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Speaker 2: Strong payrolls report relatively so seems to reinforce the soft
Speaker 2: landing case. Let's discuss with our next guest, Mike Becky
Speaker 2: Frankowitz a manpower group. She joins us from Chicago right now. Hey, Becky,
Speaker 2: thanks for being with us. Your takeaway from today's report.
Speaker 3: Yeah, So, today's report shows a definite moderation happening in
Speaker 3: the US labor market. It is a cooling, I would say,
Speaker 3: it's not a collapse. We are seeing some month over
Speaker 3: months softness, but some of that is welcome because now
Speaker 3: employers are actually able to fill jobs at a faster
Speaker 3: rate than they've been able to all year long. Ration
Speaker 3: is the headline A slight glide, slow glide into a
Speaker 3: more stable labor market, I would say, is what we
Speaker 3: can look forward to for new years.
Speaker 4: Yeah, Becky, I wanted to talk about that time it
Speaker 4: takes to fill a job these days. I was reading
Speaker 4: a note you sent to us before the show, the
Speaker 4: time to fill roles has dropped to forty nine days
Speaker 4: in November from an average of one hundred and twenty
Speaker 4: two days in twenty and twenty three year to date,
Speaker 4: one hundred and twenty two days seems to me like
Speaker 4: a tremendous amount of time to fill a job. I mean,
Speaker 4: is that just off the charts Historically what would sort
Speaker 4: of be like a healthy normal number of days for
Speaker 4: that metric.
Speaker 3: Yeah, so it fluctuates, as you might imagine, but four
Speaker 3: months to fill a job is unprecedented. So we're sitting
Speaker 3: on about a month and a half, as you said,
Speaker 3: forty nine days today. We like to see that at
Speaker 3: about forty to forty five, So you know, it takes
Speaker 3: a month a week or so to actually fill a
Speaker 3: job in a normalized labor market, but a significant month
Speaker 3: over month or for the year today average to the month,
Speaker 3: and that's really the hallmark of this cooling reduction in demand. Again,
Speaker 3: but for November, we saw double digit demand declines from
Speaker 3: October to November across all sectors in the economy, and
Speaker 3: the jobs report, while it looks quite robust, the underlying
Speaker 3: thing we should be asking about, is hey, what's happening
Speaker 3: with holiday hiring, what's happening with retail logistics slowed down?
Speaker 3: What impact were the strikes on the numbers we saw
Speaker 3: in government?
Speaker 5: So when you.
Speaker 3: Disaggregate the report, while it looks very quite positive, I
Speaker 3: would say at face value, it's actually quite moderate and
Speaker 3: gives us some signals of what to expect as we
Speaker 3: close December.
Speaker 2: Is there any evidence that what we call labor hoarding
Speaker 2: has evaporated or is that still there?
Speaker 3: Yeah, so we're not seeing the pandemic paranoia that I
Speaker 3: would call the labor hoarding output of back after the crisis,
Speaker 3: But we are seeing employers still hold on to their employees.
Speaker 3: We're not seeing we're seeing some increases. You heard Spotify
Speaker 3: Panera was in the news, but we're not seeing recession
Speaker 3: type increases in layoffs. They're quite stable. And so what's
Speaker 3: happening is employers are holding onto their talent. And there's
Speaker 3: a new term in the marketplace. It's called talent mobility.
Speaker 3: And what that means is within a company, employers don't
Speaker 3: want to let go of their talent, and so they're
Speaker 3: trying to move people around based on their capabilities versus
Speaker 3: letting people go and rehiring for new skills, and I
Speaker 3: think that's great news for the American employee, as we
Speaker 3: all need to upskill and rescille for the future.
Speaker 4: You know, Becky, one of the other labor reports we
Speaker 4: got this month that's sort of hinted at that slowdown
Speaker 4: you're talking about was that Jolts survey. That's the government's
Speaker 4: survey of job openings in the US, and it really
Speaker 4: has softened quite a bit. I mean, it was again
Speaker 4: one of those numbers that was just off the charts
Speaker 4: last year, over twelve million job openings. This past month
Speaker 4: that came down by about six hundred thousand to about
Speaker 4: eight point seven million. How does that number job with
Speaker 4: the data you see at Manpower, I mean, are the
Speaker 4: number of available jobs really shrinking at a pretty rapid rate.
Speaker 5: Yeah.
Speaker 3: We saw about a twenty percent reduction from October Snovember
Speaker 3: on available jobs in the countries. That's a pretty significant reduction.
Speaker 3: I'll counter that though, by saying there are still one
Speaker 3: point three jobs for every unemployed American that's looking for
Speaker 3: work today. And you might say one point three, how
Speaker 3: does that compare pre crisis? We were running about one
Speaker 3: point two and So when I say we're getting back
Speaker 3: into a more moderate labor market, today's labor market is
Speaker 3: starting to look like twenty nineteen, not twenty twenty, which
Speaker 3: is a positive.
Speaker 2: When Mike leaves Bloomberg the say afternoon, he's going to
Speaker 2: go to his other job, kidding, what else could he do?
