WEBVTT - Jobs Day, Markets, And Hiring (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.439 at Bloomberg dot com slash podcast. We are looking at 0:00:22.480 --> 0:00:24.520 this market. Continue to sell off here. But I want 0:00:24.600 --> 0:00:27.440 to get back to the jobs data again. I think 0:00:27.440 --> 0:00:29.680 it was pretty good. I'm sticking with it was pretty good, 0:00:29.720 --> 0:00:31.760 and maybe even better than pretty good. But let's talk 0:00:31.760 --> 0:00:33.760 to somebody who does this stuff for living. Julia Pollock, 0:00:33.800 --> 0:00:37.680 Chief economists for Zip Recruiter. Julia A give us your 0:00:37.720 --> 0:00:40.200 take on the job's number today and then be maybe 0:00:40.200 --> 0:00:43.640 even more importantly what you're seeing in your business as 0:00:43.720 --> 0:00:48.720 Zip recruiter. This was a most encouraging report, like the 0:00:48.880 --> 0:00:54.400 Goldilocks of jobs reports, just great broad games, huge games. 0:00:54.560 --> 0:00:57.240 I mean the twelve months average job game now the 0:00:57.320 --> 0:01:00.440 net growth and jobs each months and five D forty 0:01:00.480 --> 0:01:04.160 five thousands that is huge. Is three times the average 0:01:04.200 --> 0:01:07.759 job beating twenty and twenty nineteen. So big, big, big numbers. 0:01:08.240 --> 0:01:11.840 Broad growth across the economy and then exactly what the 0:01:11.840 --> 0:01:14.720 FED wants to see, you know, the boil coming off 0:01:14.760 --> 0:01:18.440 wage growth, a little bit slight cooling there. Yeah, I 0:01:18.480 --> 0:01:21.199 was gonna ask, where does this put us on sort 0:01:21.240 --> 0:01:24.120 of the soft landing narrative when it comes to the 0:01:24.160 --> 0:01:28.000 economy and the Fed. So in twenty nineteen, we saw 0:01:28.240 --> 0:01:31.759 that we could get rapid wage growth and real rapid 0:01:31.800 --> 0:01:35.440 job growth and real wage growth without inflation. And what 0:01:35.520 --> 0:01:38.120 we and the reason we could was because labor force 0:01:38.120 --> 0:01:40.800 participation was going up. What we want to see now 0:01:41.000 --> 0:01:44.360 is labor force participation rising and recovering, and that's what 0:01:44.440 --> 0:01:47.880 this report shows is happening. We got a good solid 0:01:47.920 --> 0:01:51.360 recovery among prime age workers and among workers over the 0:01:51.360 --> 0:01:54.960 age of fifty five. Laborce percipation is fully recovered among 0:01:55.120 --> 0:01:59.200 teens and among prime age workers almost um and it's 0:01:59.200 --> 0:02:01.440 still down, you know, three point five percentage points among 0:02:01.480 --> 0:02:04.080 older workers, but it is trending in the right direction. 0:02:04.240 --> 0:02:06.720 Some of those workers are unretiring and coming back. And 0:02:06.760 --> 0:02:10.600 then of course immigration is finally resuming as well. You know, 0:02:10.680 --> 0:02:13.960 there has been a huge backlog of legal immigrants waiting 0:02:13.960 --> 0:02:17.840 for their visas. UM staffing agencies that specialized in finding 0:02:17.919 --> 0:02:20.959 nurses from abroad, for example, have long, long, long lists 0:02:20.960 --> 0:02:23.360 of candidates who are lined up with the mortar waiting 0:02:23.400 --> 0:02:26.320 to come in, waiting for those those documents. And finally 0:02:26.320 --> 0:02:29.400 we're seeing that pick up as well. So the labor 0:02:29.440 --> 0:02:32.920 constraints that have been holding back job growth and that 0:02:32.960 --> 0:02:37.560 has been fueling this massive wage growth and possibly inflationary 0:02:37.560 --> 0:02:40.920 wage growth UM looks like it is easing. We're seeing 0:02:41.000 --> 0:02:44.520 labor force patization recovering. That is really great news for employers. 