November 7, 2025 • 21 mins
If the government were open, we'd be getting a jobs report today. But as it is, we're in this blackout of official economic data. That's unfortunate, because the economy is already in a very confusing spot, and so any additional data right now would be very helpful in figuring out where things are heading. In the absence of Non-Farm Payrolls, we talked with Bloomberg Opinion columnist Conor Sen about the worsening state of the labor market, and why he thinks the Federal Reserve needs to step in before the unemployment rate deteriorates further. We also talk about the role AI is (or isn't) playing in the labor market.
Read more:
US Companies Announce Most October Job Cuts in Over 20 Years
Fed’s Hammack Says Inflation a Bigger Concern Than Labor Market
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
Do you guys know what today is?
Speaker 3 (00:10):
It's our tenure anniversary? Because everyone I know, we only
we knew, we only knew that.
Speaker 1 (00:16):
I didn't realize that today was the actual ten year
anniversary until I started getting emails from random people this morning.
It's like, oh, happy ten yures?
Speaker 3 (00:22):
Like what random Bloomberg people too?
Speaker 2 (00:25):
I thought I would be the first three.
Speaker 3 (00:26):
Oh yeah, sorry, in our hearts you were the first.
Speaker 1 (00:30):
Yes, ten years ago today the first episode.
Speaker 2 (00:32):
Of Do You Have I forget who said this to me?
I have a mug.
Speaker 1 (00:36):
Yeah, so, happy anniversary to us, Happy birthday, Happy birthday.
Speaker 3 (00:40):
What did you get me?
Speaker 1 (00:40):
I guess this is a little weird. Happy anniversary to us,
Happy birthday to odd lots and uh, you know what,
I didn't get you anything. I know you don't.
Speaker 3 (00:50):
I wait, I wait with baited breath for a gift
from Joe one of these days.
Speaker 1 (00:53):
You know what, No, that's not true. I've gotten your
gift name one. Well, I always bring back sweet when
I travel. I guess that. No, I guess that doesn't count, right,
You know it would be a really wonderful gift. Fresher
Jobs Data Oh yes, I did a deadlist.
Speaker 3 (01:12):
I'm both the most popular trader and most successful trader
at Citadel. That is going viral, uh barges.
Speaker 1 (01:19):
This isn't after school Special, except I've.
Speaker 3 (01:21):
Decided I'm going to base my entire personality going forward
on campaigning for a strategic pork reserve in the US.
Speaker 1 (01:27):
Black goals.
Speaker 3 (01:28):
These are the important question. Is that robots taking over
the world.
Speaker 2 (01:31):
No.
Speaker 1 (01:31):
I think that, like in a couple of years, the
AI will do a really good job of making the
Odd Lots podcast. One day that person will have the
mandate of heaven.
Speaker 3 (01:41):
How do I get more popular and successful?
Speaker 2 (01:43):
We do have.
Speaker 3 (01:46):
You're listening to lots More where we catch up with
friends about what's going on right now, because.
Speaker 1 (01:51):
Even when the Odd Lots is over, there's always lots.
Speaker 3 (01:54):
More and we really do have the perfect guest. I
don't know about you, guys, but I did not expect
to miss the NFP as much as I am at
the moment. I just thought, you know, we have all
the alt data. Things will be fine.
Speaker 1 (02:10):
It doesn't hit the same, does it, Connor?
Speaker 2 (02:13):
It doesn't not ADP Like having to care about ADPs
is the worst.
Speaker 1 (02:17):
You're like all these estimates or whatever. It's like, it
just doesn't even if you know it's coming out, it
doesn't hit the same. There's nothing like uh.
Speaker 2 (02:25):
Chicago Fed estimate of unemployment, Like, all right, Austin goles
with you, that's not the same.
Speaker 1 (02:30):
Well wait, we gotta get him on here. Okay.
Speaker 3 (02:33):
So the one upside of not having the official data,
the official jobs data because of the government shutdown is
everyone gets to be really mean about the alt data
right and say like really harsh things about why they
don't like ADP. But could someone just remind me why
we hate ADP?
Speaker 1 (02:49):
Oh, yeah, what's wrong with it?
Speaker 3 (02:50):
Connor?
Speaker 2 (02:51):
I mean, it's always they revise it to the BLS data,
so it's like, here's our estimate, and then six months
lady revise it. So then the historical data looks fine,
but in the mind it's actually not the same at all.
Speaker 1 (03:00):
It's interesting because you know, people always say, like ADP,
oh it missed again. But it is a little weird,
and it gets to I think some philosophical things which
aren't necessarily worth diving into for a conversation about what
does it even mean to be right or wrong? I mean,
NFP gets revised all the time NFPH at the model
for the real economy, you know, a little confusing the
map and the territory stuff. Anyway, when people are listening
(03:22):
to this, it should have been jobs Day, and so
I don't really think there's gonna be a report and
list on how the government gets hoped.
Speaker 2 (03:27):
I don't think that's happening.
Speaker 3 (03:29):
This is our gift to Odd Lots listeners. Yes, in
celebration of our tenure anniversary, we are bringing you this
labor market episode of Lots More, brought to you by
Odd Lots. And it's a poor substitute perhaps, but it's
the best that we can do.
Speaker 1 (03:42):
So this morning there was a headline Challenger, which has
never been a particularly like top shelf data point for me,
Like they said, the worst month for layoffs in twenty years.
On the other hand, in initial claims have been steady. Also,
there was a headline from Cleveland Fed's Hammock, she's more
concerned about inflation than employment right now in terms of
risk to the dual mandate. Connor, you've sort of pretty
(04:06):
taken the opposite view. You think the labor market situation
is pretty serious and urgent, maybe underappreciated as a risk
you'd probably disagree with.
Speaker 2 (04:15):
You've had this low hires, low fires labor market for
at least eighteen to twenty four months now, and I
think we have evidence over the past few months that
at least there's no reason for low fires to still
be happening in corporate America. They don't have to hoard
labor because if nothing else, if you really want to hire,
there's plenty of young people. There's plenty of long term
unemployee people to hire. Unemployment rates kind of low, but
(04:35):
there's plenty of slack out there to hire people. So
to the extent that Amazon has shown the way of
we don't need to hold onto our COVID workers anymore,
that could get permission to other companies to do the same.
