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What the November jobs report means for rate cuts · The Financial Exchange Show

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  Speaker 1: Chuck ZATDA and Mike Armstrong.
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  Speaker 2: Chuck Mike Entucker with you on a Jobs Friday here
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  Speaker 2: and at eight thirty am this very morning, in fact,
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  Speaker 2: we got the release of the Employment Situation Report from
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  Speaker 2: the Bureau of Labor Statistics, which is very nicely nestled
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  Speaker 2: inside the US Department of Labor. It's it's very cute,
• 1:35
  Speaker 2: the little setup they have there, is it. I have
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  Speaker 2: no clue. It's like a nesting Russian nesting doll. Yes,
• 1:41
  Speaker 2: it's it's the American dol version of that got it
• 1:46
  Speaker 2: so much more utilitarian, you know, It's it's not as
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  Speaker 2: artfully designed, sure, but that's that's how I envisioned the
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  Speaker 2: BLS at least. And what we saw two hundred and
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  Speaker 2: twenty seven thousand jobs created estimates were you know, generally,
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  Speaker 2: the range that I saw for consensus estimates, depending on
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  Speaker 2: what consensus you were looking at, was between two hundred
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  Speaker 2: and two hundred and twenty thousand. So this is you know,
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  Speaker 2: the high end there, but not a huge one.
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  Speaker 3: We say yesterday one seventy five to two fifty somewhere
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  Speaker 3: in that general range.
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  Speaker 2: You're right in there, so you're you're fine on that
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  Speaker 2: side of things. The unemployment rate did take up to
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  Speaker 2: four point two percent, and so those are the headline
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  Speaker 2: numbers that everyone is going to.
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  Speaker 3: Report other key pieces. Last month was pretty bad. They
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  Speaker 3: revised those data up a little bit, but not substantially.
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  Speaker 3: So the revised numbers for September, in fact, two hundred
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  Speaker 3: and fifty five thousand jobs were created, that up by
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  Speaker 3: what twenty some one thousand, and then October was revised
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  Speaker 3: up to thirty six thousand. So we talked about October.
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  Speaker 3: October was a hot mess both for collection as well
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  Speaker 3: as hiring because of hurricanes striking the southeastern United States.
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  Speaker 3: With this report, we seem to be confirming that that
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  Speaker 3: was more hurricane related than anything else. When you take
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  Speaker 3: the three month average now of what we've seen here,
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  Speaker 3: you're sitting at one hundred and seventy three thousand jobs created,
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  Speaker 3: which is a touch hotter than you've seen for the
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  Speaker 3: rest of this year.
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  Speaker 2: And I think that again, the headline numbers, if you
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  Speaker 2: look at them, the job creation number of two twenty seven, Okay,
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  Speaker 2: that's that's fine. It shows, you know, a nice bounce
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  Speaker 2: back and making up for the week number in October.
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  Speaker 2: The unemployment rate number, we need to dig in on
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  Speaker 2: a little bit because this is where I start to
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  Speaker 2: look at the report, and as I look through it,
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  Speaker 2: I kind of go, this might be a little bit
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  Speaker 2: worse than is being led on by the headline numbers
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  Speaker 2: here for a couple of reasons.
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  Speaker 3: So to be clear, the unemployment rate spiked up to
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  Speaker 3: four point three. It was it in June or July
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  Speaker 3: this year. It is one of those two months August. Okay, August,
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  Speaker 3: August we hit four to three. We had since come
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  Speaker 3: down to four to one, and today we bumped back
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  Speaker 3: up according to data release today. In November we bumped
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  Speaker 3: up to four point two percent. So what's catching your eye?
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  Speaker 2: So couple things on this. The first is that unemployment rate.
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  Speaker 2: It's the second month in a row that it's gotten
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  Speaker 2: lucky because of rounding, the unrounded number is four point
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  Speaker 2: two four six, so it missed being four point three
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  Speaker 2: by point zero five percent. So that's the first thing
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  Speaker 2: that you see. I'm sorry, point zero zero five percent,
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  Speaker 2: So it missed by like eight people saying they were unemployed.
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  Speaker 2: So there's you know, there's something there where Hey if
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  Speaker 2: that happened, this would look a little bit worse. The
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  Speaker 2: other piece is that in the last two months, the
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  Speaker 2: labor force participation rate, which is what the unemployment rate
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  Speaker 2: is calculated off of, has declined from sixty two point
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  Speaker 2: seven to sixty two point five. So if you simply
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  Speaker 2: held the labor force participation rate the same saying the
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  Speaker 2: same number of people are participating in the labor force unemployment,
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  Speaker 2: unemployment looks like it's four to four potentially heading to
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  Speaker 2: four to five right now. And that's a very different
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  Speaker 2: picture than the unemployment rate sitting at four point two.
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  Speaker 2: So that to me is something where I say, Okay,
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  Speaker 2: there's there's something that is a little bit concerning there
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  Speaker 2: is it? Quite honestly, if the if the unemployment rate
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  Speaker 2: right now was four or five, I probably would be saying, yeah,
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  Speaker 2: there's a real problem here, because that's up from three
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  Speaker 2: point seven percent a year ago. Like that, that's a
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  Speaker 2: meaningful rise in unemployment, and other than a one or
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  Speaker 2: two month interruption, it's been a pretty consistent trend. So
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  Speaker 2: there there's a problem. There Is it a five alarm fire, No,
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  Speaker 2: but it's it's a one to two alarm like that,
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  Speaker 2: there's a real issue that you have on that side.
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  Speaker 3: Of things, and if it once again sounds like we
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  Speaker 3: are contradicting ourselves in some way, shape or form, because
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  Speaker 3: I just got done telling you that, hey, we created
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  Speaker 3: over two hundred thousand jobs. The revisions from September and
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  Speaker 3: October were pass You've averaged one hundred and seventy some
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  Speaker 3: odd thousand jobs created over the last three months now,
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  Speaker 3: which is a very normal and healthy pace of job creation.
