International Women's Day Part One

TV colleagues, Mike and myself day too. Have fed Chair J. Powell up on Capitol Hill what we got today, par for the course, Powell stressing the policymakers had not made up their minds on the size of their interest rate increase later this month and said it would hinge on incoming data on jobs and inflation. Mike, it sounds like data dependent to me. It really doesn't. What's fascinating is that's as honest as they can be about the situation, right,

and they repeat it over and over again. Transparency with a capital tea. Yeah, but the market just wants that sort of certainty of where they are going to stop raising rates, and they just can't tell you right now. And I think, you know, if the story the market over the last year is not up down sideways, you know, you look at the recent PAS average over the last year it's it's basically where we are now. So all this file tell you all these up down days and

dawns days, we market really hasn't going anywhere. All right, Let's see what are a former Bloomberg colleague, Lena Shlechiva, senior US economist at BNP Pariba, has to say about all of this. She joins us via zoom in New York City. Lena, it's so good to have you here with Mike and myself. All right, so we got Jay Powell. Day two, you got the Beige Book, you get another strong bunch of data points when it comes to the labor market. What was front and center for you today?

I think you highlighted it. Carolin is so nice to be back with you guys. So you highlight it very clearly, you know, the fattest data dependent. But you know, Powell saw the market reaction to his testimony yesterday and he decided to repeat the same exact hawkish message today. And you know he qualified it a little bit that, well, yeah, it's data dependent. He wanted to stress that point. That

was the only kind of caveat in today's remarks. But still the tone of the speech today was the same hawkish type of comments that he delivered yesterday, and I think it would be very difficult for the FIT to walk back from away from that hawkish message. It would take a really weak economic data for them to under deliver on what he seemed to have hinted in his

prepared remarks. You know, and Yelena, obviously we're all biting our nails waiting for that main event of economic data on Friday, the jobs report ADPs Jobs report today, two hundred and forty two thousand private sector jobs. That Jolt's job openings was a little bit higher than expected ten point eight million openings. Are you bracing for another hot jobs number? So totality, in Powell's words, of employment data is telling us that the labor market remains extremely tight.

And there's no question about it, whether you look at like some movements some near to movements in job openings or claims or anything else ADP, so all of it is telling us the same exact story. The labor market remains tight, and that is ahead of the Pyrol's report on Friday, so we are expecting another solid reading. We're slightly above consensus here at two forty, so we think we will see some reversal of weather related distortions that

were very prominent in the January report. We estimate something like thirty percent of the number was driven by weather related distortions. But still, you know, February was still warm. I was like not wearing my warm clothes. Crazy, right, the Burgess game when the plants are coming up, right, can I ask you something? It's totality. Now the new transitory that we're going to parse over exactly what this

new tea word means? And now the tea word right, So it does seem like that they keep repeating that sentence, but that's what it is. So they look at a whole bunch of different indicators, including wage growth. So that's another key story in the upcoming Perils report. On Friday, we will we are looking for some re acceleration of wage growth in the Perils Report in February. So if

that comes to fruition, we may um. You know, that is going to be a very interesting story for the FED because Chair Powell specifically mentioned wages and wage growth in his testimony. It was right in the first few paragraphs that wage wage growth is it's great for workers. But when you know you look at it in terms of inflation and nominal wages, that's a different that could be a different story. So we don't want a significant re acceleration in nominal wages. And this is something that

we may see on Friday. So that's gonna that If it is true, that would be another piece of a puzzle to persuade the Fed that they need to potentially go faster and stay in the restrictive territory for longer. You know, Yelena, I think one of the big sort of underappreciated issues for the market this year is everyone talks about, well, how high will the Fed increase interest rates? But the markets previously we're pricing in sort of a short term peak and that the Fed would probably be

cutting rates this year. Now it seems like everyone's rethinking that and that, yeah, we might hit that peak rate, whether it's five and a half percent, six percent for Fed funds interest rate, but it's going to stay there longer than what the market had anticipated before. Where do you stand on that? How long will we sit at that peak rate? Do you think our newly released projections We just released a new global outlook just recently, so

we don't see any cuts until next year. So it's really was the message from the Fed that they're very serious about staying there for longer. Is just that the market is adjusting to that as as you mentioned, So, I think it would really depend on the pace of inflation deceleration. So it's really easy to get to something like three to four percent in terms of inflation growth, but the trajector of disinflation from there and to the two percent inflation target is going to be very difficult

