Latest / Bloomberg Intelligence / New Business Starts Are Up Well Over 20%: Paychex CEO

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New Business Starts Are Up Well Over 20%: Paychex CEO · Bloomberg Intelligence

0:01
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
0:04
Speaker 1: with my co host of Bonnie Quinn. Every business day
0:06
Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
0:10
Speaker 1: along with essential market moving news. Kind the Bloomberg Markets
0:13
Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
0:17
Speaker 1: and on Bloomberg dot com. Well, as we saw this morning,
0:20
Speaker 1: the US labor market lost jobs in December for the
0:23
Speaker 1: first time in eight months. Let's get a closer look
0:26
Speaker 1: on kind of the labor market overall in the United States.
0:29
Speaker 1: We welcome Martin uh Moosey, President and CEO of Paychecks.
0:33
Speaker 1: They're based in Rochester, Uh, New York. Martin, thanks so
0:37
Speaker 1: much for joining us here. I know you guys have
0:39
Speaker 1: been doing a lot of work on small businesses and
0:41
Speaker 1: we know that they've just been really, really challenged during
0:45
Speaker 1: this pandemic. What can you tell us, Well, we saw
0:49
Speaker 1: again this month in December. You know, we did see
0:51
Speaker 1: a drop in the small business index that Paychecks puts
0:54
Speaker 1: out every month. That pretty much mirrored the jobs report
0:57
Speaker 1: that you saw this morning. While the jobs were down
0:59
Speaker 1: to hundred and forty. On the jobs report, you did
1:02
Speaker 1: see that leisure and hospitality were down almost five thousands,
1:06
Speaker 1: So not unexpected with the closures and the restrictions that
1:09
Speaker 1: you're seeing in restaurants and bars and so forth across
1:11
Speaker 1: the country. I guess the positive news would be that
1:14
Speaker 1: jobs intempt staffing, for example, we're up uh and and
1:18
Speaker 1: so you're seeing that these small and mid sized businesses
1:21
Speaker 1: in particular are bringing some people in or keeping them
1:24
Speaker 1: at a part time level or temporary staffing to kind
1:27
Speaker 1: of see how things go as the vaccine rolls out, Marty.
1:32
Speaker 1: From the data that you received, phone calls perhaps that
1:35
Speaker 1: you've taken and make what are you hearing about how
1:38
Speaker 1: concerned people are in terms of getting back into a workforce,
1:42
Speaker 1: into a new job with the risk of coronavirus out there. Well, yeah,
1:46
Speaker 1: there is a there is concern. I think the vaccine,
1:49
Speaker 1: you know, the speed of how fast we can get
1:51
Speaker 1: it out that is going to slow the recovery a
1:53
Speaker 1: bit until things start moving along, which I hope they
1:56
Speaker 1: will very shortly. I think you'll also see that you
1:58
Speaker 1: can see how important the new stimulus package was that
2:01
Speaker 1: was approved and maybe more to come, because small businesses,
2:06
Speaker 1: mid sized businesses really needed that help and this stimulus
2:09
Speaker 1: was very focused on small businesses. You know, you can
2:12
Speaker 1: apply basically asked for a loan of up to a
2:15
Speaker 1: hundred and fifty thousand dollars, which can mean a lot
2:17
Speaker 1: to a small business, without even giving any data at all.
2:21
Speaker 1: And the forgiveness is going to be that basically you
2:23
Speaker 1: attest to drop in your revenue over a quarter past quarter.
2:28
Speaker 1: So it really is making it much more, much easier
2:31
Speaker 1: to get this p PP loan. We've gotten some guidance
2:34
Speaker 1: this weekend that process loans. Looks like loans will be
2:37
Speaker 1: starting to be processed on Monday the eleven, So that's
2:40
Speaker 1: great news for small business in particular. So, Marty, you
2:44
Speaker 1: guys have paychecks, you're you know you have you have
2:46
Speaker 1: six d eighty thousand clients you pay one in twelve
2:49
Speaker 1: private sector employees across the United States. What has your
2:52
Speaker 1: experience been as we presumably get towards mid year and
2:56
Speaker 1: the vaccinations really really ramp up and perhaps you kin
3:00
Speaker 1: it begins to open up. How many of those shuttered
3:03
Speaker 1: businesses that we see as we walk along Main Street
3:05
Speaker 1: USA that are closed, that were once vibrant businesses, how
3:10
Speaker 1: do you think they're going to come back? Well, our
3:13
Speaker 1: experience has been that actually quite a few have been
3:16
Speaker 1: able to hold on. They may have suspended their service,
3:19
Speaker 1: but they've continued to be uh to keep their business live,
3:24
Speaker 1: meaning that they're going to open back up or change.