And at a time when everybody's trying to cut costs,
that could snowball a little bit.
Speaker 3 (04:50):
So just going back to the ADP data for a second.
So sorry, I hate to do this, but according to ADP,
payrolls were up.
Speaker 1 (04:56):
We're going to get a call from No. I'm sure
we're gonna want to come on and defend, which is fun.
Speaker 3 (05:00):
Well, I'm trying to get to some of the tension here,
but Okay, jobs up forty two thousand for October, and
then we get the Challenger data for that same month,
and as Joe said, it's like the worst job cuts
in twenty years, I think, over one hundred and fifty
thousand cut. Why does it seem like we are getting
these two very different streams of jobs data at the moment,
(05:21):
where we do have some alternative data points that are
coming in better than expected, and then we have some
that are just coming in that look almost I don't
want to say depression level, but like certainly worse than
it feels at the moment.
Speaker 2 (05:32):
Well, the way the Challenger data works is it's announced layoffs,
So that could be anything from UPS saying we've laid
off fifty thousand people over the past twelve months or
announced job cuts that haven't happened yet. So they're just headlines,
not actual job cuts that month.
Speaker 3 (05:45):
Oh I see, Okay, So it's aggregating just people saying stuff.
And we're still not entirely sure whether we have on nagregation.
Speaker 2 (05:53):
Not confirmed layoffs that month.
Speaker 1 (05:55):
What do we know about initial claims?
Speaker 2 (05:59):
So the initial claims are still pretty low. I think
one thing we're dealing with right now is that the
year over year is incorporating the Hurricane Halene situation from
last year. So if you remember that was in a September,
then you saw claims in North Carolina and Florida in
the southeast as people were you know, there was flooding
and so companies were closed for a while. So you
saw spiking claims in October. So we're kind of lapping
(06:22):
that period. And so to the extent that the year
every years don't look bad right now, that could be
partially a hurricane impact.
Speaker 3 (06:27):
Do you have like a shadow NFP figure in your
mind that you're working on.
Speaker 2 (06:33):
For me, it's just sort of I don't think jobs
are really growing in the aggregate right now, certainly ex healthcare.
And so to the extent that we think corporate earnings
are going to grow ten percent over the next twelve months,
how do you grow earnings ten percent if there's no
job growth. It just seems like you'd need a real
productivity miracle or some sort of compositional dynamic to get there.
Speaker 1 (06:50):
If the labor market is substantially weakening, we are going
to revisit the cyclical versus structural debate, except this time
the structural argument would be that it has something to
do with AI. And if the call in that if
AI is driving job loss, which I'm not really convinced by,
but if AI is driving job loss, then rate cuts
(07:10):
aren't going to do much.
Speaker 2 (07:12):
Like what is it going to give you? Yeah, to
give you my conundrum of what I think is going on.
I think about Craig Fuller and free commodity markets and
all the supply chain episodes you guys did, and I
think about there's sort of the contracted rate of promotions
and jobs that people got in twenty twenty two, home
prices people committed to in twenty twenty two, and then
like the spot market, which is long term, unemployee young people,
(07:35):
resale housing inventory, and I feel like the spot market
wants to get back to twenty nineteen affordability, and then
the contracted market wants to stay at twenty twenty two prices,
and there's this really growing tension between the two as
the spot market's trying to drag down the contracted market,
so to speak.
Speaker 1 (07:50):
So to understand this to maybe the way to think
about this is that there is a seat that a
company has a role, and the person sitting in that
seat might be taking in one hundred and fifty thousand
dollars currently. But if that see we're open and they
had to hire for it, maybe it would only be
they could hire for that role for one hundred thousand
or ninety thousand or a hundred and ten thousand, and
(08:12):
thus the gap between contract and spot right.
Speaker 2 (08:16):
And I think you know it's you think about like
a bank analyst program where you hire a bunch of
twenty one year olds. Maybe they were making one hundred
thousand dollars in twenty twenty, and then that got raised
at one hundred and fifty and twenty twenty two because
the job market was so strong. Those analysts then become associates,
and then there's kind of an expectation they're going to
leave for business school or private equity or whatever, but
because the labor market's so bad, they don't want to leave.
(08:38):
And they might be perfectly fine people, but at some
point you're like, well, we need to kind of kick
you out to make room for the next twenty one
year olds. Almost like if a college like University of Texas,
if the seniors were like, we're not leaving because the
job markets, We're just going to stay and at some
point Texas is like, well, we have freshmen that need beds.
You have to leave, Yeah, and I worry we're kind
of getting there.
Speaker 1 (08:57):
That's a great analogy.
Speaker 3 (08:58):
There's a whole movie about Ryan Reynolds trying to stay
at university because of a lackluster job market. I presume anyway,
the other thing that everyone seems to be debating at
the moment is the impact of immigration or lack thereof,
on the total labor market and what that means for supply.
And depending on where you come out on this particular debate,
you might have very different impressions of what's going on
(09:20):
at the moment. What side of it are you sort
of landing on.
Speaker 2 (09:25):
I think it's fair to say that the break even
job's rate is much lower, like maybe it's thirty thousand,
But also supply kind of generates demand as well, and
I think you can look at housing to show that.
I don't know if he'll appreciate me calling him out,
but Lee Everett, who you've had on to talk about
multi family a couple of times, I asked him, do
you think that reduce immigration is hurting multi family performance?
Because Q three was pretty softer apartments and his view
(09:47):
is it's not like undocumented migrants are living in Class
A and Class B apartments. But if you don't have
population growth, you don't need job growth, and if you
don't have job growth, you don't need to resign an
apartment lease. So might not be directly leading to weakness
and whatever, but it's sort of that demand weakness is
showing up elsewhere in housing, in consumer staples, things like that.
Speaker 1 (10:09):
Let's get back to the AI question. Do you think
it's playing some role in cut because yeah, I'll.
Speaker 2 (10:16):
Leave it at that. I think in two ways. Yes,
I don't think it's the technologies displacing workers, but I
think that companies are first cost constrained and they feel
like they have to invest in AI. So if you
have to increase here your budget somewhere, you've got to
cut it somewhere else, and labor's a good way to
do that. And then I just think the vibes in
general of well, if you're hiring a bunch of people,
you're probably a loser that you get AI, and so
(10:38):
you can't look like a loser, so you're just not
doing it.
Speaker 3 (10:40):
Yeah, this is what I worry about with the optics,
which is if there are a bunch of companies recently
who have seen their share prices go down, and we're
recording this at lunchtime, so all the food ones are
on my mind. But for instance, McDonald's, Chipotle right came
out with disappointing earnings and shares are going down. If
you're a company watching your stock price go down, you're
thinking about the levers you can pull to make it
(11:02):
go up in the future. Price increases probably aren't going
to work when everyone's already complaining that. You know, cheeseburger
and fries over at McDonald's are like more than ten
dollars now. But one thing you can do is say, well,
we're going to cut workers, and by cutting workers, look
at us, we really understand AI and we're in on
like the current trend or craze.
Speaker 2 (11:24):
Something McDonald's did eighteen months ago is they finally when
everything was slumping in twenty three and twenty four, their
cop sales in the US went negative, and they had
this big earnings call saying, we've always prided ourself on value.
Our value gap versus our peers has really compressed, but
we are going to win at value whatever it takes.
Almost like a droggy moment for past food, and they
introduced this five dollars value meal. This they cotton makevalue
(11:47):
their new program that they launched earlier this year, and
they've really clawed that value gap back, and so it's
sort of like they're going to claim their market share
and then everybody else is going to lose traffic to McDonald's.
So I think they're kind of fine. And that kind
of gets to that contracted versus spot economy framework where
McDonald's got back to where they need to be. Everybody
else isn't there, and they're all trying to figure out
(12:08):
how do we deal with this environment where demand is
weak and consumers are very price pressured.
Speaker 3 (12:12):
I want to say, Joe, I have yet to experience
the rebound of value at McDonald's. I had a moment
of weakness on Monday.
Speaker 1 (12:18):
Yeah, and I did, and it was costly.
Speaker 3 (12:20):
It was costly. I went through the drive through. I
didn't use the app, so that was probably the problem.
But like, it is not nothing to get a meal
from McDonald's nowadays.
Speaker 2 (12:28):
Would do.
Speaker 1 (12:29):
My favorite thing is whenever like a sector comes up,
I started like pulling up stock charts on the terminal.
Sweet Green that was a forty five dollars stock last November.
This is maybe the biggest trump You're a loser. It
was forty four dollars. Now it's a six dollars stock.
Cova was a one hundred and fifty dollars stock also
(12:51):
in late twenty twenty four. Now it's a forty seven
dollars stock. I mean these are like, you know, these
are the tip of the sphere, the most cutting edge
slot bowls you can get.
Speaker 2 (12:59):
And there I feel like if you were the kind
of person working for like Jiggrshaws group and like eating
lunch in DC, the things you're eating, that's like in
a bad recession. Now those types of work I do.
Speaker 1 (13:09):
Yeah, I mean that's not funny, it's it's true. I also, Tracy,
like when I I love our DC listeners, so I
don't want to insult people in DC. But when I
think of, like, what is the city which I'm certain
has the highest percentage of people that sort of eat
a bowl lunch, I always think in terms of the workforce,
it must.
Speaker 2 (13:27):
Be DC, And I do think it's actually founded.
Speaker 1 (13:29):
Well and sweet both Tava and Sweet Green are like
this is true innovation serving the local market, and so
I do think it's interesting that DC is an industrial
hutbed for these kind of lunches.
Speaker 3 (13:40):
I'll just say I see a lot of sad salad
eaters here, including Americ including Joe. But I am willing
to say that Kava and Sweet Green are certainly that
sort of I guess, liberal bureaucratic government official code in
your meal?
Speaker 1 (13:54):
Yeah, your rations they.
Speaker 3 (13:56):
Are, yeah, they are. Here's your bowl of salad.
Speaker 2 (13:59):
Oh man, when you're hearing like Chipotle talked about weakness
among twenty five to thirty five year old ye, yeah,
not just twenty to twenty four year olds. So it
does seem like that weakness is kind of creeping up
the income scale the age ladder, and you know, maybe
the AMEX consumer is still fine, but it just seems
like the weakness is moving up the income curve.
Speaker 3 (14:28):
We were actually talking about the labor monent. Yeah, and
I know this is related. But one thing that kind
of worries me at the moment is that even if
the government opens up tomorrow and NFP gets released soon
after that, it feels like it's just going to be messy,
and even if we get the official number, it's not
actually going to be that insightful, and we're still going
(14:50):
to be spending all our time having the debates that
we're having right now.
Speaker 2 (14:53):
I think we're not going to have a clean read
on the data until least January, just because October is
gonna be a mess. Who knows when we're going to
get the data. Then even if the government reopens, then
you have the November data is impacted by the shutdown,
which so yeah, yeah, we're kind of just twiddling our
thumbs until your end.
Speaker 1 (15:07):
So let's talk about you know, let's put it in
the stakes for the FED. If you're the FED share,
which you know you probably play fantasy, there's.
Speaker 3 (15:16):
A non zero chance that Connor could one day yeah.
Speaker 1 (15:18):
Or certainly yeah, or certainly governor, Like, what do you like?
Is there of an effective move here? Is is it
keep cutting raids? And how effective would they be? Play
it out?
Speaker 2 (15:26):
From the FED framework, What I think they're thinking is
that we keep missing on inflation. We don't know if
tariffs are going to lead to unanchored and placed and expectations.
Even though they don't take the stock market into account,
I do think on some vibes level, if the stock
market's high, that doesn't force their hand and they they're
really anchoring to the unemployment rate is historically low, which
kind of but again if you look at the long
(15:49):
term unemployment numbers at age twenty twenty four, kind of
that spot labor market groups that's actually quite weak. That's
more of like a twenty fifteen type of labor market,
And I just think they don't want to do anything
until their hand is forced. But again for me, I
see howsing getting worse. We've the Fed's cut rates one
hundred fifty basis points, and housing is worse now than
it was a year and a half ago. So I
(16:09):
think the whole when the FED cuts rates, housing is
going to be fixed. It has not proven to be true,
and the labor market doesn't seem to be getting better yet.
