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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller. Every business day, we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. All right, let's talk

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Speaker 1: about this labor number again. I thought it was pretty good.

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Speaker 1: It came in a little bit better and expected unemployment

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Speaker 1: rate ticked up, but we had some, you know, higher participation,

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Speaker 1: which is something people have been talking about for a

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Speaker 1: long time. Let's check in with our good friend Tom Gimble.

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Speaker 1: He's a founder and CEO of LaSalle Network. Tom, and

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Speaker 1: look pretty solid from my perspective. And I love to

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Speaker 1: get your thoughts because you're talking to these companies every

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Speaker 1: day about filling open slots. I feel like we're doing

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Speaker 1: Groundhog Day every month, guys. I mean, three hundred and

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Speaker 1: fifteen thousand jobs and participation rates up. What it shows

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Speaker 1: is is that the ADP numbers are crazy. They don't

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Speaker 1: know what they're doing. It shows that the economy me

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Speaker 1: still strong and like the football season, the college football

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Speaker 1: season that you omitted a few minutes ago. Correct, that

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Speaker 1: starts tonight. Uh, we're kicking off the fall season, the

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Speaker 1: last third of the year, with a great economy and

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Speaker 1: a great jobs are board. The TCU horn Frogs are

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Speaker 1: coming into Boulder, Colorado tonight to take along the Colorado.

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Speaker 1: But I graduated ninety four. Boulder isn't what it was

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Speaker 1: really how so? Well, I mean I was saying from football,

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Speaker 1: from the economy, Boulders unbelievable and expensive. The football team.

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Speaker 1: It never should have left the Big twelve. But that's

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Speaker 1: the whole another time three So but um, this isn't

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Speaker 1: really helpful in terms of lowering inflation though, tom is it?

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Speaker 1: I mean, we did have a ton of job openings,

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Speaker 1: but uh, well, we had a ton of job openings,

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Speaker 1: were adding a ton of jobs. Average hour, early earnings

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Speaker 1: are up more than five Um does that help bring

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Speaker 1: down inflation? You know? Uh, it's funny. Uh, you go

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Speaker 1: out for dinner and things maybe a little bit more

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Speaker 1: expensive here and there. People want to say that we're

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Speaker 1: in the mid nineteen seventies again, and we're not. Now

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Speaker 1: there's a difference between this economy and every other that

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Speaker 1: we've ever been in and and those differences are a

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Speaker 1: it's truly a global world. Number two, we have a

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Speaker 1: real supply chain shortage that we've never had in this

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Speaker 1: country before. And number three, we're still feeling the after

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Speaker 1: effects of a global pandemic. And people want to have

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Speaker 1: A plus B equals C according to normal historical economics,

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Speaker 1: and it's just not that way anymore. Tom When you

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Speaker 1: talk to your clients, your companies that are looking to

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Speaker 1: fill jobs, kind of give us a sense of what

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Speaker 1: their biggest challenges are. Do they do they just have

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Speaker 1: to pay more, Do they have to be touchy feely

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Speaker 1: and have fun things in your office? What are some

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Speaker 1: of the challenges that they really face and filling these openings.

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Speaker 1: The number one challenge that every company is facing is

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Speaker 1: they want to get their people in the office more

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Speaker 1: than what they currently are, and they're afraid of turnover.

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Speaker 1: And as long as unemployment as a record lows, even

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Speaker 1: with a two tenths of a percent uptick today, as

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Speaker 1: long as it's a record lows, they're afraid to do

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Speaker 1: what they think is best for the business. And the

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Speaker 1: only way that it's gonna turn is when unemployment really

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Speaker 1: rises and you see it a four and a half

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Speaker 1: five five and a half, which I don't see it

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Speaker 1: happening in the near future, but that will eventually happen

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Speaker 1: because everything runs in cycles, and then it'll go back

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Speaker 1: and and we'll go through a cycle again. That's that's

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Speaker 1: how things work. Well. The FED probably wants to see

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Speaker 1: that as soon as possible. I know everyone's a macro

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Speaker 1: tourist these days. Um, I'm very guilty of that. But

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Speaker 1: doesn't this just give the FED ammunition to go seventy

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Speaker 1: five and seventy five? It does, and and and I

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Speaker 1: got news for you. That's what it should be doing,

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Speaker 1: and it should have done it last year. And we

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Speaker 1: need that because if we ever get into an air

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Speaker 1: quotes real recession, we're gonna need that lever we're not

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Speaker 1: in a real people say, oh, they're gonna kill the

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Speaker 1: econo of he's doing great. What it shows is is

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Speaker 1: the economy is so strong it can run when money

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Speaker 1: isn't free. Isn't that the whole point? Yeah, well that's

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Speaker 1: a great point actually, And um, that's something I haven't

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Speaker 1: heard a lot of people saying lately. But you might

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Speaker 1: as well build up a war chest. I know, that's

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Speaker 1: not the primary reason to raise rates. But if that's

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Speaker 1: a secondary effect, I'll take it. Wait wait wait wait

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Speaker 1: wait wait wait wait, what do you mean it's not

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Speaker 1: the primary reason we started raising the feed started raising

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Speaker 1: interest rates before there was inflation, and everybody said it

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Speaker 1: should have happened last year when there wasn't inflation. The

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Speaker 1: primary reason to have interest rate inflation already inflation was

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Speaker 1: already last year was the transitory debate, right. Last year was, dude.

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Speaker 1: Last year was when housing prices started going insane. Last

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Speaker 1: year was when you couldn't buy a car. Last year

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Speaker 1: was when used cars cost more than new cars in

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Speaker 1: supply chain issues, not because of inflation, because you couldn't

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Speaker 1: get a car. It was a supply and demand issue,

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Speaker 1: not an inflationary issue. Tom. If I go down to Austin, Texas,

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Speaker 1: can I get job or in Florida, that's for everybody's flowing.

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Speaker 1: Are the regional differences out there? Yeah, there's always regional differences.

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Speaker 1: And I've said that on your show a million times.

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Speaker 1: Is that the problem is is that we look at

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Speaker 1: unemployment for the most part as a United States issue,

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Speaker 1: and it's really, uh, it's very regionally driven and and

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Speaker 1: the same with wages. Who cares what the wages are

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Speaker 1: in New York City versus it's really what they are

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Speaker 1: in Tulsa, Oklahoma. Right. I mean, we've got to figure

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Speaker 1: out how to how to look at things more regionally

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Speaker 1: and that will attract people. But we live in a

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Speaker 1: world where people are so entitled. This isn't the seventeen hundred.

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Speaker 1: People aren't gonna go out west for a job anymore.

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Speaker 1: You are gonna leave Manhattan to go to work in

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Speaker 1: Oklahoma when they know that the government's gonna bail him

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Speaker 1: out to live in New York. It's right, He's right.

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Speaker 1: You know, it's a shame job says only one day

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Speaker 1: a month. Because we get have Tom on like you

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Speaker 1: know much, we should take our show to him. Where

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Speaker 1: is him? I don't know where he is in Chicago? Right? Okaga? Yeah?

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Speaker 1: I guess all right, Tom Gimbell, he's a found in

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Speaker 1: Cea of La Sound Network. That's right. Uh. And let's

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Speaker 1: sell Network the one of the big staffing recruiting companies

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Speaker 1: in the country. So Tom knows what he's talking about

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Speaker 1: when it comes to how do you fill up these jobs?

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Speaker 1: All right, let's get some more color on these jobs numbers.

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Speaker 1: John Gollneck, vice president for a Deco, joins us, Hey, John,

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Speaker 1: what's your takeaway from these jobs numbers today? Again a

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Speaker 1: little bit better than expected, weaker than the prior month,

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Speaker 1: but still pretty decent. Yeah, you know, I think, um,

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Speaker 1: I think this is a good report. And the term

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Speaker 1: said friendly, I think you guys are putting the right

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Speaker 1: color on this right now. I think there's two things

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Speaker 1: from this report that really stand out to me. Um. One,

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Speaker 1: you know, the average hourly earnings month over month, we

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Speaker 1: were expecting point four percent and it came in point

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Speaker 1: three percent. And I think that wage deceleration. It's still

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Speaker 1: growing but not not as not as hyper as it

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Speaker 1: was before. Good point. I think that's said friendly. I

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Speaker 1: think that's a thread friendly metric right well, in the

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Speaker 1: sense that they want to bring inflation down, but um,

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Speaker 1: it doesn't give them ammunition to hike. Maybe that's why

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Speaker 1: that's a really good point. The other thing I mean,

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Speaker 1: I guess is participation rate right right, participation rate is up,

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Speaker 1: which drives unemployment rate a little bit. So even though

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Speaker 1: that we've seen the unemployment rate at three point seven

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Speaker 1: versus the three point five, the participation that we saw

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Speaker 1: in the labor market was more than expected. It's not

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Speaker 1: a one for one correlation on the math there, but

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Speaker 1: there's a driving force. So for me overall, I look

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Speaker 1: at the last three months. You know, we've averaged three

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Speaker 1: seventy eight thousand jobs. I mean that that was a

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Speaker 1: hundred and sixty four. I think the economy is resilient.

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Speaker 1: We still have a lot of need out there for

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Speaker 1: a lot of employers. Um. You know again, I think,

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Speaker 1: like everybody else, I think the Fed is happy with

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Speaker 1: this report. I think I'm hopeful that it's not a

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Speaker 1: full seventy five and hopeful that it's a fifty. And

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Speaker 1: then to your guys point, we wait for the next

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Speaker 1: seven day. Have to come out John, because you've just

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Speaker 1: answered that what was a big question mark over my head. Um,

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Speaker 1: And it's really a reframing of my idea. What the

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Speaker 1: Fed wants. Um, they really want at the end of

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Speaker 1: the day to bring on a inflation down and they

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Speaker 1: probably don't want to have to hike as much as

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Speaker 1: they can. So um, a DECO is the biggest uh,

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Speaker 1: you know, workforce placement, workforce solutions firm in the world.

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Speaker 1: So um, maybe you can answer another conundrum that we've

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Speaker 1: been struggling with. Here we're getting layoff announcements left and right,

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Speaker 1: and not little ones, right, um, big or of whole

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Speaker 1: workforce job cuts. And yet the JOLTS number was eleven

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Speaker 1: point eight million job openings. I mean, almost a record

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Speaker 1: high amount of job openings. How can you um put

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Speaker 1: those two things together? Yeah, you know, I think it's

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Speaker 1: there's a lot of things you have to look at

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Speaker 1: in our economy, and you have to look at it

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Speaker 1: from sector to sector. Right. You know, we saw we

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Speaker 1: saw in July that you know, service based, hospitality, leisure.

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Speaker 1: It was crazy highs ninety six July and only thirty

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Speaker 1: one thousand this month. Wow, what a dip, right, Well,

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Speaker 1: not really what a super spike. Right. People people are

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Speaker 1: in the summertime season, they're getting some traveling done, They're

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Speaker 1: getting some traveling done before the school season starts again.

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Speaker 1: It makes sense a little bit more people are are

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Speaker 1: are free to travel with you know, pandemic restrictions, um,

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Speaker 1: and they want to get back out there. So that

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Speaker 1: makes sense. But what we look at, that's that's really

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Speaker 1: driving you know, retail. We saw huge retail layoff announcements.

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Speaker 1: You know, when we saw Walmart announced plans. We saw

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Speaker 1: some other folks, but we're still seeing a massive need.

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Speaker 1: I can't go to I can't go to any storefront

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Speaker 1: without seeing what we're hiring sign you know, hey, we're

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Speaker 1: hiring key holders. We're looking for managers, assistant managers in

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Speaker 1: retail um. The demand is huge because I think our

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Speaker 1: workforce that used to fill these jobs, right, they were

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Speaker 1: impacted in tremendously from COVID. Your servers, your bartenders, your waiters,

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Speaker 1: You're people that relied on the tips business, right, the

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Speaker 1: foot traffic. They had to find other ways in a

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Speaker 1: gig economy. So so now returning back to that nine

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Speaker 1: to five, you know, let me be in one place,

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Speaker 1: let me let me punch a cock. There's a culture

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Speaker 1: shift we're we're adjusting. So I think that's part of it,

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Speaker 1: as as we look for more labor participation in that

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Speaker 1: you know, sixteen to twenty two year bucket to fill

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Speaker 1: some of these roles they're has historically been filled by

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Speaker 1: them in the past. But what I'm most excited about,

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Speaker 1: to be honest with you about about the job need

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Speaker 1: and demand is there's there's a huge need in demand

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Speaker 1: and manufacturing and supply chain logistics. When when when COVID

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Speaker 1: impacted us and we were dependent on foreign goods man,

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Speaker 1: that woke a lot of people up that we needed

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Speaker 1: to research our manufacturing base here and and that's where

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Speaker 1: we see continued demand fill in second third shifts. How

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Speaker 1: do how do we get more participation there? So and

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Speaker 1: so we solve that riddle. I think I think we're

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Speaker 1: going to see some steam, you know, in this job's

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Speaker 1: number for quite some time. That's good stuff, good numbers,

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Speaker 1: good analysis. John Galnack, Chief Researcher VP at A DECO

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Speaker 1: and a shout out to your former or your future job,

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Speaker 1: I should say my future job as a great Oh,

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Speaker 1: darn wright at Walmart, greaterer at Walmart. I'm gonna be

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Speaker 1: a darn good one, and they've better be ready for

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Speaker 1: me coming up in a few years. Bringing on our

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Speaker 1: next guest, Kate to Shane, CEO of r g P

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Speaker 1: r GPS Resources the Global Professionals. It's the operating arm

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Speaker 1: of Resources Connections, which is a publicly traded company. Our

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Speaker 1: GPS a ticker you can put into your Bloomberg terminal.

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Speaker 1: I've got a six hundred sixty million market company based

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Speaker 1: in Irvine, California. The stocks up about uh this year.

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Speaker 1: The company provides consulting services a consert wide range of

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Speaker 1: business issues. Okay, thanks so much for joining us here.

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Speaker 1: You know, we had a pretty good jobs number today.

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Speaker 1: I'd love to hear what your companies that you talked

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Speaker 1: to and you consult with on the human resources from

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Speaker 1: what's their biggest issue? Is it just getting bodies in

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Speaker 1: the door, or are they even trying to still figure

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Speaker 1: out the hybrid work thing. What are some of the

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Speaker 1: big issues that you're hearing from your clients. Yeah, thanks

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Speaker 1: for having me. I'm certainly happy to be here. So

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Speaker 1: it's a multitude of issues. I think certainly the war

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Speaker 1: for talent is still tight um. But as we're seeing

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Speaker 1: um jobs increase and labor participation increase a little bit,

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Speaker 1: that's good news. But I think going forward, one of

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Speaker 1: the biggest issues is how are people working when they

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Speaker 1: return to the workforce, And so that means is that

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Speaker 1: hybrid um when do you work? How do you work?

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Speaker 1: And building more flexibility and agility into workforce planning. Uh,

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Speaker 1: those are the kind of discussions that we're really having

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Speaker 1: with clients, especially in the face of recessionary worries. You know,

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Speaker 1: how do you get work done in more creative ways?

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Speaker 1: So you advise primarily financial firms, right, I mean finance accounting,

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Speaker 1: and maybe I financing accounting right is our core because management.

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Speaker 1: I've been thinking about this UM from the client perspective. Right,

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Speaker 1: if I hire a finance firm, I'm gonna pay good

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Speaker 1: money for their staff to do what I want when

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Speaker 1: I on. I don't want their staff to be working

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Speaker 1: from home. I don't want them to be taking off

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Speaker 1: labor day weekend. I don't want them to be worried

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Speaker 1: about work life balance. I just want them to do

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Speaker 1: what I want when I want. So how do you, um,

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Speaker 1: how do you square that with companies that are trying

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Speaker 1: to like be kinder and gentler to their workforce. Well,

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Speaker 1: I think we all have to recognize that the world

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Speaker 1: of work is fundamentally changed post pandemic, and talent is

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Speaker 1: really in the driver's seat. So I understand the perspective

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Speaker 1: that you just shared, but really the world is different,

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Speaker 1: and I think that what creative companies and what companies

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Speaker 1: that are really thriving understand is that there isn't a

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Speaker 1: black and white answer here. That you have to find

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Speaker 1: a middle ground. That works both from a business perspective

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Speaker 1: and from a talent perspective. And so there's a lot

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Speaker 1: of creativity happening. There's a lot of work that's been

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Speaker 1: delivered remotely, or we use a term borderless talent, meaning

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Speaker 1: that we can better match in today's environment to the

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Speaker 1: exact client need if a client is willing to be

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Speaker 1: more creative about when, where, how that work gets done.

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Speaker 1: Um So we might find the perfect financial professional for

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Speaker 1: a client engagement, but that person might sit in Dublin

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Speaker 1: UM or in London or in Atlanta. And so if

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Speaker 1: a client's thinking can shift to say, I don't need

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Speaker 1: them in the cubicle next door, it really opens the

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Speaker 1: aperture of the talent availability. How do you think about

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Speaker 1: I mean, Kate, I'm a little bit old school. I

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Speaker 1: you know, I kind of came up on Wall Street

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Speaker 1: where you really did put in the hours and then

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Speaker 1: you built up that camaraderie and you built up your

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Speaker 1: relationships um and still today at this later stage of

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Speaker 1: my career, the relationships are are absolutely the most valuable

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Speaker 1: thing I take away from my career. And I think

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Speaker 1: a lot of people generally agree with that. But that

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Speaker 1: seems like it might get lost here in this new

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Speaker 1: hybrid world or work from home world. How do you

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Speaker 1: think about that? How do your companies think about that? Well?

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Speaker 1: I think that the balance is important, and so you know,

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Speaker 1: we go back to the word hybrid, but I think

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Speaker 1: it's a little of both. Um. There's certainly benefits to

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Speaker 1: be UM found in collaboration learning. So what we're talking

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Speaker 1: to clients about is spend those days in the office

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Speaker 1: in really meaningful ways. Don't spend them on zoom calls

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Speaker 1: or on individually oriented work. When you're in the office,

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Speaker 1: be together, have learning moments, have collaboration sessions, and when

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Speaker 1: you're not in the office, that's when you do your

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Speaker 1: head down work, which we all have a lot of

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Speaker 1: that as well. UM, So you need you need to

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Speaker 1: learn to work differently, and and that I think will

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Speaker 1: be the predominant UM path forward as we continue to

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Speaker 1: recover in this economy, not all one way or the other.

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Speaker 1: This is something that Paul and I talked about all

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Speaker 1: the time because I'm convinced that a lot of that

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Speaker 1: can be done in the can act really be done

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Speaker 1: in the metaverse or whatever we're calling this world right now. UM,

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Speaker 1: I could be wrong about that, but listen, I want

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Speaker 1: to ask about your company. You have, at least from

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Speaker 1: a stock perspective, trounced um, whatever benchmark index I want

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Speaker 1: to put you up against. If I look over also

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Speaker 1: any period over the last year, over the last two years,

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Speaker 1: over the last five years, you've beaten the UM, SMP

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Speaker 1: Small Cap Index, the Russell one thousand, two thousands, three thousand,

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Speaker 1: the SMP five dred Um. What are you doing right?

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Speaker 1: You think that investors appreciate we're taking care of our people.

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Speaker 1: I mean we're really listening. We've we've become really a

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Speaker 1: learning and a listening organization, and that's listening both to

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Speaker 1: how companies need to get work done, especially around project

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Speaker 1: orientation as they face transformation and disruption, and we're listening

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Speaker 1: to people and how they want to be treated. I

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Speaker 1: mean our core workforce UM Paul and Matt are experienced,

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Speaker 1: hire diverse professionals who you know they're in the middle

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Speaker 1: probably or later stages of their career, so they already

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Speaker 1: know their work, they know their subject matter and their expertise,

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Speaker 1: and they want to be appreciated and work with more flexibility, transparency,

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Speaker 1: choice and control. And we're really giving the talent market

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Speaker 1: what they want today and that's really helped us thrive.

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Speaker 1: How about the industry, I mean, do you think more UM.

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Speaker 1: You know, financial leaders who are you know, like Paul's age,

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Speaker 1: are coming to you for help in this new world.

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Speaker 1: They are because what we see. You know, twenty years ago,

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Speaker 1: a large enterprise might have one transformation project going on

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Speaker 1: at the same time one or two. Fast forward to today,

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Speaker 1: transformation is happening everywhere in large organizations. So your transformation

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Speaker 1: agenda works something like twenty to twenty five concurrent projects.

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Speaker 1: No organization is staffed up for that much change, and

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Speaker 1: so you need a trusted partner to say, can you

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Speaker 1: bring the expertise in the additional bandwidth I need? And

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Speaker 1: that's really where we play. We partner with our clients

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Speaker 1: to co deliver on their transformation projects and a lot

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Speaker 1: of them are related to UM finance systems, transactions, regulatory change, etcetera.

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Speaker 1: So we're a perfect UM adjunct to the initiative business

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Speaker 1: initiatives they're trying to accomplish. All right, Kate to Shane,

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Speaker 1: thank you so much for joining us. We appreciate getting

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Speaker 1: your perspective on the workforce, on the hiring environment, on

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Speaker 1: the work environment still a work in progress for a

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Speaker 1: lot of companies. Kate to Shane's CEO of r g P.

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Speaker 1: I saw some news met over the last week or so, Goldman, Sachs, Morgan, Stanley,

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Speaker 1: Jeffreys all talking tough. Yeah about this time, we mean it.

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Speaker 1: After Labor Day. We want you guys back in the office.

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Speaker 1: But I have to agree with Kate that it's a

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Speaker 1: different It's going to be a different work environment that

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Speaker 1: was pre pandemical. So yes, they want you to come

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Speaker 1: in probably um three four five days a week, but

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Speaker 1: not every single week. And they're willing to be more

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Speaker 1: flexible than they were before. And they realized they can

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Speaker 1: get a lot more done for cheaper than they could before.

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Speaker 1: We'll see how that plays out, but certainly that's kind

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Speaker 1: of where it appears to be moving. Good jobs day today.

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Speaker 1: All right. We know our Federal Reserve is raising rates,

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Speaker 1: but they're also engaging in something called quantitative tightening. I'm

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Speaker 1: not really sure what that is. I don't really do

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Speaker 1: that stuff for a living, but Kevin Mirror does. He's

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Speaker 1: a prop trador for Windoor Capital h He's also the

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Speaker 1: author of the Macro Tourist newsletter, and he's also a

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Speaker 1: Bloomberg opinion contributor. And Kevin, I know you had a

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Speaker 1: column out recently we say we shouldn't really fear QT.

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Speaker 1: But first, for equity geeks like me, what is quantitative

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Speaker 1: tightening and how's the FED doing it? Well? Good morning,

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Speaker 1: paul Um. The quantity of tightening is the opposite of

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Speaker 1: quantitative easing. Quantitative easing is when the Federal Reserve goes

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Speaker 1: out and buys bonds or other assets for its balance sheet,

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Speaker 1: basically putting money into this system and taking financial instruments out.

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Speaker 1: Quantity of tightening would be the opposite, meaning that it

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Speaker 1: shrinks its balance sheet and either by letting those bonds

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Speaker 1: run off or extreme cases, actually selling those bonds. So

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Speaker 1: should we be concerned that the Fed is talking about

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Speaker 1: quantitative tightening and or just kind of what do we

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Speaker 1: know about their policies and what do you think about QT? Well,

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Speaker 1: first of all, the Fed's doing a lot more than

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Speaker 1: talking about quantity of tightening. They've actually scheduled it, and

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Speaker 1: they've so far they've agreed that they're going to let

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Speaker 1: the balance sheet run off by forty seven and a

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Speaker 1: half billion dollars per month, and they're increasing that to

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Speaker 1: billion starting in September, and this is what the market

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Speaker 1: is a little concerned about because that seems like a

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Speaker 1: large number. And if we think about quantitative easing, quantitative

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Speaker 1: easing was the process of putting money out into the

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Speaker 1: system and trying to make things better, and it actually

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Speaker 1: has the kind of the intended consequence of easing financial conditions.

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Speaker 1: If we think the quantity of tightening, is you off

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Speaker 1: us that we should expect that to tighten financial conditions,

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Speaker 1: i e. Sen Stocks down. Unfortunately, there's a there's a

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Speaker 1: lot more to this story, and that's kind of what

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Speaker 1: the topic of my letter is. That it's not as

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Speaker 1: easy as just taking the SMP five and superimposing the

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Speaker 1: FEDS balance sheet on it and saying one one's going up,

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Speaker 1: the other one's going you know, the smple follow and

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Speaker 1: then when the FEDS balance sheet goes lower, that the

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Speaker 1: SMP will follow it lower as well. So, Kevin, the

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Speaker 1: size of this is what matters here when it comes

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Speaker 1: to they've done this before, and that they've tried to

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Speaker 1: at least a massive rate high cycle where they did

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Speaker 1: try to pull back on quantitative easing, But this is

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Speaker 1: only the second time that they've done it in the

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Speaker 1: first time they tried. They didn't even do it completely.

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Speaker 1: What are the odds they're actually successful in this operation?

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Speaker 1: So creany are absolutely correct. The in the post g

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Speaker 1: FC era, the Federal Reserve expanded their balance sheet from

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Speaker 1: one trillion dollars to roughly four and they went to

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Speaker 1: four and a half trillion, and they tried to go

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Speaker 1: in and put the their the economy on a policy

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Speaker 1: where they would shrink that and they only managed to

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Speaker 1: get it back to three in three quarters before they

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Speaker 1: had to halt the quantitative tightening, and that was for

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Speaker 1: a variety of different factors. And that is why the

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Speaker 1: market is very concerned about this quantitative tightening that the

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Speaker 1: Fed's going to embark on down But I would contend

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Speaker 1: that this is a much different situation than in when

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Speaker 1: they tried to do quantitative tightening. And the main point

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Speaker 1: that is often missed is that with the extraordinary amount

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Speaker 1: of stimulus that the Federal Reserve did in the post

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Speaker 1: COVID era, and it wasn't just the Federal Reserve, it

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Speaker 1: was also the fiscal stimulus that it did. There is

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Speaker 1: so much extra liquidity in the system that the Federal

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Speaker 1: Reserve needs to engage in what's known as reverse repost,

428
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Speaker 1: and reverse reposts are when they take the collateral, the

429
00:22:58,880 --> 00:23:01,680
Speaker 1: high quality bond that are on their balance sheet and

430
00:23:01,840 --> 00:23:04,200
Speaker 1: they go and lend it out into the market for

431
00:23:04,320 --> 00:23:07,199
Speaker 1: a short period of time so that it soaks up

432
00:23:07,280 --> 00:23:10,440
Speaker 1: some of the liquidity. Imagine that there's just so much

433
00:23:10,600 --> 00:23:13,399
Speaker 1: money out there that if the Federal Reserve didn't do this,

434
00:23:13,680 --> 00:23:16,360
Speaker 1: what what happened would be the target rate would fall

435
00:23:16,480 --> 00:23:19,760
Speaker 1: below the interest rate that they're trying to set. So

436
00:23:19,920 --> 00:23:23,760
Speaker 1: there's this overnight reverse repo has gone from zero a

437
00:23:23,880 --> 00:23:28,000
Speaker 1: year ago to two point two trillion dollars. And that's

438
00:23:28,119 --> 00:23:31,000
Speaker 1: just a function of how much liquidity is out there.

439
00:23:31,280 --> 00:23:33,600
Speaker 1: And so when we think about this quantitative tightening and

440
00:23:33,680 --> 00:23:35,680
Speaker 1: we think, oh Jesus, you know what, we're going from

441
00:23:35,720 --> 00:23:38,960
Speaker 1: forty seven and a half billion to a month, it's

442
00:23:38,960 --> 00:23:41,399
Speaker 1: sure sounds like a little big number. Well it's a

443
00:23:41,440 --> 00:23:45,080
Speaker 1: big number, except that there's two point two trillion dollars

444
00:23:45,480 --> 00:23:48,160
Speaker 1: of excess liquidity out there that the Fed is soap

445
00:23:48,440 --> 00:23:52,280
Speaker 1: soaping up, soaking up every single night in reverse repos.

446
00:23:52,920 --> 00:23:57,040
Speaker 1: And so when I think about what potentially could happen, Yes,

447
00:23:57,160 --> 00:24:00,439
Speaker 1: there is a duration mismatch, meaning that the Federal Reserve

448
00:24:00,560 --> 00:24:03,360
Speaker 1: doesn't own the exact same thing that the market players

449
00:24:03,640 --> 00:24:06,399
Speaker 1: that are engaging in the reverse repos want, but in

450
00:24:06,560 --> 00:24:09,080
Speaker 1: terms of the total amount of liquidity, they're having to

451
00:24:09,119 --> 00:24:11,400
Speaker 1: soak up all this extra liquidity. So as they let

452
00:24:11,480 --> 00:24:15,240
Speaker 1: their balance sheet run down, I suspect the reverse repo

453
00:24:15,520 --> 00:24:19,200
Speaker 1: will also run down, off setting it good stuff. All right, Kevin,

454
00:24:19,240 --> 00:24:21,640
Speaker 1: thank you for That's what I call inside baseball, that's

455
00:24:21,720 --> 00:24:24,320
Speaker 1: the plumbing of the markets. Kevin m you're a prop

456
00:24:24,359 --> 00:24:27,919
Speaker 1: trader for wind Or Capital. Talk about some quantitative tightening,

457
00:24:28,000 --> 00:24:30,640
Speaker 1: it's uh, you know, it's critics pointing out it's something

458
00:24:30,680 --> 00:24:33,320
Speaker 1: we don't experience in the marketplace that often. It does,

459
00:24:33,520 --> 00:24:35,480
Speaker 1: It does happen, but not that often. It just seems

460
00:24:35,480 --> 00:24:39,240
Speaker 1: like we've been talking about forever quantitative easning in the

461
00:24:39,359 --> 00:24:43,440
Speaker 1: easy money conditions in the marketplace, and that is clearly

462
00:24:43,960 --> 00:24:46,760
Speaker 1: changing here as we talked about the Fed raising interest rates.

463
00:24:46,840 --> 00:24:49,399
Speaker 1: We heard from Jackson Hole last week they are on

464
00:24:49,680 --> 00:24:55,360
Speaker 1: a tear there to fight inflation. All right, Let's talk

465
00:24:55,480 --> 00:24:57,920
Speaker 1: electric vehicles and we're not. It's not just electric cars.

466
00:24:58,000 --> 00:25:00,639
Speaker 1: We got trucks. They're on the way. I drove the

467
00:25:00,720 --> 00:25:05,000
Speaker 1: four D F one fifty lightning and uh it's awesome.

468
00:25:05,320 --> 00:25:08,760
Speaker 1: Matt read a story about boats, all kinds of stuff

469
00:25:09,119 --> 00:25:13,000
Speaker 1: coming to the e V space. Regie's did you recr

470
00:25:13,160 --> 00:25:16,080
Speaker 1: is an executive director for Auto and farm sectors at

471
00:25:16,200 --> 00:25:18,960
Speaker 1: MA Hinder Group. He joined us talk about what they're doing.

472
00:25:19,040 --> 00:25:21,520
Speaker 1: Regie's love to just know what you guys that group

473
00:25:21,560 --> 00:25:24,840
Speaker 1: are doing in the e V space. Yeah, Well, first

474
00:25:24,880 --> 00:25:26,680
Speaker 1: we thanks for having me on the show. It's a

475
00:25:26,720 --> 00:25:30,520
Speaker 1: pleasure to be with you here this morning, and especially

476
00:25:30,680 --> 00:25:34,520
Speaker 1: to talk about our electric plans. As you know, we

477
00:25:35,000 --> 00:25:38,680
Speaker 1: are a leading SUV player in India actually number one

478
00:25:38,760 --> 00:25:41,720
Speaker 1: by revenue, and as we look at the future, we

479
00:25:41,840 --> 00:25:45,720
Speaker 1: believe that electric SUV's will be a significant part of

480
00:25:45,840 --> 00:25:50,000
Speaker 1: that long term plan. So when we started thinking about

481
00:25:50,520 --> 00:25:54,680
Speaker 1: where we should be headed from here, we thought, when

482
00:25:54,760 --> 00:25:58,520
Speaker 1: we have planned for about any type percent of our

483
00:25:58,640 --> 00:26:02,080
Speaker 1: volumes in a sus coming out of electric vehicles by

484
00:26:02,160 --> 00:26:05,680
Speaker 1: around the eclic pointing seven, So we put together a

485
00:26:05,840 --> 00:26:09,480
Speaker 1: plan to help us get that end of a electric

486
00:26:09,800 --> 00:26:12,440
Speaker 1: sue vehicle volume in the ind in dostic market. In

487
00:26:12,480 --> 00:26:14,960
Speaker 1: the beginning with talk to us about just kind of

488
00:26:15,000 --> 00:26:17,240
Speaker 1: where India is right now in terms of the ev

489
00:26:18,080 --> 00:26:21,040
Speaker 1: market here in the States, obviously, I'm sure you're where

490
00:26:21,160 --> 00:26:24,040
Speaker 1: Tesla has led the way completely. But now we've got

491
00:26:24,080 --> 00:26:26,119
Speaker 1: all the major global O E M s, you know,

492
00:26:26,200 --> 00:26:28,200
Speaker 1: kind of throwing their hats into the ring. Talk to

493
00:26:28,280 --> 00:26:32,479
Speaker 1: us about the Indian market, So so Paull. In India,

494
00:26:33,160 --> 00:26:35,919
Speaker 1: the electric penetration at the moment is at a very

495
00:26:36,040 --> 00:26:40,320
Speaker 1: nascent stage of evolution. We are seeing in much faster

496
00:26:41,000 --> 00:26:44,600
Speaker 1: electric penetration and these small commercial vehicles, which is really

497
00:26:44,760 --> 00:26:47,280
Speaker 1: the three wheeler space, and we have a strong presence

498
00:26:47,280 --> 00:26:52,280
Speaker 1: there where are three wheeler electric vehicles have a market shot.

499
00:26:53,880 --> 00:26:57,040
Speaker 1: And here the electric penetration is as high as ten

500
00:26:57,160 --> 00:26:59,840
Speaker 1: percent and we are seeing it grow very rapidly month

501
00:26:59,880 --> 00:27:03,360
Speaker 1: in month. The penetration, as I said, in the passenger

502
00:27:03,520 --> 00:27:07,920
Speaker 1: vehicles space is still very small two to three. We

503
00:27:08,200 --> 00:27:11,800
Speaker 1: are expecting this to grow very significantly over the next

504
00:27:11,840 --> 00:27:15,800
Speaker 1: for five years, as a better technology comes into vehicles,

505
00:27:16,240 --> 00:27:19,760
Speaker 1: as charging in fry improves, and of course evolving into

506
00:27:19,840 --> 00:27:25,920
Speaker 1: consumer who is now inclined who adopt electric vehicles. The

507
00:27:26,040 --> 00:27:28,760
Speaker 1: government in the Indian government is also putting a lot

508
00:27:28,800 --> 00:27:35,000
Speaker 1: of emphasis on promoting electric vehicles, enabling electric vehicle conversion

509
00:27:35,560 --> 00:27:40,359
Speaker 1: and have put in place several subsidies to enable that

510
00:27:40,560 --> 00:27:45,320
Speaker 1: as well as investment linked incentives to promote investments in

511
00:27:45,359 --> 00:27:48,440
Speaker 1: the electric working space. I know, Mahinder is you know,

512
00:27:48,640 --> 00:27:51,320
Speaker 1: obviously a large player in any tractor business and that

513
00:27:51,520 --> 00:27:55,520
Speaker 1: side of the vehicle business. How is the EV revolution

514
00:27:55,600 --> 00:28:01,159
Speaker 1: going to impact that party? Think uh, Paul, So you know,

515
00:28:01,480 --> 00:28:03,760
Speaker 1: like right he said, in the Indian market, we have

516
00:28:03,920 --> 00:28:06,920
Speaker 1: a strong presence in the tractor business. Were number one

517
00:28:07,760 --> 00:28:10,000
Speaker 1: one to send market share a very large volume, so

518
00:28:10,160 --> 00:28:13,399
Speaker 1: we sell over three hundred thou tractors Elier in India.

519
00:28:13,840 --> 00:28:15,960
Speaker 1: We also have a very good presence in North America

520
00:28:16,000 --> 00:28:18,480
Speaker 1: and building a very strong brand and I think some

521
00:28:18,600 --> 00:28:20,960
Speaker 1: of some of your listeners would have seen us on

522
00:28:21,040 --> 00:28:25,560
Speaker 1: the NASCAR more recently doing very well there, so you

523
00:28:25,640 --> 00:28:28,040
Speaker 1: know the brand is getting strong. We are a number

524
00:28:28,119 --> 00:28:30,359
Speaker 1: three player in the less a hundred horse par segment.

525
00:28:31,240 --> 00:28:34,680
Speaker 1: We think the electric part of the tractor business in

526
00:28:34,880 --> 00:28:38,000
Speaker 1: North America will you know, evolve faster than it will

527
00:28:38,320 --> 00:28:41,560
Speaker 1: in India. And the reason for that is in India,

528
00:28:41,680 --> 00:28:46,240
Speaker 1: in mainstream agg applications typically you know, the tractors the

529
00:28:46,320 --> 00:28:49,680
Speaker 1: prime mover for other implements and that means a very

530
00:28:49,800 --> 00:28:52,920
Speaker 1: high talk or a backup talk, and that doesn't quite

531
00:28:52,960 --> 00:28:56,240
Speaker 1: come as easily, uh, you know, with electric. But in

532
00:28:56,360 --> 00:29:00,080
Speaker 1: North America where you know, in the smaller, let's one

533
00:29:00,160 --> 00:29:04,520
Speaker 1: hundred horsepower segments, we see you know, law moving a

534
00:29:05,120 --> 00:29:08,480
Speaker 1: you know application to the kind that we participate in

535
00:29:08,720 --> 00:29:12,080
Speaker 1: with Google lifestyle ers. We think electric will follow the

536
00:29:12,200 --> 00:29:15,200
Speaker 1: next two to four years. Talking about you know, one

537
00:29:15,240 --> 00:29:18,960
Speaker 1: of the challenges logistically even here in the United States,

538
00:29:19,040 --> 00:29:22,600
Speaker 1: as as more and more uh people go, electric is

539
00:29:22,600 --> 00:29:26,200
Speaker 1: gonna be the charging station infrastructure. And there's just for

540
00:29:26,280 --> 00:29:28,080
Speaker 1: a lot of parts this country, I just don't see

541
00:29:28,120 --> 00:29:32,360
Speaker 1: it happening. You know, it's gonna take a big, big undertaking,

542
00:29:32,400 --> 00:29:34,600
Speaker 1: and I would think it would be by orders of

543
00:29:34,720 --> 00:29:38,880
Speaker 1: magnitude even more difficult. In India. How does how do

544
00:29:38,960 --> 00:29:41,760
Speaker 1: you and other industry participants see the roll out the

545
00:29:41,800 --> 00:29:47,240
Speaker 1: evolution of the charging infrastructure in India? Yeah, so you know,

546
00:29:47,440 --> 00:29:50,400
Speaker 1: the government is committed the ball to create a charging

547
00:29:51,040 --> 00:29:55,800
Speaker 1: and a lot of the fuel stations there's a road

548
00:29:55,840 --> 00:29:59,760
Speaker 1: map to convert them into energy stations as we go forward.

549
00:30:00,280 --> 00:30:02,120
Speaker 1: A lot of startups are getting in the space as

550
00:30:02,160 --> 00:30:05,200
Speaker 1: well about what we're seeing as you know, the first

551
00:30:05,280 --> 00:30:09,760
Speaker 1: stage adoption of the electric revolution India will happen a

552
00:30:09,840 --> 00:30:14,240
Speaker 1: lot around private charging station. Okay, people in their house,

553
00:30:14,880 --> 00:30:17,760
Speaker 1: either in their homes or your houses, or in housing

554
00:30:17,840 --> 00:30:21,840
Speaker 1: complexes or at place of work would start moving into

555
00:30:22,600 --> 00:30:27,080
Speaker 1: you know, private charging. And to begin with, we think

556
00:30:27,200 --> 00:30:31,440
Speaker 1: that in the personal segment, electric penetration will happen with

557
00:30:31,960 --> 00:30:35,760
Speaker 1: in those households who either have to just operate within

558
00:30:36,000 --> 00:30:39,920
Speaker 1: a non operating circles like example, doctors going to their

559
00:30:40,440 --> 00:30:44,600
Speaker 1: hospitals for work, you know, the nature movement is predictable.

560
00:30:44,720 --> 00:30:47,480
Speaker 1: Or people with multi cards you know, who are less

561
00:30:47,560 --> 00:30:51,760
Speaker 1: worried about range anxiety and hence less worried about charging

562
00:30:51,800 --> 00:30:53,840
Speaker 1: in FRA. And which is why we think for the

563
00:30:53,920 --> 00:30:57,400
Speaker 1: next four to five years at twenty percent penetration of

564
00:30:57,560 --> 00:31:03,600
Speaker 1: this segment using electric is a reasonable assumption. Just to

565
00:31:03,920 --> 00:31:07,560
Speaker 1: quick beyond that is one of the cycle. Just real quick,

566
00:31:07,760 --> 00:31:11,400
Speaker 1: Just where are the non Indian manufacturers in India, the

567
00:31:11,640 --> 00:31:14,000
Speaker 1: Volkswagons of the world and and and others? Are they

568
00:31:14,160 --> 00:31:19,280
Speaker 1: in India in a big way in electric? H No,

569
00:31:19,440 --> 00:31:22,080
Speaker 1: so actually not at all at the moment. So we

570
00:31:22,600 --> 00:31:25,800
Speaker 1: have you know, quite significantly Tata and then we are

571
00:31:25,880 --> 00:31:30,160
Speaker 1: launching revealing actually in the eighth and nine to September,

572
00:31:30,240 --> 00:31:33,000
Speaker 1: which is the word ev day, A product called the

573
00:31:33,080 --> 00:31:36,120
Speaker 1: actually Be four double which is a four point to

574
00:31:36,240 --> 00:31:41,360
Speaker 1: meet a vehicle electric which we will launch. We interestingly

575
00:31:41,480 --> 00:31:43,920
Speaker 1: do don't have a tie up or our in Glow

576
00:31:43,960 --> 00:31:48,959
Speaker 1: platform with Volkswagon where we will be using the components

577
00:31:49,000 --> 00:31:53,360
Speaker 1: from the enemy by platform, more specifically the battery, sales

578
00:31:53,440 --> 00:31:56,600
Speaker 1: and the motors as a part of the Innglow platform

579
00:31:56,640 --> 00:32:00,280
Speaker 1: on which will be building for the five universities. Great

580
00:32:00,280 --> 00:32:03,320
Speaker 1: stuff for g Juror Car Executive director, Auto and farm

581
00:32:03,400 --> 00:32:07,440
Speaker 1: sectors for Mahinda Group out of India. They are going

582
00:32:07,760 --> 00:32:10,640
Speaker 1: electric like everybody else, it seems. Coming up balance of power.

583
00:32:10,760 --> 00:32:13,800
Speaker 1: Joe Matthew sitting in for David Weston today. He'll drive

584
00:32:14,040 --> 00:32:21,400
Speaker 1: the conversation forward. Thanks for listening to the Bloomberg Markets podcast.

585
00:32:21,840 --> 00:32:24,960
Speaker 1: You can subscribe and listen to interviews with Apple Podcasts

586
00:32:25,160 --> 00:32:29,080
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm

587
00:32:29,120 --> 00:32:33,320
Speaker 1: on Twitter at Matt Miller. P On Fall Sweeney I'm

588
00:32:33,320 --> 00:32:35,920
Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can

589
00:32:36,000 --> 00:32:38,200
Speaker 1: always catch us worldwide at Bloomberg Radio