0:02:44.560 --> 0:02:47.240 It's also good news for the fits. Yeah, I agree 0:02:47.360 --> 0:02:49.960 that the numbers look pretty solid to me. UM, We're 0:02:50.000 --> 0:02:52.799 starting to see a couple of companies, most notably today 0:02:53.520 --> 0:02:55.960 Tesla talking about you know, maybe laying off some people, 0:02:56.320 --> 0:02:58.320 you know, pausing hiring. We're hearing that from some other 0:02:58.360 --> 0:03:00.840 tech companies. What do you make from that? I mean you, 0:03:00.840 --> 0:03:02.760 you guys are a recruiter. You are absolutely on the 0:03:02.800 --> 0:03:05.440 front lines of day to day hiring. What do you 0:03:05.440 --> 0:03:07.840 make of some of those new stories? Well, this is 0:03:07.880 --> 0:03:11.680 what's so interesting. So everyone reads about tech layoffs, yet 0:03:12.000 --> 0:03:15.320 job postings overall are growing and growing fastest in the 0:03:15.320 --> 0:03:18.239 tech center in sector. So uh tech and I T 0:03:18.600 --> 0:03:23.079 jobs are soaring in our marketplace. And what you hear 0:03:23.200 --> 0:03:26.760 right now is the sound of talent acquisition teams and 0:03:27.320 --> 0:03:32.080 HR departments rapidly looking up workers at Tesla on LinkedIn 0:03:32.440 --> 0:03:35.160 and reaching out to them to recruit them. Uh So, 0:03:35.520 --> 0:03:38.400 anytime a tech worker is laid off, there are lots 0:03:38.400 --> 0:03:41.200 and other companies, not just in the tech sector. Uh 0:03:41.560 --> 0:03:44.480 you know, in retail, in government departments, all of the place. 0:03:44.560 --> 0:03:47.520 Everyone now needs to collect the store and analyze data. 0:03:47.640 --> 0:03:50.200 Everyone has a website, everyone has an app. There tech 0:03:50.320 --> 0:03:53.280 jobs throughout the economy. Demand for those workers and those 0:03:53.320 --> 0:03:56.800 skills is white hot, and it remains so. But just 0:03:56.800 --> 0:03:58.680 sort of falling up on the point that Paul reis 0:03:58.760 --> 0:04:00.840 that we did just this week. I feel like just 0:04:00.880 --> 0:04:03.200 a barrage of news when you think about Tesla today, 0:04:03.200 --> 0:04:06.600 but you also had Gemini and coin Base yesterday. A 0:04:06.600 --> 0:04:08.560 lot of this is concentrated in the crypto and the 0:04:08.760 --> 0:04:10.960 tech industry, it seems like. But do you think that, 0:04:11.160 --> 0:04:14.320 I mean, that is some sort of uh, I don't know, 0:04:14.360 --> 0:04:17.839 foreshadowing of what's to come with the labor market being 0:04:17.880 --> 0:04:19.400 that it is so hot, and I mean we've heard 0:04:19.440 --> 0:04:23.719 from Powell himself that the unemployment rate is probably unsustainably 0:04:23.720 --> 0:04:29.599 low right now, so the unemployent rate will probably trend 0:04:29.760 --> 0:04:34.600 even lower for a while. Um. Yeah. Economic models show 0:04:34.680 --> 0:04:37.240 that if you were to bring inflation all the way 0:04:37.279 --> 0:04:39.800 down to two percent right now, yes, that would require 0:04:39.800 --> 0:04:41.960 pushing unemployment all the way to six percent, right So 0:04:41.960 --> 0:04:43.839 that that's what's in the back of people's minds that 0:04:44.080 --> 0:04:47.400 the set has said it's going to cut inflation, and 0:04:47.560 --> 0:04:53.279 what does that mean? That would mean cooling demand uh somewhat, um, 0:04:53.520 --> 0:04:58.799 unless labor force participation recovers really rapidly, and supply chain 0:04:59.440 --> 0:05:04.120 issues ease, and all of these other unforeseen factors that 0:05:04.120 --> 0:05:09.120 that have contributed to this crisis kind of uh magically 0:05:09.320 --> 0:05:13.799 miraculously uh subside. So I think that's what everyone's hoping, 0:05:14.520 --> 0:05:19.400 that that the you know, the sort of adiosyncratic issues 0:05:19.480 --> 0:05:25.000 that led to massive oil price spikes uh and food 0:05:25.000 --> 0:05:27.880 price spikes, that some of those will will ease in 0:05:27.920 --> 0:05:31.320 the coming months, uh, and then that uh labor force 0:05:31.360 --> 0:05:36.279 participation recovering will sort of cool the pressures in leisure, 0:05:36.320 --> 0:05:41.040 hospitality and warehousing and transportation UM and and this service sector. 0:05:41.400 --> 0:05:43.680 So joy I mean on that labor force participation rate 0:05:43.720 --> 0:05:46.520 about thirty seconds left it's sixty two point three percent. 