Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside my co host Matt Miller. Every business day we bring you interviews from CEOs, market pros, and Bloomberg experts, along with essential market moving news. Find the Bloomberg Markets podcast called Apple Podcasts or wherever you listen to podcasts, and at Bloomberg dot com slash podcast.
I want to switch gears and bring in our next two guests. Michael McKee, who's here in studio. He's the international economics and Policy correspondent as we know with Bloomberg News. And Alice Andre who's are us interest Rates and FX reporter with Bloomberg News, joining us on zoom Mike, I have to start with you and get your take from this morning's jobs print.
Well, it's a pretty good outcome. Put it that way. It depends on where you sit whether think gets a good report or not. For the fan, it's a good report in the sense that it validates their view that unemployment would have to rise to bring down inflation and that their rate increases would put pressure on the labor market. And it does show the labor market is loosening up. Unemployment goes up to three point eight percent, seven hundred
and thirty six thousand people join the labor force. Now, some of that is probably a senior, a seasonal adjustment issue, but it does show people coming back into the labor force, which is what the FED has also been looking for. Now, if you're a worker who's worried about keeping up with inflation with your wages, wages didn't rise as much two tens of a percent. Good news on the inflation side.
Bad news and keeping up with inflation side. And then those who didn't get jobs or who lost their jobs and the unemployment went up, it basically not good news either. So a kind of a mixed report with the numbers, but in terms of the overall macro economy and the Fed outlook, good news, Alie.
I want to bring you into this conversation break down what we're seeing in the bond market reaction to this report.
I think that overall the bond market is viewing this as a weaker report, which was as expected, but not outright weakness. I think that traders are viewing it as a moderation accelerating. But that's exactly what the FED wants, you know, they want the labor market to come back into better balance. And I think that what the bond market is saying is that this probably puts the majority of the FED participants on hold. And I think that it also really doesn't take the final hike off of
the table. And I think that bond yields are reflecting that today.
Yeah, initially it was at least a ten basis point drop in the more policy reactive two year we're back to what the down three two basis points right now for eighty three. One of the questions I want to ask, did I miss the boat on rates putting all my money in nice, safe treasuries that a really healthy yield.
No.
I think you have some time on that. Like I said, I think that people think that the Fed's going to be on hold for a little bit, and I mean, you know, rates are probably just going to trade a bit of a range, and they're definitely going to be very data dependent. I mean, that's when we're going to see big moves is on big data days. You know, probably the next one being CPI, and you know you'll
have your chance. But I think that I think it's pretty clear that the economy is not falling into recession. And I think that rates are going to stay high for a long time. I think that there's been a move in the back, you know, further out in like June and May Fed funds, and now they're reflecting that the first cut'll come in May instead of June. But
you know, it was kind of a small move. I think that the thing that you really got to keep your eye on is the November Fed Funds, and they're still pricing a very good chance of another hike coming.
Yeah, we have in this since it's Friday, we have a drinking game in the studio. Every time somebody uses the phrase goldilocks, we have another show. Is this goldilocks? Michael McKee, goldilocks? John, thank you.
I want to see you crawl out of here.
You could.
That description is being used on this because it basically is, as she said, slowing, which is what the Fed wants without crashing. I mean, the economy is still growing and we're still adding jobs at a pace above the level needed to absorb new entrance to the labor force. So yeah, things are pretty much in a fairy tale world.
One thing I'm curious about, Mike, is July had two more weekend days than June. How does that affect the wage print.
It doesn't affect the wage print. It affects it can affect ours work. But the wages are going to be based on what you're being paid in the month, in the week that includes the twelfth of the month, the pay period that includes the twelfth of the month, which is very complicated because if you get paid once a month, it's the entire month. If you get paid every two weeks, it maybe just you know, you get into part of it.
And sometimes people aren't included at all if you're a freelancer and you get unusual pay periods, which is one reason we did not see the SAG after a strike show up until this month because some of those people aren't paid on a regular basis.
Also, no coming into this, you wrote a piece on the team talking about how bonds were at risk for rally based on what potentially could happen with this August data. How do you viewed the direction of the bond market and particularly yields and the ten year moving forward in the next couple of weeks To your point, because we do have that September CPI print on the thirteenth.