Speaker 2: How many people out there actually have more than one
Speaker 2: job at this point and has that changed dramatically?
Speaker 3: Yeah, so, great question. We're seeing about five percent Americans
Speaker 3: hold more than one job. Some of those are multiple
Speaker 3: part time jobs. Some of those are full time plus
Speaker 3: part time, not super unusual as we go into the
Speaker 3: holiday season. That's getting us back to pre pandormic, pre
Speaker 3: pandemic averages. But you know, the holiday season has been surprising,
Speaker 3: and so people are trying to earn money. So we
Speaker 3: don't see this continued expansion in credit or you know,
Speaker 3: pay as you go by now pay later that we're
Speaker 3: starting to see really take off with the millennials. People
Speaker 3: are needing to take on more jobs to get more
Speaker 3: money to pay for their holiday season.
Speaker 4: Well, Bucky, where are the jobs shrinking the most? Are
Speaker 4: there any certain sectors that are cooling down faster than others?
Speaker 5: Yeah?
Speaker 3: So quite sobering. We saw double digit declines across all
Speaker 3: sectors in the economy, whether that's the fiery hot medical
Speaker 3: space or whether that's in it. What I will say
Speaker 3: are the top three jobs still in demand in the
Speaker 3: country are medical about two point three million open jobs
Speaker 3: in the country, followed by sales about nine hundred thousand
Speaker 3: open jobs, and it another nine hundred thousand. And so
Speaker 3: when we say it's cooling, not collapsing, that's because there's
Speaker 3: still amazing jobs available for Americans in the economy, just
Speaker 3: not as many as we're available.
Speaker 2: In October, he give us some advice for job seekers
Speaker 2: or even job holders, how to hold on to their
Speaker 2: jobs or what they should be looking for. I mean,
Speaker 2: like I was mentioning, Mike pretty much does it all.
Speaker 2: He's like the utility infielders, so he's never going to
Speaker 2: get fucked.
Speaker 4: I'm mopping the floors later.
Speaker 3: They have me, So Mike, call me when you're ready
Speaker 3: for something new. No, I would say for skills in
Speaker 3: demand again, if you want to make yourself in demand,
Speaker 3: medical is a hot space. If you didn't grow up
Speaker 3: in that, it's a hot space not just for nurses,
Speaker 3: the hot space for you CNA or nurse assistants. When
Speaker 3: you get into software, almost anyone can get certification online
Speaker 3: today to learn new skills like salesforce or SAP and
Speaker 3: so make yourself position yoursell for in demand jobs. And
Speaker 3: you can do a lot of this online. It doesn't
Speaker 3: require you going to get a new degree. So that
Speaker 3: would be for people seeking for people holding their job.
Speaker 3: Now is a time to tuck in. You know, we're
Speaker 3: seeing stabilization and the quick rate that had been increasing,
Speaker 3: you know, hovering very high in terms of an average.
Speaker 3: Now's a good time to kind of tuck in and
Speaker 3: make sure you're developing yourself in your role versus looking
Speaker 3: to change jobs extensively. It's probably best to wait and
Speaker 3: not make that your new year's resolution, wait until Q
Speaker 3: two when we anticipate some recovery in the marketplace.
Speaker 2: And I guess, I guess that would also mean if
Speaker 2: like your employer wants you back in the office five
Speaker 2: days a week, you better get back right.
Speaker 3: Yeah, that's a hot topic, John, that's a hot topic.
Speaker 3: We're still seeing and if you scope out, it's still
Speaker 3: a very tight labor market, still more jobs than people,
Speaker 3: and so this negotiation, this tug of war happening between
Speaker 3: in the officer out of the office. We're seeing that
Speaker 3: settle about three days a week with a lot of flexibility.
Speaker 4: You know, Becky, the other big question that always comes
Speaker 4: up as well, these are the hot jobs now, but
Speaker 4: what about the future. And I kind of have a
Speaker 4: selfish reason to ask for this. I have a daughter
Speaker 4: who's a college student and heard all our friends that
Speaker 4: is the hot topic is when I graduate in two years.
Speaker 4: You know, where are the hot jobs? Is it still
Speaker 4: in that medical and tech field? Do you think are
Speaker 4: there other places to consider?
Speaker 2: What you're really asking is when is she going to
Speaker 2: move out of it?
Speaker 1: Wait?
Speaker 5: Talk my kid?
Speaker 2: A job is the question?
Speaker 4: And we only have about thirty seconds.
Speaker 3: Yes, I have three in college, so I understand.
Speaker 6: Go for STEM.
Speaker 3: STEM jobs are still going to be the future. AI,
Speaker 3: anything with data that's going to be a hot field
Speaker 3: and fairly future proof for both of our of our kids.
Speaker 4: Good advice, AI, John, It's all about AI.
Speaker 2: Okay, Becky, thanks a lot. It looks like Becky's working
Speaker 2: from home. I'm just saying, Becky Frankowitz, Manpower Group joining
Speaker 2: us from Chicago. Let me to call you out on that.
