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Speaker 2: Well, as we mentioned earlier, the US job market remains resilient,
Speaker 2: to say the least. Job growth in April broad based,
Speaker 2: reflecting gains and healthcare, professional and business services, as well
Speaker 2: as leisure and hospitality. We're going to talk a little
Speaker 2: bit more about leisure and hospitality later on with the
Speaker 2: CEO of Trevago. Keep in mind, though the two prior
Speaker 2: months apparels were revised lower by a combined one hundred
Speaker 2: and forty nine thousand, so important to factor that in
Speaker 2: as well.
Speaker 3: Well.
Speaker 2: Back with this on what she is seeing in terms
Speaker 2: of employment needs is Becky Frankowitz. She's Chief Commercial Officer,
Speaker 2: President of North America at Manpower Group. She joins us
Speaker 2: via Zoom from Milwaukee. Becky, good to have you back
Speaker 2: with us. Tell us we got another strong jobs report.
Speaker 2: We saw some revisions the prior to What are you
Speaker 2: seeing specifically, what words would you describe or use to
Speaker 2: describe the current labor market and how it compares to
Speaker 2: maybe the last few months.
Speaker 4: Yeah, so I would say, you know, better than expected
Speaker 4: job numbers. I like to do the analogy. It shows
Speaker 4: the promise of spring. You know, very low unemployment three
Speaker 4: point four percent CAROL, matching the all time low of
Speaker 4: nineteen sixty nine, so very tight labor market. Two hundred
Speaker 4: and fifty three thousand jobs created. Not so, you know,
Speaker 4: there's some clouds on the horizon. We're not seeing labor
Speaker 4: force participation come back at the rate that we want.
Speaker 4: You mentioned the revisions are now material. One hundred and
Speaker 4: forty nine thousand is material, and I would say that
Speaker 4: the third kind of storm cloud we want to keep
Speaker 4: our eye on is temporary staffing is now in decline,
Speaker 4: which you know is often referred to as the canary
Speaker 4: in the coal mine in terms of going into an
Speaker 4: economic slowdown. So I think very good overall numbers. Another positive,
Speaker 4: by the way, is reabsorption, and so as people are
Speaker 4: laid off, their being reabsorbed very quickly, as we saw
Speaker 4: continue to unemployment claims tick down. So there's lots of
Speaker 4: in a few storms on the horizon we want to
Speaker 4: keep our eye on.
Speaker 5: Becky I'm curious to hear about what industries are seeing
Speaker 5: some strength when it comes to job growth, whereas other
Speaker 5: industries that are struggling right now.
Speaker 4: Yeah, so medical IT and sales are making up forty
Speaker 4: four percent of all the open jobs in our country
Speaker 4: right now, Medical IT and sales, So lots of strength there.
Speaker 4: And again this is we know the job's numbers are
Speaker 4: looking backward. I'm giving you real time data today in
Speaker 4: the country. We're also seeing strength and you mentioned it
Speaker 4: in your opening in hospitality and leisure. Retail starting to
Speaker 4: come back in a very interesting fact. So you know,
Speaker 4: the probably the last two years we've talked about the
Speaker 4: three most in demand roles in our country have been
Speaker 4: registered nurses, software developers and logistics or truck drivers. It's
Speaker 4: been the same for at least two years. We've seen,
Speaker 4: for the first time in two years, truck drivers drop down.
Speaker 4: They're not in the top five or ten, and surprisingly
Speaker 4: in the number three position now after registered nurses and
Speaker 4: software developers is stock clerks definitely indicating the return to retail,
Speaker 4: So nurses, software and now for stock stock clerks, so
Speaker 4: that clerk, So that plays into the retail sector specifically.
Speaker 2: Absolutely, what does that tell you that's an interesting switch
Speaker 2: because I would kind of say that you need logistics
Speaker 2: and supply to bring the stuff to the stores so
Speaker 2: that the stock clerks can do something with it.
Speaker 4: Yes, well, it's still but it would think about the way.
Speaker 4: What it indicates is the way we're shopping has changed.
Speaker 4: Logistics is still you know, in the top twenty in
Speaker 4: terms of jobs in demand, but it's the first time
Speaker 4: I've seen it fall out of the top three. And
Speaker 4: it tells you that the way we are shopping has changed.
Speaker 4: So you know, we're going back in physical retail, still
Speaker 4: shopping online, but back in physical retail. And it tells
Speaker 4: you that, you know, people are traveling more and so
Speaker 4: going and stocking up before they head out for spring
Speaker 4: break or head out for summer travel with retail expenditure
Speaker 4: and so it's the other interesting fact is if you
Speaker 4: think about who's hiring, what companies are hiring. You know,
Speaker 4: Clips the hair company shipped, so you know a little
Speaker 4: counter they're now back on the hiring and then back
Speaker 4: in the top five and they had dropped out. Surprisingly
Speaker 4: Amazon top three companies hiring in the country today.
Speaker 5: Oh wow, I'm curious to hear more about what you're
Speaker 5: seeing on the wage front, because we did. When you're
Speaker 5: looking at these month over month numbers in this latest report,
Speaker 5: it rose about five tenths of a percent. Animals, we're
Speaker 5: thinking you'd be round three tens of a percent. Obviously,
Speaker 5: wages have been such a big thing that we know
Speaker 5: the Federal Reserve is watching. What do you see there?