Yeah, so, I mean it was a really pretty easy setup for the bond market today. I mean, all the metrics showed most of them. I think there was two indicators that was one of the S and P globals and claims was really the only positive thing for this payroll report. All the other ones were negative. All the sad reports, saw the isms, they were all pointing to a weaker report. And so the setup for the bomb
market was pretty easy. I mean, everybody knew that it was going to rally and then we were going to sell off right away. I'm sorry that, yeah, that we were going to sell off right after that. And I think that part of it is a function of what we're waiting for on Monday, and we're looking for a lot of corporate supply to come into the bomb market,
and so bond traders are just preparing for that. They're either selling because they're going to take down some of this corporate supply on Tuesday, or you're seeing issuers coming in in ratelacking. So that's part of this pullback today in prices and yields going higher as it as it moves forward. I think, like I said, we're just going to trade the range. I think that they're going to you know, bond traders are going to part and parcel
every single piece of data. And one of the pieces of data that I thought was pretty interesting was yesterday's Chicago Purchasing Manager's report, and they really don't give you a whole lot of information in the report, but what you can glean from it was that new orders and production moved from contraction to expansion. And also employment, I had heard had a very big uptick, and in fact it did slow. It did it contracted, but at a
slower rate. And so to me, that just really kind of gives the same picture of one that the economy is showing some glimmers of starting to pick up, which is what we've been anticipating, that we're going to see a big pickup starting in the second half, and that that's why people are hoarding their labor and they're just
using layups as a complete last resort. The other thing that I wanted to say is that on Monday, the Dallas SPED Manufacturing Report talked about the fact that they're going to most participants think that they're going to raise wages at a rate of five percent this year, and so that's far and above inflation and above what we're seeing in average hourly earnings, and so you could get
an uptick in inflation based on wages. Again, and most of the FED surveys had talked about this year, even recent ones, that they're just going to have to continue to raise wages, you know, first of all to keep up with the demand that's expected, but also because they just they can't afford to let go of their labor force, so they're just going to have to raise wage.
Right.
The other thing was is on that work week. I thought that that was pretty consistent with what we've seen from some of the FED surveys, that the uptick in the work week was consistent with you know, you put your workers to work doing other things on the factory floor or in your shop to keep them busy.
Right, Mike McKay final thought in twenty seconds.
Next week, number of FED speakers, Yeah, we have a number of five speakers.
We have John Williams, the New York FED President, coming in here to Bloomberg and we'll get their views. But I think this kind of unless we get on the thirteenth of September a really surprising CPI report, is probably locks.
In a pause. The FED does not have to raise. It doesn't make the case for raising at this.
Point, right, So John Williams next week. Former Fed official Jim Bullard also on the calendar, as well as Susan Collins, So Michael McKee, International Economics and Policy correspondent with Bloomberg News, and Alice andre Us, Interest rate in FX reporter with Bloomberg News.
You're listening to the tenth Can't Live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, the iHeartRadio app and the Bloomberg Business App, or listen on demand wherever you get your podcasts.
Continuing the fund. So I'm glad you gave us an update obviously on what's going on with those bond yields, especially when you're looking at the ten year as well as the two year. But who better to break us down when we're looking at what's happening in the fixed income market than Ben Emmon's head of fixed income at New Edge Wealth, who I've known for a long time, joining us to talk to It is also about how markets are responding to this latest jobs report, but it's
always a pleasure speaking with you. Let's start off with your take on this morning's jobs report and your sort of view on how this could impact the fixed income market ahead of the feed decision on September twentieth.
I just hi, John, Happy, happy, happy labor jobs day.
Right, thanks for joining us on a quieter day here heading.
Day we can. Yeah, and I'm all casual here. I'm seeing myself streaming live on YouTube. You know, anguel shared in California. But you know, let's do it. So I kind of echo Mike McKee's points, like, you know, this is a job support where if you're seeing that many people getting pulled into the labor force, which is like seven hundred and thirty thousand or so, it tells you that the that the labor market is spokeled in demand from people wanting to be to get back to work
to try to make more money. And that's good for the economy, right, that's productivity. That's actually a very positive and so it is an interesting reaction to bomb market. How the number came out, it was sort of in line the headline and then people go through the details to see like, yeah, there's loosing of the labor market here. That's what the Fed wants. So the yields on the
short end two year go down. But then as we go on a little bit in the session, you see long term indistry started a rise a little bit and it said ICEM date that just came out, which was a bit stronger than expected. But the employment component in there too better and expected as well as prices paid. You see this shift in the YEL curve with long rates going up, and I think you take the payroll support and ICM together, it tells you like, there's not
a weakening economy. This is just more people coming into labor force, so loose a labor market. But the FED is looking for. On the other hand, you know the soft landing no recession scenario stays in place, and this is why you're getting this steepening of the yel curve on both the shorter end of the yl curve and the longer hand. So that's I think very goldilocks moment.
Are called Billy And you know about our drinking game here this you're guests to say Goldie lockskepally as far as inflationary components, how much bargaining power to workers have over employers?
Yeah, they still do, John, because I think that the the weaighte trackers from the Atlanta fats still show a big difference between those who can quit their job and those who stay in the job, for example, and meaning people quit their job to try to find, you know,
better paying jobs. That's still a difference there. You also could think of that the job openings ratio to employment that's still elevated to pre pandemic also indicates right that you know, companies are still actively looking for positions to be filled, but all of those metrics have moderated from the real elevated level. So these strikes that we're talking about, and these these weight settlements that were going through currently, it does show that labor is really having control here.
Nowaw strike actually happens, it would be a negative for the economy. So it just looked like they want to try to get bargaining to a better deal. I would point that though, that this, if this leads to a real good deal for the workers, there's a little bit of that seventies idea of better than bargaining. Right, one union wins a good agreement, other unions to try to do the same thing. So I think we'll say a little bit in that dynamic one thing.
I've been thinking a lot about ben is just the ten year in relation to or the S and P five hundred is trading. So say, earlier in August, we did see the ten year peak out around four thirty three. If you looked at where it peaked out back in last autumn, it was around four to twenty two. But at that time the S and P five hundred was trading around thirty five hundred. Now it's one thousand points higher. What's the difference.
I think the difference one is just the economy in itself, just that at that moment in time we had much higher inflation and not growing as fast as you currently. This year turned out to be an economy that's just much better than last year, even though last years still looked like I guess if you came in in early twenty twenty two is a really boom pandemic economy. But in fact, actually we have a batter economy this year.
So I think that explains the thousand points differences. In addition to that, we obviously have earnings that have not gone to do any recession. If anything, they actually showed some bottoming in that fall period and they've actually moved up higher. And the projection is still higher. That makes it also the difference. Lastly, well, the thing you're topping out of at full point three and change, just like
we had this month. I think it does tell you a story about this inflation being very successful by the Federal Reserve, both on inflation and now also showing up in the labor data. I think that too expresses itself into this higher stock market, showing that one we can keep pricing, we don't have wages really spiring out of control. We certainly don't have any recession here term given the
strength of the labor market. So I think that just leads you to this conclusion that you're having a stock market being better because of a better economy.
So what's the level on the tenure that you're watching to where other asset classes would need to reprice, including the stock market depending on where it would be headed, say, would it be four to five?
Yeah, it could be. You know, it's kind of signing boss Bill grows like it was the other day on TV, and kind of agree with him, like, there's still that risk at it. You have four point five as a level where if you do break that or test set that we're getting a different situation because there's another aspect here happening. That is that the economy is strong because we were investing in the economy with infrastructure out of
projects and just business spending itself. But we're also borrowing there for a lot of money, right, and that will continue that could actually keep rates at least higher or potentially test that level of four and a half, So that we do want to watch. Despite a little bit of a rally down now from the last high, you know, just seeing it this morning, the ism data being just surprisingly a bit stronger, Price's Bay component goes up a little bit, and then you yields immediately moves up from
four point oh seven to four point fifteen. That you know, that seems like an inter they move, but it's it does signify this idea of yeah, is in the economy that stays strong, be wary of how inflation could return and higher again if it stays that strong.
So September off the table. What's in play at this point before the Federal Reserve?
I think markets John F f calculated that the Fed needs a bit more time to assess this economy. Therefore, another meeting could be skipped, even though none of the FAT members actually has indicated any of that. By the way it's it's it still seems to be much of a live meeting. Therefore, all the data that we're getting right up to that meeting will count in that decision.
But it seems that as we had several data points a bit soft on labor and inflation trending sort of sideways, that there's a possibility that the FAT said, okay, we can skip another meeting to assess a longer period of data and then make our next decision. That seems right, But we got to keep in mind that what's happening in energy markets and what's happening also with China in terms of it's all its efforts to try to boost its economy in the third fourth quarter, and on our
third quarter, GDP is actually kicking off better. And now that I think we have to keep in mind that the FAT may well use the settement meeting to hike after all.
So with the backdrop of all this, how are you advising clients to position in the fixed income market?
