Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. We have John Goldnack.
Speaker 1: He is a vice president at Attico. Part let's start
Speaker 1: off with the jobs numbers here because not only as
Speaker 1: mid terms went to be one of the major drivers
Speaker 1: with the jobs numbers as well. John, apologies on my part.
Speaker 1: Let's start with your initial reaction to the jobs numbers today.
Speaker 1: What was great was, you know, you see the markets
Speaker 1: going up and down. There's a lot of good in
Speaker 1: this job's report, um and then and then there's ways
Speaker 1: that you know, you could interpret it a little bit differently.
Speaker 1: But what I love about it wage growth, you know,
Speaker 1: starting to slow down. We're seeing stability that's going to
Speaker 1: allow companies that you know, that confidence to continue to hire.
Speaker 1: The quits are holding steady, so some of the retention
Speaker 1: strategies that are employers are putting in really slowing down
Speaker 1: the churn that we saw a couple of quarters ago.
Speaker 1: So I like to that consistency. One of the things
Speaker 1: that Pals dated though, was that demand, can you know
Speaker 1: substantially is exceeding supply right now? So I think we
Speaker 1: do need to look at that labor participation rate. We're
Speaker 1: holding flat there. Um, we've got to continue to focus
Speaker 1: on upskilling and reskilling these workers so we can get
Speaker 1: some of those leisure and hospitality colleagues that really haven't
Speaker 1: been enjoying the fruit right now since COVID. We need
Speaker 1: to get them in some other industries right now so
Speaker 1: we can uptake this participation rate. And I think I
Speaker 1: think we're gonna be in a good spot. But yeah,
Speaker 1: there's still some pause I think in the labor market,
Speaker 1: waiting to see what happens with these midterms. Yeah, it's
Speaker 1: a really interesting point you make there. I want to
Speaker 1: get into that a little bit more about the dislocation
Speaker 1: between the openings that we're seeing and the participation rate.
Speaker 1: Is that starting to come together in terms of people
Speaker 1: getting into the jobs that are open or are we
Speaker 1: are still seeing a gap there. We're still seeing a
Speaker 1: gap there, but we're making progress. We're seeing employers take
Speaker 1: a look at their job descriptions, looking at the you know,
Speaker 1: the barriers to entry. Do you need a high school diploma?
Speaker 1: Can we do some on the job training. We're also seeing,
Speaker 1: you know, a re emergence of some vocational and technical
Speaker 1: trade schools coming up. You know, if we can't upscale
Speaker 1: or rescale, we're gonna have to create some workers to
Speaker 1: come in. So I see people getting more creative, opening
Speaker 1: up their days and letting letting new people come in. Um,
Speaker 1: it's just a question of that the culture change. It's
Speaker 1: going to take a little bit more time and as
Speaker 1: we continue, you know, to improve. We're seeing so much
Speaker 1: hiring and healthcare has been consistent, I mean, seven thousand
Speaker 1: per month compared to nine thousand per month twenty two
Speaker 1: versus twenty one. So what a huge investment in infrastructure.
Speaker 1: But but you're right, there's a dislocation by sector and
Speaker 1: until we can get the whole up in that participation rate, UM,
Speaker 1: we still have to stay focused on reskilling and upskilling workers. Well,
Speaker 1: speaking of a diversion by sector, I I'm interested in
Speaker 1: the oil and gas sector specifically. Believe only four hundred
Speaker 1: jobs were added in that sector sector that the Biden
Speaker 1: administration has been actively trying to really ramp up in
Speaker 1: terms of production. In turn, the industry saying, look, we
Speaker 1: are still in dealing with supply chain issues despite these
Speaker 1: record profits. We can't ramp up production that quickly. Where
Speaker 1: does the jobs market falls. They're a little bit of
Speaker 1: catch up to be played by that sector. I think
Speaker 1: when you look at energy in general, it's been it's
Speaker 1: been growing. Energy has been a growing sector. So you
Speaker 1: know this this comes into can we get people to
Speaker 1: work around the clock, can we get second third shifts?
Speaker 1: You know, oil industry is not a nine to five job,
Speaker 1: so you're looking at a type of worker. Um, that's
Speaker 1: a very narrow base. So again this comes down to,
Speaker 1: you know, we need to reskill and bring people in
Speaker 1: two different industries like energy, like healthcare that are growing. Um,
Speaker 1: it's it's challenging. But you know, one of the other
Speaker 1: things I think is important to note if you look
Speaker 1: at the ADP report, UM specifically, they had a comment
Speaker 1: there about company size and company size fifty employees. They
Speaker 1: added two jobs per a DP. Now, if you look
Speaker 1: at that, that's virtually almost all gains. So so what
Speaker 1: that tells me a little bit I interpret that as
Speaker 1: the larger companies right now have have got a little
Speaker 1: bit of the talent they're they're holding right now, they've
Speaker 1: got strategy, they're waiting to see what happens in the
Speaker 1: mid terms, but it's created an opportunity window for these
Speaker 1: small and midsized companies who have been fighting for the talent.
