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Crypto Regulation, Supply Chain Constraints, Labor · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day, we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. You know, we are
• 0:21
  Speaker 1: on top of this crypto space here on this show,
• 0:24
  Speaker 1: and it's becoming clearer and clearer that some regulation is
• 0:29
  Speaker 1: coming to the world of crypto. Let's get some more
• 0:31
  Speaker 1: color on that. Mary Beth Buchanan, President of the America's
• 0:34
  Speaker 1: and global Chief Legal Officer Mercal Science. Mary Beth, it
• 0:38
  Speaker 1: just feels like the drumbeat is really beginning to pound
• 0:41
  Speaker 1: here for regulation of what is a growing crypto market.
• 0:44
  Speaker 1: Gary Ginstler, a new ahead of the SEC certainly making
• 0:47
  Speaker 1: some comments there. How do you think this will kind
• 0:51
  Speaker 1: of really evolve over time? You know, I think there's
• 0:55
  Speaker 1: been a lot of really great news in the cryptocurrency
• 0:58
  Speaker 1: space in the last few weeks, and as crypto continues
• 1:02
  Speaker 1: to grow and have mass adoption, not just in the
• 1:06
  Speaker 1: US but across the globe, regulators are taking a much
• 1:09
  Speaker 1: closer look at it, and they're looking at many different
• 1:12
  Speaker 1: aspects from stable coins to defy U two. Uh, you
• 1:17
  Speaker 1: know new expected guidance coming out today. From the fat
• 1:19
  Speaker 1: of it's it's an exciting time. But I agree with
• 1:22
  Speaker 1: you that additional regulation will be coming. So it's interesting
• 1:28
  Speaker 1: to think about Gary Gensler regulating this space. Is bitcoin
• 1:32
  Speaker 1: of security? No, I think that Gary Gensler is certainly
• 1:39
  Speaker 1: in a great position to understand the cryptocurrency markets as
• 1:44
  Speaker 1: he's been teaching at an m I T. The SEC
• 1:46
  Speaker 1: has been pretty clear that bitcoin is not a security
• 1:50
  Speaker 1: and so I don't think that there's any danger that
• 1:53
  Speaker 1: this is going to change in the near future. So,
• 1:58
  Speaker 1: Mary Beth, the US just this department created a National
• 2:02
  Speaker 1: Cryptocurrency Enforcement Team. That sounds ominous, what is that? Yeah,
• 2:08
  Speaker 1: the the Cryptocurrency Enforcement Team that was announced in early
• 2:12
  Speaker 1: October by the Deputy Attorney General is an effort by
• 2:15
  Speaker 1: many different components of the Department of Justice to come
• 2:19
  Speaker 1: together and to really attack one of the latest plagues
• 2:24
  Speaker 1: in the crypto space, which is ransomware attacks. Ransomware attacks
• 2:29
  Speaker 1: have gone up a hundred and fifty in compared to
• 2:34
  Speaker 1: so this task force is going to help root out
• 2:38
  Speaker 1: those who would use cryptocurrency to try to attack and
• 2:43
  Speaker 1: strangle businesses in the US and throughout the globe. What
• 2:48
  Speaker 1: you've been involved in the digital space for quite a while, now, um,
• 2:53
  Speaker 1: what can be done? You know when I whenever I
• 2:55
  Speaker 1: see a ransomware attack, I always think that's silly because
• 2:58
  Speaker 1: it's not an anonymous UM transaction. We know that it's
• 3:03
  Speaker 1: going to wallets, we know which wallets it's trading in,
• 3:06
  Speaker 1: but those wallets aren't attached to names, right, So what
• 3:09
  Speaker 1: can be done in order to really attack the ransomware
• 3:17
  Speaker 1: UM actors? We're going to need to see a lot
• 3:21
  Speaker 1: of collaboration between cryptocurrency exchanges, UM, blockchain analytics companies like
• 3:27
  Speaker 1: Marble Science, and the government. Recently, or rather later in
• 3:32
  Speaker 1: late summer, the Justice Department called the industry together and
• 3:37
  Speaker 1: shared with us some of the information that they've been
• 3:39
  Speaker 1: learning with recent ransomware attacks, and we shared with the
• 3:43
  Speaker 1: government some information that we've been learning. So I think
• 3:47
  Speaker 1: that through this this collaboration information sharing, we're going to
• 3:51
  Speaker 1: be able to stop stop these attackers before they can
• 3:55
  Speaker 1: find additional victims. So, you know, maybe about a lot
• 4:00
  Speaker 1: of folks are saying that this the crypto space really
• 4:04
  Speaker 1: needs regulation, if for no other reason than for it
• 4:08
  Speaker 1: to be validated and for its development and for more investment.