So most of this year just we have been a shorter duration in the index, and that proved to be the right way because I judged that base upon the economy's resilience and strength. But then you want to what I say, follow the you curve. So if it's still an inverted you curve, if we continue to see this sort of grinding loosening of the mark of the labor market and this this inflation on inflation front go on, I continue, I would think that the UK would start
to normalize. And so the real good position to be in is that intermediate part of the you curve. And then ultimately, if we do get up in a situation where employment rate is at four percent and inflation is a little lower, that you can extenduration further. So I think the intermediate part of you curve that that's what we've been advising to clients.
Hey, Bin, we only have about thirty seconds left. What's the top question you hear from your clients?
Well, how high can rates go and how high do they stay? And that's definitely on the top of mind. You know that, and I think that will continue to be a debate. You know, we don't know how high it will actually go from here, and I think that's an uncertainty going into twenty twenty four.
Well, Ben, thanks so much for joining us. Ben Emans head of fixed income at New Edge Wealth, joining us on a slower trading day a little bit.
Here, you're listening to the tape Can's our live program, Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
I want to get straight to our next guest, I mean, John, You know, we've been talking about the jobs report all morning, but I want to bring in Julia Pollock, who's joining us on zoom. She's the chief US economist at ZIP Recruiter who's going to break down some of these job numbers.
So we've gotten the sort of the service level take here from the macro side of things, but I wanted to get more of your thoughts when you're looking from an industry level in the job market, what particular corners are holding up better than others at this point.
Sure, so we've seen the job makes sort of shift back to normal, with healthcare and professional business services leading the way. This is an interesting report because it really shows you very clearly what's happening in certain industries.
We saw.
Truck transportation lose more than thirty six thousand jobs. That's largely results of yellow freight, that that business's closure. We also see signs of the Hollywood strike in this report, with more than sixteen thousand jobs lost in the movie industry. So you know, you really get a very granular look in this report at how differently things are playing out in different industries.
Okay, so what does this mean for the panther A head for the federal reservist as far as the indust rates.
So you know, I would liken this report to an aircraft sort of cruising at the perfect cruising altitude. If a plane goes too high.
You know, got you know when you say goldielocks, we that's our drinking game.
So every time I guess, so we're keeping a talent.
That's a new metaphor. I like that one.
Here's a new one exactly.
Yeah.
I was worried that perhaps the long and variable lag of monetary policy would would start to squeeze too much air out of the room and choke growth. And it doesn't appear that that's happening yet. This slave market appears to be running at a sustainable, solid pace that is not going to fuel inflation, but that is going to continue creating opportunity for workers.
We did see earlier this week, we also had, as you know, the Jolt stata that came out that did show that US job openings did decline to the lowest level since early twenty twenty one. What are you sing when it comes to some of the quit rates.
Yeah, So this report suggests that FED chair Waller was right that high interest rates would slow the labor market, but because there was so much excess demand, that slowing would come in the form of fall job openings, not of falling employment. And that's still what we're seeing. The labor market does appear to have come pretty much all the way back to normal when you look at just sort of the labor market dynamics, the quits rate is all the way back to normal. Online job postings on
zib Regruter are all the way back to normal. Jalt's openings are still high, but they lag a little bit and they may also be a little inflated for a number of reasons.
Do you see evidence there of what do we call it labor hoarding where especially small businesses that had such a difficult time at least according to the NFIB statistics, finding qualified workers. They just hanging on to the people that they have right now.
You know, there are a few industries, very unique, peculiar industries, where employers are hoarding labor that is relatively idle. The examples I could give are things like consulting companies your
Baines and McKenzie's. With the tech industry entering this year of efficiency, tech companies are not paying for management consultants to come in and run all kinds of projects for them, and as a result, you have all these Ivy League educated consultants sitting there watching Netflix with very very few projects to work on. That's a rare case in normal industries across America, when workers are idle, they get furloughed or laid off. That's not happening in some of these
organizations because they worry about the long term impacts. You know, you don't want to lay off a bunch of Harvard graduates of who are going to be future Titans of the universe and then shoot yourself on the foot come the next recruiting season. But that's a very unique situation in most of the country. I would say the country
is still understaffed. Go to a restaurant, go to an airport, you'll see lots of check in counters and very few check in associates and so long weights, low customer satisfaction. Those are still big problems in the economy. And for the most part, employment levels are below what would be predicted by spending levels and activity levels.
What are you seeing when it comes to temporary employment?