Speaker 1: They're finally starting to get some of it right now.
Speaker 1: So that was encouraging for me to see small and
Speaker 1: midsized companies really make some gains. Um. I think we'll
Speaker 1: see the fruit of that in the next couple of months,
Speaker 1: certainly something we're going to keep our eye on. John
Speaker 1: Golnac of a Deco, we thank you as always for
Speaker 1: joining us an apologies again for the intro. I look
Speaker 1: forward to to having you back on the show. What
Speaker 1: also never gets old is analysis from a certain gentleman
Speaker 1: who has just a real affinity for looking at things
Speaker 1: state by state. Of course, as a background in Muty bonds,
Speaker 1: so I feel like you never forget your first speak.
Speaker 1: Matthew Winkler, Editor in chief Meritis joins me right here
Speaker 1: in studio. Real pleasure I wanted before we get to
Speaker 1: your column. Is that true? You never forget your first beat.
Speaker 1: I think it's true, and it's always delight to be
Speaker 1: with you. You're very sweet. Thank you. Um Well. He
Speaker 1: wrote this incredible column about Ohio specifically, when you think
Speaker 1: about globalization, Ohio doesn't necessarily immediately come to mind for me.
Speaker 1: It's New York or l A maybe, but right, you know,
Speaker 1: somewhere near the water m But he makes the argument
Speaker 1: that Ohio is actually benefited, perhaps more than others from globalization.
Speaker 1: Walks through that. So you're absolutely right. If you are
Speaker 1: on the campaign trail, all you hear is very xenophobic
Speaker 1: comments about businesses overseas from both the Democrat and the
Speaker 1: Republican candidates for Senate j d Vance on the Republican
Speaker 1: side and Ryan among the Democrats. What is the reality, however,
Speaker 1: is that Ohio is um one of the greatest beneficiaries
Speaker 1: of globalization, as measured by the fact that it has
Speaker 1: more foreign owned factories per square thousand miles than any
Speaker 1: other state in the country. And if you break that
Speaker 1: down even more, h every business, the publicly traded Giant,
Speaker 1: Procter and Gamble to family owned companies, they all are
Speaker 1: huge beneficiaries of trade with China, Canada, and Mexico. And
Speaker 1: that's a long running story. And if you consider that,
Speaker 1: probably the factory worker as we know it historically has
Speaker 1: been displaced mostly by automation. Ohio has actually been working
Speaker 1: because of globalization. So that's really the story and it
Speaker 1: and it doesn't stop. But nobody talks about this. And
Speaker 1: every way you look at it, there's something like almost
Speaker 1: eight hundred foreign factories in Ohio. You can't miss them.
Speaker 1: I mean, if land in Columbus, for example, and just
Speaker 1: drive a little bit north you hit Marysville, Ohio, which
Speaker 1: is the center of Honda's North American UM production factory.
Speaker 1: Of course they at The argument that anti globalists would
Speaker 1: make is that it's added to the wealth gap between
Speaker 1: rich and poor. That you know, so much labor can
Speaker 1: be farmed out to foreign countries and the US doesn't
Speaker 1: get that much in return. Are you seeing that in Ohio? Well,
Speaker 1: not really, because Ohio has done very well recruiting uh,
Speaker 1: not just Honda, but Siemens uh for example, air liquid
Speaker 1: from France. UM. It's done a great job recruiting companies
Speaker 1: from overseas and letting them prosper in Ohio, paying very
Speaker 1: high wages. By the way, all of these companies that
Speaker 1: are far and owned that operate in Ohio are the
Speaker 1: ones that are providing the high is paying jobs. Now,
Speaker 1: the biggest employer in Ohio is Walmart. They have something
Speaker 1: like fifty five thousand what they call associates earning less
Speaker 1: than eighteen dollars an hour. And by the way, you're
Speaker 1: very well aware that Walmart gets a lot of its
Speaker 1: stuff and has been for some time from China. So
Speaker 1: there's Walmart employing more Ohioans than any other company. And
Speaker 1: Ohio is okay with that because Walmart is the biggest
Speaker 1: employer in Ohio. So then factor in the politics of this. Now,
Speaker 1: what could change perhaps in Ohio given some of this rhetoric. Well, unfortunately,
Speaker 1: that's saying the truth is the first casualty, and we
Speaker 1: know it all too well in our own profession of journalism.
Speaker 1: And UM, this contradiction, uh, and that's really what it is. UM.
Speaker 1: The lack of honesty on the campaign trail or even
Speaker 1: in the media narrative makes it difficult for people to
Speaker 1: accept what, in fact, uh is the reality for not
Speaker 1: just the US, but every modern economy in the world.