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  Speaker 3: It's because they do contradict themselves. They're two separate surveys,
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  Speaker 3: and we talk about this frequently, but I think it's
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  Speaker 3: worth reminding folks that the survey that talks about unemployment,
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  Speaker 3: you're talking to households. You're going around, You're surveying a
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  Speaker 3: few thousand different individuals and asking them are they working,
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  Speaker 3: are they looking for work?
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  Speaker 2: Yes? Or no?
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  Speaker 3: Separately, they're asking a bunch of business owners and HR departments,
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  Speaker 3: did you hire people last month? If so, how many
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  Speaker 3: of them did you hire? And getting an estimate of
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  Speaker 3: how many jobs were created. They're two separate surveys that
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  Speaker 3: we use, and once again, they're indicating slightly different things.
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  Speaker 3: I don't think that they are completely sending opposite signals.
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  Speaker 3: But they're sending slight contradictions here with unemployment ticking up,
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  Speaker 3: fewer people looking for work, and that's tough to put
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  Speaker 3: together with one hundred and seventy five thousand on average
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  Speaker 3: jobs created over the last three months.
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  Speaker 2: Other things that are problematic here. The number of people
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  Speaker 2: that have been on unemployment for twenty seven weeks and
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  Speaker 2: over continues to increase. Went from one point six million
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  Speaker 2: to one point sixty six It's also up from one
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  Speaker 2: point to two million in the last year, so we've
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  Speaker 2: seen expansion of long term unemployment by about four hundred
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  Speaker 2: thousand people. So the overall total number of unemployed people
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  Speaker 2: is moving up, you know, modestly, but they're kind of
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  Speaker 2: coalescing in that long term unemployment area, which speaks to
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  Speaker 2: what we're seeing in the Joltz report that we got
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  Speaker 2: earlier this week, which is, yeah, if you have a job,
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  Speaker 2: you're not really being laid off, but once you are unemployed,
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  Speaker 2: it's taking you longer to find a job because the
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  Speaker 2: hiring rate is dropping into an area that's a little
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  Speaker 2: bit concerning as well, kind of mid you know, twenty
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  Speaker 2: fourteen twenty fifteen levels to give you a sense of
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  Speaker 2: where things are on that front. Other data that we're
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  Speaker 2: seeing here when you look at the Establishment survey, like
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  Speaker 2: where are the jobs actually being created, They're not being
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  Speaker 2: created in large numbers in construction at this point. Ten
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  Speaker 2: thousand construction jobs added this month after two thousand last months.
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  Speaker 2: So you didn't see some giant bounce back in construction
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  Speaker 2: even after construction got back to work in the Southeast
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  Speaker 2: after the hurricanes. It's kind of okay, we're you know,
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  Speaker 2: moving ahead there, but nothing huge. It really is places
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  Speaker 2: like leisure and hospitality with another fifty three thousand jobs created,
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  Speaker 2: Financial services seventeen thousand jobs created, healthcare and social assistance
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  Speaker 2: seventy two thousand jobs created. You know, that's that's where
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  Speaker 2: you're seeing seeing this, you know, really happening, and that
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  Speaker 2: equates to you know, seventy seventy five percent of the
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  Speaker 2: job creation for the month coming in. You know, those
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  Speaker 2: areas there other things that are of note. Wage growth
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  Speaker 2: point four percent for the month, a little bit hotter
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  Speaker 2: than you'd like to see ideally, like to see kind
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  Speaker 2: of in that point three range. That's what we've seen historically.
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  Speaker 2: And the aggregate payrolls number, what I use, is a
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  Speaker 2: nice proxy for kind of overall like total income in
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  Speaker 2: the US, aggregate payrolls. Just a reminder on it. Take
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  Speaker 2: the job growth over the last year and combine it
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  Speaker 2: with the wage growth, and what you end up with is, hey,
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  Speaker 2: how much your company's having to pay out as far
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  Speaker 2: as salaries simply because that's that's how it works. It's
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  Speaker 2: how many jobs are you adding and how much more
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  Speaker 2: are you paying your people? Aggregate wage growth right now
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  Speaker 2: or aggregate payroll growth coming in at five point one
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  Speaker 2: percent for the last year, it's a pretty good number
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  Speaker 2: pre pandemic, like in twenty you know, fifteen through twenty nineteen,
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  Speaker 2: that's what you were seeing was was, you know, kind
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  Speaker 2: of four eight to five three. So five' one is fine.
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  Speaker 2: That number has been coming down over the last year
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  Speaker 2: or so, but we're starting to see some stability in
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  Speaker 2: that five percent range. Take sorry, go ahead, now you're fine.
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  Speaker 2: Big takeaways on this first, if you're grading this report out,
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  Speaker 2: just you know, kind of as an individual one be minus.
• 9:56
  Speaker 2: It's fine, but there's some concerning stuff in there. Okay,
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  Speaker 2: you know it's not bad, it's above average, but you
• 10:03
  Speaker 2: gotta watch it. And that's why I give it a
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  Speaker 2: B minus instead of like a B plus if you
• 10:09
  Speaker 2: do want to, you know, talk a little bit and
• 10:11
  Speaker 2: why don't we actually take a quick break here and
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  Speaker 2: when we come back to talk a little bit about
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  Speaker 2: this in the context of the FED and what it
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  Speaker 2: means about the job they've done to this point and
• 10:20
  Speaker 2: the job they have to do heading into next year.
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• 11:15
  Speaker 3: Chuck, I know we want to move to the FED
• 11:17
  Speaker 3: and their potential reaction to this. I want to just
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  Speaker 3: once again try and describe this labor market, because I
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  Speaker 3: hear descriptions of it that range considerably depending on what
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  Speaker 3: part of the country you live in and what industry
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  Speaker 3: you're in. But I keep concluding that we describe this
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  Speaker 3: one as healthy but stagnant. I think is where I
• 11:38
  Speaker 3: keep going to and what I keep hearing from people,
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  Speaker 3: and I think the reason you have to describe.
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  Speaker 2: It as healthy.