to achieve and it might take some time. And that's why the FIT is clearly telling us we're going to stay there until the job is done. We're going to stay at it and keep at it and do whatever it takes to conquer inflation, which may need to for that, we may need to see rates higher for longer. So

all right, so if that that could possibly happen. And then Yelena, looking at what's going on between the twos and tents right now, right above the spread more than a hundred basis points, does that mean yes, definitely recession. Does that also potentially mean recession deeper and longer? Well, recession has been the front and center of our outlook. We are sticking with our call unfortunately for a recession, and that we think is a necessary condition for inflation

to come back at where it needs to be. So the path to so called soft blending is so narrow that it would be a miracle if that realizes. We all want that, but the reality is it may take us through a downturn to in order to achieve that. But what kind of a downturn? That's what I'm curious about. Is it deeper, is it wider? Yeah, potentially, yeah, something akin to the nineties recession. Probably not see recession. Yeah,

well I remember the financial crisis recession. Probably not as severe as that, but still, you know, severe enough for a lot of Americans to feel the pain. But unfortunately, maybe a necessary condition for us to go back into balance. I wonder if that means grunge music will come back, Carol, if we're ready for that. But it gets possible, Elena. Obviously,

the other big number on tap next week's CPI. I'm looking at the consensus estimate here for it to come down from six point four percent to six percent, core to come down from five point six to five point four. Where do you stand on that? What's your marker for next week's CPI report, So we think, you know, payrolls would be more crucial in terms of defining what the FAT does next. So CPI will probably decelerate. What we'll

be looking at where services inflation is going. If that super core services inflation is sticking where it is, and we call it stick inflation. For that to go down, we need to see wages to decelerate. If that is still significant, that will reinforce the defense message. You know, what really struck us in the previous CPI report is

the breadth of inflation gains. It was everywhere in the goods and the services you know categories, right, So I would personally be looking at the breadth oh for inflation games, Yelena, really fast twenty five seconds? Okay, hot labored market. What if we get a strong job's report but week CPI data, can the Fed be softer in their march move? Just quickly? What ten seconds is significant deceleration in wage precious, That's what we'll should be looking on at. That's that's what

is important. Okay. Good to know, um always great to see you. We love you, Yelena Shaltiva, As we said, a former Bloomberg colleague, senior US economists at BNP Power. By joining us via zoom in New York City, you're listening to the Bloomberg Business Week Podcast. Catch us live week days from two to five pm Easter 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 eleven thirty. We have actually been talking with a lot of well known folks in the restaurant space, Ericape, Danielle Blue, John Tapper, Bar Rescue. One common denominator that they seem to all talk about and stress is the tight labor market and just having a hard time finding enough workers. Yeah. Absolutely, I mean a lot of competition for jobs out there, let's be honest, restaurant restaurants. Yeah, but they're not exactly known for their high wages and

great benefits and stress free atmosphere. That is several good points, all right. So in keeping with that, and we did get a lot of laborer points, if you will, economic statistics today. This next story definitely jumps out at us. It's about how restaurants have come roaring back, pass post rolling back, post pandemic with everything they need, but staff. So let's get to it with Bloomberg News consumer reporter Leslie Patton. She joins us, she's on the phone from Chicago. Leslie,

good to have you here with Mike and myself. So we do hear this a lot. Tell us what you found out in reporting your story. You know, it's interesting. We're seeing that demand is up. Everyone knows about. There's this Panus demand for dining happening. Chains are expanding quickly,

looking to open new locations. But what kind of the problem is It's staff a lot of these people and you know what's different than in the past is that a lot of these food service employees have left the industry for good and did that over the course of its pandemic for a bunch of different reasons. Really, Leslie, I'm wondering, is it having an impact on their businesses? You know, are they missing out on sales because of this,

or they haven't closed locations anything like that. Yeah, that's been happening during the pandemic, but three years later, it's still happening. And a lot of these big chains they don't like to explicitly say we're missing sales, but you can read between the lines a lot of them. At the big chains, they're still operating on reduced hours, so they're not open as long as they used to be during the pandemic, So maybe they aren't running that night shift.

