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US Hiring Tops All Estimates, Jobless Rate Falls · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
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  Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 3: Let's take a little deeper into that labor data we
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  Speaker 3: got today. We're joined by Joni Biley, chief workforce analyst
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  Speaker 3: at She's also the chair of the American Staffing Association,
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  Speaker 3: So we appreciate chatting with Jony every time we get
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  Speaker 3: these jobs numbers. Jenny, what do you make of this
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  Speaker 3: number that the print right across that the you know,
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  Speaker 3: the surface looks really solid.
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  Speaker 1: Yeah, well, hello Paul and Emily. Great to be with
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  Speaker 1: you today. Really interesting report this morning. You know, the
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  Speaker 1: headline number looks very strong, you know, over two hundred
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  Speaker 1: and fifty thousand, and it's interesting listening to Austin Gooles.
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  Speaker 1: We talk about, you know, the numbers and how this
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  Speaker 1: might relieve you know, a lot of pressure. But I
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  Speaker 1: have a little bit of a different take when you
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  Speaker 1: dig into these numbers. You know, most of the jobs
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  Speaker 1: that were actually created in the month of September were
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  Speaker 1: in the healthcare sector and then also in the leisure
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  Speaker 1: and hospitality sector. Those two sectors alone had about one
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  Speaker 1: hundred and sixty thousand jobs created. So then if you
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  Speaker 1: dig into the details here, we can see, you know,
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  Speaker 1: construction was good, twenty five thousand jobs created, the government
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  Speaker 1: added thirty one thousand jobs. But then we're not seeing
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  Speaker 1: robust growth in many of the other sectors. And so
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  Speaker 1: I think that headline number can be a bit misleading
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  Speaker 1: when you look at the actual data that is in
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  Speaker 1: the Establishment survey.
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  Speaker 4: So what then is it telling you about the current
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  Speaker 4: state of the US economy when you do seem to
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  Speaker 4: have noticed this kind of maybe distorted picture of the
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  Speaker 4: labor market at least just looking at the numbers and
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  Speaker 4: the data that we got this morning.
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  Speaker 1: Yes, I think there are some sectors that are doing well.
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  Speaker 1: I'd like to see growth come back, you know, in
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  Speaker 1: the manufacturing sector, stronger numbers in the professional and business
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  Speaker 1: service sector. We still saw a decline in September of
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  Speaker 1: almost fourteen thousand jobs in the temporary help staffing sector.
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  Speaker 1: And that's something that I always pay attention to because
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  Speaker 1: it's part of the industry that I'm in. So Emily
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  Speaker 1: I think what it's telling me is that we're still
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  Speaker 1: in a soft job market. Though some of these indicators
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  Speaker 1: look good, and I do believe, you know, Austin did
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  Speaker 1: mention it, there are other indicators that are showing we're
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  Speaker 1: still in that soft job market. Maybe we've gotten to
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  Speaker 1: a point where we do have that soft landing and
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  Speaker 1: things will start to improve over the next few months.
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  Speaker 1: And I certainly hope that that is the case, But
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  Speaker 1: I don't think that we are out of the woods
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  Speaker 1: just yet.
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  Speaker 3: So that's a more cautious take than we've heard throughout
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  Speaker 3: the morning here, Joony. Just in terms of this market,
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  Speaker 3: as you characterize the labor markets, maybe a little bit
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  Speaker 3: softer than it appears here. What are people missing do
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  Speaker 3: you think?
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  Speaker 1: Well, I think if you look at the report, you know,
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  Speaker 1: and seeing almost eighty thousand jobs come back in leisure
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  Speaker 1: and hospitality, those jobs are lower leveled skilled jobs and
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  Speaker 1: lower wage positions. So what we're not seeing come back
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  Speaker 1: yet are the higher skilled, more professional positions. Certainly in
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  Speaker 1: the healthcare sector that remains very strong, but we're not
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  Speaker 1: seeing jobs like in accounting and finance and and really
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  Speaker 1: that stem field, which there is a strong you know,
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  Speaker 1: demand in the future for you know, the skilled jobs
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  Speaker 1: in science and engineering, but we're not seeing a ton
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  Speaker 1: of job creation in those sectors right now. I also
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  Speaker 1: is very surprised that when you look at, you know,
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  Speaker 1: some of the numbers in like transportation and warehousing, those
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  Speaker 1: numbers were very soft, which tells me we're going into
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  Speaker 1: the retail season. We're not seeing you know, the companies
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  Speaker 1: really get ready for a strong, you know, retail holiday season.
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  Speaker 1: We're also seeing employers that normally hire this time you know,
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  Speaker 1: of the year and start to ramp up for the holidays.
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  Speaker 1: Their projections are a bit softer of the amount of
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  Speaker 1: people that they are going to need. So that's where
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  Speaker 1: I think I take a little bit more of a
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  Speaker 1: cautious approach. I'm not saying that we're going to fall
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  Speaker 1: off cliff by any means, but we still need you know,
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  Speaker 1: a few more months of job growth and really start
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  Speaker 1: to see some of that growth come from other sectors,
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  Speaker 1: you know, if you know, in addition to healthcare and
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  Speaker 1: leisure and hospitality.
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  Speaker 3: All right, Jenny, thank you so much for joining us.
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  Speaker 3: We really appreciate getting your perspective when we try to
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  Speaker 3: break down some of these jobs numbers here today Jonny Biley.
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  Speaker 3: She's a division president at employee Bridge and she's also
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  Speaker 3: the chair of the American Staffing Association. So a great
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  Speaker 3: voice to speak to speak with on these important job stays.
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  Speaker 3: Thirty again on the labor front of the print here,
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  Speaker 3: as Lisa was just just reporting very strong jobs or
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  Speaker 3: print for the non farm payrolls today, much better than expected.
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  Speaker 3: Some good unemployment rate numbers as well. Let's check on
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  Speaker 3: Ben Emmons because we want to see what this means
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  Speaker 3: for the Federal Reserve. Ben Emmons is a founder and
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  Speaker 3: chief investment officer of Fed Watch Advisors, joining us from Washington, DC.
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  Speaker 3: So Ben, again, a strong labor number today non farm payrolls.
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  Speaker 3: How do you think this Federal Reserve is going to
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  Speaker 3: interpret this data?
