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Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside
Speaker 2: my co host Matt Miller.
Speaker 1: Every business day we bring you interviews from CEOs, market pros,
Speaker 1: and Bloomberg experts, along with essential market moven News.
Speaker 2: Find the Bloomberg Markets Podcast called Apple Podcasts or wherever
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Speaker 2: Ben Emmons joins us here in our Bloomberg Interactive Broker studio.
Speaker 2: He doesn't mail it in or own it, and he's
Speaker 2: a principal, senior portfolio manager and head of fixed Income
Speaker 2: at New Edge wealth. Been lots of economic data today
Speaker 2: and really this week here I don't know. I mean
Speaker 2: this services data kind of took me by surprise. Here
Speaker 2: again the ism services data, and we talk about services,
Speaker 2: it's important. It's seventy percent of our economy came in
Speaker 2: at fifty point six, so it's still above fifty, still
Speaker 2: showing some expansion in the economy, but well below last
Speaker 2: month and well below the consensus of fifty two point five.
Speaker 2: That's kind of got the bonds here, yields coming in
Speaker 2: a little bit in stocks higher. What would you make
Speaker 2: of that services data, yep.
Speaker 3: Paul, I thought that the surprise there was that employment components,
Speaker 3: you know, dropping below fifty free sharply.
Speaker 2: Yep.
Speaker 3: I think that's what that triggered the rally in bonds
Speaker 3: because it's a bit contradicting to what we saw yesterday
Speaker 3: with the b ANDI services data. Now, the surveys a
Speaker 3: little different from each other, but nonetheless in the employment component,
Speaker 3: that survey was up and it was actually I think
Speaker 3: part of the reason why we saw about a payroll
Speaker 3: data this morning. So I guess this survey is indicating that,
Speaker 3: you know, some of the people in the supply management
Speaker 3: survey view that the economy is perhaps getting weaker or
Speaker 3: they're having less demand for labor. Either way, you're getting
Speaker 3: this whipsite on the market this morning. You goes up
Speaker 3: to four point ten on the ten year on the
Speaker 3: pay roverboard and reverse back down between ninety six. So
Speaker 3: I think what it tells us is that this is
Speaker 3: a good economy. There will be some ray cuts coming
Speaker 3: in the future, but it is not like a recession
Speaker 3: economy either, so you're not see much lower yields I
Speaker 3: think from here.
Speaker 4: Yeah, So but let's get into the rate cuts that
Speaker 4: you talked about. Because we have the jobs that we
Speaker 4: have ism, you also get resource from Wall Street firms,
Speaker 4: from banks, So when do you see these rate cuts
Speaker 4: possibly kicking in it?
Speaker 3: So I think the March raycut is probably too soon,
Speaker 3: and that's just because the way the Fed is communicated
Speaker 3: that so far, you know, they've given us an idea
Speaker 3: that they are in projections out that probably gives them
Speaker 3: the confidence that they can actually this year can lower
Speaker 3: rates compared to last year when they said resoundingly like
Speaker 3: there's no case for raycouts. But a March raycot would
Speaker 3: mean that inflation data we're getting out until that time
Speaker 3: would see such significant decline that they start reacting to
Speaker 3: that and then make the case that March is the
Speaker 3: live meeting. So I think from the here at LISA,
Speaker 3: it will be more about as we're getting several months
Speaker 3: of inflation employment data, and it could used to go
Speaker 3: towards the you know, the goal that they have two
Speaker 3: percent inflation and unemployment rate maybe a little bit above four.
Speaker 3: That probably is more close to the June to get
Speaker 3: the first ray cut and then we really are into
Speaker 3: the second half of the year, So I don't think
Speaker 3: you're going to see six raycouts this year. So, Ben,
Speaker 3: what did you.
Speaker 2: Make We haven't spoken to you in a while here.
Speaker 2: What did you make of that big move we've saw
Speaker 2: in the markets there in the last I don't know,
Speaker 2: ten weeks of the year. Last year, we just had
Speaker 2: the ten year ago from five percent to three and
Speaker 2: a quarter. We had the stocks just rip. I mean,
Speaker 2: what was that?
Speaker 5: Yeah?
Speaker 3: Actually the right right in a way to say, what
Speaker 3: was it really about? Was it just about yields going down?
Speaker 3: Because one CPI reports showed that the owner's equipmental event
Speaker 3: finally starts to decline. I don't see it in New York.
Speaker 3: But okay, it's it's finally declining. So that triggered the
Speaker 3: move down and yields and there was a relief, and
Speaker 3: you're getting all the high beta and small caps and
Speaker 3: everything start to pricing this idea that yeah, Okay, the
Speaker 3: economy is not going to go to a recession. It
Speaker 3: will be a soft landing, maybe even no landing. I think,
Speaker 3: because it's just simply an economy is staying on track.
Speaker 3: And at the same time, it's about those who had
Speaker 3: money on the sidelines redeploying in something that lacked relative
Speaker 3: to technology, so sort of a relative catch up that
Speaker 3: I think all I think what drove this rally. Now
Speaker 3: will it continue is to be seen because I think
Speaker 3: what we're coming into this year is that we're going
Speaker 3: to keep a fat still restricted for a bit of time.
Speaker 3: So the economy, if it does stay in the slower
Speaker 3: track than last year, you know, you may see stocks
Speaker 3: not perform so strongly. If it's a lie, she has
Speaker 3: yields to sort of stay where we are, And I
Speaker 3: think that there's a really important part about that story. Ultimately,
Speaker 3: it's all about interest rates.
Speaker 4: Now, but a strong drug jobs market. It's that main
Speaker 4: kind of engine for resilient consumer spending, and it's pushed
Speaker 4: a lot of economists to rethink their recession calls. What's
Speaker 4: what's your take on that.
Speaker 3: Yeah, I think the recession call, I've never been in
Speaker 3: that camp. I still think there's no recession this year.
Speaker 3: It may not even be next year. I think here's
Speaker 3: where I come from. This important point to make maybe
Speaker 3: is that the fiscal impulse that we have to the economy,
Speaker 3: fiscal spending is not going to change this year. They
Speaker 3: have agreed on the dead seating last year. They have
Speaker 3: one percent mandatory spending cut across the board. But that's
Speaker 3: so small if you think about back in twenty eleven
Speaker 3: twelve when they had a ten percent mandatory spending cut,
Speaker 3: which really slowed down the economy. One percent is just
Speaker 3: not going to do much for the economy. Especially I've
Speaker 3: seeing job stated like this coming out, and you're seeing
Speaker 3: confidence picking up and financial conditions being looser. So I
Speaker 3: think it's an economy that stays on track. What could
Speaker 3: change it is next year whomever was in the White House.
Speaker 3: But here's one other things about that White House race,
Speaker 3: the new president. But it's buy no Trump, which what
Speaker 3: it looks like either of them wants to stimulate the economy,
Speaker 3: either with text cuts or with more spending. So either way,
Speaker 3: I think this recession scenario is not going to play
Speaker 3: out unless we getting major fiscal spending contraction. As I mentioned,
Speaker 3: I don't think that's the case.
Speaker 2: So given that backdrop, Ben kind of what's your best
Speaker 2: idea here? Coming into twenty twenty four, A lot of
Speaker 2: folks were saying, hey, just be long equity markets, but
Speaker 2: then you had that huge run up in the end
Speaker 2: of the year and maybe some of the glory was
Speaker 2: taken out of there. What's your best idea or do
Speaker 2: you think about twenty four?
Speaker 3: Well, we do look carefully at new edge valuations, and
Speaker 3: you know MC colleague Cameron Dawson who was on Bloomberg's
Speaker 3: events the other day, she kind of make the case
Speaker 3: on that too. It's saying, look, we do have overvaluation
Speaker 3: in tech and the adjustment of interest rates a bit higher.
Speaker 3: For me, I guess economy, it's just better takes off
Speaker 3: some of that that that valuation fraft that's in there
Speaker 3: with those also some I think some level of frath
Speaker 3: coming into uh you know, really Higbida elements of the market,
Speaker 3: so I think you want to play it more a
Speaker 3: bit more defense. We like energy, we like utility sector,
Speaker 3: like some of the healthcare sector. You really pick your
Speaker 3: best parts there. There's very some stocks are very undervalued
Speaker 3: relative to the marketing, trading really at low multiples, and
Speaker 3: actually the earning forecast much were realistic.
Speaker 2: So not chasing. I guess those magnificent seven.
Speaker 3: Not not really so to the call like, yeah, jefferis
Speaker 3: like Microsoft. We all know that Microsoft is a great company.
Speaker 3: It's good and strong, but you will be chasing it
Speaker 3: probably here at these valuation levels. But I like and
Speaker 3: fixed income, and also I think inequity is that emerging
Speaker 3: markets is an interesting story because we are coming off
Speaker 3: really restrictive rates in emerging markets and inflation is really moderated.
Speaker 6: There.
Speaker 3: There's some really good earning growth stories both Asia and
Speaker 3: Latin America, so I think there's an opportunity. We like Japan,
Speaker 3: there's another market that's contasued to be outperformer. And international equity.
Speaker 3: And then lastly, we gotta watch what the dollar is
Speaker 3: going to do this year. If the Fat's going to
Speaker 3: lower rates, it's gonna lead like into a week a
Speaker 3: dollar environment every time the dollar does go below a
Speaker 3: haunted on the index, it leads to significant rally and
Speaker 3: energy and commodities. It's been that historically that way. I
Speaker 3: don't think it's going to be different this way this
Speaker 3: year and now whatever happens with ge politically, Energy is
Speaker 3: I think a bit unvalued from where it is currently.
Speaker 3: Same thing some someone in commodities. Lastly, gold could actually
Speaker 3: be a strong air for gold given uncertainty and fat
Speaker 3: easy it performs quite well in that environment.
Speaker 4: And just a quick I want to get an idea
Speaker 4: of sentiment out there. I mean, you think rising interest
Speaker 4: rates makes it more expensive for companies to operate. I
Speaker 4: mean some of your clients, they're entrepreneurs, their corporate executives.
Speaker 4: What's the feeling that they're getting out there?
Speaker 3: Now, Wow, there's caution and nowice this. Obviously, we do
Speaker 3: deal with this election and it's it's uncertainty. We also
Speaker 3: just do the fat discussion. It's not clear right if
Speaker 3: you're actually going to get these raycouts and how many
Speaker 3: uncertainty while watching what's going on in the Middle East,
Speaker 3: and we don't know how that's going to exactly play out.
Speaker 3: So uncertainty. On the other hand, there doesn't seem to
Speaker 3: be this slowdown that everybody can teach to talk about
Speaker 3: that the solda and that tips us into a recession.
Speaker 3: So I think that our clients are more about, you know,
Speaker 3: we like risk. We'd like to not be out of
Speaker 3: the market. We still like some of the areas like
Speaker 3: private credit or private equity. That's not something we want
Speaker 3: to necessarily skill completely out of it because of recession risk.
Speaker 3: But we don't want you to play the high beta
Speaker 3: trade either, and meaning you know, going reading in high
Speaker 3: risk really small small small caps or you know, go
Speaker 3: into I don't know crypto and things like that. You know,
Speaker 3: we don't want to play the liquidity high risk game
Speaker 3: that way, and be mindful that we do have fixed income.
Speaker 3: We can we can finally get some additional income that's
Speaker 3: still really important in the portfolio this year.
Speaker 2: Thanks so much for joining us, Benham's principal at New
Speaker 2: Edge Wealth.
Speaker 5: You're listening to the team Ken's a our live program,
Speaker 5: Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot com,
Speaker 5: the iHeartRadio app, and the Bloomberg Business app, or listen
Speaker 5: on demand wherever you get your podcasts.
Speaker 2: There is no greater friend to the municipal bond market
Speaker 2: than me. I tell every governor of the State of
Speaker 2: New Jersey, I'm probably the largest private creditor to the
Speaker 2: State of New Jersey through my municipal bond holdings. Chris
Speaker 2: Burgante Brigatti, he thinks he knows a thing or two
Speaker 2: about it. But Senior vice president Director Strategic Planning at SWBC, Hey, Chris,
Speaker 2: thanks so much for joining us here in studio. Fixed
Speaker 2: income actually had a positive year last year in terms
Speaker 2: of total return. How did the municipal bond market do?
Speaker 7: The municipal bond market had a very good year, and
Speaker 7: it all really happened in the last two months of
Speaker 7: the year. It was negative coming into and through October,
Speaker 7: so the performance actually turned quite positive about six point
Speaker 7: four percent to the positive by the end of the
Speaker 7: year with over seven percent return is coming in November December.
Speaker 2: All right, So what are we doing here with the
Speaker 2: unicipal bond market in twenty twenty four. What's the call here?
Speaker 7: The call is to be very strategic in terms of
Speaker 7: how you approach a market and delegate your capital. A
Speaker 7: lot of the investors that we're talking to and a
Speaker 7: lot of the people that we engaged directly, are really
Speaker 7: kind of being very cautious on their credit approach, not
Speaker 7: really going too far out on the credit curve because
Speaker 7: those credit spreads and narrow significantly in the rally through
Speaker 7: November and December. So now it's a matter of when
Speaker 7: can you re engage the market in a more strategic
Speaker 7: manner further out the curve or down the credit curve,
Speaker 7: And I think both of those opportunities could happen this year.
Speaker 7: But I do expect this to be another quite constructive
Speaker 7: year for the market in general.
Speaker 2: So what else are we doing in the fixed the
Speaker 2: gum space here, because I you know, twenty twenty two
Speaker 2: is so brutal for across fixed income space, double digit
Speaker 2: declines declient is like the fixing the market had never
Speaker 2: really seen had some positive results in twenty twenty three.
Speaker 2: Any reason for me to own bonds here in twenty twenty.
Speaker 7: Four, I think there still are. You know, you look
Speaker 7: at the fact that we've got real good yields that
Speaker 7: we have not seen in well over a decade. So
Speaker 7: for a longer term perspective, you start looking at that,
Speaker 7: and you know, if you're going to be clipping coupons
Speaker 7: and be able to grab that four percent yield if
Speaker 7: rates remained unchanged, barring the expectation for lower rate environment,
Speaker 7: which would add additional performance to a bond. If you
Speaker 7: can lock in four percent or better type of yields
Speaker 7: in this market, you're really looking at strong performance in chase.
Speaker 4: Dig a little bit deeper into what banks are doing
Speaker 4: with some of them munity teams.
Speaker 2: Your city they announced at getting out of the municipal
Speaker 2: ball market. They did they can't do that.
Speaker 7: It's amazing they've they've made that announcement in backing out
Speaker 7: of the market. I mean the market is becoming tougher
Speaker 7: and tougher, spreads are narrow, it's becoming much more constrained.
Speaker 7: Regulators aren't helping. I'm not going to really kind of
Speaker 7: go down that path too deeply, but it's a challenging
Speaker 7: market for banks to make money in. And so the
Speaker 7: strategy and the way you approach it is how can
Speaker 7: you embed yourself deeper and better with clients to provide
Speaker 7: better service. And that's one of the goals that we're
Speaker 7: trying to produce at SWBC is how can we ingrain
Speaker 7: ourselves as a partner to those clients and really add
Speaker 7: value SBbc stand for Southwest Business Court.
Speaker 2: Southwest where you guys based.
Speaker 7: San Antonio, Texas's headquarter.
Speaker 3: Nice?
Speaker 2: Is that where you're from?
Speaker 3: No?
Speaker 7: No, I'm Northern New Jersey.
Speaker 2: Here in northern New Jersey. Okay, I'm a big fan
Speaker 2: of San anton all right. So in the I don't
Speaker 2: know where are we going to see a new issuance
Speaker 2: this year? I mean, am I going to see a
Speaker 2: bunch of new fixed income issueans, credit issuance? High yield
Speaker 2: municipal bonds? Am I going to see a bunch of issuance?
Speaker 2: Now that interest rates are coming down? Do you think?
Speaker 6: I think so?
Speaker 7: I think the opportunity for issuance to rise is twofold
Speaker 7: when you look at what happened with the taxable municipal
Speaker 7: market last year, which was down about thirty percent in
Speaker 7: terms of issuance. So I expect that to rebound a
Speaker 7: little bit. Last year, issuance came in around three hundred
Speaker 7: and eighty billion dollars, which was a few percentage points
Speaker 7: lower than the previous year in twenty two. I expect
Speaker 7: this year to be a little bit north of four hundred.
Speaker 2: And an average year is like five six hundred.
Speaker 7: No, an average year of late has been somewhere in
Speaker 7: that mid to.
Speaker 2: Low force mid force.
Speaker 7: Yeah, yeah, so I expect to get more towards the
Speaker 7: average and the opportunity for investors who engage that should
Speaker 7: be well stated.
Speaker 2: But the municipal bond like I've been told in the
Speaker 2: past that municipal bond issuers, municipalities, they don't issue money
Speaker 2: when rates are low per se, they issue money when
Speaker 2: they need it. Correct, So aren't we having a bunch
Speaker 2: of like infrastructure acts and things like that. Don't have
Speaker 2: a bunch of stuff going from the federal grim that
Speaker 2: needs to be funded in municipal bond market.
Speaker 7: There are You know, it's funny when the infrastructure bill
Speaker 7: came out several years ago, the market got all heady
Speaker 7: and for lack of a better way of putting it, in
Speaker 7: terms of the opportunity for more issuance to come. But
Speaker 7: those infrastructure things take time to build. It takes years
Speaker 7: to get through the system through the process at local
Speaker 7: or even larger municipalities to be able to construct that
Speaker 7: new road, to do something with a bridge. All those
Speaker 7: infrastructure projects take time to even get started. So once
Speaker 7: they get started, that's when the borrowing is going to happen,
Speaker 7: and I think that we kind of got through twenty
Speaker 7: twenty three with the huge spiking yields we saw in
Speaker 7: October that scared a lot of people. Now that it's
Speaker 7: kind of more normalized, I think that the issuers are
Speaker 7: going to come back into the market, and they, like
Speaker 7: you said, they're going to come in when they have
Speaker 7: and when they don't have to and rates are high,
Speaker 7: they stayed as far away as they can. So now
Speaker 7: it's the opportunity is going to be there, and I
Speaker 7: think they're going to come in quite strongly.
Speaker 2: So who are buyers of municipal bonds these days? I'm
Speaker 2: likely retail versus institutional. How does that split look today
Speaker 2: and maybe how's that changed over the last decade or so.
Speaker 7: Yeah, you know, that's one of the most interesting things,
Speaker 7: and that's one of the things we're trying to be
Speaker 7: aware of at SWBC is the retail investor has historically
Speaker 7: been a strong participant in the municipal market. Their participation
Speaker 7: has shifted less away from the funds. ETFs have kind
Speaker 7: of picked up some of the fund bandwidth and fund opportunity,
Speaker 7: but the small accounts that are managed by portfolio managers,
Speaker 7: so they're professionally managed, but it's an SMA. Those types
Speaker 7: of accounts are really where most of the opportunity is,
Speaker 7: and that has grown by more than double in the
Speaker 7: past several years. So those investors are really participating strongly
Speaker 7: and reaping the benefits tax for yield.
Speaker 2: What's not to like, Yeah, exactly. And so what's the
Speaker 2: credit quality in the municipal space. I'm actually surprised. I mean,
Speaker 2: always the Puerto Rico issue or something out of Illinois
Speaker 2: or something like that. But other than some of those
Speaker 2: weird situations, I haven't heard of any cracks of note
Speaker 2: in the municipal bond market really for years.
Speaker 7: It's been several years, you know. You look at the
Speaker 7: fact that the federal government allowed for some of the
Speaker 7: infrastructure bill, some of the opportunity for federal aid or
Speaker 7: during the pandemic and COVID, so a lot of issuers
Speaker 7: have built up a reserve of funds as a result
Speaker 7: of that. So the credits are actually quite high, higher
Speaker 7: than they possibly would otherwise be. But generally the municipal
Speaker 7: market is really really solid footing. I mean, most of
Speaker 7: the space could take most of the investment and opportunity
Speaker 7: to take space in the double triple B and higher
Speaker 7: investment grade. That's where the vast majority of issuance is
Speaker 7: and the default rate on those is less than one percent.
Speaker 7: So the only thing time you hear about something like
Speaker 7: that is sketch your credits in odd different markets. Healthcare
Speaker 7: is notoriously a challenge some of the housing market as well.
Speaker 7: And then you get the odd issuers and the Puerto
Speaker 7: Rico story I always rears its head.
Speaker 2: Then there's the ball across the river there.
Speaker 8: Exactly what's going on with that?
Speaker 2: What's the dream mall? I think, yeah, yeah, somebody would.
Speaker 2: I mean, that is fascinating to me. I remember when
Speaker 2: that issue came to market, I said, I know nothing
Speaker 2: about the dream mall. I know nothing about the municipal
Speaker 2: bond market, but I wouldn't go near that bond issuance.
Speaker 2: I mean, I couldn't see how that thing would actually
Speaker 2: be successful, much less pay me back my principle.
Speaker 3: Have you been there?
Speaker 8: No, that's still nice.
Speaker 2: That's the point either.
Speaker 7: I know, you know, it's in a tough location for
Speaker 7: New Yorkers especially, it's it's not easier fund to go
Speaker 7: over the bridge and then travel through there. And you know,
Speaker 7: my kids have been there to go on some of
Speaker 7: the rides and do some of those things, and they
Speaker 7: enjoy it. But I haven't stepped foot in myself either.
Speaker 7: And it's a tough credit, that's for sure.
Speaker 6: All Right.
Speaker 2: What are some of the sectors that you think are
Speaker 2: going to be interesting in twenty twenty four?
Speaker 7: You know, I always mention things that are quality revenue
Speaker 7: bonds that I really like, and you know, you go
Speaker 7: down the path of water and sewer bonds. Everyone has
Speaker 7: to pay their water bill, it needs to or so
Speaker 7: I think in terms of higher credit quality, that's definitely
Speaker 7: on the plate. I think that office opportunity, other things
Speaker 7: that make sense, or some of the better higher quality
Speaker 7: education bonds the well known names for lack of a
Speaker 7: better way of putting it, and then transportation transportation revenue bonds,
Speaker 7: bigger airport revenue bonds, those sorts of things are going
Speaker 7: to be on the uptrend, I believe.
Speaker 2: How about education, because we've seen some stories about how
Speaker 2: if you're a small, mid size liberal arts college, that's
Speaker 2: a tough business. And I've seen some issuance. I've seen
Speaker 2: some issuance from secondary schools, prep schools and things like that.
Speaker 2: I can't remember which the issue was, but one of
Speaker 2: the top prep schools. How about those education back bonds?
Speaker 2: How do you think about those?
Speaker 7: You know, to your point, it depends on the name
Speaker 7: and ten bands on the issuer and the credit you
Speaker 7: really got and kind of understand and digg into weeds
Speaker 7: a little bit to understand what is the underlying credit
Speaker 7: quality of each one. And to your point, you know,
Speaker 7: you stick to the higher names that are very well
Speaker 7: known the place where it's ivy leagues, et cetera. You know,
Speaker 7: those names stand up very well. They have very strong participation,
Speaker 7: Their endowment programs are enormous, and when you look at
Speaker 7: their acceptance rates, they still have low acceptance percentages, meaning
Speaker 7: a lot of people still want to go there and
Speaker 7: very few still get in. You look down the curve
Speaker 7: and you start looking at some of the less well
Speaker 7: known issuers.
Speaker 6: The liberal arts colleges.
Speaker 7: That you mentioned, they're having a tougher time attracting retaining people,
Speaker 7: and I think COVID was not helpful for that construct.
Speaker 7: They definitely suffered in terms of people wanting to go
Speaker 7: to college and or how they engage colleges directly.
Speaker 2: So just real quick on Puerto Rico, are they out
Speaker 2: of the woods yet, I can't remember kind of where
Speaker 2: we are there.
Speaker 7: Yeah, they're not quite out of the woods yet. That
Speaker 7: story seems to be the story that never ends. So
Speaker 7: they're in challenging times. There's constant discussions over you know,
Speaker 7: what's going to happen with the debt service and who's
Speaker 7: going to be paying it and who's responsible, and then
Speaker 7: what is the restructuring going to look like? And you know,
Speaker 7: that's getting into the weaths of it. Very challenging, yeah stuff.
Speaker 2: Luckily, we have the Joe Mysak who covers the municipal
Speaker 2: bond mark for like a goajillion years at Bloomberg News,
Speaker 2: and he keeps us up to date on what's happening there,
Speaker 2: so we appreciate that. Chris Burgotti, thanks for joining us.
Speaker 2: Christoph Gotti is a senior vice president, director of Strategic
Speaker 2: Planning at SWBC based in San Antonio.
Speaker 5: Listening to the tape Cat's are live program Bloomberg Markets
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Speaker 2: All right, the two teams from twenty twenty one from
Speaker 2: a stock market perspective for me, that just came out
Speaker 2: of nowhere. One was AI okay, of course, and the
Speaker 2: other one is this weight loss stuff the GLP ones.
Speaker 4: Now it's EMPI gov.
Speaker 2: I mean, you're a workout Maven, so this is a
Speaker 2: non issue for you. But for a lot of people
Speaker 2: it's huge. I could see how this could just be massive,
Speaker 2: particularly if they get into a pill format. My question
Speaker 2: is always who pays for it? Simone Foxman, reporter for
Speaker 2: Bloomberg News, TV radio and all that kind of stuff.
Speaker 2: She's everywhere. She did a lot of reporting on this,
Speaker 2: has got a great story out on the Bloomberg terminal
Speaker 2: here she joins us live here in our Bloomberg Interactive
Speaker 2: Brokers studio. Simone, help us figure out, because I think
Speaker 2: you can make an argument that almost well get jillions
Speaker 2: of people in the US in theory would want to
Speaker 2: take this drug, will want to take this drug, are
Speaker 2: taking this drugg But my question is who pays for it?
Speaker 2: How does that all work?
Speaker 6: Well?
Speaker 9: So there are different classes of people, right, you have
Speaker 9: your people who are insured and their employers maybe pay
Speaker 9: for their healthcare, and some of them who are insured
Speaker 9: pay for it themselves. Then you have, you know, people
Speaker 9: on Medicare, and then you have eighty five million people
Speaker 9: low income people typically on Medicaid. And this is the
Speaker 9: area that we really dive into as well as some
Speaker 9: of those insured people, because a lot of this burden
Speaker 9: is going to fall on states. States spend on average
Speaker 9: over a quarter of their overall state budget on healthcare costs,
Speaker 9: and those you know, for many states, including New York,
Speaker 9: are skyrocketing, and it turns out, you know, this is
Speaker 9: going to be a larger and larger part of their
Speaker 9: budget as they try and pay for Medicaid costs, which
Speaker 9: is part of is a respect ability they have. They
Speaker 9: contribute to that as well as their own state employees.
Speaker 9: Now right now, most insurers, this is private, public, et cetera,
Speaker 9: pay for GLP ones for people with type two diabetes.
Speaker 2: But the whole.
Speaker 9: Idea that we have been hearing from Wall Street is
Speaker 9: people who just are seeking this for weight loss, who
Speaker 9: are overweight, They're the ones that are ultimately going to
Speaker 9: be seeking this and that's why this is such a
Speaker 9: massive market.
Speaker 4: Yeah, the cosmetic weight loss, I mean exactly likely. They
Speaker 4: came out yesterday and they warned about people doing it
Speaker 4: for this, but.
Speaker 9: It's but it's not just cosmetic weight loss. It should
Speaker 9: be very if you know, noted that this has all
Speaker 9: these variety of health benefits. Uh, the twenty percent reduction
Speaker 9: that a Novo Nordisks showed among patients who had a
Speaker 9: health had a heart condition or some history of heart
Speaker 9: disease as well as obesity, you know, that's an enormous
Speaker 9: savings potentially for insurers, including public insurers. But at a
Speaker 9: cost of one thousand dollars a month. That's the shrugs.
Speaker 2: That's the number that jumped out of meat from your reporting.
Speaker 2: One thousand dollars a month. And you know a lot
Speaker 2: of these you know, government officials saying that's going to
Speaker 2: we don't have that money.
Speaker 9: And the first government officials that were really starting to
Speaker 9: hear from are the ones who control the state health plans. Again,
Speaker 9: not every state health plan covers this for weight loss.
Speaker 9: They almost all do for subject to restrictions for type
Speaker 9: two diabetes. But the ones who do, including North Carolina
Speaker 9: and Connecticut, have both flagged that this is a real
Speaker 9: rising cost and in North Carolina this was a subject
Speaker 9: of very heated meeting over whether or not they should
Speaker 9: continue covering these drugs for weight loss at all, and
Speaker 9: ultimately they decided anyone who was on it up till
Speaker 9: January first can stay on it for that reason. But
Speaker 9: people who are just seeking these for weight loss beyond
Speaker 9: this specifically.
Speaker 2: You got some crazy numbers in here, just in terms
Speaker 2: of the medicage growing GLP one bill. Here are the
Speaker 2: numbers in twenty twenty three point three billion, in twenty
Speaker 2: twenty one five billion, and in twenty twenty two seven
Speaker 2: point nine billion.
Speaker 9: So that's just we medicate, and we have some limited
Speaker 9: data for twenty twenty three. I can tell you already
Speaker 9: the nut number is bigger.
Speaker 3: Wow.
Speaker 9: But here's the thing.
Speaker 4: You have to be on this drug forever. This is
Speaker 4: not a one time thing a couple of months. No,
Speaker 4: you have to continue to be on this correct.
Speaker 3: Yeah.
Speaker 9: And the thing is, you know some of these costs,
Speaker 9: the costs that you just mentioned, Paul, A lot of
Speaker 9: these are driven by type two diabetes patients. In fact, uh,
Speaker 9: why I was going through these numbers. The biggest driver
Speaker 9: of that increase that you talk about between twenty twenty
Speaker 9: and twenty twenty two is for a drug called Trullicity.
Speaker 9: This is a GOLP one that has has been out
Speaker 9: there may cause some weight loss, but it's not the ozembic,
Speaker 9: it's not the wee goov, it's not the one with
Speaker 9: all this name recognition really for weight loss. So it's
Speaker 9: there's still a long way to go. If we just
Speaker 9: are to cover all the type two diabetes patients, and
Speaker 9: we calculate it in our analysis that that bill if
Speaker 9: all the type two diabetes patients that actually deserve this,
Speaker 9: according to the research, were covered, that would be forty
Speaker 9: one billion dollars for Medicaid alone. Don't we can't even
Speaker 9: take in state healthcare plans there.
Speaker 2: I mean, I'm not sure how to do the math
Speaker 2: or I'm sure it's being done within the healthcare industry.
Speaker 2: But if more people are on these GLP one drugs, Okay,
Speaker 2: that's an incremental cost and can the system bear that?
Speaker 2: But you offset that by presumably some of the issues
Speaker 2: they won't have to deal with, you know, obesit, diabetes,
Speaker 2: things like that, And that goes down to I've even
Speaker 2: seen medical device companies stocks sell off because there'll be
Speaker 2: less knee replacements, hip replacements, all that kind of thing.
Speaker 2: I'm not sure how to quantify that benefit versus what
Speaker 2: I know is the upfront cost.
Speaker 9: This is an incredibly problematic analysis. We know that obesity
Speaker 9: itself is very expensive. Diabetes is three hundred and twenty
Speaker 9: seven billion dollars in medical cost a year. That's one
Speaker 9: and out of every four dollars spent. That said, you know,
Speaker 9: and like, don't bring into account the potential benefits of
Speaker 9: having people who are not spending their entire day on dialysis,
Speaker 9: you know, who are contributing to the economy.
Speaker 6: You know.
Speaker 9: That said, some of the early indications are and the
Speaker 9: CBO has done has kind of done a little bit
Speaker 9: of thinking about this. Is the cost is still too high,
Speaker 9: you know, and.
Speaker 4: The and the supply is kind of being limited at
Speaker 4: this time.
Speaker 8: So what do you I mean, do you ration it out?
Speaker 4: What do you do at this point?
Speaker 9: Yeah, the supply being limited means that the likes of
Speaker 9: Novo Nordisk have limited who these drugs go to first, essentially,
Speaker 9: and they're going to the diabetic patients first because it
Speaker 9: has it's more meaningful for them on a whole on
Speaker 9: an aggregate basis, immediately, but you know, they're rimming up supply.
Speaker 9: The problem is the demand is so huge, how do
Speaker 9: you ever bring down costs meaningfully enough to make it
Speaker 9: worth it. Now, it should be noted that some of
Speaker 9: these costs that we've talked about here are pre rebate,
Speaker 9: So prescription costs for Medicaid essentially have due to manufacture rebates.
Speaker 9: Since these are the same and but these are the
Speaker 9: numbers we're kind of talking about, I think they give
Speaker 9: a good indication of how significant this is going to be.
Speaker 2: Well, I like, I mean, I'm I'm a big fan
Speaker 2: of North the state of the state of North Carolina,
Speaker 2: not necessarily the University of North Carolina being a duke
Speaker 2: red But here I noticed in your reporting here that
Speaker 2: the debate has played out most heatedly in North Carolina,
Speaker 2: where Novo Nordis has three plants that make drugs for
Speaker 2: obesity and diabetes. Yet they're at the forefront of the
Speaker 2: state trying to limit who you know, what the state
Speaker 2: will pay for it. So very ironic there and.
Speaker 9: Here there's also this incredible calculus as well. So Dale Folwell,
Speaker 9: who will speak to later today on radio as well
Speaker 9: as on Bloomberg TV. He you know, it runs this
Speaker 9: plan and apparently the Prescription Benefit Manager CVS, he says,
Speaker 9: told him that if they start restricting the population who
Speaker 9: can get drugs, Novo Nordisk will cut the rebates they get,
Speaker 9: so they'll have to pay much closer to thirteen forty
Speaker 9: nine the list price of you know, we go via
Speaker 9: the weight loss version of one of these drugs.
Speaker 2: That's nine dollars yes for a month.
Speaker 9: Yes, versus the seven hundred and seventy two that they
Speaker 9: were currently paid. So that makes the calculus even worse. Right, So,
Speaker 9: I mean, essentially, if manufacturers threatened to cut these rebates
Speaker 9: because people are restricting that, I mean, it's this whole
Speaker 9: vicious cycle.
Speaker 4: But I mean they're pushing it.
Speaker 6: You know.
Speaker 4: Eli Lilly said it's going to launch this digital healthcare platform,
Speaker 4: you know, and that's really going to pressure They're going
Speaker 4: to home deliver some of these these medications.
Speaker 2: So they're they're pushing it.
Speaker 9: And they're doing impact studies talking about the costs of
Speaker 9: obesity that Lily has publicized a bunch of those or
Speaker 9: funded a bunch of those. H they are lobbying state
Speaker 9: and federal officials. Mind you, Medicare is a federal thing.
Speaker 9: And there are some officials on Capitol Hill who are
Speaker 9: saying Medicare should cover this for Medicare beneficiaries, just for
Speaker 9: weight loss too. I mean, anytime you hear about this,
Speaker 9: it's expanding the potential population of people who could get
Speaker 9: these and don't. That doesn't even begin to take in
Speaker 9: the kind of marketing that we're.
Speaker 2: Seeing, all right. I mean, great reporting here, Simone, Simone Foxman,
Speaker 2: you know, with this story and along with your co
Speaker 2: reporter Laura nas Nomius. So, Laura Namias, Simone Foxman, great
Speaker 2: reporting here, great story of Zempic's mania's billions and bills
Speaker 2: are coming for US taxpayers. Check it out on the
Speaker 2: Bloomberg terminal Bloomberg dot com. It really it's really good.
Speaker 2: It's got a lot of data that I have not
Speaker 2: seen before in terms of the cost and how the
Speaker 2: costs are broken down, what are the drugs that are
Speaker 2: in the marketplace, who's who's in there, and where's the
Speaker 2: the money going and where's the money coming from. Some
Speaker 2: great reporting, Simone, thanks so much.
Speaker 5: You're listening to the tape. Can's are Live program Bloomberg
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the
Speaker 5: tune in app, Bloomberg dot Com, and.
Speaker 6: The Bloomberg Business App.
Speaker 5: You can also listen live on Amazon Alexa from our
Speaker 5: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
Speaker 2: My next life. I want to come back as a
Speaker 2: healthcare m and a banker. Those guys get paid every day.
Speaker 2: It seems like every Monday we come in and there's
Speaker 2: another mega healthcare deal. So let's see if that's going
Speaker 2: to continue here. Kristin Pathier, Principal National and Global HCLs
Speaker 2: Deal Advisor and Strategy Leader, Christian, We've got to deal
Speaker 2: with that title there. We got to work on that. KPMG.
Speaker 2: I mean, let's just say you're the global deal person.
Speaker 2: That's what I'm going to go with. At KPMG, they
Speaker 2: know what's going on out there in the world. So
Speaker 2: Kristin talk to us about the landscape for healthcare MNA.
Speaker 2: It just seems like it's just a it's almost like
Speaker 2: a way of doing business for this industry. If you
Speaker 2: can't come up with the drug or the therapeutic or
Speaker 2: whatever in your own R and D, you go out
Speaker 2: and buy it. Is that kind of where we are.
Speaker 10: Absolutely and when you look at healthcare and life sciences
Speaker 10: in general, it really is one of those recession proof industries.
Speaker 10: People are getting sick. People get sick worldwide. They need
Speaker 10: better medication, they can need faster medication, they need more
Speaker 10: access to therapeutics, diagnostics, devices, And regardless of whether we're
Speaker 10: in a major pandemic or whether we're in a major recession,
Speaker 10: we still have people that are getting sick. And so
Speaker 10: all of our groups in this space, whether they be
Speaker 10: healthcare firms, life.
Speaker 8: Sciences firms, they have to continue to innovate.
Speaker 10: And innovation in medicine is precision medicine. It is the
Speaker 10: future of medicine. It is generative AI. It is putting
Speaker 10: together a number of different types of pieces of the
Speaker 10: ecosystem so that we get to our patients faster.
Speaker 8: So you are absolutely right.
Speaker 10: Both inorganic and organic strategies are absolutely essential in this space,
Speaker 10: and that is what we have seen throughout the years.
Speaker 10: Even as the deal market has softened over the past
Speaker 10: couple of years.
Speaker 4: You know, I want to get more into that innovation
Speaker 4: that you were talking about. I hosted a panel for Bloomberg.
Speaker 4: It was about AI and one of the companies there
Speaker 4: was healthcare and they said, AI is playing a big part.
Speaker 4: It is a game changer. So if you can get
Speaker 4: a little bit more into that.
Speaker 10: For us, absolutely, and it's a game changer across all
Speaker 10: of the different subsectors of healthcare and life sciences. Remember
Speaker 10: there are a number of different groups that are playing
Speaker 10: into this ecosystem.
Speaker 8: Our pharma companies.
Speaker 10: Need generative AI to really help take their rapidity of
Speaker 10: their pipelines, make everything going through the pipeline a lot faster,
Speaker 10: a lot more efficient, a lot more effective. Our health
Speaker 10: systems are using it both in the front office and
Speaker 10: the back office to take all of the patient data,
Speaker 10: all the patient claims, everything that they're getting hit with,
Speaker 10: and develop new patient journeys, new sample journeys for those
Speaker 10: patients to get them better and more effective therapeutics.
Speaker 8: And what I would say is that over.
Speaker 10: The last year alone, the amount of time and energy
Speaker 10: and diligence that has been spent on generative AI, the companies,
Speaker 10: the partnerships, how we're even dealing with the space has
Speaker 10: just gone snowballed throughout the industry, and so we're getting
Speaker 10: more and more questions on that every day. I would
Speaker 10: say that the amount of deal making, actual m and
Speaker 10: a in generative AI is less so than the partnerships
Speaker 10: and all of the questions around generative AI, but in
Speaker 10: twenty twenty four, we expect that to increase.
Speaker 2: So what is precision medicine exactly?
Speaker 10: And from your perspective, absolutely, precision medicine is the best
Speaker 10: therapeutic or care for the best patient at the best time.
Speaker 8: And so when you.
Speaker 10: Think about that and you think about what I just said,
Speaker 10: it isn't a buzzword.
Speaker 8: It's the future of medicine.
Speaker 10: We want to be able to take one patient, look
Speaker 10: at that patient, and provide them the most effective and
Speaker 10: efficient care.
Speaker 8: And so that's what we see. And when we take
Speaker 8: that precision.
Speaker 10: Medicine out to precision healthcare, it adds in the entire ecosystem,
Speaker 10: whether it be the diagnostics that surround those therapeutics, whether
Speaker 10: it be the patient services, and whether it be in
Speaker 10: a domestic market or a worldwide market.
Speaker 4: Now, talk to about hospitals, they're facing these big financial pressures.
Speaker 4: You have workers, there's a shortage of workers. How is
Speaker 4: this going to change the industry moving into twenty twenty four.
Speaker 10: Absolutely, both generative AI and precision health health happen to
Speaker 10: really help what you just mentioned when you think about
Speaker 10: how many workers we have to put in the workforce,
Speaker 10: when you think about how many therapeutics that we need
Speaker 10: to save people's lives. If we can get more precise diagnostics,
Speaker 10: more precise services to our patients in amount of time
Speaker 10: in those health systems, that allows us to take our
Speaker 10: workforce and refine our workforce to only who we need.
Speaker 10: It also allows us to upscale our workforce, maybe with
Speaker 10: bringing in people that could be upskilled faster through generative
Speaker 10: AI approaches, and then allow us to manipulate and change
Speaker 10: our workforce to better suit the needs of what we
Speaker 10: need in the future.
Speaker 2: All Right, So, from a deal perspective, Kristen, what sectors
Speaker 2: do you think are going to be most in play
Speaker 2: over the next twelve months.
Speaker 10: When you look across healthcare and life sciences and you
Speaker 10: look at the lows of twenty twenty three and you
Speaker 10: look at what's recovering quicker, each one of the subsectors
Speaker 10: in life sciences continues to be very exciting in for
Speaker 10: different reasons. Within biopharma, the innovation around selling gene therapy
Speaker 10: within a lot of our other biologics within Companion Therapeutics
Speaker 10: is continuing to move us through the pipeline and look
Speaker 10: at deals that are continuing to change the portfolio.
Speaker 8: Of each one of our pharmaceutical companies.
Speaker 10: When you look at diagnostics, we had a little bit
Speaker 10: of a lull last year, of course, as our diagnostics
Speaker 10: companies went into the new normal post COVID, But now
Speaker 10: they are looking for interesting point of care and interesting
Speaker 10: innovations within diagnostics to help pharmaceutical companies and to help
Speaker 10: services in better ways. Devices are always going to be
Speaker 10: one of those areas where we keep on looking to say,
Speaker 10: is this the year device companies had a harder time
Speaker 10: during COVID? Of course, as elective procedures really tanked. All
Speaker 10: those elective procedures, hips, knees, etc. All have come up again,
Speaker 10: and now as our health systems continue to promote those
Speaker 10: elective procedures continue to bring them in, our device companies
Speaker 10: are looking very carefully at new innovative ways that they
Speaker 10: can bring new devices to the fold and emerge as
Speaker 10: the victors in that particular area.
Speaker 8: In healthcare, when you.
Speaker 10: Look at health systems, when you look at payers, when
Speaker 10: you look at physician groups, we're seeing health it and
Speaker 10: physician groups as being the most exciting areas and continued
Speaker 10: consolidation and thoughts on health systems as the health systems
Speaker 10: continue to recover from COVID and really be very thoughtful
Speaker 10: about their costs, paired with the innovation that they're seeing
Speaker 10: from life sciences. Life sciences and healthcare are inactuably linked sectors,
Speaker 10: and so as we look at this overall, we're continuing
Speaker 10: to see the dynamics between innovation between those two teams.
Speaker 2: Kristin, thanks so much for joining us. Really fascinating stuff there.
Speaker 2: Kristin Pathier, Principal National and Global HCLs Deal Advisory and
Speaker 2: Strategy leader for KPMG.
Speaker 5: You're listening to the tape cans our live program, Bloomberg
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the
Speaker 5: tune in app, Bloomberg dot Com, and the.
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Speaker 2: Let's talk about this jobs market again. It is resilient,
Speaker 2: it is robust. I don't know what you it doesn't matter.
Speaker 2: It just seems like you can't crack this labor market
Speaker 2: that continues to be some pretty solid demand. Julia Pollock
Speaker 2: joins us. She's a chief economist at ZipRecruiter. So, Julie,
Speaker 2: we got some better than I think expected jobs dated
Speaker 2: today in terms of the number of jobs and then
Speaker 2: also the wages. What are you seeing at there at
Speaker 2: ZipRecruiter when you look at there at the labor market,
Speaker 2: it was a mixed jobs report.
Speaker 11: But yes, you know, zooming out twenty twenty three was
Speaker 11: a remarkable year in the labor market. We not just
Speaker 11: dodged a recession, we completely completely avoided a recession in
Speaker 11: the labor market, even though it did slow substantially. And
Speaker 11: not only that, it was actually one of the best
Speaker 11: years on record when it comes to the unemployment rate,
Speaker 11: the average unemployment rate, it ties for fifth place with
Speaker 11: nineteen sixty eight. Wow, So pretty strong year overall.
Speaker 4: And talk about some of the trends that are going on.
Speaker 4: We used to talk about that trend of job switching.
Speaker 2: Is that still safe?
Speaker 4: Ords it best to just stay in place.
Speaker 11: So the data that came out earlier in the week,
Speaker 11: the JAULTZ data showed a pretty substantial decline in job switching.
Speaker 11: So the quits rate fell to the lowest rate since
Speaker 11: before since early twenty eighteen, and that suggests that the
Speaker 11: Great resignation is fully completely over. And the higher's rate
Speaker 11: also plunged to the lowest level since twenty fourteen. And
Speaker 11: so the reason that overall employment levels are going up
Speaker 11: is not because of aggressive hiring. It's more because of
Speaker 11: very slow turnover and churn. And what we're seeing at
Speaker 11: ZIP recruiter is a continued, gradual, orderly cooling in the
Speaker 11: label market that's likely to persist until the FED takes
Speaker 11: its foot off the rate piel and allows the economy
Speaker 11: to invest in boom again.
Speaker 2: So, Julia, what is I guess employee hoarding? Is it
Speaker 2: a thing? Is it real?
Speaker 11: So if you at layoffs and firings, they have been
Speaker 11: about twenty percent lower this year than was normal between
Speaker 11: twenty sixteen and twenty nineteen. So we're seeing historically unusually
Speaker 11: low firing and layoffs at a time when there are
Speaker 11: many industries where activity has taken a huge knock from
Speaker 11: high interest rates. If you look at the construction sector,
Speaker 11: it's actually up over four hundred thousand jobs since before
Speaker 11: the pandemic. Industries like banking where I think if you
Speaker 11: look at a lot of the numbers it hasn't been
Speaker 11: so great, right, Lots and lots of bank deposits have
Speaker 11: left that SIB system, like on eight hundred and seventy
Speaker 11: billion dollars. Bank stocks have fallen pretty substantially and underperformed
Speaker 11: the S and P five hundred by the largest amount ever.
Speaker 11: And yet overall employment in that sector has been flat
Speaker 11: as a pancake. So yes, I think there is a
Speaker 11: sign that employers are holding on to the workers they've got,
Speaker 11: even in industries that are pretty slow, because they are
Speaker 11: confident that things are going to turn around.
Speaker 4: So and when you talk about that, you know, managing
Speaker 4: this headcount, So is it that they're relying on attrition
Speaker 4: or rather than doing layoffs? What do you say?
Speaker 11: Yes, but even overall headcount numbers are staying pretty flat
Speaker 11: and stable.
Speaker 3: You know.
Speaker 11: One exception is transportational warehousing, where we are seeing some
Speaker 11: sort of right sizing in that sector now after it
Speaker 11: posted the largest gains since the pandemic. So, you know,
Speaker 11: as people get back to normal and spend more on
Speaker 11: services and good spending slows, growth and good spending slows,
Speaker 11: that industry is shedding jobs, but most are not. Employment
Speaker 11: is pretty stable and flat and resilient. That's actually the
Speaker 11: only sectors that are really contributing to growth at the
Speaker 11: moment are these three largely acyclical sectors, the government, healthcare,
Speaker 11: and leisure hospitality. They accounted for ninety two percent of
Speaker 11: all jobs added in the last six months.
Speaker 2: So, Julia, people are at work. My question is where
Speaker 2: are they working. Are they working at home, are they
Speaker 2: working in the office? Where are we on that these days?
Speaker 11: So it's a very very mixed bag. Remote work has
Speaker 11: pretty much stabilized now at around twenty five to twenty
Speaker 11: eight percent of all worked days, up from about five
Speaker 11: percent before the pandemic. And this is the year when
Speaker 11: that really stabilized. The Many companies brought workers back to
Speaker 11: the office, but many other companies started afresh in a
Speaker 11: remote first posture, and among companies the flexibility became the norm.
Speaker 11: The five day in office work week became very rare.
Speaker 11: Only sixteen percent of companies with office.
Speaker 2: So I'm one of the special people's five days.
Speaker 11: You're one of those.
Speaker 2: I know, I was specialty.
Speaker 11: Most people get at least one, two, three or four
Speaker 11: days off, so I hear out out of the office
Speaker 11: a week.
Speaker 4: And we've learn a lot of us in twenty twenty
Speaker 4: three about the great resignation is that gone in the
Speaker 4: days of twenty twenty four.
Speaker 11: It's gone. Turnovers not just back to pre pandemic normal,
Speaker 11: it's actually lower. It's about where it was in early
Speaker 11: twenty eighteen. And that is a really reliable measure of
Speaker 11: how much economic opportunity there really is for unemployed workers,
Speaker 11: for workers to find better jobs. And I think it
Speaker 11: suggests that there is some cooling in this live market
Speaker 11: and that workers are finding it a little bit harder
Speaker 11: to find new jobs and to find the kinds of
Speaker 11: jobs that they want right now.
Speaker 2: All right, my I guess employment ready offspring, they're all employed.
Speaker 2: But how about folks coming out of college and graduate school.
Speaker 2: How's that entry market right now?
Speaker 11: So, surveys of employers suggest that they are projecting hiring
Speaker 11: fewer members of the graduating class of twenty twenty four
Speaker 11: than of previous classes. That said, those projections can change.
Speaker 11: It's quite possible that twenty twenty four could be like
Speaker 11: twenty twenty three again, in that companies start the year
Speaker 11: expecting to cut headcount and cut costs more aggressively and
Speaker 11: then realize, wait a second, there's nerve recession. On hand,
Speaker 11: the consumer is still strong. I need workers and actually
Speaker 11: hire more than they're expecting at the start of the year,
Speaker 11: especially if we see interest rates come down and investment
Speaker 11: rise again.
Speaker 4: And new year people out there looking for a new job.
Speaker 4: Do you have to rip up the script when it
Speaker 4: comes to your resume? I mean, if you want to
Speaker 4: start all over again, what should you do differently when
Speaker 4: you're putting it together? Is it more about skills? What
Speaker 4: should you have on there that really stands out?
Speaker 8: Yeah?
Speaker 11: So this is not a chronology. It's more like an
Speaker 11: advertising pamphlet, showing your most your greatest hits, your most
Speaker 11: relevant skills and experience. That's I think how people should
Speaker 11: think about their resumes. Put the relevant experience up first,
Speaker 11: and then you know, it's really important these days to
Speaker 11: have a digital jobs or seecret profile. So upload your resume,
Speaker 11: make sure it can be read by computers and parsed
Speaker 11: by these job marketplaces, so that you're actually getting your
Speaker 11: foot through the door and getting past the robots into
Speaker 11: a human.
Speaker 2: How about it In the trades, people tell me that
Speaker 2: there's still a shortage of trades men and women out there.
Speaker 2: How does that part of the market look to you.
Speaker 11: Yes, So there are many industries with aging workforces, with
Speaker 11: a lot of retirements and with shrinking pipelines of new talent.
Speaker 11: New younger generations of workers are not as interested in
Speaker 11: those roles. They also are seeing a work a labor
Speaker 11: force with a lot more flexible opportunities, and so they're
Speaker 11: going to the remote jobs and the tech jobs and
Speaker 11: the influencer jobs. There's tremendous interest still in marketing roles
Speaker 11: and pr roles and those kinds of things, and much
Speaker 11: less interest in doing hard labor in manufacturing or construction.
Speaker 11: That said, wages in those fields are rising in order
Speaker 11: to deal with the supply shortage, and perhaps you'll see
Speaker 11: a tipping point where people start to take more interest
Speaker 11: in these roles.
Speaker 4: And what about the gig sector. I've heard a lot
Speaker 4: of talk about there's more freelancers out there, that's what
Speaker 4: people are looking to do more. Is that still growing
Speaker 4: into twenty twenty four or is that cut back? You
Speaker 4: think this year a little cut back.
Speaker 11: So unfortunately, official data on gigwork is not very good,
Speaker 11: and we haven't really been tracking it over over time
Speaker 11: in a consistent way, so it's kind of a bit
Speaker 11: of a black box. It's hard to note. We can
Speaker 11: look at the company's earning statements about how many users
Speaker 11: they have. Look broadly, we do see a lot of
Speaker 11: interest among job seekers on zip recruiter in those kinds
Speaker 11: of gig roles because of the flexibility they offer. There
Speaker 11: are many young people who sort of live from hand
Speaker 11: to mouth and have fun and watch video games and
Speaker 11: do what they want to do. And if they need
Speaker 11: cash and need a buy groceries, need to buy dinner,
Speaker 11: they know, log onto an app and deliver groceries for
Speaker 11: a couple hours and then buy their own and then
Speaker 11: go back to doing what they're doing. That it is
Speaker 11: quite common to work that way these days. That said,
Speaker 11: there's some new research showing that once AI tools chatch
Speaker 11: GVD was launched, generative AI demand for other kinds of
Speaker 11: freelancers started to fall. So interesting, all right, we'll get
Speaker 11: a white collar freelancer.
Speaker 2: Yeah, you just walked across or walk through any local
Speaker 2: coffee shop and I'm like, what are these people doing here?
Speaker 2: You know, they all got to laptops out and they
Speaker 2: look like they're doing something committing value. I don't know.
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