Maybe the dining rooms closed during certain times of the day. Dominos has said they still can't find enough delivery drivers, so it's taking longer to get each pizza to people's doors. So yes, all of that affects sales. I mean, how bad is it is it? Mom and pop? It sounds like you're telling us about some well known names, So how bad is it across the industry. It's harder for mom and pops, I think, overall, for the independence to find and keep workers in a lot of cases. But

but we're hearing it from big chains too. I mean, Jack in the Box, it's still doing reduced hours, they're not open as much as they used to be, and all of this is happening. One important thing to keep in mind despite pretty big gains for wages. You know, it's funny, I'm thinking back Leslie to my own days working at Denny's as a teenager. One thing I always looked for to is that's great, that's free meal. You got on your shift is a nice perk at a restaurant,

But I'm wondering are there perks like that? I mean, obviously probably a free meal is not enough to bring anyone back. But are these companies doing anything? Is there any anything they can do or that they're trying to do to attract workers? Yeah, I mean I think I think pay benefits those are the big ones, and they all are offering higher pay than they used to and in a lot of cases more benefits. One interesting thing I found talking to a Burger King and q Doba

franchise e. He's in West Virginia in Ohio. He said that he started doing an extra two dollars an hour attendance bonus just to get people to show up for their shifts because he was having so many call outs and no shows. It definitely has helped. So, I mean, when it comes down to it, it's the money, right, Well, can you remind us you know in Mike's day, you know he'd go work for a restaurant, right or a franchise.

I have a sister who worked at McDonald's. Like growing up, like these were jobs teenagers you know definitely saw it out. What's the typical labor pool for restaurants that they typically pull from. It is still somewhat of an entry level job. But I think you're right that that idea as restaurants of your first job as you go to the local McDonald's down the street and you get a job when you're sixteen. I think that idea has has kind of dissipated in a lot of ways. Right, So we're not

seeing as many younger teenage workers. Maybe they have internships, or they're doing more after school activities that sort of thing. It's really the kind of millennial gen X generation that's working in restaurants these days. Can I just to follow though? What about immigrants? You know, and you know that typically that's often an entry job for folks who come into this country. Is that part of the problem. Yeah, I

think that's part of it. You know, we saw fewer immigrants over the you know, the past what was it four or five years or something. I mean, the meat industry has called that out too, because the meat industry, the packing and slaughtering houses, they employ so many immigrants and they're really struggling for staff. And we're during the pandemic and during kind of the Trump presidency and ask

because of stricter border controls. You know, Leslie, I sometimes I feel like a broken record because I feel like every economic markets discussion always reverts back to the topic of inflation, and I'm wondering, you know, this all sounds to me like we should expect higher prices from restaurants going forward. Have you has there been a lot of price increases? I mean, I know there's been some, but what is sort of the vibe there as far as

the outlook for higher prices at restaurants? Great question, so that there have been a lot of price increases for restaurants over the past year or so, But at the same time, I think we can probably expect more because wages are continuing to be pressured. There's still a shortage of staff, which mean wages needs to go up further, which means many prices are going up further. This really doesn't give too much hope for the Fed's emphasis on

kind of stamming inflation in that service sector. I mean, maybe the rate is coming down a little bit, but it certainly isn't over. Yeah, it does feed into that wage inflation and makes it stickier. What do you folks in the restaurant industry typically make and what kind of you know, increases have they been getting. I think on average, you know, a fast food cook is maybe around twelve or thirteen dollars. But a lot of states have have

this kind of you know, fifteen dollars minimum wage. A lot of municipalities have moved to that, so it really varies across the country. I mean, still we're at this federal minimum wage of around seven bucks. So there's huge, huge discrepancies across the country in terms of what people are making. You know, in here, I'm in Chicago, I've seen restaurants put signs up saying they're hiring people starting at twenty dollars an hour. But that's certainly not the

case in some more rural areas well. Twenty an hour. That's where I'm some of my kids care over. It's not too shabby. You know. Let's say, I remember a few years ago to the pandemic, some restaurants started trying to automate as much as the process as possible, that you know, ordering with touchscreens, that sort of thing. You know, there's even talk about well maybe you know, the cooking and preparation of the food could be automated. Where do

you see that going? Is there? Obviously there's a greater motivation to automate as much as possible now, but are we seeing that play out at all in real life? It's going, it's happening, but it's slow going. It's the important thing to remember. And another thing, I mean, we're not going to have robots necessarily cooking all of our food in the next few years. I mean these are

still largely very much people labor jobs. I mean we see kiosks and restaurants and fast food places sometimes, but when you think about it, when you go in, do you go to the kiosk or do you go to the register if there's someone standing there? I think nine times out of ten people go to the person. They don't go to the kiosk. So so there's movements there,

but it's slow and it's you know, incremental. At this point, I gotta say it a pan era, I have no problem with using my app and then just running by and picking up or going in and using their kiosk and then you just pick it up. So I do wonder if at some point Leslie, these you know, these restaurant chains are going to have to do more automation, especially if this trend doesn't change. I mean it's not easy. It's long hours sometimes not great hours, and not great conditions,

many would argue, and just got about twenty seconds here. Yeah, sure. I mean with with the apps, I think yes, that's a way to kind of like for restaurants to skip over these kiosks, and the pandemic has hardest to be more okay with ordering you know grub Hub, that sort of thing on an app. So yeah, I think that's right, Carol. Right, you go to an airport, right, you just see it's it's an iPad. Yeah, and all of a sudden somebody like brings you food. I'm waiting for the chat cheap

pt element, Carol, Can you have what should I eat? Yeah? We're give me a new recipe for we're you know something, get up before you get on the plane. Leslie Patton a great story and really relevant Leslie Patton. She's consumer reporter at Bloomberg News. Joining us on the phone from Chicago. 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. It is International Women's Day and we thought it made a lot of sense to check out how the Impact Shares YMCA Women's Empowerment ETF was doing the ETF celebrate its three year anniversary mic that happened last August. It's up on average annually nearly fifteen percent over the past

three years. Top holdings we're talking about names you know and Vidia, Amazon, Apple, Meta, J and J and Moore. So let's get to it with us. Is Jill O'Donovan, adviser to Impact Share. She joins us via zoom from Chicago. Jeel, good to have you here with Mike and myself. How are you. I'm good, Thank you for having me. Well, tell us a little bit about the investment theory this ETF what it specifically can invest in and it attracts

it index correct it does? It does so. The actual gender equity research is done by Equality out of the Netherlands, and that information is taken and given a morning Star who creates the Women's Empowerment Index, and then the fund is developed based on that index and the work of the y to WCA, and relation to this is as

the impact partner. The y to WCA, as many people tend to not know, has been around for over one hundred and sixty years empowering women and working to eliminate racism throughout the United States, and because our focus is

women's empowerment, we thought this was a great partnership. We provide a lot of the advice about what things do empower women in the workforce and looking at specifically the equiligue criteria and the way that those specific things really align with the that we've been doing for all these years. So what are some of the things that are screened for. Is I'm assuming representation of women on boards and c suites, that that sort of thing. Joe, Yes, that's that's one

of the first tiers that we look at. There's four broad categories of the nineteen criteria, the first being gender balance and leadership in the workforce. Then we also consider equal compensation and work life balance as a category, policies promoting gender equity, and then in general overall commitment to women's empowerment and the transparency of the company and accountability. Um So, within each of those four there are some

subset sectors. Obviously women on boards, which is a big, big topic right now, and as well as women in the C suite. But we died a little bit deeper and also look at women in senior management, the overall workforce. We look at the promotion and career development opportunities by comparing the senior management and workforce, and look at what companies are doing in those areas to really be able to advance women throughout their company, not just at the

top levels. Hey, Jill, do you feel like you really it's transparent in terms of I mean, some of those are pretty obvious, right You can look at a board and understand how many women are there. But when you start talking about career development policies and so on, how do you really get a good grasp of what's going on in a company. They can say they're doing one thing, but that doesn't necessarily mean they're doing it right. Right on a high level, we rely on the research that

equally is doing. But then when the YDWCI gets involved, we you know, we have a lot of interactions with some of these companies just based on the fact that they're corporate donors or corporate sponsors, just to individual YDWC is across the country and so we get to know the folks that work at these companies and we can help sort of guide them along the way on their journey for these to better themselves in these different area and they're receptive. UM so far. UM, you know, it's

been it's been a slow process and UM. You know, we are a nonprofit SOUR our resources are fairly limited when it kinds of devoting a lot of energy to you know, really engage with the corporations. But we're building

on that. UM. You know. One of the things we like to say is, you know, we we do a lot of work on the ground level preparing women for the marketplace, and we really see that there's an opportunity to prepare the marketplace for these women and so you know, we're shifting in that direction to you know, try to really use all levers that are available to us, um

to advance the work that we're doing. You know, Chill, there's been a bit of a backlash recently from some very far right politicians about investing notions such as ESG and corporate programs for diversity, equity and inclusion. I'm wondering if that's um on your radar screen at all. You know, is it a risk for an ETF like this, say, if some states pension fund will be forbidden from from investing in this type of vehicle. How are you thinking

about that that backlash? Yeah, absolutely, that's a concern. We like to think of ourselves as the true s in ESG. I mean, we are the social experts in these areas. We know what it takes to make these changes, you know, to advance women in the workplace. So we like to distinguish ourselves that way that it's not just you know, it's not just sort of greenwashing or women washing. You know, this is something that we bring these two worlds together,

we can make real change. It is interesting because I do feel like, you know, Jill, that we kind of are having these conversations over and over again. My team knows because every time we're talking about this subject, I feel like when I kicked off my career a few years ago, many years ago, we were having these conversations about women and equity and gender balances, you know, as you see it and as you are having the conversations with companies and you know, working with the folks that

are doing research on equity and gender equity. Are we making progress? We are, It's it's slow. You know, we didn't we didn't get to this place overnight. We're not going to fix it overnight. UM. It takes. It's a long road. And that's why, you know, after as we've been doing this work for over one hundred and sixty years, you know, really looking at ways to UM to use all of the resources that are available to us UM.

You know, we see this as a very important impact tool, UM, a very important platform for us to be able to change the conversation, be in different rooms, you know, really talk to people, get them thinking about UM. As an employee, what can you be asking of your employer as a company,

what can you be doing? Differently? As an investor, how can you be directing your funds to you know, companies that are doing the things you want them to you want them to do, and also for just general consumers UM, you know, make them aware of these things and how they can use their money to actually drive the work

that which you are continue. Joe, I wonder is you know, is there any potential to be sort of an activist shareholder with this type of fund, you know, voting against firms proxy UH in proxy votes, you know, against policies that you're not happy with at a company. You know, is there any chance of that? Absolutely, and that you know that's one of the long term goals that we have to be able to be more activist investors UM as far as the shareholder proxy issues or the shareholder

resolutions are concerned. Recently, Impact Shares file the shareholder resolution with Norfolk Southern about paid sick leave, and just I believe it was last week and that was based on the holdings that they have in the women FUNDUM and I believe in last week Norfolk Southern Reporter that they had negotiated with two unions and this was in direct response to the the UH the shareholders the sharehold proposal that Impact Shares had filed. Hey, Jill, I'm just gonna

um and I'm just gonna push a little bit. But the why your et F, the women's empowerment ETF. If I look at some of the top holdings and video Amazon, Apple, x On, United Health, Meta, J and J. Procter, and Cable Comcast, all of them have men's CEOs. So I understand what you're saying in terms of progress, but I just feel like, you know, what is what is the conversation you're hearing about why we're not seeing more female CEOs.

That's a very good question. UM. You know there was a time when the reason was, well, they're just they're just aren't any you know, they're they're just not quality candidates. UM. I think that conversation has changed. UM. I think it's one of those things that will just take time. UM and to be able to you know, have the It's one of the reasons in fact that we look at sort of this overall promotion and career development track UM, so that we have that sort of UM that pool

to be creating and and and pulling from. UM. It is slow. It's very slow progress. And you know, with respect to the companies that are in the in the index, I know that there's you know, people can come up with issues for each of the different companies that you know, don't take different boxes UM. And it's we would love to see a time where each of the each of the holdings UM. Actually you know they're they're getting a

grades across the board from actually on these different categories. UM. I actually have just released their most recent reports and UM it looks like, you know, even the best companies are still in the C plus category. UM, So you know it's it's going to take more time, but I think we are. You know, we're encouraged. We see a shift. Um in at least the last five years. I think it's been a lot bigger. That's a good thing. I'm gonna have to leave it on that note, Jill, thank

