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Speaker 1: Welcome to the Bloomberg Penl podcast. I'm Paul swing you,

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Speaker 1: along with my co host Lisa Brahma Ways, each day

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Speaker 1: we bring you the most noteworthy and useful interviews for

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Speaker 1: you and your money. Whether at the grocery store or

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Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple

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Speaker 1: Podcasts or wherever you listen to podcasts, as well as

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Speaker 1: at Bloomberg dot com. Fascinating numbers that came out today

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Speaker 1: absolutely blew away any and all projections via US economists

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Speaker 1: and frankly raised a lot of questions given the anecdotal

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Speaker 1: data that we keep getting, Tom, what did you make

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Speaker 1: of this information? I think a lot of it's the

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Speaker 1: PPP money. I think, if if I read the data correctly,

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Speaker 1: the report that a lot of the people coming back,

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Speaker 1: or a decent percentage were furlog were the furloged folks,

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Speaker 1: which means, and I listened, beggars can't be choosers. We're

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Speaker 1: adding people to work who weren't working. But these aren't

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Speaker 1: newly created jobs. They're old jobs bringing people back, which

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Speaker 1: is a positive sign, and to look at it any

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Speaker 1: other way as crazy, and we should be very optimistic

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Speaker 1: from this number so interesting, Tom, it's um I think

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Speaker 1: no matter either. Are some nuances in this number time,

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Speaker 1: but it's just signal to you kind of at the

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Speaker 1: very least setting a bottom for the employment picture. I'm

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Speaker 1: not necessarily sure about that. I think for the short term,

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Speaker 1: meaning sixty days, it's probably abottom. But what we've got

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Speaker 1: to see is what happens in the end of the

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Speaker 1: third quarter, in early fourth quarter, if the airline travel

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Speaker 1: doesn't pick up, in the airlines lay people off, and

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Speaker 1: hotels UH don't continue to grow. If if we do

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Speaker 1: get another spike from COVID, and what happens in that

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Speaker 1: regard um to working in the in the restaurant service space,

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Speaker 1: I think we could have another big, big hit, Tom.

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Speaker 1: I think it's fascinating to get your view. I know

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Speaker 1: you've been more optimistic than a lot of economists have

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Speaker 1: over the past months and years when we've had you

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Speaker 1: on and always added really good perspective. Right now, you

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Speaker 1: sound less optimistic than a lot of people are when

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Speaker 1: they take a look at these numbers. What are you

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Speaker 1: seeing on the ground that's making you less optimistic? So

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Speaker 1: what's happened in a in a in a true recession

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Speaker 1: which I believe we're in is companies stop hiring in volume.

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Speaker 1: They have key hires they need to make, and they

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Speaker 1: may get a new project and they bring people on,

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Speaker 1: but there isn't growth for few there is. They are

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Speaker 1: isn't hiring for future growth because they believe they're gonna

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Speaker 1: need it. And that belief is what's been fueling this

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Speaker 1: bull market for ten years, is that companies keep thinking

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Speaker 1: it's going to get stronger and better, and it has been.

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Speaker 1: And now what we've seen, uh is companies are not

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Speaker 1: hiring in volume. We're not seeing sales hiring, which is

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Speaker 1: a really big indicator. When companies are building up their salesforce,

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Speaker 1: it means they're anticipating that they'll be more revenue growth,

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Speaker 1: and that leads to other areas of the business not

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Speaker 1: seeing that in volume. A few hires here and there,

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Speaker 1: but again not in volume, and that gives me some concern.

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Speaker 1: And then temporary staffing, which we have a large business

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Speaker 1: practice in that area, is usually a leading indicator, and

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Speaker 1: it's not It's not as terrible as the search business,

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Speaker 1: but it definitely isn't starting to grow at the rapid

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Speaker 1: volume that we've seen over the past ten and really

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Speaker 1: past twenty years, so I'm a little bit apprehensive. And

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Speaker 1: then the liquidity issue is what's going to happen after

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Speaker 1: the p PP money rolls off and companies don't have

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Speaker 1: to keep their employees anymore. And if revenues aren't there,

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Speaker 1: whether it's due to COVID, whether it's due to social unrest,

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Speaker 1: is are we going to have a situation where companies

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Speaker 1: have there's more bankruptcies? Tom, This is an incredibly important conversation. Frankly,

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Speaker 1: what you are telling me finally is giving me some light.

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Speaker 1: I've had so many questions this morning. This is one

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Speaker 1: of the most confusing data dumps I have ever seen

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Speaker 1: in my life. And even with the p PP taken

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Speaker 1: into account, as Matt Bosler of Bloomberg News was just

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Speaker 1: talking about, that still would only bring not only I

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Speaker 1: mean it's still catastrophic, but it would bring the unemployment

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Speaker 1: rate up to about six still well below consensus. So

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Speaker 1: is it that the market is better than people expected,

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Speaker 1: but not as necessarily good as the headline numbers here imply,

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Speaker 1: or is it closer to what people had expected. We

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Speaker 1: just aren't seeing that level of actual layoffs just yet.

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Speaker 1: Well we've seen is is that the service level can

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Speaker 1: only get hit so hard. It's that's the difference between

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Speaker 1: restaurants and hospitality versus white collar. Is if the restaurants

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Speaker 1: lay everybody off, which is what essentially has happened, there

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Speaker 1: is no more cutting. If you have a company, a

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Speaker 1: Fortune five company that's done layoffs like a bowling or

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Speaker 1: who are an airline or whomever else, they're not laying

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Speaker 1: off the entire company. And that's what the restaurants have

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Speaker 1: done for the most part. And so what we see

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Speaker 1: now is there there really isn't that much more room

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Speaker 1: to go on the service side on the hospitality side.

