WEBVTT - Mixed Jobs Numbers Hard for Markets to Digest 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.239 at Bloomberg dot com slash podcast. Right now, I want 0:00:21.239 --> 0:00:23.880 to go over get over to Andrews Pearson Um. He 0:00:24.000 --> 0:00:26.640 is the chief investment Officer of Global fixed Income at 0:00:26.680 --> 0:00:28.680 New Vene. And Andrews, I want to first get your 0:00:28.720 --> 0:00:32.960 take on the jobs report. Um, it was pretty fascinating. 0:00:33.080 --> 0:00:35.160 It was a miss, of course, but still an ad 0:00:35.240 --> 0:00:38.720 of more than half a million jobs in the US economy. Now, 0:00:38.920 --> 0:00:42.760 John John said, always very interesting, a lot of focus 0:00:42.760 --> 0:00:44.960 on the markets, and at the core, I would say 0:00:44.960 --> 0:00:47.600 it's it's more of the same year we had, okay, 0:00:47.760 --> 0:00:52.479 not grade numbers once again, some some mixed messages for 0:00:52.560 --> 0:00:55.600 the market to kind of digest. And I think he 0:00:55.760 --> 0:00:58.040 just kind of seeing that on the ten year today 0:00:58.080 --> 0:01:01.520 and you partly given bats in the yield move post 0:01:01.560 --> 0:01:05.839 to strong DP numbers and generally the market is expecting 0:01:06.480 --> 0:01:09.000 strong job numbers and we haven't quite been getting that, 0:01:09.200 --> 0:01:11.880 so so we're seeing a little bit less progress in 0:01:11.959 --> 0:01:14.720 the labor market. Um, that means less pressure for the 0:01:14.800 --> 0:01:18.200 said to remove accommodation, and that means a lower tenure. 0:01:18.319 --> 0:01:23.319 So continue to have these mixed numbers. That makes it 0:01:23.480 --> 0:01:27.600 quite tough ultimately for the markets to digest what's going 0:01:27.640 --> 0:01:32.880 on here, and this debate around growth versus inflation really continues. 0:01:33.200 --> 0:01:35.880 Anders I have to say, I don't envy you fixed 0:01:35.880 --> 0:01:39.480 income guys. I don't know where you go to get yield. 0:01:40.200 --> 0:01:43.240 Where do I go to get some yield here in 0:01:43.319 --> 0:01:45.440 the fixed income markets? How much risk do I have 0:01:45.520 --> 0:01:49.400 to take to get a reasonably decent return? I know, 0:01:49.480 --> 0:01:51.480 it's it's certainly a dilemma for all of us, and 0:01:51.600 --> 0:01:56.080 something investors are constantly asking us around. And you know, 0:01:56.120 --> 0:02:00.240 at the core, we we maintain its vally const aft 0:02:00.240 --> 0:02:03.520 to view and we're comfortable keeping you know, a modest 0:02:03.640 --> 0:02:07.880 risk overweight stands here and continue to focus on credit 0:02:07.920 --> 0:02:11.120 and spread sectors. Um. You know, with the backdrop of 0:02:11.240 --> 0:02:16.840 this slowly improving economic kind of environment, fundamental still improving nicely. 0:02:17.000 --> 0:02:20.160 We still have, you know, in my mind, nice support 0:02:20.200 --> 0:02:22.720 from the Fed and the central banks, are being delvish 0:02:22.760 --> 0:02:27.040 and patient and not look into race rates to too early. UM. 0:02:27.120 --> 0:02:32.520 That combined with UH stretched but still okay evaluations, we 0:02:32.600 --> 0:02:34.960 kind of call it we're priced for reality, nice class 0:02:35.280 --> 0:02:38.760 for perfection. So we're kind of expecting spreads to have 0:02:38.880 --> 0:02:41.839 more of a range found kind of type being there 0:02:41.840 --> 0:02:44.600 for a bit longer, so so that really offers up 0:02:44.639 --> 0:02:48.000 an attractive terror trade or a cowpund clipping kind of 0:02:48.000 --> 0:02:51.000 cup environment, so that we're kind of seeing that playing 0:02:51.000 --> 0:02:54.239 out for the next several months and throughout the rest 0:02:54.240 --> 0:02:56.480 of the year. So so to answer your question, we're 0:02:56.520 --> 0:03:00.840 comfortable kind of keeping more of a US overweight and 0:03:01.000 --> 0:03:05.079 going down into the rating spectrum UH and really liked 0:03:05.160 --> 0:03:07.560 asset classes to offer this a little more of the 0:03:07.639 --> 0:03:09.640 reads for yielding and so a couple of areas that 0:03:09.680 --> 0:03:14.560 we've been focused on, our leverage loans and preferreds loverage loans, 0:03:14.680 --> 0:03:19.120 you know, are definitely benefiting from all of these trans Fundamentally, 0:03:19.160 --> 0:03:23.200 the pictures improving lower defaults are happening or or kind 0:03:23.200 --> 0:03:26.760 of seeing. Given the economic rebound and the loans, you 0:03:26.840 --> 0:03:30.240 have a nice feel pick up spread profile, particularly when 0:03:30.240 --> 0:03:33.400 you compare to other fixed income sectors and and a 0:03:33.520 --> 0:03:36.240 key aspect for us right now is as well as that, 0:03:36.600 --> 0:03:39.840 um you know, loans and preferred generally have floating rate 0:03:40.000 --> 0:03:44.080 aspects of it. So historically fliving rate, uh, you know, 0:03:44.120 --> 0:03:47.440 performance very well in the writing rate environments. Um So, 0:03:47.480 --> 0:03:50.280 that's that's a key area that we're we're finding value. 0:03:50.320 --> 0:03:52.839 And then finally on the loan side in particular, we're 0:03:52.840 --> 0:03:58.000 seeing strong technical support. We've seen roughly twenty one straight 0:03:58.040 --> 0:04:02.440 weeks of inflows, been coming up to about twenty three 0:04:02.520 --> 0:04:06.120 billion dollars of inflows for for the low space, so 0:04:06.480 --> 0:04:10.200 very nice momentum. We expect that to continue for the 0:04:10.200 --> 0:04:13.600 rest of the year. Um So, loans in particulars and 0:04:13.760 --> 0:04:16.839 expected to be a solid perform in this kind of environment. 0:04:17.760 --> 0:04:19.960 All right, Anders, thank you so much for joining us. 0:04:19.960 --> 0:04:23.479 Really appreciate getting your perspective on those fixed income markets. 0:04:23.520 --> 0:04:27.080 Anders Parson. He is the chief investment Officer of Global 0:04:27.160 --> 0:04:32.360 fixed Income at Nouvene. Well, Matt, A couple of years ago, 0:04:32.480 --> 0:04:36.200 our next guest showed me an app called flight Radar 0:04:36.320 --> 0:04:39.280 twenty four kind of tracks airlines, air flights kind of 0:04:39.320 --> 0:04:41.680 all around the world. So now you can offer round 0:04:41.720 --> 0:04:43.800 your house. Yeah, you can just find me looking up 0:04:43.800 --> 0:04:45.800 at the sky, then down at the app seeing where 0:04:45.800 --> 0:04:49.200 this plane is going. George Ferguson, senior aerospace, defense and 0:04:49.240 --> 0:04:52.400 airlines analysts. He's responsible for that, He's for Blueberg Intelligence. 0:04:52.440 --> 0:04:55.640 He's been covering the airline business for decades. Absolutely an 0:04:55.640 --> 0:04:59.240 expert on Wall Street. George, it seems like they're a 0:04:59.279 --> 0:05:01.960 lot more plane in the air. Um, give us a 0:05:02.000 --> 0:05:05.159 sense of where we are in terms of overall air 0:05:05.200 --> 0:05:07.840 traffic as we head into the busy summer season and 0:05:08.160 --> 0:05:12.680 how are things progressing? Hey, so thanks for having me. Yet, Um, 0:05:12.839 --> 0:05:15.240 what we're starting to see is that the level of 0:05:15.320 --> 0:05:19.400 capacities that the airlines are flying is approaching, if not 0:05:19.520 --> 0:05:24.400 exceeding l So that's a that's a great thing. Um. 0:05:24.480 --> 0:05:28.279 The load factors, from what we're hearing, are are quite good. 0:05:29.160 --> 0:05:31.000 I think they're I Frank, I think there's you know, 0:05:31.040 --> 0:05:34.800 sort of eighties and nineties and on their airlines, probably 0:05:34.839 --> 0:05:38.960 creating a little bit of stress with the flying public. 