So outside of AI, it's just hard to see any
upward momentum heading into twenty twenty six.
Speaker 3 (16:21):
If you were at the FED dealing with an AI
economy versus the economy of ten years ago, let alone
thirty or forty years ago. But let's say ten years ago,
does that make you think about monetary policy and the
transmission mechanism different at all? Joe kind of got up
this earlier, but yeah.
Speaker 2 (16:38):
It's I think, you know, we all lived through the
mid two thousands and then the bust and the bailouts,
and it's like, should the FED have prevented Open Eye
from making these commitments? Should the FED have prevented Nvidia
from doing vendor finance on the scale they have? Maybe,
we'll say in hindsight, yes, but like in the moment,
which is right, now, come on, like that's not going
to happen. So I'm a little more sympathetic now to
(16:59):
the FED being blind certain things in the boom, especially
when it's sort of outside of their band aid, just.
Speaker 3 (17:04):
Because it's right. They're not AI regulators, no exactly.
Speaker 2 (17:08):
And it's also with Trump, it's not like they're going
to be telling Sam Altman he can't do what he's doing.
So I feel like they're going to probably have a
role in the cleanup, but in the moment, there's not
a whole lot they can do.
Speaker 1 (17:17):
It's funny that we're already like projecting it so far forward,
but it is. I mean, this is and I really
want to do more on this. I think the politics
of AI are going to be huge in twenty twenty eight,
and I expect I don't know, it's very possible to
me that the AI industry at the same time is
a very big deal in the US touch and sort
of friendless in DC. It seems very plausible. Seems very
(17:41):
plausible to me that in twenty twenty eight, the story
is most people again, twenty twenty eight, it's a lifetime
from now, both politics and technology. But it could be
a story where it's like, here's this thing, it's really important,
there's tons of investment in it, but people for the
most part either mostly see it as a job killers
slash and electricity price booster, and there are some you know,
(18:05):
the stakes are going to be very high, and I
expect sort of like especially on the Republican primary, I
would expect I would expect the Democrats to sort of
be more comfortable. Their antagonism towards big tech has obviously
been you know, several years. I think it's going to
be some interesting divisions on the geop side in terms
of which lanes. And I think there is going to
be an AI lane or an anti a line AI lane.
(18:27):
You already see Ron DeSantis, he's been tweeting a lot
about this. I think that's very telling.
Speaker 2 (18:32):
Well, it's also in twenty twenty four, the MAGA coalition
was kind of working class voters of all races and
ethnicities and then tech and VC. Yeah, and it's just
hard to see how their interests are truly aligned on AI.
Speaker 1 (18:44):
Let's talk a little bit more just about the job
market right now, Like, you know, let's say we were
getting data, like do you think you know some role
like we're in sort of it's sort of come down,
But how close do you think we are to the snowball?
Like how urgent? How far behind do you think the
FED could get here?
Speaker 2 (19:01):
I remember when Liberation Day happened and people were wondering
how bad it was going to get. And my thought
was that companies don't like to change their capex plans
into April and May. They're going to try to get
through the end of the year and then figure out
twenty twenty six and Q four. Yeah, and as they're
doing that right now, it's hard to think that they're
going to feel like we need outside of AI, like
we need to step up investment in hiring.
Speaker 3 (19:19):
We feel really good about twenty twenty six when the
government's shut down, And.
Speaker 2 (19:23):
Yeah, exat share price is going on, and so I
worry a bit that it's like we all freaked out
in April and May, and then it was kind of
fine for six months, and then now is when people
are going to make their investment in spending plans for
next year, and those are going to come in lower
than they did a year ago, and we're going to
start to see that show up in Q one. So
I don't think it's a next week, next month thing.
But could the unemployment rate go certainly into the high fours, Yes,
(19:45):
and I think we probably will get there. Does it
get beyond that? I don't know, But I just think
three to six months from now it's still gonna be
worse than it is today.
Speaker 1 (19:53):
How concerned are you about, like just lower here and
have you somebody first brand tree Clore some of these
dodgy credits, you know, Jamie Diamond cockroaches right, like, you know,
what's your sense?
Speaker 2 (20:07):
I feel like the whole private asset thing is that
it was small in two thousand and eight, so there
weren't really any problems there, and then in the early
twenty tens you had zup and then very cheap assets
and they had a great decade of performance based on that,
and then the asset class kind of just kept getting
bigger just because, like I don't know if there's a
real fundamental reason for it. It just became like a
thing that institutions do. And so it's like, are they
(20:27):
really underwriting very well? Like you look at the stock
prices of a firm and up work or all these
like AI fintech lenders are getting destroyed and you've had
that's the treaty guy talked about Blue Owl, which is just
hard to think underwriting is really really great right now.
And so if anything works in the economy, I assume
that those guys are gonna be in trouble.
Speaker 1 (20:47):
The Blue Owl things we're talking about more, and I
think we have an episode coming up that we'll touch
on that. You know what I should say. We've been
speaking with Bloomberg opinion columnist Connor sund Oh. Yes are
important that I wanted to make sure I knew there
was one more thing I wanted to get in the conversation,
and so I wanted to establish who the guest we
(21:07):
are actually talking to was.
Speaker 3 (21:09):
I guess Connorson person with non zero chance of becoming fed.
Speaker 1 (21:12):
Shaer non zero chance of becoming fed.
Speaker 3 (21:14):
She said, that's that's the real title, just the real title.
We should leave it there, We should go. I kind
of want McDonald's again.
Speaker 1 (21:20):
Yeah, it's Lunchhime lots More is produced by Carmen Rodriguez
and dash Ol Bennett, with help from Moses Onam and
Kill Brooks.
Speaker 3 (21:31):
Our sound engineer is Blake Maples. Sage Bauman is the
head of Bloomberg Podcasts.
Speaker 1 (21:36):
Please rate, review, and subscribe to Odd Lots and lots
More on your favorite podcast platforms.
Speaker 3 (21:42):
And remember that Bloomberg subscribers can listen to all our
podcasts at free by connecting through Apple Podcasts. Thanks for listening.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
Do you guys know what today is?
Speaker 3 (00:10):
It's our tenure anniversary? Because everyone I know, we only
we knew, we only knew that.
Speaker 1 (00:16):
I didn't realize that today was the actual ten year
anniversary until I started getting emails from random people this morning.
It's like, oh, happy ten yures?
Speaker 3 (00:22):
Like what random Bloomberg people too?
Speaker 2 (00:25):
I thought I would be the first three.
Speaker 3 (00:26):
Oh yeah, sorry, in our hearts you were the first.
Speaker 1 (00:30):
Yes, ten years ago today the first episode.
Speaker 2 (00:32):
Of Do You Have I forget who said this to me?
I have a mug.
Speaker 1 (00:36):
Yeah, so, happy anniversary to us, Happy birthday, Happy birthday.
Speaker 3 (00:40):
What did you get me?
Speaker 1 (00:40):
I guess this is a little weird. Happy anniversary to us,
Happy birthday to odd lots and uh, you know what,
I didn't get you anything. I know you don't.
Speaker 3 (00:50):
I wait, I wait with baited breath for a gift
from Joe one of these days.
Speaker 1 (00:53):
You know what, No, that's not true. I've gotten your
gift name one. Well, I always bring back sweet when
I travel. I guess that. No, I guess that doesn't count, right,
You know it would be a really wonderful gift. Fresher
Jobs Data Oh yes, I did a deadlist.
Speaker 3 (01:12):
I'm both the most popular trader and most successful trader
at Citadel. That is going viral, uh barges.
Speaker 1 (01:19):
This isn't after school Special, except I've.
Speaker 3 (01:21):
Decided I'm going to base my entire personality going forward
on campaigning for a strategic pork reserve in the US.
Speaker 1 (01:27):
Black goals.
Speaker 3 (01:28):
These are the important question. Is that robots taking over
the world.
Speaker 2 (01:31):
No.
Speaker 1 (01:31):
I think that, like in a couple of years, the
AI will do a really good job of making the
Odd Lots podcast. One day that person will have the
mandate of heaven.
Speaker 3 (01:41):
How do I get more popular and successful?
Speaker 2 (01:43):
We do have.
Speaker 3 (01:46):
You're listening to lots More where we catch up with
friends about what's going on right now, because.
Speaker 1 (01:51):
Even when the Odd Lots is over, there's always lots.
Speaker 3 (01:54):
More and we really do have the perfect guest. I
don't know about you, guys, but I did not expect
to miss the NFP as much as I am at
the moment. I just thought, you know, we have all
the alt data. Things will be fine.
Speaker 1 (02:10):
It doesn't hit the same, does it, Connor?
Speaker 2 (02:13):
It doesn't not ADP Like having to care about ADPs
is the worst.
Speaker 1 (02:17):
You're like all these estimates or whatever. It's like, it
just doesn't even if you know it's coming out, it
doesn't hit the same. There's nothing like uh.
Speaker 2 (02:25):
Chicago Fed estimate of unemployment, Like, all right, Austin goles
with you, that's not the same.
Speaker 1 (02:30):
Well wait, we gotta get him on here. Okay.
Speaker 3 (02:33):
So the one upside of not having the official data,
the official jobs data because of the government shutdown is
everyone gets to be really mean about the alt data
right and say like really harsh things about why they
don't like ADP. But could someone just remind me why
we hate ADP?
Speaker 1 (02:49):
Oh, yeah, what's wrong with it?
Speaker 3 (02:50):
Connor?
Speaker 2 (02:51):
I mean, it's always they revise it to the BLS data,
so it's like, here's our estimate, and then six months
lady revise it. So then the historical data looks fine,
but in the mind it's actually not the same at all.
Speaker 1 (03:00):
It's interesting because you know, people always say, like ADP,
oh it missed again. But it is a little weird,
and it gets to I think some philosophical things which
aren't necessarily worth diving into for a conversation about what
does it even mean to be right or wrong? I mean,
NFP gets revised all the time NFPH at the model
for the real economy, you know, a little confusing the
map and the territory stuff. Anyway, when people are listening
(03:22):
to this, it should have been jobs Day, and so
I don't really think there's gonna be a report and
list on how the government gets hoped.
Speaker 2 (03:27):
I don't think that's happening.
Speaker 3 (03:29):
This is our gift to Odd Lots listeners. Yes, in
celebration of our tenure anniversary, we are bringing you this
labor market episode of Lots More, brought to you by
Odd Lots. And it's a poor substitute perhaps, but it's
the best that we can do.
Speaker 1 (03:42):
So this morning there was a headline Challenger, which has
never been a particularly like top shelf data point for me,
Like they said, the worst month for layoffs in twenty years.
On the other hand, in initial claims have been steady. Also,
there was a headline from Cleveland Fed's Hammock, she's more
concerned about inflation than employment right now in terms of
risk to the dual mandate. Connor, you've sort of pretty
(04:06):
taken the opposite view. You think the labor market situation
is pretty serious and urgent, maybe underappreciated as a risk
you'd probably disagree with.
Speaker 2 (04:15):
You've had this low hires, low fires labor market for
at least eighteen to twenty four months now, and I
think we have evidence over the past few months that
at least there's no reason for low fires to still
be happening in corporate America. They don't have to hoard
labor because if nothing else, if you really want to hire,
there's plenty of young people. There's plenty of long term
unemployee people to hire. Unemployment rates kind of low, but
(04:35):
there's plenty of slack out there to hire people. So
to the extent that Amazon has shown the way of
we don't need to hold onto our COVID workers anymore,
that could get permission to other companies to do the same.
And at a time when everybody's trying to cut costs,
that could snowball a little bit.
Speaker 3 (04:50):
So just going back to the ADP data for a second.
So sorry, I hate to do this, but according to ADP,
payrolls were up.
Speaker 1 (04:56):
We're going to get a call from No. I'm sure
we're gonna want to come on and defend, which is fun.
Speaker 3 (05:00):
Well, I'm trying to get to some of the tension here,
but Okay, jobs up forty two thousand for October, and
then we get the Challenger data for that same month,
and as Joe said, it's like the worst job cuts
in twenty years, I think, over one hundred and fifty
thousand cut. Why does it seem like we are getting
these two very different streams of jobs data at the moment,
(05:21):
where we do have some alternative data points that are
coming in better than expected, and then we have some
that are just coming in that look almost I don't
want to say depression level, but like certainly worse than
it feels at the moment.
Speaker 2 (05:32):
Well, the way the Challenger data works is it's announced layoffs,
So that could be anything from UPS saying we've laid
off fifty thousand people over the past twelve months or
announced job cuts that haven't happened yet. So they're just headlines,
not actual job cuts that month.
Speaker 3 (05:45):
Oh I see, Okay, So it's aggregating just people saying stuff.
And we're still not entirely sure whether we have on nagregation.
Speaker 2 (05:53):
Not confirmed layoffs that month.
Speaker 1 (05:55):
What do we know about initial claims?
Speaker 2 (05:59):
So the initial claims are still pretty low. I think
one thing we're dealing with right now is that the
year over year is incorporating the Hurricane Halene situation from
last year. So if you remember that was in a September,
then you saw claims in North Carolina and Florida in
the southeast as people were you know, there was flooding
and so companies were closed for a while. So you
saw spiking claims in October. So we're kind of lapping
(06:22):
that period. And so to the extent that the year
every years don't look bad right now, that could be
partially a hurricane impact.
Speaker 3 (06:27):
Do you have like a shadow NFP figure in your
mind that you're working on.
Speaker 2 (06:33):
For me, it's just sort of I don't think jobs
are really growing in the aggregate right now, certainly ex healthcare.
And so to the extent that we think corporate earnings
are going to grow ten percent over the next twelve months,
how do you grow earnings ten percent if there's no
job growth. It just seems like you'd need a real
productivity miracle or some sort of compositional dynamic to get there.
Speaker 1 (06:50):
If the labor market is substantially weakening, we are going
to revisit the cyclical versus structural debate, except this time
the structural argument would be that it has something to
do with AI. And if the call in that if
AI is driving job loss, which I'm not really convinced by,
but if AI is driving job loss, then rate cuts
(07:10):
aren't going to do much.
Speaker 2 (07:12):
Like what is it going to give you? Yeah, to
give you my conundrum of what I think is going on.
I think about Craig Fuller and free commodity markets and
all the supply chain episodes you guys did, and I
think about there's sort of the contracted rate of promotions
and jobs that people got in twenty twenty two, home
prices people committed to in twenty twenty two, and then
like the spot market, which is long term, unemployee young people,
(07:35):
resale housing inventory, and I feel like the spot market
wants to get back to twenty nineteen affordability, and then
the contracted market wants to stay at twenty twenty two prices,
and there's this really growing tension between the two as
the spot market's trying to drag down the contracted market,
so to speak.
Speaker 1 (07:50):
So to understand this to maybe the way to think
about this is that there is a seat that a
company has a role, and the person sitting in that
seat might be taking in one hundred and fifty thousand
dollars currently. But if that see we're open and they
had to hire for it, maybe it would only be
they could hire for that role for one hundred thousand
or ninety thousand or a hundred and ten thousand, and
(08:12):
thus the gap between contract and spot right.
Speaker 2 (08:16):
And I think you know it's you think about like
a bank analyst program where you hire a bunch of
twenty one year olds. Maybe they were making one hundred
thousand dollars in twenty twenty, and then that got raised
at one hundred and fifty and twenty twenty two because
the job market was so strong. Those analysts then become associates,
and then there's kind of an expectation they're going to
leave for business school or private equity or whatever, but
because the labor market's so bad, they don't want to leave.
(08:38):
And they might be perfectly fine people, but at some
point you're like, well, we need to kind of kick
you out to make room for the next twenty one
year olds. Almost like if a college like University of Texas,
if the seniors were like, we're not leaving because the
job markets, We're just going to stay and at some
point Texas is like, well, we have freshmen that need beds.
You have to leave, Yeah, and I worry we're kind
of getting there.
Speaker 1 (08:57):
That's a great analogy.
Speaker 3 (08:58):
There's a whole movie about Ryan Reynolds trying to stay
at university because of a lackluster job market. I presume anyway,
the other thing that everyone seems to be debating at
the moment is the impact of immigration or lack thereof,
on the total labor market and what that means for supply.
And depending on where you come out on this particular debate,
you might have very different impressions of what's going on
(09:20):
at the moment. What side of it are you sort
of landing on.
Speaker 2 (09:25):
I think it's fair to say that the break even
job's rate is much lower, like maybe it's thirty thousand,
But also supply kind of generates demand as well, and
I think you can look at housing to show that.
I don't know if he'll appreciate me calling him out,
but Lee Everett, who you've had on to talk about
multi family a couple of times, I asked him, do
you think that reduce immigration is hurting multi family performance?
Because Q three was pretty softer apartments and his view
(09:47):
is it's not like undocumented migrants are living in Class
A and Class B apartments. But if you don't have
population growth, you don't need job growth, and if you
don't have job growth, you don't need to resign an
apartment lease. So might not be directly leading to weakness
and whatever, but it's sort of that demand weakness is
showing up elsewhere in housing, in consumer staples, things like that.
Speaker 1 (10:09):
Let's get back to the AI question. Do you think
it's playing some role in cut because yeah, I'll.
Speaker 2 (10:16):
Leave it at that. I think in two ways. Yes,
I don't think it's the technologies displacing workers, but I
think that companies are first cost constrained and they feel
like they have to invest in AI. So if you
have to increase here your budget somewhere, you've got to
cut it somewhere else, and labor's a good way to
do that. And then I just think the vibes in
general of well, if you're hiring a bunch of people,
you're probably a loser that you get AI, and so
(10:38):
you can't look like a loser, so you're just not
doing it.
Speaker 3 (10:40):
Yeah, this is what I worry about with the optics,
which is if there are a bunch of companies recently
who have seen their share prices go down, and we're
recording this at lunchtime, so all the food ones are
on my mind. But for instance, McDonald's, Chipotle right came
out with disappointing earnings and shares are going down. If
you're a company watching your stock price go down, you're
thinking about the levers you can pull to make it
(11:02):
go up in the future. Price increases probably aren't going
to work when everyone's already complaining that. You know, cheeseburger
and fries over at McDonald's are like more than ten
dollars now. But one thing you can do is say, well,
we're going to cut workers, and by cutting workers, look
at us, we really understand AI and we're in on
like the current trend or craze.
Speaker 2 (11:24):
Something McDonald's did eighteen months ago is they finally when
everything was slumping in twenty three and twenty four, their
cop sales in the US went negative, and they had
this big earnings call saying, we've always prided ourself on value.
Our value gap versus our peers has really compressed, but
we are going to win at value whatever it takes.
Almost like a droggy moment for past food, and they
introduced this five dollars value meal. This they cotton makevalue
(11:47):
their new program that they launched earlier this year, and
they've really clawed that value gap back, and so it's
sort of like they're going to claim their market share
and then everybody else is going to lose traffic to McDonald's.
So I think they're kind of fine. And that kind
of gets to that contracted versus spot economy framework where
McDonald's got back to where they need to be. Everybody
else isn't there, and they're all trying to figure out
(12:08):
how do we deal with this environment where demand is
weak and consumers are very price pressured.
Speaker 3 (12:12):
I want to say, Joe, I have yet to experience
the rebound of value at McDonald's. I had a moment
of weakness on Monday.
Speaker 1 (12:18):
Yeah, and I did, and it was costly.
Speaker 3 (12:20):
It was costly. I went through the drive through. I
didn't use the app, so that was probably the problem.
But like, it is not nothing to get a meal
from McDonald's nowadays.
Speaker 2 (12:28):
Would do.
Speaker 1 (12:29):
My favorite thing is whenever like a sector comes up,
I started like pulling up stock charts on the terminal.
Sweet Green that was a forty five dollars stock last November.
This is maybe the biggest trump You're a loser. It
was forty four dollars. Now it's a six dollars stock.
Cova was a one hundred and fifty dollars stock also
(12:51):
in late twenty twenty four. Now it's a forty seven
dollars stock. I mean these are like, you know, these
are the tip of the sphere, the most cutting edge
slot bowls you can get.
Speaker 2 (12:59):
And there I feel like if you were the kind
of person working for like Jiggrshaws group and like eating
lunch in DC, the things you're eating, that's like in
a bad recession. Now those types of work I do.
Speaker 1 (13:09):
Yeah, I mean that's not funny, it's it's true. I also, Tracy,
like when I I love our DC listeners, so I
don't want to insult people in DC. But when I
think of, like, what is the city which I'm certain
has the highest percentage of people that sort of eat
a bowl lunch, I always think in terms of the workforce,
it must.
Speaker 2 (13:27):
Be DC, And I do think it's actually founded.
Speaker 1 (13:29):
Well and sweet both Tava and Sweet Green are like
this is true innovation serving the local market, and so
I do think it's interesting that DC is an industrial
hutbed for these kind of lunches.
Speaker 3 (13:40):
I'll just say I see a lot of sad salad
eaters here, including Americ including Joe. But I am willing
to say that Kava and Sweet Green are certainly that
sort of I guess, liberal bureaucratic government official code in
your meal?
Speaker 1 (13:54):
Yeah, your rations they.
Speaker 3 (13:56):
Are, yeah, they are. Here's your bowl of salad.
Speaker 2 (13:59):
Oh man, when you're hearing like Chipotle talked about weakness
among twenty five to thirty five year old ye, yeah,
not just twenty to twenty four year olds. So it
does seem like that weakness is kind of creeping up
the income scale the age ladder, and you know, maybe
the AMEX consumer is still fine, but it just seems
like the weakness is moving up the income curve.
Speaker 3 (14:28):
We were actually talking about the labor monent. Yeah, and
I know this is related. But one thing that kind
of worries me at the moment is that even if
the government opens up tomorrow and NFP gets released soon
after that, it feels like it's just going to be messy,
and even if we get the official number, it's not
actually going to be that insightful, and we're still going
(14:50):
to be spending all our time having the debates that
we're having right now.
Speaker 2 (14:53):
I think we're not going to have a clean read
on the data until least January, just because October is
gonna be a mess. Who knows when we're going to
get the data. Then even if the government reopens, then
you have the November data is impacted by the shutdown,
which so yeah, yeah, we're kind of just twiddling our
thumbs until your end.
Speaker 1 (15:07):
So let's talk about you know, let's put it in
the stakes for the FED. If you're the FED share,
which you know you probably play fantasy, there's.
Speaker 3 (15:16):
A non zero chance that Connor could one day yeah.
Speaker 1 (15:18):
Or certainly yeah, or certainly governor, Like, what do you like?
Is there of an effective move here? Is is it
keep cutting raids? And how effective would they be? Play
it out?
Speaker 2 (15:26):
From the FED framework, What I think they're thinking is
that we keep missing on inflation. We don't know if
tariffs are going to lead to unanchored and placed and expectations.
Even though they don't take the stock market into account,
I do think on some vibes level, if the stock
market's high, that doesn't force their hand and they they're
really anchoring to the unemployment rate is historically low, which
kind of but again if you look at the long
(15:49):
term unemployment numbers at age twenty twenty four, kind of
that spot labor market groups that's actually quite weak. That's
more of like a twenty fifteen type of labor market,
And I just think they don't want to do anything
until their hand is forced. But again for me, I
see howsing getting worse. We've the Fed's cut rates one
hundred fifty basis points, and housing is worse now than
it was a year and a half ago. So I
(16:09):
think the whole when the FED cuts rates, housing is
going to be fixed. It has not proven to be true,
and the labor market doesn't seem to be getting better yet.
So outside of AI, it's just hard to see any
upward momentum heading into twenty twenty six.
Speaker 3 (16:21):
If you were at the FED dealing with an AI
economy versus the economy of ten years ago, let alone
thirty or forty years ago. But let's say ten years ago,
does that make you think about monetary policy and the
transmission mechanism different at all? Joe kind of got up
this earlier, but yeah.
Speaker 2 (16:38):
It's I think, you know, we all lived through the
mid two thousands and then the bust and the bailouts,
and it's like, should the FED have prevented Open Eye
from making these commitments? Should the FED have prevented Nvidia
from doing vendor finance on the scale they have? Maybe,
we'll say in hindsight, yes, but like in the moment,
which is right, now, come on, like that's not going
to happen. So I'm a little more sympathetic now to
(16:59):
the FED being blind certain things in the boom, especially
when it's sort of outside of their band aid, just.
Speaker 3 (17:04):
Because it's right. They're not AI regulators, no exactly.
Speaker 2 (17:08):
And it's also with Trump, it's not like they're going
to be telling Sam Altman he can't do what he's doing.
So I feel like they're going to probably have a
role in the cleanup, but in the moment, there's not
a whole lot they can do.
Speaker 1 (17:17):
It's funny that we're already like projecting it so far forward,
but it is. I mean, this is and I really
want to do more on this. I think the politics
of AI are going to be huge in twenty twenty eight,
and I expect I don't know, it's very possible to
me that the AI industry at the same time is
a very big deal in the US touch and sort
of friendless in DC. It seems very plausible. Seems very
(17:41):
plausible to me that in twenty twenty eight, the story
is most people again, twenty twenty eight, it's a lifetime
from now, both politics and technology. But it could be
a story where it's like, here's this thing, it's really important,
there's tons of investment in it, but people for the
most part either mostly see it as a job killers
slash and electricity price booster, and there are some you know,
(18:05):
the stakes are going to be very high, and I
expect sort of like especially on the Republican primary, I
would expect I would expect the Democrats to sort of
be more comfortable. Their antagonism towards big tech has obviously
been you know, several years. I think it's going to
be some interesting divisions on the geop side in terms
of which lanes. And I think there is going to
be an AI lane or an anti a line AI lane.
(18:27):
You already see Ron DeSantis, he's been tweeting a lot
about this. I think that's very telling.
Speaker 2 (18:32):
Well, it's also in twenty twenty four, the MAGA coalition
was kind of working class voters of all races and
ethnicities and then tech and VC. Yeah, and it's just
hard to see how their interests are truly aligned on AI.
Speaker 1 (18:44):
Let's talk a little bit more just about the job
market right now, Like, you know, let's say we were
getting data, like do you think you know some role
like we're in sort of it's sort of come down,
But how close do you think we are to the snowball?
Like how urgent? How far behind do you think the
FED could get here?
Speaker 2 (19:01):
I remember when Liberation Day happened and people were wondering
how bad it was going to get. And my thought
was that companies don't like to change their capex plans
into April and May. They're going to try to get
through the end of the year and then figure out
twenty twenty six and Q four. Yeah, and as they're
doing that right now, it's hard to think that they're
going to feel like we need outside of AI, like
we need to step up investment in hiring.
Speaker 3 (19:19):
We feel really good about twenty twenty six when the
government's shut down, And.
Speaker 2 (19:23):
Yeah, exat share price is going on, and so I
worry a bit that it's like we all freaked out
in April and May, and then it was kind of
fine for six months, and then now is when people
are going to make their investment in spending plans for
next year, and those are going to come in lower
than they did a year ago, and we're going to
start to see that show up in Q one. So
I don't think it's a next week, next month thing.
But could the unemployment rate go certainly into the high fours, Yes,
(19:45):
and I think we probably will get there. Does it
get beyond that? I don't know, But I just think
three to six months from now it's still gonna be
worse than it is today.
Speaker 1 (19:53):
How concerned are you about, like just lower here and
have you somebody first brand tree Clore some of these
dodgy credits, you know, Jamie Diamond cockroaches right, like, you know,
what's your sense?
Speaker 2 (20:07):
I feel like the whole private asset thing is that
it was small in two thousand and eight, so there
weren't really any problems there, and then in the early
twenty tens you had zup and then very cheap assets
and they had a great decade of performance based on that,
and then the asset class kind of just kept getting
bigger just because, like I don't know if there's a
real fundamental reason for it. It just became like a
thing that institutions do. And so it's like, are they
(20:27):
really underwriting very well? Like you look at the stock
prices of a firm and up work or all these
like AI fintech lenders are getting destroyed and you've had
that's the treaty guy talked about Blue Owl, which is just
hard to think underwriting is really really great right now.
And so if anything works in the economy, I assume
that those guys are gonna be in trouble.
Speaker 1 (20:47):
The Blue Owl things we're talking about more, and I
think we have an episode coming up that we'll touch
on that. You know what I should say. We've been
speaking with Bloomberg opinion columnist Connor sund Oh. Yes are
important that I wanted to make sure I knew there
was one more thing I wanted to get in the conversation,
and so I wanted to establish who the guest we
(21:07):
are actually talking to was.
Speaker 3 (21:09):
I guess Connorson person with non zero chance of becoming fed.
Speaker 1 (21:12):
Shaer non zero chance of becoming fed.
Speaker 3 (21:14):
She said, that's that's the real title, just the real title.
We should leave it there, We should go. I kind
of want McDonald's again.
Speaker 1 (21:20):
Yeah, it's Lunchhime lots More is produced by Carmen Rodriguez
and dash Ol Bennett, with help from Moses Onam and
Kill Brooks.
Speaker 3 (21:31):
Our sound engineer is Blake Maples. Sage Bauman is the
head of Bloomberg Podcasts.
Speaker 1 (21:36):
Please rate, review, and subscribe to Odd Lots and lots
More on your favorite podcast platforms.
Speaker 3 (21:42):
And remember that Bloomberg subscribers can listen to all our
podcasts at free by connecting through Apple Podcasts. Thanks for listening.
Hosts And Creators
Joe Weisenthal
Tracy Alloway
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