0:05:46.640 --> 0:05:49.480 Where would you like to see that? I mean, I 0:05:49.520 --> 0:05:50.720 would like to see that go all the way back 0:05:50.760 --> 0:05:53.760 up to where it was before UM and and higher 0:05:53.800 --> 0:05:56.880 or what we saw and where is that sixty s 0:05:57.200 --> 0:06:01.040 four percent? I believe um and UH we we could 0:06:01.080 --> 0:06:06.520 actually what we saw amazingly in nine was that conditions 0:06:06.560 --> 0:06:09.800 were right for people to find work. More people entered 0:06:09.920 --> 0:06:14.120 the lave market and UH and so we know that 0:06:14.279 --> 0:06:17.840 there is actually more UH fuel in the tank in 0:06:17.880 --> 0:06:20.120 the lave market. Right, Good stuff, all right, Julia, thank 0:06:20.120 --> 0:06:22.440 you so much for joining us. Love getting your perspective there. 0:06:22.520 --> 0:06:26.040 Julia Pollock, chief economist at Zip Recruiter. And I think 0:06:26.040 --> 0:06:27.800 it's like when I talk to my kids are in 0:06:27.839 --> 0:06:29.880 their twenties, Zipp Recruiters like a big go to in 0:06:30.520 --> 0:06:33.360 addition to Lincoln, they talk about Zipp Recruiter all the time. 0:06:33.400 --> 0:06:35.800 They also have a full push on advertising. I feel 0:06:35.800 --> 0:06:41.760 like I hear them a lot on podcasts right now. 0:06:41.760 --> 0:06:44.000 And we're checking with David Beat's managing principal and senior 0:06:44.000 --> 0:06:47.720 portfolio strategist at the UH. I guess I don't know 0:06:47.760 --> 0:06:50.320 a Gladstone Bank, Peacack Private Wealth Management. David what's the 0:06:50.360 --> 0:06:51.560 name of your firm to stay? I you know I 0:06:51.640 --> 0:06:54.039 grew up it was Pepack Gladstone Bank. What are you 0:06:54.040 --> 0:06:56.720 calling it these days? So that's the parent company, p 0:06:56.920 --> 0:07:00.960 Pack Gladstone Bank, and we're in the pepack um kind 0:07:00.960 --> 0:07:04.159 of private wealth management decision. Alright, good stuff. All I 0:07:04.200 --> 0:07:06.440 know is David Dietz has been covering these markets for 0:07:06.520 --> 0:07:09.520 a long time, folks, so when he speaks, he comes 0:07:09.520 --> 0:07:11.640 with a lot of perspective. So day, we had some 0:07:11.680 --> 0:07:15.280 good jobs data out today. Um, the economy seems to 0:07:15.280 --> 0:07:17.600 be in pretty good shape. How are you guys thinking 0:07:17.600 --> 0:07:22.200 about things? So the number one concern right now is 0:07:22.240 --> 0:07:26.840 this stagflation concern, the concern that inflation continues to be 0:07:26.880 --> 0:07:30.520 a problem, which keeps to Fed vigorously hiking rates, yet 0:07:30.560 --> 0:07:33.720 the economy is starting to cool. So, you know, the 0:07:33.800 --> 0:07:36.240 job's report today, I thought it as a bit mixed. 0:07:36.240 --> 0:07:38.640 I mean, I guess the good news from an economic 0:07:38.720 --> 0:07:41.080 point of view is we got more jobs than expected, 0:07:41.680 --> 0:07:43.840 although they did reduce March and April. The problem is 0:07:43.880 --> 0:07:46.880 it's not enough for the Fed to say, gee, maybe 0:07:46.880 --> 0:07:50.720 we'll be taking a pause in our rate hikes come September. Um, 0:07:50.760 --> 0:07:53.560 you know, the good news I suppose was that the 0:07:53.800 --> 0:07:59.120 hourly wage, uh conversation increases. We're a little bit better 0:07:59.160 --> 0:08:02.040 than expected. It was three tenths of a percent. But still, 0:08:02.200 --> 0:08:04.840 you know you multiple times twelve you get three point 0:08:04.920 --> 0:08:08.160 six percent this country, this fed I don't think we'll 0:08:08.200 --> 0:08:10.600 be satisfied with three point six percent. Inflation is the 0:08:10.640 --> 0:08:13.680 end target. And you brought up seculation, and I want 0:08:13.720 --> 0:08:15.360 to stay there because it seems like it's a very 0:08:15.400 --> 0:08:18.240 loaded term. And when I talk to people about sex fleation, 0:08:18.280 --> 0:08:20.200 they always point to the labor market and tell me, 0:08:20.520 --> 0:08:22.760 you know you you do, you don't have sex flation. 