Jobs, Tech Layoffs, and Baby Formula

in in regal Jeff. I don't know what your forecast was for the job's number, but good morning. I can't imagine, Jeff, he has five seventeen thousand dollars in your model five seventeen thousand jobs. I had plus two twenty three. I'll admit that, so I goes a little above consensus. But wow, this just blew me away. I think my initial reaction was, wait, what exactly is that an error? I mean, I love

reports like this. It completely up ends the narrative I've been getting from clients and colleagues, you know, the talk of an imminent recession. Uh, it's hard to find something that I don't like in this job's report, it's hard to I guess what I've been saying, maybe just because I don't know. It's tough to forecasts of recession when

everybody's got a job, isn't it. Absolutely? I mean, at the end of the day, when we look at things, if if people are employed, they're working more hours average, I only earned is still growing at a pretty decent clip, plus over four percent year on year. Uh, that's your spending power and to consume the economy of seventy consumer. So ultimately you can't be too barished in that situation. The time where we would get much more bearished would

be if aggregate incomes are dropping. And you know, that's what you saw before two thousand and eight, and we're not seeing that here in this data. So I mean, what does it mean to the Fed? What does this mean to Jerome Powell, who like doved out on Wednesday, Well,

it kind of explains a lot. Like he strode out to the podium, right, and he and he was getting pushed back right for some of the reporters, and he's like, okay, you have your forecast, I have mine, all right, we'll see And he was sort of you know, he and pushed back heavily, and the market took that as devilishness. But you know, now that you see this data report, it's like, oh, okay, yeah, he has his forecast and he they said ongoing increases, So a couple of more

rate hikes get you up over five. I think with this data that's a slam dunk. I mean, so he was he kind of knew, Um, the economy is so strong, we're really going to continue. We'll say we're data dependent so we don't freak the markets out. Yeah. I mean, I don't know if you had this in hand, but I'm just saying, like, now in retrospect, it seems much more like, you know, he didn't need to aggressively push back and try to you know, try to lecture anyone.

He's like the way of one other question that I'll put to you, uh, Jeffrey Um, as an economist, how accurate are these jobs numbers? I mean I have heard that there is a margin of error of around two hundred and fifty thousand. I haven't heard anyone say that for ten years. But is that the case or you know, in the tents, we would say, you know, the number could come out anywhere between plus one hundred thousand and plus three hundred thousand, and it would be within the

realm of possibly that would be accurate. So there are pretty pretty decent error bars on this UM. But you know, they revised these things annually. They mark them to tax uh tax rolls. So I think this is uh the as far as the economic data goes, this is pretty solid. I'd rather relye on non foreign payrolls than purchasing manager and disease, you know, surveys like that, So I think this is I think this is pretty good. All right, Jeff,

thanks so much. We appreciate that. Jeffrey Cleveland, he's the chief EOS economist of Payton and Regal. Our C suite conversation today, Matt Calkin, CEO of apien UH joins us to talk about his company, talk about tech, talk about the tough year two that was for tech stocks. UM. Matt, thanks so much for joining us here. Apien nasdac happien ap up on your phone, okay, cool? Appien app N is the ticker to put into your Bloomberg terminal of the stock trade on NASAC. UH. Just give us the

thirty second kind of elevator pitch. What is apping? What are you guys doing? Where do you play in this tech stack? Sure it's good to be on. Hey, we do process automation. Process automation means that we are organizing a process from the very beginning to the end through an organizations. You plant, you program it, you automated, you execute it, and you revise it. Everything to do with the process, and that's that's how organizations make the changes

and automate the behaviors that they do. So processes are really central to the way large organizations behave and automation, well, that's just uh, that's just when software helps you do the work. Usually software is kind of a tool, like if you use a product, it's helping you. But automation is when software literally does the work. So we're talking about artificial intelligence, robotic process automation, tools and rules that

allow you to delegate your work to software. So, uh, last year was tough for tech companies and as we've been saying, there's a real turnaround this year. Stock is no different. It just goes up and almost a straight line at the beginning of this year. What do you think has made investors reconsider was it just like tax loss, harvesting and December that they're coming back to buy now. It's kind of funny. And I heard you talking about Apple a moment ago, and I think the same phenomena

is happening across the tech sector right now. We're seeing the prices have been driven more by mood than by the underlying value of the organizations, and so Apple can deliver a result which you could question, and yet the stock is up and Appen stock has been rising on well, not very much news, and I think it's just an alleviation of some of the mood that's been holding holding

stocks where they were. So give us your sense of kind of what you're hearing from your customers in terms of how they view kind of their their tech spend. Here there's you know where it definitely concerned about a recession in the general economy in twenty three and what a discussions you're having to your clients about what they're

doing with their tech spend. Yeah, that's right, Well, there is concerned about a recession, and I think that particularly when there's a recession, that the high rates to come with that are a weight on tech stocks, particularly because so much of the value of the tech stock is out in the distance, so you have to depreciate it according to whatever interest rates do you think we're going to prevail. We see customers right now trying to moderate their risk, trying to plan for change, and and also

they're worried about productivity in the labor market. There's a lot of volatility right now in that and of course we've got this big job's number just recently, but we don't know where the labor market is going. We don't know about the supply of jobs right which is how many jobs the employers are willing to create. But we also don't know how about the supply of labor, which has been unusually volatile since COVID, and it's still up

in the air. And we don't know about the productivity which may change post COVID, according to people working in a dispersed way or people being augmented by other technologies like AI. AI is a huge topic right now here. Everybody talking about it, and I think that the last cold months has been a unique to break through in the history of this technology. It's it's still a demo, honestly, it's just a really good demo at this point, things like chat, GPT and UH and Dolly are showing that

AI is extraordinarily powerful. And the other shoe that's waiting to drop, that everybody's asking about talking about is when will this move human productivity numbers? When are we going to see this effected businesses instead of just just a great demonstration of its power. When is it going to be truly meaningful? Uh to the to the income statement and and it's coming. So when will it beat you at a board game? I can do it already had a good really, so listeners may not know, but Matt

is um. He's authored several award winning board games, and he's often the top finisher. Have you won the World Board Gaming Championships? My best finish was third? Okay, So, but there's there are apps out there that can beat you and complicated I mean, is there AI out there? Excuse me? They can beat you in a complicated board game at chess or go absolutely and I think at poker at this point there and then much better. And

it's the other games. The only reason why it can't beat me is that no programmer has bothered to put the time into it. AI at this point is exceptionally good at systems in which the rules don't change quickly, like driving or playing chess, or interpreting a photograph to see how much damage there is to your car or whether there's a kitten in the picture. AI is really good when the rules don't change. The only hope for us humans is that that that the rules in our

world change pretty fast. So, Matt, you've got we've got just thirty seconds here, But are you putting this to work at Appian? Are you using AI as well? Oh? Absolutely absolutely, we were already integrating uh chat yv team. We've had a AI for years, particularly for interpreting documents, but it's one of the core things that our customers are asking of us now. All right, Matt, thanks so

much for joining us. Really appreciate it. Uh, Matt Calkins, He's see you on founder of Appian, the nastack symbols a P P and plug into your Bloomberg terminal. Uh, really interesting company. All right, let's get back to the uh. The job's number, the payroll number again, the raw number, the top line number, seventeen thousand jobs added. That gets your attention. Unemployment rate down the three point four percent, another headline number, that gets your attention and average hourly

earnings up four point four percent. Let's break it all down like we like to do when we get these numbers with Tom Gibble, founder and CEO of Lasal Network. Lassal Network is a national staffing recruiting firm. Uh, Tom, just blow out numbers. Help us find some perspective here. Everybody's wrong and nobody gets it. My man, there you go.

What what did you take away? I took away that the economy is extremely healthy, and I think what you see with the stock market going down is that what everybody knows is that the Fed's gonna raise interest rates. And what nobody's saying is the Fed's gonna raise raise interest rates because they can because the economy will tolerate it. Because this economy is is so strong with labor and jobs and wages increasing that companies can afford to borrow

money and actually pay for it versus zero percent. And I think that raising interest rates is making up for what wasn't done during the last decade. And we've got a really strong economy. So you go back into Oh

recession was based purely on academic analytics. Analytics of two consecutive negative GDP quarters, but you were comparing it against the best year ever, because it was compared to the worst year ever, And so you know, we're really just at a really strong standpoint and a half a million new jobs is awesome, And does that seem in line with what you expect to keep happening? Are we I mean, maybe we won't see five hundred thousand again, but are we gonna keep seeing two D three D over the

