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Jobs Day, Austan Goolsbee, Tech Earnings, and DEI (Podcast) · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller.
• 0:05
  Speaker 2: Every business day we bring you interviews from CEOs, market pros,
• 0:09
  Speaker 2: and Bloomberg experts, along with essential market moving news.
• 0:14
  Speaker 1: Find the Bloomberg Markets Podcast called Apple Podcasts or wherever
• 0:17
  Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.
• 0:20
  Speaker 3: I'm David Weston.
• 0:21
  Speaker 4: I'm delighted to be joined right now by the Federal
• 0:24
  Speaker 4: the president of the Chicago Fed.
• 0:26
  Speaker 3: He is Austin Goolsby.
• 0:27
  Speaker 4: Austin, thanks for being here. We've so we're out here
• 0:29
  Speaker 4: for the Aspen Economic Strategy Group meetings. A lot of
• 0:32
  Speaker 4: talk about fiscal issues, monetary issues, but we all I
• 0:35
  Speaker 4: have now the key jobs figures a little bit lighter
• 0:40
  Speaker 4: than expected, one hundred and eighty seven thousand, set of
• 0:41
  Speaker 4: two hundred thousand, little heavier than expected. On the wages,
• 0:45
  Speaker 4: what did you take them?
• 0:46
  Speaker 3: It was pretty much what we expected.
• 0:48
  Speaker 5: I mean, let's remember the job's number is whatever it is,
• 0:51
  Speaker 5: plus or minus one hundred and twenty thousand a month,
• 0:54
  Speaker 5: so there's no point quibbling over over numbers.
• 0:58
  Speaker 3: The job mark.
• 1:00
  Speaker 5: Mart is cooling a little too kind of a balanced level,
• 1:04
  Speaker 5: but it's still extremely strong. That's the strongest part of
• 1:07
  Speaker 5: the economy by far is how low the unemployment rate
• 1:11
  Speaker 5: is and people can get a job if they want
• 1:13
  Speaker 5: a job.
• 1:14
  Speaker 4: To that point of being tight one hundred and seven
• 1:16
  Speaker 4: thousand plus or minus, it's still way more than you
• 1:19
  Speaker 4: need just to catch up to keep even with the
• 1:21
  Speaker 4: new people coming into the workforce. So it is tightening
• 1:24
  Speaker 4: in that sense, is it not. I think that's right.
• 1:26
  Speaker 5: You know, let's say one hundred thousand just from population
• 1:31
  Speaker 5: and what's coming into the workforce, so it's stronger than that.
• 1:35
  Speaker 5: It's been the surprise of the year, of the six
• 1:38
  Speaker 5: months that all of the people that folks thought were
• 1:44
  Speaker 5: gone from the labor force never to return, a lot
• 1:47
  Speaker 5: of them are coming back.
• 1:48
  Speaker 3: You know. When it's when the job market is as strong.
• 1:50
  Speaker 5: As that, you've seen labor force participation rise back to
• 1:54
  Speaker 5: levels that we hadn't seen for several years at least.
• 1:58
  Speaker 3: So that's been great. I mean, that's strongest part of
• 2:00
  Speaker 3: the economy.
• 2:01
  Speaker 4: Yeah, none of us wants anybody be out of a job,
• 2:03
  Speaker 4: so it's a good thing. It's just many p other jobs.
• 2:05
  Speaker 4: But what about the wages where now these numbers were
• 2:08
  Speaker 4: four point four percent year over year.
• 2:10
  Speaker 3: I believe it was.
• 2:11
  Speaker 4: That doesn't sound like something consistent with getting to two
• 2:13
  Speaker 4: percent inflation overall.
• 2:16
  Speaker 3: The way I view it is two things.
• 2:18
  Speaker 5: One can't say anything about wages until you actually know
• 2:23
  Speaker 5: what's happening with productivity. We got some productivity numbers. They
• 2:27
  Speaker 5: were strong for the quarter. That's very noisy. But if
• 2:30
  Speaker 5: you have strong productivity growth, you can have wage growth
• 2:33
  Speaker 5: and it doesn't generate inflation.
• 2:35
  Speaker 3: And the other thing about wages is.
• 2:37
  Speaker 5: They're not a leading indicator of price inflation.
• 2:41
  Speaker 3: They're backward looking. They move. Wages move more slowly.
• 2:45
  Speaker 5: When things happen, we get shocks, the prices move first
• 2:48
  Speaker 5: and then the wages. So when we see what's happening
• 2:51
  Speaker 5: to wages today, this is kind of an amalgam of.
• 2:54
  Speaker 3: A bunch of stuff that already occurred.
• 2:58
  Speaker 5: I think if you want to know if you're beat inflation,
• 3:01
  Speaker 5: go watch the inflation. You know, the price series, and
• 3:04
  Speaker 5: especially the new months of inflation in the core.
• 3:07
  Speaker 3: That's really what you want to be Why.
• 3:08
  Speaker 4: What are those numbers telling you right now? Particularly goods inflation?
• 3:11
  Speaker 4: Is it a bit stickier than you.
• 3:12
  Speaker 3: Thought it has been?
• 3:13
  Speaker 5: But the last couple of readings have been pretty positive.
• 3:19
  Speaker 5: It's important that you raise this goods loosely. If you
• 3:23
  Speaker 5: look at core inflation, you got goods, you got housing,
• 3:25
  Speaker 5: you got services not including housing. And we've much remarked
• 3:30
  Speaker 5: on the skinness and persistence of services inflation.
• 3:34
  Speaker 3: But we knew.
• 3:34
  Speaker 5: That that that's not where we went wrong over at
• 3:39
  Speaker 5: the end of last year beginning of this year, with
• 3:42
  Speaker 5: inflation lasting a little longer than we thought, it has
• 3:45
  Speaker 5: been that goods prices, while down, have not gone all
• 3:49
  Speaker 5: the way down to where.
• 3:51
  Speaker 3: They were before the pandemic.
• 3:54
  Speaker 5: I feel like that's kind of started and that's put
• 3:57
  Speaker 5: the FED on this line. I mean, it's a thin
• 3:59
  Speaker 5: line to walk, but getting the prices down without having
• 4:03
  Speaker 5: a big recession, we're gonna Johnny cash this thing and
• 4:07
  Speaker 5: walk that line. And that that's for sure the goal.
• 4:11
  Speaker 5: And goods price has got to come down. And then
• 4:14
  Speaker 5: the next one's got to be housing.
• 4:16
  Speaker 3: As you know, it's.
• 4:18
  Speaker 5: The the housing that's in the CPI is based on
• 4:23
  Speaker 5: a bunch of market rents and it takes.
• 4:24
  Speaker 3: A while to flow through.
• 4:26
  Speaker 5: So hopefully as we go into the fall, that's that's
• 4:28
  Speaker 5: gonna be the next one.
• 4:29
  Speaker 4: So also gonna stick with the Johnny Cash. Yeah, walk
• 4:31
  Speaker 4: in that line. How long is the line? And we
• 4:34
  Speaker 4: know that the target is two percent. It doesn't feel
• 4:36
  Speaker 4: like you're going to come up that two percent goal?
• 4:38
  Speaker 4: But how long until you get there? How patient can
• 4:40
  Speaker 4: you be?
• 4:41
  Speaker 3: We got to be some of patient. You know.
• 4:44
  Speaker 5: Take as just a microcosmic example, this thing with housing.
• 4:48
  Speaker 5: We've seen the market rents coming down, but it takes
• 4:52
  Speaker 5: a while for that to flow through into the let's
• 4:55
  Speaker 5: call it the average housing prices that are in the CPI.
• 5:00
  Speaker 3: It's got to be patient.
• 5:01
  Speaker 5: I know everybody wants to say, ah, fine, vove, we're done.
• 5:04
  Speaker 3: That's not how it works.
• 5:06
  Speaker 5: If you walk the golden path and you walk that line,
• 5:11
  Speaker 5: it's going to take a while. And rather than arguing
• 5:15
  Speaker 5: about the peak rate of how many more rate increases
• 5:19
  Speaker 5: do there need to be, what we should probably start
• 5:22
  Speaker 5: thinking about is that, well, how long does this last
• 5:25
  Speaker 5: that you're going to.
• 5:26
  Speaker 3: Be at these elevated rates.
• 5:29
  Speaker 5: It's been a five hundred plus basis point increase over
• 5:33
  Speaker 5: a relatively short period. If you hold at five and
• 5:37
  Speaker 5: a quarter, five and a half, five and whatever while
• 5:41
  Speaker 5: inflation goes down, that is a restrictive environment.
• 5:44
  Speaker 3: Holding is increasing restrictiveness in that sense.
• 5:48
  Speaker 4: Austin, let me ask you one of the questions it
• 5:50
  Speaker 4: came up this week, which is the Fitch rating on
• 5:52
  Speaker 4: the US sovereign debt that took out surprised a lot
• 5:55
  Speaker 4: of people. I think, is it important? And I'm not
• 5:58
  Speaker 4: saying was the rating important in itself? But is what
• 6:01
  Speaker 4: they're pointing toward important.
• 6:05
  Speaker 5: In a vague sense? Yes, but everybody knows that. I mean,
• 6:09
  Speaker 5: we went through the debt ceiling. Every day we're talking
• 6:11
  Speaker 5: about this. This is dysfunctional.
• 6:15
  Speaker 3: We've got to get out of this dynamic.
• 6:18
  Speaker 5: I was around in Washington the last time we went
• 6:20
  Speaker 5: through this downgrade thing. There's a couple of things I
• 6:24
  Speaker 5: don't understand about it. Ultimately, I don't think it's gonna
• 6:27
  Speaker 5: make that much difference. This isn't like a some obscure
• 6:30
  Speaker 5: stock or bond that nobody knows and it's ah the
• 6:33
  Speaker 5: rating agency went and looked at it, so you don't
• 6:35
  Speaker 5: have to. I mean, this is US Treasury is the
• 6:38
  Speaker 5: most observed market with the most information in the entire world.
• 6:42
  Speaker 5: So h I don't know what their motivation was. I'm
• 6:47
  Speaker 5: not gonna I'm not gonna guess at that, but I
• 6:51
  Speaker 5: guess I don't see how something else is gonna be
• 6:54
  Speaker 5: rated triple A. If they were defaulting on US treasuries,
• 6:58
  Speaker 5: it seems like that would be.
• 6:59
  Speaker 3: A pad hey for the market. But lets say ask
• 7:01
  Speaker 3: you a different question.
• 7:02
  Speaker 4: We've heard various FED presidents j Powell but also Jenn
• 7:05
  Speaker 4: you don't talk about the fiscal sustainability of the path
• 7:08
  Speaker 4: of the United States is and especially some concern of
• 7:10
  Speaker 4: the long term that it's not sustainable. If that's right,
• 7:14
  Speaker 4: what are the consequences of that, and what if anything
• 7:17
  Speaker 4: can be done about it.
• 7:19
  Speaker 5: That's a whole separate topic from the you know, what
• 7:22
  Speaker 5: should the ratings of treasuries be.
• 7:23
  Speaker 3: For right now?
• 7:24
  Speaker 4: But fiction invoked that right in there is an announcement.
• 7:27
  Speaker 5: But then the proper question is did something happen in
• 7:32
  Speaker 5: the last two weeks that made you think that was different?
• 7:36
  Speaker 5: As you know, the FED doesn't weigh in on fiscal policy.
• 7:39
  Speaker 5: Congress and the administrations they had to sort that out.
• 7:44
  Speaker 5: I think my read of the evidence is exactly what
• 7:46
  Speaker 5: you say that the long run there's a fiscal gap
• 7:49
  Speaker 5: in the United States. That long run gap smaller in
• 7:52
  Speaker 5: the United States than in most of the advanced if
• 7:55
  Speaker 5: not all of the advanced economies of the world because
• 7:58
  Speaker 5: our demographics are better. It's rooted in the aging of
• 8:01
  Speaker 5: the population and social security and medicare and things like that.
• 8:06
  Speaker 5: And the US has got some choices that it has
• 8:11
  Speaker 5: to make, but gets to make in a way that
• 8:14
  Speaker 5: some other countries don't get to make them. They already
• 8:16
  Speaker 5: have income tax rates higher than our raids. They already
• 8:19
  Speaker 5: have twenty five percent vats, They have worse demographics, their spending.
• 8:24
  Speaker 3: Levels already higher.
• 8:25
  Speaker 5: To start with those fiscal questions, will they will be
• 8:29
  Speaker 5: with us for decades because the baby boomers are going
• 8:33
  Speaker 5: to all retire I think, you know, over the next
• 8:38
  Speaker 5: couple of decades. That's different from what we're trying to
• 8:42
  Speaker 5: do with the FED. You know, our job is we
• 8:44
  Speaker 5: accept the economy as it is. We go watch the data,
• 8:48
  Speaker 5: and we maximize employment and stabilize prices.
• 8:51
  Speaker 3: That's what we're going to do.
• 8:52
  Speaker 4: One other development this week, a lot of people took
• 8:54
  Speaker 4: noted is Bank of America changed their call and recession.
• 8:57
  Speaker 4: They had been predicting recession in the fourth quarter this
• 8:59
  Speaker 4: year or the first of the and that sort of
• 9:01
  Speaker 4: trails where we heard actually from the FED chair last
• 9:03
  Speaker 4: week week that the FED staff now has taken recession
• 9:06
  Speaker 4: designs off.
• 9:07
  Speaker 3: Take We're going to walk that line.
• 9:08
  Speaker 5: That's what I'm telling you, is that golden path, that's
• 9:11
  Speaker 5: what we got to stay on.
• 9:12
  Speaker 3: Is that where you are is.
• 9:15
  Speaker 5: I don't know if it's just what I want or
• 9:17
  Speaker 5: if that's where I am, but I feel like we've
• 9:20
  Speaker 5: been getting promising numbers on inflation the new months of inflation,
• 9:26
  Speaker 5: in core inflation, especially goods and especially housing over the
• 9:29
  Speaker 5: next several months. That's what let's keep an eye on.
• 9:33
  Speaker 5: That will tell us are we on this golden path
• 9:36
  Speaker 5: or not. If we are able to pull us off,
• 9:39
  Speaker 5: that will be a triumph. There are many smart people,
• 9:42
  Speaker 5: and you've talked to them on the air, who say
• 9:45
  Speaker 5: it's impossible. The FED kids, the FED has never been
• 9:48
  Speaker 5: able to reduce inflation as much as we're reducing it,
• 9:51
  Speaker 5: and we need to now without generating a big increase
• 9:55
  Speaker 5: in the unemployment rate and a big recession. And while
• 9:59
  Speaker 5: that has history been true, this was a weird business cycle,
• 10:04
  Speaker 5: it can be a weird recovery. And I am hopeful
• 10:07
  Speaker 5: that we can pull it off, and so far we've
• 10:09
  Speaker 5: been doing it. You know, if you look back a year,
• 10:12
  Speaker 5: the unemployment rate is not up, and inflation has come
• 10:15
  Speaker 5: way down.
• 10:15
  Speaker 4: In fact, it came down a little bit. I think
• 10:17
  Speaker 4: this month, if anything, can you gotta tell you right
• 10:19
  Speaker 4: from what was expected.
• 10:20
  Speaker 3: But I'm absolutely clear on this.
• 10:22
  Speaker 4: You think that we can get inflation under control with
• 10:24
  Speaker 4: unemployment rate in the mid.
• 10:26
  Speaker 3: Threes, I don't know if it's exactly the mid threes.
• 10:30
  Speaker 5: What my goal and I think that we can pull off,
• 10:33
  Speaker 5: and it's what we should try, is to stay on
• 10:36
  Speaker 5: a path where you get inflation down and you don't
• 10:40
  Speaker 5: have a major recession. And there are a lot of
• 10:42
  Speaker 5: people who if you have in your mind this stable
• 10:46
  Speaker 5: relationship trade off between unemployment and inflation, that's that the
• 10:54
  Speaker 5: golden path is impossible. But if you believe that the
• 10:58
  Speaker 5: data have just not been backing that up, we've forgotten
• 11:01
  Speaker 5: inflation down a fair amount without increasing the unemployment rate,
• 11:06
  Speaker 5: and the job market does need to get into balance.
• 11:10
  Speaker 5: We have been in spots where it's been out of
• 11:13
  Speaker 5: balance so hot that it's that it's it's not stable.
• 11:18
  Speaker 3: But we're we're doing that over these past couple of months.
• 11:21
  Speaker 5: You see the quit rate, you see the vacancy rate
• 11:25
  Speaker 5: relative to how many unemployed there are and you see
• 11:28
  Speaker 5: the jobs numbers pulling more into balance.
• 11:30
  Speaker 4: Walk that line, Walk that line. Okay, Austin goes with
• 11:34
  Speaker 4: thank you so much. He is the president, of course,
• 11:36
  Speaker 4: of the Chicago Fed.
• 11:39
  Speaker 6: You're listening to the team Ken's are Live program Bloomberg
• 11:42
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• 11:46
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• 11:49
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• 11:53
  Speaker 1: Let's get back to the jobs number. You know, we
• 11:55
  Speaker 1: had a little bit lighter than expect in terms of
• 11:57
  Speaker 1: the total number of jobs built, stronger on the wage side.
• 12:00
  Speaker 1: So let's break it down a little bit. We'd like
• 12:01
  Speaker 1: to do that on Jobs Day with Tom Gimble. He's
• 12:03
  Speaker 1: the CEO at LaSalle Network. Tom, what was your takeaway
• 12:07
  Speaker 1: from what we heard this morning from the federal government
• 12:10
  Speaker 1: on the jobs?
• 12:11
  Speaker 7: Well, first, I've got a bone to pick that I
• 12:13
  Speaker 7: was in the office last month or in the studio
• 12:15
  Speaker 7: last month, and you weren't.
• 12:16
  Speaker 1: There, aid yes, So.
• 12:19
  Speaker 7: Just for the record, good, you know what I'm gonna say,
• 12:21
  Speaker 7: we have one hundred and eighty seven thousand jobs added.
• 12:25
  Speaker 7: I mean, we're kidding ourselves that we say it's not
• 12:28
  Speaker 7: a good jobs market. It is a really really strong market.
• 12:33
  Speaker 7: I think it sends the right message to both Wall
• 12:36
  Speaker 7: Street and Main Street is that the market is still very,
• 12:39
  Speaker 7: very healthy. And at the same time, it sends a
• 12:41
  Speaker 7: message to the Fed that it's down a little bit
• 12:44
  Speaker 7: from where it was. So we'll probably see a little
• 12:46
  Speaker 7: bit of a hold at the next rates meeting and
• 12:49
  Speaker 7: they won't raise.
• 12:51
  Speaker 8: Yeah.
• 12:51
  Speaker 9: Interesting. I mean when you look through where the jobs
• 12:54
  Speaker 9: are being created, what stood out to you?
• 12:58
  Speaker 7: I mean, listen, it's always going to be bigger when
• 13:01
  Speaker 7: you're doing when we're in this type of market with
• 13:03
  Speaker 7: low unemployment in the services sector, in the hospitality sector,
• 13:08
  Speaker 7: and I think we're looking for bad news instead of
• 13:12
  Speaker 7: appreciating what's going on. We've got record low unemployment again,
• 13:17
  Speaker 7: We've got increase in wages a four tenths of a
• 13:20
  Speaker 7: point again, right. We continue to see these really positive
• 13:24
  Speaker 7: signs throughout the report, and we're trying to find the
• 13:27
  Speaker 7: one thing that might be reason for alarm. We know
• 13:31
  Speaker 7: that eventually we're going to hit it a bumpy cycle,
• 13:34
  Speaker 7: but we should really enjoy things while they're good.
• 13:37
  Speaker 1: So, I mean, what's really good in this one if
• 13:40
  Speaker 1: you're a worker, is four point four percent gain and
• 13:42
  Speaker 1: wages from the prior year, and that's the second strength
• 13:45
  Speaker 1: month we've seen that and it was above all economists
• 13:48
  Speaker 1: forecasts who called for a slowdown. So good for the
• 13:51
  Speaker 1: workers out there. What's driving that?
• 13:53
  Speaker 8: Do you think?
• 13:54
  Speaker 7: I think it's inflation, you know, I mean, I think
• 13:56
  Speaker 7: this is the problem that we have is that main
• 13:59
  Speaker 7: Street does and understand that when wages go up for
• 14:02
  Speaker 7: everybody across the board, that the cost of goods are
• 14:05
  Speaker 7: going to go up equally, if not exponentially, to cover that.
• 14:09
  Speaker 7: And so, you know, I'm not sure if everybody's realized
• 14:14
  Speaker 7: that making more money and having things cost more money
• 14:17
  Speaker 7: is sometimes a neutral situation. And so there's some lack
• 14:23
  Speaker 7: of education that exists with the common person, and I'm
• 14:27
  Speaker 7: including myself in that, with all of us that we
• 14:30
  Speaker 7: need to understand how the markets work. And what we're
• 14:33
  Speaker 7: seeing though, is that companies are still hiring, They're not
• 14:36
  Speaker 7: hiring in mass. That's the biggest challenge that we're seeing
• 14:39
  Speaker 7: is that in twenty twenty one, in twenty twenty two,
• 14:42
  Speaker 7: it was such a rebound from COVID that companies were
• 14:45
  Speaker 7: hiring hundreds, if not thousands of people in order to
• 14:48
  Speaker 7: take advantage of this recovery from the three month recession
• 14:53
  Speaker 7: that existed in twenty twenty because of the pandemic. Now
• 14:56
  Speaker 7: we're in a very similar situation to twenty eighteen and
• 14:59
  Speaker 7: two thousand nineteen, which is a really good, strong economy.
• 15:03
  Speaker 7: But the difference is then we were scrambling for people.
• 15:06
  Speaker 7: Now we're not. We've seen people re enter the workforce,
• 15:09
  Speaker 7: We've seen a lot of the gig workers transition back,
• 15:12
  Speaker 7: and businesses really seems to be healthy.
• 15:15
  Speaker 9: What do you make of the fact that every single
• 15:17
  Speaker 9: payroll release in the first half of the year has
• 15:19
  Speaker 9: been revised lower. Apparently this is the longest streak of
• 15:24
  Speaker 9: downward revisions since the global financial crisis. What do you
• 15:29
  Speaker 9: think of that?
• 15:31
  Speaker 7: I think that it shows that predictions and economists are
• 15:35
  Speaker 7: not always right. I think it shows that we have
• 15:38
  Speaker 7: to be careful of relying too heavily on what we
• 15:43
  Speaker 7: process of information versus the eye test and the smell
• 15:46
  Speaker 7: test of what we see on the street, and that
• 15:49
  Speaker 7: the revisions are real and legitimate. But at the same time,
• 15:55
  Speaker 7: it's not like we're seeing negative jobs reports every month.
• 15:59
  Speaker 7: We're still seeing so you know, I think again we're
• 16:02
  Speaker 7: looking for for negativity and as I say every month,
• 16:06
  Speaker 7: you know, let's stop being chicken little and let's let's
• 16:08
  Speaker 7: enjoy the rain and not think the whole sky's falling.
• 16:11
  Speaker 1: Yeah all right, Tom, good jobs number, no question about it,
• 16:15
  Speaker 1: continues to be. This job mark is just so resilient.
• 16:17
  Speaker 1: It's just amazing. Tom Gimble, CEO at LaSalle Network. We
• 16:21
  Speaker 1: like talking to Tom every month when we get those
• 16:23
  Speaker 1: jobs numbers.
• 16:24
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• 16:31
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• 16:34
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• 16:37
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• 16:42
  Speaker 1: We also love talking to anaag Rana when we've got
• 16:45
  Speaker 1: two big tech companies reporting earnings. Ana rog Rana, senior
• 16:49
  Speaker 1: tech analysts for Bloomberg Intelligence, joins us here. So, honurrog
• 16:54
  Speaker 1: you know we've got Amalon, Amazon, We've got Apple. Let's
• 16:57
  Speaker 1: start with Apple. The services was the story here? Is
• 17:00
  Speaker 1: that where I should focus or should I focus on
• 17:02
  Speaker 1: the fact that you know they're not selling the growth
• 17:05
  Speaker 1: rate for you know, iPhones and all that kind of stuff,
• 17:09
  Speaker 1: not what it was where should we put the focus.
• 17:12
  Speaker 10: So the focus really is for iPhone. As we said
• 17:15
  Speaker 10: even in the preview, it's going to be a boring
• 17:17
  Speaker 10: quarter because the next one is going to be launched
• 17:19
  Speaker 10: in September, which you know should start selling let's say
• 17:22
  Speaker 10: sometime in October or November, and that's really what the
• 17:25
  Speaker 10: next push for the cycle is going to come from.
• 17:28
  Speaker 10: Services growth is actually a good thing because it's a
• 17:30
  Speaker 10: much more higher margin business and a much more recurring
• 17:33
  Speaker 10: business that we always understand. And it's also once you
• 17:36
  Speaker 10: you know, get on iCloud, you're not going to get
• 17:38
  Speaker 10: back and try to get your data somewhere else. So
• 17:41
  Speaker 10: that's really encouraging that it's still growing in constant currency
• 17:45
  Speaker 10: in double digits. Margins are over seventy percent in terms
• 17:49
  Speaker 10: of gross margins. So I like it both the product
• 17:52
  Speaker 10: has to come back. The product growth has to come back,
• 17:55
  Speaker 10: and I think that's just a function of time. It's
• 17:58
  Speaker 10: not a question that it's never going to be back,
• 18:00
  Speaker 10: just a matter of a quart or two that we
• 18:01
  Speaker 10: should see a bounce back in iPhones.
• 18:04
  Speaker 9: I feel like we have this consternation every time Apple
• 18:08
  Speaker 9: reports that Hey, they haven't introduced a massive amount of
• 18:12
  Speaker 9: new exceptional products. They haven't recreated the iPhone enthusiasm. I mean,
• 18:18
  Speaker 9: should we just generally get away from that? Should we
• 18:20
  Speaker 9: expect them to become much more of a services oriented business.
• 18:25
  Speaker 9: I hate to say that, because you know of what
• 18:27
  Speaker 9: the iPhone is.
• 18:29
  Speaker 10: Yeah, as a financial analyst, that's a very the right
• 18:32
  Speaker 10: way to do it. But you know, if I really
• 18:34
  Speaker 10: want to get and talk about you know, new zy things,
• 18:37
  Speaker 10: then you know, it's always fun to talk about new products.
• 18:39
  Speaker 10: But I don't think any new product is going to
• 18:42
  Speaker 10: be anywhere close to what the iPhone is to Apple.
• 18:45
  Speaker 10: And largely the reason for that is the size of
• 18:48
  Speaker 10: the install based the reach of what it does. Even
• 18:51
  Speaker 10: if you think about a car, I mean, how many
• 18:53
  Speaker 10: units can they sell mixed reality headsets? How many can
• 18:56
  Speaker 10: they sell? And the iPhone they sell over two hundred
• 18:59
  Speaker 10: million the units a year of five phones. Irrespective of
• 19:02
  Speaker 10: the economy, they sell a lot of iPhones and that
• 19:06
  Speaker 10: really should and is the most important part of that.
• 19:09
  Speaker 1: All right, let's switch gears to our friends in Seattle.
• 19:12
  Speaker 1: Amazon really strong quarter, the street really likes what they
• 19:16
  Speaker 1: heard last night. What was your takeaway.
• 19:19
  Speaker 10: Yeah, I've been smiling since yesterday evening because this is
• 19:21
  Speaker 10: really I think, but with the bottom to the cloud
• 19:25
  Speaker 10: story that you know, we have been trying to defend
• 19:27
  Speaker 10: for almost a year.
• 19:28
  Speaker 3: Now that you know, please do not worry.
• 19:30
  Speaker 10: It will come back. It will come back. And I
• 19:32
  Speaker 10: think they said that maybe the next quarter you will
• 19:34
  Speaker 10: see similar growth rates to this year, which is this quarter,
• 19:38
  Speaker 10: which is somewhere around twelve percent, and then you know,
• 19:40
  Speaker 10: we are really expecting an acceleration going into next year.
• 19:44
  Speaker 10: We just put a note out we think next year
• 19:46
  Speaker 10: AWS growth is going to be north of twenty percent.
• 19:50
  Speaker 10: You know, market consensus still is about fourteen fifteen percent.
• 19:53
  Speaker 10: We think we should see as a good rebound not
• 19:56
  Speaker 10: just in growth rate, but margins also.
• 19:59
  Speaker 9: I'm not sure exactly how many times Amazon mentioned artificial intelligence.
• 20:04
  Speaker 9: What do you make of how their mentions of AI
• 20:08
  Speaker 9: and generative AI and where that plays out in their business.
• 20:11
  Speaker 9: I mean, are you positive on that or do you
• 20:13
  Speaker 9: think they're hitting the right tone?
• 20:16
  Speaker 10: Yeah, I think I'm goose in the minority because I
• 20:18
  Speaker 10: was not there. It was probably the only not the
• 20:20
  Speaker 10: only one was saying that, oh no AWS to throw
• 20:22
  Speaker 10: behind it, Like I don't believe any of that stuff
• 20:24
  Speaker 10: because at the end of the day, AWS controls the
• 20:27
  Speaker 10: biggest portion of cloud infrastructure, which is the nuts and
• 20:30
  Speaker 10: bolts of what people need to put this particular piece together.
• 20:34
  Speaker 10: They may not have a relationship with open EI, but
• 20:38
  Speaker 10: that is not everything. If a company needs to develop
• 20:41
  Speaker 10: generate AAI product in house where they're going to take
• 20:44
  Speaker 10: their own data, not worry about exposing it to any
• 20:47
  Speaker 10: other outside large language model or any AI model, They're
• 20:50
  Speaker 10: going to build it using cloud infrastructure tools, AWS being
• 20:56
  Speaker 10: the leader among them. Now, it's going to take some
• 20:57
  Speaker 10: time for this thing to really impact growth, probably two
• 21:01
  Speaker 10: to three years, but I really think Amazon is one
• 21:03
  Speaker 10: of the biggest beneficiaries of the strength.
• 21:06
  Speaker 1: All Right, honurrog Great Stuff has always really appreciate getting
• 21:08
  Speaker 1: a few minutes of your time on rog Rana. He's
• 21:10
  Speaker 1: a senior tech analyst for Bloomberg Intelligence. Two big heavyweights
• 21:15
  Speaker 1: last night, Amazon and Apple a little bit of tail
• 21:17
  Speaker 1: of two tapes there. Apple trading off about three percent
• 21:21
  Speaker 1: here and Amazon up ten percent. Big big move for Amazon.
• 21:26
  Speaker 1: So get skinny on what's happening in the world of
• 21:28
  Speaker 1: big tech.
• 21:29
  Speaker 6: With the honorrog Rana, you're listening to the team. Ken's
• 21:32
  Speaker 6: a our live program, Bloomberg Markets weekdays at ten am
• 21:35
  Speaker 6: Eastern on Bloomberg dot com, the iHeartRadio app and the
• 21:39
  Speaker 6: Bloomberg Business App, or listen on demand wherever you get
• 21:42
  Speaker 6: your podcasts.
• 21:44
  Speaker 1: Quincy Crosby, chief Global strategist for LPL Financial. Quincy, thanks
• 21:49
  Speaker 1: so much for joining us again again. We had a
• 21:52
  Speaker 1: jobs print today. We've got some a lot of inflation
• 21:55
  Speaker 1: data points we've seen over the past several weeks. You
• 21:58
  Speaker 1: put it all together, what do you expect our Federal
• 22:01
  Speaker 1: Reserve to do in the coming months.
• 22:06
  Speaker 11: Well, you know, I always like to say that the
• 22:08
  Speaker 11: Fed is data dependent, but I think the market is
• 22:11
  Speaker 11: more ferociously data dependent than even the Fed. And you know,
• 22:15
  Speaker 11: next week we do get the CPI report. They've got
• 22:18
  Speaker 11: over forty five days before they have to make a decision.
• 22:22
  Speaker 11: But the fact is, I don't think that they are
• 22:25
  Speaker 11: going to back down if they feel that inflation remains
• 22:28
  Speaker 11: sticky and is not untangling fast enough. I think the
• 22:32
  Speaker 11: market makes a mistake that the Fed will somehow say, well,
• 22:35
  Speaker 11: let's just pause and wait and see. They're not going
• 22:38
  Speaker 11: to wait and see that much. And besides which you know,
• 22:41
  Speaker 11: they don't want to get involved in the election season.
• 22:44
  Speaker 11: That's something the FED has always try to keep away from.
• 22:50
  Speaker 11: But more than that, you know, they're focused on making
• 22:53
  Speaker 11: sure that inflation moves in the right direction and doesn't
• 22:57
  Speaker 11: have a chance to create another bout of inflation. And
• 23:02
  Speaker 11: you mentioned gasoline prices. Granted it's headline, but let's just
• 23:06
  Speaker 11: face it. Consumers are very much affected by gasoline prices
• 23:10
  Speaker 11: in terms of how they see future inflation, and that's
• 23:13
  Speaker 11: something the FED does not want to see.
• 23:15
  Speaker 9: Yeah, but isn't that sort of I guess the whole
• 23:18
  Speaker 9: idea that the FED can push against Saudi Arabia making
• 23:23
  Speaker 9: decisions to extend its you know, production cuts. Isn't it
• 23:27
  Speaker 9: just kind of a fallacy that the FED has the
• 23:29
  Speaker 9: true ability to control exactly what's happening with oil prices
• 23:34
  Speaker 9: And shouldn't companies have been factoring this in, just understanding
• 23:38
  Speaker 9: that most of the commentary from energy analysts was that
• 23:41
  Speaker 9: oil is probably going to be tight by the end
• 23:43
  Speaker 9: of the year.
• 23:45
  Speaker 6: Well, yeah, I know, the FED.
• 23:46
  Speaker 11: The FED can't. I mean the fact, look, the administration
• 23:49
  Speaker 11: couldn't pressure your mind. Went to uh Saudia Radio to
• 23:53
  Speaker 11: try to come back with a good deal and you know,
• 23:56
  Speaker 11: just the opposite. So they have their own vested in US.
• 23:59
  Speaker 8: We know it is.
• 24:00
  Speaker 11: It is to get all prices up as much as possible.
• 24:03
  Speaker 11: Their budget is huge. They're building cities, they're trying to
• 24:08
  Speaker 11: create a landscape post crew to oil, and that requires
• 24:13
  Speaker 11: higher all prices. So they you know, the market had
• 24:16
  Speaker 11: expected that before today's panel discussion that they're having online,
• 24:22
  Speaker 11: that the Satties would come in and say, hey, we're
• 24:24
  Speaker 11: going to extend those quote unquote voluntary cuts through September,
• 24:27
  Speaker 11: which they did. But what's interesting about this is that
• 24:32
  Speaker 11: it didn't work. I mean, when the market was fixated
• 24:36
  Speaker 11: and obsessed by recession, it actually made no difference about
• 24:42
  Speaker 11: the production cuts, absolutely no difference. So now all of
• 24:45
  Speaker 11: a sudden, when you have sort of a light at
• 24:48
  Speaker 11: the end of the tunnel in terms of the GDP
• 24:51
  Speaker 11: growth in the country, suddenly the question is what about
• 24:55
  Speaker 11: those prices? You know what's going to happen. Look, without
• 24:59
  Speaker 11: some misogynous shock, it's hard to see that they're going
• 25:02
  Speaker 11: to get all prices up to ninety bucks a barrel
• 25:04
  Speaker 11: on WTI. But you see that it's already moving up
• 25:07
  Speaker 11: above eighty. Little bit, little bit companies do well, American
• 25:13
  Speaker 11: all companies do well forty five dollars a barrel. But
• 25:16
  Speaker 11: the fact remains for the average American. We know this statistically,
• 25:21
  Speaker 11: they may not even drive, they may drive electric vehicles,
• 25:25
  Speaker 11: but when they see those prices inching higher the one
• 25:29
  Speaker 11: year and especially the three year projections or inflation move higher,
• 25:35
  Speaker 11: and here's the other statistic that goes right along with it,
• 25:38
  Speaker 11: then they blame the administration, regardless of power, regardless of party.
• 25:44
  Speaker 1: All right, Quincy, we've had about eighty percent of the
• 25:47
  Speaker 1: S and P five hundred companies report here. Do you
• 25:51
  Speaker 1: feel like we're at earnings trough?
• 25:52
  Speaker 3: Here?
• 25:53
  Speaker 1: How do you think about earnings going forward based upon
• 25:55
  Speaker 1: what you've seen so far in this second quarter?
• 25:58
  Speaker 11: Well, you know, it's been a just market. It is
• 26:00
  Speaker 11: in the market. It has not been a market that
• 26:02
  Speaker 11: has you know, given a pass to companies that are missing,
• 26:05
  Speaker 11: even missing slightly. They've been punished. But the fact of
• 26:10
  Speaker 11: the matter is there's resiliency in the companies, obviously X energy.
• 26:16
  Speaker 11: But the fact of the matter is we also see
• 26:19
  Speaker 11: that twenty twenty four, we'll see, you know, a nice
• 26:22
  Speaker 11: climb higher with the companies. The thing to look for, though,
• 26:26
  Speaker 11: to push those prices higher, the share prices higher. Is
• 26:29
  Speaker 11: that we also expect to see a pullback in the
• 26:31
  Speaker 11: amount of share buybacks, and you know that has been
• 26:34
  Speaker 11: a tremendous catalyst for the stock market.
• 26:39
  Speaker 9: Quincy talk us through a little bit more on the
• 26:41
  Speaker 9: jobs report today. You know, was there was there a
• 26:44
  Speaker 9: surprising detail for you to come out of this in
• 26:49
  Speaker 9: terms of where we're headed.
• 26:53
  Speaker 11: Well, it was interesting to see the unemployment rate come down, right,
• 26:56
  Speaker 11: and then to see the wage growth remain quote unquote sticky.
• 27:02
  Speaker 11: The Fed doesn't want to see that, And why that's
• 27:04
  Speaker 11: so important is there is a political tug of war
• 27:09
  Speaker 11: about it. You can see it in the part of
• 27:13
  Speaker 11: the political parties, but you also see it on Wall Street.
• 27:16
  Speaker 11: Why does that bother the Fed? Why does that bother
• 27:19
  Speaker 11: Chairman Powell specifically? Why can't he be happy about the
• 27:24
  Speaker 11: higher wages because they're going to low wage earners. And
• 27:28
  Speaker 11: the fact is the concern from completely a political perspective
• 27:33
  Speaker 11: is companies want to pass along those costs once the
• 27:38
  Speaker 11: wages are higher. It is an input cost and it
• 27:41
  Speaker 11: is one of the most important input costs for companies.
• 27:45
  Speaker 11: So it hasn't leveled off. Everyone was expecting three tenths
• 27:49
  Speaker 11: of a percent. It's stay at four tenths of percent.
• 27:52
  Speaker 11: That is what was so surprising, the expectations and the
• 27:56
  Speaker 11: hopes or let that come down. And boy will we
• 27:59
  Speaker 11: celebrate because that I think the market felt that'll clinch it.
• 28:03
  Speaker 1: The Fed is finished, all right, Quincy, given that backdob
• 28:07
  Speaker 1: as it relates to interest rates, that backdob as it
• 28:09
  Speaker 1: relates to some of the economic conditions out there. And
• 28:11
  Speaker 1: we had mister Goolsby from the FED talk to David
• 28:15
  Speaker 1: Weston today from Bloomberg saying that they're trying to walk
• 28:18
  Speaker 1: that fine line of keeping inflation in check while not
• 28:21
  Speaker 1: push his economy into recession. Given all that background, I've
• 28:25
  Speaker 1: got a market that's doing great this year. The S
• 28:27
  Speaker 1: and P five hundreds up about eighteen percent, the nastacs
• 28:30
  Speaker 1: up about thirty four percent. How much more do we
• 28:33
  Speaker 1: have to go here? Should I be jumping in here?
• 28:35
  Speaker 1: What's your call?
• 28:38
  Speaker 8: Well, you know, in.
• 28:39
  Speaker 11: Terms of seasonality, unless there's a surprise and this turns
• 28:43
  Speaker 11: out to be a good good season as opposed to
• 28:46
  Speaker 11: shopping and dicey, how many catalysts are there right now?
• 28:50
  Speaker 11: Maybe next week the CPI report could be a tremendous
• 28:54
  Speaker 11: catalyst to push this market up despite the negative seasonality.
• 28:58
  Speaker 11: So if we start to see that core come down,
• 29:02
  Speaker 11: I think it could be again a catalyst to keep
• 29:05
  Speaker 11: the market moving higher. But earnings are an important catalyst.
• 29:09
  Speaker 11: And obviously we're going to get the a retail picture
• 29:13
  Speaker 11: about the US consumer with the consumer consumer names. But
• 29:18
  Speaker 11: remember it has been led by the big tech. That's
• 29:22
  Speaker 11: what started all of this, the big tech megateech led.
• 29:26
  Speaker 11: So maybe you have to wait until August twenty third
• 29:28
  Speaker 11: for the video to come out. That was the one
• 29:31
  Speaker 11: that was the one performance. It was a triple play right,
• 29:37
  Speaker 11: revenue growth, bottom line, the guidance was stupendous, and what
• 29:40
  Speaker 11: it did was it confirmed that high move in the
• 29:45
  Speaker 11: meg tech anything associated with artificial intelligence. They're coming out
• 29:49
  Speaker 11: on August twenty third. The market may have to wait
• 29:51
  Speaker 11: for that. But overall, if we could see that core
• 29:55
  Speaker 11: super core inflation coming down at a quicker pace that
• 30:00
  Speaker 11: tangled the stickiness, that'll be a tremendous catalyst for the market,
• 30:04
  Speaker 11: regardless of season reality.
• 30:05
  Speaker 1: All right, appreciate that. Quincy Crosby, Chief Global Strategist lp
• 30:09
  Speaker 1: L Financial always appreciate Gett Quincy's perspective.
• 30:11
  Speaker 6: Here you're listening to the tape cansur live program Bloomberg
• 30:16
  Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 30:20
  Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
• 30:23
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• 30:26
  Speaker 6: flagship New York station, Just Say Alexa, playing Bloomberg eleven thirty.
• 30:31
  Speaker 1: Looking at the risk on a take in the market today.
• 30:34
  Speaker 1: I'm going to describe some of the moves today, some
• 30:36
  Speaker 1: of it potentially to the comments from Austin Goldsby, President
• 30:40
  Speaker 1: of the Federal Reserve Bank of Chicago. Hughes was interviewed
• 30:42
  Speaker 1: by Bloomberg's David Weston earlier at in Aspen, Colorado, which
• 30:46
  Speaker 1: is a scam in and of itself. I'll get to
• 30:48
  Speaker 1: it later, but Ike said he feels that the Federal
• 30:52
  Speaker 1: Reserve is making some headway, having some success of walking
• 30:56
  Speaker 1: that fine line between fighting inflation without pushing the me
• 31:00
  Speaker 1: into a recession. So maybe that's how anything's apple. Let's
• 31:03
  Speaker 1: check in with somebody who does this stuff for a living.
• 31:05
  Speaker 1: Jonathan Hurdle. He's executive chairman. Hurdle, Callahan and Company founded
• 31:09
  Speaker 1: that company back in eighty eight was a Goldman Sachs
• 31:12
  Speaker 1: before there was an officer in the US Marine Corps
• 31:15
  Speaker 1: from nineteen seventy five to nineteen eighty two. So we
• 31:17
  Speaker 1: certainly thank him for service there. But for me, the
• 31:19
  Speaker 1: highlight is the NBA from Penn State. Good stuff there. Hey, John,
• 31:24
  Speaker 1: you're out in Wyoming. Why I don't know, but you're
• 31:27
  Speaker 1: out in Wyoming. Yeah, you're wearing a guard but like
• 31:30
  Speaker 1: you'd wear on Wall Street. Dude, you got this nice
• 31:33
  Speaker 1: shirt this tie. Is that a little formal for Wyoming?
• 31:37
  Speaker 12: It is a little formal for Wyoming. But we're managing
• 31:39
  Speaker 12: twenty billion dollars and we need to pay attention wherever
• 31:42
  Speaker 12: we are.
• 31:42
  Speaker 1: That's what I like to hear. Very good. So Jonathan morning,
• 31:45
  Speaker 1: Good morning, sir. How do you feel about this market?
• 31:48
  Speaker 1: Cause we're looking at the S and P up seventeen
• 31:50
  Speaker 1: eighteen percent, we've got the NASDAC up thirty four to
• 31:54
  Speaker 1: thirty five, and boy if that's been a heck of
• 31:57
  Speaker 1: a run off of a terrible twenty twenty two. What
• 32:00
  Speaker 1: are you telling your clients these days?
• 32:03
  Speaker 12: Well, it's pretty much a stady as she goes kind
• 32:05
  Speaker 12: of a market here. We have negotiated as that Austin
• 32:10
  Speaker 12: Goldsby has said, you know, we're sort of on a
• 32:11
  Speaker 12: golden path. You just mentioned his name. So we've been
• 32:14
  Speaker 12: able to avoid a recession. Inflation is coming down, wage
• 32:19
  Speaker 12: growth is increasing, but not so much to be a problem.
• 32:22
  Speaker 12: So it is, you know, amazingly positive all the things
• 32:27
  Speaker 12: that are coming together here. And you know, the United
• 32:31
  Speaker 12: States is doing better than the rest of the world.
• 32:33
  Speaker 12: This free enterprise thing seems to be working. And you know,
• 32:37
  Speaker 12: we've got terrific managers in this country. See, we just
• 32:40
  Speaker 12: heard on the newsburg on the Bloomberg Business Flash that
• 32:43
  Speaker 12: eighty percent of reported earnings have surprised, either met or
• 32:47
  Speaker 12: surprised on a positive side. So good things are happening.
• 32:51
  Speaker 12: The excesses that we worried about don't seem to be
• 32:53
  Speaker 12: coming through. So it's it's just everything's working right now.
• 32:58
  Speaker 9: Well, we're seeing, you know, continue added jobs every time
• 33:01
  Speaker 9: we get a job's report number. We're seeing that those
• 33:04
  Speaker 9: bright spots for corporate earnings are things too good. I mean,
• 33:09
  Speaker 9: is this going to push the Federal Reserve to continue
• 33:13
  Speaker 9: to raise interest rates maybe more than we had and
• 33:17
  Speaker 9: then the market even is anticipating.
• 33:20
  Speaker 12: Well, good morning, simone. My sense is you know, you
• 33:23
  Speaker 12: see the tenure coming down ten basis points today and
• 33:26
  Speaker 12: that the jobs report has taken a touch of pressure
• 33:29
  Speaker 12: off the Feds need to raise rates. But even if
• 33:32
  Speaker 12: they do raise rates, I think it doesn't matter at
• 33:35
  Speaker 12: this point. We've got a picture in place. What we
• 33:37
  Speaker 12: need to worry about. I mean, what we're worrying about
• 33:39
  Speaker 12: is the things we always worry about, like exogynous risks.
• 33:43
  Speaker 12: But the actual fundamentals of the market are sound and positive.
• 33:49
  Speaker 12: You know that we do have a high price earnings
• 33:53
  Speaker 12: multiple on the market relative to averages. But my sense
• 33:57
  Speaker 12: is this is another another signal from the market that
• 34:01
  Speaker 12: we think we're going to have long term interest rates
• 34:03
  Speaker 12: coming down. So you know, the tenure treasury we still
• 34:07
  Speaker 12: have an inverted yield curve, but the real return on
• 34:10
  Speaker 12: the tenure treasury is not particularly high, and so that
• 34:14
  Speaker 12: tells us over the long run, and also another the
• 34:17
  Speaker 12: thing is this inverted yield curve. One of the things
• 34:19
  Speaker 12: that tells us is that the long term rates we
• 34:24
  Speaker 12: still think are low, but short term we have policy
• 34:26
  Speaker 12: things going on that might raise rates. So this notion
• 34:30
  Speaker 12: that we've got we're sort of in this sweet spot continues.
• 34:33
  Speaker 12: So you know, it is true that it's like we're
• 34:37
  Speaker 12: all neurotic. So if things are good, we were there
• 34:39
  Speaker 12: too good, and things are bad we hate that. So
• 34:42
  Speaker 12: but we're we're in sort of a sweet spot here
• 34:44
  Speaker 12: where everything seems to be working. We're walking that line.
• 34:48
  Speaker 12: And we have to give credit to corporate managers because
• 34:51
  Speaker 12: our way of thinking is that, you know, it's always
• 34:53
  Speaker 12: about buying future cash flows and that comes from earnings.
• 34:58
  Speaker 12: Another thing that's really a positive impact over the last
• 35:01
  Speaker 12: relative of the last ten years is you know, for
• 35:03
  Speaker 12: the first thirty years of my career, we had real
• 35:07
  Speaker 12: bond yields to.
• 35:07
  Speaker 3: Work with you.
• 35:08
  Speaker 12: Bonds were an important part of the portfolio. For the
• 35:10
  Speaker 12: last ten years that has generally not been true. But
• 35:14
  Speaker 12: right now we're starting to get real yields again in
• 35:16
  Speaker 12: the bonds, in bonds and even money market funds. So
• 35:19
  Speaker 12: that's a terrific tool to have back in our toolbox.
• 35:23
  Speaker 1: So John, you know, if I sit in to your treasury,
• 35:27
  Speaker 1: I can get four point eight one percent. That seems
• 35:29
  Speaker 1: pretty good. But I feel like it might be the
• 35:32
  Speaker 1: time to maybe go out on the curve a little bit,
• 35:34
  Speaker 1: maybe get some more duration. Should I do that or
• 35:37
  Speaker 1: should I just sit comfortably with my two year.
• 35:41
  Speaker 12: Little of each In other words, you know, one of
• 35:43
  Speaker 12: the things we really believe is you can't predict, you
• 35:46
  Speaker 12: can only prepare. So when you have a two year
• 35:48
  Speaker 12: treasury yielding almost five percent, why not. And on the
• 35:52
  Speaker 12: other hand, if you are if you have a full duration.
• 35:55
  Speaker 12: We're a little bit under duration on our bond portfolios today,
• 35:59
  Speaker 12: but we've been adding duration as interest rates go higher.
• 36:03
  Speaker 12: If you do have a pullback, this is what it means.
• 36:05
  Speaker 12: We can't predict this, No one can predict it. But
• 36:08
  Speaker 12: if you did have a pullback, then having that and
• 36:10
  Speaker 12: interest rates fell, then those having longer duration would give
• 36:14
  Speaker 12: you some protection against a pullback in the market, in
• 36:17
  Speaker 12: the stock market. And you know, meanwhile you're picking up
• 36:19
  Speaker 12: that coupon. So it's a little bit of each you know,
• 36:22
  Speaker 12: find the most compelling things you can do, find and
• 36:25
  Speaker 12: then believe each one a little bit.
• 36:27
  Speaker 9: Yeah, what's the top acid class in what you're adding
• 36:29
  Speaker 9: your marginal dollar at this point, Well.
• 36:33
  Speaker 12: We're overweight US, and we're overweight things like healthcare equipment
• 36:40
  Speaker 12: and the you know, technology stocks is a consumer facing
• 36:44
  Speaker 12: technology stocks and software. So you know, we're really continuing
• 36:50
  Speaker 12: to focus on these companies that have strong market share,
• 36:55
  Speaker 12: strong balance sheets and moats around them to keep them
• 36:58
  Speaker 12: protect them from protecting competition. So that's still we know
• 37:03
  Speaker 12: our portfolio is overweight US and overweight that sector marginal
• 37:07
  Speaker 12: dollar comes in. We're still doing that, John, also are
• 37:11
  Speaker 12: looking for that's the core portfolio. And then on top
• 37:14
  Speaker 12: of that, of course, we're always looking for opportunistic things,
• 37:17
  Speaker 12: for example like private credit, which is a whole nother discussion,
• 37:20
  Speaker 12: and it really matters what segment you're in, which managers are.
• 37:23
  Speaker 3: Using, and so forth.
• 37:25
  Speaker 1: John, it looks like a beautiful day out there in Wyoming.
• 37:27
  Speaker 1: How are our friends out there in Wyoming having good summer?
• 37:32
  Speaker 12: Everything's good. It's you know, my friends in the East
• 37:35
  Speaker 12: are worried about hot and humid, and it's not hot
• 37:37
  Speaker 12: and humid here. And you know, we've got the Jackson
• 37:39
  Speaker 12: Hole fed meeting them enough. But I think it's going
• 37:42
  Speaker 12: to be a relatively sort of a non event compared
• 37:45
  Speaker 12: to recent years, which where it's been so dramatically important.
• 37:49
  Speaker 1: Right, Hey, John, thanks for taking a few minutes. We
• 37:51
  Speaker 1: always appreciate getting your thoughts and your perspective. Jonathan Hurdle,
• 37:55
  Speaker 1: he's the executive chairman of hurdle Callahan and Company coming
• 37:58
  Speaker 1: to us from beautiful Wyoming out there, so good for them.
• 38:02
  Speaker 6: You're listening to the tape. Catch our live program Bloomberg
• 38:05
  Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 38:09
  Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
• 38:12
  Speaker 6: You can also listen live on Amazon Alexa from our
• 38:15
  Speaker 6: flagship New York station. Just say Alexa play Bloomberg eleven thirty.
• 38:21
  Speaker 1: Again. Payroll Day, Jobs Day today. I think it was
• 38:24
  Speaker 1: a solid number all around. The thing that jumped out
• 38:27
  Speaker 1: of me was average hourly earnings. It's pretty darn healthy
• 38:30
  Speaker 1: of four point four percent, kind of consistent with last month.
• 38:33
  Speaker 1: I'll take that. I wonder if our next guest is
• 38:36
  Speaker 1: with me here, Jeffrey Cleveland, director and chief economis at
• 38:39
  Speaker 1: Payden Andrigo. Jeffrey, I love to get your takeaway from
• 38:42
  Speaker 1: what we saw on the labor front, and maybe more importantly,
• 38:46
  Speaker 1: how our federal Reserve is going to view this number well.
• 38:50
  Speaker 13: I think this is a very soft landing, like soft
• 38:53
  Speaker 13: landing ish. I don't know if we can use that
• 38:55
  Speaker 13: term type report. Yep, you had solid payroll growth. Of course,
• 38:59
  Speaker 13: payrolls have been slowing over the last year. Everyone knows that,
• 39:02
  Speaker 13: but the three month average is still two eighteen, which
• 39:05
  Speaker 13: at any other era we would say is is stellar
• 39:08
  Speaker 13: job growth. So that's that's very good. The one drag
• 39:13
  Speaker 13: or one sector that's been problematic is also one that
• 39:16
  Speaker 13: everyone knows information to the technology type sector, so that's
• 39:21
  Speaker 13: well known. Everything else, we're seeing pretty broad based gains
• 39:24
  Speaker 13: in unemployment. The unemployment rate is still low. I think
• 39:28
  Speaker 13: we're just above the cycle low at three and a
• 39:31
  Speaker 13: half percent. So this is the part I find most amusing,
• 39:35
  Speaker 13: where the Fed has been hiking. It's an historic hiking cycle,
• 39:39
  Speaker 13: the most rapid hiking cycle since in forty years, and
• 39:44
  Speaker 13: the unemployment rate is below where it was when the
• 39:47
  Speaker 13: hiking cycle began.
• 39:49
  Speaker 9: So I like you point out that job leavers as
• 39:52
  Speaker 9: a percentage of total unemployed in July's employment report rose
• 39:55
  Speaker 9: to fourteen point six percent. You sent us some notes
• 39:58
  Speaker 9: across earlier. That's like a high.
• 40:02
  Speaker 8: You know that.
• 40:02
  Speaker 9: I mean that that is even a stronger data point
• 40:05
  Speaker 9: for this report than the overall headline number, which I
• 40:08
  Speaker 9: guess missed analysts estimates generally. Why is this, I guess
• 40:13
  Speaker 9: just not a bullish Let's go get them kind of
• 40:16
  Speaker 9: sign it seems, you know, if we're seeing this soft
• 40:20
  Speaker 9: landing picture, then it suggests that at least the FED
• 40:22
  Speaker 9: is gonna kind of stay back on the sidelines.
• 40:26
  Speaker 13: Well, I think that's the important of the soft landing,
• 40:29
  Speaker 13: you know, story, it's it's not just semantics. It is
• 40:33
  Speaker 13: a indication if the soft line is playing out, then
• 40:36
  Speaker 13: then maybe the FED doesn't have a lot more to do.
• 40:39
  Speaker 13: And I think you see that today. The equity market
• 40:41
  Speaker 13: loves that. The bond market will love that as well.
• 40:44
  Speaker 13: I talked to bond traders every day. They would they
• 40:46
  Speaker 13: would love it if the FED is done. So if
• 40:49
  Speaker 13: we are on the soft landing, then yeah, then arguably
• 40:52
  Speaker 13: the FED is done.
• 40:53
  Speaker 9: Yeah, but I just think, yeah, sorry, go on, No,
• 40:56
  Speaker 9: I mean you you bring up the.
• 40:58
  Speaker 13: Kind of an important issue is that maybe this job
• 41:01
  Speaker 13: market is even stronger than this report suggests. When you
• 41:04
  Speaker 13: dig into the internals of the report, still some great
• 41:08
  Speaker 13: signs that could be that will have continued growth, the
• 41:11
  Speaker 13: unemployment rate will go even further, wage growth will remain
• 41:15
  Speaker 13: four to five percent, And I think in that environment
• 41:18
  Speaker 13: the FED might not be as pleased as the markets
• 41:21
  Speaker 13: are today with the report. That could be a situation
• 41:25
  Speaker 13: where you have a no landing type scenario where the
• 41:27
  Speaker 13: economy is still above trend, low unemployment, solid wage growth,
• 41:31
  Speaker 13: and inflation is too high it's above two percent. The
• 41:34
  Speaker 13: FED probably has more to do in that case. In
• 41:37
  Speaker 13: that environment, So I think that's still a real risk
• 41:40
  Speaker 13: that scenario. But right now everyone seems to be golming
• 41:44
  Speaker 13: on to the soft landing.
• 41:46
  Speaker 1: So are we taking recession off the table?
• 41:50
  Speaker 13: Yeah, we took it off the table a while ago.
• 41:53
  Speaker 13: You know, we thought after SVB that there was the
• 41:56
  Speaker 13: risk that credit was going to contract more significantly. That
• 41:59
  Speaker 13: hasn't played out. I was just looking at the lending
• 42:02
  Speaker 13: data in the weekly FED data. I mean, lending growth
• 42:06
  Speaker 13: has slowed, but it is still up five percent roughly
• 42:09
  Speaker 13: year over year. So we have not seen a collapsing
• 42:12
  Speaker 13: credit borrowing A discount window has completely evaporator gone down,
• 42:18
  Speaker 13: so the stress in the banking system has gone. So
• 42:20
  Speaker 13: the hard landing recession is imminent type stories that we're
• 42:24
  Speaker 13: out there. I think those are gone for the time being,
• 42:27
  Speaker 13: so you have to push out your timing for a recession.
• 42:31
  Speaker 13: We have the US economy growing more than two percent
• 42:33
  Speaker 13: this year in our forecast now quartered on a Q
• 42:36
  Speaker 13: four to Q four basis. So I know that's a
• 42:38
  Speaker 13: little bit more bullish than the Bloomberg terminals suggests the consensus.
• 42:42
  Speaker 13: But that's where we see things here, and today's jobs
• 42:45
  Speaker 13: report I think doesn't change that view at all.
• 42:47
  Speaker 9: Wow, that's so interesting two percent growth here on your
• 42:50
  Speaker 9: I mean, if the two options here are no landing
• 42:55
  Speaker 9: or soft landing, what's the kind of timeline that we
• 42:58
  Speaker 9: see them play out?
• 43:00
  Speaker 13: Well, when I think about this, I'm always talking about
• 43:03
  Speaker 13: the next six months, the next six to twelve months,
• 43:05
  Speaker 13: so that that will carry us into middle of next year.
• 43:09
  Speaker 13: I realize for some investors, some viewers, you don't want that.
• 43:12
  Speaker 13: You want to know the next three to five years,
• 43:14
  Speaker 13: but nobody could provide that. So just trying to be real,
• 43:16
  Speaker 13: be realistic. It's you know, I was talking to one
• 43:19
  Speaker 13: of my colleagues yesterday, it's it's quite interesting you if
• 43:22
  Speaker 13: you have for the next six months or so the
• 43:24
  Speaker 13: no landing scenario, then it's possible the FED has to
• 43:28
  Speaker 13: do more. They hike even more, and then there are
• 43:30
  Speaker 13: some ramifications for that down the road that could mean
• 43:34
  Speaker 13: a more significant slowdown in growth, maybe some other financial
• 43:38
  Speaker 13: market casualties. So when you think about these scenarios, you
• 43:42
  Speaker 13: know they can evolve over time, but I think for
• 43:44
  Speaker 13: the next six six to twelve months, we don't have
• 43:47
  Speaker 13: a recession. The FED is you know, on hold or
• 43:51
  Speaker 13: maybe hiking another another time where I don't think we're
• 43:55
  Speaker 13: going to see things evolve as a recession and rate cuts,
• 43:58
  Speaker 13: and I think that's really important to take in because
• 44:01
  Speaker 13: that has big financial market implications. We kind of were
• 44:04
  Speaker 13: seeing that play out earlier in this week with the
• 44:07
  Speaker 13: flattening of the treasury yield curve. The way I think
• 44:10
  Speaker 13: about it, if the FED is on hold just where
• 44:12
  Speaker 13: they are, then the longer end of the treasury curve
• 44:16
  Speaker 13: can drift up just for that reason. You know, the
• 44:19
  Speaker 13: earlier this year where there's the expectation that the FED
• 44:21
  Speaker 13: would be cutting, and I think that underlied. You know
• 44:24
  Speaker 13: a lot of the inversion in the curve, but if
• 44:26
  Speaker 13: that's coming out, then a flatter curve makes sense.
• 44:29
  Speaker 1: It kind of hurts something along those lines. This morning,
• 44:31
  Speaker 1: Austin Goldsby, the president of the Federal Reserve Bank of Chicago,
• 44:35
  Speaker 1: was interviewed by Bloomberg's David Wesson, and he kind of
• 44:38
  Speaker 1: said the same thing. I guess the implication was they
• 44:41
  Speaker 1: feel like they're making some good headway walking that fine
• 44:44
  Speaker 1: line with holding inflation down while not pushing the economy
• 44:49
  Speaker 1: into recession, suggesting that that is consistent with kind of
• 44:53
  Speaker 1: keeping rates where they are for a while. Does that
• 44:55
  Speaker 1: seem reasonable?
• 44:57
  Speaker 13: Yeah, I think this is again great news for the Fed.
• 45:00
  Speaker 13: The core inflation has come down, so on course CPI
• 45:04
  Speaker 13: we were six to six at the peak year on year,
• 45:06
  Speaker 13: now we're four point eight. But the unemployment rate is
• 45:09
  Speaker 13: at three point five, as we saw this morning, below
• 45:12
  Speaker 13: where it was when the Fed started hiking. That's the
• 45:14
  Speaker 13: best case scenario for the policymakers improvement on inflation without
• 45:19
  Speaker 13: having a downturn. But that said, doesn't mean that the
• 45:23
  Speaker 13: Fed is going to be cutting rates anytime soon, not
• 45:25
  Speaker 13: with the unemployment rate at three point five. And then,
• 45:28
  Speaker 13: even though we've seen an improvement inflation, inflation is still
• 45:31
  Speaker 13: above well above the Fed's target. So stasis holding here
• 45:35
  Speaker 13: might might be how things play out. But I think
• 45:37
  Speaker 13: that has implication for two year treasury yields, but also
• 45:40
  Speaker 13: ten year treasury yields.
• 45:43
  Speaker 9: We're looking at some important data on CPI on PPI
• 45:47
  Speaker 9: producer price in next and next week. Talk me through
• 45:51
  Speaker 9: your expectations there. What kind of number are you looking
• 45:55
  Speaker 9: to see?
• 45:57
  Speaker 13: Well, the big thing for me is last month so
• 46:00
  Speaker 13: June core CPI was softer, softer than expected and I
• 46:05
  Speaker 13: think very soft. So looking for that to pick back
• 46:09
  Speaker 13: up month to month, maybe one point three percent month
• 46:13
  Speaker 13: to month percent change, So it could it could pour
• 46:17
  Speaker 13: some cold water on the on the soft landing scenario
• 46:21
  Speaker 13: if that does play out. But again it ties back
• 46:24
  Speaker 13: to our suspicion that the FED is probably not done,
• 46:28
  Speaker 13: and I think that would be the conclusion if you
• 46:30
  Speaker 13: do see a pick back up in the core CPI reading.
• 46:34
  Speaker 13: So that's really the critical report for me.
• 46:36
  Speaker 1: All right, Jeff, appreciate it as always getting your thoughts
• 46:38
  Speaker 1: Jeffrey Cleveland. He's a director and chief economist at Payden
• 46:42
  Speaker 1: and Regal.
• 46:44
  Speaker 6: You're listening to the tape catch a live program Bloomberg
• 46:47
  Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 46:50
  Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business app.
• 46:54
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• 46:57
  Speaker 6: flagship New York station, Just Say Alexa playing Bloomberg eleven thirty.
• 47:02
  Speaker 1: We got movement higher yet again in energy WTI crude
• 47:06
  Speaker 1: oil up one point two percent. I've been calling this
• 47:08
  Speaker 1: out for the last several weeks. This wdacrud's had a
• 47:11
  Speaker 1: nice little run here. I don't know what the heck's
• 47:13
  Speaker 1: going on. So let me bring in a couple of
• 47:14
  Speaker 1: people that we pay to know what's going on here.
• 47:16
  Speaker 1: Mike mcglohon' senior macro strategist with Bloomberg Intelligence. He's located
• 47:20
  Speaker 1: in the self proclaimed crypto capital of the world, Miami Beach.
• 47:24
  Speaker 1: Good luck with that. And Fernando Voley, senior analyst for
• 47:27
  Speaker 1: Bloomberg Intelligence. His whole career is kind of doing this
• 47:30
  Speaker 1: energy thing. So let's start off with Mike. Mike, just
• 47:33
  Speaker 1: from a technical perspective, why this scene was sixty seven
• 47:36
  Speaker 1: dollars or barrel WTI crude oil like a month five
• 47:39
  Speaker 1: weeks ago, here we are at eighty two. What's going on?
• 47:42
  Speaker 14: Were saying, we're seeing a decent bounce of a market
• 47:45
  Speaker 14: that we got very over so managed money net positions
• 47:48
  Speaker 14: were very short.
• 47:50
  Speaker 8: The market bounced from its sixty month moving average.
• 47:53
  Speaker 14: But the key thing to remember about crudeill juxtaposed the
• 47:57
  Speaker 14: stock market, which has that mantra if it goes out,
• 48:00
  Speaker 14: it will go up, and Crudel's the opposite, opposite. Remember
• 48:03
  Speaker 14: and the point you see the price you see in
• 48:05
  Speaker 14: the screen was first trade in about two thousand and seven.
• 48:07
  Speaker 8: It's when it goes up, it usually makes it go
• 48:09
  Speaker 8: back down.
• 48:10
  Speaker 14: And right now it's going it's rallying on the back
• 48:12
  Speaker 14: of not only that positions coming back, but the stock
• 48:15
  Speaker 14: market's going up and yields are popping. But I view
• 48:18
  Speaker 14: this as a bear market rally, and I have good
• 48:20
  Speaker 14: bias from that. The highest put in two thousand and eight,
• 48:23
  Speaker 14: We had that bounce up till last year that was
• 48:26
  Speaker 14: lower than that high around one thirty recently, and now
• 48:28
  Speaker 14: we have situation with OPEC cutting supply and Russian saying
• 48:32
  Speaker 14: they're cutting supply.
• 48:32
  Speaker 8: But that's typically what happens in bear markets.
• 48:35
  Speaker 14: From a cartel, they see this yield curve, they see
• 48:38
  Speaker 14: the global bent towards recession, they see the declining economic
• 48:43
  Speaker 14: growth out of China, they see the US rapidly raising
• 48:46
  Speaker 14: interest rates, and they see the risks of Crudell going lower.
• 48:49
  Speaker 14: And this what it normally does, is it mean reverts.
• 48:52
  Speaker 14: The question is whereas it peak and where's it go?
• 48:54
  Speaker 14: So I look at these levels eighty three has kind
• 48:56
  Speaker 14: of been the high since looks like a November of
• 49:01
  Speaker 14: last year. So I see we're near the upper end
• 49:03
  Speaker 14: the range.
• 49:03
  Speaker 1: Now, all right, Fernando Joints is here in a Bloomberg
• 49:06
  Speaker 1: Interactive broker studio paying three dollars and eighty three cents
• 49:09
  Speaker 1: a gallon to fill up the beamer at the Jersey Shore.
• 49:13
  Speaker 1: That's much higher than I want to pay. Why can't
• 49:16
  Speaker 1: And people are telling me there's a refinery issue, which
• 49:19
  Speaker 1: I'm not buying, by the way, but that's an exact
• 49:21
  Speaker 1: an excuse. Talk to me about the refining situation this country.
• 49:24
  Speaker 1: Do we have a refinery down or out or.
• 49:26
  Speaker 10: What's going on?
• 49:27
  Speaker 3: Not buying a refinery or no I want to buy it.
• 49:29
  Speaker 1: I'll tell you what I want to do. I want
• 49:31
  Speaker 1: to go down to Corpus Christi or golf Port or
• 49:33
  Speaker 1: wherever they put those things and build a refinery. Can
• 49:36
  Speaker 1: I do that?
• 49:37
  Speaker 15: You can just revamp some of it recently shuttered refineries,
• 49:40
  Speaker 15: including in Louisiana and in Philadelphia. Well, that one's going
• 49:44
  Speaker 15: to take a lot of work. But yeah, we do
• 49:46
  Speaker 15: have some refinery shortages. And when you look, it's not
• 49:48
  Speaker 15: just crude prices that are driving gasoline prices higher, crackspreads
• 49:52
  Speaker 15: are forty dollars a barrow for both gasoline and diesels.
• 49:55
  Speaker 1: Crackspread is the difference between what I pay for barrel
• 49:58
  Speaker 1: boy and.
• 49:58
  Speaker 15: What I yes the stuff for the diesel and the
• 50:01
  Speaker 15: gasoline to produce it out of it.
• 50:03
  Speaker 1: So I want to if I'm an produce it, I
• 50:04
  Speaker 1: want a bigger crackspread.
• 50:05
  Speaker 15: Exactly, And they were getting me. It's over three times
• 50:09
  Speaker 15: what they usually get, so they're pretty healthy. And that
• 50:12
  Speaker 15: just goes to show you that we are really short
• 50:14
  Speaker 15: on the refining capacity, and I'll make matters worse. It
• 50:18
  Speaker 15: actually looks worse in Europe, especially on the diesel side,
• 50:21
  Speaker 15: because they don't have Russian crude. They've lost a lot
• 50:25
  Speaker 15: of refinery capacity over the past five years, and electricity
• 50:30
  Speaker 15: prices there are significantly higher. So we're going to need
• 50:32
  Speaker 15: a lot more diesel and it's not gonna get cheaper
• 50:35
  Speaker 15: anytime soon.
• 50:37
  Speaker 9: Yeah, but we also see you know, US producers boosting production.
• 50:41
  Speaker 9: The shale producers that stayed on the sidelines preserved their
• 50:46
  Speaker 9: you know, fiscal picture as even the Biden administration was
• 50:51
  Speaker 9: telling them to get back out there to get pumping.
• 50:53
  Speaker 9: I mean, does that kind of offset. Sure, we have
• 50:57
  Speaker 9: this maybe bottleneck in refining, but then does that sort
• 50:59
  Speaker 9: of all set what we're hearing from Saudi Arabia around
• 51:02
  Speaker 9: continuing those cuts. Does that kind of put an upside
• 51:07
  Speaker 9: ceiling to where we go with oil prices?
• 51:10
  Speaker 15: Well, the limit is really on the demand side. As
• 51:12
  Speaker 15: Mike was alluding to, the shale producers can only grow
• 51:16
  Speaker 15: so much. There are variety of limitations. I think the
• 51:19
  Speaker 15: biggest and most importance to geological limitation. You just can't
• 51:23
  Speaker 15: grow as fast as you as you hope because the
• 51:26
  Speaker 15: productivity isn't there. And then outside of the permium, you
• 51:30
  Speaker 15: just don't have any investments. Even when you look at
• 51:32
  Speaker 15: the rig count, it's still relatively low. Frack spreads, they're
• 51:36
  Speaker 15: not back to their peaks before twenty twenty, and so
• 51:40
  Speaker 15: we're not going to see that sort of growth. And ultimately,
• 51:43
  Speaker 15: when it comes to gasoline and diesel prices, you have
• 51:46
  Speaker 15: an added issue, which is what we produce in the
• 51:49
  Speaker 15: US is not really set up for what we refine
• 51:52
  Speaker 15: in the US, and we need a lot more heavy crude.
• 51:55
  Speaker 15: And when OPEC cuts barrows, they cut the stuff that
• 51:58
  Speaker 15: we need, which is the medium and heavier grades and
• 52:01
  Speaker 15: that makes especially diesel more expensive.
• 52:04
  Speaker 3: I don't know that all works.
• 52:05
  Speaker 1: Mike mcgloan talk to us about kind of just the
• 52:08
  Speaker 1: trading here of WTI crewed or just the you know,
• 52:10
  Speaker 1: the other energy components here. How much of it is
• 52:13
  Speaker 1: really technical versus the fundamentals that Fernando's talking about.
• 52:20
  Speaker 14: Price is the number one factor in crude oil and
• 52:22
  Speaker 14: what drives price futures traders. I just love pointing it
• 52:25
  Speaker 14: out because I actually I am an ex futures trader
• 52:28
  Speaker 14: and I've spent a good portion of my career running
• 52:30
  Speaker 14: money and deal with clients doing that. And that's the
• 52:33
  Speaker 14: bottom line is it's really price that drives it. And
• 52:35
  Speaker 14: now why do you see opek worried about cutting because
• 52:37
  Speaker 14: they see what's happening, see prices going down. But the
• 52:40
  Speaker 14: bottom line is we're still well above the average cost
• 52:42
  Speaker 14: of production the world's largest producer and net export of
• 52:45
  Speaker 14: the US. And one thing I do point out and
• 52:49
  Speaker 14: like to point out is how things have changed.
• 52:50
  Speaker 8: Now.
• 52:51
  Speaker 14: This is just a little bit of where Fernando and
• 52:54
  Speaker 14: I disagree, is rig accounts declining is actually a variable
• 52:58
  Speaker 14: of bearish sign for crude oil because if you look
• 53:00
  Speaker 14: at what's there's been a very high correlation with Ricoins
• 53:03
  Speaker 14: councilor lasts almost twenty years, partly because when you drill
• 53:07
  Speaker 14: down one drill, you can go horizontal who knows how
• 53:09
  Speaker 14: many ways. But it's just the fact of what I
• 53:11
  Speaker 14: show in prices, and I love pointing this out a
• 53:13
  Speaker 14: year ago is the fantasies of Crudel where people still
• 53:16
  Speaker 14: focus on those kind of things, and then people talk
• 53:18
  Speaker 14: about lack of investment. I you know, I'll be going
• 53:20
  Speaker 14: down to the farmland again next week. And you know,
• 53:24
  Speaker 14: in this country we get almost fifteen percent of our
• 53:26
  Speaker 14: total and leaded gas now from ethanol, and that demand
• 53:29
  Speaker 14: from leading gas in this country is actually declining. It's
• 53:32
  Speaker 14: down five percent then when it was before COVID so
• 53:35
  Speaker 14: and well, this major bent towards EV. So I look
• 53:37
  Speaker 14: at it is this is an enduring bear market that's
• 53:40
  Speaker 14: just catching up. If you want to look for a
• 53:41
  Speaker 14: good bullmarket commodities, look for gold. The price today this
• 53:45
  Speaker 14: year is the average highest. The average price for gold
• 53:47
  Speaker 14: this year is the highest ever at nineteen one hundred
• 53:51
  Speaker 14: and thirty six dollars announce. Crude oil is just the
• 53:54
  Speaker 14: average price. There is seventy five that's met it's just
• 53:56
  Speaker 14: a normal price. It's just fluctuating around that average.
• 53:59
  Speaker 1: So I'm going to quote are just I think I
• 54:00
  Speaker 1: can summarize Mike Gloan's commodities call buy gold, short everything
• 54:05
  Speaker 1: else exactly.
• 54:06
  Speaker 8: That's the trend, and he makes.
• 54:09
  Speaker 11: A living on this.
• 54:10
  Speaker 1: I don't believe he gets fanded into stuff.
• 54:12
  Speaker 8: No.
• 54:12
  Speaker 9: I mean, his commentary here is pretty that he writes
• 54:15
  Speaker 9: for Bloomber Contelatis is pretty harsh. Either we are reversing
• 54:20
  Speaker 9: our trajectory since two thousand and nine and an upward trend,
• 54:23
  Speaker 9: or we're in the early stages of a severe economic contraction,
• 54:27
  Speaker 9: and he, by the way, believes the latter. I mean,
• 54:30
  Speaker 9: for Nando, what's your take, do you disagree? I mean,
• 54:33
  Speaker 9: I know you're specialize in the energy space, but.
• 54:36
  Speaker 15: Yeah, absolutely, I think I agree with that the demand
• 54:39
  Speaker 15: socide of the equation is the biggest driver in the
• 54:42
  Speaker 15: short term, and Mike and I view on the short
• 54:45
  Speaker 15: term is very aligned. We think that's probably the lower
• 54:48
  Speaker 15: price than what you've seen on the screen right now.
• 54:51
  Speaker 15: But then on the long term, where I'll disagree with
• 54:53
  Speaker 15: Mike is because my homeland is poor and doesn't have
• 54:56
  Speaker 15: a lot of energy, and that whole land for people
• 54:58
  Speaker 15: is Brazil and we're not buying evs. We went through
• 55:02
  Speaker 15: blackouts throughout my childhood and OECD the developed countries are
• 55:07
  Speaker 15: now less than half of energy demand globally and the
• 55:11
  Speaker 15: only area that grows is emergent markets, so they are
• 55:14
  Speaker 15: the biggest drivers. And when you look at China having
• 55:17
  Speaker 15: to buy more coal because they don't have enough energy,
• 55:21
  Speaker 15: India and Pakistan and their challenges with electricity, believing that
• 55:26
  Speaker 15: the whole world's going to be driving a tesla in
• 55:28
  Speaker 15: ten years is just completely nonsense to me.
• 55:31
  Speaker 1: All right, so are your companies, your global energy companies,
• 55:34
  Speaker 1: are they investing enough in the fossil fuel infrastructure?
• 55:39
  Speaker 15: I mean excellent and Chevron plan to grow two to
• 55:41
  Speaker 15: three percent a year, and while BP and Shell are
• 55:44
  Speaker 15: thinking they're going to declient. So no, in the long term,
• 55:47
  Speaker 15: we're not. And then there's a question on whether Saudi
• 55:51
  Speaker 15: can actually grow much more than they do. They always
• 55:53
  Speaker 15: talk about a big game about growing production and then
• 55:57
  Speaker 15: for the past fifteen years they've been pretty much flat.
• 56:00
  Speaker 15: So there's a lot of questions there. We don't think
• 56:02
  Speaker 15: we have enough energy long term, and solar and wind
• 56:07
  Speaker 15: won't cut it in the next ten to fifteen years.
• 56:10
  Speaker 1: All right, there you go, folks. I think that's some
• 56:12
  Speaker 1: of the smartest conversation you get on energy. You got
• 56:15
  Speaker 1: to coming from a commodity perspective as well as a
• 56:17
  Speaker 1: fundamental analyst who talks to these companies every day. That's
• 56:20
  Speaker 1: Mike mcgloone and Fernando Vali. They're both from Bloomberg Intelligence.
• 56:24
  Speaker 1: I wonder who hired them. Anyway, there's a good view
• 56:28
  Speaker 1: on the energy space there.
• 56:30
  Speaker 6: You're listening to the tape cans a live program Bloomberg
• 56:33
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• 56:37
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• 56:40
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• 56:49
  Speaker 1: It's stuff diversity in inclusion. This is Jobs Day, and
• 56:53
  Speaker 1: it's put in the context of diversity and inclusion that
• 56:56
  Speaker 1: remains obviously a challenge, seemingly an ongoing challenge for most
• 57:00
  Speaker 1: of corporate America, and that certainly includes the financial services industry,
• 57:03
  Speaker 1: the big investment banks. To help us kind of get
• 57:06
  Speaker 1: a sense of where we are right now, Sondra Quince
• 57:09
  Speaker 1: joins us. She's the CEO for Paradigm for Parody. She
• 57:13
  Speaker 1: joins us via zoom, Sandra, talk to us about Paradigm
• 57:16
  Speaker 1: for Parody.
• 57:17
  Speaker 13: Just start us off.
• 57:18
  Speaker 8: What is it?
• 57:19
  Speaker 1: What are you guys trying to accomplish?
• 57:22
  Speaker 16: Yeah, thank you so much for having me today.
• 57:24
  Speaker 17: So, Paradigm for Parody is quite simply a coalition organization
• 57:28
  Speaker 17: that's focused on closing the gender parity gap and elevating
• 57:32
  Speaker 17: women at every level of leadership in corporate America.
• 57:35
  Speaker 16: We do this with a lens on racial equity.
• 57:37
  Speaker 17: We provide our companies with a clear strategy, and then
• 57:41
  Speaker 17: we provide them with the key tactics, the programs, and
• 57:46
  Speaker 17: the resources that they need in order to close the
• 57:49
  Speaker 17: parody gap.
• 57:50
  Speaker 9: One of the interesting lines from this earnings report Sondra
• 57:54
  Speaker 9: is that the participation rate for ages twenty five to
• 57:59
  Speaker 9: fifty for actually fell for the first time since late
• 58:02
  Speaker 9: last year, mainly because women were leaving the workforce. I thought,
• 58:08
  Speaker 9: you know, there's been this run up in family information,
• 58:11
  Speaker 9: but you know, do you where do you see this
• 58:13
  Speaker 9: coming from? And you don't necessarily have all the nittigritty
• 58:17
  Speaker 9: of the data, but what are the trends that you're
• 58:18
  Speaker 9: seeing with the companies you work with.
• 58:21
  Speaker 17: Yeah, so certainly there are women that are making decisions
• 58:24
  Speaker 17: to leave the workforce.
• 58:25
  Speaker 16: The companies that we're working with are really focused.
• 58:28
  Speaker 17: On how do we keep women in the workforce or
• 58:31
  Speaker 17: become a company that women can really see themselves thriving.
• 58:35
  Speaker 17: And some of the things that companies are doing, quite frankly,
• 58:38
  Speaker 17: is is they are looking for opportunities to ensure that
• 58:41
  Speaker 17: they're hiring women, but more importantly that they're providing developmental
• 58:45
  Speaker 17: opportunities to support women up and through the c suite.
• 58:48
  Speaker 17: So where there it's sponsorship programs or whether it's programs
• 58:52
  Speaker 17: like our Paradigm for Parity, Profit and Loss Leadership Accelerator
• 58:56
  Speaker 17: program whereby your exposing women to other opportunities within Core
• 59:00
  Speaker 17: America is critically important. And then, last but not least,
• 59:03
  Speaker 17: I think it's important that leaders create the right type
• 59:06
  Speaker 17: of inclusive people leaders so that you know whoever you're
• 59:10
  Speaker 17: working for, that they understand some of the challenges and
• 59:13
  Speaker 17: the issues and can really provide a workplace where all
• 59:16
  Speaker 17: of their talent can thrive.
• 59:18
  Speaker 16: And then companies that we're.
• 59:19
  Speaker 17: Talking with are also looking at their benefits to ensure
• 59:23
  Speaker 17: that they're meeting the needs of not only women, but
• 59:26
  Speaker 17: they're broader workforce.
• 59:28
  Speaker 1: Sandra, what are the companies that you deal with? What
• 59:32
  Speaker 1: are they saying or what are they asking you? In
• 59:33
  Speaker 1: let of the Supreme Court decision on affirmative action.
• 59:38
  Speaker 17: Yeah, so a part of you know, what they're saying
• 59:41
  Speaker 17: is number one, they want to stay the course and
• 59:44
  Speaker 17: ensure that they don't, you know, reverse any of the
• 59:47
  Speaker 17: progress that they've made over time. Some of the conversations
• 59:51
  Speaker 17: that we're having is really stems around, you know, what
• 59:54
  Speaker 17: do we do about our language.
• 59:56
  Speaker 16: How do we ensure that we can continue to be a.
• 59:59
  Speaker 17: Diverse and inclusive workforce, but ensure that we're bringing everyone
• 1:00:02
  Speaker 17: along in this journey. So I think many of our
• 1:00:05
  Speaker 17: companies are just taking a step back and looking at
• 1:00:09
  Speaker 17: their language to be sure that that.
• 1:00:11
  Speaker 16: Language is inclusive.
• 1:00:12
  Speaker 17: They're also taking a look at their programs to be
• 1:00:15
  Speaker 17: sure that while they have opportunities around women and those
• 1:00:20
  Speaker 17: that are ethnically underrepresented, that they're creating the right processes
• 1:00:24
  Speaker 17: in place to ensure that they are inclusive in that approach,
• 1:00:29
  Speaker 17: that they are promoting all people within their organizations. So
• 1:00:32
  Speaker 17: for many of our organizations, it's really around staying the course,
• 1:00:36
  Speaker 17: but just taking a review of our processes and the
• 1:00:40
  Speaker 17: language that we're using.
• 1:00:41
  Speaker 9: Well, I mean staying the course though has kind of amounted,
• 1:00:45
  Speaker 9: at least in recent months, to just not talking about
• 1:00:49
  Speaker 9: diversity policies. I mean that was certainly the case when
• 1:00:51
  Speaker 9: you look through earnings reports around Pride month after some
• 1:00:56
  Speaker 9: dustktops over particularly LGBTQ strategy, but particularly around the t
• 1:01:03
  Speaker 9: element of that. And is that the right way forward
• 1:01:07
  Speaker 9: is to just kind of focus internally and not speak
• 1:01:10
  Speaker 9: as much about diversity policies or is this kind of
• 1:01:13
  Speaker 9: a temporary moment and you think we'll hear more going forward.
• 1:01:17
  Speaker 13: Yeah.
• 1:01:18
  Speaker 17: So I think on some levels, right, for some organizations,
• 1:01:21
  Speaker 17: the right thing for them to do maybe to again
• 1:01:24
  Speaker 17: just not sort of address some of the broader issues.
• 1:01:27
  Speaker 16: But the companies that are really on the.
• 1:01:31
  Speaker 17: That are really making progress and have made progress over time,
• 1:01:34
  Speaker 17: those companies are still speaking publicly about the fact that
• 1:01:37
  Speaker 17: they are going to continue around their diversity and inclusion efforts,
• 1:01:42
  Speaker 17: that they are going to continue to make progress because
• 1:01:45
  Speaker 17: they want to reflect the clients and communities that they serve,
• 1:01:48
  Speaker 17: which is certainly the right thing to do. We've even
• 1:01:50
  Speaker 17: heard the same conversation coming from some universities as well,
• 1:01:54
  Speaker 17: that while affirmative action may have been impacted, they can
• 1:01:58
  Speaker 17: still make impact in the universities and create inclusive environments
• 1:02:04
  Speaker 17: where they reflect the communities and in which.
• 1:02:08
  Speaker 16: They're they're located.
• 1:02:09
  Speaker 17: So I really think that staying the course for companies
• 1:02:13
  Speaker 17: can mean a couple of things. Whether it means we're
• 1:02:16
  Speaker 17: remain silent, but for others, it means we're going to
• 1:02:18
  Speaker 17: continue to speak out and speak out publicly around the
• 1:02:22
  Speaker 17: work that we're doing and leading.
• 1:02:25
  Speaker 1: Childcare. What's the most common reason that employers cite for
• 1:02:30
  Speaker 1: not providing childcare for their employees.
• 1:02:35
  Speaker 16: Yeah, so that's an interesting question.
• 1:02:37
  Speaker 17: Many of the companies that I, you know, we have
• 1:02:41
  Speaker 17: that are part of our coalition that we mainly interact with,
• 1:02:45
  Speaker 17: all of them have childcare. So there are very few
• 1:02:47
  Speaker 17: that come across that that are that are not providing
• 1:02:53
  Speaker 17: some level of opportunity for families to care for their children.
• 1:02:58
  Speaker 16: So I do think for some though that are not
• 1:03:01
  Speaker 16: offering it, it could be the.
• 1:03:02
  Speaker 17: Fact of affordability for their employee base, But there are
• 1:03:06
  Speaker 17: tons of ways that you can provide childcare for your
• 1:03:10
  Speaker 17: employees without companies.
• 1:03:12
  Speaker 16: Having to pay tons of money for it and provide.
• 1:03:16
  Speaker 17: Opportunities flexible work, for example, offering for assistance around for
• 1:03:24
  Speaker 17: companies to be able to connect people to childcare opportunities
• 1:03:29
  Speaker 17: or connect employees to opportunities or places to take their
• 1:03:32
  Speaker 17: children so that they can come to work and know
• 1:03:34
  Speaker 17: that their children are in a safe environment. So I
• 1:03:36
  Speaker 17: think there on some level there's something that companies can
• 1:03:39
  Speaker 17: be doing that can be precostpective.
• 1:03:42
  Speaker 1: All right, Santra, really appreciate you taking the time to
• 1:03:44
  Speaker 1: speak with this here on important topic. Sandra Quint's CEO
• 1:03:48
  Speaker 1: for Paradigm for Parody P for P.
• 1:03:56
  Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can
• 1:03:59
  Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever.
• 1:04:03
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• 1:04:05
  Speaker 1: I'm Matt Miller.
• 1:04:06
  Speaker 2: I'm on Twitter at Matt Miller nineteen seventy three.
• 1:04:09
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• 1:04:12
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• 1:04:15
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