Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg Business Week Insight from the reporters and
Speaker 2: editors that bring you America's most trusted business magazine, plus
Speaker 2: global business, finance and tech news. The Bloomberg Business Week
Speaker 2: Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3: Well.
Speaker 4: Of the more than ninety lawsuits filed against the Trump
Speaker 4: administration in the first month, more than twenty directly involved DOGE,
Speaker 4: of course, the Department of Government efficiency. These cases challenge
Speaker 4: Elon Musk's position, DOJ's structure and who is getting access
Speaker 4: to internal agency systems, some of which include the personal
Speaker 4: information sensitive payments data of US citizens. You might recall
Speaker 4: just last week a group of nineteen mostly Democratic controlled
Speaker 4: states suing the Trump administration over doje's access to sensitive data.
Speaker 4: When their first motion are one emotion, I should say
Speaker 4: for a preliminary injunction to extend and existing restraining order
Speaker 4: on the team. So let's talk about this in all
Speaker 4: the activity that's going on among.
Speaker 3: Those involved in those suits.
Speaker 4: Is our next guest we welcome in studio, Connecticut State
Speaker 4: Attorney General William Tongue. General tong great to have you
Speaker 4: here in studio. There's a lot going on in terms
Speaker 4: of lawsuits by democratic controlled states, given all of them
Speaker 4: that are challenging activities of desks, modes, Team, Dose, Team,
Speaker 4: what do you think is the most important for Americans
Speaker 4: and why?
Speaker 5: So? Thanks Carol and Tim for having me here. What's
Speaker 5: most important is that democratic state attorneys general are taking
Speaker 5: action to protect our states. You know, no matter who
Speaker 5: the president is, it's my job to protect Connecticut families.
Speaker 5: And right now they're exposed.
Speaker 4: You know, all about money that essentially should come to
Speaker 4: the states or what in particular.
Speaker 5: Money are social security numbers, banking information, important private information
Speaker 5: that's not just in the US Treasury that may be
Speaker 5: at the Department of Education, that may be at the irs.
Speaker 5: Right an unelected billionaire and his army of hackers and
Speaker 5: want to be stormtroopers are now tearing up the federal government.
Speaker 5: Nobody elected them. There's no authority or statutory basis to
Speaker 5: give them this power to go in and tear up
Speaker 5: the federal government. It's as if I said to you, Carol,
Speaker 5: you know what is Donald Trump came down here and said, Carol,
Speaker 5: you're great. I'm going to put you in the most
Speaker 5: secure and nuclear weapons facility in the US Armed Forces.
Speaker 5: I'm going to give you the password. Just log in
Speaker 5: and have at it. Would anybody have a problem with that?
Speaker 4: Is it what's being done, who's doing it, or that
Speaker 4: there is no transparency to it.
Speaker 5: It's all of that, and it's the damage right now.
Speaker 5: You know, when he gained access to Treasury's central payment system,
Speaker 5: the Bureau of Fiscal Services, he had control one guy
Speaker 5: and again his army of hackers to cut off Social
Speaker 5: Security payments, veterans benefit. Right They're already canceling contracts at
Speaker 5: the Department of Education. It's real world impact right now.
Speaker 5: Money is not flowing to states. The Medicaid portal was closed,
Speaker 5: the head Start portal was closed. Important grants and federal
Speaker 5: funding for transportation products, electric vehicles, climate related investments, all
Speaker 5: of those depending on the day and depending on the hour,
Speaker 5: they're open or they're closed.
Speaker 6: General Elon Musk did speak during a cabinet meeting or
Speaker 6: ahead of a cabinet meeting. We took those comments live.
Speaker 6: He said that DOS is helping fix government computer systems. Overall,
Speaker 6: DOGE goal is to address the deficit. What would you
Speaker 6: say to the folks out there listening or watching right now,
Speaker 6: who said this is what Americans voted for. They voted
Speaker 6: for more efficiency, They voted for spending government spending to
Speaker 6: go to be reduced, and as the President says, a
Speaker 6: reduction and again his words, waste, fraud, and abuse.
Speaker 5: Yeah, they didn't vote for mass unemployment. They didn't vote
Speaker 5: for mass layoffs. They didn't vote for an unelected billionaire
Speaker 5: to wreck families in Connecticut and across this country. And
Speaker 5: if you know, it's not just a federal employee in
Speaker 5: Alexandria or Virginia. And by the way, that's important too.
Speaker 5: If mom or dad gets fired tomorrow, many families, even
Speaker 5: families that do well and listen to this show, you know,
Speaker 5: they live thirty days out or check to check, and
Speaker 5: that family may have relatives in Connecticut. They are federal
Speaker 5: workers in Connecticut. There are nonprofits in Connecticut that are
Speaker 5: laying people off right now because they rely on anticipate
Speaker 5: federal funding that is not flowing and they have to
Speaker 5: make decisions amidst all of this uncertainty. And so families,
Speaker 5: children are being hurt right now. And it's my job,
Speaker 5: as Connecticut's turning general to protect them.
Speaker 6: Do you have specific examples of how many workers have
Speaker 6: been affected in can etiquette, how families have been hurt
Speaker 6: in Connecticut. What can you point to as sort of
Speaker 6: real world effects.
Speaker 5: So, for example, there are highway programs right now that
Speaker 5: aren't proceeding, that aren't going forward because funding from the
Speaker 5: Department of Transportation is not flowing. Remember, government isn't just
Speaker 5: a big employer. It's one of the biggest employers. It's
Speaker 5: also one of the biggest investors, spenders, and customers. And
Speaker 5: if the federal government is not there to buy, invest
Speaker 5: to be a customer, then projects don't happen. And that
Speaker 5: impacts not just state government, not just the federal government,
Speaker 5: but all of the businesses, small businesses run by people
Speaker 5: in Connecticut, small business people who rely on that part
Speaker 5: of the economy.