0:05:39.480 --> 0:05:45.280 What we still see is it's a very leisure oriented bounce, right, 0:05:45.320 --> 0:05:49.240 and so that's keeping says depressed at bit. So even 0:05:49.240 --> 0:05:54.360 as we see this increasing capacity, increasing load factor, the 0:05:54.400 --> 0:05:58.279 revenue numbers aren't coming up as strongly. I think we 0:05:58.279 --> 0:06:00.240 really need to see the business traveler come back can 0:06:00.360 --> 0:06:03.000 And to me, it looks a bit like things have 0:06:03.160 --> 0:06:06.040 spread out on the bounds right. So we originally thought 0:06:06.040 --> 0:06:08.039 that you would get answered a really heavy bounce in 0:06:08.040 --> 0:06:11.800 the core summer season July August. You know, it looks 0:06:11.800 --> 0:06:14.320 to me like people are getting a vaccination and going 0:06:14.400 --> 0:06:16.680 a vacation right away. You know, they all have thirty 0:06:16.760 --> 0:06:19.800 days a vacation built up, so they get they get vaccinated, 0:06:19.800 --> 0:06:21.919 they get comfortable and desought. Hey, we're gonna go in 0:06:22.080 --> 0:06:24.760 May or in June on a vacation and disappear for 0:06:24.800 --> 0:06:26.440 a week or two and get on an airplane. But 0:06:26.440 --> 0:06:29.960 that's what I's looking to us right now. Absolutely on 0:06:30.000 --> 0:06:33.320 a vacation front, for sure. On the business front, I 0:06:33.360 --> 0:06:37.520 wonder what kind of developments you're seeing. Yes, still like 0:06:37.560 --> 0:06:40.680 I said that there were still being business is coming 0:06:40.720 --> 0:06:44.960 back slowly. You know, even me and my business gets very, 0:06:45.440 --> 0:06:48.080 very driven by air travel. Most of the people in 0:06:48.080 --> 0:06:50.760 my business should be willing to take meetings and ready 0:06:50.760 --> 0:06:53.480 to go to competences because we're the we're the believers 0:06:53.560 --> 0:06:56.840 in air travel. And you know, I'm starting to see 0:06:57.120 --> 0:07:03.000 physical competences. Uh, you know, late to Q early three 0:07:03.080 --> 0:07:06.440 q they're getting some some decent numbers of people there. 0:07:06.720 --> 0:07:09.200 But I think we're on the early side of it. 0:07:09.279 --> 0:07:13.160 As the aerospace aviation people, we don't think business travel 0:07:13.200 --> 0:07:16.360 is really gonna come back well into sort of probably 0:07:16.520 --> 0:07:20.320 deep into week q UH. And you know, we really 0:07:20.320 --> 0:07:23.200 think we still see it sort of being you know, 0:07:23.240 --> 0:07:27.480 maybe it gets back to sixt ish of last year 0:07:28.240 --> 0:07:31.520 UM in sort of three Q four q UM, but 0:07:31.600 --> 0:07:34.520 we don't think it's sort of surging back to of 0:07:34.600 --> 0:07:38.920 twenty nineteen levels until we get into into we think 0:07:38.920 --> 0:07:41.720 it's going to be slow. George, can I ask you 0:07:41.800 --> 0:07:44.480 as one of the believers. Everyone who's connected to the 0:07:44.520 --> 0:07:51.080 airline industry swears by UM the ventilation system says you're 0:07:51.160 --> 0:07:53.880 unlikely to get sick in an aircraft, But all normal 0:07:53.960 --> 0:07:56.600 people know that when you go on a long haul flight, 0:07:56.600 --> 0:07:58.840 you're gonna get sick. Why is that? Why is there 0:07:58.880 --> 0:08:04.960 that discrepancy? You know, I think that of course, whenever 0:08:05.000 --> 0:08:07.320 you're stuck in in tight spaces and a whole bunch 0:08:07.360 --> 0:08:10.400 of other people, I think, you know, human beings immediately 0:08:10.440 --> 0:08:15.080 get concerned about transfer of cold and whatever else. But look, 0:08:15.120 --> 0:08:18.000 I'll tell you you probably don't know anything about the 0:08:18.160 --> 0:08:21.920 HVAC system in in the office you're going to every day, 0:08:22.000 --> 0:08:24.559 the restaurant you go to, and taking nothing in your house. 0:08:24.640 --> 0:08:27.520 All right, and I'll do you. The airplane HVAC system 0:08:27.600 --> 0:08:30.080 is looked at more frequently than all those places and 0:08:30.160 --> 0:08:31.800 has a bunch of fresh air coming through it. So 0:08:32.120 --> 0:08:35.360 I'm believing that one, to be honest, George. How about 0:08:35.360 --> 0:08:38.040 international trouble, that's that's a part of the business as 0:08:38.160 --> 0:08:41.880 really profitable for airlines, But it just seems like that's 0:08:41.920 --> 0:08:44.000 I mean, given how different parts of the world are 0:08:44.000 --> 0:08:45.920 dealing with the pandemic, that might be the last thing 0:08:45.920 --> 0:08:48.640 that comes along. It's a mess, I mean, and that's 0:08:48.720 --> 0:08:51.960 the other challenge we really see, sort of getting everything 0:08:52.000 --> 0:08:56.360 moving again, getting that high that high margin international chapel back. Yeah. 0:08:56.400 --> 0:08:58.680 I mean, you know, I was looking today Australia doesn't 0:08:58.679 --> 0:09:01.120 want anybody to travel into also early it's still you 0:09:01.160 --> 0:09:04.160 know right now, uh, you know there's issues in the UK. 0:09:04.480 --> 0:09:08.160 Was with the people traveling in India. Looks good for 0:09:08.200 --> 0:09:10.840 a while, went bad and now you know you don't 0:09:10.840 --> 0:09:13.760 want to be traveling to India. There's varying regulations or 0:09:13.800 --> 0:09:17.520 not between the US and Europe and back with US, 0:09:17.559 --> 0:09:20.280 but has been our Europeans that has been It's a mess, 0:09:20.280 --> 0:09:24.160 and different countries had sort of different views on the violence, 0:09:24.559 --> 0:09:30.400 different risk asiances, different willingness to require people to disclose vaccines. 0:09:30.559 --> 0:09:33.160 We don't think you see a really good international travel 0:09:33.200 --> 0:09:36.880 scene until mid next year. We think it's the earliest. 0:09:36.920 --> 0:09:38.440 We think it will be a week one this year. 0:09:38.840 --> 0:09:40.600 And what we're seeing is the countries that have been 0:09:40.640 --> 0:09:44.280 more open, you know, for the US, Latin America, South America, 0:09:44.640 --> 0:09:46.599 that's where that's where we're seeing the flights go to. 0:09:46.840 --> 0:09:49.920 That's a very leisure market, So that's a challenge. It's 0:09:49.920 --> 0:09:51.760 a mess. Which I were in the States, I would 0:09:51.760 --> 0:09:54.679 go to South America on vacation instead of trying to 0:09:54.720 --> 0:09:58.160 figure out which European country will let me in even 0:09:58.200 --> 0:10:01.920 if I'm fully vaccinated. It truly is a mess. George, 0:10:01.920 --> 0:10:05.120 thanks so much for joining us. George ferguson their senior Aerospace, 0:10:05.240 --> 0:10:10.880 Defense and Airlines analyst at Bloomberg Intelligence. Now let's get 0:10:10.920 --> 0:10:14.800 over to Lena Chelius Eva. She is Bloomberg Intelligence senior 0:10:14.920 --> 0:10:17.840 US economists and she can tell us what happened with 0:10:17.880 --> 0:10:21.120 this job's report. So Elena, let's start with the overall 0:10:21.200 --> 0:10:25.800 number here. It wasn't um it wasn't just a miss. 0:10:25.920 --> 0:10:27.880 It was a big miss. If you look at the 0:10:27.880 --> 0:10:30.280 whisper number on the other hand, it's on the right 0:10:30.280 --> 0:10:34.440 side of zero. And we were about consensus and we 0:10:34.559 --> 0:10:39.760 missed even more. I would say true Bloomberg intelligence a right, 0:10:40.760 --> 0:10:45.200 Bloomberg economics. Yes, I think it's just uh, just showing 0:10:45.360 --> 0:10:50.400 us that it's the inertia on the board of potential 0:10:50.440 --> 0:10:54.239 workers who remain inhibited to rejoin the ranks of employment. 0:10:54.559 --> 0:10:59.240 So whether it's unwillingness to lose those expended unemployment fenessy, 0:11:00.080 --> 0:11:04.839 or it's some sort of inability to find proper childcare 0:11:05.640 --> 0:11:09.720 um or just you know, simply being comfortable well with 0:11:10.080 --> 0:11:14.280 living on a smaller income. All these factors contribute to 0:11:15.200 --> 0:11:19.439 limiting people rejoining the labor force. And we saw a 0:11:19.480 --> 0:11:24.520 declining labor force participation and uh, that was the MAZE report. 0:11:24.840 --> 0:11:28.480 I think we will continue some inertia going forward in 0:11:28.640 --> 0:11:33.800 June and July, but maybe we will see some acceleration. Nevertheless, 0:11:33.840 --> 0:11:38.440 because the augmented unemployment benefits expired in the middle of 0:11:38.480 --> 0:11:41.920 this month, in half of the U S states that 0:11:42.080 --> 0:11:46.360 could help motivate more people to get back into the 0:11:46.440 --> 0:11:49.400 labor force. I think it will just take some time 0:11:49.520 --> 0:11:54.720 for um job gains to accelerate to uh, you know, 0:11:54.840 --> 0:11:59.760 really help close that huge gap in employment in the 0:11:59.760 --> 0:12:02.440 big eating of the crisis. All right, So Elena, a 0:12:02.480 --> 0:12:05.839 couple of months in a row where we the job 0:12:05.960 --> 0:12:08.880 numbers came in below forecast. So is this a problem 0:12:08.960 --> 0:12:12.040 potentially with the labor market or is it simply a 0:12:12.040 --> 0:12:15.200 function of economists really don't know how are having a 0:12:15.240 --> 0:12:20.720 tough time forecasting an economy that's reopening from essentially a standstill. Well, 0:12:20.760 --> 0:12:22.959 it depends on what you put a new model. If 0:12:23.000 --> 0:12:26.839 you look at driver us of demand, they are shoulge in. 0:12:27.000 --> 0:12:31.319 Look at the job splentiful of for example, indexes from 0:12:31.320 --> 0:12:35.280 the Conference Board Servy, look at claims. These things are 0:12:35.360 --> 0:12:40.440 telling us that labor market growth should accelerate at a 0:12:40.559 --> 0:12:44.120 very high rate. But you also need to look at 0:12:45.200 --> 0:12:50.480 things that limits that kept that job growth and unfortunately 0:12:50.600 --> 0:12:55.280 the really very um few precedents in the past that 0:12:55.600 --> 0:12:59.760 help us forecast those things. But just based on demand, 0:13:00.120 --> 0:13:02.720 you know, job gains should be higher than a million 0:13:03.160 --> 0:13:06.520 Look at the previous year for example, like at this 0:13:06.640 --> 0:13:10.040 period of time. Just a year ago, we saw gains 0:13:10.080 --> 0:13:14.359 in two millions, like exceeding two millions five million jobs 0:13:14.360 --> 0:13:20.120 coming out of the initial UH wave of UH the virus. 0:13:20.160 --> 0:13:22.960 So you would think, Okay, the economy is in a 0:13:23.200 --> 0:13:25.880 much better shape at this point, so we should see 0:13:26.200 --> 0:13:29.360 a much higher gains. But people adjust it to the 0:13:29.440 --> 0:13:33.400 new reality, and right now it is really the supply 0:13:33.640 --> 0:13:37.840 of workers that is holding a most significant progress in 0:13:37.880 --> 0:13:41.199 the labor market. Lenna, We've heard two very smart people, 0:13:41.320 --> 0:13:45.360 Gina Martin Adams and Tom Keane both talk about margin compression. 0:13:46.320 --> 0:13:49.640 What do they mean? What Why are employers having to 0:13:50.000 --> 0:13:54.920 reduce margins um in order to get employees back at work. Well, 0:13:54.960 --> 0:13:58.360 they have to raise wages to attract them, right, That's 0:13:58.360 --> 0:14:03.480 that's the supply issue UH by itself. So you really 0:14:03.600 --> 0:14:07.400 need to attract workers who are just sitting on the sideline. 0:14:08.559 --> 0:14:14.440 I think that we may see some temporary pickup in compensation, 0:14:14.600 --> 0:14:19.920 but I don't really believe that it will start a 0:14:19.920 --> 0:14:24.880 new wave of wage acceleration at a fundamental level. I think, 0:14:25.440 --> 0:14:28.280 you know, still, the slack in the labor market is 0:14:28.320 --> 0:14:32.800 so big at seven points point six million people that 0:14:33.440 --> 0:14:36.360 at the end of the day, it will weigh on 0:14:37.360 --> 0:14:43.760 wage growth. It's it may spike uh temporarily just informal 0:14:43.880 --> 0:14:47.640 temporarily bonuses or things like that to attract workers back 0:14:47.720 --> 0:14:51.760 into the labor force, but um fundamentally going forward, I 0:14:51.840 --> 0:14:56.640 don't see a big increase in wages. So, Lena, I 0:14:56.760 --> 0:14:59.560 was kind of skeptical when the argument was raised last 0:14:59.640 --> 0:15:02.760 month that, you know, the reason that the number missed 0:15:02.880 --> 0:15:05.080 so much again two six or six thousand versus a 0:15:05.120 --> 0:15:07.800 consensus of you know, close to a million, that's because 0:15:07.840 --> 0:15:10.000 people weren't incentive to go back to the workforce because 0:15:10.080 --> 0:15:13.240 they were receiving such generous unappoyment benefits. But now we've 0:15:13.280 --> 0:15:15.720 got a couple of months of data points here, is 0:15:15.760 --> 0:15:20.520 that a rational economic argument? You think that actually holds water. Well, 0:15:20.960 --> 0:15:26.240 it's one of the factors that is holding uh more 0:15:26.600 --> 0:15:29.840 growth back. I think we will find an answer to 0:15:29.960 --> 0:15:33.160 that in June and July because a lot of those 0:15:33.280 --> 0:15:37.240 are augmented unemployment benefits expiring, so at least we will 0:15:37.320 --> 0:15:41.160 clear that hurdle. But there are other things to look at, 0:15:41.520 --> 0:15:44.560 and I think, you know, being a model of a toddler, 0:15:44.640 --> 0:15:48.200 I can certainly see why a lot of women are 0:15:48.240 --> 0:15:52.000 not going back into the label force. You cannot simply 0:15:52.120 --> 0:15:57.000 find the proper childcare. You're scared to send your child 0:15:57.040 --> 0:16:01.040 back uh to uh you know, to child care center 0:16:01.280 --> 0:16:05.080 or back to school for in person learning. So with 0:16:05.280 --> 0:16:09.280 more vaccinations and and even like if you can get 0:16:09.480 --> 0:16:14.240 your kids vaccinated by by stay September October, that will 0:16:14.320 --> 0:16:18.080 help a lot to in terms of acceleration and job growth. 0:16:18.520 --> 0:16:22.280 And another thing is just simple inertion on the part 0:16:22.400 --> 0:16:27.120 of potential entrance into the labor force. We can probably 0:16:27.320 --> 0:16:29.960 by now figured out how to leave on one income 0:16:30.600 --> 0:16:34.080 instead of two, for example, and some people will just 0:16:34.400 --> 0:16:37.800 stay in that state. So it will be very hard 0:16:37.920 --> 0:16:40.720 to draw back all the people that were lost from 0:16:40.760 --> 0:16:44.840 the labor force. And as the Secretary of Labor said 0:16:44.920 --> 0:16:47.480 that just just now a few minutes ago, you cannot 0:16:47.560 --> 0:16:50.080 slip a switch. So it will take some time to 0:16:50.600 --> 0:16:53.400 for people to get back, maybe at least three months, right, 0:16:53.440 --> 0:16:56.320 I mean we're going into summer and if you are 0:16:56.760 --> 0:17:00.800 receiving unemployment benefits, the kids are going to be out 0:17:00.840 --> 0:17:04.119 of school for the next three months. And you figured 0:17:04.160 --> 0:17:06.440 it out in terms of your um you know, in 0:17:06.600 --> 0:17:09.480 terms of the budget. Why even bother looking for a 0:17:09.640 --> 0:17:13.320 job until September other than to please you know, the 0:17:13.400 --> 0:17:18.000 person at the work center. Well, that just tells you 0:17:18.200 --> 0:17:21.400 that maybe the summer will not be as hot as 0:17:21.720 --> 0:17:26.600 UH would be expected by all this surveys and increased 0:17:26.880 --> 0:17:31.560 reopening demand. So it may take some time for UH 0:17:31.840 --> 0:17:36.240 job growth to accelerate. So even though you know GDP 0:17:36.440 --> 0:17:40.560 growth will probably hit in the second quarter, in the 0:17:40.720 --> 0:17:44.119 third quarter of the years, it will take much longer 0:17:44.280 --> 0:17:48.159 for employment growth to accelerate. And that is a key 0:17:48.240 --> 0:17:51.480 reason why the set is not going to rush into 0:17:51.720 --> 0:17:56.239 ending as it purchases that the pace that is at 0:17:56.280 --> 0:18:01.200 the current pea. I think tapering talks will probably commenced 0:18:01.359 --> 0:18:04.680 towards the end of the summer, but the actual tapering 0:18:04.760 --> 0:18:09.399 process will not start until twenty two. Elena did that 0:18:09.520 --> 0:18:10.879 the data we're seeing here in the labor front to 0:18:10.920 --> 0:18:16.080 side impact your GDP forecast at Bloomerk Economics, not GDP forecast, 0:18:16.280 --> 0:18:21.040 because for GDP forecast and the implications from the the 0:18:21.240 --> 0:18:24.880 roll's report, we usually look at ours work and ours 0:18:25.000 --> 0:18:29.800 worked as quite strong, so UH and quite consistent with 0:18:29.960 --> 0:18:35.639 our forecast for the second quarter GDP growth in the 0:18:35.720 --> 0:18:40.240 vicinity of ten percent. I think that still holds what 0:18:40.320 --> 0:18:45.240 about Carl's forecast at Bloomberg Intelligence. What is girl, folks, 0:18:45.880 --> 0:18:47.840 I don't know. I thought you guys worked together. I 0:18:48.000 --> 0:18:52.080 just I'm learning about this separation. I had no idea. Well, 0:18:52.640 --> 0:18:57.560 that is uh an interesting situation. And actually Carl was 0:18:57.640 --> 0:19:01.399 a little bit more pessimistic on on that, so I 0:19:01.840 --> 0:19:05.080 I really miss him. I really miss his judgment. All right, 0:19:05.119 --> 0:19:07.840 So Lena, what do you think we're going to hear 0:19:08.080 --> 0:19:12.240 from that Sherman Powell over the coming weeks and months? Um, 0:19:12.800 --> 0:19:15.440 I guess this gives him some ammunition to kind of say, see, 0:19:15.520 --> 0:19:21.240 we know what we're doing. Well, so the fat I 0:19:21.359 --> 0:19:25.640 think really knows what they're doing. They they are being patient, 0:19:26.119 --> 0:19:30.200 and I think that will hold this status square and 0:19:31.000 --> 0:19:34.600 we will not see any uh you know, major updates 0:19:34.640 --> 0:19:39.440 in terms of tapering or of course no interest rate 0:19:39.760 --> 0:19:44.800 increases talk for a very long time. So our forecast 0:19:44.920 --> 0:19:49.360 holds for tapering to start in twenty two and UH, 0:19:49.640 --> 0:19:53.119 for that, we do need to see a string of 0:19:53.359 --> 0:20:00.280 accelerating job games going into the late summer. So that chair, well, 0:20:00.359 --> 0:20:04.240 can um talk about uh, you know, some progress, some 0:20:04.560 --> 0:20:09.520 significant progress towards uh the FED schools and dual mandate 0:20:10.000 --> 0:20:15.399 and inflation. We're gonna get CPI A numbers again next week. Uh. 0:20:15.760 --> 0:20:20.040 Probably still acceleration in the pace of inflation. That will 0:20:20.119 --> 0:20:24.000 not change their stance. That may push people back to 0:20:24.080 --> 0:20:27.000 work though, because we're seeing now you, Lena, that food 0:20:27.040 --> 0:20:30.240 prices are up to their highest level in a decade. Um. 0:20:30.359 --> 0:20:35.200 Housing obviously off the charts. Uh you know, car transportation 0:20:35.400 --> 0:20:40.000 costs rising with gasoline at the pump. So I guess 0:20:40.000 --> 0:20:42.320 if you're looking for a catalyst while we're still on 0:20:42.440 --> 0:20:49.760 these unemployment uh generous unemployment, relatively generous unemployment, um um, Uh, 0:20:50.440 --> 0:20:53.880 don't you get about don't forget about the savings, those 0:20:54.080 --> 0:20:59.160 extra accumulated savings over them of the crisis. I think 0:20:59.240 --> 0:21:04.760 people will be is slightly indifferent to all this, uh way, 0:21:05.080 --> 0:21:08.399 well to all this price increases over the course of 0:21:08.480 --> 0:21:11.879 the summer. Well, they still have those savings and they 0:21:12.000 --> 0:21:16.560 still get some of those benefits, but a steams uh 0:21:17.000 --> 0:21:20.399 payments kind of fate into the end of the summer, 0:21:20.720 --> 0:21:24.480 we will see some deterioration in the purchasing power, and 0:21:24.680 --> 0:21:29.439 then those price increases will stink. All right, Elena, thank 0:21:29.480 --> 0:21:31.399 you so much for joining us to really appreciate it. 0:21:31.440 --> 0:21:35.840 As always Elena Bloomberg, senior US Economists, giving her thoughts 0:21:35.960 --> 0:21:41.359 on the May jobs report. All right, let's check in 0:21:41.520 --> 0:21:44.639 right now with Bloomberg opinion columnist Tim O'Brien. He is 0:21:44.680 --> 0:21:48.879 writing about the success of Zoom. I mean, um, we 0:21:49.080 --> 0:21:52.720 all now zoom each other, regardless of whether we're actually 0:21:52.920 --> 0:21:57.639 using Zoom video communications technology. You just call it that, 0:21:57.800 --> 0:22:02.680 like Kleenex or hampers, right. So, Um, like Google, we 0:22:02.800 --> 0:22:06.400 google things and we zoom people. Um. Tim, it's interesting 0:22:06.800 --> 0:22:08.960 you write in your column that we that we say 0:22:09.040 --> 0:22:13.200 this because the one of the biggest companies in the world, 0:22:14.040 --> 0:22:17.159 Microsoft has had technology to do this kind of thing 0:22:17.280 --> 0:22:20.480 Skype for much longer than Zoom has been around. And yet, 0:22:21.240 --> 0:22:24.399 as you put it, Zoom left Skype in its dust. 0:22:25.359 --> 0:22:29.240 How why Micro Microsoft had a product that was also 0:22:29.320 --> 0:22:33.000 a verb, right, we used to say skyped me instead 0:22:33.040 --> 0:22:37.080 of I'll zoom with you. It just shows how dangerous 0:22:37.119 --> 0:22:39.239 it might be to have your your company's name put 0:22:39.320 --> 0:22:43.080 in the Oxford English Dictionary. Um. I think you know 0:22:43.280 --> 0:22:47.560 this is an example of I think not only Skype 0:22:47.640 --> 0:22:50.159 but also Internet Explore, which I addressed in the column 0:22:50.640 --> 0:22:54.399 as two products owned by a tech titan that was 0:22:54.720 --> 0:22:58.680 unable to either preserve the market share they had when 0:22:58.720 --> 0:23:02.560 it developed or bought them and and largely I think 0:23:02.680 --> 0:23:05.960 because it was out of sync with what it needed 0:23:06.040 --> 0:23:08.399 to do to create a competitive product. And I think 0:23:08.440 --> 0:23:12.359 the technology industry is full of examples of this in which, 0:23:13.320 --> 0:23:16.320 you know, companies can't maintain leads for a long time 0:23:16.359 --> 0:23:22.560 because there's such a premiacy paste and utility, quality and innovation, 0:23:22.760 --> 0:23:25.320 and if you can't keep up, it doesn't matter if 0:23:25.359 --> 0:23:29.639 you've got micro Soft, deep pockets and expertise. In some cases, 0:23:30.000 --> 0:23:31.800 you can really get shunted into the what to the 0:23:31.920 --> 0:23:34.439 side of the road. And and we've seen this now 0:23:34.560 --> 0:23:37.200 happen with Zoom obviously. Yeah, and we see this all 0:23:37.240 --> 0:23:39.400 the time and technology, and we hear about it from 0:23:39.640 --> 0:23:42.920 entrepreneurs founders of these companies. They're they're wary, you know, 0:23:43.040 --> 0:23:45.600 they want to take the big takeout deal, the big money, 0:23:45.640 --> 0:23:48.879 the big payday from you know, a Microsoft or Google, 0:23:48.960 --> 0:23:52.800 but they really are fearful of losing, you know, that 0:23:53.200 --> 0:23:56.160 edge that made them such a disruptor in the first place. 0:23:56.240 --> 0:23:59.280 And your column points out that's kind of what we 0:23:59.320 --> 0:24:03.440 see here in a for examples from Microsoft, right. You know, 0:24:04.720 --> 0:24:07.040 if you think back to two about two thousand and 0:24:07.119 --> 0:24:13.240 one or so, Internet Explorer had at least a share 0:24:13.320 --> 0:24:17.119 of the Brown Cowser market and today that is a 0:24:17.280 --> 0:24:22.280 less than one and Google Google Chrome it has well 0:24:22.400 --> 0:24:26.880 over six of the global browser market. And Google developed 0:24:26.880 --> 0:24:31.639 a better product. It was lighter, loaded, faster. Developers preferred it, 0:24:32.119 --> 0:24:34.119 it played well on mobile. And some of this is 0:24:34.280 --> 0:24:38.159 is a legacy of of Microsoft zone history. Microsoft was 0:24:38.200 --> 0:24:41.399 a world beater or when it introduced Windows as the 0:24:41.680 --> 0:24:47.560 leading PC desktop application, and everything Microsoft built was really, 0:24:48.160 --> 0:24:50.639 in a way tethered to the desktop, and the company 0:24:50.680 --> 0:24:54.320 got sideswiped by the web and then sideswiped by mobile, 0:24:54.680 --> 0:24:57.840 and it wasn't able, i think, to create consumer products 0:24:58.359 --> 0:25:01.200 that did as well on mobile as a company like Google. 0:25:01.480 --> 0:25:04.000 And you saw that more board out in the in 0:25:04.080 --> 0:25:07.880 the Web Browser Awards. And and now with video conferencing, 0:25:07.960 --> 0:25:11.560