaker 1: a really important one. It's not about waiting for a
Speaker 1: repeat of December, and it's about providing the adequate guidance
Speaker 1: to how people understand what the reaction function is now
Speaker 1: on rates. I think they've done that on the asset
Speaker 1: purchase program, I really don't think they have. And earlier
Speaker 1: this week when they say things like it's a statement
Speaker 1: of confidence, yes it is higher real yields is a
Speaker 1: statement of confidence in the forward outlook. But if you're
Speaker 1: a central bank right now, you can also just add
Speaker 1: on the line really simply will be vigilant about what
Speaker 1: happened to the long end in case at least to
Speaker 1: undue tightening of financial conditions and feeds back into the
Speaker 1: economy and that's not an expensive line to fit in,
Speaker 1: is it. No, it certainly isn't, and I don't think
Speaker 1: that it is one that would materially shift the monetary
Speaker 1: policy stands. It will simply be an acknowledgement of what
Speaker 1: has gone on in terms of the price action and
Speaker 1: its potential ramifications. It great to catch up Inn and
Speaker 1: the Female Capital Market's head of US rate strategy. We
Speaker 1: need to get this economy reopen, and we need to
Speaker 1: get Lesa's kids back to school. It's a big, big
Speaker 1: issue for parents across the nation. Joining us now, I'm
Speaker 1: pleased to say, is Congresswoman Ashley Hinston, Republican from Iowa.
Speaker 1: And actually, I know you used to be a news anchor,
Speaker 1: so well, I don't play any tricks. I'll play straight
Speaker 1: down the middle and keep the question. Sure, Actually, how
Speaker 1: do we get this country and the kids of this
Speaker 1: country back to school? Well, Jonathan and Lisa, thank you
Speaker 1: so much for having me, and good morning. It is
Speaker 1: essential for kids to get back to school. My kids
Speaker 1: back in Iowa are about to get up, get ready
Speaker 1: to eat some breakfast, and get on the school bus
Speaker 1: today because our schools in Iowa are open and I
Speaker 1: has led the way on this, but unfortunately, about a
Speaker 1: third of students across the country are still only learning
Speaker 1: from behind screens. So we can get them back to school.
Speaker 1: The science shows that kids can be back to school safely. Um.
Speaker 1: So we need to do that with billion dollars in
Speaker 1: money that's already been appropriated to go to get schools reopen. Um.
Speaker 1: So that's why I filed the Reopen Schools Act. We
Speaker 1: need some accountability on this money to ensure that our
Speaker 1: our teachers get back in the classroom and they get
Speaker 1: back safely, and that our kids get back um. They're
Speaker 1: falling behind. There are mental health challenges that are just
Speaker 1: growing immensely. The number of emergency room visits for our
Speaker 1: young people um are increasing um and that's troubling to
Speaker 1: me as a mom. So we have to get these
Speaker 1: schools reopen, and we can do it with the money
Speaker 1: that's already been appropriated and spent um. And we we
Speaker 1: just need to make sure that there's some accountability there
Speaker 1: so we do get these kids back in the classroom.
Speaker 1: I sent from you, it's not a resource issue. What
Speaker 1: do you think is held in this back? Well, unfortunately,
Speaker 1: I think politics have been getting in the way here.
Speaker 1: And our kids shouldn't be a political football and keep
Speaker 1: if we keep moving the goalposts here, we keep pushing
Speaker 1: back what that that end result is one day in
Speaker 1: a classroom, Um, is not enough for our kids. And
Speaker 1: it's not as easy as just walking down the stairs
Speaker 1: and logging onto a computer for so many families, Um,
Speaker 1: I'm hearing from so many people. You know, they had
Speaker 1: to go to sit in the libraries parking lot to
Speaker 1: access the WiFi to be able to complete their work.
Speaker 1: That's a reality for so many ways, and it's not
Speaker 1: easy to do. And so unfortunately, I think politics has
Speaker 1: gotten in the way. Democrats have actually blocked my bill
Speaker 1: three times already. So, UM, this shouldn't be a partisan issue.
