Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
Speaker 1: my co host Matt Miller.
Speaker 2: Every business day we bring you interviews from CEOs, market pros,
Speaker 2: and Bloomberg experts, along with essential market moving news.
Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever
Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.
Speaker 3: We're gonna go ahead and go over to Tom Gimble.
Speaker 4: Now, he's the founder and CEO of Lesalm Network and
Speaker 4: he this is a hiring firm, so he is going
Speaker 4: to be able to give us a fantastic outlook of
Speaker 4: those jobs numbers that we got yesterday and of course
Speaker 4: the numbers that we got today.
Speaker 3: Tom.
Speaker 4: Great to speak with you, and thanks so much for
Speaker 4: chatting with us on this Friday. Talk me through the
Speaker 4: totality of the data here and what it tells you
Speaker 4: about the jobs market. Is it the bad news that
Speaker 4: we should be listening to or the good news?
Speaker 5: I think an economist can spend in any way they
Speaker 5: want to. However, anytime an economy adds over two hundred
Speaker 5: thousand jobs, I'd say, thank you, let's move on to
Speaker 5: the next month. I mean, there's nothing here that we
Speaker 5: should be depressed about. I think what the layman needs
Speaker 5: to realize is there's really two messages. One is the
Speaker 5: economy good for me today? And number two is what
Speaker 5: are economists and the Fed looking at for interest rates,
Speaker 5: which is a longer ballgame at a higher macro level.
Speaker 5: And what this says right now is that because of
Speaker 5: two hundred and nine thousand versus roughly a quarter million,
Speaker 5: which is what the economists were estimating, is that the
Speaker 5: Fed won't raise interest rates again, that people think it's
Speaker 5: slowing down, which is actually an even better thing for
Speaker 5: the economy. So we missed the number by a smidge.
Speaker 5: We still add over two hundred thousand jobs. The Fed
Speaker 5: won't raise interest rate, the party continues. Everybody's happy, but
Speaker 5: let's paint it is really sad and depressing right now.
Speaker 6: Well, there was a time when if I could fond
Speaker 6: a mirror, I could get a job. Is that still
Speaker 6: the case?
Speaker 5: It's not too far off from that, to be quite frank.
Speaker 5: We're looking at a situation where companies are still hiring. Obviously,
Speaker 5: we added over two hundred thousand jobs, and the difference
Speaker 5: is is they're not hiring in bulk. So you might
Speaker 5: not be able to get a job at any company
Speaker 5: you want to, as you could have in twenty twenty one. However,
Speaker 5: there are more than enough jobs for people who are
Speaker 5: looking okay.
Speaker 4: But when you look at the ADP data specifically, leisure
Speaker 4: was the biggest growth area. But leisure, I mean, you
Speaker 4: can tell me this, Tom, It feels like a little
Speaker 4: bit of a concerning area because it can those jobs
Speaker 4: can go away so fast, and we obviously saw that
Speaker 4: in March.
Speaker 5: Seasonality No, no, I disagree because it's seasonality. So compare
Speaker 5: June over June and look at the summer, and we
Speaker 5: know those are coming. So that was built into the
Speaker 5: estimate that the economists had that they've been doing this
Speaker 5: for forever. And when they predict two hundred and forty
Speaker 5: thousand or two hundred and fifty thousand, they're figuring in
Speaker 5: for the summer hospitality jobs too. This is a good report.
Speaker 5: Anything other is chicken little, as I say every month
Speaker 5: on this show.
Speaker 4: But is it potentially a final gasp for air before
Speaker 4: the economy starts to slow?
Speaker 5: No, I really don't think so, because what's gonna end
Speaker 5: up My guess is I haven't what's the market doing right?
Speaker 6: Now, oh, with a stock market, I'm gonna call it mixed.
Speaker 3: Yeah, it's a little unch very much.
Speaker 5: It's unchanged, right, So what that message sends. If it
Speaker 5: were a bad number, the market would be down. It's
Speaker 5: a number that says we're still adding jobs. And once
Speaker 5: the Fed doesn't raise rates at the next go around,
Speaker 5: this thing is gonna shoot. The market's gonna shoot up
Speaker 5: even more. We added over two hundred thousand jobs. It's
Speaker 5: funny how quickly we forget the spring of twenty twenty.
Speaker 5: It's funny how quickly we forget two thousand and eight
Speaker 5: and two thousand and nine. Those were bad. This is good.
Speaker 5: We got to keep things in.
Speaker 6: Perspective, Tom Doo, Who has the leverage is that the
Speaker 6: mixed starting to change is still the employee, like, hey,
Speaker 6: you can give me a raise or else I'm gonna
Speaker 6: go find another job. But we're with the employer.
Speaker 5: We've gotten away from that. The leverage is back on
Speaker 5: the employer side, and I think that's what the changes
Speaker 5: that we're seeing. And if there's a little bit of
Speaker 5: not desperation in the air, but fear around, it's people
Speaker 5: bringing employee companies bringing employees back to the office. And
Speaker 5: the employees can't quit and go get another job working
Speaker 5: fully remote anymore because a lot of companies are bringing
Speaker 5: people back to the office. So my feeling is a
Speaker 5: year from now, we're not going to be talking oh,
Speaker 5: post pandemic and who's working in the office and who's
Speaker 5: working not Almost every company will be three days a week,
Speaker 5: if not four days a week a year from now.
Speaker 4: And where are you seeing the most demand for workers.
Speaker 5: It's always going to be in technology right now because
Speaker 5: we have well, we have this intersection right now where
Speaker 5: it's technology is growing so fast and we're having so
Speaker 5: Now we have AI, which is what dot Com was
Speaker 5: twenty years ago. Right twenty years ago, you put dot
Speaker 5: com in your company's name and you'd go public. Can
Speaker 5: you'd be worth a billion dollars? Just wait until every
Speaker 5: company has it being less sound network AI. Everything is
Speaker 5: going to be AI AI AI, and we're going to
Speaker 5: see this be a self fulfilling prophecy that it's going
Speaker 5: to balloon a new market and it's going to be
Speaker 5: the driver of jobs through AI and cybersecurity.
Speaker 6: Well, what's go over average pay for me in the
Speaker 6: different industries that you are familiar with.
Speaker 5: Well, I think average pay is a really interesting issue,
Speaker 5: and the reason is is because it figures in salaried
Speaker 5: and hourly, and we have hourlyas that have been en
Speaker 5: that have rose over the past three years due to
Speaker 5: number one COVID pandemic, pay, number two social unrest, number
Speaker 5: three municipalities wanting to with more liberal aldermen so to speak,
Speaker 5: and mayors and officials running it. So we've seen the
Speaker 5: municipal minimum wage rise that used to be ten dollars
Speaker 5: an hour. In some cities it's fifteen to seventeen dollars
Speaker 5: an hour. And we've seen hourly factory workers and hourly
Speaker 5: warehouse workers go from ten to twelve dollars an hour
Speaker 5: to eighteen to twenty to twenty five dollars an hour.
Speaker 5: So you have that aspect of the business which is
Speaker 5: still healthy, but we'll see how that gets affected. It's
Speaker 5: usually the first area. The interesting thing is on the
Speaker 5: white collar jobs, where people were getting counteroffers from their
Speaker 5: employer when they leave for huge amounts to get them
Speaker 5: to stay. We're not seeing that as much anymore. We're
Speaker 5: seeing companies toe the line and say we're not going
Speaker 5: to screw up our whole salary structure. Because the economy's good,
Speaker 5: not unbelievable.
Speaker 4: But we're seeing also a decline to your point in
Speaker 4: weekly hours worked. Is that a key indicator to you
Speaker 4: of something that's to come and is that something that
Speaker 4: you're seeing in your day to day now.
Speaker 5: I think you see a decline in weekly hours work
Speaker 5: because of the increase in the hospitality sector. And so
Speaker 5: when you've got people that are hiring in those phases,
Speaker 5: it sometimes leverages down the amount of hours work by
Speaker 5: each employee. And so the thing that makes it good
Speaker 5: is that more people are getting jobs in that space.
Speaker 5: The thing that makes it bad is some people who
Speaker 5: are working over time and doing things like that. It's
Speaker 5: not leveraged into the average hours, so you see a
Speaker 5: natural decline in that way. You also see more people
Speaker 5: taking time off in the summer, which lowers the average
Speaker 5: hours worked. I don't think that's as big a deal
Speaker 5: as a lot of economists do.
Speaker 6: Can you give me an update on the gig economy?
Speaker 6: Where does where does that stand?
Speaker 7: Yeah?
Speaker 5: I think the gig economy was a gig. I think
Speaker 5: that it was something that we're seeing that people in
Speaker 5: good times. It's awesome. I don't need my boss. I
Speaker 5: can get a job whenever I want, so, I'll go uber,
Speaker 5: I'll do door dash, I'll be a dog walker, I'll
Speaker 5: do all these things. And that's why it didn't show
Speaker 5: into the jobs numbers. Now we see those people saying, hey,
Speaker 5: wait a second, I can't keep up with the cost
Speaker 5: of living doing that. I need to get benefits. I
Speaker 5: want to have a four to oh one k. People
Speaker 5: start to settle in as gen Z becomes in their thirties, right,
Speaker 5: So you have this cyclical nature. That's something that happened
Speaker 5: with MILLENNI and they don't want to be doing gig economy.
Speaker 4: Work really quickly. Thirty seconds here, Tom, If J. Powell
Speaker 4: calls you and says, what do I need to know
Speaker 4: about the jobs market that the economists aren't telling me?
Speaker 3: What are you saying, I tell him.
Speaker 5: The same thing I told him this morning when we
Speaker 5: were talking. No, I'm kidding. I would tell him keep
Speaker 5: things flat for the next cycle, don't do a thing.
Speaker 4: All right, Well, we'll see if the market agrees with
Speaker 4: you there. Tom, thank you so much for joining us
Speaker 4: this morning to break down that job's data for us.
Speaker 3: That was Tom Gimble. He is CEO at LaSalle Network.
Speaker 4: That's a hiring firm, so John, he's got a great
Speaker 4: outlook on what's really going on on the ground when
Speaker 4: it comes to hiring and wages.
Speaker 8: There you're listening to the team Ken's are Live program
Speaker 8: Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com,
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Speaker 4: We were easing some of those declines earlier today and
Speaker 4: now it's looking like we're back in the red for
Speaker 4: the S and p NASDAC relatively unchanged. So we're going
Speaker 4: to talk about what to make of the day's trade
Speaker 4: with Ben Emmons. He is the principal, senior portfolio manager
Speaker 4: and head of fixed income and Macro at New Edge Wealth.
Speaker 3: Got a laundry.
Speaker 4: List of previous work in the finance industry that we're
Speaker 4: going to talk to him about. Ben, thanks for being
Speaker 4: in studio with us. Helped me make sense of what's
Speaker 4: going on in markets today. How are they digesting the
Speaker 4: data here?
Speaker 9: Still digesting medisine, But I think it's about you know,
Speaker 9: the ADP number took a lot of the gas out
Speaker 9: of the market. Because I was a real surprise. So
Speaker 9: it's this headline from non fan patals comes in a
Speaker 9: little softer, you get some muted reaction, but the reaction
Speaker 9: is the same as yesterday. I yields a little bit
Speaker 9: lower stocks because the market's trying to digeste This is
Speaker 9: a job market that doesn't really cool off. If anything,
Speaker 9: it just really underlines that the FED has to pull
Speaker 9: forward here. It has to probably hike maybe more than
Speaker 9: two times because the resiliency of the economy, you know,
Speaker 9: there's too much strength underneath. And I know these reporters
Speaker 9: that didn't show any significant weakness in any area. So
Speaker 9: I think markets are looking at like we're going to
Speaker 9: have to start factoring in a higher terminal rate that
Speaker 9: may be beyond what the FED is factoring it in
Speaker 9: for the end of the year.
