December 8, 2023 • 36 mins
Becky Frankiewicz, Chief Commercial Officer at ManpowerGroup, shares her thoughts on the November jobs report and employment trends. Chris Giancarlo, former Chairman of the CFTC, Senior Counsel at Willkie Farr & Gallagher, discusses testing new technologies for the future of money with The Digital Dollar Project. “Fragrance Queen” Linda G. Levy, President of The Fragrance Foundation, has gift-giving ideas for this holiday season. And we Drive to the Close with Paul Christopher, Head of Global Investment Strategy at Wells Fargo Investment Institute.
Hosts: John Tucker and Mike Regan. Producer: Paul Brennan.
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Speaker 1 (00:01):
This is Bloomberg Business Wait inside from the reporters and
editors who bring you America's most trusted business magazine, plus
gloom oall business finance and tech news. The Bloomberg Business
Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2 (00:21):
Strong payrolls report relatively so seems to reinforce the soft
landing case. Let's discuss with our next guest, Mike Becky
Frankowitz a manpower group. She joins us from Chicago right now. Hey, Becky,
thanks for being with us. Your takeaway from today's report.
Speaker 3 (00:39):
Yeah, So, today's report shows a definite moderation happening in
the US labor market. It is a cooling, I would say,
it's not a collapse. We are seeing some month over
months softness, but some of that is welcome because now
employers are actually able to fill jobs at a faster
rate than they've been able to all year long. Ration
(01:00):
is the headline A slight glide, slow glide into a
more stable labor market, I would say, is what we
can look forward to for new years.
Speaker 4 (01:08):
Yeah, Becky, I wanted to talk about that time it
takes to fill a job these days. I was reading
a note you sent to us before the show, the
time to fill roles has dropped to forty nine days
in November from an average of one hundred and twenty
two days in twenty and twenty three year to date,
one hundred and twenty two days seems to me like
a tremendous amount of time to fill a job. I mean,
(01:31):
is that just off the charts Historically what would sort
of be like a healthy normal number of days for
that metric.
Speaker 3 (01:40):
Yeah, so it fluctuates, as you might imagine, but four
months to fill a job is unprecedented. So we're sitting
on about a month and a half, as you said,
forty nine days today. We like to see that at
about forty to forty five, So you know, it takes
a month a week or so to actually fill a
job in a normalized labor market, but a significant month
(02:00):
over month or for the year today average to the month,
and that's really the hallmark of this cooling reduction in demand. Again,
but for November, we saw double digit demand declines from
October to November across all sectors in the economy, and
the jobs report, while it looks quite robust, the underlying
(02:21):
thing we should be asking about, is hey, what's happening
with holiday hiring, what's happening with retail logistics slowed down?
What impact were the strikes on the numbers we saw
in government?
Speaker 5 (02:30):
So when you.
Speaker 3 (02:30):
Disaggregate the report, while it looks very quite positive, I
would say at face value, it's actually quite moderate and
gives us some signals of what to expect as we
close December.
Speaker 2 (02:40):
Is there any evidence that what we call labor hoarding
has evaporated or is that still there?
Speaker 3 (02:47):
Yeah, so we're not seeing the pandemic paranoia that I
would call the labor hoarding output of back after the crisis,
But we are seeing employers still hold on to their employees.
We're not seeing we're seeing some increases. You heard Spotify
Panera was in the news, but we're not seeing recession
type increases in layoffs. They're quite stable. And so what's
(03:10):
happening is employers are holding onto their talent. And there's
a new term in the marketplace. It's called talent mobility.
And what that means is within a company, employers don't
want to let go of their talent, and so they're
trying to move people around based on their capabilities versus
letting people go and rehiring for new skills, and I
think that's great news for the American employee, as we
(03:30):
all need to upskill and rescille for the future.
Speaker 4 (03:33):
You know, Becky, one of the other labor reports we
got this month that's sort of hinted at that slowdown
you're talking about was that Jolts survey. That's the government's
survey of job openings in the US, and it really
has softened quite a bit. I mean, it was again
one of those numbers that was just off the charts
last year, over twelve million job openings. This past month
(03:54):
that came down by about six hundred thousand to about
eight point seven million. How does that number job with
the data you see at Manpower, I mean, are the
number of available jobs really shrinking at a pretty rapid rate.
Speaker 5 (04:10):
Yeah.
Speaker 3 (04:11):
We saw about a twenty percent reduction from October Snovember
on available jobs in the countries. That's a pretty significant reduction.
I'll counter that though, by saying there are still one
point three jobs for every unemployed American that's looking for
work today. And you might say one point three, how
does that compare pre crisis? We were running about one
point two and So when I say we're getting back
(04:33):
into a more moderate labor market, today's labor market is
starting to look like twenty nineteen, not twenty twenty, which
is a positive.
Speaker 2 (04:41):
When Mike leaves Bloomberg the say afternoon, he's going to
go to his other job, kidding, what else could he do?
How many people out there actually have more than one
job at this point and has that changed dramatically?
Speaker 3 (04:57):
Yeah, so, great question. We're seeing about five percent Americans
hold more than one job. Some of those are multiple
part time jobs. Some of those are full time plus
part time, not super unusual as we go into the
holiday season. That's getting us back to pre pandormic, pre
pandemic averages. But you know, the holiday season has been surprising,
(05:17):
and so people are trying to earn money. So we
don't see this continued expansion in credit or you know,
pay as you go by now pay later that we're
starting to see really take off with the millennials. People
are needing to take on more jobs to get more
money to pay for their holiday season.
Speaker 4 (05:33):
Well, Bucky, where are the jobs shrinking the most? Are
there any certain sectors that are cooling down faster than others?
Speaker 5 (05:42):
Yeah?
Speaker 3 (05:42):
So quite sobering. We saw double digit declines across all
sectors in the economy, whether that's the fiery hot medical
space or whether that's in it. What I will say
are the top three jobs still in demand in the
country are medical about two point three million open jobs
in the country, followed by sales about nine hundred thousand
(06:02):
open jobs, and it another nine hundred thousand. And so
when we say it's cooling, not collapsing, that's because there's
still amazing jobs available for Americans in the economy, just
not as many as we're available.
Speaker 2 (06:14):
In October, he give us some advice for job seekers
or even job holders, how to hold on to their
jobs or what they should be looking for. I mean,
like I was mentioning, Mike pretty much does it all.
He's like the utility infielders, so he's never going to
get fucked.
Speaker 4 (06:31):
I'm mopping the floors later.
Speaker 3 (06:33):
They have me, So Mike, call me when you're ready
for something new. No, I would say for skills in
demand again, if you want to make yourself in demand,
medical is a hot space. If you didn't grow up
in that, it's a hot space not just for nurses,
the hot space for you CNA or nurse assistants. When
you get into software, almost anyone can get certification online
(06:54):
today to learn new skills like salesforce or SAP and
so make yourself position yoursell for in demand jobs. And
you can do a lot of this online. It doesn't
require you going to get a new degree. So that
would be for people seeking for people holding their job.
Now is a time to tuck in. You know, we're
seeing stabilization and the quick rate that had been increasing,
you know, hovering very high in terms of an average.
(07:17):
Now's a good time to kind of tuck in and
make sure you're developing yourself in your role versus looking
to change jobs extensively. It's probably best to wait and
not make that your new year's resolution, wait until Q
two when we anticipate some recovery in the marketplace.
Speaker 2 (07:31):
And I guess, I guess that would also mean if
like your employer wants you back in the office five
days a week, you better get back right.
Speaker 3 (07:37):
Yeah, that's a hot topic, John, that's a hot topic.
We're still seeing and if you scope out, it's still
a very tight labor market, still more jobs than people,
and so this negotiation, this tug of war happening between
in the officer out of the office. We're seeing that
settle about three days a week with a lot of flexibility.
Speaker 4 (07:59):
You know, Becky, the other big question that always comes
up as well, these are the hot jobs now, but
what about the future. And I kind of have a
selfish reason to ask for this. I have a daughter
who's a college student and heard all our friends that
is the hot topic is when I graduate in two years.
You know, where are the hot jobs? Is it still
(08:20):
in that medical and tech field? Do you think are
there other places to consider?
Speaker 2 (08:24):
What you're really asking is when is she going to
move out of it?
Speaker 1 (08:26):
Wait?
Speaker 5 (08:27):
Talk my kid?
Speaker 2 (08:28):
A job is the question?
Speaker 4 (08:29):
And we only have about thirty seconds.
Speaker 3 (08:31):
Yes, I have three in college, so I understand.
Speaker 6 (08:34):
Go for STEM.
Speaker 3 (08:36):
STEM jobs are still going to be the future. AI,
anything with data that's going to be a hot field
and fairly future proof for both of our of our kids.
Speaker 4 (08:46):
Good advice, AI, John, It's all about AI.
Speaker 2 (08:49):
Okay, Becky, thanks a lot. It looks like Becky's working
from home. I'm just saying, Becky Frankowitz, Manpower Group joining
us from Chicago. Let me to call you out on that.
Speaker 1 (08:59):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from three to six Eastern Listen on
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Speaker 4 (09:13):
All right, John, I have a pop quiz for you already,
no pressure lay it on me if I give you
the initials cb DC.
Speaker 2 (09:22):
Do you know what I'm talking about b DC. I'm
gonna imagine it has something to do with something I
don't understand, which is the world of crypto. You're absolutely right, Michael.
I'll just tell you well, as a thing that really
scares me about crypto is the fact that it's the
number one topic of the barbershop. And when that happens,
that's like a contrarian indicator to me run and hide.
Speaker 4 (09:45):
That's like the shoeshine Boy with JP Morgan. Well, we've
got a great guest here today to explain it all
to us. His name is Chris John Carlow. He is
the former chairman of the Commodity Futures Training Commission and
it's now a senior counsel at the law firm of Wilkie,
far and Gallagher, and he is co founder of Something
(10:07):
called the Digital Dollar Project, which is a non profit
group focused on exploring digital innovation in money and future
proofing the US dollar. Chris, thanks so much for joining
us today.
Speaker 5 (10:20):
Mike, it's great to be with you. Thank you for
the introduction.
Speaker 4 (10:23):
And Chris, I try, I've tried several times to explain
what a CBDC is. You know, I think most people
when they think of their money, they view it on
their phone or on a computer screen. They think it's
digital already. But could you just sort of explain to us,
in Layman's term, what the difference is between a CBDC,
(10:43):
a central bank digital currency, and what we think of
money today.
Speaker 7 (10:47):
Sure, CBDC stands for central bank digital currency, and the
concept is it's digital money, digital currency. That means it's
on somewhere on a digital network, as opposed to Sydney
simply on a bank balance sheet. But it enjoys the
full faith and credit of the US government, unlike a
stable coin, which may have stores of reserves of currency
(11:11):
or treasury securities, but is based upon the credit of
a corporate institution, of a private sect director.
Speaker 4 (11:17):
And so what is the future of the CBDC, I mean,
are we definitely in the US going to see one soon.
Speaker 7 (11:26):
No, but we will be seeing cbdc's of all kinds
here in the United States, whether the United States deploys
a digital dollar or not, because one hundred and thirty
countries around the world are currently exploring central bank digital
currency or CBDCs.
Speaker 2 (11:40):
We have like Nicaragua has already done it, has has
it not?
Speaker 7 (11:43):
Well, let's put outside small economies. China has already done it,
and they already have it in two hundred and sixty
million Chinese citizens' wallets.
Speaker 5 (11:53):
The European Union.
Speaker 7 (11:54):
Has moved from exploration to now development of a digital
euro and they expect to have it in place in
the next two or three years.
Speaker 2 (12:00):
So see we're seeing deployed. Does it work?
Speaker 5 (12:05):
China works.
Speaker 7 (12:06):
It's actually quite sophisticated, it's quite powerful, and in a
matter of time, China will not only use it for
domestic use, but will export it around the world as
an export product. You can imagine in say ten years,
a digital boulevard, which is basically a white label version
of China's digital yu Won. It'll have interoperability with China's
digital yu Wan for payments for say building up port
(12:28):
facilities or water treatment facilities, but it will be white
labeled as a digital boulevard, you.
Speaker 4 (12:34):
Know, Chris, I think one of the sort of backlashes
that comes up when this topic comes up is that
the government will be able to sort of track exactly
what you do with your money. And I feel like,
especially in the US, you know, people love their privacy. Politics.
Privacy is a big issue. How big of a stumbling block.
Speaker 6 (12:53):
Is that issue?
Speaker 5 (12:54):
Do you think so, Mike.
Speaker 7 (12:55):
First of all, it's a very legitimate concern. It's it's
you know, those those reports, sentatives like Tom Emmer and
Congress and dissentists that have talked about this.
Speaker 5 (13:04):
They're not wrong to be concerned.
Speaker 7 (13:05):
About this because the benchmark thus far is China's digital Yuan,
which is designed for full surveillance of the population.
Speaker 5 (13:14):
And if that model.
Speaker 7 (13:15):
Were to be the basis for a digital currency here
in the United States, it would be a disaster.
Speaker 5 (13:19):
It would violate the.
Speaker 7 (13:20):
Fourth Amend of the Constitution, amongst other things, but it
would be a disaster. But let's put that in context
for a second. So can a stable coin, Okay, so
can any type of centralized system of value is going
to be a honeypot for massive amount of data, So
whether the government does it directly with a digital currency
or does it indirectly by pressuring stable coin operators to
(13:41):
suck out all the data and hand it over to
the government, as as they've done with social media platforms.
The concern about privacy is the key concern. That's why
we form the Digital Dollar Project to really encourage the
United States to lead with its values. The United States
doesn't need to focus on whether or not to deploy
digital dollar right now, but it must take a leadership
(14:04):
seat at the table that is today deciding what these
digital networks are valuaboth sovereign and non sovereign are going
to look like. Because our economic competitors like Europe and
our economic adversaries like China are at the table right now,
and in China's case, they want to ensure a digital
future of money that is safe for surveillance and save
(14:24):
for censorship. We need to assure a digital future that's
safe for democracy.
Speaker 2 (14:28):
Does a central banks surrender anything in terms of monetary policy?
By going down this path.
Speaker 7 (14:35):
Designed right, they could actually obtain much more efficient tools
of monetory policy. So take the COVID disaster, for example,
what did our government do. It tried to issue paper
checks to people because it had no digital means of distributing.
Many people who were locked up at home, couldn't get
to a bank or didn't have bank accounts. But with
digital money, you could load it right onto their mobile
(14:57):
device and do something that you can't do with cash,
engage in online commerce.
Speaker 5 (15:02):
So a digital currency.
Speaker 7 (15:03):
Could actually be a great tool if we can get
the other issues like privacy, like financial inclusion, like interoperability,
and like resilience to penetration.
Speaker 5 (15:13):
If we can get those issues.
Speaker 2 (15:14):
Right, I can feel people out there saying, John and
Mike ask them about ETFs. What's happening? Can you like
jump into that? Where are we with a bitcoin ETF
or whatever?
Speaker 7 (15:27):
So you know, when I was at the CFTC, we
green lighted the first regulated market for any type of crypto,
and that was bitcoin futures in the US.
Speaker 5 (15:34):
And that was five years ago.
Speaker 7 (15:35):
And that market today is liquid, it's transparent, it's operating
very very well, and it's fully regulated. It was on
that bitcoin futures market that the SEC green lighted and ETF.
Today we do have an ETF, but it's based upon
the bitcoin future, not based upon the spot market. What
we're talking about here is green lighting and ETF on
(15:57):
the spot market. Thus far, the SEC has been unwilling
to do it because the spot market is actually outside
the CFTC's jurisdiction. Long story which I won't go into now,
but it's outside. Congress is toying, and there's some bills
that would give the CFTC oversight of that, which would
make the SEC's.
Speaker 5 (16:14):
Job much easier. Now.
Speaker 7 (16:16):
Having said that, there's a lot of reason to believe
that the SEC.
Speaker 5 (16:19):
May be getting ready for an ETF.
Speaker 7 (16:21):
On the spot bitcoin and ethery of markets right now.
And if we look around the globe, Canada's already done it,
Germany's done it. There are other functioning markets that are healthy,
that are well regulated, and so I think there's very
good arguments that the SEC should and I think there's
anecdotal evidence that they will green light that product sometime
(16:43):
in the beginning.
Speaker 5 (16:44):
Of the year.
Speaker 4 (16:44):
Yeah, Chris, I'd love it if you could put your
old regulator's hat back on from your days at the CFTC,
because we've had such an aggressive crackdown in the last
year or two. You know, we've all seen Sam bankman
Fried go to jail Cz, the co founder of Bui Dance,
just pled guilty. On and on and on the list
goes on. Have we seen all the regulatory actions, all
(17:07):
the enforcement actions, all the criminal actions that need to
be done to clean up the space, or do you
think there's more work to do?
Speaker 5 (17:13):
Well, certainly we've seen the big ones.
Speaker 7 (17:15):
I think FTX and Finance long rumored are the big
ones in that category. I'm not aware of any other
big ones. But let me put in context if I
could both the regulatory actions and the criminality, and I
want to if I could just go back one hundred
and fifty years of another period of American history when a
major new technology came along that transformed the United States,
(17:36):
and that was the railroad. The railroad allowed us to
tie together a series of regional economies in one national economy,
and so it was fundamental to our nation's progress for
the next hundred and fifty years. But remember it was
accompanied by a myriad of scandals and frauds in.
Speaker 5 (17:53):
The sale of railroad stocks.
Speaker 7 (17:55):
You know, famous names like the Trasks and others were
involved in all kinds of fraudile behavior selling stocks and
roads that didn't exist. We're now facing another new technology that,
in a similar way, has the ability to tie together
a whole disparate set of economic activity, and I believe
will in the twenty first century transform finance and banking
and money itself. But it's not that surprising that it's
(18:19):
accompanied by a series of high flying scandals which will
look back to someday the way we look back to
the Vanderbilts and the Trasks and others as being speculators
in a new technology. But the technology itself has a
tremendous amount of value.
Speaker 2 (18:33):
Chris, thanks for stopping by the students today. We appreciate it. Chris.
John Carlos in your counsel at Wilkie foreign Gallagher with
the Digital Dollar Project. And let me give you a
bitcoin quote. How about that up three percent today forty
four thousand, six hundred and sixty six dollars per token.
Speaker 1 (18:54):
You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2 (19:13):
What are you suppose you're gonna get me.
Speaker 4 (19:14):
For Christmas for you, John, I was thinking, Uh, no.
Speaker 2 (19:20):
A scented candle.
Speaker 4 (19:21):
Sense it candle, no offense, But I feel like I
feel like your fragrance could use an upgrade.
Speaker 2 (19:27):
Oh, why would I be offended by that? Michael? Anyway,
this is a scented candle that we have in studio.
And you know what, I take a whiff of it.
You know what it smells like to me?
Speaker 4 (19:37):
I got a hint of cinnamon.
Speaker 2 (19:38):
I got a hint of fifth Avenue. There you go,
the Fragrance Queen. It's smells. Prince Queen is with this.
Linda Levy is president of the Fragrance Foundation. What's the
Fragrance Foundation?
Speaker 8 (19:53):
The Fragrance Foundation is a not for profit organization whose
members unite and gather about the passion and artistry of fragrance.
Speaker 2 (20:05):
Wow, what's this fragrance that you brought in in the
so in.
Speaker 8 (20:08):
Studio today, I've brought you nest candle which is called
Holiday And for the first time ever in New York City,
from about sixty second Street to forty seventh Street, the
avenue is scented with this scent.
Speaker 2 (20:25):
Oh, and it makes me want to go out and
buy stuff.
Speaker 8 (20:28):
Well, it makes New York City smell a lot better,
as you can imagine. And second of all, this particular
fragrance is in the White House right now for when
they decorated for holiday. But being on the avenue is
a first ever. And I would say that all of
the tourists that I see walking down the avenue are
really enjoying it.
Speaker 2 (20:46):
Now. Is this really the kind of gift to get
somebody that is so hard to buy for, like Mike
Reagan a scented candle or something along those lines.
Speaker 8 (20:56):
Well, John, I'm glad you asked. It just so happens
that most of the frame's business is done at Christmas time.
We consider the holiday season probably from about Thanksgiving time
through December twenty fifth. We do about thirty five percent
of the entire year in the months of end of October,
November and December. It's a very big time for us.
Speaker 4 (21:18):
You know, Linda, we sort of have one track minds
here at Bloomberg in that whenever any topic comes up,
we have to wonder, well, what's the market angle, what's
the economics angle? And I'm curious how the fragrance industry
fits into the economic cycle. You know, do people buy
less perfumes, for example, when the economy slows down, or
(21:39):
is it the type of thing where you know, John
says to his significant other, no diamond earrings this this year,
you're going to get some perfume. You're going to get
a sunny candle. How does do fragrances fit into the
economic cycle.
Speaker 8 (21:51):
It's a very good question because fragrance business was good
before the pandemic, but it is a surprise to most
during the pandemic, fragrance business has actually increased significantly, and
it has continued to do so. There are a few
reasons why. One reason, for instance, like this candle sitting
in front of you, is people were spending a lot
(22:13):
of time home and they really wanted to enhance their environment.
Another thing that happened was people weren't really getting dressed
up a lot. They were in front of the zoom screen.
So while they weren't getting very dressed up or investing
in fashion, they were really enjoying what we call the
invisible accessory, and they wanted some sort of ID. And
(22:34):
the last thing, which I'm sure you could relate to
is during such a difficult, challenging time, and we have
much of that now too. People really use fragrance to
transport themselves to another time or place like where did
you go on vacation? Or what did your grandmother smell like?
Or that ant that you haven't seen. So our business
and fragrance is quite robust.
Speaker 2 (22:55):
Is there some sort of healing aspect to all this?
Speaker 8 (23:00):
Yes, there is another reason that the fragrance business is
doing well. Is self care and home spas are really important.
Now you are just on the journey with me to
become fragrance experts. But sense like lavender, eucalyptus and others
are very spa like sense that a lot of people
(23:20):
like to surround themselves in their home or when they're
you know, taking the bath. Remember, even if you think
you're not wearing fragrance, you probably are.
Speaker 4 (23:29):
And are there sort of classic standard fragrances or is
there sort of a fad elements to it all? Are
there different fragrances that come in in out of fashion?
Speaker 8 (23:38):
Good question too. The top ten fragrances for years have
had a lot of names like Christian Dior, Chanel, etc.
I would say that a lot of designer fragrances are
up there, but hitting the top fifteen or ten. Once
in a while there's an interruption. Carolina Herrera, for instance,
has this one. The perfume bottle looks like a stiletto,
(24:01):
and it's really really popular. And I also think that
it's important for you to know. In the old days,
as I call it, there were women's fragrances, there were
men's fragrances. But now the biggest thing is there are
universal fragrances, which means regardless of gender identity, since have
become popular without having those labels.
Speaker 2 (24:23):
Okay, I have to ask the intersection of fragrances and yes,
artificial intelligence, is there such a thing?
Speaker 8 (24:29):
There is a connection. I often get the question will
perfumers be creating fragrances in the future or will it
be done by a robot or a computer. I'm here
to say that AI will not take over the creative
aspect and what we are so passionate about, you know,
will artists go away? Will musicians go away? Will chefs
(24:50):
go away?
Speaker 7 (24:51):
Know?
Speaker 8 (24:52):
And therefore we think, even though it's a great help
to us, it gives us a lot of data because
fragrances have been made for centuries, but it will not
replace what is today.
Speaker 2 (25:01):
You know, when I come in on my commute in
the middle of the night, I pass in Union Beach,
New Jersey, under thirty six the campus of Internet IFF
International Fragrances and Flavors or whatever it is that is
it out front. They have a part of that campus
this exotic looking greenhouse with all these crazy looking plants.
(25:23):
So begs the question where do these fragrances and scents
come from?
Speaker 8 (25:28):
You don't even realize it, but you figured it out.
The story on fragrances around the entire globe. There are
ingredients vettevire hyacinth roses all over and down in New Jersey.
You saw a greenhouse that I actually went into. What
IFF did is they gathered many different plants that exist
(25:50):
all over the world and they have them living together.
I've gone through there, and that brings something else. You
notice there's sort of a lab or an ugly building.
Excuse me for saying, next to this gorgeous, big greenhouse.
What they do is something special in fragrance. We call
it headspace. So instead of using roses and wiping out
planet Earth, someone from the lab goes into that greenhouse, extracts,
(26:15):
goes back to the lab identifies it and they can
recreate the scent from that rose or plant and actually
not wipe out the earth. So that greenhouse is a tour,
I'd be happy to take you on.
Speaker 2 (26:27):
Oh yeah, no, that'd be very cool. Yeah, right in
my own house.
Speaker 4 (26:32):
Well, Linda, you know, IFF is obviously the one of
the big players in this industry. I think a lot
of our listeners are always have one ear open to
stocks to buy or sell. Any other big players in
the industry that we don't know about.
Speaker 8 (26:45):
Yes, Iff is what we call a fragrance house, and
like you said, they make all of the companies I'm
going to name, make both fragrances and flavors. Another very
big one is Vividon. It's based in Switzerland. They do
the same and they're even bigger than IFF, I believe.
And another one that's one of the top three is
just merged and now it's called DSM Ferminish. So those
(27:09):
are the three biggest global fragrance houses that make fragrances
and flavors for the entire world. There are some that
are smaller, but those are the three big Should.
Speaker 2 (27:19):
I stick with old Spice?
Speaker 8 (27:22):
I must tell you any fragrance you wear is a
good fragrance. That old spice is still going strong.
Speaker 2 (27:28):
Yeah after all these years, Mike, So now you know
what to get me for Christmas. A scented candle. But
it has to smell like old.
Speaker 4 (27:34):
Space old spice as they need to have a candle line.
Speaker 2 (27:37):
That's a good point.
Speaker 8 (27:38):
They probably will after hearing this today. But these are
not so expensive. You thought that this candle looks expensive,
Yes it does, but it's less than fifty dollars.
Speaker 2 (27:47):
All right, Linda, thanks a lot, Lnda Levy the fragrance queen.
This is Bloomberg.
Speaker 1 (27:53):
Umbmark a journal. Now about you let me?
Speaker 6 (28:00):
Oh no, no, no, no, who's going to John Honey?
Speaker 2 (28:04):
Please, I'll travel ecuse Ma, I want to drive.
Speaker 3 (28:07):
It's a question.
Speaker 1 (28:14):
This is the drive to the clothes.
Speaker 5 (28:18):
We'll drive around each other down.
Speaker 2 (28:19):
On Bloomberg Radio. Yeah, on John Tucker along with Mike Reagan.
You are listening and watching Bloomberg Business Week on YouTube
as we drive to the clothes. Egle I Reagan pointed
out that the S and P five hundred year today
up twenty percent. Right now, just cross that mark a
little while.
Speaker 4 (28:38):
That's your shabby, John, that's your shabby.
Speaker 2 (28:40):
Well, look at the tech heavy Nasdaq, as they say,
up thirty seven percent for the year, now only a
Measley nine and a half percent. That soft landing narrative, Mike,
that that seems to have taken hold of the risk markets.
And UH, with that is the backdrop. Let's bring in
our next guest. Paul chris Her is head of Global
(29:01):
Investment Strategy at Wells Fargo Investment Institute, joining us from
Saint Louis. Hey, give us your perspective after the data
we heard. We just pointed out that we got the
inflation expectations from University of Michigan, of course earlier, the
job support. How does that all stack up for equities.
Speaker 6 (29:22):
Yeah, it stacks up in a way that takes advantage
of liquidity that's available in this market right now. Certainly
the Treasury's decision or late in October to sell a
lot of tea bills has helped a lot of liquidity
return to markets. And the soft landing scenario it's always
been there. It's been there all year. It won't really
go away. But we think, you know, this is really
(29:45):
an extended rally. It's been a long rally, but we
think there's going to be better opportunities for our clients
to invest at better prices come the beginning of the year,
or at least early in the year, because this rally
is really just way over done.
Speaker 4 (30:00):
You know, Paul, I was reading a note you sent
us before the show. One stat really caught my eye,
and that is that you write that history shows that
the S and P five hundred doesn't bottom until on
average six months after the first FED rate cut. So
I'm wondering in this scenario, what exactly are we talking
about when we when we say the bottom, I mean,
(30:22):
could could it go all the way back to that
low from last year, because that would be quite a
sell off.
Speaker 6 (30:29):
That would be that would be quite a sell off,
and for that you'd need some sort of a shock.
But there's plenty of them lined up, whether it's government
shutdown or an explosion, a further explosion in geopolitics, maybe
a combination of the shutdown and the usual election year
uncertainties as we as we head into the beginning of
the year with not really a good idea of who
(30:50):
the Republican nominee is going to be, the maybe not
even the Democratic nominee, So there's plenty of uncertainties to
start the year, and then you've got all those consumers
with their by now pay later plans since Black Friday,
and those are going to start coming due in the
early part of next year. We could be in for
a at least a consolidation, if not a correction, and
then some event could send us back down. I mean,
(31:12):
think about how narrow this rally has been. NASDAC up
thirty seven percent, the Dow only up nine percent. The
average SMP stock has not done nearly as well as
those top seven names, and that gives us quite a
bit of pause thinking about an economy that's slowing and
really vulnerable to some of these shocks going into the
new year.
Speaker 2 (31:31):
Well, Paul, tell everybody what happens at the end of
the year. For fund managers like yourself, is everybody under
pressure to make the final push get gains before the
year closes out.
Speaker 6 (31:43):
Sure, there there's some there's some straightening out of books
to get things nice and pretty for the end of
the year. And then in January you're going to have
a lot of four to one K money coming in
and that's gonna that's gonna further boost the market. But
the seasonals turn negative or at least neutral in the
immediate aftermath of that, and then more negative as we
(32:03):
headed towards the spring, and perhaps just as the economy
it continues to weaken. This this this jobs report today
for example, again showing resilience. Yeah, maybe, but the trend
is still lower. And as consumers run out of cash
and they stop spending, a labor market that's better balance
(32:24):
than it was a year and a half ago is
a labor market that's more prone to layoffs. So resilience
is one of those things that, like the economy, can
can turn gradually gradually and then suddenly.
Speaker 4 (32:37):
You know, Paul, break it down for us about you know,
where exactly we should be positioning our investments right now.
I mean, I keep hearing people still referring to those
rates on cash. You know, money market mutual fund rates
are still very attractive, especially compared to you know, pre
pandemic levels where they're basically paying nothing. I mean, is
(32:58):
it as simple as that just hide out in a
money fund?
Speaker 6 (33:02):
Well for some people maybe, but let me get to
that in a second. We've been overweight the S and
P five hundred for a good part of this year,
and we're not negative on stocks. I don't mean to
suggest that we are, but we took profits in tech
about the beginning of this excuse me, about the middle
of the year, and we think now as really the
time has been the time to be a little bit
more quality oriented, a little bit more defensive. We see
(33:25):
industrials and materials as places that look interesting as infrastructure
spending and reshoring of companies gains more steam in twenty
twenty four. We like healthcare yet hasn't been a participant
in this rally, but we like the pricing there and
we like the long term trends. So a quality orientation
during a period of volatility not a bad thought. Now
(33:46):
let me return to your thought on fixed income. We
have clients and lots of investors who've taken advantage of CDs,
let's say in that four and a half to five
percent range. My question for them is always what happens
after that? Seas de matures in a year and you've
got to skate past all this volatility. But then rates
might be lower by the end of next year according
(34:07):
to the market consensus. Would you still sign up for
it at four would you still sign up at three
and a half? If we think the equity markets are
going to come back strong. In other words, the problem
is people get used to high yields on CDs, but
those yields may not be around for as long as
the investors' goals. So you have to kind of think
about this in the longer In the longer term setting,
I would say as short term treasury bills here, yes,
(34:32):
something with a secondary market if you want to skate
over some volatility we expect in the early part of
next year, first quarter probably that's not a bad idea.
But then get out of that in time for the
market to bottom, and we think that will happen sometime
in the second quarter, and that's when your opportunities really broaden.
Small caps, mid caps, more cyclically oriented sectors, perhaps financials,
(34:56):
perhaps energy again. So we think there'll be a lot
more opportunities. That short term cash position that pays a
little bit of interest could be useful as long as
one doesn't get too used to it.
Speaker 2 (35:06):
Hey, Paul, your take on AI fad djure or what.
Speaker 6 (35:12):
It's one of those disruptors we talk about this economic disruptors,
computers PCs, or disruptors software for the personal computer, the
laptop computer. Those were all disruptors. We think AI is
definitely in that category, Generative AI in particular. We wrote
a report on this a couple of months ago. But
these trends tend to take some time to develop, and
(35:35):
in the meantime, what will be the path of regulatory
action regarding AI as it develops. We've seen a lot
of talk about that in the press, but Congress and
the President may be still trying to decide how to
approach that. That's a big uncertainty. We don't think the
market is pricing that in yet. And the second piece
of it is look over time, other companies will come
(35:57):
in that might do AI better than some of the
ones on the market today.
Speaker 2 (36:00):
All right, Paul, Always a pleasure. Appreciated, Paul Christopher at
a global investment strategy at Will's Fargo Investment Institute from
Saint Louis. This is Bloomberg.
Speaker 1 (36:10):
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Speaker 2 (00:21):
Strong payrolls report relatively so seems to reinforce the soft
landing case. Let's discuss with our next guest, Mike Becky
Frankowitz a manpower group. She joins us from Chicago right now. Hey, Becky,
thanks for being with us. Your takeaway from today's report.
Speaker 3 (00:39):
Yeah, So, today's report shows a definite moderation happening in
the US labor market. It is a cooling, I would say,
it's not a collapse. We are seeing some month over
months softness, but some of that is welcome because now
employers are actually able to fill jobs at a faster
rate than they've been able to all year long. Ration
(01:00):
is the headline A slight glide, slow glide into a
more stable labor market, I would say, is what we
can look forward to for new years.
Speaker 4 (01:08):
Yeah, Becky, I wanted to talk about that time it
takes to fill a job these days. I was reading
a note you sent to us before the show, the
time to fill roles has dropped to forty nine days
in November from an average of one hundred and twenty
two days in twenty and twenty three year to date,
one hundred and twenty two days seems to me like
a tremendous amount of time to fill a job. I mean,
(01:31):
is that just off the charts Historically what would sort
of be like a healthy normal number of days for
that metric.
Speaker 3 (01:40):
Yeah, so it fluctuates, as you might imagine, but four
months to fill a job is unprecedented. So we're sitting
on about a month and a half, as you said,
forty nine days today. We like to see that at
about forty to forty five, So you know, it takes
a month a week or so to actually fill a
job in a normalized labor market, but a significant month
(02:00):
over month or for the year today average to the month,
and that's really the hallmark of this cooling reduction in demand. Again,
but for November, we saw double digit demand declines from
October to November across all sectors in the economy, and
the jobs report, while it looks quite robust, the underlying
(02:21):
thing we should be asking about, is hey, what's happening
with holiday hiring, what's happening with retail logistics slowed down?
What impact were the strikes on the numbers we saw
in government?
Speaker 5 (02:30):
So when you.
Speaker 3 (02:30):
Disaggregate the report, while it looks very quite positive, I
would say at face value, it's actually quite moderate and
gives us some signals of what to expect as we
close December.
Speaker 2 (02:40):
Is there any evidence that what we call labor hoarding
has evaporated or is that still there?
Speaker 3 (02:47):
Yeah, so we're not seeing the pandemic paranoia that I
would call the labor hoarding output of back after the crisis,
But we are seeing employers still hold on to their employees.
We're not seeing we're seeing some increases. You heard Spotify
Panera was in the news, but we're not seeing recession
type increases in layoffs. They're quite stable. And so what's
(03:10):
happening is employers are holding onto their talent. And there's
a new term in the marketplace. It's called talent mobility.
And what that means is within a company, employers don't
want to let go of their talent, and so they're
trying to move people around based on their capabilities versus
letting people go and rehiring for new skills, and I
think that's great news for the American employee, as we
(03:30):
all need to upskill and rescille for the future.
Speaker 4 (03:33):
You know, Becky, one of the other labor reports we
got this month that's sort of hinted at that slowdown
you're talking about was that Jolts survey. That's the government's
survey of job openings in the US, and it really
has softened quite a bit. I mean, it was again
one of those numbers that was just off the charts
last year, over twelve million job openings. This past month
(03:54):
that came down by about six hundred thousand to about
eight point seven million. How does that number job with
the data you see at Manpower, I mean, are the
number of available jobs really shrinking at a pretty rapid rate.
Speaker 5 (04:10):
Yeah.
Speaker 3 (04:11):
We saw about a twenty percent reduction from October Snovember
on available jobs in the countries. That's a pretty significant reduction.
I'll counter that though, by saying there are still one
point three jobs for every unemployed American that's looking for
work today. And you might say one point three, how
does that compare pre crisis? We were running about one
point two and So when I say we're getting back
(04:33):
into a more moderate labor market, today's labor market is
starting to look like twenty nineteen, not twenty twenty, which
is a positive.
Speaker 2 (04:41):
When Mike leaves Bloomberg the say afternoon, he's going to
go to his other job, kidding, what else could he do?
How many people out there actually have more than one
job at this point and has that changed dramatically?
Speaker 3 (04:57):
Yeah, so, great question. We're seeing about five percent Americans
hold more than one job. Some of those are multiple
part time jobs. Some of those are full time plus
part time, not super unusual as we go into the
holiday season. That's getting us back to pre pandormic, pre
pandemic averages. But you know, the holiday season has been surprising,
(05:17):
and so people are trying to earn money. So we
don't see this continued expansion in credit or you know,
pay as you go by now pay later that we're
starting to see really take off with the millennials. People
are needing to take on more jobs to get more
money to pay for their holiday season.
Speaker 4 (05:33):
Well, Bucky, where are the jobs shrinking the most? Are
there any certain sectors that are cooling down faster than others?
Speaker 5 (05:42):
Yeah?
Speaker 3 (05:42):
So quite sobering. We saw double digit declines across all
sectors in the economy, whether that's the fiery hot medical
space or whether that's in it. What I will say
are the top three jobs still in demand in the
country are medical about two point three million open jobs
in the country, followed by sales about nine hundred thousand
(06:02):
open jobs, and it another nine hundred thousand. And so
when we say it's cooling, not collapsing, that's because there's
still amazing jobs available for Americans in the economy, just
not as many as we're available.
Speaker 2 (06:14):
In October, he give us some advice for job seekers
or even job holders, how to hold on to their
jobs or what they should be looking for. I mean,
like I was mentioning, Mike pretty much does it all.
He's like the utility infielders, so he's never going to
get fucked.
Speaker 4 (06:31):
I'm mopping the floors later.
Speaker 3 (06:33):
They have me, So Mike, call me when you're ready
for something new. No, I would say for skills in
demand again, if you want to make yourself in demand,
medical is a hot space. If you didn't grow up
in that, it's a hot space not just for nurses,
the hot space for you CNA or nurse assistants. When
you get into software, almost anyone can get certification online
(06:54):
today to learn new skills like salesforce or SAP and
so make yourself position yoursell for in demand jobs. And
you can do a lot of this online. It doesn't
require you going to get a new degree. So that
would be for people seeking for people holding their job.
Now is a time to tuck in. You know, we're
seeing stabilization and the quick rate that had been increasing,
you know, hovering very high in terms of an average.
(07:17):
Now's a good time to kind of tuck in and
make sure you're developing yourself in your role versus looking
to change jobs extensively. It's probably best to wait and
not make that your new year's resolution, wait until Q
two when we anticipate some recovery in the marketplace.
Speaker 2 (07:31):
And I guess, I guess that would also mean if
like your employer wants you back in the office five
days a week, you better get back right.
Speaker 3 (07:37):
Yeah, that's a hot topic, John, that's a hot topic.
We're still seeing and if you scope out, it's still
a very tight labor market, still more jobs than people,
and so this negotiation, this tug of war happening between
in the officer out of the office. We're seeing that
settle about three days a week with a lot of flexibility.
Speaker 4 (07:59):
You know, Becky, the other big question that always comes
up as well, these are the hot jobs now, but
what about the future. And I kind of have a
selfish reason to ask for this. I have a daughter
who's a college student and heard all our friends that
is the hot topic is when I graduate in two years.
You know, where are the hot jobs? Is it still
(08:20):
in that medical and tech field? Do you think are
there other places to consider?
Speaker 2 (08:24):
What you're really asking is when is she going to
move out of it?
Speaker 1 (08:26):
Wait?
Speaker 5 (08:27):
Talk my kid?
Speaker 2 (08:28):
A job is the question?
Speaker 4 (08:29):
And we only have about thirty seconds.
Speaker 3 (08:31):
Yes, I have three in college, so I understand.
Speaker 6 (08:34):
Go for STEM.
Speaker 3 (08:36):
STEM jobs are still going to be the future. AI,
anything with data that's going to be a hot field
and fairly future proof for both of our of our kids.
Speaker 4 (08:46):
Good advice, AI, John, It's all about AI.
Speaker 2 (08:49):
Okay, Becky, thanks a lot. It looks like Becky's working
from home. I'm just saying, Becky Frankowitz, Manpower Group joining
us from Chicago. Let me to call you out on that.