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Speaker 4: All right, John, I have a pop quiz for you already,
Speaker 4: no pressure lay it on me if I give you
Speaker 4: the initials cb DC.
Speaker 2: Do you know what I'm talking about b DC. I'm
Speaker 2: gonna imagine it has something to do with something I
Speaker 2: don't understand, which is the world of crypto. You're absolutely right, Michael.
Speaker 2: I'll just tell you well, as a thing that really
Speaker 2: scares me about crypto is the fact that it's the
Speaker 2: number one topic of the barbershop. And when that happens,
Speaker 2: that's like a contrarian indicator to me run and hide.
Speaker 4: That's like the shoeshine Boy with JP Morgan. Well, we've
Speaker 4: got a great guest here today to explain it all
Speaker 4: to us. His name is Chris John Carlow. He is
Speaker 4: the former chairman of the Commodity Futures Training Commission and
Speaker 4: it's now a senior counsel at the law firm of Wilkie,
Speaker 4: far and Gallagher, and he is co founder of Something
Speaker 4: called the Digital Dollar Project, which is a non profit
Speaker 4: group focused on exploring digital innovation in money and future
Speaker 4: proofing the US dollar. Chris, thanks so much for joining
Speaker 4: us today.
Speaker 5: Mike, it's great to be with you. Thank you for
Speaker 5: the introduction.
Speaker 4: And Chris, I try, I've tried several times to explain
Speaker 4: what a CBDC is. You know, I think most people
Speaker 4: when they think of their money, they view it on
Speaker 4: their phone or on a computer screen. They think it's
Speaker 4: digital already. But could you just sort of explain to us,
Speaker 4: in Layman's term, what the difference is between a CBDC,
Speaker 4: a central bank digital currency, and what we think of
Speaker 4: money today.
Speaker 7: Sure, CBDC stands for central bank digital currency, and the
Speaker 7: concept is it's digital money, digital currency. That means it's
Speaker 7: on somewhere on a digital network, as opposed to Sydney
Speaker 7: simply on a bank balance sheet. But it enjoys the
Speaker 7: full faith and credit of the US government, unlike a
Speaker 7: stable coin, which may have stores of reserves of currency
Speaker 7: or treasury securities, but is based upon the credit of
Speaker 7: a corporate institution, of a private sect director.
Speaker 4: And so what is the future of the CBDC, I mean,
Speaker 4: are we definitely in the US going to see one soon.
Speaker 7: No, but we will be seeing cbdc's of all kinds
Speaker 7: here in the United States, whether the United States deploys
Speaker 7: a digital dollar or not, because one hundred and thirty
Speaker 7: countries around the world are currently exploring central bank digital
Speaker 7: currency or CBDCs.
Speaker 2: We have like Nicaragua has already done it, has has
Speaker 2: it not?
Speaker 7: Well, let's put outside small economies. China has already done it,
Speaker 7: and they already have it in two hundred and sixty
Speaker 7: million Chinese citizens' wallets.
Speaker 5: The European Union.
Speaker 7: Has moved from exploration to now development of a digital
Speaker 7: euro and they expect to have it in place in
Speaker 7: the next two or three years.
Speaker 2: So see we're seeing deployed. Does it work?
Speaker 5: China works.
Speaker 7: It's actually quite sophisticated, it's quite powerful, and in a
Speaker 7: matter of time, China will not only use it for
Speaker 7: domestic use, but will export it around the world as
Speaker 7: an export product. You can imagine in say ten years,
Speaker 7: a digital boulevard, which is basically a white label version
Speaker 7: of China's digital yu Won. It'll have interoperability with China's
Speaker 7: digital yu Wan for payments for say building up port
Speaker 7: facilities or water treatment facilities, but it will be white
Speaker 7: labeled as a digital boulevard, you.
Speaker 4: Know, Chris, I think one of the sort of backlashes
Speaker 4: that comes up when this topic comes up is that
Speaker 4: the government will be able to sort of track exactly
Speaker 4: what you do with your money. And I feel like,
Speaker 4: especially in the US, you know, people love their privacy. Politics.
Speaker 4: Privacy is a big issue. How big of a stumbling block.
Speaker 6: Is that issue?
Speaker 5: Do you think so, Mike.
Speaker 7: First of all, it's a very legitimate concern. It's it's
Speaker 7: you know, those those reports, sentatives like Tom Emmer and
Speaker 7: Congress and dissentists that have talked about this.
Speaker 5: They're not wrong to be concerned.
Speaker 7: About this because the benchmark thus far is China's digital Yuan,
Speaker 7: which is designed for full surveillance of the population.
Speaker 5: And if that model.
Speaker 7: Were to be the basis for a digital currency here
Speaker 7: in the United States, it would be a disaster.
Speaker 5: It would violate the.
Speaker 7: Fourth Amend of the Constitution, amongst other things, but it
Speaker 7: would be a disaster. But let's put that in context
Speaker 7: for a second. So can a stable coin, Okay, so
Speaker 7: can any type of centralized system of value is going
Speaker 7: to be a honeypot for massive amount of data, So
Speaker 7: whether the government does it directly with a digital currency
Speaker 7: or does it indirectly by pressuring stable coin operators to
Speaker 7: suck out all the data and hand it over to
Speaker 7: the government, as as they've done with social media platforms.