Speaker 1: Of getting our kids back to class shouldn't be a
Speaker 1: partisan issue. We need to be getting our next generation
Speaker 1: UM back where they belong, learning with a teacher in
Speaker 1: a classroom. So are you willing to put your weight
Speaker 1: behind the one point nine trillion dollars stimulus given the
Speaker 1: fact that within that is a good chunk of cash
Speaker 1: in order to get kids back to school. Because President
Speaker 1: Biden agrees with you, he says this is crucial. We
Speaker 1: just need to put the funding behind it well, Unfortunately,
Speaker 1: as the bill stands right now, I don't plan to
Speaker 1: support it. Um. There's an additional hundred thirty billion dollars
Speaker 1: that is set to go to schools, but only five
Speaker 1: percent of that is said to be spent this year,
Speaker 1: which to me means that that's not really about getting
Speaker 1: kids back in the classroom. UM. In fact, about nine
Speaker 1: percent of the bill is designed as that targeted COVID relief,
Speaker 1: but only nine percent is designed to get more vaccinations,
Speaker 1: shots and arms. UM. The accountability there for contact tracing
Speaker 1: and testing. So when you look at everything else in
Speaker 1: this bill, only that is what's dedicated and that small
Speaker 1: amount of education funding that's set to be spent this year, UM,
Speaker 1: it's a signal to me that that's not really the
Speaker 1: priority here. And so so that's why I'm trying to
Speaker 1: make sure that there is accountability here. We're talking about
Speaker 1: a trillion dollars that's still left from that last package
Speaker 1: that was passed at the end of December before I
Speaker 1: was even in office, that hasn't been spent yet. UM.
Speaker 1: So when I look at that, we have to stand
Speaker 1: up for taxpayers and we need to make sure that
Speaker 1: the people who are getting this money, are following through
Speaker 1: on what the intent was, which was to be used
Speaker 1: to open schools and do it safely. Congress Women, A
Speaker 1: lot of people come on this show economists and they
Speaker 1: talk about how we can already see the money going
Speaker 1: into the economy directly that was passed back in December,
Speaker 1: that the aid that has been provided dear to date,
Speaker 1: are going back to to last year helped revive the
Speaker 1: economy and turbocharge the recovery. That will allow more people
Speaker 1: to get back to work. Given that more money, economists
Speaker 1: say will help the economy move at a faster pace
Speaker 1: and get to a good speed quicker. What's the reluctance
Speaker 1: to go ahead with this? I mean, is it bigger
Speaker 1: debt loads? It's very unclear to a lot of people. Yeah. Well,
Speaker 1: I think there's a few elements in this package that
Speaker 1: to me are the poison pill, one of them being
Speaker 1: the fifteen dollar minimum wage mandate. Uh, you know that's
Speaker 1: still in the House version that's going to be passing through,
Speaker 1: and so to me, that's very clear that that's a priority.
Speaker 1: It shouldn't be in this bill. We should be having
Speaker 1: conversations about that in a separate entity, but or a
Speaker 1: stuff an environment. But again, this this whole process wasn't
Speaker 1: It wasn't how process should move. It didn't make it through.
Speaker 1: We didn't we didn't get the chance in our budget
Speaker 1: committee to offer amendments, um, to try to make this
Speaker 1: bill better. Um, you talk about three fifty billion dollars
Speaker 1: bailouts to blue states. Uh. The Congressional Office that it
Speaker 1: was supposed to be thirty five billion. That's what's actually needed.
Speaker 1: So to me, it's just this, it's an overspending, it's
Speaker 1: a spending package. It's not a targeted COVID really filled. Congresswoman,
Speaker 1: you've had experience with infrastructure spending in your home state.
