1 00:00:02,440 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:08,280 --> 00:00:12,160 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 3 00:00:12,240 --> 00:00:15,320 Speaker 2: weekdays at ten am Eastern on Apple, Cardplay and Android 4 00:00:15,320 --> 00:00:18,440 Speaker 2: Auto with the Bloomberg Business app. Listen on demand wherever 5 00:00:18,480 --> 00:00:22,320 Speaker 2: you get your podcasts, or watch us live on YouTube. 6 00:00:23,440 --> 00:00:25,720 Speaker 3: Let's take a little deeper into that labor data we 7 00:00:25,760 --> 00:00:29,600 Speaker 3: got today. We're joined by Joni Biley, chief workforce analyst 8 00:00:30,080 --> 00:00:33,560 Speaker 3: at She's also the chair of the American Staffing Association, 9 00:00:34,040 --> 00:00:36,760 Speaker 3: So we appreciate chatting with Jony every time we get 10 00:00:36,800 --> 00:00:39,280 Speaker 3: these jobs numbers. Jenny, what do you make of this 11 00:00:39,360 --> 00:00:41,800 Speaker 3: number that the print right across that the you know, 12 00:00:41,960 --> 00:00:43,800 Speaker 3: the surface looks really solid. 13 00:00:45,000 --> 00:00:47,599 Speaker 1: Yeah, well, hello Paul and Emily. Great to be with 14 00:00:47,640 --> 00:00:52,240 Speaker 1: you today. Really interesting report this morning. You know, the 15 00:00:52,280 --> 00:00:56,240 Speaker 1: headline number looks very strong, you know, over two hundred 16 00:00:56,280 --> 00:01:02,600 Speaker 1: and fifty thousand, and it's interesting listening to Austin Gooles. 17 00:01:02,600 --> 00:01:05,840 Speaker 1: We talk about, you know, the numbers and how this 18 00:01:05,959 --> 00:01:09,120 Speaker 1: might relieve you know, a lot of pressure. But I 19 00:01:09,160 --> 00:01:11,280 Speaker 1: have a little bit of a different take when you 20 00:01:11,319 --> 00:01:15,240 Speaker 1: dig into these numbers. You know, most of the jobs 21 00:01:15,240 --> 00:01:19,559 Speaker 1: that were actually created in the month of September were 22 00:01:19,920 --> 00:01:23,960 Speaker 1: in the healthcare sector and then also in the leisure 23 00:01:24,000 --> 00:01:28,440 Speaker 1: and hospitality sector. Those two sectors alone had about one 24 00:01:28,560 --> 00:01:33,039 Speaker 1: hundred and sixty thousand jobs created. So then if you 25 00:01:33,200 --> 00:01:35,720 Speaker 1: dig into the details here, we can see, you know, 26 00:01:35,800 --> 00:01:39,920 Speaker 1: construction was good, twenty five thousand jobs created, the government 27 00:01:39,959 --> 00:01:43,560 Speaker 1: added thirty one thousand jobs. But then we're not seeing 28 00:01:44,160 --> 00:01:48,080 Speaker 1: robust growth in many of the other sectors. And so 29 00:01:48,680 --> 00:01:53,440 Speaker 1: I think that headline number can be a bit misleading 30 00:01:53,680 --> 00:01:56,920 Speaker 1: when you look at the actual data that is in 31 00:01:56,960 --> 00:01:58,440 Speaker 1: the Establishment survey. 32 00:01:59,640 --> 00:02:03,800 Speaker 4: So what then is it telling you about the current 33 00:02:03,880 --> 00:02:07,160 Speaker 4: state of the US economy when you do seem to 34 00:02:07,440 --> 00:02:10,760 Speaker 4: have noticed this kind of maybe distorted picture of the 35 00:02:10,840 --> 00:02:13,280 Speaker 4: labor market at least just looking at the numbers and 36 00:02:13,320 --> 00:02:14,600 Speaker 4: the data that we got this morning. 37 00:02:15,639 --> 00:02:18,600 Speaker 1: Yes, I think there are some sectors that are doing well. 38 00:02:19,400 --> 00:02:22,760 Speaker 1: I'd like to see growth come back, you know, in 39 00:02:22,800 --> 00:02:27,720 Speaker 1: the manufacturing sector, stronger numbers in the professional and business 40 00:02:27,800 --> 00:02:32,040 Speaker 1: service sector. We still saw a decline in September of 41 00:02:32,080 --> 00:02:37,600 Speaker 1: almost fourteen thousand jobs in the temporary help staffing sector. 42 00:02:37,600 --> 00:02:40,000 Speaker 1: And that's something that I always pay attention to because 43 00:02:40,000 --> 00:02:43,440 Speaker 1: it's part of the industry that I'm in. So Emily 44 00:02:43,480 --> 00:02:45,760 Speaker 1: I think what it's telling me is that we're still 45 00:02:45,919 --> 00:02:50,399 Speaker 1: in a soft job market. Though some of these indicators 46 00:02:50,440 --> 00:02:53,320 Speaker 1: look good, and I do believe, you know, Austin did 47 00:02:53,400 --> 00:02:57,280 Speaker 1: mention it, there are other indicators that are showing we're 48 00:02:57,320 --> 00:03:00,919 Speaker 1: still in that soft job market. Maybe we've gotten to 49 00:03:01,000 --> 00:03:03,840 Speaker 1: a point where we do have that soft landing and 50 00:03:03,960 --> 00:03:06,960 Speaker 1: things will start to improve over the next few months. 51 00:03:07,360 --> 00:03:10,440 Speaker 1: And I certainly hope that that is the case, But 52 00:03:10,600 --> 00:03:13,399 Speaker 1: I don't think that we are out of the woods 53 00:03:13,800 --> 00:03:14,720 Speaker 1: just yet. 54 00:03:15,120 --> 00:03:18,400 Speaker 3: So that's a more cautious take than we've heard throughout 55 00:03:18,400 --> 00:03:20,560 Speaker 3: the morning here, Joony. Just in terms of this market, 56 00:03:20,560 --> 00:03:22,600 Speaker 3: as you characterize the labor markets, maybe a little bit 57 00:03:22,600 --> 00:03:27,080 Speaker 3: softer than it appears here. What are people missing do 58 00:03:27,120 --> 00:03:27,440 Speaker 3: you think? 59 00:03:28,960 --> 00:03:31,440 Speaker 1: Well, I think if you look at the report, you know, 60 00:03:31,680 --> 00:03:34,840 Speaker 1: and seeing almost eighty thousand jobs come back in leisure 61 00:03:34,920 --> 00:03:41,040 Speaker 1: and hospitality, those jobs are lower leveled skilled jobs and 62 00:03:41,240 --> 00:03:45,800 Speaker 1: lower wage positions. So what we're not seeing come back 63 00:03:45,920 --> 00:03:52,240 Speaker 1: yet are the higher skilled, more professional positions. Certainly in 64 00:03:52,280 --> 00:03:56,680 Speaker 1: the healthcare sector that remains very strong, but we're not 65 00:03:56,760 --> 00:04:00,920 Speaker 1: seeing jobs like in accounting and finance and and really 66 00:04:00,960 --> 00:04:04,760 Speaker 1: that stem field, which there is a strong you know, 67 00:04:04,800 --> 00:04:08,120 Speaker 1: demand in the future for you know, the skilled jobs 68 00:04:08,280 --> 00:04:11,960 Speaker 1: in science and engineering, but we're not seeing a ton 69 00:04:12,000 --> 00:04:16,719 Speaker 1: of job creation in those sectors right now. I also 70 00:04:16,800 --> 00:04:20,880 Speaker 1: is very surprised that when you look at, you know, 71 00:04:20,960 --> 00:04:26,120 Speaker 1: some of the numbers in like transportation and warehousing, those 72 00:04:26,240 --> 00:04:29,400 Speaker 1: numbers were very soft, which tells me we're going into 73 00:04:29,480 --> 00:04:34,120 Speaker 1: the retail season. We're not seeing you know, the companies 74 00:04:34,240 --> 00:04:39,839 Speaker 1: really get ready for a strong, you know, retail holiday season. 75 00:04:40,040 --> 00:04:44,760 Speaker 1: We're also seeing employers that normally hire this time you know, 76 00:04:44,960 --> 00:04:47,480 Speaker 1: of the year and start to ramp up for the holidays. 77 00:04:48,400 --> 00:04:51,800 Speaker 1: Their projections are a bit softer of the amount of 78 00:04:51,839 --> 00:04:54,600 Speaker 1: people that they are going to need. So that's where 79 00:04:54,640 --> 00:04:56,120 Speaker 1: I think I take a little bit more of a 80 00:04:56,160 --> 00:04:59,560 Speaker 1: cautious approach. I'm not saying that we're going to fall 81 00:04:59,600 --> 00:05:04,840 Speaker 1: off cliff by any means, but we still need you know, 82 00:05:05,000 --> 00:05:08,520 Speaker 1: a few more months of job growth and really start 83 00:05:08,560 --> 00:05:12,040 Speaker 1: to see some of that growth come from other sectors, 84 00:05:12,680 --> 00:05:16,120 Speaker 1: you know, if you know, in addition to healthcare and 85 00:05:16,200 --> 00:05:17,440 Speaker 1: leisure and hospitality. 86 00:05:17,640 --> 00:05:19,359 Speaker 3: All right, Jenny, thank you so much for joining us. 87 00:05:19,400 --> 00:05:21,920 Speaker 3: We really appreciate getting your perspective when we try to 88 00:05:21,960 --> 00:05:25,120 Speaker 3: break down some of these jobs numbers here today Jonny Biley. 89 00:05:25,520 --> 00:05:27,960 Speaker 3: She's a division president at employee Bridge and she's also 90 00:05:28,040 --> 00:05:31,360 Speaker 3: the chair of the American Staffing Association. So a great 91 00:05:31,400 --> 00:05:34,800 Speaker 3: voice to speak to speak with on these important job stays. 92 00:05:36,279 --> 00:05:40,159 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 93 00:05:40,240 --> 00:05:43,760 Speaker 2: weekdays at ten am Eastern on applecar Play and Android 94 00:05:43,800 --> 00:05:46,960 Speaker 2: Otto with the Bloomberg Business. You can also listen live 95 00:05:47,040 --> 00:05:50,240 Speaker 2: on Amazon Alexa from our flagship New York station, Just 96 00:05:50,279 --> 00:05:52,839 Speaker 2: Say Alexa play Bloomberg eleven. 