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Speaker 1: This is Bloomberg Business Wait inside from the reporters and

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Speaker 1: editors who bring you America's most trusted business magazine, plus

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Speaker 1: global business, finance and tech news. The Bloomberg Business Week

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Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio

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Speaker 1: no one else.

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Speaker 2: I'm very enthusiastic about is the Audi what we called

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Speaker 2: in Germany the or Quattro. So that was like the

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Speaker 2: most recognizable Audi rally car from my childhood.

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Speaker 3: My dad.

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Speaker 2: Actually I was lucky enough that my dad was able

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Speaker 2: to go over to Germany and pick up an outy

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Speaker 2: five thousand back in I think the early eighties and

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Speaker 2: bring it back with him on the Queen Elizabeth two.

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Speaker 2: You can't do that anymore. This is personal for you,

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Speaker 2: so yeah, I've been a fan of the brand. In fact,

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Speaker 2: the first car I ever bought was an Audi A four.

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Speaker 2: I got the two point five TDI of vant. I

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Speaker 2: picked mine up as well in I feel like that

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Speaker 2: was near Hartzoganaurrak, where I picked it up from the factory,

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Speaker 2: so that was really cool. I want to welcome in

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Speaker 2: right now. Brian Stockton. He is the senior director of

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Speaker 2: Technical Services and Training Training for Audi and he joins

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Speaker 2: us on Zoom from Auburn Hills, Michigan. Brian, I have

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Speaker 2: a long family history related to this brand, so I'm

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Speaker 2: excited to talk to you. And I've been working on

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Speaker 2: these cars for for for decades, but only on the

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Speaker 2: internal combustion engines. And what we're going to talk to

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Speaker 2: you about today is the training that people will need

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Speaker 2: for the EVS. You know, bringing in a whole new

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Speaker 2: generation of cars. How much harder are they to work

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Speaker 2: on than the gas engine cars?

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Speaker 4: Yeah?

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Speaker 5: Good, good, And I'm glad to hear that you're happy

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Speaker 5: with outing. You've been a long time Audi brand enthusiast.

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Speaker 5: Let me kind of start off with talking about our program,

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Speaker 5: our AEP program, our Audi Educational Partnership program, and to

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Speaker 5: your point, evs, although new to the overall market, not

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Speaker 5: necessarily so new to Audi launched our first one in

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Speaker 5: twenty eighteen, and today we have five current models that

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Speaker 5: are out there available to.

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Speaker 4: Our customer base, so it's not new for us. We

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Speaker 4: had it out there for a while.

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Speaker 5: But we're kind of fine tuning how we develop our

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Speaker 5: workforce to work on those to kind of to get

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Speaker 5: to your point about what's different about it. So we

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Speaker 5: built this program called the ep AUDI Educational Partnership Program.

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Speaker 5: It's really a way to transform our technician workforce so

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Speaker 5: that they can work on these high voltage vehicles along

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Speaker 5: with the traditional ice engines, to be expert level certified

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Speaker 5: so they can really address any customer issues for our

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Speaker 5: new vehicles today and moving forward, kind of jump a

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Speaker 5: little more into the program if I could.

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Speaker 2: Well, Brian, what I'm wondering is how much do you

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Speaker 2: need to learn to work on the evs Because with

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Speaker 2: the gas engines and the diesels that AUDI has made,

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Speaker 2: you know, they were complicated motors, and I mean, you

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Speaker 2: know it took time, but over a decade we've we've

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Speaker 2: figured out how to do it. With the evs. I

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Speaker 2: feel like you need fewer people to put them together.

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Speaker 2: There are a lot fewer moving parts. It just seems

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Speaker 2: like it would be much easier to service them.

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Speaker 4: Yeah, good points.

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Speaker 5: You're right in terms of the mechanicals, the individual componentry

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Speaker 5: less componentory in an.

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Speaker 4: EV vehicle by a long shot. And you know, in

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Speaker 4: terms of you know, some of the vehicles don't have transmissions.

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Speaker 5: Some of our higher end vehicles still have transmissions that

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Speaker 5: are evs like our etron GT. However, the main difference

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Speaker 5: where you have less componentry, you have more complexity and

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Speaker 5: the logic and the computer controlled systems, so the diagnostics,

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Speaker 5: the analytics and all those things are.

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Speaker 4: Much more complex.

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Speaker 5: So where you ease up on the hardware, the complexity

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Speaker 5: is increased with these types of vehicles.

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Speaker 6: Okay, So I am going to out myself as kind

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Speaker 6: of the loser idiot of this conversation because listen, I've

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Speaker 6: just grown up without a lot of cars in my life.

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Speaker 6: I'm a New York City girl. As of eight years ago.

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Speaker 6: Before that, I was in college, I didn't have a car.

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Speaker 6: So I'm just I'm not a big cars gal. But

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Speaker 6: I do know that if I got one today, I

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Speaker 6: would have to get an EV to be considered cool. So, Brian,

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Speaker 6: you know this space incredibly well. When it comes to

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Speaker 6: younger people buying evs and the increase in demand that

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Speaker 6: we're seeing for EV's in general. How much of a

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Speaker 6: read through are you seeing from the overall transition into

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Speaker 6: evs for the need for skilled technicians to work on

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Speaker 6: those evs, Like, how direct is the correlation between the two.

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Speaker 5: We started to see the correlation back in twenty nineteen

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Speaker 5: We launched our first full EV in twenty eighteen, and

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Speaker 5: I think just from the standpoint of new technology and

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Speaker 5: the complexity and the diagnostics, we had to figure out

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Speaker 5: a way to transform our workforce. So we came up

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Speaker 5: with this thing called the AUDI Educational Partnership Program, which

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Speaker 5: is kind of what you're kind of leaning into a

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Speaker 5: little bit, if I could just take a moment and

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Speaker 5: give you a few key points on it. This program

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Speaker 5: is kind of unique in many ways and the fact

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Speaker 5: that it really takes and connects the school. So high schools,

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Speaker 5: secondary schools that have accredited programs, we reach out to them.

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Speaker 5: We give them access to all of our online training,

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Speaker 5: including all the high voltage. Then we reach out we

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Speaker 5: connect the students to our dealers, to our dealer network

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Speaker 5: so locally. So a student that wants to proceed in

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Speaker 5: this AAP program, they go to the school's online assessment.

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Speaker 5: Once they pass, then they're accepted into the program. We

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Speaker 5: connect them to a dealership and then they start what

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Speaker 5: we call the eighteen months.

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Speaker 4: In this eighteen month program, they get put into a.

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Speaker 5: Class, they stay with the same group of people for

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Speaker 5: eighteen months. We travel them around the country to different

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Speaker 5: AUDI dedicated training centers and they're going to class in

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Speaker 5: our Audi corporate training centers for technicians not through secondary schools,

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Speaker 5: and we teach them the finer points on diagnostics, all

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Speaker 5: the new technologies, all those things they need to know,

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Speaker 5: and we bring them up to an expert level technicians.

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Speaker 5: So we do in about eighteen months, where it takes

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Speaker 5: most technicians over five years to achieve. So to your point,

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Speaker 5: it takes some diagnostic thought. It takes a lot of

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Speaker 5: background and a lot of basics to be able to

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Speaker 5: get to that point to understand those systems and how

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Speaker 5: to diagnose them.

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Speaker 2: All right, So we all know, Brian, there's been a

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Speaker 2: real labor shortage in the United States. I think, especially

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Speaker 2: for skilled labor like this, it's got to be hard

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Speaker 2: to find. So this program is a great way to

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Speaker 2: kind of bring the kids up through school and into

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Speaker 2: your service base. Is that part of what you're doing here,

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Speaker 2: trying to recruit the smartest kids in America?

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Speaker 5: That's exactly what we're doing. So we lay things out

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Speaker 5: with these schools. We give them access to our content

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Speaker 5: free of charge for the students. These students that rise

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Speaker 5: to the top and take the test, and they become

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Speaker 5: accepted it into the program, then they can start their

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Speaker 5: eighteen month journey once we connect them to a dealership. So,

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Speaker 5: just like you said, it's a really the best possible

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Speaker 5: way to find the right people for the dealers. I

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Speaker 5: know people talk about it's difficult to find technicians. What

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Speaker 5: we have found as just going to secondary schools is

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Speaker 5: not enough. You've got to go into the high schools.

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Speaker 5: There are some really exceptional high school programs out there,

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Speaker 5: and some of these students that come out of high

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Speaker 5: school with a good automotive accredited program, they are very

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Speaker 5: very good.

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Speaker 2: How much can kids, by the way, expect to make

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Speaker 2: if they want to go for a career and mechanical

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Speaker 2: service like this that they want to be working on

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Speaker 2: and around cars. You know, what's a master technician to

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Speaker 2: get these days?

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Speaker 4: You know, it varies all over the country.

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Speaker 5: If we were talking in California, you know, it wouldn't

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Speaker 5: be unusual for somebody to make you know, in that

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Speaker 5: one hundred thousand dollars range, But it varies very much

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Speaker 5: by the dealer body and also by the location across

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Speaker 5: the country.

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Speaker 6: Is this a job that is safe from AI? And

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Speaker 6: our final kind of forty five seconds with you here.

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Speaker 5: Yeah, so very much, save from anything relevant to automated diagnosis,

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Speaker 5: we need technicians that know what they're doing and how

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Speaker 5: to look at what's going on with the vehicle and

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Speaker 5: interact with the service consultants to get to fix it

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Speaker 5: right the first time. This program, again, if I kind

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Speaker 5: of lean into it just a little bit quickly, it's

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Speaker 5: a dedicated training program that's just the AUDI content that

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Speaker 5: we develop for our dealers, so it's very streamlined. It's

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Speaker 5: got a pretty big component of culture because they stay

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Speaker 5: together for eighteen months. We really build a brand culture

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Speaker 5: with these techs, so they want to do the right

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Speaker 5: thing with our customers. So it's always about customer first,

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Speaker 5: and then it's also on the job training, so they're

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Speaker 5: in school, they go off of these eight weeks, and

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Speaker 5: then what you know, during this time that they're in

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Speaker 5: the dealers, they're honing those skills, working on assessments, doing

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Speaker 5: online training content.

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Speaker 4: So it's really very much a win win win from all.

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Speaker 5: Parts, making sure that the student is a big win

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Speaker 5: from education, the dealer gets a big win, and then

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Speaker 5: AUDI is a corporate team, we get a big win

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Speaker 5: for the outcome for our customers.

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Speaker 2: Brian, thanks so much for joining us. Real pleasure talking

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Speaker 2: to you, obviously. I love to talk about cars and

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Speaker 2: love to talk about Audi's especially Brian Stockton, a senior

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Speaker 2: director of Technical service and Training at Audi, joining us

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Speaker 2: at Auburn Hills, Michigan. We've got to get Maddie into

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Speaker 2: a Q four E tron soon.

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Speaker 6: That sounds cool.

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Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us

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Speaker 1: live weekday afternoons from three to six Eastern Listen on

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Speaker 1: or want us live on YouTube.

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Speaker 6: We are going to get to that big neg meeting tomorrow,

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Speaker 6: the most important one since the last. As we like

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Speaker 6: to say, the market's already pricing in at least a

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Speaker 6: skip no movement in terms of rate hikes, But the

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Speaker 6: big question starts to be what's going to happen at

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Speaker 6: the meeting after that? So here to discuss, We've got

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Speaker 6: doctor Stephen Steve Skanky with us. He's a chief economic

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Speaker 6: advisor at keel Point. He's also the former US Treasury

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Speaker 6: and White House National Security Council staff member, and he

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Speaker 6: joins us on Zoom from Alabama. Doctor Thank you so

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Speaker 6: much for being here with us. Talk to me about

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Speaker 6: your anticipation, not just for this FED meeting tomorrow, for

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Speaker 6: the one after that. What do you think the Fed's

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Speaker 6: longer term moves are going to look like?

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Speaker 7: Well, thank you Madison's it's great to be with you,

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Speaker 7: and you're absolutely right. Tomorrow they're going to be there's

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Speaker 7: going to be a skip. But what we are going

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Speaker 7: to see tomorrow is in their new Summary of Economic Projections.

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Speaker 3: It's updated and.

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Speaker 7: They're to get they're going to give us a hint

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Speaker 7: of how well they think their measures are working against inflation,

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Speaker 7: uh and where they see interest rates being at the

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Speaker 7: end of the year and into the first half of

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Speaker 7: next year. And then of course there's going to be

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Speaker 7: their statement, which I think is going to be heavily

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Speaker 7: on the hawkish side as part of their effort to

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Speaker 7: sort of get their last whip a forward guidance in.

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Speaker 3: And then we're going to wait and see what.

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Speaker 7: Happens to the inflation numbers, the employment numbers for June

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Speaker 7: that come out in early July.

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Speaker 3: Most people expect another.

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Speaker 7: Rate increase in July, and that's likely to happen unless

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Speaker 7: we get a.

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Speaker 3: Really big surprise.

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Speaker 7: Of a rapid slowdown in inflation in June that gets

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Speaker 7: picked up and they're reporting in July.

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Speaker 2: Can I ask Steve about the importance of employment, the

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Speaker 2: employment numbers and wages. I would just out of sheer

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Speaker 2: common sense figure that if more people have jobs and

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Speaker 2: if more people are getting paid more, that's going to

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Speaker 2: put upward pressure on inflation, just because they can afford

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Speaker 2: to buy stuff, and because the manufacturers are going to

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Speaker 2: have higher costs and they're going to need to make margin.

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Speaker 2: But there's been so much research out suggesting that unemployment

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Speaker 2: has no direct connection and even wages have no direct

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Speaker 2: connection to inflation, that I wonder how much the FED

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Speaker 2: is actually focused on those things.

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Speaker 3: Well, I think they do pay attention to it.

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Speaker 7: And you know what are their favorite sub indsease is

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Speaker 7: non housing CPI core services, which has fall into a

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Speaker 7: twelve month low four and a half percent from five

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Speaker 7: point one percent, And that really is a sign that

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Speaker 7: slowing wage growth is starting to show up in some

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Speaker 7: of the data. So they do care about that. I mean,

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Speaker 7: it's not a principal driver, but it certainly has had

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Speaker 7: a big impact in that part of the data that

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Speaker 7: we understand they're paid a lot of attention to.

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Speaker 6: But wasn't there a little bit of a upside surprise

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Speaker 6: in terms of the estimates to supercore today? Right?

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Speaker 8: Yes?

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Speaker 7: And what you know, there was a big surprise and

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Speaker 7: used cars right again, and that was I mean that

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Speaker 7: was a four point four month over a month increased

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Speaker 7: and used vehicle prices, and we also had a little

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Speaker 7: bit higher rate of rent and owner equivalent rent that

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Speaker 7: was like a half percent month over a month. But

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Speaker 7: those those should improve and that's where that's where we're

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Speaker 7: really have an idea as to what the FED can

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Speaker 7: do when we see those numbers come out in the

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Speaker 7: in the numbers in July, because if if used cars

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Speaker 7: come back as it seems that they have in terms

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Speaker 7: of pricing and and and same on rent and owner

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Speaker 7: equivalent rent, which is about thirty five percent of the CPI,

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Speaker 7: that'll that'll allow.

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Speaker 3: The FED even not to do another increase in July.

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Speaker 7: It's very much dated driven at this point, and that

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Speaker 7: would that would make it possible to sort of push

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Speaker 7: back on the Hawks who very much would like to

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Speaker 7: increase both at this meeting as well as the July meeting.

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Speaker 2: Steve, I wonder about the comparisons that have been made

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Speaker 2: to Jerome Powell and Arthur Burns, or to Jerome Powell,

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Speaker 2: and as I think he'd prefer, Paul Vulker. You were

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Speaker 2: advising the White House during those regimes, right, you were

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Speaker 2: advising the president during those times. Do you see parallels,

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Speaker 2: because you know, a lot of people are pointing out

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Speaker 2: that Jerome Powell doesn't want to let his guard down

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Speaker 2: too soon the way Burns did, Otherwise inflation will come

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Speaker 2: roaring back.

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Speaker 7: Yeah, I think that, you know, and it's interesting to

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Speaker 7: look at that as a comparison. Matt Arthur Burns was

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Speaker 7: known for for believing almost in the righteousness of suffering

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Speaker 7: and was as nice as guy as he was, was

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Speaker 7: pretty tough on the money policy and squeezing out inflation.

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Speaker 7: I mean, he had a big job because YUS has

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Speaker 7: gone off the gold standard, we let the dollar flow,

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Speaker 7: we had the enter energy price and the energy embargos

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Speaker 7: and the big jump in oil prices, and so he

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Speaker 7: was determined that that wasn't gonna that wasn't going to

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Speaker 7: ruin the economy, and ultimately he was unable to to

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Speaker 7: sort of keep it out. Jerome Powell doesn't want to

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Speaker 7: seem soft on inflation, but it's hard to characterize him

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Speaker 7: as a hawk. He cares very much about the employment

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Speaker 7: picture and it being broadly spread among minority and disadvantage

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Speaker 7: business groups. If you look back to some of the

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Speaker 7: things that he said in twenty nineteen, he was joyful

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Speaker 7: and sensing accomplishment in seeing a lot of those wage

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Speaker 7: and employment benefits spread. He'd like to see that again.

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Speaker 7: He knows that that's not the case right now, and

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Speaker 7: he'd like that to happen. But he can't appear soft

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Speaker 7: on inflation.

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Speaker 6: Final twenty seconds here can the Fed stop hiking if

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Speaker 6: we don't see an increase in jobless claims or see

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Speaker 6: a change to the unemployment picture. Just about twenty seconds.

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Speaker 7: If they don't see a change in jobless claims or inflation,

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Speaker 7: then they can't stop hiking. We have to have at

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Speaker 7: least one more in July. It would be hard to

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Speaker 7: imagine that we wouldn't see movement and inflation after that,

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Speaker 7: just given some of the other things that they've done.

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Speaker 2: All right, see great having on the program. I really

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Speaker 2: appreciate your insight and experienced. Steve Skanky there, chief economic

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Speaker 2: advisor at Keel Point, And as we said, He was

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Speaker 2: a US Treasury and White House National Security Council staff

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Speaker 2: member before that.

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Speaker 3: This is Bloomberg.

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Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us

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Speaker 1: live weekday afternoons from three to six Easter on Bloomberg Radio,

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Speaker 1: the Bloomberg Business app, and YouTube. You can also listen

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Speaker 1: live on Amazon Alexa from our flagship New York station

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Speaker 1: Just say Alexa playing Bloomberg eleven thirty.

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Speaker 3: I'm kicking what they're given because I'm working for them.

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Speaker 2: All right, we are, We've arrived at that point in

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Speaker 2: my day. I have say it's my favorite point of

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Speaker 2: the show. And we talk about one story from the

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Speaker 2: Business business Week mag magazine. This is going to be

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Speaker 2: the forthcoming issue of BusinessWeek magazine, and we typically talk

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Speaker 2: to Joel Weber, the editor in chief, as well as

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Speaker 2: the author of the story. We're fortunate enough to have

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Speaker 2: Ellen Hewitt with us right now. She wrote the layoffs

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Speaker 2: and AI are changing Tech's once invincible job market story,

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Speaker 2: and Ellen, I thought it was a fantastic job of

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Speaker 2: reporting and a little bit of a bummer, right because

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Speaker 2: I had thought, as well as probably many of the

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Speaker 2: kids graduating college today, that if you learn to code

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Speaker 2: and you're like halfway good at it, then your set

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Speaker 2: for a sweet job in Silicon Valley for like the

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Speaker 2: rest of your life. And it now seems that's no

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Speaker 2: longer the case.

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Speaker 9: Yeah, I mean, this is kind of the big mood

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Speaker 9: shift in Silicon Valley, which is the learning to code

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Speaker 9: is not a guarantee of amazing, forever employment anymore. To

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Speaker 9: be clear, there's still a lot of people who want

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Speaker 9: to hire software engineers, especially firms that are outside of tech,

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Speaker 9: like in health, healthcare, and finance. They're definitely looking for coders.

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Speaker 9: But there is this noticeable shift that people are experiencing,

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Speaker 9: which is this once infinite fountain of high paying jobs

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Speaker 9: where companies were just always always hiring, that's not happening anymore.

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Speaker 2: One thing I saw is that there have been two

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Speaker 2: hundred thousand layoffs in tech this year. You found a

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Speaker 2: website that essentially aggregates all of the layoffs, but eighty

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Speaker 2: thousand of those happened in January. So what I'm wondering is,

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Speaker 2: are the layoffs kind of slowing down? Does it look

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Speaker 2: like maybe it's not as bad as it was at

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Speaker 2: the start of the year.

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Speaker 9: Now, yes, that's definitely what the numbers are showing. So

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Speaker 9: in our story, we have a wonderful chart. This data

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Speaker 9: comes from layoffs at Fyi, which is a hilarious site,

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Speaker 9: very well run by just a startup founder who started

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Speaker 9: during COVID collecting layoff numbers and putting them in this

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Speaker 9: wonderful data website. So you see a bit of a

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Speaker 9: peak right after the start of the pandemic, and then

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Speaker 9: a drop, and then it really started to pick up

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Speaker 9: midl last year and peaked in January, and now it's

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Speaker 9: actually leveling out. So probably it seems like the worst

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Speaker 9: is behind us, but it definitely has. You know, the

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Speaker 9: repercussions of this are going to be felt for a

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Speaker 9: very long time.

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Speaker 3: Joel Weber.

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Speaker 10: You know what I was, what I've been thinking about

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Speaker 10: ever since it felt like there was this real major

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Speaker 10: mood shift. Was just what that what that feels like

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Speaker 10: in the valley? Ellen, And I'm curious, like being there

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Speaker 10: feeling like you could do anything you wanted forever. How

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Speaker 10: are from the sources you spoke with, how is that

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Speaker 10: manifesting itself?

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Speaker 3: This decision?

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Speaker 9: Yeah, mood all sorts of ways. I mean, everyone knows,

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Speaker 9: you know, a lot of people are just getting laid off,

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Speaker 9: you know, in the way that people you know, generally

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Speaker 9: you might have expected that recruiters or people who work

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Speaker 9: in sales might be the first to go. This time,

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Speaker 9: it's like senior engineers have worked at firms like Google

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Speaker 9: for ten or fifteen years are getting laid off. There

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Speaker 9: are people who I know who just yeah, I've worked

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Speaker 9: at a company for you know, worked at Facebook for

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Speaker 9: ten years and are getting laid off and feeling this

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Speaker 9: sense that you know, I also have a friend who

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Speaker 9: considered leaving her job, but then was like, I just

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Speaker 9: don't think I'm going to get another good one right now,

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Speaker 9: so I'm going to stay at this job that I

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Speaker 9: don't super like. It's just this this kind of feeling

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Speaker 9: that is suffusing everywhere in the industry. And then, you know,

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Speaker 9: we had this wonderful conversation with this new grad Dylan,

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Speaker 9: who just graduated from Cornell with a CS degree, had

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Speaker 9: interned at all these great places Google, Facebook, Stripe, Figma,

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Speaker 9: and had a Google offer and then it was rescinded.

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Speaker 9: And it's just this sense that this dependable thing isn't

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Speaker 9: happening anymore, and you see it making people nervous, You

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Speaker 9: make you see them nervous to switch jobs or just

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Speaker 9: like you know, looking for jobs and not finding what

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Speaker 9: they want. And there is actually a pretty sense, you know,

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Speaker 9: a pretty big sense of fear among some people. Like Dylan. Again,

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Speaker 9: this new grad was talking about how some of his

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Speaker 9: peers are accepting multiple job offers because they're concerned that

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Speaker 9: one of them is going to get rescinded, and they

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Speaker 9: have reason to believe that it might.

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Speaker 10: That new grad phenomenon is the one that I find

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Speaker 10: most interesting, because these were the people like you were

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Speaker 10: just they were just getting swept up and money thrown

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Speaker 10: at them. And especially like in Dylan's case, he had

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Speaker 10: multiple internships at all the blue chip places. There's this

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Speaker 10: helpless quality that it must feel like to be in

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Speaker 10: that twenty something age. Ellen, And I'm curious when you

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Speaker 10: who's the most freaked out. The twenty somethings are the

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Speaker 10: people who have been in the industry for a little

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Speaker 10: bit and have you know, weather changed before.

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Speaker 9: I mean, they're freaked out in different ways. The twenty

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Speaker 9: somethings are like, wow, I really thought that I was

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Speaker 9: picking the most obvious, most stable, most high paying career

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Speaker 9: and now it's none of those things. Or I might

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Speaker 9: have to struggle to get a job. Meanwhile, you know,

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Speaker 9: I talked to someone who's telling me stories about peers

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Speaker 9: of his who are maybe in their forty or fifties,

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Speaker 9: who have worked in Silicon Valley during these boom times,

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Speaker 9: have gotten used to incredibly high cost of living in

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Speaker 9: places like New York and San Francisco, and are now

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Speaker 9: accustomed to a standard of living that may no longer

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Speaker 9: be accessible to them. Like I talked to a VC

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Speaker 9: who said his friend who had been laid off was

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Speaker 9: looking for a new job and his minimum salary requirement

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Speaker 9: was six hundred thousand dollars, and he was just like that,

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Speaker 9: you may not be able to find that anymore. And

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Speaker 9: if you're used to, you know, if you have kids

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Speaker 9: in private school, like you get these golden handcuffs, and

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Speaker 9: those people are scared too. I think they're experiencing a

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Speaker 9: shift in what they expected would be available.

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Speaker 2: Well, the thing is, Ellen, if you need to charter

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Speaker 2: a jet for a fishing trip in Alaska, you know

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Speaker 2: that's not cheap anymore.

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Speaker 10: It was never yeah, but now it's really not.

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Speaker 9: I really did appreciate. You know, there's a wonderful part

441
00:23:48,440 --> 00:23:50,399
Speaker 9: in the story where yeah, we kind of reminisce about

442
00:23:50,400 --> 00:23:52,800
Speaker 9: what the boom times looked like in Silicon Valley in

443
00:23:52,800 --> 00:23:55,040
Speaker 9: the mid twenty tens. It was out of control, right,

444
00:23:55,160 --> 00:23:57,800
Speaker 9: We're talking about perks and salaries and stock grants and

445
00:23:58,000 --> 00:24:00,960
Speaker 9: these kinds of things that were you know, these companies Facebook, Google,

446
00:24:00,960 --> 00:24:03,160
Speaker 9: they were just throwing money at their employees. In fact,

447
00:24:03,200 --> 00:24:07,400
Speaker 9: they would often hire promising workers simply to have them

448
00:24:07,640 --> 00:24:10,040
Speaker 9: kind of in their corner without a specific job for them.

449
00:24:10,080 --> 00:24:11,800
Speaker 9: So again I talked to this PC who had been

450
00:24:11,960 --> 00:24:14,639
Speaker 9: a product manager at Instagram in twenty fourteen when it

451
00:24:14,680 --> 00:24:17,119
Speaker 9: was owned by Facebook, and he said he was hired

452
00:24:17,640 --> 00:24:20,000
Speaker 9: as a product manager. He didn't have a job yet.

453
00:24:20,040 --> 00:24:23,560
Speaker 9: He was like going to be assigned to a team,

454
00:24:23,640 --> 00:24:28,960
Speaker 9: but just spent three months getting trained, spending an hour

455
00:24:29,119 --> 00:24:31,600
Speaker 9: every morning reading a novel over breakfast, and then having

456
00:24:31,640 --> 00:24:33,200
Speaker 9: some casual meetings. And then at the end of the

457
00:24:33,240 --> 00:24:36,359
Speaker 9: three months he was finally assigned a job. But he

458
00:24:36,400 --> 00:24:39,000
Speaker 9: spent you know, and knew of people who had been

459
00:24:39,200 --> 00:24:42,919
Speaker 9: hired just so that they wouldn't go work at a rival.

460
00:24:43,480 --> 00:24:47,040
Speaker 9: And that was that sense of money that really cremated

461
00:24:47,200 --> 00:24:49,440
Speaker 9: Silicon Valley for more than a decade.

462
00:24:49,600 --> 00:24:52,679
Speaker 6: It sounds like, sorry, Ellen, it just sounds like another

463
00:24:52,760 --> 00:24:57,119
Speaker 6: one of those things that goes away, and when we

464
00:24:57,160 --> 00:25:00,719
Speaker 6: don't have a zero interest rate environment, less of that

465
00:25:00,840 --> 00:25:06,560
Speaker 6: kind of just getting brought on. I mean, that's at Yeah,

466
00:25:07,320 --> 00:25:09,200
Speaker 6: I'm just being smart, you know what I mean. But

467
00:25:10,200 --> 00:25:13,760
Speaker 6: one thing that I'm curious about too is whether these

468
00:25:13,840 --> 00:25:18,679
Speaker 6: companies are sort of blaming AI to be able to

469
00:25:18,840 --> 00:25:22,199
Speaker 6: fire or lay off their employees and to kind of

470
00:25:22,200 --> 00:25:24,080
Speaker 6: get away with it. Yeah, did you did you find

471
00:25:24,080 --> 00:25:24,880
Speaker 6: that in your reporting?

472
00:25:25,600 --> 00:25:28,560
Speaker 9: There's definitely a sense that AI is like the idea

473
00:25:28,640 --> 00:25:30,280
Speaker 9: of the day, and so people are pointing to it

474
00:25:30,320 --> 00:25:33,479
Speaker 9: for different reasons, one of which is, yes, there are

475
00:25:33,480 --> 00:25:35,359
Speaker 9: some CEOs who over hired at the beginning of the

476
00:25:35,359 --> 00:25:36,960
Speaker 9: pandemic when it looked like tech was going to have

477
00:25:37,000 --> 00:25:40,440
Speaker 9: this boom time. Now they're seeing that that boom time

478
00:25:40,520 --> 00:25:42,280
Speaker 9: is not around, they're going to lay people off, and

479
00:25:42,280 --> 00:25:46,119
Speaker 9: they're citing not necessarily AI taking jobs, but just the

480
00:25:46,359 --> 00:25:49,280
Speaker 9: need to maybe realign the company in order to be

481
00:25:49,280 --> 00:25:51,639
Speaker 9: able to focus on AI, which then means that they

482
00:25:51,680 --> 00:25:53,439
Speaker 9: can cut some jobs. So it's a bit of a

483
00:25:53,480 --> 00:25:55,880
Speaker 9: face saving thing. It may also be a real thing

484
00:25:55,920 --> 00:25:58,720
Speaker 9: that companies are investing more energy into it. Of course,

485
00:25:58,760 --> 00:26:01,239
Speaker 9: in our story we also talked about it AI and

486
00:26:01,440 --> 00:26:06,040
Speaker 9: machine learning. Specialists in software engineering are getting paid twelve

487
00:26:06,080 --> 00:26:09,080
Speaker 9: percent on average more than other senior software engineers. There

488
00:26:09,200 --> 00:26:11,480
Speaker 9: is genuinely a desire to hire these types of people.

489
00:26:12,280 --> 00:26:15,040
Speaker 9: AI is not replacing jobs yet, but but there is

490
00:26:15,040 --> 00:26:17,600
Speaker 9: this feeling that it's going to shake things up, and

491
00:26:17,640 --> 00:26:20,520
Speaker 9: that that shakeup may lead to some new hiring and

492
00:26:20,560 --> 00:26:22,160
Speaker 9: areas and cuts in other places.

493
00:26:22,680 --> 00:26:24,920
Speaker 6: All right, Ellen, well, thank you so much, really appreciate

494
00:26:24,960 --> 00:26:27,640
Speaker 6: you joining us and the story, of course, which will

495
00:26:27,640 --> 00:26:30,320
Speaker 6: be featured in the forthcoming issue of BusinessWeek magazine. You

496
00:26:30,320 --> 00:26:32,760
Speaker 6: can read it now on the Bloomberg terminal and at

497
00:26:32,800 --> 00:26:38,240
Speaker 6: Bloomberg dot com slash BusinessWeek, m Marco.

498
00:26:39,880 --> 00:26:40,360
Speaker 1: Journal.

499
00:26:41,359 --> 00:26:42,360
Speaker 2: Now about you, let me drive?

500
00:26:42,640 --> 00:26:47,040
Speaker 10: Oh no, no, no, no, dreg honey please, I'll do the

501
00:26:47,160 --> 00:26:48,200
Speaker 10: riding gravels.

502
00:26:48,520 --> 00:26:49,880
Speaker 7: Let's mate, I want to drive.

503
00:26:49,880 --> 00:26:53,080
Speaker 3: It's a good question.

504
00:26:53,520 --> 00:26:54,280
Speaker 8: Good time.

505
00:26:57,320 --> 00:27:00,880
Speaker 1: Is the drive to the Globe dot com? Well try around,

506
00:27:01,040 --> 00:27:03,280
Speaker 1: Saga don on Bloomberg Radio.

507
00:27:04,480 --> 00:27:07,120
Speaker 6: All right, we're going to take our coverage from Miami

508
00:27:07,240 --> 00:27:09,760
Speaker 6: over to Wall Street. As you know, it's big week

509
00:27:09,840 --> 00:27:12,240
Speaker 6: for the economy. We've got that FED meeting tomorrow. Today,

510
00:27:12,240 --> 00:27:14,959
Speaker 6: we got CPI in a little better than expected depending

511
00:27:15,000 --> 00:27:16,600
Speaker 6: on how you look at it. A lot of other

512
00:27:16,680 --> 00:27:19,479
Speaker 6: data this week, and market consensus seems to be building

513
00:27:19,520 --> 00:27:22,040
Speaker 6: around tomorrow being a non rate hike day. But the

514
00:27:22,160 --> 00:27:24,320
Speaker 6: question is is it going to be a pause, a skip,

515
00:27:24,359 --> 00:27:27,720
Speaker 6: a stop, and how are markets responding to all those options?

516
00:27:27,720 --> 00:27:29,480
Speaker 6: So here to weigh in for our drive to the

517
00:27:29,480 --> 00:27:33,919
Speaker 6: close is Jeff Crumpleman. He's chief investment strategist at Mariner

518
00:27:34,040 --> 00:27:37,760
Speaker 6: Wealth Advisors. Jeff, great to speak with you. Let's just

519
00:27:37,800 --> 00:27:40,359
Speaker 6: start on your word choice here, pause or skip.

520
00:27:42,640 --> 00:27:47,240
Speaker 8: I think that it should be a pause, but you

521
00:27:47,280 --> 00:27:51,000
Speaker 8: know we're not paid to make judgments here, as you

522
00:27:51,040 --> 00:27:54,919
Speaker 8: know followers with the capital markets. I think it's fifty

523
00:27:54,960 --> 00:27:57,639
Speaker 8: to fifty between skip and pause. I did like the

524
00:27:57,720 --> 00:28:02,040
Speaker 8: CPI inflation data, and I were on the board, I

525
00:28:02,119 --> 00:28:05,320
Speaker 8: would I would say pause. I think that there's plenty

526
00:28:05,320 --> 00:28:09,080
Speaker 8: of evidence that inflation is calming, and that they've done

527
00:28:09,080 --> 00:28:10,960
Speaker 8: a lot of good work, and some of the lagging

528
00:28:11,040 --> 00:28:14,440
Speaker 8: data like rents and some of the pressures and the

529
00:28:14,480 --> 00:28:19,280
Speaker 8: services side that's been sticky, I think is showing signs

530
00:28:19,320 --> 00:28:23,359
Speaker 8: green shoots of calming as well. So I'd love to

531
00:28:23,359 --> 00:28:26,239
Speaker 8: see pause. I think that's what they should do, but

532
00:28:27,000 --> 00:28:29,560
Speaker 8: we'll just have to see.

533
00:28:30,080 --> 00:28:33,560
Speaker 2: But you know J Powell, and you know that he

534
00:28:33,600 --> 00:28:36,760
Speaker 2: doesn't want to be the next Arthur Burns, right. I mean,

535
00:28:36,920 --> 00:28:40,520
Speaker 2: the last thing that this FED boss wants is for

536
00:28:41,880 --> 00:28:44,920
Speaker 2: the FMC to pause and then for inflation to come

537
00:28:45,040 --> 00:28:50,800
Speaker 2: roaring back after after the they were behind the curve

538
00:28:50,880 --> 00:28:53,680
Speaker 2: for so long, he's gonna want to be ahead of

539
00:28:53,720 --> 00:28:58,000
Speaker 2: it now. So do you still think we can maintain

540
00:28:58,160 --> 00:29:00,560
Speaker 2: this rally in the face of a FA that at

541
00:29:00,640 --> 00:29:04,120
Speaker 2: least wants to be restrictive.

542
00:29:06,080 --> 00:29:07,360
Speaker 4: Yes, I do, and I've.

543
00:29:07,200 --> 00:29:11,160
Speaker 8: You know, we've been pretty steady and as my mom says,

544
00:29:11,240 --> 00:29:14,440
Speaker 8: moderation and all things. And I think our team has

545
00:29:14,520 --> 00:29:18,520
Speaker 8: exercised that. We've been pretty vocal about looking for a

546
00:29:18,880 --> 00:29:20,760
Speaker 8: forty five hundred target on the S and P five

547
00:29:20,840 --> 00:29:23,040
Speaker 8: hundred by a year in and we said, you know,

548
00:29:23,200 --> 00:29:26,440
Speaker 8: we're not sure the path to that. That it could

549
00:29:26,440 --> 00:29:28,360
Speaker 8: be three yards and a cloud of duster, it could

550
00:29:28,360 --> 00:29:33,880
Speaker 8: be volatility significantly throughout the year because of debt ceiling,

551
00:29:33,960 --> 00:29:36,239
Speaker 8: because of FED, because oh you know, we get some

552
00:29:36,760 --> 00:29:40,680
Speaker 8: funky inflation numbers from month to month. But absolutely, I

553
00:29:40,720 --> 00:29:44,360
Speaker 8: think through year end we can sustain the rally. Do

554
00:29:44,480 --> 00:29:47,280
Speaker 8: I think that we get a pause in the market,

555
00:29:47,760 --> 00:29:50,200
Speaker 8: because they're going to come out tomorrow and you know,

556
00:29:50,320 --> 00:29:52,160
Speaker 8: as they do pause, what are they going to do.

557
00:29:52,440 --> 00:29:55,400
Speaker 8: They're going to say, you know, our summary of economic projections,

558
00:29:55,480 --> 00:29:58,720
Speaker 8: the SEP, the everybody talks about, oh, we're taking our

559
00:29:58,760 --> 00:30:01,800
Speaker 8: target up from five point one to something a little higher,

560
00:30:02,480 --> 00:30:05,280
Speaker 8: and they're going to talk hawkish, and people are talking

561
00:30:05,320 --> 00:30:08,880
Speaker 8: about it being a hawkish pause. That's probably what's going

562
00:30:08,960 --> 00:30:11,360
Speaker 8: to happen. And you know what, the market, it'll probably

563
00:30:11,360 --> 00:30:13,400
Speaker 8: trade off a little bit on that after we've pushed

564
00:30:13,520 --> 00:30:17,520
Speaker 8: these twenty twenty three highs. But I don't think for long.

565
00:30:17,680 --> 00:30:19,960
Speaker 8: I think that the evidence the inflation will continue to

566
00:30:19,960 --> 00:30:22,080
Speaker 8: come down to FED Now it's going to be in

567
00:30:22,120 --> 00:30:25,960
Speaker 8: the ninth inning after they might do something in July,

568
00:30:26,080 --> 00:30:28,800
Speaker 8: but then they're really in the ninth inning, and earnings

569
00:30:29,400 --> 00:30:32,200
Speaker 8: are really solid and so is the so's the economy.

570
00:30:32,480 --> 00:30:37,720
Speaker 8: It's not so negative. So yeah, based upon fundamentals, valuation levels,

571
00:30:38,040 --> 00:30:41,600
Speaker 8: and what I see in the technical price trends, yeah, absolutely,

572
00:30:41,640 --> 00:30:46,200
Speaker 8: I think you can sustain the advance in the market through.

573
00:30:46,040 --> 00:30:46,680
Speaker 4: The end of the year.

574
00:30:46,720 --> 00:30:48,160
Speaker 6: All right, Well, you know what I'm going to ask

575
00:30:48,200 --> 00:30:51,160
Speaker 6: you next, which is the rally a little bit too narrow?

576
00:30:51,240 --> 00:30:53,760
Speaker 6: Is this just an AI boom that's going to fizzle

577
00:30:53,800 --> 00:30:54,880
Speaker 6: out before the end of the year.

578
00:30:56,640 --> 00:31:00,240
Speaker 8: You know, I think that that is just overdone. It

579
00:31:00,320 --> 00:31:04,600
Speaker 8: is true. You can lie. We all can lie with statistics,

580
00:31:04,640 --> 00:31:08,280
Speaker 8: and so people will immediately say, hey, the top eight

581
00:31:08,320 --> 00:31:11,200
Speaker 8: stocks and the S and P five hundred are all

582
00:31:11,240 --> 00:31:13,240
Speaker 8: of the return of the S and P five hundred

583
00:31:13,320 --> 00:31:17,080
Speaker 8: this year, implying that the other four hundred and ninety

584
00:31:17,120 --> 00:31:20,240
Speaker 8: two stocks plus in the S and P five hundred

585
00:31:20,360 --> 00:31:23,400
Speaker 8: are really not doing well. We find that there are

586
00:31:23,480 --> 00:31:27,600
Speaker 8: broad industry groups that actually are doing well. There are

587
00:31:27,680 --> 00:31:30,680
Speaker 8: a lot of stocks that are up twenty forty fifty percent.

588
00:31:30,760 --> 00:31:33,520
Speaker 8: We own a lot of them, and an example in

589
00:31:33,600 --> 00:31:39,160
Speaker 8: probably our most aggressive large and MidCap strategy, we're outperforming

590
00:31:39,200 --> 00:31:42,320
Speaker 8: the S and P five hundred this year, and we're

591
00:31:42,480 --> 00:31:46,840
Speaker 8: just kind of neutral or under own all those eight stocks.

592
00:31:47,440 --> 00:31:50,440
Speaker 8: So we own a number of technology stocks and consumer

593
00:31:50,480 --> 00:31:55,160
Speaker 8: discretionary stocks that are actually doing quite well and outperforming.

594
00:31:55,280 --> 00:31:59,760
Speaker 8: So I think it's misleading to think make the public

595
00:32:00,040 --> 00:32:03,080
Speaker 8: think that there are eight stocks doing well and everything

596
00:32:03,120 --> 00:32:05,480
Speaker 8: else is down. And I would add to that in

597
00:32:05,560 --> 00:32:09,440
Speaker 8: terms of momentum. Over the last three weeks, you've seen

598
00:32:09,480 --> 00:32:11,560
Speaker 8: a broadening in the market. Look at how small cats

599
00:32:11,600 --> 00:32:14,880
Speaker 8: are doing in June, and small caps own a lot

600
00:32:14,920 --> 00:32:18,600
Speaker 8: more in the financial and industrials area than the tech

601
00:32:18,840 --> 00:32:22,560
Speaker 8: laden s and P five hundred, So the trend is

602
00:32:22,600 --> 00:32:26,080
Speaker 8: getting broader. I have been disappointed.

603
00:32:26,280 --> 00:32:26,960
Speaker 4: That's not to.

604
00:32:26,880 --> 00:32:30,080
Speaker 8: Say that it hasn't been a little tougher because you've

605
00:32:30,120 --> 00:32:34,360
Speaker 8: had these mega CAF stocks do well. But you're starting

606
00:32:34,400 --> 00:32:37,400
Speaker 8: to see the broadening I think play out, and that's

607
00:32:37,440 --> 00:32:38,920
Speaker 8: a good thing. I feel good about that.

608
00:32:40,360 --> 00:32:40,720
Speaker 3: All right.

609
00:32:40,760 --> 00:32:45,520
Speaker 2: So if you're picking, if you're picking industry groups that

610
00:32:45,560 --> 00:32:49,440
Speaker 2: you like for the rest of the year, what's the

611
00:32:49,440 --> 00:32:52,320
Speaker 2: top of your list or is there anything specific, any

612
00:32:52,320 --> 00:32:55,320
Speaker 2: specific strategy that you think investors should deploy right now?

613
00:32:57,040 --> 00:33:00,479
Speaker 8: Yeah, I think that number one. This idea of blend

614
00:33:00,640 --> 00:33:05,920
Speaker 8: between growth and value is a smart thing. And you know,

615
00:33:06,040 --> 00:33:11,040
Speaker 8: last year, folks were saying long duration growth stocks are dead. Well,

616
00:33:11,080 --> 00:33:13,840
Speaker 8: they got hammered and they became very attractive going into

617
00:33:13,920 --> 00:33:17,160
Speaker 8: this year. So that's where we've picked up some of

618
00:33:17,200 --> 00:33:22,400
Speaker 8: these stocks that I've mentioned, the Deckers, the Tesla, you know,

619
00:33:22,880 --> 00:33:27,640
Speaker 8: a number of stocks within technology and consumer discretionary that

620
00:33:27,680 --> 00:33:30,760
Speaker 8: have been on the cheap CrowdStrike, we tooke up at

621
00:33:30,800 --> 00:33:32,920
Speaker 8: a very attractive level, and so on and so forth.

622
00:33:33,360 --> 00:33:36,040
Speaker 8: So you don't abandon growth. But I also think that

623
00:33:36,080 --> 00:33:40,479
Speaker 8: what's underappreciated in our economy are some of the cyclical stocks.

624
00:33:40,520 --> 00:33:44,040
Speaker 8: There is a capital spending boom that's going on, and

625
00:33:44,320 --> 00:33:46,560
Speaker 8: here in Cincinnati we're going to spend three and a

626
00:33:46,600 --> 00:33:50,720
Speaker 8: half billion dollars on rebuilding a bridge. And finally we're

627
00:33:50,800 --> 00:33:53,719
Speaker 8: reON shoring in the United States and building manufacturing plants

628
00:33:53,720 --> 00:33:57,200
Speaker 8: and construction. Employment is at all time highs despite all

629
00:33:57,200 --> 00:34:01,200
Speaker 8: this talk of recession. So to only United rental to

630
00:34:01,240 --> 00:34:06,040
Speaker 8: own a Bulkan materials, to own a HP in mining,

631
00:34:06,320 --> 00:34:09,040
Speaker 8: I think that it's important to have a blend of both.

632
00:34:09,400 --> 00:34:12,000
Speaker 6: Yeah, so real quickly in our final twenty seconds here

633
00:34:12,120 --> 00:34:15,720
Speaker 6: you mentioned CrowdStrike and in phase energy, cybersecurity, and solar.

634
00:34:15,840 --> 00:34:19,320
Speaker 6: There no mention of AI and either of their descriptions.

635
00:34:19,400 --> 00:34:22,319
Speaker 6: Tell me why you're going for them and not more

636
00:34:22,400 --> 00:34:25,239
Speaker 6: AI plays in our final twenty seconds.

637
00:34:25,400 --> 00:34:28,120
Speaker 8: Well, because you know, I believe in AI, but AI

638
00:34:28,280 --> 00:34:32,120
Speaker 8: benefits directly a very narrow set we own in Vidia.

639
00:34:32,280 --> 00:34:34,200
Speaker 8: I could talk about in Nvidia, but you know, I

640
00:34:34,239 --> 00:34:37,520
Speaker 8: think our audience needs to know more than just in Vidia.

641
00:34:37,600 --> 00:34:41,040
Speaker 8: And these are stocks that have tremendous catalysts and they

642
00:34:41,080 --> 00:34:45,799
Speaker 8: were absolutely obliterated in this myth that long duration is

643
00:34:45,840 --> 00:34:49,399
Speaker 8: dead and we need cybersecurity. You know, do you think

644
00:34:49,440 --> 00:34:53,200
Speaker 8: cybersecurity is going away? I don't think so. And all

645
00:34:53,280 --> 00:34:58,120
Speaker 8: those have the catalysts driven by the productiing cybersecurity and.

646
00:34:58,160 --> 00:35:01,320
Speaker 2: Other products, jet breaching, broading it out beyond in video.

647
00:35:01,400 --> 00:35:02,759
Speaker 3: It truly is a relief for us.

648
00:35:02,800 --> 00:35:05,000
Speaker 2: Thanks very much, Jeff Propleman coming to.

649
00:35:04,960 --> 00:35:06,120
Speaker 3: Us out of Cincinnati.

650
00:35:07,520 --> 00:35:12,160
Speaker 1: This is the Bloomberg Business Week podcast, available on Apple, Spotify,

651
00:35:12,280 --> 00:35:16,000
Speaker 1: and anywhere else you get your podcasts. Listen live weekday

652
00:35:16,040 --> 00:35:19,640
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653
00:35:19,680 --> 00:35:23,000
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654
00:35:23,080 --> 00:35:26,040
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655
00:35:26,239 --> 00:35:28,120
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