Speaker 4: Some would argue, though, just because it's the biggest doesn't
Speaker 4: mean it's the best or being run the most efficiently.
Speaker 3: So what do you say to that.
Speaker 5: Yeah, so everybody, not just at the federal level, but
Speaker 5: at the state level, should be working on making government
Speaker 5: more efficient. And I don't disagree with that. I don't
Speaker 5: think anybody does. But number one, you got to do
Speaker 5: it in compliance with the law. You have to do
Speaker 5: it in a way that's safe, that maintains the safety,
Speaker 5: for example, of our personal information. Just because you want
Speaker 5: to make treasury more efficient doesn't mean you can affect
Speaker 5: the largest data breach in American history and expose all
Speaker 5: of our social security numbers and god knows what happens
Speaker 5: to that. Does that end up on the dark web,
Speaker 5: and then we all become victims of scams? And by
Speaker 5: the way, that all comes back to me as the
Speaker 5: state attorney general when my phone starts ringing off the hook.
Speaker 6: So I guess the question is if there is if
Speaker 6: the government is indeed the federal government, if there are
Speaker 6: inefficiencies there, spending does need to be cut, what would
Speaker 6: you propose is the right way to do it?
Speaker 5: That Congress exercises its power to do that. The Constitution
Speaker 5: is very clear, under the spending Clause of the US Constitution,
Speaker 5: it's Congress's prerogative to decide how the nation's resources get spent. Okay,
Speaker 5: And so Congress needs to do its job.
Speaker 4: And if Congress not doing its job right now, and
Speaker 4: are do you feel like it's certainly not along party lines.
Speaker 5: Congress in many respects feels broken. But you know, one
Speaker 5: good example of how broken it is is that Congress,
Speaker 5: it seems, in this budget proposal, proposes to cut Medicare
Speaker 5: for the states. Are you kidding You're going to go
Speaker 5: after Medicare health care children? You know? I said when
Speaker 5: the federal funding freeze was announced that this is a
Speaker 5: war on the American people, And maybe that felt a
Speaker 5: little dramatic at the time, but what's clear now four
Speaker 5: weeks in is that it's a war on America's children,
Speaker 5: right Medicaid, healthcare, head start education funding, the Department of
Speaker 5: Education saying they're going to cut education funding not just
Speaker 5: for colleges and universities, but for all levels of education
Speaker 5: if you can't meet their standards on what's acceptable not
Speaker 5: acceptable in terms of your curriculum and your programs. This
Speaker 5: attacks kids, children, families. What is the point of that.
Speaker 6: You've been in this position since twenty nineteen, that was
Speaker 6: a few years into the first Trump administration. You were
Speaker 6: active in big legal suits against the Trump administration during
Speaker 6: that time as well. We've talked a little bit about
Speaker 6: over the last few months how this administration feels a
Speaker 6: little different because of the people they've brought in. How
Speaker 6: would you say the legal aspect of this has been different.
Speaker 6: Do you think the Trump administration was much more prepared
Speaker 6: this time around.
Speaker 5: No, it's more lawless and more unconstitutional. And yes, it
Speaker 5: feels like they were more prepared to do the wrong thing.
Speaker 5: They were more prepared to break the law. They were
Speaker 5: more ready to break the law. You look at what
Speaker 5: are breaking law and Dan bonjiorno, Oh, well, first of all,
Speaker 5: the very first thing they didn't we sued on, which
Speaker 5: is to abrogate birthright citizenship and to eliminate birthright citizenship.
Speaker 5: That is utterly unlawful and constitutional, unconstitutional. Look at the
Speaker 5: fourtheth Amendment and what the words the fourth Amendment say.
Speaker 5: They're very clear. If you're born on a mayor American soil,
Speaker 5: you're an American citizen period. If not for the fourteenth Amendment, Tim,
Speaker 5: I'm not sitting here. I'm an American citizen by right
Speaker 5: of my birth. And it's as if Carol as if
Speaker 5: a democratic president, let's say some future presidents said okay,
Speaker 5: you know what, no Americans should carry firearms. It's that unconstitutional.
Speaker 5: People would lose their minds if some politicians said that,
Speaker 5: and Donald Trump is doing that with birthright citizens.
Speaker 4: General, Town what do you think will happen to Trump's
Speaker 4: birthright Citizenship executive order and his plan to also ban
Speaker 4: transgender people from the military.
Speaker 5: I think his effort will fail, and I think the
Speaker 5: Supreme Court will do the right thing and that it
Speaker 5: will read the Fourteenth Amendment to say and mean what
Speaker 5: it says, which is that if you're born in America,
Speaker 5: you're an American.
Speaker 6: Is that the ultimate test of the president's policies? Do
Speaker 6: we continue to see legal challenges to the extent that
Speaker 6: pretty much everything just goes to the Supreme Court.
Speaker 5: Look, we every middle schooler in America knows that we
Speaker 5: have a system of checks and balances. Without checks and balances,
Speaker 5: there's no America right there. If the president has unchecked power,
Speaker 5: then Congress becomes optional, our rights become optional, States become optional,
Speaker 5: and so checks and balances. These lawsuits are about checks
Speaker 5: and balances. Congress right now isn't a very effective check,
Speaker 5: and so states state attorneys general we are a check
Speaker 5: through the courts, through the judiciary, through the federal courts
Speaker 5: on a president who doesn't respect and follow the law.
Speaker 4: You know, it's interesting. There definitely have been some protests
Speaker 4: at you know, community meetings with members of Congress. But
Speaker 4: going back to that, as you say, Congress is there
Speaker 4: to enact the law right and help make decisions. But
Speaker 4: people in general, the president is still popular. People agree
Speaker 4: with what he's doing. So I go back to kind
Speaker 4: of Tim's question. If you look at Americans, put president and.
Speaker 6: He won the popular vote.
Speaker 3: This time, he won the popular vote.
