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Amazon Health AI Presents Painful Thoughts I I can't stop scratching my downtown. Yeah, but I'm not itching to go downtown and tell a receptionist I'm here to talk about my downtown. Some things you'd rather type than say out loud. There's no question too embarrassing for Amazon Health AI. Chat your symptoms and get virtual care 24. 7 Healthcare just got less painful.
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D
Bloomberg audio studios podcasts radio news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7am Eastern on Apple CarPlay or Android Auto with the Bloomberg Business app Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [01:57]
B
People are like who's Claudia Sam? Like who is she? Who is that one? Denison University was some time in Dresden and then the clouds parted. What was it like CLAUDIA Sam in 2001 to walk into the inflation analysis combine in Michigan of Shapiro and Kimball? They were at the top of their game at that time, weren't they?
- [02:23]
E
It was really great to be a student at Michigan. It was great to have Matthew as my advisor. Miles was on my committee. Like that really was a great education and in macro and and for academics they're really interested in the real world. Exactly. Macro policy.
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B
Exactly. You knew right where I wanted to go. These were real world academics trying to study real world people off this jobs report. You say the newly minted chairman way different than Claudia Sahm needs to listen to normal people discuss.
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E
Right? Well also part of my education at Michigan, even doing macro was, you know, if the data aren't there, you need go collect some data, run surveys, design survey. I mean that's a big part of my education and my research and I Think that one thing that the Fed has is just a wealth of qualitative data. Talking to business leaders, talking to people, workers and putting together in terms of analysis. We spend a lot of times on the aggregate numbers. We're going to do that here in just a few minutes and it is super important. But those kind of more qualitative, the structured interviews, it can help you get a sense of the mechanisms, a sense of what's happening beneath the numbers. And you know, those voices are missing. Focusing on the task forces. There's no Fed listens like last framework reviews and but, but the information is there. So my Bloomberg opinion piece as we kind of showcased a lot of that kind of data the Fed does collect and also showed how it can really help inform what are we thinking about the economy.
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C
Claudia, we have payrolls in three minutes from now. But you know, I just have to bring this up. You highlighted the Fed's worker perspective report as, you know, workers describing their work lives as survival rather than stable. You know, so does that mean that today's report is a nothing burger and we should be looking through to next week's inflation print I is that kind of what matters most here?
- [04:09]
E
The data we get today are important. Whatever, whatever they tell us, there's going to be some lessons for us. The thing that I was really trying to draw with the worker perspective is we're going to talk a lot about, you know, the labor market looks pretty stable or it's balanced. And I think with the aggregate data we might get some surprises. But in general, that's been a good description of it. When stable doesn't always feel good in a lived experience because stable can mean you got a job, you're thankful for that.
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D
But.
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E
But you need a better job out there right now.
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B
What Damien brought up and what you're mentioning right now, I can't emphasize enough, folks. That's what my touch with people is. Emails, anecdotes, people in restaurants. There's a whole part of America out there struggling, Claudia. Paycheck to paycheck.
- [04:52]
C
That's right.
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B
Does the Fed know that?
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E
I think the Reserve bank presidents are a lot more in touch with this. Right. Very much a part of their day job is out in, in their districts. And the community development function out in reserve banks is really strong. They're the ones that collect the beige book. They do a lot. That work is being done at the board too. And I don't want to discount what they're doing, but it's so in the fiber of what the Reserve Banks are doing. And so then I think it makes a lot of sense. It's not surprising that we're hearing some, some of the dissent, some of the distinctive voices coming out of the Reserve banks because they really are, you know, at the pulse of what's going on.
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B
We're going to pick up this theme here with Claudia. Sam, we are just so honored that she attends to us at 830 each and every labs day, Dr. Sahm with us and then Constance Hunter will join us and Christina Campman as well will be with us here. We commercial Free Across America for this next half hour. On the data front, it is a continued lift to the equity markets. And the Vix, as I said, finally broke down yesterday, 16, 17 for days closing of the 15 level. We may get to a 14 year with any kind of green on the screen. That's a bull market. 15.13 right on the Vix. I really need to mention brand 8229, full circle in the quiet of the Eastern Mediterranean. Forget Goal for America. It is jobs day.
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F
And the July jobs report crossing the Bloomberg terminal right now. And it shows that the US economy actually lost 23,000 jobs in the month of July. This is a lot less than the 80,000 we were expecting to be added. We added 57,000 in the month of June. Moving to the unemployment rate, it dipped to 4.1% versus the prior month's 4.2%. The expectation was for 4.2%. Labor force participation rate coming in at 61.4%. The month before it was 61.5%. And that's a bit lower than the expectation. Want to move over to the wage component here, which provides more clues on inflation. Average hourly earnings month over month up just a tenth of a percent. A scant tenth of a percent. Average hourly earnings year over year up 3.2%. The expectation was for three and a half percent. So again, a big surprise to the downside, the economy losing 23,000 jobs in the month of July. The expectation was for an addition of 80,000. Want to take a quick look at how the market is reacting here? Looks like futures, guys, at least for the moment, hanging on to those earlier gains. Back over to you, Alexis.
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B
Thank you so much. The markets move as you can imagine. Equities lift here, thinking free money will be out there in a lower rate environment. The yield space is the most elastic and you see it in the two year yield in a solid nine basis. Points 4.16%. Basically halfway back to that coveted 3.99 30 year bond doesn't come in as much as you'd expect but nevertheless from a 522 into 5.19%. Damien, your thoughts on the set of numbers here? The revisions extraordinary.
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C
Yeah, yeah, no, I mean exactly. We have a revised down for the last for the Last print to 20,000 from 57 and this negative 23 print you would think would get some people's attention but to Alexis's point it looks like equities are kind of looking through it for the minute and I don't want to call this a nothing burger by any stretch. I mean Claudia, I mean, you know, this, this I wonder if it's going to move markets.
- [08:30]
B
Well, we'll have to see your Claudia Sommer letting her digest the data here a little bit. I do want to with the eco screen that we have at Bloomberg, the change in Nonfarm payrolls was minus 23 versus a survey of 80 some people were there but the two month payroll adjustment and negative 103 that's combined negative 126. I think we've given her enough time. Claudia joins us here to provide perspective. Claudia, this must change the debate at the Fed.
- [09:07]
E
So first, does this remind you of anything? I mean a year ago exactly. This employment report was when we had the very large downward revision. The downside surprise the downward revisions and the BLS commissioner lost her job.
- [09:22]
D
Right.