0:08:23.200 --> 0:08:26.360 When the unemployment rate is at three point six per cent, 0:08:26.480 --> 0:08:29.880 do you agree with that? Well, I mean that is 0:08:29.920 --> 0:08:34.439 a very good number historically, that's full employment. Um, so 0:08:34.600 --> 0:08:37.080 you know, from the inflation perspective that suggested it's still 0:08:37.080 --> 0:08:39.600 going to be upward pressure on wages. But here's the 0:08:39.800 --> 0:08:43.920 here's the problem. The unemployment rate is a lagging indicator. 0:08:44.200 --> 0:08:48.240 People only companies only higher after the business conditions are good. 0:08:48.480 --> 0:08:51.640 And now we've just heard from three blue chips this week. 0:08:51.800 --> 0:08:54.040 You've got JP Morgan in the form of Jamie Diamond, 0:08:54.040 --> 0:08:57.520 You've got Microsoft, You've got Test flow, with Elon Musk 0:08:57.800 --> 0:09:01.120 suggesting that business conditions are the weekend, that there are 0:09:01.160 --> 0:09:05.000 reasons for concern. So you're looking forward here and and 0:09:05.120 --> 0:09:07.200 things don't look so good, and you know, of course 0:09:07.360 --> 0:09:10.600 a stock market investors need to look forward, all right, David, 0:09:10.760 --> 0:09:13.240 The SNP is beginning June where it started in May. 0:09:13.280 --> 0:09:14.760 I mean I could have just stayed on the North 0:09:14.760 --> 0:09:17.000 and South course Canoe Brook for the entire month of 0:09:17.080 --> 0:09:19.560 May and not missed a darned thing. What do we 0:09:19.600 --> 0:09:22.240 do from here? What are you telling your clients? So 0:09:22.640 --> 0:09:25.440 you can't time this market? And we do know. The 0:09:25.480 --> 0:09:27.360 reason that we have such a good week last week 0:09:27.440 --> 0:09:30.520 was there was some suggestions from Jerome Powell that the 0:09:30.559 --> 0:09:33.600 economy does matter to him, it's not just about inflation. 0:09:33.600 --> 0:09:35.240 And we had a great week last week, the best 0:09:35.280 --> 0:09:38.440 week since two thousand twenty this month and this week 0:09:38.480 --> 0:09:41.480 has has been cooler. So we say stay in the game, 0:09:41.800 --> 0:09:45.160 don't try and time it, but do shade into areas 0:09:45.200 --> 0:09:50.320 that certainly are cheaper. Um that for us is smaller companies. 0:09:50.840 --> 0:09:53.800 Small cap value was a no brainer. Has done better 0:09:53.880 --> 0:09:56.320 than the market this year, but now small cap growth 0:09:56.360 --> 0:09:59.520 has come down cheaper than the overall market cheaper than 0:10:00.240 --> 0:10:03.320 historically is the case, and so that's an area to 0:10:03.360 --> 0:10:06.440 look at. We still like energy. We think that there's 0:10:06.440 --> 0:10:08.520 gonna be a lack of new production, but the demand 0:10:08.559 --> 0:10:11.280 of course continue strong. Financials. You've got the Bank of 0:10:11.320 --> 0:10:15.719 American JP Morgan both down. Historically they do better when 0:10:15.760 --> 0:10:18.319 interstrates move up. So those are some areas to look at. 0:10:19.120 --> 0:10:20.559 And I want to get your thoughts on something else 0:10:20.600 --> 0:10:23.760 that happened this week because Wednesday, June one, it was 0:10:23.800 --> 0:10:28.640 the official start of quantitative tightening. So the first actual 0:10:29.520 --> 0:10:32.480 quantitative tightening will happen on June fifteenth, that's when fifteen 0:10:32.520 --> 0:10:35.280 billion dollars of treasury securities are actually set to mature. 0:10:35.320 --> 0:10:38.880 But still June first an important symbolic date. What do 0:10:38.960 --> 0:10:41.080 you expect to happen? Because there's not much of a 0:10:41.120 --> 0:10:45.800 blueprint here for how quantitative quantitative tightening plays out in 0:10:45.880 --> 0:10:48.480 the market. Uh, is this whole priced energy? You think 0:10:48.480 --> 0:10:53.160 there's more volatility to come, Well, we're certain there's gonna 0:10:53.160 --> 0:10:58.160 be more volatility, so you know, having uh, having the 0:10:58.200 --> 0:11:02.200 monetary tightening and taking ultimately about two trillion of bonds 0:11:02.280 --> 0:11:05.640 off the Federal Reserve balance sheet and braining liquidity that's 0:11:05.640 --> 0:11:07.880 the negative. And then there's the question, of course, to 0:11:07.960 --> 0:11:10.240 what extense priced in we're suggesting as priced in and 0:11:10.320 --> 0:11:13.720 some of the smaller companies. But you know, my concern 0:11:13.760 --> 0:11:15.560 that people are talking about it is though it's gonna 0:11:15.600 --> 0:11:18.480 be on autopilot every single month for the next two 0:11:18.480 --> 0:11:21.720 to three years. That's just not the case. I think 0:11:21.720 --> 0:11:25.320 this FED will be data dependent even about those objectives. 