Speaker 6: You know, little history. One of the former FED chairman,
Speaker 6: Paul Volker, used to carry in his breast pocket a
Speaker 6: readout of the latest labor agreements, wage agreements with the unions.
Speaker 6: Presumably how sticky are wages right now, because that seems
Speaker 6: to be the key for all of us who follow
Speaker 6: interest rates.
Speaker 9: Yeah, the the every average hourly earnings of four point
Speaker 9: four percent year on year. There was another I think
Speaker 9: sign of that if you have labor being this strong
Speaker 9: consistent job gains, you're going to get higher wages. And
Speaker 9: every wage striking from the Atlanta FAT shows an upward momentum.
Speaker 9: The ones that stand out to me are construction and
Speaker 9: leisured as well. I think the biggest wage gains are happening.
Speaker 9: There's maybe less of unionized area then if you think
Speaker 9: about ups as an example right of what's happening there.
Speaker 9: But to that point of Vocar, if you're getting consistent
Speaker 9: gains of labor and wages pick up, yeah, there's some
Speaker 9: level of let's say, prices drive to higher wages and
Speaker 9: vice versa. So it is happening in the economy. Not
Speaker 9: the same as in the seventies, but it's definitely a
Speaker 9: trend of higher wages.
Speaker 6: I'll go back to my ques. Is that sticky? Is
Speaker 6: that going to remain?
Speaker 10: It looks like.
Speaker 9: It's sticky because if you think of the core pce exer,
Speaker 9: core services, pce X housing you plot out against those
Speaker 9: wage trackers from the Atlanta FAT, it's exactly the same trend,
Speaker 9: almost identical, just on top of each other. That looks
Speaker 9: like very sticky to me.
Speaker 3: How sticky then, Okay, I've been dying to ask this question.
Speaker 4: John, You're gonna love this. On a scale of peanut
Speaker 4: butter to super glue, how sticky?
Speaker 9: Oh not super glue. I don't compares that probably is
Speaker 9: not because it is a competitive labor market. So I
Speaker 9: do think that if you get layoffs, so you get like,
Speaker 9: you know, some adjustment of wages in certain areas, it's
Speaker 9: just more stickier in terms of the demand for labors.
Speaker 9: Is sticky that or drives up wages. I think that's
Speaker 9: the issue. The Commerce Department put out of a board
Speaker 9: about a month ago highlighting all the labor shortages across
Speaker 9: the economy. There's a lot of it still there that
Speaker 9: keeps those wages like peing a butter.
Speaker 3: Okay, well you you well, there you go. You do
Speaker 3: a great job.
Speaker 4: Though, ben of looking at this from a global perspective,
Speaker 4: and when you look at the inflation picture in the UK,
Speaker 4: it makes me glad that I'm in the US, even
Speaker 4: though inflation here is pretty bleak for me when I'm
Speaker 4: being a consumer outside of the desk here, talk to
Speaker 4: me about to what extent the inflation picture in the
Speaker 4: UK and the credit tight ning we're seeing there could
Speaker 4: impact what the FED has to do here in the States.
Speaker 9: Yeah, there's a bit of that. That's the idea of
Speaker 9: butterfly fact. Yeah, you know, I think is more risk
Speaker 9: of that rage price spiral part of it. There is
Speaker 9: more unionized economy, but it's also it's showing the signs
Speaker 9: of it. And you know, the UK obviously is really
Speaker 9: suffering from the supply shock in Europe, the food supply
Speaker 9: shock that's compounded by the Brexit. You know, that's now
Speaker 9: really showing up in their data and they're you know,
Speaker 9: the Bank of England didn't go so far as to
Speaker 9: feted with a number of rate hikes really quickly after
Speaker 9: one of not like large rate hikes, and this is
Speaker 9: why the market is pricing in six and a half
Speaker 9: percent of a bank rate that's on the base points
Speaker 9: more than the where the FAT is projected at. I
Speaker 9: think the food price inflation is where they're struggling. They
Speaker 9: can't really cool that off because of the Brexit effect.
Speaker 9: That's really the key issue.
Speaker 6: Does the market now believe the Fed?
Speaker 9: They do, John, I mean it has actually been there
Speaker 9: way for a while. Sounds odd, but that transitory discussion
Speaker 9: that where the fat apparently lost so much credibility, you know,
Speaker 9: the bomb market early on, except like, well, Fat, you
Speaker 9: started raising rates, You're going to get your inflation back
Speaker 9: to two percent over time. That's what the inflation lik
Speaker 9: bonb market has been very consistent in and that's I
Speaker 9: think where we currently are today. It hasn't really changed
Speaker 9: even though you're getting these good, you know, payroll numbers
Speaker 9: and you see it continuing strength in the economy. There's
Speaker 9: another side of it that the energy markets have really
Speaker 9: cooled off from last year and commodity market students. That helps.
Speaker 9: I mean, it's part of that calculation in these inflation expectations.
Speaker 9: But I do think that market has been at the
Speaker 9: side of the Fat saying you're going to succeed in
Speaker 9: this mission. You're going to bring that inflation right down.
Speaker 9: It may take a number of years, but you're going together, all.
Speaker 6: Right, the obligatory questions. July that is twenty five basis points. Again,
Speaker 6: what happens after that? Is it a higher rate regime
Speaker 6: six months from now? You got forty five seconds.