- [09:22]
E
So now just looking quickly and I can't you know, do all the details of this government education. Government education was a big decline and one of the things that happens in the summer it can be really, really tough with like the school calendars and if things slip a little bit with the seasonal adjustment you can get some kind of squirrely numbers in terms of the education. That certainly is at play for the downside. Ms. Today that was something that was very clear in last year's numbers as well. So I don't want to dismiss this. And of course that was a shift from we'd had a strong labor market to like whoa, maybe it's not so strong. So I do think there is signal here. There's probably a fair bit of noise and some seasonal issues that will look through. The unemployment rate did tick down right. I think the one thing that for the Fed that may be of most interest is wages coming in soft.
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B
I'm getting out my HP12C calculator because Constance Hunter, I wouldn't do this for Claudia, but Constance Hunter jumped in. Here's what you can we do this in the control room. Can we rip up the script and have Claudia and Constance together. Is that, did you check with their people?
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C
Yes, and they say it's okay.
- [10:27]
B
Getting wired up right now Again folks, futures up 32. They advance, NASDAQ lifts double up 8, 10 of a percent here in the yield. Again the two year yield is the most elastic in at a 4.16%. Damien, ask a smart question to Dr. Sam while I figure out the three month moving average on my HP12C.
- [10:48]
C
Well, Dr. Sam, I mean average hourly earnings down 0.1% month over month. I mean, you know, you mentioned the beige book before the break, right? And you know, what did the beige book show us? That consumers are adjusting by taking on more debt, buying less but shopping more frequently, trading down to cheaper alternatives. Is this really wearing on them now? I mean, what does this all mean for the consumer?
- [11:08]
E
So certainly on the consumer side, this, this is not good news. I mean paychecks are such a key driver of consumer spend and not the only driver. But this, this is a soft, a soft reading. I think the one where, you know, the implications maybe come out the strongest for this is on the Fed side. You know, the thing that would get the Fed moving towards rate hikes the, the fastest where if there was any sign of overheating in the labor market. This is exactly the opposite of overheating. We hadn't seen wage growth really picking up, but we really haven't seen it slowing down much. And so this really takes like the labor market isn't pushing up inflation and frankly if it softens, might help hold down some of that inflation.
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B
We are so advantaged. Claudia, some New Century advisors and joining us now constantly, Constance Hunter, chief economist, eiu. The two of them together, commercial Free Across America this half hour on yield. Christina Katmani of Invesco will join us here in a bit. Constance Hunter, you're over there working on the terminal looking at the numbers. I got a 90 day average, a 3 month moving average subject to revision of 20,000 per month on jobs. You can give me all your academics. Claudia Samek. I don't care politically in America, in defense of the President, that's an unacceptable statistic for America to see. A three month moving average of 20,000 jobs per month. It doesn't get it done.
- [12:34]
D
Well, we don't think it gets it done. I'm going to take off my headphones.
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C
Please take, please take your time.
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G
Okay.
- [12:40]
D
I'm echoing in there.
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B
Oh, you're echoing.
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D
I mean, I'll put them back on to hear Claudia. Okay, but in any case, you Know, last year when we had changes to immigration, when we were deporting a number of people, there was widespread spread speculation that actually the monthly requirement had fallen. This year what we saw with, with jobs, with payroll numbers increasing monthly, but the unemployment really not coming down significantly is that, well, maybe it's higher this year, these, this 20,000 over the last three months and then that fall in the unemployment, the unemployment rate. That is not, that is not a good look for the president. You're right. And it bolsters his case to cut rates. He's going to keep beating that drum. I think this bolsters our call for a hold.
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B
Right.
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D
This is, this is definitely warrants a hold.
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B
Does, does this study that we're seeing right now, can government officials in the Fed get out front or are they colossally ex post where they just have to wait for the data before they go flat or cut rates?
- [13:47]
E
So, I mean, policymakers never have a full picture of the economy when they make a decision. It just, it takes too long. And there's always, we always want one more piece of data, one more piece of information. But when you have enough questions or you have enough tension that can, that certainly can be a reason to move a little more slowly until you get a decisive signal. I mean, I don't, I don't think today's data are decisive and reshaping that. We've had a largely balanced labor market so far this year, but they raise some concerns and we'll get more on inflation. We'll see if the disinflation is sticking or not. So you get what you have and you have to make a decision.
- [14:22]
C
Yeah, she did.
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B
She did. She's such a pro. Today's data wasn't decisive. Is there ever an economist who's ever said that today's data is decided? Damien Sasser with Constance Hunter and Claudia.
- [14:34]
C
Well, Constance, I mean, I'm just looking at, so for futures here. I mean, I see whites up a tick to a tick and a half, reds are up two and a half, three ticks. I mean, so you know, the obvious, obviously what we're seeing here are yields down, price up, and is that the right, you know, is that the right reaction to this? And just how much do you think the markets are going to rush to price September out of the equation? Is that what we're looking at here?
- [14:53]
D
I think the market will begin to price September out of equation. I think Claudia is right. Tom, I was almost going to say to you, you never look at just one number and of course you don't but you preface your question on the three month moving average. Right. And I think that's what we're talking about here. One piece of concern, right, is you saw the unemployment rate fall for bad reasons, not good reasons.
- [15:14]
B
Participation fell, people flunk exams. Who would that be, folks? Because of that, where the unemployment rates goes down for bad reasons? Discuss. Dr. Hunter.
- [15:25]
D
Well, certainly if you see that participation rate decline, it's only 1/10, but it's enough that we saw this low growth of jobs and we saw the unemployment rate fall, it suggests to you that either there's low supply along with low demand, that is not a robust labor market situation. And you know, I was looking before I came on last night, I was, I got buried in data as I, as I sometimes do. And if you look at the Fed's financial conditions index, they are, it suggests, it suggests that we have tailwinds now those tailwinds are diminishing. But it Cessna suggest that monopoly monetary policy is loose here. And if we have loose monetary policy in a budget deficit of 6% and this is the best we can do, I think it begs asking some questions about the underlying economy.
- [16:14]
C
Yeah, I mean, look, Constance, and the equity market agrees with you. I mean it is rallying here. I mean they see exactly what you see. This is an excuse for them to price out rate hikes to basically get dovish. And that is great for high risky assets. And so, you know, shifting to you. I mean, Claudia, just talk to us a little bit more about what's the thought? I mean, does this take some of the balance out of what next week's inflation print is going to look like? I mean, what are you looking for next? What's the next big figure that you're going to lean into data wise?
- [16:43]
E
Well, absolutely. The inflation data are front and center.
