Latest / Bloomberg Intelligence / China's Next Move In Trade War? Target U.S. Companies (Podcast)

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China's Next Move In Trade War? Target U.S. Companies (Podcast) · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul Sweene. You,
• 0:05
  Speaker 1: along with my co host Lisa Brahma wits each day
• 0:07
  Speaker 1: we bring you the most noteworthy and useful interviews for
• 0:10
  Speaker 1: you and your money. Whether at the grocery store or
• 0:12
  Speaker 1: the trading floor. Find a Bloomberg penl podcast on Apple
• 0:15
  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:17
  Speaker 1: at Bloomberg dot com. Time to check in with Bloomberg Opinion.
• 0:25
  Speaker 1: We're joined by Andy Brown, editorial director for the Bloomberg
• 0:28
  Speaker 1: New Economy. So, Andy, let's trade is right back on
• 0:32
  Speaker 1: the front burner for the market's given President Trump's treet
• 0:35
  Speaker 1: tweet yesterday. Just give us your sense of kind of
• 0:39
  Speaker 1: what we've experienced so far with the tariffs. Are the
• 0:42
  Speaker 1: tariffs working? Is it advancing our trade goals? Do you believe? No,
• 0:47
  Speaker 1: they're not working. So what we're learning we just heard
• 0:51
  Speaker 1: from Larry Cudlo that they were working right well, if
• 0:54
  Speaker 1: they were working, China would have bent by now, and
• 0:59
  Speaker 1: China has not budged at all. In fact, what we're
• 1:03
  Speaker 1: hearing is that China didn't make any additional offers at all.
• 1:08
  Speaker 1: UH in the latest round of talks, and this latest
• 1:12
  Speaker 1: temper cent threatened temper cent tariffs on three D billion
• 1:16
  Speaker 1: will have about as much effect as the last bunch
• 1:19
  Speaker 1: of tariffs on two D and fifty billion dollars. Trump
• 1:22
  Speaker 1: is a is a one trick pony as tarots or
• 1:24
  Speaker 1: tariffs or tariffs, he's tariff man, and he's doubling down
• 1:28
  Speaker 1: on them. So I guess that I want to just
• 1:31
  Speaker 1: offer up the other view to this. People would say
• 1:34
  Speaker 1: that it has been working, that China's economy has slowed
• 1:37
  Speaker 1: more than people would have otherwise predicted based on the tariffs,
• 1:42
  Speaker 1: and that they've had to engage in further stimulus to
• 1:44
  Speaker 1: counteract that, which leaves them with less ammunition to counter
• 1:48
  Speaker 1: their slow down going forward. I mean, what do you
• 1:51
  Speaker 1: say to those arguments? Well, I would say, as look
• 1:53
  Speaker 1: at the Chinese economy. Sure that the economy is slowing,
• 1:55
  Speaker 1: it probably would have slowed anyway it needed to slow. Um.
• 1:59
  Speaker 1: I would also say, look at the resilience of the
• 2:01
  Speaker 1: Chinese economy, and there's a lot more that they can do.
• 2:04
  Speaker 1: They can cut interest rates, they can ramp up lending,
• 2:07
  Speaker 1: they can offer support to small medium sized enterprises, the
• 2:10
  Speaker 1: ones that are going to be hurt by this latest
• 2:12
  Speaker 1: round of tariffs. They've got plenty of ammunition left. But
• 2:15
  Speaker 1: more to the point, they're just not going to bend
• 2:18
  Speaker 1: to Trump's will. So right now, the entire Chinese leadership
• 2:22
  Speaker 1: has decamped for the summer to Bay die Her, this
• 2:25
  Speaker 1: seaside resort near Beijing, to talk about strategy. You can
• 2:28
  Speaker 1: guarantee that this is going to be right at the
• 2:30
  Speaker 1: top of their agenda. Can you imagine at this point
• 2:33
  Speaker 1: a conversation she jimping, standing up and saying to this group, Okay, guys,
• 2:37
  Speaker 1: the game is up right. We don't have any option.
• 2:40
  Speaker 1: We're just going to have to force ourselves to undertake
• 2:44
  Speaker 1: really painful adjustments to our economy which Trump is demanding,
• 2:48
  Speaker 1: even though we think this is going to be a
• 2:51
  Speaker 1: really bad idea and could be and could be damaging.
• 2:53
  Speaker 1: And then, by the way, we're going to have to
• 2:55
  Speaker 1: explain this historic capitulation to the Chinese people won't have happened.
