WEBVTT - U.S Jobless Rate Climbs 0:00:02.960 --> 0:00:07.280 Bloomberg Audio Studios, podcasts, radio news. 0:00:09.960 --> 0:00:13.840 You're listening to the Bloomberg Intelligence Podcast. Catch us Live 0:00:13.920 --> 0:00:17.000 weekdays at ten am Eastern on Apple Card playing Android 0:00:17.040 --> 0:00:20.120 Auto with the Bloomberg Business App. Listen on demand wherever 0:00:20.200 --> 0:00:24.040 you get your podcasts, or watch us live on YouTube. 0:00:25.120 --> 0:00:28.480 Just kind of summarizing that farm non farm payroll data. 0:00:28.720 --> 0:00:30.480 The good news was for the month of February came 0:00:30.520 --> 0:00:32.040 in better than expected. The two hundred and seventy five 0:00:32.040 --> 0:00:34.680 thousand jobs at IT consensus was two hundred thousand, So 0:00:34.800 --> 0:00:37.120 good headline print. There kind of a little bit of 0:00:37.159 --> 0:00:39.400 the downside here is a big negative revision for the 0:00:39.440 --> 0:00:41.800 prior month. The prior month was revised down from a 0:00:41.800 --> 0:00:44.000 gain of three hundred fifty three thousand to two hundred 0:00:44.000 --> 0:00:47.000 and twenty nine. Claudia Asam from them Group said, don't 0:00:47.040 --> 0:00:49.279 worry about it, it's just noise. Taking it in, take 0:00:49.320 --> 0:00:51.839 everything on like a three month basis, rolling basis, and 0:00:52.440 --> 0:00:55.959 basically the payroll market's pretty strong. Jony Biley joins US 0:00:56.280 --> 0:01:00.400 chief workforce analysts at employ Bridge, reportedly on Zoom from 0:01:00.440 --> 0:01:01.920 Pompano Beach, Florida. 0:01:02.040 --> 0:01:02.800 What are we doing here? 0:01:02.920 --> 0:01:03.280 Jealous? 0:01:03.360 --> 0:01:03.480 Right? 0:01:03.680 --> 0:01:06.880 Yeah, why not? But I'm going out to the mountains Sunday, summer, right, Joni, 0:01:06.959 --> 0:01:10.199 what did you make of this jobs report number today? 0:01:10.200 --> 0:01:12.880 A lot of moving parts, as we've been saying, Yeah, you. 0:01:12.920 --> 0:01:15.000 Know, you really have to break it down because there 0:01:16.000 --> 0:01:18.800 is a lot of data in this report, and there's 0:01:18.840 --> 0:01:21.080 some good news and there's some bad news. 0:01:21.319 --> 0:01:23.640 So to your point you were talking about, you know, 0:01:23.720 --> 0:01:26.800 the revisions that were made to the prior months. We 0:01:26.880 --> 0:01:30.000 did see some pretty big revisions. 0:01:29.480 --> 0:01:33.920 Downward to January and then also some revisions in December. 0:01:34.000 --> 0:01:38.280 So you know, the previous month's reports weren't really as 0:01:38.319 --> 0:01:41.760 strong as we thought they were. But however, if you 0:01:41.800 --> 0:01:44.360 look at the overall job growth, you know, the US 0:01:44.760 --> 0:01:49.840 is adding jobs to the economy, mostly in the healthcare sector. 0:01:50.760 --> 0:01:54.640 We did see growth in the retail sector. Construction added 0:01:54.680 --> 0:01:58.560 over twenty thousand jobs, so you know, there is some 0:01:58.600 --> 0:02:02.559 good news and we continue to see wages also moving 0:02:02.640 --> 0:02:04.360 up in the report as well. 0:02:04.920 --> 0:02:07.640 But jo Johnny, do you care that the wages were 0:02:07.680 --> 0:02:08.520 moving up less? 0:02:09.960 --> 0:02:11.600 Yeah, we're definitely seeing a slow down. 0:02:11.680 --> 0:02:14.360 I think with you know, wage growth has been so 0:02:14.720 --> 0:02:19.560 strong over the past few years, so I expect them 0:02:19.600 --> 0:02:21.920 to flatten. I do think you know, wages will kind 0:02:21.960 --> 0:02:25.400 of soften, but I was surprised actually to see that 0:02:25.400 --> 0:02:28.160 we're still having some decent, you know, decent wage growth. 0:02:28.960 --> 0:02:31.040 So the one go ahead. 