Speaker 4: He won it all, and so there are a lot
Speaker 4: of Americans who think this is the right direction for
Speaker 4: the country.
Speaker 5: I guess I don't want to quibble with you know,
Speaker 5: whether he's popular or not. I think he's underwater according
Speaker 5: to most polls, meaning less than fifty percent. I think
Speaker 5: it's pretty clear that this country has split pretty evenly,
Speaker 5: fifty to fifty. It was a very close presidential election.
Speaker 5: I don't think most Americans who voted for Donald Trump
Speaker 5: I think. I don't think most Americans expect him to
Speaker 5: break the law and to take the Constitution and set
Speaker 5: fire to it. I don't think anybody. And this is
Speaker 5: why I think Elon Musk and again his army of
Speaker 5: hackers are very unpopular because nobody said, turn the keys
Speaker 5: over to somebody that we didn't vote for, give them
Speaker 5: the password, give them the codes, and have at it.
Speaker 5: Do whatever you want and hurt states and people directly
Speaker 5: right now. The damage is being done right now. If
Speaker 5: the state of Connecticut is working on its state budget
Speaker 5: for the next two years right now, we'll finish that
Speaker 5: work in early June. If they blow a huge hole
Speaker 5: in federal funding, we're in big trouble. And many states
Speaker 5: on the same position. And I would say something, by
Speaker 5: the way, really correctly.
Speaker 7: Two.
Speaker 5: Yeah, red states are much bigger takers of federal funding.
Speaker 4: No, it's a really good point we got to leave
Speaker 4: with there. General Tom, thank you so much. This is
Speaker 4: Bloomberg Business Week.
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Speaker 4: Inbusters in US government bonds, starting to bet that the
Speaker 4: FED will soon need to pivot from worrying about sticky
Speaker 4: inflation to freting about slowing US economic growth. That sentiment
Speaker 4: helped drive treasure yields to their lowest levels of the year.
Speaker 4: We saw the tenure dipping to four point two seven percent.
Speaker 4: I was going to pull it up just to see
Speaker 4: where we are right now. We're at four twenty five,
Speaker 4: so we're even below that, so we continue to see
Speaker 4: yields dipping lower. Strategists over at Morgan Stanley say the
Speaker 4: tenure has scope to fall back below four percent, a
Speaker 4: key level if the prevailing view on the FED shifts somewhat.
Speaker 4: So we wanted to talk a little bit more tim
Speaker 4: right about fixed income.
Speaker 6: Yeah, So from more on fixed income, we head out
Speaker 6: to San Francisco, and that's where we find Karen vera
Speaker 6: Perry head if I shares fixed income strategy over at
Speaker 6: a Blackrock. Karen, good to have you on with us,
Speaker 6: especially on a day when really everyone's obsessed about the
Speaker 6: US equity market, about the results of Nvidia coming at
Speaker 6: yes four twenty Wall Street time. What do you focus
Speaker 6: on on a day such as this.
Speaker 8: We like to look across the markets and see where
Speaker 8: what's happening in fixed income. So, as you pointed out,
Speaker 8: we're seeing the tenure at the lows for the entire year.
Speaker 8: If you recall back in September, tenure yields were at
Speaker 8: three sixty five, and they rose pretty quickly with the
Speaker 8: assumption that we're going to get a little bit higher
Speaker 8: inflation levels and more growth, and then this week that
Speaker 8: thesis has moved back down. So concerns about growth inflation
Speaker 8: has been really sticky here. So we're just watching what's
Speaker 8: going on across the yield curve as well as in
Speaker 8: the corporate bond market. We've really seen IG spreads holding
Speaker 8: tight around eighty two basis points, but we have seen
Speaker 8: high yield this week come off a little bit in
Speaker 8: the two seventy range.
Speaker 4: So does something like an Nvidia in terms of what
Speaker 4: we get. I mean, there's obviously been so much on
Speaker 4: the equity side of thing, the things the AIU four
Speaker 4: here that we've talked about over the last two years,
Speaker 4: although Nvidia kind of unchanged a little bit lower on
Speaker 4: the year here in twenty twenty five. But is there
Speaker 4: anything that you look for and clues in terms of
Speaker 4: what the company might say that might impact your world.
Speaker 8: I think the biggest thing is the market really wants
Speaker 8: the earnings to be very strong, and I think the
Speaker 8: main point that people should think when they're investing in
Speaker 8: sectors like this is they want to remain diverse.
Speaker 4: Five.
Speaker 8: You don't want to just have all your eggs in
Speaker 8: one basket. If tech it some of the other themes
Speaker 8: don't hold up, and I think think this is where
Speaker 8: we are seeing really strong flows coming back in a
Speaker 8: fixed income specifically in fixed income ETFs. We've had seventy
Speaker 8: billion dollars of inflows this year, which is the strongest
Speaker 8: start we've had for many years. And I think investors
Speaker 8: are looking to diversify portfolios away from some of the
Speaker 8: equity markets and make sure that they have some hedges
Speaker 8: built in there.
Speaker 6: Okay, well, well, speaking of hedges, I'm curious about what
Speaker 6: you see as sort of the mix for ann an
Speaker 6: investor diversified and one of your friends right now, when
Speaker 6: you think about corporates, when you think about government paper,
Speaker 6: when you think about what's happening with corporates, like, what's
Speaker 6: the mix for you?
Speaker 8: I think we're recommending people remain a little bit underweight duration.
Speaker 8: So if you think about it, over the last few decades,
Speaker 8: we've seen slowly the overall duration in the market increasing
Speaker 8: just with more and more long bond issuance. So we're
Speaker 8: seeing that sweets sweet spots still see the belly of
Speaker 8: the curve that three to call it, three to seven
Speaker 8: year point on the curve. So as people are building
Speaker 8: in portfolios are also building in more income. So we've
Speaker 8: seen about sixteen of the top twenty five flows into
Speaker 8: ETFs this year are coming into sectors that aren't in
Speaker 8: the Bloomberg Barkley's aggregate, So they're coming into sectors like
Speaker 8: floating rate, like cash like so people are keeping things
Speaker 8: really short. Tips have been popular this year, and even
Speaker 8: funds that have more incumbents to them. So as you're
Speaker 8: constructing portfolio, is thinking about having some of those those
Speaker 8: asset classes that are going to hold up a little
Speaker 8: bit better if we do see a lot of interest, right,
Speaker 8: volatility on the long.
Speaker 3: End sounds kind of conservative to me. What's your read
Speaker 3: on it? This is your world?
Speaker 4: Would you say those flows into those types of funds,
Speaker 4: whether it's tips, concerns about inflation, or whether it's more
Speaker 4: cash short term duration that it's investors saying had a
Speaker 4: good strong two years, certainly just on the equity side
Speaker 4: of things, if you look at that as a benchmark
Speaker 4: that maybe I just need to play it safe for
Speaker 4: a while and let the dust settle.
Speaker 8: Yeah, Carol, that's really interesting. We've seen about a trillion
Speaker 8: dollars coming into money market funds over the past twelve months.
Speaker 8: So we see about almost billion dollars in money market funds,
Speaker 8: so I think people are having a portion of it
Speaker 8: keeping that really conservative and really safe. We actually just
Speaker 8: launched two different money market fund ETFs that enable investors
Speaker 8: to access those money market two A seven style funds
Speaker 8: but in an ETF ropper, and I think we are
Speaker 8: going to see people who are really sitting in the
Speaker 8: front end of the curve and being really conservative of
Speaker 8: those allocations.
Speaker 4: Okay, so you launched two new funds because the demand
Speaker 4: was they are correct.
Speaker 8: Absolutely, We've seen a lot of people who are unhappy
Speaker 8: with some of their sweep options and they just want
Speaker 8: more choice when it comes to their money market funds.
Speaker 4: Hey, so, Karen, where's money going out of in the
Speaker 4: fixed income world, at least within your I shares universe universe.
Speaker 8: We're really we're still seeing kind of a barbell take
Speaker 8: place where we're seeing some front end and some long
Speaker 8: end people are moving to that belly of the curve,
Speaker 8: albeit very slowly. Our merging markets is actually an area
Speaker 8: that we've seen outflows this year. I think, just with
Speaker 8: you some of the concerns with what's happening with tariffs
Speaker 8: and overseas and growth rates. We've really seen people stick
Speaker 8: close to home, with a lot of flows into treasuries
Speaker 8: as well.
Speaker 6: Do you think that changes if these tariffs are put
Speaker 6: into effect or not put into effect, Like what moves
Speaker 6: will we see depending on Trump policy from Washington.
Speaker 8: I think we'll see people stay really conservative. I think
Speaker 8: people aren't going to aren't going to be hesitant to
Speaker 8: taking a lot of risks, whether it's with credit or
Speaker 8: with adding too much duration, So they're gonna they're going
Speaker 8: to keep it, keep it on the very short duration
Speaker 8: side of it. But I do think having at least
Speaker 8: some fixed income in your portfolio to offer that ballast. Look,
Speaker 8: what's just happened this week. We've had, you know, multiple
Speaker 8: days when the equity markets are down, and because bonnyields
Speaker 8: have have also the prices come up and that and
Speaker 8: that provides kind of a more balance experience.
Speaker 4: You know. In the introduction to you and right I
Speaker 4: am looking at a tenure right now at four twenty four,
Speaker 4: we have Morgan Stanley saying, uh, the ten year has
Speaker 4: go to fall below four percent if the prevailing view
Speaker 4: on the FED shifts somewhat.
Speaker 3: Do you think that's likely?
Speaker 8: I think it could come to pass, So let's just
Speaker 8: see how some of the data looks. What I'm looking
Speaker 8: forward to is the Summary of Economic Projections, so that's
Speaker 8: out at the next FED meeting on March nineteenth, so
Speaker 8: we'll see how they scope out their views on inflation
Speaker 8: as well as the employment situation. Right now, the FED
Speaker 8: Fund's futures market is pricing in that overnight rate getting
Speaker 8: down to three seventy five by the end of the year,
Speaker 8: and I think how quickly they do that is the question.
Speaker 8: And at this point it looks like they're going to
Speaker 8: be on pause till later in the year.
Speaker 4: Karen, is it safe to say, I am curious what
Speaker 4: your view is In terms of last FED meeting, it
Speaker 4: was more still concerned about inflation, but you more are
Speaker 4: starting to become more concerned about US growth slowing down
Speaker 4: versus inflation being sticky.
Speaker 8: I think that's really the wild card. We're trying to
Speaker 8: look out for how much some of the changes in
Speaker 8: the policies are going to come through and start to
Speaker 8: impact growth. I think it's it's been really difficult to tell.
Speaker 8: So everyone will be watching the data a hawk. We'll
Speaker 8: especially be looking at some of the jobs numbers later
Speaker 8: this week and next week, and more inflation data to
Speaker 8: kind of get a better and fuller picture on that.
Speaker 6: Do you do you see the government cuts, the Department
Speaker 6: of Government Efficiency, the layoffs just thirty seconds left. You
Speaker 6: see that having a major effect on the economic data.
Speaker 8: It might take a few months to really show up
Speaker 8: in the jobs numbers. So I think there's you know,
Speaker 8: there's a lot of uncertainty around that, but I definitely
Speaker 8: think that the federal beyond pause longer if we do
Speaker 8: start to see to see some of those numbers come through,
Speaker 8: and then they're you know, they're going to be really
Speaker 8: worried about inflation as well. So we kind of have
Speaker 8: two sides of the coin that are going to be
Speaker 8: pulling on each other.
Speaker 4: All right, Can leave it there, Hey listen, Karen, great
Speaker 4: to get some time with you. It is an Nvidia Wednesday,
Speaker 4: but really fixed it income always on our mind, no
Speaker 4: doubt about it.
Speaker 3: Karen Vera Perry.
Speaker 4: She's head of I Shares Fixed Income strategy over at Blackrock.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: Did you see this story?
Speaker 5: Carol?
Speaker 6: Most reads in the most read eight hours, most read
Speaker 6: in the last one hour. Junior banker hiring is a
Speaker 6: battle against AI written resumes. Listen to this. It's about
Speaker 6: the junior bankers who are using AI to help draft
Speaker 6: their resumes. The message recruitment firms they are onto you.
Speaker 6: Using AI becomes an issue for recruiters when the application
Speaker 6: the applicants don't properly proofread their applications. I mean, come on, guys,
Speaker 6: thank you, Yeah, got approve.
Speaker 4: Apparently they're using certain phrases and words. It's just robust
Speaker 4: and meticulous.
Speaker 6: Yeah, that's what AI use is. I'm curious what Sophie
Speaker 6: Nevadi has to say about this. She's the founder and
Speaker 6: CEO of Formation. It's a company that helps mid level
Speaker 6: software engineers get jobs at tech companies. Sophie joins us
Speaker 6: from San Francisco. Sophie, welcome. We're going to talk about
Speaker 6: AI and tech roles in just a second. But you've
Speaker 6: got such a great view of the hiring that's happening
Speaker 6: at these tech firms. You were an engineer at Meta
Speaker 6: and and next Door as well earlier in your career
Speaker 6: before launching this company. What does the landscape look like
Speaker 6: to you as you look out across Silicon value right now?
Speaker 6: How are these companies doing?
Speaker 7: Yeah, thanks Tim for having me on and uh yeah,
Speaker 7: the found founder of Formation, and we are helping software
Speaker 7: engineers land prestigious roles in some of the world's top
Speaker 7: tech companies. And we are definitely seeing a lot of
Speaker 7: shifts in the market right now. You know what, AI
Speaker 7: is really redefining a lot of the job responsibilities and
Speaker 7: skill requirements that are needed of software engineers today. And
Speaker 7: really what's happening is that as engineers are kind of
Speaker 7: adopting uh new workflows where AI is kind of automating
Speaker 7: a lot of the repetitive work as part of software engineering,
Speaker 7: humans are now being you know, uh freed up to
Speaker 7: focus on some of the more higher level work and
Speaker 7: so you know, things like running boiler play code, or
Speaker 7: generating test cases or even writing documentation, fixing you know,
Speaker 7: simple bugs like that. Our examples are of tasks that
Speaker 7: are being uh you know, reduced or even automated in
Speaker 7: some cases by AI. But as AI is taking over
Speaker 7: some of that repetitive work, engineers are being asked to
Speaker 7: focus more on the higher level creative skills, you know,
Speaker 7: like problem solving, architectural design and handling more complex design
Speaker 7: decisions as well as you know, navigating ambiguous real world requirements.
Speaker 6: And so yeah, well, Sophia, a few years ago, you know,
Speaker 6: everybody was told to go learn how to code, and
Speaker 6: that was sort of the way to to get this
Speaker 6: into this prestigious career and get like a solid the
Speaker 6: solid career, especially as a pivot goes. Is that still
Speaker 6: good advice for folks who are out there or has
Speaker 6: AI taking those kind of roles that you'd learn you
Speaker 6: sort of entry level.
Speaker 7: Yeah, so it's definitely a tricky question. So you know,
Speaker 7: right now the entry level role in terms of software
Speaker 7: engineering is changing very rapidly. AI in some ways is
Speaker 7: making engineering more accessible by making I think one of
Speaker 7: my favorite quotes about AI is that the hottest new
Speaker 7: programming language is now English, right, which is great, but
Speaker 7: people code gra you're an engineer, I like it, okay,
Speaker 7: but you know, but but I would say that right now,
Speaker 7: that's kind of the ideal. And realistically what's happening is that,
Speaker 7: you know, really senior engineers are very much required and
Speaker 7: even more so than ever to be defining and designing
Speaker 7: system architecture and figuring out how to interpret you know,
Speaker 7: product and business needs into technical specification and really ensure
Speaker 7: that the AI generated code needs quality, security, and performance
Speaker 7: expectations and you know, your ability to evaluate uh, that
Speaker 7: code requires the knowledge to be able to code. And
Speaker 7: so I believe that the ability to code as a
Speaker 7: foundational layer is going to remain the case for a
Speaker 7: very long time to come, and without it, it's going
Speaker 7: to be very hard to be performing at the level
Speaker 7: that is expected of you.
Speaker 4: So, so engineering the market you mentioned, I think the
Speaker 4: entry roll in engineering being impacted maybe the most by AI.
Speaker 4: Does that mean it's it's ultimately going to be replaced
Speaker 4: by AI, do you think, and maybe the higher levels
Speaker 4: of engineering will be safer.
Speaker 7: Yeah. Well, so AI really is reshaping, but not replacing,
Speaker 7: the software engineering role overall, and a lot of the
Speaker 7: repetitive work that is being replaced, UH is a portion
Speaker 7: of every single software engineer's job, but it is a
Speaker 7: bigger percentage of more junior engineer's job, which is you know,
Speaker 7: one of kind of the driving forces behind the huge
Speaker 7: shift that we're seeing towards more senior UH engineers. I
Speaker 7: think that the again the at the same time, AI
Speaker 7: is making it easier for engineers to onboard and learn
Speaker 7: about learn about large code bases and get ramped up.
Speaker 7: You know, I will tell you I will always remember
Speaker 7: my first day at Meta where I first opened up
Speaker 7: a you know, million file codebase and have no having
Speaker 7: no idea where to start, right as a fresh college
Speaker 7: grad who had only worked in tiny, tidy code bases before.
Speaker 7: The ramp up time was significant in the months before
Speaker 7: an engineer is able to be productive, and I think
Speaker 7: that time is going to get significantly accelerated with the
Speaker 7: use of AI tools.
Speaker 3: But the way that.
Speaker 7: You were interacting with the codebases, I think are going
Speaker 7: to change, and so we're going to have to incorporate
Speaker 7: the usage of AI tools as part of you know
Speaker 7: CS curriculum as well as obviously Formation is thinking about
Speaker 7: how we can introduce engineers into using these tools as
Speaker 7: a native tool as part of their learning journeys.
Speaker 6: And reminded everybody you were working on meta platforms back
Speaker 6: when it was a company called Facebook.
Speaker 7: Still struggling with calling it meta, but yeah.
Speaker 6: You're not the only one, hey, I think for some context,
Speaker 6: for our viewers, our listeners give us an idea of
Speaker 6: salaries that are typical for the jobs that you place
Speaker 6: people in.
Speaker 7: Yeah. So, I am incredibly proud of the results that
Speaker 7: we've been able to achieve at Formation right now, and
Speaker 7: we're in twenty twenty four, our average, we were able
Speaker 7: to help people increase their compensation by over one hundred
Speaker 7: thousand dollars on average. And in terms of what this
Speaker 7: looks like typically on the market, there is a I
Speaker 7: would say, huge pay disparity I would say between kind
Speaker 7: of what you would call the top tier tech companies
Speaker 7: and kind of the average tech company, maybe some of
Speaker 7: the smaller tech companies, as well as companies in the
Speaker 7: lower paying industries. I would say, and this is one
Speaker 7: of the kind of results we've been really driving at
Speaker 7: Formation that in the last year, seventy six percent of
Speaker 7: our placements have been happening at you know, the top
Speaker 7: tier companies like I think are our top companies, are
Speaker 7: you know, Meta, Amazon, Microsoft, Google, companies like that. And
Speaker 7: at a company like that, you know, a senior software engineer,
Speaker 7: they might be looking at compensation in the range of
Speaker 7: two hundred and fifty to upwards of five hundred thousand dollars.
Speaker 7: And you know what that looks like is a base
Speaker 7: salary that's maybe starting at around let's say one hundred
Speaker 7: and seventy to two hundred k. There's typically we're often
Speaker 7: a ten to fifteen percent target bonus as that goes.
Speaker 3: Along with that.
Speaker 7: And additionally, you know, senior engineers are getting very substantial
Speaker 7: stock compensation packages that can sometimes even exceed the base
Speaker 7: salaries that you're getting for you know, a total compensation
Speaker 7: of over four hundred thousand dollars, and that is in
Speaker 7: stark contrast to what you see at these other tech firms,
Speaker 7: where you know, you might start with the base salary
Speaker 7: in the one twenty to one fifty range, there might
Speaker 7: be very modest performance bonuses, and oftentimes there are minimal,
Speaker 7: if any stock compensations. So you know, landing a role
Speaker 7: at one of these companies might result in half the
Speaker 7: compensation you'd expect at you know, a FANG level.
Speaker 6: You were talking about the fang companies, the mag seven.
Speaker 6: What about the high flying startups like an open AI
Speaker 6: or an Anthropic.
Speaker 7: Oh, yes, absolutely, I am including these companies. It's really
Speaker 7: hard to I've just settled on the term top tier
Speaker 7: to be kind of umbrella term to include.
Speaker 6: You include open AI in there for example, because we
Speaker 6: just would. The reason I ask is, we've just heard
Speaker 6: about the talent war that's happening in Silicon Valley and
Speaker 6: the way that these companies are coming out.
Speaker 7: I think that every time like a major AI researcher
Speaker 7: moves from one company or other is a headline news, right,
Speaker 7: it's that big?
Speaker 3: But is I would tell that is there?
Speaker 4: We just got about thirty seconds left, Sophie. Is there
Speaker 4: a talent war for top engineers in Silicon Valley right now?
Speaker 8: Yes?
Speaker 3: Absolutely.
Speaker 7: I would say that this is existing both within very
Speaker 7: senior software engineering roles for product positions as well as
Speaker 7: in particular AI focused roles within engineering. So this is
Speaker 7: both increased demand in kind of traditional roles such as
Speaker 7: machine learning, data scientists, things like that, as well as
Speaker 7: some of the emerging roles that are happening as a
Speaker 7: result of AI, like you know, prompt engineering, fine tuning specialists.
Speaker 4: Right, So, parents, if you're listening, sign those kids up,
Speaker 4: got it?
Speaker 3: Yeah?
Speaker 4: Hey, that's what I'm thinking engineering tech, right, computer engineering?
Speaker 3: Sephie Nevadi, founder and CEO of Formation.
Speaker 4: Yeah, but you let me drive.
Speaker 6: Oh, no, no, no, no, this is not a toy.
Speaker 3: Please, I'll do the gravel.
Speaker 4: Wat I want to drive.
Speaker 6: It's a good question.
Speaker 3: This is the drive to the clothes plungs for music.
Speaker 2: Well Don on Bloomberg Radio.
Speaker 4: All right, everybody, just about eighteen minutes away from the
Speaker 4: closing bell on this Wednesday. A slew of earnings coming
Speaker 4: your way, including n video about four twenty pm Sea time. Yes, seriously,
Speaker 4: video's happening to You're so funny. We've seen stocks bouncing around.
Speaker 4: There are loads of the session you heard from Charlie
Speaker 4: and Bill, but we will see whether or not. And
Speaker 4: vidio kind of changes the feel and the tone in
Speaker 4: the tree.
Speaker 3: Is it time to buy? I don't know.
Speaker 6: Is it time to sell?
Speaker 3: I got a great guest you can answer that.
Speaker 6: That's the question we always post to Vance Howard. Let's
Speaker 6: drive to the clothes of Vance Howardy, CEO and portfolio
Speaker 6: manager at Howard Capital Management. He's here in the Bloomberg
Speaker 6: Interactive Brokers studio. You've got the syndicator. Is there any
Speaker 6: AI or is this just a screen?
Speaker 7: Jim.
Speaker 9: We're working hard to make it better and better and better,
Speaker 9: and the tools that are out there now are making
Speaker 9: it more efficient and a little bit more effective. So
Speaker 9: that's kind of interesting and fun. You know, we'll live
Speaker 9: our whole lives and you're never going to get it perfect, right,
Speaker 9: But if he keeps striving and working hard, you can
Speaker 9: create something that's very effective. And I think that we have.
Speaker 6: It's called the HCM byline. What's it telling you right now?
Speaker 9: It's telling us to stay long this market? Data is
Speaker 9: it is, We're long this market. It's saying any pullbacks bible,
Speaker 9: you know, right now. So we're very positive. I'm real positive.
Speaker 9: On twenty twenty five. You know, the market got tired
Speaker 9: about November. We had a little run up with the
Speaker 9: election and all this kind of stuff. But it's been
Speaker 9: tired for about four months. And markets get tired. That
Speaker 9: doesn't mean anything's wrong. It doesn't mean you're headed for
Speaker 9: a bear market. It just means it's like we call
Speaker 9: it and takes a little Spanish pause.
Speaker 3: So I love that.
Speaker 4: Hey listen, let me ask you though, in terms of
Speaker 4: your indicator, when there's stuff that is kind of coming
Speaker 4: at us every day. Not a judgment call, but we
Speaker 4: do have a president who likes to make comments, and
Speaker 4: we are holding We're seeing events from the oval office
Speaker 4: every day. Does it kind of muck up the indicator
Speaker 4: at all? Like how do you take out when there's
Speaker 4: that much static almost on a daily basis, that could
Speaker 4: packed industries, companies and so on.
Speaker 9: Carol, I think that's the beauty the ACM byline. That's
Speaker 9: what it was designed to do, is to take all
Speaker 9: that noise out and just trade what actually is happening.
Speaker 3: When there's stuff.
Speaker 9: It even makes it more powerful because I mean we've
Speaker 9: had you know what, we've had chopped for four months
Speaker 9: straight and it's just been chopped. But the byline is strong,
Speaker 9: it's staying strong, you know. And also when you look
Speaker 9: at like the cash built up a seven tree and
Speaker 9: on the sidelines, you know, that's amazing amount of firepower
Speaker 9: for this thing.
Speaker 3: Not all of it may come back now, not all
Speaker 3: of it. It only takes a T.
Speaker 9: Two to move this market. So we're going to stay
Speaker 9: positive on that. But you know, with the ACM byline,
Speaker 9: what I do like about is it holds your feet
Speaker 9: to the fire. Yeah, you know, and all of a
Speaker 9: sudden you get news here, you get news there, and
Speaker 9: just just file it and put it in a file
Speaker 9: cabinet and look the byoline do its thing. As long
Speaker 9: as the trends up. You want to stay along the market,
Speaker 9: and you want to take you want to buy on
Speaker 9: every dip and look at good quality stock, good quality
Speaker 9: ETFs and trade long.
Speaker 3: Is it ever wrong?
Speaker 9: Absolutely, it's wrong. It's wrong about it's wrong almost thirty
Speaker 9: two percent of the time.
Speaker 3: Okay, so almost one third.
Speaker 9: Yeah, And but one good thing about it is it
Speaker 9: never stays wrong. It'll adjust reasonably quick. But it is
Speaker 9: not a person.
Speaker 7: Now.
Speaker 9: They don't make a perfect indicator.
Speaker 6: So I'm just looking at the latest of the S
Speaker 6: and P five hundred. Right now we actually are in
Speaker 6: the green, up one tenth of one percent, so we've
Speaker 6: we're off those losses earlier in the session. Is this
Speaker 6: a dip worth buying?
Speaker 9: Yes, it is. And you know it's a funny thing
Speaker 9: is when you look in the video and it's all
Speaker 9: the rage today and in all probability, it's going to
Speaker 9: be like a boop. You know tomorrow is going to
Speaker 9: be like, okay, that really had no real you know, everybody,
Speaker 9: I don't think it's going to move the market one
Speaker 9: way or the other because I think the video is
Speaker 9: sort of worn out and tired, right now, not that
Speaker 9: it's not a great company, not that it's not a
Speaker 9: great buy, but everybody's played the news off of for
Speaker 9: two years now. We need a new story.
Speaker 3: You do like the QQQ though, right?
Speaker 4: I love the and then video is the second biggest
Speaker 4: holding in the QQQ it is, so that's a lot
Speaker 4: of those go go go names it is.
Speaker 9: And I've owned the video in our funds for three
Speaker 9: years straight now and I'm not selling it right now,
Speaker 9: but yeah, QQQ, if it'll break out of about five forty,
Speaker 9: then you've got a new breakout on your hands. And
Speaker 9: I think that's incredibly positive, incredibly robust, and people should
Speaker 9: buy that breakout.
Speaker 3: It's at five point fifteen right now.
Speaker 9: Yeah, five forty right now, if it if it breaks
Speaker 9: out of that five forty, because it's touched it a
Speaker 9: couple of times, Caryl, it just hasn't been able to
Speaker 9: really thrust its way through. So you've had the momentum
Speaker 9: structurally back and off. But you you know, went from.
Speaker 3: Just say, is that five fifteen now? So you're saying
Speaker 3: it needs.
Speaker 9: To break about five forty right right, And so we're
Speaker 9: we you know, it came close like two or three
Speaker 9: weeks ago, and it was touching up to a five
Speaker 9: thirty nine. It tapped it tapped it and then it's
Speaker 9: been selling off a little bit since.
Speaker 3: But so it's got to move up a little bit.