• 3:00
  Speaker 1: So you mentioned that you recently came back from Hong Kong,
• 3:03
  Speaker 1: So do you have a sense, I'm guessing you're spending
• 3:05
  Speaker 1: time over that part of the world, you have a
• 3:07
  Speaker 1: sense of what the Chinese really want in a deal
• 3:11
  Speaker 1: realistically what they want and that they think they can
• 3:13
  Speaker 1: actually get. Well, the the you know, the the Hong Kong,
• 3:18
  Speaker 1: the Hong Kong situation is now aggravating everything else. So
• 3:22
  Speaker 1: what you're hearing, the rhetoric you're hearing from the Chinese
• 3:25
  Speaker 1: propaganda outlets is that the American black hands are behind
• 3:31
  Speaker 1: this protest. And by the way, Trump very unhelpfully yesterday
• 3:35
  Speaker 1: picked up all kinds of Chinese communist body talking points
• 3:38
  Speaker 1: describing these protests in Hong Kong where two million people
• 3:42
  Speaker 1: took to the streets against this extradition law, as riots,
• 3:45
  Speaker 1: and he said, basically, it's nothing to do with us.
• 3:47
  Speaker 1: China can fix it. Hong Kong is a part of China.
• 3:50
  Speaker 1: Uh and and and so the worst possible thing he
• 3:53
  Speaker 1: could have said at this point. So we're now getting
• 3:56
  Speaker 1: a sense that China does plan to retaliate against any
• 4:00
  Speaker 1: sational tariffs at President Trump does implement them. What do
• 4:03
  Speaker 1: you expect in terms of how that retaliation will look. Yeah, well,
• 4:06
  Speaker 1: you see, they can't really retaliate in kind because they
• 4:09
  Speaker 1: run out of goods to to put tariffs on. America
• 4:12
  Speaker 1: just doesn't sell enough stuff to China's So what we
• 4:15
  Speaker 1: can expect is American companies to take a look at
• 4:19
  Speaker 1: Look at the Boeing share price right there there in
• 4:21
  Speaker 1: the middle now, or the end stages of negotiating a
• 4:25
  Speaker 1: huge fleet sale to the Chinese. Don't hold your breath.
• 4:29
  Speaker 1: I mean, you know, I can't see that being signed
• 4:31
  Speaker 1: under the present circumstances. Companies like FedEx, for instance, which
• 4:35
  Speaker 1: are already in hot water for mishandling this package that
• 4:39
  Speaker 1: was supposed to have been sent to Huawei. Maybe maybe
• 4:41
  Speaker 1: they come, Maybe they roll out there so called Unreliable
• 4:45
  Speaker 1: Entities list, essentially a hit list of American companies. FedEx
• 4:48
  Speaker 1: may well be on such a list. Uh, forget about
• 4:52
  Speaker 1: purchases of oil seeds, grains, cottons. China had just started
• 4:56
  Speaker 1: to buy a bit of that. That won't be happening either,
• 5:00
  Speaker 1: so you know, and just generally making life really miserable
• 5:03
  Speaker 1: for American companies and the lot they can do without
• 5:06
  Speaker 1: formal sanctions. I'm just looking right now at some of
• 5:10
  Speaker 1: the share prices and the commodities that you're mentioning. Interestingly,
• 5:13
  Speaker 1: Bowing shares are slightly up, soybean prices are slightly up.
• 5:18
  Speaker 1: So either markets are not taking this seriously or people
• 5:22
  Speaker 1: think that this has already been priced in. Well, I mean,
• 5:26
  Speaker 1: you know, these prices are up and down. Bowing took bowing.
• 5:28
  Speaker 1: Bowing took a hit yesterday on the New Spin its
• 5:32
  Speaker 1: Own World of Hurt. Sure. Look, I mean China will
• 5:38
  Speaker 1: have to respond in some fashion. And and you know,
• 5:42
  Speaker 1: since they since they honestly cut, since they cannot even
• 5:45
  Speaker 1: if they wanted to put on more tariffs. I think
• 5:48
  Speaker 1: these direct threats to individual US companies to make them
• 5:52
  Speaker 1: feel the pain is probably what we should expect. You
• 5:55
  Speaker 1: can read more on all of these things and other
• 5:57
  Speaker 1: stories from the Brook Opinion, a Bloomberg dot com slash opinion.
• 6:00
  Speaker 1: Uh Andy Brown, thank you so much for being with us.
• 6:16
  Speaker 1: We have been getting earnings out of the big gas giants.
• 6:21
  Speaker 1: I guess you would say, I know, Paul, they're giving
• 6:23
  Speaker 1: me a look. I mean, honestly, between the solar system
• 6:27
  Speaker 1: studying in my home household and the fact that I
• 6:29
  Speaker 1: have two young boys, that's that's where my mind goes.
• 6:32
  Speaker 1: I do want to talk, though, more broadly, about what's
• 6:34
  Speaker 1: going on in oil, because it's been frankly a wild ride,
• 6:38
  Speaker 1: and to help us pass through not only the earnings
• 6:40
  Speaker 1: from Chevron and Exxon and others. But also what we're
• 6:44
  Speaker 1: seeing in the crude market is John Kilda, founding partner
• 6:47
  Speaker 1: of Again Capital, joining us on the phone. John. Let's
• 6:50
  Speaker 1: just start with the wild ride. Yesterday we saw the
• 6:53
  Speaker 1: biggest plunge and crewed in four years, dropping about eight percent.
• 6:58
  Speaker 1: Today you're seeing a bit of a rebound. How much
• 7:00
  Speaker 1: would additional tariffs really crimp the value of oil? First
• 7:06
  Speaker 1: of all, good morning, but very much. I mean, I've
• 7:09
  Speaker 1: been saying for a while that the the U. S.
• 7:11
  Speaker 1: China trade war has had an outsized effect on the
• 7:15
  Speaker 1: oil market, on energy pricing because it's been hitting the
• 7:19
  Speaker 1: Asian economic region Japan, South Korea, China, Singapore, Indonesia, UH
• 7:25
  Speaker 1: the hardest and the slowed slowing economic activity there, Every
• 7:31
  Speaker 1: measure that comes out manufacturing, p M, I, S, G, D,
• 7:34
  Speaker 1: p S, exports, you name it, all have been really
• 7:37
  Speaker 1: on a on a terrific down slope, and that goes
• 7:40
  Speaker 1: to the heart of the energy demand growth outlook. It's
• 7:43
  Speaker 1: been hollowed out to a great degree by this economic slowing. So, uh,
• 7:49
  Speaker 1: you want to ratchet up the trade war more, it's
• 7:52
  Speaker 1: going to ratchet down demand growth more. And that's why
• 7:55
  Speaker 1: you're seeing these prices come under such pressure, and John, I,
• 7:58
  Speaker 1: you know, we've all seen I think reports that Iranian
• 8:01
  Speaker 1: oil tankers have been quietly offloading their supply into Chinese ports.
• 8:05
  Speaker 1: That seems like a risky strategy for the Chinese. What
• 8:10
  Speaker 1: do you think is going on there? It's actually, um,
• 8:13
  Speaker 1: they're being quite clever about it while they're they're what
• 8:16
  Speaker 1: they're doing is the the Iranian tankers, not to get
• 8:19
  Speaker 1: too technical here, are unloading the oil into what they
• 8:22
  Speaker 1: call bonded storage or storage facilities that are actually owned
• 8:25
  Speaker 1: by Iran. So it doesn't count yet as an actual
• 8:29
  Speaker 1: transfer or transaction that would be that would be violative
• 8:32
  Speaker 1: of the U S sanctions. But what that's doing is
• 8:36
  Speaker 1: creating this huge overhang of millions of barrels of oil.
• 8:39
  Speaker 1: Literally that if there's some kind of easing or if
• 8:42
  Speaker 1: the Chinese want to throw down and say, you know,
• 8:44
  Speaker 1: we don't care about your sanctions, We're going to buy
• 8:46
  Speaker 1: the oil, all of a sudden we have a new
• 8:47
  Speaker 1: flood of oil that goes into the Chinese market, which
• 8:51
  Speaker 1: would displace obviously other salady barrels and other supply that
• 8:55
  Speaker 1: would again cause the potential, you know, further cratering of
• 8:58
  Speaker 1: the price so um, it's actually something we're all watching
• 9:01
  Speaker 1: because it's it's oil. It's almost like a mini strategic
• 9:05
  Speaker 1: petroleum reserved that it's being built up into that if
• 9:08
  Speaker 1: it gets tapped or called on, would obviously be another
• 9:11
  Speaker 1: price break opportunity. So, John, you've nailed it with respect
• 9:15
  Speaker 1: to your calls on oil prices. I'm looking right now,
• 9:18
  Speaker 1: crew treated on the night Max currently treading at fifty
• 9:22
  Speaker 1: five two cents a barrel, up two and a half
• 9:25
  Speaker 1: percent today after yesterday's eight percent plunge. Where will this
• 9:29
  Speaker 1: price be? What should it be? Should the tariffs, the
