1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg P and L 6 00:00:20,840 --> 00:00:33,520 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. You know, Lisa, 7 00:00:33,560 --> 00:00:36,840 Speaker 1: when you help manage more than five trillion dollars, it's 8 00:00:37,159 --> 00:00:39,879 Speaker 1: very good to listen to people who have that kind 9 00:00:39,880 --> 00:00:43,080 Speaker 1: of responsibility. And we're lucky to have Greg Davis. He's 10 00:00:43,080 --> 00:00:46,560 Speaker 1: the chief investment officer for the Vanguard Group total assets 11 00:00:46,600 --> 00:00:51,720 Speaker 1: under management. I'm sorry, I misspoke. Five point one trillion dollars. 12 00:00:51,800 --> 00:00:53,559 Speaker 1: We have a five point one trillion dollar man in 13 00:00:53,600 --> 00:00:55,920 Speaker 1: the office. Well, it's great to be here with you today. 14 00:00:57,200 --> 00:01:01,640 Speaker 1: All right, Uh, let's let's let's let's do the sort 15 00:01:01,640 --> 00:01:03,200 Speaker 1: of news stuff first and then we can get into 16 00:01:03,280 --> 00:01:05,240 Speaker 1: some details because we want to get your thoughts on 17 00:01:05,280 --> 00:01:08,120 Speaker 1: a lot of stuff. The jobs, the non farm payroll 18 00:01:08,200 --> 00:01:11,039 Speaker 1: report today, your your reaction, your thoughts. You know, it 19 00:01:11,080 --> 00:01:12,920 Speaker 1: was slightly weaker than what we expected, but if you 20 00:01:13,000 --> 00:01:15,680 Speaker 1: take into consideration the two month revisions of fifty nine 21 00:01:15,760 --> 00:01:18,320 Speaker 1: thousand dollar fifty nine thousand jobs. We thought that was 22 00:01:18,560 --> 00:01:21,520 Speaker 1: still a relatively strong report. You saw the unemployment rate 23 00:01:21,560 --> 00:01:24,880 Speaker 1: ticked down slightly and the unemployment rate you six, tick 24 00:01:24,920 --> 00:01:27,400 Speaker 1: down even more at seven point five percent. So overall, 25 00:01:27,440 --> 00:01:29,520 Speaker 1: we thought it was a solid report. And just real quick, 26 00:01:29,560 --> 00:01:31,160 Speaker 1: do you care about the trade tensions or is it 27 00:01:31,200 --> 00:01:32,800 Speaker 1: all just noise at this point? You know, I think 28 00:01:33,120 --> 00:01:34,640 Speaker 1: you have to pay attention to it, but I think 29 00:01:34,680 --> 00:01:36,520 Speaker 1: at this point it's still early on and there is 30 00:01:36,560 --> 00:01:38,160 Speaker 1: a lot of noise in that, and I think the 31 00:01:38,200 --> 00:01:41,199 Speaker 1: market has really discounted just given the you know, conversations 32 00:01:41,200 --> 00:01:43,600 Speaker 1: have been happening for the last several months that you 33 00:01:43,640 --> 00:01:45,200 Speaker 1: still have to wait and see how it plays out 34 00:01:45,200 --> 00:01:47,240 Speaker 1: over time, and the markets have actually held in pretty 35 00:01:47,240 --> 00:01:49,640 Speaker 1: well given that attention. All right, so what are your 36 00:01:50,000 --> 00:01:53,040 Speaker 1: three top bets for this year? So when we think 37 00:01:53,080 --> 00:01:55,600 Speaker 1: about for our for our active you know, active fixed 38 00:01:55,640 --> 00:01:58,280 Speaker 1: income portfolios, again, what we've been trying to do is 39 00:01:58,280 --> 00:02:00,000 Speaker 1: trying to be a bit more defensive when it comes 40 00:02:00,040 --> 00:02:02,680 Speaker 1: to the credit space, given the fact that valuations when 41 00:02:02,720 --> 00:02:05,760 Speaker 1: it comes to investment grade bonds and high yield are 42 00:02:05,840 --> 00:02:07,640 Speaker 1: not as attractive if they were, you know, over the 43 00:02:07,720 --> 00:02:09,960 Speaker 1: last ten years or so, so we think there's been 44 00:02:10,000 --> 00:02:12,680 Speaker 1: a lot of spread compression. We view that as a 45 00:02:12,680 --> 00:02:15,480 Speaker 1: place for us to be slightly more defensive, and given 46 00:02:15,560 --> 00:02:17,560 Speaker 1: where we are in terms of the economic cycle and 47 00:02:17,560 --> 00:02:19,960 Speaker 1: what the Federal Reserve is doing, there's a risk that 48 00:02:20,040 --> 00:02:24,919 Speaker 1: as the Fed goes to more restrictive policy in emerging markets, investment, 49 00:02:24,960 --> 00:02:27,400 Speaker 1: grade and high yield will also all be impacted. From 50 00:02:27,400 --> 00:02:33,200 Speaker 1: a negative standpoint, investors may have been complacent in getting 51 00:02:33,240 --> 00:02:36,400 Speaker 1: double digit returns in the past, are they going to 52 00:02:36,480 --> 00:02:39,680 Speaker 1: have to readjust their thinking. Absolutely. If you look at 53 00:02:39,720 --> 00:02:42,680 Speaker 1: where valuations are around the globe, I mean our our 54 00:02:42,720 --> 00:02:45,560 Speaker 1: investment Strategy group has recently done are done their analysis 55 00:02:45,600 --> 00:02:48,280 Speaker 1: in terms of expectations for the next ten years, and 56 00:02:48,280 --> 00:02:50,960 Speaker 1: when you look at the US equity market, the expectations 57 00:02:50,960 --> 00:02:53,400 Speaker 1: there are that you get a tenure annualized return of 58 00:02:53,400 --> 00:02:55,960 Speaker 1: about three point nine percent. When we ran the same 59 00:02:55,960 --> 00:02:58,840 Speaker 1: analysis five years ago, the expectation was closer to eight percent. 60 00:02:59,480 --> 00:03:01,400 Speaker 1: The reason it means a lot today is that we 61 00:03:01,440 --> 00:03:04,920 Speaker 1: still think that outside of the US given valuations, that 62 00:03:05,040 --> 00:03:07,960 Speaker 1: international equities actually offer more compelling value, and that the 63 00:03:08,000 --> 00:03:09,880 Speaker 1: returns over the next ten years are gonna be somewhere 64 00:03:09,880 --> 00:03:12,040 Speaker 1: in neighborhood about six and a half percent or so. 65 00:03:12,040 --> 00:03:15,080 Speaker 1: So again, the you know, basically saying that investors need 66 00:03:15,120 --> 00:03:18,200 Speaker 1: to focus on international diversification. And the other thing I 67 00:03:18,200 --> 00:03:20,040 Speaker 1: would point out is that the fact that yields have 68 00:03:20,080 --> 00:03:24,800 Speaker 1: started to rise, cash treasuries, investment grade bonds are actually 69 00:03:24,800 --> 00:03:26,919 Speaker 1: more of a compelling investment today than they were five 70 00:03:27,000 --> 00:03:30,120 Speaker 1: years ago. So it's actually a a real competing force 71 00:03:30,200 --> 00:03:33,359 Speaker 1: relative to equities in in certain cases. All right, now, 72 00:03:33,400 --> 00:03:35,520 Speaker 1: let's get to the real issue. Let's talk about fees. 73 00:03:35,680 --> 00:03:37,640 Speaker 1: Let's talk about the fact that Fidelity is trying to 74 00:03:37,720 --> 00:03:42,160 Speaker 1: be you, trying to beat you by being the first 75 00:03:42,440 --> 00:03:47,520 Speaker 1: fund to offer zero fees basically free funds. And this 76 00:03:47,680 --> 00:03:52,360 Speaker 1: made headlines earlier this week. So is Vanguard concerned that 77 00:03:52,400 --> 00:03:55,920 Speaker 1: Fidelity is going to out Vanguard? Vanguard The way we 78 00:03:56,040 --> 00:03:58,160 Speaker 1: think about it, Look, we have we have a mutual 79 00:03:58,200 --> 00:04:01,000 Speaker 1: ownership structure, and you know, the way we see these 80 00:04:01,000 --> 00:04:03,480 Speaker 1: stories playing out, it's really the Vanguard effect. Right at 81 00:04:03,480 --> 00:04:06,120 Speaker 1: the end of the day, Because of Vanguard's approach of 82 00:04:06,120 --> 00:04:08,920 Speaker 1: continuing lowering fees for investors, we're seeing more and more 83 00:04:08,920 --> 00:04:11,880 Speaker 1: competitors continuing to lower fees for their investors as well 84 00:04:12,000 --> 00:04:14,400 Speaker 1: and for the overall marketplace. We think that's a good thing. 85 00:04:14,760 --> 00:04:17,920 Speaker 1: But when you look at Vanguards specifically the average expense 86 00:04:18,040 --> 00:04:21,760 Speaker 1: ratio across our entire complex, both index and active, at 87 00:04:21,760 --> 00:04:25,839 Speaker 1: which of our funds are actually actively managed, our complex 88 00:04:25,839 --> 00:04:28,360 Speaker 1: wide expense ratios of love and basis points. And although 89 00:04:28,360 --> 00:04:30,200 Speaker 1: we might have some competitors out there that use a 90 00:04:30,200 --> 00:04:32,839 Speaker 1: lost leader strategy and reduce the costs in certain areas 91 00:04:33,200 --> 00:04:36,440 Speaker 1: across the board, investors still get tremendous value by coming 92 00:04:36,440 --> 00:04:40,000 Speaker 1: to Vanguard in our ownership structure. I just want you 93 00:04:40,040 --> 00:04:42,880 Speaker 1: to go back to something that kind of alluded to, 94 00:04:42,960 --> 00:04:45,640 Speaker 1: which is that investors are going to get going to 95 00:04:45,720 --> 00:04:50,160 Speaker 1: have to get used to something different, meaning lower returns. 