you so much. Jill O'Donovan, advisor of Impact Shares. Joining us via zoom from Chicago. You're listening to the Bloomberg Business Week podcast cat Just Live weekdays from two to five pm Eastern on Bloomberg Radio The Bloomberg Business a band you Doo. You can also listen live to our flagship New York station, Just Say Alexa, play Bloomberg, E, Loove and Dirty. No doubt about it. Everybody's talking about it,

jumping in. Just yesterday, Salesforces VCRM launched two hundred and fifty million dollars fun it's largest to date to invest in generative artificial intelligence startups. Bloomberg talked with Ken Griffin of Citadel. We talked about this too, how they are negotiating an enterprise wide license to use open Aiyes, chat GBT tool, I mean everybody, it's everywhere. It's amazing, and I mean, you know what, there's been hype around AI

for years, but it's just really reached this Chriscendow. We kind of reminds me of when companies would just started adding blockchain to the name of recover dot comsccer dot com. So it's you know, it's hard not to imagine that maybe people get a little carried away with this. All right, so we want to talk about this, We want to talk about VC more broadly. We've got a perfect guest,

Alison Baumgate. She's general partner at Sempervirens, where she invests in technology transforming companies in work, health and financial wellness. She is with us via Zoom in San Francisco. She's get a book out, Breaking into Venture, an outsider turned venture capitalist, shares how to take risks, create power, and build life changing wealth. Alison, Welcome, Welcome, Nice to have you here with us. First of all, we can start broadly,

what is the environment today for investing in startups? Is it a good one? Today is actually the best time in recent history to invest in startups. The venture capital industry has gone through a lot of changes over the last several decades, but the best businesses tend to be

built in recessions. And not that we're technically in a recession, but when you see a pullback, and it's a lot easier to determine which companies are actually building real value as opposed to just increasing their valuation, because there are a lot of investors around the table, and these are the times when it's easier to find that signal from the noise, you know, alsa it seems like a year or two ago there was so much buzz towards Crypto and Web three in the VC space. How's the vibe

there for that now? Is it? You know? Is that all sort of gone away? Is is there any funding being done for crypto and Web three businesses these days? It's definitely cooled off significantly, and we've seen a lot of the excitement and the hype cycle around Crypto and Web three now moved toward AI in generative AI pre

your point earlier. But what I think, it's what's really important for investors and entrepreneurs to understand, and is the reason why I wrote this book, is that venture capital is an industry that has hype cycle after a hype cycle, and that is inevitable, and so being able to understand how to navigate some of the some of that excitement and put it in context for yourself when you're deciding whether to take a job at a technology company, whether

to invest in a technology company, whether it to start one. You have to be able to sift through that and understand how the industry works if you're going to figure out what to actually pay attention to. I love, let's go there. You said, you know, to figure out what's hype and what's not. What is hype in this environment? What's not AI not hype? I think everybody in venture

agrees that AI is incredibly exciting. As you said, it's been around for a long time, but we've clearly crossed a threshold very recently where it can start to have some more exciting commercial applications. But again, the mission of this book is to try to open up the venture capital industry, make it apparent how it operates, what incentives are at stake, so that we can bring more types

of people around the table. We're at a moment in time right now with AI where the business model behind some of its applications is going to determine who it affects, how it affects them, how it grows and change over time,

and it's going to be affecting us for generations. And we need more types of perspectives, more types of people around the table talking about what business model makes the most sense, because it is the venture investors behind some of these companies that determine what the business models are and that has implications for society more broadly. So I think it's important that society is reflected in venture capital

funds as well. Are you saying I mean to be fair, right, AI has been out there for a while, but we're taking into another level. Is it fair to say that we really don't know exactly how it's going to impact this and we're all kind of in this giant lab right now. Absolutely, That's the exciting thing about disruption is you just don't know exactly where it's going to go. But that's where the diversity of perspectives is really critical,

you know. And alson the other obvious buzzworthy thing in VC was medical healthcare type of spaces after the pandemic? Is that where where does that stand now? Is there still a lot of buzz or hype around, you know, startups dealing with sort of COVID or the next virus that we have to worry about type of situation. We invest in digital healthcare, and COVID created a variety of catalysts for adoption of new technology in the space. You know, when we evaluate a business, we look at five t

