WEBVTT - Schwab Agrees to Buy Private Share Platform for $660 Million 0:00:02.520 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business 0:00:10.520 --> 0:00:14.400 Week Daily reporting from the magazine that helps global leaders 0:00:14.440 --> 0:00:18.360 stay ahead with insight on the people, companies, and trends 0:00:18.360 --> 0:00:23.360 shaping today's complex economy. Plus global business finance and tech 0:00:23.440 --> 0:00:27.320 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.640 --> 0:00:31.720 with Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:32.120 --> 0:00:35.000 Earlier, you know, we did get some deal news. Charles 0:00:35.000 --> 0:00:38.240 Schwab agreed to buy Forge Global Holdings. It's a marketplace 0:00:38.240 --> 0:00:40.360 for buying and selling shares of private companies. 0:00:40.600 --> 0:00:43.080 The deal about six hundred and sixty million or forty 0:00:43.080 --> 0:00:43.920 five dollars to share. 0:00:43.960 --> 0:00:47.560 That is a seventy two percent premium to the Wednesday close. 0:00:47.640 --> 0:00:50.320 Rick Worster, as you know, is president and CEO of 0:00:50.400 --> 0:00:53.280 Charles Schwab, and he stopped by earlier today for a 0:00:53.320 --> 0:00:56.800 second interview with us here at Impact twenty twenty five. 0:00:56.840 --> 0:01:01.400 My first question to Rick, why this deal, why now, 0:01:01.800 --> 0:01:02.760 and why this company? 0:01:03.120 --> 0:01:06.440 Well, we're thrilled to be able to democratize access to 0:01:06.520 --> 0:01:09.600 private investing. This is a market that forever has been 0:01:09.680 --> 0:01:11.280 for the high net worth and the ultra high net 0:01:11.319 --> 0:01:14.080 worth and with the acquisition of Forge, we'll be able 0:01:14.080 --> 0:01:17.560 to bring access to private companies to every investor, and 0:01:17.600 --> 0:01:20.479 so we're thrilled about that. Second, it continues our history 0:01:20.520 --> 0:01:24.000 of innovation, and our innovation has always centered around what 0:01:24.760 --> 0:01:27.760 can we do to provide more access, more opportunity to 0:01:27.800 --> 0:01:30.039 our clients so that they can grow and improve their 0:01:30.040 --> 0:01:32.840 net worth. So we're just thrilled about this, and Forge 0:01:33.840 --> 0:01:35.240 was the firm we really wanted to work with. 0:01:35.280 --> 0:01:37.720 It's been a lot of speculation about this company, as 0:01:37.760 --> 0:01:38.800 you know, yes. 0:01:38.600 --> 0:01:41.240 Well you know there's stock who's down ninety percent off 0:01:41.240 --> 0:01:43.480 its highs and at the same time they're the leader 0:01:43.480 --> 0:01:46.080 in the private company of marketplace, and so for us 0:01:46.120 --> 0:01:48.520 to be able to acquire the leading company that has 0:01:48.800 --> 0:01:52.160 the deepest relationships with the private companies and who have 0:01:52.280 --> 0:01:54.800 the stock opportunity, it's just phenomenal for us. 0:01:54.880 --> 0:01:56.600 Rick was it a bit competitive and I'm just thinking 0:01:56.600 --> 0:01:58.280 about the premium that you guys paid, what was it 0:01:58.320 --> 0:02:01.560 seventy two percent above the closing price yesterday? I'm thinking 0:02:01.560 --> 0:02:04.040 of was that Morgan Stanley just did a deal to 0:02:04.080 --> 0:02:07.760 buy equity Zen, which is another similar platform. So it 0:02:07.760 --> 0:02:10.880 does feel like big firms are jockeying to provide this 0:02:11.000 --> 0:02:13.640 access to their investors. So was there pressure to do 0:02:13.639 --> 0:02:14.720 this deal and get it done now? 0:02:15.240 --> 0:02:18.640 Well, as a public company, Forge has to run a process, 0:02:18.639 --> 0:02:20.760 and so absolutely this was a competitive process. 0:02:20.760 --> 0:02:22.920 They've been pretty I think transparent about this. 0:02:23.160 --> 0:02:23.320 Yes. 0:02:23.560 --> 0:02:26.520 From our standpoint though, we think we're paying a very 0:02:26.560 --> 0:02:30.280 reasonable price where it's five times revenue less than what 0:02:30.320 --> 0:02:33.720 we trade on a revenue basis, and the opportunity for 0:02:33.840 --> 0:02:36.800 us in private markets is so much bigger than what 0:02:36.800 --> 0:02:38.600 we're paying for the company. We're paying six hundred and 0:02:38.600 --> 0:02:42.720 sixty million dollars for the company. This market could be huge, 0:02:43.040 --> 0:02:45.200 and when we bring our forty six million clients to 0:02:45.240 --> 0:02:48.720 this marketplace, I think the opportunity to grow our economics 0:02:48.800 --> 0:02:50.880 is significant. But most importantly and why we did this 0:02:50.960 --> 0:02:53.040 deal was not about making money. 0:02:52.840 --> 0:02:54.040 Relative to the purchase price. 0:02:54.320 --> 0:02:58.480 It was about democratizing access to private investing and to 0:02:58.800 --> 0:03:00.160 helping our clients grow their wealth. 0:03:00.520 --> 0:03:03.240 Will this only be for accredited investors or what's the 0:03:03.280 --> 0:03:06.919 plan in terms of new product placement or product offerings 0:03:07.280 --> 0:03:09.280 to offer it up to the retail investor. 0:03:09.919 --> 0:03:11.640 What I'm so excited about is we're going to have 0:03:11.639 --> 0:03:15.360 an opportunity for every type of investor to invest in 0:03:15.400 --> 0:03:18.320 alternatives with this acquisition. Well, three ways that clients can 0:03:18.360 --> 0:03:21.240 invest today. We already have for both our rias and 0:03:21.280 --> 0:03:25.320 retail clients a menu of alternative managers, the leaders that 0:03:25.360 --> 0:03:27.320 you're aware of, some of the big names in private 0:03:27.360 --> 0:03:30.280 equity and venture capital. That's one way our clients can invest. 0:03:30.600 --> 0:03:33.119 The second way is through this acquisition of Forge, which 0:03:33.120 --> 0:03:36.160 owns an asset management company, we will in the first 0:03:36.240 --> 0:03:39.320 quarter of next year launch an indexed fund that is 0:03:39.600 --> 0:03:40.520 an index. 0:03:40.200 --> 0:03:42.880 Of the sixty biggest private. 0:03:42.480 --> 0:03:45.360 Companies, and any investor with any wealth, if they have 0:03:45.400 --> 0:03:47.960 interests in that, we'll be able to invest. And then third, 0:03:48.360 --> 0:03:51.920 for accredited investors, we will have a marketplace opportunity for 0:03:52.000 --> 0:03:55.960 those investors to buy individual private companies and invest in 0:03:56.000 --> 0:04:00.480 those companies directly. That does require you being an accredited investor. 0:04:00.520 --> 0:04:02.120 A couple of questions I want to ask you, so, 0:04:02.160 --> 0:04:04.040 how does it kind of improve your ability to win 0:04:04.600 --> 0:04:08.800 more wallet share when it comes specifically to clients. We 0:04:08.880 --> 0:04:13.600 know that retail investors have been clamoring for more access. 0:04:13.400 --> 0:04:14.400 To private markets. 0:04:14.960 --> 0:04:16.560 I think we've gone I. 0:04:16.520 --> 0:04:19.680 Know it's not about money, yeah, or I know it's 0:04:19.760 --> 0:04:21.839 not about in terms of the price you paid, but 0:04:22.240 --> 0:04:24.400 it is about right, Like you want to make sure 0:04:24.400 --> 0:04:27.360 your clients are happy and they're getting all the offerings. 0:04:27.400 --> 0:04:29.000 So I'm just curious, how does it help you win 0:04:29.040 --> 0:04:29.560 more share? 0:04:29.760 --> 0:04:32.680 Over the last ten years, we've become a premier destination 0:04:32.880 --> 0:04:35.440 for high net worth and alternate high networth clients. And 0:04:35.480 --> 0:04:37.799 the reason for that is we have a product offer 0:04:37.800 --> 0:04:41.120 that can't be matched, whether it's access to privates, lending 0:04:41.160 --> 0:04:45.800 capabilities that are straightforward, fast efficient with great rates, wealth 0:04:45.839 --> 0:04:49.240 support on their tax, trust and estate needs, and access 0:04:49.279 --> 0:04:51.720 to live individuals to speak to. They can walk into 0:04:51.760 --> 0:04:54.479 one of our four hundred branches all across the country, 0:04:54.680 --> 0:04:56.800 have a conversation with a real life person about their 0:04:56.800 --> 0:04:59.920 financial needs, have a discussion about financial planning and what's 0:05:00.080 --> 0:05:02.400 going on in their life. And so we really have 0:05:02.520 --> 0:05:05.360 become over the last decade a premier destination for high 0:05:05.360 --> 0:05:06.080 network clients. 0:05:06.360 --> 0:05:08.800 And this acquisition just adds to our capabilities. 0:05:08.920 --> 0:05:10.200 What about from your rias? 0:05:10.200 --> 0:05:12.200 And I think about all the independent advisors who are 0:05:12.240 --> 0:05:14.159 here right this is what this event is all about. 0:05:14.440 --> 0:05:16.440 So how much does this kind of help them in 0:05:16.480 --> 0:05:17.480 their pitch to clients? 0:05:17.480 --> 0:05:19.880 And I'm just curious, is this to some extent in 0:05:19.920 --> 0:05:22.800 response to what you've been hearing from independent advisors. 0:05:22.320 --> 0:05:24.240 It absolutely is and this is a game changer for 0:05:24.320 --> 0:05:27.040 us in the RIA space. Today, we have five trillion 0:05:27.080 --> 0:05:30.440 dollars of RIA assets that we custody, one point two 0:05:30.440 --> 0:05:33.360 percent of them sitting in alternatives. We know there's more 0:05:33.400 --> 0:05:36.000 demand that number probably should be closer to five, six 0:05:36.080 --> 0:05:38.960 or seven percent. And with this acquisition, we've now given 0:05:39.000 --> 0:05:41.600 them three different ways to get invested, and I expect 0:05:41.600 --> 0:05:43.719 over the coming years we'll see that one percent grow 0:05:43.800 --> 0:05:46.799 more towards the five percent. So the rias are thrilled. 0:05:47.040 --> 0:05:48.840 They've wanted us to do more in alternatives, and I 0:05:48.839 --> 0:05:50.320 think with this acquisition. 0:05:49.800 --> 0:05:50.400 We've nailed it. 0:05:50.480 --> 0:05:52.560 And you said the new client offering, it's next year. 0:05:52.600 --> 0:05:54.240 We'll see early part of next year. 0:05:54.400 --> 0:05:56.880 Well, Forge is up and going today, so hopefully some 0:05:56.920 --> 0:05:59.240 of our clients will go find it starting tomorrow and 0:05:59.600 --> 0:06:01.919 start getting invested if that's what they want to do. 0:06:01.960 --> 0:06:05.080 But what I have non accredited I think about like that. 0:06:05.400 --> 0:06:07.520 We're going to launch the fund in the first quarter 0:06:07.560 --> 0:06:09.920 of next year. That's the current plan, and then we'll 0:06:09.960 --> 0:06:12.200 continue to roll out their services in the coming months. 0:06:12.520 --> 0:06:14.440 You know, the other side of this rick is, you know, 0:06:14.520 --> 0:06:18.159 concerns about hurdles in terms of transparency and investors really 0:06:18.320 --> 0:06:21.280 understanding what they're buying when they tap into anything in 0:06:21.320 --> 0:06:23.960 the private markets. So are there any kind of hurdles 0:06:23.960 --> 0:06:25.880 that you anticipate, regulatory or otherwise. 0:06:26.160 --> 0:06:28.320 That's why we really wanted to work with Forge, Okay, 0:06:28.560 --> 0:06:32.239 because Forge is the market leader in providing robust research 0:06:32.279 --> 0:06:35.160 to clients, and so clients will be able to access 0:06:35.240 --> 0:06:38.920 that level of research through Forge. In addition to that, 0:06:38.960 --> 0:06:43.039 we've also stood up a team of alternative investment experts 0:06:43.080 --> 0:06:45.400 at our firm that any client can call and talk 0:06:45.440 --> 0:06:48.159 to about, you know, a question they have about a 0:06:48.200 --> 0:06:51.600 type of alternative or a particular investment that they want 0:06:51.640 --> 0:06:53.320 to make, And so we really are trying to do 0:06:53.400 --> 0:06:55.920 everything we can to support clients. This is a great 0:06:55.920 --> 0:06:59.279 opportunity for clients to be diversified to grow their wealth 0:06:59.520 --> 0:07:01.880 in a new aset class. But at the same time, 0:07:02.120 --> 0:07:04.400 we want to make sure we do everything we can 0:07:05.080 --> 0:07:06.919 that they for them to be able to do this 0:07:06.960 --> 0:07:09.159 in a thoughtful, well researched way. 0:07:09.800 --> 0:07:12.080 Is there a company you're most excited about that's on 0:07:12.120 --> 0:07:14.440 the Forge platform or that might be on the Forge platform? 0:07:14.480 --> 0:07:14.960 At some point. 0:07:15.040 --> 0:07:18.600 I mean, there's opening, there's anthropic. Is there any company 0:07:18.600 --> 0:07:19.560 that you're really excited about? 0:07:19.760 --> 0:07:20.120 Is not a. 0:07:20.040 --> 0:07:22.800 Particular one I'm interested in, but I am thrilled that 0:07:22.840 --> 0:07:24.520 there are a lot of people on our platform and 0:07:24.560 --> 0:07:26.040 a lot of people that listen to your show that 0:07:26.080 --> 0:07:29.280 are active in markets and they want to get into 0:07:29.320 --> 0:07:31.920 cracking because they love crypto or you know, they love 0:07:31.920 --> 0:07:34.000 Elon Musk and want to get into SpaceX. 0:07:34.040 --> 0:07:36.040 So that say, sex is another one. 0:07:36.160 --> 0:07:37.720 Yeah, I think that's. 0:07:37.560 --> 0:07:39.560 What's so interesting is that we find a lot of 0:07:39.560 --> 0:07:42.240 our investors do have these passions and now they're going 0:07:42.280 --> 0:07:45.280 to be able to invest in them through private companies. 0:07:45.360 --> 0:07:47.440 So we know you took over in January, this is 0:07:47.480 --> 0:07:49.280 your first deal. Is there more m and A to 0:07:49.320 --> 0:07:51.680 coom Like, how are you thinking about what else you 0:07:51.760 --> 0:07:53.280 need to bring under the Schwab umbrella. 0:07:53.520 --> 0:07:56.320 Well, with forty six million clients on our platform, we 0:07:56.400 --> 0:08:00.160 have an incredible opportunity to continue to add capabilities to 0:08:00.160 --> 0:08:03.000 serve and meet more of their financial life. The average 0:08:03.000 --> 0:08:05.720 fifty year older than fifty year old client has seven 0:08:05.760 --> 0:08:09.200 financial services relationships in their life, so we want to 0:08:09.240 --> 0:08:12.560 add more and more capabilities so they can handle more 0:08:12.560 --> 0:08:15.160 of their financial life at Schwab. And as we add 0:08:15.160 --> 0:08:18.400 those capabilities, we'll either build them, we can partner, or 0:08:18.480 --> 0:08:19.960 we can buy, and so we'll look at all three 0:08:20.000 --> 0:08:21.920 of those. But we want to round out our capabilities 0:08:22.040 --> 0:08:25.120 and do everything we can to stand behind our clients 0:08:25.120 --> 0:08:26.560 and make a difference in their financial life. 0:08:26.560 --> 0:08:28.840 And just one last question, mostly small, probably tack ons. 0:08:28.880 --> 0:08:31.280 I mean, you guys already have digested a large company, 0:08:31.480 --> 0:08:33.679 so I'm just curious or could it be a pretty 0:08:33.720 --> 0:08:35.439 significant and any deal. 0:08:35.400 --> 0:08:38.040 You know, it's going to depend when. Again, we'll look 0:08:38.080 --> 0:08:41.360 at build by partner based on what capabilities we want 0:08:41.400 --> 0:08:43.480 to add, But I think we're open to just about anything. 0:08:43.520 --> 0:08:45.440 We want to grow our company. We want to do 0:08:45.480 --> 0:08:47.280 the best job we can serve in clients. We want 0:08:47.320 --> 0:08:48.920 to make a difference in their lives. And if there's 0:08:49.320 --> 0:08:51.720 a company or capability out there that we can add 0:08:52.080 --> 0:08:55.319 to our platform that's going to make a difference, we're going. 0:08:55.320 --> 0:08:55.640 To do it. 0:08:57.200 --> 0:08:59.679 That is That is Rick Wurster, He's President's that you 0:08:59.720 --> 0:09:00.760 have to Schwab. 0:09:02.160 --> 0:09:02.920 Stay with us. 0:09:03.000 --> 0:09:06.000 More from Bloomberg Business Week Daily coming up after this. 0:09:10.000 --> 0:09:13.880 You're listening to the Bloomberg Business Week Daily podcast. Catch 0:09:13.920 --> 0:09:16.600 us live weekday afternoons from two to five e's during 0:09:16.840 --> 0:09:20.720 Listen on Applecarplay and Android autto with the Bloomberg Business app, 0:09:20.920 --> 0:09:21.640 or watch us. 0:09:21.679 --> 0:09:22.600 Live on YouTube. 0:09:24.400 --> 0:09:26.600 All right, today we're going to go from Schwab corporate 0:09:26.600 --> 0:09:30.400 strategy to really macro strategy today's environment, and he is 0:09:30.440 --> 0:09:32.839 back with us. Delighted that he is Kevin Gordon, head 0:09:32.840 --> 0:09:36.000 of macro Research and Strategy at Schwab Center for Financial Research. 0:09:36.280 --> 0:09:41.280 Good to have you here, guys, Welcome to Impact. Where's up? 0:09:41.480 --> 0:09:43.640 We get such a great feel, so much fun of 0:09:43.679 --> 0:09:44.440 how things are going. 0:09:44.440 --> 0:09:47.559 But I do feel like there's kind of this internal 0:09:47.640 --> 0:09:50.320 turmoil right now in terms of the environment. 0:09:50.480 --> 0:09:52.400 Is it inflation we have to worry about? 0:09:52.720 --> 0:09:54.920 We saw that companies announced the most job cuts for 0:09:55.040 --> 0:09:58.080 any October and more than two decades. This from Challenger, 0:09:58.080 --> 0:10:00.720 Gray and Chris Christmas and the did talk about an 0:10:00.760 --> 0:10:01.880 AI component to it. 0:10:03.000 --> 0:10:05.800 I can't figure out where we are. What do you think? 0:10:05.840 --> 0:10:06.040 You know? 0:10:06.280 --> 0:10:09.600 It's like the flavor changes almost literally every day, because 0:10:09.600 --> 0:10:12.080 this morning, I mean, it was much more labor driven. 0:10:12.120 --> 0:10:14.040 You had the Challenger data you mentioned, but you also 0:10:14.080 --> 0:10:17.200 had data from Revellio Labs, which has become much more 0:10:17.240 --> 0:10:19.840 important to look at in terms of private sector providers 0:10:19.880 --> 0:10:23.440 and what they're looking at for job growth, and what 0:10:23.480 --> 0:10:25.760 they showed for October was a decline of nine thousand 0:10:25.800 --> 0:10:28.080 for payrolls. But you know, for me, the labor market 0:10:28.120 --> 0:10:31.360 stuff is almost this hall of mirrors because all of 0:10:31.400 --> 0:10:34.280 the different indicators tell you completely different things as to 0:10:34.280 --> 0:10:35.959 what's going on in the labor market. If you look 0:10:36.000 --> 0:10:38.600 at claims data, which we're not getting at the national level, right, 0:10:38.640 --> 0:10:40.720 but if you aggregate everything at the state level, it 0:10:40.800 --> 0:10:42.000 still looks relatively healthy. 0:10:42.000 --> 0:10:43.560 It's state relatively low and stable. 0:10:44.040 --> 0:10:46.559 If you look at ADP for October, surprise to the 0:10:46.640 --> 0:10:48.960 upside as we learned, you know, a couple of days ago. 0:10:49.520 --> 0:10:51.880 If you look at something like Revellio though week if 0:10:51.880 --> 0:10:52.720 you look at something. 0:10:52.520 --> 0:10:53.880 Like Challenger also weak. 0:10:54.080 --> 0:10:56.240 The interesting thing with Challenger is, and we always try 0:10:56.280 --> 0:10:58.599 to make this, you know, important distinction and emphasis for 0:10:58.960 --> 0:11:04.040 investors layoff announcements. They're not exactly cuts themselves. So there 0:11:04.120 --> 0:11:05.800 is a little bit of a lag there in terms 0:11:05.800 --> 0:11:06.600 of what you can expect. 0:11:06.679 --> 0:11:08.199 Yeah, oftentimes ninety days, right. 0:11:08.280 --> 0:11:11.320 Plus I think the one thing that is i will 0:11:11.360 --> 0:11:14.160 say maybe a little bit more worrisome with the one 0:11:14.240 --> 0:11:16.640 for October relative to what we saw earlier this year, 0:11:16.640 --> 0:11:18.280 because there was a huge pickup and challenge your job 0:11:18.320 --> 0:11:20.439 cut announcements earlier this year, but most of that was 0:11:20.440 --> 0:11:22.360 at the federal level that was focused on what everything 0:11:22.400 --> 0:11:24.600 was going on regarding to this one was a little 0:11:24.600 --> 0:11:26.800 bit more broad based. As you mentioned with the AI overlay, 0:11:26.880 --> 0:11:29.720 the concentration for the sectors was mostly in tech and warehousing. 0:11:29.760 --> 0:11:32.520 So clearly this cost cutting going on by companies, yeah, 0:11:32.600 --> 0:11:34.160 which is never a good feeling. 0:11:34.160 --> 0:11:36.079 No, And I think what's what's been interesting so far 0:11:36.120 --> 0:11:39.600 it's been relatively methodical where it's gone sector by sector. 0:11:39.600 --> 0:11:41.920 It hasn't been broad based across the economy, which I know. 0:11:41.960 --> 0:11:43.600 I've talked about this with you guys a lot and 0:11:43.679 --> 0:11:46.280 Lazanne you know who I work with closely on this 0:11:46.760 --> 0:11:48.839 are the sort of this concept and thesis of rolling 0:11:48.840 --> 0:11:51.480 recessions in the economy. You're still experiencing that to some 0:11:51.640 --> 0:11:54.920 extent where it's not filtering up to the surface and 0:11:54.960 --> 0:11:57.559 it's not aggregating together to give you a full blown 0:11:57.559 --> 0:12:00.080 traditional recession, but it's still happening at pockets. 0:12:00.120 --> 0:12:03.080 Or is Lizan We all call her liz Ane Saunders too. 0:12:03.240 --> 0:12:04.400 That's the Lizanne you're referring to. 0:12:04.760 --> 0:12:09.040 Well, yeah, and she's their chief global strategyment strategis so yeah, 0:12:09.120 --> 0:12:09.440 the big part. 0:12:09.520 --> 0:12:11.960 And you guys are my first boss, my mentor, and 0:12:12.040 --> 0:12:14.960 she loves you on our program yesterday. 0:12:14.960 --> 0:12:18.800 She's the best Kevin corporate Going from. 0:12:18.440 --> 0:12:21.240 The corporate world and thinking about, Okay, what are companies 0:12:21.280 --> 0:12:23.800 doing with employees? How are they hiring, how are they firing? 0:12:23.800 --> 0:12:26.640 How are they announcing this to consumer spending? Because the 0:12:26.679 --> 0:12:31.120 consumer powers this economy. Yeah, we're getting some troubling anecdotes. 0:12:32.240 --> 0:12:32.800 What do you see? 0:12:32.840 --> 0:12:34.480 You know, what's interesting is that when you look at 0:12:34.480 --> 0:12:36.320 I mean, this is where the labor market's so crucial 0:12:36.360 --> 0:12:39.280 to understand the differences between the stock and the flow. 0:12:39.640 --> 0:12:42.160 So the stock of labor is still relatively healthy. I mean, 0:12:42.160 --> 0:12:45.079 you look at a mostly fully employed America and that's 0:12:45.080 --> 0:12:45.720 where we're at. 0:12:45.960 --> 0:12:46.320 Any of the. 0:12:46.320 --> 0:12:49.319 Layoff activity we've seen, it's just at the margin, relatively minimal. 0:12:49.400 --> 0:12:52.240 So if you see relatively low layoffs despite a very 0:12:52.280 --> 0:12:55.120 low hiring rate, which we're basically at psycho lows, the 0:12:55.160 --> 0:12:57.000 fact that the stock of labor is strong means that 0:12:57.040 --> 0:12:59.600 the aggregate income growth month to month, assuming you stay 0:12:59.600 --> 0:13:02.280 employed is relatively strong. So that's why real spending is 0:13:02.320 --> 0:13:05.679 still positive. But to your point about some of these 0:13:05.720 --> 0:13:08.280 anecdotes and some of these cracks under the surface, they 0:13:08.320 --> 0:13:10.560 are starting to widen a little bit more, especially if 0:13:10.559 --> 0:13:12.559 you look at that bottom half of the what everybody 0:13:12.559 --> 0:13:14.400 calls now the K shaped sort of economy. 0:13:15.120 --> 0:13:17.480 There are economists look at that bottom wrong. 0:13:17.960 --> 0:13:19.640 You could break it down by wealth level, I like 0:13:19.679 --> 0:13:22.400 the FED data and looking at sort of percentile levels 0:13:22.400 --> 0:13:22.960 of well. 0:13:22.760 --> 0:13:24.840 In terms of it like overall economic growth and what 0:13:24.880 --> 0:13:26.640 the FED like, how do you think. 0:13:26.440 --> 0:13:28.280 About this is the tough part because you know. 0:13:28.920 --> 0:13:30.720 There's a social answer and then they're sych. 0:13:30.720 --> 0:13:33.480 Well, the multiplier effect up the wealth and the income 0:13:33.480 --> 0:13:34.720 spectrum is just much stronger. 0:13:34.880 --> 0:13:35.600 It's just the math. 0:13:35.960 --> 0:13:38.000 And when you look at how well asset markets have 0:13:38.040 --> 0:13:40.640 done over the past couple of years, even this year, 0:13:40.679 --> 0:13:42.760 the bounce from the April lows. I mean, if you're 0:13:42.760 --> 0:13:45.200 benefiting from that as an asset owner, we have household 0:13:45.240 --> 0:13:47.720 exposure to equities at an all time high, beyond where 0:13:47.720 --> 0:13:50.080 we were just slightly but still beyond where we were 0:13:50.120 --> 0:13:51.600 at the at the peak in two thousand. 0:13:51.880 --> 0:13:54.480 So the wealth effect and the power of the market. 0:13:54.240 --> 0:13:56.760 In terms of an economic driver, has become quite strong 0:13:56.800 --> 0:13:58.760 and quite potent. So I think when you add that 0:13:58.800 --> 0:14:01.839 together with what is true ditionally an economy that has 0:14:02.000 --> 0:14:04.480 become more or I shouldn't say traditionally, but over time 0:14:04.480 --> 0:14:07.000 has become more powered by that wealthy cohort, then you've 0:14:07.000 --> 0:14:08.120 got a pretty strong effect. 0:14:08.200 --> 0:14:10.280 When you say full employment, do you how do you 0:14:10.320 --> 0:14:12.160 define that? And then how does the FED define that? 0:14:12.280 --> 0:14:15.840 Because relatively low and employment rate to history compared to history, 0:14:15.880 --> 0:14:17.120 there has been a little bit of an uptick. But 0:14:17.200 --> 0:14:19.080 you look at that, and you look at overall payrolls 0:14:19.120 --> 0:14:21.280 and we're still right around, you know, all time time. 0:14:21.360 --> 0:14:23.880 But does it mean the person who's who's has the 0:14:23.880 --> 0:14:27.520 computer science undergraduate degree is working in computer science or 0:14:27.520 --> 0:14:28.240 working at Chipotle? 0:14:28.680 --> 0:14:29.880 Oh yeah, exactly. 0:14:29.880 --> 0:14:32.960 Fully, the question just sort of in nominal terms, looking 0:14:32.960 --> 0:14:35.960 at at face value, a job being a job, whether 0:14:36.000 --> 0:14:38.040 that job is perfectly matched with what the person is doing. 0:14:38.080 --> 0:14:39.000 That's a little bit of how do. 0:14:39.040 --> 0:14:41.480 We measure that well? Because it doesn't that seems like 0:14:41.480 --> 0:14:42.240 a concern right now. 0:14:42.240 --> 0:14:44.240 Well, then I think is going to show up, probably 0:14:44.280 --> 0:14:46.480 start to show up a lot more within the next year. 0:14:46.640 --> 0:14:48.160 In a lot of the labor flows that we're going 0:14:48.240 --> 0:14:49.400 to get because one of the you know, one of 0:14:49.480 --> 0:14:52.320 the longer term concerns I have for the labor market 0:14:52.360 --> 0:14:54.120 is what's happening right now in some of the churn 0:14:54.200 --> 0:14:57.320 with the pretty significant decline in immigration, but also not 0:14:57.680 --> 0:14:59.320 sort of the lack of replacement. 0:14:58.840 --> 0:15:00.400 A lot of a lot of those jobs. We're just 0:15:00.400 --> 0:15:01.280 not seeing that happen. 0:15:01.320 --> 0:15:03.359 And you see that happening in you know, youth unemployment, 0:15:03.360 --> 0:15:05.760 black unemployment. It's really starting to spread in some of 0:15:05.800 --> 0:15:09.040 those pockets. So the areas that were supposed to benefit, 0:15:09.160 --> 0:15:11.480 you know, throughout this year as you had more of 0:15:11.480 --> 0:15:14.320 a domestic strengthening the in the fate of born labor force, 0:15:14.560 --> 0:15:16.440 it's not yet happening. So it's a little bit lagged. 0:15:16.440 --> 0:15:19.200 I hope it's delayed and not completely derailed. But I 0:15:19.240 --> 0:15:21.640 think in the next year, figuring out replacements for a 0:15:21.680 --> 0:15:23.200 lot of those lost jobs that's going to be key. 0:15:23.240 --> 0:15:25.080 And the reason I brought up the Chipotle computer science 0:15:25.080 --> 0:15:28.040 exactly well, always ungry, but that was what's be cited 0:15:28.040 --> 0:15:29.840 in that New York Times article back in August. Yes, 0:15:29.880 --> 0:15:33.120 computer science degrees having trouble finding those computer science jobs. 0:15:33.280 --> 0:15:35.760 It's kind of this interesting environment we are when we 0:15:35.800 --> 0:15:37.560 look at the labor force. Hey, one of the things 0:15:37.560 --> 0:15:39.440 I wanted to ask you your team shared with us 0:15:40.120 --> 0:15:41.960 that you believe Tina is back, and it's not the 0:15:42.000 --> 0:15:43.040 Tina that we think about. 0:15:43.080 --> 0:15:45.440 There is no alternative in terms of like US difequities. 0:15:45.480 --> 0:15:48.720 Yeah, but it's something we started off with about US 0:15:48.840 --> 0:15:49.640 government data. 0:15:49.800 --> 0:15:52.160 It is important no alternative. I mean, the depth and 0:15:52.200 --> 0:15:54.120 the breadth of the government debt you just can't imagine. 0:15:54.160 --> 0:15:57.800 And I think you know, so far, Thank goodness, the 0:15:57.800 --> 0:16:01.400 markets have been sort of, maybe in a negative way, 0:16:01.400 --> 0:16:03.520 whistling sort of passed the graveyard of no government data. 0:16:03.560 --> 0:16:05.360 But you know, they've been able to manage through with 0:16:05.400 --> 0:16:07.240 corporate earnings. I think that's been a nice bridge to 0:16:07.280 --> 0:16:09.960 get us to when the shutdown ends. I think though, 0:16:10.040 --> 0:16:11.480 you know, the longer this goes on, I think what 0:16:11.880 --> 0:16:13.440 we have to keep in mind, and what we've really 0:16:13.440 --> 0:16:16.720 been emphasizing to our clients is that you know, when 0:16:16.720 --> 0:16:19.480 you don't collect this data, yes you can go back 0:16:19.480 --> 0:16:21.840 and retroactively. 0:16:20.840 --> 0:16:22.640 Get it, but it's not going to be clean. 0:16:22.880 --> 0:16:25.040 So the longer this extends and we don't get you know, 0:16:25.120 --> 0:16:27.800 presumably we're not getting a jobs report tomorrow. Even if 0:16:27.800 --> 0:16:29.880 you don't get when the next week, it's weird. So 0:16:29.960 --> 0:16:33.720 you're going basically almost a quarter without this really key data. 0:16:33.880 --> 0:16:37.280 So you're going to have a delayed third quarter GDP report, 0:16:37.400 --> 0:16:39.360 You're going to have missing data in a way for 0:16:39.440 --> 0:16:42.480 the fourth quarter, and then you have benchmark revisions coming 0:16:42.520 --> 0:16:45.520 in February, which kind of throws another wrench into this 0:16:45.560 --> 0:16:46.000 for label. 0:16:46.080 --> 0:16:48.080 So what does it mean for Like I think I 0:16:48.120 --> 0:16:51.880 asked Lezanne this yesterday, Zanne Saunders, that do we get 0:16:51.920 --> 0:16:54.400