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Speaker 1: So now it is does part two of the real

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Speaker 1: white collar layoffs we've had them, but we haven't had

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Speaker 1: If you eliminated all the service jobs and you just

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Speaker 1: had the white collar layoffs, it wouldn't be anywhere nearly

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Speaker 1: as at a stropic. We'd probably be sitting at seven

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Speaker 1: and a half percent unemployment and it wouldn't be that bad. So, Tom,

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Speaker 1: do you expect that? Is that something that you kind

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Speaker 1: of survey some of the companies that you're in touch with,

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Speaker 1: you expect kind of more white collar office level type

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Speaker 1: of layoffs across the economy coming up. Well, that'll be

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Speaker 1: the really interesting thing. And we have to see. I

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Speaker 1: mean to me, that's the difference between the V curve

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Speaker 1: versus the you or the L curve of of does

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Speaker 1: things do things bounce back? Now? The one opportunistic or

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Speaker 1: or optimistic both probably is the strength of the stock

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Speaker 1: market is seeing that the market is saying we're looking

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Speaker 1: at companies from the long term. We're not looking at

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Speaker 1: a month over month or even in the quarter that

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Speaker 1: we're saying who's the strong company and will they be

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Speaker 1: strong at the end of this year in the early

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Speaker 1: part of next year. And that lends me to believe

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Speaker 1: that companies are going to have the liquidity to be

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Speaker 1: able to hire people. So there is optimism on that.

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Speaker 1: But I think all of the BLS numbers until we

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Speaker 1: get into the July reports the first week in August

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Speaker 1: are a little bit of smoke and mirrors to really

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Speaker 1: see how things level off. Stands the p P P alright,

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Speaker 1: So looking forward, there is a question about whether this report,

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Speaker 1: given how much better than expected it was, whether it

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Speaker 1: reduces the pressure on Congress to pass additional fiscal and

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Speaker 1: and and stimulus, whether it takes the pressure off the

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Speaker 1: Federal Reserve to keep its bazooka wide open. I'm totally

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Speaker 1: conflating different metaphors there. I'm just wondering, though, from your perspective,

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Speaker 1: how worried you are about that. I think that we

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Speaker 1: should not do any more stimulus at the time being.

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Speaker 1: I think I think the government uh overshot quite frankly, now,

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Speaker 1: I'm not I'm not being critical of it from the

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Speaker 1: standpoint of in a in a catastrophe, you have to

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Speaker 1: do things at the moment, and it's easy to have hindsight.

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Speaker 1: But writing the check to everybody who makes under seventy

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Speaker 1: five thousand employed or unemployed really wasn't necessary. And what

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Speaker 1: we saw was that comping people wanted to have jobs

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Speaker 1: and companies needed to have jobs. And the real challenge

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Speaker 1: we're gonna face in Part two or Part three, however

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Speaker 1: you look at it, is the federal stimulus on the

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Speaker 1: unemployment and people who are making more money being unemployed

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Speaker 1: in these service jobs, and when they go back to work,

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Speaker 1: that's where the dynamics going to be felt come July.

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Speaker 1: All right, So, Tom, we've had differing states have different

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Speaker 1: kind of schedules for reopening their economies. Are we seeing

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Speaker 1: any regional impact unemployment data that might be reflect that.

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Speaker 1: You know what, I'd be frank with you, I haven't

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Speaker 1: had a chance to study that that much, but I

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Speaker 1: do think that that from what who I've been talking

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Speaker 1: to c e O s and finance and HR leaders

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Speaker 1: in the in the southern below the Mason Dixon line,

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Speaker 1: that it really is two different economies, and we're seeing

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Speaker 1: that those those areas, geographically speaking, are much more prone

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Speaker 1: to be proactive um and optimistic versus versus the northern

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Speaker 1: the Northern States. Just real quick here, Tom Gimble, before

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Speaker 1: we let you go, is there any color sector that

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Speaker 1: you are most concerned about from here that you expect

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Speaker 1: would suffer the first or the next round of layoffs.

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Speaker 1: Here's the really interesting thing for this recession versus the

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Speaker 1: last two where I was running a business in OH

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Speaker 1: one and O eight No. Nine, is this isn't sector focused.

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Speaker 1: It's company focused across all sectors. So you could have

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Speaker 1: an airline that actually ends up being okay and and

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Speaker 1: the majority of others that are that are in the toilet,

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Speaker 1: and that could be for every single company. I'm seeing

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Speaker 1: it in insurance and technology and manufacturing that that many

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Speaker 1: companies aren't doing great, but there's a few outliers that

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Speaker 1: really are doing well. So but if I had to

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Speaker 1: put my finger on it, I would say that that

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Speaker 1: a lot of technology based companies, I think you're gonna

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Speaker 1: see if things don't pick up, are gonna be laying

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Speaker 1: people off because their profits are lagging and they don't

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Speaker 1: have the A lot of them don't have the funding

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Speaker 1: to go out and just hire people. And that's a

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Speaker 1: real interesting dynamic, the nonprofitable companies that exist in the

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Speaker 1: tech space. Tom, thanks so much for joining us on

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Speaker 1: this historic jobs Friday. Tom Gimbal, founder and CEO of

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Speaker 1: LaSalle Network based in Chicago, breaking down those numbers. Joining

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Speaker 1: us now is someone with incredible history just surveying the

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Speaker 1: ground and the research in every aspect of the economy.

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Speaker 1: Danielle de Martino Booth, chief executive officer and chief strategistic

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Speaker 1: Quill Intelligence, also a Bloomberg opinion columnist who spent years

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Speaker 1: of the Dallas Federal Reserve as an adviser there. She

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Speaker 1: is joining us from Dallas. Danielle, as you pass into

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Speaker 1: the numbers that we got today showing that the jobless

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Speaker 1: rate actually declined even though it had been expected, to increase.

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Speaker 1: What's your main takeaway about the strength of the U. S. Economy?

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Speaker 1: You know, my biggest takeaway is that if you look

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Speaker 1: at the continuing claims number and you compare that to

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Speaker 1: the size of the workforce, you get to thirteen point

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Speaker 1: one percent, and so this is bizarrely so really, I

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Speaker 1: mean truly. I was one of the people who said, typo, uh,

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Speaker 1: it's kind of reflective of where the U. S. Economy

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Speaker 1: is right now with thirteen point one percent of the

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Speaker 1: population collecting unemployment benefits at the moment um. My other

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Speaker 1: takeaway was that the BLS is error, UH is equivalent

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Speaker 1: to what the unemployment rate was a few months ago

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Speaker 1: that they're they're saying possibly three percent distortion in the

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Speaker 1: unemployment rate. I think that's where we were back in February.

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Speaker 1: So it's just this is really incredible data to see.