97 00:05:52,640 --> 00:05:56,560 Speaker 3: Thirty again on the labor front of the print here, 98 00:05:56,560 --> 00:06:00,560 Speaker 3: as Lisa was just just reporting very strong jobs or 99 00:06:00,760 --> 00:06:03,440 Speaker 3: print for the non farm payrolls today, much better than expected. 100 00:06:03,960 --> 00:06:07,479 Speaker 3: Some good unemployment rate numbers as well. Let's check on 101 00:06:07,520 --> 00:06:09,279 Speaker 3: Ben Emmons because we want to see what this means 102 00:06:09,279 --> 00:06:10,960 Speaker 3: for the Federal Reserve. Ben Emmons is a founder and 103 00:06:11,040 --> 00:06:14,800 Speaker 3: chief investment officer of Fed Watch Advisors, joining us from Washington, DC. 104 00:06:15,320 --> 00:06:20,080 Speaker 3: So Ben, again, a strong labor number today non farm payrolls. 105 00:06:20,400 --> 00:06:21,840 Speaker 3: How do you think this Federal Reserve is going to 106 00:06:21,960 --> 00:06:24,560 Speaker 3: interpret this data? 107 00:06:24,720 --> 00:06:28,200 Speaker 5: Hi? Paul Well listening to Austin Goolsby, You know he 108 00:06:28,560 --> 00:06:31,880 Speaker 5: does continue to indicate that more cuts coming, right, I 109 00:06:31,920 --> 00:06:35,840 Speaker 5: think they feel that although these could be sometimes outliers 110 00:06:36,200 --> 00:06:39,040 Speaker 5: on a multi basis, it's interesting it still happens because 111 00:06:39,080 --> 00:06:42,080 Speaker 5: of the pandemic effect with all this distortion in the 112 00:06:42,080 --> 00:06:46,200 Speaker 5: household versus establishment survey. It's nonetheless a labor market does 113 00:06:46,240 --> 00:06:48,760 Speaker 5: show the vation. Like if you look at the median 114 00:06:49,760 --> 00:06:53,000 Speaker 5: duration of unemployment and there's now risen to twenty two weeks, 115 00:06:53,440 --> 00:06:56,480 Speaker 5: that's the highest since I think twenty twenty two. If 116 00:06:56,520 --> 00:06:58,719 Speaker 5: you take you know, the percentage of people you know 117 00:06:58,800 --> 00:07:00,880 Speaker 5: of twenty seven weeks, so long we're out of work, 118 00:07:01,040 --> 00:07:03,359 Speaker 5: there's no our twenty three percent of total employed. So 119 00:07:03,800 --> 00:07:06,800 Speaker 5: there's some underlying deterioration. I think this feat is keen 120 00:07:06,839 --> 00:07:10,480 Speaker 5: on bringing that back in and trying to control for 121 00:07:10,560 --> 00:07:13,040 Speaker 5: the worst thing of the picture given the restrictive stance. 122 00:07:13,040 --> 00:07:14,760 Speaker 5: So I think the fatal could either look at this 123 00:07:14,840 --> 00:07:17,400 Speaker 5: saying we have room to cut. This is a good 124 00:07:17,480 --> 00:07:20,160 Speaker 5: labor market, but we can cut rage because we just 125 00:07:20,200 --> 00:07:23,080 Speaker 5: have very restrictive policy to keep the labor market in 126 00:07:23,120 --> 00:07:23,480 Speaker 5: good ship. 127 00:07:24,520 --> 00:07:26,800 Speaker 4: I'm wondering, if you know, a lot of people talk 128 00:07:26,840 --> 00:07:30,480 Speaker 4: about how monetary policy happens and comes with a lag, 129 00:07:30,880 --> 00:07:34,280 Speaker 4: and yet we're only about a month after the first 130 00:07:34,440 --> 00:07:37,240 Speaker 4: rate cut. So Ben, would you say that the rate 131 00:07:37,280 --> 00:07:41,480 Speaker 4: cut is already working or is something else also driving 132 00:07:41,720 --> 00:07:44,000 Speaker 4: the strength in the labor market right now? 133 00:07:45,680 --> 00:07:48,600 Speaker 5: So I think it's part of the signaling effect from raycuts. 134 00:07:48,720 --> 00:07:50,960 Speaker 5: If you step back actually going to the June July 135 00:07:51,160 --> 00:07:54,360 Speaker 5: period when all that softness start to come through and 136 00:07:54,400 --> 00:07:56,880 Speaker 5: the fat speaker start also look at that and start 137 00:07:56,960 --> 00:07:59,840 Speaker 5: to talk about raycuts, all that signaling happened. If you 138 00:08:00,080 --> 00:08:03,680 Speaker 5: look at the ISM data that's coming through now, including 139 00:08:03,720 --> 00:08:06,480 Speaker 5: regional data, you see all the forward looking indicators some 140 00:08:06,560 --> 00:08:08,960 Speaker 5: sort of a turn upwards, right, and that's your new 141 00:08:09,120 --> 00:08:12,840 Speaker 5: orders and inventories, and that's sort of like cyclical indicators. 142 00:08:13,400 --> 00:08:17,360 Speaker 5: And again bring basically back each time to Bostic, who 143 00:08:17,600 --> 00:08:19,960 Speaker 5: who are so outspoken on this, saying that they're in 144 00:08:20,000 --> 00:08:22,560 Speaker 5: their surveys with local businesses. They got a lot of 145 00:08:22,560 --> 00:08:24,480 Speaker 5: feedback like, okay, fed, if you're going to cut rates, 146 00:08:24,520 --> 00:08:26,160 Speaker 5: we're going to see a lot more sales activity, a 147 00:08:26,200 --> 00:08:28,880 Speaker 5: lot of things going happening. And I think that may 148 00:08:28,880 --> 00:08:31,800 Speaker 5: be a reason. Right, So in surveys it shows up. 149 00:08:32,280 --> 00:08:35,720 Speaker 5: Whereas this employment report itself. I was talking to your 150 00:08:35,760 --> 00:08:38,880 Speaker 5: economists and A Wong about this. There's some alternative data 151 00:08:38,960 --> 00:08:41,600 Speaker 5: out there that's that indicated that that may have been 152 00:08:41,640 --> 00:08:44,320 Speaker 5: a really strong month, but it could be because of 153 00:08:44,480 --> 00:08:47,840 Speaker 5: just a lot of shifts happening underneath. So I think 154 00:08:48,000 --> 00:08:50,960 Speaker 5: the basis points of custo that we just had that 155 00:08:51,120 --> 00:08:53,640 Speaker 5: is just hitting the economy as we speak, but that 156 00:08:53,720 --> 00:08:56,280 Speaker 5: may take some time for truly works through. Why this 157 00:08:56,400 --> 00:08:58,960 Speaker 5: fat I think is not that they're cutting rates from 158 00:08:58,960 --> 00:09:02,400 Speaker 5: here despite this number, but the signaling of cuts is 159 00:09:02,440 --> 00:09:05,559 Speaker 5: interesting that is coming through the fore looking indicators. 160 00:09:05,960 --> 00:09:08,040 Speaker 3: Hey, Ben, we kind of came into this morning with 161 00:09:08,440 --> 00:09:10,960 Speaker 3: a reasonable likelihood that fifty basis points was on the 162 00:09:10,960 --> 00:09:12,560 Speaker 3: table for the next meeting. I'm looking at the work 163 00:09:12,600 --> 00:09:15,800 Speaker 3: function here and that seems to be kind of off 164 00:09:15,800 --> 00:09:18,080 Speaker 3: the table. Seems to be pricing in a twenty five 165 00:09:18,080 --> 00:09:20,800 Speaker 3: bas point cut in the November meeting. How do you 166 00:09:20,800 --> 00:09:23,160 Speaker 3: expect the Federal Reserve to proceed over the next you know, 167 00:09:23,160 --> 00:09:25,040 Speaker 3: three four to five meetings as we get into next year. 168 00:09:26,520 --> 00:09:29,520 Speaker 5: Yeah, these these probabilities are so fluctuating. In Paul, like, 169 00:09:29,960 --> 00:09:32,040 Speaker 5: I looked at that too. It was thirty percent before 170 00:09:32,040 --> 00:09:34,280 Speaker 5: the number now dropped to seven and a half percent 171 00:09:34,640 --> 00:09:38,160 Speaker 5: for fifty base point cut. So it is definitely sensitive 172 00:09:38,200 --> 00:09:41,080 Speaker 5: to anything that's stronger of data, very versus the weaker 173 00:09:41,120 --> 00:09:44,520 Speaker 5: of data. I think that's the mechanics of the markets. 174 00:09:45,120 --> 00:09:47,160 Speaker 5: So the Fed will ultimately come down to the back, 175 00:09:47,240 --> 00:09:50,480 Speaker 5: but they didn't at this meeting at this minute sound 176 00:09:50,480 --> 00:09:52,600 Speaker 5: in a couple of weeks, I think they just continue 177 00:09:52,640 --> 00:09:54,959 Speaker 5: to look at like where the policy is in broader 178 00:09:55,040 --> 00:09:57,760 Speaker 5: sense of how restrictive it really is. And it looks 179 00:09:57,800 --> 00:10:02,000 Speaker 5: since the last two CPI reposts reports the real interest 180 00:10:02,040 --> 00:10:03,719 Speaker 5: rate that the fat funds rate has only risen a 181 00:10:03,760 --> 00:10:06,280 Speaker 5: little further from here, so it's gotten even more room 182 00:10:06,360 --> 00:10:10,080 Speaker 5: to cut rates. We get CBI on Wednesday, I believe 183 00:10:10,400 --> 00:10:12,120 Speaker 5: it's probably going to be not a sole of a 184 00:10:12,200 --> 00:10:14,719 Speaker 5: CPI data either, so that that real FET funds rate 185 00:10:14,840 --> 00:10:18,120 Speaker 5: remains quite high, drifting towards three percent. I think that 186 00:10:18,280 --> 00:10:20,800 Speaker 5: is what they're looking at to say we can take 187 00:10:20,840 --> 00:10:24,560 Speaker 5: some off, so we'll keep cutting rates until at some 188 00:10:24,600 --> 00:10:28,920 Speaker 5: point that does information that shows some stabilization maybe turning higher, 189 00:10:29,520 --> 00:10:34,320 Speaker 5: and you're seeing the economy accelerating, really accelerating growth, what 190 