96 00:04:51,440 --> 00:04:53,800 Speaker 1: Do you find that people feel that they will be 97 00:04:53,839 --> 00:04:57,600 Speaker 1: the exception to that, and as a result, they make 98 00:04:57,760 --> 00:05:01,760 Speaker 1: mistakes because they don't want to scept average, They don't 99 00:05:01,760 --> 00:05:04,680 Speaker 1: want to accept those single digit returns, so they go 100 00:05:04,720 --> 00:05:07,479 Speaker 1: and do things that they don't have the experience or 101 00:05:07,480 --> 00:05:10,080 Speaker 1: the knowledge to actually do with their money. You know, 102 00:05:10,120 --> 00:05:12,200 Speaker 1: we we saw this, We saw this um you know, 103 00:05:12,320 --> 00:05:14,840 Speaker 1: shortly after the financial crisis, when you had basically money 104 00:05:14,839 --> 00:05:18,479 Speaker 1: market funds yielding zero, and you saw investors migrating out 105 00:05:18,520 --> 00:05:20,839 Speaker 1: taking on more risks. So they migrated out to the 106 00:05:20,839 --> 00:05:22,960 Speaker 1: further end of the yelker. First it started with short 107 00:05:23,080 --> 00:05:24,880 Speaker 1: term bonds and it was intermediate. Then it was a 108 00:05:24,920 --> 00:05:27,960 Speaker 1: long end again just trying to find other places for yield. 109 00:05:28,320 --> 00:05:30,360 Speaker 1: And then they started going deeper in terms of credit 110 00:05:30,440 --> 00:05:33,000 Speaker 1: risk by going into you know, high yield, and then 111 00:05:33,040 --> 00:05:35,320 Speaker 1: they started to expand it even further by going into 112 00:05:35,680 --> 00:05:38,600 Speaker 1: bond like products. On the equity side, reads high dived 113 00:05:38,640 --> 00:05:41,039 Speaker 1: and yielding stocks. But the great thing now is that 114 00:05:41,080 --> 00:05:44,040 Speaker 1: when you look at the valuations around around the marketplace, 115 00:05:44,080 --> 00:05:46,160 Speaker 1: what you can see is that investors don't need to 116 00:05:46,160 --> 00:05:48,080 Speaker 1: take as much risk anymore, at least at this point 117 00:05:48,120 --> 00:05:50,359 Speaker 1: in time. You're not benefiting a lot taking on a 118 00:05:50,360 --> 00:05:52,440 Speaker 1: lot of duration risk and taking on that interest rate 119 00:05:52,440 --> 00:05:54,800 Speaker 1: exposure further out the curve because the curve is so flat. 120 00:05:55,360 --> 00:05:58,080 Speaker 1: So you can avoid having some of that volatility by 121 00:05:58,120 --> 00:06:00,440 Speaker 1: being more focused on the shorter end of to curve. 122 00:06:00,720 --> 00:06:03,080 Speaker 1: But for most investors, we would tell them to again 123 00:06:03,080 --> 00:06:06,159 Speaker 1: look at the risk tolerance, have a balanced portfolio around 124 00:06:06,160 --> 00:06:09,279 Speaker 1: the globe, both equities and fixed income, and make sure 125 00:06:09,320 --> 00:06:12,160 Speaker 1: that they're continually rebalancing because some of these ratios can 126 00:06:12,160 --> 00:06:14,800 Speaker 1: get out of line over time. So, given the fact 127 00:06:14,839 --> 00:06:19,280 Speaker 1: that we're moving into a more volatile period, supposedly, Um, 128 00:06:19,480 --> 00:06:22,800 Speaker 1: do you think that we've seen peak passive? No? You know, 129 00:06:22,839 --> 00:06:25,560 Speaker 1: when you think about no, I don't think that's the case. 130 00:06:26,279 --> 00:06:28,040 Speaker 1: When you think about when you think about the value 131 00:06:28,040 --> 00:06:33,279 Speaker 1: proposition at passive passive offers to investors is that they 132 00:06:33,320 --> 00:06:35,919 Speaker 1: have they get they get a market return at a 133 00:06:36,080 --> 00:06:38,880 Speaker 1: very low cost. And what it's been shown is that 134 00:06:39,200 --> 00:06:41,520 Speaker 1: active managers really have a hard time in the long 135 00:06:41,600 --> 00:06:45,320 Speaker 1: run out performing their benchmarks net of fees. And so 136 00:06:45,560 --> 00:06:49,880 Speaker 1: in less active managers substantially substantially reduced their fees, they're 137 00:06:49,880 --> 00:06:51,839 Speaker 1: gonna have a hard time in the long run beating 138 00:06:52,040 --> 00:06:54,640 Speaker 1: beating the indiceas. And that's going to continue to allow 139 00:06:55,320 --> 00:06:58,440 Speaker 1: passive investing to be a very popular, you know, technique 140 00:06:58,440 --> 00:07:03,240 Speaker 1: for for investors. Just quickly, what is more overvalue today? 141 00:07:03,680 --> 00:07:10,120 Speaker 1: Corporate bonds high yield or investment grade corporate bonds UM 142 00:07:10,240 --> 00:07:12,560 Speaker 1: investment grade corporate bonds, if you look at where they 143 00:07:12,560 --> 00:07:15,760 Speaker 1: are from the valuation perspective, there's somewhere around the fifteen 144 00:07:15,920 --> 00:07:20,360 Speaker 1: percentile um from a spread perspective over the last ten 145 00:07:20,440 --> 00:07:23,200 Speaker 1: year periods, so we'd say they're pretty deeply overvalued at 146 00:07:23,200 --> 00:07:25,200 Speaker 1: this point in time. I think what you have to 147 00:07:25,240 --> 00:07:28,000 Speaker 1: really really be cognizant of is the fact that again, 148 00:07:28,040 --> 00:07:30,480 Speaker 1: as the Federal Reserve keeps hiking interest rates and they 149 00:07:30,520 --> 00:07:32,760 Speaker 1: get to that point where they start becoming restrictive in 150 00:07:32,840 --> 00:07:35,440 Speaker 1: terms of economic growth, that part of the market is 151 00:07:35,440 --> 00:07:37,960 Speaker 1: definitely going to be at risk for spread widing. So 152 00:07:38,080 --> 00:07:41,200 Speaker 1: at what point will they be restrictive? I mean, people 153 00:07:41,240 --> 00:07:44,880 Speaker 1: are widely expecting the Federal Reserve to raise rates in September. 154 00:07:45,360 --> 00:07:47,960 Speaker 1: Are you expecting two rate hikes this year? And at 155 00:07:47,960 --> 00:07:50,600 Speaker 1: what point next year? How many rate hikes would be 156 00:07:50,640 --> 00:07:54,600 Speaker 1: a mistake. So we're expecting we're expecting two rate hikes 157 00:07:54,600 --> 00:07:56,840 Speaker 1: this year, both in September and December, and we're expecting 158 00:07:56,840 --> 00:07:59,120 Speaker 1: somewhere in the neighborhood of two to three rate hikes 159 00:07:59,160 --> 00:08:01,240 Speaker 1: next year. You know, by the time we get to 160 00:08:01,320 --> 00:08:03,600 Speaker 1: the second half of next year, we could actually start 161 00:08:03,640 --> 00:08:07,720 Speaker 1: approaching the restrictive territory. And the question becomes is there 162 00:08:07,720 --> 00:08:11,080 Speaker 1: still enough momentum in the economy, both from a GDP 163 00:08:11,200 --> 00:08:14,280 Speaker 1: growth and an inflation and jobs perspective. That the FED 164 00:08:14,400 --> 00:08:16,200 Speaker 1: keeps going and if that's the case, we may end 165 00:08:16,240 --> 00:08:18,360 Speaker 1: up going too far. All right, So what are the 166 00:08:18,480 --> 00:08:20,680 Speaker 1: chances of a downturn next year? I know a lot 167 00:08:20,680 --> 00:08:24,600 Speaker 1: of people have been talking about possible recession. So in 168 00:08:26,040 --> 00:08:29,240 Speaker 1: our expectations based upon our models are showing, you know, um, 169 00:08:29,320 --> 00:08:31,400 Speaker 1: the probability of recession the next twelve months have gone 170 00:08:31,400 --> 00:08:34,680 Speaker 1: from about five percent up to ten. Now, what we're 171 00:08:34,679 --> 00:08:37,920 Speaker 1: expecting towards the tail end, the tail end of twenty nineteen, 172 00:08:37,960 --> 00:08:40,920 Speaker 1: if we're looking forward a year from there, we'd expect 173 00:08:41,120 --> 00:08:43,880 Speaker 1: we'd expect that the recession rest starts to rise to 174 00:08:43,960 --> 00:08:46,880 Speaker 1: something like thirty over the course of the next year. 175 00:08:46,880 --> 00:08:50,120 Speaker 1: So I would take us through the end of today. 