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  Speaker 5: Hi? Paul Well listening to Austin Goolsby, You know he
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  Speaker 5: does continue to indicate that more cuts coming, right, I
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  Speaker 5: think they feel that although these could be sometimes outliers
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  Speaker 5: on a multi basis, it's interesting it still happens because
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  Speaker 5: of the pandemic effect with all this distortion in the
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  Speaker 5: household versus establishment survey. It's nonetheless a labor market does
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  Speaker 5: show the vation. Like if you look at the median
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  Speaker 5: duration of unemployment and there's now risen to twenty two weeks,
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  Speaker 5: that's the highest since I think twenty twenty two. If
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  Speaker 5: you take you know, the percentage of people you know
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  Speaker 5: of twenty seven weeks, so long we're out of work,
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  Speaker 5: there's no our twenty three percent of total employed. So
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  Speaker 5: there's some underlying deterioration. I think this feat is keen
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  Speaker 5: on bringing that back in and trying to control for
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  Speaker 5: the worst thing of the picture given the restrictive stance.
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  Speaker 5: So I think the fatal could either look at this
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  Speaker 5: saying we have room to cut. This is a good
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  Speaker 5: labor market, but we can cut rage because we just
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  Speaker 5: have very restrictive policy to keep the labor market in
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  Speaker 5: good ship.
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  Speaker 4: I'm wondering, if you know, a lot of people talk
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  Speaker 4: about how monetary policy happens and comes with a lag,
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  Speaker 4: and yet we're only about a month after the first
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  Speaker 4: rate cut. So Ben, would you say that the rate
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  Speaker 4: cut is already working or is something else also driving
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  Speaker 4: the strength in the labor market right now?
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  Speaker 5: So I think it's part of the signaling effect from raycuts.
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  Speaker 5: If you step back actually going to the June July
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  Speaker 5: period when all that softness start to come through and
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  Speaker 5: the fat speaker start also look at that and start
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  Speaker 5: to talk about raycuts, all that signaling happened. If you
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  Speaker 5: look at the ISM data that's coming through now, including
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  Speaker 5: regional data, you see all the forward looking indicators some
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  Speaker 5: sort of a turn upwards, right, and that's your new
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  Speaker 5: orders and inventories, and that's sort of like cyclical indicators.
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  Speaker 5: And again bring basically back each time to Bostic, who
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  Speaker 5: who are so outspoken on this, saying that they're in
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  Speaker 5: their surveys with local businesses. They got a lot of
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  Speaker 5: feedback like, okay, fed, if you're going to cut rates,
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  Speaker 5: we're going to see a lot more sales activity, a
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  Speaker 5: lot of things going happening. And I think that may
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  Speaker 5: be a reason. Right, So in surveys it shows up.
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  Speaker 5: Whereas this employment report itself. I was talking to your
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  Speaker 5: economists and A Wong about this. There's some alternative data
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  Speaker 5: out there that's that indicated that that may have been
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  Speaker 5: a really strong month, but it could be because of
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  Speaker 5: just a lot of shifts happening underneath. So I think
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  Speaker 5: the basis points of custo that we just had that
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  Speaker 5: is just hitting the economy as we speak, but that
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  Speaker 5: may take some time for truly works through. Why this
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  Speaker 5: fat I think is not that they're cutting rates from
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  Speaker 5: here despite this number, but the signaling of cuts is
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  Speaker 5: interesting that is coming through the fore looking indicators.
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  Speaker 3: Hey, Ben, we kind of came into this morning with
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  Speaker 3: a reasonable likelihood that fifty basis points was on the
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  Speaker 3: table for the next meeting. I'm looking at the work
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  Speaker 3: function here and that seems to be kind of off
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  Speaker 3: the table. Seems to be pricing in a twenty five
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  Speaker 3: bas point cut in the November meeting. How do you
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  Speaker 3: expect the Federal Reserve to proceed over the next you know,
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  Speaker 3: three four to five meetings as we get into next year.
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  Speaker 5: Yeah, these these probabilities are so fluctuating. In Paul, like,
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  Speaker 5: I looked at that too. It was thirty percent before
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  Speaker 5: the number now dropped to seven and a half percent
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  Speaker 5: for fifty base point cut. So it is definitely sensitive
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  Speaker 5: to anything that's stronger of data, very versus the weaker
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  Speaker 5: of data. I think that's the mechanics of the markets.
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  Speaker 5: So the Fed will ultimately come down to the back,
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  Speaker 5: but they didn't at this meeting at this minute sound
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  Speaker 5: in a couple of weeks, I think they just continue
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  Speaker 5: to look at like where the policy is in broader
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  Speaker 5: sense of how restrictive it really is. And it looks
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  Speaker 5: since the last two CPI reposts reports the real interest
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  Speaker 5: rate that the fat funds rate has only risen a
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  Speaker 5: little further from here, so it's gotten even more room
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  Speaker 5: to cut rates. We get CBI on Wednesday, I believe
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  Speaker 5: it's probably going to be not a sole of a
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  Speaker 5: CPI data either, so that that real FET funds rate
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  Speaker 5: remains quite high, drifting towards three percent. I think that
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  Speaker 5: is what they're looking at to say we can take
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  Speaker 5: some off, so we'll keep cutting rates until at some
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  Speaker 5: point that does information that shows some stabilization maybe turning higher,
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  Speaker 5: and you're seeing the economy accelerating, really accelerating growth, what
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  Speaker 5: does that.
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  Speaker 4: Mean for investing in bonds? I mean today I'm looking
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  Speaker 4: at you know, the two year up fifteen point eight
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  Speaker 4: basis points the ten year up ten basis points. I
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  Speaker 4: guess those expectations that maybe the Fed is not going
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  Speaker 4: to cut as much. Is that bad for people trying
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  Speaker 4: to make money in bonds here?
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  Speaker 5: It could be because you know that when we were
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  Speaker 5: at roughly the lows on the tenure was somewhere three
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  Speaker 5: sixty five or so a few weeks ago. I mean,
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  Speaker 5: I'll almost back to four percent, right, so call it
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  Speaker 5: thirty five basis points of change. You know, the industry
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  Speaker 5: sensitivity bounds is still really high, and noted from the
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  Speaker 5: index duration, it's a sensitivity of interest. Rates has climbed
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  Speaker 5: up again since we had this decline from interst rates
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  Speaker 5: from the spring from April all the way into the summer.
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  Speaker 5: And so it does show that if you're getting a
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  Speaker 5: little moving rates higher, you immediately get these accruing losses.
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  Speaker 5: So be mindful of this volatility that's that's basically caused
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  Speaker 5: by this interstrate sensitivity. The short end, the yucave alwys
• 11:36
  Speaker 5: remain a bit more attractive because the yucreve has slowly normalized,
• 11:41
  Speaker 5: but not as much. But there's still much more yield there.
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  Speaker 5: That's been said a lot, but I think I say
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  Speaker 5: on that that that's a view too, But bouncing itself
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  Speaker 5: will remain at the basically at the whim of this
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  Speaker 5: data movement. So there's volatility in bounds that's higher than
• 11:56
  Speaker 5: we have pre pandemic, which makes it not always that
• 11:59
  Speaker 5: easy to go all in bounce, and that says that
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  Speaker 5: would be more careful with long duration bounds here.
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  Speaker 3: All right, Ben, thanks so much for joining us. Always
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  Speaker 3: appreciate getting a few minutes of your time. Ben Emmon's
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  Speaker 3: chief investment officer and founder at fed Watch Advisors.
• 12:13
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  Speaker 2: weekdays at ten am Eastern on Apple car Playing and
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  Speaker 2: broud Otto with the Bloomberg Business app. Listen on demand
• 12:23
  Speaker 2: wherever you get your podcasts, or watch us live on YouTube. Again.
• 12:29
  Speaker 3: The story of the day, one of the economic stories
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  Speaker 3: of the day is certainly that job's number and he
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  Speaker 3: came in really strong and non farm payroll here. So
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  Speaker 3: let's break it down with somebody who does this stuff
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  Speaker 3: for a living, Tom Gimble. He's a founder and board
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  Speaker 3: member of LASALM Network. LASAL is founded in nineteen ninety
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  Speaker 3: eight and it is one of the leading staffing and
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  Speaker 3: recruiting firms in the country. So this is Tom's business.
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  Speaker 3: Hey Tom, you guys put up being the labor markets
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  Speaker 3: a pretty strong data point here today.
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  Speaker 6: What do you make of it?
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  Speaker 7: Well, I think number one, I went to the UVA
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  Speaker 7: of the Rocky at the University of Colorado. Oh yeah,
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  Speaker 7: we can get if we can get a go buff's
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  Speaker 7: real quick.
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  Speaker 3: I bet go buffs, go buffs.
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  Speaker 7: There we go. Now listen, this report is If you're
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  Speaker 7: anything but optimistic after this report, you're crazy. This is
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  Speaker 7: an unbelievable number with unemployment dropping and higher than expected
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  Speaker 7: jobs numbers, and it's a really good sign for the economy.
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  Speaker 3: So what do you make Tom? Where a is some
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  Speaker 3: of this demand coming from?
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  Speaker 6: There are a lot of.
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  Speaker 3: People that want to maybe poke a little bit of
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  Speaker 3: a throw some shade on this to say it's a
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  Speaker 3: it's coming from leisure, it's coming from healthcare, and not
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  Speaker 3: really the higher paying jobs. How do you make the
• 13:37
  Speaker 3: how do you when you go underneath the service? What's
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  Speaker 3: the what's what's it look like?
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  Speaker 5: Yeah?
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  Speaker 7: I think I always find that interesting. Right, So they
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  Speaker 7: would rather not have people being hired in hospitality and
• 13:47
  Speaker 7: leisure and construction. It's it's the fact that we have
• 13:51
  Speaker 7: consumer spending that happens at hotels and restaurants and service
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  Speaker 7: industries means that consumers are making more money and they
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  Speaker 7: have more disposable income, which is a positive sign for
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  Speaker 7: the economy. So that hiring is really good, and what
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  Speaker 7: will end up happening is that continues to fuel it.
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  Speaker 7: That if people are spending more than the companies that
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  Speaker 7: make those retail products, we'll be hiring more people at
• 14:16
  Speaker 7: those companies and so on and so forth. And without
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  Speaker 7: getting too reaganesque, but it's trickled down economics, and you're
• 14:22
  Speaker 7: going to have a situation where it keeps fueling more
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  Speaker 7: better employment numbers, which is exactly what we want to
• 14:29
  Speaker 7: have happen now. The one soft spot I continue to
• 14:32
  Speaker 7: see is in recent college grads. I'm not seeing the
• 14:35
  Speaker 7: volume of hiring at people coming right out of college
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  Speaker 7: a year out as I have during other bull markets,
• 14:42
  Speaker 7: but I think that'll change post the election.
• 14:45
  Speaker 4: From your neck of the woods, how much are people
• 14:47
  Speaker 4: actually talking about the Federal Reserve and the impact of
• 14:51
  Speaker 4: rate cuts on the labor market, Because obviously at Bloomberg,
• 14:54
  Speaker 4: we are just obsessed with every piece of data that
• 14:58
  Speaker 4: comes out and what it means for the FED. But
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  Speaker 4: how much do you actually talk about it at lasal network?
• 15:05
  Speaker 5: Oh.
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  Speaker 7: I think that whether it's the Sound network or the
• 15:08
  Speaker 7: CEOs and CFOs and heads of HR that I talked
• 15:11
  Speaker 7: to on a regular basis, the FED rate is really
• 15:15
  Speaker 7: important to people, and I would say more on mid
• 15:18
  Speaker 7: and large cap companies because they're looking at the cash flow,
• 15:23
  Speaker 7: the borrowing rate, how they're going to be able to
• 15:25
  Speaker 7: hire people, how their wages affect their bottom line, and
• 15:29
  Speaker 7: so I think it's a really important indicator that people look.
• 15:32
  Speaker 7: Even if people don't understand exactly what the FED rate means,
• 15:37
  Speaker 7: they do get that when rates were really low, there
• 15:41
  Speaker 7: was nothing stopping hiring in the economy and what's going on.
• 15:44
  Speaker 7: So when companies see that the fed's dropping rates by
• 15:47
  Speaker 7: fifty basis points, people get excited. Now. The biggest difference,
• 15:51
  Speaker 7: and I've been preaching this with you guys and elsewhere
• 15:53
  Speaker 7: for a long time, is that we have more employers
• 15:57
  Speaker 7: in this country now than ever before. And what I
• 16:00
  Speaker 7: mean by that is if you would have gone back
• 16:02
  Speaker 7: sixty seventy years ago, if somebody lost their job at
• 16:05
  Speaker 7: Ford or General Motors, they were car people. They could
• 16:08
  Speaker 7: only get jobs at the car industry, excuse me, rebounded
• 16:12
  Speaker 7: Today skills are so transferable due to technology, and while
• 16:17
  Speaker 7: I think it's not going to last forever, but remote
• 16:19
  Speaker 7: work that you can lose your job in Detroit and
• 16:21
  Speaker 7: be working for a company in Silicon Valley as well,
• 16:24
  Speaker 7: And so we have that opportunity, and then the startup
• 16:27
  Speaker 7: nature that companies and individuals can raise venture money and
• 16:31
  Speaker 7: startups that I don't think we're ever going to have
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  Speaker 7: an employment lag like we had in the seventies really
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  Speaker 7: ever Again.
• 16:38
  Speaker 3: Tom, I guess I haven't asked you this in a while,
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  Speaker 3: but where are we on that whole remote work? Have
• 16:43
  Speaker 3: we settled into a new normal? And I guess that's
• 16:46
  Speaker 3: company by company three days, four days, five days. Where
• 16:48
  Speaker 3: do you think it is these days?
• 16:50
  Speaker 2: Yeah?
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  Speaker 7: I think right now it's three days. I still see.
• 16:53
  Speaker 7: It still amazes me, Paul, how many CEOs are afraid
• 16:57
  Speaker 7: they'll they'll talk to me, they'll talk to each other,
• 16:59
  Speaker 7: and they'll God, we got to get people in, but
• 17:01
  Speaker 7: they won't lead, they won't say it, And that to
• 17:05
  Speaker 7: me is really the disturbing part. I think the Amazon
• 17:11
  Speaker 7: statement last week was really powerful, and you'll start to
• 17:14
  Speaker 7: see some follow the leader type statements coming out. I
• 17:17
  Speaker 7: think where we're going to get to is four days
• 17:20
  Speaker 7: a week, and some companies going five and some going three,
• 17:23
  Speaker 7: but the average will be four. And come twenty twenty five,
• 17:27
  Speaker 7: we're not going to remote work and people wanting that
• 17:30
  Speaker 7: isn't gonna happen. And you're going to see when companies
• 17:32
  Speaker 7: start to downsize, and that will happen and other companies
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  Speaker 7: will hire them, so it won't affect the numbers. But
• 17:37
  Speaker 7: when you see companies lay people off, it's going to
• 17:40
  Speaker 7: be the remote workers that get hit first.
• 17:42
  Speaker 4: Just going back to the print that we saw this morning,
• 17:45
  Speaker 4: hourly earnings rose four percent from a year ago, the
• 17:48
  Speaker 4: biggest advance in four months. I'm wondering what you make
• 17:53
  Speaker 4: of this upside surprise in wages and you know what
• 17:57
  Speaker 4: that tells you about the strength of the labor market.
• 18:00
  Speaker 7: Well, I think it's interesting, and I have to dive
• 18:04
  Speaker 7: a little bit deeper into the hourly wage increase and
• 18:07
  Speaker 7: I saw that as well. But it really comes down
• 18:10
  Speaker 7: to you have more people working more hours, and in
• 18:13
  Speaker 7: the retail space, it's so hard. I mean, listen, I'm
• 18:17
  Speaker 7: in Chicago, I was in New York a few weeks ago.
• 18:21
  Speaker 7: I was in Nashville last week. It's really when you
• 18:23
  Speaker 7: go to a restaurant, the service is lacking because there
• 18:25
  Speaker 7: aren't enough people. And I talked to the managers when
• 18:27
  Speaker 7: I'm there to find out on the ground what's happening,
• 18:30
  Speaker 7: and I think what you're seeing when you see hourly
• 18:33
  Speaker 7: rates increase, hourly wages increasing, it's because you can't find
• 18:36
  Speaker 7: the people, and so you got to pay a little
• 18:40
  Speaker 7: bit more to make sure that your people stay. And
• 18:42
  Speaker 7: if you find somebody that you're getting the best that
• 18:44
  Speaker 7: you can get.
• 18:45
  Speaker 3: Tom you mentioned just about college graduates still having a
• 18:48
  Speaker 3: tough time. Why do you think that is?
• 18:51
  Speaker 7: I think company because usually what happens with kids out
• 18:54
  Speaker 7: of college, and I'm not talking about accounting degrees or
• 18:57
  Speaker 7: pre law or whatever, but more liberal arts education, the
• 19:01
  Speaker 7: massive state colleges and people coming out is that companies
• 19:04
  Speaker 7: hire in volume, whether it's sales or marketing, or they're
• 19:07
  Speaker 7: going to do a training class and all of that
• 19:09
  Speaker 7: type of thing. And when you hear the sky's falling
• 19:13
  Speaker 7: every day from both sides of the political spectrum during
• 19:17
  Speaker 7: an election year, companies put the brakes on massive hiring
• 19:20
  Speaker 7: at individual companies. So we're seeing sporadic hiring in small
• 19:24
  Speaker 7: medium sized business hiring, But we haven't seen the huge
• 19:28
  Speaker 7: uptake of late stage venture companies, private equity companies that
• 19:33
  Speaker 7: are really pouring money into hiring and mass and that's
• 19:36
  Speaker 7: the biggest difference I see versus twenty oh one and
• 19:39
  Speaker 7: twenty eighteen twenty nineteen when the market was really on fire.
• 19:43
  Speaker 4: We only have about a minute left. But what's the
• 19:46
  Speaker 4: outlook here for job growth for the rest of the year,
• 19:50
  Speaker 4: particularly when you take into consideration the hurricanes in the
• 19:54
  Speaker 4: Southern United States.
• 19:56
  Speaker 7: Yeah, well, I think that's an interesting one, and I'm
• 19:58
  Speaker 7: sure you'll have a lot of people talking about it.
• 20:00
  Speaker 7: My take on it is you're actually going to see
• 20:02
  Speaker 7: a lot of additional employment in the Southeast because we
• 20:05
  Speaker 7: need people to do the work to clean it up,
• 20:08
  Speaker 7: and the companies that do that, whether it's the government
• 20:11
  Speaker 7: or private industry, don't have enough body. So you're going
• 20:13
  Speaker 7: to see a lot of hiring going on down there,
• 20:16
  Speaker 7: and the companies that employ the people who can't get
• 20:18
  Speaker 7: to work, those people aren't going to be fired most
• 20:20
  Speaker 7: likely and not being filing unemployment. So I think we'll
• 20:23
  Speaker 7: actually maybe see a spike in the October jobs report
• 20:26
  Speaker 7: coming out that first Friday in November due to the hurricane,
• 20:29
  Speaker 7: that we'll have a mass of people going to work
• 20:31
  Speaker 7: in the southeast to help that situation.
• 20:35
  Speaker 3: All right, Tom, thanks so much for joining us, as
• 20:37
  Speaker 3: I always love talking to you on Jobs Day. Tom Gimble,
• 20:40
  Speaker 3: he's a founder and board member of LaSalle Network, giving
• 20:43
  Speaker 3: us a breakdown there. Obviously, he's taking a very positive
• 20:46
  Speaker 3: take on those strong jobs numbers. And again I'm glad
• 20:49
  Speaker 3: you put it up, Emily, the wage number, because that's
• 20:53
  Speaker 3: been strong and it's been higher than inflation for the
• 20:56
  Speaker 3: last almost two years now. So the real income for
• 20:59
  Speaker 3: most of Americans after the very difficult time coming of
• 21:02
  Speaker 3: during the pandemic, has actually been quite positive real income.
• 21:05
  Speaker 3: So that's visa the inflation, Yeah, purchasing power there, so
• 21:09
  Speaker 3: that is good news.