00:10:34,360 --> 00:10:34,880 Speaker 5: does that. 191 00:10:34,800 --> 00:10:38,120 Speaker 4: Mean for investing in bonds? I mean today I'm looking 192 00:10:38,200 --> 00:10:41,120 Speaker 4: at you know, the two year up fifteen point eight 193 00:10:41,160 --> 00:10:44,520 Speaker 4: basis points the ten year up ten basis points. I 194 00:10:44,559 --> 00:10:47,280 Speaker 4: guess those expectations that maybe the Fed is not going 195 00:10:47,320 --> 00:10:51,680 Speaker 4: to cut as much. Is that bad for people trying 196 00:10:51,679 --> 00:10:52,840 Speaker 4: to make money in bonds here? 197 00:10:54,400 --> 00:10:57,640 Speaker 5: It could be because you know that when we were 198 00:10:57,679 --> 00:11:00,319 Speaker 5: at roughly the lows on the tenure was somewhere three 199 00:11:00,440 --> 00:11:03,400 Speaker 5: sixty five or so a few weeks ago. I mean, 200 00:11:03,400 --> 00:11:06,040 Speaker 5: I'll almost back to four percent, right, so call it 201 00:11:06,080 --> 00:11:10,199 Speaker 5: thirty five basis points of change. You know, the industry 202 00:11:10,320 --> 00:11:13,079 Speaker 5: sensitivity bounds is still really high, and noted from the 203 00:11:13,600 --> 00:11:17,440 Speaker 5: index duration, it's a sensitivity of interest. Rates has climbed 204 00:11:17,520 --> 00:11:20,280 Speaker 5: up again since we had this decline from interst rates 205 00:11:20,320 --> 00:11:22,680 Speaker 5: from the spring from April all the way into the summer. 206 00:11:23,360 --> 00:11:25,080 Speaker 5: And so it does show that if you're getting a 207 00:11:25,080 --> 00:11:28,600 Speaker 5: little moving rates higher, you immediately get these accruing losses. 208 00:11:29,080 --> 00:11:33,280 Speaker 5: So be mindful of this volatility that's that's basically caused 209 00:11:33,280 --> 00:11:36,839 Speaker 5: by this interstrate sensitivity. The short end, the yucave alwys 210 00:11:36,880 --> 00:11:41,280 Speaker 5: remain a bit more attractive because the yucreve has slowly normalized, 211 00:11:41,280 --> 00:11:43,680 Speaker 5: but not as much. But there's still much more yield there. 212 00:11:43,880 --> 00:11:45,720 Speaker 5: That's been said a lot, but I think I say 213 00:11:45,720 --> 00:11:49,280 Speaker 5: on that that that's a view too, But bouncing itself 214 00:11:49,320 --> 00:11:51,960 Speaker 5: will remain at the basically at the whim of this 215 00:11:52,160 --> 00:11:56,000 Speaker 5: data movement. So there's volatility in bounds that's higher than 216 00:11:56,280 --> 00:11:59,000 Speaker 5: we have pre pandemic, which makes it not always that 217 00:11:59,120 --> 00:12:01,959 Speaker 5: easy to go all in bounce, and that says that 218 00:12:02,000 --> 00:12:04,400 Speaker 5: would be more careful with long duration bounds here. 219 00:12:04,880 --> 00:12:06,760 Speaker 3: All right, Ben, thanks so much for joining us. Always 220 00:12:06,760 --> 00:12:08,559 Speaker 3: appreciate getting a few minutes of your time. Ben Emmon's 221 00:12:08,600 --> 00:12:12,080 Speaker 3: chief investment officer and founder at fed Watch Advisors. 222 00:12:13,480 --> 00:12:17,360 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 223 00:12:17,440 --> 00:12:20,160 Speaker 2: weekdays at ten am Eastern on Apple car Playing and 224 00:12:20,280 --> 00:12:23,160 Speaker 2: broud Otto with the Bloomberg Business app. Listen on demand 225 00:12:23,200 --> 00:12:29,000 Speaker 2: wherever you get your podcasts, or watch us live on YouTube. Again. 226 00:12:29,120 --> 00:12:31,200 Speaker 3: The story of the day, one of the economic stories 227 00:12:31,240 --> 00:12:34,599 Speaker 3: of the day is certainly that job's number and he 228 00:12:34,640 --> 00:12:36,480 Speaker 3: came in really strong and non farm payroll here. So 229 00:12:36,520 --> 00:12:38,199 Speaker 3: let's break it down with somebody who does this stuff 230 00:12:38,200 --> 00:12:39,920 Speaker 3: for a living, Tom Gimble. He's a founder and board 231 00:12:39,920 --> 00:12:43,319 Speaker 3: member of LASALM Network. LASAL is founded in nineteen ninety 232 00:12:43,320 --> 00:12:45,920 Speaker 3: eight and it is one of the leading staffing and 233 00:12:45,960 --> 00:12:49,760 Speaker 3: recruiting firms in the country. So this is Tom's business. 234 00:12:49,840 --> 00:12:52,720 Speaker 3: Hey Tom, you guys put up being the labor markets 235 00:12:52,760 --> 00:12:54,080 Speaker 3: a pretty strong data point here today. 236 00:12:54,080 --> 00:12:54,719 Speaker 6: What do you make of it? 237 00:12:55,600 --> 00:12:57,320 Speaker 7: Well, I think number one, I went to the UVA 238 00:12:57,400 --> 00:12:59,400 Speaker 7: of the Rocky at the University of Colorado. Oh yeah, 239 00:12:59,559 --> 00:13:01,200 Speaker 7: we can get if we can get a go buff's 240 00:13:01,200 --> 00:13:01,640 Speaker 7: real quick. 241 00:13:01,920 --> 00:13:03,480 Speaker 3: I bet go buffs, go buffs. 242 00:13:04,000 --> 00:13:09,120 Speaker 7: There we go. Now listen, this report is If you're 243 00:13:09,160 --> 00:13:13,280 Speaker 7: anything but optimistic after this report, you're crazy. This is 244 00:13:13,559 --> 00:13:19,800 Speaker 7: an unbelievable number with unemployment dropping and higher than expected 245 00:13:19,880 --> 00:13:23,800 Speaker 7: jobs numbers, and it's a really good sign for the economy. 246 00:13:24,480 --> 00:13:26,200 Speaker 3: So what do you make Tom? Where a is some 247 00:13:26,240 --> 00:13:27,280 Speaker 3: of this demand coming from? 248 00:13:27,280 --> 00:13:27,680 Speaker 6: There are a lot of. 249 00:13:27,640 --> 00:13:29,600 Speaker 3: People that want to maybe poke a little bit of 250 00:13:29,640 --> 00:13:31,599 Speaker 3: a throw some shade on this to say it's a 251 00:13:31,679 --> 00:13:34,440 Speaker 3: it's coming from leisure, it's coming from healthcare, and not 252 00:13:34,640 --> 00:13:37,160 Speaker 3: really the higher paying jobs. How do you make the 253 00:13:37,280 --> 00:13:38,839 Speaker 3: how do you when you go underneath the service? What's 254 00:13:38,920 --> 00:13:40,160 Speaker 3: the what's what's it look like? 255 00:13:40,760 --> 00:13:40,960 Speaker 5: Yeah? 256 00:13:41,120 --> 00:13:43,600 Speaker 7: I think I always find that interesting. Right, So they 257 00:13:43,640 --> 00:13:47,320 Speaker 7: would rather not have people being hired in hospitality and 258 00:13:47,440 --> 00:13:51,600 Speaker 7: leisure and construction. It's it's the fact that we have 259 00:13:51,840 --> 00:13:56,800 Speaker 7: consumer spending that happens at hotels and restaurants and service 260 00:13:56,840 --> 00:14:00,680 Speaker 7: industries means that consumers are making more money and they 261 00:14:00,679 --> 00:14:03,400 Speaker 7: have more disposable income, which is a positive sign for 262 00:14:03,480 --> 00:14:07,040 Speaker 7: the economy. So that hiring is really good, and what 263 00:14:07,120 --> 00:14:09,680 Speaker 7: will end up happening is that continues to fuel it. 264 00:14:10,120 --> 00:14:12,480 Speaker 7: That if people are spending more than the companies that 265 00:14:12,600 --> 00:14:15,959 Speaker 7: make those retail products, we'll be hiring more people at 266 00:14:16,000 --> 00:14:19,920 Speaker 7: those companies and so on and so forth. And without 267 00:14:19,920 --> 00:14:22,560 Speaker 7: getting too reaganesque, but it's trickled down economics, and you're 268 00:14:22,600 --> 00:14:25,800 Speaker 7: going to have a situation where it keeps fueling more 269 00:14:25,960 --> 00:14:29,360 Speaker 7: better employment numbers, which is exactly what we want to 270 00:14:29,360 --> 00:14:31,960 Speaker 7: have happen now. The one soft spot I continue to 271 00:14:32,000 --> 00:14:35,560 Speaker 7: see is in recent college grads. I'm not seeing the 272 00:14:35,640 --> 00:14:39,120 Speaker 7: volume of hiring at people coming right out of college 273 00:14:39,120 --> 00:14:41,880 Speaker 7: a year out as I have during other bull markets, 274 00:14:42,160 --> 00:14:44,320 Speaker 7: but I think that'll change post the election. 275 00:14:45,200 --> 00:14:47,160 Speaker 4: From your neck of the woods, how much are people 276 00:14:47,200 --> 00:14:50,880 Speaker 4: actually talking about the Federal Reserve and the impact of 277 00:14:51,000 --> 00:14:54,200 Speaker 4: rate cuts on the labor market, Because obviously at Bloomberg, 278 00:14:54,320 --> 00:14:58,480 Speaker 4: we are just obsessed with every piece of data that 279 00:14:58,520 --> 00:15:00,240 Speaker 4: comes out and what it means for the FED. But 280 00:15:01,920 --> 00:15:05,000 Speaker 4: how much do you actually talk about it at lasal network? 