• 9:32
  Speaker 1: additional tariffs at President Trump discussed yesterday get implemented and
• 9:36
  Speaker 1: there is some sort of retaliatory move by the Chinese government,
• 9:41
  Speaker 1: you know, we're heading back down towards fifty dollars a
• 9:43
  Speaker 1: barrel at this point. That's where major support is on
• 9:46
  Speaker 1: on the chart. It's not just around psychological number. There's
• 9:49
  Speaker 1: some real um you know math if you will involved
• 9:53
  Speaker 1: with that, with that level um. And it's remarkable right
• 9:58
  Speaker 1: if you think about it, that with all the ten
• 10:00
  Speaker 1: the surrounding Iran, with all the efforts by Saudi Arabian,
• 10:03
  Speaker 1: some mothers in OPEC, including Russia to try to reduce
• 10:06
  Speaker 1: supplies and get the price back up. That it's just
• 10:08
  Speaker 1: not reacting. It shows you just how you know, the
• 10:12
  Speaker 1: delitarious this situation is. And the fallout from the trade
• 10:15
  Speaker 1: war is on the demand outlook. And that's what's just
• 10:18
  Speaker 1: key right now. And you know, we're gonna be heading
• 10:21
  Speaker 1: down to that fifty barrel level and we'll see if
• 10:24
  Speaker 1: that doesn't prompt another response from the Saddie's or the
• 10:27
  Speaker 1: rest of OPEC in Russia, UM or even the other
• 10:31
  Speaker 1: show that could fall here. What we're going to start
• 10:33
  Speaker 1: to watch out for is our own shale players. UM.
• 10:36
  Speaker 1: The they're here in footsteps from the financial markets about
• 10:40
  Speaker 1: you know, persisting in their money losing endeavors here and uh,
• 10:45
  Speaker 1: we've seen US domestic productions stall out of about twelve
• 10:48
  Speaker 1: million barrels. It could very well start to go back
• 10:50
  Speaker 1: on the decline. Uh if this doesn't improve. So that's
• 10:53
  Speaker 1: the other thing to watch out for. So John, just
• 10:55
  Speaker 1: real quickly, in thirty seconds, we heard from Chevron and
• 10:59
  Speaker 1: Exxon reported earnings today. What are the big oil companies
• 11:01
  Speaker 1: saying about trade and how that risks their business? Well,
• 11:06
  Speaker 1: it's it's a problem for them. The only bright spot
• 11:09
  Speaker 1: they've had recently is their petrochemical businesses at the bigger
• 11:12
  Speaker 1: companies X and Chevron and some of the others. Now
• 11:15
  Speaker 1: that's going to face an economic slowdown, and those businesses
• 11:18
  Speaker 1: are highly cyclical, So if you get a downturn in
• 11:20
  Speaker 1: the global economy, that's the that's their last vestage is
• 11:23
  Speaker 1: now going to get hit too. So there's a reason
• 11:26
  Speaker 1: why the energy sector is less than five percent of
• 11:28
  Speaker 1: the S and P five hundred um. They're they're really
• 11:30
  Speaker 1: uninvestable at this point. Uninvestable. That's hard, yeah, because they
• 11:34
  Speaker 1: both eat expectations and their share prices are down. So
• 11:38
  Speaker 1: I think a lot of people probably agree with John absolutely.
• 11:41
  Speaker 1: John Kilda, thank you so much for joining us once again.
• 11:43
  Speaker 1: John is founding partner of Again Capital, based in New
• 11:46
  Speaker 1: York City. Giving us an update on the oil markets. Well,
• 12:05
  Speaker 1: this may be the dog days of summer, but we
• 12:07
  Speaker 1: certainly had a busy week. This week. We had the FED,
• 12:10
  Speaker 1: we had trade and tariffs, and today the jobs reports,
• 12:14
  Speaker 1: so we actually had plenty for the markets to digest.
• 12:17
  Speaker 1: Help us kind of tie it all together. We welcome
• 12:19
  Speaker 1: Dr Bob Eisenbeis Bob as a vice chairman and chief
• 12:22
  Speaker 1: monetary economist for Cumberland Advisers, and Dr Eisenbeiss was formerly
• 12:27
  Speaker 1: executive vice president and director of Research at the Federal
• 12:30
  Speaker 1: Reserve Bank of Atlantic joins us on the phone from Sarasota. Bob,
• 12:34
  Speaker 1: thanks so much for joining us. Let's kind of work backwards,
• 12:36
  Speaker 1: maybe from what has been a very busy week, and
• 12:39
  Speaker 1: we'll start with the jobs report that we got this morning.
