Jobs Day, Markets, And Hiring (Podcast)

it was pretty good. I'm sticking with it was pretty good, and maybe even better than pretty good. But let's talk to somebody who does this stuff for living. Julia Pollock, Chief economists for Zip Recruiter. Julia A give us your take on the job's number today and then be maybe even more importantly what you're seeing in your business as Zip recruiter. This was a most encouraging report, like the Goldilocks of jobs reports, just great broad games, huge games.

I mean the twelve months average job game now the net growth and jobs each months and five D forty five thousands that is huge. Is three times the average job beating twenty and twenty nineteen. So big, big, big numbers. Broad growth across the economy and then exactly what the FED wants to see, you know, the boil coming off wage growth, a little bit slight cooling there. Yeah, I was gonna ask, where does this put us on sort of the soft landing narrative when it comes to the

economy and the Fed. So in twenty nineteen, we saw that we could get rapid wage growth and real rapid job growth and real wage growth without inflation. And what we and the reason we could was because labor force participation was going up. What we want to see now is labor force participation rising and recovering, and that's what this report shows is happening. We got a good solid recovery among prime age workers and among workers over the

age of fifty five. Laborce percipation is fully recovered among teens and among prime age workers almost um and it's still down, you know, three point five percentage points among older workers, but it is trending in the right direction. Some of those workers are unretiring and coming back. And then of course immigration is finally resuming as well. You know, there has been a huge backlog of legal immigrants waiting

for their visas. UM staffing agencies that specialized in finding nurses from abroad, for example, have long, long, long lists of candidates who are lined up with the mortar waiting to come in, waiting for those those documents. And finally we're seeing that pick up as well. So the labor constraints that have been holding back job growth and that has been fueling this massive wage growth and possibly inflationary wage growth UM looks like it is easing. We're seeing

labor force patization recovering. That is really great news for employers. It's also good news for the fits. Yeah, I agree that the numbers look pretty solid to me. UM, We're starting to see a couple of companies, most notably today Tesla talking about you know, maybe laying off some people, you know, pausing hiring. We're hearing that from some other tech companies. What do you make from that? I mean you, you guys are a recruiter. You are absolutely on the

front lines of day to day hiring. What do you make of some of those new stories? Well, this is what's so interesting. So everyone reads about tech layoffs, yet job postings overall are growing and growing fastest in the tech center in sector. So uh tech and I T jobs are soaring in our marketplace. And what you hear right now is the sound of talent acquisition teams and HR departments rapidly looking up workers at Tesla on LinkedIn

and reaching out to them to recruit them. Uh So, anytime a tech worker is laid off, there are lots and other companies, not just in the tech sector. Uh you know, in retail, in government departments, all of the place. Everyone now needs to collect the store and analyze data. Everyone has a website, everyone has an app. There tech jobs throughout the economy. Demand for those workers and those skills is white hot, and it remains so. But just sort of falling up on the point that Paul reis

that we did just this week. I feel like just a barrage of news when you think about Tesla today, but you also had Gemini and coin Base yesterday. A lot of this is concentrated in the crypto and the

tech industry, it seems like. But do you think that, I mean, that is some sort of uh, I don't know, foreshadowing of what's to come with the labor market being that it is so hot, and I mean we've heard from Powell himself that the unemployment rate is probably unsustainably low right now, so the unemployent rate will probably trend

even lower for a while. Um. Yeah. Economic models show that if you were to bring inflation all the way down to two percent right now, yes, that would require pushing unemployment all the way to six percent, right So that that's what's in the back of people's minds that the set has said it's going to cut inflation, and

what does that mean? That would mean cooling demand uh somewhat, um, unless labor force participation recovers really rapidly, and supply chain issues ease, and all of these other unforeseen factors that that have contributed to this crisis kind of uh magically

miraculously uh subside. So I think that's what everyone's hoping, that that the you know, the sort of adiosyncratic issues that led to massive oil price spikes uh and food price spikes, that some of those will will ease in the coming months, uh, and then that uh labor force participation recovering will sort of cool the pressures in leisure, hospitality and warehousing and transportation UM and and this service sector.