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  Speaker 3: By the way, I'll just use one statistic instead of
• 11:47
  Speaker 3: trying to summarize a bunch of them. And we've talked
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  Speaker 3: about this one frequently, the employment to population ratio, specifically
• 11:53
  Speaker 3: for twenty five to fifty.
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  Speaker 2: Four year olds. This is another concerning one here.
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  Speaker 3: I agree, yeah, it's experiencing a downturn, but for the
• 12:00
  Speaker 3: most recent reading, it sat at eighty point four percent.
• 12:04
  Speaker 3: The concerning piece I'm guessing for you is that as
• 12:06
  Speaker 3: of September it was sitting at nearly eighty one percent. Yeah,
• 12:09
  Speaker 3: I mean, you've got You've had a half percentage point
• 12:12
  Speaker 3: downtick in the last two months.
• 12:15
  Speaker 2: Here, So is that a trend? Will it continue? Let
• 12:19
  Speaker 2: me also just talk about like why that's potentially concerning,
• 12:23
  Speaker 2: is that if you look at previous recessions, just as
• 12:28
  Speaker 2: an example, during the let's look at like the last
• 12:33
  Speaker 2: forty years, because I don't really think the nineteen sixty
• 12:36
  Speaker 2: one recession is relevant. Sure here, Like it's just kind
• 12:39
  Speaker 2: of a different labor force early nineteen eighties. You saw
• 12:43
  Speaker 2: during the eighty one into eighty two recession, the prime
• 12:47
  Speaker 2: age labor force participation rate went from seventy five to
• 12:50
  Speaker 2: one all the way down to seventy two to eight,
• 12:52
  Speaker 2: so about a two percentage point decline. You then take
• 12:55
  Speaker 2: a look at early nineteen nineties SNL crisis, Gulf War,
• 12:59
  Speaker 2: things like that. You saw a decline start in February
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  Speaker 2: of ninety, a few months before the recession, and it
• 13:05
  Speaker 2: didn't stop until several months after, and again declined by
• 13:09
  Speaker 2: about two and a half percent. You go up to
• 13:12
  Speaker 2: two thousand and the tech bubble. You started seeing a
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  Speaker 2: decline in April of two thousand from about eighty one
• 13:17
  Speaker 2: point nine percent. It bottomed in January of three. Actually no, sorry,
• 13:22
  Speaker 2: it didn't bottom fully until September of three seventy eight
• 13:25
  Speaker 2: point six percent, a drop of like three and a half.
• 13:28
  Speaker 2: You take a look at the financial crisis peak, there
• 13:33
  Speaker 2: was about eighty point three percent in January of seven.
• 13:36
  Speaker 2: By the time you got through the financial crisis in
• 13:39
  Speaker 2: December of nine, it was down to seventy four point seven,
• 13:41
  Speaker 2: so that was a big one. Again, like a five
• 13:43
  Speaker 2: percent shift there. When you start seeing half a percent
• 13:47
  Speaker 2: shifts in two months, you kind of look at and
• 13:51
  Speaker 2: you go you don't normally see this. It's likened some
• 13:55
  Speaker 2: kind of major issue.
• 13:56
  Speaker 1: Though.
• 13:56
  Speaker 2: The last time we saw something like this, by the way,
• 13:58
  Speaker 2: there were two instances in the twenty ten's. One was
• 14:01
  Speaker 2: in twenty eleven Euro debt crisis, and remember everyone was
• 14:04
  Speaker 2: concerned with double dip recession. Then the other one was
• 14:06
  Speaker 2: in twenty thirteen, where we had some similar recessionary concerns
• 14:10
  Speaker 2: towards the end of the year, even though the year
• 14:12
  Speaker 2: as a whole was pretty good for markets and the economy.
• 14:15
  Speaker 2: So it's not something that you see all the time.
• 14:18
  Speaker 2: And granted it's a two month trend, so it's a
• 14:21
  Speaker 2: short one, yeah, but it's hey, if this continues in
• 14:24
  Speaker 2: the December and January data, Yeah, if you're under eighty. Boy,
• 14:28
  Speaker 2: we've got something to be a little bit concerned about that.
• 14:30
  Speaker 3: Yeah, again, and why you have to contextualize it as
• 14:33
  Speaker 3: still healthy though, even with these declines, because they've declined
• 14:36
  Speaker 3: to a rate right eighty point four percent of prime
• 14:39
  Speaker 3: age workers are employed today according to the survey, that's
• 14:43
  Speaker 3: higher than any time from two thousand and one right
• 14:47
  Speaker 3: through twenty nineteen.
• 14:49
  Speaker 2: It's a healthier job market.
• 14:51
  Speaker 3: Like even right before the Great Recession, we didn't get
• 14:54
  Speaker 3: to where we are right now. So that's where I
• 14:56
  Speaker 3: have to contextualize it all. Yeah, we got a little
• 14:58
  Speaker 3: bit higher during COVID, we got a little but higher
• 15:00
  Speaker 3: in the early twenty twenties right.
• 15:02
  Speaker 2: Before COVID struck.
• 15:03
  Speaker 3: But other than that, we haven't been at these levels
• 15:05
  Speaker 3: of prime age employment since the dot com bubble.
• 15:08
  Speaker 2: So we've got that going on here. Now, let's talk
• 15:10
  Speaker 2: a little bit about this in the context of the FED.
• 15:15
  Speaker 2: We said at the beginning of this year that ultimately
• 15:19
  Speaker 2: this year was gonna be the one where you give
• 15:21
  Speaker 2: the FED a scorecard and hey, did they achieve the
• 15:23
  Speaker 2: soft landing or not? And the benchmark on that was, hey,
• 15:27
  Speaker 2: did you keep unemployment below four and a half percent,
• 15:30
  Speaker 2: and did you keep inflation below four and a half percent,
• 15:33
  Speaker 2: did you see any rebounds back into those areas? The
• 15:36
  Speaker 2: answer was no, you did not. And so again, I
• 15:38
  Speaker 2: know there's one more CPI to go, but look, it's
• 15:41
  Speaker 2: it's I can't officially call it till January, but we
• 15:43
  Speaker 2: got the soft landing. I'm gonna call it like CPI
• 15:47
  Speaker 2: is not gonna print, you know, two percent for the
• 15:50
  Speaker 2: month of December alone.
• 15:52
  Speaker 3: Likewise, unemployments not likely to spike up over four and
• 15:55
  Speaker 3: a half percent in December.
• 15:56
  Speaker 2: We're just not gonna get there. The unemployment piece that
• 15:59
  Speaker 2: there's a chance that it could, but I'm basically gonna
• 16:03
  Speaker 2: call it here. Guys, the Fed got the soft landing.
• 16:06
  Speaker 2: They wanted sure, anything that happens from here, yes, it's
• 16:11
  Speaker 2: still may be reflective of FED policy, but the Fed's
• 16:14
  Speaker 2: in a cutting cycle right now. And so if you
• 16:18
  Speaker 2: end up with you know, a recession in November of
• 16:22
  Speaker 2: next year, or if unemployment gets up to four and
• 16:25
  Speaker 2: a half in you know, April or May of next year, guys,
• 16:29
  Speaker 2: that the hiking cycle that started, you know, almost three
• 16:33
  Speaker 2: years ago now is not something that you can point
• 16:36
  Speaker 2: to and say, yeah, that was a direct cause of
• 16:38
  Speaker 2: that it's it's much more. Hey, the economies continued to
• 16:41
  Speaker 2: evolve in things along those lines, and ultimately economies always,
• 16:47
  Speaker 2: you know, end up seeing some kind of slowing at
• 16:49
  Speaker 2: something like that. They don't just grow forever. It's not possible.
• 16:53
  Speaker 2: And I think you have to give the Fed a
• 16:56
  Speaker 2: good amount of credit for being able to pull this off.
• 17:00
  Speaker 2: And I say this again anyone who's been listening to
• 17:02
  Speaker 2: the show knows. Look, we ripped on them plenty in
• 17:04
  Speaker 2: twenty two and even for you know, good chunk of
• 17:06
  Speaker 2: twenty three. But you do have to give them credit
• 17:09
  Speaker 2: where credits due when that, Hey, they have prevented unemployment
• 17:13
  Speaker 2: from rising the way that it typically would in order
• 17:15
  Speaker 2: to get inflation down to this point and inflation is
• 17:19
  Speaker 2: not rebounded to the rate that would be concerning. Again,
• 17:23
  Speaker 2: all they need to do right like this is they
• 17:26
  Speaker 2: succeeded at their only objective this time around. Did they make.
• 17:30
  Speaker 3: Mistakes before, yes, we've criticized them for such, but during
• 17:34
  Speaker 3: this cycle, which started in twenty twenty two, they kind
• 17:38
  Speaker 3: of nailed it. They nailed the back half of it,
• 17:42
  Speaker 3: the front end left something to be desired.
• 17:44
  Speaker 2: Yeah, they heightd too sly, Yeah, they hiked way too slowly,
• 17:47
  Speaker 2: and quite honestly, probably like four to six months too late.
• 17:50
  Speaker 3: They were purchasing bonds way too late. They were doing
• 17:52
  Speaker 3: a bunch of things on that way up that I
• 17:55
  Speaker 3: think has been troubling. But you know, for the last
• 17:58
  Speaker 3: two years, I can't really think much in the way
• 18:00
  Speaker 3: of criticism, and you can't argue with the results.
• 18:05
  Speaker 2: You can think of this this hiking cycle now into
• 18:07
  Speaker 2: the cutting cycle. It's kind of a come from behind
• 18:09
  Speaker 2: victory for the FED. You know, it was they were
• 18:11
  Speaker 2: down twenty eight to three to the Falcons. Things were
• 18:13
  Speaker 2: looking pretty darn bad for them, and they pulled one
• 18:18
  Speaker 2: out here, like they I gotta give them credit for that.
• 18:21
  Speaker 2: Atlanta is never gonna er our show, are they.
• 18:24
  Speaker 3: So as we look into December eighteenth meeting, here we
• 18:28
  Speaker 3: have a ninety and a half percent probability of another
• 18:31
  Speaker 3: quarter point rate hike. This jobs report was kind of
• 18:34
  Speaker 3: the last thing we were and there's another CPI report,
• 18:36
  Speaker 3: but this was one of the last data points that
• 18:38
  Speaker 3: FED would be looking at as part of that meeting,
• 18:40
  Speaker 3: and so that seems fairly locked in. The big question
• 18:44
  Speaker 3: remains what comes in twenty twenty five, and then you
• 18:47
  Speaker 3: know more for everyday people out there, What do the
• 18:49
  Speaker 3: longer term rates do as a result of economic thinking.
• 18:53
  Speaker 2: Along those lines? You got ten seconds to give an
• 18:55
  Speaker 2: answer on this, Paul and I did this on Wednesday.
• 18:58
  Speaker 2: What do you think the highest is that thirty year
• 19:00
  Speaker 2: fixed rate mortgage hits next year? What do you think
• 19:02
  Speaker 2: the lowest is that it hits.
• 19:04
  Speaker 3: I think we're already at the highs and I think
• 19:07
  Speaker 3: it gets down to six and a half percent, So.
• 19:10
  Speaker 2: You think we're gonna be in a really tight range,
• 19:11
  Speaker 2: like six ' nine to sixty five. Yeah, all right, Tucker,
• 19:14
  Speaker 2: you can put that on the board. Let's take a
• 19:16
  Speaker 2: quick break here. We got Wall Street Watch next.
• 19:32
  Speaker 1: Like us on Facebook and follow us on Twitter at
• 19:35
  Speaker 1: TFE show. Breaking business news is always first right here
• 19:40
  Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
• 19:45
  Speaker 1: Street Watch. A complete look at what's moving markets so
• 19:48
  Speaker 1: far today right here on the Financial Exchange Radio Network.
• 19:52
  Speaker 4: Well markets are in positive territory? Is Wall Street reacts
• 19:55
  Speaker 4: to the November Jaws report posted this morning. We're two
• 19:58
  Speaker 4: hundred and twenty seven jobs were added last month, better
• 20:02
  Speaker 4: than expectations of two hundred and twenty thousand. The unemployment
• 20:06
  Speaker 4: rate also ticked slightly higher to four point two percent.