Speaker 1: Given that this bill is likely to be passed, would
Speaker 1: you support an infrastructure bill in addition to the current
Speaker 1: fiscal support fiscal stimulus has been passed. Well, I hope
Speaker 1: we do get to work on an infrastructure package. And um,
Speaker 1: that is something that's passion of mine back home. I
Speaker 1: understand infrastructure is economic development and in the true Iowa
Speaker 1: fashion U the great Iowa line, if you build it,
Speaker 1: they will come. Um. We know that in Iowa, infrastructure
Speaker 1: is a crucial part of our economy. We're an agg
Speaker 1: state and we're a manufacturing state. We need to get
Speaker 1: those products to market, and we need to have the
Speaker 1: infrastructure to do it. Um. I think infrastructure though also
Speaker 1: not just your roads and bridges, but broadband. We've seen
Speaker 1: be such an important issue in the last year. So
Speaker 1: that's something that I'm very passionate about and I want
Speaker 1: to work on for Iowa, and so I'm hopeful we
Speaker 1: get to consider an infrastructure package. But unfortunately this package
Speaker 1: one point nine trillion dollars UM. It's not targeted cover relief,
Speaker 1: which is what we should be considering here. Actually wonderful
Speaker 1: to catch up. Please sty Close come back soon. We'd
Speaker 1: love to tell more. Congresswoman actually hints in the Republican
Speaker 1: from Iowa, there's a question of what the world will
Speaker 1: look like once COVID ends, once the pandemic subsides, and
Speaker 1: not just the future of vacation, which we're all planning
Speaker 1: hopefully in sometime in the near term if we can,
Speaker 1: but also for work. And this is something in a
Speaker 1: subject of a high controversy. Susan Lund has been studying
Speaker 1: it at McKinsey. She's a Global Institute partner there, and
Speaker 1: they're putting out a series of reports on the future
Speaker 1: of work and how it will transform how the COVID
Speaker 1: pandemic has accelerated some of the technological changes that really
Speaker 1: we're already underway. Susan, Can you just talk about one
Speaker 1: of the largest findings from your latest report in terms
Speaker 1: of fundamental changes that you're already seeing take hold and
Speaker 1: what that means for the future of work? Hi, Well,
Speaker 1: what we found is that some of the changes in
Speaker 1: consumer and business behavior that we're forced on us in
Speaker 1: the pandemic are going to stick. And the impact of
Speaker 1: this and the workforce is that we may see a
Speaker 1: lot of jobs that weren't really affected by technology and
Speaker 1: other trends, like those in food service and retail. A
Speaker 1: lot of frontline, low wage workers could find demand for
Speaker 1: their services going down over the long term. But we
Speaker 1: all already kind of figured this would happen, right with
Speaker 1: artificial intelligence and with other technological advances. Is there something
Speaker 1: that structurally has changed or gotten accelerated beyond what people
Speaker 1: are expecting in terms of these jobs going away, it's
Speaker 1: really been accelerated. COVID nineteen has been a massive shock
Speaker 1: to both consumers and businesses, and we were forced to
Speaker 1: do things and try new ways of interacting that many
Speaker 1: people had resisted. So for instance, remote work, I'm sitting
Speaker 1: here on Zoom and many executives had really resisted the
Speaker 1: idea that people could be productive from home. Well, now
Speaker 1: we know that's not true. You look at e commerce
Speaker 1: or telemedicine, usage went up tremendously, And when we look
Speaker 1: at the Consumer Pulse survey results that we do monthly
Speaker 1: around the world, we find a lot of those new
Speaker 1: users that were forced to try a digital interaction are
Speaker 1: finding that it was convenient and efficient, and so it's
Speaker 1: going to stick. So we really saw this step change
Speaker 1: in behavior during the last year UM and that's one
Speaker 1: of the disruption going forward is it's going to be
Speaker 1: different than just the gradual evolution we had been experiencing
Speaker 1: before the pandemic. Susan, This is an incredibly important conversation
Speaker 1: from an economic perspective as well. When we talk about wages,
Speaker 1: we talk about the employment rate and what we're targeting
Speaker 1: here in the United States. We've been talking a lot
Speaker 1: about the Federal Reserve this morning and how they're aiming
Speaker 1: for full employment of possibly three and a half percent.
