July Jobs Report Beats Expectations

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Global News. Again, another bang up jobs number today, some good news for folks that really take a look at the jobs as a driver this economy. And earlier today, speaking from the White House, President Biden said July's jobs report shows that his economic policies are working. Let's take a listen. What is indisputable now is this

The Biden plan is working. The Biden Plan produces results, and the Biden Plan is moving the country forward. Right now. The first administration is history to jobs every single month in our first six months in office. Alright, That was President Biden that I would say, taking a little bit of a victory lap there on the strong data coming out of the labor market. Let's bring in Lindsay Pigs, chief economists for Steple Financial. She joins us on the

phone from Wisconsin. So, Lindsay, you know, on the surface, it seemed like a really really solid number. It's not that million dollars, that million job number that people were hoping for at some point here, but still very strong. What's your takeaway, Well, it certainly was very strong. And to your point, if we actually add in the revision from June and May, the overall change was actually well over a million new jobs added to the U. S economy.

So I think this was a very strong report all around. Really hard to find weakness in that type of jobs number. But but, but, and this is what Michael McKee talked to us a little bit about Dave Wilson earlier. It covers the first two weeks of the month, that's the survey data comes in. So that wasn't when we were talking about the delta variant. That wasn't when companies were saying do not return to the office in September. How does that affect the way that hiring is going to

go uh in this period. Well, there is some fear that that the impact on the delta variant is going to have an impact going forward, but at least for now, businesses don't appear to be deterred from continuing to add employees as we as we continue to attempt to reach this this new normal. Now, to your point, we have seen the fear of the delta variant to lay some companies reopening requiring employees to go back to work, but that doesn't necessarily translate into the second part of the equation,

which is layoffs or a slower pace of hiring. This just speaks to a different way that we are working and right now, still restaurants, hotels, the travel industry, the the industries that were the hardest hit are those that are most desperate to get employees back in the doors so that they can reopen to full capacity. But the one constraint that they are seeing is the limited pool

of available labor. So I do think that this report could actually be it could have been ecuse me, even stronger if we saw more workers available and ready to go back to work. Do you expect that to materially change over the next several weeks as schools reopened. I know, for example, California reopens a lot of their schools Monday. A lot of other schools in the South and the West have are to reopened, and here in the Northeast

kind of after Labor Day. For a lot of people, we hear that childcare and back to school is a really big issue. Do you factor that into your outlook for labor? Oh? Absolutely. According to the BLS, there's some seven million Americans that report they are currently sidelined from the labor force because of daycare or childcare issues. And as we see America's youth return to full time in person learning, I do think that's going to create a

lot less pressure on the labor market. Also, as we see some of these federal programs expire, enhance unemployment benefits expire, and also vaccination rates continue to rise, that's going to eliminate some of the fear of contracting or spreading the virus or even the new delta variants. So as we move forward, there are a lot of factors that are on the positive side for the economy to continue this

recovery at a very robust pace. Lindsey F. J. Powell sees a month like this, with those May and June upward revisions as well, how does he changes thinking at the FED. Well, policymakers have been very clear that they will continue to wait for further substantial progress, particularly when it comes to the labor market before adjusting accommodation. Now, certainly one report is not going to be enough to dictate a change in policy, but it certainly moves the ball.

It moves the FED closer to at least releasing an outline for an eventual adjustment to policy, with of course taper being that first step. And we continue to anticipated outline being released as early as later this month, with a formal announcement coming for taper by the end of the year. So that does make the actual taper event at least in my opinion, of two events pushing that

first rate increase out to three or beyond. So even as the data continues to strengthen, we're still looking at a FED likely to be very accommodated, very patient for quite some time. Lindsay has the delta variant altered um Steeple's outlook for GDP for the remainder this year until next year. Well, we had already factored in a lingering fear of the virus and potentially a second round resurgence around the fall, the time when we start to see

flu season set in. So we had anticipated that some return of restrictions would be placed in the country, not the owner's restrictions that we saw in twenty but certainly a return of mask mandates. This this was not unanticipated by ourselves or I think many economists trying to factor in these uncertainties. But I think the biggest component right now is the change in policy metrics, specifically coming out