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Speaker 1: I think you have to keep your focus on the

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Speaker 1: weeds right now, look at what companies are doing, not

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Speaker 1: what the data are saying, because it's obviously completely thrown

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Speaker 1: off by many different factors. And that's what I try

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Speaker 1: and do. I try and pay attention to what individual

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Speaker 1: companies are doing around the country on a daily basis, So,

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Speaker 1: daniel I mean, as President Trump was just saying in

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Speaker 1: the Rose Garden, he from his first spective, he believes

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Speaker 1: that the worst is over, and then you know America

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Speaker 1: is on its way back. Does a data point like this,

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Speaker 1: you know, kind of confirm that or again, are you

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Speaker 1: going to step back and maybe look at a lot

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Speaker 1: more data at the more granular level. I'm gonna keep

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Speaker 1: focusing on granularity at Bloomberg put out a great report

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Speaker 1: this week that showed that the next wave of higher

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Speaker 1: income paying jobs could be up to six million UM.

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Speaker 1: And you know, I've just been following the past few

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Speaker 1: days and whether you're talking about a K Steel or

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Speaker 1: Auto Nation or UM Stitch Fixed, which was a Unicorn

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Speaker 1: in San Francisco laying off of its workforce, Carpenter Technology

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Speaker 1: in Philadelphia of its workforce UM and another you know,

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Speaker 1: Perella Weinberg seven percent tied to deal making Lazy Boy

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Speaker 1: ten percent of its workforce, UM, Saber, the software technology

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Speaker 1: company for for for the global travel industry eight hundred

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Speaker 1: in additions to the four hundred and committed voluntary early retirements.

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Speaker 1: I'm talking about the last four day hours. Yeah, Danielle,

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Speaker 1: So if you're focused on the granularity, I'm wondering what

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Speaker 1: you're seeing on the ground in the daily and weekly

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Speaker 1: statistics that we're getting, and I'm wondering if you could

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Speaker 1: compare that with the headline figure from the Job's report.

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Speaker 1: In other words, you know, people are saying it's as hypo,

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Speaker 1: it's an error, they questioned the data. But are there

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Speaker 1: obvious discrepancies or is this just very explainable classification issues

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Speaker 1: with the p p P program and other issues that

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Speaker 1: will come to the four over time. But the bottom

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Speaker 1: line takeaway here is that the labor market isn't as

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Speaker 1: bad as many people expected. Well, I think that that

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Speaker 1: is is partially mathematical. We are going to have mathematically,

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Speaker 1: we are going to have a tremendous uh improvement in

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Speaker 1: the numbers in going forward, regardless of what area of

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Speaker 1: the economy you're you're talking about, because we have to

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Speaker 1: come off the bottom. We can't stay on the bottom

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Speaker 1: and reopen at the same time their diametor really opposed.

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Speaker 1: We've seen the same phenomena in Italy. We've seen a

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Speaker 1: tremendous decline in their unemployment rate, for example. So we're

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Speaker 1: going to have this happen. But if you look at

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Speaker 1: Google trends on unemployment insurance searches, that is completely flatlined,

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Speaker 1: meaning it's no longer improving. If you look at people's intentions.

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Speaker 1: Fresh data out of Cox Automotive this morning, people are

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Speaker 1: saying that they're going to delay a car purchase for

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Speaker 1: the first time since early March. It's it's popped right

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Speaker 1: back up to the hive. So we are reopening. But

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Speaker 1: my question is going to be, once we get past

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Speaker 1: the less bad, what is the follow through going to

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Speaker 1: look like? And I think that that is a great unknown.

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Speaker 1: But in real time data, we're starting to see weakness

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Speaker 1: re emerge despite the reopening of the of the economy.

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Speaker 1: So where do you think that's going to leave Congress, Danielle,

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Speaker 1: I mean, we do have uh, some more fiscal stimulus

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Speaker 1: kind of winding its way through Congress. Doesn't seem to

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Speaker 1: be a lot of uh. I guess, you know, impetus

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Speaker 1: to get this thing done quick. Where do you think

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Speaker 1: the next step is going to be from Congress in

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Speaker 1: terms of stimulus? Well, you know there's the irony, right,

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Speaker 1: You've got potential legislation being proposed to have a job

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Speaker 1: credit paid to pay people to come back into the

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Speaker 1: workforce because so many are collecting more with this additional

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Speaker 1: six dollars a week. Small business owners that have reopened

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Speaker 1: are like, well, I can't get my employees back by

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Speaker 1: the same token. What kind of extra incentive do we

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Speaker 1: have now to pass this legislation? Now that the president

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Speaker 1: has informed the country that it's not a V shaped

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Speaker 1: recovery but a rocket ship, So why do you go

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Speaker 1: back to the to the drawing board and say that

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Speaker 1: we need to to put more stimulus into this economy

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Speaker 1: if it's fully recovered. So going forward, what are you

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Speaker 1: watching in order to determine how much some of the

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Speaker 1: labor market is declining? I guess I'm I come up

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Speaker 1: with speechless just because this has been such a fast

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Speaker 1: moving labor market and economic recession that it's hard to

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Speaker 1: pinpoint the numbers, and the data has been all over

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Speaker 1: the place. I mean, some people could say that there

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Speaker 1: is discrepancy with the state and local claims in part

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Speaker 1: because of processing issues there, So perhaps this is a

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Speaker 1: more comprehensive number. What are you looking for to confirm

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Speaker 1: your view that, yes, the labor market is weak, and

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Speaker 1: yes there was a bit of an improvement, but it

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Speaker 1: appears to be plateau ng, so I'm actually following. I'm

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Speaker 1: trying to be as stringent as I possibly can with data.

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Speaker 1: I'm looking for permanence. And I actually checked in with Challenger,

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Speaker 1: Gray and Christmas yesterday just to confirm that what they report,

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Speaker 1: which has seems so really low compared to some of

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Speaker 1: the large numbers we're seeing, but they did confirm that

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Speaker 1: they only report permanent layoffs. So we're at one point

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Speaker 1: four million or so. Uh, since this whole thing has started,

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Speaker 1: the highest level in history is almost two million. It

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Speaker 1: looks like we'll get there by July or so. So

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Speaker 1: I'm going to continue to watch things like bankruptcy filings. Uh,

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Speaker 1: these are companies that are going away and not coming back.

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Speaker 1: I'm going to continue to watch permanent layoffs. I'm going

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Speaker 1: to stay in the weed and and continue to run

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Speaker 1: my Twitter polls and asking people what they're actually doing,

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Speaker 1: if they're if they're truly I am ready to go

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Speaker 1: back and spend like I used to spend, or if

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Speaker 1: this reticence remains. So, I think the weeds are going

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Speaker 1: to be the right place to be because it's so

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Speaker 1: difficult to follow data when everything every economics textbook in

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Speaker 1: the world tells you that the unemployment rate is the

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Speaker 1: most lagging of all economic indicators, and yet it lad

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Speaker 1: coming right out of the gate because we shut the

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Speaker 1: economy down, So the old rules don't apply if unemployment

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Speaker 1: is leading us into recession. So Danielle, as you look

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Speaker 1: at your GDP model, and you're obviously, uh, employment is

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Speaker 1: a big, big factor, and it does the data we

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Speaker 1: got today materially change kind of your outlook for how

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Speaker 1: the rest of this year and into next year is

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Speaker 1: going to unfold in terms of kind of the economic growth. Well,

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Speaker 1: I mean, at this point you could you could take

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Speaker 1: a guess. I mean, there's no methodology today because my

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Speaker 1: mess atology has been throwing out the window. But if

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Speaker 1: I was just throw spaghetti on the wall and see

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Speaker 1: if it's six, I would say maybe the second quarter

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Speaker 1: is not going to be as bad as some of

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Speaker 1: the most dire predictions out there. If you look at

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Speaker 1: the spectrum of Bloomberg consensus estimates UM. But that by

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Speaker 1: that same token again, if you're seeing reticence and if

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Speaker 1: you're seeing higher income paying job growth come down UM,

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Speaker 1: then you're going to see a more sclerotics third and

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Speaker 1: fourth quarter growth than what's being anticipated based on the

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Speaker 1: original kind of we're gonna see a U shaped recovery.

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Speaker 1: So one of the things I'm following the most closely

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Speaker 1: I suggest you do as well, is every Thursday in

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Speaker 1: the Bloomberg Consumer Comfort data, I've been following those who

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Speaker 1: make seventy dollars a year their confidence. Unlike overall, the

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Speaker 1: consumer comfort headline has yet to come back. It's continued

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Speaker 1: to pick down week after week, and that would indeed

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Speaker 1: reflect whether or not worth seeing hire income paying job

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Speaker 1: job losses. Danielle, Just to wrap this all up, I

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Speaker 1: know you can follow the consumer credit space very carefully,

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Speaker 1: and one thing that I found, uh surprisingly positive is

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Speaker 1: the lack of the increase in defaults and delinquencies that

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Speaker 1: many people had expected. And one of the reasons why

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Speaker 1: is because people said the enhancement employment benefits, the checks

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Speaker 1: that everyone got mailed that who earned a less than

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Speaker 1: eventy five tho dollars helped pat out the resources. How

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Speaker 1: much do you think that has been a cushion against

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Speaker 1: losses in consumer credit versus actual strength and rehiring that

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Speaker 1: we saw hinted at with this job's report. Oh look,

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Speaker 1: I'm going to use the President's favorite word here. I

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Speaker 1: think it's been tremendous. Um. Look, we we have seen

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Speaker 1: the We've seen an arresting in subprime auto delinquency because

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Speaker 1: again one in five people receiving an employment benefits are

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Speaker 1: making double what they made before. We've seen obviously the

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Speaker 1: forbearance on mortgages, but even though we've still got nearly

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Speaker 1: nine percent of all mortgages in forbearance, you haven't seen

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Speaker 1: that play out because they put a hold on people's

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Speaker 1: on that being reflected in people's credit reports. We haven't seen.

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Speaker 1: We haven't seen evictions go up. We haven't seen you know,

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Speaker 1: renters are not in major distress. Again, this stimulus has

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Speaker 1: been extremely powerful for the lowest income earners in America,

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Speaker 1: more than two thirds of whom are bringing in more

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Speaker 1: than they did prior to this. Daniel thanks so much

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Speaker 1: for joining us. I really appreciate your thoughts and comments.

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Speaker 1: Danielle di Martino Booth CEO and chief strategist for Quill Intelligence.

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Speaker 1: Markets are ripping on the back of that job's number.

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Speaker 1: Let's see where the real action is. We welcome Bluebrick

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Speaker 1: Stocks editor Dave Wilson as well as Matt Bosler. He's

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Speaker 1: a Bloomberg fed reporter. We'll get his thoughts on these

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Speaker 1: jobs and numbers. Dave, what are you looking at right here? Really?

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Speaker 1: I mean, if you want to understand what's going on

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Speaker 1: today here, here's one way you can frame it. Best

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Speaker 1: performing of the eleven main industry groups in the SMP

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Speaker 1: five hundred by far is energy. Of course, you're talking

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Speaker 1: about an economically sensitive sector there, and so you know,

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Speaker 1: if oil prices are going up, you figured it's not

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Speaker 1: great for the likes of airlines and cruise lines and

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Speaker 1: you know other companies that you know that they use fuels,

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Speaker 1: they are gonna be facing higher costs down the line.

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Speaker 1: Forget that. I mean you look, you see Americans shares

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Speaker 1: up twenty two and a half percent after rising forty

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Speaker 1: one percent yesterday. You see Carnival in Norwegian among the

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Speaker 1: best performers, Royal Caribbean too, So those are your three

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Speaker 1: cruise line stocks in the s and P five up

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Speaker 1: at least thirteen and a half percent. So you know,

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Speaker 1: this is really, you know, a market where given what

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Speaker 1: we saw on the jobs front, people are figuring the

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Speaker 1: economies coming around that people are gonna want to spend,

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Speaker 1: that they're gonna take the plane trips and the cruises

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Speaker 1: down the line that they have been putting off because

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Speaker 1: of the coronavirus. So put it all together, I mean,

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Speaker 1: it's it's a market that's showing real straight too. And

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Speaker 1: let's just give some perspective on what's driving this. The

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Speaker 1: expectation was for seven and a half million jobs to

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Speaker 1: be lost in this May non farm payrolls report. Instead

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Speaker 1: there was a two point five million jobs gain. And

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Speaker 1: I want to dig into what we actually were seeing. Matt,

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Speaker 1: come on in here. Some people saying, how did Wall