176 00:08:50,160 --> 00:08:52,800 Speaker 1: We got the news that the Intercontinental Exchange plans to 177 00:08:52,880 --> 00:08:59,800 Speaker 1: launch a regulated physical bitcoin futures contract and warehouse in November. 178 00:09:00,520 --> 00:09:05,679 Speaker 1: What's the conversation at Vanguard about cryptocurrencies and bitcoin? Then 179 00:09:06,000 --> 00:09:09,439 Speaker 1: we're not fans of We're not fans of of of bitcoin. Um. 180 00:09:09,640 --> 00:09:12,760 Speaker 1: We are very interested in the technology that underlies bitcoin 181 00:09:12,800 --> 00:09:14,400 Speaker 1: in terms of blockchain and what it can do in 182 00:09:14,520 --> 00:09:17,559 Speaker 1: terms of increasing efficiency when it comes to settling transaction, 183 00:09:17,720 --> 00:09:21,240 Speaker 1: receiving index data and things of that nature. But the 184 00:09:21,320 --> 00:09:23,559 Speaker 1: concept of investing in bitcoin, we think that's a bit 185 00:09:23,559 --> 00:09:28,040 Speaker 1: of a speculative bubble, all right, So the blockchain trend 186 00:09:28,120 --> 00:09:31,040 Speaker 1: perhaps is not more hype than it is reality because 187 00:09:31,040 --> 00:09:32,959 Speaker 1: there have been some studies at show that. No, we 188 00:09:32,960 --> 00:09:35,560 Speaker 1: think there's real potential there in terms of increasing efficiencies 189 00:09:35,600 --> 00:09:38,320 Speaker 1: and uh. And again that's that The reason we're interested 190 00:09:38,360 --> 00:09:39,840 Speaker 1: in that is because to the extent that can help 191 00:09:39,920 --> 00:09:42,360 Speaker 1: us drive down costs even further, we think there's value there. 192 00:09:42,600 --> 00:09:45,120 Speaker 1: So what about flows, what are you seeing there? And 193 00:09:45,800 --> 00:09:50,240 Speaker 1: is there some divergence between institutional flows and individual flows 194 00:09:50,320 --> 00:09:53,040 Speaker 1: right now? So we haven't seen a big divergence. UM 195 00:09:53,200 --> 00:09:57,000 Speaker 1: So this year, this was through June. UM we have 196 00:09:57,080 --> 00:10:00,400 Speaker 1: taken in about a hundred billion in cash flow, and 197 00:10:00,440 --> 00:10:03,440 Speaker 1: that's been broken up between I'd say about half of 198 00:10:03,480 --> 00:10:07,160 Speaker 1: that was in US equities, with the in the equity market, 199 00:10:07,160 --> 00:10:09,520 Speaker 1: with the majority of going into index products, and then 200 00:10:09,559 --> 00:10:12,160 Speaker 1: we've had you know, fair flows the rest broken up 201 00:10:12,160 --> 00:10:15,720 Speaker 1: between UM fixed income as well as money market. So 202 00:10:15,720 --> 00:10:18,000 Speaker 1: money markets has really seen a lot of growth this year, 203 00:10:18,040 --> 00:10:21,200 Speaker 1: just given the fact that the curve is flattened so much. Right, 204 00:10:21,960 --> 00:10:24,679 Speaker 1: the flows that you're talking about, the people look at 205 00:10:24,679 --> 00:10:28,760 Speaker 1: the expense ratios first rather than the product. I think 206 00:10:28,800 --> 00:10:32,160 Speaker 1: informed investors will always look at the expense ratio first. Um, 207 00:10:32,240 --> 00:10:33,960 Speaker 1: you know, when when they've made the decision that they 208 00:10:33,960 --> 00:10:36,000 Speaker 1: want to invest in the money market product or a 209 00:10:36,000 --> 00:10:39,360 Speaker 1: actively managed fund, the expense ratio is something they always 210 00:10:39,360 --> 00:10:42,320 Speaker 1: take a look at. And especially in an environment where 211 00:10:42,320 --> 00:10:45,160 Speaker 1: you're expecting returns whatnot, it's on the bond side, or 212 00:10:45,200 --> 00:10:48,199 Speaker 1: even on the equity side to be somewhat muted relative 213 00:10:48,240 --> 00:10:51,880 Speaker 1: to what we have experienced historically, expense ratios make a 214 00:10:51,880 --> 00:10:53,720 Speaker 1: big difference. It's eating more and more of your returns 215 00:10:53,720 --> 00:10:55,440 Speaker 1: if you're in a high cost product relative to a 216 00:10:55,480 --> 00:10:57,000 Speaker 1: low cost product. Do you think we're ever going to 217 00:10:57,080 --> 00:11:00,360 Speaker 1: see a fund that actually pays investors to invest with it. 218 00:11:01,480 --> 00:11:03,800 Speaker 1: You know, there's all kinds of marketing gimmicks, gimmicks, so 219 00:11:03,840 --> 00:11:06,200 Speaker 1: I'm not sure. You know, maybe it's possible. I I 220 00:11:06,200 --> 00:11:07,920 Speaker 1: don't know. I really don't know. I mean, like, do 221 00:11:07,960 --> 00:11:09,559 Speaker 1: you think that if we're going to be close to 222 00:11:09,679 --> 00:11:13,280 Speaker 1: zero for almost all funds in five years? I think 223 00:11:13,280 --> 00:11:15,000 Speaker 1: it's difficult to tell, but I would I would. I 224 00:11:15,040 --> 00:11:18,400 Speaker 1: would expect that you will see this continued, this continued 225 00:11:18,559 --> 00:11:22,160 Speaker 1: impact of you know, firms that have economies of scale 226 00:11:22,160 --> 00:11:24,800 Speaker 1: will continue to lower prices, and the firms that are 227 00:11:24,920 --> 00:11:28,319 Speaker 1: you know, higher cost producers will continue to struggle quickly. 228 00:11:28,800 --> 00:11:31,439 Speaker 1: What's your biggest mistake you've made over the last twelve months. 229 00:11:33,000 --> 00:11:35,560 Speaker 1: I would say we were probably as a firm, we're 230 00:11:35,600 --> 00:11:38,800 Speaker 1: probably a bit slow when it comes to um a 231 00:11:38,800 --> 00:11:40,440 Speaker 1: bit too early, i should say, when it comes to 232 00:11:41,600 --> 00:11:45,920 Speaker 1: reducing our exposure to investment grade credit. Again, we expected 233 00:11:46,000 --> 00:11:48,320 Speaker 1: that spreadwood wide and not at some point in time, 234 00:11:48,320 --> 00:11:50,120 Speaker 1: and we're a bit too early to a bit too 235 00:11:50,120 --> 00:11:52,959 Speaker 1: early to that trade. UM. So i'd say that was 236 00:11:53,000 --> 00:11:54,520 Speaker 1: probably a bit of a bit of a miss from 237 00:11:54,520 --> 00:11:57,480 Speaker 1: mark perspective, but not a miss that you've seen a 238 00:11:57,559 --> 00:11:59,920 Speaker 1: hundred billion dollars of influences here and that you are 239 00:12:00,000 --> 00:12:03,000 Speaker 1: a five point one trillion dollar man. Greg Davis, thank 240 00:12:03,000 --> 00:12:04,760 Speaker 1: you so much for being with us. It is such 241 00:12:04,760 --> 00:12:07,360 Speaker 1: a pleasure having in my pleasure. Greg Davis is Chief 242 00:12:07,400 --> 00:12:12,199 Speaker 1: investment Officer at the Vanguard Group. Van's guards total assets 243 00:12:12,360 --> 00:12:15,760 Speaker 1: under management five point one trillion dollars. It is an 244 00:12:15,760 --> 00:12:33,440 Speaker 1: economy unto itself. China's u N is headed up for 245 00:12:33,520 --> 00:12:37,719 Speaker 1: its worst weekly loss in its history, joining US now 246 00:12:37,720 --> 00:12:40,440 Speaker 1: to talk about that. Some of the latest efforts out 247 00:12:40,440 --> 00:12:44,240 Speaker 1: this morning from the PBOC to try to mitigate some 248 00:12:44,360 --> 00:12:46,840 Speaker 1: of those losses is Steven England are Global head of 249 00:12:47,000 --> 00:12:50,640 Speaker 1: G ten FX Research North American macro Strategy for Standard 250 00:12:50,800 --> 00:12:54,440 Speaker 1: Charter Bank. He is also a Bloomberg opinion columnist. Stephen, 251 00:12:54,480 --> 00:12:56,240 Speaker 1: thank you so much for being with us. We really 252 00:12:56,360 --> 00:13:00,160 Speaker 1: enjoy having you on. What's your take on the move 253 00:13:00,280 --> 00:13:02,800 Speaker 1: that the PBOC, the People's Bank of China took this 254 00:13:02,880 --> 00:13:06,360 Speaker 1: morning to try to how should we say this, I 255 00:13:06,360 --> 00:13:10,520 Speaker 1: guess perhaps prevent people from speculating too much on the 256 00:13:10,600 --> 00:13:14,480 Speaker 1: ones drop. UM. First, thank you for having me on. UM. 257 00:13:15,160 --> 00:13:18,920 Speaker 1: I think what you're seeing is that the UH Chinese 258 00:13:19,000 --> 00:13:21,840 Speaker 1: act that markets have been increasingly under pressure. The equity 259 00:13:21,880 --> 00:13:24,800 Speaker 1: market has been under performing, UH, not just the US 260 00:13:24,840 --> 00:13:29,360 Speaker 1: equity market, but even neighboring Asian equity markets. UM. So 261 00:13:29,880 --> 00:13:33,400 Speaker 1: it feels as if, UH, there's a perception that China 262 00:13:33,520 --> 00:13:37,120 Speaker 1: is much more vulnerable to these trade tensions than say 263 00:13:37,200 --> 00:13:39,439 Speaker 1: what's thought a month ago, or even or even two 264 00:13:39,480 --> 00:13:42,199 Speaker 1: months ago. And that's translating into both weakness and equities 265 00:13:42,240 --> 00:13:47,360 Speaker 1: and weakness in the exchange rate. UM. What the Chinese 266 00:13:47,360 --> 00:13:50,880 Speaker 1: authorities want, I think is one to keep money easy 267 00:13:51,240 --> 00:13:55,960 Speaker 1: onshore because there's both an onshore market in continental China 268 00:13:56,000 --> 00:14:00,480 Speaker 1: and an offshore market um outside of China. They want 269 00:14:00,480 --> 00:14:05,200 Speaker 1: to keep monetary conditions easy on shore for domestic economic 270 00:14:05,240 --> 00:14:07,840 Speaker 1: reasons because their their economy has been kind of wobbling 271 00:14:07,880 --> 00:14:10,640 Speaker 1: a little bit, nothing dramatic, but not performing as well 272 00:14:10,640 --> 00:14:13,320 Speaker 1: as they would have wanted. At the same time, they 273 00:14:13,360 --> 00:14:16,640 Speaker 1: don't want by keeping money easy on shore to encourage 274 00:14:16,640 --> 00:14:19,800 Speaker 1: money to leave. So they're saying, look, if you if 275 00:14:19,800 --> 00:14:23,520 Speaker 1: you want to UM do these transactions, you actually have 276 00:14:23,640 --> 00:14:26,160 Speaker 1: to basically like post the margin and just keep it 277 00:14:26,200 --> 00:14:29,160 Speaker 1: on deposit with the PBOC. So it makes it harder 278 00:14:29,640 --> 00:14:33,840 Speaker 1: and discourages the movement to capital from on shore to offshore, 279 00:14:34,720 --> 00:14:38,400 Speaker 1: and in sometimes should mitigate the weakness in c n 280 00:14:38,600 --> 00:14:41,840 Speaker 1: Y in c and Y and c n H. Stephen Anglader, 281 00:14:41,960 --> 00:14:44,840 Speaker 1: we were listening earlier today to an interview with Larry Cudlow, 282 00:14:44,880 --> 00:14:48,560 Speaker 1: Director of the National Economic Council. Larry Cutlow said he 283 00:14:48,600 --> 00:14:53,000 Speaker 1: believes that China's currency is weakening and that it's a 284 00:14:53,000 --> 00:14:57,360 Speaker 1: lousy investment. He also said that China's China has a 285 00:14:57,400 --> 00:15:03,760 Speaker 1: weak economy. Do you agree well, look, you know, I've 286 00:15:03,800 --> 00:15:05,760 Speaker 1: I've been here long enough. I've seen the dollar at 287 00:15:05,760 --> 00:15:08,480 Speaker 1: one sixty against the euro, and and you know now 288 00:15:08,480 --> 00:15:12,320 Speaker 1: it's at one sixteen. So currency is weakened, currency strengths, 289 00:15:12,360 --> 00:15:15,920 Speaker 1: And i'd say the Chinese, the Chinese economy, it's it's 290 00:15:15,960 --> 00:15:18,240 Speaker 1: as I said before, it's disappointing. It's not doing as 291 00:15:18,280 --> 00:15:21,880 Speaker 1: well as some people, you know, many people expected, but 292 00:15:22,400 --> 00:15:24,960 Speaker 1: it's not in free falls by any means. It's just like, 293 00:15:26,000 --> 00:15:29,560 Speaker 1: you know, call it a bump. And I think the uncertainty, 294 00:15:29,720 --> 00:15:33,880 Speaker 1: uncertainty about the parish is adding to some of the pressure. 295 00:15:34,440 --> 00:15:37,480 Speaker 1: But it's not a crisis. It's it's uh, you know, 296 00:15:37,560 --> 00:15:39,720 Speaker 1: it's it's an irritant. But in this way I would 297 00:15:39,800 --> 00:15:42,600 Speaker 1: characterize it. So if it's an irritant, would this be 298 00:15:42,680 --> 00:15:47,320 Speaker 1: a good opportunity to invest in China? Well, you know, 299 00:15:47,360 --> 00:15:50,520 Speaker 1: I think if you're investing in China, you're you're making 300 00:15:51,560 --> 00:15:56,000 Speaker 1: a bet that the paraficies will be resolved in a 301 00:15:56,080 --> 00:15:58,920 Speaker 1: kind of you know what most people expect to happen, 302 00:15:58,920 --> 00:16:01,760 Speaker 1: which is that the US and China will have very 303 00:16:01,760 --> 00:16:04,720 Speaker 1: low tariffs, and they'll keep on talking about intellectual property, 304 00:16:04,920 --> 00:16:10,160 Speaker 1: which is a much more complicated issue. Um, if he 305 00:16:10,240 --> 00:16:12,960 Speaker 1: believes that that's going to be the ultimate outcome, notwithstanding 306 00:16:13,000 --> 00:16:16,160 Speaker 1: the short term gyrations. UM. You know, China would be 307 00:16:16,240 --> 00:16:18,640 Speaker 1: very interesting even you have, given how much it's sold off. 308 00:16:18,840 --> 00:16:21,560 Speaker 1: But you know, you have to be clear that you 309 00:16:21,880 --> 00:16:23,960 Speaker 1: have a strong view that this will be resolved in 310 00:16:23,960 --> 00:16:26,280 Speaker 1: a way where we don't where everyone doesn't end up 311 00:16:26,320 --> 00:16:30,960 Speaker 1: with tariffs on each other. Stephen, you've been covering the 312 00:16:31,120 --> 00:16:34,720 Speaker 1: FX markets and engage with them for about two decades, 313 00:16:34,960 --> 00:16:38,360 Speaker 1: and you've seen a lot of different phases. Has it 314 00:16:38,440 --> 00:16:41,560 Speaker 1: ever been harder to kind of understand the different winds 315 00:16:41,680 --> 00:16:44,400 Speaker 1: at play that it is right now given the rhetoric 316 00:16:44,560 --> 00:16:47,880 Speaker 1: and the tweets and and all of that mixed with 317 00:16:48,040 --> 00:16:53,920 Speaker 1: a lot of easing, a lot of central bank intervention. Well, 318 00:16:54,240 --> 00:16:57,720 Speaker 1: you know, i'd say, in as it's happening, it always 319 00:16:57,720 --> 00:17:00,600 Speaker 1: seems hard. It's very very hard to know what the 320 00:17:00,640 --> 00:17:03,040 Speaker 1: next one percent or five percent move on the dollar 321 00:17:03,160 --> 00:17:06,000 Speaker 1: is going to be. UM, And I'd actually say it's 322 00:17:06,000 --> 00:17:10,360 Speaker 1: not much worse now. I think it's for many of us. 323 00:17:10,480 --> 00:17:15,840 Speaker 1: The the political dimension, both the geopolitical and domestic political dimension, 324 00:17:15,960 --> 00:17:20,199 Speaker 1: is UH an additional complication. But you know, you look 325 00:17:20,280 --> 00:17:23,960 Speaker 1: at volatility in in FX markets as far from from 326 00:17:23,960 --> 00:17:26,399 Speaker 1: being extreme. So I think it's it's something you just 327 00:17:26,440 --> 00:17:30,080 Speaker 1: adjust to. Stephen, taking a look at the dollar euro 328 00:17:30,240 --> 00:17:35,040 Speaker 1: right now one nine pounds, sterling, one thirty yen one eleven, 329 00:17:35,520 --> 00:17:37,480 Speaker 1: you think the dollar is going to continue to strengthen, 330 00:17:38,800 --> 00:17:41,480 Speaker 1: you know, I think the dollar is strengthening on on 331 00:17:42,200 --> 00:17:45,119 Speaker 1: um these power of concerns because it is behaving like 332 00:17:45,160 --> 00:17:50,560 Speaker 1: a safe haven. UM. I think investors have become you know, 333 00:17:50,640 --> 00:17:52,840 Speaker 1: are flirting with the idea that US may actually have 334 00:17:52,880 --> 00:17:55,480 Speaker 1: a good economy, notwithstanding the slope of the yield curve 335 00:17:55,520 --> 00:17:57,400 Speaker 1: and some of the other questions that have been raised. 336 00:17:57,840 --> 00:18:01,560 Speaker 1: And so I think that there's an emerging set more 337 00:18:01,640 --> 00:18:03,640 Speaker 1: comfort with the U S economies and say there worth 338 00:18:03,680 --> 00:18:07,360 Speaker 1: a month ago, two months ago, or six months ago. Um. 339 00:18:07,480 --> 00:18:10,840 Speaker 1: So that's all all the positive, but I'd say overwhelmingly 340 00:18:10,960 --> 00:18:14,240 Speaker 1: the sentiments on Europe is so negative that Europe. You know, 341 00:18:15,000 --> 00:18:18,760 Speaker 1: if Europe just holds its place, that will be a 342 00:18:18,800 --> 00:18:22,159 Speaker 1: euro positive. So you know, again, the euro dollar story 343 00:18:22,720 --> 00:18:24,879 Speaker 1: is one that you know, I don't think it's going 344 00:18:24,880 --> 00:18:27,880 Speaker 1: to be the main story. The story could be how 345 00:18:27,920 --> 00:18:31,800 Speaker 1: the euro and the dollar together do against the rest 346 00:18:31,800 --> 00:18:35,960 Speaker 1: of the world UM, but you know, the usual sort 347 00:18:35,960 --> 00:18:39,280 Speaker 1: of all the up or down against the euro UM. Yeah. 348 00:18:39,400 --> 00:18:41,600 Speaker 1: I don't think that's going to be a dramatic issue 349 00:18:41,720 --> 00:18:44,960 Speaker 1: in in coming months because both of them have strength. 350 00:18:45,720 --> 00:18:47,520 Speaker 1: All right, I'd love to get your view just real 351 00:18:47,600 --> 00:18:50,240 Speaker 1: quick on what this means. If we are seeing dollar 352 00:18:50,280 --> 00:18:53,840 Speaker 1: strength that will continue because people are realizing that the U. 353 00:18:53,920 --> 00:18:56,280 Speaker 1: S economy is doing well, what does this mean for 354 00:18:56,320 --> 00:19:01,000 Speaker 1: emerging markets? Well, you know it's going to be difficult 355 00:19:01,040 --> 00:19:04,720 Speaker 1: for them, um, emerging markets. You know, again, there's there's 356 00:19:04,760 --> 00:19:07,200 Speaker 1: been a sell off, certainly on the currency side, and 357 00:19:07,359 --> 00:19:11,960 Speaker 1: there certainly valuation is there. But the question is, you know, 358 00:19:12,480 --> 00:19:15,639 Speaker 1: where's the sizzle? You know, what are you buying? You know, 359 00:19:15,760 --> 00:19:19,440 Speaker 1: if if growth is coming primarily from the US, it's 360 00:19:19,480 --> 00:19:23,240 Speaker 1: not very good intensive intensive, it's not very commodity is intensive. 361 00:19:23,920 --> 00:19:26,919 Speaker 1: So you know, the question is what is going to 362 00:19:27,040 --> 00:19:30,520 Speaker 1: sort of be the trigger to get people back into 363 00:19:30,520 --> 00:19:33,840 Speaker 1: the emerging markets. And and again, valuation is very important 364 00:19:33,840 --> 00:19:35,760 Speaker 1: at a certain point to get so cheap that they 365 00:19:35,800 --> 00:19:38,720 Speaker 1: can only go up. But I think you'd like to 366 00:19:38,720 --> 00:19:40,879 Speaker 1: see some of you know, some indications that the economies 367 00:19:40,920 --> 00:19:45,600 Speaker 1: are are stabilizing and surprising to the upside. Stephen just quickly, 368 00:19:45,640 --> 00:19:48,919 Speaker 1: Does this mean that commodity based currencies will continue to 369 00:19:49,440 --> 00:19:54,400 Speaker 1: weaken against the dollar? Yeah? I think you know, there's 370 00:19:54,440 --> 00:19:57,399 Speaker 1: a structural story here, which is um, you know, we 371 00:19:57,520 --> 00:19:59,840 Speaker 1: buy services on the margin. We don't. We don't buy 372 00:20:00,000 --> 00:20:02,399 Speaker 1: all the intensive goods. You know, Europe is growing, but 373 00:20:02,440 --> 00:20:05,639 Speaker 1: they buy services as well. I think it's you know, 374 00:20:05,920 --> 00:20:08,760 Speaker 1: there's a supplied demand balance, but serve an uphill battle 375 00:20:08,840 --> 00:20:12,240 Speaker 1: for for the commodity producers, especially if China is looking soft. 376 00:20:12,720 --> 00:20:15,320 Speaker 1: All right, we gotta leave it there. Stephen Englander is 377 00:20:15,359 --> 00:20:19,560 Speaker 1: the global head of g TENX Research and North American 378 00:20:19,680 --> 00:20:24,080 Speaker 1: macro Strategy for Standard Charter Bank, and he is also 379 00:20:24,160 --> 00:20:44,879 Speaker 1: a Bloomberg opinion columnist. Will the explosion of money creation 380 00:20:45,080 --> 00:20:47,879 Speaker 1: catch up with the US economy? This is one of 381 00:20:47,920 --> 00:20:51,280 Speaker 1: the most difficult questions of the moment, especially as the 382 00:20:51,320 --> 00:20:55,600 Speaker 1: Federal Reserve continues to raise interest rates bit by bit 383 00:20:55,680 --> 00:20:58,360 Speaker 1: to try to get to some normal level. To weigh 384 00:20:58,359 --> 00:21:00,919 Speaker 1: into this, and very very happy to say we are 385 00:21:00,920 --> 00:21:03,159 Speaker 1: going to be joined by a Mere Sufi, Professor of 386 00:21:03,240 --> 00:21:07,440 Speaker 1: Economics and public Policy at Chicago's Booth School of Business. Uh, Mere, 387 00:21:07,560 --> 00:21:11,840 Speaker 1: thank you so much for being with us. I'm super 388 00:21:12,040 --> 00:21:14,520 Speaker 1: I'm really I'm excited to hear your perspective. You wrote 389 00:21:14,760 --> 00:21:18,000 Speaker 1: The House of Debt, which was widely thought to be 390 00:21:18,080 --> 00:21:20,560 Speaker 1: a very accurate and interesting look at the explosion of 391 00:21:20,560 --> 00:21:23,520 Speaker 1: debt leading to the financial crisis. You just posted an 392 00:21:23,600 --> 00:21:28,399 Speaker 1: article that was published again, arise at household debt systematically 393 00:21:28,440 --> 00:21:31,439 Speaker 1: predicts a decline in subsequent GDP growth. This was a 394 00:21:31,480 --> 00:21:34,480 Speaker 1: line from the report Where are we now in terms 395 00:21:34,600 --> 00:21:36,760 Speaker 1: of credit explosion and what does it say about growth 396 00:21:36,800 --> 00:21:40,560 Speaker 1: going forward? So one of the positive signs is that 397 00:21:40,840 --> 00:21:43,760 Speaker 1: the household debt expansion during this recent cycle is not 398 00:21:43,840 --> 00:21:46,080 Speaker 1: nearly as dramatic as what it was from two thousand 399 00:21:46,080 --> 00:21:48,919 Speaker 1: two to two thousand and six. And that's mostly because, 400 00:21:49,080 --> 00:21:51,760 Speaker 1: you know, most of household debt is associated with mortgages 401 00:21:51,880 --> 00:21:54,840 Speaker 1: and housing and the boom we saw from two thousand 402 00:21:54,840 --> 00:21:58,560 Speaker 1: and two thousand seven, which is unprecedented in history. Nowadays 403 00:21:58,600 --> 00:22:01,639 Speaker 1: we have more auto debt, more student debt, but just 404 00:22:01,720 --> 00:22:04,840 Speaker 1: the magnitude of the increases is not nearly as large. 405 00:22:04,920 --> 00:22:08,359 Speaker 1: So that's one positive sign um. I think generally we 406 00:22:08,400 --> 00:22:10,639 Speaker 1: are at a point in the cycle where it seems 407 00:22:10,680 --> 00:22:14,760 Speaker 1: like credit is very easily available for corporations, for firms, 408 00:22:14,840 --> 00:22:19,160 Speaker 1: and for households, and that generally forecasts probably lower growth 409 00:22:19,200 --> 00:22:21,440 Speaker 1: going forward. But I don't think we're anywhere near where 410 00:22:21,480 --> 00:22:23,320 Speaker 1: we were and say two thousand six or two thousand 411 00:22:23,400 --> 00:22:26,600 Speaker 1: seven speak if you count a little bit about the 412 00:22:26,680 --> 00:22:31,760 Speaker 1: debt of the government and what that does to financial markets. 413 00:22:31,800 --> 00:22:35,080 Speaker 1: So in our research, we looked at forty countries going 414 00:22:35,119 --> 00:22:38,600 Speaker 1: about back to about the nineteen sixties, and we actually 415 00:22:38,680 --> 00:22:44,240 Speaker 1: don't find evidence that arise in government debt tends to 416 00:22:44,320 --> 00:22:49,720 Speaker 1: predict financial crises or recessions with the same power as 417 00:22:49,880 --> 00:22:52,199 Speaker 1: right is in private debt. Why private debt, I mean 418 00:22:52,280 --> 00:22:57,320 Speaker 1: both debt to non financial corporations and to households. So 419 00:22:57,480 --> 00:23:01,760 Speaker 1: that seems to be one of the most more robust correlations, 420 00:23:02,240 --> 00:23:05,679 Speaker 1: is the private debt predictability. Government debt doesn't seem to 421 00:23:05,760 --> 00:23:08,920 Speaker 1: predict as well. What usually happens is there's a crisis 422 00:23:08,960 --> 00:23:12,040 Speaker 1: caused by private debt expansion, and then the government debt 423 00:23:12,080 --> 00:23:14,600 Speaker 1: goes up in response, and as we saw in Europe 424 00:23:14,600 --> 00:23:16,560 Speaker 1: in two thousand ten and two thousand eleven, that can 425 00:23:16,600 --> 00:23:19,720 Speaker 1: often cause problems. But it's not the rise in government 426 00:23:19,720 --> 00:23:23,040 Speaker 1: debt that generally causes uh Either financial crises or a 427 00:23:23,040 --> 00:23:26,439 Speaker 1: slowdown in economic growth. So, just to sort of underscore this, 428 00:23:27,200 --> 00:23:30,480 Speaker 1: household debt is really the best predictor. Explosion of household 429 00:23:30,480 --> 00:23:33,040 Speaker 1: debt is the best predictor of the magnitude of the 430 00:23:33,080 --> 00:23:36,240 Speaker 1: next downturn. Corporate debt a bit, but less so in 431 00:23:36,320 --> 00:23:39,640 Speaker 1: government debt, not as much at all. That's right. That's right. 432 00:23:39,640 --> 00:23:41,520 Speaker 1: And one of the nice things is we've actually seen 433 00:23:41,600 --> 00:23:45,240 Speaker 1: example since the publication of our book. UH, the you 434 00:23:45,240 --> 00:23:47,240 Speaker 1: know economy in the world that had probably the most 435 00:23:47,240 --> 00:23:50,119 Speaker 1: severe recession over the last five years was Brazil. In 436 00:23:50,160 --> 00:23:52,399 Speaker 1: Brazil in two thousand, fifteen and sixteen, they had one 437 00:23:52,400 --> 00:23:54,919 Speaker 1: of the worst recessions they've had on record. And in 438 00:23:54,920 --> 00:23:57,360 Speaker 1: our view, it's unsurprising that in the decade before there 439 00:23:57,400 --> 00:24:00,280 Speaker 1: was just a tremendous expansion of household debt, auto debt, 440 00:24:00,320 --> 00:24:03,200 Speaker 1: paid a loans, mortgage debt. Uh. And again I think 441 00:24:03,240 --> 00:24:05,400 Speaker 1: that's one of the big reasons why Brazil had such 442 00:24:05,400 --> 00:24:08,040 Speaker 1: a big downturn from two thousands fifteen and two thousand 443 00:24:08,040 --> 00:24:10,600 Speaker 1: and sixteen. So I guess that this is really interesting 444 00:24:10,640 --> 00:24:14,080 Speaker 1: to think about right now because you have banks like Goldman, 445 00:24:14,160 --> 00:24:18,439 Speaker 1: Sachs and many others trying to ramp up consumer lending, 446 00:24:18,600 --> 00:24:22,280 Speaker 1: and you're seeing credit card outstandings going up. Auto loans 447 00:24:22,320 --> 00:24:24,639 Speaker 1: have been a robust area of lending for a while. 448 00:24:25,119 --> 00:24:27,240 Speaker 1: I'm just wondering, at what point do you start to 449 00:24:27,280 --> 00:24:30,879 Speaker 1: get concerned that we're heading toward another uh sort of 450 00:24:31,080 --> 00:24:34,359 Speaker 1: peak that could uh for tell some pain. Yeah, I mean, 451 00:24:34,400 --> 00:24:36,800 Speaker 1: I've been looking at the data, especially in the auto 452 00:24:36,880 --> 00:24:39,120 Speaker 1: market and the credit card market. As you point out, 453 00:24:39,160 --> 00:24:41,560 Speaker 1: those are really the markets that seem hot um in 454 00:24:41,680 --> 00:24:45,439 Speaker 1: terms of the willingness of creditors to provide more financing 455 00:24:45,480 --> 00:24:48,600 Speaker 1: to consumers. Uh. There's a few questions about what the 456 00:24:48,640 --> 00:24:51,840 Speaker 1: trigger would be that would cause those markets to suffer. 457 00:24:51,880 --> 00:24:53,639 Speaker 1: I've been thinking a little bit about a rise in 458 00:24:53,720 --> 00:24:56,720 Speaker 1: gas prices. For example, if gas prices were to rise 459 00:24:56,760 --> 00:24:59,760 Speaker 1: one or two dollars per gallon, you could imagine a 460 00:24:59,760 --> 00:25:02,800 Speaker 1: lot of people with a lot of auto debt don't 461 00:25:02,840 --> 00:25:06,280 Speaker 1: have much room to adjust, especially if you think about 462 00:25:06,359 --> 00:25:09,520 Speaker 1: drivers for uber and lyft. So it doesn't seem like 463 00:25:09,560 --> 00:25:12,280 Speaker 1: a disaster's eminent to me, But I'm thinking about the 464 00:25:12,359 --> 00:25:15,960 Speaker 1: kinds of economic shocks that would lead to a situation 465 00:25:16,000 --> 00:25:19,480 Speaker 1: in which consumers have a difficult time paying back the 466 00:25:19,560 --> 00:25:22,200 Speaker 1: interest payments and principle on those credit cards and auto 467 00:25:22,240 --> 00:25:24,720 Speaker 1: loans and the rising gas prices is one that I 468 00:25:24,800 --> 00:25:27,879 Speaker 1: kind of think of, And of course any labor income 469 00:25:28,000 --> 00:25:31,960 Speaker 1: shock to the economy would would be dangerous. In all 470 00:25:32,000 --> 00:25:35,080 Speaker 1: of our research, there's usually some shock that you need 471 00:25:35,240 --> 00:25:37,480 Speaker 1: in order to get the high household debt to then 472 00:25:37,560 --> 00:25:39,919 Speaker 1: really have a bad effect on the economy. That collapse 473 00:25:39,920 --> 00:25:42,400 Speaker 1: in house prices, for example in two thousand seven and eight, 474 00:25:43,040 --> 00:25:46,720 Speaker 1: is really what happened. Then what effect does the deregulation 475 00:25:46,800 --> 00:25:51,920 Speaker 1: of financial industries have on the health of an economy. Well, 476 00:25:51,960 --> 00:25:54,639 Speaker 1: one of the big points of our recent research is 477 00:25:54,680 --> 00:25:58,600 Speaker 1: to show that deregulation in the long run, and there's 478 00:25:58,640 --> 00:26:01,600 Speaker 1: a lot of research to support this, improve financial efficiency 479 00:26:01,640 --> 00:26:06,000 Speaker 1: and improves the allocation of credit and growth of an economy. 480 00:26:06,040 --> 00:26:08,320 Speaker 1: But in the short to medium runs, think about three 481 00:26:08,359 --> 00:26:13,760 Speaker 1: to five years, it sometimes can basically amplify the business cycle. 482 00:26:13,880 --> 00:26:17,359 Speaker 1: That is, a deregulated banking sector kind of throws a 483 00:26:17,400 --> 00:26:19,960 Speaker 1: bit more fuel on the fire during booms, and then 484 00:26:20,000 --> 00:26:26,640 Speaker 1: subsequently oftentimes we see more severe recessions. The recession, for example, 485 00:26:26,720 --> 00:26:29,919 Speaker 1: was preceded by a huge wave of deregulation in the 486 00:26:29,960 --> 00:26:32,600 Speaker 1: banking sector that we argue in some of our research 487 00:26:33,119 --> 00:26:36,400 Speaker 1: lead to an expansion of lending, especially to real estate 488 00:26:36,440 --> 00:26:39,240 Speaker 1: and commercial real estate, which then made the recession of 489 00:26:40,680 --> 00:26:43,720 Speaker 1: one worse than it otherwise would have been. You know, 490 00:26:43,720 --> 00:26:46,680 Speaker 1: one of the biggest explosions in debt and consumer debt 491 00:26:46,760 --> 00:26:48,960 Speaker 1: of late has been really in the student loan area. 492 00:26:49,040 --> 00:26:50,920 Speaker 1: And you know, one question I've had with a number 493 00:26:50,920 --> 00:26:54,200 Speaker 1: of analysts is how much do people just simply ignore 494 00:26:54,280 --> 00:26:56,760 Speaker 1: this because they're backed by the federal government, and how 495 00:26:56,840 --> 00:27:00,440 Speaker 1: much people pay attention to this as as a potential 496 00:27:00,480 --> 00:27:03,959 Speaker 1: sort of fragile fragile node. That's a great point. I 497 00:27:03,960 --> 00:27:06,840 Speaker 1: think the first point you made is quite important, and 498 00:27:06,880 --> 00:27:09,800 Speaker 1: that most of that debt is being provided or back 499 00:27:09,920 --> 00:27:13,560 Speaker 1: directly by the federal government. In that sense, there's not 500 00:27:13,760 --> 00:27:15,720 Speaker 1: much of a risk that there's going to be a 501 00:27:15,760 --> 00:27:19,639 Speaker 1: student debt default crisis that will precipitate a broader banking 502 00:27:19,680 --> 00:27:22,720 Speaker 1: crisis or financial crisis. So in that sense, it's different 503 00:27:22,800 --> 00:27:25,560 Speaker 1: than mortgage debt or auto debt or some of the 504 00:27:25,600 --> 00:27:28,440 Speaker 1: other markets that we worry more about. I think when 505 00:27:28,480 --> 00:27:31,000 Speaker 1: we think about student debt, it's not so much the 506 00:27:31,080 --> 00:27:35,760 Speaker 1: cyclical worries we have. It's more a longer run drag 507 00:27:35,960 --> 00:27:40,040 Speaker 1: on consumption, especially for younger and say middle aged Americans 508 00:27:40,040 --> 00:27:42,360 Speaker 1: who have a lot of student debt. And what does 509 00:27:42,400 --> 00:27:45,720 Speaker 1: that mean about the overall US economy. It just seems 510 00:27:45,720 --> 00:27:49,120 Speaker 1: like the US economy has a very hard time generating 511 00:27:49,160 --> 00:27:53,240 Speaker 1: the kind of demand that is needed to sustain high growth. 512 00:27:53,640 --> 00:27:56,560 Speaker 1: And we either try to sustain that demand through more credit, 513 00:27:57,440 --> 00:28:00,600 Speaker 1: truth through boosting the economy through lower you know, lower 514 00:28:00,640 --> 00:28:03,840 Speaker 1: interest rates by the FED UM and now student debt 515 00:28:03,880 --> 00:28:06,239 Speaker 1: to me, just is another drag that's going to make 516 00:28:06,280 --> 00:28:08,480 Speaker 1: it harder in the long run for us to generate 517 00:28:08,520 --> 00:28:11,160 Speaker 1: the kind of the kind of consumption that we need 518 00:28:11,520 --> 00:28:15,560 Speaker 1: in order to sustain the economy. Just quickly, twenty seconds. 519 00:28:16,280 --> 00:28:20,720 Speaker 1: Do non bank financial companies and the expansion of their 520 00:28:20,760 --> 00:28:24,719 Speaker 1: credit facilities amplify the business cycle? Yeah, One of the 521 00:28:24,840 --> 00:28:27,160 Speaker 1: points of our recent research is really to look at 522 00:28:27,280 --> 00:28:30,280 Speaker 1: the important role of non banks, especially during the two 523 00:28:30,320 --> 00:28:33,439 Speaker 1: thousand to two thousand seven cycle. And now there's a 524 00:28:33,480 --> 00:28:36,800 Speaker 1: lot of research in the academic sphere about you know, 525 00:28:36,880 --> 00:28:40,040 Speaker 1: fintech and just how many, for example, mortgages are now 526 00:28:40,120 --> 00:28:44,480 Speaker 1: being originated by non traditional financiers. Think about Quicken and 527 00:28:44,840 --> 00:28:48,080 Speaker 1: some of the other lenders and the fact that they're 528 00:28:48,160 --> 00:28:50,240 Speaker 1: less regulated, the fact that they had less skin in 529 00:28:50,240 --> 00:28:52,280 Speaker 1: the game, you know, is is something that that one 530 00:28:52,320 --> 00:28:54,479 Speaker 1: wants to worry about, and we're thinking about the quality 531 00:28:54,520 --> 00:28:58,120 Speaker 1: of those loans. Thank you very much, Amira Sufi, professor 532 00:28:58,160 --> 00:29:01,760 Speaker 1: at the Chicago Boots School of bisin this thanks for listening. 533 00:29:15,400 --> 00:29:18,560 Speaker 1: For more details about the job market, we turned to 534 00:29:18,560 --> 00:29:22,520 Speaker 1: Tom Gimbal. He is the chief executive of LaSalle Network. 535 00:29:22,600 --> 00:29:26,400 Speaker 1: It is a national network for job placement. Tom, thanks 536 00:29:26,480 --> 00:29:29,680 Speaker 1: very much for being with us. Can you explain why 537 00:29:30,000 --> 00:29:34,040 Speaker 1: you we don't see wages rising as fast as many 538 00:29:34,080 --> 00:29:37,640 Speaker 1: would like. Yeah. Absolutely. Number one, We're we're in a 539 00:29:37,680 --> 00:29:41,640 Speaker 1: global economy, so it's not it's not as domesticated obviously 540 00:29:41,640 --> 00:29:43,600 Speaker 1: as it used to be. So we're not competing against 541 00:29:43,600 --> 00:29:45,320 Speaker 1: our neighbors in the cul de Sac or the High 542 00:29:45,400 --> 00:29:49,040 Speaker 1: Rise for jobs. So we are competing against people in 543 00:29:49,040 --> 00:29:52,600 Speaker 1: in India, in China, in Latin America. And when you're 544 00:29:52,600 --> 00:29:55,640 Speaker 1: doing that, and those companies, um are not at the 545 00:29:55,680 --> 00:29:59,960 Speaker 1: same level of compensation and societally wise, you're gonna happy, 546 00:30:00,040 --> 00:30:02,080 Speaker 1: but that are paid less. So it's not necessarily just 547 00:30:02,160 --> 00:30:04,680 Speaker 1: that our economy is doing well. It's what labor can 548 00:30:04,720 --> 00:30:07,600 Speaker 1: be acquired for so that is still a major issue. 549 00:30:08,000 --> 00:30:10,160 Speaker 1: So Tom just to push back a little bit, because 550 00:30:10,160 --> 00:30:13,680 Speaker 1: we hear about shortages of certain types of workers, shortages 551 00:30:13,720 --> 00:30:17,720 Speaker 1: of construction workers, of truck drivers, of plumbers and builders, 552 00:30:17,760 --> 00:30:21,240 Speaker 1: and all sorts of industrial jobs here in the US. 553 00:30:21,400 --> 00:30:25,600 Speaker 1: Would there not be a shortage if perhaps these these 554 00:30:25,600 --> 00:30:31,000 Speaker 1: companies just offered more money. Unfortunately that's that's not the case. 555 00:30:31,280 --> 00:30:33,720 Speaker 1: And the reason being is look at truck drivers, where 556 00:30:33,760 --> 00:30:36,760 Speaker 1: there there's a huge shortage and companies are willing to 557 00:30:36,800 --> 00:30:38,880 Speaker 1: pay a lot more, but people don't want to be 558 00:30:38,920 --> 00:30:41,520 Speaker 1: truck drivers. Now there's reasons behind that, where to drive 559 00:30:41,520 --> 00:30:44,000 Speaker 1: a commercial truck over state lines you have to be 560 00:30:44,080 --> 00:30:46,080 Speaker 1: at least twenty one years old. So you get people 561 00:30:46,120 --> 00:30:48,160 Speaker 1: that don't get their college degree that's starting a career 562 00:30:48,200 --> 00:30:50,720 Speaker 1: when they're eighteen and they're not going to make that shift. 563 00:30:51,200 --> 00:30:54,720 Speaker 1: We've also seen a situation due to the quote unquote 564 00:30:54,720 --> 00:30:57,920 Speaker 1: gig economy where people are doing stuff that are are 565 00:30:58,040 --> 00:31:02,320 Speaker 1: no skills required on non office jobs or construction jobs 566 00:31:02,320 --> 00:31:04,440 Speaker 1: that are easier on the body, like being an uber driver, 567 00:31:04,840 --> 00:31:07,760 Speaker 1: and that's taking people away. So now you've got where 568 00:31:07,760 --> 00:31:11,440 Speaker 1: we really have gone from manufacturing and distribution economy to 569 00:31:11,640 --> 00:31:14,760 Speaker 1: service economy. And so we're seeing that just paying more 570 00:31:14,920 --> 00:31:17,960 Speaker 1: isn't going to do it unless you're targeting the right people. 571 00:31:18,280 --> 00:31:21,360 Speaker 1: And that's where businesses have to evolve, is where they're 572 00:31:21,360 --> 00:31:23,640 Speaker 1: going to find the people, how they're targeting the people. 573 00:31:23,680 --> 00:31:25,680 Speaker 1: And the most important thing that haven't been touched on 574 00:31:25,720 --> 00:31:28,960 Speaker 1: in this economy is training and development to acquire and 575 00:31:29,000 --> 00:31:33,720 Speaker 1: retain staff. Well, do uh do job applicants have the 576 00:31:34,560 --> 00:31:39,840 Speaker 1: skills and the experience necessary for the jobs in growing 577 00:31:39,880 --> 00:31:45,160 Speaker 1: areas like technology, healthcare, logistics. Yeah, and and there really is. 578 00:31:45,160 --> 00:31:47,080 Speaker 1: It's a tale of two economies, right. It's the blue 579 00:31:47,120 --> 00:31:49,440 Speaker 1: collar economy we were just talking about, and then it's 580 00:31:49,480 --> 00:31:54,000 Speaker 1: the white collar economy um of technology and sales and marketing. 581 00:31:54,240 --> 00:31:57,000 Speaker 1: And that's where the discrepancy is. And so when you 582 00:31:57,040 --> 00:32:00,280 Speaker 1: look at the long term unemployed, that number really didn't 583 00:32:00,360 --> 00:32:03,040 Speaker 1: change in this report and hasn't for some time because 584 00:32:03,080 --> 00:32:05,880 Speaker 1: those folks they're they're out of this economy. They don't 585 00:32:05,880 --> 00:32:08,880 Speaker 1: have the skills gap, are they Because of the skills gap, 586 00:32:09,080 --> 00:32:11,960 Speaker 1: they can't get back in unless they move downstream into 587 00:32:12,000 --> 00:32:14,440 Speaker 1: a lower level position or a blue collar job, and 588 00:32:14,480 --> 00:32:16,480 Speaker 1: they don't want to. So what we have to do 589 00:32:16,520 --> 00:32:19,880 Speaker 1: in the skills gap is figure out a more college 590 00:32:19,920 --> 00:32:22,520 Speaker 1: graduates are going to get jobs than ever before, and 591 00:32:22,640 --> 00:32:25,880 Speaker 1: we're not seeing any slowdown in that area. And number two, 592 00:32:26,200 --> 00:32:29,240 Speaker 1: if companies really need people to continue to grow profits 593 00:32:29,240 --> 00:32:32,720 Speaker 1: and revenue and shareholder value, they need to spend more 594 00:32:32,760 --> 00:32:36,720 Speaker 1: money in training and development. So one thing that I'm 595 00:32:36,760 --> 00:32:39,560 Speaker 1: trying to understand is we focus on the average numbers 596 00:32:39,560 --> 00:32:43,360 Speaker 1: that we get out, is how bifurcated is the market 597 00:32:43,600 --> 00:32:47,200 Speaker 1: four jobs between sort of the top earners and the 598 00:32:47,240 --> 00:32:51,080 Speaker 1: low earners. Are we seeing faster wage gains at the 599 00:32:51,120 --> 00:32:55,680 Speaker 1: top of the income sphere of versus a lower one. Yeah, 600 00:32:55,680 --> 00:32:59,240 Speaker 1: I do believe that exists. And what ends up happening 601 00:32:59,320 --> 00:33:02,560 Speaker 1: due to the ad vent of technology is that jobs 602 00:33:02,560 --> 00:33:05,920 Speaker 1: on the lower end become easier due to the technology 603 00:33:05,920 --> 00:33:10,120 Speaker 1: technologically advanced advancements. Right, So, so if due to the 604 00:33:10,160 --> 00:33:13,240 Speaker 1: technological advances that people either have to continue to grow 605 00:33:13,360 --> 00:33:15,560 Speaker 1: to grow their career, but if they stay at the 606 00:33:15,600 --> 00:33:17,480 Speaker 1: same level, the jobs get easier, So they're not going 607 00:33:17,520 --> 00:33:19,600 Speaker 1: to get paid more for doing the same work. When 608 00:33:19,600 --> 00:33:21,640 Speaker 1: you look at the executive level side, and why those 609 00:33:21,680 --> 00:33:24,760 Speaker 1: salaries increase is because people are learning, growing and being 610 00:33:24,800 --> 00:33:28,360 Speaker 1: promoted into those roles, and they're getting paid. Is their 611 00:33:28,400 --> 00:33:30,800 Speaker 1: advancement and their skill set rises. It's not as simple 612 00:33:30,840 --> 00:33:32,760 Speaker 1: to say people who make more money are going to 613 00:33:32,840 --> 00:33:35,680 Speaker 1: grow faster. They're growing faster because they have the ability 614 00:33:35,720 --> 00:33:38,120 Speaker 1: to make more money, and that gets lost in the equation. 615 00:33:38,200 --> 00:33:41,400 Speaker 1: It's not simply keep the low people oppressed and pay 616 00:33:41,440 --> 00:33:43,719 Speaker 1: the rich people more. Is about what are they accomplishing 617 00:33:43,720 --> 00:33:47,240 Speaker 1: and are they growing tom What accounts for the lack 618 00:33:47,280 --> 00:33:51,480 Speaker 1: of summer jobs that are available for young people, Well, 619 00:33:51,520 --> 00:33:53,440 Speaker 1: I think there's a variety of reasons. I think what 620 00:33:53,560 --> 00:33:56,440 Speaker 1: you see a lot more happening is college kids and 621 00:33:56,520 --> 00:33:58,840 Speaker 1: high school kids want to do internships. So if you 622 00:33:58,880 --> 00:34:01,400 Speaker 1: grow up in an area where you believe that you're 623 00:34:01,400 --> 00:34:03,520 Speaker 1: going to go to college and have a white collar career, 624 00:34:03,720 --> 00:34:06,160 Speaker 1: people want to start in that area is as soon 625 00:34:06,200 --> 00:34:08,680 Speaker 1: as they can. And so what ends up happening is 626 00:34:09,160 --> 00:34:12,799 Speaker 1: the hourly jobs, the delivering pizza, the retail jobs. Those 627 00:34:12,880 --> 00:34:15,520 Speaker 1: end up going to lower income people who companies know 628 00:34:15,600 --> 00:34:17,520 Speaker 1: we're going to be there. So there isn't as much 629 00:34:17,560 --> 00:34:20,239 Speaker 1: seasonality in summer work as there used to be. And 630 00:34:20,280 --> 00:34:22,320 Speaker 1: I think a lot of this goes to the social 631 00:34:22,360 --> 00:34:25,520 Speaker 1: mediazation of America. Is that when kids are seeing that 632 00:34:25,760 --> 00:34:30,600 Speaker 1: on shark Tank and through Instagram of eight five year 633 00:34:30,600 --> 00:34:33,759 Speaker 1: old kids that are making hundreds of thousands, millions of 634 00:34:33,800 --> 00:34:35,920 Speaker 1: dollars at an early age, what do I need to 635 00:34:35,920 --> 00:34:38,279 Speaker 1: do to get there as fast as possible? And that's 636 00:34:38,280 --> 00:34:41,239 Speaker 1: not about taking an hourly job at the local retail store. No. 637 00:34:41,440 --> 00:34:44,480 Speaker 1: Tom pim is talking about this. He has a daughter, 638 00:34:44,920 --> 00:34:46,920 Speaker 1: I have a son. We're both looking for them to 639 00:34:47,000 --> 00:34:50,160 Speaker 1: go bring in their worth, right, he's nodding at me. 640 00:34:50,880 --> 00:34:52,759 Speaker 1: I mean, I'm partially kidding, but actually I think that 641 00:34:52,800 --> 00:34:57,520 Speaker 1: they would probably enjoy having the responsibility. Tom. Just going forward, 642 00:34:57,560 --> 00:34:59,520 Speaker 1: I'm trying to figure out when people the thing that 643 00:34:59,560 --> 00:35:02,920 Speaker 1: people tell talk about is the slack in the labor market. 644 00:35:02,960 --> 00:35:05,560 Speaker 1: Are there more people who are on the sidelines who 645 00:35:05,560 --> 00:35:08,720 Speaker 1: will get brought in as this labor market continues to improve. 646 00:35:09,080 --> 00:35:12,400 Speaker 1: What's your take on that. If you're on the sidelines 647 00:35:12,440 --> 00:35:14,279 Speaker 1: in this economy, it's because you want to be on 648 00:35:14,320 --> 00:35:16,759 Speaker 1: the sidelines. And I what I mean by that is 649 00:35:16,960 --> 00:35:19,040 Speaker 1: you may not like the position that you can go 650 00:35:19,120 --> 00:35:22,560 Speaker 1: and play in the game, but you can play good. Right, 651 00:35:22,600 --> 00:35:24,960 Speaker 1: So doing the sports analogy, you may want to be 652 00:35:25,040 --> 00:35:27,799 Speaker 1: a quarterback. But if the position that's open for you 653 00:35:27,880 --> 00:35:30,640 Speaker 1: that the coach likes is a wide receiver. If you 654 00:35:30,640 --> 00:35:33,000 Speaker 1: want to play in the game, be the wide receiver. 655 00:35:33,080 --> 00:35:35,319 Speaker 1: Don't complain that you're not the quarterback. And so the 656 00:35:35,320 --> 00:35:38,040 Speaker 1: white collar analogy is you may have had a job 657 00:35:38,120 --> 00:35:40,600 Speaker 1: doing accounting or finance. In this economy. If you can't 658 00:35:40,600 --> 00:35:43,160 Speaker 1: get a job doing accounting and finance, then you're not 659 00:35:43,200 --> 00:35:44,560 Speaker 1: good enough to be at it. So you've got to 660 00:35:44,560 --> 00:35:46,759 Speaker 1: take a job at a lower level. Might be administrative, 661 00:35:46,840 --> 00:35:48,560 Speaker 1: might be in a call center, might be blue collar. 662 00:35:48,880 --> 00:35:50,239 Speaker 1: But if you want a job and you want to 663 00:35:50,239 --> 00:35:52,080 Speaker 1: make money and you don't have one in this economy, 664 00:35:52,160 --> 00:35:54,560 Speaker 1: you're the problem. So then thirty seconds, if you're the 665 00:35:54,760 --> 00:35:57,040 Speaker 1: if you're saying to these people, you're the problem. And 666 00:35:57,080 --> 00:36:01,520 Speaker 1: there still is um a pretty low prior age participation 667 00:36:01,600 --> 00:36:07,759 Speaker 1: rate relative to history. What's that all about about accountability? Right? 668 00:36:07,800 --> 00:36:11,560 Speaker 1: So the participation rate of people is what happened during 669 00:36:11,800 --> 00:36:14,160 Speaker 1: the recession in the in the thirties was people would 670 00:36:14,200 --> 00:36:16,720 Speaker 1: they double up and have multiple families living in houses 671 00:36:16,719 --> 00:36:18,319 Speaker 1: and sell apples on the street for a dime. And 672 00:36:18,360 --> 00:36:20,560 Speaker 1: what we had coming out of two thousand nine was 673 00:36:20,840 --> 00:36:23,279 Speaker 1: an entitlement situation and people think the government's going to 674 00:36:23,320 --> 00:36:25,040 Speaker 1: be there to support them. And today we're in a 675 00:36:25,080 --> 00:36:26,960 Speaker 1: situation where there's a skills gap, yet there's a ton 676 00:36:27,000 --> 00:36:29,520 Speaker 1: of jobs available. Blue collar and white collar people need 677 00:36:29,560 --> 00:36:31,000 Speaker 1: to get off the couch and take get back in 678 00:36:31,040 --> 00:36:34,200 Speaker 1: the game. There you go, Tom Kimball with some tough talk. 679 00:36:34,480 --> 00:36:37,640 Speaker 1: Tom Gimbell, founder and chief executive officer for LaSalle Network 680 00:36:37,760 --> 00:36:40,960 Speaker 1: based in Chicago. Uh. He said just in some notes 681 00:36:41,000 --> 00:36:43,080 Speaker 1: to us ahead of this that he has been in 682 00:36:43,080 --> 00:36:45,680 Speaker 1: this business for more than twenty five years staffing and 683 00:36:45,719 --> 00:36:48,560 Speaker 1: this is the best jobs market he has ever seen. 684 00:36:48,640 --> 00:36:51,200 Speaker 1: So there's no excuse. If somebody doesn't have a job 685 00:36:51,200 --> 00:36:53,120 Speaker 1: and wants to have a job, they should be able 686 00:36:53,280 --> 00:37:00,080 Speaker 1: to get one. Thanks for listening to the Bloomberg n 687 00:37:00,200 --> 00:37:03,200 Speaker 1: L podcast. You can subscribe and listen to interviews at 688 00:37:03,280 --> 00:37:07,719 Speaker 1: Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm 689 00:37:07,719 --> 00:37:11,200 Speaker 1: pim Fox. I'm on Twitter at pim Fox. I'm on 690 00:37:11,200 --> 00:37:14,520 Speaker 1: Twitter at Lisa Abramo wits one. Before the podcast, you 691 00:37:14,520 --> 00:37:17,040 Speaker 1: can always catch us worldwide on Bloomberg Radio