Very interesting. So we've seen a very large drop over the past couple of months, since since early twenty twenty two in the number of temporary health services employees. Over two hundred thousand of those jobs have been lost, and that typically is a signal of a recession. It's caused many of us that are leading economic indexes to suggest that we're going to we're in for a big downturn.
So how much we are potential lag would that signal? As far as looking ahead to that, like, how far ahead would that signal potential recession?
Usually it's only about three to four months ahead. But we've been seeing this indicator decline now for a year and a half, and I would argue that this time is different. The decline is a return to normal.
It is a good because of the pandemic.
Yes, so during the pandemic, companies were so short staffed that they were forced to rely excessively on overtime hours and external agency staff. Now, as they build up their own internal staff, they no longer need to rely so heavily on external agencies.
Using the ZIP recruiter data, can I tell my college graduates where to what industries to look in? Where the biggest self? What do you get when you're a philosophy major? What are they paying philosophers these days?
Right?
So there are big, big differences across college majors. We have a college grad report that discusses these in some detail on our website. It is those stem fields that are still getting graduates the biggest paychecks, computer science and all the healthcare fields. Healthcare is showing unstoppable demand for workers. There are huge staffing shortages and many different occupations there.
Physicians are retiring in huge numbers. We expect by the end of this decade that forty percent will be over the age of sixty five, and that's creating huge opportunity all the way down. So nurses are moving up into becoming physician assistants and nurse practitioners. Hospitals are having to pull out all the stops to retain nurses. They're increasingly offering training programs for CNAs and less educated workers to enter those kinds of roles.
Julia, we'll leave about twenty seconds left. What's the top concern that employers have when you speak to them.
They are still worried that there could be a downturn ahead. They're worried that the US consumer will be hit by these high interest rates on credit cards and auto loans, and they worry about the student loan debt resumption. Just around the corner, all.
Right, Julia Pollock, chief US economists at ZIP Recruiter, joining us to break down the latest jobs numbers.
You're listening to the Team Can't Live program Bloomberg Markets weekdays at ten am Eastern.
On Bloomberg dot Com.
I heard radio app and the Low Park Business app, or listen on demand wherever you get your podcast.
So this morning's jobs report seeing employers adding one hundred and eighty seven one thousand jobs in August. You also see the unemployment rate tick up to about three point eight percent, but it had been hovering around three and a half percent, about a half century low for a while here. So I want to bring in Tom gimbal CEO of Losal Network to break down some of these hiring trends and some of a kind of a deep
dive here within the data. Tom, thanks for joining John Tucker and myself this morning, especially on a slower Friday heading into the Labor day weekend. What's your take when you are looking at some of these headline numbers, because I know that the unemployment rate did climb a little bit to its highest level since last year, but is a lot of that due to more people just coming back into the labor force.
Yeah.
Absolutely, participation rate increased a little bit, which is a good sign. And we had one hundred and eighty seven thousand jobs that were added, which is good. And you got to remember the prediction was one hundred and seventy
five thousand, so we exceeded that. We're not over two hundred, but we are exceeding with the average jobs that were added between twenty sixteen and twenty twenty, which was one hundred and seventy eight thousand jobs on average, So it really signals it might not be the strongest economy we've seen in the past three years, but it's definitely not weak.
Now, I'm not going to give you an opening to do a commercial, but what does the Sound Network do.
So we're a staffing and recruiting firm for white collar jobs. So we do search for accountants, technology, sales, marketing, et cetera. And then we also have an interim or temporary staffing group placing people in those same fields.
Okay, can you gauge for us how much they're getting paid, whether it's more the salaries are increasing or what I'm trying to get a gauge of the inflationary components in all this.
Totally salaries over the past during the pandemic, salaries increased the same way you saw it on the hourly side, with Target and Amazon getting up into twenty and twenty five dollars an hour. It happened in the same thing within supply chain and marketing and HR and accounting and technology is always growing. And that continued really up until
the end of last year. And then now we're sitting at a standpoint where it stabilized a little bit, where we've seen that the employee isn't in control the way they were in twenty twenty one in twenty twenty two, where they could work when they wanted and demand whatever salary. And I think we see that by the labor force increasing and the unemployment rate going up, that companies are not in as much of a high demand as they were before.
What industries are seeing wage increases the most. I know you were talking about obviously technology and some others over the past year, but are there some less obvious particular groups there.
Well, I think it's really less about the industry and more more about the roles. You could have somebody in technology that's working in a manufacturing company and they're going to get paid more. You could have a salesperson for a technology company being paid less because all the layoffs that exist. So I think it's really more about the individual roles of people than it is about sectors anymore. And that's usually what's happened since the Great Recession is
that it's been less industry. It's been industry agnostic when it comes to the recession, and more about the individuals and the roles that are in high demand. Cybersecurity continues to be super super hot. You have healthcare that continues to be really, really hot and people that are willing to do that, whether whether it be in the on
the software and the technology side of healthcare. You know, remember three years ago you couldn't find a nurse, you know, pun intended to save your life, and now we don't have that same problem. So things stabilize a lot quicker. And I just don't talk about that as much as we do when things are in short supply.
What are you saying when it comes to sort of the work from home dynamic and some of the concessions that employers had been giving the past few years. Is there any sort of shift you're beginning to see happen here as obviously COVID begins to easier.
Yeah, I think COVID has ease. I don't think that that's really the driver anymore. And what we're dealing with now is companies that are getting out front and leading. And I think what you'll see after labor Day is more and more of companies that will be demanding people to come into the office three days a week and four days a week and the occasional five. Now they'll always be the outlier company that, in order to recruit people will say we'll let you work fully remote, but
it's going to be few and far between. And I think on the big companies, you're going to see the majority of them over sixty or seventy percent, they're going to have mandatory days in the office.
Is there a predictive capability to a temporary help employment? What does it tell us about what businesses view of the economy.
Yeah, temporary help traditionally has been a leading indicator of when temporary wages and temporary staffing increases. It's companies putting their tone in the water following a recession or a slump in the economy, and that's how they bridge in now what we've seen. There was an article in The Journey yesterday that said temporary staffing's lagging, which really lends itself to saying that the market's cooled down a little bit. I think it's really a different, different segment of that.
I think that as unemployment and participation rates increase, that companies are able to find some people on their own a little bit more, a little easier, and that's an indicator. And we're seeing that people from the gig economy are now starting to re enter the workforce, and the big one is going to be that we're still seeing, and I think this is an important indication. We're seeing tempt
to perm fees continue to be steady. And what that is means is that companies bring in people to do temporary work and then they'll pay money to buy out the agreement and bring them onto their payroll. And when that's happening, the economy is still strong because companies weren't planning to hire those people permanently, but they end up doing it, and that's a really strong indicator. And I still see those numbers as being on the strong side.
Hey, Tom, whenever you have particular economists who want to argue about a potential recession on the horizon in the next couple of quarters or just weakness in the economy, I mean, to your point earlier that you were alluding to, you still see that strength there.
What do you tell them, Well, I think the good thing about economists is they'll stick with their prediction even if it goes for quarters and years, and then they'll eventually have it happen and they'll say I told you so, even though it has been going on for three years. And I think that's not real life. I think real life is that companies are hiring people. There's jobs for people that still don't have ideal backgrounds, which tells me
it's still a strong economy. And it's not always about how much you pay somebody, it's our people willing to do the work. And you know, we've gotten to a standpoint of entitlement in the country where we've got people that simply don't want to don't want to do jobs, no matter what the dollar amount is. And that's where
the disconnect is in our in our economic society. So I tell economists all the time, let's look at the companies that are hiring and the people that are taking the jobs, and what the turnover and attrition rates are and that'll tell you real things. But that's not captured in the BLS.
You talked about the sectors. What about the regions of the country. Who's doing what, who's doing best and worst? And can you break that down?
Yeah, I think we're starting to see that, you know, some of some of the policies and the regulations on the on the West Coast is really starting to affect some of that. And we've seen that obviously the moves of companies into Texas and Tennessee and other states. But we're seeing that if there's an area of the country where remote work is being offered more, it's coming out of California companies because a lot of people don't want to pay the taxes and have the regulation there, so
we're seeing a lot more remote work there. It's easier to fire and terminate people who aren't working in the state of California. And I think the Coast sarn is as desirable as they as they once were Sands Florida. So we see a lot of uptick in Texas. We see a lot of it in Tennessee, which are you know, there's big growth areas in Austin and Nashville, and those
tend to be really, really strong and hiring. In the South, the traditional you know, I call it the SEC South from Alabama over to South Carolina tends to be strong areas for small to medium sized companies.
Tom, we only have about thirty seconds left. What's some of the top questions or concerns you hear from employers.
Oh, I think the biggest thing is, you know, we're going into an election year, so there's a lot more there's less concern thinking that DC will want to have
the economy humming going into it. But the biggest challenge that they're feeling is that of concern is if the overtime exemption salary is going to increase what they're talking about from thirty I think it's thirty eight thousand to fifty four thousand, and that'll be something that could really hurt if inflation doesn't settle down and having to pay overtime for people at entry level jobs.
Tom, thanks so much for joining us. Always a pleasure. Tom Gimball, CEO of La Salle Network, breaking down what's happening with the jobs picture in hiring.
You're listening to the tape Kenser Live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa playing Bloomberg eleven thirty.
I want to get straight to our next guest, Eddie Vanderwold of Bloomberg News. Eddie, we really appreciate your patients sticking with us this afternoon. As we just heard from President Biden, I want to get your thoughts on his comments as well as the labor market data this morning, in the manufacturing data sort of, what is your takeaway when he is talking about the resiliency here with the US economy in the job market.
Yeah, absolutely, you know what I think. I think he probably has a reason to be satisfied with some of those numbers that came out today. The non fun payrolls obviously came in above expectations and in fact above the prior month's revive revisions. Now, we did see the unemployment rate tick high at a three point eight percent, but that's partly of a reason, partly because people are coming back to the jobs market. We've got more people participating
in the jobs market. Now, we saw the participating participation rate pick up. Subsequently to those numbers, we had the PMI numbers come in, which showed that manufacturing in the US actually slow the less that was expected, and that turned the markets around. We're now seeing you know, the S and P pretty much flat on the day. But I think the real action for me is in the
bond market, we were seeing a real steepening. We're seeing thirty year yields and ten year yields rise by about seven or eight basis points, much more than at the front end of the curve. And what that tells us is that the markets are pricing out a little bit recession risk, and of course Biden will be very happy about that coming into an election next year.
I mean, talk to me about the bond market though, I mean earlier this week the two year was above five percent. Was that the last we're going to see in that or do we think that there's a potential here to kind of reverse some of the movements that we've seen over the last couple of days.
Yeah, you know what, the two years tried above couple of times and hasn't light it. I don't think many in the market think that the FED is going to raise rates much more. And really the two year end of the curve is a bet on whether the Fed is going to be able to hike at going into next year or will be forced into hiking going into next year, and with inflation doing what it is doing at the moment, which is, you know, coming down slow
and steadily, not many people think that. The bigger risk I think for most economists is that that the that the FED will have to cut that they will be forced into cutting because inflation slows. But at the same time the US goes into a recession, you're seeing the market, the the the you know, main street starting to shad jobs.
But we're not.
Seeing that at the moment. What we're seeing is that steepening. And we're sitting now with about about seventy basis points of inversion between the two year and the ten year points on the yield curve.
I want to get your thoughts on China, world's second largest economy here. You know, there's concerns about some of its flagging growth, but is some of the disinflation that's happening Is that actually in favor of the FED in maybe some other corners of the global markets here as far as when you're looking at these other central banks that are still trying to fight inflation.
I think China has been an exporter of this inflation, right. I think this inflation that we saw there is feeding through into goods that we buy here and therefore also into services and also into wages. But I think it's wider than that, right. I think it's more worrying because if China is slowing, that's because people across the world is not buying their goods, right, And if we're not buying their goods, that means that we're not spending money,
and that's a recessionary flag. Now they've been slowly and steadily they've been you know, people were hoping for this kind of big bang stimulus in China. Instead they've been getting fairly small measures. But somebody the newsroom said to me earlier today that maybe those small measures are starting to look like a machine gun.
Right.
They're delivering them over and over and over. Every day that you come in there, there's a little bit more stimulus. So maybe it's not a Maybe it's not a bazuka. Maybe it's a machine gun. But the market's starting to pay attention and we are starting to see, you know, Chinese stocks doing slightly better. They still have a lot of trouble in their property sector though.
Yeah.
I mean every day you come in, mortgage support here, tax breaks here, stocks support here. I mean, just very quickly, we all have about twenty seconds here. But do you see more of a risk that China of China contagion than the markets are pricing in?
Just yes or no?
Please?
I think probably yes. I think China. If China slows down significantly, that's going to be a problem for the rest of the world, right well.
World's second largest economy behind US and of course Japan third largest economy. Eddie, thank you for being patient sticking with us. We really appreciate Eddie Vanderwold of Bloomberg News, of course breaking down what we were seeing with the obviously the jobs picture, and then on the back of those comments from President Joe Biden.
You're listening to the tape kens our live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station just say Alexa playing Bloomberg eleven thirty.
When you are looking at what's happening with Amjen as well as Horizon, so Amjin can move forward with its around close to twenty eight billion dollar takeover of Horizon Therapeutics after the FTC did say Friday that it accepted a binding settlement that the combined company would bundle would not bundle together two of Horizons blockbuster drugs. I want to bring in Jennifer Ree, senior litigation analysts at Bloomberg Intelligence.
She's always on top of all things when it comes to when it comes to actually stories and deals like this, joining us to talk about this FTC settlement on this Amgin Horizon deal here, Jennifer, thanks for joining us this afternoon, walk us through what this means moving forward with this deal.
Well, thanks for having me. I mean, I think this was a really smart move by the STC. To be honest, they have sought a way to try to slow down consolidation, particularly in the pharmaceutical industry, and I thought, I think that they thought, you know, this is a great opportunity with this merger to try out a novel theory, try to push the law out to make it easier to block pharmaceutical deals, and to try to go to court to get a judge to stop this deal using kind
of a novel theory. And what that theory was was that those two blockbuster drugs of Horizon that you just mentioned, one for chronic gout and the other for I diybory disease, would be in Amgen's hands. Amgen would be able to maintain the monopolies for those drugs because it would bundle it and provide rebates for those bundles with other blockbusters drugs that Amgen already has, and it could do that better than Horizon could on its own, and it would
lock the future and of other drugs. And here's the thing. That kind of theory could almost be used in almost any pharmaceutical deal. So it was kind of a big deal for the industry. So the fact that it's settling is also a big deal for the industry because it shows that the STC kind of backed off that theory, which really is a broad theory.
Okay, but dig into the details a little bit for me here. So Tapeza and christis right, apologies. Does how does bundling an agreement not to bundle those drugs accomplish this purpose?
So the idea is that they if engine provided really seed rebase let's state of pharmacy benefit managers or insurers to bundle those drugs to put it on a drug formulary. What that would do would be to block out other potential up and coming new FDA approved drugs that can compete with those two. With christecks that I can't say it either any other drugs.
It's always avousible, you know, they always are.
I don't know why they named drugs with they really do.
But the idea is that if there are other innovators out there trying to come up with a drug or get FDA approval for a drug that could treat the same condition and potentially bring prices down across the board for drugs that treat those two conditions, that they really wouldn't be able to get into the market because these bundles rebates would be too enticing for the pharmacy benefit managers to they'd have to accept them, and to accept them, they'd have to put the horizon drugs on the formulary
and not these competing drugs, And so the competing drugs can't get into the market. They can't get in a foothold. So if Amgent can't bundle them, it opens up that avenue. It takes away that blockade, right and if it allows for the possibility down the road for other rivals to try to come in and compete against those two drugs, who.
Do you consider to be the biggest rivals at this point for them?
You know, I think that's the most speculative part of this entire law. They're really they really couldn't really name any I mean, now there may be in phase three or phase two somewhere along the FDA process, some rivals, other analysts would be better off, who know what's going on in the biotech space to speak about that. But here's the thing. It was so speculative because the FTC couldn't really say, hey, X drug or Y drug or ABC company has something coming soon. They couldn't do that.
It was really speculative that maybe down the road, maybe there will be something that might compete and might not be able to So it was a tough theory for the FTC to try to win in court. And that's why I say that it was probably a smart thing for them to do to get this settlement instead.
Yeah, I mean, also, what do you think that this says about the broader FTC task here? You know, we had Black Knight Ice dropping the challenge there yesterday as the FDC's realize that it's run up against the wall, you know, I sort.
Of think it has. I think the FDC got a little bit tired of losing. You know, they lost two big merger challenges that were really well publicized that was a challenge to Meta trying to buy a small virtual reality company called Within, and then Microsoft trying to buy Activision. You know, these were really well known, kind of sort of spectacularly public court losses, and I think that they pulled back a little bit. They have been very aggressive.
I think they do want to continue to be aggressive, but maybe they've pulled back to think about, Look, we can be aggressive, but maybe we need to pick and choose our challenges to deal just with a little bit more discretion, because when we go into court with a really tough theory, particularly if you don't have the evidence and the facts to back that new theory that you're asking a judge to accept, you know, we're really there's a good chance we're headed for a loss and we
need to get a win down the road. So yeah, I think it probably show is that the STT is going to exercise a little more caution and going forward with respect to challenging specific types of deals.
Jennifer Ree, senior litigation analysts at Bloomberg Intelligence, Thank you so much for joining us.
Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple podcasts, or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller nineteen seventy three. And I'm fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio