A Deep Dive Into Jobs, The Markets, And Crypto

thanks so much for joining us. Always great to get your take. I wonder if, first off, what you think what you thought of the numbers? One thousand better than the street was looking for, better than the whisper number as well, and we had wages up, although not faster than inflation as the presidents at earlier four point nine percent, which is better than a stick in the eyes. My stockbroker always tells me, yeah, well, I agree with you. It's uh. It's a strong report and and it shows

broad based job scheme. So when we look at things like the diffusion index, right, we see it at a at a at a high UH, and it shows that employers are adding workers. We also saw some things which might seem counterintuitive at first. For example, we saw hourly weekly hours work to go down slightly, and this has been at an all time high after the pandemic because workers are Employers are having difficulty finding workers, so they're taking the workers they do have and adding more hours

onto them. And those are not necessarily hours that all those workers want. So when we take it in total, it's a very good sign. We have momentum. We have manufacturing jobs coming back, especially in autos. We've leaves are in hospitality jobs coming back. So overall, a great report, and it suggests we're the speed bump from the delta brea that we saw in the third quarters is passed up constant for the time being. Forgive me, because I'm a little bit of the perma bear here at Bloomberg.

And this labor force participate patient rate, Yes it's stable, but it's still not moving. So you know, how do we get that number to start making some gains? And I'll use a Muhammedalarians term here and say, you know it was a disappointment. Yeah, Well, so what we saw and what I looked at was the also the female labor force participation, which went up two tenths of a percentage point. But we have a considerable sticking point here, and this is that we still have temper cent fewer

childcare workers than prior to the pandemic. UM and this creates knock on effects, right because if you can't find childcare, you're you yourself then may not be in the labor force because you have to be home taking care of children. Between six to eight percent of the labor force has children under the age of six UM and so so this creates knock on problems. And the question is when do those childcare workers go back or do they go

back if they start to look for other jobs. Will will they not fully go back until children under the age of six are vaccinated? Will they not fully go back until we have you know, really UM, widespread remediation if you if you catch COVID for example, like this

fisor product that was announced this morning. UM. And I think what we're seeing is that this pandemic in the rear view mirror is something we keep expecting to happen in the next month and the next quarter, and the virus keeps coming back and it is it is where we see these sort of persistent problems in labor force participation and in the ability of the economy to completely recover. I'm not just here, but but globally constance. Today is my birthday. I know how thank you I'm getting older.

I'm getting old. I'm I'm four twelve year old. That's also cooler. Thank you. It makes me think about the older people as well. UM plus in labor participation is not climbing back to the pre pandemic levels. I think part of that is and I know a lot of people who have been able to retire a little earlier and they thought they would, um, they didn't feel like dealing and therefore, oh one case did really well? Are we is that part of what we're seeing a little

bit of a structural change. So there was a great paper presentative Jackson Hole this year that addresses sort of this issue of retirement and participation and what happens during recessions and then what happens during recoveries and expansions, and so the longer the expansion, the more likely it is some of those people who are retired or did retire

temporarily come back to the labor force. UM and and that depends on the on the length of the expansion and the variety of UH opportunities available, as well as people's personal circumstances. So we think that eventually that participation rate does start to return. But you bring up a

good point. The probability of people over the age of fifty five returning is lower than the possibility of prime age workers who say they're retired returning, and and it does bring us to this sort of long term UH so called deficit of consumption, which is one of the reasons why we've had the disinflation and deflation of the last several decades, and one of the reasons that people think the inflation is transitory. I'm going to use the

T word transitory is state dependent, not time dependent. So the state that the transitory inflation is dependent upon is COVID. The problem is that state COVID is lasting much longer than people anticipated. So I also want to switch gears here a little bit and talk about that's a great point, though let's I mean, I just want to linger on that for a second, because I haven't heard that, and that makes a lot of sense. Being transitory is state

dependent and not time dependent. It reminds me a little bit of you know, I was um having a discussion with Anna Edwards this morning about our fossil fuel use and she said, yes, the President wants OPEC to pump more, but this is just for the short term, until you know, to bridge this period until we can get UM into more renewable use. And I think that's a pretty good comparison. Um, it's the state that we're in rather than a specific time chunk of time that we that we could guess,

that we could estimate. Yeah, I do want to switch gears a little bit because this number has been particularly concerning throughout this entire pandemic, and it's that unequal recovery, the idea that Black unemployment is seven point nine percent while the rest of the country is facing, you know, an average four point six percent unemployment rate for Hispanics, it's five point nine percent, still little or no change over the month. So why is that? And what can