Speaker 6: Does the does the HTM buyline? Does it look at
Speaker 6: individual equities or does it look at just sent the
Speaker 6: like sentiment and indexes like does Can you plug an
Speaker 6: equity into it and it'll tell you whether to buy
Speaker 6: it or not.
Speaker 9: It's challenging on an individual equity or the individual etf
Speaker 9: And we have different systems that monitor and do that
Speaker 9: to help us pick out what's the most productive asset
Speaker 9: class or stock. Don't or do you given time, But
Speaker 9: what you really want to know is that the sales
Speaker 9: are in. You are the wind in your sales, and
Speaker 9: if it's not, you know, you're fighting the upward, you know,
Speaker 9: finding a nasty tide. You don't want to do.
Speaker 6: That with some data like we got yesterday. When you
Speaker 6: know consumer sentiment comes in soft, for example from the
Speaker 6: conference board, does that change the read Well.
Speaker 9: It doesn't change that quick because asuen byline, you know,
Speaker 9: has been positive for two straight years. In twenty twenty two,
Speaker 9: it went negative a couple of times. We pull a
Speaker 9: lot of money to cash and and it's been positive
Speaker 9: for quite some time. It's not a short term indicator, which.
Speaker 6: But there is still that it gets you to do
Speaker 6: something right. Like you sometimes sometimes it'll tell you to
Speaker 6: pull cash, you do it, and then it'll have to
Speaker 6: tell you when to put that cash back in. So
Speaker 6: what's sort of the not the breaking point, but what's
Speaker 6: like the indicator that tells you to do.
Speaker 9: That to come back in? Yeah, well, the byline is
Speaker 9: the indicator. I mean, if it goes negative, we're going
Speaker 9: to pull the cash. And if it goes positive, we
Speaker 9: know we're going to move back in. But when we
Speaker 9: move back in, our job is to also select the
Speaker 9: most productive asset classes of attech is it financials and energy.
Speaker 9: We've got to do that because that's how you build
Speaker 9: up AUF inside your fund is trying to catch those
Speaker 9: nice pops when you're getting some good movement.
Speaker 4: So how do you all right? So we mentioned the
Speaker 4: QQQ that you like. Amazon is another name that you like.
Speaker 9: I like it. On this pullback, I think it's come back.
Speaker 9: That's a very bible pullback.
Speaker 3: It's just fund about two percent for the year. But
Speaker 3: you think this is what that you would be. And
Speaker 3: is it just because it's pulled.
Speaker 9: Back or I think it's a wonderful company. You know,
Speaker 9: it's one of the Magnificent Seven, and the Magnificent Seven
Speaker 9: went from being overbought now it's over sold. So I
Speaker 9: think if you look at some of those seven stocks,
Speaker 9: there's some nice opportunities there, Carol, my top top pick
Speaker 9: of the year. Salesforce CRM was my top pick this year.
Speaker 9: I love it a lot well. Number One, I love
Speaker 9: recurring revenue. Their subscription base, so that means every month
Speaker 9: or not having to resell their product. They've got a
Speaker 9: subscription base. Every month they' getting a check, right. Number two,
Speaker 9: AI is going to benefit them quite a bit. They're
Speaker 9: well managed, they got great revenue inspectation.
Speaker 4: It's going to be an overlay right of all the
Speaker 4: A but forgive me go ahead.
Speaker 9: No, but I think it Like what you just said,
Speaker 9: I think AI is going to make a big impact
Speaker 9: with the Salesforce, and I think that people actually be
Speaker 9: able to use it and feed it a little bit
Speaker 9: more than they can in other areas.
Speaker 4: Stalks down about sixteen percent from hitting a high back
Speaker 4: in early December.
Speaker 3: So you've been putting new money to it we have been.
Speaker 4: Yeah, is there a presidential trade that you find interesting
Speaker 4: right now?
Speaker 9: Well, you know, you go back and you look at
Speaker 9: what happened with Trump and the first term, and it
Speaker 9: was the same stuff it was first nine and twenty
Speaker 9: four or five months. It was just sloppy and everybody's
Speaker 9: trying to figure him out. And then everybody got used
Speaker 9: to it, and all of a sudden, the news that
Speaker 9: comes out was.
Speaker 3: Like, it's sloppy this time around.
Speaker 4: I think many would argue that it's a lot more
Speaker 4: organized and they came in with a plan.
Speaker 9: It is, but I'm talking about the market, and I'm
Speaker 9: talking about the market. You know, if you remember three
Speaker 9: or four months when he took over, it was pretty
Speaker 9: sloppy and messy, and this same thing here. But you
Speaker 9: got to get used to the guy. He's uh, he's
Speaker 9: interesting to say the least.
Speaker 4: So, yeah, are you done with your portfolio management? No?
Speaker 7: I'm not.
Speaker 9: I never am.
Speaker 8: Now.
Speaker 6: We can't. We can't do any thing. We can just
Speaker 6: buy indexes and hold them forever.
Speaker 3: Do you like to pick your brain?
Speaker 6: That's all we do here?
Speaker 3: Like what I know, we have to sit and kind
Speaker 3: of sit.
Speaker 6: On our hands. But I think psychologically it's better for me. Psychologically,
Speaker 6: it's better for me because can you imagine me like
Speaker 6: trying to pick time stocks.
Speaker 3: I've had to do like wait to sell something, and
Speaker 3: it's just it's just rough. It's just rough. But we
Speaker 3: do have to be careful like it.
Speaker 6: I get to ask the questions. So there's no you know,
Speaker 6: risky behind number.
Speaker 4: Risk on trade you would pursue at this point versus
Speaker 4: risk off.
Speaker 3: I would do risk on for sure, as long as
Speaker 3: it says okay, all right, good to have you back,
Speaker 3: Happy New Year, I thank you, good to see you.
Speaker 4: It's Howard, CEO and portfolio manager at Howard Capital Management,
Speaker 4: right here in studium.
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