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Speaker 1: Street economists get this so wrong? Based on the anecdotal

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Speaker 1: evidence coming out of states, coming out of federal official

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Speaker 1: data sources. Yeah, so there are definitely some important caveats

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Speaker 1: to note with this report, some of which the BLS

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Speaker 1: actually did note in the text of the release they

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Speaker 1: put out. I think the biggest one is that, um,

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Speaker 1: there might have been a classification issue wherein um, you know, uh,

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Speaker 1: some people who were should have been classified as unemployed

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Speaker 1: and contemporary layoff we're actually classified as employed but absent

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Speaker 1: from work for various reasons. And so the BLS says

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Speaker 1: that the unemployment rate actually would have been about three

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Speaker 1: points higher than reported if those people have been classified correctly,

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Speaker 1: and so that would have, you know, manifested in an

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Speaker 1: increase in the unemployment rate in May to something like

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Speaker 1: sixteen point three percent. So that's um, you know, definitely

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Speaker 1: an increase, but still well below the media and estimate

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Speaker 1: in our survey. So um, you know, definitely a better

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Speaker 1: than expected report none the less, although maybe not quite

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Speaker 1: as good as as that headline number indicates. Matt, how

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Speaker 1: do you think the US Federal Reserve is gonna look

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Speaker 1: at this number? So? I think the said for the

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Speaker 1: moment is pretty resigned to um, you know, a long

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Speaker 1: and slow recovery here, and so this doesn't really bring

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Speaker 1: interest rates into play obviously. But one interesting thing to

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Speaker 1: note about the Fed is that they're actually going to

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Speaker 1: be putting out presumably forecast for the unemployment rate for

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Speaker 1: the first time since before this pandemic began next Wednesday

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Speaker 1: when they announced their um policy decisions. So we're going

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Speaker 1: to get the first look at how they're kind of

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Speaker 1: looking at the labor market situation going forward. So far,

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Speaker 1: in public comments, they've been pretty vague and talking about

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Speaker 1: just all of the uncertainty, So it'll be interesting to

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Speaker 1: see what numbers they actually finally do put down to paper. Here,

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Speaker 1: all I can say, Matt, is that somebody cutting the

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Speaker 1: lawn behind you. That's me, that's you. But it's actually

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Speaker 1: it actually adds to the whole moment of time, people

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Speaker 1: getting back to work and getting things back up into order.

430
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Speaker 1: I'm wondering, you know, just from your perspective, Dave, whether

431
00:23:31,359 --> 00:23:34,439
Speaker 1: what we saw out of this job's report confirms the

432
00:23:34,520 --> 00:23:37,920
Speaker 1: optimism that the market has been expressing. In other words,

433
00:23:37,920 --> 00:23:41,560
Speaker 1: we're seeing the narrative shift from markets are divorced from

434
00:23:41,600 --> 00:23:45,399
Speaker 1: reality to markets got it right and economists got it wrong.

435
00:23:45,680 --> 00:23:49,199
Speaker 1: Is that correct? Well, I mean you'd be hesitant to

436
00:23:49,320 --> 00:23:51,480
Speaker 1: do it off just you know, a couple of sets

437
00:23:51,600 --> 00:23:55,840
Speaker 1: of data here. I mean that said, you have to

438
00:23:55,880 --> 00:23:59,399
Speaker 1: remember that the stock market is always forward looking. I

439
00:23:59,440 --> 00:24:02,200
Speaker 1: mean that's the idea. You can't buy last quarters profits,

440
00:24:02,200 --> 00:24:05,000
Speaker 1: you can only buy next quarters and the quarter after that.

441
00:24:05,240 --> 00:24:09,000
Speaker 1: And the focus has been one uh in terms of

442
00:24:09,119 --> 00:24:13,320
Speaker 1: perhaps when people are expecting earnis to rebound. Certainly shows

443
00:24:13,400 --> 00:24:17,439
Speaker 1: up in the estimates for SMP five hundred profit that

444
00:24:17,720 --> 00:24:20,800
Speaker 1: we've compiled from analysts. You know, you don't start to

445
00:24:20,840 --> 00:24:25,399
Speaker 1: see renewed growth until next year. That said, uh, people

446
00:24:25,400 --> 00:24:29,040
Speaker 1: are anticipating that you're going to get some kind of

447
00:24:29,040 --> 00:24:31,400
Speaker 1: a recovery in the second half. And you know, if

448
00:24:31,440 --> 00:24:34,760
Speaker 1: maybe things aren't so bad this quarter and the recovery

449
00:24:35,080 --> 00:24:39,239
Speaker 1: comes sooner or stronger than people are anticipating, you know,

450
00:24:39,680 --> 00:24:42,159
Speaker 1: you put it all together. In the very least, you

451
00:24:42,200 --> 00:24:45,119
Speaker 1: can understand why investors have taken the position they have,

452
00:24:45,400 --> 00:24:47,640
Speaker 1: even in the face of all the economic data they

453
00:24:47,680 --> 00:24:50,760
Speaker 1: had seen before the Job's report. Hey, Matt, do you

454
00:24:50,800 --> 00:24:55,080
Speaker 1: think this job's number brings the V shaped recovery discussion

455
00:24:55,119 --> 00:24:59,240
Speaker 1: back on the table. You know, that's a really interesting question.

456
00:24:59,359 --> 00:25:00,920
Speaker 1: One of the things I have been thinking about this

457
00:25:00,960 --> 00:25:03,280
Speaker 1: morning is one thing we did see was that the

458
00:25:03,359 --> 00:25:06,800
Speaker 1: unemployment rate for white Americans fell, but the unemployment rate

459
00:25:06,840 --> 00:25:09,640
Speaker 1: for Black Americans actually still rose, and so it's kind

460
00:25:09,640 --> 00:25:12,040
Speaker 1: of widening that gap. And you know, one of the

461
00:25:12,080 --> 00:25:14,000
Speaker 1: things we've been talking about in terms of the V

462
00:25:14,119 --> 00:25:16,680
Speaker 1: shape recovery and whether that's going to be possible is

463
00:25:17,080 --> 00:25:20,520
Speaker 1: the response from Congress here, and so so far it's

464
00:25:20,600 --> 00:25:22,920
Speaker 1: it's kind of looked like Congress is really dragging their