3:26
Speaker 1: You know, many in the first wave we're able to
3:29
Speaker 1: for restaurants, for example, the hardest hit we're able to
3:32
Speaker 1: go to pick up only for food, adjust their workforce
3:36
Speaker 1: and so forth. Uh. And I think, you know, small businesses,
3:39
Speaker 1: mid sized businesses in the US are very resilient and
3:42
Speaker 1: they have found also a new ways to do things.
3:45
Speaker 1: You know, about half of our clients kept the same
3:47
Speaker 1: number of employees through December, and another quarter of them
3:51
Speaker 1: added employees actually, and a quarter reduced employees. So we've
3:54
Speaker 1: also seen small and mid sized businesses be pretty nimble
3:57
Speaker 1: and pivot and finding opportunities in the pandemic to maybe
4:01
Speaker 1: adjust their businesses and do things a little bit different.
4:04
Speaker 1: Of course, we know that, you know, really the majority
4:06
Speaker 1: of small businesses actually fail. It's a very very very
4:09
Speaker 1: tough environment, even in the best of times to get
4:12
Speaker 1: a small business up and running with the amount of
4:14
Speaker 1: capital involved and keep it up and running in a
4:16
Speaker 1: successful way. Do you have any data on you know,
4:20
Speaker 1: how many sort of newer small businesses will be created
4:24
Speaker 1: or how many will will will go down the drain. Well,
4:28
Speaker 1: one of the things that's been very interesting to watch
4:30
Speaker 1: is that year to date, through the year now, actually
4:34
Speaker 1: new business starts are up well over twenty So, you know,
4:38
Speaker 1: new businesses have found ways to find an opportunity in
4:41
Speaker 1: the pandemic to fulfill a need that a that a
4:44
Speaker 1: a customer has and so they've been able to start
4:47
Speaker 1: a lot of new businesses, particularly California, Florida, Georgia and construction.
4:52
Speaker 1: Things around construction have been continued to be very strong.
4:56
Speaker 1: We've seen construction job growth up for the last seven
5:01
Speaker 1: months consecutively and uh, and now you're starting to see
5:04
Speaker 1: a little bit of wage go up as well as
5:07
Speaker 1: minimum wages have gone into effect here January one, So
5:10
Speaker 1: there is some positive light there. You know, some businesses,
5:12
Speaker 1: you're right, you know, this was too long of a
5:15
Speaker 1: time to go and particularly too much time between the
5:17
Speaker 1: two stimulus packages unfortunately, but this latest stimulus, BECCAS has
5:21
Speaker 1: shown a lot of interest and UH and a lot
5:25
Speaker 1: of good positive things to help them with cash Flower
5:27
Speaker 1: the next few months already talked to us about the
5:30
Speaker 1: regionality of kind of maybe what you're seeing in terms
5:32
Speaker 1: of the jobs market, the labor market, the business small businesses. Um,
5:36
Speaker 1: this third wave seems to be kind of a national
5:38
Speaker 1: wave if you've always seen any regional differences. Sure, the
5:42
Speaker 1: South has continued to be the strongest region for job
5:45
Speaker 1: index in these small businesses in particular, and that has
5:48
Speaker 1: been led by construction, both residential and commercial as well.
5:53
Speaker 1: Uh you know, sales of new single family homes across
5:55
Speaker 1: the country are up over through November, so it's November
6:01
Speaker 1: over November, so it's amazing that, you know, while low
6:04
Speaker 1: interest rates have really helped people, uh, you know, build
6:08
Speaker 1: new homes, that has helped construction in jobs. But the
6:11
Speaker 1: South has been the strongest. Florida, Texas, Georgia, they have
6:14
Speaker 1: been the strongest states. The West has probably taken the
6:17
Speaker 1: biggest hit with hospitality, leisure and hospitality jobs. They're being
6:21
Speaker 1: the biggest drop in the Northeast has been down at
6:24
Speaker 1: the beginning and is kind of holding right now. So
6:27
Speaker 1: South has definitely been the strongest from a region standpoint. Marty,
6:31
Speaker 1: thank you so much for joining us, and the best
6:34
Speaker 1: of luck in Rochester. They're keeping safe from the coronavirus
6:37
Speaker 1: and putting people to work. Much appreciate your joining us today.
6:41
Speaker 1: Marty Mucy is president and CEO of Paychecks, which pays
6:46
Speaker 1: you know, one in four people employed by small business
6:50
Speaker 1: around the country. It is time for Bloomberg Opinion today.
6:56
Speaker 1: We're joined by Remeeu, Senior editor National Review, also a
7:00
Speaker 1: Bloomberg Opinion columnists based in Washington, d c. Remesh. Perfect
7:03
Speaker 1: timing to chat with you. We've had a couple of
7:06
Speaker 1: days to digest what we witnessed in the nation's capital.
7:10
Speaker 1: Would love to get your thirty foot view of what occurred. Well,
7:18
Speaker 1: I think that UM Senate Majority leader until now Mitch
7:24
Speaker 1: McConnell had it right when he called it a failed insurrection, right.
7:29
Speaker 1: I mean, it was a in some ways ridiculous attempt
7:34
Speaker 1: at an insurrection, but in another way deadly serious. I mean,
7:37
Speaker 1: in that way it was like the Beer Hall putsch
7:40
Speaker 1: in UM. This was an attempt to disrupt the lawful
7:45
Speaker 1: proceedings of the United States, to keep there from being
7:50
Speaker 1: a peaceful transfer of presidential power. And it failed. But
7:55
Speaker 1: it was shocking that it was attempted, and that it
8:00
Speaker 1: was attempted is a real stain on the Republican officeholders,
8:06
Speaker 1: most especially President Trump, who have done so many irresponsible
8:11
Speaker 1: things to encourage it. Well, the President tweeting to his
8:16
Speaker 1: voters this morning, again calling them seventy five millions strong.
8:20
Speaker 1: Unclear if they are actually still seventy five million strong,
8:24
Speaker 1: But I am curious, Ramesh, does this affect in any
8:28
Speaker 1: way his ability to be sort of an elder statesman
8:31
Speaker 1: type character for the GOP or even possibly another run. Well,
8:37
Speaker 1: it's it's close to seventy four million. But he's who
8:40
Speaker 1: voted for him, But he's never been really is a
8:42
Speaker 1: stickler for facts that's actually closer to the truth than
8:45
Speaker 1: than a lot of the things he says. Look, he's
8:47
Speaker 1: never going to be uh an elder statesman in the
8:50
Speaker 1: traditional way. Um. He can try to be a force
8:54
Speaker 1: in the Republican Party. Um, but the kind of you know,
8:57
Speaker 1: the becoming a respectable, um, normal figure called in when
9:02
Speaker 1: serious UH and sober statesmanship is required. Um, you know
9:07
Speaker 1: that's not going to happen. Future presidents are not going
9:09
Speaker 1: to use him as that kind of resource. UH, And
9:13
Speaker 1: ask for whether he can even be the kind of
9:15
Speaker 1: kingmaker or future candidate that he wants to be. I
9:17
Speaker 1: do think that the events this week have hurt that possibility. Um,
9:24
Speaker 1: But we have to, I think wait and see some
9:27
Speaker 1: of the long term repercussions, in particular to see whether
9:31
Speaker 1: Republican voters respond to his disgraceful behavior and to his
9:36
Speaker 1: loss of power by moving on. That's kind of where
9:40
Speaker 1: I wanted to go. Remesh, what, in your opinion is
9:44
Speaker 1: the future of the political party I'm thinking about, you know,
9:47
Speaker 1: the George will conservative view of the Republican Party that
9:53
Speaker 1: seems to be a thing of the past. Is it
9:56
Speaker 1: that Ted Cruz, Josh Hawley. I just don't know what
9:59
Speaker 1: the future of the republ the party is. What do
10:00
Speaker 1: you think, Well, I think that it is up for grabs. Um.
10:05
Speaker 1: I don't think that it makes sense or is possible
10:09
Speaker 1: for the Republican Party to simply move back to its
10:13
Speaker 1: pre Trump incarnation. I think one of the reasons Trump
10:17
Speaker 1: was able to become the leader of the party was
10:20
Speaker 1: that that previous party was too often out of touch
10:25
Speaker 1: with the economic interests of most Americans. UM. And so
10:31
Speaker 1: you know, when Trump talks about becoming a working class party,
10:34
Speaker 1: some of that is just marketing. Um. But I do
10:37
Speaker 1: think that there is something to the idea that the
10:39
Speaker 1: Republican Party needed to change and still needs to to
10:42
Speaker 1: change in some ways, um, in its thinking and its
10:46
Speaker 1: approach to those issues. But I don't think that the
10:49
Speaker 1: party has a future um being tied to the worst
10:54
Speaker 1: aspects of President Trump's personality, which is what to a
10:59
Speaker 1: very army extent, it has become, you know. Punch bowlded
11:04
Speaker 1: the new media outlet and DC had a story today
11:07
Speaker 1: about Minority Leader in the House Kevin McCarthy and President
11:10
Speaker 1: Trump having a screaming match the other day. Who is
11:13
Speaker 1: in President Trump's corner within the White House, within the
11:17
Speaker 1: administration these days? From well, it seems to be a
11:21
Speaker 1: shrinking group of people. Um. All accounts, both private and public,
11:27
Speaker 1: seemed to be that that he's kind of hunkered down,
11:31
Speaker 1: and uh, you know, I mean, this is what happens
11:34
Speaker 1: when you have a leader who doesn't want to hear
11:38
Speaker 1: news that is unflattering or inconvenient to him. Um, you know,
11:43
Speaker 1: And and the the fact is he's got to leave.
11:47
Speaker 1: I mean, he's he's relatedly you know, through you know,
11:50
Speaker 1: basically through grow to tea much much too late, admitted
11:54
Speaker 1: as much. But but he doesn't want to hear it.
11:58
Speaker 1: And uh, and so you know, he's he's just talking
12:01
Speaker 1: to the true believers. Seventy four million people voted for
12:07
Speaker 1: President Trump the last election. What does the Democratic Party,
12:13
Speaker 1: President lick Biden, what did they need to do to
12:15
Speaker 1: reach some or many of those seventy four million people.
12:22
Speaker 1: I think that some are many is the exact right
12:25
Speaker 1: way to think about this. And uh, and President Lick
12:29
Speaker 1: Biden has a shrewd understanding of this that you make
12:35
Speaker 1: changes at the margin. Um. He was able to win
12:39
Speaker 1: by picking up a lot of the Republicans who had
12:43
Speaker 1: an independence, who had leaned Republican who were alienated by Trump,
12:47
Speaker 1: but also by winning back some of the Democrats who
12:50
Speaker 1: have gone over to Trump and UH and bringing them
12:55
Speaker 1: back home. He has made a very crucial point of
12:59
Speaker 1: saying he wants to govern for all Americans. Now it's
13:03
Speaker 1: important to follow through on that, of course, and that's
13:06
Speaker 1: the harder part. But frankly, even just saying it is
13:10
Speaker 1: an important step. And it's the kind of thing that
13:14
Speaker 1: has been almost entirely absent from President Trump's politics. Mess.
13:20
Speaker 1: Do you see any you know, young charismatic people coming
13:25
Speaker 1: up through the ranks of the GOP that might, you know,
13:28
Speaker 1: try to unify the party in some way, trying to
13:30
Speaker 1: find a middle ground between the factions. Well, I think
13:35
Speaker 1: that's what a lot of Republicans think of themselves as
13:38
Speaker 1: doing in various ways. But who's going to actually be
13:42
Speaker 1: able to put the pieces together and in what configuration
13:46
Speaker 1: those pieces will go? That is I think completely up
13:51
Speaker 1: in the air. We don't know. Um, who's going to
13:54
Speaker 1: be successful that it might take end up being a governor,
13:58
Speaker 1: somebody who has not been so high to the Washington
14:01
Speaker 1: Party during the Trump years, but somebody who's actually been
14:04
Speaker 1: been out doing other things and only occasionally commenting on Trump. Um,
14:10
Speaker 1: who has the best chance of success in that endeavor?
14:15
Speaker 1: And should the Amendment be invoked? Well, you know, I
14:21
Speaker 1: I think that at the very least, is a good
14:25
Speaker 1: thing that we are spending these days, these last days
14:29
Speaker 1: of the Trump presidency, discussing impeachment, removal and the amendment,
14:35
Speaker 1: if only to help box this president in. Um. I
14:39
Speaker 1: don't know how realistic any of those options are. But look,
14:44
Speaker 1: it's always been my view that he's unfit for office
14:47
Speaker 1: and uh and he's a dangerous man. And as a result.
14:51
Speaker 1: Rerepreneur Bloomberg Opinnion contributor and senior editor at the National Reviews.
14:55
Speaker 1: Thank you very much. Well. I guess it took a
15:01
Speaker 1: insurrection at the US nation's capital to push the pandemic
15:05
Speaker 1: off the front pages for a day or two, but
15:07
Speaker 1: it is still there. The US suffered more than four
15:10
Speaker 1: thousand coronavirus deaths in a single day for the first time. Uh.
15:15
Speaker 1: It is just brutal out there. Let's get the latest
15:17
Speaker 1: on the virus and on vaccines. We do that every week.
15:21
Speaker 1: We're so fortunate to have Lauren Sour join us. Lauren
15:24
Speaker 1: is an associate professor of Emergency Medicine the Johns Hopkins
15:27
Speaker 1: School of Medicine. On the phone, we should note that
15:29
Speaker 1: the Bloomberg School of Public Health is promoted by Michael R. Bloomberg,
15:32
Speaker 1: founder Bloomberg LP and Bloomberg Philanthropies. Lauren, I'd love to
15:36
Speaker 1: talk you first about the surge in cases. I'm trying
15:39
Speaker 1: to get a sense of how much is being driven by,
15:42
Speaker 1: you know, maybe just the fallout, if you will, from
15:44
Speaker 1: the holidays when people got together and perhaps didn't uh
15:48
Speaker 1: do the social distancing thing as well as they should,
15:51
Speaker 1: versus maybe this new strain which appears to be more uh,
15:56
Speaker 1: you know, more difficult. Yeah, it's a great question. I
16:00
Speaker 1: think there's a lot of eyes on trying to make
16:03
Speaker 1: that determination. I think it's probably both, to be perfectly honest. UM,
16:08
Speaker 1: I saw it, uh the other day on Meet the Press,
16:10
Speaker 1: Tony Fauci said, it's terrible, it's unfortunate, but it was predictable.
16:14
Speaker 1: And I think, um, that's how we're all feeling. We
16:17
Speaker 1: as we saw people get on airplanes, we sell, people
16:20
Speaker 1: drive to friends and family that they didn't you know,
16:22
Speaker 1: normally interact with. And UM, now we're seeing the impact
16:26
Speaker 1: of that holiday travel and that new holiday mixing h
16:30
Speaker 1: really play out across the country. We are starting to
16:32
Speaker 1: see the variant pop up in a lot of UM
16:35
Speaker 1: places across the country, UM and across the globally. But
16:38
Speaker 1: I think, um, you know that the spread of that
16:42
Speaker 1: variant is quelled by following those travel restrictions, following physical
16:47
Speaker 1: distancing practices, following mask and practices in the same way
16:51
Speaker 1: that that the non variant spread is is dampened. And
16:54
Speaker 1: so if people are traveling, then you're just going to
16:57
Speaker 1: have an even greater impact, whether it's by UM people
17:00
Speaker 1: infected with the stream with the variant or not. The
17:03
Speaker 1: UK had its steady estay yesterday as well as the
17:05
Speaker 1: United States, Lauren, how many weeks would people have to
17:08
Speaker 1: shelter in place for this thing to actually move back
17:11
Speaker 1: a little bit? Give us a chance to get people vaccinated. Yeah,
17:15
Speaker 1: I think you're gonna see lockdown similar to before. So
17:18
Speaker 1: at least four to six weeks to get get spread
17:20
Speaker 1: under control. And that's really um that that number is
17:25
Speaker 1: dependent on how well people adhere to um, the lockdowns,
17:29
Speaker 1: to the restrictions, and to the masking and distancing when
17:32
Speaker 1: they come out of it, right. So even when the
17:35
Speaker 1: lockdowns are released and restrictions are lightened, Um, people have
17:40
Speaker 1: to be good stewards of those things that we know
17:42
Speaker 1: that work really well. Right. So if the restrictions are
17:46
Speaker 1: released and then all of a sudden people go back
17:48
Speaker 1: to the behavior they were having right before and during
17:50
Speaker 1: the holidays, then we'll just be back in that place
17:52
Speaker 1: again until um, you know, until we get it under
17:56
Speaker 1: control again, and it'll just be a cycle, Lauren. One
17:59
Speaker 1: of the issues kind of cropping up here in the
18:03
Speaker 1: New York metro area is a fairly significant percentage of
18:06
Speaker 1: those one A those Phase one A essential workers healthcare workers.
18:11
Speaker 1: People in the nursing homes are choosing not to get
18:15
Speaker 1: the vaccination, and now the question is, well, what do
18:18
Speaker 1: you do with those vaccines that aren't being administered? So
18:20
Speaker 1: that's kind of a bonus contention here in New York.
18:22
Speaker 1: What are you finding at the Johns Hopkins University of
18:24
Speaker 1: the Medical Center? Are people is a meaningful percentage of
18:29
Speaker 1: the healthcare workers choosing not to get it? I think
18:33
Speaker 1: we're seeing people get the vaccine here UM, thankfully. But
18:36
Speaker 1: we've done a lot of work to educate people a
18:38
Speaker 1: town halls, UM emails with information, frequently asked questions, fact sheets,
18:44
Speaker 1: UM a system that is accessible and easy for them
18:48
Speaker 1: to use within the context of their job to just
18:51
Speaker 1: sign up to get it. So I think the problems
18:54
Speaker 1: stem from a lack of funding in communication strategies and
19:00
Speaker 1: building trust about the vaccine. You know, we've heard that
19:03
Speaker 1: a lot of people are concerned about the shortened timeline,
19:06
Speaker 1: and so we should have spent and should still continue
19:09
Speaker 1: to spend time and effort explaining how even though the
19:12
Speaker 1: timeline was accelerated, all of the steps were in there
19:16
Speaker 1: and to create a safe and effective vaccine, And that's
19:18
Speaker 1: what I think we need to be focused on. And
19:21
Speaker 1: then just making sure that people can actually access it, right,
19:23
Speaker 1: So having a system that is not a website that
19:27
Speaker 1: continues to crash, or a paper based system, or a
19:30
Speaker 1: line you know, a queuing based system, UM that that
19:34
Speaker 1: inhibits people from being able to really get in and
19:37
Speaker 1: get out in the shortest amount of time possible and
19:39
Speaker 1: go back to their jobs. The frontline, healthcare workers and
19:41
Speaker 1: essential workers keeping this responsive bloat Lauren, how long before
19:46
Speaker 1: we know whether we'll have to get a vaccine every year?
19:50
Speaker 1: I think we're going to start to see some of
19:51
Speaker 1: those data come out as people are being um vaccinated
19:55
Speaker 1: with more regularity and the vaccine programs expand. UM this
20:00
Speaker 1: second season or next round. You know, we're in sort
20:04
Speaker 1: of year one of the pandemic, but we're also in
20:07
Speaker 1: year one of potentially cyclical or seasonal virus UM and
20:11
Speaker 1: so we're gonna learn a lot in the next twelve
20:13
Speaker 1: months about how this virus works and how immunity UM
20:17
Speaker 1: is both conferred and last in vaccinated populations, so also
20:21
Speaker 1: in people who had natural infections and some combination of
20:25
Speaker 1: the two. All right, Lauren, continue the fantastic work, and
20:29
Speaker 1: thank you for always making time for us. We get
20:31
Speaker 1: updated regularly by Lauren Sour Johns Hopkins University, Associate Professor
20:36
Speaker 1: of Emergency Medicine, and of course Johns Hopkins University is
20:40
Speaker 1: support of my Michael R. Bloomberg, who is obviously the
20:44
Speaker 1: owner and of this news network and the parent company,
20:48
Speaker 1: Bloomberg LP. Joe mis Act Maybes, editor for Bloomberg Briefs
20:54
Speaker 1: joins us. Now, Joe, since the last time we spoke
20:57
Speaker 1: with you, we have a lot more clarity about what
21:00
Speaker 1: the next four years and Washington is going to be. Like.
21:02
Speaker 1: We've had the Georgia Senate runoffs and they've both gone
21:06
Speaker 1: blew those seats. How did the muni market react? Well, Uh,
21:11
Speaker 1: with a great sense of relief, I think, because now
21:15
Speaker 1: you have a very real possibility of more relief going
21:20
Speaker 1: to states and municipalities directly rather than the sort of
21:24
Speaker 1: indirect relief that's already contained in the package that Congress
21:29
Speaker 1: passed earlier. Uh. And just you know, relief because there's
21:37
Speaker 1: more certainty about what's going to happen and the next
21:40
Speaker 1: thing is going to be. I would imagine, according to
21:44
Speaker 1: my sources, very quick action on what some people would
21:49
Speaker 1: call tax reform. That's where I want to go Joe. UM.
21:54
Speaker 1: A topic that is near and dear to the hearts
21:56
Speaker 1: of our listeners in the Tri State area and selected
21:59
Speaker 1: other markets around the country, which is the Trump tap
22:03
Speaker 1: on state and local taxes. Where do you do you
22:08
Speaker 1: think that's going to be on the agenda? A whole
22:10
Speaker 1: very much so thank you. You know, between between salt
22:15
Speaker 1: and this thing called advance for fundings that municipalities do
22:21
Speaker 1: that was taken away by by the previous administration on
22:26
Speaker 1: a tax exempt basis, So those two things are going
22:29
Speaker 1: to be very much in the sites of state and
22:32
Speaker 1: local lobbyists. But yeah, that's salt, the salt repeal. You know,
22:36
Speaker 1: the Democrats are in the kind of they're they're torn
22:40
Speaker 1: two ways on this because they don't want to be
22:42
Speaker 1: seen as, uh, giving a tax break to the rich.
22:46
Speaker 1: But at the same time, the salt cap was really
22:51
Speaker 1: aimed at chiefly democratically run states, So I would imagine
22:59
Speaker 1: that they're going to go with the the soft cap
23:02
Speaker 1: and get rid of that. I think that's what's going
23:04
Speaker 1: to happen there. So yeah, that's very very big and
23:07
Speaker 1: uh in the municipal market, and people are just getting
23:10
Speaker 1: prepared for, you know what the next next tax bill
23:13
Speaker 1: is going to we're not even tax reconciliation. I guess
23:17
Speaker 1: they call it go to how the previous tax reform
23:20
Speaker 1: was passed. So give us some details, Joe, into which
23:24
Speaker 1: states did we see the most flows? Out of which
23:26
Speaker 1: states did we see the most flows? Well, let's see.
23:30
Speaker 1: I think I read a report last week. I'm not
23:34
Speaker 1: talking about uh uh specifically tax reheaded but Texas was
23:41
Speaker 1: the big winner, uh in the last couple of years.
23:44
Speaker 1: I think you know, they are the states that has
23:47
Speaker 1: the most people going into it. And of course, uh,
23:50
Speaker 1: you know they don't have the income tax and in Texas. Uh,
23:56
Speaker 1: so of course you know that's um, we're of the
24:00
Speaker 1: but that was one of the Trumpet arguments I guess
24:03
Speaker 1: for doing away with assault uh deductions or you know,
24:07
Speaker 1: lowering them. Uh. Those are supposed to sunset anyway. But yes,
24:11
Speaker 1: in response to your question, Texas was a big winner. Uh,
24:14
Speaker 1: many states down south Florida obviously. UM. So we'll see
24:21
Speaker 1: if if this at all will help to reverse the flow.
24:26
Speaker 1: Probably not, but you never know. Such expectations are that
24:30
Speaker 1: with the Biden administration and now you know, a a
24:33
Speaker 1: very narrow uh lead in Congress that perhaps income taxes
24:38
Speaker 1: will be going up. Does that mean people are gonna
24:41
Speaker 1: be searching for tax advantaged yields in the muni markets?
24:45
Speaker 1: Are expecting a fund of course, of course they're good
24:51
Speaker 1: you know, tax exempt income uh, municipal bonds, preservation of capital,
24:57
Speaker 1: tax attempt income. Uh. You know, never goes out of style.
25:01
Speaker 1: And with higher taxes, of course there's going to be
25:03
Speaker 1: more demand. Uh. So you know, that's it's going to
25:07
Speaker 1: be an interesting dynamic to watch in the coming few months.
25:14
Speaker 1: So Joe talked us about some of the indussease and
25:16
Speaker 1: you know, where you might be able to buy protection
25:19
Speaker 1: in terms of the markets, given you know, the amount
25:22
Speaker 1: of chaloes that we've seen just this week alone and
25:24
Speaker 1: the fact that there's potential for more chaos in the
25:26
Speaker 1: next two weeks. Wow. Uh, well, you know, I think
25:31
Speaker 1: you know, we carried an interesting story earlier this week
25:35
Speaker 1: about municipal bond insurance making a big comeback, and I
25:39
Speaker 1: just wanted to say a word about that. That was
25:41
Speaker 1: a very interesting thing because, like you said, there's so
25:43
Speaker 1: much chaos in the market and so many uh, there
25:47
Speaker 1: was so much fear of you know, the economy cratering
25:52
Speaker 1: and causing more damage to state's municipalities that uh, you
25:56
Speaker 1: know in in there's a big increase to UH. I
25:59
Speaker 1: think it was something like thirty four billion dollars. The
26:02
Speaker 1: municipal bonds were insured, and people look out, you know,
26:05
Speaker 1: on the horizon and think it's probably gonna be more
26:08
Speaker 1: bonds ensured because that fear of default and economic erosion
26:16
Speaker 1: for a lot of states and especially municipalities is still there.
26:19
Speaker 1: So people were saying, you know, insured bonds, it's probably
26:23
Speaker 1: gonna be more of them. Ian. Hey, Joe, thanks so
26:27
Speaker 1: much for joining us. We always appreciate chatting with you
26:30
Speaker 1: on because it means it's Friday's. When we talk to
26:32
Speaker 1: Joe Misac, that means it's Friday's. That's a good thing.
26:34
Speaker 1: John my sac Muni's editor for Bloomberg Briefs giving us
26:38
Speaker 1: the update on the municipal bond market. And I'll tell
26:40
Speaker 1: you if Annie, that state and local tax issue is
26:44
Speaker 1: a big one for the folks in the metro New
26:46
Speaker 1: York area, Los Angeles, San Francisco, that was really a big,
26:51
Speaker 1: big issue. Absolutely, we're seeing more and more companies open
26:55
Speaker 1: what they're calling basses in Florida. They're they're maintaining that
26:58
Speaker 1: they're saying in New York, but I wonder you know
27:01
Speaker 1: where the books are actually tottled up. Yeah, it'll be
27:04
Speaker 1: interesting to see to what extent the Biden administration in
27:07
Speaker 1: the Democrats in Congress King perhaps roll back that sotcap.
27:13
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
27:15
Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever
27:19
Speaker 1: a podcast platform you prefer. I'm Bonnie Quinn. I'm on
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Speaker 1: Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm on
27:25
Speaker 1: Twitter at pt Sweeney. Before the podcast, you can always
27:28
Speaker 1: catch us worldwide at Bloomberg Radio