0:02:31.639 --> 0:02:32.960 Well, the one thing I was going to say that 0:02:33.000 --> 0:02:36.720 concern me the most about this Job's report was actually 0:02:36.800 --> 0:02:41.080 the household survey, and that's where you saw unemployment, you know, 0:02:41.200 --> 0:02:44.760 tick up to three point nine percent. And when you 0:02:44.880 --> 0:02:47.480 look at the data and kind of break that down, 0:02:47.960 --> 0:02:51.600 we see that the population is growing, the size of 0:02:51.680 --> 0:02:56.440 the labor forces growing, but we actually have over three 0:02:56.520 --> 0:03:01.120 hundred and thirty thousand more people on unemployment, and. 0:03:01.000 --> 0:03:02.120 That concerns me. 0:03:02.280 --> 0:03:05.200 So, you know, we have these two surveys, and so 0:03:05.360 --> 0:03:08.200 when you look at you know, the establishment survey, the 0:03:08.240 --> 0:03:11.240 headline number of you know, two hundred and seventy five 0:03:11.280 --> 0:03:15.320 thousand jobs being created looks great, but that household survey 0:03:15.520 --> 0:03:19.560 is really concerning that we're seeing more people on unemployment. 0:03:20.400 --> 0:03:23.400 So, Jony, I think when you listen to earnings conference 0:03:23.400 --> 0:03:26.000 calls from companies and just about every industry, they say 0:03:26.040 --> 0:03:30.720 it's still really hard to attract and retain a good 0:03:31.080 --> 0:03:34.440 talent and labor. Are you still seeing that? Is it 0:03:34.560 --> 0:03:36.280 as a cute today as it was maybe you know, 0:03:36.440 --> 0:03:37.200 a year or two ago. 0:03:38.480 --> 0:03:40.200 Yeah, it's definitely softened a bit. 0:03:40.320 --> 0:03:43.680 The job market, you know, was much stronger last year 0:03:43.920 --> 0:03:46.600 and the prior year, you know, even coming out of 0:03:46.600 --> 0:03:48.880 the pandemic, we just had robust growth. 0:03:49.240 --> 0:03:51.040 It was a very competitive market. 0:03:51.360 --> 0:03:54.720 People were quitting their jobs going somewhere else the grass was. 0:03:54.680 --> 0:03:56.040 Greener, making more money. 0:03:56.440 --> 0:03:58.880 Now we're starting to see, you know, the quits rate 0:03:59.120 --> 0:04:02.520 is coming down. It is still though, a very tight 0:04:02.640 --> 0:04:05.960 job market to your point, you know, we have eight 0:04:05.960 --> 0:04:10.960 point nine million job openings, about six point four million 0:04:11.200 --> 0:04:14.640 unemployed workers, so more jobs than there are people. But 0:04:15.080 --> 0:04:18.920 it depends on the sector you know that you're in. 0:04:19.320 --> 0:04:22.000 We've seen a slowdown in some of the professional and 0:04:22.040 --> 0:04:27.760 business service sector. Healthcare though continues to remain strong. Leisure 0:04:27.800 --> 0:04:31.159 and hospitality, you know, it is very hard to find 0:04:31.200 --> 0:04:32.600 people in that industry. 0:04:32.640 --> 0:04:34.040 So we've seen wages. 0:04:33.680 --> 0:04:37.599 Really start to increase, and employers are focused on that, 0:04:37.800 --> 0:04:42.479 you know, employee retention strategies to keep their workforce engaged 0:04:42.520 --> 0:04:43.599 and keep them with them. 0:04:44.000 --> 0:04:46.360 So to that point, the market is pricing in now 0:04:46.440 --> 0:04:48.679 one hundred basis points of cuts. This year really starts 0:04:48.680 --> 0:04:50.839 to kick off in June. Is this an economy that 0:04:51.000 --> 0:04:54.320 needs that. Like, if we do get those cuts, is 0:04:54.400 --> 0:04:57.200 there now penned up demand with companies so it actually 0:04:57.200 --> 0:04:58.400 make the job market tighter. 0:04:59.640 --> 0:05:03.080 Well, I do think if we get those cuts, you know, 0:05:03.200 --> 0:05:05.719 even if it's in the second, you know, half of 0:05:05.760 --> 0:05:11.120 the year, that will help many companies feel better about 0:05:11.120 --> 0:05:14.680 investing and start hiring again. Because what we see at 0:05:14.680 --> 0:05:18.680 employee Bridge is employers are talking about hiring. They say 0:05:18.680 --> 0:05:22.240 they have the demand, but they do seem a bit cautious. 0:05:22.400 --> 0:05:25.920 They're not adding, you know, to their payrolls as quickly 0:05:26.160 --> 0:05:28.599 as they have before, and I think they have to 0:05:28.640 --> 0:05:32.719 be careful with their cash position. And certainly you know, 0:05:32.960 --> 0:05:37.080 their their debt and the interest rates being high, you know, 0:05:37.320 --> 0:05:41.080 of course it's impacting companies with making those investments. So 0:05:41.160 --> 0:05:43.839 if we start to see those rates, you know, begin 0:05:43.920 --> 0:05:47.920 to ease, I would certainly feel better about companies starting 0:05:47.920 --> 0:05:50.240 to add to their permanent payrolls again. 0:05:51.080 --> 0:05:53.640 JNY last night was the State of the Union address 0:05:53.640 --> 0:05:57.479 and one of the key issues was immigration issues at 0:05:57.680 --> 0:06:01.080 the border. How does immigration with it's legal or illegal, 0:06:01.120 --> 0:06:04.120 how has it been impacting Have you seen it anywhere 0:06:04.120 --> 0:06:06.360 in the labor market? What are your clients saying, because 0:06:06.360 --> 0:06:08.200 I was speaking to a buddy mine who owns a 0:06:08.240 --> 0:06:10.159 restaurant just yesterday, and he was saying, for the first 0:06:10.200 --> 0:06:12.920 time in three years, he actually has everybody he needs 0:06:13.600 --> 0:06:15.840 for all his shifts. And these are you know, bus 0:06:15.839 --> 0:06:18.880 boys and waiting staff and dishwashers and things like that. 0:06:19.680 --> 0:06:21.520 Has it shown up in your work. 0:06:22.680 --> 0:06:25.440 Yeah, so we're we I think it's still too soon 0:06:25.640 --> 0:06:29.119 to tell. To be honest with you, it definitely will 0:06:29.160 --> 0:06:31.680 have an impact. When you look at the numbers of 0:06:31.720 --> 0:06:35.560 people that are coming into the country. You know, obviously 0:06:35.600 --> 0:06:40.200 that's adding, you know, to the population, and many of 0:06:40.240 --> 0:06:45.080 them are unskilled workers, you know, so they will really 0:06:45.400 --> 0:06:49.160 you know, if obviously getting their green cards are being 0:06:49.200 --> 0:06:53.040 able to work in the United States, they will impact 0:06:53.279 --> 0:06:56.720 the lower level, lower level. 0:06:56.560 --> 0:07:01.720 Jobs, you know, looking for talent more in those unskilled positions. 0:07:01.760 --> 0:07:04.280 And we see that we haven't really seen. 0:07:04.040 --> 0:07:07.760 The big impact in the workforce yet, but it certainly 0:07:07.960 --> 0:07:10.080 would impact the workforce in the future. 0:07:11.280 --> 0:07:13.640 What do you look for next then, so if there's 0:07:13.680 --> 0:07:15.600 some good interest in bad it's like a Worsheck test, 0:07:15.680 --> 0:07:18.440 right when it comes to the jobs data, what's going 0:07:18.520 --> 0:07:20.680 to be the next data point that you're really paying 0:07:20.680 --> 0:07:22.680 attention to in the jobs numbers. 0:07:23.640 --> 0:07:25.920 Well, I think there's a couple of things that'll that 0:07:26.000 --> 0:07:27.800 we need to continue to watch. 0:07:28.640 --> 0:07:30.920 One thing is labor participation. 0:07:31.440 --> 0:07:34.240 You know, if you look at the overall workforce, we're 0:07:34.280 --> 0:07:39.320 at about sixty two point five percent labor participation, and 0:07:39.320 --> 0:07:42.520 that if you break that down, you know, men over 0:07:42.600 --> 0:07:45.320 twenty years old we're up at seventy percent, which is 0:07:45.360 --> 0:07:49.679 a pretty good number. Women for over twenty years old 0:07:50.240 --> 0:07:54.280 are We're at fifty nine percent. So when I look 0:07:54.320 --> 0:07:56.880 at the overall job market, I'm also looking not only 0:07:56.920 --> 0:07:59.679 where is the job growth and who's adding what's happening 0:07:59.680 --> 0:08:04.040 with ages, but are we getting people back to work 0:08:04.720 --> 0:08:07.600 in the United States? And are we seeing that labor 0:08:07.640 --> 0:08:11.640 participation start to tick up? And that's a very important 0:08:11.640 --> 0:08:15.840 indicator that I certainly watch. It's still at a very 0:08:15.960 --> 0:08:19.560 very low rate, and we have some work to do 0:08:19.680 --> 0:08:21.560 I think in encouraging people that it is a. 0:08:21.480 --> 0:08:22.320 Good job market. 0:08:22.400 --> 0:08:26.440 There are opportunities out there, there's training opportunities out there, 0:08:27.240 --> 0:08:30.640 and certainly need to get that number up. I'll also 0:08:30.680 --> 0:08:33.319 be watching for revisions next month, you know, are the 0:08:33.400 --> 0:08:38.839 numbers getting continually revised downward? The temporary help sector is 0:08:39.520 --> 0:08:43.720 interesting to follow. Usually, if we're losing jobs in the 0:08:43.880 --> 0:08:47.880 temporary help services sector, that's not a good sign for 0:08:47.960 --> 0:08:51.800 the economy because companies will lay off temporary workers first, 0:08:52.200 --> 0:08:54.120 and unfortunately. 0:08:53.440 --> 0:08:58.320 That has been declining for many months, which could show 0:08:58.440 --> 0:08:59.400 us that, you. 0:08:59.320 --> 0:09:02.080 Know, we're not at this yet, Johnny, there are definitely 0:09:02.280 --> 0:09:03.520 some softening Johnny. 0:09:03.559 --> 0:09:06.920 We appreciate your time. Thank you so much. Jony Biley, 0:09:07.040 --> 0:09:11.400 she is employee Bridge, Chief Workforced Analyst, joining us there. 0:09:11.400 --> 0:09:12.719 We very much appreciate your time. 0:09:14.240 --> 0:09:18.160 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:09:18.240 --> 0:09:21.760 weekdays at ten am Eastern on applecar Play and Android 0:09:21.760 --> 0:09:24.559 Auto with the Bloomberg Business app. You can also listen 0:09:24.679 --> 0:09:27.760 live on Amazon Alexa from our flagship New York station. 0:09:28.120 --> 0:09:30.880 Just say Alexa play Bloomberg eleven thirty. 0:09:32.200 --> 0:09:35.199 Happy Friday to everyone we made at the end of 0:09:35.240 --> 0:09:38.000 the week. You're listening to Bloomberg Intelligence. I'm Bloomberg Radio. 0:09:38.040 --> 0:09:40.480 You can also check us out on YouTube. We are 0:09:40.520 --> 0:09:42.600 live in the interactive at Broker Studio right here at 0:09:42.600 --> 0:09:45.640 headquarters in New York. I'm Alex Steel, Paul Sweeney as well. 0:09:45.800 --> 0:09:48.839 So we have thousands of analysts hundreds. It's good. With 0:09:48.920 --> 0:09:51.160 hundreds hundred of analysts that cover two thousand companies and 0:09:51.160 --> 0:09:53.400 one hundred and thirty industries around the world, they are 0:09:53.400 --> 0:09:56.400 truly the best of the best. And one of the 0:09:56.400 --> 0:09:59.080 headliners here is Gina Martin Adams. She is the chief 0:09:59.120 --> 0:10:02.160 equity strategist at Bloomberg Intelligence and she joined us now 0:10:02.760 --> 0:10:05.840 from the Golden State. Gina, I'm looking at the market, 0:10:06.160 --> 0:10:08.360 and I've been skeptical of the rally for a long time. 0:10:08.400 --> 0:10:11.400 But then I get things like the Rustle two thousand 0:10:11.679 --> 0:10:13.800 up the most and hitting its highest level since March 0:10:13.800 --> 0:10:16.200 of twenty twenty two. Then I get things like you 0:10:16.280 --> 0:10:18.960 have the equal Weighted Index sitting at a record high, 0:10:18.960 --> 0:10:21.960 you have industrials doing really well, and it's not just uber. 0:10:22.520 --> 0:10:24.480 Is it time for me to stop being skeptical? 0:10:25.760 --> 0:10:28.600 Yeah, I dare say, Alex, we should have convinced you 0:10:28.640 --> 0:10:32.240 a little while ago to stop being skeptical. But frankly, 0:10:32.320 --> 0:10:34.360 I do think that what is happening in the market, 0:10:34.600 --> 0:10:36.560 You're not alone. There are a lot of people that 0:10:36.600 --> 0:10:38.560 are very skeptical to in the market, and that is 0:10:38.600 --> 0:10:41.520 what makes what makes the wall of worry that stocks 0:10:41.520 --> 0:10:44.640 tend to climb right and I do think though that 0:10:44.640 --> 0:10:46.280 when you look at the bulk of the evidence, you 0:10:46.440 --> 0:10:50.559 see fundamentals starting to turn a corner. For the vast 0:10:50.600 --> 0:10:53.240 majority of the S and P five hundred and prices 0:10:53.240 --> 0:10:56.920 are reflecting that corner that fundamentals are turning over the 0:10:56.920 --> 0:10:59.240 course of twenty twenty three. Of course, the big argument 0:10:59.280 --> 0:11:03.640 against stuff is that this market was really just driven 0:11:03.679 --> 0:11:06.800 by the biggest names, but that argument has been diminished 0:11:06.840 --> 0:11:09.280 considerably over the last three months. So we're starting to 0:11:09.280 --> 0:11:11.760 see breakouts across the board. As a matter of fact, 0:11:12.320 --> 0:11:15.400 more than half of industrials companies are making new all 0:11:15.480 --> 0:11:18.439 time highs over the last three months, so you are 0:11:18.520 --> 0:11:22.840 starting to see much broader gains emerge. Small caps starting 0:11:22.880 --> 0:11:25.720 to show some signs of life as well, breaking across 0:11:25.840 --> 0:11:29.599 key resistance levels just this week. So we're starting to 0:11:29.600 --> 0:11:34.320 see more participation, more capitalization, participation, more sectors, more stocks 0:11:34.360 --> 0:11:36.160 really getting on board this full market. 0:11:37.000 --> 0:11:40.480 So I guess, just in the back Gina on the 0:11:40.600 --> 0:11:42.840 jobs number today, it seems like the bond market is 0:11:42.840 --> 0:11:45.400 pricing in, you know, pretty confidently. 0:11:45.520 --> 0:11:46.400 A rate cut in. 0:11:46.840 --> 0:11:50.800 June gave us just kind of what you're fed outlook 0:11:50.960 --> 0:11:53.560 is for kind of the remainder this year, and how 0:11:53.920 --> 0:11:55.920 important that is to kind of just the overall fundament 0:11:56.000 --> 0:11:57.439 of the movement of the markets. 0:11:58.160 --> 0:12:00.800 Yeah, so luckily, paul I, that's one thing I don't 0:12:00.840 --> 0:12:02.760 have to set is a FED outlook. But I will 0:12:02.800 --> 0:12:06.760 say that what the equity market is pricing is generally 0:12:07.040 --> 0:12:10.640 we're starting to adopt the thesis that earnings are improving. 0:12:11.160 --> 0:12:13.840 I do think that what's really driving the equity market 0:12:13.840 --> 0:12:16.320 more than anything is not what's happening in rates. As 0:12:16.320 --> 0:12:18.520 a matter of fact, we see some very clear evidence 0:12:18.559 --> 0:12:22.600 that equities are detaching from the rates landscape, and we're 0:12:22.600 --> 0:12:26.080 not necessarily as closely correlated on a daily basis, monthly 0:12:26.120 --> 0:12:28.800 basis with watchab what's happening with rates and the bond market, 0:12:28.840 --> 0:12:32.679 speculation about the FED, and instead we're looking at much 0:12:32.679 --> 0:12:35.480 stronger than expected earnings and cash flow growth that has 0:12:35.520 --> 0:12:38.240 emerged for the S and P five hundred, and the 0:12:38.320 --> 0:12:42.040 anticipation that maybe earnings actually will prove to be much 0:12:42.080 --> 0:12:45.480 stronger than the market was forecasting over the course of 0:12:45.520 --> 0:12:47.559 this year. I do think that that's the most important 0:12:47.640 --> 0:12:51.160 driver of stocks. That said, you can't completely ignore the FED. 0:12:51.320 --> 0:12:55.560 If the FED is going to even just modestly reduce 0:12:55.640 --> 0:12:58.640 interest rates because inflation risks has diminished. That could be 0:12:58.720 --> 0:13:02.840 very supportive of equities as well and certainly contribute to valuations. 0:13:03.000 --> 0:13:06.199 I think the most dangerous condition for stocks right now 0:13:06.880 --> 0:13:10.280 is one of two things happen. First and foremost, the 0:13:10.320 --> 0:13:14.720 biggest sort of not predicted component of the market outlook 0:13:14.840 --> 0:13:18.000 is this idea that maybe inflation is stickier than anticipated. 0:13:18.400 --> 0:13:22.079 If inflation reaccelerates, that is obviously very bad for stocks 0:13:22.120 --> 0:13:24.040 because it could compress profit margins. 0:13:24.440 --> 0:13:25.439 On the other end of the. 0:13:25.400 --> 0:13:28.600 Spectrum, if the FED is easing policy because growth is 0:13:28.640 --> 0:13:32.520 breaking down, that's also not great for stocks. We need 0:13:32.520 --> 0:13:36.840 this middle zone of sort of stable policy, stable inflation, 0:13:37.160 --> 0:13:40.240 and modest improvement and earnings growth to really support the 0:13:40.280 --> 0:13:41.320 equity market right now. 0:13:41.400 --> 0:13:45.120 That is a Goldilocks word there for Gina. Okay, But 0:13:45.160 --> 0:13:47.040 here's my question is that if we do get the cuts, 0:13:47.480 --> 0:13:49.959 let's say they start in June, and neither of those 0:13:50.000 --> 0:13:52.800 negative scenarios imply like there's no sticky inflation and there's 0:13:52.800 --> 0:13:56.160 no disastrous economy, the risk of the cuts is that 0:13:56.200 --> 0:14:00.440 we actually fuel more investment into an economy that doesn't 0:14:00.440 --> 0:14:02.160 need it, and then that kind of sets us up 0:14:02.200 --> 0:14:04.080 for a rougher twenty twenty five. 0:14:05.000 --> 0:14:07.200 I think that's a really good point, is how much 0:14:07.240 --> 0:14:11.360 can they cut before they ultimately the ultimate result is 0:14:11.400 --> 0:14:14.200 another bout of inflation into twenty twenty five, And we 0:14:14.240 --> 0:14:17.480 won't know this until we get to mid twenty twenty 0:14:17.480 --> 0:14:20.760 four when they do start cutting. If they do, but 0:14:20.840 --> 0:14:23.520 the Fed does have to threat a pretty fine needle 0:14:23.960 --> 0:14:26.840 if we're at a point where growth is relatively stable 0:14:26.880 --> 0:14:30.560 and inflation is simply decelerating, I think the arguments for 0:14:30.640 --> 0:14:35.120 those cuts are relatively deminimus. So if we do get 0:14:35.120 --> 0:14:37.560 to that point and the Fed does start cutting, you 0:14:37.640 --> 0:14:40.400 could indeed see the markets start to think about, well, 0:14:40.440 --> 0:14:42.960 what does this really mean for inflation prospects in twenty 0:14:43.000 --> 0:14:46.400 twenty five? Is it justified to see these growth this 0:14:46.520 --> 0:14:50.520 sort of outlook from the Fed? Will we see much 0:14:50.520 --> 0:14:53.240 more volatile inflation conditions emerging? What will that mean for 0:14:53.320 --> 0:14:56.440 profit margins? That of course comes in the middle landscape 0:14:56.480 --> 0:14:59.640 of we do have the election coming later this year, 0:14:59.680 --> 0:15:01.880 We've gone I have a lot of other potential moving 0:15:01.920 --> 0:15:04.800 parts to contend with in the economy, but it's certainly 0:15:04.800 --> 0:15:05.920 one factor to consider. 0:15:06.440 --> 0:15:09.520 Geet, I'm glad you brought the election because we'd had 0:15:09.520 --> 0:15:11.120 this State of the Union last night, So it just 0:15:11.120 --> 0:15:13.440 feels like that's kicking off what's going to be a 0:15:13.560 --> 0:15:17.840 very long campaign here in a very long process. Historically speaking, 0:15:18.240 --> 0:15:20.880 How do markets perform in a presidential election year? 0:15:21.840 --> 0:15:25.120 Yeah, I think Paul I tend to dismiss a lot 0:15:25.120 --> 0:15:28.120 of those sort of the statistical evidence about election years 0:15:28.160 --> 0:15:30.680 because you get very different results if you talk about 0:15:30.840 --> 0:15:34.000 how seasonality and political cycles play out over the last 0:15:34.000 --> 0:15:36.240 twenty years versus the last fifty years versus the last 0:15:36.280 --> 0:15:38.560 one hundred years. So you can kind of pick your narrative. 0:15:38.760 --> 0:15:38.920 Yep. 0:15:39.600 --> 0:15:41.840 I think that things that are most important, of course 0:15:41.880 --> 0:15:44.760 to drive stocks really are what's happening with growth and inflation. 0:15:45.560 --> 0:15:47.960 That said, as we move closer to the election, I 0:15:48.000 --> 0:15:50.320 do think that there are two major macro issues to 0:15:50.520 --> 0:15:53.960 consider with respect to the twenty twenty five outlook, and 0:15:54.000 --> 0:15:57.600 they will matter depending upon who ultimately becomes the US president, 0:15:57.640 --> 0:16:00.560 and that is really tax and trade. And trade are 0:16:00.560 --> 0:16:03.680 the two issues that could have very meaningful impacts on 0:16:03.720 --> 0:16:06.920 the outlook for earnings growth. Both of these presidents do 0:16:07.040 --> 0:16:11.320 tend to have fight bipolar policies with respect to especially taxation, 0:16:11.520 --> 0:16:15.520 but also trade policies and a sort of international framework 0:16:15.560 --> 0:16:18.400 of relationships. So I think we want to pay pretty 0:16:18.440 --> 0:16:21.000 close attention to those two issues as we get closer 0:16:21.040 --> 0:16:23.480 to the election because they could have meaningful outcomes for 0:16:23.520 --> 0:16:25.200 equities going into twenty twenty five. 0:16:25.520 --> 0:16:27.160 So before we get there, I just want to before 0:16:27.160 --> 0:16:28.960 we let you go enjoy the weekend, I want to 0:16:28.960 --> 0:16:31.520 get your take on what's happening with certain areas of tech. 0:16:31.840 --> 0:16:34.720 So if you have Tesla, if you have Apple, if 0:16:34.760 --> 0:16:39.280 you have maybe Alphabet starting to really break down, yep, 0:16:39.360 --> 0:16:41.160 but yet you still have an Aazak one hundred at 0:16:41.160 --> 0:16:42.800 a record high. How long do you think that that 0:16:42.920 --> 0:16:44.680 divergence can last? 0:16:45.240 --> 0:16:47.640 Yeah, I think this is super interesting, Alex And something 0:16:47.680 --> 0:16:49.760 we've been actually exploring over the course of the last 0:16:49.760 --> 0:16:52.480 two weeks as well is what's happening in the market 0:16:52.520 --> 0:16:55.720 is quite interesting. Beneath that headline, what we see is 0:16:55.800 --> 0:17:00.560 actually tech stops relative performance, failing to make new so 0:17:00.640 --> 0:17:04.520 tech appears to be consolidating, even communications, as you noted, 0:17:04.520 --> 0:17:08.199 with Alphabet sort of breaking down, communication stocks have been 0:17:08.240 --> 0:17:10.520 in a bit of a downtrend. At the same time 0:17:10.640 --> 0:17:13.400 the broader markets are moving higher and that's because we're 0:17:13.440 --> 0:17:17.399 seeing greater participation outside tech really push those markets higher. 0:17:17.760 --> 0:17:20.680 Within the Nasdaq, for instance, you've started to see breakouts 0:17:20.720 --> 0:17:24.399 in healthcare. Healthcare of courses is horrible laggard in twenty 0:17:24.480 --> 0:17:27.520 twenty three. If you get momentum games in the rest 0:17:27.520 --> 0:17:30.240 of the market and tech just stalls or even starts 0:17:30.280 --> 0:17:33.000 to break down a little bit, you can see stocks work. 0:17:33.040 --> 0:17:34.720 And the last week and a half or so has 0:17:35.000 --> 0:17:38.560 proves some evidence of that case. We do need to see, though, 0:17:38.600 --> 0:17:41.240 participation continue to emerge in the rest of the market 0:17:41.280 --> 0:17:44.040 if tech is indeed going into a stall state. 0:17:45.240 --> 0:17:47.120 All right, Gina, thanks so much for joining us, as 0:17:47.160 --> 0:17:48.080 always appreciate it. 0:17:48.119 --> 0:17:48.320 Geina. 0:17:48.359 --> 0:17:51.600 Martin Adams, chief equity strategist for Bloomberg Intelligence, joining us 0:17:51.600 --> 0:17:52.960 from zoom from NJ. 0:17:54.920 --> 0:17:58.800 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:17:58.880 --> 0:18:01.639 weekdays at ten am on Eppo car Play and then 0:18:01.720 --> 0:18:04.600 broud Otto with the Bloomberg Business app. Listen on demand 0:18:04.640 --> 0:18:08.960 wherever you get your podcasts, or watch us live on YouTube. 0:18:09.480 --> 0:18:11.119 Let's get broader market. I want to pick up on 0:18:11.160 --> 0:18:12.879 where John Tucker sort of left off there, which is 0:18:12.960 --> 0:18:16.400 the Russell. It's at a highest level since twenty twenty two, 0:18:16.640 --> 0:18:18.960 and again the signs of the broadening part of the 0:18:19.040 --> 0:18:21.359 rally and all of that significant as certain parts of 0:18:21.400 --> 0:18:24.440 tech really start to underperform. So joining us now is 0:18:24.480 --> 0:18:27.720 Grace Lee, senior portfolio manager for Columbia Thread Needle. She 0:18:27.840 --> 0:18:30.480 is standing by for us. Is this the moment for 0:18:30.600 --> 0:18:33.080 value and is it going to last? 0:18:34.320 --> 0:18:36.879 That's a great question, and thanks for having me on today. 0:18:38.000 --> 0:18:42.720 I think we're getting closer to a tipping point for value. 0:18:42.760 --> 0:18:46.600 I think you know, last year our value was certainly 0:18:46.680 --> 0:18:50.639 hit with a double whammy of rates rising, hurting a 0:18:50.680 --> 0:18:55.040 lot of the defensive sectors, and then you had the 0:18:55.480 --> 0:19:00.000 AI trade where our value really doesn't play very obviously 0:19:00.160 --> 0:19:03.239 in the first round. But I think right now what 0:19:03.240 --> 0:19:07.200 you're seeing is is people are looking for other other 0:19:07.280 --> 0:19:11.240 opportunities and even other ways to play the AI trade, 0:19:12.000 --> 0:19:14.560 and we're seeing rate cuts on the horizon, and I 0:19:14.600 --> 0:19:18.280 think that's that's also going to be you know, a 0:19:18.840 --> 0:19:21.280 it's going to drive a return to some of these 0:19:21.359 --> 0:19:23.200 underperforming sectors from last year. 0:19:24.000 --> 0:19:26.760 Grace, how do you find define value? 0:19:27.560 --> 0:19:31.560 I like this, Well, we look at value in a 0:19:31.640 --> 0:19:33.640 number of ways. I think you know, we do look 0:19:33.680 --> 0:19:36.600 to the Rustle one thousand. Value is as sort of 0:19:36.680 --> 0:19:41.960 the you know, the broader index, but but it also 0:19:42.040 --> 0:19:47.600 involves just looking for undervalued opportunities and and so you know, 0:19:47.640 --> 0:19:50.159 I think one thing that has been overlooked is that 0:19:50.640 --> 0:19:54.359 a lot of companies are going through transformations. And and 0:19:54.560 --> 0:19:57.840 you know, as much as people think that that, you know, 0:19:57.920 --> 0:20:02.640 equities are are valued or something, but there's there's always pockets, 0:20:02.680 --> 0:20:04.040 and we look for those pockets. 0:20:04.680 --> 0:20:04.840 You know. 0:20:04.880 --> 0:20:07.480 I think City Group is actually a really interesting example 0:20:07.520 --> 0:20:11.959 where the company is going through a significant transformation, simplifying 0:20:12.000 --> 0:20:16.280 the business, really driving better accountability, and you know that 0:20:16.480 --> 0:20:20.800 that stock still trades a maybe seventy percent of book value, 0:20:21.200 --> 0:20:23.439 and we think that that one's very interesting. So we 0:20:23.480 --> 0:20:26.760 look for those types of opportunities where even in a 0:20:26.880 --> 0:20:29.879 very strong market, you know, you look under the covers 0:20:29.880 --> 0:20:33.120 and there's always something there that looks interesting. 0:20:33.800 --> 0:20:37.560 What gives you confidence at this time will be different? 0:20:37.680 --> 0:20:40.919 I mean I feel like value, specifically small caps go 0:20:41.000 --> 0:20:43.919 there had their chance their moment last year, it didn't 0:20:44.000 --> 0:20:44.920 last for very long. 0:20:45.960 --> 0:20:49.600 What do you think, Well, I think it does feel 0:20:49.680 --> 0:20:54.520 like it's always one step forward, two steps back for value. 0:20:54.680 --> 0:20:56.840 And I think you know, to a certain extent you 0:20:56.920 --> 0:21:01.080 can you can certainly extend that to small caps. But 0:21:02.160 --> 0:21:05.720