• 20:10
  Speaker 2: Right now, the.
• 20:11
  Speaker 4: Dow is up by thirty five points, SMP five hundred
• 20:14
  Speaker 4: is up by about a third of a percent, or
• 20:16
  Speaker 4: twenty points, and the Nasdaq is up nearly three quarters
• 20:19
  Speaker 4: of a percent or one hundred and thirty six points.
• 20:21
  Speaker 4: Russell two thousand is up by about a half a
• 20:23
  Speaker 4: percent or thirteen points. Tenure Treasure Reel down by two
• 20:27
  Speaker 4: basis points of four point one five percent, and crude
• 20:31
  Speaker 4: oil down nearly two percent, rating just above sixty seven
• 20:36
  Speaker 4: dollars a barrel. Lululemon share is jumping by sixteen percent
• 20:41
  Speaker 4: after the athletic apparel retailer beat street expectations for its
• 20:45
  Speaker 4: fiscal third quarter and also raised its annual outlook, citing
• 20:49
  Speaker 4: a strong start to the holiday season. Meanwhile, DocuSign shares
• 20:53
  Speaker 4: surging by twenty three percent after the E signature company
• 20:57
  Speaker 4: lifted forecast for key full year financial measures after business
• 21:01
  Speaker 4: improved in the previous quarter. Elsewhere, Ultra Beauty beat third
• 21:05
  Speaker 4: quarter earnings and revenue expectations, where the cosmetics retailer also
• 21:09
  Speaker 4: hiked its forecast for the full year. Alta stock is
• 21:13
  Speaker 4: up by ten percent. Victoria's Secret up by six percent
• 21:16
  Speaker 4: after beating quarterly expectations and raising its full year outlook.
• 21:20
  Speaker 4: Get Lab shares up by three percent after the developer
• 21:24
  Speaker 4: tools software maker beat third quarter earning X and revenue
• 21:27
  Speaker 4: forecasts and also named a new CEO, and AMC Entertainment
• 21:31
  Speaker 4: shares down by over eight percent after the movie theater
• 21:34
  Speaker 4: chain agreed to sell up to fifty million shares. This
• 21:37
  Speaker 4: comes after meme stock trader Roaring Kitty posted to X yesterday,
• 21:42
  Speaker 4: sending shares of both AMC and game Stop up by
• 21:44
  Speaker 4: about six percent on Thursday. I'm Tucker Silvan, that's Wall
• 21:48
  Speaker 4: Street watch.
• 21:50
  Speaker 2: So sick of roring Kitty already? We should just not
• 21:54
  Speaker 2: talk about him. It's just it's done. It's just like yea,
• 21:58
  Speaker 2: his time has played out. He's made hundreds of million dollars.
• 22:00
  Speaker 2: Let's just let it go. Also, we have some breaking
• 22:04
  Speaker 2: news out of Let's see. I think this is New York.
• 22:09
  Speaker 2: I don't know where it happened exactly.
• 22:11
  Speaker 4: I saw it come across from Bloomberg first.
• 22:15
  Speaker 2: You saw Bloomberg. Yes, so Bloomberg maybe has the original
• 22:19
  Speaker 2: reporting on this that the TikTok ban was upheld by
• 22:24
  Speaker 2: an appeals court and so they are now facing a
• 22:27
  Speaker 2: ban of operations in the United States. If they do
• 22:31
  Speaker 2: not meet a January nineteenth deadline to sell TikTok.
• 22:36
  Speaker 3: One would assume that they can now appeal this to
• 22:39
  Speaker 3: the US Supreme Court and further delay it.
• 22:43
  Speaker 2: They probably can appeal it to the Supreme Court, who
• 22:47
  Speaker 2: is probably going to make a very quick ruling as
• 22:51
  Speaker 2: to whether or not they're going to take the case
• 22:53
  Speaker 2: because there is a time sensitive issue here. So again,
• 22:58
  Speaker 2: whether or not the Supreme Court ends up taking a
• 23:00
  Speaker 2: case or not, I think is an open question. But
• 23:03
  Speaker 2: you would likely have them trying to appeal this upward.
• 23:08
  Speaker 2: It's unknown if they would actually end up taking the case.
• 23:12
  Speaker 3: I know it's been banned in a few other places recently,
• 23:16
  Speaker 3: so in March of twenty three, New Zealand banded TikTok.
• 23:19
  Speaker 3: The United Kingdom banned TikTok from government workers. In Canada,
• 23:25
  Speaker 3: they banned TikTok from government issued devices.
• 23:29
  Speaker 2: India.
• 23:29
  Speaker 3: I know it's banned entirely. I'm trying to remember where
• 23:32
  Speaker 3: else it might have been seeing these trends play.
• 23:35
  Speaker 2: Out, I mean, that's quite a few major countries. It is.
• 23:38
  Speaker 3: Sorry, I miss I misspoke. In New Zealand, it's on
• 23:41
  Speaker 3: Parliament staff, not on a countrywide ban.
• 23:46
  Speaker 2: In any case. Look, guys, it's it's it's a social
• 23:51
  Speaker 2: media company owned by a Chinese company that, if asked
• 23:58
  Speaker 2: by the Chinese military, has to turn over information on
• 24:03
  Speaker 2: whatever is being requested. This is, but let's be on
• 24:07
  Speaker 2: it shouldn't be able to operate in the United States.
• 24:09
  Speaker 2: I'm one hundred percent with you.
• 24:10
  Speaker 3: I don't think it should, and I think that the
• 24:12
  Speaker 3: band should absolutely go forward unless they completely divest of
• 24:15
  Speaker 3: it and sell it to a US entity, which they've
• 24:17
  Speaker 3: said publicly that they are absolutely not going to do.
• 24:21
  Speaker 2: Massively disruptive right.