s in our diligence process. We look at technology, team terms, TAM and most importantly, timing. And there are a lot of great ideas that just have the wrong timing. But COVID, I think, unlocked a lot of reimbursement models, you know, made it possible to do virtual care, which has changed a lot of the landscape around healthcare. So I think we're still really excited about how that has disrupted the

industry for the better. But there are a lot of businesses that we had that had that thought they had product market fit, but they actually had COVID market fit. And I think some of those are getting sorted out from the group now, you know, it takes sense. It's interesting. I'm thinking if folks are listening to you, right, and there's a lot of folks who come out with NBA's and they don't necessarily go to Wall Street anymore. If they do, it's kind of a touch and go, and

then they go out to the venture capital world. Right, And I know, certainly think about your own experience, Right, you were at Goldman and you know here you are. But what I'm wondering is when you think about companies who are buying, maybe it's older line companies, Like I'm thinking about a weight watchers right that bought a telehealth provider. Yesterday we saw the stock sore on the news, Like, how, what is your advice to folks who are looking at

kind of trying to figure out where to go? Is this an old line company, but they're doing some cool things that are innovative? How to innovative? Excuse me? So, how do you what's your advice on that? That's a lot of what we cover in the book, and of course, on its cover, it's geared toward anyone that wants to break into venture capital, but the concepts actually apply to any kind of career and figuring out where you want

to place your bets. Right, if you take a job at a company, you're actually investing your time and your reputation with that company as well. So It is very similar to the venture model in that way, and a lot of what I encourage individuals to do, whether you're an entrepreneur, professional or a venture capitalist, is to do your homework and understand what exactly you're joining, what that looks like, and then what it means for you in the future. Does it open up more possibilities or will

it shut off possibilities for you? So my advice is to surround yourself with people that can help you figure out what makes most sense and what's going on behind the curtain, because everybody knows how to tell a great story, but what really matters is who's pulling the strings and what kind of power they have and what that means for you. Yeah, Alison, you know, obviously the markets this year have been so laser focused on these surging interest rates.

I'm wondering if does that have a chilling effect on early stage VC or not. You know, there's just so much dry powder that it doesn't really matter. Absolutely it

has an impact. I mean, we're investing in growth businesses right and the cost of capital is a really big factor and how quickly companies can grow and how they're valued, and I think the current environment the compression multiples in the public markets is going to have the biggest impact on later stage companies that have raised a lot of capital already and have raised at valuations that were based on assumed revenue rates that they hadn't yet reached, and

now the environment is different, and so that has a waterfall effect. But when it comes to investing at the very early stages, and you're investing in new companies that haven't raised a lot of capital, that haven't made those promises to their investors yet, now is an incredible time to do that because they have a clean slate and

they don't have that baggaged dragging them back. So it actually creates an opportunity for new businesses to disrupt incumbents in a way that it might have been harder when capital was a moat. All right, well, great to check in with you. Allison bab Gate is general partner at Sempervirens. Joining us via Zoom from San Francisco. 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 Masser and Tim Stenebec from Bloomberg Radio. Roommchael a journal now, but you let me drive? Oh no, no, no, no, who's home? Honey? Please, I'll do the riding drivels. Let me. I want to drive. It's good question. This is the drive to the clothes. Do concomunic well, Briar Joga down on Bloomberg Radio. All right, everybody, just about seventeen and

a half minutes left in today's trading session. Check this out, microcin some buying here in the last eighteen minutes of trading on the equity side. Mind you, we're still well off our best levels of the session, but you know we're up about a quarter of a percent on the nasdack. Yeah, THAT'SMP about flat five. You know someone's behind the tip, I guess. Yeah, it's kind of interesting to see. But

a few more minutes left in the trade. On day two of J Powell tested testimony, some strong labor reports as well. So let's get to it. Let's get to our drive to the closed guests. Sonja Meskin is head of US Macro at bnymel And Investment Management, former senior financial expert at the IMF, also spent some six years at the New York FED working on analytics. Perfect guest to have us on this FED Wednesday and also on International Women's Day. She joins us via zoom in New

York City, Sonia. So good to have you here with us. We are living an interesting time. Stuff coming at us. How do you make sense of the macro conditions of this market environment? Yeah, you know, it's indeed very very interesting, him say, with anticipated markets to be evolved all this year,

that is exactly what has spared so far. I think there's certainly a tension in the macro data between the you know, the fat tightening, but also the underlying strength of the US economy, especially the US consumer, as inflation remains elevated, of course, but also does continue to decline within real incomes will actually be fairly solid this year, barring massive way of Senator recession. So certainly very very interesting times. I think the outlook for risk assets for

me is quite uncertain. Area wait environment hanging on a second, Because you said you expected volatility, We're getting it. I've got a VIX it's below twenty. What's up with that? You know? I do think that there is certainly some optimism regarding the equity market, I think that investors are now pricing in to some extent, a more hawky shred. But on the other hand, the US economic resilience indicates that we might be able to withstand that. You know, Sonya.