465
00:25:22,960 --> 00:25:25,879
Speaker 1: feet on the next um phase of some sort of

466
00:25:25,880 --> 00:25:30,040
Speaker 1: potential stimulus or income support and I just wonder if

467
00:25:30,119 --> 00:25:32,440
Speaker 1: you know, given all the unrests were seeing, if those

468
00:25:32,520 --> 00:25:35,520
Speaker 1: kinds of numbers, those disparities that are being reinforced in

469
00:25:35,520 --> 00:25:38,360
Speaker 1: this report, even though it was better than expected, might

470
00:25:38,400 --> 00:25:42,000
Speaker 1: provide some you know, additional impetus for that kind of

471
00:25:42,040 --> 00:25:45,080
Speaker 1: congressional response. And if that's the case, maybe it does

472
00:25:45,640 --> 00:25:49,439
Speaker 1: perhaps raise the odds of quicker snap back. But I

473
00:25:49,480 --> 00:25:52,840
Speaker 1: think absent that sort of response from Congress, we're still

474
00:25:52,840 --> 00:25:55,639
Speaker 1: looking at a situation where, um, it's going to be

475
00:25:55,680 --> 00:25:58,400
Speaker 1: hard to bring these numbers down quickly because even though

476
00:25:58,440 --> 00:26:02,600
Speaker 1: you've got people reopening, people going back to work, there's

477
00:26:02,600 --> 00:26:06,400
Speaker 1: still that crucial question of consumer psychology, um, and how

478
00:26:06,440 --> 00:26:08,439
Speaker 1: long that's going to take a toll on some of

479
00:26:08,440 --> 00:26:11,600
Speaker 1: these sectors like leisure and hospitality, where people you know,

480
00:26:11,680 --> 00:26:14,639
Speaker 1: may not be willing to go out and and spend

481
00:26:14,640 --> 00:26:17,760
Speaker 1: at restaurants so quickly. Given these lingering concerns we're going

482
00:26:17,800 --> 00:26:20,800
Speaker 1: to be having about the virus going forward. We're speaking

483
00:26:20,800 --> 00:26:22,560
Speaker 1: with Matt Bosler, who covers the FED for us here

484
00:26:22,560 --> 00:26:25,320
Speaker 1: at Bloomberg, as well as Dave Wilson, Bloomberg Stocks editor,

485
00:26:25,359 --> 00:26:28,320
Speaker 1: and as we speak, markets ripping higher on the heels

486
00:26:28,359 --> 00:26:32,000
Speaker 1: of that way better than expected employment report. The expectation

487
00:26:32,040 --> 00:26:34,800
Speaker 1: we're seven and a half million jobs lost. Instead there

488
00:26:34,840 --> 00:26:37,320
Speaker 1: were two and a half million jobs that gained. Although

489
00:26:37,359 --> 00:26:42,760
Speaker 1: we are grappling to understand the classifications underneath this. Bank

490
00:26:42,800 --> 00:26:45,600
Speaker 1: stocks soaring or looking at the SMP up two point

491
00:26:45,640 --> 00:26:49,080
Speaker 1: two percent three thousand one and eighty one points means

492
00:26:49,119 --> 00:26:52,280
Speaker 1: while the Nasdaq is up by one point six percent. Again,

493
00:26:52,280 --> 00:26:55,800
Speaker 1: that rotation is into the cyclicals, not necessarily the quote

494
00:26:55,800 --> 00:26:58,960
Speaker 1: havens which have been big tech. Matt, I want to

495
00:26:58,960 --> 00:27:01,720
Speaker 1: dig a little bit deeper here in terms of how

496
00:27:01,800 --> 00:27:06,560
Speaker 1: long lasting this optimism can possibly be in the reclassification

497
00:27:06,640 --> 00:27:10,080
Speaker 1: of some of the employers who allowed employees to stay

498
00:27:10,080 --> 00:27:13,439
Speaker 1: on the payroll because of the p p P loans,

499
00:27:13,720 --> 00:27:16,520
Speaker 1: how long do we have for that? How much can

500
00:27:16,560 --> 00:27:19,639
Speaker 1: we really depend on that to be the reality for

501
00:27:19,680 --> 00:27:25,440
Speaker 1: the longer term and cushion any further job cuts going forward. Yes,

502
00:27:25,600 --> 00:27:27,959
Speaker 1: so we have a story out on the terminal this

503
00:27:28,040 --> 00:27:32,280
Speaker 1: morning about um, you know, looking at employment and uh

504
00:27:32,320 --> 00:27:34,960
Speaker 1: sort of the bailout package that was passed in March.

505
00:27:35,040 --> 00:27:37,360
Speaker 1: It's important to keep in mind that, you know, those

506
00:27:37,400 --> 00:27:41,119
Speaker 1: p p P loans to cover payrolls were really only

507
00:27:41,160 --> 00:27:45,600
Speaker 1: for small businesses, which account for forty some percent of uh,

508
00:27:45,600 --> 00:27:49,119
Speaker 1: you know, overall employment in this country, whereas um, you know,

509
00:27:49,200 --> 00:27:52,560
Speaker 1: more than half of employment is in large companies that

510
00:27:52,600 --> 00:27:56,600
Speaker 1: did not receive any sort of grants or payroll support

511
00:27:56,960 --> 00:27:59,320
Speaker 1: to keep employees on the payroll. And I think what

512
00:27:59,400 --> 00:28:02,320
Speaker 1: we're seeing a lot of those larger companies is that

513
00:28:02,359 --> 00:28:05,280
Speaker 1: they are announcing these big layoffs. And even some of

514
00:28:05,320 --> 00:28:09,520
Speaker 1: the companies that took money directly from treasury, like the airlines,

515
00:28:09,680 --> 00:28:13,840
Speaker 1: with employment strings attached, those strings are only attached until September,

516
00:28:14,280 --> 00:28:16,359
Speaker 1: and then some of those have announced that they're planning

517
00:28:16,359 --> 00:28:19,360
Speaker 1: to do layoffs after that as well. And so um,

518
00:28:19,359 --> 00:28:22,159
Speaker 1: this is kind of a tricky situation where we we

519
00:28:22,240 --> 00:28:25,719
Speaker 1: may have uh, you know, some some issues with cascading

520
00:28:25,800 --> 00:28:29,720
Speaker 1: job losses that aren't necessarily showing up right away in

521
00:28:29,760 --> 00:28:32,480
Speaker 1: these numbers, and we still, unfortunately have to wait for

522
00:28:32,520 --> 00:28:35,560
Speaker 1: those to come over the coming months. And so again,

523
00:28:35,640 --> 00:28:39,360
Speaker 1: that really just underscores, um the need for some sort

524
00:28:39,360 --> 00:28:43,800
Speaker 1: of game plan here and coordination to to prevent that

525
00:28:44,000 --> 00:28:48,200
Speaker 1: from happening. And so um, the other thing that people

526
00:28:48,240 --> 00:28:51,120
Speaker 1: are looking at is these weekly jobless claims data that

527
00:28:51,160 --> 00:28:54,560
Speaker 1: we're getting. We saw yesterday and the latest report that

528
00:28:55,000 --> 00:28:58,560
Speaker 1: you know, another one point nine million people filed for

529
00:28:58,720 --> 00:29:01,760
Speaker 1: initial claim aimes even this far into this at the

530
00:29:01,840 --> 00:29:05,440
Speaker 1: end of May, and so those numbers are just so huge, um,

531
00:29:06,000 --> 00:29:08,440
Speaker 1: and they don't look like they're really going down anytime soon.

532
00:29:08,480 --> 00:29:12,480
Speaker 1: That's going to keep overall unemployment high ostensibly for the

533
00:29:12,520 --> 00:29:15,880
Speaker 1: foreseeable future. Here, Dave Wilson, you know, as I think,

534
00:29:15,920 --> 00:29:18,040
Speaker 1: as I look at this market, another two percent move

535
00:29:18,160 --> 00:29:20,520
Speaker 1: higher here, and that's in the face of you know,

536
00:29:20,760 --> 00:29:24,880
Speaker 1: really ugly earnings revisions on the downside, here are we

537
00:29:24,920 --> 00:29:27,760
Speaker 1: starting to get some evaluation concerns coming off a Wall

538
00:29:27,760 --> 00:29:31,600
Speaker 1: Street or strategist saying, boy, this market from evaluation standpoint

539
00:29:32,160 --> 00:29:35,640
Speaker 1: is getting ahead of itself. Well, there are certainly a

540
00:29:35,760 --> 00:29:38,840
Speaker 1: number of strategies, you know, looking at things like uh

541
00:29:39,000 --> 00:29:42,400
Speaker 1: forward price earnings ratios where you're you're you're looking at

542
00:29:42,480 --> 00:29:47,400
Speaker 1: projected profit rather than historical learnings and saying, look, I

543
00:29:47,400 --> 00:29:50,000
Speaker 1: mean you're you're back to where you were, you know,

544
00:29:50,080 --> 00:29:53,760
Speaker 1: near the highs and two thousands. So that becomes an

545
00:29:53,760 --> 00:29:59,000
Speaker 1: issue for some investors anyway, I mean, others kind of justified,

546
00:29:59,360 --> 00:30:03,160
Speaker 1: you know, looking at the potential for a rebound here

547
00:30:03,560 --> 00:30:06,000
Speaker 1: you know, in earnings that would kind of bring down

548
00:30:07,000 --> 00:30:11,000
Speaker 1: the ratio, and that's you know, a potential going forward.

549
00:30:11,040 --> 00:30:14,040
Speaker 1: I mean, analysts estimates have kind of figured in the

550
00:30:14,080 --> 00:30:16,880
Speaker 1: worst at this point, and if what we're seeing on

551
00:30:16,920 --> 00:30:20,160
Speaker 1: the economic front kind of carries over in terms of

552
00:30:20,520 --> 00:30:24,320
Speaker 1: companies results, then maybe they have to go back and

553
00:30:24,400 --> 00:30:27,160
Speaker 1: kind of redo the numbers there in terms of what

554
00:30:27,200 --> 00:30:30,200
Speaker 1: they're anticipating on earnings. So I me, you know, the

555
00:30:30,240 --> 00:30:33,600
Speaker 1: concerns they're sure there are, uh, is it possible that

556
00:30:33,640 --> 00:30:37,640
Speaker 1: those concerns maybe you know, mitigated by what we're seeing

557
00:30:37,680 --> 00:30:40,320
Speaker 1: on the economic front. I mean, that's looking like a

558
00:30:40,360 --> 00:30:43,640
Speaker 1: possibility as well. Let's talk about the bank stocks. They're

559
00:30:43,680 --> 00:30:46,840
Speaker 1: ripping higher. I'm looking at S and P sub index

560
00:30:47,200 --> 00:30:50,240
Speaker 1: of financials. There are more than four percent today and

561
00:30:50,320 --> 00:30:54,040
Speaker 1: it's the biggest one day gain, uh since April, since

562
00:30:54,080 --> 00:30:56,440
Speaker 1: early April. I'm trying to understand if this is just

563
00:30:56,520 --> 00:30:58,680
Speaker 1: a yield curve bat with the two tens spread at

564
00:30:58,680 --> 00:31:01,000
Speaker 1: the highest since two thousand and eight teen, seeing a

565
00:31:01,040 --> 00:31:03,680
Speaker 1: similar kind of widening in the five thirties spread, Is

566
00:31:03,720 --> 00:31:06,760
Speaker 1: that really what this is? Or is it also optimism

567
00:31:06,800 --> 00:31:10,160
Speaker 1: that perhaps there will not be necessarily consumer defaults delinquencies

568
00:31:10,160 --> 00:31:12,920
Speaker 1: and business will actually pick up. One kind of gets

569
00:31:12,920 --> 00:31:14,840
Speaker 1: you to the other to some extent. I mean, if

570
00:31:14,840 --> 00:31:17,240
Speaker 1: you think about it, you know, the idea that what

571
00:31:17,320 --> 00:31:20,200
Speaker 1: we're seeing in the bond market is a reflection of

572
00:31:20,200 --> 00:31:23,240
Speaker 1: what the jobs numbers are suggesting about the economy, and

573
00:31:23,280 --> 00:31:26,040
Speaker 1: if indeed that holds up and this is not just

574
00:31:26,160 --> 00:31:30,120
Speaker 1: some one month wonder, then you know, consumers may well

575
00:31:30,160 --> 00:31:32,400
Speaker 1: be in a better position than they were before in

576
00:31:32,480 --> 00:31:35,280
Speaker 1: terms of being able to keep up payments, in terms

577
00:31:35,320 --> 00:31:37,760
Speaker 1: of being willing to spend more. And as you know,

578
00:31:37,800 --> 00:31:41,920
Speaker 1: all kinds of businesses open up as a results of

579
00:31:41,960 --> 00:31:44,800
Speaker 1: the easing of the coronavirus pandemic. I mean there's a

580
00:31:44,840 --> 00:31:47,560
Speaker 1: potential for more business down the line coming out of that.

581
00:31:47,840 --> 00:31:50,920
Speaker 1: So you know, it's kind of a both and as

582
00:31:50,960 --> 00:31:53,640
Speaker 1: opposed to when either or in terms of you know,

583
00:31:53,720 --> 00:31:57,360
Speaker 1: what's being reflected in the financial stocks at this point,

584
00:31:58,080 --> 00:32:00,320
Speaker 1: and Mattic just wondering, you know, it's again it's better

585
00:32:00,320 --> 00:32:02,400
Speaker 1: than expected job number. We're gonna have President Trump and

586
00:32:02,520 --> 00:32:05,120
Speaker 1: moments doing a victory lap by well deserved victory lap

587
00:32:05,200 --> 00:32:08,520
Speaker 1: for this number here, followed up by Larry Cuddlo with

588
00:32:08,600 --> 00:32:11,520
Speaker 1: John Farrow, What does that mean for the folks in Congress,

589
00:32:11,560 --> 00:32:14,680
Speaker 1: is that reduced the odds of getting this next round

590
00:32:14,800 --> 00:32:18,000
Speaker 1: of stimulus, even though the needs still may very well

591
00:32:18,000 --> 00:32:20,440
Speaker 1: be there. As you listen to Governor Cuomo talk about

592
00:32:20,440 --> 00:32:23,000
Speaker 1: the need for stimulus at the state and local level,

593
00:32:23,880 --> 00:32:26,760
Speaker 1: you know, this is really just a multi trillion dollar question,

594
00:32:26,800 --> 00:32:29,160
Speaker 1: I think, right because, um, like you said, you know,

595
00:32:29,200 --> 00:32:31,720
Speaker 1: there's some cross currents here, we're getting some mixed signals,

596
00:32:31,760 --> 00:32:33,720
Speaker 1: and I think one of the interesting things about what

597
00:32:33,760 --> 00:32:37,000
Speaker 1: we're seeing in the economy and the stock market is that, um,

598
00:32:37,040 --> 00:32:39,200
Speaker 1: you know, we've kind of been really holding out hope

599
00:32:39,240 --> 00:32:42,160
Speaker 1: since the beginning of this pandemic that um, you know,

600
00:32:42,280 --> 00:32:44,840
Speaker 1: things would turn out okay and maybe better than expected.

601
00:32:44,840 --> 00:32:48,120
Speaker 1: There's so much uncertainty right now, um, and we don't

602
00:32:48,160 --> 00:32:50,600
Speaker 1: really know much about you know, the nature of the

603
00:32:50,680 --> 00:32:53,800
Speaker 1: virus itself. Um, And so that kind of you know,

604
00:32:54,000 --> 00:32:56,440
Speaker 1: leaves us to be able to hold out for hope.

605
00:32:56,480 --> 00:32:59,240
Speaker 1: You know. It's I just remember back to mid March

606
00:32:59,320 --> 00:33:02,520
Speaker 1: when initially the lockdowns were going to be two weeks,

607
00:33:02,520 --> 00:33:06,240
Speaker 1: and then um, they were extended another two weeks after that,

608
00:33:06,400 --> 00:33:09,160
Speaker 1: and we just kind of kept extending things every two

609
00:33:09,160 --> 00:33:11,600
Speaker 1: weeks and now We're in a situation where a lot

610
00:33:11,680 --> 00:33:14,240
Speaker 1: of us are, you know, maybe going back to eat

611
00:33:14,280 --> 00:33:17,040
Speaker 1: at a restaurant for the first time in several months,

612
00:33:17,040 --> 00:33:18,840
Speaker 1: and so that makes us feel good and you know,

613
00:33:19,000 --> 00:33:22,840
Speaker 1: gives us some optimism. But um, we we definitely have

614
00:33:22,960 --> 00:33:27,560
Speaker 1: some key milestones or flag posts I think coming up here. Um,

615
00:33:27,600 --> 00:33:30,480
Speaker 1: the the next big one for the economy is um

616
00:33:30,640 --> 00:33:34,960
Speaker 1: these extended or expanded unemployment insurance benefits that are set

617
00:33:34,960 --> 00:33:37,120
Speaker 1: to expire at the end of July. So that's going

618
00:33:37,200 --> 00:33:41,280
Speaker 1: to be a big um, you know, potential flashpoint for

619
00:33:41,280 --> 00:33:43,600
Speaker 1: for Congress to debate and keep an eye on. That

620
00:33:43,640 --> 00:33:46,840
Speaker 1: will determine how things go going forward. And Matt, thanks

621
00:33:46,840 --> 00:33:49,000
Speaker 1: so much for joining us. We really appreciate your thoughts.

622
00:33:49,000 --> 00:33:53,240
Speaker 1: Matt Bostler, Bloomberg Fed reporter, also Bloomberg Stocks editor Dave Wilson,

623
00:33:53,240 --> 00:33:55,960
Speaker 1: thanks so much for your color here on this very

624
00:33:56,000 --> 00:34:00,720
Speaker 1: strong job to report and very strong equity market. Thanks

625
00:34:00,720 --> 00:34:03,040
Speaker 1: for listening to the Bloomberg pen L podcast. You can

626
00:34:03,080 --> 00:34:05,880
Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever

627
00:34:05,920 --> 00:34:08,960
Speaker 1: podcast platform you prefer. I'm Paul Sweeney, I'm on Twitter

628
00:34:09,000 --> 00:34:11,600
Speaker 1: at p t Sweeney. I'm Lisa Bramwoyits. I'm on Twitter

629
00:34:11,680 --> 00:34:14,680
Speaker 1: at Lisa Bramwoits one before the podcast, you can always

630
00:34:14,680 --> 00:34:16,760
Speaker 1: catch us worldwide. I'm Bloomberg Radio