Fed Fully Focused on February Jobs

since oh nine, led by tech companies. That was from Challenger, Gray and Christmas and then Mike. We had a separate report that showed applications for unemployment benefits last week up to the highest since December, driven by spikes in California and New York, so suggesting maybe some softening in what is still though a tight labor market. Yeah, I mean historically though, two hundred and eleven thousand jobs claims in a week still pretty low. I mean, it is an uptick.

It was more than expected. All of the other data, you know, the job's growth, the jolts, job openings, all that really pretty red hot. So something has to be the first to show the cracks and want to keep an eye on those jobless claims because they are the only thing we get every week, the only sort of you know, high frequency number that we can watch in real time. Right, yeah, yeah, So I think it is an interesting development that they've picked up a little bit

off the loads. All right, Well, we have two great voices to really go through it and pass through it and give us a heads up on tomorrow's monthly jobs report. Julia Pollock is chief economist at ZIP Recruiter, and she joins us via zoom from Los Angeles. They've also done a survey of recently fired workers along with us. Also with US is Bloomberg News International Economics and Policy correspondent

Mike McKee. He's on the phone in New York City. Mike, I do want to start with you, and we've been kicking around some of the data, certainly with our TV colleagues, but just first up, walk us through the data and

will perhaps indicates something new on the US labor market. Well, it's start since you brought it up with the challenger rain Christmas Layoup notices they don't get a lot of attention from economists because they're basically just notices, and in many cases the companies don't follow through or the layoffs are really through attrition. And also they count wherever somebody is working, so many of the jobs that get into that number are overseas, so it doesn't really count a

whole lot other than maybe in a general direction. The JAVAST claims today were kind of a problem because it turns out that when New York City, well New York State schools go on spring break or any other break than the school employees are eligible to file for javas's claims, and that's what happened last week, so they had We had a one week spike there that was largely caused by school workers who are now back at work, So it doesn't appear that jobless claims really moved at all.

The biggest question is our Jolts starting to tell us anything, because there's been a lot of questions about whether or not we were going to see a slowdown in construction hiring because the business has started to dry up with higher mortgage rates, and yesterday the Jolts numbers shown us biggest decline in construction job openings in the history of that series. I realize I'm setting you up for your next guest, for your other guests. But we've also saw

a loss of construction jobs in the ADP numbers. So if you're looking for a crack in the labor markets armament, it may be in the job openings side. All right, So let's bring in Julia Pollack, chief economists and ZIP recruiter. So, Julia, you heard what Mike had to say. You guys are doing your own research. You did a survey of recently laid off workers, with a lot of construction workers in

that data. Yes, it was a nationally representative survey, and we do see that there are several industries where layoffs are sort of proportionate right now compared to the share of people employed in those industries. Still, mainly they're focused in tech and finance, and also in transportation and warehousing because consumers are shifting back to services from goods. But construction is definitely the area to watch in our marketplace.

Construction job postings have fallen prey dramatically in the jolt Stata yesterday they fell forty nine percent in one month. And then we know historically that wait, your job postings are down forty nine percent in one month no, no no, no, no. The government data of the adults data yesterday showed that construction job openings went forty nine percent in one month. So it's the key industry to watch. We've all been

talking about tech. It's a small portion of the labor market, not that significant when it comes to macro impacts, but construction is large. It's volatile, and we know that in recessions and in housing slowdowns in particular, it can shed millions of jobs. You know, Julie, I wanted to ask you about those tech layoffs because they always make the head lines. You know, eight thousand jobs here, ten thousand jobs there. It seems like something that should move the

needle on numbers like unemployment or jobless claims. I get your point that it's a small segment, but I also wonder are those people just able to find a new

job pretty quickly. I mean, after all, what company isn't a tech company these days and looking for programmers and tech savvy people even if they're not technically a tech company, you know what I mean, right, So they have sort of been a net neutral when you look at employment levels in tech related industries, there has been no decline yet in the national data which suggests that tech workers

are finding jobs in other tech companies. In our laid off workers are the majority of people laid off in tech found new jobs quickly in about seven weeks, and most of them did find jobs in other tech companies, about seventy three percent or so. So they are finding new jobs within tech, and then those who aren't finding new jobs within tech are moving into fintech and retail

and health insurance companies. Every single part if the US economy is increasingly having a tech department larger than most tech companies. So Mike, come on back in here, because as I'm listening to Julie, I'm thinking about tomorrow's report, and I know a lot of focuses on wage inflation. This is something that's certainly the FED is watching. But walk us through. I mean, if we get another hot print, what more than five hundred thousand jobs created the month before,

I mean, is it one and done with? In terms of a FED being much more aggressive at that March meeting, Well, forget anything like we got the month before. Then it pretty much locked the FED into maybe doing fifty basis points at the March twenty second meeting. We'll still be watching very closely for what happens with the CPI report next week. But right now, the consensus is for two hundred and twenty five thousand jobs, and that may be overstated.

We'll see because of what we've just been talking about here. If we get anything south of two hundred thousand, it probably keeps the FED on course for twenty five because it would at least put us back to trend, back to kind of where we were going before the January numbers. And we know there were statistical issues and weather issues with those numbers that maybe a one off. That's the question, was it one off? Do we revert back tomorrow or

is there's something out there we're not understanding. Mike, you look at the jobs market, I mean all economic data obviously, but the jobs market from so many different angles. I'm just wondering, as you listen to Julia, do you have a question for her? Well, I guess besides the construction workers going down, there is there any sign that we're seeing large number of layoffs across a lot of different industries that would be cyclically sensitive sensitive to interest rates

being this high. So the main action, Mike, right now, I think is not on the layoff front, but on pullbacks and hiring and those of us on the front lines of the labor market. Indeed LinkedIn zip Recruiter. We have seen a similar trend in our data. In the last few months. Job postings online across the US Web across thousands of websites have fallen steadily since June. There's still above pretty pandemic levels, but the direction is very

very clear, and there's a broad based pullback. There are three industries where they're still growing, transportation, leisure, hospitality at healthcare, restaurants and airlines actually experienced a bit of a turning point in the middle of February with customer data at customer levels surpassing twenty nineteen levels for the first time

in months since the pandemic. So there are parts of the economy that are still doing well, but outside of sort of personal care, transport, and restaurants, we're seeing a pretty serious pullback, and that tracks what we've seen in the GDP reports too. In twenty twenty two, we had a real growth fload and we had an outright decline

in business investment in response to high interest rates. These high five hundred plus jobs report numbers are only going to be sustainable if businesses resume investments in new locations, new technology, new functions. If they're not doing that, they've just been a higher to replace turnover, and we could see overall employment levels fall as the FED is projected. Julie, the other big piece of the puzzle that's so important, important for the FED especially is that wage growth. You know,

I'm looking at our estimates for tomorrow. Consensus estimate is actually that average hourly earnings ticked up a little bit from four point four percent of four point seven percent year over year. I understand that you guys are actually expecting a little bit lower than that. Could you talk to us briefly about why that is? And Jess got about thirty seconds to yeah, okay, So the lad market is still very tight. Wage growth pressures are still high.

The FED wants to see wage growth of around three point five percent. That would be consistent with two percent inflation, right sent for inflation one point five percent for productivity growth. We're still far away from that. Even if we are seeing a moderate slowdown in wage growth, pressure largely driven by job seeker sentiment, by the fact that workers are worried about these layoffs and worried about losing job security.

Mike saved you fifteen seconds. Are we seeing economists rotted up or down their estimates for the jobs report tomorrow just quickly? They really haven't moved a whole lot. We were a little lower league. We came up from about two fifteen to two twenty five, but that's within the statistical noise level. Whisper number was two forty seven on Wall Street this afternoon. We'll see if it holds through tomorrow, all right, or kind of on our on our pins

and needles here waiting for tomorrow's monthly jobs report. Yeah, I love a good whisper number, don't we all have to say? Like this? Though? Exactly? Julia Pollock, she's chief economists at zip Recruiter via zoom in La and of course our own Bloomberg News International Economics and Policy correspondent Mike McKee on the phone in New York City, is going to be all over that eight thirty am Wall

Street time number two tomorrow. This is Bloomberg Business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebec from Bloomberg Radio. All right, we did also want to get a check on the auto sector. All of these conversations, all of these earnings reports help us to

give us more clarity about the economic outlook. Right now, we have with us, and back with us the CEO of the online seller of the aftermarket autoparts company. We're talking about carparks dot Com. David Mignon joining us via zoom from Torrens, California. David, nice to have you here with Mike Reagan and myself. Welcome back. Your stock rallied yesterday following earnings Tuesday night, fourth quarter revenue beat. Tell us about the quarter, tell us about the outlook. Tell

us about the environment, the business environment. Are you thinking recession or not? Thanks for having Yeah, I'll tell you even more than the quarter. I'll tell you about the year. We know we've been in business for twenty five years, and twenty twenty two was a record year for us, both the top line and the bottom line. Our sales were up fourteen percent to six hundred and sixty one million.

Our adjusted IBADAO was up more than fifty percent, and today as we sit, we're free cash flow positive, we're growing, and we're virtually debt free. Now. As far as the second part of the question, in terms of the economy, what we're seeing is that inflation is everywhere and the customer is still spending. However, what I'm feeling is that they're a lot more discipline as to where they spend, how much they spend, and when they spend. Yeah, So

what does that signal to, David? You know, I'm trying to wrap my head around where a company like yours fits into the economic climate. You know, on one hand, you would think, like any business, sales would slow down. But on the other hand, is it actually a little bit resilient to an economic slowdown because people maybe will repair their car rather than buying a new one. Yeah. Point, And historically we see that our business and our company

is you know, it's inflation. If inflation and recession resilient, you know, we sell a need and not a want. Now, the last three years have been an economic boom in terms of spending because of all the artificial dollars flowing into the system. But what we're seeing today, and at least for us at Carparts dot Com is an opportunity to double down on the customer. Like I said, because the customer is still very discipline as to where they spend. We have to focus on the value that we deliver

to the customer. So for me, the last three years have been about availability and trying to figure out a way to connect the dot between the supply and the demand. But today it's more about what value can we deliver to the customer and how can we be there for them in times of needs? You know, Carol, it's funny is we talk to day, but I'm reminded I have a busted taillight on my Toyota Highlander. I think we'll have to talk after you can't I know a place

quality direct to consumer, factory to warehouse warehouse? Do you Carparts dot Com? And I'll give you the VIP pricing? No, no, no, I can't. I can't accept that, But I do want to ask about those those warehouses. You know, a lot of suppliers have struggled to match inventory with demand over you know, the last three years, with the pandemic, the supply chain disruptions. How is the inventory situation with CARP Carparts dot Com are you back to sort of a

normal supplying demand relationship? Are you ever supplied undersupplied? You know, is it a depend on what parts you're talking about. What's the sort of big picture there as far as inventories with car parts. So you're absolutely right. The last couple of years have been around you know, longer lead times and the need to carry additional inventory to fulfill the demand. And so if you look at our inventory position last year, we significantly flexed up in a lot

of parts. Now today, to your point, we're in a much more normalized kind of inventory position. And you know, as of the end of last year, we sat at you know, about one hundred and thirty eight million dollars worth of inventor and that's the right level for the current environment for us. So ultimately, what we do is we try to focus on carrying the right parts close to the customers so that we can deliver that value as quickly as possible. So you guys are ahead of

pre pandemic levels at this point. We are ahead of pre pandemic levels because our business has grown so pre pandemic. Actually, pre twenty nineteen, our business was sitting at around less than three hundred million dollars in sales, and like I said, twenty twenty two was six hundred and sixty millions. So we're a different company. We've opened a lot of buildings. You know, the last year was very exciting for us. We've delivered record results and so we're in a good

spot today. So not pulling back in any way in terms of spending, expansion, none of it. So what we're doing is trying to be a little more intentional as to where we spend the money. And so there's a couple of areas where we're kind of taking away some of the spend in terms of that discretionary spend and reinvesting those dollars into customer centric initiatives. So its intentional the same as being cautious a little bit. It's cautious,

it's aggressive mindset, but it's a defense playbook. David, what keeps you up at night? You know? I think what keeps me up at night today is how do we become the number one destination for our customer? You Know, the way I think about our industry is there's three hundred billion dollars of parts being sold in the United States and only four percent of that or five percent of that are online? How do we make it ten percent? How do we make it fifteen percent? Like apparel, like electronics.

We want to be the number one. What keeps me up at night is trying to become number one. All right, can leave it there, David, thanks so much, appreciate the time. David Meagnon, CEO Carparks dot Com via zoom in California, you're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio.

The Bloomberg Business a band you two. You can also listen live to our flagship New York station Just Say Alexa, play Bloomberg Eleve and Dirty Well, we've got a devil Jovis. At Bloomberg Business we cover stories Firsteplet's to the domestic cover and the dawn of the induction age meaning induction ranges. With that story, let's get to Bloomberg business Week editor Joel Webber and Business Week freelance contributor Aaron Gale with us via zoom from upstate New York. Chill here in

our interactive Brokers studio. How do we all get talking about induction versus gas here. Joel, Well, it became all the rage earlier this year and basically, you know, this lowly kitchen appliance who lit a culture war. And it all kind of actually began with some you know, a Bloomberg News reporter getting Richard Trumka of them the Consumer Product Safety Commission to say that any options on the table in terms of regulations and products that can't be

made safe can be banned. It turns out gas stoves maybe you know, not the greatest thing to be breathing all day every day. But what that really kicked off was this culture war, like like I mentioned, and there could be all kinds of like you know, push back from the left and the right over what's better. But the thing that's emerged is sort of there's actually maybe a better technology out there, which is induction. And just as we've shown how electric cars are perhaps a better technology,

maybe induction is also that. The thing is that most people, you know, if you've got a viking or a wolf in the center of your kitchen, you spent pretty good chunk of change for that, and it's not something that you think of changing out so easily, right, So that led us to just be like, Okay, what how do we tell this story? And it turns out Aaron was like just the right person to do that. So Aaron talked to us about where you went and what you

learned to get us inside this funny little fight. Sure. Thanks. Well, first, I just want to say, you know, whatever people think of Commissioner Trump because comments or this incredible backlash, what I've found in my reporting is that it really jumped started a public conversation that's probably long overdue we should have been having a long time ago, which is just should we be piping this explosive gas through our neighborhoods and into our homes when there's a safer alternative that

is much more popular in Europe and elsewhere. And so my thought was, you know, I realized when this began that there was this big kitchen in Bath trade show happening in Las Vegas the very week after, and so I decided to go out there and just get a feel for how the issue was playing among the industry, the appliance industry folks and also homebuilders, designers, architects and all the folks that attend that trade show. And what

I found was that there was a real split. The appliance people, they all have some experience with induction, They really love it. The home builders and designers not so much. These folks really are very upset about Trumka's statement, and you know, eager to hold onto gas. But the other thing I found was that hardly any of them know what induction is. The ones that think they know what it is. Often people think they know and they actually don't.

And one reason for that is because an induction cooktop looks exactly like what they call a resistance electric cooktop, which is the old fashioned kind that we've all probably had some experience. Yeah, everybody hates it's It's actually quite common in many many homes, but like, people don't love that. And so there is like a real marketing challenge for induction, which is that it looks just like something people hate.

So how do you get around that? You know, Aaron, I'm going to date myself a little bit here, but I'm old enough that I was a kid the microwaves were still a novel technology. Yeah, and I remember my mom like refused to buy one for the longest time because she thought that we were all going to get cancer from microwaves, which it's kind of been settled, I guess to the benefit of the microwave makers. We all

have one now anyway. But I'm wondering where where exactly is the science on guest of you know, you mentioned the risk of explosion, but it's it's more than that, right, there's a concern about the toxicity of the exhaust too. How long has the science really been sort of sounding an alarm about that, And what's the sort of consensus thinking in the community, the scientific community about what a

what big of a risk it is? Yeah, well, I think there are a number of problems with gas, which people like to call natural gas, but maybe we need to get away from that a little bit because some of them, the byproducts of burning it, you know, are really quite toxic and there is a scientific, um, a lot of scientific research that shows that it can have negative impacts on our health. And you it's not really surprising when you think about it. Um, you wouldn't bring

your Weber gas grill into your house and start grilling. Um. And yet we started to Sorry, but but you know, I think like we're just so used to the idea that this is normal, um, But in fact, it seems obvious that UM, that these these byproducts are harmful, and in particular, they've noted in one study that UM they they estimate that twelve percent or so of childhood asthma

UM could be attributable to UM gas stoves. UM. Whether that's true or not, there's a debate about that, and certainly the American Gas Association has pushed back hard on that study. UM, So there's a little bit of back

and forth. Earth. But the other thing that we know is that UM natural gas is made up mostly of methane, which is m a very powerful greenhouse gas that probably has like I think they estimate it's you know, twenty two one hundred times as harmful to the environment as UM as burning fossil fuels and so or as a CO two and so UM. That's sort of you know, one result of all of that is that you know, we're not we're not causing global warming by cooking scrambled

eggs on our stoves. But I think like what the industry understands, and also people on the environmental side understand is that this is kind of like a proxy battle for a much bigger fight, which is, you know, the need to reduce fossil fuel use UM in all all of our applications, and mostly that in fludes head home like home heating and hot water and things like that that most people are really don't care or totally agnostic about how they're heating up their bathwater. They really care

about how they're cooking, you know, if we can change. Yeah. One of the things I thought was also really interesting here is just this idea of like, you know, Tesla has obviously become synonymous with electric vehicles, very good at telling it. Yes, talks about climate, but really the secret was he just elon here really did make a cool, better car and that became what sold the car, created the company UM, and it has you know, made it the most valuable auto company. And interesting here there is

just kind of a better technology, which is induction. And we've spent just a little bit of time talking here and it's worth mentioning that it is very difficult to photograph because it just looks like nothing. It's like, is this your justification for the cover? I think it speaks to something big, like, yes, we had to put this on the cover, UM, and we had to be very creative about you know, showing a magnet because induction ranges create a magnetic field and that's actually how it heats.

But you can put your hand or your face on the on the stovetop and it's not going to do anything. It's all because you need uh metal in order for it to conduct that heat. So there is just a very cool tech story here. But from you walk in to buy, you know the Reagans go out shopping on Saturdays to buy a new range. You know, it's you've got an instant sale. If my wife any ideas that

time of year. But I think you're prot I think you're a client salesman has as Aaron rights in the story, you're gonna sell a gas stove instantly, right, well, but let's explain yourself if you're gonna sell an induction But does this sort of change that sales pitch, you know, whether they're banned or not? Aaron, you know, do you think that this issue is enough to turn the tide towards induction stoves going forward? Is that test the moment coming?

Just to wrap up? Yeah, I think it is. I mean a number of companies are really working hard on making the technology better. I think like one big, one big obstacle for a lot of people is that if you're changing from gas to induction, you generally need to have a two hundred and twenty volt plug to plug in, so that may mean hiring an electrician to upgrade your panel. There is money in the Inflation Reduction Act for that, so that's going to have a much bigger impact, probably

than anything else we're talking about. But some of the

companies are also trying to deal with that. I know two in particular startups, Channing Street Copper Company and Impulse Labs are small startups in Silicon Valley that have figured out you can put a battery in one of these stokes, and the benefit of that is that it's drawing power or when you're not cooking, and and then you can use it when you are, so you can plug it into a regular outlet, and then if power goes out, yeah, god forbid in your neighborhood, you can plug your refrigerator

into that, or your phone or all kinds of other things. So there's a benefit to having something like that. Great well a convections to maybe come into a home near you. Um, Aaron, really great stuff. Aaron gall He's freelance contributor at Bloomberg Business Week. This is the domestic cover story our thanks to him. You're listening to the Bloomberg Business Week Podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business app band you two.

You can also listen live to our flagship New York station, Just Say Alexa play Bloomberg Eleve and Dirty. I'm brother a journal Yeah, but you let me drive. Oh no, no, no no, no, honey, please, I'll do the riding drivel. I want to drive. It's a good question. Drive. This is the drive to the clothes comul thing Well, Brian Don on Bloomberg Radio. All right, everybody, let's get to it.

We've got about seventeen minutes left in today's trading session, and we do have stocks bouncing off their loads of the session. Charlie just breaking down the trade um, some concerns over that week, jobs data today, and kind of a little bit of nervousness ahead of tomorrow's jobs reports. So let's get to it with Megan Hornaman. She's chief investment officer at Verden's Capital Advisors. They're a private wealth advisory and multi family office firm, and she joins us

via Zoom from their headquarters in Hunt Valley, Maryland. Um, Megan, good to have you here with Mike and myself. Another interesting day. Feels orderly, but it does feel like a different tone that we are seeing in the markets over the last week or so. How do you see it? Well, I think this is a case of where, you know, some of the bad news is actually turning into bad news for the market. Remember that sometimes the bad news would be investors would think that the FED could hold off.

But now we're seeing some bad news and that's resulting in some skittish skittishness I think in the overall market, and primarily it's from the banks. So we've had technology and growth be big leaders of the kind of decline in the market over the past year. But today when you start to hear about banks and their pressure on the bank, So that's when I think people start to get that rent reminder of maybe that two thousand and eight,

two thousand and nine type of scenario. Yeah, Beck, and you know, it's it's easy to understand the pressure on a silver Gate or SVB, the Silicon Valley Bank. Is it an overreaction though to sort of take those issues that those banks are dealing with and apply them to

the big megacap bank stocks. Yes, I do think that this is just, you know, again, it's any kind of news that we're starting to see crumbles where these these sectors or banks or companies that benefited from very low interest rates where it's now starting they're having to pay that price. It's going to have some impact. But I don't think this is the same situation as you're talking with the big banks. But it is just that ripple effect that feeds through the entire banking industry, all right,

So I mean, how bad does it get? And I am curious you know what you are hearing from your clients who are obviously high net worth individuals. I'm sure they're investing for the long term. Maybe they're in the private markets versus public markets. I mean, are they getting nervous? Are they saying, let's put it in something safe. I don't need to earn a lot. I just don't want to lose any There are some clients that are concerned, especially when you're looking at interest rates where they are.

So people look at a five percent on a two year treasury and say that's it. I'm out. I just want to buy, you know, the short term treasuries. You have to be very careful with that because we're not going to stay at a five percent forever and you could have some opportunity lost, especially if you are looking for the long run. We do think that you could see possibly like a ten percent correction from the recent

peak that we saw in early February. That's because the market got way ahead of itself expecting that the Fed was going to be able to stop sooner and possibly even cut rates this year. We never thought that was the case, so we thought the market was getting a little too ahead of itself. Then we think the Fed's going to just continue to raise interest rates and then stay the interest rates are going to stay higher for longer, and what we're seeing over the past few weeks is

the market trying to reprice that in. We do think there's probably still some more downside for that large cap growth, those areas of the market that have benefited from really low interest rates. I mean, keep in mind, we've seen about four or fifty basis points in rate hikes in just one year time, and let's put that in perspective. One year ago, we were sitting at point two five percent.

So what we're seeing now is again more of that, I guess, filter into where the FED rate hikes are filtering into not only the ECCO, but also whether it's corporate earnings or the outlook for corporate earnings. Yeah, Megan, it has been such an aggressive interest rate hike campaign, and you know, the thing you hear all the time as well, there's a lagging effect. We might not feel the effects of this for some months later, but that one sector where you really start to feel it pretty

quickly is housing. You know, we've seen definitely softness in housing prices, softness in the construction hiring industry. As our guest before you had mentioned what are you seeing in housing and how bad can we expect it to get? Yea, So definitely housing was the first shoe to drop, and you're seeing affordability still because interest rates now, thirty year interest rates are above seven percent, affordability is just very, very low. I don't think that the bottom and housing

is really there yet. This is not two thousand and seven to two thousand and nine. This is a completely different housing market than we're in right now. But I still do think that there is some more downside in the housing market, prices if you look at certain indicators, have been falling on a month over a month basis for the past few months. I think you'll continue to see that until we get some equilibrium there as far

as affordability coming back. And then remember, from a housing perspective, we still do have a structural issue with housing, so that's going to put a floor here on prices as well as activity in the housing market. The second shoe that we're starting to see to drop is some of those companies like like today these some of these banks that really just took advantage of that very low interest

rate environment. We're starting to see some of that come to you know that those start to suffer right now. Speculative investments like the crypto world, we're seeing that suffer. The one area that we think still is not pricing in the magnitude of FED rate hikes is the credit market. That is a concern for us this year is just corporate debt, high yield debt. When you look at spreads.

While the absolute yield has risen, spread have not reflected the big rise in interest rates, especially the refinancing schedule that you see over the next several years so this sounds like as an investor, kind of rotation and figuring out how to survive the environment, because you know, I was thinking about what we've been all focusing on banks and like, oh my god, you know what's going on. But I mean, if you take a look, I was

looking at a Bloomberg story from last December. Wall Street's big banks scored a trillion dollars of profit in a decade, So, you know, making is it smart as we look at what's going on that markets are cyclical, economies are cyclical. We are still adjusting coming off the pandemic and unprecedented stimulus. So maybe the world isn't coming undone, but it's definitely going to be a different market going forward. Absolutely. I

mean we're still seeing that. Like you mentioned, I mean, we haven't started to really feel the effects of the fed's aggressive cycle yet. We like we mentioned housing, we're starting to see it in some of these small banks. I don't think this is a big bank story. The consumer is the other area it's starting to feel it. You're seeing consumers pull back from taking out credit. You're starting to see delinquencies on things like auto loans rise.

It's just starting to make its way into the economy, and unfortunately this is absolutely necessary in order to bring inflation down. So the Fed's job is starting to get done. It always has a lagged defect. That's why we figured that this year would be another very volatile and not great year. From echanowt grows standpoint, Yeah, it just might. It's definitely gonna cause some pain and unfortunately more for some than others. All Right, Megan Horneman, thank you so much.

She's chief investment officer at Verden's Capital Advisors. Shotting us via zoom from Hunt Valley, Maryland. This is the Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else you get your podcast. Listen live each weekday starting at two pm Eastern pun Bloomberg dot Com, the iHeartRadio app, tune In, and the Bloomberg Business Happen. You can also watch us live every weekday on YouTube and always on the blue Berg Terminal. H