281 00:15:05,560 --> 00:15:05,760 Speaker 5: Oh. 282 00:15:05,840 --> 00:15:07,920 Speaker 7: I think that whether it's the Sound network or the 283 00:15:08,040 --> 00:15:11,080 Speaker 7: CEOs and CFOs and heads of HR that I talked 284 00:15:11,120 --> 00:15:15,400 Speaker 7: to on a regular basis, the FED rate is really 285 00:15:15,440 --> 00:15:18,720 Speaker 7: important to people, and I would say more on mid 286 00:15:18,800 --> 00:15:23,200 Speaker 7: and large cap companies because they're looking at the cash flow, 287 00:15:23,240 --> 00:15:24,960 Speaker 7: the borrowing rate, how they're going to be able to 288 00:15:25,000 --> 00:15:29,200 Speaker 7: hire people, how their wages affect their bottom line, and 289 00:15:29,280 --> 00:15:32,280 Speaker 7: so I think it's a really important indicator that people look. 290 00:15:32,320 --> 00:15:36,920 Speaker 7: Even if people don't understand exactly what the FED rate means, 291 00:15:37,400 --> 00:15:41,120 Speaker 7: they do get that when rates were really low, there 292 00:15:41,200 --> 00:15:44,320 Speaker 7: was nothing stopping hiring in the economy and what's going on. 293 00:15:44,480 --> 00:15:47,880 Speaker 7: So when companies see that the fed's dropping rates by 294 00:15:47,960 --> 00:15:51,600 Speaker 7: fifty basis points, people get excited. Now. The biggest difference, 295 00:15:51,600 --> 00:15:53,680 Speaker 7: and I've been preaching this with you guys and elsewhere 296 00:15:53,720 --> 00:15:57,239 Speaker 7: for a long time, is that we have more employers 297 00:15:57,240 --> 00:16:00,600 Speaker 7: in this country now than ever before. And what I 298 00:16:00,640 --> 00:16:02,520 Speaker 7: mean by that is if you would have gone back 299 00:16:02,600 --> 00:16:05,880 Speaker 7: sixty seventy years ago, if somebody lost their job at 300 00:16:05,920 --> 00:16:08,880 Speaker 7: Ford or General Motors, they were car people. They could 301 00:16:08,880 --> 00:16:12,400 Speaker 7: only get jobs at the car industry, excuse me, rebounded 302 00:16:12,720 --> 00:16:17,080 Speaker 7: Today skills are so transferable due to technology, and while 303 00:16:17,120 --> 00:16:19,200 Speaker 7: I think it's not going to last forever, but remote 304 00:16:19,240 --> 00:16:21,520 Speaker 7: work that you can lose your job in Detroit and 305 00:16:21,520 --> 00:16:23,960 Speaker 7: be working for a company in Silicon Valley as well, 306 00:16:24,360 --> 00:16:27,280 Speaker 7: And so we have that opportunity, and then the startup 307 00:16:27,400 --> 00:16:30,960 Speaker 7: nature that companies and individuals can raise venture money and 308 00:16:31,000 --> 00:16:33,360 Speaker 7: startups that I don't think we're ever going to have 309 00:16:33,440 --> 00:16:36,480 Speaker 7: an employment lag like we had in the seventies really 310 00:16:36,520 --> 00:16:37,480 Speaker 7: ever Again. 311 00:16:38,520 --> 00:16:40,840 Speaker 3: Tom, I guess I haven't asked you this in a while, 312 00:16:40,880 --> 00:16:43,400 Speaker 3: but where are we on that whole remote work? Have 313 00:16:43,480 --> 00:16:45,960 Speaker 3: we settled into a new normal? And I guess that's 314 00:16:46,040 --> 00:16:48,920 Speaker 3: company by company three days, four days, five days. Where 315 00:16:48,920 --> 00:16:50,080 Speaker 3: do you think it is these days? 316 00:16:50,760 --> 00:16:51,000 Speaker 2: Yeah? 317 00:16:51,040 --> 00:16:53,800 Speaker 7: I think right now it's three days. I still see. 318 00:16:53,840 --> 00:16:57,840 Speaker 7: It still amazes me, Paul, how many CEOs are afraid 319 00:16:57,880 --> 00:16:59,720 Speaker 7: they'll they'll talk to me, they'll talk to each other, 320 00:16:59,720 --> 00:17:01,840 Speaker 7: and they'll God, we got to get people in, but 321 00:17:01,880 --> 00:17:05,520 Speaker 7: they won't lead, they won't say it, And that to 322 00:17:05,640 --> 00:17:08,879 Speaker 7: me is really the disturbing part. I think the Amazon 323 00:17:11,160 --> 00:17:13,960 Speaker 7: statement last week was really powerful, and you'll start to 324 00:17:14,000 --> 00:17:17,439 Speaker 7: see some follow the leader type statements coming out. I 325 00:17:17,480 --> 00:17:20,160 Speaker 7: think where we're going to get to is four days 326 00:17:20,160 --> 00:17:23,200 Speaker 7: a week, and some companies going five and some going three, 327 00:17:23,240 --> 00:17:27,000 Speaker 7: but the average will be four. And come twenty twenty five, 328 00:17:27,080 --> 00:17:29,560 Speaker 7: we're not going to remote work and people wanting that 329 00:17:30,560 --> 00:17:32,439 Speaker 7: isn't gonna happen. And you're going to see when companies 330 00:17:32,440 --> 00:17:35,840 Speaker 7: start to downsize, and that will happen and other companies 331 00:17:35,880 --> 00:17:37,800 Speaker 7: will hire them, so it won't affect the numbers. But 332 00:17:37,840 --> 00:17:40,040 Speaker 7: when you see companies lay people off, it's going to 333 00:17:40,040 --> 00:17:41,720 Speaker 7: be the remote workers that get hit first. 334 00:17:42,240 --> 00:17:45,480 Speaker 4: Just going back to the print that we saw this morning, 335 00:17:45,520 --> 00:17:48,280 Speaker 4: hourly earnings rose four percent from a year ago, the 336 00:17:48,320 --> 00:17:53,280 Speaker 4: biggest advance in four months. I'm wondering what you make 337 00:17:53,600 --> 00:17:57,240 Speaker 4: of this upside surprise in wages and you know what 338 00:17:57,280 --> 00:17:59,600 Speaker 4: that tells you about the strength of the labor market. 339 00:18:00,600 --> 00:18:04,320 Speaker 7: Well, I think it's interesting, and I have to dive 340 00:18:04,359 --> 00:18:07,080 Speaker 7: a little bit deeper into the hourly wage increase and 341 00:18:07,080 --> 00:18:10,200 Speaker 7: I saw that as well. But it really comes down 342 00:18:10,240 --> 00:18:13,720 Speaker 7: to you have more people working more hours, and in 343 00:18:13,800 --> 00:18:16,959 Speaker 7: the retail space, it's so hard. I mean, listen, I'm 344 00:18:17,040 --> 00:18:19,560 Speaker 7: in Chicago, I was in New York a few weeks ago. 345 00:18:21,600 --> 00:18:23,600 Speaker 7: I was in Nashville last week. It's really when you 346 00:18:23,600 --> 00:18:25,840 Speaker 7: go to a restaurant, the service is lacking because there 347 00:18:25,840 --> 00:18:27,920 Speaker 7: aren't enough people. And I talked to the managers when 348 00:18:27,920 --> 00:18:30,640 Speaker 7: I'm there to find out on the ground what's happening, 349 00:18:30,920 --> 00:18:32,920 Speaker 7: and I think what you're seeing when you see hourly 350 00:18:33,000 --> 00:18:36,760 Speaker 7: rates increase, hourly wages increasing, it's because you can't find 351 00:18:36,760 --> 00:18:39,960 Speaker 7: the people, and so you got to pay a little 352 00:18:40,000 --> 00:18:42,119 Speaker 7: bit more to make sure that your people stay. And 353 00:18:42,200 --> 00:18:44,320 Speaker 7: if you find somebody that you're getting the best that 354 00:18:44,359 --> 00:18:45,200 Speaker 7: you can get. 355 00:18:45,880 --> 00:18:48,919 Speaker 3: Tom you mentioned just about college graduates still having a 356 00:18:48,960 --> 00:18:50,399 Speaker 3: tough time. Why do you think that is? 357 00:18:51,960 --> 00:18:54,840 Speaker 7: I think company because usually what happens with kids out 358 00:18:54,880 --> 00:18:57,760 Speaker 7: of college, and I'm not talking about accounting degrees or 359 00:18:57,840 --> 00:19:01,159 Speaker 7: pre law or whatever, but more liberal arts education, the 360 00:19:01,200 --> 00:19:04,600 Speaker 7: massive state colleges and people coming out is that companies 361 00:19:04,720 --> 00:19:07,440 Speaker 7: hire in volume, whether it's sales or marketing, or they're 362 00:19:07,440 --> 00:19:09,880 Speaker 7: going to do a training class and all of that 363 00:19:09,920 --> 00:19:13,159 Speaker 7: type of thing. And when you hear the sky's falling 364 00:19:13,240 --> 00:19:17,120 Speaker 7: every day from both sides of the political spectrum during 365 00:19:17,119 --> 00:19:20,919 Speaker 7: an election year, companies put the brakes on massive hiring 366 00:19:20,960 --> 00:19:24,679 Speaker 7: at individual companies. So we're seeing sporadic hiring in small 367 00:19:24,760 --> 00:19:28,080 Speaker 7: medium sized business hiring, But we haven't seen the huge 368 00:19:28,359 --> 00:19:33,239 Speaker 7: uptake of late stage venture companies, private equity companies that 369 00:19:33,280 --> 00:19:36,440 Speaker 7: are really pouring money into hiring and mass and that's 370 00:19:36,480 --> 00:19:39,399 Speaker 7: the biggest difference I see versus twenty oh one and 371 00:19:39,520 --> 00:19:43,040 Speaker 7: twenty eighteen twenty nineteen when the market was really on fire. 372 00:19:43,760 --> 00:19:46,560 Speaker 4: We only have about a minute left. But what's the 373 00:19:46,600 --> 00:19:49,760 Speaker 4: outlook here for job growth for the rest of the year, 374 00:19:50,160 --> 00:19:54,600 Speaker 4: particularly when you take into consideration the hurricanes in the 375 00:19:54,640 --> 00:19:55,600 Speaker 4: Southern United States. 