Speaker 7: The concern about privacy is the key concern. That's why
Speaker 7: we form the Digital Dollar Project to really encourage the
Speaker 7: United States to lead with its values. The United States
Speaker 7: doesn't need to focus on whether or not to deploy
Speaker 7: digital dollar right now, but it must take a leadership
Speaker 7: seat at the table that is today deciding what these
Speaker 7: digital networks are valuaboth sovereign and non sovereign are going
Speaker 7: to look like. Because our economic competitors like Europe and
Speaker 7: our economic adversaries like China are at the table right now,
Speaker 7: and in China's case, they want to ensure a digital
Speaker 7: future of money that is safe for surveillance and save
Speaker 7: for censorship. We need to assure a digital future that's
Speaker 7: safe for democracy.
Speaker 2: Does a central banks surrender anything in terms of monetary policy?
Speaker 2: By going down this path.
Speaker 7: Designed right, they could actually obtain much more efficient tools
Speaker 7: of monetory policy. So take the COVID disaster, for example,
Speaker 7: what did our government do. It tried to issue paper
Speaker 7: checks to people because it had no digital means of distributing.
Speaker 7: Many people who were locked up at home, couldn't get
Speaker 7: to a bank or didn't have bank accounts. But with
Speaker 7: digital money, you could load it right onto their mobile
Speaker 7: device and do something that you can't do with cash,
Speaker 7: engage in online commerce.
Speaker 5: So a digital currency.
Speaker 7: Could actually be a great tool if we can get
Speaker 7: the other issues like privacy, like financial inclusion, like interoperability,
Speaker 7: and like resilience to penetration.
Speaker 5: If we can get those issues.
Speaker 2: Right, I can feel people out there saying, John and
Speaker 2: Mike ask them about ETFs. What's happening? Can you like
Speaker 2: jump into that? Where are we with a bitcoin ETF
Speaker 2: or whatever?
Speaker 7: So you know, when I was at the CFTC, we
Speaker 7: green lighted the first regulated market for any type of crypto,
Speaker 7: and that was bitcoin futures in the US.
Speaker 5: And that was five years ago.
Speaker 7: And that market today is liquid, it's transparent, it's operating
Speaker 7: very very well, and it's fully regulated. It was on
Speaker 7: that bitcoin futures market that the SEC green lighted and ETF.
Speaker 7: Today we do have an ETF, but it's based upon
Speaker 7: the bitcoin future, not based upon the spot market. What
Speaker 7: we're talking about here is green lighting and ETF on
Speaker 7: the spot market. Thus far, the SEC has been unwilling
Speaker 7: to do it because the spot market is actually outside
Speaker 7: the CFTC's jurisdiction. Long story which I won't go into now,
Speaker 7: but it's outside. Congress is toying, and there's some bills
Speaker 7: that would give the CFTC oversight of that, which would
Speaker 7: make the SEC's.
Speaker 5: Job much easier. Now.
Speaker 7: Having said that, there's a lot of reason to believe
Speaker 7: that the SEC.
Speaker 5: May be getting ready for an ETF.
Speaker 7: On the spot bitcoin and ethery of markets right now.
Speaker 7: And if we look around the globe, Canada's already done it,
Speaker 7: Germany's done it. There are other functioning markets that are healthy,
Speaker 7: that are well regulated, and so I think there's very
Speaker 7: good arguments that the SEC should and I think there's
Speaker 7: anecdotal evidence that they will green light that product sometime
Speaker 7: in the beginning.
Speaker 5: Of the year.
Speaker 4: Yeah, Chris, I'd love it if you could put your
Speaker 4: old regulator's hat back on from your days at the CFTC,
Speaker 4: because we've had such an aggressive crackdown in the last
Speaker 4: year or two. You know, we've all seen Sam bankman
Speaker 4: Fried go to jail Cz, the co founder of Bui Dance,
Speaker 4: just pled guilty. On and on and on the list
Speaker 4: goes on. Have we seen all the regulatory actions, all
Speaker 4: the enforcement actions, all the criminal actions that need to
Speaker 4: be done to clean up the space, or do you
Speaker 4: think there's more work to do?
Speaker 5: Well, certainly we've seen the big ones.
Speaker 7: I think FTX and Finance long rumored are the big
Speaker 7: ones in that category. I'm not aware of any other
Speaker 7: big ones. But let me put in context if I
Speaker 7: could both the regulatory actions and the criminality, and I
Speaker 7: want to if I could just go back one hundred
Speaker 7: and fifty years of another period of American history when a
Speaker 7: major new technology came along that transformed the United States,
Speaker 7: and that was the railroad. The railroad allowed us to
Speaker 7: tie together a series of regional economies in one national economy,
Speaker 7: and so it was fundamental to our nation's progress for
Speaker 7: the next hundred and fifty years. But remember it was
Speaker 7: accompanied by a myriad of scandals and frauds in.