Speaker 1 (08:59):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from three to six Eastern Listen on
Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app,
or want us live on YouTube.
Speaker 4 (09:13):
All right, John, I have a pop quiz for you already,
no pressure lay it on me if I give you
the initials cb DC.
Speaker 2 (09:22):
Do you know what I'm talking about b DC. I'm
gonna imagine it has something to do with something I
don't understand, which is the world of crypto. You're absolutely right, Michael.
I'll just tell you well, as a thing that really
scares me about crypto is the fact that it's the
number one topic of the barbershop. And when that happens,
that's like a contrarian indicator to me run and hide.
Speaker 4 (09:45):
That's like the shoeshine Boy with JP Morgan. Well, we've
got a great guest here today to explain it all
to us. His name is Chris John Carlow. He is
the former chairman of the Commodity Futures Training Commission and
it's now a senior counsel at the law firm of Wilkie,
far and Gallagher, and he is co founder of Something
(10:07):
called the Digital Dollar Project, which is a non profit
group focused on exploring digital innovation in money and future
proofing the US dollar. Chris, thanks so much for joining
us today.
Speaker 5 (10:20):
Mike, it's great to be with you. Thank you for
the introduction.
Speaker 4 (10:23):
And Chris, I try, I've tried several times to explain
what a CBDC is. You know, I think most people
when they think of their money, they view it on
their phone or on a computer screen. They think it's
digital already. But could you just sort of explain to us,
in Layman's term, what the difference is between a CBDC,
(10:43):
a central bank digital currency, and what we think of
money today.
Speaker 7 (10:47):
Sure, CBDC stands for central bank digital currency, and the
concept is it's digital money, digital currency. That means it's
on somewhere on a digital network, as opposed to Sydney
simply on a bank balance sheet. But it enjoys the
full faith and credit of the US government, unlike a
stable coin, which may have stores of reserves of currency
(11:11):
or treasury securities, but is based upon the credit of
a corporate institution, of a private sect director.
Speaker 4 (11:17):
And so what is the future of the CBDC, I mean,
are we definitely in the US going to see one soon.
Speaker 7 (11:26):
No, but we will be seeing cbdc's of all kinds
here in the United States, whether the United States deploys
a digital dollar or not, because one hundred and thirty
countries around the world are currently exploring central bank digital
currency or CBDCs.
Speaker 2 (11:40):
We have like Nicaragua has already done it, has has
it not?
Speaker 7 (11:43):
Well, let's put outside small economies. China has already done it,
and they already have it in two hundred and sixty
million Chinese citizens' wallets.
Speaker 5 (11:53):
The European Union.
Speaker 7 (11:54):
Has moved from exploration to now development of a digital
euro and they expect to have it in place in
the next two or three years.
Speaker 2 (12:00):
So see we're seeing deployed. Does it work?
Speaker 5 (12:05):
China works.
Speaker 7 (12:06):
It's actually quite sophisticated, it's quite powerful, and in a
matter of time, China will not only use it for
domestic use, but will export it around the world as
an export product. You can imagine in say ten years,
a digital boulevard, which is basically a white label version
of China's digital yu Won. It'll have interoperability with China's
digital yu Wan for payments for say building up port
(12:28):
facilities or water treatment facilities, but it will be white
labeled as a digital boulevard, you.
Speaker 4 (12:34):
Know, Chris, I think one of the sort of backlashes
that comes up when this topic comes up is that
the government will be able to sort of track exactly
what you do with your money. And I feel like,
especially in the US, you know, people love their privacy. Politics.
Privacy is a big issue. How big of a stumbling block.
Speaker 6 (12:53):
Is that issue?
Speaker 5 (12:54):
Do you think so, Mike.
Speaker 7 (12:55):
First of all, it's a very legitimate concern. It's it's
you know, those those reports, sentatives like Tom Emmer and
Congress and dissentists that have talked about this.
Speaker 5 (13:04):
They're not wrong to be concerned.
Speaker 7 (13:05):
About this because the benchmark thus far is China's digital Yuan,
which is designed for full surveillance of the population.
Speaker 5 (13:14):
And if that model.
Speaker 7 (13:15):
Were to be the basis for a digital currency here
in the United States, it would be a disaster.
Speaker 5 (13:19):
It would violate the.
Speaker 7 (13:20):
Fourth Amend of the Constitution, amongst other things, but it
would be a disaster. But let's put that in context
for a second. So can a stable coin, Okay, so
can any type of centralized system of value is going
to be a honeypot for massive amount of data, So
whether the government does it directly with a digital currency
or does it indirectly by pressuring stable coin operators to
(13:41):
suck out all the data and hand it over to
the government, as as they've done with social media platforms.
The concern about privacy is the key concern. That's why
we form the Digital Dollar Project to really encourage the
United States to lead with its values. The United States
doesn't need to focus on whether or not to deploy
digital dollar right now, but it must take a leadership
(14:04):
seat at the table that is today deciding what these
digital networks are valuaboth sovereign and non sovereign are going
to look like. Because our economic competitors like Europe and
our economic adversaries like China are at the table right now,
and in China's case, they want to ensure a digital
future of money that is safe for surveillance and save
(14:24):
for censorship. We need to assure a digital future that's
safe for democracy.
Speaker 2 (14:28):
Does a central banks surrender anything in terms of monetary policy?
By going down this path.
Speaker 7 (14:35):
Designed right, they could actually obtain much more efficient tools
of monetory policy. So take the COVID disaster, for example,
what did our government do. It tried to issue paper
checks to people because it had no digital means of distributing.
Many people who were locked up at home, couldn't get
to a bank or didn't have bank accounts. But with
digital money, you could load it right onto their mobile
(14:57):
device and do something that you can't do with cash,
engage in online commerce.
Speaker 5 (15:02):
So a digital currency.
Speaker 7 (15:03):
Could actually be a great tool if we can get
the other issues like privacy, like financial inclusion, like interoperability,
and like resilience to penetration.
Speaker 5 (15:13):
If we can get those issues.
Speaker 2 (15:14):
Right, I can feel people out there saying, John and
Mike ask them about ETFs. What's happening? Can you like
jump into that? Where are we with a bitcoin ETF
or whatever?
Speaker 7 (15:27):
So you know, when I was at the CFTC, we
green lighted the first regulated market for any type of crypto,
and that was bitcoin futures in the US.
Speaker 5 (15:34):
And that was five years ago.
Speaker 7 (15:35):
And that market today is liquid, it's transparent, it's operating
very very well, and it's fully regulated. It was on
that bitcoin futures market that the SEC green lighted and ETF.
Today we do have an ETF, but it's based upon
the bitcoin future, not based upon the spot market. What
we're talking about here is green lighting and ETF on
(15:57):
the spot market. Thus far, the SEC has been unwilling
to do it because the spot market is actually outside
the CFTC's jurisdiction. Long story which I won't go into now,
but it's outside. Congress is toying, and there's some bills
that would give the CFTC oversight of that, which would
make the SEC's.
Speaker 5 (16:14):
Job much easier. Now.
Speaker 7 (16:16):
Having said that, there's a lot of reason to believe
that the SEC.
Speaker 5 (16:19):
May be getting ready for an ETF.
Speaker 7 (16:21):
On the spot bitcoin and ethery of markets right now.
And if we look around the globe, Canada's already done it,
Germany's done it. There are other functioning markets that are healthy,
that are well regulated, and so I think there's very
good arguments that the SEC should and I think there's
anecdotal evidence that they will green light that product sometime
(16:43):
in the beginning.
Speaker 5 (16:44):
Of the year.
Speaker 4 (16:44):
Yeah, Chris, I'd love it if you could put your
old regulator's hat back on from your days at the CFTC,
because we've had such an aggressive crackdown in the last
year or two. You know, we've all seen Sam bankman
Fried go to jail Cz, the co founder of Bui Dance,
just pled guilty. On and on and on the list
goes on. Have we seen all the regulatory actions, all
(17:07):
the enforcement actions, all the criminal actions that need to
be done to clean up the space, or do you
think there's more work to do?
Speaker 5 (17:13):
Well, certainly we've seen the big ones.
Speaker 7 (17:15):
I think FTX and Finance long rumored are the big
ones in that category. I'm not aware of any other
big ones. But let me put in context if I
could both the regulatory actions and the criminality, and I
want to if I could just go back one hundred
and fifty years of another period of American history when a
major new technology came along that transformed the United States,
(17:36):
and that was the railroad. The railroad allowed us to
tie together a series of regional economies in one national economy,
and so it was fundamental to our nation's progress for
the next hundred and fifty years. But remember it was
accompanied by a myriad of scandals and frauds in.
Speaker 5 (17:53):
The sale of railroad stocks.
Speaker 7 (17:55):
You know, famous names like the Trasks and others were
involved in all kinds of fraudile behavior selling stocks and
roads that didn't exist. We're now facing another new technology that,
in a similar way, has the ability to tie together
a whole disparate set of economic activity, and I believe
will in the twenty first century transform finance and banking
and money itself. But it's not that surprising that it's
(18:19):
accompanied by a series of high flying scandals which will
look back to someday the way we look back to
the Vanderbilts and the Trasks and others as being speculators
in a new technology. But the technology itself has a
tremendous amount of value.
Speaker 2 (18:33):
Chris, thanks for stopping by the students today. We appreciate it. Chris.
John Carlos in your counsel at Wilkie foreign Gallagher with
the Digital Dollar Project. And let me give you a
bitcoin quote. How about that up three percent today forty
four thousand, six hundred and sixty six dollars per token.
Speaker 1 (18:54):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from three to six on Bloomberg Radio,
the Bloomberg Business App, and YouTube. You can also listen
live on Amazon Alexa from our flagship New York station,
Just Say Alexa playing Bloomberg eleven thirty.
Speaker 2 (19:13):
What are you suppose you're gonna get me.
Speaker 4 (19:14):
For Christmas for you, John, I was thinking, Uh, no.
Speaker 2 (19:20):
A scented candle.
Speaker 4 (19:21):
Sense it candle, no offense, But I feel like I
feel like your fragrance could use an upgrade.
Speaker 2 (19:27):
Oh, why would I be offended by that? Michael? Anyway,
this is a scented candle that we have in studio.
And you know what, I take a whiff of it.
You know what it smells like to me?
Speaker 4 (19:37):
I got a hint of cinnamon.
Speaker 2 (19:38):
I got a hint of fifth Avenue. There you go,
the Fragrance Queen. It's smells. Prince Queen is with this.
Linda Levy is president of the Fragrance Foundation. What's the
Fragrance Foundation?
Speaker 8 (19:53):
The Fragrance Foundation is a not for profit organization whose
members unite and gather about the passion and artistry of fragrance.
Speaker 2 (20:05):
Wow, what's this fragrance that you brought in in the
so in.
Speaker 8 (20:08):
Studio today, I've brought you nest candle which is called
Holiday And for the first time ever in New York City,
from about sixty second Street to forty seventh Street, the
avenue is scented with this scent.
Speaker 2 (20:25):
Oh, and it makes me want to go out and
buy stuff.
Speaker 8 (20:28):
Well, it makes New York City smell a lot better,
as you can imagine. And second of all, this particular
fragrance is in the White House right now for when
they decorated for holiday. But being on the avenue is
a first ever. And I would say that all of
the tourists that I see walking down the avenue are
really enjoying it.
Speaker 2 (20:46):
Now. Is this really the kind of gift to get
somebody that is so hard to buy for, like Mike
Reagan a scented candle or something along those lines.
Speaker 8 (20:56):
Well, John, I'm glad you asked. It just so happens
that most of the frame's business is done at Christmas time.
We consider the holiday season probably from about Thanksgiving time
through December twenty fifth. We do about thirty five percent
of the entire year in the months of end of October,
November and December. It's a very big time for us.
Speaker 4 (21:18):
You know, Linda, we sort of have one track minds
here at Bloomberg in that whenever any topic comes up,
we have to wonder, well, what's the market angle, what's
the economics angle? And I'm curious how the fragrance industry
fits into the economic cycle. You know, do people buy
less perfumes, for example, when the economy slows down, or
(21:39):
is it the type of thing where you know, John
says to his significant other, no diamond earrings this this year,
you're going to get some perfume. You're going to get
a sunny candle. How does do fragrances fit into the
economic cycle.
Speaker 8 (21:51):
It's a very good question because fragrance business was good
before the pandemic, but it is a surprise to most
during the pandemic, fragrance business has actually increased significantly, and
it has continued to do so. There are a few
reasons why. One reason, for instance, like this candle sitting
in front of you, is people were spending a lot
(22:13):
of time home and they really wanted to enhance their environment.
Another thing that happened was people weren't really getting dressed
up a lot. They were in front of the zoom screen.
So while they weren't getting very dressed up or investing
in fashion, they were really enjoying what we call the
invisible accessory, and they wanted some sort of ID. And
(22:34):
the last thing, which I'm sure you could relate to
is during such a difficult, challenging time, and we have
much of that now too. People really use fragrance to
transport themselves to another time or place like where did
you go on vacation? Or what did your grandmother smell like?
Or that ant that you haven't seen. So our business
and fragrance is quite robust.
Speaker 2 (22:55):
Is there some sort of healing aspect to all this?
Speaker 8 (23:00):
Yes, there is another reason that the fragrance business is
doing well. Is self care and home spas are really important.
Now you are just on the journey with me to
become fragrance experts. But sense like lavender, eucalyptus and others
are very spa like sense that a lot of people
(23:20):
like to surround themselves in their home or when they're
you know, taking the bath. Remember, even if you think
you're not wearing fragrance, you probably are.
Speaker 4 (23:29):
And are there sort of classic standard fragrances or is
there sort of a fad elements to it all? Are
there different fragrances that come in in out of fashion?
Speaker 8 (23:38):
Good question too. The top ten fragrances for years have
had a lot of names like Christian Dior, Chanel, etc.
I would say that a lot of designer fragrances are
up there, but hitting the top fifteen or ten. Once
in a while there's an interruption. Carolina Herrera, for instance,
has this one. The perfume bottle looks like a stiletto,
(24:01):
and it's really really popular. And I also think that
it's important for you to know. In the old days,
as I call it, there were women's fragrances, there were
men's fragrances. But now the biggest thing is there are
universal fragrances, which means regardless of gender identity, since have
become popular without having those labels.
Speaker 2 (24:23):
Okay, I have to ask the intersection of fragrances and yes,
artificial intelligence, is there such a thing?
Speaker 8 (24:29):
There is a connection. I often get the question will
perfumers be creating fragrances in the future or will it
be done by a robot or a computer. I'm here
to say that AI will not take over the creative
aspect and what we are so passionate about, you know,
will artists go away? Will musicians go away? Will chefs
(24:50):
go away?
Speaker 7 (24:51):
Know?
Speaker 8 (24:52):
And therefore we think, even though it's a great help
to us, it gives us a lot of data because
fragrances have been made for centuries, but it will not
replace what is today.
Speaker 2 (25:01):
You know, when I come in on my commute in
the middle of the night, I pass in Union Beach,
New Jersey, under thirty six the campus of Internet IFF
International Fragrances and Flavors or whatever it is that is
it out front. They have a part of that campus
this exotic looking greenhouse with all these crazy looking plants.
(25:23):
So begs the question where do these fragrances and scents
come from?
Speaker 8 (25:28):
You don't even realize it, but you figured it out.
The story on fragrances around the entire globe. There are
ingredients vettevire hyacinth roses all over and down in New Jersey.
You saw a greenhouse that I actually went into. What
IFF did is they gathered many different plants that exist
(25:50):
all over the world and they have them living together.
I've gone through there, and that brings something else. You
notice there's sort of a lab or an ugly building.
Excuse me for saying, next to this gorgeous, big greenhouse.
What they do is something special in fragrance. We call
it headspace. So instead of using roses and wiping out
planet Earth, someone from the lab goes into that greenhouse, extracts,
(26:15):
goes back to the lab identifies it and they can
recreate the scent from that rose or plant and actually
not wipe out the earth. So that greenhouse is a tour,
I'd be happy to take you on.
Speaker 2 (26:27):
Oh yeah, no, that'd be very cool. Yeah, right in
my own house.
Speaker 4 (26:32):
Well, Linda, you know, IFF is obviously the one of
the big players in this industry. I think a lot
of our listeners are always have one ear open to
stocks to buy or sell. Any other big players in
the industry that we don't know about.
Speaker 8 (26:45):
Yes, Iff is what we call a fragrance house, and
like you said, they make all of the companies I'm
going to name, make both fragrances and flavors. Another very
big one is Vividon. It's based in Switzerland. They do
the same and they're even bigger than IFF, I believe.
And another one that's one of the top three is
just merged and now it's called DSM Ferminish. So those
(27:09):
are the three biggest global fragrance houses that make fragrances
and flavors for the entire world. There are some that
are smaller, but those are the three big Should.
Speaker 2 (27:19):
I stick with old Spice?
Speaker 8 (27:22):
I must tell you any fragrance you wear is a
good fragrance. That old spice is still going strong.
Speaker 2 (27:28):
Yeah after all these years, Mike, So now you know
what to get me for Christmas. A scented candle. But
it has to smell like old.
Speaker 4 (27:34):
Space old spice as they need to have a candle line.
Speaker 2 (27:37):
That's a good point.
Speaker 8 (27:38):
They probably will after hearing this today. But these are
not so expensive. You thought that this candle looks expensive,
Yes it does, but it's less than fifty dollars.
Speaker 2 (27:47):
All right, Linda, thanks a lot, Lnda Levy the fragrance queen.
This is Bloomberg.
Speaker 1 (27:53):
Umbmark a journal. Now about you let me?
Speaker 6 (28:00):
Oh no, no, no, no, who's going to John Honey?
Speaker 2 (28:04):
Please, I'll travel ecuse Ma, I want to drive.
Speaker 3 (28:07):
It's a question.
Speaker 1 (28:14):
This is the drive to the clothes.
Speaker 5 (28:18):
We'll drive around each other down.
Speaker 2 (28:19):
On Bloomberg Radio. Yeah, on John Tucker along with Mike Reagan.
You are listening and watching Bloomberg Business Week on YouTube
as we drive to the clothes. Egle I Reagan pointed
out that the S and P five hundred year today
up twenty percent. Right now, just cross that mark a
little while.
Speaker 4 (28:38):
That's your shabby, John, that's your shabby.
Speaker 2 (28:40):
Well, look at the tech heavy Nasdaq, as they say,
up thirty seven percent for the year, now only a
Measley nine and a half percent. That soft landing narrative, Mike,
that that seems to have taken hold of the risk markets.
And UH, with that is the backdrop. Let's bring in
our next guest. Paul chris Her is head of Global
(29:01):
Investment Strategy at Wells Fargo Investment Institute, joining us from
Saint Louis. Hey, give us your perspective after the data
we heard. We just pointed out that we got the
inflation expectations from University of Michigan, of course earlier, the
job support. How does that all stack up for equities.
Speaker 6 (29:22):
Yeah, it stacks up in a way that takes advantage
of liquidity that's available in this market right now. Certainly
the Treasury's decision or late in October to sell a
lot of tea bills has helped a lot of liquidity
return to markets. And the soft landing scenario it's always
been there. It's been there all year. It won't really
go away. But we think, you know, this is really
(29:45):
an extended rally. It's been a long rally, but we
think there's going to be better opportunities for our clients
to invest at better prices come the beginning of the year,
or at least early in the year, because this rally
is really just way over done.
Speaker 4 (30:00):
You know, Paul, I was reading a note you sent
us before the show. One stat really caught my eye,
and that is that you write that history shows that
the S and P five hundred doesn't bottom until on
average six months after the first FED rate cut. So
I'm wondering in this scenario, what exactly are we talking
about when we when we say the bottom, I mean,
(30:22):
could could it go all the way back to that
low from last year, because that would be quite a
sell off.
Speaker 6 (30:29):
That would be that would be quite a sell off,
and for that you'd need some sort of a shock.
But there's plenty of them lined up, whether it's government
shutdown or an explosion, a further explosion in geopolitics, maybe
a combination of the shutdown and the usual election year
uncertainties as we as we head into the beginning of
the year with not really a good idea of who
(30:50):
the Republican nominee is going to be, the maybe not
even the Democratic nominee, So there's plenty of uncertainties to
start the year, and then you've got all those consumers
with their by now pay later plans since Black Friday,
and those are going to start coming due in the
early part of next year. We could be in for
a at least a consolidation, if not a correction, and
then some event could send us back down. I mean,
(31:12):
think about how narrow this rally has been. NASDAC up
thirty seven percent, the Dow only up nine percent. The
average SMP stock has not done nearly as well as
those top seven names, and that gives us quite a
bit of pause thinking about an economy that's slowing and
really vulnerable to some of these shocks going into the
new year.
Speaker 2 (31:31):
Well, Paul, tell everybody what happens at the end of
the year. For fund managers like yourself, is everybody under
pressure to make the final push get gains before the
year closes out.
Speaker 6 (31:43):
Sure, there there's some there's some straightening out of books
to get things nice and pretty for the end of
the year. And then in January you're going to have
a lot of four to one K money coming in
and that's gonna that's gonna further boost the market. But
the seasonals turn negative or at least neutral in the
immediate aftermath of that, and then more negative as we
(32:03):
headed towards the spring, and perhaps just as the economy
it continues to weaken. This this this jobs report today
for example, again showing resilience. Yeah, maybe, but the trend
is still lower. And as consumers run out of cash
and they stop spending, a labor market that's better balance
(32:24):
than it was a year and a half ago is
a labor market that's more prone to layoffs. So resilience
is one of those things that, like the economy, can
can turn gradually gradually and then suddenly.
Speaker 4 (32:37):
You know, Paul, break it down for us about you know,
where exactly we should be positioning our investments right now.
I mean, I keep hearing people still referring to those
rates on cash. You know, money market mutual fund rates
are still very attractive, especially compared to you know, pre
pandemic levels where they're basically paying nothing. I mean, is
(32:58):
it as simple as that just hide out in a
money fund?
Speaker 6 (33:02):
Well for some people maybe, but let me get to
that in a second. We've been overweight the S and
P five hundred for a good part of this year,
and we're not negative on stocks. I don't mean to
suggest that we are, but we took profits in tech
about the beginning of this excuse me, about the middle
of the year, and we think now as really the
time has been the time to be a little bit
more quality oriented, a little bit more defensive. We see
(33:25):
industrials and materials as places that look interesting as infrastructure
spending and reshoring of companies gains more steam in twenty
twenty four. We like healthcare yet hasn't been a participant
in this rally, but we like the pricing there and
we like the long term trends. So a quality orientation
during a period of volatility not a bad thought. Now
(33:46):
let me return to your thought on fixed income. We
have clients and lots of investors who've taken advantage of CDs,
let's say in that four and a half to five
percent range. My question for them is always what happens
after that? Seas de matures in a year and you've
got to skate past all this volatility. But then rates
might be lower by the end of next year according
(34:07):
to the market consensus. Would you still sign up for
it at four would you still sign up at three
and a half? If we think the equity markets are
going to come back strong. In other words, the problem
is people get used to high yields on CDs, but
those yields may not be around for as long as
the investors' goals. So you have to kind of think
about this in the longer In the longer term setting,
I would say as short term treasury bills here, yes,
(34:32):
something with a secondary market if you want to skate
over some volatility we expect in the early part of
next year, first quarter probably that's not a bad idea.
But then get out of that in time for the
market to bottom, and we think that will happen sometime
in the second quarter, and that's when your opportunities really broaden.
Small caps, mid caps, more cyclically oriented sectors, perhaps financials,
(34:56):
perhaps energy again. So we think there'll be a lot
more opportunities. That short term cash position that pays a
little bit of interest could be useful as long as
one doesn't get too used to it.
Speaker 2 (35:06):
Hey, Paul, your take on AI fad djure or what.
Speaker 6 (35:12):
It's one of those disruptors we talk about this economic disruptors,
computers PCs, or disruptors software for the personal computer, the
laptop computer. Those were all disruptors. We think AI is
definitely in that category, Generative AI in particular. We wrote
a report on this a couple of months ago. But
these trends tend to take some time to develop, and
(35:35):
in the meantime, what will be the path of regulatory
action regarding AI as it develops. We've seen a lot
of talk about that in the press, but Congress and
the President may be still trying to decide how to
approach that. That's a big uncertainty. We don't think the
market is pricing that in yet. And the second piece
of it is look over time, other companies will come
(35:57):
in that might do AI better than some of the
ones on the market today.
Speaker 2 (36:00):
All right, Paul, Always a pleasure. Appreciated, Paul Christopher at
a global investment strategy at Will's Fargo Investment Institute from
Saint Louis. This is Bloomberg.
Speaker 1 (36:10):
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