• 4:12
  Speaker 1: How do you think this is going to play out?
• 4:14
  Speaker 1: Is this something that our government currently has a capability
• 4:18
  Speaker 1: to regulate? It just feels like so much is new
• 4:21
  Speaker 1: about crypto and the knowledge level isn't anywhere where it
• 4:24
  Speaker 1: needs to be. I think most of the private sector
• 4:30
  Speaker 1: crypto companies want regulation, um, but but they want clear
• 4:35
  Speaker 1: regulation and they want to have a voice in creating it.
• 4:38
  Speaker 1: Right now, we do have a patchwork of regulations in
• 4:41
  Speaker 1: the United States. We have different agencies that are looking
• 4:44
  Speaker 1: at different aspects of how cryptocurrency operates. There may be
• 4:48
  Speaker 1: a few spaces where we're still seeing the absence of
• 4:52
  Speaker 1: some regulation, and what we need to do, I think,
• 4:54
  Speaker 1: is identify where there's a vacuum and create a reasonable
• 5:00
  Speaker 1: set of rules that make sense to make sure that
• 5:03
  Speaker 1: we're addressing all aspects of the crypto space. I mean,
• 5:06
  Speaker 1: what you do, or at least part of what you do,
• 5:09
  Speaker 1: is you help financial companies, government entities. As you were saying, um,
• 5:16
  Speaker 1: crypto companies prevent attacks, prevent you know, getting ripped off, Basically,
• 5:22
  Speaker 1: if I'm an investor, my main concern is where do
• 5:24
  Speaker 1: I hold this stuff? If I put a million or
• 5:26
  Speaker 1: two million into crypto, I want somebody I can trust
• 5:29
  Speaker 1: UM custoding that asset. Are we in a place where
• 5:33
  Speaker 1: there there is a safe and trustworthy place for me
• 5:37
  Speaker 1: to put those assets. There are a number of extremely
• 5:44
  Speaker 1: UM well respected custodians that are holding cryptocurrency today, and
• 5:49
  Speaker 1: those custodians are regulated. UM. They are utilizing the latest
• 5:54
  Speaker 1: technology to monitor their transactions, to know who they're doing
• 5:58
  Speaker 1: business with. And there are there are any options out
• 6:00
  Speaker 1: there today from the traditional crypto custodian and even to
• 6:04
  Speaker 1: certain US banks that are UM launching crypto custody services. Alright,
• 6:12
  Speaker 1: very cool to get some time with you, Mary Beth Hope,
• 6:15
  Speaker 1: but I hope we can get you back because UM,
• 6:17
  Speaker 1: it seems to me mercle Science as a wealth of
• 6:19
  Speaker 1: information that I think our clients would like to hear
• 6:23
  Speaker 1: more about. Mary Beth Buchanan as President of the America's
• 6:26
  Speaker 1: and Global Chief Legal Officer for mercal Science. Now, let's
• 6:33
  Speaker 1: bringing David Cudlow right now. He's in the CEO and
• 6:35
  Speaker 1: chief investment strategist at Mainstay Capital Management. They've got three
• 6:40
  Speaker 1: point eight billion dollars and assets under management out of Michigan. David,
• 6:44
  Speaker 1: always great to get you on the horn. Thanks so
• 6:46
  Speaker 1: much for joining us. UM. Let's talk about it. Seems
• 6:51
  Speaker 1: it seems like there's so many headwinds. You've got the
• 6:53
  Speaker 1: supply chain constraints. You've got a labor shortage, we have
• 6:58
  Speaker 1: inflation that looks more than transitory whatever that means, and
• 7:03
  Speaker 1: now um abudding energy crisis. Should I be worried as
• 7:08
  Speaker 1: an equities investor? Hey, good morning, Yeah, And I would
• 7:13
  Speaker 1: add to that that we have, uh, consumer sediment has
• 7:18
  Speaker 1: been falling. Uh confidence in the economy has been falling.
• 7:22
  Speaker 1: And you know, if we look at the GDP numbers
• 7:25
  Speaker 1: as forecasted by the Atlanta UM Atlanta fed their GDP
• 7:29
  Speaker 1: down numbers, they've fallen over the past few months from
• 7:33
  Speaker 1: close to seven percent projection for third quarter GDP down
• 7:36
  Speaker 1: to zero point five percent, dangerously close to a quarter
• 7:40
  Speaker 1: of contraction, although consensus estimates for GDP are quite a
• 7:43
  Speaker 1: bit higher round for the third quarter. So, yeah, we
• 7:48
  Speaker 1: have all these headwinds, uh that are that are coming
• 7:52
  Speaker 1: towards I think first and foremost is the the probability.
• 7:59
  Speaker 1: What most people think that the said will start to
• 8:02
  Speaker 1: taper before the end of the year, and that doesn't
• 8:05
  Speaker 1: mean eliminating liquidity the providing, but start to taper and
• 8:09
  Speaker 1: scale it back. And then they're talking about interest rates
• 8:12
  Speaker 1: um rising as as soon as the middle of next year,
• 8:15
  Speaker 1: which we we don't think will happen. But you know,
• 8:17
  Speaker 1: with that on the positive side, as we have just
• 8:21
  Speaker 1: stellar corporate earnings in this year, and as liquidity is
• 8:26
  Speaker 1: taken out of the system and we come back to fundamentals,
• 8:29
  Speaker 1: we look at fundamentals for the market, uh, specifically priced
• 8:33
  Speaker 1: to earnings ratios. UH, they're very, very good. They've actually
• 8:36
  Speaker 1: come down through the year because earnings have been so good.
• 8:39
  Speaker 1: We set a record in the first quarter, or second
• 8:41
  Speaker 1: best in the second, and we expect the third best
• 8:43
  Speaker 1: quarter here in the third quarters. It's easy comparisons because
• 8:48
  Speaker 1: of COVID, but it's also because corporations are just have
• 8:51
  Speaker 1: just got good balance sheets that have done really good
• 8:53
  Speaker 1: in this recovery from COVID and going forward. So on
• 8:57
  Speaker 1: that side of the equation the most important thing because
• 8:59
  Speaker 1: in a long term that's what stocks should be priced on.
• 9:02
  Speaker 1: His earnings. You know, we're just looking at incredible earnings
• 9:05
  Speaker 1: and profit margins in and and really going you know,
• 9:09
  Speaker 1: going forward to the fourth quarter as well, David, I
• 9:12
  Speaker 1: look at the w T I crewed a north of
• 9:14
  Speaker 1: eighty barrel. Have I missed the energy trade? No, I
• 9:19
  Speaker 1: don't think so. Um, I don't think so at all.
• 9:22
  Speaker 1: I mean, it's our favorite sector for the second half
• 9:25
  Speaker 1: of this year. Are are still our favorite sectors coming
• 9:27
  Speaker 1: into the fourth quarter is energy And you know, we
• 9:31
  Speaker 1: we we look around the world at what's going on. Um.
• 9:35
  Speaker 1: The OPEC hasn't helped out on the oil front. We've
• 9:37
  Speaker 1: got another meeting next month. We'll see what happens. But
• 9:41
  Speaker 1: it is, you know, a function of uh, this recovery,
• 9:46
  Speaker 1: this robust recover we've had around the world from COVID,
• 9:49
  Speaker 1: and economies are expanding their demanding more energy. There's been
• 9:53
  Speaker 1: significant when we look we look at renewables, right the
• 9:57
  Speaker 1: the emphasis has been on renewables, you know, for good reasons.
• 10:01
  Speaker 1: You know, we all want renewable, sustainable energy. But but
• 10:04
  Speaker 1: you know that right now in the US that makes
• 10:07
  Speaker 1: up about of our energy supply, there's still about that
• 10:14
  Speaker 1: comes from fossil fuels. In China that's even higher. So
• 10:18
  Speaker 1: you know, we we have the natural gas issues in
• 10:22
  Speaker 1: in Europe and UH and globally we have actually have
• 10:28
  Speaker 1: coal burning plants that are being fired back up or
• 10:31
  Speaker 1: increasing production. UH. We had we have expecting coal to
• 10:36
  Speaker 1: be at the highest level of use UH in this
• 10:40
  Speaker 1: country since and that's because of switches from l en
• 10:45
  Speaker 1: G or natural gas to to coal because of the
• 10:47
  Speaker 1: short supplies. So I think the energy trade has further
• 10:51
  Speaker 1: to go, and I think that it makes sense for
• 10:53
  Speaker 1: investors to be to have it to still continue to
• 10:56
  Speaker 1: have exposure there. What do you think about the rates
• 10:59
  Speaker 1: moves that we've seen recently, David that UM two years
• 11:03
  Speaker 1: regardless of region were sold off drastically. At the beginning
• 11:06
  Speaker 1: of the week, we've seen a curve flattening and we're
• 11:09
  Speaker 1: looking at a tenuere US treasure yield right now one
• 11:12
  Speaker 1: sixty six, whereas a month ago was one. Yeah, and
• 11:18
  Speaker 1: from a low of of of around just under one nineteen,
• 11:23
  Speaker 1: we've had a significant rise UM. You know. I think
• 11:27
  Speaker 1: that's a function somewhat of a reaction to what the
• 11:31
  Speaker 1: Fed has been trying to UH send signals on on
• 11:35
  Speaker 1: their policy. UH. Certainly, the the pullback in the market
• 11:40
  Speaker 1: I think was a response to that increased rates because
• 11:42
  Speaker 1: we've seen that, right, We saw that in the first quarter,
• 11:44
  Speaker 1: we had a similar spike in rates of about seventy
• 11:47
  Speaker 1: basis points. The market market sold off, especially what we
• 11:51
  Speaker 1: consider long duration equities like tech and gross stocks um
• 11:55
  Speaker 1: and we've seen that again here. Uh. What's interesting now though,
• 11:59
  Speaker 1: is rates of need to move higher. We've seen the uh,
• 12:02
  Speaker 1: the market's rebound. I think that's you know, we're looking
• 12:05
  Speaker 1: at us again a strong earning season once again, only
• 12:08
  Speaker 1: you know, we've got maybe ten percent of companies that reported,
• 12:11
  Speaker 1: but they're coming in uh, some mixed reports, but overall,
• 12:15
  Speaker 1: we've got about eight percent of companies beating expectations. So
• 12:19
  Speaker 1: that's that's helped the market rates continualize. And it's typically
• 12:23
  Speaker 1: if it's a slow rise as a function of an
• 12:25
  Speaker 1: expanding autonomy, we would live with that. When they spike
• 12:29
  Speaker 1: or when they go up because of concerns about inflation,
• 12:33
  Speaker 1: that's going to be a problem, which inflation is probably
• 12:35
  Speaker 1: our biggest issue relative to start all right, David, David,
• 12:39
  Speaker 1: thank you so much for joining us. Really appreciated. David Coula,
• 12:41
  Speaker 1: CEO and chief investment Strategies at main Stay Capital. Let's
• 12:46
  Speaker 1: talk now about the leading Economic Indicators, the Leading Index
• 12:53
  Speaker 1: from the Conference Board right now, and what that's saying
• 12:56
  Speaker 1: about the economy. In order to do that, we bring
• 12:58
  Speaker 1: in autumn on ozel Drop. He's the director of Economic
• 13:01
  Speaker 1: Research and Global Research share at the Conference Board. If
• 13:06
  Speaker 1: you type in eco US on your Bloomberg terminal, you
• 13:10
  Speaker 1: can see the Leading Index came out at slightly disappointing
• 13:14
  Speaker 1: zero point two percent. We were looking for zero point
• 13:17
  Speaker 1: four percent and the previous month had been zero point
• 13:21
  Speaker 1: nine percent. So, Ottoman, thanks for joining us. Why the disappointment?