be done to start make these numbers more even? M M. That's a really great question. And if you let me take up the rest of your show, I'll be about all the details, um, which is to say, this is

is this complex but not complex? Right? And what we see across America is large firms like KPMG announcing initiatives to make sure that our recruiting is more diverse, right that that we are reaching out and having diverse slates of candidates to choose from, and then really being aware of biases that might cause us not to choose a more diverse slate of candidates. And and while you can skeptics and look at this and say, ah, well, you know that's not enough. If every firm does this, on balance,

you're going to see gradual shifts. I would hope in in the outcome, that's that's the goal anyway. Um, and obviously you know we're we're hoping to make bold shifts. But but I think realistically, if you look economy wide, um, there isn't awareness that this is a problem. When we don't have people, an entire group of people in our economy fully employed, we are missing out on a lot of GDP, we are missing out on a lot of growth.

I think you know, and and and it's great for KPMG as well, because I'm glad to bring this up to I don't know if you know Mindy Grossman, she's a good friend of mine if you don't got to take you both out for drinks. Um. She tells a story she started out at Ralph Lauren and then she went to Nike and did some other stuff. Now I think she runs weight watchers. She tells a story about being the only woman in the Nike boardroom with like twenty other guys, and they were asking the question, how

can we sell more shoes to women? And the entire room looked at her, you know, and of course she said, maybe if you got a couple more of me, we could do that. Right, Because um, diversity, it's not just for the sake of diversity. It's not just to be a responsible civic um citizen. It's just you can also look at it as as a profit driver, as a revenue growth driver. It will help to build GDP, right because you can reach more people that way and get

your product out there well. And if you have more people participating in the economy and fully participating in terms of their full potential in terms of education, you're going to have greater innovation, You're going to have greater wealth creation, you're gonna have greater productivity. I mean, it is absolutely ridiculous that we would systemically hold back people in our population. It just it makes no economic sense and it makes

no moral sense. Quite frankly, Constants. Always great to get your take, and I really appreciate you joining us today. Constance Hunter there is the chief economist at KPMG. I'm gonna I'm gonna hook you up with Mindy Grossman. Maybe I'll take shetionale. Why don't get drink, No, I will. I'll bring you guys all to the club or whatever, and then I'll and then i'll just uh set you free and I'll go do whatever. Um, thanks so much.

Always great to get your take. Constant Hunter is the chief economist at KPMG talking to us about the job's number, adding five one thousand. UM. We had average hourly earnings growing four point nine percent year over year. Labor participation though, is the problem here. It's the sticking point. Sixty one point six percent was the actual number we wanted to see, sixty one point seven percent. So no growth there. We're

working on it. This is Bloomberg. Now, as he said, we're gonna get over to Peter Anderson right now from Anderson Capital Management. UM. He is going to give us his outlook on markets. And first off, Pete, I want to get your take on the job's number looking pretty healthy, especially the wage growth number for nine not quite the level of inflation, but it's almost there. Well, good morning everybody,

And yeah, that number was, in a word, fantastic. And um, I don't place too much emphasis on the monthly job numbers because I do think and recovery things are very messy, and you know, we don't hang our hats on successive data like that. But when you do get a fairly vague but improving picture of the economy in the labor market, I think it's all very positive. Let me let me ask you this. I get that you don't uh, you know, one data point a trend does not make or whatever.

But we did get some pretty amazing news from Fiser. If their treatment can reduce hospitalizations and death by eight nine in high risk cases, is that not a game changer? I personally do think that I totally agree with you. I mean, this is a major announcement I would say, equal to or maybe even greater than the vaccines themselves. And the reason I say that is, you know, there's still uh contentions out there about anti vaxer's um mandatory vaccinations,

that kind of thing. We're all going through that this country. But if you have a treatment for this, that kind of obviates that entire tension between different opinions about, you know, whether or not to be vaccinated, etcetera. So I do think it is probably the most major turning point in this whole messy situation we've been in for the past

year and a half. You know, there are some COVID you know, stock market darlings, if you will, like Peloton, when people were you know, staying at home and working out, and now the stock today is down, by the way, Paul Sweeney used to be on that thing every single day during lockdown and since that, since the last couple of months, has just been hanging his coat on it. Yes, I'm filling in. I've got to fill in for Paul Sweeney, and let's talk about this Peloton issue, because you know,

it's the thing that we're seeing here with Peloton. Are there other companies exposed to this kind of issue where people used it during the COVID times and now they're walking away. Well, you know, I've always said market timing based on COVID news. Really it's like standing on a trapdoor. I mean, we just didn't know this development. I mean, as evidence even by today Viser's News. So I think it really is a foolish thing to try to time investments based solely on the way you think they will

be UM attractive during a COVID lockdown. I think we're seeing that the first damaged stock, frankly for that thesis is Peloton. We're seeing that playing out right in front of us. It's so fascinating. What do you think about the economy UH more generally overseay the next year. I mean, the cops are going to get harder as we get into um Q four, Q one, Q two. On the other hand, so you've got to think the supply chain is going to ease a little bit and the labor

crunch has to soften somewhat. Yeah, that's right, Matt. And you know a lot of people think I'm maybe a mindless optimist on this, but believe me, I spend a lot of time thinking and analyzing UH to formulate a hypothesis in our opinion, and I remained bullish. I mean I was bullish throughout this entire period a year and a half, and I continue to stay optimistic, and I do think maybe next year, you know, we will be wringing our hands a bit saying, maybe we've overshot our

estimates for earnings. But what a fantastic position to be in. If that's the case, then we would be truly I mean, I'm looking forward to worrying about that, because then we would be truly in the rear view mirror all this stuff about COVID vaccinations, COVID treatments, UH, supply chain issues, interest rates, all these things that we've been worrying about

and frankly worrying about in the dark. I mean, this is a totally new period we've been through, right, We've never had a history like this, and so that's why I urge investors to take it a little bit in stride. You know, don't hang your um your opinions on the news of the day. You really do have to step back and try to appreciate the mosaic that's slowly evolving as we get out of this mess. So as we get out of this mess, we're again we're still at

record highs in the stock market. We've been up every day this week. Not too messy if you're fully invested, right, yeah, so what do you buy now with valuations this high? Well, you know, and you earlier asked, let's just finish this other point about you know, are there other companies that might be in peril? I'll Peloton, and I do think there are. There are companies that anything that investors have invested in based on this is a hot topic for

lockdowns I would stay away from. So I've never invested during that period market timing based on certain industries instead. For instance, Peloton I never thought was attractive even before the COVID came, and I didn't think always attractive during, nor do I think it is attractive after. But certain other industries, uh, escape that and are more attractive. Let

me throw out some data security for instance. That's not going to be a COVID timing matter, data storage, cell phone towers, uh, anything that is less dependent on what I would call UM supply chain in more on intensity of say, software development is a pretty good place to be right now, and it probably will be the best place to be even as we come out of this

COVID mess. All right, That makes that makes sense. Um data security is something that we're gonna need, and healthcare is something I hear a lot about pete you know, from the tech side, from the UH read side, um um just a pure play investment in that. It seems like healthcare just still has a long way to go. It does as it always will, and I think COVID has placed a you know, macro emphasis on that industry. I will tell you another industry that I've been very

successful investing is pet care. Pet care business, whether or not it be medications for pet care such as Zoetis or the health insurance for pets called Trupanion UH, the health care of animals is probably even more has more potential for increase, and I think frankly, it's simpler to analyze. You know, when you get into health care for humans, there is a whole specialization of that and you really do almost have to have a PhD in biochemistry to

understand that. But when you look at pet care, you know, the humanization of pets is a trend that maybe was highlighted even more during r in COVID, but it's still here. It's here to stay. And as I said, when we look in the rear view mirror, that will be another industry that will be very, very attractive for sure. I mean, you know, I remember when I was reticent to get an m R I because of the costs, and yesterday I just m R I. My dog. He's okay, he's okay.

I just want to make you make the point I wasn't as worried about me as I was worried about Steve, and Steve is gonna be okay. Pete, thanks so much for joining us. Great. Always great to get your intake. Really appreciate you joining us on this program. Peter Anderson

is the founder of Anderson Capital Management. Now, one of the things that we have made almost a central part now of our data checks and business flashes, et cetera is um Crypto prices Bitcoin right now down three quarters of one percent to sixty thousand, nine hundred and eleven dollars apiece Ethereum down just over one percent right now to four thousand, four hundred and sixties seven dollars. I want to talk about cryptos with Scott Freeman. He is

the co founder and partner at j ST Capital. Talk to me first about what JST does. Scott, where do you guys do a JST Capital? Hey, Matt, good to speak to you. Yeah, we are an institutional player in the crypto space. We do everything digital and service institutional investors, clients, exchanges, protocols. We've been in the business for well over four years, so that's a that's an eternity in UH in the crypto world. What do you think about the institutional adoption?

What do you think about people making crypto part of their portfolios? How long until we get to a point where this becomes, uh, you know, as normal as holding I don't know any other commodity. Well, yeah, I think honestly, we're well on our way there already. We're from the retail side. It's very easy for people to get access to it these days, especially with the recent launch of the ETS and with the growth of the U S

futures market. I think it's just it just continues to grow day by day, week by week, year by year. The e t F I think very interesting, but it's not as uh, it's not as powerful as having a product that's backed by the underlying that buys actual bitcoin. For example, we just get the futures and there's royal risk and another number of other things related to that. When when do we get a real product that um, you know, mom and pop investors can really sink their

teeth into you know, Listen, that's a good point. I think, Yes, the future's et F is not as efficient as the cash based ETF, and we would expect maybe first second quarter next year, it's likely the s see we get more comfort with this is just an evolutionary process. The fact that the futures et F with gone tho smoothly. The world hasn't ended, um, And I think that's a good sign. More broadly, and we would expect to see more e t s next year. We'll expect to see

a cash based goodcoin. We expect to see e t s as well next year. So one of the big problems, UM, with this in investment is the volatility. You know, yesterday, Um, the new mayor of New York, Eric Adams, asked to get his first few paychecks in bitcoin, and people immediately talked about the risk associated with that. It has come down though, Um, but is this kind of volatility, I mean, is it here for for years for decades? When does when does it? When does it get to a point

where your average investor can stomach it? Yeah, listen, I think volatility at some levels all relative right, the bitcoin is a very bottle. Asset volatilities have come down over the past few months. But what we've seen in the past and what we do expect, there will be periods of extreme volatility in bitcoin and in crypto, and I think people should expect that. I think you don't go

into these assets hoping for lower volatility. Of course not, but it's at this point it's too volatile for um for a risk averse investor to to get an involved um, you know, other than just throwing a small piece at it as a punt. You know, it's more of a gamble than an investment. And that's not the case for a lot of other asset classes, and it's a big problem. Yeah, I guess we would we would postulate a little bit differently on that. We would say, listen, if you're going

to go into it, expect there will be volatility. You could be up or down on any day to day, a week to week. But for a long term investment, for you know, a small piece of your your portfolio, or even for you know, parents and grandparents who want to set up their their children for college, things like that, we don't think it's a bad idea to put a small portion of investment, and as a long term investment,

we wouldn't encourage you to speculate around this. We think long term bitcoin of cryptos more broadly are a good a good place to have a small percentage of your portfolio. All right, if you step back and look really long term, then Scott um, don't governments have an interest in crushing these cryptos, you know, and especially as they come out with their own digital assets. Yeah, I think there will be regulatory or more clarity, a lot of regulatory side

going forward. I think there's already been some progress in the US, especially around the stable coins UM. I think that will continue with evolve. I think for those of us in the industry were big proponents of greater regulatory clarity. We think lack of regulatory clarity has been UM has been an issue. We think going forward that will help. We obviously we hope that they're they're disciplined about how

they impose regulation. We hope it's still allows people to maintain some of the exciting and new things that we think or bring a lot of innovation to the space. Beyond stable coins, do you think there will be any cryptos that we can use on a daily basis like cash.

You know, I spent a couple of weeks back in two thousands a team living on bitcoin and not using dollars, which was fun, But you can't really live that way on a regular basis, especially now as transaction times get so long and um, it's expensive to transact with bitcoin. Is there anything that you think people are going to be using to transact? You know, I think the more likely scenario that people will be doing things on the

blockchain without even knowing it. Like people are already building apps today, whether their web browsers or apps on your phone, that allow you to earn incremental revenue for just day to day activity and people don't necessarily need to know that bitcoin or crypto is behind it. But I think they'll be able to extract value from day to day activities where they can't do that today. And I think that's when you start really saying the power of a

blockchain and crypto a big future and defy absolutely. Yeah, We're we're big believers in space. We're allocating more and more people on capital to the space, and we think we're not even in the first inning. It an ether, all right, Scott, to get your thoughts thanks so much for joining us. Scott Freeman there co founder and partner at j ST Capital and institutional player in the crypto space.

And you know we're covering this more and more. Obviously I have been interested in it for a decade, but UM, I think everyone is starting to look at quotes on bitcoin, quotes on ethereum. You can get it on the terminal see our yp go is where you can see our screen of crypto or cryptocurrency monitor and you know, more and more UM you're getting e t F s. It started in Canada. Now we have the future z E

t F here in the US. And as regulation increases, the question is are we're gonna see UM more of these products that UM retail investors can get into that institutional investors are going to adopt and accept. And it seems like the answer is yes, at least thus far, and will continue to cover it for you. This is Bloomberg. Let's get over now to the founder and CEO of a hiring firm that always gives us such incredible insight around UM. These data points we've got, of course, the

non farm payrolls number. It was an addition of five thirty one, which was better than anticipated, even better than the whisper number, and we got um wages up four point nine, almost as much as inflation. So that's pretty good news. Tom Gimbal joins us out of Chicago. Tom, let me get your take first off on the participation rate, because this is the big problem. Everything else looks great, but for some reason we can't get this all important

participation rate number. To Budge, it's at sixty one point six. We were hoping to get it up to sixty one point seven. What is keeping people out of the labor force.

My belief on that is we still have the kids problem with UH, not the you know, now it's changed with the approval from UH the abillity to get the kids the vaccines, but with kids in school not having the vaccine, you still have parents that were on the sidelines making sure they could be home with their kids if something happened with COVID in the classroom or their kids got COVID to make sure they were there. As

COVID goes down, participation rate will increase. It's very confusing, right because on one hand, you're we're talking about kids in schools, but education was also the big laggard in

terms of hiring here. What was going on? Well, I think education is is always interesting when you have the schools and the classrooms, you've got people that have moved into different areas, and and teacher hiring will go in when there's when there's a baby boom so to speak, that that we don't need excess hiring in that area right now. And there's been uh, for lack of a better word, of glutt of teachers on the market for for a decade or so in that capacity, and it's

it's not going to be a big change there. Where we really want to see the change is in travel, in hospitality and the service sectors. And that means that the world is getting back to normal. And when you see a job's number like five one thousand jobs uh last month, you got to look at it and say, this thing is working. And political affiliation aside. This is without an infrastructure bill getting passed. This is based on

the decline of COVID, This is on the vaccines. People are getting back to work, companies are continuing to hire, record profits, stock market, we are in a really good situation coming out of the pandemic. Well absolutely, and then we get this blockbuster news from Fiser. They have a pill that they claim, at least in clinical trials, UM reduces hospitalizations and deaths in high risk patients eight nine. Now, if that's the case, Tom, is that not a game

changer for the U. S. Economy? Oh, it's it's like getting cholesterol medicine, you know, fifty years ago. I mean, this thing is legit. And when you get that in clinical studies that it's that big for people who have disease, older people, You've got a real fight here to do that. Now that the challenges if that is what people gravitate towards, and it doesn't allow people to keep getting the vaccine because they go out, I'll just take the pill and

it doesn't have the same effects. I think the next thing is going to have to be for the CDC to roll out how the pill works in conjunction with the vaccine, with the booster shots and where things are moving. But with more and more companies coming forward and being a vaccine only environment, you're seeing the last uh, the last straw to fall, so to speak, that people are going to get the vaccine so they're not missing out on opportunity. I'm kind of curious about this tension between

vaccine mandates and workers. You know, in this Goldman study that President Biden, Marty Walsh has all pointed out. A point that Goldman makes is that point six percent of healthcare worker has left their jobs following employer vaccine man dates. Now, that's not a terribly big amount, but it is still an amount. So how do you see this tension starting to continue to play out? Well, I think there's tensions

across the board, and I think it's it's interesting. Right, We've also got a situation in the labor market where the administration is saying we're going to give bigger tax breaks to union organizations for electric vehicles the non union organizations, and I think that's what happens. We have a Secretary of Labor who is so union friendly and that's how they got got elected to be political office in Massachusetts,

and that's where the legislation is going. So I think we actually have an intersection of where the rubber is going to meet the road right now, with the election of the Republican governor in Virginia followed by the strong jobs numbers, is going to say people want moderation, they want respect in the in the community. If people leave the healthcare field, they didn't leave because they love the job and they were upset about it. They left because

they don't love the job. And then there was the mandate. Right, people don't quit abs they love because they don't want to. They feel their civil rights you're being taken away. People quit jobs they hate and they use that as an excuse. Yeah, it's it's it's a it's a pretty good um, it's a pretty good theory. I think I'm gonna go with that. There was just there was a statistic. There was a statistic about the year and a half ago and no, two years ago, before COVID, and it said sixty percent

of the workforce is disengaged. Okay, that was before COVID, before remote work, before everything else. Oh, now, all of a sudden, you can work from home to three, four or five days a week. Now you're engaged more. I don't think so. Now you like the fact that you don't have to commute more, You're not more engaged in the job. And that's the problem is we still have people doing jobs out of necessity, which is what they're passionate about. And those are bigger, deeper, societal is amen.

Brother Tom great. Always great to get your take. Thanks so much for joining us. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller N seventy three and on Fall Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio