U.S. Job Gains Accelerate While Wage Growth Slows Sharply

Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Clovel News. So much going on throughout the week, and of course it's continuing on this Friday. Upside surprise. Let's get back to one of the big stories of the day, and normally would be our top story about costs of the ongoing war in Ukraine. That is certainly

front and center. But let's not forget we did get that upside surprise from the US Labor Department this morning. US hiring booming in the month of February. What weight growth ooh slowing? Although Elena saying of our Bloomberg intelligence team, maybe not something to be too concerned about, but nonetheless safe to say strong jobs report. Yeah, the number we got was six seventy eight thousand. The change in non farm payrolls that was expected by surveyces by Economist, survey

by Bloomberg was fo three thousand. Person we go to oftentimes to talk about the economy and jobs is Becky Francoitz, President a Manpower North Manpower Group North America. She joins us on the phone from Chicago. Uh, Becky, I want to get your thoughts on digging a little deeper into this payrolls report. Uh, what about the wage growth not growing to the extent that it should in such a tight labor market? Is that something to be concerned about? Yeah,

I would agree with your analysts. Actually, we have seen really remarkable wage expansion, particularly in the blue collar segment of the economy, and so it's not it's not something I would be too concerned about at this point. I think, you know, we today is a very good day for the American labor market. We should feel confident in our employer's ability to navigate and certainties and adapt for change.

And I think that the lack of wage progress is u is a point in time, and will likely continue to see promise in that arena as we go forward. But why shouldn't we be concerned about it? And what makes you think we're going to see progress? Is it just because of the basics tenants of supply and demand. If it's a tight labor market, people are companies are gonna have to pay more to tract and retain talent.

You know, I would say it's it's likely due to the large number of jobs created in blue collar sectors where we've already seen significant wage increases before the pandemic. Again, it's not you know, I've I've really been grateful to see the wage growth that we've experienced in the economy. But we know the employers are looking at significant wage increases, are looking at full compensation, and so what what will would be required going forward to attract workers is what

they'll do. And you know, so I think for the month it's a blip. We've seen amazing wage expansion, and I anticipate in a tight labor market because you know, rest assured demand is incredibly strong and I love Caroll your word booming. I mean it was a booming labor report, and demand continues to be strong, and that really is what we're focused on. And if, if, if wages need to expand to attract workers, that's what will happen. I was also very pleased to see work for participation expanse.

That was a very very good isn't that interesting for every He was saying, Okay, we really kind of feel like everybody who wants a job has one. But that move up was was um significant to agree. Becky. Hey, one thing I wanted to ask you though about wages. We've got to think, is it states this year that are raising the minimum wage? Isn't that going to provide some support and some floor in terms of um, you know, pushing wages higher overall? Yeah, Carol, I would say, is

we started started this year? You know, people talked about new beginnings in a new year, and I was on the record talking about endings, and I think the end of twenty one and going into mark the end of the concept of minimum wage. It's not really minimum or maximum wage. It's required wage. What's required to get people, you know, to come off the sidelines first and then to come to work for you. And so yes, I you know, I do think we'll see you know, use

the word floor. I don't I don't know. I don't know if if we could talk about floors and it's I think we have to talk about what's required. So you said required minimum wage, and that would just it's required wage. YEA interesting, Okay, what about when it comes to participation among women, especially women of prime labor age. Um, we not only saw the clients they're in total in total for for those women, but also for black women

and Asian women as well, and for women overall. It was the first decline in participation that we saw in in five months. What do you read how do you read into that? Yeah, so you know it's it's ironic to him as we As we're right ahead of International Women's Day, obviously we're keeping a close look on gender

in the workforce. And one of the things that we know from our real time data is demand is on fire and I T and Tech that for most of the growth SITH and yet women are really underrepresented in that segment of the workforce. And so in fact they represent about of that segment I'm compared with over fifty percent in leisure and hospitality, and so one of the things we have to make sure is that women have the skills and are upskilling and interested in moving into

some of those booming areas of the economy. Like I t so, I think that it's one um the other, I would say, And I heard you all talking about it. Childcare continues to be a challenge. Like we think that's reopened, it's not. It's not completely reopen. And that's been a real challenge. And I was very, very disappointed to see the African American female participation or unemployment excuse me, um

go up. That was a very disappointing number. Yes, right, and you do wonder we know, you know, FED Chief j Palace talked about making it inclusive when it comes to this recovery. But you do wonder. You know, Becky, you're smart, you run a company. You're looking at what's going on the labor market, but you also see the inflationary pressures that are out there. Are you concerned that the FED will risk doing something too aggressively that might