So joy I mean on that labor force participation rate about thirty seconds left it's sixty two point three percent. Where would you like to see that? I mean, I would like to see that go all the way back up to where it was before UM and and higher or what we saw and where is that sixty s four percent? I believe um and UH we we could actually what we saw amazingly in nine was that conditions

were right for people to find work. More people entered the lave market and UH and so we know that there is actually more UH fuel in the tank in the lave market. Right, Good stuff, all right, Julia, thank you so much for joining us. Love getting your perspective there. Julia Pollock, chief economist at Zip Recruiter. And I think it's like when I talk to my kids are in their twenties, Zipp Recruiters like a big go to in addition to Lincoln, they talk about Zipp Recruiter all the time.

They also have a full push on advertising. I feel like I hear them a lot on podcasts right now. And we're checking with David Beat's managing principal and senior portfolio strategist at the UH. I guess I don't know a Gladstone Bank, Peacack Private Wealth Management. David what's the name of your firm to stay? I you know I grew up it was Pepack Gladstone Bank. What are you calling it these days? So that's the parent company, p Pack Gladstone Bank, and we're in the pepack um kind

of private wealth management decision. Alright, good stuff. All I know is David Dietz has been covering these markets for a long time, folks, so when he speaks, he comes with a lot of perspective. So day, we had some good jobs data out today. Um, the economy seems to be in pretty good shape. How are you guys thinking about things? So the number one concern right now is this stagflation concern, the concern that inflation continues to be a problem, which keeps to Fed vigorously hiking rates, yet

the economy is starting to cool. So, you know, the job's report today, I thought it as a bit mixed. I mean, I guess the good news from an economic point of view is we got more jobs than expected, although they did reduce March and April. The problem is it's not enough for the Fed to say, gee, maybe we'll be taking a pause in our rate hikes come September. Um, you know, the good news I suppose was that the hourly wage, uh conversation increases. We're a little bit better

than expected. It was three tenths of a percent. But still, you know you multiple times twelve you get three point six percent this country, this fed I don't think we'll be satisfied with three point six percent. Inflation is the end target. And you brought up seculation, and I want to stay there because it seems like it's a very loaded term. And when I talk to people about sex fleation, they always point to the labor market and tell me, you know you you do, you don't have sex flation.

When the unemployment rate is at three point six per cent, do you agree with that? Well, I mean that is a very good number historically, that's full employment. Um, so you know, from the inflation perspective that suggested it's still going to be upward pressure on wages. But here's the here's the problem. The unemployment rate is a lagging indicator. People only companies only higher after the business conditions are good. And now we've just heard from three blue chips this week.

You've got JP Morgan in the form of Jamie Diamond, You've got Microsoft, You've got Test flow, with Elon Musk suggesting that business conditions are the weekend, that there are reasons for concern. So you're looking forward here and and things don't look so good, and you know, of course a stock market investors need to look forward, all right, David, The SNP is beginning June where it started in May.

I mean I could have just stayed on the North and South course Canoe Brook for the entire month of May and not missed a darned thing. What do we do from here? What are you telling your clients? So you can't time this market? And we do know. The reason that we have such a good week last week was there was some suggestions from Jerome Powell that the economy does matter to him, it's not just about inflation.

And we had a great week last week, the best week since two thousand twenty this month and this week has has been cooler. So we say stay in the game, don't try and time it, but do shade into areas that certainly are cheaper. Um that for us is smaller companies. Small cap value was a no brainer. Has done better than the market this year, but now small cap growth has come down cheaper than the overall market cheaper than historically is the case, and so that's an area to

look at. We still like energy. We think that there's gonna be a lack of new production, but the demand of course continue strong. Financials. You've got the Bank of American JP Morgan both down. Historically they do better when interstrates move up. So those are some areas to look at. And I want to get your thoughts on something else that happened this week because Wednesday, June one, it was

the official start of quantitative tightening. So the first actual quantitative tightening will happen on June fifteenth, that's when fifteen billion dollars of treasury securities are actually set to mature. But still June first an important symbolic date. What do you expect to happen? Because there's not much of a blueprint here for how quantitative quantitative tightening plays out in

the market. Uh, is this whole priced energy? You think there's more volatility to come, Well, we're certain there's gonna be more volatility, so you know, having uh, having the monetary tightening and taking ultimately about two trillion of bonds off the Federal Reserve balance sheet and braining liquidity that's the negative. And then there's the question, of course, to what extense priced in we're suggesting as priced in and

some of the smaller companies. But you know, my concern that people are talking about it is though it's gonna be on autopilot every single month for the next two to three years. That's just not the case. I think this FED will be data dependent even about those objectives. And if there is some sign that they're weakening, that we're gonna go into a hard landing, I think they can put that on pause as well. So, just like the the federal reserve rate hikes, even the quantitative tightening

is subject to debate. I think every month, Hey, David, you know, I'm looking at the uh I end go function on the bloomber Truma gives me all these great in the see data, and I'm looking index data, and I'm looking at total corporate bond returns in the US year to day. It's down like twelve or something. I mean, it's just brutal in the bond market. Is now the time to you know, kind of lean into the bottom market, as you kids say, you we're getting more constructive on

the bondo market. I mean when you look at history, you down twelve and let's say the first four months. If you analyze that, you're gonna be down what close to three times that for the full year thirty six percent. That's not gonna happen. So we think at some point that kind of levels out here. Obviously you're getting more income now than you did at the start of the year, and of course, to some extent is due to a little um some concern over credit quality starting to creep in.

Most of it has been concerned about with you know, higher benchmark rates and the treasuries um and inflation so forth. We don't think that that's just going to continue in a straight line. So we would be looking again to hold on to some high quality fixed income. And of

course most people are worried about the stock market. If the stock market really starts to weekend, where are people going to go now with the higher income, I would suggest it would go back into bonds, including corporate bonds. And so you still need that in order to head your overall portfolio for your long time term goals. And I'm happy you went to bonds because that's what I want to ask about sort of the thinking about portfolio allocation bonds versus equities. I was looking at junk yields

for example, They're close to seven percent. Uh, that seems pretty high. It was closer to eight percent about a month ago, but still pretty high. You compare that to equity returns. How are you thinking about sizing up those two asset classes. Well, certainly junk bonds are more attractive from a yield perspective than to start of the year.

I do think it reflects some concerns that we have a hard landing, that there's the risk of recession that's increased, and you know, the question is is the compensation enough to offset that increased risks? So, you know, I think it goes back to your overall portfolio. To the extent you're leaning towards stocks, we take a light approach to junk bonds because you already got a lot of risk in your portfolio altility due to the stocks, and they

may also give you a better at tack outcome. To the extent you want to hedge recession risk in stock market volatility, we would stick with the high quality bonds because those are the bonds of people are gonna run to. Wouldn't um again go back to two thousand, two thousand nine, junk bonds did not hedge equity risk. And although we're not predicting anything like deaths going forward, if it does happen, you're not gonna want the junk bonds, all right, David,

thank you so much for joining us. David Diet's managing principal and senior portfolio strategist at Pepeck Private Wealth Management. Appreciate get David's perspective on these markets. Let's check in with our next guest right here, Jonathan Hurdle. You call him John Hurdle, Executive Chairman Hurdle, Callahan and Company. Hey, John,

thanks so much for joining us here. You know, I guess the economic discussion that certainly we've been having here a Bloomberg Radio TV over the last several weeks, if not longer, is some kinds of the stagflation recession. Um, we've gotten some pretty good consumer eight to recently we had a pretty darn solid jobs number today. How how do you think about the economic outlook is as you

guys think about your portfolios. Well, it's nice to hear your voice again, Paul, and thank you for having me on. I think economic forecasting. John Kenneth Galbreath said that it's the main purpose of economic forecasting is to make astrology look good by comparison. So you know, there's a lot of lines about that, and it's so accurate and that's

why there's so many humorous lines. Another one is if you you know, got a every economists in American lined them up head to put, that wouldn't reach a conclusion. You know, so it's clear that the economy is weaker than it was. Whether we're going into a recession or not. Only time will tell. It's really actually impossible to predict number one and number two. It's not binary. So a recession is one thing. How bad is a recession? You know,

a soft landing. When I was in the service, we used to talk about any landing you could walk away from was a successful one. So is it perfect? No, But given the work, you know, interest rates in the world, will stock still be attractive if earnings are still okay? You know, the aggregate economy is weaker, but great companies continue to succeed, and relative to bonds, the stock market still looks attractive. So you know, we think it's impossible to predict, and we don't spend a lot of time

trying to predict that economic scenarios going forward. At what point would bonds become attractive Again, Well, let's uh, you know, investor by investor, But right now, clearly the tenure treasury is still substantially negative, Katie. Um, if we take away inflation, we're really losing purchasing power every day, and so the interest rates have risen a little bit because so has inflation. So the net effect is that the real return on

bonds is still unattractive. That doesn't mean you shouldn't own some short term fixed things as just an insurance policy against volatility and an opportunity some dry powder in case you want to spend some money in the market. Yeah, Jonathan, you did. You mentioned your service. You served in the the United States Marine Corps two. So I'm guessing, uh, you're

taking a particular interest in what's happening in Ukraine. But from economic markets perspective, from a fund of you know, flow of goods and services perspective, from an inflation perspective, how do you kind of incorporate that uncertainty, uh into your outlook? Well, these exogenous events are always unpredictable, and so when you're looking at markets. You have to. You can't have a market that's priced to perfection, which we sort of did coming into the year. In other words,

the market wasn't that high relative to bonds. But this sort of scenario was that, you know, we're changing the world with secular growth companies, great tech companies. Interestmates are going to remain low, so we can have aggressive federal spending because if things keep going just as well as they've been going, we can afford it. So there's this a notion that is, as long as everything goes long

perfectly smoothly, will be fine. Well, when you start to add more things that have to go on perfectly smoothly, that's what we mean by price to perfection, and all of a sudden something happens like uh an invasion of Ukraine, like this, you know, lockdown in China that really make the supply chain woes even worse that we're created initially by COVID, and you've really got a situation that that stresses the market. So this notion of exogenous shocks always

ought to be factored into one's risk calculation. So where are you finding opportunity if you look at the equity market right now? I mean you mentioned tech sort of priced for perfection. I mean, is it safe to say

that you're not going all in on tech right now? Well, now we're we're really First of all, I would say this, Katie, if you're an allocator, in other words, if you're a four one K participant, you really ought to be happy that the market is down as much as it is because from a dollar cost averaging standpoint, this is a chance for you to buy stocks cheaper than you did

last quarter and last year. And what you want to do over time, and and you know, the beauty of dollar cost averaging is if you put in the same amount of money every quarter, you'd buy more stock, more ownership when the prices are low. So it really enhances you return over time to be buying when stocks are low.

So from a standpoint of four one K participants or allocators, they should continue to pursue their strategy, which is, if they want to have six of their assets and stocks and it's dropped a little bit, you know, balance it back up or at least halfway back up. So broadly in the US equity market and really around the world, we still think you should be buying when at low prices and then self stop there all right, good stuff. John Hurdle, Executive Chairman Hurdle, Callahan and Company. He is

a proud alumnus underground n NBA from Happy Valley. That would be State College Pennsylvania at the penn State University. It is job staying is trial is just reporting it a better and expected print there on the jobless number today, so a better and expected UH jobs environment. We had some good UH wage increases five point on an annualized basis, maybe even some room to grow on the labor participation rate. So things are pretty good here in the US. Let's take a look at how it might be on a

global scale. We can do that with our next guest, Nicole Sahine, founder and author UH and the firm is Globalization Partners, Nicole, as the name of your firm implies globalization. Um, how's the global labor market? It's pretty solid here, as we got another data point today here in the US. But what are you seeing around the world in other parts? We're seeing exactly the same thing as we're seeing in the United States, which is the talent market for professional

skilled talent is extremely tight. So the interesting of the here I'm just wondering, you know, immigration issues, UM and the whole move took. Globalization seem to you know, taken a backseat over the last you know, four or five years, the whole concept of you know, a globalized economy. Uh, people are pulling back from that a little bit. How do you think about that? Where are we in terms of the globalization of this economy? Yeah, it's it is

super interesting. I think that the key difference here is that people no longer need to immigrate in order to have access to opportunity. What we're seeing is that the best companies in the world are going wherever the talent is. So right now we see customers who have never hired internationally before UM just hiring talent anywhere they can find it.

I mean, it's it was that way for quite some time and engineering, but now we're seeing them do that all across the board and and pretty much every role that you could do in a digital environment. And that is kind of presumably that is a result or an outcome of UM a byproduct of this pandemic. Yeah, you know, I think it's a it's a result of the pandemic and our mental shift towards the idea that anyone truly can work from anywhere instead of, you know, having people

go to the office. I think we all realized how productive we can be. And of course it's a result of the incredible technology that's come along the last ten here that hasn't enabled us all to be truly productive

from anywhere. Yeah, it really is amazing. Um. You know, I was thinking just initially of the financial services industry and here in New York City, for example, when the trading desk shut down on all the traders went home, I said, there's no way they're going to be able to kind of do what they did on these big