next coming months? Yeah, I think you're gonna see see you know, two hundred thousand, give or take, meaning you know, maybe you have one fifty, maybe you have to fifty, but but I think on average will be will be in that that two area code. And I think that the point of that is saying that small and medium sized companies, which everybody has always said drives the economy

and it drives hiring, and now it really is. As we see big tech laid people off, and we see some other companies lay people off, and guess what we're gonna see over the next six to nine months. We're gonna see the beginning of the infrastructure package, and there's gonna be those jobs that are gonna becoming good. So I think we're gonna have a relatively healthy twenty three

tom Any regionality to the labor market here. Sometimes you know, when you see you might see the Sunbelt do better than you know, the Rust Belt in those types of things. Are we've seen that this time around. Yeah, I think we're we're we're getting We're continuing to see the rise of the of the of the Southern states from Texas to Florida and everything in between. And you're seeing you know, big tech in California and and letting people go in

that way and where the laws are. And I think we'll continue to see the evolution of Red States in the service level economy. I think we're gonna see, uh, really a growth in in in cities like Birmingham and in that Raleigh, Durham and that Charlotte. You're gonna see Miami continuing to get great. I mean, I'm seeing more

and more companies that are doing hiring in Tampa. I think you're seeing that evolution that that those cities in those in those Red States are are going to continue to be where companies want to hire people in the service business. And what has historically been a manufacturing car manufacturing, UH, furniture manufacturing area, will we'll move into a white collar

service area. What's your take time? On wages, we saw average hourly earnings four point three percent year over year, so a slight climbs zero point from um last month? Are workers getting enough to you run on the leading placement firms in the country. Are the people you're placing happy with the pay they're getting? Well? I think I think,

uh uh. If you ask an employee if they're happy with their pay, no matter what the number is the majority and we're gonna say no. Um, it's like a divorce settlement that one party is always gonna think they paid too much, one party is always gonna think they got too little. And and I think that that's what what wages are. However, what I mean, though, is do they have enough money to keep up with inflation? Or are they having to say, you know, cut money on

their food bill or you know, drive a loss. But answer it this way and say, I think they're in the exact same boat that they were three years ago before inflation on lower wages. What we've done is is just changed the narrative. So you're making more things cost more, and before you were making less and things cost less. People are in the exact same boat as they were before. What they're complaining about is saying I should be able to do more because I'm making more money what they did.

What the layman doesn't realize is when wages rise as fast as they have, things are gonna cost more. This is economics one O one that should be taught in high school that people are now learning in real life. And that's the problem, uh in the ballot box to grocery aisle and what we're dealing with now. And I think that that's the standard situation. And I think that you're not gonna see wages increase. I I don't. I

don't think so. I think they're gonna level off. And what we're seeing with the tech layoffs is that the tech companies continue to hire. They got rid of their poor performers, and if they bring people back, they're not doing it at the exuberant wages that they were twelve months ago. Tom, you're a proud graduate of the University of Colorado. How fired up are you for coach Prime? Let me tell you something. I have not had my phone buzz more than it has in the past sixty days.

And we are not only gonna win the Pack twelve, we are gonna be an elite power five and within two years will be the playoff. There you go, and that is a sentiment. I've never seen a coach is hiring have more of an impact on an institution than Dion Sanders at the University of Colorado. So, Tom, thanks so much for joining us there. Tom is a founder and CEO of LaSalle Network. UH, big big national staffing company. And you know he's been bullish about this job market

for the longest time. Uh, and he's been right, been right. Let's get to the story that we were talking about a little bit last year. At one point, you know, you think we had so many shortages of so many products. One of the more serious ones was uh, baby formula. And at the time we spoke to Laura Modi, CEO and founder a baby formula company Bobby Uh. She joins us again today, So Laura, thanks so much for joining us here. Can you give us an update on kind

of the baby formula market supply, demand, availability? Where are we right now? Yeah? Good to charge you guys again. I look, it has been a long year. I mean, you can coin last year's formula the shortage with severe and it really was one of the most serious shortages we've had in a long time. I would say, while the shortages coming to a close, it still remains a crisis. Fundamentally. We have not addressed the problem, which is domestic supply,

domestic manufacturing. So until we both stir our domestic manufacturing practices, we may be in this crisis for a long time. So, um, what does it look like then out there for mothers who need formula? Are they able to get any formula? Is it just um, you know, high quality formulas in short supply or what's what's it look like? We're coming up on a year since the Abbot recall happened, and since the shortage started, and as of last week nearly a heard of households with the baby under one that

they still had trouble finding formula. Yes, some high quality ones and some very sensitive formulas as well. So where are we kind of just give us the sense of kind of domestic duction, domestics supply kind of where are we today? Where should it be in your opinion? Yeah, Look, this is I believe the cause of what is being just concentrated and in many ways the complacency of a

concentrated industry. Of the market is dominated by two players, and those two players have owned been conforming in the markets for over forty years, very little innovation and no competition, which has resulted in the complacency that we see today. And your company, just to refreshes you, guys, are direct to consumer. Talk to us about your company, Bobby, and kind of how you're playing in this market, which I guess a lot of us who don't have children maybe

forget how critical it is for so many families. That's r right. Look, intanporta is an essential good. This is not a typical pantry product. It's not a granola bar. When you start your baby on formula, you need to make sure that you have the product available. Bobby is a direct to consumer formula company. We also now sit

on target shows. But we have built some models that when you subscribe to if we subscribe to you, which essentially say you come in in your first month, We're going to make sure that we have the supply for you for your entire journey. And just having that model gives that peace of mind to parents this no matter how bad the shortages get, we're going to make sure

that you have your supply. How concerned our parents. We were just talking, uh Paul and I about how you know, back in the day, kids would just walk to school by themselves, but now you know, not until you're eighteen are you allowed to be loose in the city. Parents really care Now My parents just ignored me until it worked, until I got a job. But you know, parents these days are very serious about child well being in health, and so is Bobby, you know, getting taking full advantage

of that. I mean, what's what's what's your say else? Look like the sales are good? You know, we have gotten to a place now where we're serving four percent of the nonwick market in the gusts of two years. So it has been a very fast growing two years, the fastest growing formula since the eighties, and now the fifth largest formula company in the US and hard to believe. And yet I think it's also just another big wake up call to how badly the formula industry needs to change.

And look as Terence ourselves, I've made this formula because I wanted it for my own kids. We went with a better for you infant formula, clean ingredients left out the corn syrup, And you're totally right. Parents have changed their own eating habits. They're buying organic for themselves, so obviously they want to do that for their child. And frankly, the US, as the first world country, should be putting out the best intoint formula. We deserve to do it.

It's also great to have women taking control of this. I followed the she media like crew and uh, you know they're doing this future of helping at south By Southwest, Is it is? It? Is it? Um? This is helpful, this kind of networking for women in business. Yes, and you know we need to get more women behind the wheel driving businesses that represent their needs. You know, we're we're selling an alternative to breast milk. I don't believe

anyone else should be behind the wheel. And yes, I'm still the only female CEO of an infant formula company. It's insane. That's insane. It's insane. It is absolutely insane. So I'll challenge any of those male CEOs out there

against what we're doing. No, I I am very excited to see see the rise of more female founders and CEOs, especially in industry that they think and doctors right, right, because um, Laura, there are so many issues that affect women during pregnancy and as their nurse saying that are just under researched. Um. You know, and I hope that you work with doctors and and female doctors are able to do research that that male doctors for decades or

centuries haven't done. That's exactly it. I mean, up until recently, women were treated as smaller men when it came to the research side of and anything in the world of pharma and food and anything that women were consuming. Well, we now need to look at women and gender very differently, and I believe women are driving that movement. Laura, thank you so much for joining us. Really appreciate chatting with you again. You're really so helpful to us when this

story in this issue really became apparent last year. And we're good to see some improvement in that side of the market, but still more room UH to grow into and to change. Laura Moody, she's a CEO and co founder of Bobby. Bobby is a baby formula delivery startup that sells direct to consumer and offers a sup sscription service to parents across the US. Are really unique, UH, an interesting company. 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 pt on Fall Sweeney I'm on Twitter at pt Sweeney Before the podcast. You can always catch us worldwide at Bloomberg Radio