undermine ultimately the US labor market. Well, you know, it's it's a funny thing, Cheryl is one of the things I haven't been asked recently, is, hey, you know, what's the different definition of full employment? Because we're now down to three. You know, we've all had a new definition of that. So what I would say is, I, you know, I'm not an expert on the FED. I hope that they take a broad look. But what we do, you know, is this, this concern and realization of inflation is bringing

some people off the sidelines. And so as we see the workforce start bouncing back because people need to work, as as prices go up, um, you know, wages continue to go up. We don't. We don't want to see a wage of spiral happen where they continue to escalate. Um. But the FED will likely have to act. Becky really quickly, just got about twenty seconds here. If you have to pick one sector where you're seeing a ton of hiring going on, where is it? It's I T software developers.

All right, good to know. Hey, listen, be well, have a great and safe weekend. Becky Franco, its president of Manpower Group North America, on the phone from Chicago. I T. We're talking a lot about it this. Yeah, I was just thinking that Carol, you're reading my mind. If we think about the impact that the war in Ukraine has on information technology, so many startups and established companies to have offices that have I T. Tech talent in those areas. Um,

how's it affected. Well, you know, we talk about the global supply chain, we talk about our interconnectedness, right, and that include our global workforce, right Like it's it's just that's the world today, the reality. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Well, the new issue of Bloomberg Business Week gets out. It's at Bloomberg dot com, is this Week dot com, on news stands and on the Bloomberg terminal.

It's about how to punish Russian Vladimir Putin and how the world has turned to finance, making it into a weapon of war, with the Russian Central Bank really becoming the main target. Tim. Yeah, Matt's story, Matt Bosler story. That is it's featured the new issue of Bloomberg Business Week magazine. It's available now on newsstands, on the Bloomberg and at Bloomberg dot com, Slash business Week. It's a really really important story. It's a really important issue to cover.

Is incredibly powerful. Joe Weber joins us as the editor of Bloomberg Business. We he joined us now on the

access line from Brooklyn. Joel, It's fair to say the moves that we've seen from the European Union, the United States, handful of America's allies in Asia in the last seven days or so have been pretty unprecedented, totally unprecedented, and and even just the sort of the about face that the Germany UM on its own happens, you know, that unwinds you know, more than fifty years, sixty years of policy UM and all because of obviously uh Putin's aggression

UM in Ukraine. UM. The the idea that we kind of set out here was that we've we've really never seen UM the financial the finance system UM turned into UM a weapon UM, and with the intent of obviously crippling Russia and and making Russia pull back. And clearly already even we've we've seen that that strategy may have some limitations, but even the nature of of where it has gotten us too is, you know, in a couple of years of just unprecedented, unprecedented, unprecedented, here we are

yet again using the word unprecedented. So so Matt talked to us about UM, how it's come to pass and and people who you know study this stuff. Um what what what do you what did you learn from reporting it up? Yeah, So I think one of the keys to understanding what's going on here is, um, you know, looking at the history of central banks can actually help you understand this a little bit, right, because central banks, going back to their beginning, really have been, um, you know,

heavily involved in war finance. A lot of them were set up, you know, basically for the express purpose of financing wars. And so, um, what we have here is a situation in which we are bringing down the hammer on a central bank, Russia's central bank, in a really unprecedented way for a country of Russia's size and importance

in the global economy. And so if you think of the central bank as being kind of a key mechanism through which countries have sort of always financed wars, it helps explain why, um, you know, the West is going

after Russia's central bank and why that is so significant. So, you know, obviously, the story in Russia over the last several years has been one where they have been building up foreign exchange reserves to the tune of hundreds of billions of dollars um, you know, kind of salting them away for a quote unquote rainy day or you know,

in this case, a military conflict. And uh, they thought those reserves were going to be there um and be able to be utilized to kind of insulate themselves from the fallout of the blowback if they were to take a step like this um. And what we're learning over the last week or so is that's not the case because you know, those reserves are largely held in places like the United States and Europe UM and basically those jurisdictions have flipped the switch and said you don't have

access to these anymore. Well, that's what's really cool. There's some great stuff, and you reference Bloomberg opinion columnist Matt Levine. What's interesting is it's not just about building up reserves in it being you know, to entry in the accounting ledger of the Russian Central Bank. It is about those global relationships that the Russian Central Bank had in the Russia and Russia as a country had with the rest

of the world that ultimately really are mattering right now. Yeah, it's really interesting to kind of, you know, step back from all of the news flow and get a little philosophical here on the nature of money, right, because we're getting another amazing object lesson in exactly that this week. Right.