Speaker 1: We're all inter interdependent, really, UM, and that's not going
Speaker 1: to go away. I mean, even with all of the
Speaker 1: recent hostility towards China, global trade is a reality, and uh,
Speaker 1: you know your your point about fair trade. That's something
Speaker 1: for politicians obviously to sort out. But in the meantime,
Speaker 1: people are working in Ohio because of globalization. I mean
Speaker 1: in some way, Matt, is this just a matter of
Speaker 1: you know, China is an easier political punching bag than
Speaker 1: automation to some extent, Well, it's it's easier insofar as
Speaker 1: China is an autocracy, I mean, where you want to
Speaker 1: call it a dictatorship, So it's an easy target. Having
Speaker 1: said that, it's the second largest economy in the world,
Speaker 1: and it's the one that's grown the most UH in
Speaker 1: our lifetimes. So um, yeah, you can assail China. But
Speaker 1: just about every global business that we know of, UH
Speaker 1: does business in China. And it's two ways. I mean, Ohio,
Speaker 1: by the way, exports quite a bit of its stuff
Speaker 1: to China. It gets more of its stuff from China.
Speaker 1: But it's a two way trade, if you like. And
Speaker 1: that's the reality for a lot of states. Of course.
Speaker 1: Matt Winkler Bloomberg News as founder and editor in chief emeritus,
Speaker 1: I might add wrote this incredible column. Folks check it
Speaker 1: out on Bloomberg dot Com and of course Bloomberg Opinion. O.
Speaker 1: P I N I'll go on your Bloomberg terminal. We
Speaker 1: are very excited to have him in studio, and of
Speaker 1: course he has I'm sure more columns ahead of the
Speaker 1: midterms next week. We're very excited about this next guest
Speaker 1: joining us, especially ahead of mid terms, a really crucial moment,
Speaker 1: not just for the markets, but for politics as well.
Speaker 1: Is Governor Ned Lamont of the great state of Connecticut.
Speaker 1: He's running for re election in two of course, I
Speaker 1: guess Republican Bob Stefanowski, Governor, thank you as always for
Speaker 1: making the time to join us up. Myself and Nathan
Speaker 1: are are very very excited to have you. I want
Speaker 1: to start off with a question about your business background.
Speaker 1: This is at the end of the day Bloomberg Radio.
Speaker 1: You and your opponent both have an extensive career in
Speaker 1: business and finance. But I'm curious if you think the
Speaker 1: Democratic Party has become too anti business or their policies
Speaker 1: aren't promoting enough economic growth. That's certainly some of the
Speaker 1: criticism that the Democratic Party has faced. I'll tell you
Speaker 1: one thing gratty. I think they'd be well served to
Speaker 1: have more people with a business background. You see some
Speaker 1: in the governor's world, and I think that's really positive. UM.
Speaker 1: I worked very closely with Charlie Baker up in Massa Chosetts.
Speaker 1: We both have a business background, which I thought was
Speaker 1: very helpful. Gina Romando next door to me in Rhode
Speaker 1: Island before she went on the commerce And I do
Speaker 1: think I'm the first one UM in forever here in
Speaker 1: the state of Connecticut with a business. I started up
Speaker 1: a business forty years ago building telecommunication systems came out
Speaker 1: of the cable TV and it's the likes of experience
Speaker 1: that I bring to this job every day, knowing what
Speaker 1: it means to was small business, how our policies would
Speaker 1: impact a small business. You know, Governor, your fellow governor
Speaker 1: Democrat of California, Gavin Newsom, has made no secret of
Speaker 1: his feeling that your party, the Democrats, are failing when
Speaker 1: it comes to putting out a coherent economic message. Is
Speaker 1: that of you you share and if so, what can
Speaker 1: you do about it? I'll tell you what we've done
Speaker 1: here in Connecticut. Create something called Advanced CT so I
Speaker 1: get all the business leaders at the table. No more
Speaker 1: of this adversarial relationship or two very different spheres. There
Speaker 1: are best advocates for the state, Nathan, I mean, I'm
Speaker 1: I'm a homer. When a company is thinking about coming
Speaker 1: to the state or expanding the state, Um, you know,
Speaker 1: you know what I'm gonna say and how I'm gonna
Speaker 1: push up When I can send them this abody who's
Speaker 1: an advanced manufacturing or i T or life sciences, who's
Speaker 1: part of our advanced CT team. That's a good way
Speaker 1: to reinvent and sell the company. Walk us through perhaps
Speaker 1: some of the key voter issues here. I mean, we've
Speaker 1: talked about inflation, the economy. A lot of us from
Speaker 1: from Bloombergradi and bloomber Television are talking about just how
Speaker 1: much that is going to drive the drive voters to
Speaker 1: the polls. But it's also crime, it's abortion, it's immigration.
Speaker 1: What would you say is the number one issue that
Speaker 1: is driving voters? I think the economy front and center. Uh.
Speaker 1: Here in Connecticut we've been flat as a pancake for
Speaker 1: thirty years. We hadn't added a new job in thirty years. Uh,
Speaker 1: and we were going from physical crisis to fiscal crisis.
Speaker 1: It was a pretty lousy story. And the last you know,
Speaker 1: four or five years, we're beginning to turn things around,
Speaker 1: and we've had four balanced budgets in a row. We
Speaker 1: did it without raising taxes. That sent a message loud
Speaker 1: and clear to the business community. Connecticut beginning to get
Speaker 1: its fiscal act and u together build on that. We
Speaker 1: hadn't added jobs. Today, we've got created over a hundred
Speaker 1: thousand new jobs that were really working hard to fill
Speaker 1: right now. So when it comes to the economy, we're
Speaker 1: telling that story loud and clear. But there's no getting
Speaker 1: away from inflation and how that slams the middle class.
Speaker 1: And we did what we could. We put in place
Speaker 1: the biggest middle class tax cut in our history, and
Speaker 1: that's money that when the people's pocket. As early as
Speaker 1: this summer, Governor, there is some pushback from the Biden
Speaker 1: administration at the moment against the idea that perhaps the
Speaker 1: federal reserve needs a recession to really fully tackle on
Speaker 1: inflation and in doing that have unemployment rise. Is Connecticut
Speaker 1: prepared for such a move. We're as prepared as you
Speaker 1: can be. For the first time ever. I've got a
Speaker 1: three and a half billion dollar rainy day fund. What
Speaker 1: does that mean? It's about fifteen percent of our revenues.
Speaker 1: So I budgeted very conservatively. I assumed our capital gains
Speaker 1: was gonna be going down, not up this year already.
Speaker 1: Combine that with the fact that I got fiftum set
Speaker 1: aside in cash as necessary if our revenues shortfall. I
Speaker 1: don't want to do anything that upsets the apple cart.
Speaker 1: I don't want to raise any taxes. I don't want
Speaker 1: to slash education spending. That's what the ten previous governors
Speaker 1: have done. That's not what I'm gonna do. At the
Speaker 1: national level, Governor, as you know, there's talk about lifting
Speaker 1: the debt ceiling if Democrats take back control of Congress,
Speaker 1: although here from many pollsters, they don't think that's gonna happen.
Speaker 1: Given the fiscal policy that you're putting forward in Connecticut.
Speaker 1: Is there something that Democrats can take away from on
Speaker 1: a national level from what you're doing in the state
Speaker 1: of Connecticut. I think anything that gives people confidence you're
Speaker 1: dealing with your long term issues, just not the short term,
Speaker 1: makes the difference. It's a sense of direction. I don't
Speaker 1: want anybody playing games with the debt ceiling. I've been
Speaker 1: through this before as an observer when we're gonna shut
Speaker 1: down government if we don't get our way, and now
Speaker 1: as a governor, I can tell you how disastrous that
Speaker 1: would be if there was a real risk that a
Speaker 1: lot of the ongoing support we get from the federal
Speaker 1: government was to be cut off all of a sudden.
Speaker 1: So I really hope that's not a game that Congress
Speaker 1: is going to play. So, then, is the spending that
Speaker 1: we've seen from the BI part is an infrastructure Act
Speaker 1: the Inflation Reduction Act? Is that something that you support?
Speaker 1: That's up my support? Look, Nathan, I'm a We've got
Speaker 1: a hundred year old bridges and old roads, old rails,
Speaker 1: So this is a big deal for us. Every president
Speaker 1: seems to be talking about infrastructure. Of Biden's the first
Speaker 1: guy since Ike as far as I can figure out,
Speaker 1: to really be serious about it. Look, we're geographic. We're
Speaker 1: between New York and Boston. I can take twenty minutes
Speaker 1: off your commute in each direction. It'll take you know,
Speaker 1: five or six years to do it. But these are
Speaker 1: the types of investments that the Infrastructure Bill allows us
Speaker 1: to make. But these infrastructure investments were meant to kind
Speaker 1: of manifest for lack of a better term, over a
Speaker 1: much longer time horizon. We're talking potentially ten years. It's
Speaker 1: not just about kind of roads and bridges. It's about say,
Speaker 1: chip making facilities. Even I wonder, though, if there's a
Speaker 1: risk to the Democratic Party and to this massive infrastructure investment,
Speaker 1: if we not only see a Republican sweep in in
Speaker 1: this midterm election, but potentially a Republican president. I'd be
Speaker 1: very surprised if they wanted to roll back the Infrastructure
Speaker 1: Bill that that did have some bipartisans support, thank you,
Speaker 1: Mitt Romney and um that would surprise me. The Inflation
Speaker 1: Reduction Act. Maybe you think we're putting too much money
Speaker 1: into UM charging stations or resiliency to prevent against flooding.