Speaker 9: Yeah, so July that's now of course confirmed by this
Speaker 9: data at CPI next week, so that probably he's going
Speaker 9: to fully cement it to one hundred percent probability. You
Speaker 9: know it will remain data dependent. That's how the market
Speaker 9: is trying to price it. So the September and November
Speaker 9: meetings all still in play. But the probabilities do show
Speaker 9: that you'd like you have an honor rate high extra.
Speaker 9: The federal match is median forecast plus. The probability of
Speaker 9: a six percent rate in November has notched up a
Speaker 9: little bit. It's about ten percent. So let's keep an
Speaker 9: eye on that because that is not impossible to see
Speaker 9: a six percent rate.
Speaker 3: Yeah, and it seems like if you're listening to j.
Speaker 4: Powell, he's just going to continue to look at the
Speaker 4: totality of the data when deciding what he is going
Speaker 4: to do next. Ben Emmons, thank you so much for
Speaker 4: joining us as always, great to see you in the
Speaker 4: studio with us as well. That was Ben Emmons's principal,
Speaker 4: senior portfolio manager and head of fixed income at New
Speaker 4: Edge Wealth, joining to talk about those jobs numbers and
Speaker 4: of course what the Fed is going to do next?
Speaker 3: Our favorite question here at Bloomberg.
Speaker 8: You're listening to the tape. Can's our live program Bloomberg
Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the
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Speaker 4: No, you're all loving our FED Speak analysis here, but
Speaker 4: we've got a great guest in to talk with us
Speaker 4: about the jobs data and how it's going to impact
Speaker 4: FED mooves moving forward.
Speaker 3: We've got Julia Pollock here.
Speaker 4: She is a chief economist at zip Recruiter, joining us
Speaker 4: on zoom to talk through some of these jobs numbers. Julia,
Speaker 4: thank you so much for coming on this morning with us.
Speaker 4: Talk to me about what your take is on the
Speaker 4: current jobs market. I mean, if we're listening to gooules By,
Speaker 4: it sounds like it's strong but cooling.
Speaker 3: Would you agree with that description?
Speaker 11: Absolutely strong, solid, robust, But there are clear signs of
Speaker 11: cooling in today's jobs report, not just the slowest job
Speaker 11: growth number since decem for twenty twenty, but also rise
Speaker 11: in the number of people working part time for economic reasons.
Speaker 11: Those are people who've had their hours cut or who
Speaker 11: can't find full time work but want to be working
Speaker 11: full time.
Speaker 6: You guys, a ZIP recruiter must generate its own proprietary data.
Speaker 6: What does that tell you, if anything?
Speaker 11: Absolutely so, that has shown a large decline in online
Speaker 11: job hostings than even in BLS reported jobs data, but
Speaker 11: a rebound in June. So we also saw a pretty
Speaker 11: strong June, but even clearer signs that the lave market
Speaker 11: is cooling down and that the Fed's interest rate hikes
Speaker 11: are starting to bite. That they are reducing private investment
Speaker 11: and causing companies, even those that would like to be
Speaker 11: hiring more, to be a bit more cautious and concerned.
Speaker 6: What about wages? What does your data show?
Speaker 11: So wage growth in job hostings has also slowed In
Speaker 11: twenty twenty two, the share of job titles that saw
Speaker 11: average wage increases over the year was three times higher
Speaker 11: than the share that saw declines. This time around, we're
Speaker 11: actually seeing more job titles show lower average posted wages
Speaker 11: in job hostings than games.
Speaker 4: Yeah, it's so important to watch. And our Bloomberg Economics
Speaker 4: team puts it really well that they still anticipate a
Speaker 4: recession coming in the second half of twenty twenty three.
Speaker 3: So anytime now.
Speaker 4: And they say that you start to see those cracks
Speaker 4: in the labor market about two to three quarters after
Speaker 4: recession officially begins. So, Julia, I wonder if when you're
Speaker 4: looking at the data, does it feel to you like
Speaker 4: this is just the beginning of the title wave of
Speaker 4: recessionary impacts on the jobs market, or is it something
Speaker 4: less intense than that.
Speaker 11: Well, I think it's something less intense than that. I
Speaker 11: think we're now at a place where the labor market
Speaker 11: is at as steady sustainable pace. We could keep this
Speaker 11: up for months and months and months. Employment levels are
Speaker 11: still well below their pre pandemic trend, and so there's
Speaker 11: still a lot of catch up hiring that could take
Speaker 11: place in the coming months. Industries that were hardest hit
Speaker 11: in the recession are sort of finally playing catch up,
Speaker 11: like the government, not an industry, but you know what
Speaker 11: I mean, a sector that was far behind. So I
Speaker 11: think there are lots of reasons to be bullish on
Speaker 11: this labor market still. And then we also just had
Speaker 11: an almost fifteen percent return in the stock market year
Speaker 11: to date and a rebound and consumer confidence. All of
Speaker 11: those things could bode well for job growth in the future.
Speaker 11: There are huge risks, don't get me wrong, but I
Speaker 11: don't think we necessarily are in a bad place.
Speaker 6: I put this question just about every guest we had today.
Speaker 6: I'll put it to you who's in the driver's seat,
Speaker 6: the employers have the leverage or the employees.
Speaker 11: It very much depends on the industry. Talking about goods
Speaker 11: related industries like retail, transportation, and warehousing, workers there have
Speaker 11: seen a large decline in their leverage, and that's because
Speaker 11: consumers are shifting their spending back from goods to services.
Speaker 11: Tech is still a glaring weak spot in this economy,
Speaker 11: with far fewer quits than before the pandemic and more
Speaker 11: layoffs than before the pandemic.
Speaker 4: Can I talk to you a little bit about your
Speaker 4: new higher survey that you include in your note here.
Speaker 4: I love talking about employees ghosting their employers.
Speaker 3: Do you know about this, John?
Speaker 6: All the time there's an increase.