- [16:47]
H
Right.
- [16:47]
E
And you want to see we got a very soft inflation read for June. We don't expect that to like show up again in July. Exactly that way. But you want to see some softness or at least getting back to something that's consistent with target.
- [17:00]
D
Right.
- [17:01]
E
And so there'll be a lot of attention to the cpi, the pie, the import prices. I mean, inflation is still front and center because inflation is still very far from the Fed's target. And you need, if nothing else, you want to see it moving in the right direction. Today we're seeing employment move in not the right direction. Maybe next week we'll get some better news on inflation. But I don't think this takes any pressure off of the cpi. And before The Fed meets again. We're going to get one more payroll and we've got next week's CPI and another one. So there's a lot of data to
- [17:28]
B
come across America, a real treat together. Claudius with us today from New Century Advisors and Constance Hunter of EIU off the shock report. We're up futures up 39 now. Nasdaq is up a solid stick 1% on the Nasdaq futures is even bitcoin volts up $700. Constance demanded that I quote yeah, you want 57 and Brent crude right now in the most elastic yield the 2 year 4.15% in a solid 9 basis points. I'm going to call that a ginormous move. And even the 10 year in seven basis points, I want to go to your two wheelhouses. Claudia, let me begin with you with all of your deserved acclaim over recession. We've had a popping nominal GDP. John writing over Breen notes consumption and investment 8ish percent like a banana republic. Do you just assume that if we have a tepid job economy and we don't cut rates fast enough that nominal the animal spirit comes down to a more lower normal rate.
- [18:40]
E
So I am concerned if the labor market isn't firing on all cylinders and certainly if it weakens that that would be an issue. And we've seen, we got recent data, I mean the labor share continues to drop like the share of the income in the economy going to workers. That does not feel like a good situation. And I think to Constance's point, I worry more right now about the structure underpinning the economy than maybe the cyclical, the boom bust. The, it's like things are moving under the hood of the labor market and I think that's the labor force growth, population aging, what's happening with AI. So there's some really big themes that I think we should pay attention to and maybe less to the boom bust cycle.
- [19:23]
H
Right.
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E
Because I'm not sure that's the biggest thing happening right now.
- [19:27]
B
Since the EIU remit is a wonderful global remit. What does this jobs report signal to other central banks? I mean it, it simply takes away the effervescence, doesn't it?
- [19:40]
D
You know, I would say other central banks are going to look much more closely at CPI data next week than they are the jobs data. Agree, but of course it does to Claudia's point. Right. It's what's going on under the hood here. And, and, and we have an aging labor market. We have an aging population. We're seeing people age out of the labor market, that is not a unique problem to the United States. Right. We see this around the world. This is a challenge for central banks and one could argue that is the biggest challenge for Japan. And one of the reasons why we have the situation in Japan where they have a very high budget deficit or debt to GDP ratio, right. And there's concern about that fiscal situation and it was getting expressed in the currency and we had the intervention that we had last week. So this theme of, you know what, how do you grow an economy with an aging population? Does AI help or hinder that? These are existential questions. I think that all economists, central bankers are not are looking at when they're looking at economies right now.
- [20:41]
C
And yet there's a dire, a desire to keep financial conditions loose here in the US like you rightly point out. I mean, talk to us about what you learned from yesterday's refunding announcement. I mean they just in my mind, kick the can down the road again, right? I mean like so you know, you're right to focus on fundamentals like debt to GDP here in the US but the market has not paid attention to that for so long, you know, at what time, you know, the things at least start to flash. Amber to you, Constance.
- [21:05]
D
So Warsh has his task forces, we have our task forces. So there's, there's a few things we're looking at that we felt we had to really do a deep dive. And to your point, Tom, a cross country comparison right up there is what is fiscal space? What constitutes fiscal space? When does it get tricky? Obviously we see it's not uniform across countries. And so I think one of the things we have to think about here is what is expected inflation and how does that feed into term premia and then what's that feedback loop to funding the government?
- [21:40]
B
Christina Katmanian does her people are quite upset, you know, I mean she needs more airtime. Claudia, some last question to you with immense respect for your academics. And it's just simply you're launching forward, I guess in the end of August, Jackson Hole and into September as well. It's still two Americas. The political reality. Kevin Hassett with bloomberg in the 10 o' clock hour, folks. Michael McKee and Danny Berger. I'm sorry, Claudia. And an economics on a jobs day. It's two distinct Americas, isn't it?
- [22:14]
E
There's a lot, there's a lot of division in the labor market. I mean the division I like to focus on is this low hire, low fire economy, right. For workers who have a job like their job. It's a good job. This is, this still is a pretty good labor market, today's numbers notwithstanding, for people trying to get back in, trying to get in for the first time. This is tough and this wage growth is not keeping up with the price growth and that's a bigger, that's a bigger problem. So yeah, there's a lot of divisions here.
- [22:41]
B
I love the wage growth idea. This is a, this is why we do this, why we do this. Good. This is Hunter, thank you so much.
- [22:48]
D
Thank you.
- [22:49]
B
Dr. Sam, thank you so much. New Century Advisor, both of them very active on LinkedIn. Look for their publishing out here today. We have also, I love it when world class talent calls in and says
- [23:01]
C
me, me, me, me, me comes together.
- [23:03]
B
We are tentative. Stephanie Roth scheduled to be with us and from Citigroup, Andrew Holland Orce who nailed this call. We're trying to line them up right now. We have to go through a, I mean, I mean Holland horse is like great, you just call a cell phone picks right up. Stephanie Roth. You've got to go through like six layers of compliance. It's like worse than Christina Kapmani joining us right now. So let me do this first folks. And of course always the support of Interactive Brokers. Bloomberg Surveillance is jobs day across America brought to you by IBKR. For the past three years, Interactive Brokers individual clients averaged 24.3% annually beating the S&P 500. Lower costs and access to 170 plus global markets matter. Visit ibkr.com performance and we thank Interactive Brokers for foundational support of everything we do. Christina, thank you for being patient off the shock economics. How does this economics play into a two year full faith and credit market?
- [24:07]
H
Look, I mean the market is sitting here and we've been all trying to understand what is the new reaction function of the Fed chair of the Fed committee under war.
- [24:14]
B
And he wants it to be data.
- [24:17]
H
I don't know if we know what he wants it to be quite yet. I think the jury is still out there and I think July was very different than June. So we'll see. But the market is grappling with all of these data prints and we've taken out certainly pricing for September and you're pricing now what, just about one full hike only by December.