376 00:19:56,359 --> 00:19:58,640 Speaker 7: Yeah, well, I think that's an interesting one, and I'm 377 00:19:58,640 --> 00:19:59,960 Speaker 7: sure you'll have a lot of people talking about it. 378 00:20:00,119 --> 00:20:02,080 Speaker 7: My take on it is you're actually going to see 379 00:20:02,240 --> 00:20:05,399 Speaker 7: a lot of additional employment in the Southeast because we 380 00:20:05,480 --> 00:20:07,640 Speaker 7: need people to do the work to clean it up, 381 00:20:08,480 --> 00:20:11,240 Speaker 7: and the companies that do that, whether it's the government 382 00:20:11,320 --> 00:20:13,840 Speaker 7: or private industry, don't have enough body. So you're going 383 00:20:13,880 --> 00:20:16,320 Speaker 7: to see a lot of hiring going on down there, 384 00:20:16,600 --> 00:20:18,600 Speaker 7: and the companies that employ the people who can't get 385 00:20:18,640 --> 00:20:20,680 Speaker 7: to work, those people aren't going to be fired most 386 00:20:20,720 --> 00:20:23,560 Speaker 7: likely and not being filing unemployment. So I think we'll 387 00:20:23,600 --> 00:20:26,639 Speaker 7: actually maybe see a spike in the October jobs report 388 00:20:26,680 --> 00:20:29,240 Speaker 7: coming out that first Friday in November due to the hurricane, 389 00:20:29,240 --> 00:20:31,840 Speaker 7: that we'll have a mass of people going to work 390 00:20:31,880 --> 00:20:34,760 Speaker 7: in the southeast to help that situation. 391 00:20:35,680 --> 00:20:37,399 Speaker 3: All right, Tom, thanks so much for joining us, as 392 00:20:37,440 --> 00:20:40,040 Speaker 3: I always love talking to you on Jobs Day. Tom Gimble, 393 00:20:40,080 --> 00:20:43,280 Speaker 3: he's a founder and board member of LaSalle Network, giving 394 00:20:43,359 --> 00:20:46,040 Speaker 3: us a breakdown there. Obviously, he's taking a very positive 395 00:20:46,280 --> 00:20:49,480 Speaker 3: take on those strong jobs numbers. And again I'm glad 396 00:20:49,520 --> 00:20:53,200 Speaker 3: you put it up, Emily, the wage number, because that's 397 00:20:53,240 --> 00:20:56,159 Speaker 3: been strong and it's been higher than inflation for the 398 00:20:56,200 --> 00:20:59,359 Speaker 3: last almost two years now. So the real income for 399 00:20:59,560 --> 00:21:02,600 Speaker 3: most of Americans after the very difficult time coming of 400 00:21:02,680 --> 00:21:05,600 Speaker 3: during the pandemic, has actually been quite positive real income. 401 00:21:05,680 --> 00:21:09,520 Speaker 3: So that's visa the inflation, Yeah, purchasing power there, so 402 00:21:09,560 --> 00:21:10,320 Speaker 3: that is good news. 403 00:21:11,800 --> 00:21:15,680 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 404 00:21:15,760 --> 00:21:19,280 Speaker 2: weekdays at ten am Eastern on applecar Play and Android 405 00:21:19,320 --> 00:21:22,080 Speaker 2: Auto with the Bloomberg Business app. You can also listen 406 00:21:22,200 --> 00:21:25,320 Speaker 2: live on Amazon Alexa from our flagship New York station, 407 00:21:25,680 --> 00:21:29,160 Speaker 2: Just say Alexa Play Bloomberg eleven thirty. 408 00:21:29,960 --> 00:21:32,040 Speaker 3: Demily Grafeo is sitting in for Alex Steel on Paul 409 00:21:32,080 --> 00:21:34,800 Speaker 3: Sweeneyer live here in our Bloomberg Interactive Brokers studio and 410 00:21:34,800 --> 00:21:37,480 Speaker 3: are streaming live on that internet thing. So go over 411 00:21:37,520 --> 00:21:40,840 Speaker 3: to YouTube dot com and search Bloomberg Live Radio and 412 00:21:40,840 --> 00:21:44,240 Speaker 3: that's where you'll find the video portion of this program. 413 00:21:44,440 --> 00:21:47,080 Speaker 3: I mean, again, as Charlie, just reporting a very strong 414 00:21:47,280 --> 00:21:50,960 Speaker 3: print there on the payroll data stocks hire, although they're 415 00:21:51,000 --> 00:21:54,040 Speaker 3: off their highs of the day, yields moving here, particularly 416 00:21:54,040 --> 00:21:56,160 Speaker 3: on the short end of the curve where we've got 417 00:21:56,200 --> 00:21:58,480 Speaker 3: to chew euro up nineteen basis points. How about that 418 00:21:58,560 --> 00:22:01,840 Speaker 3: kid's three point eight nine the tenure run a four percent? 419 00:22:01,880 --> 00:22:03,760 Speaker 3: Watch here three point nine six percent. Let's talk to 420 00:22:03,760 --> 00:22:06,639 Speaker 3: somebody who actually gets paid to do this stuff. Brian Levitt, 421 00:22:06,680 --> 00:22:11,360 Speaker 3: global market strategist for Investco doing the zoom thing from 422 00:22:11,359 --> 00:22:13,639 Speaker 3: the home office. Good for him, Brian, what do you 423 00:22:13,680 --> 00:22:16,199 Speaker 3: make of this print and how does it maybe change 424 00:22:16,200 --> 00:22:19,240 Speaker 3: your alter or your view of kind of where your 425 00:22:19,280 --> 00:22:20,720 Speaker 3: client should be putting money these days. 426 00:22:21,960 --> 00:22:25,080 Speaker 6: It's a strong number. You know, these things will get revised, 427 00:22:25,080 --> 00:22:26,439 Speaker 6: so we do take it with a little bit of 428 00:22:26,440 --> 00:22:28,639 Speaker 6: a grain of salt. But it's a strong payroll number, 429 00:22:28,680 --> 00:22:31,679 Speaker 6: and I do that as a good thing. It's you know, 430 00:22:31,800 --> 00:22:35,280 Speaker 6: investors had been so focused on inflation. The shift really 431 00:22:35,400 --> 00:22:39,080 Speaker 6: is now towards the sustainability, the resilience of growth, and 432 00:22:39,840 --> 00:22:42,160 Speaker 6: so when you get a strong number like this, it's 433 00:22:42,320 --> 00:22:43,160 Speaker 6: it's a positive. 434 00:22:43,200 --> 00:22:43,440 Speaker 4: Now. 435 00:22:43,720 --> 00:22:49,160 Speaker 6: The markets took it very favorably initially, As you mentioned, 436 00:22:49,200 --> 00:22:51,280 Speaker 6: some of those gains have come back, that's cause interest 437 00:22:51,359 --> 00:22:54,119 Speaker 6: rates have jumped up a lot. But I still view 438 00:22:54,160 --> 00:22:56,639 Speaker 6: it as if you're in an environment where you have 439 00:22:56,760 --> 00:23:00,280 Speaker 6: resilient growth and less rate cuts. So that's that's still 440 00:23:00,880 --> 00:23:03,840 Speaker 6: better than weak growth and more rate cuts. 441 00:23:04,200 --> 00:23:07,000 Speaker 4: So, Brian, is it fair to say then that the 442 00:23:07,000 --> 00:23:10,400 Speaker 4: Fed has engineered a soft landing when you look at 443 00:23:10,560 --> 00:23:13,120 Speaker 4: how the stock market is reacting and also just how 444 00:23:13,160 --> 00:23:16,720 Speaker 4: strong the payroll print was today, Well, that's. 445 00:23:16,920 --> 00:23:21,600 Speaker 6: The preponderance of evidence suggests a soft landing. Now, I 446 00:23:21,600 --> 00:23:25,440 Speaker 6: don't think we can be absolutely certain yet, there's still 447 00:23:25,960 --> 00:23:28,800 Speaker 6: some weakness too. If you notice in that report, in 448 00:23:28,840 --> 00:23:33,480 Speaker 6: the payroll report, the manufacturing sector did lose jobs. We've 449 00:23:33,520 --> 00:23:36,399 Speaker 6: seen some of the purchasing manager in the sas sitting 450 00:23:36,480 --> 00:23:40,679 Speaker 6: below fifty for a bit here. But yeah, I mean, 451 00:23:40,720 --> 00:23:45,520 Speaker 6: the preponderance of evidence still suggests a soft landing and 452 00:23:45,920 --> 00:23:47,480 Speaker 6: a good backdrop for investors. 453 00:23:48,680 --> 00:23:50,720 Speaker 3: So, Brian, if it is, you know, continue to be 454 00:23:50,760 --> 00:23:55,200 Speaker 3: a risk on environment, how much risk stocks, bonds, credit, treasuries, 455 00:23:55,200 --> 00:23:56,080 Speaker 3: how do you think about it? 456 00:23:57,480 --> 00:24:00,240 Speaker 6: Yeah, if so, we've been in an environment now the 457 00:24:00,320 --> 00:24:03,480 Speaker 6: leading indicators of the economy have actually been been pointing 458 00:24:03,480 --> 00:24:06,880 Speaker 6: to below trend growth and we needed easing, and so 459 00:24:07,080 --> 00:24:12,360 Speaker 6: easing comes along and the economy's actually been more resilient. Then, Yeah, 460 00:24:12,440 --> 00:24:14,520 Speaker 6: you want to be in stocks, you want to be 461 00:24:14,560 --> 00:24:18,600 Speaker 6: in riskier credit, you want to be in if you 462 00:24:18,640 --> 00:24:20,600 Speaker 6: expect growth to pick up, you want to be in 463 00:24:20,720 --> 00:24:25,920 Speaker 6: cyclicals and value. So it's a broadening picture. If you 464 00:24:26,080 --> 00:24:29,359 Speaker 6: get the soft landing, as we suspect we will, you 465 00:24:29,400 --> 00:24:33,560 Speaker 6: should see broader markets than we saw last year, and 466 00:24:34,320 --> 00:24:36,119 Speaker 6: again a good backdrop for risk taking. 467 00:24:36,760 --> 00:24:41,639 Speaker 4: What does broader mean? I'm thinking about an ETF house 468 00:24:42,240 --> 00:24:47,200 Speaker 4: at your very own shop RSP that plays of course 469 00:24:47,200 --> 00:24:50,119 Speaker 4: on the equal weight s and P five hundred. Is 470 00:24:50,160 --> 00:24:52,679 Speaker 4: that where you kind of see the gains for the 471 00:24:52,680 --> 00:24:54,240 Speaker 4: rest of the year or is it better to kind 472 00:24:54,240 --> 00:24:56,720 Speaker 4: of stay in the market cap? 473 00:24:57,960 --> 00:24:59,960 Speaker 6: Equal Weight's a great equal weight, it's a great point, 474 00:25:00,000 --> 00:25:03,800 Speaker 6: and so marketcap can have long periods of outperformance. It 475 00:25:03,960 --> 00:25:07,000 Speaker 6: tends to shift towards the end of a cycle, when 476 00:25:07,280 --> 00:25:10,200 Speaker 6: you're going into a recession and coming out, that's when 477 00:25:10,240 --> 00:25:12,399 Speaker 6: equal weight tends to do well. Now we've been in 478 00:25:12,440 --> 00:25:17,439 Speaker 6: this long environment of market caap outperformance. Can we do 479 00:25:17,520 --> 00:25:20,000 Speaker 6: it with a soft landing, you know, rather than see 480 00:25:20,080 --> 00:25:24,320 Speaker 6: it a shift with you know, the market cap outperformance 481 00:25:24,359 --> 00:25:26,639 Speaker 6: coming to the recession more along the lines of a 482 00:25:26,640 --> 00:25:30,200 Speaker 6: soft landing and then a reacceleration in activity. That would 483 00:25:30,240 --> 00:25:33,640 Speaker 6: be my view. We're starting to see it in some places. 484 00:25:33,680 --> 00:25:37,240 Speaker 6: Small cap again having a very good day today on 485 00:25:37,320 --> 00:25:41,080 Speaker 6: the expectation of this economy is in good shape. So yeah, 486 00:25:41,119 --> 00:25:43,680 Speaker 6: a lot of the reason why the market cap outperformed 487 00:25:43,960 --> 00:25:47,200 Speaker 6: last year is the market priced in a small cap 488 00:25:47,280 --> 00:25:49,760 Speaker 6: rally or an eco boy rally in two months at 489 00:25:49,760 --> 00:25:51,520 Speaker 6: the end of twenty three and then we had to 490 00:25:51,560 --> 00:25:54,240 Speaker 6: back out all the rate cuts. I don't think that's 491 00:25:54,280 --> 00:25:57,160 Speaker 6: the case this time. The FED is likely to continue 492 00:25:57,520 --> 00:26:00,440 Speaker 6: to lower rates. So long as the economy remains resilient, 493 00:26:00,480 --> 00:26:02,240 Speaker 6: then yeah, equal weight should outperform. 494 00:26:02,880 --> 00:26:05,960 Speaker 3: Brian your global market strategist, So, how do you think 495 00:26:06,000 --> 00:26:08,800 Speaker 3: about the US versus rest of the world. 496 00:26:10,040 --> 00:26:11,960 Speaker 6: It's a little bit of a challenge here in the 497 00:26:12,000 --> 00:26:16,600 Speaker 6: short term because the dollar strength and you know what 498 00:26:16,640 --> 00:26:21,800 Speaker 6: you would want to see is US growth differentials moving 499 00:26:21,840 --> 00:26:24,600 Speaker 6: back towards the rest of the world, US interest rate 500 00:26:24,720 --> 00:26:29,160 Speaker 6: differentials moving back towards the rest of the world. Today's 501 00:26:29,240 --> 00:26:33,679 Speaker 6: report throw a little bit of the challenge to that 502 00:26:34,040 --> 00:26:38,159 Speaker 6: because US growth continues to look quite good, and interest 503 00:26:38,240 --> 00:26:40,480 Speaker 6: rates may remain higher than many have thought, and the 504 00:26:40,520 --> 00:26:43,040 Speaker 6: dollars moving up pretty significantly. So that's a little bit 505 00:26:43,080 --> 00:26:46,240 Speaker 6: of a headwind to capital flowing around the world. Now 506 00:26:46,320 --> 00:26:50,560 Speaker 6: you play this out over the next few years, the 507 00:26:50,640 --> 00:26:53,439 Speaker 6: FED goes through it's easing cycle and rates starts to 508 00:26:53,440 --> 00:26:56,800 Speaker 6: come down. Rates do come down, the dollars should weaken some. 509 00:26:56,920 --> 00:26:59,879 Speaker 6: But in the short term here this is a report 510 00:27:00,400 --> 00:27:02,560 Speaker 6: that's more favorable for US assets. 511 00:27:02,880 --> 00:27:05,560 Speaker 4: Okay, so we did stocks, we did FX, we have 512 00:27:05,680 --> 00:27:09,640 Speaker 4: to do bonds as well, Paul Brian, I mean, we're 513 00:27:09,640 --> 00:27:13,240 Speaker 4: seeing a really large spike up in yields today in 514 00:27:13,280 --> 00:27:17,600 Speaker 4: the US. How are people making money in bonds? 515 00:27:19,920 --> 00:27:23,119 Speaker 6: Well, remember in twenty nineteen and investors were begging for 516 00:27:23,160 --> 00:27:27,160 Speaker 6: four percent, and so it's back again today. In twenty nineteen, 517 00:27:27,640 --> 00:27:29,879 Speaker 6: the answer to the question he do you get four percent? 518 00:27:30,040 --> 00:27:33,040 Speaker 6: Was well, land money to the Russian government and a 519 00:27:33,040 --> 00:27:35,960 Speaker 6: lot of people weren't willing to do that. So today 520 00:27:36,600 --> 00:27:42,280 Speaker 6: you can lend money to US corporates, the US Treasury, 521 00:27:42,440 --> 00:27:46,239 Speaker 6: to US municipalities and get these nice yields. Now, the 522 00:27:46,359 --> 00:27:51,080 Speaker 6: total return story may be a little bit behind us, 523 00:27:52,960 --> 00:27:56,800 Speaker 6: but the yields are there for the taking. And you know, 524 00:27:56,800 --> 00:27:59,160 Speaker 6: if you're sitting in money markets, remember those fields will 525 00:27:59,200 --> 00:28:02,040 Speaker 6: likely come down over time, so there is reinvestment risk. 526 00:28:02,080 --> 00:28:05,280 Speaker 6: So it's still a very good opportunity for income investors 527 00:28:05,320 --> 00:28:07,360 Speaker 6: to lock in the types of yields that they were 528 00:28:07,359 --> 00:28:08,880 Speaker 6: begging for five years ago. 529 00:28:09,960 --> 00:28:12,119 Speaker 3: Brian, your offices are they done in a world financial center? 530 00:28:13,000 --> 00:28:13,320 Speaker 6: They are? 531 00:28:13,680 --> 00:28:14,600 Speaker 3: So that begs a question. 532 00:28:14,720 --> 00:28:15,640 Speaker 6: Is a Jersey guy. 533 00:28:15,840 --> 00:28:17,040 Speaker 3: Fairy or path? 534 00:28:19,320 --> 00:28:20,320 Speaker 6: It's the path. 535 00:28:21,920 --> 00:28:25,320 Speaker 3: I spent. There's a cost conscious guy there because the 536 00:28:25,359 --> 00:28:27,440 Speaker 3: ferries fair well. 537 00:28:27,560 --> 00:28:31,680 Speaker 6: No, it is when you live in New Jersey, though, 538 00:28:31,760 --> 00:28:34,119 Speaker 6: you get on the you park at the first station 539 00:28:34,280 --> 00:28:37,800 Speaker 6: you can and for me that's Harrison. There's no way 540 00:28:37,840 --> 00:28:39,320 Speaker 6: I'm driving all the way to the water. 541 00:28:39,920 --> 00:28:42,400 Speaker 3: Very good, all right, Brian, we got that down. Brian Lettt, 542 00:28:42,400 --> 00:28:45,440 Speaker 3: global market strategist at a Vesco. He is a path guy. 543 00:28:45,480 --> 00:28:47,120 Speaker 3: Good to know you can talk to these Jersey guys 544 00:28:47,160 --> 00:28:48,520 Speaker 3: and they work downtown. You got to figure out how 545 00:28:48,560 --> 00:28:51,400 Speaker 3: they get across the river. I, on the other hand, 546 00:28:51,600 --> 00:28:55,160 Speaker 3: was a fairy guy because it's because and then every 547 00:28:55,240 --> 00:28:56,400 Speaker 3: night at home we took a cook car home. 548 00:28:56,520 --> 00:28:58,800 Speaker 4: It's a lot of fun. I often take the ferry 549 00:28:58,880 --> 00:29:01,200 Speaker 4: from it is marks men. If you go from Manhattan 550 00:29:01,200 --> 00:29:03,600 Speaker 4: to Brooklyn. Yes, but I just like to romanticize my 551 00:29:03,600 --> 00:29:04,000 Speaker 4: life load. 552 00:29:04,080 --> 00:29:05,400 Speaker 3: I'll tell you the ferry now. They live down the 553 00:29:05,440 --> 00:29:08,000 Speaker 3: Jersey Shore. The ferry down to the Highlands where John 554 00:29:08,040 --> 00:29:08,680 Speaker 3: Tucker lists. 555 00:29:08,680 --> 00:29:13,239 Speaker 2: That is a good voyage. There. You're listening to the 556 00:29:13,240 --> 00:29:17,400 Speaker 2: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 557 00:29:17,440 --> 00:29:20,920 Speaker 2: Eastern on applecar Play and Android Auto with the Bloomberg 558 00:29:21,000 --> 00:29:24,200 Speaker 2: Business app. You can also listen live on Amazon Alexa 559 00:29:24,240 --> 00:29:27,560 Speaker 2: from our flagship New York station just say Alexa playing 560 00:29:27,680 --> 00:29:29,920 Speaker 2: Bloomberg eleven thirty. 561 00:29:30,720 --> 00:29:33,320 Speaker 3: All right, So we had a good news story on 562 00:29:33,360 --> 00:29:35,480 Speaker 3: the labor front today. We also had some good news 563 00:29:36,400 --> 00:29:39,600 Speaker 3: last evening, also on the labor market. We've got the 564 00:29:39,720 --> 00:29:43,239 Speaker 3: US doc workers agreeing to go back to work as 565 00:29:43,720 --> 00:29:46,600 Speaker 3: talks extended into January. So that's a good thing for 566 00:29:47,000 --> 00:29:49,320 Speaker 3: those folks. It's a good thing for the US economy. 567 00:29:49,400 --> 00:29:51,040 Speaker 3: Let's break it down and see what it really means. Hey, 568 00:29:51,040 --> 00:29:53,880 Speaker 3: we could do that a leak clasical senior transport logistics 569 00:29:53,920 --> 00:29:57,280 Speaker 3: and shipping analysts for Bloomberg Intelligence joining us from Princeton. 570 00:29:57,520 --> 00:30:01,600 Speaker 3: So Lee, what did the the shippers and the dock workers, 571 00:30:01,720 --> 00:30:03,239 Speaker 3: what did they actually agree to last night? 572 00:30:04,320 --> 00:30:06,200 Speaker 8: Well, they agreed to go back to work and go 573 00:30:06,280 --> 00:30:10,880 Speaker 8: back to the negotiating tables. So you know they're going 574 00:30:10,960 --> 00:30:14,720 Speaker 8: to go back to work until an agreement is made. 575 00:30:15,200 --> 00:30:19,360 Speaker 8: The new deadline now is mid January, so you know 576 00:30:19,440 --> 00:30:22,880 Speaker 8: that's obviously on our radar, much like how this last 577 00:30:23,200 --> 00:30:25,520 Speaker 8: deadline of September thirtieth was on our radar. 578 00:30:26,360 --> 00:30:28,000 Speaker 9: And so what that means is that they're going back 579 00:30:28,040 --> 00:30:28,440 Speaker 9: to work. 580 00:30:28,840 --> 00:30:31,480 Speaker 8: You know, it's going to take some time to clean 581 00:30:31,640 --> 00:30:35,120 Speaker 8: up the mess at the ports because there was a backup. 582 00:30:35,400 --> 00:30:40,360 Speaker 8: Roughly speaking, it takes about a week to clear congestion 583 00:30:40,520 --> 00:30:43,880 Speaker 8: created by one day of a strike. So call it 584 00:30:44,040 --> 00:30:47,880 Speaker 8: three to four weeks until things quote unquote back get 585 00:30:47,920 --> 00:30:51,200 Speaker 8: back to normal. And my guess is that the unions, 586 00:30:51,200 --> 00:30:53,360 Speaker 8: when they do go back to work, they're not going 587 00:30:53,400 --> 00:30:55,280 Speaker 8: to be going at full throttle. 588 00:30:55,840 --> 00:30:59,240 Speaker 9: They might be kind of dragging their feet, if you will. 589 00:30:59,560 --> 00:31:02,560 Speaker 8: So this apply chains are getting back to normal, and 590 00:31:03,040 --> 00:31:05,840 Speaker 8: hopefully the two sides can come to an agreement where, 591 00:31:06,120 --> 00:31:11,240 Speaker 8: you know, truly the efficiencies and the throughput is returned. 592 00:31:10,800 --> 00:31:11,720 Speaker 9: To where it should be. 593 00:31:12,520 --> 00:31:15,200 Speaker 4: What do we know so far about why the workers 594 00:31:15,280 --> 00:31:17,920 Speaker 4: actually decided to end the strike? 595 00:31:19,960 --> 00:31:23,240 Speaker 8: The why, that's a great question. I don't I'm not 596 00:31:23,560 --> 00:31:26,680 Speaker 8: you know, in those meetings. But my guess is that 597 00:31:26,960 --> 00:31:30,920 Speaker 8: both sides of being pressured significantly by the Biden administration. 598 00:31:31,320 --> 00:31:33,880 Speaker 8: The Biden administration said that they did not want to 599 00:31:33,960 --> 00:31:38,840 Speaker 8: enact the Taft Hartley Act, which pretty much tells the 600 00:31:38,880 --> 00:31:40,720 Speaker 8: two parties that they got to go back to the 601 00:31:40,800 --> 00:31:44,600 Speaker 8: negotiating table and cool off for eighty days. You know, 602 00:31:44,640 --> 00:31:47,000 Speaker 8: they didn't want to do that because obviously the Biden 603 00:31:47,040 --> 00:31:51,840 Speaker 8: administration wants to be considered a pro union president. 604 00:31:52,320 --> 00:31:55,720 Speaker 9: And then you know, and then on the other side. 605 00:31:55,800 --> 00:31:58,840 Speaker 8: Biden administration also doesn't want to see anything to hurt 606 00:31:58,880 --> 00:32:02,240 Speaker 8: this fragile economy that we're currently in. You know, growth 607 00:32:02,400 --> 00:32:06,080 Speaker 8: is expected one to two percent, tepid growth, but it's 608 00:32:06,120 --> 00:32:10,520 Speaker 8: growth nonetheless, and obviously a prolonged strike could impact those 609 00:32:10,560 --> 00:32:12,680 Speaker 8: growth numbers. But I don't think it's going to have 610 00:32:12,840 --> 00:32:16,320 Speaker 8: much of an impact on overall GDP, maybe delaying some things, 611 00:32:17,360 --> 00:32:19,280 Speaker 8: and on freight rates. You know, you're seeing some of 612 00:32:19,320 --> 00:32:22,880 Speaker 8: the marine shipping names like Mares. They're down mid single 613 00:32:22,920 --> 00:32:26,040 Speaker 8: digits and trading, and that's really being driven by the 614 00:32:26,080 --> 00:32:29,640 Speaker 8: fact that if there was a prolonged strike, rates would 615 00:32:29,640 --> 00:32:33,400 Speaker 8: have probably been bouncing higher. And what we see now 616 00:32:33,520 --> 00:32:35,640 Speaker 8: is that maybe they're not going to get that bounce. 617 00:32:35,760 --> 00:32:37,960 Speaker 8: They're still a lot higher than they were last year, 618 00:32:38,800 --> 00:32:41,280 Speaker 8: but they're still not going to get that extra boost 619 00:32:41,760 --> 00:32:45,120 Speaker 8: created by the congestion and issues from. 620 00:32:44,800 --> 00:32:48,440 Speaker 9: A labor strike on the East and Gulf Coast ports. 621 00:32:48,760 --> 00:32:48,960 Speaker 10: Lee. 622 00:32:49,000 --> 00:32:51,080 Speaker 3: It sounds like, you know, there's a couple issues there 623 00:32:51,120 --> 00:32:53,760 Speaker 3: between the two parties. One is just the wages, and 624 00:32:54,120 --> 00:32:56,440 Speaker 3: presumably that is something that you can bridge the gap 625 00:32:56,480 --> 00:32:59,760 Speaker 3: and get something done. The other one is productivity and 626 00:32:59,800 --> 00:33:03,800 Speaker 3: mind modernization and you know, bringing technology or that would 627 00:33:03,920 --> 00:33:07,040 Speaker 3: threaten jobs. That seems to be a lot harder to 628 00:33:07,120 --> 00:33:09,400 Speaker 3: deal with any sense of how far away they are 629 00:33:09,480 --> 00:33:10,360 Speaker 3: or how close they may be. 630 00:33:12,000 --> 00:33:16,520 Speaker 8: On the money side, you know, from the last numbers 631 00:33:16,520 --> 00:33:18,840 Speaker 8: that we saw, you know, the union has been very 632 00:33:19,120 --> 00:33:22,280 Speaker 8: vocal and wanting seventy seven percent increase over six years, 633 00:33:22,280 --> 00:33:23,960 Speaker 8: which is roughly a little. 634 00:33:23,800 --> 00:33:24,920 Speaker 9: Under ten percent a year. 635 00:33:25,360 --> 00:33:28,800 Speaker 8: And then you know the ports came back at around 636 00:33:28,920 --> 00:33:31,720 Speaker 8: they opted it from forty percent to fifty percent. I'm 637 00:33:31,760 --> 00:33:34,080 Speaker 8: assuming they're going to get closer to that seventy seven 638 00:33:34,160 --> 00:33:37,800 Speaker 8: percent over time. The automation is probably a lot more sticky. 639 00:33:38,360 --> 00:33:41,840 Speaker 8: The ports do want to have more automation, and automation 640 00:33:42,000 --> 00:33:45,160 Speaker 8: isn't necessarily. You know, a robot comes in, it takes 641 00:33:45,160 --> 00:33:47,520 Speaker 8: out a job, it just might be a different job. 642 00:33:47,760 --> 00:33:51,600 Speaker 8: And there are sports where you know, workers are not 643 00:33:51,640 --> 00:33:54,520 Speaker 8: necessarily there's one in New York one of the ports 644 00:33:54,560 --> 00:33:57,480 Speaker 8: within the ports system in New York and New Jersey 645 00:33:57,720 --> 00:34:00,280 Speaker 8: where they have some automation where there's people kind of 646 00:34:00,520 --> 00:34:04,000 Speaker 8: operating joysticks, if you will, in an office and they 647 00:34:04,080 --> 00:34:08,279 Speaker 8: kind of take control the last couple of minutes or 648 00:34:07,400 --> 00:34:11,480 Speaker 8: the first couple of minutes of moving something to ensure 649 00:34:11,480 --> 00:34:14,880 Speaker 8: it's safety. You know, it's not only your productivity standpoint, 650 00:34:14,880 --> 00:34:17,520 Speaker 8: but also obviously the less people you have on the port, 651 00:34:17,840 --> 00:34:22,400 Speaker 8: the safer it is. You know, accidents do happen, and 652 00:34:22,480 --> 00:34:24,680 Speaker 8: so you know, I don't know where they're going to 653 00:34:24,719 --> 00:34:26,719 Speaker 8: come out on this, but obviously the ports want to 654 00:34:26,760 --> 00:34:29,640 Speaker 8: be more efficient, and the union wants to save jobs, 655 00:34:30,560 --> 00:34:32,520 Speaker 8: and they just need to figure out, you know, some 656 00:34:32,560 --> 00:34:35,239 Speaker 8: sort of middle ground, because at the end of the day, 657 00:34:35,719 --> 00:34:38,840 Speaker 8: there's great technologies out there, whether it's you know, letting 658 00:34:38,880 --> 00:34:41,839 Speaker 8: trucks in and out and report a lot quicker, and 659 00:34:41,880 --> 00:34:44,359 Speaker 8: that's not only good for port throughput, but it's also 660 00:34:44,400 --> 00:34:46,120 Speaker 8: good for you know, if you want to take an 661 00:34:46,160 --> 00:34:48,200 Speaker 8: environmental standpoint, you know, you don't have. 662 00:34:48,160 --> 00:34:51,120 Speaker 9: A queue of trucks a mile long waiting to cut 663 00:34:51,160 --> 00:34:52,960 Speaker 9: into wait to get to the authority of New York. 664 00:34:52,960 --> 00:34:53,560 Speaker 7: All right, I got you. 665 00:34:53,640 --> 00:34:56,800 Speaker 3: Lead. Great stuff is always Lee Classical senior Transport Logistics 666 00:34:56,840 --> 00:34:59,320 Speaker 3: and Chipping Antos for Bloomberg Intelligence, giving us the latest 667 00:34:59,440 --> 00:35:02,040 Speaker 3: US stock worm go back to work as talks extended 668 00:35:02,200 --> 00:35:04,040 Speaker 3: to January. That is good news. 669 00:35:05,600 --> 00:35:09,479 Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live 670 00:35:09,560 --> 00:35:13,080 Speaker 2: weekdays at ten am Eastern on applecar Play and Android 671 00:35:13,120 --> 00:35:15,880 Speaker 2: Otto with the Bloomberg Business app. You can also listen 672 00:35:16,000 --> 00:35:19,120 Speaker 2: live on Amazon Alexa from our flagship New York station 673 00:35:19,480 --> 00:35:22,960 Speaker 2: just Say Alexa playing Bloomberg eleven thirty. 