• 21:11
  Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 21:15
  Speaker 2: weekdays at ten am Eastern on applecar Play and Android
• 21:19
  Speaker 2: Auto with the Bloomberg Business app. You can also listen
• 21:22
  Speaker 2: live on Amazon Alexa from our flagship New York station,
• 21:25
  Speaker 2: Just say Alexa Play Bloomberg eleven thirty.
• 21:29
  Speaker 3: Demily Grafeo is sitting in for Alex Steel on Paul
• 21:32
  Speaker 3: Sweeneyer live here in our Bloomberg Interactive Brokers studio and
• 21:34
  Speaker 3: are streaming live on that internet thing. So go over
• 21:37
  Speaker 3: to YouTube dot com and search Bloomberg Live Radio and
• 21:40
  Speaker 3: that's where you'll find the video portion of this program.
• 21:44
  Speaker 3: I mean, again, as Charlie, just reporting a very strong
• 21:47
  Speaker 3: print there on the payroll data stocks hire, although they're
• 21:51
  Speaker 3: off their highs of the day, yields moving here, particularly
• 21:54
  Speaker 3: on the short end of the curve where we've got
• 21:56
  Speaker 3: to chew euro up nineteen basis points. How about that
• 21:58
  Speaker 3: kid's three point eight nine the tenure run a four percent?
• 22:01
  Speaker 3: Watch here three point nine six percent. Let's talk to
• 22:03
  Speaker 3: somebody who actually gets paid to do this stuff. Brian Levitt,
• 22:06
  Speaker 3: global market strategist for Investco doing the zoom thing from
• 22:11
  Speaker 3: the home office. Good for him, Brian, what do you
• 22:13
  Speaker 3: make of this print and how does it maybe change
• 22:16
  Speaker 3: your alter or your view of kind of where your
• 22:19
  Speaker 3: client should be putting money these days.
• 22:21
  Speaker 6: It's a strong number. You know, these things will get revised,
• 22:25
  Speaker 6: so we do take it with a little bit of
• 22:26
  Speaker 6: a grain of salt. But it's a strong payroll number,
• 22:28
  Speaker 6: and I do that as a good thing. It's you know,
• 22:31
  Speaker 6: investors had been so focused on inflation. The shift really
• 22:35
  Speaker 6: is now towards the sustainability, the resilience of growth, and
• 22:39
  Speaker 6: so when you get a strong number like this, it's
• 22:42
  Speaker 6: it's a positive.
• 22:43
  Speaker 4: Now.
• 22:43
  Speaker 6: The markets took it very favorably initially, As you mentioned,
• 22:49
  Speaker 6: some of those gains have come back, that's cause interest
• 22:51
  Speaker 6: rates have jumped up a lot. But I still view
• 22:54
  Speaker 6: it as if you're in an environment where you have
• 22:56
  Speaker 6: resilient growth and less rate cuts. So that's that's still
• 23:00
  Speaker 6: better than weak growth and more rate cuts.
• 23:04
  Speaker 4: So, Brian, is it fair to say then that the
• 23:07
  Speaker 4: Fed has engineered a soft landing when you look at
• 23:10
  Speaker 4: how the stock market is reacting and also just how
• 23:13
  Speaker 4: strong the payroll print was today, Well, that's.
• 23:16
  Speaker 6: The preponderance of evidence suggests a soft landing. Now, I
• 23:21
  Speaker 6: don't think we can be absolutely certain yet, there's still
• 23:25
  Speaker 6: some weakness too. If you notice in that report, in
• 23:28
  Speaker 6: the payroll report, the manufacturing sector did lose jobs. We've
• 23:33
  Speaker 6: seen some of the purchasing manager in the sas sitting
• 23:36
  Speaker 6: below fifty for a bit here. But yeah, I mean,
• 23:40
  Speaker 6: the preponderance of evidence still suggests a soft landing and
• 23:45
  Speaker 6: a good backdrop for investors.
• 23:48
  Speaker 3: So, Brian, if it is, you know, continue to be
• 23:50
  Speaker 3: a risk on environment, how much risk stocks, bonds, credit, treasuries,
• 23:55
  Speaker 3: how do you think about it?
• 23:57
  Speaker 6: Yeah, if so, we've been in an environment now the
• 24:00
  Speaker 6: leading indicators of the economy have actually been been pointing
• 24:03
  Speaker 6: to below trend growth and we needed easing, and so
• 24:07
  Speaker 6: easing comes along and the economy's actually been more resilient. Then, Yeah,
• 24:12
  Speaker 6: you want to be in stocks, you want to be
• 24:14
  Speaker 6: in riskier credit, you want to be in if you
• 24:18
  Speaker 6: expect growth to pick up, you want to be in
• 24:20
  Speaker 6: cyclicals and value. So it's a broadening picture. If you
• 24:26
  Speaker 6: get the soft landing, as we suspect we will, you
• 24:29
  Speaker 6: should see broader markets than we saw last year, and
• 24:34
  Speaker 6: again a good backdrop for risk taking.
• 24:36
  Speaker 4: What does broader mean? I'm thinking about an ETF house
• 24:42
  Speaker 4: at your very own shop RSP that plays of course
• 24:47
  Speaker 4: on the equal weight s and P five hundred. Is
• 24:50
  Speaker 4: that where you kind of see the gains for the
• 24:52
  Speaker 4: rest of the year or is it better to kind
• 24:54
  Speaker 4: of stay in the market cap?
• 24:57
  Speaker 6: Equal Weight's a great equal weight, it's a great point,
• 25:00
  Speaker 6: and so marketcap can have long periods of outperformance. It
• 25:03
  Speaker 6: tends to shift towards the end of a cycle, when
• 25:07
  Speaker 6: you're going into a recession and coming out, that's when
• 25:10
  Speaker 6: equal weight tends to do well. Now we've been in
• 25:12
  Speaker 6: this long environment of market caap outperformance. Can we do
• 25:17
  Speaker 6: it with a soft landing, you know, rather than see
• 25:20
  Speaker 6: it a shift with you know, the market cap outperformance
• 25:24
  Speaker 6: coming to the recession more along the lines of a
• 25:26
  Speaker 6: soft landing and then a reacceleration in activity. That would
• 25:30
  Speaker 6: be my view. We're starting to see it in some places.
• 25:33
  Speaker 6: Small cap again having a very good day today on
• 25:37
  Speaker 6: the expectation of this economy is in good shape. So yeah,
• 25:41
  Speaker 6: a lot of the reason why the market cap outperformed
• 25:43
  Speaker 6: last year is the market priced in a small cap
• 25:47
  Speaker 6: rally or an eco boy rally in two months at
• 25:49
  Speaker 6: the end of twenty three and then we had to
• 25:51
  Speaker 6: back out all the rate cuts. I don't think that's
• 25:54
  Speaker 6: the case this time. The FED is likely to continue
• 25:57
  Speaker 6: to lower rates. So long as the economy remains resilient,
• 26:00
  Speaker 6: then yeah, equal weight should outperform.
• 26:02
  Speaker 3: Brian your global market strategist, So, how do you think
• 26:06
  Speaker 3: about the US versus rest of the world.
• 26:10
  Speaker 6: It's a little bit of a challenge here in the
• 26:12
  Speaker 6: short term because the dollar strength and you know what
• 26:16
  Speaker 6: you would want to see is US growth differentials moving
• 26:21
  Speaker 6: back towards the rest of the world, US interest rate
• 26:24
  Speaker 6: differentials moving back towards the rest of the world. Today's
• 26:29
  Speaker 6: report throw a little bit of the challenge to that
• 26:34
  Speaker 6: because US growth continues to look quite good, and interest
• 26:38
  Speaker 6: rates may remain higher than many have thought, and the
• 26:40
  Speaker 6: dollars moving up pretty significantly. So that's a little bit
• 26:43
  Speaker 6: of a headwind to capital flowing around the world. Now
• 26:46
  Speaker 6: you play this out over the next few years, the
• 26:50
  Speaker 6: FED goes through it's easing cycle and rates starts to
• 26:53
  Speaker 6: come down. Rates do come down, the dollars should weaken some.
• 26:56
  Speaker 6: But in the short term here this is a report
• 27:00
  Speaker 6: that's more favorable for US assets.
• 27:02
  Speaker 4: Okay, so we did stocks, we did FX, we have
• 27:05
  Speaker 4: to do bonds as well, Paul Brian, I mean, we're
• 27:09
  Speaker 4: seeing a really large spike up in yields today in
• 27:13
  Speaker 4: the US. How are people making money in bonds?
• 27:19
  Speaker 6: Well, remember in twenty nineteen and investors were begging for
• 27:23
  Speaker 6: four percent, and so it's back again today. In twenty nineteen,
• 27:27
  Speaker 6: the answer to the question he do you get four percent?
• 27:30
  Speaker 6: Was well, land money to the Russian government and a
• 27:33
  Speaker 6: lot of people weren't willing to do that. So today
• 27:36
  Speaker 6: you can lend money to US corporates, the US Treasury,
• 27:42
  Speaker 6: to US municipalities and get these nice yields. Now, the
• 27:46
  Speaker 6: total return story may be a little bit behind us,
• 27:52
  Speaker 6: but the yields are there for the taking. And you know,
• 27:56
  Speaker 6: if you're sitting in money markets, remember those fields will
• 27:59
  Speaker 6: likely come down over time, so there is reinvestment risk.
• 28:02
  Speaker 6: So it's still a very good opportunity for income investors
• 28:05
  Speaker 6: to lock in the types of yields that they were
• 28:07
  Speaker 6: begging for five years ago.
• 28:09
  Speaker 3: Brian, your offices are they done in a world financial center?
• 28:13
  Speaker 6: They are?
• 28:13
  Speaker 3: So that begs a question.
• 28:14
  Speaker 6: Is a Jersey guy.
• 28:15
  Speaker 3: Fairy or path?
• 28:19
  Speaker 6: It's the path.
• 28:21
  Speaker 3: I spent. There's a cost conscious guy there because the
• 28:25
  Speaker 3: ferries fair well.
• 28:27
  Speaker 6: No, it is when you live in New Jersey, though,
• 28:31
  Speaker 6: you get on the you park at the first station
• 28:34
  Speaker 6: you can and for me that's Harrison. There's no way
• 28:37
  Speaker 6: I'm driving all the way to the water.
• 28:39
  Speaker 3: Very good, all right, Brian, we got that down. Brian Lettt,
• 28:42
  Speaker 3: global market strategist at a Vesco. He is a path guy.
• 28:45
  Speaker 3: Good to know you can talk to these Jersey guys
• 28:47
  Speaker 3: and they work downtown. You got to figure out how
• 28:48
  Speaker 3: they get across the river. I, on the other hand,
• 28:51
  Speaker 3: was a fairy guy because it's because and then every
• 28:55
  Speaker 3: night at home we took a cook car home.
• 28:56
  Speaker 4: It's a lot of fun. I often take the ferry
• 28:58
  Speaker 4: from it is marks men. If you go from Manhattan
• 29:01
  Speaker 4: to Brooklyn. Yes, but I just like to romanticize my
• 29:03
  Speaker 4: life load.
• 29:04
  Speaker 3: I'll tell you the ferry now. They live down the
• 29:05
  Speaker 3: Jersey Shore. The ferry down to the Highlands where John
• 29:08
  Speaker 3: Tucker lists.
• 29:08
  Speaker 2: That is a good voyage. There. You're listening to the
• 29:13
  Speaker 2: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
• 29:17
  Speaker 2: Eastern on applecar Play and Android Auto with the Bloomberg
• 29:21
  Speaker 2: Business app. You can also listen live on Amazon Alexa
• 29:24
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• 29:27
  Speaker 2: Bloomberg eleven thirty.
• 29:30
  Speaker 3: All right, So we had a good news story on
• 29:33
  Speaker 3: the labor front today. We also had some good news
• 29:36
  Speaker 3: last evening, also on the labor market. We've got the
• 29:39
  Speaker 3: US doc workers agreeing to go back to work as
• 29:43
  Speaker 3: talks extended into January. So that's a good thing for
• 29:47
  Speaker 3: those folks. It's a good thing for the US economy.
• 29:49
  Speaker 3: Let's break it down and see what it really means. Hey,
• 29:51
  Speaker 3: we could do that a leak clasical senior transport logistics
• 29:53
  Speaker 3: and shipping analysts for Bloomberg Intelligence joining us from Princeton.
• 29:57
  Speaker 3: So Lee, what did the the shippers and the dock workers,
• 30:01
  Speaker 3: what did they actually agree to last night?
• 30:04
  Speaker 8: Well, they agreed to go back to work and go
• 30:06
  Speaker 8: back to the negotiating tables. So you know they're going
• 30:10
  Speaker 8: to go back to work until an agreement is made.
• 30:15
  Speaker 8: The new deadline now is mid January, so you know
• 30:19
  Speaker 8: that's obviously on our radar, much like how this last
• 30:23
  Speaker 8: deadline of September thirtieth was on our radar.
• 30:26
  Speaker 9: And so what that means is that they're going back
• 30:28
  Speaker 9: to work.
• 30:28
  Speaker 8: You know, it's going to take some time to clean
• 30:31
  Speaker 8: up the mess at the ports because there was a backup.
• 30:35
  Speaker 8: Roughly speaking, it takes about a week to clear congestion
• 30:40
  Speaker 8: created by one day of a strike. So call it
• 30:44
  Speaker 8: three to four weeks until things quote unquote back get
• 30:47
  Speaker 8: back to normal. And my guess is that the unions,
• 30:51
  Speaker 8: when they do go back to work, they're not going
• 30:53
  Speaker 8: to be going at full throttle.
• 30:55
  Speaker 9: They might be kind of dragging their feet, if you will.
• 30:59
  Speaker 8: So this apply chains are getting back to normal, and
• 31:03
  Speaker 8: hopefully the two sides can come to an agreement where,
• 31:06
  Speaker 8: you know, truly the efficiencies and the throughput is returned.
• 31:10
  Speaker 9: To where it should be.
• 31:12
  Speaker 4: What do we know so far about why the workers
• 31:15
  Speaker 4: actually decided to end the strike?
• 31:19
  Speaker 8: The why, that's a great question. I don't I'm not
• 31:23
  Speaker 8: you know, in those meetings. But my guess is that
• 31:26
  Speaker 8: both sides of being pressured significantly by the Biden administration.
• 31:31
  Speaker 8: The Biden administration said that they did not want to
• 31:33
  Speaker 8: enact the Taft Hartley Act, which pretty much tells the
• 31:38
  Speaker 8: two parties that they got to go back to the
• 31:40
  Speaker 8: negotiating table and cool off for eighty days. You know,
• 31:44
  Speaker 8: they didn't want to do that because obviously the Biden
• 31:47
  Speaker 8: administration wants to be considered a pro union president.
• 31:52
  Speaker 9: And then you know, and then on the other side.
• 31:55
  Speaker 8: Biden administration also doesn't want to see anything to hurt
• 31:58
  Speaker 8: this fragile economy that we're currently in. You know, growth
• 32:02
  Speaker 8: is expected one to two percent, tepid growth, but it's
• 32:06
  Speaker 8: growth nonetheless, and obviously a prolonged strike could impact those
• 32:10
  Speaker 8: growth numbers. But I don't think it's going to have
• 32:12
  Speaker 8: much of an impact on overall GDP, maybe delaying some things,
• 32:17
  Speaker 8: and on freight rates. You know, you're seeing some of
• 32:19
  Speaker 8: the marine shipping names like Mares. They're down mid single
• 32:22
  Speaker 8: digits and trading, and that's really being driven by the
• 32:26
  Speaker 8: fact that if there was a prolonged strike, rates would
• 32:29
  Speaker 8: have probably been bouncing higher. And what we see now
• 32:33
  Speaker 8: is that maybe they're not going to get that bounce.
• 32:35
  Speaker 8: They're still a lot higher than they were last year,
• 32:38
  Speaker 8: but they're still not going to get that extra boost
• 32:41
  Speaker 8: created by the congestion and issues from.
• 32:44
  Speaker 9: A labor strike on the East and Gulf Coast ports.
• 32:48
  Speaker 10: Lee.
• 32:49
  Speaker 3: It sounds like, you know, there's a couple issues there
• 32:51
  Speaker 3: between the two parties. One is just the wages, and
• 32:54
  Speaker 3: presumably that is something that you can bridge the gap
• 32:56
  Speaker 3: and get something done. The other one is productivity and
• 32:59
  Speaker 3: mind modernization and you know, bringing technology or that would
• 33:03
  Speaker 3: threaten jobs. That seems to be a lot harder to
• 33:07
  Speaker 3: deal with any sense of how far away they are
• 33:09
  Speaker 3: or how close they may be.
• 33:12
  Speaker 8: On the money side, you know, from the last numbers
• 33:16
  Speaker 8: that we saw, you know, the union has been very
• 33:19
  Speaker 8: vocal and wanting seventy seven percent increase over six years,
• 33:22
  Speaker 8: which is roughly a little.
• 33:23
  Speaker 9: Under ten percent a year.
• 33:25
  Speaker 8: And then you know the ports came back at around
• 33:28
  Speaker 8: they opted it from forty percent to fifty percent. I'm
• 33:31
  Speaker 8: assuming they're going to get closer to that seventy seven
• 33:34
  Speaker 8: percent over time. The automation is probably a lot more sticky.
• 33:38
  Speaker 8: The ports do want to have more automation, and automation
• 33:42
  Speaker 8: isn't necessarily. You know, a robot comes in, it takes
• 33:45
  Speaker 8: out a job, it just might be a different job.
• 33:47
  Speaker 8: And there are sports where you know, workers are not
• 33:51
  Speaker 8: necessarily there's one in New York one of the ports
• 33:54
  Speaker 8: within the ports system in New York and New Jersey
• 33:57
  Speaker 8: where they have some automation where there's people kind of
• 34:00
  Speaker 8: operating joysticks, if you will, in an office and they
• 34:04
  Speaker 8: kind of take control the last couple of minutes or
• 34:07
  Speaker 8: the first couple of minutes of moving something to ensure
• 34:11
  Speaker 8: it's safety. You know, it's not only your productivity standpoint,
• 34:14
  Speaker 8: but also obviously the less people you have on the port,
• 34:17
  Speaker 8: the safer it is. You know, accidents do happen, and
• 34:22
  Speaker 8: so you know, I don't know where they're going to
• 34:24
  Speaker 8: come out on this, but obviously the ports want to
• 34:26
  Speaker 8: be more efficient, and the union wants to save jobs,
• 34:30
  Speaker 8: and they just need to figure out, you know, some
• 34:32
  Speaker 8: sort of middle ground, because at the end of the day,
• 34:35
  Speaker 8: there's great technologies out there, whether it's you know, letting
• 34:38
  Speaker 8: trucks in and out and report a lot quicker, and
• 34:41
  Speaker 8: that's not only good for port throughput, but it's also
• 34:44
  Speaker 8: good for you know, if you want to take an
• 34:46
  Speaker 8: environmental standpoint, you know, you don't have.
• 34:48
  Speaker 9: A queue of trucks a mile long waiting to cut
• 34:51
  Speaker 9: into wait to get to the authority of New York.
• 34:52
  Speaker 7: All right, I got you.
• 34:53
  Speaker 3: Lead. Great stuff is always Lee Classical senior Transport Logistics
• 34:56
  Speaker 3: and Chipping Antos for Bloomberg Intelligence, giving us the latest
• 34:59
  Speaker 3: US stock worm go back to work as talks extended
• 35:02
  Speaker 3: to January. That is good news.
• 35:05
  Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 35:09
  Speaker 2: weekdays at ten am Eastern on applecar Play and Android
• 35:13
  Speaker 2: Otto with the Bloomberg Business app. You can also listen
• 35:16
  Speaker 2: live on Amazon Alexa from our flagship New York station
• 35:19
  Speaker 2: just Say Alexa playing Bloomberg eleven thirty.
• 35:23
  Speaker 3: All right, let's talk about electric vehicles, and you talk
• 35:26
  Speaker 3: about electric vehicles, I feel like you got to talk
• 35:28
  Speaker 3: about tariffs, because it seems like everybodys slapping tariffs on
• 35:30
  Speaker 3: everybody else's EV's, particularly the ones coming out of China.
• 35:33
  Speaker 6: The EU.
• 35:33
  Speaker 3: The latest he announces that they're imposed some tariffs of
• 35:36
  Speaker 3: up to forty five percent on Chinese electric vehicles. How
• 35:40
  Speaker 3: big of a deal is this for that market? David
• 35:42
  Speaker 3: Weltz joins is Bloomberg Detroit Bureau chief. So if I'm
• 35:46
  Speaker 3: a Chinese EV, I mean, am I welcome anywhere on
• 35:49
  Speaker 3: this planet outside of China? What's going on there? David?
• 35:53
  Speaker 10: So far, they've had growth in Brazil, not just TV's
• 35:56
  Speaker 10: but Chinese car makers in general. In the Bazilian government
• 35:59
  Speaker 10: hasn't he at them yet. But yeah, look, the Chinese
• 36:04
  Speaker 10: benefited greatly from American, Japanese, Korean, European companies going to
• 36:08
  Speaker 10: their market, and we split the profits with them, We
• 36:11
  Speaker 10: gave them our technology, and you know, now there, you
• 36:15
  Speaker 10: know a lot is happening that's squeezing out all those
• 36:18
  Speaker 10: foreign interlopers. And they have tons of excess capacity in China.
• 36:22
  Speaker 10: I mean we're talking tens of millions of vehicles and
• 36:25
  Speaker 10: access capacity, and they don't want to lay Chinese workers
• 36:28
  Speaker 10: off the governments. They are willing to absorb some losses,
• 36:31
  Speaker 10: but they want to turn the country into a giant
• 36:33
  Speaker 10: export base. That of course would be at the expense
• 36:36
  Speaker 10: of everybody making and selling vehicles in the US, in Europe,
• 36:41
  Speaker 10: Southeast Asia, where Toyota does a lot of business. So yeah,
• 36:45
  Speaker 10: everybody feels threatened by this. The Chinese government subsidizes its
• 36:49
  Speaker 10: companies in other ways like free land, paying for factories,
• 36:53
  Speaker 10: funding R and D, and you know, the government's local
• 36:58
  Speaker 10: and national owned some of these companies, and they're willing
• 37:00
  Speaker 10: to absorbble losses while they all go for market ship.
• 37:03
  Speaker 10: They're getting subsidies in every way possible. And you know,
• 37:07
  Speaker 10: the foreign governments are saying, enough is enough here, and
• 37:11
  Speaker 10: we're not going to just give our car market away
• 37:12
  Speaker 10: to a Chinese export giant.
• 37:15
  Speaker 4: So why is the EU voting to impose these tariffs now?
• 37:19
  Speaker 4: Bring us up to speeding kind of the context here
• 37:22
  Speaker 4: and the relationship between the EU and China.
• 37:26
  Speaker 10: Yeah, the EU years ago decided diesel wasn't their thing
• 37:31
  Speaker 10: for clean air, and they really pushed for adoption of
• 37:33
  Speaker 10: VS and the Chinese seized on that and they've been
• 37:37
  Speaker 10: growing a lot of market share in all the different
• 37:40
  Speaker 10: European markets within the EU, and that does hurt the
• 37:44
  Speaker 10: domestic companies. Interestingly, with this vote, Germany voted against it,
• 37:50
  Speaker 10: which I thought was kind of fascinating in the sense
• 37:52
  Speaker 10: that this sounds like a very tactical vote by the
• 37:55
  Speaker 10: Germans because they probably knew that there'd be enough votes
• 37:59
  Speaker 10: to implement the terriff. By voting against it, they signal
• 38:03
  Speaker 10: to China that they're they're open for business and they
• 38:08
  Speaker 10: need that because Volkswagen, Mercedes and BMW are big players
• 38:12
  Speaker 10: in the Chinese market and they don't want to be
• 38:14
  Speaker 10: penalized there for what the EU governments are doing.
• 38:17
  Speaker 3: Interesting, So if I am a Western automaker, you know,
• 38:21
  Speaker 3: whether it's Volkswagen or Afford David, what do I How
• 38:25
  Speaker 3: do I think about the Chinese market? Is that an
• 38:26
  Speaker 3: opportunity for me? Is that more of a risk here?
• 38:31
  Speaker 10: Look, it's it's going away, and okay, I think it's
• 38:35
  Speaker 10: a matter of time before the Western companies are mostly
• 38:38
  Speaker 10: squeezed out. I mean, you know, you have two factors
• 38:41
  Speaker 10: or played. One is the Chinese product. The domestic products
• 38:43
  Speaker 10: a very good so it's tough to compete there. They
• 38:46
  Speaker 10: have a cost advantage because of the subsidies, but also
• 38:49
  Speaker 10: because labor is cheap. Arguably Western companies enjoy some of
• 38:53
  Speaker 10: that which is cheap labor, but they don't necessarily benefit
• 38:58
  Speaker 10: from all the government subsidies and money for factories, money
• 39:02
  Speaker 10: for R and D and so forth. But the Chinese
• 39:05
  Speaker 10: government is increasingly pressuring people by domestic and the product
• 39:08
  Speaker 10: is that. So you're seeing market share losses from everybody.
• 39:11
  Speaker 10: GM's market share is down by a third, Volkswagen that's
• 39:14
  Speaker 10: taken hit. Hyundai's down like eighty percent because there was
• 39:17
  Speaker 10: tension between the Korean soft marene government and China's government
• 39:20
  Speaker 10: in the South China Sea a couple of years ago,
• 39:22
  Speaker 10: and then suddenly nobody wanted to buy Hyundais and Kyas
• 39:26
  Speaker 10: in China. So you see a lot of these domestic
• 39:29
  Speaker 10: pressures in China against foreign name plates, and it's just
• 39:33
  Speaker 10: tough and tougher for everyone to new business there.
• 39:35
  Speaker 3: All right, David, thanks so much for joining us. I
• 39:37
  Speaker 3: always appreciate getting your reporting and your perspective. David Wellchi's
• 39:40
  Speaker 3: a Detroit bureau chief for Bloomberg News. Again, kind of
• 39:45
  Speaker 3: some concerted effort on a part of some of these
• 39:46
  Speaker 3: Western countries in a form of terraffs against the Chinese
• 39:50
  Speaker 3: electric vehicles, a competitive market. To be short in developing
• 39:55
  Speaker 3: story to be short.
• 39:56
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