trading desks. But sure enough, quarter after quarter after quarter, Wall Street has delivered incredible trading results showing that their employees could, in fact, uh, their bankers, their traders could in fact be productive. Is that what we're seeing in a lot of the economy other parts of the economy as well. Oh? Absolutely, I mean we're seeing exactly that people can be productive from working remotely and from home, and people want to be able to work from wherever

they are. So I think in many ways it's great for everyone. It's great for companies, and it's great for employees, because again, we all want to live where we want to live instead of just consolidating opportunity around New York, in the Silicon Valley in London. Are we seeing employers or do you think we will see employers say Okay, you don't want to work in high priced Silicon Valley or or New York City. You want to you know, be in Idaho. I'm going to just your compensation accordingly.

Is is that happening? Will it happen? Oh? Uh so? I think it depends on the situation. I would say that usually right now, because the labor market is so tight, and because things happen so suddenly with the pandemic without people companies being prepared. Most of many of the time, companies might have tried to adjust compensation a bit, but more often than not it was just in default the employee moved. Now, I will say, salary is still set

by a location. So in general, while we are seeing compensation go up across the board quite quickly, as we've all been talking about um, usually compensation is set by geography.

But I think over the next ten years will start you know, the trend line is changing on that, but not overnight Yeah, it's interesting and I guess what we're learning from when we listen to companies on you know, when they report quarterly either more and more companies are saying this really seems to be the new reality, this being kind of hybrid work schedule, whether it's you know, a few days a week in the office or you know, a week a month in the office. Is that the

trend you're seeing around the world, I am. We are seeing around the world. Um, it really depends a little bit by country and culture. Some some locations just it's really the cultural norm to go into the office. And that was the case much more as compared to the United States, which awaits how to work. We had a pretty flexible remote work policy for most professional organizations. But now what we're seeing there's two interesting trends I would

say around the world. One is that the remote work has become one of the most valuable benefits for employees everywhere in the world. People just do not want to go into the office, um, and I think that companies that are insisting everyone go into the office all the time are going to get some pushed back. The other trend is that we're seeing we're seeing employees and locations everywhere saying I don't want an Indian salary or I don't want an Ohio salary. I want a New York

City salary. And I'm worth it regardless of what my costs and what my cost of living is. That's hugely different than it was before. Yeah, it's certainly. I think the leverage is on the on the part of the employee at this moment um. It's it's interesting, you know, I spent thirty years on Wall Street, and you know, when I think about the various firms I worked at, I don't think about really the building. I don't think about, you know, necessarily the deals we did or the trades

we made. It was more about the people that I identify with and and that was forged by being together, working together, eating together, traveling together. I do, in fact, wonder how important that is. It seems important to me now as I look back on my career, but I wonder how important that whole camaraderie and working together, the benefits of being together, how much of a risk that

is for employees and employers longer term. Yeah, it's it's incredibly important because I think you're right that human connection is what bonds us. What we're doing at Globalization partners UM is you know, with our own internal team, we are working to bring to people together on a quarterly, bi annual or annual basis where people can see each other in person. And in some cases we're getting not office locations, but locations where people can go in and

meet each other and talk. So, for example, with our Global Employments platform UM, it enables companies to hire talent all over the globe without dealing with legal HR and tax issues. Are engineers like to meet in a central location and just kind of brainstorm things out with a white board, So we're you know, trying to enable them to have those meeting spaces UM without forcing people to go to an office on a schedule, because they really do their best, you know, alone work at home by

themselves in most cases. Interesting. Well it just lastly, just quickly on immigration in this country, we still see a lot of you know, pretty much every restaurant, every place you kind of go, retail help wanted and I kind of think a lot of that those types of roles were filled by immigrants, legal and illegal. How do you think see that involving in the US. That's stuff to say.

I mean that is definitely a political question. But at the end of the day, Um, I think wages are going up, so hopefully more of those roles will be filled by people who are here. I think prices are going up, so in California, for example, did increase significantly restaurant prices. And there's inflation cost adjustments on menus, which is just a new way organizations are dealing with this type of costs. Um. Right. I think immigration is a good thing when we don't have enough people to fulfill

all the jobs that we want. Um. Highly politically charged topic. Yeah, absolutely want to see how that evolves. Nicole Sahine, founder an author of Globalization partis talking about the global labor markets. Certainly good here in the US again, good good jobs number today. 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 three and on Fall Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.