Speaker 1: Is that type of unemployment rate possible in an environment
Speaker 1: where a lot of services jobs, where a lot of
Speaker 1: these lower wage jobs that you're talking about simply disappear.
Speaker 1: It's possible in the long term, but it's going to
Speaker 1: require people currently in those low wage service jobs to
Speaker 1: gain skills to get into the growing fields, whether it's
Speaker 1: a more technical feel like marketing or supply cheng management,
Speaker 1: or healthcare um or a technology related job. So the
Speaker 1: key is going to be, can we provide opportunities for
Speaker 1: people to in a short amount of time, a matter
Speaker 1: of weeks or months, uh, learn the skills they need
Speaker 1: to get into a career letter again on the first
Speaker 1: run of the ladder that moves them upward. Okay, so
Speaker 1: the skills that they need is this sort of computer programming.
Speaker 1: I mean, what skills are the important skills for a
Speaker 1: vastly transforming technological backdrop that takes you know, a lot
Speaker 1: of flexibility. Frankly, well, what we need is people with
Speaker 1: a lot more specific, job specific vocational skills. But yes,
Speaker 1: obviously we're gonna need a lot more people in technology.
Speaker 1: But there's good news for people who are not uh,
Speaker 1: technology folks. We need more workers with socio emotional skills
Speaker 1: because that's what machines don't do. They're not very good
Speaker 1: at coaching and mentoring, training others, teaching UM, care giving
Speaker 1: roles UM. We also need people with creativity and critical thinking.
Speaker 1: But I think for the vast majority of the workers
Speaker 1: were talking about they are going to need to switch occupations.
Speaker 1: All I need is a football. So there are now
Speaker 1: a variety of programs across the country in where in
Speaker 1: a matter of months, you can teach someone, say the
Speaker 1: basic skills to be a certified nurse assistant, and then
Speaker 1: that gets them on the on the career letter in nursing.
Speaker 1: Or you can go to a coding boot camp and
Speaker 1: get your first job in I T support UM and
Speaker 1: get onto a digital career path. So we've got to
Speaker 1: think about those types of programs because for people mid
Speaker 1: career with families and mortgages, you know, going back to school,
Speaker 1: even community college for two years, is simply not going
Speaker 1: to be an option. So there's a real question here
Speaker 1: structurally about what this means for the society, and not
Speaker 1: to paint this in such a big brush, but I
Speaker 1: was reading this Project Syndicate essay this week by Standford
Speaker 1: professor Michael Spence, where he was talking about how we
Speaker 1: shouldn't be looking at greater unemployment as a result of
Speaker 1: artificial intelligence and some of the technological advances, but rather
Speaker 1: a greater dispersion in wages, a widening in the wealth gap,
Speaker 1: the wealth disparities that we see people at the high
Speaker 1: end earning that much more people at the low end
Speaker 1: UH and learning that much less. How concerned are you
Speaker 1: about that? Well? I am concerned. The fundings of our
Speaker 1: research show that UM is possible over the next decade
Speaker 1: that all the job growth is going to be in
Speaker 1: jobs that are currently high wage, meaning the top thirty
Speaker 1: of the income distribution UM. What that means is that
Speaker 1: all the folks now and lower wage jobs or middle
Speaker 1: wage jobs are going to see flat or declining demand
Speaker 1: for what they're doing UM so, and we see that
Speaker 1: already in the employment data right the level of employment
Speaker 1: for high which jobs recovered by last October, whereas we're
Speaker 1: still at double digit unemployment rate for people in low
Speaker 1: wage jobs. Susan Lund, Thank you so much for being
Speaker 1: with us. Susan Lund, a McKenzie Global Institute partner on
Speaker 1: this really important topic. M This is the Bloomberg Surveillance Podcast.
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