of the federal government. When you talk about UH stopping the the influx of trillions upon trillions upon trillions of dollars into the economy, that's going to have a material effect on top line g d P. When we look at the organic components, the consumer is extremely strong, wage growth, gage growth up at four percent, housing, manufacturing services all running it at full speed. The economy is well established, but it will be slower than the six and a

half percent at the start of the year. Lindsay Piggs, I thank you so much for joining us. Really appreciate it as always. Lindsay Piggs Pigs, chief economists for Steeple Financial Paul Sweeney temps down of ECNY Bloomberg Interactive Broker's studio in New York. Paul, earlier this week, you and I uh got the news in the afternoon of the

New York Auto Show, right was canceled. We're discussing that it felt like one of those moments, like from March of where you think things are going in a certain way and then you start hearing about these events being canceled, and that that changes things. Um Indeed, the delta variant is increasingly threatening some parts of the US economy. Read Pickart writes about it on the Bloomberg terminal and on

Bloomberg dot com. She's US economy reporter for Bloomberg New She's on the phone in Washington, d C. Read help us make sense of the jobs report that we got today, coming out a time when companies are saying, wait a second, we've told you to come back to the office in September. Hold that thought. Maybe October, maybe January. Absolutely so so. The delta variant, as we all know, it's spreading rapidly, and as a result, it's injected a lot of uncertainty

into the economic outlook. In just a couple of weeks. So we got to f fantastic jazz report today. UM. But the key thing to keep in mind about it is that it's a snot shot of mid July. So in the weeks since then, delta has escalated and companies like Black Cross up in Amazon have all pushed back their return to work these um and as you mentioned just now, you've also started to seek conventions start to

get canceled. UM. So we're trying to monitor high frequency data as a result, UM, and you're start just starting to see UM there it might be having an impact on spending, particularly on things like entertainment and travel. Um. But you know, the key with these high frequency indicators is there is a lot of noise. So interpreting this

volatile data on a week tweek basis can be quite challenging. Yeah, it does, but I think it's really helpful for those that can really spend the time with it because I think about certain data points like open table, you know, restaurants, where's the restaurant traffic? What are we seeing in the last week or two? Because this two and I've been talking about it just feels like this delta variant discussion is really heated up over the last couple of weeks.

Right so, so right now with the open table data, we haven't been a clear downward trend yet, but the same that didcount to me that I thought was quite interesting. UM. So there's a company called Castle Systems which essentially tracks UM electronic access to office buildings, so you know, think of like the little fob that you often white to get into your office building on each day. And you started to see this pullback UM last week from its

pandemic peaks just a week earlier. And so we're starting to kind of see these moments where it's not you know, you're not sure if it's UM a one week thing or the start of a broader trend. But the fact that it could be the start of a broader trend is part of why there's all of the economic concerncy that we have and plays a lot into you know, how long we think this is gonna last? What UM,

what the economic effects are going to be UM. But when it comes to monthly data, things like the jobs report, we're going to have to wait a little while until we can actually start to see any impact in those figures. We're talking about this during during the break and it's it seems like, at least the way that we're living right now, I haven't pulled back my spending. I'm still going into the office. Maybe in the metro New York

area's got generally a high vaccination rate. Maybe you know, UM, it'll be interesting to see on the regional side read what is the other data that we should really be keeping an eye on, because you do point out that total spending using Make of America debon and credit cards decelerated meaningfully last week according to economists from the Bank

m JP. Morgan actually had a no doubt today as well, UM using their Chase cards spending data that showed a similar kind of picture in terms of I'll pull back in spending on travel, UM and entertainment categories. UM. But but I do want to talk a little bit about today's jobs report, if that's okay. It's one of those things that, you know, not often do we get to talk about a report that's kind of right across the board. There's this obviously had a couple of caveats, um and

like every report does. UM, but I think it showed us that heading into this the delta variant, we had a lot of momentum. So not only did we get more jobs than we expected UM for the July report, but we also saw pretty significant upward revision to the prior month as well. So you have all this job growth, you saw unemployment decline more than most people thought UM, and you saw the number of long term unemployed or the folks who have been out of work for twenty