Speaker 5: The sale of railroad stocks.
Speaker 7: You know, famous names like the Trasks and others were
Speaker 7: involved in all kinds of fraudile behavior selling stocks and
Speaker 7: roads that didn't exist. We're now facing another new technology that,
Speaker 7: in a similar way, has the ability to tie together
Speaker 7: a whole disparate set of economic activity, and I believe
Speaker 7: will in the twenty first century transform finance and banking
Speaker 7: and money itself. But it's not that surprising that it's
Speaker 7: accompanied by a series of high flying scandals which will
Speaker 7: look back to someday the way we look back to
Speaker 7: the Vanderbilts and the Trasks and others as being speculators
Speaker 7: in a new technology. But the technology itself has a
Speaker 7: tremendous amount of value.
Speaker 2: Chris, thanks for stopping by the students today. We appreciate it. Chris.
Speaker 2: John Carlos in your counsel at Wilkie foreign Gallagher with
Speaker 2: the Digital Dollar Project. And let me give you a
Speaker 2: bitcoin quote. How about that up three percent today forty
Speaker 2: four thousand, six hundred and sixty six dollars per token.
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Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.
Speaker 2: What are you suppose you're gonna get me.
Speaker 4: For Christmas for you, John, I was thinking, Uh, no.
Speaker 2: A scented candle.
Speaker 4: Sense it candle, no offense, But I feel like I
Speaker 4: feel like your fragrance could use an upgrade.
Speaker 2: Oh, why would I be offended by that? Michael? Anyway,
Speaker 2: this is a scented candle that we have in studio.
Speaker 2: And you know what, I take a whiff of it.
Speaker 2: You know what it smells like to me?
Speaker 4: I got a hint of cinnamon.
Speaker 2: I got a hint of fifth Avenue. There you go,
Speaker 2: the Fragrance Queen. It's smells. Prince Queen is with this.
Speaker 2: Linda Levy is president of the Fragrance Foundation. What's the
Speaker 2: Fragrance Foundation?
Speaker 8: The Fragrance Foundation is a not for profit organization whose
Speaker 8: members unite and gather about the passion and artistry of fragrance.
Speaker 2: Wow, what's this fragrance that you brought in in the
Speaker 2: so in.
Speaker 8: Studio today, I've brought you nest candle which is called
Speaker 8: Holiday And for the first time ever in New York City,
Speaker 8: from about sixty second Street to forty seventh Street, the
Speaker 8: avenue is scented with this scent.
Speaker 2: Oh, and it makes me want to go out and
Speaker 2: buy stuff.
Speaker 8: Well, it makes New York City smell a lot better,
Speaker 8: as you can imagine. And second of all, this particular
Speaker 8: fragrance is in the White House right now for when
Speaker 8: they decorated for holiday. But being on the avenue is
Speaker 8: a first ever. And I would say that all of
Speaker 8: the tourists that I see walking down the avenue are
Speaker 8: really enjoying it.
Speaker 2: Now. Is this really the kind of gift to get
Speaker 2: somebody that is so hard to buy for, like Mike
Speaker 2: Reagan a scented candle or something along those lines.
Speaker 8: Well, John, I'm glad you asked. It just so happens
Speaker 8: that most of the frame's business is done at Christmas time.
Speaker 8: We consider the holiday season probably from about Thanksgiving time
Speaker 8: through December twenty fifth. We do about thirty five percent
Speaker 8: of the entire year in the months of end of October,
Speaker 8: November and December. It's a very big time for us.
Speaker 4: You know, Linda, we sort of have one track minds
Speaker 4: here at Bloomberg in that whenever any topic comes up,
Speaker 4: we have to wonder, well, what's the market angle, what's
Speaker 4: the economics angle? And I'm curious how the fragrance industry
Speaker 4: fits into the economic cycle. You know, do people buy
Speaker 4: less perfumes, for example, when the economy slows down, or
Speaker 4: is it the type of thing where you know, John
Speaker 4: says to his significant other, no diamond earrings this this year,
Speaker 4: you're going to get some perfume. You're going to get
Speaker 4: a sunny candle. How does do fragrances fit into the
Speaker 4: economic cycle.
Speaker 8: It's a very good question because fragrance business was good
Speaker 8: before the pandemic, but it is a surprise to most
Speaker 8: during the pandemic, fragrance business has actually increased significantly, and
Speaker 8: it has continued to do so. There are a few
Speaker 8: reasons why. One reason, for instance, like this candle sitting
Speaker 8: in front of you, is people were spending a lot
Speaker 8: of time home and they really wanted to enhance their environment.
Speaker 8: Another thing that happened was people weren't really getting dressed
Speaker 8: up a lot. They were in front of the zoom screen.
Speaker 8: So while they weren't getting very dressed up or investing
Speaker 8: in fashion, they were really enjoying what we call the
Speaker 8: invisible accessory, and they wanted some sort of ID. And
Speaker 8: the last thing, which I'm sure you could relate to
Speaker 8: is during such a difficult, challenging time, and we have
Speaker 8: much of that now too. People really use fragrance to
Speaker 8: transport themselves to another time or place like where did
Speaker 8: you go on vacation? Or what did your grandmother smell like?
Speaker 8: Or that ant that you haven't seen. So our business
Speaker 8: and fragrance is quite robust.
Speaker 2: Is there some sort of healing aspect to all this?
Speaker 8: Yes, there is another reason that the fragrance business is
Speaker 8: doing well. Is self care and home spas are really important.
Speaker 8: Now you are just on the journey with me to
Speaker 8: become fragrance experts. But sense like lavender, eucalyptus and others
Speaker 8: are very spa like sense that a lot of people
Speaker 8: like to surround themselves in their home or when they're
Speaker 8: you know, taking the bath. Remember, even if you think
Speaker 8: you're not wearing fragrance, you probably are.
Speaker 4: And are there sort of classic standard fragrances or is
Speaker 4: there sort of a fad elements to it all? Are
Speaker 4: there different fragrances that come in in out of fashion?
Speaker 8: Good question too. The top ten fragrances for years have
Speaker 8: had a lot of names like Christian Dior, Chanel, etc.
Speaker 8: I would say that a lot of designer fragrances are
Speaker 8: up there, but hitting the top fifteen or ten. Once
Speaker 8: in a while there's an interruption. Carolina Herrera, for instance,
Speaker 8: has this one. The perfume bottle looks like a stiletto,
Speaker 8: and it's really really popular. And I also think that
Speaker 8: it's important for you to know. In the old days,
Speaker 8: as I call it, there were women's fragrances, there were
Speaker 8: men's fragrances. But now the biggest thing is there are
Speaker 8: universal fragrances, which means regardless of gender identity, since have
Speaker 8: become popular without having those labels.
Speaker 2: Okay, I have to ask the intersection of fragrances and yes,
Speaker 2: artificial intelligence, is there such a thing?
Speaker 8: There is a connection. I often get the question will
Speaker 8: perfumers be creating fragrances in the future or will it
Speaker 8: be done by a robot or a computer. I'm here
Speaker 8: to say that AI will not take over the creative
Speaker 8: aspect and what we are so passionate about, you know,
Speaker 8: will artists go away? Will musicians go away? Will chefs
Speaker 8: go away?
Speaker 7: Know?
Speaker 8: And therefore we think, even though it's a great help
Speaker 8: to us, it gives us a lot of data because
Speaker 8: fragrances have been made for centuries, but it will not
Speaker 8: replace what is today.
Speaker 2: You know, when I come in on my commute in
Speaker 2: the middle of the night, I pass in Union Beach,
Speaker 2: New Jersey, under thirty six the campus of Internet IFF
Speaker 2: International Fragrances and Flavors or whatever it is that is
Speaker 2: it out front. They have a part of that campus
Speaker 2: this exotic looking greenhouse with all these crazy looking plants.
Speaker 2: So begs the question where do these fragrances and scents
Speaker 2: come from?
Speaker 8: You don't even realize it, but you figured it out.
Speaker 8: The story on fragrances around the entire globe. There are
Speaker 8: ingredients vettevire hyacinth roses all over and down in New Jersey.
Speaker 8: You saw a greenhouse that I actually went into. What
Speaker 8: IFF did is they gathered many different plants that exist
Speaker 8: all over the world and they have them living together.
Speaker 8: I've gone through there, and that brings something else. You
Speaker 8: notice there's sort of a lab or an ugly building.
Speaker 8: Excuse me for saying, next to this gorgeous, big greenhouse.
Speaker 8: What they do is something special in fragrance. We call
Speaker 8: it headspace. So instead of using roses and wiping out
Speaker 8: planet Earth, someone from the lab goes into that greenhouse, extracts,
Speaker 8: goes back to the lab identifies it and they can
Speaker 8: recreate the scent from that rose or plant and actually
Speaker 8: not wipe out the earth. So that greenhouse is a tour,
Speaker 8: I'd be happy to take you on.
Speaker 2: Oh yeah, no, that'd be very cool. Yeah, right in
Speaker 2: my own house.
Speaker 4: Well, Linda, you know, IFF is obviously the one of
Speaker 4: the big players in this industry. I think a lot
Speaker 4: of our listeners are always have one ear open to
Speaker 4: stocks to buy or sell. Any other big players in
Speaker 4: the industry that we don't know about.
Speaker 8: Yes, Iff is what we call a fragrance house, and
Speaker 8: like you said, they make all of the companies I'm
Speaker 8: going to name, make both fragrances and flavors. Another very
Speaker 8: big one is Vividon. It's based in Switzerland. They do
Speaker 8: the same and they're even bigger than IFF, I believe.
Speaker 8: And another one that's one of the top three is
Speaker 8: just merged and now it's called DSM Ferminish. So those
Speaker 8: are the three biggest global fragrance houses that make fragrances
Speaker 8: and flavors for the entire world. There are some that
Speaker 8: are smaller, but those are the three big Should.
Speaker 2: I stick with old Spice?
Speaker 8: I must tell you any fragrance you wear is a
Speaker 8: good fragrance. That old spice is still going strong.
Speaker 2: Yeah after all these years, Mike, So now you know
Speaker 2: what to get me for Christmas. A scented candle. But
Speaker 2: it has to smell like old.
Speaker 4: Space old spice as they need to have a candle line.
Speaker 2: That's a good point.
Speaker 8: They probably will after hearing this today. But these are
Speaker 8: not so expensive. You thought that this candle looks expensive,
Speaker 8: Yes it does, but it's less than fifty dollars.
Speaker 2: All right, Linda, thanks a lot, Lnda Levy the fragrance queen.
Speaker 2: This is Bloomberg.
Speaker 1: Umbmark a journal. Now about you let me?
Speaker 6: Oh no, no, no, no, who's going to John Honey?
Speaker 2: Please, I'll travel ecuse Ma, I want to drive.
Speaker 3: It's a question.
Speaker 1: This is the drive to the clothes.
Speaker 5: We'll drive around each other down.
Speaker 2: On Bloomberg Radio. Yeah, on John Tucker along with Mike Reagan.
Speaker 2: You are listening and watching Bloomberg Business Week on YouTube
Speaker 2: as we drive to the clothes. Egle I Reagan pointed
Speaker 2: out that the S and P five hundred year today
Speaker 2: up twenty percent. Right now, just cross that mark a
Speaker 2: little while.
Speaker 4: That's your shabby, John, that's your shabby.
Speaker 2: Well, look at the tech heavy Nasdaq, as they say,
Speaker 2: up thirty seven percent for the year, now only a
Speaker 2: Measley nine and a half percent. That soft landing narrative, Mike,
Speaker 2: that that seems to have taken hold of the risk markets.
Speaker 2: And UH, with that is the backdrop. Let's bring in
Speaker 2: our next guest. Paul chris Her is head of Global
Speaker 2: Investment Strategy at Wells Fargo Investment Institute, joining us from
Speaker 2: Saint Louis. Hey, give us your perspective after the data
Speaker 2: we heard. We just pointed out that we got the
Speaker 2: inflation expectations from University of Michigan, of course earlier, the
Speaker 2: job support. How does that all stack up for equities.
Speaker 6: Yeah, it stacks up in a way that takes advantage
Speaker 6: of liquidity that's available in this market right now. Certainly
Speaker 6: the Treasury's decision or late in October to sell a
Speaker 6: lot of tea bills has helped a lot of liquidity
Speaker 6: return to markets. And the soft landing scenario it's always
Speaker 6: been there. It's been there all year. It won't really
Speaker 6: go away. But we think, you know, this is really
Speaker 6: an extended rally. It's been a long rally, but we
Speaker 6: think there's going to be better opportunities for our clients
Speaker 6: to invest at better prices come the beginning of the year,
Speaker 6: or at least early in the year, because this rally
Speaker 6: is really just way over done.
Speaker 4: You know, Paul, I was reading a note you sent
Speaker 4: us before the show. One stat really caught my eye,
Speaker 4: and that is that you write that history shows that
Speaker 4: the S and P five hundred doesn't bottom until on
Speaker 4: average six months after the first FED rate cut. So
Speaker 4: I'm wondering in this scenario, what exactly are we talking
Speaker 4: about when we when we say the bottom, I mean,
Speaker 4: could could it go all the way back to that
Speaker 4: low from last year, because that would be quite a
Speaker 4: sell off.
Speaker 6: That would be that would be quite a sell off,
Speaker 6: and for that you'd need some sort of a shock.
Speaker 6: But there's plenty of them lined up, whether it's government
Speaker 6: shutdown or an explosion, a further explosion in geopolitics, maybe
Speaker 6: a combination of the shutdown and the usual election year
Speaker 6: uncertainties as we as we head into the beginning of
Speaker 6: the year with not really a good idea of who
Speaker 6: the Republican nominee is going to be, the maybe not
Speaker 6: even the Democratic nominee, So there's plenty of uncertainties to
Speaker 6: start the year, and then you've got all those consumers
Speaker 6: with their by now pay later plans since Black Friday,
Speaker 6: and those are going to start coming due in the
Speaker 6: early part of next year. We could be in for
Speaker 6: a at least a consolidation, if not a correction, and
Speaker 6: then some event could send us back down. I mean,
Speaker 6: think about how narrow this rally has been. NASDAC up
Speaker 6: thirty seven percent, the Dow only up nine percent. The
Speaker 6: average SMP stock has not done nearly as well as
Speaker 6: those top seven names, and that gives us quite a
Speaker 6: bit of pause thinking about an economy that's slowing and
Speaker 6: really vulnerable to some of these shocks going into the
Speaker 6: new year.
Speaker 2: Well, Paul, tell everybody what happens at the end of
Speaker 2: the year. For fund managers like yourself, is everybody under
Speaker 2: pressure to make the final push get gains before the
Speaker 2: year closes out.
Speaker 6: Sure, there there's some there's some straightening out of books
Speaker 6: to get things nice and pretty for the end of
Speaker 6: the year. And then in January you're going to have
Speaker 6: a lot of four to one K money coming in
Speaker 6: and that's gonna that's gonna further boost the market. But
Speaker 6: the seasonals turn negative or at least neutral in the
Speaker 6: immediate aftermath of that, and then more negative as we
Speaker 6: headed towards the spring, and perhaps just as the economy
Speaker 6: it continues to weaken. This this this jobs report today
Speaker 6: for example, again showing resilience. Yeah, maybe, but the trend
Speaker 6: is still lower. And as consumers run out of cash
Speaker 6: and they stop spending, a labor market that's better balance
Speaker 6: than it was a year and a half ago is
Speaker 6: a labor market that's more prone to layoffs. So resilience
Speaker 6: is one of those things that, like the economy, can
Speaker 6: can turn gradually gradually and then suddenly.
Speaker 4: You know, Paul, break it down for us about you know,
Speaker 4: where exactly we should be positioning our investments right now.
Speaker 4: I mean, I keep hearing people still referring to those
Speaker 4: rates on cash. You know, money market mutual fund rates
Speaker 4: are still very attractive, especially compared to you know, pre
Speaker 4: pandemic levels where they're basically paying nothing. I mean, is
Speaker 4: it as simple as that just hide out in a
Speaker 4: money fund?
Speaker 6: Well for some people maybe, but let me get to
Speaker 6: that in a second. We've been overweight the S and
Speaker 6: P five hundred for a good part of this year,
Speaker 6: and we're not negative on stocks. I don't mean to
Speaker 6: suggest that we are, but we took profits in tech
Speaker 6: about the beginning of this excuse me, about the middle
Speaker 6: of the year, and we think now as really the
Speaker 6: time has been the time to be a little bit
Speaker 6: more quality oriented, a little bit more defensive. We see
Speaker 6: industrials and materials as places that look interesting as infrastructure
Speaker 6: spending and reshoring of companies gains more steam in twenty
Speaker 6: twenty four. We like healthcare yet hasn't been a participant
Speaker 6: in this rally, but we like the pricing there and
Speaker 6: we like the long term trends. So a quality orientation
Speaker 6: during a period of volatility not a bad thought. Now
Speaker 6: let me return to your thought on fixed income. We
Speaker 6: have clients and lots of investors who've taken advantage of CDs,
Speaker 6: let's say in that four and a half to five
Speaker 6: percent range. My question for them is always what happens
Speaker 6: after that? Seas de matures in a year and you've
Speaker 6: got to skate past all this volatility. But then rates
Speaker 6: might be lower by the end of next year according
Speaker 6: to the market consensus. Would you still sign up for
Speaker 6: it at four would you still sign up at three
Speaker 6: and a half? If we think the equity markets are
Speaker 6: going to come back strong. In other words, the problem
Speaker 6: is people get used to high yields on CDs, but
Speaker 6: those yields may not be around for as long as
Speaker 6: the investors' goals. So you have to kind of think
Speaker 6: about this in the longer In the longer term setting,
Speaker 6: I would say as short term treasury bills here, yes,
Speaker 6: something with a secondary market if you want to skate
Speaker 6: over some volatility we expect in the early part of
Speaker 6: next year, first quarter probably that's not a bad idea.
Speaker 6: But then get out of that in time for the
Speaker 6: market to bottom, and we think that will happen sometime
Speaker 6: in the second quarter, and that's when your opportunities really broaden.
Speaker 6: Small caps, mid caps, more cyclically oriented sectors, perhaps financials,
Speaker 6: perhaps energy again. So we think there'll be a lot
Speaker 6: more opportunities. That short term cash position that pays a
Speaker 6: little bit of interest could be useful as long as
Speaker 6: one doesn't get too used to it.
Speaker 2: Hey, Paul, your take on AI fad djure or what.
Speaker 6: It's one of those disruptors we talk about this economic disruptors,
Speaker 6: computers PCs, or disruptors software for the personal computer, the
Speaker 6: laptop computer. Those were all disruptors. We think AI is
Speaker 6: definitely in that category, Generative AI in particular. We wrote
Speaker 6: a report on this a couple of months ago. But
Speaker 6: these trends tend to take some time to develop, and
Speaker 6: in the meantime, what will be the path of regulatory
Speaker 6: action regarding AI as it develops. We've seen a lot
Speaker 6: of talk about that in the press, but Congress and
Speaker 6: the President may be still trying to decide how to
Speaker 6: approach that. That's a big uncertainty. We don't think the
Speaker 6: market is pricing that in yet. And the second piece
Speaker 6: of it is look over time, other companies will come
Speaker 6: in that might do AI better than some of the
Speaker 6: ones on the market today.
Speaker 2: All right, Paul, Always a pleasure. Appreciated, Paul Christopher at
Speaker 2: a global investment strategy at Will's Fargo Investment Institute from
Speaker 2: Saint Louis. This is Bloomberg.
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