Speaker 4: I'm sure you do, increase in employees ghosting potential employers
Speaker 4: after getting job offers. Julia, what do you make of that?
Speaker 4: And how widespread is this starting to get?
Speaker 7: So?
Speaker 11: In this survey of two thousand recently hired Americans, I mean,
Speaker 11: there's still plenty of sign that workers are confident and
Speaker 11: that they are they have a lot of leverage so
Speaker 11: much so that they don't need to behave well necessarily
Speaker 11: they are, yes, exactly. They're still getting pretty big wage increases,
Speaker 11: they're still getting attractive offers, and they're still finding jobs
Speaker 11: very quickly. And the other thing that they're seeing is
Speaker 11: that companies have made huge improvements in their recruiting and
Speaker 11: hiring processes since the pandemic. They have made those far
Speaker 11: more mobile friendly. They've also adopted more automated tools. That's
Speaker 11: the likely explanation for the increase in the share of
Speaker 11: workers who are getting very quick responses to their applications.
Speaker 11: I think many companies have automated that system and tell
Speaker 11: people right away whether they're likely to get a job
Speaker 11: real quick.
Speaker 6: Can they still work from home or is that changing.
Speaker 11: Work from home has stabilized it? Around twenty eight percent
Speaker 11: of all worked days in America, up from five percent
Speaker 11: before the pandemic. There are industries where you are seeing
Speaker 11: a bit of a pullback now, but on the whole
Speaker 11: it's still very very steady.
Speaker 4: Yeah, And really I just want to mention, because we
Speaker 4: have to leave it. Their job seekers look like in
Speaker 4: your survey, they're becoming more pessimistic across the board about
Speaker 4: current labor market conditions and the medium term economic outlook,
Speaker 4: which is certainly something that I feel myself and amongst
Speaker 4: my friends here. Julia Pollock, thank you so much for
Speaker 4: joining us.
Speaker 3: That was a great conversation. Oh my god, of course
Speaker 3: I am.
Speaker 8: You're listening to the Team Can't Live program Bloomberg Markets
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Speaker 4: We are going to get back to some of that
Speaker 4: job's data from today, and on the line, we've got
Speaker 4: a really fantastic voice on this. We've got Jeffrey Cleveland
Speaker 4: here to discuss the jobs market numbers and also what
Speaker 4: we're seeing in terms of moves from the bond market
Speaker 4: off of that news as well. Jeffrey, thank you so
Speaker 4: much for joining us to talk about what.
Speaker 3: We're seeing here in the market.
Speaker 4: I mean, when you look at this June jobs report,
Speaker 4: it feels like some good news this morning. If you're
Speaker 4: the Fed, bad news yesterday when it came to that
Speaker 4: ie popping ADP number. Talk to me about where you
Speaker 4: think our economy sits when you're looking at the totality
Speaker 4: of that job's data.
Speaker 10: Well, I think the context matters, you know, when you
Speaker 10: look at each report that comes out every month, and
Speaker 10: if you I talked to a lot of economic bears,
Speaker 10: they're my favorite species of market participants in you know,
Speaker 10: they were telling me last month, Hey, you have to
Speaker 10: look at the household survey it was negative. You have
Speaker 10: to look at ours worked. You know, it had ticked down,
Speaker 10: and you know, so lo and behold, we had I
Speaker 10: think a decent non farm payroll number, two hundred and
Speaker 10: nine thousand. We had the household survey component of that
Speaker 10: bouncing back, so that was up two hundred and seventy
Speaker 10: three thousand, hours worked ticked up, and then average hourly
Speaker 10: earnings another point four month to month print. So I
Speaker 10: think you have to look at that full context and
Speaker 10: it's it's a pretty solid report in my view. It
Speaker 10: doesn't tell us, you know, maybe the job growth is
Speaker 10: slowing a bit, bought nothing close to a recession, and
Speaker 10: I even hesitate to call slow. And I mean, we're
Speaker 10: still adding over two hundred thousand jobs in the latest number.
Speaker 10: That three month average of non farm payroll still two
Speaker 10: forty two fifty k. It's really solid. We only need
Speaker 10: like one hundred thousand jobs per month just to keep
Speaker 10: the unemployment rate where it is, So if you're getting
Speaker 10: over two hundred thousand, it's a it's pretty good.
Speaker 6: All right. So what does it tell us about the
Speaker 6: stickiness of inflation.
Speaker 10: Well, I think if you're a policy maker, you're going
Speaker 10: to look at two things here. You're gonna look at
Speaker 10: that three point six percent unemployment rate, and you're going
Speaker 10: to conclude that the risks are still toward inflation pressure.
Speaker 10: That's an unemployment rate that's very low. So we have
Speaker 10: very tight labor markets. I think you heard Powell last
Speaker 10: week he said the goal for the Fed was to
Speaker 10: get the labor market in better supply demand balance. And
Speaker 10: three point six percent on employer rate, it's really tight conditions.
Speaker 10: And then the second thing you'd look at, I think
Speaker 10: would be average hourly earnings again zero point four percent
Speaker 10: month to month. So I've been hearing from the lot
Speaker 10: of the bears they oh, job growth is going to
Speaker 10: roll over, and also ways growth is going to roll
Speaker 10: over any second now, and that's just not happening. It's
Speaker 10: not playing out here. So I think this keeps the
Speaker 10: FED on track to hike we think they will hike
Speaker 10: in July at the July meeting, and we think they're
Speaker 10: on in every other meeting hiking pace right now, So
Speaker 10: that would imply skipping September and hiking again in November.
Speaker 10: So we get the five fifty by year end on
Speaker 10: FED funds.