• 12:42
  Speaker 1: What are your key takeaways from what seemed to be
• 12:44
  Speaker 1: a pretty solid report. Well, it was a salad report,
• 12:47
  Speaker 1: and there's lots of positives. The unemployment rate held constant
• 12:51
  Speaker 1: at three point seven percent. There were games in a
• 12:54
  Speaker 1: number of different categories, and uh, I noticed that those
• 12:58
  Speaker 1: categories aren't necessarily the ones that are low paying jobs.
• 13:03
  Speaker 1: We're not saying retail and food services and that sort
• 13:07
  Speaker 1: of thing. We're seeing good jobs being created. Um. And
• 13:12
  Speaker 1: then I also note the fact that we now have
• 13:16
  Speaker 1: about six point one million UH people unemployed, whereas we
• 13:22
  Speaker 1: have over seven million job vacancies. So if you're an
• 13:27
  Speaker 1: employer and you have a job, and you have a
• 13:30
  Speaker 1: job vacancy and you can't hire people, why would you
• 13:33
  Speaker 1: create more jobs? The only thing I can think of
• 13:35
  Speaker 1: is that you may be creating jobs that have different skills,
• 13:39
  Speaker 1: and so part of what we're looking at as a
• 13:41
  Speaker 1: skill min mismatch. So, Bob, given the fact that the
• 13:46
  Speaker 1: jobs market looks like it's in very solid footing, given
• 13:50
  Speaker 1: the fact that the economic expansion, albeit it is slowing,
• 13:53
  Speaker 1: it is still chugging along here, how does the Federal
• 13:57
  Speaker 1: Reserve Act going forward from your perspective, Well, they've painted
• 14:02
  Speaker 1: themselves into a corner as far as I'm concerned. Um,
• 14:06
  Speaker 1: they cut once, build it as an insurance cut. I
• 14:11
  Speaker 1: saw some commentator make the point that when you don't
• 14:14
  Speaker 1: have another rationality, you can always build it as an
• 14:17
  Speaker 1: insurance cut. Uh. They were not very convincing as to
• 14:21
  Speaker 1: why they were doing it, especially. Uh. Make make two points. First,
• 14:27
  Speaker 1: if the problems are slow down in Europe and trade issues,
• 14:31
  Speaker 1: it's not obvious to me how a cut in interest
• 14:33
  Speaker 1: rates is going to solve those dislocations. It's not so
• 14:40
  Speaker 1: I think. I think that's one of the things to
• 14:42
  Speaker 1: sort of put in the back of our mind that
• 14:45
  Speaker 1: it's just not there's not much of a connection between
• 14:48
  Speaker 1: at this juncture the problems they're trying to address and
• 14:52
  Speaker 1: the tools that they have to address it. Secondly, German
• 14:56
  Speaker 1: power kept referring to uncertainty about trade on certainty about
• 15:01
  Speaker 1: the global outlook. Well, to an economist, uncertainty has a
• 15:07
  Speaker 1: special meeting. It means that you don't have an idea
• 15:10
  Speaker 1: as to what the probabilities are going to be of
• 15:13
  Speaker 1: an event occurring. That's different from risk, where you do
• 15:17
  Speaker 1: have some way of figuring out what the likelihood of
• 15:20
  Speaker 1: these events. I don't know a single theory that says
• 15:24
  Speaker 1: that Paul's monetary policy helps to deal with uncertainty. So
• 15:28
  Speaker 1: I think I think they've really painted themselves into a corner.
• 15:32
  Speaker 1: And I guessed before the meeting that should they make
• 15:38
  Speaker 1: a cut, two things will happen. They will be criticized
• 15:42
  Speaker 1: by the President and the markets will be crying for more.
• 15:46
  Speaker 1: And that that appears to be what's happening. So it's interesting.
• 15:50
  Speaker 1: It's interesting, Bob. This week again a pretty busy week
• 15:52
  Speaker 1: in terms of data for the marketplace. We had a
• 15:54
  Speaker 1: good job report today, we had you know, a good
• 15:57
  Speaker 1: we had a rate cut by the Federal Reserve. But
• 16:00
  Speaker 1: sell off we've seen in the financial markets yesterday afternoon
• 16:02
  Speaker 1: and continuing in today, and we have the dial off
• 16:04
  Speaker 1: seven points right now. It shows where trade really fits
• 16:10
  Speaker 1: on investors right our screen, I kind of right up
• 16:12
  Speaker 1: front and center. So what is your sense as to
• 16:16
  Speaker 1: how investors should be pricing in the risk of a
• 16:18
  Speaker 1: prolonged trade dispute with China. Well, I think, uh, first
• 16:23
  Speaker 1: of all, what that means is trade is not all
• 16:28
  Speaker 1: that important to us in terms of the volume of
• 16:31
  Speaker 1: trade our exports and imports. Most of our trade is
• 16:35
  Speaker 1: with Mexico and Canada, so you need to keep our
• 16:38
  Speaker 1: eyes on what's happening in that arena as opposed to
• 16:42
  Speaker 1: necessarily worrying about the goods coming in and out of China. Um.
• 16:47
  Speaker 1: We've also seen suppliers now moving supply chains to adjust
• 16:52
  Speaker 1: to it, so they're taking steps to try to chrishion
• 16:55
  Speaker 1: themselves from the impact of those trade wars. But I
• 17:00
  Speaker 1: did find it very interesting listening to the broadcast today
• 17:04
  Speaker 1: the number of different knock on effects that people have
• 17:08
  Speaker 1: been identified that fall out of these trade negotiations. And
• 17:12
  Speaker 1: I think in this particular case, uh, those that are
• 17:17
  Speaker 1: arguing that the Chinese are in no rush to strike
• 17:20
  Speaker 1: a deal is going to be really important because the
• 17:24
  Speaker 1: longer we go, the closer we get to the election.
• 17:27
  Speaker 1: If there's a downturn in flows of funds to farmers
• 17:33
  Speaker 1: and so on in the Midwest. That's going to have
• 17:35
  Speaker 1: significant political implications going forward. Uh. I'd like to make
• 17:40
  Speaker 1: one more point about the jobs market if I could
• 17:44
  Speaker 1: go ahead. Okay, Um, we tend to look at the
• 17:48
  Speaker 1: number of jobs created as we assess how good the
• 17:53
  Speaker 1: job market is, but we forget that the economy today
• 17:56
  Speaker 1: is much bigger than it was in two thousand. It's
• 17:59
  Speaker 1: bigger than it was in nineteen sixty. If we were
• 18:03
  Speaker 1: to create jobs at the same rate we did between
• 18:07
  Speaker 1: nineteen sixty and nineteen seventy, that one and sixty five
• 18:12
  Speaker 1: thousand would be four times what it is. If we
• 18:15
  Speaker 1: were to create jobs at the same rate we did
• 18:18
  Speaker 1: between nineteen eighty and before the financial crisis, that number
• 18:22
  Speaker 1: would be twice as big. So while this is a
• 18:25
  Speaker 1: nice job number, we need to sort of put it
• 18:28
  Speaker 1: in perspective that tells us something's going on in terms
• 18:31
  Speaker 1: of the job creation and the nature of how our
• 18:35
  Speaker 1: economy is going and growing. That has implications for jobs.
• 18:40
  Speaker 1: That's that's an excellent point. Bob Eis and Bias, thank
• 18:44
  Speaker 1: you so much for being with us and giving us
• 18:46
  Speaker 1: your perspective. Bobby's and Bias's vice chairman and chief monetary
• 18:49
  Speaker 1: economist for Cumberland Advisors, joining us from Sarah Study formerly
• 18:54
  Speaker 1: was the executive vice president and director of Research at
• 18:57
  Speaker 1: the Federal Reserve Bank of Atlanta. Yeah. Car Kadonna of
• 19:17
  Speaker 1: Bloomberg Economics q f U S Economists was in here
• 19:20
  Speaker 1: earlier saying that the actual numbers of the job's report
• 19:23
  Speaker 1: today looked pretty good. You dig under that though perhaps
• 19:27
  Speaker 1: they looked a little less good, and again us a color,
• 19:30
  Speaker 1: some color of what's happening on the ground. Let's bring
• 19:32
  Speaker 1: in Becky Frankoitz, president of Manpower Group North America. Manpower
• 19:36
  Speaker 1: Group is the third largest staffing firm in the world. Becky,
• 19:40
  Speaker 1: thank you so much for joining us. So I want
• 19:41
  Speaker 1: to start there are there signs from your vantage point
• 19:45
  Speaker 1: that the US labor market is slowing down? Yeah, So
• 19:49
  Speaker 1: we would say that July's job report was pitched perfect.
• 19:52
  Speaker 1: There were wage there was wage growth, workforce participation picked up,
• 19:56
  Speaker 1: and there were strong job gains. Now the taste of
• 19:59
  Speaker 1: growth is slowing. So year to day in eighteen, we
• 20:02
  Speaker 1: had about two three thousand jobs this time and now
• 20:06
  Speaker 1: we're having about a hundred and sixty five thousand on
• 20:08
  Speaker 1: average per month. So the pace of growth is slowing.
• 20:10
  Speaker 1: But it makes so much sense, Lisa, because as we
• 20:12
  Speaker 1: have fewer qualified workers looking for work because they're all employed,
• 20:16
  Speaker 1: of course we're seeing slower job growth. So, Becky, given
• 20:19
  Speaker 1: that we are at or near someone's definition of full employment,
• 20:24
  Speaker 1: are you surprised that we're not seeing maybe better than
• 20:28
  Speaker 1: three low three percent wage growth? Yeah, So July mark
• 20:31
  Speaker 1: twelve months of three percent or greater wage growth. So
• 20:34
  Speaker 1: we're encouraged by that. But of course, you know, the
• 20:37
  Speaker 1: basics of economics would tell you we should continue to
• 20:39
  Speaker 1: see wages pick up based on supply demand. So, and
• 20:44
  Speaker 1: this is something that we have been expecting for a
• 20:46
  Speaker 1: long time, and it's been a little bit uh slower
• 20:49
  Speaker 1: to take off than people have expected. Where are the
• 20:52
  Speaker 1: main job gains, I mean in what industries? Yes, so
• 20:56
  Speaker 1: really encouraging. In July we saw professional and technical services
• 21:00
  Speaker 1: add thirty one thousand jobs, and about a third of
• 21:03
  Speaker 1: those jobs when computer systems designs and so we're actually
• 21:06
  Speaker 1: starting to see these the effects of AI and automation
• 21:10
  Speaker 1: come into new jobs in the workforce, which speaks to
• 21:13
  Speaker 1: the fact that we have to start upskilling American workers
• 21:16
  Speaker 1: now again encouraging that we've seen more companies commit to
• 21:20
  Speaker 1: up skilling, so teaching, you know, people new new skills
• 21:23
  Speaker 1: for future jobs. We've seen more companies commit in the
• 21:26
  Speaker 1: last two months than we've seen in the last two years.
• 21:29
  Speaker 1: But upskilling our workers for tomorrow's jobs is mission critical
• 21:32
  Speaker 1: for our country. Yeah, that's interesting. That's kind of where
• 21:35
  Speaker 1: I wanted to go because Lisa and I speak to
• 21:36
  Speaker 1: a lot of h C suite people and they tell
• 21:39
  Speaker 1: us one of their challenges is actually finding qualified workers.
• 21:43
  Speaker 1: What do you think what are we seeing out of
• 21:45
  Speaker 1: corporate American in terms of trying to address what is
• 21:47
  Speaker 1: I guess a high class problem that you can't find
• 21:49
  Speaker 1: enough qualified workers. Yes, I think I think it's actually
• 21:53
  Speaker 1: a problem across all sectors of the economy, Paul. So
• 21:55
  Speaker 1: you know what we're seeing is I spend my time
• 21:57
  Speaker 1: with CEOs across America like you do, is a ride.
• 22:00
  Speaker 1: Almost fifty of American employers are saying they can't find
• 22:03
  Speaker 1: the skills that they need, and so we have to
• 22:05
  Speaker 1: create the workforce that we need for tomorrow. Our population
• 22:09
  Speaker 1: growth in our country hit a thirty two year low
• 22:12
  Speaker 1: in in earlier this year March of this year. And
• 22:14
  Speaker 1: the challenge with that is the workforce we have is
• 22:16
  Speaker 1: the workforce will have. And so we are seeing companies
• 22:19
  Speaker 1: commit to upskilling, but that's just one piece of what's
• 22:22
  Speaker 1: required for success. To have successful upskilling, we actually have
• 22:25
  Speaker 1: to understand the potential of our workers, understand the jobs
• 22:29
  Speaker 1: that we're gonna need today and tomorrow, and then map
• 22:32
  Speaker 1: people through career paths into those jobs, which industries are
• 22:36
  Speaker 1: offering the biggest pay gains right now. Yeah, so again
• 22:39
  Speaker 1: encouraged this morning. You know, retail jobs were down about
• 22:42
  Speaker 1: three point six or UM, but we saw manufacturing increase,
• 22:47
  Speaker 1: so that's exciting UM and the positive of that is
• 22:50
  Speaker 1: manufacturing jobs pay a little bit more than retail, so
• 22:52
  Speaker 1: good to see growth there. You know, construction was up,
• 22:55
  Speaker 1: but we're honestly, we're seeing growth across the economy. With
• 22:57
  Speaker 1: the supply and demand we have in our country, it's
• 23:00
  Speaker 1: a great time to be an American worker. So, Becky,
• 23:03
  Speaker 1: one of the things that one of the uncertainties in
• 23:06
  Speaker 1: the marketplaces back kind of front and center. That's trade
• 23:08
  Speaker 1: tensions with China. President Trump tweeting that the raising terrorists
• 23:13
  Speaker 1: are putting tariffs on additional three billion dollars worth of goods.
• 23:16
  Speaker 1: As you talk to hiring managers, are the trade uncertainties
• 23:20
  Speaker 1: impacting their confidence as it relates to hiring or expanding. Yeah,
• 23:24
  Speaker 1: I would say, of course it's a topic of conversation,
• 23:27
  Speaker 1: but we're not seeing that pull through into action. Despite
• 23:30
  Speaker 1: the uncertainty around trade. Americans are increasingly positive and this
• 23:34
  Speaker 1: plus job market and so are employers, and so we're
• 23:37
  Speaker 1: continuing to see demand increase for qualified workers. And yes,
• 23:41
  Speaker 1: of course the conversation is concerned over trade, but it
• 23:44
  Speaker 1: is not translating into the slowdown of powering. Okay, this
• 23:47
  Speaker 1: is yet, Okay, this is really interesting. So it's not
• 23:49
  Speaker 1: contributing to a slowdown in hiring. What are you hearing
• 23:52
  Speaker 1: from businesses in terms of when it will or in
• 23:56
  Speaker 1: other words, when they will start to pair back, how
• 23:59
  Speaker 1: much they commit to future businesses based on concerns or
• 24:03
  Speaker 1: the reality of ongoing trade tensions. Yeah, we're seeing a
• 24:06
  Speaker 1: wait and see approach honestly, where companies are saying, hey,
• 24:09
  Speaker 1: we're going to continue to it because the fear is
• 24:12
  Speaker 1: if I don't put my job request out there, I
• 24:14
  Speaker 1: might miss an opportunity for a worker that would be
• 24:17
  Speaker 1: willing to switch to my company, and so wait and
• 24:19
  Speaker 1: see in terms of talking about trade, but not changing behavior,
• 24:23
  Speaker 1: but continuing to post jobs. In fact, we do a
• 24:25
  Speaker 1: Manpower group, a Manpower Employment Outlook survey, and candidly for
• 24:30
  Speaker 1: Q three, we saw a ten year high in intention
• 24:33
  Speaker 1: to hire in our U S economy. So people still
• 24:36
  Speaker 1: intend to hire even with that uncertainty. So beggy looking
• 24:39
  Speaker 1: at you think about your survey work or just discussions
• 24:42
  Speaker 1: with hiring managers. Are you seeing geographic particular areas of
• 24:46
  Speaker 1: strength and our weakness in the US? Now we're you know,
• 24:49
  Speaker 1: of course there's there's variety across the cities, but we're
• 24:52
  Speaker 1: seeing a lot of strength across all four areas of
• 24:54
  Speaker 1: the country, whether it's you know, north, southwest or east UM.
• 24:58
  Speaker 1: And so continued to see opportunity be regardless of where
• 25:00
  Speaker 1: you live in the country. You know. The other interesting
• 25:02
  Speaker 1: thing about today's job reports is, you know, I mentioned
• 25:05
  Speaker 1: we saw workforce participation pick up. The total labor force
• 25:09
  Speaker 1: set a record high, and so again there are jobs
• 25:12
  Speaker 1: geographically across the country, and we saw three hundred and
• 25:14
  Speaker 1: seventy thousand new workers come into the labor force. I
• 25:17
  Speaker 1: did some math this morning. That's like the entire city
• 25:20
  Speaker 1: of Tampa, Florida, coming into the workforce in one month.
• 25:23
  Speaker 1: Thank you, Frank Witz, Thank you so much for joining
• 25:25
  Speaker 1: us on this job's Friday. Becky is the president of
• 25:28
  Speaker 1: Manpower Group North America, based in Chicago. Thanks for listening
• 25:34
  Speaker 1: to the Bloomberg P and L podcast. You can subscribe
• 25:36
  Speaker 1: and listen to interviews at Apple Podcasts or whatever podcast
• 25:39
  Speaker 1: platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney.
• 25:42
  Speaker 1: I'm Lisa bram Woyd's. I'm on Twitter at Lisa bram
• 25:45
  Speaker 1: Woyds one. Before the podcast, you can always catch us worldwide.
• 25:48
  Speaker 1: I'm Bloomberg Radio.