Speaker 1: This is Bloomberg Business Wait inside from the reporters and
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Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Maddie, we've gone wow almost this whole week without talking
Speaker 2: much about bitcoin.
Speaker 3: I mean, I can't believe you've been able to do it, Tim.
Speaker 2: I know, well, I've been saving it for this afternoon
Speaker 2: because it's our weekly segment where we talk about cryptocurrencies.
Speaker 2: Very please right now to have Mni Bali joining us.
Speaker 2: He's the co founder and CEO of Trust Machines, also
Speaker 2: the co founder of Stacks. When he joins us via zoom,
Speaker 2: could have you with us this AFTERNOONI but I'm on
Speaker 2: your website for Trust Machines, and what you promised to
Speaker 2: do is build a decentralized economy on bitcoin. I think
Speaker 2: what people understand about bitcoin and cryptocurrency is how we
Speaker 2: can use it as a currency. But I don't think
Speaker 2: a lot of people understand how you can build build
Speaker 2: on it. What do you mean by that?
Speaker 4: Yeah?
Speaker 5: Absolutely, thanks thanks for having me. So I think if
Speaker 5: if bitcoin is money.
Speaker 6: So what we're talking about is building the entire financial
Speaker 6: infrastructure and financial markets around it. And we've actually seen
Speaker 6: early signs of that in other ecosystems like Etherium and Solana.
Speaker 6: But Bitcoin happens to be the largest handbook, the most durable,
Speaker 6: the most recognizable brand, and I think it's sort of
Speaker 6: like surprising so far we haven't seen more financial infrastructure builds.
Speaker 2: Are bitcoin itself like, who what would you think that
Speaker 2: should be built on it? Right now?
Speaker 6: I think the things that come to minds first of all,
Speaker 6: are decentilized exchanges. Obviously, you know, we know about coinbase,
Speaker 6: and we've seen the ftx blow up out. So if
Speaker 6: things are decent lized, if people can just trade in
Speaker 6: a decentilized way, that that that's really good. Even bringing
Speaker 6: stable coins to Bitcoin. Most of the stable coins like
Speaker 6: tether and USDC right now they're issues around aterium and
Speaker 6: some other change and they're not really working on the
Speaker 6: Bitcoin rails. And I think bringing several coins to bitcoin
Speaker 6: building lending protocols. Again, we saw things like blog five
Speaker 6: blow up, So if there were decent lized lending protocols
Speaker 6: directly built on top of Bitcoin, I think people could
Speaker 6: have really benefited from tact.
Speaker 3: When you think about the trade of bitcoin, it seems
Speaker 3: like it's losing its mojo a little bit. Right When
Speaker 3: we look at it year to date, we're not seeing
Speaker 3: as much of the volatility that you usually see when
Speaker 3: it comes to bitcoin. It's gone eight trading sessions as
Speaker 3: of today without a one percent move. What does that
Speaker 3: tell you? Are you concerned at all about bitcoin as
Speaker 3: kind of an asset class.
Speaker 5: So this is my.
Speaker 6: Third beer market, right, and I think this is probably
Speaker 6: the most pleasant bit market that I've been through. So
Speaker 6: I consider as being a bear market, I think given
Speaker 6: for a bear market, this is actually a pretty good
Speaker 6: trading market to be in. Things are including that, and
Speaker 6: I think I would be just looking forward to the
Speaker 6: bigcoin hobbing, which is scheduled for April next year. I
Speaker 6: think historically, again this is how the market has been working.
Speaker 6: No guarantee it will work like that in the future,
Speaker 6: but historically around the bigcoin hobbing is when you know
Speaker 6: markets pick up, there's a lot more excitement, and because
Speaker 6: it's just it's just the market dynamics, the supply of
Speaker 6: bigcoin goes down even more, and I think I think
Speaker 6: people get more interested in it.
Speaker 3: Well, what's interesting. What's interesting though, when it comes to
Speaker 3: what markets are more interested in, is that we have
Speaker 3: this really cool word search function on the terminal. If
Speaker 3: you want to nerd out with me for a second,
Speaker 3: I do.
Speaker 2: I don't know what you're talking about, and it looks great.
Speaker 3: Well, you can do DS go to document search, but
Speaker 3: smarter people than me just write it up for me.
Speaker 3: So I don't even have to use the function, to
Speaker 3: be honest. But one of the reports from this week
Speaker 3: looks at how Barbie Mentions outbeat Bitcoin for mentions on
Speaker 3: the terminal this week. So and that's the second week
Speaker 3: in a row that that's happened, by the way, So
Speaker 3: what does that tell you? Does bitcoin have a pr problem?
Speaker 3: Do they need to become a Barbenheimer to get back
Speaker 3: into the zeitgeist here?
Speaker 7: Yeah?
Speaker 6: So I think I'll go back to this four year
Speaker 6: cycle theory. Right, So we see these spikes, the coin
Speaker 6: basically does a ten x or so, right in terms
Speaker 6: of number of view users. In the first cycle, we
Speaker 6: went to like one million users, then ten and depending
Speaker 6: on how you count, maybe the last one will get
Speaker 6: included to Warner. So I think the interest goes down
Speaker 6: as well. But this is a time for billers, right.