• 13:27
  Speaker 1: Good morning, good to be here. So, um, the the
• 13:30
  Speaker 1: zero point two percent is less than expected, but just
• 13:35
  Speaker 1: keep it in perspective that that is still a good
• 13:37
  Speaker 1: positive number. Uh. It continues a rising trend in the
• 13:42
  Speaker 1: Leading Index, but it is a little bit slower um
• 13:46
  Speaker 1: and a big reason for that this month in September
• 13:50
  Speaker 1: was the large negative contribution to the index from housing
• 13:54
  Speaker 1: residential construction UM and some softening and consumer confidence also
• 14:00
  Speaker 1: contributed to that. But all in all, the majority of
• 14:04
  Speaker 1: the Leading Index components have been rising six out of ten,
• 14:09
  Speaker 1: so that still points to still a healthy expansion in
• 14:12
  Speaker 1: the Earth economy. So Ottoman, what do you make of
• 14:15
  Speaker 1: the labor market out there. We've still got a lot
• 14:18
  Speaker 1: of people that are not in this labor force despite
• 14:20
  Speaker 1: the you know, very high number of job postings. Is
• 14:25
  Speaker 1: this a permanent new reality for the US labor market
• 14:28
  Speaker 1: that just fewer people are going to be working? You know,
• 14:32
  Speaker 1: I think the global pandemic has really caused a lot
• 14:37
  Speaker 1: of disruption in labor markets in many sectors across uh,
• 14:41
  Speaker 1: the Earth economy. And now UM, you know, we're dealing
• 14:45
  Speaker 1: with the delta variant that's creating more headwinds. UH. It's
• 14:49
  Speaker 1: keeping a lot of people on the sidelines because of
• 14:53
  Speaker 1: you know, concerns about getting sick and you know, staying
• 14:57
  Speaker 1: out of the labor force. UM. I think UM in
• 15:01
  Speaker 1: the future that will um eventually settle down. Uh. The
• 15:05
  Speaker 1: economy growth rates are you know settling down, uh to
• 15:09
  Speaker 1: our new expansion trajectory. And we're all getting used to,
• 15:13
  Speaker 1: you know, living with this. We're learning how to you know,
• 15:17
  Speaker 1: work and shop. UM and UH. I think as things normalize,
• 15:22
  Speaker 1: we'll see labor markets, you know, going back to the
• 15:26
  Speaker 1: trends that we have been seeing before the pandemic. UM
• 15:31
  Speaker 1: and UH, you know that was really going back to
• 15:34
  Speaker 1: lower unemployment rates and even labor shortages. So well, we
• 15:39
  Speaker 1: have labor shortages now, right, I mean one of the
• 15:43
  Speaker 1: big problems is companies can't hire enough people. Yeah, so
• 15:50
  Speaker 1: I think there there are probably two factors underlying those, right.
• 15:54
  Speaker 1: What one is uh the sort of the course of
• 15:57
  Speaker 1: the pandemic with the delta there and and people, um,
• 16:01
  Speaker 1: you know, not being willing to work, um, in especially
• 16:05
  Speaker 1: in in person services, so uh not being able to
• 16:09
  Speaker 1: find the workers because of that low uh labor force participation. UM.
• 16:15
  Speaker 1: But there's also underlying all of this. The context is
• 16:20
  Speaker 1: UM this longer term demographic changes in the US population, UM,
• 16:26
  Speaker 1: the aging population, the retirement of the baby boomers, so
• 16:32
  Speaker 1: all of those are really um leading to a smaller
• 16:38
  Speaker 1: pool of labor supply that's available. And uh, that's the
• 16:43
  Speaker 1: larger context that we're operating in Alama Boomer And I'm
• 16:46
  Speaker 1: working and I'll continue to work for why I think
• 16:49
  Speaker 1: so so Automan also, Dron, thank you so much for
• 16:52
  Speaker 1: joining us a director of economic research and global research
• 16:55
  Speaker 1: chair at the conference score conference board. Again, the leading
• 16:58
  Speaker 1: economic indicator for the month of September came in at
• 17:01
  Speaker 1: zero point two Consensus was for zero point four percent.
• 17:04
  Speaker 1: We had a revision as well. For the prior month
• 17:07
  Speaker 1: it was zero point nine percent growth and that was
• 17:09
  Speaker 1: revised down slightly uh to zero point eight percent, but
• 17:13
  Speaker 1: still positive. And it'll be really interesting to see how
• 17:16
  Speaker 1: this labor market continues to evolve post pandemic. You know.
• 17:22
  Speaker 1: One of the more fascinating economic aspects of this pandemic,
• 17:26
  Speaker 1: and they fledgedly recovery, is a changing labor market. We've
• 17:29
  Speaker 1: got still five or six main folks that are out
• 17:32
  Speaker 1: of the labor force, yet there are more than ten
• 17:35
  Speaker 1: million job openings at the moment. It's just that mixed
• 17:38
  Speaker 1: mixed mash. Mixed mash is really kind of interesting here.
• 17:42
  Speaker 1: How will it develop? Law On next guest has some
• 17:44
  Speaker 1: thoughts on that the radically changing labor market. Barry rid Hults,
• 17:48
  Speaker 1: founder of rid Hult's Wealth Management, Bloomberg opinion columnists, and
• 17:50
  Speaker 1: the host of Masters in Business. So, Barry, what do
• 17:53
  Speaker 1: you make of this labor market here? UM seems to
• 17:57
  Speaker 1: be a little bit different than what we had pre pandemic. Yeah,
• 18:00
  Speaker 1: it certainly is. A number of things have changed, and
• 18:03
  Speaker 1: we we've talked about this on the air about how
• 18:06
  Speaker 1: a lot of workers UM took advantage of the past
• 18:10
  Speaker 1: eighteen months and having lots of cash in their bank
• 18:15
  Speaker 1: accounts due to the generosity of the Cares Act. And
• 18:19
  Speaker 1: they you know, they up skilled, they got certified, they
• 18:22
  Speaker 1: got degrees, and for a lot of dead end jobs.
• 18:26
  Speaker 1: And there are really four industries that have run into
• 18:28
  Speaker 1: a lot of trouble, hospitality, food service, most particularly UM
• 18:34
  Speaker 1: and they've you know, Elvis has left the building. They
• 18:36
  Speaker 1: they're no longer participating in those careers. And I think
• 18:40
  Speaker 1: what we're starting to see, and I wrote about this
• 18:42
  Speaker 1: about six months ago, is that the balance of power
• 18:46
  Speaker 1: is shifting. And it's you know, we see these regular
• 18:50
  Speaker 1: oscillations from capital to labor and back well, capital had
• 18:54
  Speaker 1: the upper hand since the nineteen eighties. It's shifting back
• 18:58
  Speaker 1: to the direction of labor. So one of the cool
• 19:03
  Speaker 1: things about this, maybe not for employers, but for employees,
• 19:06
  Speaker 1: is that they're going to get paid more. Um. You know,
• 19:09
  Speaker 1: whenever we talked to somebody who runs a hotel chain
• 19:13
  Speaker 1: or restaurants, they always say, I can't get anybody come
• 19:16
  Speaker 1: in here. And I always say, well, why don't you
• 19:18
  Speaker 1: just double their salary. I'm sure they'll show up. Is
• 19:21
  Speaker 1: that going to lead to a price wage spiral? Though?
• 19:25
  Speaker 1: Is that going to lead to inflation that sticks around.
• 19:27
  Speaker 1: Um So, So first you have to look at the
• 19:32
  Speaker 1: context and and and look more than just the past
• 19:35
  Speaker 1: six months, by just about any measure, when we look
• 19:39
  Speaker 1: at wages at the bottom half of the pay scale,
• 19:42
  Speaker 1: for the past thirty years, they have lagged just about everything,
• 19:47
  Speaker 1: just about every measure. They've lagged inflation, they've lagged productivity,
• 19:51
  Speaker 1: they've lagged corporate profits, they've lagged c suite compensation, which
• 19:56
  Speaker 1: certainly has been fairly robust for the past few decades.
• 20:01
  Speaker 1: And so this is less of a hey, we're driving
• 20:05
  Speaker 1: inflation forward, and more of a this is a reset.
• 20:09
  Speaker 1: This is a catch up for wages that really have
• 20:11
  Speaker 1: been far too low. And when you have an economy
• 20:15
  Speaker 1: that's operating at pretty close to full capacity, well, guess what.
• 20:20
  Speaker 1: At a certain point, um, a limited commodity has pricing power.
• 20:28
  Speaker 1: And in this case, that limited commodity commodity is labor.
• 20:33
  Speaker 1: Barry continue on the labor discussion. Three days a week, hybrid.
• 20:38
  Speaker 1: It just feels right now that that's where, at least
• 20:41
  Speaker 1: in the US, this market is going to. Do you
• 20:44
  Speaker 1: think that's the case, It's a good bad do we care?
• 20:47
  Speaker 1: So again, another really fascinating topic with a lot of
• 20:52
  Speaker 1: moving pieces. So so first let's talk about the hybrid workforce,
• 20:57
  Speaker 1: but also within that context bring in challenging and hiring
• 21:02
  Speaker 1: and and and inflationary wage. Bush and I have to
• 21:06
  Speaker 1: start by pointing out productivity is so important in this space.
• 21:12
  Speaker 1: The big surprise from the work from home has been
• 21:17
  Speaker 1: not only was it not a drop in productivity. When
• 21:21
  Speaker 1: you look at the go to Fred look at productivity numbers,
• 21:24
  Speaker 1: it's tripled over the past on an hourly output basis
• 21:28
  Speaker 1: over the past eighteen months. That that's a massive, massive
• 21:32
  Speaker 1: um increase. That's a that's a huge change from remember
• 21:36
  Speaker 1: Robert Solo famously equipped. You can see the computer age everywhere,
• 21:40
  Speaker 1: but in the productivity statistics, well, here we are a
• 21:43
  Speaker 1: generation later from when he said that productivity is going
• 21:48
  Speaker 1: up tremendously. So first, huge juge offset of inflation. If
• 21:53
  Speaker 1: you're paying people more but you're getting more output from them,
• 21:56
  Speaker 1: it's not inflationary. It's essentially a push. Now the allene
• 22:00
  Speaker 1: is having that work its way downstream. Two bars and
• 22:05
  Speaker 1: restaurants and hotels and frontline healthcare providers. In a lot
• 22:10
  Speaker 1: of those fields, you're not seeing the same sort of
• 22:15
  Speaker 1: productivity increase, except where people have made those investments in technology.
• 22:20
  Speaker 1: So you go to a restaurant and the waiter isn't
• 22:23
  Speaker 1: writing down your order, they're using an iPad and you're
• 22:27
  Speaker 1: not even getting a menu. You're just using your phone
• 22:29
  Speaker 1: to scan that that QR code on the table. Those
• 22:33
  Speaker 1: sort of things gradually show up to the bottom line.
• 22:36
  Speaker 1: They make things more productive, quicker better. You know, if
• 22:39
  Speaker 1: restaurants have a faster turnover, they're they're seeing more people,
• 22:43
  Speaker 1: they're they're making more revenue starting serving more meals. So
• 22:47
  Speaker 1: maybe you'll start to see productivity gains there. But white
• 22:50
  Speaker 1: collar workers productivity gains have been spectacular. Verry got an
• 22:55
  Speaker 1: important question. I'm moving back to New York in just
• 22:58
  Speaker 1: a couple of months. I gotta reportedly one one year
• 23:02
  Speaker 1: old daughter and a um three point eight leader flat
• 23:08
  Speaker 1: six in a stick shiftsion and baby seat in the
• 23:13
  Speaker 1: in the back of that. I think, so what my
• 23:16
  Speaker 1: my thought is this, I would love to give it
• 23:18
  Speaker 1: to her. I met a guy the other day who
• 23:20
  Speaker 1: had a nice going to give the eleven well when
• 23:24
  Speaker 1: she's older. I met a guy the other day. He
• 23:26
  Speaker 1: was with his dad. He was seventeen with his dad
• 23:28
  Speaker 1: when he bought the car that he now drives. And
• 23:31
  Speaker 1: but I'm I'm moving back. Freight rates are like twenty
• 23:35
  Speaker 1: thousand for for container and use car prices are soaring.
• 23:41
  Speaker 1: Do I let go of it before I come home?
• 23:43
  Speaker 1: So my daughter is gonna live in a sea of
• 23:45
  Speaker 1: self driving electric cars. It's gonna be pretty cool for
• 23:48
  Speaker 1: this very very simple question. Is this an air cooled
• 23:52
  Speaker 1: nine eleven or a later war No, it's so hit
• 23:56
  Speaker 1: that bit. You can sell that, take the profit and
• 23:59
  Speaker 1: then go by yourself for a car that will continue
• 24:02
  Speaker 1: to appreciate. Minivan stick Now, well that you don't need
• 24:05
  Speaker 1: a minivan in New York. You can uber wherever you're going.
• 24:07
  Speaker 1: But if you want to give your daughter a nine eleven,
• 24:10
  Speaker 1: give her something that that's going to be worth something
• 24:13
  Speaker 1: in twenty years. You know, water cooled modern Porsche. They're
• 24:19
  Speaker 1: great today, but you know ten years from now that
• 24:22
  Speaker 1: that's gonna be pure electric. So go back to what
• 24:25
  Speaker 1: is it p Give her an air cooled nine eleven
• 24:29
  Speaker 1: and she'll teach her to drive a stick and she'll
• 24:31
  Speaker 1: be a happy camper. I like it. Yeah, I'll go
• 24:34
  Speaker 1: before that, because then the last air cold I don't
• 24:38
  Speaker 1: like the way the head headlights were so slanty. I
• 24:41
  Speaker 1: like the nine six four because I'm a child of
• 24:43
  Speaker 1: the eighties, you know. That's the look for me, not
• 24:46
  Speaker 1: the Turbo, just a simple maybe even an earlier eighties Carrera.
• 24:52
  Speaker 1: Barry rid Holt's always great to have you on Bloomberg
• 24:54
  Speaker 1: Opinion contributory. He runs rid Hole twelfth Management, and he
• 24:58
  Speaker 1: writes a blog is well called The Big Picture. This
• 25:03
  Speaker 1: is Bloomberg. Thanks for listening to the Bloomberg Markets podcast.
• 25:07
  Speaker 1: You can subscribe and listen to interviews with Apple Podcasts
• 25:10
  Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
• 25:14
  Speaker 1: on Twitter at Matt Miller nineteen seventy three. Put on
• 25:18
  Speaker 1: ball Sweeney. I'm on Twitter at pt Sweeney. Before the podcast.
• 25:21
  Speaker 1: You can always catch us worldwide at Bloomberg Radio.