Speaker 4: Yeah, so we have continued to see robust wage growth.
Speaker 4: I would say the rate of increase has slowed, but
Speaker 4: I like to look at it in two parts, and Jess,
Speaker 4: I think that was your question. I love to look
Speaker 4: at it in two parts. What is the wage growth
Speaker 4: for people staying in their job, and that's about five
Speaker 4: point six percent increase year over year if you stay
Speaker 4: in your job, and if you change jobs, it's up
Speaker 4: to a thirteen point two percent increase. So we still
Speaker 4: are in a labor market that's in sinning movement and
Speaker 4: senting people to change jobs. So wage growth continues. The
Speaker 4: pace is a little slower, but the increase divided by
Speaker 4: those who stay in those who move jobs, still very robust.
Speaker 2: That's interesting. So you know, maybe that is what we
Speaker 2: continue to see pop up in a jolt surveys because
Speaker 2: there's still a lot of movement around here. So you know,
Speaker 2: Becky add it all up. Does it say to you
Speaker 2: have recession?
Speaker 3: Folks?
Speaker 2: Are you crazy? Or I continue to I've been kind
Speaker 2: of asking this for a long time. Could we see
Speaker 2: slow down, recession even but with a strong job market.
Speaker 4: I think that's a that's actually a fantastic question. What
Speaker 4: I would say is we do anticipate some cooling. We've
Speaker 4: seen some slow down in demand in a couple of areas.
Speaker 4: I've talked about the top demand, but a little slow
Speaker 4: down in finance and accounting, in research and development in
Speaker 4: terms of demand. So some of the professional manufacturing industrials,
Speaker 4: you know, slowing down a bit in demand. So I
Speaker 4: think we're going to see a cooling. But I think
Speaker 4: we may see a recession or a slow down with
Speaker 4: a strong job market than we've seen historically in those times.
Speaker 4: I'm not sure it will it will have the free
Speaker 4: fall that we're all expecting.
Speaker 2: Are people still labor hoarding? Which has been like a
Speaker 2: new which has been a new phrase that has come
Speaker 2: out of all of this. But this is basically companies,
Speaker 2: because they know it's such a tight labor market, saying
Speaker 2: I'll hold on to these workers because I know things
Speaker 2: are going to turn around, rather than let folks go.
Speaker 4: Well, it's a little bit of an overhang of pandemic paranoia.
Speaker 2: You know.
Speaker 4: I had to let people go that I couldn't find anyone,
Speaker 4: so then I hoarded all the labor and didn't let
Speaker 4: them go. And yes, we are seeing people hold on
Speaker 4: to the talent they have and in addition hire for
Speaker 4: really specific in demand roles. I do want to caution
Speaker 4: all of us though, this tick down and temp hiring
Speaker 4: is traditionally the leading indicator for going into an economic slowdown.
Speaker 4: And yeah, temp powering fall. In fact, it's down, you're
Speaker 4: over year almost one hundred and seventy thousand jobs, and
Speaker 4: so that we all need to keep an eye on that.
Speaker 5: What's a particular threshold when it comes to that metric
Speaker 5: that would be more of a red flag to you.
Speaker 4: Yeah, so I think the decline is the first, you know,
Speaker 4: the month over month decline. We've seen it for several
Speaker 4: several months now, and it's been a little sporadic. Like
Speaker 4: everything else. It'll decline and it goes back up, and
Speaker 4: it declines again. But I'd say we're in the territory
Speaker 4: now where labor hoarding people will hold onto their permanent workers,
Speaker 4: but in fear of recessionary conditions, they won't hire the
Speaker 4: additional flexibility from a temporary workforce. And so I would
Speaker 4: say we see enough of a yellow flag. I will't
Speaker 4: say red flag, a yellow flag now to keep a
Speaker 4: very close eye on it.
Speaker 2: Go back to when you said Amazon now was among
Speaker 2: the top three companies in terms of hiring. They had
Speaker 2: dropped out. That's based on what data. And I'm curious
Speaker 2: how who else is in that top three?
Speaker 4: Yes, so in the number one position is great Clips,
Speaker 4: so the hair haircutter. Then you have shipped the online
Speaker 4: retailer who had been not even on the list, so
Speaker 4: you know they what happened there is they weren't hiring
Speaker 4: at all, and now they have some needs to catch
Speaker 4: up with the summer travel and stocking up. And then
Speaker 4: number three was Amazon. So what's happening there is we're
Speaker 4: starting to see those stocks, you know, a different version
Speaker 4: of stock clerks, but seeing that same retail phenomenon start
Speaker 4: to come back into the economy.
Speaker 2: Where's that data from?
Speaker 4: Oh, yes, I'm sorry to answer that. That's we actually
Speaker 4: scan all of the open jobs in the country. We
Speaker 4: scan them all and we aggregate the data and that's
Speaker 4: the source, so any without duplication, so there is a
Speaker 4: duplication in the data.
Speaker 5: We only have about forty five seconds left, but I
Speaker 5: wanted to follow up because you had mentioned obviously those
Speaker 5: finance jobs where we saw those starting to lose that momentum.
