China Hits Pause on Giant Chip Spending

or Bloomberg dot com. You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or stream us live on YouTube and Bloomberg dot com. All right, right now, we want to get to another story that caught our attention, certainly earlier in the day, and that is what's going on in the chip space. Some news out of China pausing massive investments aimed at building a chip industry to compete with the US as a nationwide COVID resurgence strains the world's number two economy

and Beijing's finances. Tim, we have a great voice when it comes to what's going on in global Semis very pleased to have back with us. Chris Miller. He's the author of Chip War. It's the fight for the World's most critical Technology. Chris's associate professor of international history at Tufts University. He joins us once again via zoom for Boston. I do want to note that Chris's book was recently highlighted in a selection of the best business books of

the year from the New York Times. Chris, good to have you back with us. Uh, this exclusive from our team here at Bloomberg News. How should our investing audience understand China potentially scaling back its investments to compete with international ship manufacturers. Well, I would say first off that we need to wait for more information and corroboration from

China to see how true uh this is. I don't doubt the report itself, but the Chinese policy making process works in complicated ways, and focusing on domesticating semiconductor technology has been a core goal of the Chinese government since and so it would really be a dramatic shift if overnight China where to really scale back ship making. Somebodies, especially because it would only about a month ago when China announced over a hundred billion dollars of new subsidies

for the chip industry. So I think we need to wait for some more information to understand what exactly does this new report mean in the context of what China's policy has been for almost a decade. Chris, that's a great point. I do feel like sometimes I'm getting smacked in many directions when it comes to China policy and trying to make sense of what are they really doing, especially for a country that we know lays out long

term policy. Chips are in everything chip. You know, China has come out very clearly and said it wants to dominate on a higher technology level, right, So I mean having said that, you know, we're seeing the socks you know, a little bit of a rally today. Again, we kind of have to wait longer term, but doesn't it I mean, just using our brains say that China is gonna have

to invest in this space because this is the future. Well, I certainly think that's been what China's signaled over the path decade, both from officials with high up the changing paying all the way down until local level. We've heard all sorts of uh Chinese visual talk about the industry being important, and if you look at the Chinese economy, um, whether it's manufacturing or the tech sector, there's deep reliance on sem conductors, and today China has been more money

importing chips that's been importing oil. So there's a really strong rationale for China to want to domesticate. Uh. Some of that it has to import from abroad. On the other hand, though, it is the case that the restrictions the US imposed on China late last year are really top and it will just be really expensive to get around, So it would be economically rational I think for China to recognize the ways it's just going to have to remain reliant on important technology. But it hasn't in the

past focused on economic issues when national security is in play. Hey, Chris, Uh, We've been talking over the last few months about investments that companies including Intel, TSMC, and more have made in the US in places like Ohio, Arizona, and more. When it comes to building facility, these that perhaps one day will build chips or parts of chips up on the supply chain. Uh. What more do you think the American government needs needs to do in order to uh spur

innovation manufacturing here at home? How would you advise policymakers if you were doing that. I think the first thing the US needs to do and is doing is implement the policies that have already been passed. The Congress pass the chip stacked last year, but it's still in the really early stages of implementation, and it's going to take a couple of years to have all of the changes that were put into that law actually enacted and the

incentive programs dispersed. The other fact of this is that a key input the company's decisions about where to UH where to invest is tact policy, and in the past, US tact policy has been much less favorable to UH some anconductor investment and then in places like Taiwan or in China, and so right now that the key area of focus is making sure that the US has the best tax policy UH in terms of providing deductions for manufacturing investment in low tax rates to make it viable

to operate a semi facility here relative to other countries that have lower taxes. I mean, Chris in some ways, like as you say, you know microchips, semis, you know

the new oil. So I do wonder do we think about kind of the model of the Middle East, right and their dominance and control and hold over most of the world, certainly the developed world for decades, you know, is that the model could you know essentially, if one player, whether it's China, whether it's the US, is a dominant player when it comes to semis is that how we need to think about it. Well, the chip industry is