• 24:23
  Speaker 3: I did two interviews this morning with Vinnie Penn and Jimpilito,
• 24:26
  Speaker 3: and both of them mentioned tiktoks that they have done
• 24:28
  Speaker 3: or viewed over the last few months. Like this is
• 24:31
  Speaker 3: a huge piece of many people's lives right now and
• 24:35
  Speaker 3: it's going to be significantly disrupted. I'm kind of excited
• 24:37
  Speaker 3: about it, which part all of the people. Well, I
• 24:42
  Speaker 3: don't mean to wish misery around people, but I do
• 24:46
  Speaker 3: feel bad for the people who have successfully built a
• 24:48
  Speaker 3: business on it. I don't feel bad for the people
• 24:50
  Speaker 3: that are giving, you know, crap financial advice or the
• 24:53
  Speaker 3: ones that are like stopping foot traffic because they need
• 24:56
  Speaker 3: to film a dance video in front of people.
• 24:58
  Speaker 2: Here's the thing, though, go somewhere. But those like those
• 25:01
  Speaker 2: are not TikTok. Like if it wasn't on TikTok, it
• 25:04
  Speaker 2: would be somewhere else. It's not like TikTok made these problems.
• 25:08
  Speaker 2: So I don't know if any problem with people being
• 25:10
  Speaker 2: idiots on TikTok. People are idiots on every social platform,
• 25:14
  Speaker 2: and they're just going to migrate to a different right,
• 25:15
  Speaker 2: They'll go somewhere else. That's that's totally fine. The issue
• 25:19
  Speaker 2: is a national security one and that continues to be
• 25:22
  Speaker 2: the big one that I am focused on with this
• 25:25
  Speaker 2: in that if if TikTok parent company Byte Dance got
• 25:30
  Speaker 2: an order from the Chinese Communist Party that the PLA
• 25:34
  Speaker 2: who said, hey, you need to you know, change your
• 25:38
  Speaker 2: algorithms so that it starts showing Americans more of whatever
• 25:42
  Speaker 2: red peppers or you know, whatever the heck they want
• 25:45
  Speaker 2: to show us.
• 25:46
  Speaker 3: They can do so they have to do so. Yeah,
• 25:50
  Speaker 3: it's not that they can, they have to.
• 25:51
  Speaker 2: They are legally required in China to do so.
• 25:56
  Speaker 3: So take your bets. Divesture or well, the other thing
• 26:01
  Speaker 3: that's really interesting or banner no, like, will this actually
• 26:04
  Speaker 3: go forward? Here's the thing that's fascinating about this is
• 26:09
  Speaker 3: January nineteenth is kind of a big day, the last
• 26:12
  Speaker 3: day of the Biden administration. Twentieth Trump administration is in office,
• 26:16
  Speaker 3: and Trump during the last year, after meeting with one
• 26:21
  Speaker 3: of the financiers of TikTok, pivoted from his Remember the
• 26:26
  Speaker 3: Trump administration in his first term wanted to ban TikTok,
• 26:31
  Speaker 3: and then earlier in this year he came out and said, no,
• 26:35
  Speaker 3: I think it should be able to continue to operate.
• 26:37
  Speaker 3: Oh jeez, huh So who like does TikTok just delay
• 26:43
  Speaker 3: until the twentieth and be like, hey like this, you know,
• 26:46
  Speaker 3: we're just gonna wait and see what happens. But on
• 26:51
  Speaker 3: the by the same token, you sit there and you say, okay,
• 26:55
  Speaker 3: Like one of the main points of the Trump campaign is, hey,
• 26:58
  Speaker 3: we don't want to play quite as nice with China.
• 27:01
  Speaker 2: How do we how do we reconcile these two views?
• 27:06
  Speaker 3: It doesn't seem like it be a useful bargaining chip
• 27:09
  Speaker 3: for who for the Trump administration to say, hey, you know,
• 27:12
  Speaker 3: come to the negotiating table or we'll ban TikTok, Like,
• 27:15
  Speaker 3: I don't know, we'll ban a private business that.
• 27:19
  Speaker 2: I think it's a pretty useful bargaining chip, think so
• 27:22
  Speaker 2: direct access to hundreds of millions of Americans. Yeah, but
• 27:27
  Speaker 2: that's why you can't bargain over it. Well, I'm not
• 27:29
  Speaker 2: saying that you should bargain over it. I'm saying that,
• 27:31
  Speaker 2: like in theory, if you were willing to bargain over it,
• 27:34
  Speaker 2: it's a good bargaining.
• 27:35
  Speaker 3: You either believe that this is a national security threat
• 27:37
  Speaker 3: or you don't. Therefore you can't use it as a
• 27:39
  Speaker 3: bargaining I personally believe it's a national security threat. Similar to, hey,
• 27:44
  Speaker 3: we probably shouldn't allow Chinese corporations to be buying up
• 27:47
  Speaker 3: businesses right next to military bases and stuff like, there's
• 27:50
  Speaker 3: a whole laundry list we can go through.
• 27:52
  Speaker 2: Yeah, and TikTok is on that list in my opinion.
• 27:56
  Speaker 2: With you, let's see what were we going to talk? Productivity?
• 28:01
  Speaker 3: Before we got into that. Productivity, Yeah, it's good. Well
• 28:05
  Speaker 3: it's not only good, it's better than just about anywhere
• 28:07
  Speaker 3: else in the world.
• 28:08
  Speaker 2: No, but productivity in general is good. We bought it. Yeah, yeah,
• 28:11
  Speaker 2: productivity is it's great. Actually, we have. It's probably the.
• 28:14
  Speaker 3: Best thing you can get out of an economy, making
• 28:17
  Speaker 3: more stuff with the same number of hours. Kind of
• 28:20
  Speaker 3: what human advancement is all about exactly.
• 28:23
  Speaker 2: Hey, you figure out how to attach a whole bunch
• 28:26
  Speaker 2: of you know, fishing hooks to a big line out
• 28:29
  Speaker 2: in the middle of the ocean. Great, you can get
• 28:31
  Speaker 2: a whole bunch of swordfish in one fell swoop. That's
• 28:34
  Speaker 2: productivity instead of having to you know, cast out there,
• 28:37
  Speaker 2: and you know what are we gonna get? That is
• 28:39
  Speaker 2: productivity is doing more with less, more efficiently. The interesting
• 28:43
  Speaker 2: thing is, you note is for whatever reason, and no
• 28:47
  Speaker 2: one knows why, So like, don't try to make this
• 28:50
  Speaker 2: about like anything. This isn't about any of us. No
• 28:56
  Speaker 2: one knows why. The US is seeing increased rates of
• 28:58
  Speaker 2: productivity relative to every every other major developed country for
• 29:01
  Speaker 2: the last five years.
• 29:02
  Speaker 3: But over the past five years, quarterly year of a
• 29:04
  Speaker 3: year productivity grown at an average of two point one percent.
• 29:07
  Speaker 3: In Europe less than one percent since twenty fifteen, so
• 29:11
  Speaker 3: not the exact same time comparison. But and in Canada
• 29:15
  Speaker 3: annual productivity average barely better than zero percent since twenty nineteen,
• 29:19
  Speaker 3: which is the same five year period Does Canada have
• 29:22
  Speaker 3: access to artificial intelligence so far as you know, Chuck, Yes,
• 29:26
  Speaker 3: Do they have access to free markets?
• 29:30
  Speaker 2: Pretty darn similar.
• 29:31
  Speaker 3: Do they stimulate the economy in similar ways to the
• 29:35
  Speaker 3: United States over the last five years?
• 29:36
  Speaker 2: Yeah, pretty good.
• 29:39
  Speaker 3: There are next door neighbor and they are not experiencing
• 29:42
  Speaker 3: the same productivity with access to I would.
• 29:44
  Speaker 2: Argue the Canadian economy right now is borderline recessionary. Yeah,
• 29:48
  Speaker 2: it's kind of where a lot of people thought the
• 29:50
  Speaker 2: US economy would be right now. So a year ago,
• 29:53
  Speaker 2: it's tough for me to say, oh, we're seeing great
• 29:54
  Speaker 2: productivity growth and it's all on the back of artificial intelligence.
• 29:58
  Speaker 3: Well, Europe has access the same AI tools that we do. Sure,
• 30:02
  Speaker 3: so I don't. Yeah, Like you said, it's tough to
• 30:05
  Speaker 3: nail down what exactly is causing it. But it is
• 30:07
  Speaker 3: good to celebrate because it's the most important thing.
• 30:13
  Speaker 2: Productivity cures a lot of ills, but no one knows
• 30:17
  Speaker 2: how to generate it consistently, or at least productivity growth consistently.
• 30:22
  Speaker 2: Let's take a quick break here. When we come back,
• 30:25
  Speaker 2: let's talk a little bit about parents who say that
• 30:28
  Speaker 2: childcare problems are keeping them out of work and what
• 30:31
  Speaker 2: that situation looks like going forward.
• 30:34
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• 30:38
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• 30:41
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• 30:45
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• 32:08
  Speaker 2: Mike Apiece from acxios here. More parents say childcare problems
• 32:12
  Speaker 2: are keeping them out of work. This according to some
• 32:15
  Speaker 2: new research from the Federal Reserve Bank of Chicago, and
• 32:20
  Speaker 2: specifically the number of these childcare affected parents increase nineteen
• 32:25
  Speaker 2: percent from pre pandemic to present day.
• 32:28
  Speaker 3: So a survey of people saying that they can't work
• 32:31
  Speaker 3: because of the burdens of childcare, which everyone in this
• 32:36
  Speaker 3: room right now, Tucker, Chuck and myself can understand how
• 32:39
  Speaker 3: challenging that could be. My question would be, Chuck, though,
• 32:43
  Speaker 3: when we look at the aggregate data, does it really
• 32:46
  Speaker 3: support this.
• 32:49
  Speaker 2: View?
• 32:49
  Speaker 3: I guess when we're taking a look at things like
• 32:52
  Speaker 3: the percentage of women in the workforce right now compared
• 32:55
  Speaker 3: to twenty nineteen and other statistics. We're pretty much higher
• 33:00
  Speaker 3: on all of these compared to twenty nineteen. I guess
• 33:03
  Speaker 3: the question is how much better could we be doing
• 33:07
  Speaker 3: were childcare not as big an issue as it is.
• 33:10
  Speaker 2: I have some answers on that, do you. I? Well,
• 33:13
  Speaker 2: I think I have some answers on that. And for this,
• 33:16
  Speaker 2: we're going to look at what's called prime age employment
• 33:18
  Speaker 2: to population ratio or prime age epop. Okay, yes, Tucker,
• 33:24
  Speaker 2: why you gigglin? It's is I knew it was coming.
• 33:29
  Speaker 3: Chuck has an acronym for everything, yes epop, Yeah, which
• 33:33
  Speaker 3: is different from k pop, which is Korean pop music,
• 33:36
  Speaker 3: which is also fantastic.
• 33:37
  Speaker 2: Yeah. Let's talk a little bit about prime age epop. So,
• 33:41
  Speaker 2: in January of twenty twenty, just before the pandemic, if
• 33:44
  Speaker 2: you will, get overall, prime age EPOP was eighty point
• 33:48
  Speaker 2: five percent, So that meant that eighty point five percent
• 33:51
  Speaker 2: of people aged twenty five to fifty four were working.
• 33:53
  Speaker 2: When was that January of twenty Okay, just before the pandemic. YEP,
• 33:58
  Speaker 2: like literally the last data point you could look at YEP.
• 34:01
  Speaker 2: Today it's eighty point four, so it's it's basically in line.
• 34:06
  Speaker 2: If we look at it in broken down by gender,
• 34:09
  Speaker 2: for men before the pandemic, it was eighty six point
• 34:13
  Speaker 2: six today it's eighty six point one. For women, it
• 34:17
  Speaker 2: was seventy four point six today it's seventy four point eight.
• 34:19
  Speaker 2: So women are actually a little bit higher, men are
• 34:21
  Speaker 2: a little bit lower. And he end up basically in
• 34:23
  Speaker 2: the same spot in theory. Like let's say that no
• 34:28
  Speaker 2: one had to care for their own children, which is
• 34:31
  Speaker 2: a crazy world. But like again in theory, what can
• 34:34
  Speaker 2: you get to my guess is probably somewhere around ninety percent.
• 34:40
  Speaker 2: And the reason that I say that is because ultimately,
• 34:44
  Speaker 2: there are really three reasons that you are not working
• 34:48
  Speaker 2: in age twenty five to fifty four. Really four. The
• 34:51
  Speaker 2: first one and the most likely one, you're taking care
• 34:54
  Speaker 2: of kids, the biggest one, sure. The second piece is
• 34:58
  Speaker 2: you're going back for schooling master's degrees, med school, things
• 35:02
  Speaker 2: like that that still happened in your late twenties as
• 35:04
  Speaker 2: opposed to your early twenties. The third one is, hey,
• 35:08
  Speaker 2: you've made enough money or you worked in a certain
• 35:10
  Speaker 2: profession where you are forced to retire early. There are
• 35:13
  Speaker 2: you know, those professions that force you out at fifty
• 35:15
  Speaker 2: and stuff like that. The fourth would be illness and
• 35:18
  Speaker 2: disability yep. And the fourth would be illness and disability,
• 35:21
  Speaker 2: and the fifth would be screw it, I'm just not
• 35:24
  Speaker 2: working and I'm gonna figure it out. I'll just stay
• 35:25
  Speaker 2: on the couch a you know, my butt, which is
• 35:27
  Speaker 2: not a huge piece, but the biggest one is children, because,
• 35:31
  Speaker 2: like you look at all of the data, they ask
• 35:33
  Speaker 2: people like why this is, and it's generally children, And
• 35:36
  Speaker 2: so you could probably get this like the absolute theoretical
• 35:40
  Speaker 2: maximum if no one had to take care of their kids,
• 35:43
  Speaker 2: it's probably around ninety percent. But you're never going to
• 35:46
  Speaker 2: get there because you have to take care of your
• 35:50
  Speaker 2: own freaking kids at some point at least, like you
• 35:53
  Speaker 2: can't just pawn them off to someone else forever otherwise
• 35:56
  Speaker 2: they're not really your kids anymore except in name only.
• 35:59
  Speaker 3: And it's amazingly tricky to figure out, Okay, how much
• 36:03
  Speaker 3: more benefit would we received by how much more in
• 36:07
  Speaker 3: tax revenue and productivity would you get by providing something
• 36:11
  Speaker 3: like universal pre kindergarten.
• 36:13
  Speaker 2: I have no idea how to measure that.
• 36:15
  Speaker 3: You would certainly get more people in the labor force,
• 36:17
  Speaker 3: but how many more and what would it cost? Is
• 36:20
  Speaker 3: tricky to sort out.
• 36:22
  Speaker 2: I also, like, I give you a theoretical maximum. I'm
• 36:25
  Speaker 2: not sure if that's even like practically even if you
• 36:28
  Speaker 2: get there, because there might just be more people who
• 36:30
  Speaker 2: are like, no, I'm not going to go back to work.
• 36:32
  Speaker 2: I'm instead going to go and get additional schooling since
• 36:35
  Speaker 2: I don't have to care for the nineties. That's probably yeah,
• 36:40
  Speaker 2: that's like the theoretical red line.
• 36:43
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  Speaker 1: The proceeding was paid for and the views expressed are
• 37:37
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
• 37:39
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• 37:43
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• 37:46
  Speaker 2: I want to talk about this piece from the Boston Globe.
• 37:48
  Speaker 2: It's talking about Boston's housing crisis and saying, hey, we
• 37:50
  Speaker 2: invited a bunch of people up from Austin, Texas to
• 37:52
  Speaker 2: tell us what they did to fix their crisis. Could
• 37:54
  Speaker 2: at work here? Guess what they did. They allowed it
• 37:57
  Speaker 2: to be much easier to zone multifamily.
• 38:00
  Speaker 3: Oh so that works. Huh so, look it does. But
• 38:03
  Speaker 3: there's also some major differences.
• 38:05
  Speaker 2: Like Austin, Texas is three hundred and nineteen square miles
• 38:09
  Speaker 2: of land area. Yeah, Boston, Massachusetts is forty eight like that.
• 38:16
  Speaker 2: We can't just compare. They're not the same. They're fundamentally
• 38:20
  Speaker 2: different for you. And by the way, so you talk
• 38:22
  Speaker 2: about that and you say, okay, well, you know Austin
• 38:24
  Speaker 2: has more people. Yeah, Austin does have more people. It's
• 38:27
  Speaker 2: got nine hundred and seventy four thousand insteads six hundred
• 38:30
  Speaker 2: and seventy five. So Austin is eight times the size
• 38:33
  Speaker 2: of Boston and has twenty percent more people. Yeah, so
• 38:36
  Speaker 2: a few reasons, housings more. It's a lot easier to
• 38:39
  Speaker 2: solve that problem than the Boston one. I'm not saying
• 38:42
  Speaker 2: don't up zone and allow for more multi family construction.
• 38:46
  Speaker 2: I'm saying, unless you're gonna find Boston another two hundred
• 38:49
  Speaker 2: and sixty square miles of land area. Like, instead of
• 38:52
  Speaker 2: the Big dig, we could do the Big fill and
• 38:54
  Speaker 2: just fill in the Atlantic Ocean. That'd be kind of fun.
• 38:57
  Speaker 3: I also like the idea of the big fill, Like it's, hey,
• 39:00
  Speaker 3: twenty years ago, we dug just thinking about my very
• 39:03
  Speaker 3: small neighbor.
• 39:04
  Speaker 2: Now we're gonna fill that hole in the big one,
• 39:07
  Speaker 2: the Atlantic Ocean, and then put a new time zone
• 39:10
  Speaker 2: there for us because it's further east. Let's take a
• 39:13
  Speaker 2: quick break. We got more coming up after this.