- [24:34]
C
So, so I mean I know you guys are short duration over there at Invesco. I know you like steepness. Talk to us about how does this change the, you know, your outlook at all over the near term?
- [24:44]
H
Look, I think there are a few things Again, if we go back to this new regime from the Fed and talking about letting the market do the work, I think that introduces a lot more volatility and especially in the back end of the curve. So I think that still means that you are looking for higher yields, higher yields out the curve and steeper curves. We haven't broadly this year you've seen a lot of flattening of the curves. So I think that that still holds and the tremendous amount of AI and hyperscaler issuance weighs on that too. And I know you guys have been talking about that today and it's been a theme, but you have these companies that are issuing the size of government bond deals weighing on the market. So I think we are still warranting needing higher yields out the curve.
- [25:28]
C
So Christina, you know I'm an emerging market fixed income guy. I look at EM credit, I look at the basis to investment grade spreads and I look at it and I say wow, 10 basis points, wow, that is as tight as I have ever, ever seen it. And I think you're absolutely right to hit on that. I think year to date, what 300 billion in hyperscaler call it AI issuance going forward. I mean it's not going to go away, right? I mean they just roll this over, add to it. I mean at what point do you see the crowding out effect that many, many strategists and analysts are calling for here?
- [25:56]
H
So we have been again, when we look at our portfolios, we manage global portfolios, we have the three levers of rates, credit and effects. Credit is where we've leaned on the least just because of how tight spreads are. And I know that's kind of been unpopular opinion and corporates have continued to perform well and stay tight. But I think that's where there's the most kind of jump risk and concern. And I think it's been supported by this appetite for all in yields, just given levels. But like you have to take a step back and say you have this changing regime which should mean higher even government bonds. You are, it's not the end of the issuance out of these issuers. So there's more to come income and we've been at such compressed yield levels for so long. So talking about can a ten year be at five and a quarter? Sure. Is that in the potential?
- [26:44]
C
So you know we talk about the different factors which drive total returns and fixed income. You've got duration, you've got spread, you've got coupon income, you have effects. Right? So talk to us about you know exactly what you do. If you, if you, if you don't like duration and you don't like spreads, does that mean you're shifting and you're kind of leaning into currency risk here?
- [27:01]
H
So currency risk has definitely been kind of top of mind I'd say of the last two years. It's certainly I know something Tom and I have been talking about. It's like Asia is so mispriced Asia. And it's that kind of what has been most mispriced has been frustrating and obviously has gotten more play in the last week and a half with official yen intervention and the Korea move. But yeah, I think we are sitting in an environment where people even coming out of of the July meeting say okay, from an perspective we're in this multipolar world. There are different things driving it. So can we lean into em carry and at least until we get music to my kind of to the to the next Fed meeting. We have this holding period. We have a lot of data. This is obviously a shift but like let's take a step back too and say when we came to the beginning of the year people were talking about is breaking in payrolls 0, 25, 50. So yes, this is a big reset from where we were running the first three months of the year. But maybe that thesis actually hasn't changed. So it's not as robust. But this is not this is just wonderful folks.
- [28:08]
B
Claudia so I'm with this 100A Christina Kapman who looks at yield with their global reach and we've got scheduled Stephanie Roth and Andrew Holland Horst. We're working on right now it's Citigroup. I want you to take the yield shop. You get too many economists lined up. We got to get some real conversation. In which Christina Campmany as well. Do you have an underlying disinflation and real GDP growth vectors that are lower that will support a lower yield environment?
- [28:38]
H
Look, I think that there are disinflationary trends that were in place at the beginning of the year. Again, if you zoom back to where we were in January before Middle east situation kind of became front and center. That was the thesis housing to come down like a lot of these things to come down again. We're back in a world with a lot of uncertainty. We don't know what the situation in the Middle east is. We don't know where oil will end up. It has been choppy. It has come down I think at crude sitting at 80 is something that the economy can sustain at 120 that's very different. And I think what the Fed is trying to weed through and all of us in the markets and all the economists are what is most concerning, most likely for the Fed is the kind of COVID style rollover that you're seeing it into wages and into pricing power in the economy and that which we haven't seen yet, but it's something that people are concerned about.
- [29:29]
B
It's nuts. It's not is what it is. My scientific analysis. Christina Kennedy, thank you so much with Invesco with great perspective there. Again, that benchmark 2 year yield 4.17 now in 8 basis points. Stay with us. More from Bloomberg Surveillance coming up after this
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- [30:43]
G
Innovation is what gets your business to market and Wasabi is designed to give every business a shot at competition. How break free from skyrocketing storage costs and unpredictable egress fees from old and top heavy legacy providers. You know the big guys. Wasabi is the world's hottest cloud storage company and the go to provider for professional and collegiate sports teams and leagues around the world. And here's why. Innovation from Wasabi's AI enabled intelligent media storage, Wasabi Air to the industry's only cloud storage service with triple protection against cybercriminals, data deletion and ransomware. The world's top companies trust Wasabi. Remember, Wasabi is up to 80% less than market competition and doesn't charge a cent for businesses to access their own data. Wasabi Another championship story. Check them out for free@wasabi.com Wasabi Hot Cloud Storage proud partner of iHeart Podcast Network.
- [31:48]
D
You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10am Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [32:00]
B
Okay, this is like totally different Nicole Michonne. She invented the sort of the hipster digital economy. She was at Zillow as a young kid, and she's just built and built and built up a different knowledge than Wall Street. Now a zipper recruiter. Their chief economist, Nicole Basho, to piece it together for us this morning. What's different that you see in the modern hipster Seattle digital economy, Nicole, than what we hear from global Wall Street?
- [32:33]
I
What we're seeing right now is, is people across the board are really responding to different macroeconomic influences. But we're kind of all in the same realm here. There's a lot of stagnation in the labor market right now, Hesitation from employers and from workers, people on the sidelines. Everybody's kind of afraid to make a move because there's so much volatility happening in the market right now. It's really difficult to see on the horizon, you know, when there's going to be clarity and when people can really commit to that next step.
- [33:04]
B
Do you believe the data?
- [33:07]
I
I. I do. You know, we're seeing this response to really high volatility in prices. Inflation is bouncing around pretty wildly the last couple of months, and we're seeing the response coming from both employers and from workers. This simultaneous pullback in supply and demand for jobs is leading to this really unique environment we're in right now. You know, unemployment is dropping at the same time that job growth is slowing, but that's because there are fewer people who are still looking for work. As we see these labor force dynamic changes, that's really going to shape what the labor market looks like going forward and what jobs and how many jobs we actually need to have a stable economy.
- [33:48]
C
Nicole, the zip recruiter Job Seeker Confidence Index was at, like, its highest since 2022 in the first quarter of this year. Are things changing right now? I mean, what's your take? How are things on the ground?
- [34:02]
I
Yeah, yeah. We're getting our next round of the Job Seeker Confidence Survey back. Just, just the. This week. And, you know, we're still seeing that job seekers are remaining confident. And I think that, you know, the confidence in the market and the availability of jobs, those things are kind of different. You know, job seekers are remaining resilient. They're utilizing the resources that are available to them. Job seekers who tap into AI tools and resources are seeing better results in their job searches and are having more confident searches. So people who are really, you know, taking advantage of every opportunity and resource they have, that's who we're really seeing benefit in this market.
- [34:42]
B
Damien says. Nicole Bushel, Chief Economist at ZipRecruiter can't say enough about it, folks. Stacy Vanek Smith is on deck as well. There's been a sighting. We'll continue with Nicole.
- [34:55]
C
Nicole, I have a son who's going to be a senior in and my question is for you is are you seeing anything in the demographics? I mean, what do you, what do you envisage for, you know, first time entrance into the labor market? Are things more or less difficult for them?
- [35:11]
I
Things are really challenging for new entrants to the labor market right now. What we found in our spring grad report a couple of months ago is people who had or these new grads who had work experience on their resume from some type of job degree during school were more than twice as likely to land employment post graduation than their peers who didn't have any work experience. So finding a way to take any opportunity, whether that's being a teaching assistant or, you know, doing some sort of volunteer program, putting that on a resume on paper and highlighting the skills and how that translates to the workplace, that's what employers are looking for from these young folks.
- [35:47]
B
So what have you learned from say, Amazon and the kind of person they're laying off? They're still hiring everybody on 3rd Avenue unload in boxes. I get it. They're still hiring all the AIEO people. I get it. But you know, what the knowledge tells me is they're unloading middle managers. Where are those people going to get jobs? Nicole?
- [36:11]
I
What we're seeing, especially with the impacts of how AI is reshaping the labor market and jobs, is the skills needed within jobs are turning over really rapidly. So somebody who is, say a software engineer needs a different skill set today than they did five years ago. The same way that somebody's like a clerical assistant needs a different skill set. So we're going to see more turnover within jobs as that starts to play out. Job seekers who are able to be more well rounded, who are really upskilling themselves on how to use AI and how to market that skill. That's who's really going to win out in this environment. And that's what employers are looking for right now.
- [36:48]
B
Thank you so much. Nicole Schoder. This chief economist. I'm a ZipRecruiter out on Seattle. Stay with us. More from Bloomberg Surveillance coming up after this.
- [37:05]
D
You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10am Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [37:18]
B
Across the Pacific from San Diego up to Vancouver, there's just so much that we don't cover being here on the far and distant shore. Gene Soroka owns the high ground here, driving all of the Los Angeles port. Technology's been doing it for 12, 14 years. We're thrilled. He would love when he comes in because he just gives us a flavor. Thumb up or thumb down. Right now on Pacific transportation, given a war thumbs up.
- [37:45]
A
We've seen a lot of fits and starts because of trade policy. The war in Iran. There are five conflicts happening in the Middle east right now. The Suez Canal effectively has been running at 10 to 20% efficiency for four years. So cargo has really started to move in to that Southern California gateway over this time because it didn't have that many options. But you know, Tom, compared to COVID 19, when we saw those ships backed up and the pilots of cargo, things are moving normal. We've moved more cargo during this time period than we did during the peak of the peak then. And not one ship is.
- [38:20]
B
Are union members happy? Are they working triple overtime? Kind of.
- [38:24]
A
Hey, I see some of these guys at the Elks Club for happy hour. They're getting a lot of hours on the job. They're working, they're throwing the cargo, they're hustling. Yeah, they're the best in the business.
- [38:33]
B
We're like, yeah, it's like overtime.
- [38:35]
C
Well, I love the genes making comparisons to what the market was like at the height of the pandemic and how improved, how much more efficient it's running. I mean, talk to us a little bit about those lessons you learned from the pandemic. Are they paying off now?
- [38:47]
A
Yeah. Damien, two things. Number one, we had to be humble, lean on each other, kind of open up the books a little bit and see where it went wrong. And it was probably a little bit of communication lapse, Folks doing things on their own, nobody trying to do anything sinister, but everybody was out there just trying to edge ahead for themselves. Second, the advent of technology, whether it's the truck reservation system, being able to see cargo 40 days before it lands on the shore of Los Angeles, all of that makes us smarter. Leaning on each other made us better.
- [39:18]
C
You know, Tom, this is amazing because, you know, if you look at JP Morgan, a lot of these people and what they're talking about, what they got wrong here about the impact of inflation, of Hormuz, of Iran on inflation here in the US Is that the demand destruction is real. Like the way that the consumer has adjusted their demand patterns in order to adjust to the supply shock. Talk to us about what else you're seeing from the perspective of the consumer. Are you seeing volumes still continuing to expand? Are they kind of getting a little constrained here? What are your thoughts?
- [39:44]
A
Yeah David, the example is happening right now. We saw small to middle sized importers bringing in their cargo a little bit earlier than a traditional peak season. Two main reasons. One, the temporary tariffs were expiring on July 24. I know my price, I've got a window, I've got to speed the cargo to market. And then second, the fuel adjustment factors in the shipping industry lag by about three months. So they saw a day when that price was going to spike. Let me average my cost down, get as much product in as I can.
- [40:14]
B
I look at this Jane, and wrapped around it is, I think it's 80 different cities in Los Angeles. In Los Angeles it's like bigger than Rhode island.
- [40:23]
A
That's right, 88 cities in LA County.
- [40:26]
B
It wants to stay here. Such a great voice for an L A downtrodden billionaires tax. Everybody's moving to Austin, Texas or they're moving up to the Central Valley, etcetera, etcetera. What's the real story of L A right now that you see 1 in
- [40:42]
A
15 working Angeles have a job related to this port complex and supply chain. Wow, that's super powerful. We've got 20 million people that live in Southern California. So when we do all these imports, we got a lot of mouths to feed, we've got a lot of consumers. We also have the largest manufacturing base of employment in the country, 400,000 jobs in L A county. A lot of notice.
- [41:05]
B
My father used to lecture me on this, like McDonald, Douglas and the rest of it way back, aerospace and all.
- [41:12]
A
It's aerospace say to that's 400,000.