674 00:35:23,440 --> 00:35:26,440 Speaker 3: All right, let's talk about electric vehicles, and you talk 675 00:35:26,440 --> 00:35:28,120 Speaker 3: about electric vehicles, I feel like you got to talk 676 00:35:28,120 --> 00:35:30,360 Speaker 3: about tariffs, because it seems like everybodys slapping tariffs on 677 00:35:30,360 --> 00:35:33,040 Speaker 3: everybody else's EV's, particularly the ones coming out of China. 678 00:35:33,160 --> 00:35:33,600 Speaker 6: The EU. 679 00:35:33,719 --> 00:35:36,640 Speaker 3: The latest he announces that they're imposed some tariffs of 680 00:35:36,719 --> 00:35:40,080 Speaker 3: up to forty five percent on Chinese electric vehicles. How 681 00:35:40,120 --> 00:35:42,319 Speaker 3: big of a deal is this for that market? David 682 00:35:42,320 --> 00:35:46,839 Speaker 3: Weltz joins is Bloomberg Detroit Bureau chief. So if I'm 683 00:35:46,840 --> 00:35:49,799 Speaker 3: a Chinese EV, I mean, am I welcome anywhere on 684 00:35:49,840 --> 00:35:52,680 Speaker 3: this planet outside of China? What's going on there? David? 685 00:35:53,480 --> 00:35:56,800 Speaker 10: So far, they've had growth in Brazil, not just TV's 686 00:35:56,840 --> 00:35:59,560 Speaker 10: but Chinese car makers in general. In the Bazilian government 687 00:35:59,640 --> 00:36:04,239 Speaker 10: hasn't he at them yet. But yeah, look, the Chinese 688 00:36:04,280 --> 00:36:08,239 Speaker 10: benefited greatly from American, Japanese, Korean, European companies going to 689 00:36:08,320 --> 00:36:11,880 Speaker 10: their market, and we split the profits with them, We 690 00:36:11,920 --> 00:36:15,759 Speaker 10: gave them our technology, and you know, now there, you 691 00:36:15,800 --> 00:36:18,399 Speaker 10: know a lot is happening that's squeezing out all those 692 00:36:18,440 --> 00:36:22,760 Speaker 10: foreign interlopers. And they have tons of excess capacity in China. 693 00:36:22,880 --> 00:36:25,480 Speaker 10: I mean we're talking tens of millions of vehicles and 694 00:36:25,520 --> 00:36:28,680 Speaker 10: access capacity, and they don't want to lay Chinese workers 695 00:36:28,719 --> 00:36:31,320 Speaker 10: off the governments. They are willing to absorb some losses, 696 00:36:31,320 --> 00:36:33,480 Speaker 10: but they want to turn the country into a giant 697 00:36:33,560 --> 00:36:36,560 Speaker 10: export base. That of course would be at the expense 698 00:36:36,600 --> 00:36:40,680 Speaker 10: of everybody making and selling vehicles in the US, in Europe, 699 00:36:41,440 --> 00:36:45,520 Speaker 10: Southeast Asia, where Toyota does a lot of business. So yeah, 700 00:36:45,560 --> 00:36:49,279 Speaker 10: everybody feels threatened by this. The Chinese government subsidizes its 701 00:36:49,320 --> 00:36:53,799 Speaker 10: companies in other ways like free land, paying for factories, 702 00:36:53,840 --> 00:36:57,960 Speaker 10: funding R and D, and you know, the government's local 703 00:36:58,000 --> 00:37:00,239 Speaker 10: and national owned some of these companies, and they're willing 704 00:37:00,280 --> 00:37:02,520 Speaker 10: to absorbble losses while they all go for market ship. 705 00:37:03,160 --> 00:37:07,520 Speaker 10: They're getting subsidies in every way possible. And you know, 706 00:37:07,880 --> 00:37:11,000 Speaker 10: the foreign governments are saying, enough is enough here, and 707 00:37:11,080 --> 00:37:12,879 Speaker 10: we're not going to just give our car market away 708 00:37:12,920 --> 00:37:14,320 Speaker 10: to a Chinese export giant. 709 00:37:15,040 --> 00:37:19,640 Speaker 4: So why is the EU voting to impose these tariffs now? 710 00:37:19,920 --> 00:37:22,359 Speaker 4: Bring us up to speeding kind of the context here 711 00:37:22,360 --> 00:37:25,720 Speaker 4: and the relationship between the EU and China. 712 00:37:26,920 --> 00:37:31,040 Speaker 10: Yeah, the EU years ago decided diesel wasn't their thing 713 00:37:31,080 --> 00:37:33,560 Speaker 10: for clean air, and they really pushed for adoption of 714 00:37:33,640 --> 00:37:36,960 Speaker 10: VS and the Chinese seized on that and they've been 715 00:37:37,000 --> 00:37:40,280 Speaker 10: growing a lot of market share in all the different 716 00:37:40,320 --> 00:37:44,600 Speaker 10: European markets within the EU, and that does hurt the 717 00:37:44,640 --> 00:37:48,680 Speaker 10: domestic companies. Interestingly, with this vote, Germany voted against it, 718 00:37:50,080 --> 00:37:52,560 Speaker 10: which I thought was kind of fascinating in the sense 719 00:37:52,560 --> 00:37:55,080 Speaker 10: that this sounds like a very tactical vote by the 720 00:37:55,120 --> 00:37:59,200 Speaker 10: Germans because they probably knew that there'd be enough votes 721 00:37:59,280 --> 00:38:02,960 Speaker 10: to implement the terriff. By voting against it, they signal 722 00:38:03,040 --> 00:38:08,919 Speaker 10: to China that they're they're open for business and they 723 00:38:08,960 --> 00:38:12,320 Speaker 10: need that because Volkswagen, Mercedes and BMW are big players 724 00:38:12,320 --> 00:38:14,040 Speaker 10: in the Chinese market and they don't want to be 725 00:38:14,080 --> 00:38:17,160 Speaker 10: penalized there for what the EU governments are doing. 726 00:38:17,520 --> 00:38:21,320 Speaker 3: Interesting, So if I am a Western automaker, you know, 727 00:38:21,320 --> 00:38:25,279 Speaker 3: whether it's Volkswagen or Afford David, what do I How 728 00:38:25,320 --> 00:38:26,799 Speaker 3: do I think about the Chinese market? Is that an 729 00:38:26,840 --> 00:38:28,680 Speaker 3: opportunity for me? Is that more of a risk here? 730 00:38:31,000 --> 00:38:35,759 Speaker 10: Look, it's it's going away, and okay, I think it's 731 00:38:35,760 --> 00:38:38,560 Speaker 10: a matter of time before the Western companies are mostly 732 00:38:38,640 --> 00:38:41,440 Speaker 10: squeezed out. I mean, you know, you have two factors 733 00:38:41,520 --> 00:38:43,960 Speaker 10: or played. One is the Chinese product. The domestic products 734 00:38:43,960 --> 00:38:46,640 Speaker 10: a very good so it's tough to compete there. They 735 00:38:46,680 --> 00:38:49,560 Speaker 10: have a cost advantage because of the subsidies, but also 736 00:38:49,600 --> 00:38:53,880 Speaker 10: because labor is cheap. Arguably Western companies enjoy some of 737 00:38:53,880 --> 00:38:58,280 Speaker 10: that which is cheap labor, but they don't necessarily benefit 738 00:38:58,320 --> 00:39:02,120 Speaker 10: from all the government subsidies and money for factories, money 739 00:39:02,160 --> 00:39:05,000 Speaker 10: for R and D and so forth. But the Chinese 740 00:39:05,080 --> 00:39:08,680 Speaker 10: government is increasingly pressuring people by domestic and the product 741 00:39:08,719 --> 00:39:11,280 Speaker 10: is that. So you're seeing market share losses from everybody. 742 00:39:11,400 --> 00:39:14,160 Speaker 10: GM's market share is down by a third, Volkswagen that's 743 00:39:14,160 --> 00:39:16,920 Speaker 10: taken hit. Hyundai's down like eighty percent because there was 744 00:39:17,000 --> 00:39:20,480 Speaker 10: tension between the Korean soft marene government and China's government 745 00:39:20,520 --> 00:39:22,359 Speaker 10: in the South China Sea a couple of years ago, 746 00:39:22,880 --> 00:39:26,080 Speaker 10: and then suddenly nobody wanted to buy Hyundais and Kyas 747 00:39:26,120 --> 00:39:29,240 Speaker 10: in China. So you see a lot of these domestic 748 00:39:29,239 --> 00:39:33,440 Speaker 10: pressures in China against foreign name plates, and it's just 749 00:39:33,480 --> 00:39:35,359 Speaker 10: tough and tougher for everyone to new business there. 750 00:39:35,480 --> 00:39:37,080 Speaker 3: All right, David, thanks so much for joining us. I 751 00:39:37,120 --> 00:39:40,480 Speaker 3: always appreciate getting your reporting and your perspective. David Wellchi's 752 00:39:40,520 --> 00:39:44,960 Speaker 3: a Detroit bureau chief for Bloomberg News. Again, kind of 753 00:39:45,120 --> 00:39:46,719 Speaker 3: some concerted effort on a part of some of these 754 00:39:46,719 --> 00:39:50,560 Speaker 3: Western countries in a form of terraffs against the Chinese 755 00:39:50,760 --> 00:39:55,160 Speaker 3: electric vehicles, a competitive market. To be short in developing 756 00:39:55,200 --> 00:39:56,080 Speaker 3: story to be short. 757 00:39:56,400 --> 00:40:00,960 Speaker 2: This is the Bloomberg Intelligence podcast, available on that Apples, Spotify, 758 00:40:01,120 --> 00:40:04,760 Speaker 2: and anywhere else you'll get your podcasts. Listen live each weekday, 759 00:40:04,920 --> 00:40:07,880 Speaker 2: ten am to noon Eastern on Bloomberg dot com, the 760 00:40:08,000 --> 00:40:11,440 Speaker 2: iHeartRadio app tune In, and the Bloomberg Business app. You 761 00:40:11,480 --> 00:40:14,680 Speaker 2: can also watch us live every weekday on YouTube and 762 00:40:14,840 --> 00:40:16,440 Speaker 2: always on the Bloomberg terminal