seven weeks or more followed by the most on record. UM. So there there's definitely the sense that you have this massive wave of economist momentum heading into delta UM. And obviously a delta proposes, you know, adds uncertainty, but for now most economists see delta as a downside risk rather than changing fundamentally changing their baseline forecast. Hevery thanks so

much for this. We really appreciate your reporting. Here. Reid Pickered, US economy reporter for Bloomberg News joining us on the phone from washing in, d C. Again, this that the narrative we've had tim for the last you know, seventeen eighteen months. It is what is a virus? What is a coronavirus? Right? What do we name it? What do we call it? And oh my gosh, this is bad. This is much worse than we thought. This is not just going to go away. Then it became one, thankfully

of shutdowns and all that thing. And then it became, oh my goodness, these vaccines came, and it came perhaps earlier than we thought, and oh boy, are they efficient and do they get the job done? And now it's seems to be getting jabs into people in vaccination rates and mass. And but now we've got a delta variant. It is throwing a wrange in everything. It seems like we're just hitting rewind a little bit here and again the discussion points are point we've got to get people

vaccinated and to um mass. We have to have that discussion again. I think that's coming back. It's definitely coming back, especially in the context of school. Paul. It's it's interesting because, and I've talked about this this week, but there's this air of uncertainty around corporate earnings and at least when it comes to guide and and companies just don't know what the delta variant is going to do in terms of changing consumer behavior. Peter Kern, the Expedia Group CEO

and vice chair, was on Bloomberg TV earlier today. He said that even though this isn't COVID all over again, Like this isn't lockdowns at least here in the US. When it's it's more of a wave right. When cases go up, local governments around the world change their recommendations some he said, like Australia lockdown. That changes things, and it changes things in an unforeseen way. Yeah, it does.

And it just kind of just reminds us, um that this is going to be with us for a while in some form, And it's a question of how has it has been from the beginning, of how we alter our behavior, how we deal with it, how we engage with it on a daily basis. Thankfully, you know, the vaccine, many many people are vaccinated in many parts of the world. Unfortunately, many parts of the the world are are tremendously under vaccinated, and that's where the focus needs to go on a

global scale. But given that there is good vaccination rates and many parts of the world, Uh, you know, we're told by the exper US that this is this is different. Um. We can live with this, we can work through this, um, and but there may be some time force I'm asking, well, let's talk a little bit more about the virus and vaccines. Because it is the cover of this week's Bloomberg Business Week. It's available on newsstands and at Bloomberg dot com slash

business Week. It is a double issue. It has a fantastic, fantastic group of stories. Joel Webber's editor of Bloomberg Business Week. He joins us now on the remote from Massachusetts, I want to start droll with the with the cover here. Uh, Vaccine Mandates for Kids is the next big back to school fight. It is the cover story by Riley Griffin and Susie Ring. Take us into Uh we talked to you earlier this week about the story. Take us into the cover though, who is it and how did you

choose it? Amazingly, this is the daughter of one of our our directors on the staff. Really this is not a stock photo yet not a stock photo and we shot it last weekend. Um. She actually is a gap model or has been a gap models kind of took her out of her retirement. Did you did you have to get her agents to approved that dad approved? We did not. We did not pay Dad for for this. Um. So so uh, you know, we tried to look a little bit into the teacher with this story because we're

just around the corner from the school year starting. Um, we're gonna have a real moment here with society when schools reopened and kids who you know, obviously below twelve don't have um vaccination abilities yet, but twelves and seven team, we've seemed really lackluster numbers, and so we're gonna see a really interesting moment here with schools decided to mandate vaccines as kids begin going back to school with those that can get vaccines, and then you know, potentially as

early as the beginning of the new year, we could see kids under twelve start to get vaccinated as well. Yeah, it's interesting and Joel, you probably saw that the news. But here in the state of New Jersey where I live, the Governor Murphy just announced that schools will require masking. Everybody's coming back full service, everybody in the in the in the classroom, but h going to require mask and that appears to be one path forward in some some states.

I think I think of Florida maybe taking a different path that's going to be. And you know, masking is divisive and and you know vaccination is is that plus like times of thousand really um, And what we know though is the delta variant being such a variable here. Um, I think we're going to see more and more states come around to a masking mandate, at least for school as sort of a uh AN entry point, right, And obviously I think some of those decisions are going to

break down politically at least dong state lines. But yeah, that that masking mandate is sort of part of it, and the vaccination discussion isn't far beyond. Now, keep in mind, the other variable on all of this is that school's mandate vaccines all the time. You know that it's different about the COVID one is that we still don't have and the FDA backing and that FDA acting is sort of the thing that everybody's watching for. We're still under

the Emergency Use authorization. I don't imagine though, that people who are declining shots right now are going to be lining up once the FDA fully approves these vaccines. But you know it's because of delta. We've actually seen some uptick in places uh in terms of inoculations in places that have been there too for slow to adopt. So it is yet another thing that can hopefully help overcome

some hesitancy. One thing that we were also talking about this week, joll and it's in the current issue of Bloomberg Business Week is the mad rush to deliver groceries in ten minutes. Vcs have bet billions of dollars on getting you bananas and beer in a very short period of time. Uh, what's the opportunity there? This is a story by Alex Webb of Bloomberg Quick take Over in London. The illustration for this story is awesome. It's a little beer can with rocket jets on attached to it. Back

um there. Obviously, there have been the instant cart kind of services that have effectively teamed up with grocery stores and to do delivery for the past year. But the other phenomenon on is this new thing where we're seeing basically what are dark stores pop up and those these locations are actually their own services, things like gorillas is is is it one? Get here? Is another? Bill puff as another. There's other ones. Even New York has its

own versions of this. But they're all promising basically to be able to deliver groceries within tend to fifteen or twenty minutes. And VC has spotted a huge opportunity here to disrupt the corner Deli. Those corner delis have long been very profitable UM, and by pouring a ton of

VC money into this, it's opened up an opportunity. But the thing is that that window is is dependent upon UM being there without that much competition, and we're already seeing so many competitors that potentially the profit won't won't be sustainable. I love the corner of Bodega. I know I do too. I think most peop who would want to take it from you? Right? I had to go to ours this morning to get some milk, ran out of milk and it was closed. It was too early.

I had to put a one that was way further away, And I was actually thinking about this story because it was like the one time where I needed to get milk in ten minutes or less. Joe Weber Or Weber is editor at Bloomberg Business Week, joining us each and every day here on Bloomberg Business Week. You heard Paul earlier mentioned New Jersey Governor Phil Murphy mandating masks in schools as cases increase among a younger population. That next

month is going to start in person lessons. Also some other virus headlines United becoming the first major US carry to require employee inoculation UH and JP Morgan Chase, as we talked about earlier, is bringing back its mask requirement as Amazon did for frontline workers, even for those people who have already been vaccinated. So a host of virus news to get to. Let's do it as we do each and every Friday, with Dr Ian LUs Beder, clinical Professor of Medicine at n y U Langones Medical Center,

joining us on the phone from New York City. Dr LUs Beder always great to check in with you on Fridays. It feels different now, and I know I don't I don't want to. I don't want to say that we're not looking at the data because the data is different, and that's why it does feel different. I think where are we in terms of getting out of this pandemic?

Hello Tim and Paul, Hope you guys are doing well. Um. I think in terms of the pandemic, it's becoming pretty obvious that essentially everyone, certainly in the United States and globally, is going to be exposed to the delta variant. We always, even at the beginning of this, with vaccines and so forth. Two years ago, talked about slowing the spread, and I think that's really all we can hope for is to slow the spread. Everyone is going to be exposed at

this rate. The vaccinated people certainly have an advantage UH in the sense that at this time it looks like the vaccines, even as antibody levels drop a bit, are really avoiding UM for the most part, hospitalizations and severe disease. You know, the unvaccinated UH typically will get a bad cold, but certainly a significant percent will get hospitalized. And at this point it looks like the vast majority of patients who are hospitalized with COVID are unvaccinated. So vaccines are

one arm. Everyone is going to be exposed. Even those who have been vaccinated may well get DELTA to one degree or another, it looks like they will avoid severe disease, and we're relying on other things to kind of hold things up. Masks, for example, which also are not a cure old by any means, they do reduce spread maybe fifty depending on the kind of mask, obviously the more effective.

So I think what we're doing is trying to UM have a variety of techniques to to mitigate because we're really not going to stop the pandemic at this point, there are just too many people who are unvaccinated. Uh. It's too hard to destroy me at all these vaccines, and I think all we can do is do our best to sort of protect vulnerable people while the pandemic plays out. And this is really what happened in Unfortunately

without vaccines. But it took about three years for everyone to get infected, fifty million plus dead, uh, and ultimately it went away. And I think that's what's gonna happen here. But there will be more carnage before that happens. Dr los Pader want to get a sense of timing if we can even do that. In terms of this delta variant, is this something that could burn itself out quickly or is this going to stay around? I'm thinking about some of the short surgeones we saw in the UK and

in Israel. Um, is that what we're gonna see here? Is this going to be here for longer in terms of this variant? You know, I think that's a good question. I think in the next few months we are going to have a significant increase in cases throughout the United States and basically everyone in the US. Probably by the end of the year will be exposed and whoever gets sick, um, you know, will get sick. And so I think in

the US it probably will burn itself out. Globally it probably will continue, and of course as it continues globally there's risk of other variants. So I think Delta will burn itself out in the United States. Fortunately, it doesn't seem to be much worse than the original alpha variant. Maybe in some pockets, certainly much more contagious. But I don't think COVID will go away, and it may even become a chronic illness like influenza, where you do get

a yearly shot. We don't really know that yet. Hopefully that won't happen. It did not happen in with influenza, which is different. Um. But I agree with you. I think we're going to see a surge in the next few months and then probably a significant drop in cases as the wave goes through the United States. Is this the last wave of the of this pandemic? Good question, US. I think at the end of this ways everyone in the United States three million plus will have been exposed

one way or another to COVID. Either they will have had the vaccine, they will have had the disease of or they will have UM you know, recovered or died. So I think in the US come mid year, I think will be in a somewhat better place. If there's still new variants that are coming up, and are antibody levels are dropping, which they probably will, we may need a booster sometime, you know, elate full early winter. The the FDA hasn't really commented about that. Most people that

I've checked still have good antibody levels. Some are still getting delta because the delta is a little resistant, has mutated enough so that our antibodies UM don't fully capture it. So if a new strain were to come along that's significantly different, that could be a problem come you know, next spring. You know, Dr Tim and I always like to when we have experts in frontline healthcare workers on would like to ask how the folks at your facility

are doing. It's been such a long seventeen months. How are they doing right now? So, you know, I think the hospitals in New York really had a terrible siege UM a year ago, a year and a half ago, we were really the epicenter. Fortunately, now, the the case rate, the incidents is somewhere three plus or minus. There are not many cases in the hospital. All of those cases are unvaccinated. Most are doing fairly well. So I think

this area in the Northeast is doing fairly well. That is not the case in other parts of the country. So I think in in the Northeast or the Tri State area here, I think we're going to be okay. You know, kids with masks and so forth. I think maybe treating ourselves more than treating the disease. But um, you know, there there are pros and comes to that, but I think we're through the worst of it in New York as best as I can tell. Well, that

is certainly some good news to end on. Dr Ian Las Beader, Clinical Professor of Medicine at n y U Langon Medical Center. It is always a treat to talk to you each and every Friday. Dr LUs Better, thank you so much for taking the time. All right, Berkshire Hathaway reporting earnings tomorrow. Everybody's gonna be looking, obviously for

how the company is dealing with the current environment. But of course people really want to hear from Warren Buffett and what is Warren Buffett and his team going to do with all that cash on the balance sheet? What's the next big deal? Cat Chick Lnsky joins us. She is our ace Bloomberg News reporter on Warren Buffett and Berkshire Hathaway. She joins us on the phone from New York City. Kat, Thanks so much for joining us here. First question, really tough one, This might throw you back.