0:11:25.480 --> 0:11:27.480 And if there is some sign that they're weakening, that 0:11:27.480 --> 0:11:29.480 we're gonna go into a hard landing, I think they 0:11:29.480 --> 0:11:32.040 can put that on pause as well. So, just like 0:11:32.120 --> 0:11:37.040 the the federal reserve rate hikes, even the quantitative tightening 0:11:37.480 --> 0:11:41.000 is subject to debate. I think every month, Hey, David, 0:11:41.160 --> 0:11:44.160 you know, I'm looking at the uh I end go 0:11:45.360 --> 0:11:47.520 function on the bloomber Truma gives me all these great 0:11:47.559 --> 0:11:49.319 in the see data, and I'm looking index data, and 0:11:49.400 --> 0:11:53.320 I'm looking at total corporate bond returns in the US 0:11:53.559 --> 0:11:56.120 year to day. It's down like twelve or something. I mean, 0:11:56.160 --> 0:11:59.240 it's just brutal in the bond market. Is now the 0:11:59.320 --> 0:12:02.400 time to you know, kind of lean into the bottom market, 0:12:02.400 --> 0:12:05.560 as you kids say, you we're getting more constructive on 0:12:05.600 --> 0:12:08.160 the bondo market. I mean when you look at history, 0:12:08.559 --> 0:12:11.600 you down twelve and let's say the first four months. 0:12:11.640 --> 0:12:14.720 If you analyze that, you're gonna be down what close 0:12:14.760 --> 0:12:16.840 to three times that for the full year thirty six percent. 0:12:17.120 --> 0:12:19.840 That's not gonna happen. So we think at some point 0:12:20.080 --> 0:12:22.720 that kind of levels out here. Obviously you're getting more 0:12:22.760 --> 0:12:24.680 income now than you did at the start of the year, 0:12:25.040 --> 0:12:27.120 and of course, to some extent is due to a 0:12:27.200 --> 0:12:30.920 little um some concern over credit quality starting to creep in. 0:12:31.360 --> 0:12:33.520 Most of it has been concerned about with you know, 0:12:33.640 --> 0:12:37.760 higher benchmark rates and the treasuries um and inflation so forth. 0:12:38.040 --> 0:12:40.000 We don't think that that's just going to continue in 0:12:40.040 --> 0:12:43.640 a straight line. So we would be looking again to 0:12:43.800 --> 0:12:47.160 hold on to some high quality fixed income. And of 0:12:47.160 --> 0:12:49.600 course most people are worried about the stock market. If 0:12:49.600 --> 0:12:52.240 the stock market really starts to weekend, where are people 0:12:52.240 --> 0:12:54.680 going to go now with the higher income, I would 0:12:54.720 --> 0:12:57.640 suggest it would go back into bonds, including corporate bonds. 0:12:57.800 --> 0:12:59.920 And so you still need that in order to head 0:13:00.040 --> 0:13:03.040 your overall portfolio for your long time term goals. And 0:13:03.080 --> 0:13:04.760 I'm happy you went to bonds because that's what I 0:13:04.800 --> 0:13:08.719 want to ask about sort of the thinking about portfolio 0:13:08.760 --> 0:13:12.720 allocation bonds versus equities. I was looking at junk yields 0:13:12.760 --> 0:13:16.160 for example, They're close to seven percent. Uh, that seems 0:13:16.200 --> 0:13:18.280 pretty high. It was closer to eight percent about a 0:13:18.280 --> 0:13:20.480 month ago, but still pretty high. You compare that to 0:13:20.760 --> 0:13:23.920 equity returns. How are you thinking about sizing up those 0:13:23.920 --> 0:13:29.920 two asset classes. Well, certainly junk bonds are more attractive 0:13:29.920 --> 0:13:32.240 from a yield perspective than to start of the year. 0:13:32.800 --> 0:13:35.840 I do think it reflects some concerns that we have 0:13:35.920 --> 0:13:40.040 a hard landing, that there's the risk of recession that's increased, 0:13:40.160 --> 0:13:43.160 and you know, the question is is the compensation enough 0:13:43.320 --> 0:13:47.040 to offset that increased risks? So, you know, I think 0:13:47.080 --> 0:13:49.720 it goes back to your overall portfolio. To the extent 0:13:49.800 --> 0:13:53.760 you're leaning towards stocks, we take a light approach to 0:13:54.040 --> 0:13:55.920 junk bonds because you already got a lot of risk 0:13:55.960 --> 0:13:58.719 in your portfolio altility due to the stocks, and they 0:13:58.720 --> 0:14:00.800 may also give you a better at tack outcome. To 0:14:00.880 --> 0:14:04.000 the extent you want to hedge recession risk in stock 0:14:04.040 --> 0:14:07.000 market volatility, we would stick with the high quality bonds 0:14:07.000 --> 0:14:09.280 because those are the bonds of people are gonna run to. 0:14:09.840 --> 0:14:15.280 Wouldn't um again go back to two thousand, two thousand nine, 0:14:15.679 --> 0:14:19.520 junk bonds did not hedge equity risk. And although we're 0:14:19.520 --> 0:14:22.800 not predicting anything like deaths going forward, if it does happen, 0:14:23.200 --> 0:14:25.360 you're not gonna want the junk bonds, all right, David, 0:14:25.400 --> 0:14:27.600 thank you so much for joining us. David Diet's managing 0:14:27.600 --> 0:14:32.600 principal and senior portfolio strategist at Pepeck Private Wealth Management. 0:14:32.720 --> 0:14:38.960 Appreciate get David's perspective on these markets. Let's check in 0:14:38.960 --> 0:14:40.960 with our next guest right here, Jonathan Hurdle. You call 0:14:41.040 --> 0:14:45.160 him John Hurdle, Executive Chairman Hurdle, Callahan and Company. Hey, John, 0:14:45.200 --> 0:14:47.120 thanks so much for joining us here. You know, I 0:14:47.160 --> 0:14:50.600 guess the economic discussion that certainly we've been having here 0:14:50.640 --> 0:14:52.960 a Bloomberg Radio TV over the last several weeks, if 0:14:53.000 --> 0:14:58.040 not longer, is some kinds of the stagflation recession. Um, 0:14:58.080 --> 0:15:00.680 we've gotten some pretty good consumer eight to recently we 0:15:00.720 --> 0:15:04.160 had a pretty darn solid jobs number today. How how 0:15:04.200 --> 0:15:06.520 do you think about the economic outlook is as you 0:15:06.560 --> 0:15:09.960 guys think about your portfolios. Well, it's nice to hear 0:15:10.040 --> 0:15:12.160 your voice again, Paul, and thank you for having me on. 0:15:12.440 --> 0:15:16.080 I think economic forecasting. John Kenneth Galbreath said that it's 0:15:16.120 --> 0:15:19.960 the main purpose of economic forecasting is to make astrology 0:15:20.120 --> 0:15:24.080 look good by comparison. So you know, there's a lot 0:15:24.080 --> 0:15:26.360 of lines about that, and it's so accurate and that's 0:15:26.360 --> 0:15:28.560 why there's so many humorous lines. Another one is if 0:15:28.600 --> 0:15:31.360 you you know, got a every economists in American lined 0:15:31.400 --> 0:15:33.240 them up head to put, that wouldn't reach a conclusion. 0:15:33.720 --> 0:15:36.520 You know, so it's clear that the economy is weaker 0:15:36.520 --> 0:15:39.760 than it was. Whether we're going into a recession or not. 0:15:40.240 --> 0:15:43.120 Only time will tell. It's really actually impossible to predict 0:15:43.760 --> 0:15:46.440 number one and number two. It's not binary. So a 0:15:46.560 --> 0:15:50.240 recession is one thing. How bad is a recession? You know, 0:15:50.320 --> 0:15:52.320 a soft landing. When I was in the service, we 0:15:52.400 --> 0:15:54.640 used to talk about any landing you could walk away 0:15:54.680 --> 0:15:57.600 from was a successful one. So is it perfect? No, 0:15:58.280 --> 0:16:01.080 But given the work, you know, interest rates in the world, 0:16:01.960 --> 0:16:06.160 will stock still be attractive if earnings are still okay? 0:16:06.360 --> 0:16:09.760 You know, the aggregate economy is weaker, but great companies 0:16:09.800 --> 0:16:13.480 continue to succeed, and relative to bonds, the stock market 0:16:13.520 --> 0:16:16.880 still looks attractive. So you know, we think it's impossible 