actually much more concentrated than even the oil industry. We think of Thoudy as being really important, but the study produced only fifteen or so percent of the world oil, whereas Taiwan produces of the world's most advanced processor chips. But even more concentration and therefore even more risk of to your political disruption when it comes to semiconductors relative

uh to oil. And that's why the concept of a chip war is is so important, not just for the security implications, but also for the economic implications, because it's far worse in terms of it's not kind of effect than just the disruptions to the oil larks that we've seen with the Russia stactions this year. You would imagine, for example, a disruption to its high want ability to

exupport chips. Does the world outside of China have what it takes to actually cut China out of the process at any point in the next decade, Well, China is already far cut off, cut out of the process of making advanced chips. China can't make the most advanced ships and because of the latest U S controls, it won't be able to make the second generation most advanced ships going forward. China can make fairly low TEX chips and

it will be able to UH for some time. But China is really not a major player when it comes to advanced ships. Where things stand today, what does it mean to you? We know t SMC, what investing some forty billion UH in that US plant here, giant US planted in the United States. Um, is that a new t SMC going forward in terms of being here, having a physical presence and just got about thirty seconds. Well, it's a big change for t SNC to have major

facilities outside of Taiwan. Before this year, t SMC had almost volve its manufacturing in Taiwan and just a little bit in China. So t SMC becoming a more globalized company as it invests in the US and also in Japan, maybe down the road in Europe too. Yeah, that investment by t SMC one of the largest foreign investments in the United States and the largest I believe in the State of Arizona. So pretty big deal, Chris Miller, you are a big deal. Associate Professor of International History at

Tufts University. Check out his book Chip Or The Fight for the World's Most Critical Technology as to mention, recently winning the Book of the Year award from The Financial Times. This is Bloomberg Radio. This is Bloomberg Business Week with Carol Messer and Tim Stanovic on Bloomberg Radio. Well McDonald's commitment to Russia a long and deep, nothing short of a revolution to make it all happen, officially creating a

restaurant from the ground up more than three decades ago. Well, the upcoming new issue of Bloomberg business Week, Bloomberg's Clint Rainy, a contributor to the magazine, takes us throughout the iconic fast foods journey that changed the way Russia did business and how it all came to an end. We've got with us this afternoon. Bloomberg Business Week editor Joel Weber, who's in our Bloomberg Interactive Broker's studio. Jeremy Keane joins

us as well. These Business Week Features editor on the phone from New York City, Joel, I want to start with you just give us an idea of how this story came together, because it's a real deep dive into sort of McDonald's history. And really, you know, when when the Russia's invasion of Ukraine happened, McDonald's did something that it's never done in its history. Yeah. So the story begins thirty three years ago, in three weeks and that's that's um the day that McDonald's opened up in Pushing

Square in Moscow and basically brought capitalism to Russia. And boy, that's a really interesting, uh storyline to be thinking about over the past year. And I think actually one of the big business stories of last year was to watch business russell with what to do with Russia's invasion of Ukraine. And a lot of companies immediately left, others got stuck in the middle for a while, and some are still there and quietly kind of trying to figure out what

their moves are. McDonald's was one that got called out early and then walked away. Um and that was um no doubt of really trying business conversation within the company because of this kind of amazing history story. Is that to me, this is the kind of story that we do every once in a while. It feels like the kind of thing of business school is going to talk about forever, which is, boy, you have a success story and then you know, maybe a situation out of your

control makes you have to reevaluate what you're doing. And you know, in this case, Russia um ended up walking away from from this. McDonald's end up walking away from this really interesting story. Um. But you know, Jeremy, the thing that I found that was so interesting here was that the raw ingredients that you need to make uh for McDonald's, Russia has them, but they weren't. They weren't really you know, turning it into Big Max to start with.