Speaker 6: So this is something I've seen over and over that
Speaker 6: companies and developers who really believe in the technology, they
Speaker 6: basically catch up on things during this bear market cycle.
Speaker 7: Right.
Speaker 6: So a lot of great products get built, a lot
Speaker 6: of people were basically building for the next years. They
Speaker 6: get their work done, and then the next wave of
Speaker 6: interest comes. So I think you're definitely in a bear market.
Speaker 2: What are you seeing filter right now?
Speaker 6: Yeah, So some of the things that I'm really excited
Speaker 6: about is bigcoin L two's. If you look at Ethereum,
Speaker 6: something like a two hundred and fifty billion dollar market,
Speaker 6: and it has a fifty to sixty billion dollar L
Speaker 6: two markets. L twos are these layer twos that are
Speaker 6: built on top of Atherium. They helped it scale, they
Speaker 6: bring more users and applications to it, and for the
Speaker 6: first time, I'm seeing more of that happening on bigcoin,
Speaker 6: which is absolutely critical.
Speaker 5: So you mentioned a SAX project.
Speaker 6: I'm a co creator of SAX is a bitcoin L
Speaker 6: two that helps sort of like bring more applications or
Speaker 6: being able to just do like cheap and fast bitcoin transfers.
Speaker 5: They will happen on.
Speaker 6: The L twos and not on the L one, and
Speaker 6: I think these are still maturing and more on the
Speaker 6: bitcoin side.
Speaker 5: But some pretty pretty exciting stuff happened.
Speaker 2: Given that we're still in what you describe as a
Speaker 2: bear market or you know what others described as a
Speaker 2: crypto winter, are you seeing interest around the space?
Speaker 5: Just cool?
Speaker 2: I mean, Maddie brought this up about Barbie versus bitcoin,
Speaker 2: but are you having trouble finding employees? A couple of
Speaker 2: years ago, what we were talking about was, hey, these
Speaker 2: are all people leaving Wall Street to go where crypto firms. Yes.
Speaker 6: So I think the one interesting dynamic of what happens
Speaker 6: during the bear market is bitcoin dominance actually goes out.
Speaker 6: So some people who track the bigcoin dominance it's actually
Speaker 6: at the highest right now, which just means the market
Speaker 6: cap or bitcoin versus all the other assets. So in
Speaker 6: some ways it actually becomes easier to hire for bigcoin
Speaker 6: companies because people get more burnt by all the others assets, right,
Speaker 6: they might be riskier or you know, there might be
Speaker 6: you know, alsos in theferious people behind those projects. Where
Speaker 6: bitcoin is this neutral, truly decentralized grassroots movement, and people
Speaker 6: gravitate towards that a little bit more. This is within
Speaker 6: the industry, but broadly speaking, yes, I think it's not
Speaker 6: the it's not the crazy times. But sometimes it's also
Speaker 6: a really good filter because now you're not getting the mercenaries,
Speaker 6: You're actually getting more mission driven people, people who actually
Speaker 6: believe in decentralization, who believe that building these asset systems
Speaker 6: is actually a good thing.
Speaker 5: So I've always enjoyed the bear market. It's I think
Speaker 5: the signal to noise where it should actually IMPROVESE a lot.
Speaker 6: There's a lot more signal in the market and softer
Speaker 6: as they go away.
Speaker 5: I think they're going to AI these days, and that's
Speaker 5: the word.
Speaker 2: This is that signal or noise in AI, though.
Speaker 6: I think I think as as a computer scientist, I'm
Speaker 6: definitely interested in a lot of the breakthroughs that have
Speaker 6: happened recently. I wasn't a believer like five years ago,
Speaker 6: but I've seen some some some really good stuff come out.
Speaker 6: But again, it's like the overhyping of something and people
Speaker 6: just jumping on the bandwag and stuff that we need
Speaker 6: to be a little.
Speaker 5: Bit careful of.
Speaker 2: Hey, what's it going to take Menie to get crypto
Speaker 2: out of this winter.
Speaker 6: I think I am a firm believer in bitcoin. First,
Speaker 6: I think the rest of the industry is sort of
Speaker 6: like attached to it. Bitcoin has a clear product market fit.
Speaker 6: I mean, we're seeing the turbulence in the financial markets.
Speaker 6: We're seeing inflation just go.
Speaker 5: Through the roof throughout the world. Like I think, it's
Speaker 5: not not not just in the United States.
Speaker 6: Like I have my parents who live in Pakistan, and
Speaker 6: whenever I send dollars to them, a dollar is worth
Speaker 6: like three x more just in the last two years
Speaker 6: then what it used to do. So people are feeling
Speaker 6: the pain, they're feeling inflation, and they're realizing what a
Speaker 6: hard asset means, what you know, a goldbacked currency couild
Speaker 6: have meant. And I think bitcoin is sort of like
Speaker 6: the best best thing out there. And what happens is
Speaker 6: whenever interesting bitcoin goes up, then there is a long
Speaker 6: tale of everything else that sort of like picks up
Speaker 6: on it.
Speaker 5: Right.
Speaker 6: So I feel like if you believe in bitcoin, if
Speaker 6: you think the world needs a better money, and bitcoin
Speaker 6: is the best money invented so far, and it's it's
Speaker 6: almost like an open source thing, right, There's a technology
Speaker 6: that's out of the box very hard to stop. So
Speaker 6: I think when bitcoin rises, everything else is going to
Speaker 6: advise with it.
Speaker 3: All Right, Well, we're going to have to leave it
Speaker 3: there on this Friday. I mean, thank you so much
Speaker 3: for joining us. We need all the co founder and
Speaker 3: chief executive officer of Trust Machines. I should mention you're
Speaker 3: also the co founder of Stacks coming on to talk
Speaker 3: crypto with us for our weekly crypto segment.
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Speaker 3: That Job's report, We've been talking about it all day, Tim,
Speaker 3: because you know I have a little something for everyone.
Speaker 6: Right.
Speaker 3: You've got the job growth remaining steady, non form payrolls
Speaker 3: climbing slightly less than forecast, potentially a victory for the
Speaker 3: Fed there, but the bad news for them wages still
Speaker 3: going up.
Speaker 2: Hey, that's good news for us.
Speaker 3: That's good news for us, Tim, and hopefully for our
Speaker 3: listeners here. So joining us to discuss and kind of
Speaker 3: suss out the top line takeaway here for us is
Speaker 3: Julia Pollock. She's the chief economist of Zip Recruiter, and Julia,
Speaker 3: it's great to have you on again here. I'm trying
Speaker 3: to figure out how to read the good and the
Speaker 3: bad news of this report. So just in terms of
Speaker 3: putting it into historical context for me, would you say
Speaker 3: this is the first report we've gotten that puts US
Speaker 3: back to pre pandemic levels and vibes.
Speaker 4: Yeah, this is pretty much in line with a pre
Speaker 4: pandemic rate of job growth. But I would say on
Speaker 4: wage growth, I don't think this is all worrying news
Speaker 4: for the Fed and on the inflation front, because the
Speaker 4: work week has actually become shorter over the past year.
Speaker 4: Average weekly hours, average weekly earnings have only risen three
Speaker 4: point five percent, even though average hourly earnings have risen
Speaker 4: four point four percent, So that three point five percent
Speaker 4: weekly wage growth is completely consistent with the FEDS two
Speaker 4: percent inflation. And then the data we got earlier this
Speaker 4: week on productivity also suggests that high wage growth is
Speaker 4: sustainable because productivity is rising.
Speaker 2: Julia, we love talking to you because on zip recruiter
Speaker 2: you have a great insight into the types of jobs
Speaker 2: people are looking for and the types of jobs people
Speaker 2: are applying for. Michael McKee, international Economics and Policy correspondent,
Speaker 2: was in here a little earlier and he was saying,
Speaker 2: there's a little bit of debate about Okay, people just
Speaker 2: not hiring at the same rate that they were hiring
Speaker 2: out earlier, or people just not wanting to work at
Speaker 2: the same rate that they were wanting to work out earlier.
Speaker 2: What are you seeing on your platform, Well.
Speaker 4: Job seekers have come back, and we've seen job seeker
Speaker 4: engagement on jobs rising sixty nine percent over the year.
Speaker 4: So it's not that workers are not available and not
Speaker 4: ready to work. Although many employers say that while they
Speaker 4: can find entry level workers quite easily, they're struggling to
Speaker 4: find people with specific credentials and qualifications. And they're also
Speaker 4: struggling to find people with five to ten or ten
Speaker 4: to fifteen years of experience. So quality is still a tricky,
Speaker 4: tricky issue.
Speaker 8: For why is that?
Speaker 4: It's hard to know? One issue is that many older
Speaker 4: workers left during the pandemic and they have not returned,
Speaker 4: and they've taken a huge amount of skill and knowledge
Speaker 4: with them. Many industries are also finding that the talent
Speaker 4: pipeline has sort of run dry. Fewer workers are majoring, say,
Speaker 4: in accounting. It's just not such an exciting, appealing career
Speaker 4: anymore for young people who would rather be in tech
Speaker 4: or in social media or blogging or goodness knows what.
Speaker 4: So exactly right, wellies, And it's so interesting.
Speaker 3: I want to pick up on that because we were
Speaker 3: talking with Mike McKee, as Tim said about how the
Speaker 3: biggest job loss category in this print was in management.
Speaker 3: We're starting to see, at least in the data, that
Speaker 3: companies are kind of hoarding that lower skilled, cheaper, more
Speaker 3: affordable labor and getting rid of their higher level employees
Speaker 3: that cost them a little bit more. So help me
Speaker 3: understand where you're seeing that you're seeing less people with
Speaker 3: more skills out there available to be employed.
Speaker 4: Yeah, so it's a challenging situation for employers. We're also
Speaker 4: seeing employers move away from their sort of excessive reliance
Speaker 4: during the pandemic on contract workers and temporary help agency staff,
Speaker 4: and they're shifting from those temporary recruitment strategies is like
Speaker 4: signing bonuses to more long term workforce management policies. We're
Speaker 4: seeing a large increase in the share of job hostings
Speaker 4: on zip recruiter that offer health insurance and that offer
Speaker 4: retirement plans, and that's a good sign to me. It
Speaker 4: suggests that employers are actually hiring in house staff and
Speaker 4: trying to find ways not just to get them in
Speaker 4: the door, but to keep them there and keep them happy.
Speaker 2: What about getting employees to the office. We've spoken to
Speaker 2: you several times over the past few years, Trulia about
Speaker 2: listings that show hybrid work or remote work. There's been
Speaker 2: a lot of discussion, at least here in New York
Speaker 2: City about getting workers back to the office, and also
Speaker 2: from companies such as Amazon and more tech companies like
Speaker 2: Apple as well. What are you seeing on the platform?
Speaker 4: So remote listings have mostly plateaued in most industries, although
Speaker 4: there are several industries where they have declined recently, like
Speaker 4: in customer service. There are some where they continue to rise,
Speaker 4: like in consulting financial services. So it really is a mix,
Speaker 4: and companies are carefully weighing the trade offs the cost savings,
Speaker 4: the recruitment benefits, the retension benefits. Some studies show a
Speaker 4: decline and attrition of thirty five percent, which dramatically lowers
Speaker 4: your turnover costs. So there are huge benefits from remote work,
Speaker 4: but one needs to do it right so that one
Speaker 4: doesn't lose mentorship and collaboration.
Speaker 3: Well, we know that remote work is one of the
Speaker 3: things contributing to that attrition and people switching jobs. I'm
Speaker 3: curious about pay when it comes to switching jobs, because
Speaker 3: we know from the ADP report earlier this week that
Speaker 3: you do stand to gain on the wage front when
Speaker 3: you switch jobs. You're getting about a ten percent increase
Speaker 3: in wages as opposed to six percent when you stay
Speaker 3: in the job that you currently have. What are you
Speaker 3: seeing on your platform when it comes to the ability
Speaker 3: for workers to get higher salaries if they are kind
Speaker 3: of job hopping around.
Speaker 4: So the majority of job switches is still getting pretty
Speaker 4: substantial wage increases, but the share who are increasing their
Speaker 4: wages when they switch is actually going down. Part of
Speaker 4: that is a matter of choice. So workers are prepared
Speaker 4: to give up pay in order to get remote work.
Speaker 4: They're prepared to give up about eight to ten percent
Speaker 4: of their pay because remote work saves you time and money.
Speaker 3: That's a lot to give up for remote work.
Speaker 2: You have to think about what We'll go ahead, Julia.
Speaker 4: Yeah, but if you gained seventy minutes a day that
Speaker 4: you would have spent commuting, and if you save five
Speaker 4: thousand dollars a year on transportation costs, it can really
Speaker 4: make up for it.
Speaker 2: And then seventeen minutes a day, Yeah.
Speaker 4: You have children and you spend a lot of time
Speaker 4: in the car, and you have to pay for child's care,
Speaker 4: you know, for that during that commute, and you sit
Speaker 4: there in the car feeling like, how on Earth am
Speaker 4: I doing this? Wasting my life when I could be
Speaker 4: with my kids and I'm paying for child care on
Speaker 4: top of it. Those kinds of savings are not just
Speaker 4: financial savings, but they're psychic cost savings as well.
Speaker 2: I feel like I'm getting triggered here by you saying
Speaker 2: those things, But it's true. I mean I spend I
Speaker 2: spend about forty five minutes round trip commuting from my apartment.
Speaker 3: Wait, but ten say the thing you said earlier about
Speaker 3: productivity and the return to work.
Speaker 2: This is interesting, Julia. We have a story out on
Speaker 2: the Bloomberg about a study that economists at MIT and
Speaker 2: UCLA did that shows that people are less productive at
Speaker 2: home by about eighteen percent. These are new hires, and
Speaker 2: they did experiment new hires in India, but they did
Speaker 2: talk to somebody for the article who said, you know what,
Speaker 2: these people might be less productive if they're at home,
Speaker 2: but the company may save money on real estate. So
Speaker 2: if the company's not spending the money on real estate,
Speaker 2: it's okay to have these lower productivity workers.
Speaker 4: So the real estate savings are actually a small piece
Speaker 4: of the pie because in most companies, in most companies
Speaker 4: today in the United States, in knowledge industries, your biggest
Speaker 4: cost is your people. And when you can recruit people
Speaker 4: across the country from lower cost places, you can get
Speaker 4: talent much more tea. And then if they're prepared to
Speaker 4: do the job and stay there for longer without big
Speaker 4: wage increases because they're so happy and they enjoy the
Speaker 4: work life balance that they've got, you you can save
Speaker 4: and have reduced wage growth pressure as well. So there
Speaker 4: are lots of reasons to sort of balance the productivity
Speaker 4: and cost savings benefits. Then the evidence on productivity is mixed.
Speaker 4: There are plenty of studies that show productivity gains, like
Speaker 4: studies of customer support agents that found that they gained
Speaker 4: an additional day a week of productivity because they made
Speaker 4: many more calls during times when they would otherwise have
Speaker 4: been commuting.
Speaker 3: Julia ten seconds here. What type of employee is having
Speaker 3: the easiest time finding work right now?
Speaker 4: Healthcare the industry is on a tear. It's gained enormous
Speaker 4: numps of jobs for eighteen straight months.
Speaker 2: Now, well, we got a great story on healthcare coming
Speaker 2: up a little later today with John Tazzi during the
Speaker 2: five o'clock hour. It's about the changing relationships that employers
Speaker 2: have with the health insurance that they're paying so much
Speaker 2: money to ensure their workers. Julia Pollock really appreciate you
Speaker 2: taking the time, chief economist at Zipper Corder Recruiter, joining
Speaker 2: us on the July Jobs Reporting All things employment.
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Speaker 3: There's a little something for everyone in the jobs data today.
Speaker 3: But we think so much tim when we get the
Speaker 3: job's data about how the Fed's going to respond, which
Speaker 3: can make the good news seem like bad news. Right,
Speaker 3: more jobs in pay means the FED raises rates, but
Speaker 3: of course that's bad news for anyone looking to buy
Speaker 3: a home. But then we think, okay, less jobs, the
Speaker 3: FED may cool off, but then there are fewer jobs.
Speaker 3: You got to remember that that's bad news for people too.
Speaker 3: So we wanted to focus today on the people impacted
Speaker 3: by these numbers and the data that we talk about
Speaker 3: so often. So right now we're specifically going to focus
Speaker 3: on the Hispanic population when it comes to that data,
Speaker 3: and we've got a great guests here to discuss, Javier
Speaker 3: Palomar as the president and CEO of the US Hispanic
Speaker 3: Business Council. On Javier, great to have you. Thank you
Speaker 3: so much for coming on with us. When you look
Speaker 3: at the data from today, we're seeing that for black workers,
Speaker 3: the labor force participation rate did tick slightly higher, and
Speaker 3: the same was true for the unemployment rate when it
Speaker 3: comes to Hispanic workers as well. But I'm curious, what
Speaker 3: was your biggest takeaway from the data today.
Speaker 9: Well, I mean, if you look at the numbers, you know,
Speaker 9: let me begin by saying first of all that I
Speaker 9: want to thank you for having American small business's voice
Speaker 9: on this. The United States Hispanic Business Council is a
Speaker 9: leading advocate for our nation's four point five million Hispanic
Speaker 9: on firms in this country that collectively contribute over eight
Speaker 9: hundred billion dollars to the American economy.
Speaker 7: We watch these numbers very carefully, as you can imagine.
Speaker 9: You know, one hundred and eighty seven thousand jobs is
Speaker 9: not exceptional, but it's what was predicted as it relates
Speaker 9: specifically to the Hispanic market.
Speaker 7: You know, when you look at where the majority of
Speaker 7: the growth.
Speaker 9: Happened, it was construction, healthcare, wholesale services, things of that nature.
Speaker 9: And when you look at Hispanic employment and where Hispanics are,
Speaker 9: there's a concentration of employees that are Hispanic descent. Those
Speaker 9: happen to be the sectors. So while the numbers specifically
Speaker 9: when you're looking at Hispanic may not be great, we're
Speaker 9: very enthused about what we've seen. The numbers for us
Speaker 9: overall are on track, and so you know, I think
Speaker 9: that you know, better days are are ahead of us.
Speaker 7: But certainly the numbers today, I mean to hit the projections.
Speaker 2: What are you hearing from the businesses on the ground,
Speaker 2: from these millions of people who you represent at the
Speaker 2: United States Hispanic Business Council, The millions of businesses.
Speaker 9: What are they saying, Well, you know, the market is tight,
Speaker 9: it has been tight for some time.
Speaker 2: When you say the market is tight, are you referring
Speaker 2: to the labor market.
Speaker 7: Absolutely.
Speaker 9: Absolutely, It's really about attracting the kind of worker you need,
Speaker 9: the employee you need, and then retaining that employee. And
Speaker 9: particularly in some segments obviously, as you can imagine construction
Speaker 9: and agriculture, it is a very difficult time just to
Speaker 9: keep you know, their labor force at a level at
Speaker 9: which they need. But if you look at Hispanic employment,
Speaker 9: the state of Hispanic employment according to the Department of Labor,
Speaker 9: between the years twenty twenty and twenty thirty, a little
Speaker 9: over seventy nine percent of the net new workers entering
Speaker 9: the American workforce will be of Hispanic percent.
Speaker 7: So think about that for just a minute.
Speaker 9: Almost eighty percent of net new workers between the year
Speaker 9: twenty twenty and twenty thirty will be Hispanics. So this
Speaker 9: bodes well for a community that continues to grow and
Speaker 9: continues to want to do nothing more than to contribute
Speaker 9: to this nation that we love so much. The puts
Speaker 9: in takes, you know, from a month to month basis,
Speaker 9: you know, it's going to change. There's going to be
Speaker 9: some puts and takes, and some days are better than others.
Speaker 9: But the net of it is that Hispanic employment is
Speaker 9: doing a live is doing is alive and well in
Speaker 9: the American economy, and we're thrilled to what we're seeing overall.
Speaker 3: Yeah, and Hispanic employment, to your point, is contributing about
Speaker 3: eight hundred billion dollars to the American economy when you
Speaker 3: just look at Hispanic owned businesses in the United States.
Speaker 3: I'm curious, when you think about legislation from Washington, what
Speaker 3: do you think would be and I see you laughing
Speaker 3: a little bit there, what do you think would be
Speaker 3: kind of the single biggest thing that you would hope
Speaker 3: that legislators in Washington would understand in order to help
Speaker 3: continue the growth that we're already seen in these numbers,
Speaker 3: that eight hundred billion dollar number that you cite for us.
Speaker 9: You know that that's an insightful question and if I
Speaker 9: could figure that one out, medisine. But the reality of
Speaker 9: it is, we have a Congress, we have elected officials
Speaker 9: that appear to be really disjointed from the reality of
Speaker 9: the marketplace. But with that said, there are some bright
Speaker 9: spots some glimmers of hope. I was just with Kirsten
Speaker 9: Cinema last week. I did an hour long question and
Speaker 9: answer session with her. And the reason I was so
Speaker 9: keen on going to sit with her.
Speaker 7: And talking to her.
Speaker 9: Here is a woman who was the major proponent of
Speaker 9: the Infrastructure Investment in Jobs Act. She was also a
Speaker 9: key player in the debt negotiations and saw to it
Speaker 9: that permitting was embedded into the negotiations. Now, why do
Speaker 9: we care about those two things? If you look at
Speaker 9: the infrastructure in this nation, First of all, we rank
Speaker 9: I believe, seventeenth globally, while we're the while we're the
Speaker 9: wealthiest nation on the globe. That's simply unacceptable. But if
Speaker 9: you look at the industries that fall under that broad
Speaker 9: umbrella of infrastructure, are the construction, transportation, wholesale manufacturing, or
Speaker 9: Hispanics employed construction manufacturing. So here's an individual that wasn't
Speaker 9: looking at it necessarily from a Hispanic perspective, but was
Speaker 9: clear minded in terms of what American small business needs.
Speaker 9: And if you do right by American small business, by default,
Speaker 9: you're doing right by Hispanic owned businesses and Hispanic entrepreneurs
Speaker 9: in this country.
Speaker 2: Hey, one thing I wanted to touch on you with
Speaker 2: on with you, Javier, is child labor in this country
Speaker 2: and what the Labor Department has recently found some kids
Speaker 2: as young as thirteen actually working illegally in really terrible conditions.
Speaker 2: Talk to me about what you at the US Hispanic
Speaker 2: Business counselor doing about that, and what the reaction from
Speaker 2: Washington has been. You know, I hear about these stories
Speaker 2: and I think to myself, this is twenty twenty three.
Speaker 2: How are their kids illegally working in meat packing plants
Speaker 2: in the US.
Speaker 9: Yeah, listen, you're talking to a former migrant farm worker
Speaker 9: English as a second language.
Speaker 7: Kid.
Speaker 9: I know the conditions that field laborers are working in.
Speaker 9: I've lived that and is deplorable. Things have gotten better
Speaker 9: since I was there, but it is a very very
Speaker 9: difficult environment. I mean, you're working some up to some
Speaker 9: down in the heat, in the rain, in the snow,
Speaker 9: it doesn't matter.
Speaker 7: And you're right.
Speaker 9: The Labor Department found forty four hundred cases of children
Speaker 9: working across a variety of industries throughout the United States.
Speaker 9: That's a forty four percent increase from last year. They've
Speaker 9: levied over six and a half million dollars in penalties.
Speaker 9: That's an eighty seven percent increase over last year. And
Speaker 9: while we sympathize with those industries that need the labor,
Speaker 9: we believe in commerce, of course, but commerce with a
Speaker 9: conscience and child labor is undeniably wrong, it's undeniably evil.
Speaker 9: We are America. We can do better than this, We
Speaker 9: should do better than this. With that in mind, I've
Speaker 9: been busy all week talking about this, actually, and so
Speaker 9: I'm glad you asked it, Tim, Bless you for that.
Speaker 9: But with that, there's another stark reality that we have
Speaker 9: to deal with at the USHBC, and that is that
Speaker 9: industries that rely on immigrant labor i e. Construction and agriculture,
Speaker 9: I mean agriculture alone, seventy three percent of the workforce
Speaker 9: in agriculture is of immigrant background. And so there is
Speaker 9: an environment where over the last decade, technically in our
Speaker 9: agricultural sector has had a labor shortage. And here's a
Speaker 9: stark reality. Every year we lose ten million tons of
Speaker 9: that goes unharvested. Ten million tons, not ten million pounds,
Speaker 9: ten million tons.
Speaker 7: Approached that goes unharvested.
Speaker 9: So you can imagine the strain on the agricultural sector
Speaker 9: and of course we represent that sector as well.
Speaker 3: So Javier, just because we only have a minute left
Speaker 3: with you, tell me what is one thing that you
Speaker 3: wish would be done to specifically address the problem that
Speaker 3: you're talking about right now when it comes to farming.
Speaker 9: You know, there is a piece of legislation called the
Speaker 9: Dignity Act that, of all things, is being proposed by
Speaker 9: a Republican Florida woman named Maria Elvirus Alazar and a
Speaker 9: Texas woman Democrat named Veronica Escobar.
Speaker 7: It is all about making sure that we have the.
Speaker 9: Protections that are appropriate and that are that are right
Speaker 9: for all people working in America, certainly for children. The
Speaker 9: Dignity Act, that's something we should really be looking at
Speaker 9: as a nation.
Speaker 3: All right, Javier, thank you so much. This is a
Speaker 3: great conversation and we're definitely going to have to have
Speaker 3: you back because we could have kept it going. Really
Speaker 3: appreciate you for coming on this Friday afternoon, Javier Palomarrez
Speaker 3: joining US President and CEO of the US Hispanic Business
Speaker 3: Council to talk about those jobs numbers and the work
Speaker 3: that needs to still be done. For this conversation following
Speaker 3: those jobs numbers from this morning.
Speaker 1: This is Bloomberg Business Wait inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Stock now lower after spending much the day higher. That
Speaker 2: reversal thanks to Apple moving lower, adding to its losses.
Speaker 2: Apple down right now about four point six percent. But
Speaker 2: let's talk big picture here. Get an idea for what's
Speaker 2: going on, not just today but with the macroeconomic picture
Speaker 2: and especially after that jobs report, how things are looking
Speaker 2: for the Fed's September meeting. Very pleased to add with us.
Speaker 2: Leo Kelly, founder and CEO at Vernon's Capital Advisors, joining
Speaker 2: us this afternoon on zoom from Hunt Value, Maryland. Leo,
Speaker 2: good to have you back with us. How are you
Speaker 2: I am?
Speaker 8: Well, thanks, it's good to be back. I always enjoy
Speaker 8: the Bloomberg Radio show.
Speaker 2: Oh well, we love it when you join us. So
Speaker 2: happy Friday, and yeah, thanks again for coming on the program.
Speaker 2: What are you looking at on a day where we
Speaker 2: get a jobs report that kind of has a little
Speaker 2: bit for everyone, but we're still seeing some weakness in
Speaker 2: the equity market as a result of some of those
Speaker 2: megacap tech companies lagging.
Speaker 7: Yeah.
Speaker 8: I think what we're starting to see is that as
Speaker 8: the market reaches higher and higher levels, it continues to
Speaker 8: be priced for perfection, and it continues that that razor
Speaker 8: thin line of perfection is just getting tighter and tighter,
Speaker 8: and so the market is going to start to as
Speaker 8: it discerns through various different pieces of information, does this
Speaker 8: mean the Fed's going to keep raising? Does this mean
Speaker 8: we're out of the woods recession on recession? I think
Speaker 8: we're in one of those periods where we're so optimistic
Speaker 8: right now that the market just wants everything to be
Speaker 8: good news, and so just slight, just slight concerns are
Speaker 8: really going to have a negative impact on the market.
Speaker 2: What's this like concern of today?
Speaker 5: Is it?
Speaker 2: Is it Apple's iPhone miss?
Speaker 7: Yeah?
Speaker 8: I think it's Apple's iPhone miss. I Also, again, I
Speaker 8: think we were expecting Apple to just blow the cover
Speaker 8: off the pace.
Speaker 2: It does that every time.
Speaker 8: Everything is priced. But that's where that's where the market's priced,
Speaker 8: whether it's Apple or it's a market as a whole.
Speaker 8: Remember this week, we've gone down earlier in the week,
Speaker 8: we saw a great ADP jobs number, but just before
Speaker 8: that we had the ISM numbers come out, and the
Speaker 8: forward looking jobs number for ISM was horrible. It was
Speaker 8: one of the worst readings since twenty twenty. I think
Speaker 8: this is indicative of the moment we're in. There's a
Speaker 8: lot of capital still slashing around the system. When M two,
Speaker 8: money supply went up forty percent in two years, and
Speaker 8: we just haven't gotten the money out of the system.
Speaker 8: So you're getting these mixed readings where sometimes the economy
Speaker 8: looks strong and we're ready to take off, and then
Speaker 8: the next report you say, oh my goodness, we might
Speaker 8: be in a recession by the fourth quarter. So the market,
Speaker 8: I think, is going to be volatile here. And remember
Speaker 8: seasonally we're heading into a rough spot.
Speaker 3: Eddie Ardini said today that we are not in a
Speaker 3: rolling recession, We're in a rolling recovery.
Speaker 7: Would you agree with that, Well, I think we're.
Speaker 8: We're in an earnings recession, and yet stocks have gone higher.
Speaker 8: Remember most of the games here have been pe expansion,
Speaker 8: not earnings expansion. I do think when we look, the
Speaker 8: Fed is going to get what it wants. Inflation is
Speaker 8: starting to slow down, but if they take their foot
Speaker 8: off the accelerator, even a little bit, inflation is going
Speaker 8: to come roaring back. And what that tells me is
Speaker 8: that this hope that the FED is going to stop
Speaker 8: and we're going to get a thrust in the economy.
Speaker 8: I think you have to be very very cautious with that.
Speaker 3: Why are you thinking that the FED should not lay
Speaker 3: their foot off the gas here, given that we are
Speaker 3: still seeing such strong consumer spending, we're still seeing strong wages,
Speaker 3: strong jobs data.
Speaker 8: Well, we're seeing we're also seeing some weakening. So as
Speaker 8: I said, ism the jobs information was actually not too good,
Speaker 8: and that's forward looking. We're seeing credit card debt expand dramatically.
Speaker 8: We're seeing delinquency rates go up, we're seeing the banks
Speaker 8: starting to take loan loss reserves, and we still haven't
Speaker 8: seen the impact of what we're seeing consistently in the
Speaker 8: surveys of tightening credit conditions at banks and commercial real estate.