0:16:16.880 --> 0:16:18.680 to predict, and we don't spend a lot of time 0:16:18.720 --> 0:16:22.560 trying to predict that economic scenarios going forward. At what 0:16:22.720 --> 0:16:27.000 point would bonds become attractive Again, Well, let's uh, you know, 0:16:27.080 --> 0:16:30.640 investor by investor, But right now, clearly the tenure treasury 0:16:30.840 --> 0:16:35.240 is still substantially negative, Katie. Um, if we take away inflation, 0:16:35.640 --> 0:16:39.040 we're really losing purchasing power every day, and so the 0:16:39.120 --> 0:16:41.840 interest rates have risen a little bit because so has inflation. 0:16:42.280 --> 0:16:45.040 So the net effect is that the real return on 0:16:45.280 --> 0:16:49.120 bonds is still unattractive. That doesn't mean you shouldn't own 0:16:49.200 --> 0:16:52.360 some short term fixed things as just an insurance policy 0:16:52.400 --> 0:16:56.120 against volatility and an opportunity some dry powder in case 0:16:56.320 --> 0:17:00.600 you want to spend some money in the market. Yeah, Jonathan, 0:17:00.600 --> 0:17:02.480 you did. You mentioned your service. You served in the the 0:17:02.600 --> 0:17:07.400 United States Marine Corps two. So I'm guessing, uh, you're 0:17:07.400 --> 0:17:10.520 taking a particular interest in what's happening in Ukraine. But 0:17:10.680 --> 0:17:15.399 from economic markets perspective, from a fund of you know, 0:17:15.520 --> 0:17:18.920 flow of goods and services perspective, from an inflation perspective, 0:17:19.480 --> 0:17:23.399 how do you kind of incorporate that uncertainty, uh into 0:17:23.480 --> 0:17:29.360 your outlook? Well, these exogenous events are always unpredictable, and 0:17:29.480 --> 0:17:32.320 so when you're looking at markets. You have to. You 0:17:32.359 --> 0:17:35.000 can't have a market that's priced to perfection, which we 0:17:35.080 --> 0:17:37.080 sort of did coming into the year. In other words, 0:17:37.359 --> 0:17:41.040 the market wasn't that high relative to bonds. But this 0:17:41.160 --> 0:17:43.679 sort of scenario was that, you know, we're changing the 0:17:43.720 --> 0:17:47.240 world with secular growth companies, great tech companies. Interestmates are 0:17:47.280 --> 0:17:51.080 going to remain low, so we can have aggressive federal 0:17:51.119 --> 0:17:53.760 spending because if things keep going just as well as 0:17:53.760 --> 0:17:56.159 they've been going, we can afford it. So there's this 0:17:56.200 --> 0:18:00.280 a notion that is, as long as everything goes long 0:18:00.359 --> 0:18:04.119 perfectly smoothly, will be fine. Well, when you start to 0:18:04.160 --> 0:18:07.080 add more things that have to go on perfectly smoothly, 0:18:07.119 --> 0:18:09.399 that's what we mean by price to perfection, and all 0:18:09.440 --> 0:18:13.480 of a sudden something happens like uh an invasion of Ukraine, 0:18:13.640 --> 0:18:16.840 like this, you know, lockdown in China that really make 0:18:16.960 --> 0:18:21.560 the supply chain woes even worse that we're created initially 0:18:21.560 --> 0:18:24.480 by COVID, and you've really got a situation that that 0:18:24.600 --> 0:18:29.080 stresses the market. So this notion of exogenous shocks always 0:18:29.080 --> 0:18:34.000 ought to be factored into one's risk calculation. So where 0:18:34.040 --> 0:18:37.000 are you finding opportunity if you look at the equity 0:18:37.320 --> 0:18:39.560 market right now? I mean you mentioned tech sort of 0:18:39.680 --> 0:18:42.280 priced for perfection. I mean, is it safe to say 0:18:42.280 --> 0:18:46.280 that you're not going all in on tech right now? Well, 0:18:46.400 --> 0:18:49.679 now we're we're really First of all, I would say this, Katie, 0:18:50.080 --> 0:18:52.879 if you're an allocator, in other words, if you're a 0:18:52.920 --> 0:18:55.760 four one K participant, you really ought to be happy 0:18:55.960 --> 0:18:57.639 that the market is down as much as it is 0:18:57.640 --> 0:19:00.720 because from a dollar cost averaging standpoint, this is a 0:19:00.840 --> 0:19:03.320 chance for you to buy stocks cheaper than you did 0:19:03.720 --> 0:19:06.359 last quarter and last year. And what you want to 0:19:06.359 --> 0:19:08.679 do over time, and and you know, the beauty of 0:19:08.680 --> 0:19:10.640 dollar cost averaging is if you put in the same 0:19:10.680 --> 0:19:15.080 amount of money every quarter, you'd buy more stock, more 0:19:15.160 --> 0:19:18.760 ownership when the prices are low. So it really enhances 0:19:18.800 --> 0:19:21.440 you return over time to be buying when stocks are low. 0:19:21.840 --> 0:19:25.600 So from a standpoint of four one K participants or allocators, 0:19:25.640 --> 0:19:29.040 they should continue to pursue their strategy, which is, if 0:19:29.040 --> 0:19:31.280 they want to have six of their assets and stocks 0:19:31.800 --> 0:19:34.200 and it's dropped a little bit, you know, balance it 0:19:34.280 --> 0:19:37.440 back up or at least halfway back up. So broadly 0:19:37.600 --> 0:19:40.080 in the US equity market and really around the world, 0:19:40.160 --> 0:19:43.520 we still think you should be buying when at low 0:19:43.640 --> 0:19:47.320 prices and then self stop there all right, good stuff. 0:19:47.480 --> 0:19:52.159 John Hurdle, Executive Chairman Hurdle, Callahan and Company. He is 0:19:52.200 --> 0:19:55.879 a proud alumnus underground n NBA from Happy Valley. That 0:19:55.880 --> 0:20:01.840 would be State College Pennsylvania at the penn State University. 0:20:04.080 --> 0:20:06.040 It is job staying is trial is just reporting it 0:20:06.080 --> 0:20:08.720 a better and expected print there on the jobless number today, 0:20:08.840 --> 0:20:12.120 so a better and expected UH jobs environment. We had 0:20:12.200 --> 0:20:16.840 some good UH wage increases five point on an annualized basis, 0:20:17.080 --> 0:20:19.560 maybe even some room to grow on the labor participation rate. 0:20:19.640 --> 0:20:21.320 So things are pretty good here in the US. Let's 0:20:21.320 --> 0:20:22.800 take a look at how it might be on a 0:20:22.840 --> 0:20:25.080 global scale. We can do that with our next guest, 0:20:25.160 --> 0:20:28.159 Nicole Sahine, founder and author UH and the firm is 0:20:28.160 --> 0:20:33.560 Globalization Partners, Nicole, as the name of your firm implies globalization. Um, 0:20:33.600 --> 0:20:36.320 how's the global labor market? It's pretty solid here, as 0:20:36.359 --> 0:20:38.400 we got another data point today here in the US. 0:20:38.480 --> 0:20:40.560 But what are you seeing around the world in other parts? 0:20:41.720 --> 0:20:43.680 We're seeing exactly the same thing as we're seeing in 0:20:43.680 --> 0:20:47.120 the United States, which is the talent market for professional 0:20:47.320 --> 0:20:52.919 skilled talent is extremely tight. So the interesting of the 0:20:52.960 --> 0:20:59.000 here I'm just wondering, you know, immigration issues, UM and 0:20:59.200 --> 0:21:01.920 the whole move took. Globalization seem to you know, taken 0:21:01.960 --> 0:21:04.240 a backseat over the last you know, four or five years, 0:21:04.240 --> 0:21:08.159 the whole concept of you know, a globalized economy. Uh, 0:21:08.240 --> 0:21:10.560 people are pulling back from that a little bit. How 0:21:10.600 --> 0:21:12.240 do you think about that? Where are we in terms 0:21:12.280 --> 0:21:17.000 of the globalization of this economy? Yeah, it's it is 0:21:17.040 --> 0:21:20.000 super interesting. I think that the key difference here is 0:21:20.040 --> 0:21:23.119 that people no longer need to immigrate in order to 0:21:23.119 --> 0:21:26.119 have access to opportunity. What we're seeing is that the 0:21:26.160 --> 0:21:28.800 best companies in the world are going wherever the talent is. 0:21:29.280 --> 0:21:31.879 So right now we see customers who have never hired 0:21:31.920 --> 0:21:35.679 internationally before UM just hiring talent anywhere they can find it. 0:21:35.720 --> 0:21:37.320 I mean, it's it was that way for quite some 0:21:37.400 --> 0:21:39.480 time and engineering, but now we're seeing them do that 0:21:39.560 --> 0:21:42.080 all across the board and and pretty much every role 0:21:42.160 --> 0:21:45.480 that you could do in a digital environment. And that 0:21:45.640 --> 0:21:49.080