But you think, you know, dairy potatoes, meat bread, those are all like raw ingredients that you would need to make McDonald's happen. So what was the magic that allowed McDonald's to crack Russia initially? Yeah, so, I mean they had a first mover advantage because the George Collen, a longtime executive McDonald has kind of made it his mission to get into the Soviet Union. That took him a very long time to kind of work through the communist

bureaucracy and get permission to do that. And then you know, they were sort of the first of these Western companies to me in there. UM and you know, a bunch of others uh followed over over the nineties and into the two thousand's UM, but you know McDonald's initially it caught on quickly because it was a symbol of capitalism.

It was something that I think Russians were hungry for at that moment, that terrible pun sorry, uh, at that moment in history and UM and then and then it kind of worked that advantage, you know, it built on it.

They what old talking about is UM over the two thousands in particular, you know that they developed they realized that they needed to do a better job of working with Russian ingredients, that they had everything available, and started building this this big supply chain to complement the the operation that they that they developed to you know, to

service the restaurants themselves. And they built it out and built it out to the point that you know, by the time Putin came along, UM and and now nationalism increased in Russia, they were able to say like, well, look like we're already very Russian in terms of you look at our supply chain and and the way that we do you know, even the potatoes for their fries,

which they know they struggled to find. Really, even the Russia produces a lot of potatoes, they struggled to find the ones that would produce the Christmas that they were after with surprise, and you know, after a long time they eventually figured that out too. So you know, for them, they had they had invested and kind of built deep roots in the country by the time the envision of

Ukraine happened, and you know they yah, it's pretty incredible. Jeremy, just to share, well, actually, before I get to these numbers, Clint, did you know, go a few years ago and actually eat at the restaurant and pushkin square and he does, right that it actually seems like a big mac or you know what they call it there. You know, I actually don't even know what they call it in Russia. Helped me out, y'all um, but it's it's the Jeremy,

what is it? The mac uh? What macdac is McDonald's that. Yeah, but it's pretty you know, he said it did actually taste better there, and you know they said, oh, well, that's because all the ingredients come come locally. But I want to talk about the economic impact of the restaurant

on the country. H In the chain purchased about four percent of Russia's potatoes, two percent of its cheese, paid a billion dollars in taxes h during the years of this study, so between roughly by it accounted for seven percent of all Russian restaurants sales. So what's going on now with sort of the I don't want to call it a reinvention, but a rebrand of the existing McDonald's,

which they were close to a thousand. Yeah, so they basically sold, they suspended operations and then sold all their assets to Alexander go our Um Mining Executive and he Um spent Um. They rebranded it of Crucial which tasty period and kind of continued along the way that they were. And you know, Clint gets into the story. It's kind of a sub sub theme of the story that there was sort of a long tradition of Russian imitators of McDonald's who would pop up and try and do what

they were doing. Sometimes the the rip offs boiled down to even using essentially the same menus um and so you know, and and also over the years, like Russian competitors responds, there are companies like Terra Mock, who speaks with the CEO of that company, and they make their BLEMI chain and they really followed McDonald's textbook too, so you know that the market I guess has become more mature and there's more local options and that sort of thing.

So there, you know, there there's local operators who are they're kind of doing what was going on before. And I think they also, I found not mistake and retained a fair bit of the staff um from before, so that you know they they have to some degree, I believe,

continued the operations and the brand. It's pretty incredible when you think about it, because it's like, wow, like McDonald's came in, there's no mistaken McDonald's, Like anywhere you go in the world, every body knows what double Archers look like. And then all of a sudden, like kind of almost overnight, it's like this huge geopolitical catastrophe happens and then they're gone, but yet the brand has been rebranded and like is in new ownership now and yet sort of sort of

still there. It's it's wild. It's a really interesting story that I think, um, you know, before we totally wrap up, it's worth mentioning like how how big of a business? Uh deal? This was? You do think about how peace schools too? Will like use that. It's like a case study, right, and like as a CEO of this, you know, hey, your business is being impacted by events that you don't like. What are you gonna do about it? All right? Thanks to Joe Weber, Editor Bloomberg Business Week. This story in