Speaker 5: Is that clearly the obvious reason of what we've been
Speaker 5: seeing the past few months there with those what's been
Speaker 5: happening with the stress and the regional banks.
Speaker 4: Yes, I think they're definitely related. You know, if you
Speaker 4: think about the macro trends that drive changes in the
Speaker 4: labor market, one of course is banking and the other,
Speaker 4: you know, depression of demand we're seeing is anything related
Speaker 4: to inflation, so durable goods starting to be under pressure.
Speaker 4: So it's all tied to the economy.
Speaker 2: That's why we like talking to you man. You give
Speaker 2: us the specific stats, you give us perspective. I am
Speaker 2: like blown away by that Amazon right figure, because it's
Speaker 2: they've certainly been among those, you know, who are cutting
Speaker 2: coming off of the pandemic.
Speaker 5: So retailers in the summer, stalkers as well.
Speaker 2: Stockers did you say, are stokers.
Speaker 5: Stalker's access accent.
Speaker 2: Becky, thank you has always have a great week. And
Speaker 2: Becky Frankowitch. She's Chief Commercial Officer, President of North America
Speaker 2: Manpower Group.
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Speaker 2: All right, as promised, we want to talk a little
Speaker 2: bit about the travel and use your in hospitality space,
Speaker 2: and we have a great guest with us. We've talked
Speaker 2: a lot about folks traveling again again continuing post pandemic.
Speaker 2: So we'll see what Axel Heefer is seeing firsthand. He's
Speaker 2: CEO at Travago. He joins us on Zoom from Dusseldorf, Germany.
Speaker 2: So nice to have here with us. Axel. First off,
Speaker 2: how are you.
Speaker 3: I'm good. I'm good. Traveler is coming back now even
Speaker 3: in Asia, so yeah, well getting better every day.
Speaker 2: Well, tell us a little bit and we want to
Speaker 2: drill down a little because we've gotten from a lot
Speaker 2: of companies. Your company reported earnings. We've heard from Expedy
Speaker 2: and Booking, They Booking Holdings, they both reported double digit
Speaker 2: increases and gross bookings in the first quarter. Investors reacted
Speaker 2: a little bit differently to each of those. You guys
Speaker 2: came out and reported on Tuesday, shares did sell off
Speaker 2: on Wednesday. I just want to go there first of
Speaker 2: First off, what are you hearing from the ALS community
Speaker 2: investors about your results specifically?
Speaker 3: Yeah, so, I guess they if you're looking at our results,
Speaker 3: and we've we've seen solid growth in the first quarter,
Speaker 3: and we've we've seen a slightly lower margin that we
Speaker 3: had last year because we started to invest into our
Speaker 3: brand marketing and into our hotel direct initiative to prepare
Speaker 3: for the sum The reaction on earnings is always against expectations,
Speaker 3: so so apparently expectations have been higher than what we delivered.
Speaker 3: But we're we're happy with with our results and we
Speaker 3: think we are on good track forward summer, So you.
Speaker 2: Expect and then those investments that you're making to work
Speaker 2: and get through the summer, that'll you'll see that in
Speaker 2: subsequent quarters that will pay off.
Speaker 3: Yeah. I mean, I guess you have obviously your your
Speaker 3: your direct direct performance marketing investment that have an immediate payoff.
Speaker 3: And then we've always been very strong in in brand marketing,
Speaker 3: and they're in particularly in TV. You produce our spots
Speaker 3: in house, we we test them in house, et cetera.
Speaker 3: So that's that's one of our core strengths, and they're
Speaker 3: the payoff is it's not immediate, but you get significant
Speaker 3: payback within the first year, and then you're obviously building
Speaker 3: it up and coming out of the pandemic, we obviously
Speaker 3: need to build up that that brand equity and and
Speaker 3: revamp it in a way so you will see the
Speaker 3: positive effect of the campaigns really of the quarters to come.
Speaker 5: Something that I thought was interesting, you did have a
Speaker 5: survey recently that showed that consumers they were comparing prices
Speaker 5: more than they had been, especially as we are going
Speaker 5: into the summer travel season. What is this telling you
Speaker 5: and telling all of us really about the consumers as
Speaker 5: far as just trying to find cheaper prices at this
Speaker 5: point when inflation obviously is still troubling for some of
Speaker 5: these ticket prices.
Speaker 3: I mean, that's exactly the reason. I mean, the inflation
Speaker 3: is sky high in most of the western countries and
Speaker 3: there real wage contractions in quite a lot of countries,
Speaker 3: so consumers need to save money and they saved money
Speaker 3: in the daily groceries, and they saved money when they
Speaker 3: are traveling. But what is interesting is that that people
Speaker 3: do want to travel. So what they do is they
Speaker 3: compare more prices. As you said, So in the US
Speaker 3: and our survey, more than sixty percent of Americans said
Speaker 3: that they are comparing more hotel prices than they've done before.