- [41:17]
B
You know Damien, you not even old enough to remember Atlanta Richfield. But the bottom line is. Did you just say it's the largest
- [41:23]
A
manufacturing base of employment in the country, L A County?
- [41:27]
C
You know I have to ask you this Gene, and I'm sorry to shift gears but you know, I haven't heard much about the rebuild since the wildfires hit Malibu in LA County. I mean can you give us a little bit of insight as a local there? I mean are we seeing people, you know, move back into that area? Are people building there? Again, talk to us a little bit about that.
- [41:43]
A
The progress and the resolve are two different things. Folks absolutely want to get back in to Altadena, to Pacific Palisades and even the edges of Malibu that were, that were burned so badly. But one thing that's real. Are the international and tariff policies. Softwood lumber that comes out of Canada, appliances that are made in the maquiladora areas of Mexico. Steel with 50% tariffs. Furniture and footwear are up 10% or more over last year. It's more expensive to rebuild. And then of course, as you guys have reported, the gap between the insurance coverage and the rebuild cost only exacerbated by tariffs.
- [42:24]
B
Chief Sirocco were this from Los Angeles driving all the port. They love having them in with the flavor of Southern California. You grew up in New Orleans. You're in school in New Orleans which is humidity and heat. Now you're out in Southern California which is I guess dry in heat and it's getting hotter. Discuss climate change is it affects your staff, the customers of your operation. It's getting hotter out in Phoenix over to L. A, isn't it?
- [42:51]
A
It sure is, Tom. And feel it. I feel it. And the thing that we look at the most is in that harbor enclave at the Port of L. A, we've got 260,000 residents in San Pedro, Wilmington, Harbor City, Harbor Gateway and Watts. There are millions more that live along these key commerce corridors. We believe it's our job to bring that health risk down through reduction in pollution. We've reduced diesel particulate matter, tailpipe pollution by 91% since we started our Clean Air Action Plan in 2006.
- [43:25]
B
Jamie wants to get a bunch. I got to get this one. One question. And Damian takeover. How do you respond to 45 tankers stuck in the Persian Gulf?
- [43:36]
A
Having lived and worked in the Middle east for five years, Tom, I'm keeping up with my business contacts and lifelong friends that I made during my time stationed in Dubai. This is really tough because it's the crew members that are on these vessels that have been stranded. Now we're in our sixth month of this war. And there are other conflicts happening throughout the region that have put an unbelievable amount of stress on these people that guide the ships and the supply chains they support. There's an adage in our industry if your port gets shut down for a day, weather, whatever the case may be, takes about three days to catch up. We're now six months into this war straight of hormuz, closed, open, really closed. It's going to take a long time not only to get these ships back into rotation, but to repair the damage that's been done through this war torn region and future proof it.
- [44:25]
C
You know, I'd love to ask you about why the Dodgers have just lost six in a row. And whether or not you're worried about it. But Gene, what I really will ask you is about El Nino and how you expect the port to adapt, you know, to, to climate change. To rightly point out, I mean, Tom, I think he hit the nail on the head here. You know, there's going to be some interesting dynamics. What are you expecting through the second half of this year? Fel Nino really does continue and it starts to even, you know, get stronger here.
- [44:47]
A
Well, this is not meant to be to the detriment of any other port. Ricardo Vasquez, who my friend Katine, who runs the Panama Canal Authority, good friend, great businessman. He's now faced with some, some issues. Yeah, what we're doing is not taking his cargo. We're planning in the event he can't move as much product through his three locks in the canal, how do we prepare in Los Angeles to get ready? I see that just on the drawing board here, probably a 5% uptick in cargo because some of it will move to avoid any type of concerns in the supply chain. And we're working with our harbor trucking association, Robert Loya, our terminal operators, our rail partners and longshore labor to make sure guys down the pipe, we see a little bit of an uptick. Let's get ready with our skilled labor, land and machinery to take that on. And if it doesn't happen, there's no shame in that. But we've got to have the preparedness based on these changes in supply chain patterns.
- [45:43]
B
We welcome all of you across America and of course, early morning Pacific Rim as well. From San Diego up to Vancouver farther north. Good morning, Whistler, where I think it's almost 60 degrees. It's probably nicer the way you choose to listen to us. Thank you so much on Sirius XM and of course, good morning, 92.9fm Boston, 99.1fm, Nathan Hager, radio Washington and Bloomberg. 113 oh, jobs day in about. I'm doing the math, 15, 16 minutes with a great lineup. But this is just a joy on a summer Friday to talk to Gene Soroka about the pulse going north from the port. We have stereotypes here, but as you go up to San Francisco, up to Portland, Oregon, all that Carney in Canada is doing on their west coast, it's basically a booming. How many miles? I'm going to say a thousand miles. Am I guessing pretty close? It's booming, right?
- [46:42]
A
Absolutely. And so are we. This port of Los Angeles is in a period of time right now, Tom, where we've really lined up our commercial business the relationships run deep across the supply chain and the financial setting that we're in right now has never been better. We've got 160 capital improvement projects on our dashboard.
- [47:00]
B
Give us an example of that. Give us a capital improvement.
- [47:03]
A
One of the reasons I'm in New York this week, we just signed an agreement with the Newsom administration, California Governor Gavin Newsom's administration, to build a new bridge that traverses from the residential areas in San Pedro to Terminal Island. I'm here seeing banks and financial institutions to work on a P3 concept that's never, never been done before. We're really excited about this. We're also building a new cruise terminal that's being helped out by a number in the industry, including Carex and ssa. And for the first time in a generation, we've got bids due in December for a brand new container. The investment at the port of LA is off the charts.
- [47:40]
B
I'm sorry, the bridge has got to be the Trig School bridge.
- [47:43]
C
Oh my God, it's got to be. Well, you know, I just thought Gene was in town basically meeting with his colleagues at the Port of New York and he. Jersey, you know, like going golfing and outside of Port Elizabeth.
- [47:50]
B
What's the state of our reports here from 3,000 miles away? Yeah, it's. What's the state of the ports here?
- [47:55]
A
Beth Rooney runs the Port of New York in New Jersey. She is one of the best in the business. And these guys mean so much. You're within drive time of two thirds of the American population. With cargo coming in and out of this gateway. It is essential for the American economy.
- [48:09]
C
I mean, do you regularly interact obviously with the Port of New York, New Jersey, but Port of Savannah, you know, all these, I mean, do you guys kind of, you know, like, like you rightly point out, you know, preparing for some, you know, some sort of something to happen with the Panama Canal. Do you guys kind of all work together to make sure that logistically speaking you guys are on the same page?
- [48:25]
A
Yeah, and contrary to popular opinion, we all get along extremely well. The pockets of cargo, the people that we serve and the jobs that we have to do every day are so important to this country and our local communities. It is a really good band of folks that we have working together at port in the US today.
- [48:41]
B
He has never said anything negative.
- [48:43]
C
No, it's amazing as the gift, it's unbelievable.
- [48:48]
B
What's a longshoreman bank?
- [48:51]
A
Oh, it depends. These guys out on the west coast do really well, but this is one of the Most dangerous.
- [48:56]
B
Yeah, I know that. You didn't answer my question. They're popping big six figures, right?
- [49:01]
F
Yeah.
- [49:01]
A
They make a good middle class wage. Now you've got registered longshoremen, about 9,000.
- [49:08]
B
They make the middle class wage that this America was built on after World War II. These are guys making a legit middle class wage.
- [49:17]
A
On average north of 200,000.
- [49:19]
B
It's a vapor. Why is it evaporated from America? Why have we lost the jobs that were middle class in Detroit, the jobs in New Jersey that were middle class? The ones you're living right now at the port?
- [49:32]
A
Again, we look at Detroit, we do about $30 billion worth of business with the OEMs in Detroit and the tiered suppliers throughout the Ohio Valley. I've been impressed by what Michigan has done to modernize around the industry. You got four miles of electrical cable in cars. Now, the price being at $50,000 for a new vehicle is problematic and it is symptomatic of what we've talked about with respect to inflation and trade policies. But the state of Michigan is behind its automotive industry.
- [50:04]
C
I mean, I mean, if you're going to let me. I mean, I'm happy to ask, Gene, what outside of, you know, meeting with banks and finance types and trying to get, you know, funding for, you know, your. For what are hopefully great investments, talk to us about, you know, demand for those meetings. Demand for infrastructure. Demand for infrastructure investments. Are you seeing, you know, people, you know, willing to put their hands in their pockets in this environment with yields where they are to, to, to lend to you over the long term?
- [50:30]
J
I do.
- [50:30]
A
And this week in New York, it's been super encouraging. The way folks look at it is, and for agencies like ours, we have to invest through budget cycles, economic cycles and even election cycles now to build this new bridge from stem to stern will be about seven to 10 years. So we can't get to the point where we're wringing our hands today because things don't look exactly perfect. And that's what the big thinkers here in Manhattan were telling me this week,
- [50:56]
B
the Tarek Scubal Bridge. Do you know the Dodgers have lost six in a row and they're still playing well.
- [51:01]
C
They ran into a buzz saw. They ran into the Red Sox. Right. And then I think the Cubs just got them.
- [51:05]
A
That's right.
- [51:06]
J
Yeah.
- [51:06]
A
They got swept two series in a row, one at home, one on the road.
- [51:09]
B
Crisis.
- [51:10]
C
Yes. No, I'm kidding. I didn't mean.
- [51:12]
A
It's 162 game season. You're going to go through bumps. Okay, back to back World Series champs. I'm not going to count them out.
- [51:18]
B
Okay. Thank God Detroit named it the Gordy Howe Bridge, not the TER Scuba Bridge. Jean Soka, thank you so much. Stay with us. More from Bloomberg Surveillance coming up after this. Amazon Health AI presents Painful Thoughts I I can't stop scratching my downtown. Yeah, but I'm not itching to go downtown and tell a receptionist I'm here to talk about my downtown. Some things you'd rather type than say out loud. There's no question too embarrassing for Amazon Health AI. Chat your symptoms and get virtual care 24. 7 Healthcare just got less painful.
- [52:05]
G
Innovation is what gets your business to market and Wasabi is designed to give every business a shot at competition.
- [52:12]
J
How?
- [52:12]
G
Break free from skyrocketing storage costs and unpredictable egress fees from old and top heavy legacy providers. You know the big guys. Wasabi is the world's hottest cloud storage company and the go to provider for professional and collegiate sports teams and leagues around the world. And here's why. Innovation from Wasabi's AI enabled intelligent media storage Wasabi Air to the industry's only cloud storage service with triple protection against cybercriminals, data deletion and ransomware. The world's top companies trust Wasabi. Remember, Wasabi is up to 80% less than market competition and doesn't charge a cent for businesses to access their own data. Wasabi Another championship story. Check them out for free@wasabi.com Wasabi Hot Cloud Storage proud partner partner of iheart podcast network.
- [53:10]
D
Every sale comes down to a single second, the one between Buy now and maybe later. PayPal is built to help your business win that moment with a checkout experience that feels certain, reliable and familiar with a global two sided network and hundreds of millions of buyers who already know us all to keep you in control. However, buying happens next. New markets, new AI powered selling services. A whole new agentic era where you decide how your business will show up and stand up. PayPal is built to help your business come out ahead. We're built for payments, built for growth, built for Agentic. PayPal open built for all business. Visit PayPalOpen.com to get started. That's PayPalOpen.com. You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10am Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [54:22]
B
What we're going to do here we're going to get the market open here in six minutes and helping out right now with CF Wolff Associates is Bruce Wolfe actually worries about like retirement systems. This is off of his service at BlackRock and we're thrilled he could join us today. For one case. They've been on fire here. Nobody remembers when they went down.
- [54:45]
J
Right.
- [54:45]
B
They went down. Give us where we're going to be on our 401k. Planning one year out, five years out.
- [54:53]
J
Yeah, you know, it's a great point because it's I think affecting people's behavior quite a bit that they're like, well, the markets are just going to keep going up. And one of the areas that I focus on is when individuals actually move into retirement and now are going to start to spend down their money. And in my view is that there's, it's a different problem when you're thinking about individuals accumulating assets versus spending down their assets. And we've spent the last 40 years, I think doing a very good job of helping individuals save for retirement.
- [55:24]
B
Yeah.
- [55:25]
J
But I don't think we've spent nearly as much time and effort in helping individuals as they draw down. And the key point there is we're solving for a different problem. Right, right. Helping people save retirement is very different than helping them live in retirement.
- [55:39]
C
Bruce, as you know, we live in a country that is very bifurcated just in terms of haves and the have nots. Big take article this weekend was just an unbelievably scathing one. I mean, I have to say it, it's an amazing article. I read the whole thing. It's a tax strategy for the rich built by the world's largest hedge fund and they're talking about Cliff Asness, AQR and tax loss harvesting. For our audience, can you just give US A quick 1000 foot view of what tax loss harvesting is and how important a role it's now playing in retirement portfolios for. For the rich.
- [56:08]
J
Sure. So for, you know, as we know, as you just alluded to, assets have gone up dramatically. Right. So you have a high level of capital gains associated with a lot of the underlying stocks. And so the idea is with tax loss harvesting is trying to find a way in essence to offset losses that you may have in your portfolio with gains. And as a result you'll net out and mitigate the amount of taxes that an individual may incur when they're selling. Selling out of a position.
- [56:34]
C
Right, right.
- [56:35]
J
And that clearly increasingly important over time.
- [56:39]
B
Barron's just eight pages last week on annuities. I think you're dead on. The entire thing was Successfully to build up a pot. And now we got to figure out what to do it. Are annuities efficacious as a way to structure income outflow of a retirement?
- [56:56]
J
They are. They are one for sure. There are one way to do it and they're very simple annuities that you can use. And the point I would make is when you're thinking about moving into retirement, basically I'd create two buckets. I have one bucket that's associated with delivering cash flows, so maybe your required expenses or necessities, then you have another bucket for discretionary spend for that bucket that's associated with the requireds. I think you want to look towards solutions and there are interesting investment solutions as well, aside from annuities that will deliver those cash flows. Right. And give you that level of certainty. And then for the rest of your portfolio, you basically can go ahead and you can invest that more aggressively.
- [57:39]
B
Is your math. 4% is still the bogey on retirement because there's a whole industry out there saying you can go higher.
- [57:46]
J
Scary. Okay, so I have a fundamental view that I think the 4% rule is something that is an interesting rule of thumb, but for some reason has become the, the retirement strategy for many people out there. And I don't think that's correct. Right. The 4% rule, if you go back to how it was designed, does not really reflect the realities and the complexities of people moving into retirement.
- [58:10]
C
One last question here. Every single guest, every single guest we've had on today is talking about shorting duration, shorting the long end of the yield curve. Yet that is critical part of the yield curve for insurers for pensions. Talk to us about what, what this all means. If people stop buying long dated paper, long dated treasury paper here in the US how is it going to impact the pension market?
- [58:29]
J
So as relates to. Yeah, so buying less into the, the market obviously is going to drive up rates. It's what we're seeing now is right, the rates are up, which makes annuities attractive, more attractive than they were, you know, five years ago. For example.
- [58:44]
C
Who's holding those annuities that were issued five years ago? That's right.
- [58:48]
J
Yeah. And that's why I don't think you want to think about buying annuities as that's going to be the be all in terms of a strategy for you, it should be a component. And I would actually say the most effective way to think about annuities is around protecting against longevity.
- [59:03]
B
Can you stay around?
- [59:04]
J
Of course.
- [59:04]
B
Don't move. Bruce Wolf we're going to come back here. These are top topics I should mention. Bloomberg Money today at 12 noon. Meredith Whitney with us on charge cards and consumption in the David Kelly of JP Morgan will join us as well. We've got a special golf guest as well because Damien said he won't watch Bloomberg Money unless we do more golf.
- [59:28]
C
Quite true.
- [59:28]
B
Seriously that they had the PGA coming on today, which is good. What a morning. It has been saving us Alexis Christophers
- [59:36]
F
and Tom Matt softer than expected. She July jobs report gave futures a nice lift and that is translating into regular trading. So on this Friday we've got The S&P 500 starting the day off up about 26 points or a third of a percent. Dow Jones Industrial Average up about 70 points or a tenth of a percent. Both are on pace for their biggest weekly gain since April. We've got the Nasdaq up 195 points, looking at its best week since early May. Also NASDAQ 100 up 243 part points to start this Friday morning. The Bloomberg Dollar Spot Index down 4.10of a percent at 1200.30. The Japanese Yen up 6.10of a percent at 157.42 against. The US Dollar yields lower across the board after that weaker than expected jobs report. The two year yield 4.17% down 6 basis points. The 10 year down 5 basis points at 4.62%. We have got Bitcoin up more than 1% now just above $65,100. And spot gold is up nearly 3% at 43.55the ounce. And taking a look at some stock movers, Under Armour is a big loser here in the early going down about 9% after it forecast a bigger than expected revenue decline in the current quarter. That is your Bloomberg opening bell report. Tom and Damian, thanks so much Alexis.
- [60:56]
B
Drew Mattis just publishes at MetLife a blistering note on a Fed on hold. He says unemployment dips. That's the unemployment rate but also so does participation dips which leads to a soggy economy. S and p, the Dow up 22 points. Nasdaq up 8. 10 of a percent. We continue with Bruce Wolf, founder CS Wolf and Associates on our fractured retirement system money question. ERISA 1974 were we better off with a defined benefit architecture than this modern everyone for themselves architecture?
- [61:31]
J
Sure. Yeah. I mean I think if you could go back in time and ask individuals do they want a defined contribution program or defined benefit program, you would clearly I think hear from individuals that they prefer to have A defined benefit program. And if you really think about the direction of travel with the DC structure, it's moving more and more towards trying to replicate as much as possible. Yeah, right. So it's a little bit back to the future in terms of the structure and be it within a 401k or even through the wealth management side of the house, it's the same deal.
- [62:03]
C
Well, talk to us about the hedging that insurers have to do in order to match their liabilities. Right. And I mean, I come back to this thought that, you know, Dr. Crow was talking about earlier, that, you know, the participation of leveraged funds, of hedge funds in the U.S. treasury market, especially at the long end, and how volatile that's starting to, to get. You know, what does that mean when you're inside one of these very sophisticated, long dated perpetual insurers and you have to kind of match your liabilities to this? I mean, like, does it become more expensive? Does it be, I mean, at what point does the rubber meet the meet the road here?
- [62:33]
J
Yeah, sure, absolutely. It'll become more expensive.
- [62:35]
C
Yeah.
- [62:35]
J
You know, there's no question. And the, and you know, and then kind of coming back to. For individuals. Right. Because this is the idea that if individuals are going to be more and more either automatically put into annuity, like for example, we've seen trends with target date funds. That's right, right. Where an annuity is now attached to it that either you automatically put into it or you'd be able to actively move into it. I think the annuity market is going to become more and more democratized in a sense that more and more people are going to be taking on an annuity as a portion. The key point there is as a portion of, of the income and if you think about it, at the end of the day, what's the objective when you're in retirement?
- [63:17]
B
We're going to have to leave it there. Bruce Wolf, this has been perfectly timed. Bruce Wolfe, thank you so much. C.S. wolf and Associates.
- [63:23]
D
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