the upcoming issue of Bloomberg Business Week magazine. Jeremy Keane, Features editor Bloomberg Business Week. This is Bloomberg Radio. You're listening to Bloomberg Business Week with Carol Messer and Tim Stenovic on Bloomberg Radio. We'll get into a Tessa and you can definitely be in the fast lane and it can even use all up pilot, but be careful. She got to stay awake in hands on the wheel. I was wondering where that was going. We learned that lesson Tesla for a long time was in the Fascela in

terms of the share price. But it's been a very different story in the last year or so. Stock though up today after twelve sell off yesterday, stuck still down about from it's November one high. But Tim and I talked about this earlier, Tesla shares getting a boost thanks to Kathy Wood of our investment. She's been on a buying spree really in the last couple of months as Tesla has really tanked and doing some big buying yesterday

as well. And why wouldn't she, I mean back in carried her to triple digit a triple digit returns and really brought our invest to the forefront of Benny investors mind with more on Tesla. Let's bring in Bloomberg News technology reporter Dana Hole. She's a go to voice for us on all things Tesla. She joins us on the phone from San Francisco. Danna, good to have you with us. What the conversation about Tesla in recent days, recent months has really been about, well, a few things. One, supply

and demand. We learned that, you know over the weekend when we learned that deliveries for the most recent quarter for the third time in a row, missed expectations. But it's also been one about Elon Musk and his focus and where that focus has been of late. What's top of mind for you and indeed for Tesla investors too, is they kind of determined, Well, Hey, where's this company going to go in Yeah, I mean I think for a long time, you know, Tesla under promised and over delivered.

Now it's kind of the opposite where they're over promising and under delivering, and that has investors really rattled. I mean, if you'll remember, in the third quarter, Musk said that there was going to be this epic year end, and then they ended the year like missing not only like Wall Street consensus for delivery figures, but their own company compiled consensus and thirty four cars were like still in transit, which begs all these questions about like why can't they

figure out their logistical issues? Um? And then here we are heading into three. Musk still seems to be very focused on Twitter, the company that he bought in October. Um. He has said that he'll eventually name him a new CEO Twitter, but it's not clear who actually wants that job. Twitter doesn't even have a board of directors. At Tesla, there's only three named executive officers. Like, there's no clear secession plan at Tesla, So it's sort of like how

stretched thin can this guy be? I mean, he already runs SpaceX, so now he's basically running three companies and no one company has his full attention. Well, sorry, Carolin, I want to cop in here. Is SpaceX a little different because it has you know, Gwen Shotwell who sort of seems to be running day to day operations there And could that be some sort of model for what

Tesla could be if he does indeed install some number two. Yes, I mean I think I think SpaceX is very different when is the clear number two has been for quite some time? And space X is a private company, um, you know, and its customers are like the military and NASA, whereas well you're saying the government gives money to Elon musk Oh, Yeah, has just want to confirm, like Tesla, Tesla sells a consumer facing product, and I mean you

know that. The two other named officers are Zach kirk Corn, the highly regarded CFO, and Drew Biglino, who is basically the CTO. But it's not like there's no clear number two there. And then we've had a lot of reporting here in Bloomberg recently about Tom Zoo, who's kind of ascendant.

He has been the guy overseeing Tesla China. He has been brought in recently to kind of help with production in Texas and he seems to be like a rising star at the company, but there has been no press release or eight K or any announcement like promoting Tom officially. So it's like, well, so what's up with that? Like, I mean, it's just kind of time for Tesla to fill out its bench and give some clarity as to like what is Elon's Like, what is how is Elon

spending his time? I mean, um, so, yeah, it's and people are just very rattled. I mean, beat beat is a beat, a miss as a miss. They were promising fifty year of rear growth and this year it was I mean, that's that's a significant off the market. Tart, That's that's significantly off the market from what they promised. So growing pains for Tesla distracted el On, you know, and investors just not willing to give Ellen some space and a break because we used to all the time,

