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Mixed Jobs Numbers Hard for Markets to Digest · 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. Every business day, we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. Right now, I want
• 0:21
  Speaker 1: to go over get over to Andrews Pearson Um. He
• 0:24
  Speaker 1: is the chief investment Officer of Global fixed Income at
• 0:26
  Speaker 1: New Vene. And Andrews, I want to first get your
• 0:28
  Speaker 1: take on the jobs report. Um, it was pretty fascinating.
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  Speaker 1: It was a miss, of course, but still an ad
• 0:35
  Speaker 1: of more than half a million jobs in the US economy. Now,
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  Speaker 1: John John said, always very interesting, a lot of focus
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  Speaker 1: on the markets, and at the core, I would say
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  Speaker 1: it's it's more of the same year we had, okay,
• 0:47
  Speaker 1: not grade numbers once again, some some mixed messages for
• 0:52
  Speaker 1: the market to kind of digest. And I think he
• 0:55
  Speaker 1: just kind of seeing that on the ten year today
• 0:58
  Speaker 1: and you partly given bats in the yield move post
• 1:01
  Speaker 1: to strong DP numbers and generally the market is expecting
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  Speaker 1: strong job numbers and we haven't quite been getting that,
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  Speaker 1: so so we're seeing a little bit less progress in
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  Speaker 1: the labor market. Um, that means less pressure for the
• 1:14
  Speaker 1: said to remove accommodation, and that means a lower tenure.
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  Speaker 1: So continue to have these mixed numbers. That makes it
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  Speaker 1: quite tough ultimately for the markets to digest what's going
• 1:27
  Speaker 1: on here, and this debate around growth versus inflation really continues.
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  Speaker 1: Anders I have to say, I don't envy you fixed
• 1:35
  Speaker 1: income guys. I don't know where you go to get yield.
• 1:40
  Speaker 1: Where do I go to get some yield here in
• 1:43
  Speaker 1: the fixed income markets? How much risk do I have
• 1:45
  Speaker 1: to take to get a reasonably decent return? I know,
• 1:49
  Speaker 1: it's it's certainly a dilemma for all of us, and
• 1:51
  Speaker 1: something investors are constantly asking us around. And you know,
• 1:56
  Speaker 1: at the core, we we maintain its vally const aft
• 2:00
  Speaker 1: to view and we're comfortable keeping you know, a modest
• 2:03
  Speaker 1: risk overweight stands here and continue to focus on credit
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  Speaker 1: and spread sectors. Um. You know, with the backdrop of
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  Speaker 1: this slowly improving economic kind of environment, fundamental still improving nicely.
• 2:17
  Speaker 1: We still have, you know, in my mind, nice support
• 2:20
  Speaker 1: from the Fed and the central banks, are being delvish
• 2:22
  Speaker 1: and patient and not look into race rates to too early. UM.
• 2:27
  Speaker 1: That combined with UH stretched but still okay evaluations, we
• 2:32
  Speaker 1: kind of call it we're priced for reality, nice class
• 2:35
  Speaker 1: for perfection. So we're kind of expecting spreads to have
• 2:38
  Speaker 1: more of a range found kind of type being there
• 2:41
  Speaker 1: for a bit longer, so so that really offers up
• 2:44
  Speaker 1: an attractive terror trade or a cowpund clipping kind of
• 2:48
  Speaker 1: cup environment, so that we're kind of seeing that playing
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  Speaker 1: out for the next several months and throughout the rest
• 2:54
  Speaker 1: of the year. So so to answer your question, we're
• 2:56
  Speaker 1: comfortable kind of keeping more of a US overweight and
• 3:01
  Speaker 1: going down into the rating spectrum UH and really liked
• 3:05
  Speaker 1: asset classes to offer this a little more of the
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  Speaker 1: reads for yielding and so a couple of areas that
• 3:09
  Speaker 1: we've been focused on, our leverage loans and preferreds loverage loans,
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  Speaker 1: you know, are definitely benefiting from all of these trans Fundamentally,
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  Speaker 1: the pictures improving lower defaults are happening or or kind
• 3:23
  Speaker 1: of seeing. Given the economic rebound and the loans, you
• 3:26
  Speaker 1: have a nice feel pick up spread profile, particularly when
• 3:30
  Speaker 1: you compare to other fixed income sectors and and a
• 3:33
  Speaker 1: key aspect for us right now is as well as that,
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  Speaker 1: um you know, loans and preferred generally have floating rate
• 3:40
  Speaker 1: aspects of it. So historically fliving rate, uh, you know,
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  Speaker 1: performance very well in the writing rate environments. Um So,
• 3:47
  Speaker 1: that's that's a key area that we're we're finding value.
• 3:50
  Speaker 1: And then finally on the loan side in particular, we're
• 3:52
  Speaker 1: seeing strong technical support. We've seen roughly twenty one straight
• 3:58
  Speaker 1: weeks of inflows, been coming up to about twenty three
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  Speaker 1: billion dollars of inflows for for the low space, so
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  Speaker 1: very nice momentum. We expect that to continue for the
• 4:10
  Speaker 1: rest of the year. Um So, loans in particulars and
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  Speaker 1: expected to be a solid perform in this kind of environment.
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  Speaker 1: All right, Anders, thank you so much for joining us.
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  Speaker 1: Really appreciate getting your perspective on those fixed income markets.
• 4:23
  Speaker 1: Anders Parson. He is the chief investment Officer of Global
• 4:27
  Speaker 1: fixed Income at Nouvene. Well, Matt, A couple of years ago,
• 4:32
  Speaker 1: our next guest showed me an app called flight Radar
• 4:36
  Speaker 1: twenty four kind of tracks airlines, air flights kind of
• 4:39
  Speaker 1: all around the world. So now you can offer round
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  Speaker 1: your house. Yeah, you can just find me looking up
• 4:43
  Speaker 1: at the sky, then down at the app seeing where
• 4:45
  Speaker 1: this plane is going. George Ferguson, senior aerospace, defense and
• 4:49
  Speaker 1: airlines analysts. He's responsible for that, He's for Blueberg Intelligence.
• 4:52
  Speaker 1: He's been covering the airline business for decades. Absolutely an
• 4:55
  Speaker 1: expert on Wall Street. George, it seems like they're a
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  Speaker 1: lot more plane in the air. Um, give us a
• 5:02
  Speaker 1: sense of where we are in terms of overall air
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  Speaker 1: traffic as we head into the busy summer season and
• 5:08
  Speaker 1: how are things progressing? Hey, so thanks for having me. Yet, Um,
• 5:12
  Speaker 1: what we're starting to see is that the level of
• 5:15
  Speaker 1: capacities that the airlines are flying is approaching, if not
• 5:19
  Speaker 1: exceeding l So that's a that's a great thing. Um.
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  Speaker 1: The load factors, from what we're hearing, are are quite good.
• 5:29
  Speaker 1: I think they're I Frank, I think there's you know,
• 5:31
  Speaker 1: sort of eighties and nineties and on their airlines, probably
• 5:34
  Speaker 1: creating a little bit of stress with the flying public.
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  Speaker 1: What we still see is it's a very leisure oriented bounce, right,
• 5:45
  Speaker 1: and so that's keeping says depressed at bit. So even
• 5:49
  Speaker 1: as we see this increasing capacity, increasing load factor, the
• 5:54
  Speaker 1: revenue numbers aren't coming up as strongly. I think we
• 5:58
  Speaker 1: really need to see the business traveler come back can
• 6:00
  Speaker 1: And to me, it looks a bit like things have
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  Speaker 1: spread out on the bounds right. So we originally thought
• 6:06
  Speaker 1: that you would get answered a really heavy bounce in
• 6:08
  Speaker 1: the core summer season July August. You know, it looks
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  Speaker 1: to me like people are getting a vaccination and going
• 6:14
  Speaker 1: a vacation right away. You know, they all have thirty
• 6:16
  Speaker 1: days a vacation built up, so they get they get vaccinated,
• 6:19
  Speaker 1: they get comfortable and desought. Hey, we're gonna go in
• 6:22
  Speaker 1: May or in June on a vacation and disappear for
• 6:24
  Speaker 1: a week or two and get on an airplane. But
• 6:26
  Speaker 1: that's what I's looking to us right now. Absolutely on
• 6:30
  Speaker 1: a vacation front, for sure. On the business front, I
• 6:33
  Speaker 1: wonder what kind of developments you're seeing. Yes, still like
• 6:37
  Speaker 1: I said that there were still being business is coming
• 6:40
  Speaker 1: back slowly. You know, even me and my business gets very,
• 6:45
  Speaker 1: very driven by air travel. Most of the people in
• 6:48
  Speaker 1: my business should be willing to take meetings and ready
• 6:50
  Speaker 1: to go to competences because we're the we're the believers
• 6:53
  Speaker 1: in air travel. And you know, I'm starting to see
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  Speaker 1: physical competences. Uh, you know, late to Q early three
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  Speaker 1: q they're getting some some decent numbers of people there.
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  Speaker 1: But I think we're on the early side of it.
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  Speaker 1: As the aerospace aviation people, we don't think business travel
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  Speaker 1: is really gonna come back well into sort of probably
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  Speaker 1: deep into week q UH. And you know, we really
• 7:20
  Speaker 1: think we still see it sort of being you know,
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  Speaker 1: maybe it gets back to sixt ish of last year
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  Speaker 1: UM in sort of three Q four q UM, but
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  Speaker 1: we don't think it's sort of surging back to of
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  Speaker 1: twenty nineteen levels until we get into into we think
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  Speaker 1: it's going to be slow. George, can I ask you
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  Speaker 1: as one of the believers. Everyone who's connected to the
• 7:44
  Speaker 1: airline industry swears by UM the ventilation system says you're
• 7:51
  Speaker 1: unlikely to get sick in an aircraft, But all normal
• 7:53
  Speaker 1: people know that when you go on a long haul flight,
• 7:56
  Speaker 1: you're gonna get sick. Why is that? Why is there
• 7:58
  Speaker 1: that discrepancy? You know, I think that of course, whenever
• 8:05
  Speaker 1: you're stuck in in tight spaces and a whole bunch
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  Speaker 1: of other people, I think, you know, human beings immediately
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  Speaker 1: get concerned about transfer of cold and whatever else. But look,
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  Speaker 1: I'll tell you you probably don't know anything about the
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  Speaker 1: HVAC system in in the office you're going to every day,
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  Speaker 1: the restaurant you go to, and taking nothing in your house.
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  Speaker 1: All right, and I'll do you. The airplane HVAC system
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  Speaker 1: is looked at more frequently than all those places and
• 8:30
  Speaker 1: has a bunch of fresh air coming through it. So
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  Speaker 1: I'm believing that one, to be honest, George. How about
• 8:35
  Speaker 1: international trouble, that's that's a part of the business as
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  Speaker 1: really profitable for airlines, But it just seems like that's
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  Speaker 1: I mean, given how different parts of the world are
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  Speaker 1: dealing with the pandemic, that might be the last thing
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  Speaker 1: that comes along. It's a mess, I mean, and that's
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  Speaker 1: the other challenge we really see, sort of getting everything
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  Speaker 1: moving again, getting that high that high margin international chapel back. Yeah.
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  Speaker 1: I mean, you know, I was looking today Australia doesn't
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  Speaker 1: want anybody to travel into also early it's still you
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  Speaker 1: know right now, uh, you know there's issues in the UK.
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  Speaker 1: Was with the people traveling in India. Looks good for
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  Speaker 1: a while, went bad and now you know you don't
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  Speaker 1: want to be traveling to India. There's varying regulations or
• 9:13
  Speaker 1: not between the US and Europe and back with US,
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  Speaker 1: but has been our Europeans that has been It's a mess,
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  Speaker 1: and different countries had sort of different views on the violence,
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  Speaker 1: different risk asiances, different willingness to require people to disclose vaccines.
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  Speaker 1: We don't think you see a really good international travel
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  Speaker 1: scene until mid next year. We think it's the earliest.
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  Speaker 1: We think it will be a week one this year.
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  Speaker 1: And what we're seeing is the countries that have been
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  Speaker 1: more open, you know, for the US, Latin America, South America,
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  Speaker 1: that's where that's where we're seeing the flights go to.
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  Speaker 1: That's a very leisure market, So that's a challenge. It's
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  Speaker 1: a mess. Which I were in the States, I would
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  Speaker 1: go to South America on vacation instead of trying to
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  Speaker 1: figure out which European country will let me in even
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  Speaker 1: if I'm fully vaccinated. It truly is a mess. George,
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  Speaker 1: thanks so much for joining us. George ferguson their senior Aerospace,
• 10:05
  Speaker 1: Defense and Airlines analyst at Bloomberg Intelligence. Now let's get
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  Speaker 1: over to Lena Chelius Eva. She is Bloomberg Intelligence senior
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  Speaker 1: US economists and she can tell us what happened with
• 10:17
  Speaker 1: this job's report. So Elena, let's start with the overall
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  Speaker 1: number here. It wasn't um it wasn't just a miss.
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  Speaker 1: It was a big miss. If you look at the
• 10:27
  Speaker 1: whisper number on the other hand, it's on the right
• 10:30
  Speaker 1: side of zero. And we were about consensus and we
• 10:34
  Speaker 1: missed even more. I would say true Bloomberg intelligence a right,
• 10:40
  Speaker 1: Bloomberg economics. Yes, I think it's just uh, just showing
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  Speaker 1: us that it's the inertia on the board of potential
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  Speaker 1: workers who remain inhibited to rejoin the ranks of employment.
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  Speaker 1: So whether it's unwillingness to lose those expended unemployment fenessy,
• 11:00
  Speaker 1: or it's some sort of inability to find proper childcare
• 11:05
  Speaker 1: um or just you know, simply being comfortable well with
• 11:10
  Speaker 1: living on a smaller income. All these factors contribute to
• 11:15
  Speaker 1: limiting people rejoining the labor force. And we saw a
• 11:19
  Speaker 1: declining labor force participation and uh, that was the MAZE report.
• 11:24
  Speaker 1: I think we will continue some inertia going forward in
• 11:28
  Speaker 1: June and July, but maybe we will see some acceleration. Nevertheless,
• 11:33
  Speaker 1: because the augmented unemployment benefits expired in the middle of
• 11:38
  Speaker 1: this month, in half of the U S states that
• 11:42
  Speaker 1: could help motivate more people to get back into the
• 11:46
  Speaker 1: labor force. I think it will just take some time
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  Speaker 1: for um job gains to accelerate to uh, you know,
• 11:54
  Speaker 1: really help close that huge gap in employment in the
• 11:59
  Speaker 1: big eating of the crisis. All right, So Elena, a
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  Speaker 1: couple of months in a row where we the job
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  Speaker 1: numbers came in below forecast. So is this a problem
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  Speaker 1: potentially with the labor market or is it simply a
• 12:12
  Speaker 1: function of economists really don't know how are having a
• 12:15
  Speaker 1: tough time forecasting an economy that's reopening from essentially a standstill. Well,
• 12:20
  Speaker 1: it depends on what you put a new model. If
• 12:23
  Speaker 1: you look at driver us of demand, they are shoulge in.
• 12:27
  Speaker 1: Look at the job splentiful of for example, indexes from
• 12:31
  Speaker 1: the Conference Board Servy, look at claims. These things are
• 12:35
  Speaker 1: telling us that labor market growth should accelerate at a
• 12:40
  Speaker 1: very high rate. But you also need to look at
• 12:45
  Speaker 1: things that limits that kept that job growth and unfortunately
• 12:50
  Speaker 1: the really very um few precedents in the past that
• 12:55
  Speaker 1: help us forecast those things. But just based on demand,
• 13:00
  Speaker 1: you know, job gains should be higher than a million
• 13:03
  Speaker 1: Look at the previous year for example, like at this
• 13:06
  Speaker 1: period of time. Just a year ago, we saw gains
• 13:10
  Speaker 1: in two millions, like exceeding two millions five million jobs
• 13:14
  Speaker 1: coming out of the initial UH wave of UH the virus.
• 13:20
  Speaker 1: So you would think, Okay, the economy is in a
• 13:23
  Speaker 1: much better shape at this point, so we should see
• 13:26
  Speaker 1: a much higher gains. But people adjust it to the
• 13:29
  Speaker 1: new reality, and right now it is really the supply
• 13:33
  Speaker 1: of workers that is holding a most significant progress in
• 13:37
  Speaker 1: the labor market. Lenna, We've heard two very smart people,
• 13:41
  Speaker 1: Gina Martin Adams and Tom Keane both talk about margin compression.
• 13:46
  Speaker 1: What do they mean? What Why are employers having to
• 13:50
  Speaker 1: reduce margins um in order to get employees back at work. Well,
• 13:54
  Speaker 1: they have to raise wages to attract them, right, That's
• 13:58
  Speaker 1: that's the supply issue UH by itself. So you really
• 14:03
  Speaker 1: need to attract workers who are just sitting on the sideline.
• 14:08
  Speaker 1: I think that we may see some temporary pickup in compensation,
• 14:14
  Speaker 1: but I don't really believe that it will start a
• 14:19
  Speaker 1: new wave of wage acceleration at a fundamental level. I think,
• 14:25
  Speaker 1: you know, still, the slack in the labor market is
• 14:28
  Speaker 1: so big at seven points point six million people that
• 14:33
  Speaker 1: at the end of the day, it will weigh on
• 14:37
  Speaker 1: wage growth. It's it may spike uh temporarily just informal
• 14:43
  Speaker 1: temporarily bonuses or things like that to attract workers back
• 14:47
  Speaker 1: into the labor force, but um fundamentally going forward, I
• 14:51
  Speaker 1: don't see a big increase in wages. So, Lena, I
• 14:56
  Speaker 1: was kind of skeptical when the argument was raised last
• 14:59
  Speaker 1: month that, you know, the reason that the number missed
• 15:02
  Speaker 1: so much again two six or six thousand versus a
• 15:05
  Speaker 1: consensus of you know, close to a million, that's because
• 15:07
  Speaker 1: people weren't incentive to go back to the workforce because
• 15:10
  Speaker 1: they were receiving such generous unappoyment benefits. But now we've
• 15:13
  Speaker 1: got a couple of months of data points here, is
• 15:15
  Speaker 1: that a rational economic argument? You think that actually holds water. Well,
• 15:20
  Speaker 1: it's one of the factors that is holding uh more
• 15:26
  Speaker 1: growth back. I think we will find an answer to
• 15:29
  Speaker 1: that in June and July because a lot of those
• 15:33
  Speaker 1: are augmented unemployment benefits expiring, so at least we will
• 15:37
  Speaker 1: clear that hurdle. But there are other things to look at,
• 15:41
  Speaker 1: and I think, you know, being a model of a toddler,
• 15:44
  Speaker 1: I can certainly see why a lot of women are
• 15:48
  Speaker 1: not going back into the label force. You cannot simply
• 15:52
  Speaker 1: find the proper childcare. You're scared to send your child
• 15:57
  Speaker 1: back uh to uh you know, to child care center
• 16:01
  Speaker 1: or back to school for in person learning. So with
• 16:05
  Speaker 1: more vaccinations and and even like if you can get
• 16:09
  Speaker 1: your kids vaccinated by by stay September October, that will
• 16:14
  Speaker 1: help a lot to in terms of acceleration and job growth.
• 16:18
  Speaker 1: And another thing is just simple inertion on the part
• 16:22
  Speaker 1: of potential entrance into the labor force. We can probably
• 16:27
  Speaker 1: by now figured out how to leave on one income
• 16:30
  Speaker 1: instead of two, for example, and some people will just
• 16:34
  Speaker 1: stay in that state. So it will be very hard
• 16:37
  Speaker 1: to draw back all the people that were lost from
• 16:40
  Speaker 1: the labor force. And as the Secretary of Labor said
• 16:44
  Speaker 1: that just just now a few minutes ago, you cannot
• 16:47
  Speaker 1: slip a switch. So it will take some time to
• 16:50
  Speaker 1: for people to get back, maybe at least three months, right,
• 16:53
  Speaker 1: I mean we're going into summer and if you are
• 16:56
  Speaker 1: receiving unemployment benefits, the kids are going to be out
• 17:00
  Speaker 1: of school for the next three months. And you figured
• 17:04
  Speaker 1: it out in terms of your um you know, in
• 17:06
  Speaker 1: terms of the budget. Why even bother looking for a
• 17:09
  Speaker 1: job until September other than to please you know, the
• 17:13
  Speaker 1: person at the work center. Well, that just tells you
• 17:18
  Speaker 1: that maybe the summer will not be as hot as
• 17:21
  Speaker 1: UH would be expected by all this surveys and increased
• 17:26
  Speaker 1: reopening demand. So it may take some time for UH
• 17:31
  Speaker 1: job growth to accelerate. So even though you know GDP
• 17:36
  Speaker 1: growth will probably hit in the second quarter, in the
• 17:40
  Speaker 1: third quarter of the years, it will take much longer
• 17:44
  Speaker 1: for employment growth to accelerate. And that is a key
• 17:48
  Speaker 1: reason why the set is not going to rush into
• 17:51
  Speaker 1: ending as it purchases that the pace that is at
• 17:56
  Speaker 1: the current pea. I think tapering talks will probably commenced
• 18:01
  Speaker 1: towards the end of the summer, but the actual tapering
• 18:04
  Speaker 1: process will not start until twenty two. Elena did that
• 18:09
  Speaker 1: the data we're seeing here in the labor front to
• 18:10
  Speaker 1: side impact your GDP forecast at Bloomerk Economics, not GDP forecast,
• 18:16
  Speaker 1: because for GDP forecast and the implications from the the
• 18:21
  Speaker 1: roll's report, we usually look at ours work and ours
• 18:25
  Speaker 1: worked as quite strong, so UH and quite consistent with
• 18:29
  Speaker 1: our forecast for the second quarter GDP growth in the
• 18:35
  Speaker 1: vicinity of ten percent. I think that still holds what
• 18:40
  Speaker 1: about Carl's forecast at Bloomberg Intelligence. What is girl, folks,
• 18:45
  Speaker 1: I don't know. I thought you guys worked together. I
• 18:48
  Speaker 1: just I'm learning about this separation. I had no idea. Well,
• 18:52
  Speaker 1: that is uh an interesting situation. And actually Carl was
• 18:57
  Speaker 1: a little bit more pessimistic on on that, so I
• 19:01
  Speaker 1: I really miss him. I really miss his judgment. All right,
• 19:05
  Speaker 1: So Lena, what do you think we're going to hear
• 19:08
  Speaker 1: from that Sherman Powell over the coming weeks and months? Um,
• 19:12
  Speaker 1: I guess this gives him some ammunition to kind of say, see,
• 19:15
  Speaker 1: we know what we're doing. Well, so the fat I
• 19:21
  Speaker 1: think really knows what they're doing. They they are being patient,
• 19:26
  Speaker 1: and I think that will hold this status square and
• 19:31
  Speaker 1: we will not see any uh you know, major updates
• 19:34
  Speaker 1: in terms of tapering or of course no interest rate
• 19:39
  Speaker 1: increases talk for a very long time. So our forecast
• 19:44
  Speaker 1: holds for tapering to start in twenty two and UH,
• 19:49
  Speaker 1: for that, we do need to see a string of
• 19:53
  Speaker 1: accelerating job games going into the late summer. So that chair, well,
• 20:00
  Speaker 1: can um talk about uh, you know, some progress, some
• 20:04
  Speaker 1: significant progress towards uh the FED schools and dual mandate
• 20:10
  Speaker 1: and inflation. We're gonna get CPI A numbers again next week. Uh.
• 20:15
  Speaker 1: Probably still acceleration in the pace of inflation. That will
• 20:20
  Speaker 1: not change their stance. That may push people back to
• 20:24
  Speaker 1: work though, because we're seeing now you, Lena, that food
• 20:27
  Speaker 1: prices are up to their highest level in a decade. Um.
• 20:30
  Speaker 1: Housing obviously off the charts. Uh you know, car transportation
• 20:35
  Speaker 1: costs rising with gasoline at the pump. So I guess
• 20:40
  Speaker 1: if you're looking for a catalyst while we're still on
• 20:42
  Speaker 1: these unemployment uh generous unemployment, relatively generous unemployment, um um, Uh,
• 20:50
  Speaker 1: don't you get about don't forget about the savings, those
• 20:54
  Speaker 1: extra accumulated savings over them of the crisis. I think
• 20:59
  Speaker 1: people will be is slightly indifferent to all this, uh way,
• 21:05
  Speaker 1: well to all this price increases over the course of
• 21:08
  Speaker 1: the summer. Well, they still have those savings and they
• 21:12
  Speaker 1: still get some of those benefits, but a steams uh
• 21:17
  Speaker 1: payments kind of fate into the end of the summer,
• 21:20
  Speaker 1: we will see some deterioration in the purchasing power, and
• 21:24
  Speaker 1: then those price increases will stink. All right, Elena, thank
• 21:29
  Speaker 1: you so much for joining us to really appreciate it.
• 21:31
  Speaker 1: As always Elena Bloomberg, senior US Economists, giving her thoughts
• 21:35
  Speaker 1: on the May jobs report. All right, let's check in
• 21:41
  Speaker 1: right now with Bloomberg opinion columnist Tim O'Brien. He is
• 21:44
  Speaker 1: writing about the success of Zoom. I mean, um, we
• 21:49
  Speaker 1: all now zoom each other, regardless of whether we're actually
• 21:52
  Speaker 1: using Zoom video communications technology. You just call it that,
• 21:57
  Speaker 1: like Kleenex or hampers, right. So, Um, like Google, we
• 22:02
  Speaker 1: google things and we zoom people. Um. Tim, it's interesting
• 22:06
  Speaker 1: you write in your column that we that we say
• 22:09
  Speaker 1: this because the one of the biggest companies in the world,
• 22:14
  Speaker 1: Microsoft has had technology to do this kind of thing
• 22:17
  Speaker 1: Skype for much longer than Zoom has been around. And yet,
• 22:21
  Speaker 1: as you put it, Zoom left Skype in its dust.
• 22:25
  Speaker 1: How why Micro Microsoft had a product that was also
• 22:29
  Speaker 1: a verb, right, we used to say skyped me instead
• 22:33
  Speaker 1: of I'll zoom with you. It just shows how dangerous
• 22:37
  Speaker 1: it might be to have your your company's name put
• 22:39
  Speaker 1: in the Oxford English Dictionary. Um. I think you know
• 22:43
  Speaker 1: this is an example of I think not only Skype
• 22:47
  Speaker 1: but also Internet Explore, which I addressed in the column
• 22:50
  Speaker 1: as two products owned by a tech titan that was
• 22:54
  Speaker 1: unable to either preserve the market share they had when
• 22:58
  Speaker 1: it developed or bought them and and largely I think
• 23:02
  Speaker 1: because it was out of sync with what it needed
• 23:06
  Speaker 1: to do to create a competitive product. And I think
• 23:08
  Speaker 1: the technology industry is full of examples of this in which,
• 23:13
  Speaker 1: you know, companies can't maintain leads for a long time
• 23:16
  Speaker 1: because there's such a premiacy paste and utility, quality and innovation,
• 23:22
  Speaker 1: and if you can't keep up, it doesn't matter if
• 23:25
  Speaker 1: you've got micro Soft, deep pockets and expertise. In some cases,
• 23:30
  Speaker 1: you can really get shunted into the what to the
• 23:31
  Speaker 1: side of the road. And and we've seen this now
• 23:34
  Speaker 1: happen with Zoom obviously. Yeah, and we see this all
• 23:37
  Speaker 1: the time and technology, and we hear about it from
• 23:39
  Speaker 1: entrepreneurs founders of these companies. They're they're wary, you know,
• 23:43
  Speaker 1: they want to take the big takeout deal, the big money,
• 23:45
  Speaker 1: the big payday from you know, a Microsoft or Google,
• 23:48
  Speaker 1: but they really are fearful of losing, you know, that
• 23:53
  Speaker 1: edge that made them such a disruptor in the first place.
• 23:56
  Speaker 1: And your column points out that's kind of what we
• 23:59
  Speaker 1: see here in a for examples from Microsoft, right. You know,
• 24:04
  Speaker 1: if you think back to two about two thousand and
• 24:07
  Speaker 1: one or so, Internet Explorer had at least a share
• 24:13
  Speaker 1: of the Brown Cowser market and today that is a
• 24:17
  Speaker 1: less than one and Google Google Chrome it has well
• 24:22
  Speaker 1: over six of the global browser market. And Google developed
• 24:26
  Speaker 1: a better product. It was lighter, loaded, faster. Developers preferred it,
• 24:32
  Speaker 1: it played well on mobile. And some of this is
• 24:34
  Speaker 1: is a legacy of of Microsoft zone history. Microsoft was
• 24:38
  Speaker 1: a world beater or when it introduced Windows as the
• 24:41
  Speaker 1: leading PC desktop application, and everything Microsoft built was really,
• 24:48
  Speaker 1: in a way tethered to the desktop, and the company
• 24:50
  Speaker 1: got sideswiped by the web and then sideswiped by mobile,
• 24:54
  Speaker 1: and it wasn't able, i think, to create consumer products
• 24:58
  Speaker 1: that did as well on mobile as a company like Google.
• 25:01
  Speaker 1: And you saw that more board out in the in
• 25:04
  Speaker 1: the Web Browser Awards. And and now with video conferencing,
• 25:07
  Speaker 1: you know, Microsoft has a great product, Microsoft Team. Uh.
• 25:11
  Speaker 1: It's a great video conferencing tool that's built up a
• 25:14
  Speaker 1: big audience. But it's a corporate tool more than it's
• 25:17
  Speaker 1: a consumer tool. And and Zoom obviously took the world
• 25:21
  Speaker 1: by store during the pandemic. Had Microsoft stayed out its game,
• 25:24
  Speaker 1: it paid over eight billion dollars to buy Skype, and
• 25:30
  Speaker 1: I doubt they feel they've gotten the return on that investment,
• 25:33
  Speaker 1: to say the least. But had they done it right,
• 25:36
  Speaker 1: they would have been beautifully positioned when the pandemic rolled
• 25:38
  Speaker 1: around to have a product that consumers would have embraced
• 25:42
  Speaker 1: on My is it maybe not possible to always create
• 25:47
  Speaker 1: the best product? I mean, I think about this a
• 25:49
  Speaker 1: lot in terms of music. Tim like more autos, right,
• 25:54
  Speaker 1: you know auto the auto industry, like the back of
• 25:56
  Speaker 1: your hand. Yes, But well, I you know there are
• 26:00
  Speaker 1: examples there that are well, I guess it's all a
• 26:03
  Speaker 1: matter of taste. But if I listened to Derek and
• 26:05
  Speaker 1: the Domino's Leila, it's great from start to finish. It's
• 26:08
  Speaker 1: like an unbelievable record. And if you think, why doesn't
• 26:12
  Speaker 1: another band come out with a record that's as good
• 26:14
  Speaker 1: or better and they just can't write, I wonder why
• 26:18
  Speaker 1: can't Internet Explorer be as good as Chrome? Um? Maybe
• 26:22
  Speaker 1: Chrome just wrote that perfect song and you know they
• 26:25
  Speaker 1: got lucky. Well, I think luck is a factor. I mean,
• 26:28
  Speaker 1: I think Google was positioned at the time to really
• 26:32
  Speaker 1: be a present for for both the mobile and the
• 26:38
  Speaker 1: web revolution in a way that Microsoft couldn't because of
• 26:41
  Speaker 1: its own legacies. Has happened the companies in industry after industry,
• 26:45
  Speaker 1: you know, we see it on the auto industry with
• 26:46
  Speaker 1: electric vehicles, right, Tesla has been positioned to be a
• 26:51
  Speaker 1: world leader in e V. Whether or not it consustained
• 26:55
  Speaker 1: that over time is one thing. But they also as
• 26:57
  Speaker 1: a company or positioned to take advantage of a trend
• 27:00
  Speaker 1: with the big the big two auto makers couldn't jump
• 27:03
  Speaker 1: on a Tim, thanks so much for joining us a
• 27:06
  Speaker 1: fascinating column. Tim O'Brien, Senior Columns for Bloomberg Opinion has
• 27:09
  Speaker 1: got a fascinating column out today, just kind of looking
• 27:11
  Speaker 1: at Zoom, looking at Skype and Microsoft, word to Microsoft,
• 27:15
  Speaker 1: kind of go wrong where they lost, uh that leading
• 27:18
  Speaker 1: position in the video conference business to Zoom, which we've
• 27:22
  Speaker 1: all become accustomed to, uh here over the last year
• 27:25
  Speaker 1: and a half. And you can read all of Tim's
• 27:27
  Speaker 1: stuff and all the good stuff from Bloomberg Opinion at
• 27:29
  Speaker 1: Bloomberg dot com, slash Opinion, or if you're sitting in
• 27:32
  Speaker 1: front of one of those great Bloomberg terminals, just type
• 27:35
  Speaker 1: in O, P, I N go and get some really
• 27:37
  Speaker 1: great work from Bloomberg Opinion. This is bloombergon. Thanks for
• 27:41
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• 27:44
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• 27:48
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• 27:52
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• 27:58
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