So you know, you can think of politics almost as a spectrum, uh, you know, between people who think of money as a social relationship um that is, you know, basically defined by um, you know, who is willing to accept that money, right, versus on the other end of the spectrum, people who think of money more as a thing, right, like the commodity standard, the gold, like something that you possess that you can then utilize as you see fit.

And you know, this is just another example, kind of on a global scale of that social character money where it really does depend on the person on the other side of the transaction being willing to accept it. And so you know, once again we're getting a real lesson in that. Hey man, I want to go back to what you said about salting some of that money away over the last few years in order to build these reserves.

I'm wondering how that exacerbates the hit to Russia's economy that this takes, because that money wasn't then put back into the Russian economy, that's right. Yeah, so you know that is the trade off here that they have made, right.

I mean, you could be um, you know, bringing in all of this money from exports of your natural resources, and you know, one thing you could be doing would be to be reinvesting that money into your economy, growing your economy, um, you know, building out your consumer base, UM, and your industry and so on and so forth, and

and really modernizing. And that's something that um, you know, has been a problem for Russia because, um, you know, another aspect of this that we're seeing is now some of these export controls that are being put in place against them. You know, they import a lot of the really high tech necessities, UM you know, like things like computer chips and so on and so forth that they

need to continue upgrading their military. Well, now the US and Europe is slapping bands on exports of that technology to Russia, and it's really closing doors for them in terms of what they're going to be able to do

going forward. We're now doing the same with um, you know, high tech oil and gas exports, UM that they would need to continue you know, upgrading their um, you know, energy sector, and so that's uh, you know, that's going to be a big problem for them, and you know, uh, President Vladimir Putin is kind of saying, well, this is an opportunity for us to you know, now, um, increase our resiliency and our self reliance by actually developing you know,

some of those capabilities on our own, but might be too too little, too late. Well, incredible story, and there's an incredible series of stories that make up the cover story this week in Bloomberg Business Week magazine. Highly recommend that you check them all out. Uh, that story and the others, certainly the magaz being on newsstands, on the

Bloomberg and a Bloomberg dot com. Also in our weekend show or thanks to Matt Bosler, fed reporter here at Bloomberg along with the editor of Business Week, Jill Weber, you're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Historian The Bloomberg though today about the coin based CEO, saying, ordinary Russians are using bitcoin as a lifeline now that their

currency has collapsed. There's a lot we're watching in the crypto markets as a result of the Russian invasion UH into Ukraine and all the financial pushback by the world against Russia. Well, let's go deeper into that story with Corey Clipston at CEO at Swan Bitcoin. SWAT Swan Bitcoin is a financial services provider, is something that helps people automate purchasing a bitcoin, like a savings account for example. Corey, how are you welcome? Thank you so much for having

me out A. Yeah, it's good to speak with you again. Corey. Um, you know, it's been a it's been a couple of weeks since we last spoken, and I'm wondering how you've been watching the events unfold in Ukraine and really how that plays out across cryptocurrency. I mean, I was talking to somebody earlier today and we were saying, wasn't this exactly what cryptocurrency was designed for, the facility to facilitate cross border transactions without a middle person. That's exactly right.

It really is fascinating to watch this play out in real time. The last time that we really saw something on the global stage is almost out of memory. It was Cyprus in with the b O N and and that kind of coincided with the bitcoin bull run and that that caught the cohort of people that got interested, and it's already been nine years since then, and this is obviously of you know, one or two orders of magnitude larger in global consequence and in the amount of

attention that it's attracting. And we're getting to see, you know, not just aggregated data coming out of the crisis and what bitcoin is being used for and how it's being used, but also just such a high volume of mechanic outs and stories coming out. And I'm getting to touch some of these stories personally, happy to share a couple of them. Well,

and I want stories, and I want anecdotes. I want to know that really what you're seeing on your platform that you think is a direct result of what's going on in Ukraine and Russia. Yeah. So we are obviously, as as a company that serves humans all over the world, not taking sides, but we are also essentially an open platform and will serve anyone that we are not blocked

from serving. And I will tell you that it appears that a little over of the headline volume of donations that are being collected in bitcoin are being processed by swan and turned into dollars by these these NGOs that are turning around and paying for aid and things on the ground in the Ukraine. So that's one story at

a platform level. And then you know, as smaller story is my co founder of SWAN, Jan Pritsker, who talked about the experience of his family leaving Ukraine with only a hundred dollars worth of goods in and what that could have been had they had bitcoin, because they were a normal middle class family and could have could have been doing just fine had they been able to leave

with some of their wealth. And you know, right now he has extended friends on the ground that can take funding right there, no middleman, as you said, don't need to find an n g O in the US to coordinate with an NGO in the Ukraine. There is a group of women in Kiev that are trusted through the network that are taking bitcoin donations directly to the people who need them right now today, and you know, I and others can can just make donations in that method.

It really is fascinating. But coit What about the flip side of this and and and something that Carol alluded to is the idea and we've talked about it this week that you know, right now we see oligarchs on edge around the world as their assets are in some in some senses obfuscated or at least attempted to be confiscated by governments in Europe and other parts of the world. Does it Does it provide an opportunity for UH people who really shouldn't have access to capital because of sanctions,

to get access to capital. I know you said that at SWAN you're not doing that. You're not allowing people access who are who are blocked or banned, but can't they get access to crypto? Well, it's a really bad way to launder money or try to do anything, sort of at a large level. So if you need to hide a lot of money or move a lot of money, that's very easy for law enforcement to see. It's very easy force sanctions providers to go and hunt that down.

It's really a tool of freedom for the individual and sort of smaller players to be able to do what

they want to do. But if you have a shortlist of sanctioned individuals or sanctioned entities and you can see literally everything on an open blockchain, that everybody has a copy of the sluicing there As we've seen time and time again of law enforcement and governmental agencies ability to go and hunt down bad actors or essentially anybody that they're looking to target is quite good and probably quite a bit better than they're able to go and crack

what's going on with the major private banks and investing banks around the world. To be frank is you know, it's funny when I ask that question. I think back to you know, the so called crocodile of Wall Street, the you know, the woman and her husband as well, who were recently charged with with laundering bitcoin um and it was I don't want to say easy, because I didn't do it, but it was possible for US authorities

to track them down. Well, what was interesting there is they sat on it all these years since because they couldn't figure out how to move it without it being seen, right, So they were sophisticated enough to pull up the social engineering of getting the bitcoin, but not sophisticated enough to understand end and figure out how to clean it. And that's a very very common story. You can see all

the bit clins, but it's very difficult to spend it. Hey, Corey, one thing I'm curious about, and sometimes it's moments of crisis alla the pandemic that sped up the development of innovation, digitization, A lot of things that might have taken multiple years all of a sudden happened overnight because businesses, people, individuals for survival had to do it. Um. What I'm curious is you keep talking about um how I think you said donations collected by Swan in bitcoin. We're talking about

donations to help out the people in Ukraine. What about though, how this event is maybe causing people a rethink about digital currencies and wanting to have access to digital currencies to just transact on a regular basis, not necessarily just in a moment of crisis. Any signs of that that

you're seeing as a result of what's going on. So, in general of the past, amount of vasion of a new asset runs through the store of value first and then into medium of exchange, as more and more people store more of the value in an asset than they actually demand to be able to spend it. So I think we're still very very early, especially in the West, with a large consumer demand to be able to spend bitcoin. I still think this is a story of it's too late when the crisis is upon you to even be

able to sell off. It's hard to find a buyer in the middle of the crisis, right, So you know, the time to the time for Lebanese folks to protect themselves was long before their currency collapsed and the economy kind of fell off the shelf right, And the time for Ukrainians and Russians to protect themselves was before there

was essentially a you know, a hot conflict. And that's what you have to think about everywhere around the world is what percentage of your net worth are you going to hold outside of the system that is controlled by governments and central banks and is unconfiscatable and is non correlated in the zoomed out view with any other asset out there. This is just this is bitcoin and it it lives in the digital world alone, and and no

one can take it from you. So each of us needs to think about, you know, what percentage of our net worths and what percentage of our liquid assets ought to be stored in the bitcoin. For the call, we're speaking with Corey eclipsed In, the CEO of a Swan Bitcoin, the financial services platform that helps people automate the purchase of bitcoin coin. I want to go back to something that you said earlier because it sounds like, you know,

this is something good for for people. You know, cryptocurrency in your mind, is something that that works well for refugees, it works well for political dissidents, but at the same time doesn't work well for people trying to skirt sanctions. I'm having trouble making sense of those two things. How can it be for both? Yeah, it's the size. It's the size. So the people that are generally getting targeted um by the US government or or or by you know, those for lack of a better term, UM, I don't

think it's about crypto Wales. We're mostly talking about oligarchs and people kind of close to the Russian government or even Russian entities, whether companies or or governmental entities, and the size that they would need to move the it's just too easy to spot that, and it's too easy to get in in front of that and stop that happening.

They have to acquire the bitcoin somewhere. It's almost impossible to do that without going through a service that requires k y C and a mL know your customer and antim money laundering UM screens of the customers, and so they just can't get enough for it. To make a material difference versus you know, these commodity markets that they're operating in or these large you know stakes that they might be holding in different businesses or various accounts and

things like that. So that's it's really you can hide when you're small numbers, but once the numbers get very big, it's it's impossible. You know, interesting talking to the head of a global organization yesterday and you know, a savvy investor, institutional investor, entrepreneur and just saying, you know, what's your exposure to crypto? And what's interesting is this individual said, you know, I've got to be looking at it basically but not necessarily having exposure yet, right but soon and

tiptoeing into it. And so I do wonder how we need to all be thinking about um bitcoin specifically since that's the dominant player. So pre this crisis, previ war, let's be truthful about what's going on. What trends were you seeing in terms of adoption and growth on your platform,

and be as specific as you could. Absolutely, Yeah, I mean I think we are still searching the wave of adoption that started with the realization of what bitcoin was for lots of new people and lots of famous people after the pandemic rolled out in in que of so you had people like Stanley Druppon Miller and Paul Teator Jones speaking openly about having large positions Bill Miller, and you know, obviously Michael Saylor hit the war path and did all the shows and continued to do them for

the last two years. We've talked and now we're go ahead. Now we've talked with him. Yeah, go ahead, yeah, yeah, And and so now we're seeing an opportunity for a new cohort of business leaders and influential folks that are that are understanding what bitcoin is based on this crisis. So just so forgive me just real quickly, because we've only got about twenty seconds. So what kind of growth are you seeing in terms of users or the amount

of activity that's going on to real quickly? So all right, huge influx of interest over the past couple of weeks, which is fantastic. We're a fairly new company. We got the market two years ago in March of Our growth was up you know, over thirty x year over year twenty but some of that lot of small numbers got it fantastic. Corey, We gotta run. Thank you so much. Corey Clipston, he's CEO at Swan Bitcoin, joining us on the phone from l A. You're listening to Bloomberg Radio.

This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stenovich on Bloomberg Radio. But you might recall with it yesterday day before NFP. We joked earlier this week with Mike McKee that NFP stood for not focused on payrolls, and yet this morning strong report did remind us once again about the strength and tightness of today's US labor market. Tim six seventy eight thousand jobs created last month, nearly every sector seeing gains, the unemployment rate,

Carol dropping below four percent to three percent. Well, we welcome former US Labor Secretary and former chair of the Democratic National Committee. He's now running to be governor of Maryland. He's also co chair of American Bridge twenty one Century. We are delighted to have with us Tom Perez. He's on the phone from Chacoma Park, Maryland. Tom, nice to have you here with us. Um, let's do there is so much going on, but let's let's get you first.

The Job's report. Uh, certainly something that in a normal week we would have been focused from Monday, and we talked about it a little bit. But obviously, as you would imagine, what's going on in Ukraine, UH is certainly front and center. We'll talk about that in a moment. But when you look at the US labor market, what jumps out for you in terms of those longer trends that stay with us? Right? I mean this, this month's

report was a great report. Uh, what's one month never makes a trend, But when you look back at the last year, it's pretty remarkable. Uh. We saw the economy grow by seven million jobs last year, the fastest rate in forty nine years. Uh. The unemployment rate dropped, as you said, to three point eight percent. And one thing I learned long ago, the unemployment rate can go down for good reasons and it can go down for bad reasons. Last month, the unemployment rate went down for good reasons

because people were getting jobs in the marketplace. I'm haartened to see that female labor force, the patient is moving up. It was at its lowest level in decades January. It's inching back up. We still have more work to do there. Uh, this is a resilient economy. I mean, we we have a remarkable array of forces, a global pandemic, the excess of of Putin, and and the tension that puts on

our global economy. And yet you see what happened last month, and UH inflation is a real concern, there's no doubt about it. But one thing I would ask your listeners to remember, and I remember vividly when I was Labor Secretary, the challenge that was the vexing challenge for us was the long term unemployed. The reason we had such a high concentration in of long term unemployed was because the

stimulus bill back in two thousand and nine. It was as much as the politics permitted at that point, but frankly, it wasn't enough. And the fact that this time around lawmakers went to school on the lessons of the Great Recession, that was a really important lesson, because I would nobody wants to see inflation. It's a real challenge. UM, it's a real issue. But I tell you, UM, I dealt with the plight of the long term unemployed, and we

don't have that because we had a UM. The American Rescue Plan and by Parts and Infrastructure Bill are sufficiently muscular so that we were able to climb back faster. But tom wasn't too much because inflation is running so rampant, the highest in forty years. And and look, we're still not back to pre pandemic levels of workers in the United States. Well, we expect to be back to pre pandemic levels by the end of which is uh, pretty remarkable.

Last year President Biden grew the economy by seven million jobs at the fastest rate in forty nine years. If there's a friend of mine at least ruled from the Economic Policy Institute, I saw on Twitter today she had a chart about the length of time it took to recover in the Great Recession, the length of time it took to recover in this post pandemic, or well, we hope to be post pandemic in the naza distant future. Uh.

And it's night and day. Uh. And so we can always and we must always look back and learn the lessons. But I think the lesson that was taken, which was an important lesson, was that, um, we need a more we needed a more muscular um investment. And you know, the the Infrastructure Bill, the Bipartisan Infrastructure Bill, UM it's long overdue. It's the most this is the most money spent on this since Eisenhower, and um, everyone will benefit

from that. Well. The unemployee rate declining broadly among all racial and ethnic groups as well, jobs rate among Asian and Hispanic workers dropping point five per image point, while that of Black Americans falling point three point UM. So when you look at it, and we've heard FIT Chief J. Powell Tom talk about the importance of inclusion when it comes to the bounce back after the pandemic in the

in the labor force. Are you comfortable with what you're seeing among minorities and the diversity of what's happening in the labor force. In terms of improvements, we we always have room for improvement there. I'm hartened to see that it was broad based. I am still I look at African American unemployment rates. H it's still uh two times the white unemployment rate, right, um, And so we have more work to do there. And and that remains so

much of the unfinished business of this recovery. And that's been a challenge for a number of years. And that's why why is that Because it's certainly something you guys were dealing with and I feel like it's administration after administration. Why can't we impy? Well, I think we have to make very very um uh like he here in Maryland. You know, we have a blueprint for educational reform that is designed to ensure that no matter where you live,

you have access to a world class education. And we have historically, UM all too frequently underinvested in the educational infrastructure in UH communities of color, and UH we pay a price for that. Our blueprint here in Maryland is all about making sure from cradle through career that we're preparing people everywhere to succeed. And I think we have to understand that civil rights still remains a big part

of the unfinished business of America. And when we invest in UM black communities and other communities of color, I think we will yield that return. And when we invest in, for instance, we're gonna have a energy infrastructure here with offshore wind in Maryland and elsewhere, and we've got to make sure that UM those jobs, and those are thirty union jobs, right, that we're building an infrastructure in the career and technical education so that those jobs are accessible

UH in every community. To do it, we want to tap into you've gotta be a and international relations and political science, and we've got to tim tap into what Tom has has to say about what's going on in Ukraine right now. Yeah. Tom, we've been covering the humanitarian situation closely. We've been covering the economics effects, the economic effects and of course the market effects of Russia's invasion

of Ukraine. And I was talking to Carol earlier and I said, you know, when we heard the administration policymakers talking about the inflation that we've seen of late, it's really been a story that they're telling about a demand shock, but that seemed to shift in the last ten days with the supply shock elements of Russia's invasion of Ukraine, with potentially getting cut off from Russian oil to Biden administration thinking about that, Um, how does the how does

the administration get inflation under control when they're seeing shocks in the supply side and on the demand side. Well, I mean, you know, the images out of Ukraine are indeed horrifying, and innocent civilians are being targeted, lives are being lost. The refugee Cristi is unlike anything we've seen world War two. Um, and and Putin started this war and he needs to end it. And uh. There, I have a student that I talked to literally yesterday, a former student of mine who did Peace Corps for two

years in Ukraine, and she was in tears. She just got back your year or so ago. And you know, there, the the efforts to isolate the Russian dictatorship are compelling, they are essential. And um, will that have an adverse impact on prices at the pump? Very likely it could, um and will um, But as I watch the heroism of of people in Ukraine, and I take a step back and I examine what's going on. Uh, this is a moment where we must come together as a global community,

understanding that it will have economic impact. Here the President outline steps he's taken to reduce the cost of prescription drugs and and childcare and other things. But I as I look at the moment at hand, and I recognize that many people, so many people around the country are living you know, week the week here. Um. But this is a humanitarian crisis unlike anything we've seen since World War two, and um, and we need to come together as a global community. And and and our economy has

proven resilience. Look at the top numbers. To day, we're begandering through a thicket of unprecedented challenges and we continue to grow. Hey, Tom, just got about a month. A month. I wish we had a month. I was still to talk with you, but we have just about a minute left here, and I do wonder, UM, what we look back. Is this a moment in time where in terms of the global economy, in terms of geopolitical relations, Russia is going to be squeezed out in on its own probably

longer term. Well, I think so. And uh, I think you will see at some point in the not so distant future that the International Criminal Court is going to announce an investigation, a formal investigation, um, not just an investigation, but a prosecution for war times violations by Putin and his regime. UM. And I think that's something that has to happen. And we need to keep this uh pressure up.

And I know it's going to be difficult and it's going to have some impact, but UM, there are just forces. We have a democracy recession around the world. Authoritarianism cannot be the wave of the future. UH, this is a real moment of of peril. And UH we have to come together as a global community, just like we did um in World War Two, and just like we have in other moments in our global journey to form a more perfect global union. Wow, Um, Tom, I'm I'm wondering.

You know, when we when we think about what's been happening in Ukraine, the Russian invasion there, how do you think it ends? I don't I if I knew that, I don't know the answer, and I don't know that anyone knows, uh the answer, because we can't get into Putin's head right now. Uh, he needs to back off. But it just seems like with every passing day, Um, his intent appears to be doubling down. And that's why the global community needs to come together. Well, I must say,

you know, after nine eleven, we came together as a nation. Um. We understood that we needed to come together as a nation. And I hope we will do that. I. You know, some of the things I periodically read um here at home are just really puzzling and and and disappointing. I hope we will come together, um, because this person is a thug and we need to understand that. Tom just

got about thirty seconds left here. I do feel like we are at a junct, a point where there's a lot of demarcation when it comes to democracy versus those countries that don't embrace democracy. Does China need to be on good hard or do you see that as a

different situation, And again, just got about thirty seconds or so. Well, I hope I'll be interested to see what happens in China, because um, I think the Chinese government needs to understand the swift and certain reaction of the global community to the events in Russia. If you attempt to do the same thing, we will deal with you in the same way. And I hope that what's happening right now is a

cautionary tale for uh, the regime in China. So delighted to get some time with you, Tom, Thank you so much. Tom Perez, former US Labor Secretary, co chair at American Bridge twenty one century, joining us on the phone from Maryland. Tom be well, thank you, Roam morow. Yeah, but you let me drive? Oh no, no, no, please, I want to drive. It's a good question. Drive to the cloth radio. Gotta say, this was a jam packed week, we know, and it was an important week. It was a heavy week.

It was a volatile week, and we certainly saw that play out in the financial markets. And here we are bouncing around again on a Friday as we head into a weekend with as we heard from Charlie down more than one percent, about the S and P and the DAW the NAZAC down two point two percent, which maybe explains why Doug Cioca's research note to us was pretty thick. There was a lot there. All right, Let's bring in Doug Cioka, CEO and partner at Cavar Capital Partners. They've

got our billion in assets under management. On the phone from Leewood, Kansas. We're having some fun with you. When I was getting my file from our producer Paul Brandon, like, wow, that's a lot from Doug. But it was a luck going on. Doug. How are you? How are you good? To have you here? So we know we understand. I think it's safe to say, right some of the financial moves that we're seeing, whether it's energy, whether it's defense,

whether it's travel. In terms of what's going on in the marketplaces this week, you know, the movement that we've seen in yield. What is it that's I don't know most important interesting to you and the investments that you

need to make for clients. Doug. Yeah, so it's been it's been a really a crazy year, right, And this this week, as you mentioned, kind of gives contextually um coming where we were last Friday with an eight point moving the down and then to have but basically all but the four but all but one down day this week.

So much is hinding is hinging obviously on what's taking place to you politically, and it is obscuring everything else and oftentimes and and there is a positive aspect of of what's taking place in the form of indiscriminate selling, right, And the positive part is that you do have great

companies that are treated like very poor stocks. And that's a condition that doesn't tend to persist for very long, right, So trying to be opportunistic and look a little bit around the corner, right, We do a lot of quantity quantitative screening for a stock port playos and evaluations tend to weight sectors accordingly, and you know, interestingly, like right now, large industry groups represented by our screens our financial stocks,

technology stocks, and healthcare stocks, and these screens try to eliminate like the profitists and super speculves of the companies as much as they require stronger alying fundamentals and empisides evidenturary aspects of the company's profitability and not just aspirations.

What does that tell you, though, that you've got a cyclical financials, defensive technology, and a combination healthcare all screening positively right, give us an indication there is broad based value right now in US equities and that for the long term gets to very constructive and excited. So healthcare,

tech and what else? Was it? Financials? Okay? Okay? So yeah, So are we you know here we are eating the Nasdaq composite down eighteen percent from its all time highs um the s and P five hundred down what this year? You know, close to nine just this year alone. Are we at levels where you're seeing values? Are you ready

to go in and by the death? Oh? Absolutely, Tim, I mean we we We mentioned in this client letter that there's this old investment adage related to armed conflict, right, and it goes like this, right by on the cannons

and selling the trumpets. And basically, when ambiguity is high and sentiment is low, prices tend to go down and they offer interesting entry points, and we always say that that comes across it is sounding maybe a bit heartless, and that's not the intent, right, It's more that you're channeling kind of accommodation of nationalism and optimism and capitalism and public private sector unite and the whole common purposes resolution and kind of a modern day adaptation of cannons

and trumpets would be be opportunistic within your objectives, right, Price, this location and volatility are generally short term nature. Guessing when they will end is impossible. Knowing they will end is responsible. So we try to retain an adherence to kind of well designed asset allocation as a key to long term investing success, but at the same time as growing ample resources out of the path of harm, that's

the key to short term peace of mind. So we've said for a long time, invest for long term, managed for the short term. But they're undeniably value in this market and gin evaluations to the second. But a lot of people are comparing this period to sort of the prior geopolitical uh influence negative on the market, which was the pandemic, and we're now at pre pandemic levels of of of valuation. Multiply the s and T. But back then SMP orrings, we're gonna go maybe four or five

percent in two thousand and nineteen and twenty. Now, the expectation, even though last year ye ever hear, is to grow over So you have a valuation that's cheaper and a and a growth rate that's four or five times we're looking at two years ago. All right, did you about arnies growth rate? Yes? So you know what's interesting, Um, that makes sense to me, logical, right, and you start and there's a point where you have to step back and get away from the headlines and the volatility and

just stay. This is something Martin Adams does for a Bloomberg intelligence, like, let's look at the fundamentals, whether it's earnings, whether it's margin expansion or you know whatever. What's interesting is, though, if we go into recession and often in a FED tightening cycle, it's not a guarantee, but it's tricky for the Fed to get it right and not either overshoot.

And earlier this week there was US economic data for the first quarter of two has been so weak that the Atlanta Feds GDP now tracker showed a zero percent reading for GDP growth based on data release through that point was earlier this week. If we get a recession, does that change it or if you if we get a recession, do you anticipate it's kind of a touch and go and we move off of it pretty quickly. Yeah. I think we would move off of it pretty quickly.

And people talk about recessions in terms of depths and what it will be really deeper, shallow. I think it would be shallow and quick. I think the exacting its influences that are headwinds for economic growth could get us

into a technical definition of a recession. And I put that as a very low probability of a couple of consecutive quarters of negative GDP because when you look at an economy right now that has amazing underlying consumer strength, partially a function of a great job market, partially a function of persistently low interest rates for a while, partially of a function of an economy that is this in

a transition spawned by entrepreneurial opportunities. And you add that to the valuation of the market, and then you overlay that with the job number that we got this morning, right which was so wonderful because it was inflation neutral, but economically positive, and it's it's not meaningful today, right because it's a geopolitical backdrop, but you looked at the

client year over your average hourly earnings. That's really significant and that it suggests that the said is not facing this immediate wage price spiral that could be very very sessionary in its form, and that's not the case right now, and that's very positive. I just want to point out because I'm watching the equity trade. We've just got about four and a half minutes left here, and we're seeing some buying into the clothes and we talked about this.

We're still down across the board, we're off our lows, but particularly on the SMP and the DOW, we're seeing it move up towards its higher levels of the day NOWASA trying to but nonetheless we are seeing some buying into the close here. Do does that do those concerns? Are those still eased for you, Doug, despite the fact that we're seeing this supply shock right now as a result of Russia's invasion of Ukraine. I mean, we talked earlier about the rising grain prices and wheat prices this week,

and that's going to hit consumers really hard. Yeah, no questions. The whole inflationary aspect is concerning. And again I do think that's what gives the FED the capability because of these exogenous headwinds, that they can modify the change rates in the implementation of tighter monetary policy, the telegraphing capability of doing so, and being data dependent, which they by requirement are, I think that is going to give the economy the necessary runway and clearance to make modifications as

best they can now. Tim If this conflict extends weeks and months, then there's gonna have to be potentially just the opposite of what the peasants tending to do, and we were worried they were gonna have to do that over the weekend. With the swift messaging system, sanctions is actually even expand the balance sheet. They don't have a lot of gun. They don't have a lot of howder the gun, But if you need to hopefully have enough,

right well, data dependent, right flexible. We heard Jamie Diamond saying the Fed's got to be flexible, and we have seen the Fed certainly watch the headlines and be data dependent. Um, Doug Cioca, thank you so much. Have a great weekend. Douglas, partner of our Capital Partners, on the phone from Leewood, Kansas.

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