Our investors used to all the time. So how do you, from someone who has really watched the trajectory of this company and of this individual, how do we assess it Like at this moment of time of the company's history. I think that we just have to remember the kind of larger macroeconomic picture, which is that Tesla was born in the last recession, got through the recession thanks to funding from the Recovery Act and the Obama administration, and then kind of ran wild in this era of low

interest rates. That era is over, like the FED rates are high, we are we are in an inflationary environment and Tesla cars still cost luckily sixty and you know, so it's just a very different scenario. And I mean Ellen himself basically keeps bashing the said, you know, for all of his problems, and um, so I don't want to. I don't so, I just want to It's like when the when the era of free money and low interest rates and the you know it, it does change the

equations for cars as a whole. I mean, I think we're just sort of entering an environment where, um, you know, people are thinking quite carefully about making a big purchase like a vehicle. And you know, for a decade, Tesla basically ran the field. And now there are other options. I mean, if you want to buy an electric car, you can get a Rivian pickup truck. You can look at you know, what Hyundai has to offer. I mean,

Tesla is not the only game in town anymore? Do you feel like a Tesla buyer is the same as a Hyundai buyer, And forgive me, that's not like the electric keyas the electric Undas are cool. I'm just saying, Okay, I'm not making forgive me and it's it's better than the other. I just feel like they're different markets. Is that well? So I think for a long time people were like, you know, the consumers weren't like, I want to buy an electric vehicle. They were like, I want

to buy a Tesla. But now you have this whole swath of consumers that are like, I want to buy a Tesla. But I am really turned off by on Musk and his politics and his the things that he said about Dr Fauci and the way that he's acting, And so I'm gonna look elsewhere and I'm gonna option shop. And so you're seeing like that core constituency, which for so long was like the liberal Californian who wanted to save the planet, now like now just thinking twice about

buying a Tesla. I mean that said, you know, Tesla cars still have the best range and the best charging infrastructure and the techne you know, and the best software. And so it's not like there's going to be this huge cannibalization. But for a long time, like there really wasn't another electric car on the market and now there is.

Danna back to this interest rates discussion because I mentioned this last week, but during my week the week before Christmas, Elon must did this Twitter spaces and he really bashed the idea of higher interest rates and UM. He's tweeted about UM and he's he's talked about it being a challenge for the company. But what what rings hollow to me about that argument is that that's a that's an environment that every single company out there has to face.

Higher interest rates are not unique to Tesla, Folkswagon, everybody out there, Microsoft, Apple, we all live in a higher interest rate environment. Yeah, no, we do for sure, and UM. And so it's interesting. So it's just sort of interesting that he's he's kind of blaming the macro and not taking any responsibility for his own action. I mean, the same thing to do would have been on the last quarter.

They could have they could have lowered their guidance. They could have said, listen, we've got disibility into you know, orders for the for the fourth quarter, we're we're heading into and you know, we're heading into a downturn. You know, we originally gave guidance year year growth. Now I think it's going to be closer, but they didn't do that.

I mean, if you'd listen to the call, Zach Kirkhorn was very like, sort of frugal and kind of was like we we might be short of fifty percent, and then Ellen was like, no, no, it's going to be an epic year end. And so it's like, come on, like just be honest with your investors. I mean, I feel like that's that's what's happening here. You're sharing me see cracks in people believing what Elon has said. Kathy

what is still a believer? Oh yeah? And like for long term fans, I mean they see this as like a once in a generation buying opportunity, you know. And I mean there's people on Twitter that I've talked about mortgaging their houses so that they can load up on more shares because it's never been this cheap. Um. I mean, we shall see, you know, I mean the you know, and you know, the stock could make a comeback. I mean when it drops as far as it did in two.

There's you know, it's like how there's only sort of one way to go. I mean, I guess, I mean it could drop further, of course, but like you know, they could climb, it could also climb back. Um. But it's it's just it's just it's just so fascinating. I mean, if you had told me in the beginning of that Elon Musk was gone by Twitter and that the company, and that the company would lose two thirds of its value,

I would have never ever forecast that. And uh so here we are at the beginning of the new year, and I'm like, what's the theme for this year? Um? But I think it's like Ellen's got to make a decision, like where is he going to focus his energy? Like being a CEO is not a part time job, and he's basically the CEO of three companies and overseeing two

other startups. As I've said before, Peter Attward always reminds me, I'm always say when it comes to Ellen, where weary of him and wary of him because you just never quite know where it's going to go. Danna, I think I may have asked this type of question for you before. I've only got about thirty seconds. But if you could sit down with Ellen and ask him one one question, what would it be? When are you gonna when are you going to name a CEO at Tesla? And who isn't? Okay,

we'll see what the new year brings. Um, maybe an interview with Musque, Danna, I don't think why would he so he doesn't need to interview with me. He'll just go on Twitter speed and heard it out. It's so true, right if they would need a PR department to to start with it. Well, gets a lot of attention, Danna. Thank you as always, looking forward to all your reporting in the new year. Donna Hall, she is a go to voice for us when it comes to Tesla and

Elon Musk. We've said it before, because it's true. Donna's Bloomberg News Technology reporter joining us on the phone. Uh in San Francisco shares a Tesla. Right now, they are up about five percent, but as we know, way way down from their high back in one. All right, you're listening watching Bloomberg Business Week, Carol Master, Tim Steinfeck. This is Bloomberg Radio. I'm Brolo Maca turn on. Yeah, but you let me drive. No, no, no no, who's all right, please,

I'll do the riding gravels. I want to drive. It's a good question. Drive this good ride to the clothes well Briar on Bloomberg Radio. All Right, folks, just got about eighteen minutes left in today's trading session. We've got stocks up and down, if you will, off our highs and loads of this session, still down on the Dow Jones Industrial average. And now i's like just going back into the red. Of course, Charlie breaking down the numbers here.

We've got a great guest to talk about those fed minutes and a way forward here in very please to app back with us. Liz Young, head of investment Strategy. It's so Fi Technologies. It's the online personal finance services company. She joins us from New York this afternoon. Liz, Happy New year. How are you? Happy New Year to you? I am, well, hopefully in for a better year than

That's that's the question. I think one person who's kind of in charge of that right now is true Oo and Powell at the Federal Reserve kind of you know, putting a little uh damper on the enthusiasm that we got earlier in the day when those minutes came out at two o'clock today. What was your read on the way that the FED talked about not pivoting in and not cutting rates in twenty three and how that kind of goes against what the tone of the market has been,

at least in the first part of December. Well, well, look, I mean, if you look at what happened in December, it was actually not a very good month all things considered. We were down seven percent in a month that we were supposed to have seasonal tail winds, and there might have been a year end rally. None of that ever really materialized. So I think what happened so far in three is that the sentiment, that bearish sentiment, the selling sentiment,

has carried over. Obviously, we've seen a couple of swings today and we're only two days in, so we can't really talk about this as a year to date situation yet. But what we heard from the Fed again is the same thing that we keep hearing. And I don't know why people are hoping that they're going to change their minds, because the data has not shown them that they should

change their minds. So we are going to continue hearing from them that they intend to fight inflation, They intend to raise rates up to a point that is probably close to five percent, and that they don't intend to cut rates in Now that being said, everything that they intend to do obviously will change if there is an event that would change their minds or change the sentiment

in the market. So if the consensus view is that we have a recession in three, that likely pulls the Fed's reaction function forward, and I would expect to see a little bit more of a dubbish conversation later in the year, but that's just not something that we're going to know in the first quarter of this year. So we just don't know, right So would you love to kind of fast forward list like six months from now.

Do you feel like there'll be more clarity. Yes, I think there'll be more clarity at the end of the first quarter, and the way that the market is pricing it in right now, we're going to see a twenty five basis point hike in February and another one in March, and that might be it. So we may know by the end of the first quarter that they're done hiking rates, and then we'll just move to the question of Okay,

how long do they keep rates this high? And that's really more along the lines of what does the economy look like in the meantime and our capital markets functioning in a healthy manner. Now, when I want to be really clear here, capital markets functioning in a healthy manner doesn't mean always going up. They can go down. We can continue to see draw downs, and we can see a drawdown beyond if we're going into a recession. The FED would not likely characterize that as an unhealthy thing.

So I don't want investors to get kind of twisted with the idea that, my gosh, if the market goes down that means they'll pivot. That is not at all the case. So we do not think, Lisen, that the recession is already factored in in the markets. You don't. I do not think it's already factored and I think we've gotten close. So the biggest drawdown that we saw in from from a peak to a trough in was that's pretty mild when you look at the context of

prior recessionary drawdowns. Usually a recessionary drawdown is beyond and actually on average beyond we may not get down that far, but I don't think it's all entirely priced in yet and I think there are a decent amount of investors still hoping for that soft landing. The soft landing is maybe what's priced And yet some individual names you could argue maybe could be in a recession, a pretty deep recession, right do you So are they outliers exceptional cases? How

do you think about that? Uh? They're not necessarily outliers. And I can't speak to specific names, but if you just look at basically the industry groups, the sectors that have been hit hardest, that are beyond that draw down, those are the ones that were most sensitive to an environment like this, or the ones that enjoyed so much of the upside before this environment began, So there was a lot more to give back and there was a lot more to bring back in balance, Also, this has

affected different parts of the economy at different speeds. So right now we're sort of sitting on this waiting game of when will it affect the consumer and when will it affect the labor market? I think actually once the labor market gets affected is when the consumer pulls back meaningfully and they're spending, and then we start to see that in the data. But because it's happened at different speeds.

It's also happened at different speeds in the market, and different sectors have taken it on the chin more than others. Is there any indication to you that we're getting any closer to a time when this will affect the labor market? I mean, look at the Jolts number that we got this morning, another another strong report for employees right now, I mean people who are looking for a job there, you know what, one point seven jobs for every person looking for one. Yeah, a Jolts data certainly has not

shown any meaningful weakness yet. But I would point out that that Jolts number was from November. So when we start to get the December data in labor, I think that that will be the first month where we say, you know what, things changed a little bit when we have to look back on it. Right this might be in May that we're looking back on December data and saying that that was the month that it changed. But I do think we're going to start to see weakness.

And the reason I say that is because we heard about a lot of those tech layoffs, but technology really doesn't make up that big of a portion of the labor force. In December, we started to hear about layoffs and other sectors. It bled into some of the big banks, We heard about it across other sectors of the economy, and that's when it starts to hit the actual data, the monthly data that we hear from jobs and also the continuing claims information that we've gotten has shown a

pretty decidedly upward move in claims. That's been consistent over the last few weeks. So continuing claims is people that have been claiming jobless for more than two weeks. So once that starts to bake into the data too, we'll see it in the monthly numbers. Interesting year. I feel like it could be another tricky year. Having said that, what do you think investors should watch more closely that's going to be more accurate and kind of of where we are and where we're going. The bond market or

the equity marketing just got about thirty seconds. Well, if you read my outlook or anything that I've written in the last thirty days, I think the bond market has this right. But when I say bond market, I mean the treasury market, and the treasury market is calling for a recession. I think the credit market has yet to really get that message, so we'll probably see spread blowout a little bit more. Alright, Gonna leave it on that note, Hey, listen,

Thank you so much. Liz Young, Happy New Year. She's head of investment strategy over its so Fi Technologies, the online personal financial services company, joining us as you saw via zoom For those who are watching on YouTube and Bloomberg Quicktakes, she's there in New York City. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,

or Bloomberg dot com. You can also listen to our radio show at two pm Eastern on Bloomberg Radio or stream us live on YouTube and Bloomberg dot com