It seems like almost every day we see news about more big layoffs from the tech industry or even Wall Street. Yet I look at these job numbers that keep coming in today. The ADP employment number two hundred and forty two thousand jobs added in February, way higher than expected. That jolts job openings at ten point eight million. What explains this sort of disconnect between the anecdotal headlines about layoffs and how this labor market just continues to be

so red hot according to the official numbers. Of course, I think there is some sexual rotation going on in the US economy as well. We saw the tech companies did vary very well during the pandemic because mobility was low, why people still had money to spend. Certainly those sectors hired quiet, you know, strongly. There was the finitely run

up in crypto. It's all for example, those transtend to you know, not last permanently, and they're currently onlinding, but those are very specific sectors and we really haven't seen this the layoff spread to the rest of the economy. And what we're hearing instead from most sectors is that workers remain hard to source and that even if we do enter a recession, that labor hoarding is a real risk. So are you expecting another very strong jobs report on Friday?

And you know that is that just another good news is bad news type of situation for equity markets. I think that you know, there was definitely some seasonality that boosted the numbers in January, but I do think the labor market is in fact quite strong, So I think we we'll see maybe not as as highway headline number on Friday, but we'll see a strong number. You know. It's interesting too, and folks much smarter than me, and

I am thinking about our Neil data. Renaissance Macro sending out a note and he's like, remarkable that homebuilder and homebuilding stocks are holding up. He had mortgage rates increasing for a fourth week, the highest level since mid November. Mortgage bankers putting that out, and yet I'm looking at the group of homebuilder stocks up one point six percent. So we know, the Fed's going to continue raising rates. We're talking about maybe the possibility, good chance that we're

going to have a recession. So again, how am I supposed to as an investor read that signal? Sonya, Well, I think the housing market is a very interesting market. There is certainly, you know, in the past, through of monetary policy to the real economy. The real estate sector, specifically residential real estate is one of those key sectors

that gets you know, feels the monetary policy tightening. But that is a cyclical issue and it always falls against the structural background of what's going on in that sector. And what we're facing today is almost the opposite of what we were facing in two thousand and eight, two thousand and sevent, two thousand and eight, when um, you know race. You know, obviously the FED had been in a tightening cycle, but we really had access capacity in

a sector. We had the froth that this time around we had encrypto, but then we had it in the housing sector in the US, which was obviously for the rest of the economy much more pervasive. Um, the stem around, we're having a structural shortage. We hadn't been building nearly as much as what you know, demand would be consistent with us to just apply to band once again out

of balance in home building. And it's exactly exactly. And you know what actually ends up happening is that when those mortgage URIs get high, we still know sellers might not be as interested in selling it somewhat lower prices. But if you look at the run up in prices we've had since COVID, we've barely put it done to that. You know, Sonya, Everyone I talked to seems to say the same thing in that is, when the FED hikes rates aggressively, they tend to break something. And I'm wondering,

it doesn't seem like anything's broken yet. Maybe you know market returns last year, but from the pure economic you know inputs, is anything breaking or where what would you look to sort of break first? I just got about thirty seconds of course, Well, I think that crypto is long area and where I've seen we're certainly seeing something there. You know, I would look at the private credit area. I do think things are fairly solid there overall. I

think firms generally have turned out funding. But you know, the longer we staying in the high rate environment and the sooner we get towards a point where firms have to roll over debt, the more you're probably going to see some difficulty rolling over into the high rate environment. Well, it makes your job and our job really interesting, all of this stuff that's going on, Sonia, thank you so much,

So appreciate it. Sonia Maska. She's head of US Macro at B and Y Mail and Investment Management, joining SB zoom in New York City. 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 on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal