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Speaker 2: We start unbelievably strong for Global Wall Street. Arguably our
Speaker 2: conversation of the day, given what's going on with fixed income.
Speaker 2: Kelsey row is executive director Fixed Income at JP Morgan.
Speaker 2: She is the closest desk to Dangerous Provisions breakfast food.
Speaker 2: Oh okay, h Jpie Morgan, I walked live. Well there,
Speaker 2: it's fourteen steps away. So you and I are having
Speaker 2: breakfast at Dangerous Provisions this morning, along with your team
Speaker 2: and the great hallmark of Bob Michael's team. As you
Speaker 2: guys argue like cats and dogs and come up with
Speaker 2: a consensus on the thirty year bond. Do you have
Speaker 2: in your head a yield? It's a tipping point, a
Speaker 2: great point where things unwind.
Speaker 3: It's difficult to say exactly what that level is, but
Speaker 3: I do think that we can take some signal from
Speaker 3: the markets right now and also from the way that
Speaker 3: policy makers are reacting So when we reached five thirty
Speaker 3: a five point three percent on the thirty year treasure yield, right,
Speaker 3: that's when we saw Secretary Bessant step in with the buybacks.
Speaker 3: We saw a quick ten basis point rally lower on thirties,
Speaker 3: and then essentially all of that got wiped away, which
Speaker 3: I'm not going to say means that the whole thing was.
Speaker 4: A complete waste.
Speaker 3: There is signaling there there is more that he can do,
Speaker 3: but it does speak to the fact that to really
Speaker 3: get stabilization in the markets right now, it's not just
Speaker 3: one factor. You're going to need multiple factors to come together.
Speaker 3: So what we've been looking at is the fall of
Speaker 3: twenty twenty three experience. So that was a time where
Speaker 3: the Fed had finished hiking, but people weren't quite sure.
Speaker 3: The tenure yield tested five percent and then ultimately retraced,
Speaker 3: and there were a number of things that came together.
Speaker 3: One of them was a surprise from the Treasury at
Speaker 3: the time. Jannie Yellen, who had shifted the issue in schedule,
Speaker 3: made some surprise announcements in terms of less long end issuance,
Speaker 3: and that did help stabilize the market, but ultimately it
Speaker 3: also had to come from softer economic data and a
Speaker 3: shift in the FED. And so that's why I think
Speaker 3: while I can point to similarities between that time, there
Speaker 3: are also big differences, which is then you know there
Speaker 3: was a much greater concern of a growth slowdown.
Speaker 4: We're not seeing that now.
Speaker 3: So when we're talking about stabilization and yields, we're not
Speaker 3: talking about one hundred basis point retracement, but we are
Speaker 3: talking about the potential that term premium has rised sufficiently
Speaker 3: and we may be at a point where, you know,
Speaker 3: you can find some stabilization if the right factors come
Speaker 3: into place.
Speaker 5: Stabilization stabilization, I mean a five handle in the thirty
Speaker 5: year Should we get used to that?
Speaker 4: Do you think we could?
Speaker 3: And I think these are levels that are really more normal,
Speaker 3: That's what we want to be thinking about them as
Speaker 3: their normal relative to.
Speaker 4: The growth backdrop.
Speaker 3: When you look at nominal GDP, when you look at
Speaker 3: real GDP, you know, these these.
Speaker 4: Are levels that are are normal to those.
Speaker 3: And also this is an environment where the curve is
Speaker 3: very steep to cash. So thinking about it as a
Speaker 3: bond investor, we've been through a lot of periods in
Speaker 3: the last few years where nobody looked at bonds because
Speaker 3: cash had a higher yield than bonds and we had
Speaker 3: inverted yield curves and those that was not a good
Speaker 3: environment for fixing come demand.
Speaker 4: Right now, we actually have the opp that we have.
Speaker 3: Very steep curves. There's a significant me oald to pick
Speaker 3: up to cash. There's roll down when you extend beyond
Speaker 3: the curve. So there's actually a lot of opportunity. And
Speaker 3: so the thing that I've been focused on. Everybody talks
Speaker 3: about record growth supply. You know, in September in investment
Speaker 3: grade we're looking at anywhere between one hundred and seventy
Speaker 3: five billion and two hundred and fifty billion of supply.
Speaker 3: But also what's been forgotten is that you've also seen
Speaker 3: record demand for high grade funds. So this year so far,
Speaker 3: year to date, it's the largest in terms of flows
Speaker 3: into high grade funds compared to every cumulative you're back
Speaker 3: to twenty ten.
Speaker 2: Would you say in this and I was grilled on
Speaker 2: this this weekend by everyone. I mean, these two multuous
Speaker 2: times that we're in, you make the distinction that late nine,
Speaker 2: late twenty twenty three was about a slower economic growth.
Speaker 2: To me, the most important person in this debate is
Speaker 2: Michael Feroli and that we have to figure out what
Speaker 2: nominal GDP's going to do, what real GDP is going
Speaker 2: to do, And isn't the solution here to get away
Speaker 2: from a ridiculous banana republic boom economy statistic.
Speaker 3: So I'm not sure that I agree with that because
Speaker 3: it really depends on what the neutral rate is and
Speaker 3: if this is causing inflation.
Speaker 4: So when you talk about concerns.
Speaker 3: About deficits, when you talk about concerns around running the
Speaker 3: economy too hot, the reason that those are unsustainable is
Speaker 3: because they cause too much inflation. But the reality is
Speaker 3: that we're not actually seeing signs of inflation or runaway
Speaker 3: inflation in the data or in the markets. So if
Speaker 3: you look at inflation expectations, those have remained really well anchored.
Speaker 3: If you look at CPI, which I know is not
Speaker 3: the FEDS metric, but the three month run rate is
Speaker 3: below two percent, and the sixth month in the year
Speaker 3: over year at two point four and two and a
Speaker 3: half percent. Core PCE, the FEDS preferred measure, is actually
Speaker 3: the inflation outlier. Now I'm not saying inflation is low,
Speaker 3: it is running somewhat above the Fed's target.
Speaker 4: But that being said, I'm not seeing the signs that
Speaker 4: this is unsustainable.
Speaker 3: As it relates to creating excess inflation pressure that people
Speaker 3: should be concerned about.
Speaker 2: FED Chairman Walsh.
Speaker 5: He's going to be out in Jackson Hole later this week.
Speaker 5: What do you expect to hear from him?
Speaker 4: That is a really good question.
Speaker 3: So one of the things that I have been doing
Speaker 3: is going around and asking what do you want out
Speaker 3: of Worsh.
Speaker 4: Everybody agrees that they want to.
Speaker 3: Hear something good out of Worsh, that this is a
Speaker 3: great opportunity for him to maybe clean up his messaging,
Speaker 3: to create some clarity, to create some stability.
Speaker 4: But then when you ask people, well, what actually does
Speaker 4: he need to.
Speaker 3: Say to get that outcome, that's where the range of
Speaker 3: views is actually very wide. So there is a camp
Speaker 3: out there that thinks that the only way to get
Speaker 3: the long end the under control is for him to
Speaker 3: sound very hawkish, to hint at a hike in septem
Speaker 3: That's not what the bond market is pricing.
Speaker 4: I'm not necessarily in that camp.
Speaker 3: I don't think that you need to be hawkish to
Speaker 3: be credible, but to be credible, you do need to
Speaker 3: point to what data you're looking at and create a
Speaker 3: allow the market to understand why there is a case
Speaker 3: to stay on hold and not for the future.
Speaker 4: Why not just explain why you did what you did
Speaker 4: in July.
Speaker 2: Listen to her, She's like she's hot, fush, I know
Speaker 2: she's on fire. Kelsey Baro, thank us so much with
Speaker 2: JP Margaret stay with us. More from Bloomberg Surveillance coming
Speaker 2: up after this.
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Speaker 2: Sarah House chewin just right now with Wells Fargo, which
Speaker 2: is a good thing. Working with Thomas Purcelli down there
Speaker 2: and I love buried in your notes, Sarah, how you're
Speaker 2: saying Jackson hole could be a you? Honor? Are you
Speaker 2: telling me with this anticipation? Chairman Walsh is only going
Speaker 2: to talk about task forces?
Speaker 6: Yeah, So obviously we all have to pay attention to
Speaker 6: this speech because at times it has been used to
Speaker 6: give some pretty important policy hints, but more often than not,
Speaker 6: it's used to address some of the bigger questions out there.
Speaker 6: And while I think there has been some pushback about
Speaker 6: Chairworsh's communication so far, he's a lesson more guy when
Speaker 6: it comes to laying out his reaction function. And we're
Speaker 6: still only three months in, so I don't think he's
Speaker 6: going to abandon that strategy and I think if anything, it'll.
Speaker 7: Probably be used to lay out some more of what the.
Speaker 6: Task forces are trying to solve for maybe what some
Speaker 6: of the potential options are around size and composition and
Speaker 6: balance sheet, how they use the SEP. But they're not
Speaker 6: going to commit to anything, but I think ultimately it's
Speaker 6: going to be used to buy some time until those
Speaker 6: task forces are complete with their findings.
Speaker 5: Sir, I think one of the task force is that
Speaker 5: a lot of folks are really focusing on is kind
Speaker 5: of what data might the FED look at that's maybe
Speaker 5: something different than what they've done in the past. What
Speaker 5: do you expect to hear on that front?
Speaker 4: Yeah, so I think.
Speaker 6: We'll hear more in terms of the different alternative data sources,
Speaker 6: So particularly when it comes to the labor market, there's
Speaker 6: a lot of other options for the FED to look
Speaker 6: at in addition to the monthly Employment Report, some of
Speaker 6: the other BLS data like the Jobs Opening and Labor
Speaker 6: and Labor Turnover Survey. But I think ultimately, even as
Speaker 6: I think the FED is going to try to leverage
Speaker 6: some of these alternative data sources that do leverage the
Speaker 6: big data that we have so much access to now
Speaker 6: in the economy, it would really be more about how
Speaker 6: those data sources are going to complement the government data,
Speaker 6: which still remains the gold standard I think, for all
Speaker 6: the different issues it's had in terms of survey responses.
Speaker 7: Fund et cetera.
Speaker 6: It's the one thing that's designed to really mimic the
Speaker 6: broader economy.
Speaker 7: So I would.
Speaker 6: Expect a task force like that, or it'll highlight a
Speaker 6: lot of the other options available, But it all comes
Speaker 6: down to what do they say together in concert. You
Speaker 6: can't just switch from just going from some of the
Speaker 6: government data to these alternative sources, but it's all about
Speaker 6: what do they say together and leveraging that additional information.
Speaker 5: Sarah, we've had now, you know, four or five days
Speaker 5: to kind of digest Treasury Secretary Vesent and is bond
Speaker 5: buying efforts last week. How do you guys at Wells
Speaker 5: Fargo think about that going forward.
Speaker 6: Yeah, so I think, I mean, in some ways this
Speaker 6: is just a short term play to help bring those
Speaker 6: longer and yields down, and it's not going to address
Speaker 6: what we think is the underlying issue, which is really
Speaker 6: these unsustainable fiscal deficits. So yes, there's been other factors
Speaker 6: at play, like increase competition from corporate borrowers, additional uncertainty
Speaker 6: or around the geopolitical inflation, how the Fed's going to
Speaker 6: handle that, But so much of this comes down to
Speaker 6: that we have six percent deficits at a time of
Speaker 6: full employment with I think neither party willing to address that.
Speaker 6: And so I think this doesn't get away that you know,
Speaker 6: this isn't going to bring great sustainably lower Sarah.
Speaker 2: I was thinking about this this weekend with all the
Speaker 2: hysteria Thursday, Friday, and we're living in it right now, folks.
Speaker 2: Future is negative twenty, the VICS sixteen. Again, you know,
Speaker 2: it's not like a Vixa thirty. But there's a lot
Speaker 2: of emotion out there, Sarah. What's the likelihood and wells
Speaker 2: Fargo's really good at this. What's the likelihood that in
Speaker 2: set us some drama? We just keep moving forward with
Speaker 2: this successful American economy.
Speaker 7: Yeah, I mean, I think that's what we've been seeing
Speaker 7: these past few years.
Speaker 6: You've thrown so much at the US economy, everything from
Speaker 6: that aggressive fat hiking cycle to some of them some
Speaker 6: of the biggest changes in trade, Paul.
Speaker 7: See that we've seen in decades.
Speaker 6: You've had some questions around fiscal we've had now higher
Speaker 6: gas prices back above four dollars. But as we've seen
Speaker 6: all these different challenges thrown out the US economy, the
Speaker 6: consumer continues to spend, and of course we've also had
Speaker 6: this very positive secular shock coming from the AI investment.
Speaker 6: So our expectation is that we continue to see pretty
Speaker 6: decent growth through the back half of the year, so
Speaker 6: somewhere a little over over two percent. Maybe consumer not
Speaker 6: quite as strong, but that business investment still booing overall
Speaker 6: growth and also supporting lending some indirect support through through
Speaker 6: the consumer that offsets some of those challenges like higher
Speaker 6: gas prices, the fading boost from tax refunds for example.
Speaker 2: Like Paul, I'm thinking about this, like what are the
Speaker 2: outcomes here out of Jackson Hole and you know, per
Speaker 2: selling the house, play it down at Wills Fargo. But
Speaker 2: to be the basic idea is the juggernaut just keeps going. Yeah.
Speaker 2: I mean Europe looks at Ai says we got to play.
Speaker 5: Yeah, that's interesting. So I mean, Sarah to that end
Speaker 5: of the economy just keep chugging along. Talk to us
Speaker 5: about the labor market. How strong is it or should
Speaker 5: we be concerned that there may not be as strong
Speaker 5: as we think it is. How do you guys view that?
Speaker 7: Yeah, so I'd say overall the labor markets stable, but
Speaker 7: I wouldn't.
Speaker 6: Say it's as strong as as certainly I think what
Speaker 6: the job and the unemployment rate this year would imply
Speaker 6: in terms of that pointing to at.
Speaker 7: Least some modest tightening, we just don't see that.
Speaker 6: I think when you step back and look at okay,
Speaker 6: the unemployment rate is down a couple of tenthsince the
Speaker 6: start of the year.
Speaker 7: Well, the participation rates.
Speaker 6: Down seven tenths, and so this isn't nearly as strong.
Speaker 7: As as first meets the eye.
Speaker 6: You saw some weakness and payrolls there with the July
Speaker 6: report still looking a little bit better, you're to date,
Speaker 6: But I think when you still scratch underneath the surface,
Speaker 6: hiring still remains very very narrow, still a very low
Speaker 6: turnover environment because there just aren't a lot of job
Speaker 6: opportunities out there, and so it's fine if you have
Speaker 6: a job right now, you're at low risk of losing that.
Speaker 6: And that's been another support, I think, to consumer spending.
Speaker 6: But it's very different for a segment of American workers
Speaker 6: to crack into that jobs market. And so when we
Speaker 6: I think, when we step back and we look at
Speaker 6: it in its totality, I say, the labor market's just okay.
Speaker 2: Sarah, Thank you so much. Sarah House with Wells Fargo.
Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.
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Speaker 2: Joining us now, Sir Dana Ives joins us here with
Speaker 2: Yorkville and I let's start with this because Tom Sekunda,
Speaker 2: founder of Bloomberg, cornered me one day in a food court,
Speaker 2: you know, over the cheeses and he said, hey, stupid,
Speaker 2: get perplexed. It changed my life. Dana. What is perplexity?
Speaker 8: Yeah, when you think about from a model perspective, I
Speaker 8: think perplexity is one of the best out there, especially
Speaker 8: for someone like can't you know when it comes down
Speaker 8: to like heavy analytics a lot of sort of numbers.
Speaker 8: I think perplexity is probably one of the best out there.
Speaker 8: And that's why when you look at what Nvidia is
Speaker 8: potentially doing, it would make actually a lot of sense
Speaker 8: relative to where we see this AI revolutionary.
Speaker 2: In what way would perplexity help in video?
Speaker 8: Well for them, Look, they're essentially taking stakes across the
Speaker 8: whole ecosystem, whether it's infrastructure on the model side, and
Speaker 8: it's a way given anthropic and open AI that I
Speaker 8: really had to dooperly to some extent in terms of AI.
Speaker 8: This would enable them to diversify because in video and
Speaker 8: gen has talked about it even from an open source
Speaker 8: for other models. The cheaper the models get, the more
Speaker 8: pervasive that gets, it's better for AI I spend because
Speaker 8: the cheaper acats you're going to have more and more demand.
Speaker 5: So we are going to hear from Nvidio after the
Speaker 5: closed Wednesday, what should the market be listening for.
Speaker 8: No one has a better perch around demand than the
Speaker 8: god father of AI, Jensen a video. I think it's
Speaker 8: really about when you look, they'll talk. They'll probably talk
Speaker 8: about that price increase that you report over the weekend
Speaker 8: from memory perspective driven, But I think it's really about
Speaker 8: what they're seeing from customers in terms of acceleration. We
Speaker 8: think overall AI demand, we've seen acceleration twenty percent the
Speaker 8: last few months, and there's one chip in the world
Speaker 8: fueling the AI revolution. So I think that this is
Speaker 8: a huge piece of the puzzle when you're thinking about demand,
Speaker 8: especially after what we saw from an earning season that
Speaker 8: was extremely strong, especially from the hyper scours.
Speaker 5: You write down that the biggest tug of war in
Speaker 5: the tech space is around AI sovereignty. What do you
Speaker 5: mean by that?
Speaker 8: What that means is and it's becoming more and more
Speaker 8: of a debate. Really hot button issue is that the data.
Speaker 8: I'm not going to give that data. If I'm a
Speaker 8: company to the model player, to an open AI, to
Speaker 8: an anthropic I can maybe use them, but there's going
Speaker 8: to be a sort of cording off where I won
Speaker 8: control as a company over that data. And that's something
Speaker 8: where in Nvidia Pollunteer there's a big focus specially from
Speaker 8: Carton Pollenteer on sovereign AI data because the view is
Speaker 8: that eventually, if you have my data, then ultimately competitive wise,
Speaker 8: could I marginalize your model? So I think it speaks
Speaker 8: to what's starting to happen is as you're hearing more
Speaker 8: maturity now in the AI space, where enterprises are focused
Speaker 8: more on who has access to their data and should
Speaker 8: they have more control?
Speaker 2: Danna answer this, folks for a quick tech brief here
Speaker 2: we'll talk can to here in a moment. Good Morning
Speaker 2: across America on Serious XM Channel one Morning across all
Speaker 2: of Canada is well, the house is fired up about
Speaker 2: Apple announcements after I believe Labor Day. What will we
Speaker 2: see from Apple and what's it mean for their free
Speaker 2: cash flow and stock price?
Speaker 8: I think for Apple and I think investors now are
Speaker 8: starting more and more to reconneen we've talked about a
Speaker 8: lot on the show. Is that the consumer AI revolution
Speaker 8: that highway. They're a toll collector on that and that's
Speaker 8: going to continue to go through them. I think it's
Speaker 8: really it's about not just the AI strategy, but now
Speaker 8: as you get to the latest iPhone that they release,
Speaker 8: what that's going to do to ultimate demand? Because it
Speaker 8: LEAs out the foundation for everything we're talking about in
Speaker 8: AI is about enterprise comes down to consumer. What are
Speaker 8: device is going to look like? Where is most of
Speaker 8: that going to go through Apple? As when you think
Speaker 8: about one point five billion iPhones. So that's why there's
Speaker 8: such a focus to see as they come out with
Speaker 8: their latest iPhone. Not necessarily there's going to be so
Speaker 8: many changes from a hardware perspective, but tom it's really
Speaker 8: also related more of the AI strategy that they finally
Speaker 8: actually have one now with Gemini.
Speaker 5: So software, earlier in the year, we saw a soft
Speaker 5: and software that I don't think I've seen I can't remember.
Speaker 5: I mean, it's just software, you just own it because
Speaker 5: of the recurring revenue, the high margins, a free cash flow.
Speaker 2: What is the software call.
Speaker 5: On the street these days? Are we trying to pick
Speaker 5: winners and losers? I mean Microsoft was down twenty five
Speaker 5: percent year data one point this year, but now it's
Speaker 5: rallied back to flat.
Speaker 2: What's the software call?
Speaker 8: Well, Paul, I, first of all, I always thought that
Speaker 8: that was a fictional thesis that Anthropic was going to
Speaker 8: eat software companies lunch, that these models were essentially you know,
Speaker 8: going to be destructed. I think what's starting to happen
Speaker 8: now more and more is the use cases get deputed.
Speaker 8: Software is playing a bigger, bigger role. That's what's happling Microsoft.
Speaker 8: You've seen and Pallenteer, and you've seen with service Now
Speaker 8: and a bunch of others. I think it's idiosyncratic to
Speaker 8: the point that there will be software companies disintermediate. And
Speaker 8: you look at companies, maybe the view back against you know,
Speaker 8: when you look in names like Adobe is a good example.
Speaker 8: That's a good example of one where it's okay, Adobe
Speaker 8: into it? How they how is their business not going
Speaker 8: to adjust? But it's a much different narrative today than
Speaker 8: it was six months ago.
Speaker 2: Nobody cares. Alexis here, wants to know who are you
Speaker 2: wearing today? I love this?
Speaker 5: What's what's on your ship?
Speaker 2: For these penguins? So these are penguin penguins. These are
Speaker 2: the parrots.
Speaker 4: And then here this is a duck hat.
Speaker 2: You're very bird today. Who in God's name shirt are
Speaker 2: you wearing? So many emails in they go, is Dan
Speaker 2: wearing Pucci?
Speaker 8: No? This is actually it's a company out of Bali.
Speaker 8: Kenny Matthews, Kenny Flowers.
Speaker 2: I can see it on your show, Kenny Flowers. They're
Speaker 2: out of Bali people wild. I want to know dan Ice,
Speaker 2: thank you so much greatly appreciate it with all of
Speaker 2: his work as well. Here and looking for that Apple
Speaker 2: launch here in a bit Yorkville and ives. Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 2: Over a decade ago, David Brooks did an essay that
Speaker 2: was just spectacular on the nerds and the smooth people,
Speaker 2: and it was like instantly you shoe in an essay
Speaker 2: of the year, And every year there's like four or
Speaker 2: five six essays where I'm like, yeah, what am I
Speaker 2: going to do here? Which is the essay of the year.
Speaker 2: Last year was like the Brooks essay of decades ago,
Speaker 2: complete total layup. Is gen Z unemployable? Susie Welch, You
Speaker 2: didn't have to do this some serious academics around our
Speaker 2: perfect grandchildren and our dogs. How many dogs do you have?
Speaker 9: I just have three at the moment.
Speaker 2: Okay, it's a three dog then, but yeah, okay, and
Speaker 2: Susie welch with us of NYU and just incredible work
Speaker 2: on you know, all the emotions that we face every day.
Speaker 2: You have a blistering update? Is gen Z unemployable? Are
Speaker 2: they strivers? Now?
Speaker 9: You know, I don't think it's blistering. I think it's fascinating.
Speaker 9: I love gen Z. I know that they can be very,
Speaker 9: very frustrating. I get that, but I spend all day
Speaker 9: with them, and I don't want to hate on them. Okay,
Speaker 9: but so I will say this. Here's the update.
Speaker 5: Though.
Speaker 9: We test values. We have a psychometric tool called the
Speaker 9: Values Bridge, and it's a very clean, scientifically validated tool,
Speaker 9: and it rank orders people's values and we can cut
Speaker 9: all the data by we have two hundred thousand data points.
Speaker 9: We can cut it by generation. So last year, at
Speaker 9: this time gen Z had achievement, which is ambition and
Speaker 9: grit and desire to win and compete, down at number eleven.
Speaker 9: And actually Tom, the good news is that over the
Speaker 9: past year, probably because of the constricting job market for
Speaker 9: entry level jobs, gen Z's achievement value has marched steadily
Speaker 9: up to number six. So this should be cause for
Speaker 9: celebration in some ways because we would like them to
Speaker 9: like to work. The complicating factor is that the value
Speaker 9: of work centrism, which is the desire to organize yourself
Speaker 9: around work, has dropped, has dropped. It's number fourteen. Okay,
Speaker 9: So what we've got is, look, and you know, it's
Speaker 9: not just gen Z. Their parents also have relatively low
Speaker 9: work centrism.
Speaker 2: And I think that's a problem with the Keynouse.
Speaker 9: I mean, I think that it's that it's people have
Speaker 9: a lot of trouble wrapping their hearts and souls around
Speaker 9: this concept of organizing their life around work because they've
Speaker 9: learned the hard way that work does not love you back. Okay,
Speaker 9: you can work and work and work, and then you
Speaker 9: can get fired or your job can evaporate. And so
Speaker 9: people are like, yeah, here's the conundrum. Want achievement. Gen
Speaker 9: Z wants achievement more than ever in recent years, the
Speaker 9: data shows, but they want to work probably less than ever.
Speaker 5: How about AI for the young folks, that's got to
Speaker 5: be almost issue number one.
Speaker 9: This is what's causing it. AI is making them more
Speaker 9: ambitious because they think, okay, if all the entry level
Speaker 9: jobs are going to go away. I'm going to fight
Speaker 9: harder for them. I've got to get something. So I
Speaker 9: think that the rise and ambition and achievement and wanting
Speaker 9: to win is from the fact that AI is coming
Speaker 9: and they can hear the hoof, you know, the hoof
Speaker 9: beats going. But I think the desire to work and
Speaker 9: the lack of desire to work is also from AI,
Speaker 9: because they're like, what's the point the contract is broken.
Speaker 9: I can throw myself into work and I'm still going
Speaker 9: to be outsourced at some point. And so look, they're
Speaker 9: dealing with this, they're right on the front lines of it,
Speaker 9: and I know, please don't jump down my throat, but
Speaker 9: I feel for them.
Speaker 1: I do.
Speaker 5: How's that manifesting itself in how they study in school,
Speaker 5: what they study in school, how they pursued jobs, how
Speaker 5: they think about a higher education. Well, there's a graduate degree,
Speaker 5: a professional degree.
Speaker 9: Well, I think two things are going on at once.
Speaker 9: There's a They're depending heavily on AI. In the classroom.
Speaker 9: I had to go back to blue books last semester.
Speaker 9: It was just like the old the days. And then
Speaker 9: I saw their handwriting and I was like, Okay, I've
Speaker 9: got to have another solution for this. I think that
Speaker 9: they're very confused about what to study. I think the
Speaker 9: school's education. I mean, I'm not saying anything new. Need
Speaker 9: to change what they're teaching. They've got to change what
Speaker 9: they're teaching because it's really you know, professors are called
Speaker 9: flat footed about what we teach. I teach a class
Speaker 9: called Becoming You, so it's kind of evergreen every semester.
Speaker 9: But even in teaching management, I now have to which
Speaker 9: I also teach, I have to think about what they're
Speaker 9: actually learning. And I'm actually focusing more and more on
Speaker 9: people skills, you know, and which we're considered soft and
Speaker 9: sort of like, don't waste our time with the people's skills. Now,
Speaker 9: I'm going right back to that same cool and the
Speaker 9: machine will do.
Speaker 2: People.
Speaker 9: Why why why?
Speaker 2: I see so many kids that are train wrecks, and
Speaker 2: by kids, I mean people into their thirties where they're
Speaker 2: doing things that are complete career.
Speaker 9: Look Tom, I total I called like and what a
Speaker 9: CAUSEES is a whole demographic of sad parents. I think
Speaker 9: there's like a gigantic co board of sadness.
Speaker 2: No joining us now, Alexis I got.
Speaker 10: Three gen z Yes, Okay, So I definitely hear what
Speaker 10: you're saying, and you know, is it that they are
Speaker 10: just you know, they feel like the social contract has
Speaker 10: been broken, right, I mean even even when it comes
Speaker 10: to like being able to afford a home, right, they're
Speaker 10: just like, you know.
Speaker 9: They think they'll never afford a home. They think I
Speaker 9: could work my rear end off and I'll never have
Speaker 9: a house. You had that promise, I don't have it.
Speaker 2: Susie Welch with a professor of management practice at NYU
Speaker 2: and my essay of the Year last year, and she's
Speaker 2: just on fire dealing with gen Z. I got eight
Speaker 2: ways ago, Paul, get a question in here because I
Speaker 2: got eight ways to go with Professor Welch.
Speaker 5: Well, I mean the issues I have four kids twenty
Speaker 5: two to thirty.
Speaker 2: Wait stop stop, guys, Sweeney as the perfect family off
Speaker 2: four from total head screwed on. They're working, totally deployed,
Speaker 2: working hard.
Speaker 5: Go So what's the message to them, Like, what do
Speaker 5: you think is resonating with the folks that you talk
Speaker 5: to that maybe you're facing some of these issues.
Speaker 9: Well, I'm face this issue every day in the classroom
Speaker 9: because I'm helping them with career formation, and so I
Speaker 9: say something that they don't want to hear. Okay, they
Speaker 9: want to be told go learn this skill, that skill,
Speaker 9: major in this and go get that job. That's what
Speaker 9: they want to hear. And I say, I'm sorry, I'm
Speaker 9: going to see something much harder. Sit down, and what
Speaker 9: I say is the world is changing so much. We
Speaker 9: don't know what's going to happen in six months. We
Speaker 9: don't know where industry is going. We don't know anything.
Speaker 9: Here's something you really have to know. You have to
Speaker 9: know yourself. What are your aptitudes? Not your skills, because
Speaker 9: your skills are going to change. What are your aptitudes?
Speaker 9: Are you a generalist or a specialist? Are you a
Speaker 9: future focuser, prison and focuser. You've got to know your
Speaker 9: values like cold, you can't list off the virtues that
Speaker 9: everybody has. Oh, I believe in honesty, fairness, everybody does.
Speaker 9: I don't want to know you If you don't, what
Speaker 9: are your actual values? What are you willing to trade off?
Speaker 9: And then you have to know. I mean, here's the
Speaker 9: thing they hate hearing. They hate hearing is like you
Speaker 9: have to understand all the conveyor belts are broken. You
Speaker 9: cannot march directly into banking or consulting the way you
Speaker 9: used to guess what open up that aperture. There's twelve
Speaker 9: mega trends. There's tons of other industries you're not thinking about.
Speaker 9: Not true, far the fastest growing your stream in the world.
Speaker 2: Let me let me take two texts. Here Robert from Bracton,
Speaker 2: thank you for listening. Ninety to nine FM up in Bracton.
Speaker 2: Robert for Brackton says the problem is because of YouTube
Speaker 2: and the influencers. They all think they're going to start
Speaker 2: at one hundred and fifty thousand a year. Where did
Speaker 2: this come from?
Speaker 9: I have no idea, but it's true.
Speaker 8: It's true.
Speaker 9: People who are literally not a single skill, not a
Speaker 9: single day's experience, coming in about the six figure in
Speaker 9: their head. I think it must be connected to what
Speaker 9: their parents paid for college, and they think I gotta
Speaker 9: start getting the money train going. And it's disconnected from reality,
Speaker 9: completely disconnected from reality.
Speaker 2: Let's go to a reality. Can we start. You're out
Speaker 2: of your Urbana, Illinois. You're a chemical engineer. You're popping
Speaker 2: ten thousand and five at their dollars a few years
Speaker 2: ago with one thousand dollars raise. If you're Lucky General
Speaker 2: Electric in Pittsfield, Massachusetts, and Jack Welch said, I don't
Speaker 2: like this, and he literally quit ge before the guy
Speaker 2: above him saved him.
Speaker 9: Me h, let's talk about why he quit. He quit
Speaker 9: because everybody got the same bonus at Christmas, and he
Speaker 9: hated the fact that he was the best performer, which
Speaker 9: he was, and he got the same bonus as the
Speaker 9: worst performer because he was a big guy in meritocracy. Okay,
Speaker 9: So like this cold concept of being paid more or
Speaker 9: less run straight into the sense of equity today, Jack Welch, who.
Speaker 2: You full disclosure, folks, I'm qus me bias at my father.
Speaker 2: My father would look at schonnecting go Tom. Anyways, I'm
Speaker 2: biased Susie too, frankly your former husband. But the bottom
Speaker 2: line is Paul Sweeney and I what was your first job, Paul, oh,
Speaker 2: washing dishes, ready begging groceries at Wegmans. That was my
Speaker 2: first choice.
Speaker 9: I stopped milk at Cumberland Farms. Okay, man, I know
Speaker 9: I did.
Speaker 7: I was so proud.
Speaker 9: I was so proud I got fired. I got fired
Speaker 9: because you wouldn't that.
Speaker 4: I don't lay one day. I'm still kick it over it.
Speaker 10: I'm still ashamed of yourself. I was a cash here
Speaker 10: at Pioneer Supermarket. There's like one in Manhattan left.
Speaker 4: That's how I started out, not over so.
Speaker 5: I mean, you know, my thirty year old twins, their
Speaker 5: first memory was nine to eleven. They went through the
Speaker 5: Great Financial Crisis, then the pandemic interrupted. They're education.
Speaker 2: I think back.
Speaker 4: I'm like, man, you guys have had a kind of
Speaker 4: rough and I don't like to give them. I don't
Speaker 4: like to give them any I agree with them.
Speaker 9: No, no, get in line, Get in line. I think
Speaker 9: that I hear this all the time. You know what
Speaker 9: I hear often from my students is that not for
Speaker 9: my students, but I hear from people who are gen
Speaker 9: z generly not my students are excellent, but they They'll say,
Speaker 9: I had a tough childhood, and I'm like, let's compare.
Speaker 2: You know what I mean.
Speaker 9: It's like, this is there's always some there's always some
Speaker 9: excumes because it's this. But I want them to take
Speaker 9: charge of their lives and get to know themselves very
Speaker 9: very well. With the sunglasses with the rose colored glasses off.
Speaker 2: That drives me nuts. And I've been so advantaged with
Speaker 2: the interim program here at Bloomberg have really smart because
Speaker 2: my record is they have four people that work for
Speaker 2: me in the press conference at the FED press conference.
Speaker 2: That's cool, but it drives me nuts when somebody in
Speaker 2: the gen z who says they're so smart, and I'm like, no,
Speaker 2: actually they're not. How do you explain to a lot
Speaker 2: of these kids, as my mother would say, slid through,
Speaker 2: that youve got to get smarter fast. Your math isn't there.
Speaker 2: You didn't do what.
Speaker 9: I don't know what smartest anymore. I don't because it's
Speaker 9: because the machine can do everything. And so look, I
Speaker 9: teach my students to understand what their aptitudes are. And
Speaker 9: one of the questions I have is do aptitudes matter anymore?
Speaker 9: Because if you don't have an apportueney, you're not a brainstormer.
Speaker 9: That's an aptitude, Okay, how quickly your brain shoots that ideas?
Speaker 9: That's actually a studied identified at what.
Speaker 2: Percentage of machine can do it?
Speaker 4: Okay?
Speaker 2: So what percentage of your class at n YU are
Speaker 2: the brainstormers you call them that I grew up with.
Speaker 9: So okay, so brainstorming is sort of thirty thirty percent
Speaker 9: of the population has very quick idea generation thirty percent
Speaker 9: or idea contributors. They sort of lay one good idea
Speaker 9: a year and then most people are in. You know,
Speaker 9: there's sort of forty some thirty forty yes, but you know,
Speaker 9: actually the admissions department looks for those those kids. But
Speaker 9: my question is with AI, what difference does it make
Speaker 9: if you're a natural brainstormer or not. What difference does
Speaker 9: it make you can just go to the machine and say, hey,
Speaker 9: I need five ideas in ten minutes. What they think?
Speaker 9: Then why why do not agree?
Speaker 2: I think you've got to have an underlying set of
Speaker 2: critical thinking skills and then AI helps you.
Speaker 9: I hope that's true, But I mean AI can do
Speaker 9: amazing things, and I think actually, one thing, it's becoming
Speaker 9: a crutch so quickly. I mean, this is a real
Speaker 9: challenge for us as professors, just like, well, what do
Speaker 9: we teach them now?
Speaker 10: But you know, there was a survey today about recruiters saying, hey, listen,
Speaker 10: I know when your resume has been written by AI.
Speaker 10: So now they're going back to old fashioned ways. They're
Speaker 10: testing people before they at the job. They're looking at referrals.
Speaker 10: They are talking about you know, who knows this person
Speaker 10: best and are they really going to fit with the
Speaker 10: culture of my company?
Speaker 5: Right?
Speaker 9: I know, well, that's actually very interesting that students come
Speaker 9: in or young people come in for interviews. Now am
Speaker 9: I caring a huge amount about culture? And I remember
Speaker 9: when I started out as like beggars can't be choosers.
Speaker 9: You just went in and you got the best job
Speaker 9: you could. You were sort of like Now they come
Speaker 9: in and they kind of quiz you about culture. I
Speaker 9: think that they've been trained that in college is to
Speaker 9: really ask, you know, am I going to fit with
Speaker 9: this culture? And I guess back in the day within
Speaker 9: ourselves into the culture of the organization.
Speaker 5: So I mean, I don't know how in your business
Speaker 5: of education, Yeah, I don't know how you guys do
Speaker 5: it today.
Speaker 2: From the first grade through university?
Speaker 5: How do you deal with AI and what?
Speaker 9: Yeah, we've had Look, it's been we've all been learning
Speaker 9: on our feet. So I think I remember the first
Speaker 9: time it was maybe two three years ago and I
Speaker 9: asked a question in a quiz and I was I
Speaker 9: had eighty students and like seventy eight of the answers
Speaker 9: were exactly the same day. Literally cut has to put
Speaker 9: the question into AI and so I came into the
Speaker 9: classroom and I said, hey, why don't you help me
Speaker 9: figure out what you would do? I put up the
Speaker 9: question and then I clicked through after one after another
Speaker 9: of every single answer being the same, and I said,
Speaker 9: what would you do if you were me? They were
Speaker 9: in dead silence. And now I've just started getting quzzes
Speaker 9: in the classroom. I give a lot of oral quizzes.
Speaker 9: I think we're scrambling to figure it out. We're not
Speaker 9: sure in education you want to even teach in business
Speaker 9: school anymore.
Speaker 2: I got one final question with immense respect for all
Speaker 2: you've done and with Jack and Susie Welch, it was
Speaker 2: just an incredible formative time of not striving, but just
Speaker 2: belief in the American corporate system. How do we rationalize
Speaker 2: one hundred thousand a year to go to college?
Speaker 5: Oh?
Speaker 8: I don't.
Speaker 2: I mean Alexis had a thing last week, or maybe
Speaker 2: it was Lisa and Bloomberg money on ninety thousand dollars,
Speaker 2: Sorority rushes the fancy people.
Speaker 9: Susie is just out of comm I don't know how
Speaker 9: you rationalize it. And this is why some people are
Speaker 9: opting out of college. And I think this is why
Speaker 9: you know, people are beginning to push back and say
Speaker 9: what do you getting out of it? But I don't
Speaker 9: know how you rationalize it. I don't know which way
Speaker 9: it's going. I think every time I sort of poke
Speaker 9: around and say, like, you know, what are we going
Speaker 9: to be doing, what's the campus going to look like
Speaker 9: in five years? What are we going to be teaching?
Speaker 9: Every Look, we're all in kind of a throll. This
Speaker 9: is like a big bomb that's been dropped on what
Speaker 9: education has done. And education has been around doing the
Speaker 9: exact same thing for a couple hundred years. It is
Speaker 9: going through in massive upheaval. I have no answers for you.
Speaker 5: I'm in there having sat on boards before. You have
Speaker 5: to cut the cost base, not five percent, not ten percent,
Speaker 5: thirty forty fifty percent at cost base, fixed cost, look around.
Speaker 9: Maybe there can be two years of work before you
Speaker 9: go to college or something like that. But I just
Speaker 9: still I want to keep coming back to this thing
Speaker 9: is you got to know yourself. Kids come out and
Speaker 9: they have absolutely no idea what they're good at. That's
Speaker 9: a problem.
Speaker 2: And your free time are you going to put a
Speaker 2: book together? Yeah?
Speaker 9: I got one coming out in March, right, you'll believe
Speaker 9: me again. I'll be around banging on your door in March.
Speaker 2: Okay, she'll be flagging it. You will be Professor Welch,
Speaker 2: thank you so much my essay of the year last year.
Speaker 2: I'll put it out again on Twitter and LinkedIn Professor
Speaker 2: Management Practice at NY.
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