Speaker 8: So right now, just to give you an idea, we're
Speaker 8: neutral in our equity position. We're neutral, and that speaks
Speaker 8: to where we are. I can point to ten things
Speaker 8: that would make you concern about the economy, and you
Speaker 8: could point back with ten that make it look pretty good.
Speaker 8: And what that speaks to is exactly what we've been
Speaker 8: talking about on this program for a few years, and
Speaker 8: that is, when you flood the system with trillions of
Speaker 8: dollars artificially, you create an economic anomaly, the greatest economic
Speaker 8: anomaly in history. And the result of that is you're
Speaker 8: going to get these these very confusing periods whereas we
Speaker 8: unwind the anomaly, the information's not going to make a
Speaker 8: lot of sense. We think this is a more cautionary environment.
Speaker 8: And by the way, you're getting five percent on your
Speaker 8: short treasury. Yeah, so it's not like you're not getting anything,
Speaker 8: you know, it's just now it's not the time to
Speaker 8: go chase tech, go chase the high priced stuff and
Speaker 8: overweight your portfolio. Doesn't make sense after a run like
Speaker 8: we've just.
Speaker 2: Had, When does it make sense to deploy new cash
Speaker 2: inte equities? When does it make sense to move that
Speaker 2: cash that's earning five percent in a money market fund equity?
Speaker 8: Well, you just hit you just hit the point square on.
Speaker 8: Look at the rate of return and the risk adjuster return.
Speaker 8: So let's take the SMP it's twenty times earnings. If
Speaker 8: we invert that right and we take one twentieth Right,
Speaker 8: that's a quarter. So we're gonna make you know. A
Speaker 8: ten pe is ten percent, Okay, a twenty pe is
Speaker 8: five percent, And so we're getting five percent on stocks
Speaker 8: with growth. By the way, so pick an earnings growth
Speaker 8: number a percent with the economy, that's your rate of return. Well,
Speaker 8: if we're getting five percent on risk free assets, the
Speaker 8: question is is there enough of a risk premium in
Speaker 8: those stocks to take that risk? And I would tell
Speaker 8: you you have to be very careful. I would also
Speaker 8: say that there's two different markets at the moment. Remember
Speaker 8: ten stocks are about thirty forty percent of the return
Speaker 8: of the market this year, so it's a narrow advance.
Speaker 8: So you've got this one group of stocks, which by
Speaker 8: the way, everybody's chasing, where actually the pes are astronomically higher,
Speaker 8: which means the rate of returns are lower versus this cash.
Speaker 8: So there is a place to put money. Small capsule,
Speaker 8: interesting value looks, interesting international develop looks, interesting emerging markets
Speaker 8: are starting to come up. You have to just be
Speaker 8: very discerning of your evaluations.
Speaker 3: How do you defend staying on the sidelines though to
Speaker 3: clients and not even you specifically, but how would you
Speaker 3: advise that defense because we have seen the Nasdaq up
Speaker 3: what in the first half of this year? How do
Speaker 3: you not get into this magnificent seven?
Speaker 8: Well again, I think I think you just hit you
Speaker 8: just really hit a home a point. Right, we're neutral,
Speaker 8: and yet to clients that feels like we're on the sidelines.
Speaker 7: Yea.
Speaker 8: And that even the language of saying, hey, just be
Speaker 8: neutral and it's okay to hold five percent treasuries and
Speaker 8: be underweight let's say long term bonds, which we are,
Speaker 8: that feels that feels somehow we're on the sidelence.
Speaker 7: We're not.
Speaker 8: That's called prudent long term asset management, right, it's called
Speaker 8: long term strategy. I guess the question is if we
Speaker 8: were to look back in time nineteen ninety nine, two thousand,
Speaker 8: two thousand and seven, two thousand and eight, nineteen seventy
Speaker 8: one going into seventy two to fifty to fifty crash, Right,
Speaker 8: as we look back in time, everyone would say, hey,
Speaker 8: I want to sell when the markets are strong and
Speaker 8: be smart, and I want to buy when markets are
Speaker 8: down and be smart. And yet, because we're human beings,
Speaker 8: we continue to do the opposite.
Speaker 2: Because we don't know when markets are up or down
Speaker 2: unless we have a crystal ball, or can you travel
Speaker 2: in time or.
Speaker 8: You use valuation, use fundamental valuation right. It walks you
Speaker 8: through the process and you have to have a long
Speaker 8: term perspective and not be thinking short term. It's really simple.
Speaker 8: And my point of view is this. I'm not suggesting
Speaker 8: you leave the market, or you stand on the sidelines,
Speaker 8: or you try to grab some traumatic moment to put
Speaker 8: it in. I'm saying, with the markets run as far
Speaker 8: as it has with evaluations, why be overweight?
Speaker 2: Leo Kelly, we love it when you join us, founder
Speaker 2: and CEO of Verdan's Capital Advisors on the on the
Speaker 2: Zoom from Hunt Valley, Maryland. Have a great afternoon, Leo,
Speaker 2: have a great weekend. We'll talk to you next time.
Speaker 2: You're listening to Bloomberg Business Week.
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