July 24, 2025 • 25 mins
- Ajay Rajadhyaksha, Global Chairman: Research at Barclays
- Dan Ives, Global Head: Technology at Wedbush Securities
- Libby Cantrill, Head: Public Policy at PIMCO
- Nela Richardson, Chief Economist at ADP
Ajay Rajadhyaksha, Global Chairman: Research at Barclays, discusses President Trump's visit to the Federal Reserve today and how Fed independence affects markets. Dan Ives, Global Head: Technology at Wedbush Securities, talks tech earnings and Tesla. Libby Cantrill, Head: Public Policy at PIMCO, discusses President Trump's tariff and economic priorities. Nela Richardson, Chief Economist at ADP, reacts to jobless claims and talks about the labor market in the US.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:11):
This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
with Lisa Bromwitz and a Marie Hordern. Join us each
day for insight from the best in markets, economics, and
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(00:33):
Bloomberg Terminal and the Bloomberg Business app.
Speaker 3 (00:36):
Let's turn to the Federal Reserve.
Speaker 2 (00:37):
The Trump administration parling the pressure on FED share Jpowell.
Speaker 4 (00:41):
The President said he is not going to fire Chair Powell.
It would do Chair Powell a favor, and he would
be doing the Institution of favor if if he did
an internal review. This mission creep from the FED is
endangering their independence and monetary policy.
Speaker 2 (01:02):
President Trump making a rev visit to the Federal Serve
this afternoon to see the two point five billion dollar renovation.
A Chi Raja Yaksha of Barclay's writes and concerns about
FED independence persists, but we expect status quo to prevail
actually joins us now for more a j E goodmonic,
Good morning. This market is shaken off a lot, threats
to fed independence, trade tariffs, threats actual tariffs.
Speaker 3 (01:24):
Can this economy keep shaking it off?
Speaker 5 (01:27):
Yeah?
Speaker 6 (01:27):
I think as long as you don't get a polysym
mistake out of Washington on the magnitude of actually trying
to fire the fetchure, which I don't think will happen.
I think we are past the worst of it and
we are looking forward to a big, you know, big
boost and growth over the next few concert.
Speaker 2 (01:41):
This is really important because some people still fear that
the worst of the data is ahead of us.
Speaker 6 (01:45):
What gives you confidence the fact that that I've been
virtually no second order effects. Remember I agree with your
Plivi's gust living made the point to that there have
been substantial talis. If you told me we are a
two and a half percent during the year we finished
at seventeen eighteen, I would have been But part of
the reason I would have been shaken is that because
I would have expected business investment to pull back, I
would have expected consumer precautionary savings to go up.
Speaker 5 (02:08):
Factors matters, John, None of those things.
Speaker 6 (02:09):
Have happened, and that's to do with the You know,
if they were going to happen, they were going to
happen with the headlines, they were not going to happen.
Speaker 5 (02:15):
When it actually plays out, it's.
Speaker 6 (02:18):
Very very hard for me to see big new second
order effects now the consumer pulling back hard, and without that,
you do not get a lusting like a recession, a
lusting hit two years growth.
Speaker 1 (02:29):
Are we measuring the economy correctly? And I asked that
because there is. There are pockets that are clearly suffering,
and you're seeing that in numbers like from Southwest where
consumers who don't have as much money aren't able to
travel as much. But then you have this industrial revolution,
this renaissance, this huge investment AI technology that's generating efficiency
and profitability at the biggest and the most powerful companies
(02:52):
and individuals.
Speaker 7 (02:54):
Is this showing up in.
Speaker 1 (02:55):
The data or is this just changing the way we
understand our economy.
Speaker 6 (02:58):
I think it's the latter. I think we are measuring
it correctly. There's no reason to believe that we've suddenly changed.
The fact of the matter is what you said, the
United States is two different economis.
Speaker 5 (03:07):
One is the old economy.
Speaker 6 (03:08):
You know, we all grow up believing housing is a
business cycle, for example, and you know housing is struggling
with mortgage rates staying.
Speaker 5 (03:14):
Where they are.
Speaker 6 (03:16):
The durable goods sector, you know, you mentioned airlines, they
are struggling.
Speaker 5 (03:19):
Doesn't matter.
Speaker 6 (03:20):
You have the large tech side and the AI dividends
starting to kick in, and I think that matters far
more at an index level, at an economy white level.
The fact that the hyperscaler is just never pulled back
on spending. You know, you might have worried as an
important into the United States about Mexico Canada, where I
can make my business work or not. Who cares when
Google is spending on the eighty five million dollars at
(03:42):
a macro level.
Speaker 1 (03:43):
Well, at the same time, back during the pandemic, it
was sort of the revenge of the physical world. That
was something that John said every morning as we walked in,
and it was sort of the reality of trying to
get toilet paper. Although he is tacked up, I am
just wondering whether we're going to end up with revenge
of the physical world once more. We're talking about investment
in the cloud, all of this sort of technology that's
(04:03):
for companies, the way we think, the way we do
work in white collar businesses. What about the goods and
services that have to go overroun on ships.
Speaker 6 (04:10):
I don't think there's going to be a revenge of
the physical world. I almost think it's the other way around,
meaning that right now we are all focused on llm's.
You know, you put in text and you get out
a bunch of information that is the AI models and
that we think will hit services jobs.
Speaker 5 (04:24):
The fact of the matter is.
Speaker 6 (04:25):
I think there are three four five years away from
the same thing happening where you put in a bunch
of texts and you have a robot doing subtasks. I'm
not kidding. This is not sci fi. It's you know,
this is I feel the way I did about NVDA
five years ago.
Speaker 5 (04:38):
You know, none of us thought it would get as
big as it is.
Speaker 6 (04:41):
But the fact of the matter is, you know that
Moore's law, you know the fact that things are twice
as cheap every eighteen months or twice as powerful does
work in the semiconductor world, doesn't work in the physical world.
Fusing air and robotics is powerful, and I almost worry
that you're going to have more of the.
Speaker 5 (04:57):
Profits continue to go to capital.
Speaker 6 (05:00):
We always go believing, you know, plumbers, you'll always need plumbers.
Speaker 5 (05:03):
Well you might not five seven, eight.
Speaker 2 (05:05):
Years from what you're saying could relatively mean the market
is okay, but the employment market gets a whole lot worse.
Speaker 6 (05:12):
It does, and with our limits to that. The limits
are put in by society.
Speaker 5 (05:18):
At some point.
Speaker 6 (05:18):
If there's seventy million knowledge workers in the United States,
you know, I've had this A person I considered the
single best investor of all time make the argument to
me that he's looked at this upwards downwards five years
from side, you know, Sunday, and he's telling me that
ten million of these workers will not be needed in
five to seven years.
Speaker 5 (05:35):
He's not saying they want have jobs.
Speaker 6 (05:36):
The economic activity that they do now, the value add
will be done by machines. We see it in big tech, right,
forty percent of coding. You realize Microsoft's let go of
twenty thousand people. They have money coming out of the years.
There's a reason why that this is happening. Eventually society
pushes back. It's happened in every technological revolution. But the
difference now, John, is that in the past, when you
had had this right. We were okay with Debtor's prisons
(05:59):
were ok which I one hundred years ago, you know,
the transition that we didn't make noise this time it
will make a lot of.
Speaker 2 (06:04):
Fun share with you are concerns mean, and I'll be
open and personal abouts here for children of Thatcher and Reagan.
I am highly concerned that if you concentrate capital and
wealth in the hands of just a few, that the
political movement, the corrective course of action on behalf of
the paper, will be for the state to get a
whole lot bigger, to go forward with higher taxes, universal
basic income. And for people like me who don't really
(06:27):
believe ideologically in that view of the world, that's scarce
they live in daylight sadamy.
Speaker 5 (06:32):
It should, but that is a very real risk.
Speaker 6 (06:35):
Now, until we get there, you're going to have corporate
earnings flat flattened, you know, for years to come, you're
going to have operating margin leverage. And then the other
side of it will be society pushing.
Speaker 5 (06:44):
But it's happened before.
Speaker 6 (06:45):
I mean, you know, six of the seven big oil
majors came out of one company, Standard Oil, remember, you know,
so this is not every fifteen to twenty fifty years.
If you have a big technology change, but all of
advantages go to capital, which is what is going to happen.
I think eventually society will push back, But until it happens,
it's actually a very nice ride the building.
Speaker 8 (07:04):
On John's point, should we just expect higher deficits then.
Speaker 5 (07:08):
No, I think so.
Speaker 6 (07:10):
The OBBA and the tariffs from revenues, the total deficit
from that is not higher than if just the trump
casks that were expiring had been extended, and we all
thought they would be extended if nothing else right. The problem,
the reason why the long bound in the United States
refuses to come below five percent is not because the
OBBA is more profligate.
Speaker 5 (07:31):
It's because it locks in.
Speaker 6 (07:33):
It makes it clear that we are not going to
go away from six and a half to seven percent deficits,
which is where we were this year, last.
Speaker 5 (07:39):
Year, for at least ten more years.
Speaker 6 (07:41):
You know, you mentioned Rachel Rees and the conversation from
three weeks ago. The significant part was not that she
got emotional in person. The significant part for me was
Labor has a big parliamentary majority and cannot pass a
simple change, a small change to the welfare build that
was the significance of it.
Speaker 5 (07:58):
There's no political will.
Speaker 2 (08:00):
I appreciate your time, enjoy the right of the market
right now sings for the message, and we'll catch up
in five fist time. We just around a time you
called Libby cantroll of Libby, goodmonic.
Speaker 7 (08:18):
Good morning August.
Speaker 3 (08:19):
First, are we going to wrap this up for it's
not in new July ninth?
Speaker 9 (08:23):
Yeah, I mean, look, I think what we were been
telling our clients is that we are going to be
living with trade policy and tear policy uncertainty for the
duration of this administration. So maybe we get a little
bit more clarity. I would agree that fifteen percent is
the new ten percent, ten percent is the new zero percent.
Speaker 7 (08:37):
Kind of the best.
Speaker 9 (08:39):
That a country can hope for those with trade surpluses
is going to be ten percent, and then everything else
is going to be higher. I mean, Japan got I
think arguably a pretty good deal here.
Speaker 7 (08:49):
But again, if you just look, if we just take a.
Speaker 9 (08:51):
Step back and go back to December, right after the election,
and we were just saying we're going to be sitting
here and talking about how fifteen percent seems pretty benign
on one of our closest ally and trading partners.
Speaker 7 (09:01):
I don't think anybody would believe it.
Speaker 9 (09:02):
So I think that the Overton window, if you will,
has really been expanded here, kind of shattered in terms
of what is acceptable in the markets and in Washington.
And again, I think from an economic and markets perspective,
we do think this will start having a bite at
some point, even though maybe markets are just, you know,
willfully ignoring the reality here.
Speaker 7 (09:21):
Well, all the market's numb.
Speaker 8 (09:23):
Has Trump basically conditioned them to accept fifteen percent because
they're not as a sky high April second terraffs originally
this administration came out.
Speaker 9 (09:31):
With yet and I think you know what we have
been talking to our clients are the sort of like
the taco man versus tariff man, this idea of Trump
always chickening out, And if you actually look at the
tariff level right now, it would not suggest that he
is chickening out.
Speaker 7 (09:44):
Yet.
Speaker 9 (09:44):
Yes, he has softened his most extreme stands. So will
the effect of average tar freight go up to thirty percent?
Speaker 7 (09:52):
Not likely, But.
Speaker 9 (09:53):
Where we think it probably will Land is between fifteen
and twenty percent. Fifteen and twenty percent tariff, I mean
that's you know, that's not insignificant. So yes, I do
think that in some ways, again this idea of you know,
the Overton window sort of what's possible in Washington, he's
expanded that so much that the market is somewhat desensitized.
But we really, we do think this will start having
(10:14):
actually real economic effects at some point.
Speaker 7 (10:16):
When it comes to these negotiations.
Speaker 8 (10:18):
I was really struck by the Japanese one because of
that five hundred and fifty billion dollar fund, and I'm
still kind of confused about exactly what it is because
the Prime Minister of Japan is talking about that these
are basically loan guarantees, and Howard Lutnik, the Commerce Secretary,
is saying it's much much more than that. Almost sounds
like a bit of a slush fund. Do you understand
what the administration is looking for when it comes to
training partners?
Speaker 9 (10:39):
Yeah, I think what we are, we are, like everybody else,
is waiting for the details. I mean think a couple
of things on this one is that, you know, for
for another country to be funding our industrial policy, that
could actually have some implications. So I think there's there's
one of just sort of is this sort of politically
realistic that you're actually relying on another country to actually
(11:02):
make investments in things that are important from a national
security or from an economic perspective for the country. The
other which is a little bit technical and a little
bit walking, but I think also important is if the
adjective for the administration is to reduce the trade deficit,
you can't reduce the trade deficit with the country and
increase the capital account. Those things are supposed to be offset. So,
(11:23):
you know, I think that you're trying to have kind
of both ways here.
Speaker 7 (11:26):
So we'll sort of see what the details are.
Speaker 9 (11:29):
I think, you know, our you know, our suggestion to
our clients is just to focus on what we do
know though, which is the fifteen percent tariffs. And again
that's that's an increase from the three percent that we
had in January.
Speaker 1 (11:39):
And you have the joy on the opportunity of going
around the world and explaining this to everybody. And I'm
curious how different the reaction is for people not in
the US versus the United States and how they plan
to sort of operate around that.
Speaker 9 (11:52):
Yeah, I was just I was just saying before before
the before the segment, that I was in Canada yesterday
meeting with some of our large institutional clients.
Speaker 7 (11:59):
I've been all, you know, all over the world.
Speaker 9 (12:01):
We have the benefit of having long standing relationships with clients,
you know, again outside of the US and inside the US,
and then the perspective is different, you know. I think
that you know, in some ways, there's there's asymmetry around
the information. So I think there's some assumptions that are
made that maybe are not necessarily right for our for
our foreign clients. But I think more importantly, you know,
(12:22):
our clients were already over index to sort of US
equities to US dollar based assets coming into this year, right,
the sort of the narrative of American exceptionalism, the expectation
for you know, just blockbuster growth in the US and
sort of languishing growth elsewhere come you know, in January,
that obviously has changed. Those expectations have changed. So our
(12:42):
clients in some ways, we're already reevaluating some of their
dollar based asset allocation.
Speaker 7 (12:47):
And I think this probably has accelerated that.
Speaker 9 (12:50):
Certainly, the tariffs, I think again maybe they're impervious to that,
maybe a little bit more desensitized some of the knocks
on the FED, some of the cut questions about the
in strength of the institutions, sort of the you know,
the political, you know, functionality of Washington. I think those
all are still questioned. The questions are front in terms
of their in their minds.
Speaker 7 (13:08):
You know.
Speaker 1 (13:09):
Sam Zef of jpm Worgan Private Bank was on earlier
and he said, initially people just work in the derivatives
market to hedge their dollar exposure, but the actual reallocation
happens over time. Is that something that you're seeing too,
that there's a lot of reallocation away from dollar to
dominated assets in the pipeline that hasn't fully come to
the four yet.
Speaker 7 (13:28):
Yeah.
Speaker 9 (13:29):
I would say with our clients, we are seeing exactly
that we were seeing them this sort of being taken
out in the FX market, you know, hedging their dollar
based exposure, and you know, you know, broadly speaking, there
was some discussion around the tax bill. There was a
section eight ninety nine, the revenge tax, which was definitely
I think would have had some significant implications on actual
asset allocation. I think now they are maybe sort of
(13:53):
taking a step back and not necessarily divesting from the US,
but I think sort of maybe hitting the hitting in
a little bit more of the pose. But in terms
of your new allocation new allocations, yes, but of course
it's different for every client, so I don't want to
sort of generalize, but I do think that there is,
you know, more of which is a reevaluation of some
of their dollar based assets.
Speaker 2 (14:11):
It's going to say thanks for being here. Let me
cancher that a thin.
Speaker 3 (14:24):
Dan, I's of wet Bush.
Speaker 2 (14:25):
It's the biggest Tesla bull on the street with a
price target of five hundred and an outperform rating. Dan
joins us now for more, Dank and Mornic.
Speaker 5 (14:32):
Great to be here.
Speaker 2 (14:32):
Revenue down twelve percent, vehicles deliver down, average sunning, price down,
and yet you're at five hundred dollars.
Speaker 3 (14:39):
Tell me why?
Speaker 10 (14:40):
Yeah, I mean, look the quarter itself nothing right home about,
But I mean our view, it's about autonomous robotics. AI
is the future for Tesla. So to me, yeah, it's
a rough few quarters ahead, but I believe autonomous we
are in the beginning what's going to be a trillion
dollar valuation alone for a Tesla. So that's why I
don't get so concern. We talk about deliveries which actually
(15:03):
were kind of in line, you know, when we look
at what's gonna happen the second half the story here
when it comes to physical AI. Two best ones out there,
it's gonna be Tessa and then video.
Speaker 2 (15:13):
Moving from a pre autonomy to a post autonomy world.
Did he do enough on the call last night to
convince investors that it's going to be smooth sigbink.
Speaker 10 (15:21):
Look, I mean obviously the call, you know, definitely some
could have criticism in terms of you promising so much.
Speaker 7 (15:26):
Well, my view is if twenty to thirty.
Speaker 10 (15:29):
Percent of what he promised, you see in the next year,
this is a stock that's up seventy eighty percent from here.
So that's that's why when I look at Tesla, I
don't focus, and we've talked about so much in the
show over the years, I don't focus near term deliveries
what that means in terms of you know, ev tax credits.
This is an autonomous robotics story, and I think, look
(15:50):
the AI revolutions we saw from you know, from from Alphabet.
I mean, we are just in the early days of
this playing out.
Speaker 1 (15:57):
Maybe I'm chicken little, but I was looking at this
press call, diference. I was reading this and I was thinking,
this is a disaster. I mean, Essentially this was a
dreamstock and suddenly they're talking about tax credits and things
of that nature. They used to talk about an affordable vehicle.
Now they're talking about a stripped down model hy that
doesn't sound that sexy at all, and they're going to
expedite production of pre of other vehicles and put that
on hold. What would it take for you to get barished?
Speaker 5 (16:19):
Yeah?
Speaker 10 (16:19):
Look, I mean you bring up great points and that
will be the bearish points. And when it comes to
the affordable next vehicle, is that just a stripped down version. Look,
my view is that it comes down to like ROBOTAXI.
If you're in twenty five cities in the next year
and you should actually start to get volume production of optimists.
When it comes to robotics, I think ninety percent of
(16:40):
the future value is going to be in the AI story,
not on the actual deliveries.
Speaker 5 (16:45):
In terms of cars out there.
Speaker 10 (16:46):
You have ten million vehicles in terms of teslas out there.
It's all about the data and I believe the big
thing is going to be the Sherelder mean where they'll
have a significant investment XAI and I think that's where
you get more of a wartime CEO in Musk, and
I think that's really going to be the difference.
Speaker 1 (17:03):
Re satisfied by his answers about Xai, about the investments there,
the crossover with Tesla, because there was a lot of
ambiguity and he was asked that directly and he wasn't
able to explain that connection and how it really does
rebound over other than some people who are in this
industry don't really want to work at a car company.
I want to offer them an opportunity to.
Speaker 10 (17:20):
Yeah, I wouldn't say like that conference call is not
you wouldn't put him in the Neery Hall of Fame
that conference call. Okay, But but again we know, like
with Musk, it's never going to be you know, it's
not going to be Microsoft like. But my view is,
and we've talked about it, like the board, they need
to get.
Speaker 5 (17:37):
Him twenty five percent voted. I think that's key.
Speaker 10 (17:40):
Then that starts what's going to be a significant investment
in Xai. But we've said also, are there guard rails
there that they need to put on.
Speaker 5 (17:47):
You've seen him become less political since the.
Speaker 3 (17:49):
July fourth third party you know.
Speaker 10 (17:52):
Too, so I think, look, you want to seem less
focused on that more focused on being CeAl because it
comes down to the biggest asset for Tessa is Musk.
Speaker 8 (18:00):
The Press secretary yet yesterday was asked does the president
support federal agencies contracting with Elon Musk's AI company.
Speaker 7 (18:08):
Her answer, I don't think so. No, can he do
this about contracts?
Speaker 10 (18:12):
Look, I think, but then it comes out look at
Groan when it comes to groc in the huge part
of the do O D deal. Look, the reality is
that Trump administration could say what they're going to say,
but they need Musk. Of course they need Jensen. I
mean they're gonna need leaders when it comes to you.
Speaker 3 (18:29):
Know, of what this AI revolution.
Speaker 5 (18:31):
I think.
Speaker 10 (18:31):
Look, that's the reality, and I do think at one
point you'll start to see them. You know, I wouldn't
say this I become friends again, but sort of men
fences given what must needs.
Speaker 8 (18:42):
To do going to Elon Musk, Sam Altman were not
called out yesterday when the President was giving shoutouts at
this AI summit.
Speaker 7 (18:49):
Is Jensen Wang the new first buddy?
Speaker 5 (18:51):
Look, he's the cool kids table.
Speaker 10 (18:53):
I mean right now, like if you look where Jensen is,
like he is the first buddy for.
Speaker 7 (18:57):
Trump because he's almost running Dan.
Speaker 10 (19:00):
Look, and the reality is there's one chip in the
world fueling the AI revolution. And that's why when it
comes to the Middle East trip, who's the right of him?
Speaker 5 (19:08):
Jensen?
Speaker 10 (19:09):
When it comes in that he's when it comes to
China negotiation, the biggest poker chip that you have is
a video.
Speaker 5 (19:16):
I mean when it comes down. So yeah, So.
Speaker 10 (19:18):
First Buddy is wearing a black leather jackets names Jensen.
Speaker 3 (19:21):
Final word, Alphabet. What do you think the numbers?
Speaker 10 (19:24):
I thought this was as bullish as you could see
in terms of the action numbers from search, from YouTube.
And this is no longer an alphabet in the corners
say they crying, this is one coming out being like
we're on the offense.
Speaker 2 (19:37):
You say, they can make the transition from that app
model that's dominated the last several decades in Silicon Valley.
Speaker 3 (19:43):
We can make the transition away from them.
Speaker 10 (19:44):
I think it's going to be a renaissance for Alphabet.
I still I believe from a large cap prosductive it's
one of the best rest awards out there. That's why
it's a table pounder. We went to twenty five in
the price target and look, haters hate on this and
I get it, but the Bears in hibernation mood, there
was nothing on their call that they're going to grasp
on to it. I want to see them increase cappex.
(20:06):
It's an arms race of that right now in AI.
You want to see them in the Lefley.
Speaker 2 (20:09):
The good news is the markets wanting to support them.
Bremo that the stock is up off the back of
this capex space and it's not down because then they
have very different problems.
Speaker 1 (20:16):
Well, initially it was down, and that was interesting because
people had the knee jerk reaction of stop spending so
much before you can give us a sense of how
you're going to monetize it. But as he spoke, and
he talked about customer demand to change. Right now, I
am chat cheepyteeing. Is Google Search in its decline and
I will let you know what it says.
Speaker 10 (20:33):
But I also see the bears when they're in the
hibernation mood, in the caves. They can find AI in
the spreadsheets, and that's part of what I think how
they've missed so much of the AI revolution.
Speaker 5 (20:43):
Look, get the popcorn out.
Speaker 10 (20:45):
This is just a precursor of what's going to be
a bullsh Tecker, Microsoft, Meta Volunteer and others.
Speaker 3 (20:51):
Then I a Weber Standard Frey chet.
Speaker 2 (20:52):
Here, what's around a cycle?
Speaker 3 (21:03):
Native Richardson of IDP, Native of Monic.
Speaker 7 (21:06):
It's great to be here with you.
Speaker 3 (21:07):
It's good to see it.
Speaker 2 (21:07):
Let's talk about this job states. We've had a lot
from a lot of people who say this lip of
banka is no longer a reason to be holkish. Is
it becoming a reason to be dubbish.
Speaker 11 (21:17):
I think you can't say that this labor market's not
in transition. If you look at the last three months
of hiring, they're slowing. It's clear. And so whether hawkish
or dubbish, the l l labor market is an issue
on the table to consider. And I think when we
look at next week, which will be jobs week, uh,
(21:37):
we'll see a continuation of a slowing trend. And I'd
like to mark that trend with something that you can
see clearly in the ADP data. The slowdown isn't coming
from goods. It's coming from services, and that is the
turnaround in the labor market. It has been that services
have held the water for the labor market. It's really
the goods sector that's suffered. And with terra in play. Still,
(22:01):
you would think it would be the goods sector that
is bringing down the momentum.
Speaker 7 (22:06):
It's not.
Speaker 11 (22:06):
It's services, which points to a whole different case study
on what's really going on in the US economy. So
talk us through what that case study is in terms
of are we just seeing the cycle shift from goods
to services, but goods goods hiring will pick up significantly,
or does it speak to a broader.
Speaker 7 (22:24):
Type of trend.
Speaker 11 (22:25):
You know, there's so many megatrons right now, and I
like to look at the first six months of twenty
twenty five and compare it to the first six months
of twenty nineteen before the pandemic. This was actually inspired
by something Johnathan said about getting a pay raise, because
if you look, I thought it was a great question.
I wasn't satisfied with my answer, so I went to
the data, and it turns out that there hasn't been
(22:48):
an increase in new higher average pay and over a
year eighteen dollars it's been and that's because the supply
and demand dynamics have held firm. It's a really bound
labor market. I think it breaks because we're seeing lower supply.
The labor force participation rate now is lower than it was.
Speaker 7 (23:07):
Six years ago.
Speaker 11 (23:08):
There are fewer people working and looking for work, and
that's what's going to keep pay a little bit higher
or a little bit more stable for new hires than
it was six years ago.
Speaker 1 (23:18):
So this rice is a really good, interesting question. Even
if we get numbers that look pretty good on the
jobless front, not that many jobless claims on the job
creation front, more than some people would expect, is there
anything about this labor market that's inflationary with wages increasing.
Speaker 11 (23:34):
Well, this is a very deep labor market. We talked
about whether it's stock solid. I think of it as deep.
Still waters run deep, and what you're seeing is that, yes,
if you look at job stayers and job switchers, which
we look at all the time at ADP.
Speaker 7 (23:49):
Pay growth is elevated.
Speaker 11 (23:50):
But when you look at those new hires they're pretty stagnant.
And I also look at the job openings by the
US government, which shows five hundred thousand more jobs now
than and there were six years ago. But the hiring rate,
the rate at which employers are hiring is lower three
point four in May compared to May twenty nineteen three
(24:10):
point eight. There is less urgency to fill those positions,
and that's what's leading to this no higher, no fire
stasis in the jobs market. I think it breaks because
of labor supply issues, not necessarily labor demand issues.
Speaker 8 (24:26):
Governor Waller was sitting in your seat last week and
it seemed to really weigh on him. The unemployment rate
on recent college grads seven percent.
Speaker 7 (24:35):
What's going on? Why are they not able to get
a job?
Speaker 11 (24:37):
Well, I think it bends back to the data we
just saw continuing claims. It's harder to get a job
in this labor market where supply and demand are in balance,
and for young people coming out into the market, this
is not their older brothers or sister's labor market in
twenty twenty two. They were snatched right up. They have
that expectation. Their older sister told them that they were
(24:58):
snatched right up, and that was the ex expectation. It's
not that labor market anymore. To a labor market that
requires patients in networking, it's gen z. It's going to
take a little bit longer. And where these college grads
are coming out is what exactly is slowing Professional businesses.
Services are slowing down, finance is slowing down. If they
(25:19):
were coming out in construction, I think they would see
that kind of snatch up in the labor market, but
they're not seeing it now.
Speaker 3 (25:25):
Nyla.
Speaker 2 (25:25):
It's great to see you. Thanks for writing it down.
Appreciate it. Nia Riches and there of ADP. This is
the Bloomberg Surveillance Podcast, bringing you the best in markets, economics, angiopolitics.
You can watch the show live on Bloomberg TV weekday
mornings from six am to nine am Eastern. Subscribe to
the podcast on Apple, Spotify, or anywhere else you listen,
(25:46):
and as always, on the Bloomberg Terminal and the Bloomberg
Business app.
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:11):
This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
with Lisa Bromwitz and a Marie Hordern. Join us each
day for insight from the best in markets, economics, and
geopolitics from our global headquarters in New York City. We
are live on Bloomberg Television weekday mornings from six to
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or anywhere else you listen, and as always on the
(00:33):
Bloomberg Terminal and the Bloomberg Business app.
Speaker 3 (00:36):
Let's turn to the Federal Reserve.
Speaker 2 (00:37):
The Trump administration parling the pressure on FED share Jpowell.
Speaker 4 (00:41):
The President said he is not going to fire Chair Powell.
It would do Chair Powell a favor, and he would
be doing the Institution of favor if if he did
an internal review. This mission creep from the FED is
endangering their independence and monetary policy.
Speaker 2 (01:02):
President Trump making a rev visit to the Federal Serve
this afternoon to see the two point five billion dollar renovation.
A Chi Raja Yaksha of Barclay's writes and concerns about
FED independence persists, but we expect status quo to prevail
actually joins us now for more a j E goodmonic,
Good morning. This market is shaken off a lot, threats
to fed independence, trade tariffs, threats actual tariffs.
Speaker 3 (01:24):
Can this economy keep shaking it off?
Speaker 5 (01:27):
Yeah?
Speaker 6 (01:27):
I think as long as you don't get a polysym
mistake out of Washington on the magnitude of actually trying
to fire the fetchure, which I don't think will happen.
I think we are past the worst of it and
we are looking forward to a big, you know, big
boost and growth over the next few concert.
Speaker 2 (01:41):
This is really important because some people still fear that
the worst of the data is ahead of us.
Speaker 6 (01:45):
What gives you confidence the fact that that I've been
virtually no second order effects. Remember I agree with your
Plivi's gust living made the point to that there have
been substantial talis. If you told me we are a
two and a half percent during the year we finished
at seventeen eighteen, I would have been But part of
the reason I would have been shaken is that because
I would have expected business investment to pull back, I
would have expected consumer precautionary savings to go up.
Speaker 5 (02:08):
Factors matters, John, None of those things.
Speaker 6 (02:09):
Have happened, and that's to do with the You know,
if they were going to happen, they were going to
happen with the headlines, they were not going to happen.
Speaker 5 (02:15):
When it actually plays out, it's.
Speaker 6 (02:18):
Very very hard for me to see big new second
order effects now the consumer pulling back hard, and without that,
you do not get a lusting like a recession, a
lusting hit two years growth.
Speaker 1 (02:29):
Are we measuring the economy correctly? And I asked that
because there is. There are pockets that are clearly suffering,
and you're seeing that in numbers like from Southwest where
consumers who don't have as much money aren't able to
travel as much. But then you have this industrial revolution,
this renaissance, this huge investment AI technology that's generating efficiency
and profitability at the biggest and the most powerful companies
(02:52):
and individuals.
Speaker 7 (02:54):
Is this showing up in.
Speaker 1 (02:55):
The data or is this just changing the way we
understand our economy.
Speaker 6 (02:58):
I think it's the latter. I think we are measuring
it correctly. There's no reason to believe that we've suddenly changed.
The fact of the matter is what you said, the
United States is two different economis.
Speaker 5 (03:07):
One is the old economy.
Speaker 6 (03:08):
You know, we all grow up believing housing is a
business cycle, for example, and you know housing is struggling
with mortgage rates staying.
Speaker 5 (03:14):
Where they are.
Speaker 6 (03:16):
The durable goods sector, you know, you mentioned airlines, they
are struggling.
Speaker 5 (03:19):
Doesn't matter.
Speaker 6 (03:20):
You have the large tech side and the AI dividends
starting to kick in, and I think that matters far
more at an index level, at an economy white level.
The fact that the hyperscaler is just never pulled back
on spending. You know, you might have worried as an
important into the United States about Mexico Canada, where I
can make my business work or not. Who cares when
Google is spending on the eighty five million dollars at
(03:42):
a macro level.
Speaker 1 (03:43):
Well, at the same time, back during the pandemic, it
was sort of the revenge of the physical world. That
was something that John said every morning as we walked in,
and it was sort of the reality of trying to
get toilet paper. Although he is tacked up, I am
just wondering whether we're going to end up with revenge
of the physical world once more. We're talking about investment
in the cloud, all of this sort of technology that's
(04:03):
for companies, the way we think, the way we do
work in white collar businesses. What about the goods and
services that have to go overroun on ships.
Speaker 6 (04:10):
I don't think there's going to be a revenge of
the physical world. I almost think it's the other way around,
meaning that right now we are all focused on llm's.
You know, you put in text and you get out
a bunch of information that is the AI models and
that we think will hit services jobs.
Speaker 5 (04:24):
The fact of the matter is.
Speaker 6 (04:25):
I think there are three four five years away from
the same thing happening where you put in a bunch
of texts and you have a robot doing subtasks. I'm
not kidding. This is not sci fi. It's you know,
this is I feel the way I did about NVDA
five years ago.
Speaker 5 (04:38):
You know, none of us thought it would get as
big as it is.
Speaker 6 (04:41):
But the fact of the matter is, you know that
Moore's law, you know the fact that things are twice
as cheap every eighteen months or twice as powerful does
work in the semiconductor world, doesn't work in the physical world.
Fusing air and robotics is powerful, and I almost worry
that you're going to have more of the.
Speaker 5 (04:57):
Profits continue to go to capital.
Speaker 6 (05:00):
We always go believing, you know, plumbers, you'll always need plumbers.
Speaker 5 (05:03):
Well you might not five seven, eight.
Speaker 2 (05:05):
Years from what you're saying could relatively mean the market
is okay, but the employment market gets a whole lot worse.
Speaker 6 (05:12):
It does, and with our limits to that. The limits
are put in by society.
Speaker 5 (05:18):
At some point.
Speaker 6 (05:18):
If there's seventy million knowledge workers in the United States,
you know, I've had this A person I considered the
single best investor of all time make the argument to
me that he's looked at this upwards downwards five years
from side, you know, Sunday, and he's telling me that
ten million of these workers will not be needed in
five to seven years.
Speaker 5 (05:35):
He's not saying they want have jobs.
Speaker 6 (05:36):
The economic activity that they do now, the value add
will be done by machines. We see it in big tech, right,
forty percent of coding. You realize Microsoft's let go of
twenty thousand people. They have money coming out of the years.
There's a reason why that this is happening. Eventually society
pushes back. It's happened in every technological revolution. But the
difference now, John, is that in the past, when you
had had this right. We were okay with Debtor's prisons
(05:59):
were ok which I one hundred years ago, you know,
the transition that we didn't make noise this time it
will make a lot of.
Speaker 2 (06:04):
Fun share with you are concerns mean, and I'll be
open and personal abouts here for children of Thatcher and Reagan.
I am highly concerned that if you concentrate capital and
wealth in the hands of just a few, that the
political movement, the corrective course of action on behalf of
the paper, will be for the state to get a
whole lot bigger, to go forward with higher taxes, universal
basic income. And for people like me who don't really
(06:27):
believe ideologically in that view of the world, that's scarce
they live in daylight sadamy.
Speaker 5 (06:32):
It should, but that is a very real risk.
Speaker 6 (06:35):
Now, until we get there, you're going to have corporate
earnings flat flattened, you know, for years to come, you're
going to have operating margin leverage. And then the other
side of it will be society pushing.
Speaker 5 (06:44):
But it's happened before.
Speaker 6 (06:45):
I mean, you know, six of the seven big oil
majors came out of one company, Standard Oil, remember, you know,
so this is not every fifteen to twenty fifty years.
If you have a big technology change, but all of
advantages go to capital, which is what is going to happen.
I think eventually society will push back, But until it happens,
it's actually a very nice ride the building.
Speaker 8 (07:04):
On John's point, should we just expect higher deficits then.
Speaker 5 (07:08):
No, I think so.
Speaker 6 (07:10):
The OBBA and the tariffs from revenues, the total deficit
from that is not higher than if just the trump
casks that were expiring had been extended, and we all
thought they would be extended if nothing else right. The problem,
the reason why the long bound in the United States
refuses to come below five percent is not because the
OBBA is more profligate.
Speaker 5 (07:31):
It's because it locks in.
Speaker 6 (07:33):
It makes it clear that we are not going to
go away from six and a half to seven percent deficits,
which is where we were this year, last.
Speaker 5 (07:39):
Year, for at least ten more years.
Speaker 6 (07:41):
You know, you mentioned Rachel Rees and the conversation from
three weeks ago. The significant part was not that she
got emotional in person. The significant part for me was
Labor has a big parliamentary majority and cannot pass a
simple change, a small change to the welfare build that
was the significance of it.
Speaker 5 (07:58):
There's no political will.
Speaker 2 (08:00):
I appreciate your time, enjoy the right of the market
right now sings for the message, and we'll catch up
in five fist time. We just around a time you
called Libby cantroll of Libby, goodmonic.
Speaker 7 (08:18):
Good morning August.
Speaker 3 (08:19):
First, are we going to wrap this up for it's
not in new July ninth?
Speaker 9 (08:23):
Yeah, I mean, look, I think what we were been
telling our clients is that we are going to be
living with trade policy and tear policy uncertainty for the
duration of this administration. So maybe we get a little
bit more clarity. I would agree that fifteen percent is
the new ten percent, ten percent is the new zero percent.
Speaker 7 (08:37):
Kind of the best.
Speaker 9 (08:39):
That a country can hope for those with trade surpluses
is going to be ten percent, and then everything else
is going to be higher. I mean, Japan got I
think arguably a pretty good deal here.
Speaker 7 (08:49):
But again, if you just look, if we just take a.
Speaker 9 (08:51):
Step back and go back to December, right after the election,
and we were just saying we're going to be sitting
here and talking about how fifteen percent seems pretty benign
on one of our closest ally and trading partners.
Speaker 7 (09:01):
I don't think anybody would believe it.
Speaker 9 (09:02):
So I think that the Overton window, if you will,
has really been expanded here, kind of shattered in terms
of what is acceptable in the markets and in Washington.
And again, I think from an economic and markets perspective,
we do think this will start having a bite at
some point, even though maybe markets are just, you know,
willfully ignoring the reality here.
Speaker 7 (09:21):
Well, all the market's numb.
Speaker 8 (09:23):
Has Trump basically conditioned them to accept fifteen percent because
they're not as a sky high April second terraffs originally
this administration came out.
Speaker 9 (09:31):
With yet and I think you know what we have
been talking to our clients are the sort of like
the taco man versus tariff man, this idea of Trump
always chickening out, And if you actually look at the
tariff level right now, it would not suggest that he
is chickening out.
Speaker 7 (09:44):
Yet.
Speaker 9 (09:44):
Yes, he has softened his most extreme stands. So will
the effect of average tar freight go up to thirty percent?
Speaker 7 (09:52):
Not likely, But.
Speaker 9 (09:53):
Where we think it probably will Land is between fifteen
and twenty percent. Fifteen and twenty percent tariff, I mean
that's you know, that's not insignificant. So yes, I do
think that in some ways, again this idea of you know,
the Overton window sort of what's possible in Washington, he's
expanded that so much that the market is somewhat desensitized.
But we really, we do think this will start having
(10:14):
actually real economic effects at some point.
Speaker 7 (10:16):
When it comes to these negotiations.
Speaker 8 (10:18):
I was really struck by the Japanese one because of
that five hundred and fifty billion dollar fund, and I'm
still kind of confused about exactly what it is because
the Prime Minister of Japan is talking about that these
are basically loan guarantees, and Howard Lutnik, the Commerce Secretary,
is saying it's much much more than that. Almost sounds
like a bit of a slush fund. Do you understand
what the administration is looking for when it comes to
training partners?
Speaker 9 (10:39):
Yeah, I think what we are, we are, like everybody else,
is waiting for the details. I mean think a couple
of things on this one is that, you know, for
for another country to be funding our industrial policy, that
could actually have some implications. So I think there's there's
one of just sort of is this sort of politically
realistic that you're actually relying on another country to actually
(11:02):
make investments in things that are important from a national
security or from an economic perspective for the country. The
other which is a little bit technical and a little
bit walking, but I think also important is if the
adjective for the administration is to reduce the trade deficit,
you can't reduce the trade deficit with the country and
increase the capital account. Those things are supposed to be offset. So,
(11:23):
you know, I think that you're trying to have kind
of both ways here.
Speaker 7 (11:26):
So we'll sort of see what the details are.
Speaker 9 (11:29):
I think, you know, our you know, our suggestion to
our clients is just to focus on what we do
know though, which is the fifteen percent tariffs. And again
that's that's an increase from the three percent that we
had in January.
Speaker 1 (11:39):
And you have the joy on the opportunity of going
around the world and explaining this to everybody. And I'm
curious how different the reaction is for people not in
the US versus the United States and how they plan
to sort of operate around that.
Speaker 9 (11:52):
Yeah, I was just I was just saying before before
the before the segment, that I was in Canada yesterday
meeting with some of our large institutional clients.
Speaker 7 (11:59):
I've been all, you know, all over the world.
Speaker 9 (12:01):
We have the benefit of having long standing relationships with clients,
you know, again outside of the US and inside the US,
and then the perspective is different, you know. I think
that you know, in some ways, there's there's asymmetry around
the information. So I think there's some assumptions that are
made that maybe are not necessarily right for our for
our foreign clients. But I think more importantly, you know,
(12:22):
our clients were already over index to sort of US
equities to US dollar based assets coming into this year, right,
the sort of the narrative of American exceptionalism, the expectation
for you know, just blockbuster growth in the US and
sort of languishing growth elsewhere come you know, in January,
that obviously has changed. Those expectations have changed. So our
(12:42):
clients in some ways, we're already reevaluating some of their
dollar based asset allocation.
Speaker 7 (12:47):
And I think this probably has accelerated that.
Speaker 9 (12:50):
Certainly, the tariffs, I think again maybe they're impervious to that,
maybe a little bit more desensitized some of the knocks
on the FED, some of the cut questions about the
in strength of the institutions, sort of the you know,
the political, you know, functionality of Washington. I think those
all are still questioned. The questions are front in terms
of their in their minds.
Speaker 7 (13:08):
You know.
Speaker 1 (13:09):
Sam Zef of jpm Worgan Private Bank was on earlier
and he said, initially people just work in the derivatives
market to hedge their dollar exposure, but the actual reallocation
happens over time. Is that something that you're seeing too,
that there's a lot of reallocation away from dollar to
dominated assets in the pipeline that hasn't fully come to
the four yet.
Speaker 7 (13:28):
Yeah.
Speaker 9 (13:29):
I would say with our clients, we are seeing exactly
that we were seeing them this sort of being taken
out in the FX market, you know, hedging their dollar
based exposure, and you know, you know, broadly speaking, there
was some discussion around the tax bill. There was a
section eight ninety nine, the revenge tax, which was definitely
I think would have had some significant implications on actual
asset allocation. I think now they are maybe sort of
(13:53):
taking a step back and not necessarily divesting from the US,
but I think sort of maybe hitting the hitting in
a little bit more of the pose. But in terms
of your new allocation new allocations, yes, but of course
it's different for every client, so I don't want to
sort of generalize, but I do think that there is,
you know, more of which is a reevaluation of some
of their dollar based assets.
Speaker 2 (14:11):
It's going to say thanks for being here. Let me
cancher that a thin.
Speaker 3 (14:24):
Dan, I's of wet Bush.
Speaker 2 (14:25):
It's the biggest Tesla bull on the street with a
price target of five hundred and an outperform rating. Dan
joins us now for more, Dank and Mornic.
Speaker 5 (14:32):
Great to be here.
Speaker 2 (14:32):
Revenue down twelve percent, vehicles deliver down, average sunning, price down,
and yet you're at five hundred dollars.
Speaker 3 (14:39):
Tell me why?
Speaker 10 (14:40):
Yeah, I mean, look the quarter itself nothing right home about,
But I mean our view, it's about autonomous robotics. AI
is the future for Tesla. So to me, yeah, it's
a rough few quarters ahead, but I believe autonomous we
are in the beginning what's going to be a trillion
dollar valuation alone for a Tesla. So that's why I
don't get so concern. We talk about deliveries which actually
(15:03):
were kind of in line, you know, when we look
at what's gonna happen the second half the story here
when it comes to physical AI. Two best ones out there,
it's gonna be Tessa and then video.
Speaker 2 (15:13):
Moving from a pre autonomy to a post autonomy world.
Did he do enough on the call last night to
convince investors that it's going to be smooth sigbink.
Speaker 10 (15:21):
Look, I mean obviously the call, you know, definitely some
could have criticism in terms of you promising so much.
Speaker 7 (15:26):
Well, my view is if twenty to thirty.
Speaker 10 (15:29):
Percent of what he promised, you see in the next year,
this is a stock that's up seventy eighty percent from here.
So that's that's why when I look at Tesla, I
don't focus, and we've talked about so much in the
show over the years, I don't focus near term deliveries
what that means in terms of you know, ev tax credits.
This is an autonomous robotics story, and I think, look
(15:50):
the AI revolutions we saw from you know, from from Alphabet.
I mean, we are just in the early days of
this playing out.
Speaker 1 (15:57):
Maybe I'm chicken little, but I was looking at this
press call, diference. I was reading this and I was thinking,
this is a disaster. I mean, Essentially this was a
dreamstock and suddenly they're talking about tax credits and things
of that nature. They used to talk about an affordable vehicle.
Now they're talking about a stripped down model hy that
doesn't sound that sexy at all, and they're going to
expedite production of pre of other vehicles and put that
on hold. What would it take for you to get barished?
Speaker 5 (16:19):
Yeah?
Speaker 10 (16:19):
Look, I mean you bring up great points and that
will be the bearish points. And when it comes to
the affordable next vehicle, is that just a stripped down version. Look,
my view is that it comes down to like ROBOTAXI.
If you're in twenty five cities in the next year
and you should actually start to get volume production of optimists.
When it comes to robotics, I think ninety percent of
(16:40):
the future value is going to be in the AI story,
not on the actual deliveries.
Speaker 5 (16:45):
In terms of cars out there.
Speaker 10 (16:46):
You have ten million vehicles in terms of teslas out there.
It's all about the data and I believe the big
thing is going to be the Sherelder mean where they'll
have a significant investment XAI and I think that's where
you get more of a wartime CEO in Musk, and
I think that's really going to be the difference.
Speaker 1 (17:03):
Re satisfied by his answers about Xai, about the investments there,
the crossover with Tesla, because there was a lot of
ambiguity and he was asked that directly and he wasn't
able to explain that connection and how it really does
rebound over other than some people who are in this
industry don't really want to work at a car company.
I want to offer them an opportunity to.
Speaker 10 (17:20):
Yeah, I wouldn't say like that conference call is not
you wouldn't put him in the Neery Hall of Fame
that conference call. Okay, But but again we know, like
with Musk, it's never going to be you know, it's
not going to be Microsoft like. But my view is,
and we've talked about it, like the board, they need
to get.
Speaker 5 (17:37):
Him twenty five percent voted. I think that's key.
Speaker 10 (17:40):
Then that starts what's going to be a significant investment
in Xai. But we've said also, are there guard rails
there that they need to put on.
Speaker 5 (17:47):
You've seen him become less political since the.
Speaker 3 (17:49):
July fourth third party you know.
Speaker 10 (17:52):
Too, so I think, look, you want to seem less
focused on that more focused on being CeAl because it
comes down to the biggest asset for Tessa is Musk.
Speaker 8 (18:00):
The Press secretary yet yesterday was asked does the president
support federal agencies contracting with Elon Musk's AI company.
Speaker 7 (18:08):
Her answer, I don't think so. No, can he do
this about contracts?
Speaker 10 (18:12):
Look, I think, but then it comes out look at
Groan when it comes to groc in the huge part
of the do O D deal. Look, the reality is
that Trump administration could say what they're going to say,
but they need Musk. Of course they need Jensen. I
mean they're gonna need leaders when it comes to you.
Speaker 3 (18:29):
Know, of what this AI revolution.
Speaker 5 (18:31):
I think.
Speaker 10 (18:31):
Look, that's the reality, and I do think at one
point you'll start to see them. You know, I wouldn't
say this I become friends again, but sort of men
fences given what must needs.
Speaker 8 (18:42):
To do going to Elon Musk, Sam Altman were not
called out yesterday when the President was giving shoutouts at
this AI summit.
Speaker 7 (18:49):
Is Jensen Wang the new first buddy?
Speaker 5 (18:51):
Look, he's the cool kids table.
Speaker 10 (18:53):
I mean right now, like if you look where Jensen is,
like he is the first buddy for.
Speaker 7 (18:57):
Trump because he's almost running Dan.
Speaker 10 (19:00):
Look, and the reality is there's one chip in the
world fueling the AI revolution. And that's why when it
comes to the Middle East trip, who's the right of him?
Speaker 5 (19:08):
Jensen?
Speaker 10 (19:09):
When it comes in that he's when it comes to
China negotiation, the biggest poker chip that you have is
a video.
Speaker 5 (19:16):
I mean when it comes down. So yeah, So.
Speaker 10 (19:18):
First Buddy is wearing a black leather jackets names Jensen.
Speaker 3 (19:21):
Final word, Alphabet. What do you think the numbers?
Speaker 10 (19:24):
I thought this was as bullish as you could see
in terms of the action numbers from search, from YouTube.
And this is no longer an alphabet in the corners
say they crying, this is one coming out being like
we're on the offense.
Speaker 2 (19:37):
You say, they can make the transition from that app
model that's dominated the last several decades in Silicon Valley.
Speaker 3 (19:43):
We can make the transition away from them.
Speaker 10 (19:44):
I think it's going to be a renaissance for Alphabet.
I still I believe from a large cap prosductive it's
one of the best rest awards out there. That's why
it's a table pounder. We went to twenty five in
the price target and look, haters hate on this and
I get it, but the Bears in hibernation mood, there
was nothing on their call that they're going to grasp
on to it. I want to see them increase cappex.
(20:06):
It's an arms race of that right now in AI.
You want to see them in the Lefley.
Speaker 2 (20:09):
The good news is the markets wanting to support them.
Bremo that the stock is up off the back of
this capex space and it's not down because then they
have very different problems.
Speaker 1 (20:16):
Well, initially it was down, and that was interesting because
people had the knee jerk reaction of stop spending so
much before you can give us a sense of how
you're going to monetize it. But as he spoke, and
he talked about customer demand to change. Right now, I
am chat cheepyteeing. Is Google Search in its decline and
I will let you know what it says.
Speaker 10 (20:33):
But I also see the bears when they're in the
hibernation mood, in the caves. They can find AI in
the spreadsheets, and that's part of what I think how
they've missed so much of the AI revolution.
Speaker 5 (20:43):
Look, get the popcorn out.
Speaker 10 (20:45):
This is just a precursor of what's going to be
a bullsh Tecker, Microsoft, Meta Volunteer and others.
Speaker 3 (20:51):
Then I a Weber Standard Frey chet.
Speaker 2 (20:52):
Here, what's around a cycle?
Speaker 3 (21:03):
Native Richardson of IDP, Native of Monic.
Speaker 7 (21:06):
It's great to be here with you.
Speaker 3 (21:07):
It's good to see it.
Speaker 2 (21:07):
Let's talk about this job states. We've had a lot
from a lot of people who say this lip of
banka is no longer a reason to be holkish. Is
it becoming a reason to be dubbish.
Speaker 11 (21:17):
I think you can't say that this labor market's not
in transition. If you look at the last three months
of hiring, they're slowing. It's clear. And so whether hawkish
or dubbish, the l l labor market is an issue
on the table to consider. And I think when we
look at next week, which will be jobs week, uh,
(21:37):
we'll see a continuation of a slowing trend. And I'd
like to mark that trend with something that you can
see clearly in the ADP data. The slowdown isn't coming
from goods. It's coming from services, and that is the
turnaround in the labor market. It has been that services
have held the water for the labor market. It's really
the goods sector that's suffered. And with terra in play. Still,
(22:01):
you would think it would be the goods sector that
is bringing down the momentum.
Speaker 7 (22:06):
It's not.
Speaker 11 (22:06):
It's services, which points to a whole different case study
on what's really going on in the US economy. So
talk us through what that case study is in terms
of are we just seeing the cycle shift from goods
to services, but goods goods hiring will pick up significantly,
or does it speak to a broader.
Speaker 7 (22:24):
Type of trend.
Speaker 11 (22:25):
You know, there's so many megatrons right now, and I
like to look at the first six months of twenty
twenty five and compare it to the first six months
of twenty nineteen before the pandemic. This was actually inspired
by something Johnathan said about getting a pay raise, because
if you look, I thought it was a great question.
I wasn't satisfied with my answer, so I went to
the data, and it turns out that there hasn't been
(22:48):
an increase in new higher average pay and over a
year eighteen dollars it's been and that's because the supply
and demand dynamics have held firm. It's a really bound
labor market. I think it breaks because we're seeing lower supply.
The labor force participation rate now is lower than it was.
Speaker 7 (23:07):
Six years ago.
Speaker 11 (23:08):
There are fewer people working and looking for work, and
that's what's going to keep pay a little bit higher
or a little bit more stable for new hires than
it was six years ago.
Speaker 1 (23:18):
So this rice is a really good, interesting question. Even
if we get numbers that look pretty good on the
jobless front, not that many jobless claims on the job
creation front, more than some people would expect, is there
anything about this labor market that's inflationary with wages increasing.
Speaker 11 (23:34):
Well, this is a very deep labor market. We talked
about whether it's stock solid. I think of it as deep.
Still waters run deep, and what you're seeing is that, yes,
if you look at job stayers and job switchers, which
we look at all the time at ADP.
Speaker 7 (23:49):
Pay growth is elevated.
Speaker 11 (23:50):
But when you look at those new hires they're pretty stagnant.
And I also look at the job openings by the
US government, which shows five hundred thousand more jobs now
than and there were six years ago. But the hiring rate,
the rate at which employers are hiring is lower three
point four in May compared to May twenty nineteen three
(24:10):
point eight. There is less urgency to fill those positions,
and that's what's leading to this no higher, no fire
stasis in the jobs market. I think it breaks because
of labor supply issues, not necessarily labor demand issues.
Speaker 8 (24:26):
Governor Waller was sitting in your seat last week and
it seemed to really weigh on him. The unemployment rate
on recent college grads seven percent.
Speaker 7 (24:35):
What's going on? Why are they not able to get
a job?
Speaker 11 (24:37):
Well, I think it bends back to the data we
just saw continuing claims. It's harder to get a job
in this labor market where supply and demand are in balance,
and for young people coming out into the market, this
is not their older brothers or sister's labor market in
twenty twenty two. They were snatched right up. They have
that expectation. Their older sister told them that they were
(24:58):
snatched right up, and that was the ex expectation. It's
not that labor market anymore. To a labor market that
requires patients in networking, it's gen z. It's going to
take a little bit longer. And where these college grads
are coming out is what exactly is slowing Professional businesses.
Services are slowing down, finance is slowing down. If they
(25:19):
were coming out in construction, I think they would see
that kind of snatch up in the labor market, but
they're not seeing it now.
Speaker 3 (25:25):
Nyla.
Speaker 2 (25:25):
It's great to see you. Thanks for writing it down.
Appreciate it. Nia Riches and there of ADP. This is
the Bloomberg Surveillance Podcast, bringing you the best in markets, economics, angiopolitics.
You can watch the show live on Bloomberg TV weekday
mornings from six am to nine am Eastern. Subscribe to
the podcast on Apple, Spotify, or anywhere else you listen,
(25:46):
and as always, on the Bloomberg Terminal and the Bloomberg
Business app.
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