Speaker 1: But I think after Hurricane Ian people say, hey, probably
Speaker 1: these are investments worth making. You know, I think you'd
Speaker 1: probably have grid luck that the Republicans take over Congress
Speaker 1: and not much had happened for the next two years.
Speaker 1: But we've got a lot of our plate right now.
Speaker 1: I've got to make sure it's appropriately invested. Of course,
Speaker 1: there's a lot of talk as well, Governor about rolling
Speaker 1: back entitlements, Social Security, Medicare Medicaid reform as well. You've
Speaker 1: even heard from Joe Mansion, the Democrat from West Virginia,
Speaker 1: saying that needs to be looked at as well. How
Speaker 1: much of a concern is that for you. I'll tell
Speaker 1: you what we've done here in Connecticut, Nathan. Um. You know,
Speaker 1: they were talking about walking away from our pension obligations
Speaker 1: to state employees we couldn't afford it, and to let
Speaker 1: them fend for themselves. We've done just the opposite. Um.
Speaker 1: We've paid down, not just made the required contributions to
Speaker 1: the state veget funds, but paid down about ten percent
Speaker 1: of it. We're look, we're no showcase. We still have
Speaker 1: a big unfunded liability, but we're a lot better off
Speaker 1: than we were before. And I really urged the federal
Speaker 1: government to take it seriously. Everybody sort of kicks the
Speaker 1: can on Social Security. You can't do that any longer.
Speaker 1: Look what Chip and Ronnie did back in nineteen eighty
Speaker 1: two or three. I think you'll see something like that
Speaker 1: going forward. That's a throwback tip and Ronnie, I want
Speaker 1: to ask you about that a little bit in terms
Speaker 1: of the polarization we're seeing as well. I mean when
Speaker 1: you think of Tip O'Neil and Ronald Reagan, you think
Speaker 1: about you know, there was a time when the parties
Speaker 1: could at least make a show of working together. Now
Speaker 1: we have so much polarization in this country and threats
Speaker 1: of political violence as well. Of course, we saw what
Speaker 1: happened with the Speaker's husband last week. How do we
Speaker 1: get past this polarization in our politics? Governor, you gotta
Speaker 1: turn down the rhetoric. First of all, Um, I don't
Speaker 1: get partisan much, but I think a lot of what
Speaker 1: Donald Trump was saying five years ago made the impermissible permissible.
Speaker 1: I can say here in Connecticut, I think we have
Speaker 1: lowered the temperature. I'm a business guy and a progressive,
Speaker 1: so I do pretty well with both wings, the Republican
Speaker 1: and Democrat. I work like heck to bring people together.
Speaker 1: We've done a fair amount on a bipartisan basis, and
Speaker 1: anything I could do in that way lowers the temperature,
Speaker 1: respect the voting process. Democracy is not a spectator sport. Governor.
Speaker 1: I want to ask you about violence in America at
Speaker 1: the moment, specifically politically motivated violence in America. There's a
Speaker 1: wide by partisan majority of Americans who are worried about
Speaker 1: this issue, and I believe there's a new Washington Post
Speaker 1: ABC News poll that shows nearly nine how to ten
Speaker 1: Americans are concerned that political divisions have intensified to the
Speaker 1: point that there's an increased risk of violence. Is something
Speaker 1: we've certainly seen here in New York City and across
Speaker 1: the country. I'm sad to say, but how do you
Speaker 1: tackle that? Social media has been a really um that
Speaker 1: pours gasoline on the flames, and people are watching that
Speaker 1: and a lot of things that you never say in person.
Speaker 1: You see gin dup uh. Some of that's political, some
Speaker 1: of it's just um, you know, threats. Somebody going online
Speaker 1: and making a threat about his school or something. What
Speaker 1: do you do? Do you shut it down? How do
Speaker 1: you how do you handle that? Um? Number one um,
Speaker 1: Like I said, said, lower the temperature. I try and
Speaker 1: lead by example. I'm not a very polarizing guy, at
Speaker 1: least I hope I'm not. I think that makes a difference.
Speaker 1: And I think as if you see something, say something.
Speaker 1: When I see some of the anti Semitic and racist
Speaker 1: things that get um in graffiti and other threats, you've
Speaker 1: got to say something loud and clear. You can't do
Speaker 1: everything by law. You gotta do a lot by attitude.
Speaker 1: Got about a minute left here, and we appreciate your time. Governor.
Speaker 1: We know you're focused, of course on your own re
Speaker 1: election race, but we want to get your take on
Speaker 1: what you see from the midterms. Lots of talk about
Speaker 1: a potential red wave. Is that what you're seeing from
Speaker 1: where you sit in Connecticut? I hope not. I um
Speaker 1: sometimes divided government's not all bad. You force people to
Speaker 1: the center and get things done. I think it was
Speaker 1: a big red wave that would just be um gridlock.
Speaker 1: I'm not sure that's what you want, but I think
Speaker 1: you know, for the Democrats, you've got to take care
Speaker 1: of the everyday bread and butter, kitchen tabe issues. That's
Speaker 1: inflation and that's a crime. You've got to hit those hard.
Speaker 1: We've done that here in Connecticut, and I think that's
Speaker 1: a message that Democrats to take around the country. The governor,
Speaker 1: we thank you so much for your time. Governor, A
Speaker 1: real pleasure to have you on Bloomberg Radio. Governor Ned
Speaker 1: Lamont of the great State of Connecticut. We thank you
Speaker 1: as always. Let's get the take from our one only
Speaker 1: Ed Ludlow are Bloomberg News West Coast correspondent. He joins
Speaker 1: us from San Francisco, once again going nationwide, from DC
Speaker 1: to New York to San Francisco. Ed, in the context
Speaker 1: of today's jobs report, where you saw such strength across
Speaker 1: the board, tech sending a very different message. Yeah, it's
Speaker 1: been a really strange week. Um, let's stay out loud
Speaker 1: that the layoffs at Twitter are sort of specific and
Speaker 1: anomalous in the context of other tech layoffs, right, because
Speaker 1: Musk is doing something specific there. But what we've heard
Speaker 1: in the last twenty four hours is Stripe, one of
Speaker 1: the biggest par companies, laying off fourteen percent of staff,
Speaker 1: Lift the Right sharing platform laying off percent of staff,
Speaker 1: Amazon pulling back on its corporate worker footprint and hiring. Um,
Speaker 1: and there are many others. Um it is. It is
Speaker 1: a picture incongruous with the macro picture painted by these
Speaker 1: jobs numbers. But then again, this is about tech and
Speaker 1: tech leaders and executives at these companies battening down the
Speaker 1: hatches because they're acting what we believe are signs of
Speaker 1: cracks in the strengths of the businesses that they're operating.
Speaker 1: Now that I know, even following all the developments with
Speaker 1: Twitter very closely since Elon Musk took over ownership. There's
Speaker 1: been so many headlines just crossing in the last hour
Speaker 1: here about employees getting two months severance pay once they
Speaker 1: get let go, and now Elon Musk tweeting that the
Speaker 1: company has seen a massive drop in revenue from advertisers
Speaker 1: pulling out. What do you make of some of these
Speaker 1: latest moves? Yes, so on on the staff them selves.
Speaker 1: I mean, let's just call this what this is. It's
Speaker 1: deeply unpleasant that many thousands of people are losing their jobs.
Speaker 1: I think that's worth stating. And that's not me giving
Speaker 1: an opinion. That's you know what I'm hearing from Twitter insiders, sources,
Speaker 1: and many people that have been laid off that I've
Speaker 1: spoken to. UM. The severance is not confirmed company wide.
Speaker 1: We believe it will be sixty days, but in New
Speaker 1: York City, for example, UM, I'm told that staff will
Speaker 1: be kept as non working employees through February second. They
Speaker 1: will be paid significant severance in that period, but they'll
Speaker 1: also stay long enough for another UM batch of restricted
Speaker 1: stock units to vest an rsu Cliff, which you know
Speaker 1: is additional compensation. Musk has not addressed the issues of layoffs.
Speaker 1: As you said, he tweeted that right now, he's not
Speaker 1: talking about in the past, he's talking about in this moment,
Speaker 1: Twitter's revenues being hit, advertisers are pulling back. That's a
Speaker 1: concession from him. And why will Elon Musk's mind. What
Speaker 1: he's saying is it's because these advertisers are being pressured
Speaker 1: by lobby groups who are concerned about content moderation on
Speaker 1: the platform. And I also read I believe when we're
Speaker 1: new reporting, which I want to say your name was
Speaker 1: on this, but I'm not sure, but this idea that
Speaker 1: a lot of these Twitter employees who haven't yet heard
Speaker 1: about their jobs actually joining unions, some of them even
Speaker 1: already forming a Twitter alumni network. What does this due
Speaker 1: to the credibility of Twitter as a company one it
Speaker 1: does ultimately want to hire in the future. Yeah. Look,
Speaker 1: before Musk took over Twitter as a company of people
Speaker 1: across the world, Asia, EMA, New York City, San Francisco,
Speaker 1: it had a very distinct company culture. Um. Much of
Speaker 1: that was carried over from Jack Dawsey's leadership into paragag Row.
Speaker 1: You know, some of the reporting we've done, for example,
Speaker 1: is that Musk has taken pretty severe actions like canceling
Speaker 1: what they call a day of rest, and there was
Speaker 1: so much readership at this story on the terminal, I
Speaker 1: couldn't believe it. So basically, you know, throughout the pandemic period,
Speaker 1: there was one day month where Twitter staff were given
Speaker 1: the day off to kind of recuperate, a day of rest,
Speaker 1: and must got rid of that. Um, he's kind of
Speaker 1: That's just one example of him. I'm doing the culture.
Speaker 1: So on the unionization effort, Um, what does it mean
Speaker 1: for Twitter long term? It's impossible to say. You know,
Speaker 1: all I can tell you is that there are lots
Speaker 1: of people UM at Twitter at all levels, whether it's sales, engineering, marketing,
Speaker 1: who loved that company and are desperately sad that they've
Speaker 1: been part of this layoff process. And and you know,
Speaker 1: many people, I'm told by sources, we're trying to find
Speaker 1: creative ways to stay. They volunteered for kind of the
Speaker 1: projects that Musk was pushing, like Vine or the Twitter
Speaker 1: Blue project, because they felt that if they volunteered for
Speaker 1: such a project, they might be seen as sort of
Speaker 1: willing and Musk might keep them. UM. But you know,
Speaker 1: unionized Asian efforts across technology have been a mixed bag
Speaker 1: this year. I think about Amazon for example, Guys, they've
Speaker 1: had some successes but also some failures to um in
Speaker 1: in unionizing different workplaces. Well just quickly, and we know
Speaker 1: how resisting elon Musk is to unionization just from what
Speaker 1: we've seen it. Tesla keeps going forward. And now when
Speaker 1: we have a class action lawsuit against the layoffs on unfolding,
Speaker 1: I mean, what could this mean for worker musk relations
Speaker 1: in the new Twitter? Yes, so um Musk was sued.
Speaker 1: Twitter was sued by a class action lawsuit here in
Speaker 1: San Francisco. The accusation is that workers say the company
Speaker 1: did these layoffs with the now without giving enough notice
Speaker 1: based on federal law. I'm talking about warn notices right. Um.
Speaker 1: We actually are still trying to report this out, but
Speaker 1: I imagine that there will be a number of lawsuits
Speaker 1: over the timing and how these layoffs were communicated, both
Speaker 1: in line with federal and state laws. Bloomers at Luve
Speaker 1: Law always a pleasure of joining us from San Francisco.
Speaker 1: Never a day of rest. I don't know when he sleeps.
Speaker 1: By the way, breaking news left and right on on
Speaker 1: some of this for the organization. We thank you as
Speaker 1: always for your time for your insight, Nathan. An exciting
Speaker 1: day for us, headline number on for the for the
Speaker 1: for the Job's day. For the market, perhaps not so
Speaker 1: much because it doesn't feel like there's a clear message.
Speaker 1: Two sixty one thousand jobs on an estimate of just one, right,
Speaker 1: A little bit of a mixed bag when you see
Speaker 1: that kind of strong creation number on the payrolls and
Speaker 1: also a little bit of an uptick on the unemployment
Speaker 1: rate as well. It's uh, maybe giving investors a little
Speaker 1: bit of direction to look for, but certainly the direction
Speaker 1: for the markets is up, up, up at the moment.
Speaker 1: It is even as we start to see average hourly
Speaker 1: earnings to hire as well the labor force participation rate
Speaker 1: coming in line with estimates. But are we where we
Speaker 1: need to be? And is the Federal Reserve happy with
Speaker 1: this number. Let's bring in our next guest here, Jeffrey Cleveland,
Speaker 1: chief economists over at Payden and Regal, to get his take. Jeffrey,
Speaker 1: thank you as always for joining us this number that
Speaker 1: we got from the Job's Report. From a fiscal perspective,
Speaker 1: the Biden administration clearly celebrating more jobs in America. But
Speaker 1: how much much of a margin of deceleration do we
Speaker 1: need to really see the Federal r reserve excuse me,
Speaker 1: perhaps take their foot off the book, Gospital. Well, I mean,
Speaker 1: I tell you there's something for everyone in this report.
Speaker 1: If you want to be bullish, you point to the
Speaker 1: non farm payroll beat. You want to be bearished, then
Speaker 1: maybe you point to the household survey in the rise
Speaker 1: in the unemployment rate. So you can probably tell any
Speaker 1: story you want to tell. I would tell you, though
Speaker 1: you probably want to put more emphasis on the establishment survey.
Speaker 1: And you know, if we're adding jobs, you know, the
Speaker 1: three months average of almost two nine thousand jobs per
Speaker 1: months in the last three months, this really strong job growth. Um,
Speaker 1: the Fed you've talked to you listen to share Powell
Speaker 1: the other day talking about the labor market being out
Speaker 1: of balance, and um, certainly you know from the payroll
Speaker 1: data today it's just confirmation of that you have very
Speaker 1: strong job growth. So I think the Fed probably prefer
Speaker 1: much slower job growth enough to get unemployment rate up
Speaker 1: UM maybe a percentage point. So that would that would
Speaker 1: mean I mean, if you do the math, you need
Speaker 1: job growth really to stall out to fall under a
Speaker 1: hundred thousand per month, and we're not seeing that two
Speaker 1: hundred today, you know, Jeffrey. I wonder if a lot
Speaker 1: of investors sort of took note of the commentary today
Speaker 1: from Richmond FED President Thomas Barkins saying that we can
Speaker 1: credibly say now that the FED has its foot on
Speaker 1: the break, does this job's report can keep up the
Speaker 1: case for them that they can start to slow down
Speaker 1: on rates or does there need to be more data
Speaker 1: coming in. I don't think that. I think it's too
Speaker 1: soon to jump to that conclusion, but I have to
Speaker 1: tell you, I mean again, you look at that household survey.
Speaker 1: You could say, well, the unemployment rate rose a bit,
Speaker 1: that's a sign of the economy slowing. I don't know
Speaker 1: if I would say that it's very choppy, noisy survey. Um,
Speaker 1: the unemployment rate has been kind of bouncing around where
Speaker 1: it is now for for the better part of the
Speaker 1: last six months. The household serve is really choppy. Um,
Speaker 1: it's had some big gains and some in down months.
Speaker 1: I don't know. I wouldn't I wouldn't confirm that. Also,
Speaker 1: the wage growth data has slowed maybe a little bit
Speaker 1: month to month. I think the increase today was point
Speaker 1: four percent month to month, a little bit slower than
Speaker 1: we saw, you know, earlier this year and then last year,
Speaker 1: but point four month a month is still pretty strong
Speaker 1: wage growth. We're hanging out around five percent year on
Speaker 1: year wage growth, and that is not consistent, in my view,
Speaker 1: with two percent inflation. I think it's far too soon
Speaker 1: for the Fed to say they're they're putting the brakes
Speaker 1: on here. Thank you, Jeffrey Cleveland. I'm so glad you
Speaker 1: said that, because I literally have asked a lot of
Speaker 1: economists on the show whether to a two percent inflation
Speaker 1: target is actually reasonable um um in the long term
Speaker 1: when you have this sticky wage inflation, uh that that
Speaker 1: won't really go away. But I'm curious how that squares with,
Speaker 1: for example, the Biden administrations moves to on shore a
Speaker 1: lot of manufacturing on shore, a lot of production. Doesn't
Speaker 1: that just create um a tailwind if you will, for
Speaker 1: labor market that needs to have some of the steam
Speaker 1: let out. It depends. I mean, in terms of inflation,
Speaker 1: we have benefited from twenty five or thirty years of
Speaker 1: globalization and technology. Where are our goods? The good side
Speaker 1: of your CPI ledger if you will. Goods prices were
Speaker 1: falling for most of that period. Um, so if on
Speaker 1: shoring means it's going to be much more expensive to
Speaker 1: produce goods, then you know that could be a problem
Speaker 1: for overall inflation. The reason we had to present inflation
Speaker 1: for the better part of two decades, you know, leading
Speaker 1: into COVID, was that goods prices were falling and that
Speaker 1: was off setting roughly three percent services inflation. So it
Speaker 1: is to get back to that scenario. To get back
Speaker 1: to that two percent story, you probably need to see
Speaker 1: goods prices falling again, because I don't think we're going
Speaker 1: to see a big distileration and services side. I don't
Speaker 1: know if that makes sense, but that's that's how I
Speaker 1: think about it. If we can on shore and still
Speaker 1: produce goods very very cheaply, then and maybe that will
Speaker 1: work out fine for the inflation story. We just have
Speaker 1: to see. I think it's too soon to have a
Speaker 1: really strong conviction on that on that part of the story.
Speaker 1: So just thirty seconds left here, Jeffrey is to percent
Speaker 1: a realistic inflation target not in the next twelve months, No,
Speaker 1: I don't think so, just because what we're seeing on
Speaker 1: the services side um and then the good side. We've
Speaker 1: we've seen goods prices to decelerate, but there not enough,
Speaker 1: and we're seeing very strong, as you know, services price growth,
Speaker 1: everything for medical care services to rents. We'll get an
Speaker 1: update next week. Right, I'm looking for another month of
Speaker 1: point five percent months and months growth, so that is
Speaker 1: very strong inflation. So it's it's hard to see two
Speaker 1: percent in the next year. I'm so glad we had
Speaker 1: this conversation, Jeffrey Cleveland. I just feel very relieved that
Speaker 1: someone agrees with me. Jeffrey Cleveland, Chief Economists over at
Speaker 1: Paydon Regal. We thank you, as always for your insight
Speaker 1: in your time on this job day in America. Thanks
Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
Speaker 1: and listen to interview is an Apple Podcasts or whatever
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
Speaker 1: at Matt Miller three. On Fall Sweeney, I'm on Twitter
Speaker 1: at pt Sweeney before the podcast. You can always catch
Speaker 1: us worldwide at Bloomberg Radio