Speaker 4: What's so interesting to me is that the data and
Speaker 4: the FED moves and the market moves are all over
Speaker 4: the place, but also the vibes of us regular folks
Speaker 4: out in the world. We just talked with an economist
Speaker 4: from Zip Recruiter who talk to us about how the
Speaker 4: majority of job seekers are feeling this pinch of market
Speaker 4: conditions and they feel that they should take the first
Speaker 4: job that they're offered because they're so concerned with the economy.
Speaker 4: From where you sit, Jeffrey, does that square with what's
Speaker 4: actually going.
Speaker 3: To happen in the economy?
Speaker 4: And what do you make of the feeling of anxiety
Speaker 4: with American workers given that we continue to get these
Speaker 4: great jobs numbers.
Speaker 10: Well, just talking to friends and family, we're being constantly
Speaker 10: told that the recession is going to start imminently, right,
Speaker 10: It's going to be dead next week, next month. We've
Speaker 10: been hearing that for a better part of a year
Speaker 10: now really since last June. So if that is what
Speaker 10: the average person is hearing, I can understand a little
Speaker 10: bit of consternation. The data, though the macro data doesn't
Speaker 10: really bear that out. I mean, in terms of labor demand,
Speaker 10: still very very high job openings hanging out around ten million,
Speaker 10: so we're still seeing pretty good labor demand. Now. It's
Speaker 10: down from the peak where we had extreme amount of
Speaker 10: labor demand, but it's still high relative to other cycles,
Speaker 10: so I still think it's a pretty good time to
Speaker 10: be in the market looking for a job. I think
Speaker 10: we also saw that the quits data tick back up.
Speaker 10: Yeah for May. Yeah, we saw that that was the
Speaker 10: paidon and regal chart of the week. If anyone was
Speaker 10: interested in checking that out. We just compared quits you know,
Speaker 10: this cycle are still well above what we saw at
Speaker 10: any point really in the twenty tenths. So I still
Speaker 10: think it's a better environment now, and that's good news
Speaker 10: for someone who's looking for a job or was in
Speaker 10: the labor market. It's better environments than it was for
Speaker 10: much of the twenty tenths, so that's good.
Speaker 6: I don't want to get too geeky, but there was
Speaker 6: an account of as Rudy dorm Bush. Among other things,
Speaker 6: he said that when things turn, they turn pretty quickly.
Speaker 6: Do you get a sense of that.
Speaker 10: Yeah. We always say, like the unemployment rate is a
Speaker 10: good example of this. It falls like a feather and
Speaker 10: it rises like a rocket. So you can see looking
Speaker 10: at the unemployment rate chart that exact story. So that's
Speaker 10: why we're always on guard looking at things just for
Speaker 10: the early hints, in the early signs, you know, initial
Speaker 10: claims for unemployment. That weekly data that comes out tends
Speaker 10: to be a pretty good but you know sign an
Speaker 10: indicator of that. It ticked up recently, but it's been
Speaker 10: hanging out. I would say for the last three or
Speaker 10: four months, around two hundred and forty thousand in the
Speaker 10: weekly claims data.
Speaker 3: So it's moved up.
Speaker 10: It's indicative of a slower job growth, but it's it's
Speaker 10: nothing worrisome. I don't I don't think. I also think payrolls.
Speaker 10: He gets a lot of pushback and people say, oh,
Speaker 10: it's a lagging indicator. But in real time, we're getting
Speaker 10: data for last month, for June, we're getting it released here,
Speaker 10: you know, seven days into the month. It's pretty good
Speaker 10: real time indicator from me from a bond market economist perspective,
Speaker 10: always have relied on that, and as I started this segment,
Speaker 10: two hundred and forty four thousand, the three month moving
Speaker 10: average of non payroll growth, it's a pretty good indicator
Speaker 10: of where we are. It's it's slowed down, so growth
Speaker 10: has slowed from a year ago, six months ago, but
Speaker 10: still very solid job growth.
Speaker 6: So you're a bond market he's a bond market economist.
Speaker 6: So that means you are a pessimist, is it not.
Speaker 10: I'm supposed to be. Yeah, I'm supposed to be out
Speaker 10: here telling you that, you know, inflation is rolling over,
Speaker 10: it's time to buy bonds, you know, exten duration. But
Speaker 10: I would like to think that I'm objective. I'm just
Speaker 10: looking at the data here. Yeah, we're very far from
Speaker 10: the Fed's target on inflation. Yeah, the unemployment rate is
Speaker 10: very low, and I think their bias from policy makers
Speaker 10: is going to be to keep hiking, So that's going
Speaker 10: to keep putting pressure on front end yields. So you're too.
Speaker 10: You know, yesterday we did see two year yields creep
Speaker 10: above five percent, which makes sense to me. We're back
Speaker 10: below this morning. I think we'll move back above. At
Speaker 10: some point, the Fed's got two more rate hikes.
Speaker 3: That's the gott.
Speaker 10: To face the facts here. So that's what bond market
Speaker 10: participants have to face those facts. Don't fight the Fed.
Speaker 4: Okay, well, since you brought it up, I got to
Speaker 4: talk to you about the yield curve because we are
Speaker 4: seeing a little bit of a moderation when it comes
Speaker 4: to the twos tens inversion. Are you thinking that the
Speaker 4: bond market is seeing something that the Fed isn't when
Speaker 4: it comes to where this economy is going.
Speaker 10: Go talk to our traders on the trading floor. They
Speaker 10: would tell you, yes, the bond market, bond investors are smart.
Speaker 10: Maybe they are, But you think about the yield curve.
Speaker 10: I've always I've always loved looking at the yeld curve,
Speaker 10: but it can have long lags to when it actually
Speaker 10: signals a downturn. So I remember this very well. If
Speaker 10: you go back to say the two thousand and six era,
Speaker 10: if you're looking at the yield curve, you started to
Speaker 10: get concerned, but the recession didn't begin until end of seven.
Speaker 10: So people tend to go early if they just focus
Speaker 10: on the yield curve. So that's the thing. It could
Speaker 10: be long lags. Not to ignore the yield curve. You
Speaker 10: got to look at there's information there, but it could
Speaker 10: be long lags. I also think there's some unique features
Speaker 10: this time. I mean, inflation is higher than it has
Speaker 10: been at any time really in the last forty years.
Speaker 10: So in typical business cycles, you haven't really had to
Speaker 10: think about, well, what's going on in the front end.
Speaker 10: Why is the front end so high? The front end
Speaker 10: is high and yield because the FED is trying to
Speaker 10: stamp out inflation. I think the bond market has a
Speaker 10: bit different forecast for inflation than we do. The bond
Speaker 10: market has been perpetually expecting inflation to come down much
Speaker 10: more quickly, and so maybe that's the reason why five
Speaker 10: year yels and ten year yields have been a bit lower.
Speaker 10: So as you, as you pointed out in the last
Speaker 10: day or so, the long end even moved up, and
Speaker 10: I think, yeah, yeah, I think that's a recognition of
Speaker 10: the fact that, hey, things are you know, the economy
Speaker 10: is in better shape. We're not getting that recession everyone advertised.
Speaker 10: Inflation is a bit more sticky. The FED is going
Speaker 10: to be higher and maybe higher for longer, and that
Speaker 10: does tend to have some impact on five intentions and.
Speaker 3: Maybe a soft landing.
Speaker 10: You think, yeah, you know, this morning, one of my
Speaker 10: colleagues ping me. He said, oh, this is goldilocks, this
Speaker 10: is this is a soft landing report. We've got a
Speaker 10: very low unemployment, we've got a little bit of a
Speaker 10: slowdown in job growth, so it's possible. We wrote a
Speaker 10: piece at the beginning of the year, you know, we
Speaker 10: said we said it's the case for a soft landing.
Speaker 10: It may not be the base case, but something everyone
Speaker 10: should think about. So we're we're leaning towards that. What
Speaker 10: in this I don't think was really a soft landing
Speaker 10: was probably the average early earnings because that's still coming
Speaker 10: in a little bit hot. But remember the unemployment rate
Speaker 10: stays low as job openings come down, that's your soft landing.
Speaker 10: That's your You think about the the beverage curve kind
Speaker 10: of relationship. You get, you get an easing of labor
Speaker 10: demand and the unemployment rate doesn't rise, that's your soft landing.
Speaker 10: So it's it's possible. With a three point six unemployment rate,
Speaker 10: we're on we're on track for it. I wouldn't rule
Speaker 10: it out.
Speaker 6: Keep in mind, Madison, the Goldilocks story that had three
Speaker 6: bears in it. Wow, where are you? Because we got
Speaker 6: like twenty seconds left. Because I'm interested in anecdotal you know,
Speaker 6: what's the local economy there? I'm looking out the window.
Speaker 6: Where are you?
Speaker 10: This is downtown LA. I don't know. If you can
Speaker 10: see the background, you can probably see the Hollywood signs.
Speaker 10: So we are where paid in Rigel is located. That Actually,
Speaker 10: if you want to be bearish, if you want to
Speaker 10: be bearish, the story that I would tell is I
Speaker 10: would say, hey, look at the un the plot on
Speaker 10: your Bloomberg terminal, the California and unemployment rate. It's bottomed
Speaker 10: out about a year ago at three point nine. It's
Speaker 10: at four point five right now, so it's risen point
Speaker 10: six percentage points, while you know, the unemployment rate nationwide
Speaker 10: is low.
Speaker 6: Got to run.
Speaker 10: California's a big economy, so that's all.
Speaker 3: That's the best fourth largest there.
Speaker 4: Jeffrey Cleveland, director and chief economist at Pagan Regal, Thank.
Speaker 3: You so much.
Speaker 8: You're listening to the tape. Catch are live program Bloomberg
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Speaker 4: This is very exciting stuff. Me and my friends are
Speaker 4: all really pumped. I know that you'll you'll be joining
Speaker 4: us at the theater John, for the new Barbie movie.
Speaker 4: One of the reasons we're so pumped is because of
Speaker 4: the amount of money getting poured into branding for the film.
Speaker 3: So we're going to talk about all of this.
Speaker 4: It's today's big Take story, and we've got Kelly Gilblam
Speaker 4: on the line, our Bloomberg News editor out in LA,
Speaker 4: to discuss it with us.
Speaker 3: Kelly, thanks for being patient with us as we Is this.
Speaker 6: A kid movie or an adult I mean for older
Speaker 6: people adult?
Speaker 7: Yeah, thank you for your interest in Barbie. It's actually
Speaker 7: not really a kid movie. It's rated PG thirteen. If
Speaker 7: you've seen the trailer, you can see that it has
Speaker 7: a lot of sexual innuindow and.
Speaker 6: So it's not creepy. If Charlie goes to see it.
Speaker 3: By himself, John, it's it's for adults.
Speaker 4: It's for adults well, and it was very expensive to
Speaker 4: make and so it's it's a big bet on those
Speaker 4: adults coming in to buy tickets, right, Kelly.
Speaker 7: Yeah, it was very expensive to make. It was one
Speaker 7: hundred million dollars. Mattel, which owns the Barbie brand, didn't
Speaker 7: actually pay for the budget. It licensed the brand to
Speaker 7: Warner Brothers, which covered the budget. But Mattel is definitely
Speaker 7: taking a big bet for itself on the overall perception
Speaker 7: of the brand. If you, you know, recall hearing about
Speaker 7: Barbie dolls at any point in your life, they can
Speaker 7: be pretty controversial. So so they're really hoping that people
Speaker 7: are more endeared to them after this movie comes out.
Speaker 3: Yeah. Well, and also it's interesting.
Speaker 4: Because they have a tough challenge with the Barbie kind
Speaker 4: of stereotype that they have to sort of rebrand as
Speaker 4: like a new age feminist character.
Speaker 3: What can you tell us, Kelly about the likelihood of
Speaker 3: Warner Brothers being able to do that?
Speaker 7: It seems like from the response so far, they've mostly
Speaker 7: managed to pull it off. It's gone Everything about it
Speaker 7: has gone viral. People are so excited. The box office
Speaker 7: tracking figures keep going higher and higher and higher, and
Speaker 7: it's one of the rare movies that's actually targeted toward women.
Speaker 7: You know, we calculated only like six percent of movies
Speaker 7: with this type of budget are for women. So I
Speaker 7: do think it will it will make a big impact
Speaker 7: and could possibly pull off this reputational move that they're
Speaker 7: trying to make.
Speaker 6: The story is great, I mean, it's the history of
Speaker 6: this is fascinating, well to the extent that it can
Speaker 6: be fascinating to somebody like me. But there's actually the
Speaker 6: Barbie and Ken are actually named for the founders of Mattel,
Speaker 6: their kids.
Speaker 7: Right, that's right. Yeah, Ruth Handler was the inventor of
Speaker 7: Barbie and one of the founders of Mattel. It's a
Speaker 7: long time chief executive officer, control of operations, in control
Speaker 7: of operations there. And yeah, she saw a German doll
Speaker 7: that was actually for adults.
Speaker 6: Oh, let's be clear. This is a German sex doll
Speaker 6: on which Barbie is based, right.
Speaker 7: Do I have? I mean it was for bachelor parties people,
Speaker 7: you know, sent it around as a gag gift, and
Speaker 7: she thought it would be great for you know, if
Speaker 7: she kind of remade it more targeted for kids, would
Speaker 7: be great for her daughter, Barbara. And then a few
Speaker 7: years later Ken rolled out.
Speaker 4: Yeah, and Ken her brother either way, right right, right,
Speaker 4: very you always bring us the fun facts here, John.
Speaker 4: I also feel like Kelly Greta Gerwig as the director
Speaker 4: here is an important choice because she has kind of
Speaker 4: a history of making these inclusive films that center female
Speaker 4: characters as the main subject.
Speaker 8: Yeah.
Speaker 7: I think she's one of the pre eminent female you know,
Speaker 7: coming of age genre directors writers. She's come to prominence
Speaker 7: in recent years, especially with Little Women her remake, and
Speaker 7: with Lady Bird, both Oscar nominated films. I think one
Speaker 7: actually won an Oscar, so that was a big, a
Speaker 7: big get for them, and that was it was actually
Speaker 7: Margot Robbie who's playing Barbie, who was able to make
Speaker 7: that connection and recommended her as a screenwriter.
Speaker 3: Oh cool, I didn't know that. That's really cool.
Speaker 6: Now is Barbie? What does this do for Barbie? This film?
Speaker 6: If it's a flop, does Mattil get crushed? Is Barbie
Speaker 6: even relevant anymore?
Speaker 7: I think that's the big question for Mattel is how
Speaker 7: relevant is Barbie gonna be? It really went through a crisis,
Speaker 7: the whole company did, because Barbie fell out a step
Speaker 7: with society. They remade The Doll in twenty sixteen and
Speaker 7: made it more inclusive with different body types and that
Speaker 7: sort of thing. So this is trying to showcase that work,
Speaker 7: but it doesn't really. I mean, analysts aren't really seeing
Speaker 7: a big Toy sail bump in twenty twenty three. It
Speaker 7: could be more long term, and I think the real
Speaker 7: value for Mattel would come if they can turn it
Speaker 7: into a broader franchise, like a Marvel type of franchise,
Speaker 7: you know, where you have a Ken movie spin off
Speaker 7: and a Skipper TV series and a you know, roller
Speaker 7: coaster and that sort of thing.
Speaker 6: I was traumatized by Barbie. My sisters had it, and
Speaker 6: they used to take the legs and they'd hit me
Speaker 6: with it. So I had these like two little bruises
Speaker 6: where Barbie's breasts hit me in the you know.
Speaker 3: It's just like sorry to hear that, John. Hopefully you
Speaker 3: can you can go watch this movie and get a
Speaker 3: little bit.
Speaker 6: Has anybody seen it yet or is it you're waiting
Speaker 6: for reviews and all that stuff.
Speaker 3: It's it's coming out in July, right, Kelly later later, Yeah,
Speaker 3: a couple of weeks.
Speaker 7: That's right. Some people have seen it. They're all critics.
Speaker 7: Their reviews should start coming on the thirteenth, and then
Speaker 7: it's world premiere is on Sunday, but it's released wide
Speaker 7: on the play first.
Speaker 4: Thank you, Kelly for those listening on radio not seeing us.
Speaker 4: My hand is physically out in front of John to
Speaker 4: kind of control the commentary here when it comes to.
Speaker 6: Barbie, because you're going to hit me with your Barnbach.
Speaker 3: All right, Kelly, thank you so much for joining us.
Speaker 4: Sorry, things are getting a little crazy as we wrap
Speaker 4: up our show, but it's an incredible story.
Speaker 3: It's Today's Big Take.
Speaker 4: You can find it on Bloomberg dot com or on
Speaker 4: the terminal wherever you get your Bloomberg News. It's also
Speaker 4: the Big Take podcast, which you can download wherever you
Speaker 4: get your podcasts as well. It's incredibly well researched. They
Speaker 4: go through everything when it comes to Mattel and the
Speaker 4: Barbie movie. Highly recommend giving it a read or listen
Speaker 4: over the weekend.
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can
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Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
Speaker 2: at Matt Miller nineteen seventy three, and I'm fall Sweeney.
Speaker 1: I'm on Twitter at Ptsweeney Before the podcast, you can
Speaker 1: always catch us worldwide at Bloomberg Radio