Speaker 3: Travelers are cut in their trips short slightly, so the
Speaker 3: length of the average trip is contracting. And the third,
Speaker 3: which I think is probably the most interesting, as travelers
Speaker 3: are becoming more and more flexible in terms of destination,
Speaker 3: so they are going for a similar experience, but a
Speaker 3: cheaper destination. So if you're looking at at the two
Speaker 3: most interesting pairs from a US perspective, Canada is down
Speaker 3: relatively speaking, Mexico is up in terms of nearby a
Speaker 3: new shore international travel, UK down, and Turkey up. But
Speaker 3: the theme is the same. So it is a trip abroad,
Speaker 3: but it is a slightly cheaper experience. And that's how consumers,
Speaker 3: and that's not learning in the US, that that's pretty
Speaker 3: much everywhere in the Western world, are trying to compensate
Speaker 3: for some of the price increases that that you see everywhere.
Speaker 2: Does what you're seeing axels say to you recession in
Speaker 2: terms of what consumers are doing, are just being prudent.
Speaker 3: I don't think I would talk about a recession. I mean,
Speaker 3: we think that the travel market overall will be up,
Speaker 3: but it will not be up as much as the
Speaker 3: prices are up also, so consumers are obviously trying to
Speaker 3: soften the impact of the price increases. But still, I mean,
Speaker 3: it's a good market, but people cannot print money, so
Speaker 3: they can only spend a dollar once.
Speaker 5: And you're talking about these different regions. I mean, how
Speaker 5: much of a boost when it comes to the reopening
Speaker 5: in China in particular, do you think that'll have on
Speaker 5: that particular corner of the market, I.
Speaker 3: Mean the Asia. I mean this is the year of Asia,
Speaker 3: that's for sure. I mean we don't only have China.
Speaker 3: We also have Japan that reopened more recently. We don't
Speaker 3: operate in China. So China for US is only a destination,
Speaker 3: but it's a very very important destination for many of
Speaker 3: our Asian markets, Singapore, Hong Kong, Taiwan, and South Korea, Japan,
Speaker 3: et cetera. Japan is for US both. I mean the
Speaker 3: country will operated so it's it's an outbound inbound market
Speaker 3: and we see very strong growth there and we see
Speaker 3: exactly the same thing that we've seen in the West
Speaker 3: last year and the year before that. There there is
Speaker 3: a huge pandal demand of people that do want to
Speaker 3: see their friends, they do want to visit family, they
Speaker 3: do want to see business partners, and then there's a
Speaker 3: wave of travel coming, you.
Speaker 2: Know, axel over over the last few years, certainly, you know,
Speaker 2: during the pandemic. Out of the pandemic, we've talked about
Speaker 2: a lot of bigger, broader macro issues of running a company,
Speaker 2: and you know, one of the things is accessing a
Speaker 2: workforce and you tap into a global workforce in a
Speaker 2: big way. Where are you on that Are you hiring?
Speaker 2: Do you need to hire? What can you tell us
Speaker 2: about that? On a day where we were focused on
Speaker 2: us jobs.
Speaker 3: Yeah, I mean we we are. We are hiring, of course,
Speaker 3: I mean you need to hire. The labor market in
Speaker 3: particularly for for highly skilled labor is very tight and
Speaker 3: Europe and we are in a fortunate position that we
Speaker 3: do have a global brand and we can attract people
Speaker 3: from all over the world. So right now we are
Speaker 3: down to fifteen percent of our new colleagues are from Germany.
Speaker 3: Eighty five percent are from outside of Germany. India is
Speaker 3: a strong country where we are recruiting from. Russia actually
Speaker 3: has become a lot stronger in the last twelve months
Speaker 3: for obvious reasons. Yeah, so I think you absolutely need
Speaker 3: to recruit internationally if you want to fill a specialist positions.
Speaker 2: Tell me about India specifically, because I feel like in
Speaker 2: the last couple of months the discussion and narrative around
Speaker 2: India has changed dramatically, and some of it has to
Speaker 2: do with Apple in terms of it increasingly focusing on
Speaker 2: that not only as a place to produce, but also
Speaker 2: to sell. Is that something too that you are pivoting
Speaker 2: more towards or is that Just talk to us a
Speaker 2: little bit about that if you would.
Speaker 3: Yeah. I mean for us, it's a bit different because
Speaker 3: we just operating out of one office. So for us,
Speaker 3: it's more the strength of our brand and the local market.
Speaker 3: And India is a very big market for us because
Speaker 3: it's a very big country and we we're not operating
Speaker 3: in China, so it's the biggest country that we operate in,
Speaker 3: and that's why there's always been strong Russia. As I
Speaker 3: said has become a more important market to recruit and
Speaker 3: Africa actually is also growing very quickly as as a
Speaker 3: region where we can recruit top talent from.
Speaker 5: We only have about a minute left, but Carol and
Speaker 5: I have talked to so many different people about how
Speaker 5: AI has impacted their business. It's curious. How do you
Speaker 5: use AI when it comes to your platform.
Speaker 3: Yeah, it's it's an interesting question. I mean our platform
Speaker 3: has been run on AI or on machine learning for
Speaker 3: a very long time. I mean we use machine learning
Speaker 3: algorithms to to to ensure that we show the right
Speaker 3: hotels in the right place and the right prices. If
Speaker 3: you if you think more about CHEDGPT and the next
Speaker 3: generation of AI, that's very very interesting for certain applications
Speaker 3: on the travel space. It's more for the inspiration phase
Speaker 3: from our perspective, So if you don't really know where
Speaker 3: to go and when to go, and then it is
Speaker 3: obviously extremely valuable if you want to generate a lot
Speaker 3: of content in an automated way. So it will make
Speaker 3: a difference with the industry and you need to stay
Speaker 3: open minded of course, and then that's what we've always.
Speaker 6: Been doing well.
Speaker 5: Ax.
Speaker 2: We always appreciate the time with you. I know it's
Speaker 2: a little bit later over there, so thank you so much.
Speaker 2: Have a great weekend. Axl He for his chief executive
Speaker 2: officer of Travago. On zoom from Dusseldorf, Germany.
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Speaker 1: Just Say Alexa play Bloomberg eleven thirty.
Speaker 2: On the Bloomberg story I read in earlier this morning
Speaker 2: about New York Attorney General Letitia James proposing a state
Speaker 2: a lot of titan rules over cryptocurrency companies. It's her
Speaker 2: latest swing at an industry she claims is suffering from
Speaker 2: quote rampant fraud and dysfunction.
Speaker 3: Now.
Speaker 2: Under her proposal, New York would require independent public audits
Speaker 2: of crypto exchanges and bar people from owning both brokerages
Speaker 2: and tokens to prevent conflicts of interest. In the statement today,
Speaker 2: James calling her proposal quote the strongest and most comprehensive
Speaker 2: set of regulations at cryptocurrency in the nation and I
Speaker 2: got to say, just one thing we know for sure,
Speaker 2: after the carnage of the last year or so, regulators
Speaker 2: are looking very very closely at cryptocurrencies and anything related
Speaker 2: with it, and.
Speaker 5: Even just the dynamic of how say, Bitcoin in particular
Speaker 5: was performing, especially in March, right in the midst of
Speaker 5: what was happening with the banks, I mean, especially after
Speaker 5: we just got off of April. This is the longest
Speaker 5: winning streak for bitcoin since twenty twenty one.
Speaker 2: But a lot of holatility and still trying to understand
Speaker 2: how it all fits together going forward. And on that.
Speaker 2: In our weekly crypto segment, we have with us Christopher Alexander.
Speaker 2: He's Chief Communitycations Officer at Liberty Blockchain. They're a blockchain provider.
Speaker 2: He joins us via zoom from Seattle. Christopher, nice to
Speaker 2: have you here on Bloomberg Radio.
Speaker 7: How are you good?
Speaker 6: Good?
Speaker 7: Thank you. Checked in on what was going on with
Speaker 7: the news, and it came across the decision in New York,
Speaker 7: so an eventful day.
Speaker 2: What do you make of that specifically, Well, I haven't.
Speaker 7: Looked closely at it, to be honest, kind of skimmed
Speaker 7: it listening to your description of it. The concern that
Speaker 7: I have is a lack of understanding by regulators of crypto,
Speaker 7: and I think the biggest breakdown is understanding the difference
Speaker 7: between blockchain and crypto. And you know, crypto is the
Speaker 7: byproduct of essentially time sharing your computer to serve as
Speaker 7: a server excuse me, on a form of internet, and
Speaker 7: you can speculate, sorry, excuse me, you can speculate on
Speaker 7: exchanges with coins. Blockchain is the technology with is amazing potential.
Speaker 7: And when you conflate the two and treat blockchain mining
Speaker 7: and certain things the same as if we're crypto, that's
Speaker 7: where these problems really break down. And I'm a little
Speaker 7: concerned about what they're trying to do in New York
Speaker 7: and how they're stunting the technological development in order to
Speaker 7: deal with a exchange type of issue.
Speaker 5: In what ways would this end up impacting the technology
Speaker 5: behind When we're looking at blockchain in particular, whether it's
Speaker 5: in New York or when we hear obviously officials in
Speaker 5: Congress debating about different regulations.
Speaker 7: Well, I'll give you a great example. There's a mining
Speaker 7: brig of sorts, and it is essentially a piece of
Speaker 7: computer hardware and the signal from the SEC who won't
Speaker 7: actually give us rules as an industry, despite our repeatedly
Speaker 7: asking and Coinbase now suing to compel them to start
Speaker 7: making rules instead of just regulating by enforcement. Their argument
Speaker 7: is that it is a security well by way of analogy,
Speaker 7: what they're saying is, if you buy stocks with the
Speaker 7: computer because you're day trading online, your computer is a
Speaker 7: security that could be regulated by the SEC. Now, I'm
Speaker 7: going to presume they don't mean to do that, but
Speaker 7: I think it perfectly highlights this problem of not fully
Speaker 7: understanding again the difference between buying bitcoin on an exchange
Speaker 7: and being part of a blockchain and looking at developing
Speaker 7: Web three applications could have amazing impacts in the future.
Speaker 5: That's interesting too as far as the regulation that could
Speaker 5: potentially becoming. What are you expecting on that front, as
Speaker 5: far as what other things could be rolling out.
Speaker 2: Because would you agree that there needs to be some
Speaker 2: transparency and oversight considering what we've seen in the last year.
Speaker 7: Oh, I don't dispute that for a second. And I
Speaker 7: think it's very interesting that two of the recent SEC
Speaker 7: actions that have been notable was a wells notice to
Speaker 7: Coinbase and find a crack, and those are two groups
Speaker 7: that want to work with the SEC and have been
Speaker 7: begging essent to the SEC to provide a clear framework.
Speaker 7: There is a very clear framework in Japan and Switzerland
Speaker 7: for example. I've done an amazing job France as well. Yes,
Speaker 7: there does need to be that there should be rules,
Speaker 7: and industry welcomes any effort by the SEC to actually
Speaker 7: maybe so tell.
Speaker 2: Us, you know, and I would agree with you on
Speaker 2: a certain level that I agree that blockchain is different
Speaker 2: from cryptocurrencies, but yet they do certainly go hand in hand.
Speaker 2: Tell us about liberty blockchain, specifically your company, what you
Speaker 2: are doing, because you're not the only blockchain out there,
Speaker 2: So tell us a little bit about what you guys
Speaker 2: are up to.
Speaker 7: I will, and just to clarify, so you can have
Speaker 7: a blockchain with no crypto Deloitte, I believe in Amazon
Speaker 7: Web services both run pieces on the blockchain. I mean
Speaker 7: the California DMV is now putting files on the watchchain
Speaker 7: so you can separate them. But it's very an usual
Speaker 7: and when people think about this, and this is really
Speaker 7: what they're talking about. It is a blockchain that produces
Speaker 7: a proof of work or proof of steak, which is
Speaker 7: a coin, but as as for liberty. We're at a
Speaker 7: veteran led organization and what we believe in is a
Speaker 7: free and open society. And what we're doing is we're
Speaker 7: building the infrastructure from the ground up and then we work,
Speaker 7: which is with a dial with the community of people.
Speaker 7: We're going to decide what we're going to do with
Speaker 7: with that, with that blockchain and those capabilities. And one
Speaker 7: of the things we're working I'm very excited about is,
Speaker 7: you know, we want to look to build a a
Speaker 7: free and open society for the future. We also want
Speaker 7: to learn from the mistakes of the past and trying
Speaker 7: to do it. So we're kind of a fusion of those.
Speaker 7: So one of the first things we'll probably roll out
Speaker 7: it's in development, is a historical explorer app. So you
Speaker 7: can go to save Fort McHenry in Baltimore where I live,
Speaker 7: see what the star Spangled banner was, and then you
Speaker 7: might get a reward, a digital reward for participate and
Speaker 7: it's kind of learned to earn it too.
Speaker 5: I know you also have talked about when it comes
Speaker 5: to the off ramping of crypto. Can you explain a
Speaker 5: little bit about what that is and maybe how there's
Speaker 5: some relation there whenever we're talking about the squeeze obviously
Speaker 5: on some of the banks that we've seen in recent ones.
Speaker 7: Off ramping is is where for me personally, when I
Speaker 7: listen to discussions about crypto, the fair critiques and the
Speaker 7: ones that perhaps are not, it really frustrates me. Off
Speaker 7: ramping is how you take your Bitcoin or any other
Speaker 7: form of digital currency and turn it into a fiat
Speaker 7: currency to pay locally for something. So you're paid saying
Speaker 7: I'm paid with the US dollar coin so it's a
Speaker 7: stable coin, and then I convert that to dollars to
Speaker 7: a number of different ways when I want to When
Speaker 7: I want to buy something or move my money out, well,
Speaker 7: I do it to a bank, and if I don't
Speaker 7: do it through a bank, I do it through visa
Speaker 7: MasterCard and they've they've certified everything. So with some rare exceptions,
Speaker 7: it's very hard launder money because there's a transaction and
Speaker 7: there's a point where you have to turn that into
Speaker 7: a local currency. Now you can launder in countries where
Speaker 7: you can easily launder money, but this is not something
Speaker 7: that's in any way inherent or essentially a part of
Speaker 7: the blockchain. In fact, what you find is you know,
Speaker 7: you have a group out in DC that supports US
Speaker 7: government investigations. The transparency of the blockchain allows them to
Speaker 7: roll all of these transactions up like they did with sobrowth.
Speaker 7: So off ramping is turning your crypto in your currency.
Speaker 7: And when you say the crypto industry is rampant with
Speaker 7: all these problems, well, the only place you can really
Speaker 7: off ramp is a bank. So I'm not sure how
Speaker 7: you don't critique banks and in all of it on
Speaker 7: crypto it's an issue that's being resolved. And it goes
Speaker 7: back to your point about yes, we do need regulations
Speaker 7: and off ramping is the point where you can very
Speaker 7: effectively tamp down on terror financing and other issues if.
Speaker 2: I may, because we only have about a minute or
Speaker 2: so left. I mean you're interesting too, and you have
Speaker 2: a very very varied background in terms of some of
Speaker 2: the different companies you've worked with, Disney, IBM, Coca Cola,
Speaker 2: and then you know, tell us attle bit about the
Speaker 2: folks that are involved specifically at Liberty. I know veterans
Speaker 2: is a big part of it. Just what that means
Speaker 2: in terms of your perspective.
Speaker 7: Yeah, we mostly met in the special operations community, working
Speaker 7: in Iraq, Afghanistan. I was an information warfare planner.
Speaker 3: I gues should say.
Speaker 7: Some of us had other other jobs, and we were
Speaker 7: fascinated by the potential of blockchain. We wanted to have
Speaker 7: something that again promoted the principles of a free and
Speaker 7: open society. We're going to look to do a lot
Speaker 7: for veterans as well, and so we just knew and
Speaker 7: trusted each other from you know, the most trying of
Speaker 7: circumstances and the most steer environments, and that's kind of
Speaker 7: how we coalesced and started working.
Speaker 2: On Christopher, you know, just thirty seconds here. Who do
Speaker 2: you perceive will ultimately be using your blockchain or are already?
Speaker 7: I think it's a mixed clip. But I think if
Speaker 7: you're concerned about authoritarianism, if you're if you're concerned about
Speaker 7: some of the some of the creeping sort of censorship
Speaker 7: and things that we see in in social media platforms
Speaker 7: and the like, uh, you're great for us. If I
Speaker 7: had to summon in a word, we're kind of the
Speaker 7: libertarian blockchain.
Speaker 2: I think, all right, well, interesting, and I'll be curious
Speaker 2: to see about the future for you guys, So look
Speaker 2: forward to checking back. Christopher Alexander's chief communications officer at
Speaker 2: Liberty Blockchain, joining us via Zoom from Seattle on this Friday.
Speaker 1: The Journal, Now about you, let me drive? No, no, honey,
Speaker 1: please gravel. Let's wait, I want to drive.
Speaker 3: It's a good question.
Speaker 1: This is the drive to the globe down well on
Speaker 1: Bloomberg Radio.
Speaker 2: All right, everybody, just under eighteen minutes left, and it's
Speaker 2: a broad based rally on Wall Street. So you are
Speaker 2: seeing a lot of buying into the trade. We're just
Speaker 2: coming off our best level. As you just heard Charlie
Speaker 2: giving the market update, you did see yields moving up
Speaker 2: certainly at the shorter end. So let's get to it
Speaker 2: with our next guest with us. Is Michael Sheldon back
Speaker 2: with us, I should say he's executive director, chief investment
Speaker 2: officer over and High Tower RDM Financial Group, joining us
Speaker 2: once again on zoom from Westport, Connecticut. Michael, nice to
Speaker 2: have you here, Jess says Man. I talked to Michael
Speaker 2: all the time. Have for a long time, interesting market cycle. Again,
Speaker 2: I feel like we have said that a million times
Speaker 2: since we've come off the pandemic. What are you more
Speaker 2: optimistic right now about the outlook or more pessimistic.
Speaker 6: Well, we had a lot of news this past week,
Speaker 6: and I think going into the week, we sort of
Speaker 6: had a very bifurcated market. It's strange to sort of
Speaker 6: think of that, but we've had Going into this week,
Speaker 6: we had three sectors of the S and P five
Speaker 6: hundred that were up double digits, and we had four
Speaker 6: sectors of the market which were actually negative. So it's
Speaker 6: a very strange kind of market. It's been a very
Speaker 6: narrow market, with a lot of the gains led by
Speaker 6: a few stocks. If you look at the sort of
Speaker 6: health of the market, back when the market peaked earlier
Speaker 6: this year, we had something like eighty percent of stocks
Speaker 6: in the S and P five hundred above their two
Speaker 6: hundred day moving average, and today we only have less
Speaker 6: than fifty percent of stocks above their two hundred day
Speaker 6: moving average. So it's a really kind of difficult market
Speaker 6: to sort of navigate right now. I think we had
Speaker 6: some interesting news this week. We had obviously the FED meeting,
Speaker 6: and I think we were hoping for two things. We
Speaker 6: were hoping to hear whether the FED was done. We
Speaker 6: didn't really hear about that, although we know they're closer
Speaker 6: to the end, and Unfortunately, the FED did not say
Speaker 6: that they were about to cut rates, even though the
Speaker 6: Fed fund futures market is focus currently pricing in three
Speaker 6: cuts this year. So that sort of difference between the
Speaker 6: fan and what the investors are thinking is yet to
Speaker 6: be determined. And then we also got a lot more
Speaker 6: news on earnings, and then today we had the jobs number.
Speaker 5: So how do you position in this type of environment
Speaker 5: when investors are so split? What are you buying? What
Speaker 5: are you selling?
Speaker 6: Well, it's important. As investment advisors, we do a financial
Speaker 6: plan for most clients that come in and then we
Speaker 6: sort of figure out what the rate of return is
Speaker 6: they need in order to meet their long term investment objectives.
Speaker 6: So we have different models. We have a more growth
Speaker 6: oriented model, we have a more income oriented model. Some
Speaker 6: clients need to be more aggressive, some can afford to
Speaker 6: be more defensive. I can tell you over the past
Speaker 6: few weeks, for example, we've over the past month or two,
Speaker 6: one thing we've been doing is we've been buying more
Speaker 6: corporate bonds. So we used to own a lot of
Speaker 6: corporate bonds in the past, but many of them matured
Speaker 6: and the yields were just too low to reinvest. But
Speaker 6: more recently, yields are the highest they've been in quite
Speaker 6: a while. So I'd like to say this some income
Speaker 6: and fixed income now. So we've been buying a lot
Speaker 6: of corporate bonds and it's great that we can lock
Speaker 6: in that four and a half maybe five and a
Speaker 6: quarter percent yield, and that's on the fixed income side
Speaker 6: of clients' portfolios.
Speaker 2: One of the things I thought was interesting along those
Speaker 2: lines that you shared in notes with our producer Paul Brennan,
Speaker 2: is that despite the concerns that are out there about
Speaker 2: the outlook, corporate bond credit spreads remain healthy, indicating fixed
Speaker 2: income investors are not overly concerned about the outlook for
Speaker 2: economic growth right now. It's a great indicator, correct.
Speaker 6: Yeah, absolutely. I mean there's so many things going on
Speaker 6: right now. You have the worries about the regional banks,
Speaker 6: you have problems in corporate profits. There's the lagged effect
Speaker 6: of the ten rate hikes that we've already had by
Speaker 6: the FED so far this year. But corporate credit spreads,
Speaker 6: which are often a leading indicator of trouble, especially high
Speaker 6: yield spreads, have really been pretty pretty well maintained, pretty narrow,
Speaker 6: and I think that's a fairly healthy sign. You could
Speaker 6: argue that in the high yield bond market, many of
Speaker 6: the corporations have sort of stretched out or refinanced in
Speaker 6: the past, so the quality of the high yield market
Speaker 6: is higher than it has been in the past. But
Speaker 6: if you really thought we were going to a major downturn,
Speaker 6: credit spreads should be widening as opposed to narrowing.
Speaker 5: I know we're going to get the Senior Loan Officers
Speaker 5: Survey on Monday, and this is important because obviously it's
Speaker 5: going to be the first reading since it's quarterly of
Speaker 5: obviously what we saw happen last March. What specifically are
Speaker 5: you going to be looking in this report when it
Speaker 5: comes to credit conditions and banks.
Speaker 6: Yeah, that's a great point. I think that comes out
Speaker 6: very soon, maybe next week. I'm not quite sure the date.
Speaker 5: On Monday, it actually comes out Monday.
Speaker 6: So there are a few sort of red flags that
Speaker 6: we've looked at which historically appointed to a weakening or
Speaker 6: a downturn in the economy. There's the monthly Leading Economic Index,
Speaker 6: which has been down something like twelve months in a row.
Speaker 6: There's a yield curve which is negative right now, and
Speaker 6: I'm sure You've talked a lot about the predictive powers
Speaker 6: of that. And then there's the FED Senior Loan Servage,
Speaker 6: which doesn't get a lot of press, and basically what
Speaker 6: it shows right now is I think the number we're
Speaker 6: somewhere around forty percent to net forty percent of corporation
Speaker 6: of banks have tightened lending conditions for various loans, whether
Speaker 6: it's commercial, industrial, or consumer loans. And typically that sort
Speaker 6: of when you see those types of numbers, when banks
Speaker 6: are pulling back in credit, that tends to have a
Speaker 6: negative impact on the economy looking ahead over the next
Speaker 6: two to three quarters. So we haven't really We've seen
Speaker 6: some weakness in manufacturing and housing, but overall the consumers
Speaker 6: held up pretty well. So it'll be interesting to look
Speaker 6: at the FED Senior Loan Survey in Monday to see
Speaker 6: if it gets even see if banks are getting even
Speaker 6: tighter than they were four months ago.
Speaker 2: Having said that, just coming off of Milken and so
Speaker 2: many participants in the private lending market and private credit
Speaker 2: market were there, many of them were saying the message
Speaker 2: was that listen, banks haven't been lending generally for a
Speaker 2: long time. When it comes to certainly folks in the
Speaker 2: middle market space, middle market companies, and then that's where
Speaker 2: the private credit has has jumped in. Is there some
Speaker 2: comfort to be found because we do have a shadow
Speaker 2: banking system, so that that is out there to keep
Speaker 2: kind of the economy going. And I'm curious how you see.
Speaker 6: That, Michael, Well, that's a good question. We do have
Speaker 6: in addition to owning individual stocks, mutual funds, and ETFs,
Speaker 6: we're appropriate, we do own private investments for clients when
Speaker 6: appropriate for certain clients. So we're familiar with the direct
Speaker 6: lending market, and there has been a shift over the
Speaker 6: years from loans made from banks to the I don't know,
Speaker 6: I wouldn't call it. I don't know if you'd call
Speaker 6: the shadow lending or to other sources of funding. I
Speaker 6: think the way to sort of look at this is
Speaker 6: that deposits in the banks were something like seventeen trillion
Speaker 6: dollars several months ago or six to twelve months ago,
Speaker 6: and we've started to see money coming out of the
Speaker 6: banking system, and that sort of coincides with the money
Speaker 6: supply actually having been negative recently on a year of
Speaker 6: a year basis. So I think generally speaking, it's not
Speaker 6: a healthy thing when people are pulling their deposits out
Speaker 6: of banks because banks need that money to make loans,
Speaker 6: even if on the margin they're making less loans than
Speaker 6: they were in the past.
Speaker 2: Well, you've also noted that what we have some five
Speaker 2: point three trillion in money market funds assets today versus
Speaker 2: three point nine trillion at the peak of the last
Speaker 2: economic crisis, a great financial crisis in seven oh eight,
Speaker 2: at least at Bramo. It's tweeting about that earlier today.
Speaker 2: So that's another concern certainly out there. Smart conversation, Michael,
Speaker 2: have a great, great WEEKND Michael Sheldon, Executive Director, chief
Speaker 2: Investment Officer at High Tower RDM Financial Group.
Speaker 5: This is the.
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