Why did they report on Saturday? It's a weird quirk and uh definitely makes for a busy week for all the reporters. But it is that he tends to actually like to report on days in which shareholders can take some time to look at the the release without getting swamped by too many too much coverage of it. So um, so you know, he, Yeah, he has the weird quirk, but but he's he's loved to put it either on everybody's attention. I mean, he's got full attention at the marketplace.

And what about that cash that that Paul mentioned? What do we know about the types of deals that that Berkshire Hathaway is looking at right now? Well, and that's the biggest question, right and you know, Berkshire has simply too much cash and too few opportunities. They really haven't been able to strike a ton of deals recently, and and that's been weighing on them for the past couple of years now, especially with the back boom going on um. But one of the biggest questions is will they have

other avenues to deploy it. You know, Berkshire and Buffett have finally started doing more share buy backs, and we have a hint. You know that they did at least more than six billion dollars worth of buybacks in the quarter, which is a substantial amount. But when you're Berkshire and you're throwing off that much cash, you know, it's a little hard to tell if that's actually going to be able to keep up with the gushing flows of cash that the conglomerate produces. And I think that's gonna be

the biggest key. You know. A couple of months ago we learned that Greg Abele is in line to take over for Buffett once he decided to to step down. And I think that's that's the key there. Once he decides agreed, and you know, he's coming up one Buffet is so I'm you know, I think he really loves

to stick with this business. But every earning is from here on out, everyone's going to be scrutinizing it more because it's one thing to say, hey, you know, I'll give Warren Buffett the benefit of the doubts and maybe he can find you know, another deal months down the line and it's worth him waiting. Um. It's another thing to say that, you know, hey, I'm going to give

greg Able that benefit of the doubt. Do we have any idea how their investment philosophy, they're operating strategy may change under Greg abel Well, we know for certain greg Abele is going to face more pressure and that might mean, you know, Buffett has long shine away from dividend um he finds by backs the much better use of shareholder return.

You know, there is a chance and analysts keep raising this point of you know, greg Able might face more pressure to actually issue a diffident and have a one time you know, way to release that cash. We've also been seeing and this is you know a little different

from Berkshire. We um there was a hint that Berkshire sold this vacuum cleaner company, Kirby Um, just in recent months, and so there is sort of this idea that maybe Berkshire is at a point in which it is really saying, look at all the companies we own, you know, are all of them sort of worth owning in the same way? And and that could be something that potentially changes. But obviously just one company down, we'll see um whether they

sort of take that tax with other ones. I think it's really notable that the company can't find deals right now, considering that we are likely going to see a record summer in terms of amount of money UH spent on deals and is looking like it's going to be a record year. So so what makes a Berkshire deal at Berkshire deal agreed? And and I think actually Berkshire's pitch has just sort of been lost in the stream of

capital that's coming after all these deals. I mean, Bercher's pitch for a long time to potential companies is, hey, you know, if you're a family owned business in particular, and you want it to have a home at this conglomerate, that will let you sort of run the business like you've wanted to run it and give you that sort of freedom to handle things on your own, that autonomy that something to be found at Berkshire. And and that's

an enticing pitch. I think for many companies. But when you have private equity and you have facts, and you have all this money on the sideline, you know, buffet doesn't want to overpay for a deal. And so you know, if other companies are willing to pay up for some of these acquisitions, Berkshire, you know, is going to lose. I'm looking at the five year chart to function ceo MP and over the last five years Berkshire hathways underformed the SMP. Is there any pressure building? I think there's

a lot of pressure building. Yeah, Berkshire has underperformed the SMP five hundred and you know, it's gotten to a point where I think people really question the size. I mean, it's a huge company. And when you look at all the arraysed businesses in it's in. You know, sometimes that breath is beneficial and that you know, when one business is doing well, maybe another business is not in it's

sort of off sets it. But I think the idea that there's not that many huge deals that Berkshire can find for a well priced you know, a well priced price, and and I think that sort of question is going to continue to make investors a little more cautious on the stock catch Glinsky. Finance reporter Fort Bloomberg knew she's going to be up early covering Berkshire Hathway earnings on

Saturday morning, and we certainly appreciate that. What a busy week we've had in terms of earnings, in terms of economic data today, we obviously had the jobs number coming in better than expected, markets generally moving hire. A lot of folks trying to say, boys, the next five to seven percent, moving this stock market higher or lower. Let's check up with Ryan Dietrich, He's chief market strategies for

LPL Financial, joined us on the phone from Charlotte, North Carolina. Tim, if you don't know what, Charlotte's a little town southwest of Durham, North Carolina, at home with Duke University. Just wants to point that out to you. All right, Ryan, let's we've had a lot of earnings over the past couple of weeks, We've had a lot of economic data here. What say you about this equity market? Here? Guys, thanks

for having me back. And before we go there, I do want to point out we are right now at LPL we're having a we call our focus conference with more than ten thousand of our advisors virtually we had speaking of Duke, we had Mike Sachowski virtually with our CEO Dan Arnold on Wednesday. And I'm not a huge Duke fan. I'll just give it out there, but it was an incredible Sweeney about that. Okay, there you go. But anyway that that that's my that's my part about Duke.

It was really cool as our focus event with our advisors. But listen, there's like you said, I mean, there's the strong jobs number. FED is still accommodati of the economy is doing better than we thought. But what's also happening. We're making new highs right today could be the forty four new all time high so far this year. What in the world does that mean? Well, guys, and you look at previous years up to this point, only two had more new all time highs ninety five and sixty four,

and that's a small sample size. What happens then those two previous years markets continue to be really strong, and ninety five they did pretty good the second half of sixty four. So I think the truth is there's a momentum behind this market. History would say you probably will you definitely want to continue to be a buyer, of any dips. But the answer your question could the next five or seven percent up or down. We wouldn't be surprised if it was down, right. We don't had a

five percent correction since last October. This is August, the worst month of the year in a post election year. September is the worst month on average. October is obviously vaultile. So we've been bullish, come all you guys for a while, but I tell you it makes sense. Maybe we could be due for some normal third quarter of volatility. Here, Ryan, what is it that that that sets that sends stocks lower than the third quarter this year? Yeah, very welcould be, Yeah,

very well, could be. You know, the FED policy and the inflation and the worries there at the same time, it's send the best answer, but sometimes the truth it's just been a while since we've had any volatility. Markets sometimes just get volatile to be volatile, but the inflation concerns are clearly still out there. And then also, hey,

we're making new highs. People are pretty optimistic, right, I mean, sometimes if everyone's on one side of the boat, that's what can kind of trip things up, if you will, you know, Jackson Hole obviously is a couple of weeks from now that's going to be, you know, very closely watched, and they're they're going to talk about tapering or not and what's what's it mean? What's the FED thing about inflation? And we've seen some pretty big policy decisions made at

Jackson Hole over the years. So we're not saying that's the trip up situation, but that's just something to be aware of. And lastly, September it's still out there. Remember said last September guys, we had nearly a ten percent correction. Honestly, no one probably remembers why it happened. We just had a big rally than a ten percent correction pre election jitters. Sometimes the calendar can just be something you want to

pay attention to. Alright. So Ryan, we're, you know, well through the earning season here, we're gonna have some of the retailers coming up next, some consumer names coming up next. How's you take it at these earnings? They've been great in terms of comparisons. Are they good enough for this market? Yeah, we think they are. We are making new highs as we speak. I mean it's amazing, right, I mean, recent recent data says we might be up almost ninety percent

year over year in the second quarter. Just a couple of months ago we were thinking, you know, about mid fifty percent. I mean, it's just amazing how quickly it's come up. So but that's the key thing, right, It's all about expectations and you know, clearing the bar, and the bar is getting higher and higher. I mean just today's again today's number UM on the jobs number obviously

really strong. It's got some excitement. Look at the ten ure yield, right, the tenure yield obviously has been surprising many to the downside. Maybe potentially form a little double bottom with a nice move higher here. So we're optimistic that earnings will continue to be strong. But we also think that early cyclical value group UM that it is obviously struggled, no question about the last two or three months, is still where you're going to find some leadership the

second half of this year. And with the action on the tenure, we're optimistic that maybe we found a technical bottom here and you can start having a higher tenure, which should be a tail win for banks, financials and value in general. I know you're studying in technicals. I know you're looking at the technicals. But this is all happening in the background of the delta variant spreading. Uh, We've been talking throughout the show about potential softening and spending.

There some data from Bank of America Debt and credit cards. Yesterday it said it decelerated meaningful spending, that is last week, and then today we got some news from Chase that said spending spending data has softened recently as well. How do you look at alternative data like that when you're thinking about where the market's going to go. Well, we obviously pay attention to it, but at the same time, we're almost back in that world where what was bad

news good news? Right? I mean, okay, so if the delta variant is terrible as it is, and then the spending slows down, and we do see a little economic slow down because honestly, the job's number was strong, a lot of that was before some of the delta variant stuff, like you know, kind of creep started creeping up again. So we have to have to look at it like that.

But but again, if if things start to slow down, well, the Fed they've said what they've said, right, the Fed might actually you know, keep policy low for a while and then they ignore tapering for a little bit longer. So so as strange as it sounds, and fiscal policy still out there, so bad news could be good news. We saw that a lot last year, right, I mean this time a year ago. Markets in the midst of a five month winstree five month winstree can we have

some of the worst headlines in our country's history. A lot of it was because, yeah, the economy came back, but that fiscal monetary policy is there, So it's it's just kind of the way I guess you gotta you gotta look at it from a full picture point of view, and bad news could be good news from an investment's point of view, Ryan, what are your investment professionals, you know,

hearing from their clients these days? You know, I know there's that wall of worry out there, and uh, you know, you can make the argument that it's higher than ever right now. So what are they hearing? Yeah, I mean a great question there. So the two that we've been hearing a lot lately, a delta variant, which we just kind of touched on, and but also stagflation, right, I mean, stagflation is the idea clearly that the inflation is going higher,

the economy is starting the weekends. Those are some of the things that are the concerns we're hearing about. Again. I mean, we're in the camp similar to the FED, that the inflation is probably transitory here, um, you know, And and and yeah, we had two percent inflation for like a decade, and we might see two and a half three percent for a couple of years, coming off the worst for session in our lifetime. That's that's not

overly concerning to us, but we're watching it closely. But those are the two things we're hearing a lot about. And and you're right, there is a fear of heights. I mean people everyone's optimistic. Then you get a little correction. I remember the almost five percent correction back in the late January early February game stop. I mean that was only a five percent correction, not quite but almost. There's a lot of fear on that of modest pullback. So

that's the thing we want to keep seeing. We're gonna pull backs eventually, want fear to come in and that can be you know, wash out the weekends and continue the upward trajectory that we think we're still on. So when you see those meme stocks and even Robin Hood today and so on, does that kind of point to you as a well, this is a sign of a frothy market, sign of a topping market when you see those types of market behaviors. Yeah, and in the near

term absolutely can be. I mean there's no doubt. Remember coin bases I p O came out literally the day that you know, Bitcoin tops back in April, so you see then Robin Hood, So that's kind of out there. Um. But at the same time, you know, the meme stops are one that memes stocks are one thing. But the truth is, hey, earnings are strong. I know, evaluations are stretched, but when you have the relatively low rates that we still have, Yeah, you know, stocks about be expensive, but

bonds are really expensive. So it still makes sense to us the second half of this year is we keep going that stocks will do a little bit better in bonds and value is probably gonna do a little bit better than growth. Is how we're telling our more than nineteen thousand advisors how we see the world. Brian Dietrich, chief market strategist at LPL Financial, joining us on the phone from Charlotte, North Carolina. Ryan is always a pleasure when you join us. Thank you so much for taking

the time. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube search Bloomberg Global News.