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is firmly in the soft landing camp as well. He expects a growth of around one and a half percent for the rest of the year and inflation to continue to decline. But market's kind of up and down today on concern that the elevated inflation that we've seen in recent data points, the core CPI reading still at four point seven percent, is going to stay with us for
some time to come. And part of that problem is the super core gauge of prices that Powell watches so closely, right, the services excluding housing has actually risen in the last reading. And another part is that some elements of the depressed CPI readings like airline tickets and medical costs aren't expected to continue to drop. And then got the housing picture to add to all of that, so let's welcome in Bob Heater. He's a head of Investment Policy and Strategy
group over at Silvercrest Asset Management. Bob, welcome the program. Thanks for joining us in the Interactive Broker Studio. Why are you optimistic that inflation will continue to decline?
Well, I think one of the reasons is that we've seen most of the inflationary fuel dissipate, so monetary growth has all but flat lined here. You've seen all of the supply chain problems dissipate. The index that's widely maintained and followed there really only hit normal just a few months ago. You've seen a lot of the demand swings in the economy start to normalize. We're still seeing some of that, but supply and demand a bit more stable and allowing companies to really produce at a level that
they need to to keep prices in check. And so I'm relatively optimistic on the pace of inflation continuing to decline from an economic perspective, but I think from a market perspective, we've maybe gotten a little bit of ahead of ourselves and there's a bit more work to do.
It's interesting because these CPI figures don't necessarily look ahead to things like rising oil prices and the impacts. I mean, when we think of the FED, they're looking at this core number that strips out all this other stuff, that is the stuff that consumers potentially feel most strongly. Is this going to change the FEDS thinking? Is this going to change their reaction to some of these data that we get.
So the way that I look at that on a go forward basis of trying to estimate the pace of the decline in CPI, and I think that's the real open question mark for markets here.
I think you're right.
There are a number of things that are likely to put some upward pressure on CPI, and the energy complex certainly being one of those. The one that's the biggest one, of course, on the downside is housing. And so when we look through some of those estimates of how much of the contribution from CPI from housing well over two percent, it looks like maybe middle of next year.
That starts to go flat.
So if I add back in more energy inflation than we have currently and I take out the housing, I get to a point where I sort of estimate we hit that two percent FED target sometime in the middle of next year, so we're still a ways away from that, and then beyond that, we still have to ask the question what will the FED do if and when we hit that two percent? So I think that's why the
market's struggling a little bit here. With inflation's improved a lot, I think we factored most of that in and we're sort of looking for some additional fuel.
What do you think do you think the Fed is going to hold at this level?
Right?
And what in twenty twenty four start to cut.
I think it won't be at least until the middle or late in twenty twenty four until they start to cut. I think I base that somewhat on the comments that we saw from New York Fed President Williams talking a little bit about the restrictiveness of policy increases as inflation comes down. So if we do see inflation coming down a bit, I think they may cut just a bit just enough over that too.
Right.
This is the passive hike that we got basically yesterday, right when CPI came down, even though rates were the same, essentially gives you a higher real.
Rate, yes, And I think even that process, though, will take some time. It's not like they're going to take you know, two hundred or three hundred bases points out in a single meeting. It'll be thissured pace of very slow cuts later in the year. So I think there's still a long timeline for rates being a bit elevated here and creating a bit of a drag on the economy.
Yeah, the ponderous twenty five basis points. Then we'll see and we'll pause, and we'll see in that kind of message impact on corporate profits. I mean, are we at the end of a potential earnings recession where we see things improve from here?
I think we're getting close to that. So I based that on two things. One is, I do think economic growth is mostly stabilized. And while I think we'll be running at around one and a half percent, it certainly could be a little bit lower than that in the next few quarters if the rate stress and bank stress weighs more heavily than I'm expecting. But I think in terms of looking out to next year, there's reason for
some optimism. I've started to see some signals in earnings reports this past quarter that companies are making improvements in productivity enhancement, and I think some of that has been masked by the wild swings we've had in the economy in the past few years. Now that we get back to a much more stable backdrop, I think some of
those productivity gains will start to flow through. So I wouldn't be surprised if next year is marked by a period of slightly increasing margins and getting a little bit of upside on the earnings.
What do you think about the labor fight? So they two you know, industry specific and spread out. You've got you know, labor fight over streaming, you've got a labor fight and automotive production. But there's some big numbers that we're looking at.
Right yes, and I think we saw some of that in different industries during the pandemic, particularly in service industries. My take on that is that I think an overall cost basis for companies, they can manage it. So it's good for the consumer, it's good for the people getting increase pay. But I think you do that with perhaps less headcount, and we've started to see some of that.
Companies holding the line on headcount, or companies that in industries that have been disrupted in the pandemic at staffing levels lower than they were in twenty nineteen. And higher capacity in terms of the number of customers they're serving. So wages might be going up on a basis of hourly wages for employees, but lower headcount or flatheadcount on higher revenue, okay for margins.
So at bottom line for stocks we're at we're just under s and P forty five hundred, right, we come in about two and a half or so the last couple weeks. But you think we're gonna remain at this level give or take into twenty twenty four, and then you're constructive on the index from there, Yes, basically.
I mean it's always, of course tough to time these things point to point, but I think we're really struggling for some fuel here. There's not much reason to be
overly optimistic, not much reason to be overly pessimistic. Stocks look relatively fairly priced to me, and I think it'll be until later in the year until investors start focusing on what does the path look like for twenty twenty four, maybe start to put some realistic expectations on inflation and FED policy, start to take a closer pencil to earnings in twenty four, that we start to get any fuel to the upside.
Are there any sectors, any pockets of opportunity that you were looking at?
So I like three sectors in particular. I think consumer, discretionary and industrials are still benefiting from strong demand. I think that will continue, and I think select pockets and technology where they've shown the opportunity to ab productivity enhancing and be be able to increase their own margins relatively efficiently. I think there's some upsides to earnings there as well.
Can I ask what's the impact of saying generative AI in an earnings call?
Yes, it's certainly showing up in every call. So I've been trying to weed through a lot of that and shut out the noise of just mentioning AI for hopeful purposes and companies that are actually deploying things. I think we're still very early in that it's a lot of mentions and not a lot of activity, but we're starting to see some of it pop through, and I think we're starting to again see companies producing more revenue on flat headcount. And that's beneficial, but is it.
A game changer? I mean, I saw a story the other day that the Chinese have ordered five billion dollars worth of chips from Nvidia trying to get in under the wire while they can. That's a massive number.
It is a massive number, and I think some of it will be hugely productive and some of it will be hugely wasteful. And that's really the challenge in sorting through company by company who's able to manage these things well and deploy the technology to productivity benefit.
And then you have the kind of Inflation Reduction Act and all of these long term investments in manufacturing. I mean, do we see the impact of those in the near term or is this something you're looking out for twenty twenty five, twenty six.
I think we're seeing some of it presently. In terms of economic growth. We're certainly seeing construction spend and manufacturing has ticked up quite a bit. We haven't seen it on the job front. I think hiring has been very difficult there. So I do think the hiring cycle of it will take some time, and maybe that's potentially over time and offset to some of the other jobs that get lost in other areas.
All right, Bob, thanks so much for joining us, Bob Teeter. They are from Silvercrest Asset Management. Really appreciate your time in the studio with us.
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So there's a company in the Philippines called Ancass I believe I have the pronunciation right. They have four million downloads, they have thirty thousand biker partners, and they are essentially an uber that runs on two wheels rather than four. Let's bring in the CEO right now. Vancast George Royeka joins us to talk more about the growth that they've seen in the market. George, thanks so much for your time. I'm an avid motorcyclist, so I love the idea, but
how exactly does this work? I mean I imagine people sometimes fall off.
Well, hi guys, thanks for having me here. Well, you know, we're very close here in our side of the world, and I much love to give I'm in transportation, right, so you do got to hug your driver unfortunately.
Or fortunately depending on you know, everybody needs a hug once in a while. What kind of growth have you shown, because I know you have a goal of getting to creating a million jobs, and right now you've got thirty thousand.
So actually we're at fifty thousand now.
Wow.
I think it's a few months ago we grew quite significantly and we're about eight million downloads as of date.
Wow.
Well, yeah, what what spurred that growth because I know very recently as of March it was it was quite a bit less, right March.
Yeah, Well, I think in the you know, in our part of tow congestion is you know it's a big problem and a lot of the streets here, even the main thoroughfares, it's just riddled with you know, cars and buses and there's not enough infrastructure. So you know, a ten kilometer drive can take about two hours one way. So that's that's that's very bad. So you know, there's
a really neat, big need for small, agile vehicles. You know, Indonesia has led the way for for these types of transportation, and this is something that we're seeing as a trend all over to Southeast Asia.
So what does your growth look like like going forward? If you double your download since March and you've almost doubled your your driver pool, what do you expect in the next year or two.
Yeah, well yet another we're experiencing double digit growths, right, so this is something that we're expecting over the next you know, twelve months even just the balance here. Right now, we're only the metropolitans and we're now expanding to the cities. There's about maybe another twenty odd cities that will be launching in the next sixty days. So it's been a it's been you know, quite busy for us this past few months.
Yeah, sounds like it. I mean, are the chief customers of your service? Are they people going to work? Are they leisure travelers? How would you describe who is using and cast at any given time.
I think we're alternative, you know, mode of transport really really one for emergency use cases for people want to get to their destination much faster, you know, for work especially, and also to get home to their families. Right, that's primary. So really the workforces are the main constituency for for my writers. Second would be really just anybody that you know would like to get there faster for for whatever reason.
Right.
So our demographic is quite large, so you'll see in the morning, in the evening rush hour, it's really more of the workforce and a little bit of the you know, more guys that need an affordable motor transportation because taxis, as you can imagine, can get very expensive, especially when you're when you're on the road for for a long time. You know, an hour or two hour drive would really be would cost you a lot more. So we have those people that want a more efficient ride and also
a more cheaper ride. But in the you know, throughout the day, as you go closer to you know, the weekend, it gets pretty congested, even in the off peak hours, so you just really get a wider demograph for even the more affluent base that just wants to get to places faster. So it's I think it's a little bit of both. And as we expand to the provincial cities,
there's actually less and less cars and more motorcycles. If you go outside of Metro Manil, the racial between cars to motorcycle is eighteen is to one, So we become the dominant form of transportation. As you can imagine, buying a motorcycle is a lot cheaper than getting a car. So this is something that a lot of people use, as you know, not just their family car, not just their work car, but also as a means for livelihood, which is what we're trying to really espouse is give people more jobs.
George, you, I mean, it seems like from looking at your CV, you've been very active and still are in media and content creation, entertainment, that sort of thing. Now transportation is a wholly different industry. How did that transition happen? And what does what does your exit look like? Do you have an IPO planned?
I think everybody wants to have that type of exit. Right for now, we're just trying to open to more cities and serving more customers. I think my media background really helps and telling the story, and it is the story of freedom getting unshackled from traffic. You know, in the Philippines, especially in the Metro Manila, a lot of your major and minor decisions revolves around where you live and how far it is to get to where you're supposed to go, whether it's going on a date or
you know, putting your kids through school. The daily commute matters. So this is something that I think a lot of people use just because it allows them to do a lot, you know, more things in the day and being able to really create that relate that compelling story to people is something that really has helped our company grow.
All right, great talking to you, George, and we wish you the best luck. Will continue to watch to see if this astronomical growth goes forward. George Royaka there. He's the CEO of Ancas and the Philippines. It's like the uber I Guess of motorcycles.
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So our question of m Live Question of the week is has the commercial real estate crisis escalated?
We asked this.
At a time when we work sharers are slumping. It's not become kind of a penny stock memish thing. And the question is, has you know, has this crisis really begun and gotten crazy? And the person I want to ask about this is Mark Dixon. He's the CEO of IWG. This is a brand that includes Regis spaces HQ signature. Actually we were competitor. So the question here is what is the outlook. I mean, have enough people returned to office that a lot of these office spaces can move
forward into the future. So, Mark, thank you so much for joining us. I mean, you say eight million plus people use IWG workspaces.
What are you.
Seeing in terms of the trends of people coming back? Is this escalating and what's the way forward as we get back into the farm.
Yeah, well, look, thanks very much for having me. We're in a similar business that we work, but we're not exactly the same. Our network is very diversified.
You know.
We a large part of our customers were actually already working from home.
We have a.
Significant business supports people working from home. We also have buildings very much in the suburbs and in rural locations, not just in the big cities. So what we published this week, actually the day before, we work's announcement record results for us with our revenues up to record levels and also profits hitting a record level. So you know, for us, we're producing seeing a lot of cash and
we're growing very quickly. So the market has changed. It's not that the real estate market is not there anymore. It's changed, and it's changed we think fundamentally and forever. And this is really technology changing how people can work and most importantly where they can work. So we're the leaders globally in hybrid work. We operate in one hundred
and twenty countries. We have four thousand locations and companies and individuals are working with us in a completely different way, and that business is growing.
I will say, I will I will say that we Bloomberg News used Regis office space. I remember visiting the Regis and Munich when I was a CUB reporter twenty years ago, and at my Berlin office right on the Brandenburg Gate, there is a Regis in our building. I imagine we started out leasing that space as well. So you've been around for a while, because I've been around for a while. Does does that give you some advantage over a bombastic upstart like a we work? I mean, you're very different.
We're very different business do we work? So Look, there's nothing wrong with the industry that we works in. It's just you know, they had a bad start. I mean they started at the top of the market. They grew very quickly, had a lot of capital, were the opposite the entire business has been built with three hundred million of core capital, and you know we have created everything from that. But you know, overall, you know, this isn't this is new real estate. This is digital real estate.
This is providing space to people on a platform. We were doing it for Bloomberg fifteen years ago, right at the beginning of Bloomberg basically, and many many other companies use us around the world and it is a growing part of the real estate industry.
So talk to me about the small towns, the I guess non traditional places that you're setting up some of these offices. I know this is a key strategy for you. What's the thinking there in terms of well from a company perspective too, why do they rent office space in places outside of major metro centers.
Look, we don't rent office space just to sort of I know, we're not in the real estate business as such. You know, we provide workspace as a platform. So when we sign people up or companies up, they're using us across the whole platform. So they're not it's not companies taking space generally in one particular location.
Sure, but why are they looking at these small a small town areas.
It's close to where they live. Look, the elephant in the room is commuting. You know, it's the time it takes to commute, It's the cost of commuting. It's not anything else but that folks generally want to work in an office. They don't want to work from home. They work from home some of the time, but they really want to get to an office meet with other people. They just don't want that office to be too far away.
So what we're seeing is companies allowing people and encouraging people in fact, to get an office with us close to where they live. So these openings we're doing in provincial and rural United States, the suburbs in the US, but all over the world are filling up, and they're filling up with people from large corporates, mid sized companies who just want to have an office close to home. It's really as simple as that. They're very, very popular.
So in terms of you say, you started with three hundred million in core capital, and that's obviously a very different story to the billions we work burned. But do you have any debt that you need to roll over or higher interest rates affecting you at this time?
Well, our debt will at the end of this year be about just over one time zibit, so we're low level bridge. We are reducing that debt. You know, we're producing a lot of cash. First half we produced about two hundred million dollars of cash. We'll produce more in the second half. So up until we just did our investor presentations this week, you know, this year is all about reducing them and we continue.
To do that.
Next year we'll look to start distributing cash either share buybacks. We have somewhat got caught in the tailwind of what's going on with we work. Our stock prices is basically depressed and people think we're in the real estate industry. It's those two things together. But we will buy back shares and you know there's CEM M and A we can do and you know, potentially divings. But we're in a very good situation with regard to leverage and cash flow.
Excellent. Great to get some time with you, Mark, Hope we can talk to you again in the future. Mark Dixon. They're the CEO of IWG. The ticker is i wg FF.
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I want to get to, Well, we're going to talk about the actual cage match that we've been talking about for weeks, is it or is it not going to happen between Elon Musk and Mark Zuckerberg. But we're also going to talk about the comments President Biden made I think yesterday about China, about the Communist Party leaders, about Shijin Ping.
With verbal cage match.
Yeah, it kind of it seems that way. He really came out swinging. Howard chiwa Ewan joins us. He's an international editor with Bloomberg Opinion. Howard, great to have you on. I saw your newsletter this morning, the Opinion Rap, and you kicked it off with this with these comments. I thought President Biden and this administration wanted to get on a friendlier footing with the Chinese, but he yesterday blasted
China's economic problems as a ticking time bomb. He said the Communist Party leaders are bad folks, and he also said, I think, most disturbingly, certainly from from their perspective, that the Belton Road initiative. He called it the debt and noose initiative. I mean, that's pretty hardcore, isn't it.
It's pretty hardcore. It sort of reminds me of when Donald Trump said, I remember his bad ombre UH, when
he said bad folks. It just sort of reminded me of all that UH and the UH the the news UH comparison was particularly harsh because the Belt and Road UH initiative by China has become a bit of a UH weight around she's neck actually, because it's everyone complains about how he's got that China's gotten all these developing countries UH in that the problem is, of course, China is left holding the bag if they don't pay anything back.
So so there is a there. It's a it's a two sided, two edged swords, so so it's.
It was kind of howard, even a little bit more Trumpian in that Biden seemed to be making up his own facts which were not in fact facts, right. I mean he said China percent growth exactly.
When it was actually five point five. Well everyone is suspicious, of course of Chinese numbers, but that is quite quite a difference, especially when America the American growth rate is about what one point two one point five.
He also made up his own demographics for China.
Yes, so he turned it into a very very very old country when it isn't. Actually it's it's aging, but it hasn't aged that quickly in the last couple of years.
But I mean, how is this different than the sort of bombastic commentary that we constantly got from president former President Trump? You know, I remember him talking about the Chinese virus and I mean, yes, uh, that's sort of rhetort rhetoric. How does this differ. How does it coming from Biden differ?
I'm not sure. And that's why I'm a little I worry about it sometimes when when when the President comes out and talks this way and it feels like he's just speaking off the cuff.
Uh.
I just worry that the things will get a combination of certain things may happen, and and the same thing that happened under Trump may happen again, which is that people will take him a little too much of his word and go after people they assume are the enemy. Uh so uh, and these would be they're fellow Americans.
So I worry about things like that and I'm not sure what the strategy is to speak this way, except that the uh, the way American UH economic diplomacy has been conducted over the years has basically been it's it's a zero some game and basically, if you are the main rival, UH, we're going we're going to destroy you.
So uh.
So it's and it's not that the Chinese are behaving otherwise, but it is that sort of lack of feeling that we're all in this together. There is a global economy we should share, uh Dan Moss and his column was was very good. He said, you know, there's there was this period when everyone was growing at the same time, and then suddenly the US went into recession, China had to come in. Basically it was the Chinese economy that
buoyed the rest of the world. And so now there it's the other way around, uh, and it's the the US economy is expected to bring everyone along now that the Chinese economy is down, and so there we we've come into what maybe be a new cycle.
UH.
Dan very nicely points out that that uh that uh, when the Chinese economy is down, the US economy has to come in, and if it doesn't work, out that way, then we're all in trouble.
Well, he was also supposed to be more serious. President brings some gravitas to the office, actually speaking truths rather than just making up numbers. And uh, it's so weird that President Biden would say this to a group of his own donors in Park City, right, he's not talking to the general electorate.
No, it's it's it's quite surprising that he wasn't aware the people around him weren't aware to let him know that this was going to get out.
Let's let's get to the other, to the real cage match. I mean, we hope it's real, right, we want this to happen, Howard you I guess we're a fan of the m m A at some point. I have paid for a few fights myself. I think it's pretty fast stuff. But if if two of the richest people in the world get in the cage together, man, that would be cool. Is it gonna happen? You know?
I think if they keep on talking this way, they'll have to make it happen, even though they even though one or both of them may not eventually want to do it.
Uh.
And you know, I like all these matches it's a game of cycle psycking each other out. So at this point, uh Zuckerberg looks incredibly fit. Uh while uh while must looks like he needs he might need more surgery for that supposed injury to his neck. So uh so. But but you know, as as you know, Matt, the fighters
like to psych each other out. And who knows, Musk might pick the right time to do this, just like Floyd Mayweather used to pick the right fights with with with Manny Paco uh and uh and and who knows. You can't really tell whether it would be the timing that will decide who the winner is.
Well, very interesting discussion there. I'm rooting for this. I'm rooting for this match to happen.
I want it to happen too. And I want to say that Howard has a great column on this. So if you have a Bloomberg termine in front of you, type OPI N go to check it out.
Howard. Thank you so much, Howard one joining us there.
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We've been talking about remote work. Do people go back to the offices all morning, especially with the CEO of IWG who was talking about people wanting to be back in the office, as we get a different flavor here to bring in Hayden Brown. She's the CEO of Upwork. This is a publicly traded company, reported earnings last week.
But before we get to kind of the numbers, in the nitty gritty, Hayden, I want to understand do you think that this wave of remote work is turning a corner, perhaps ending a little bit, and then you know, do you benefit or suffer from that at Upwork?
That's a great question. I think this is a long term trend that's here to stay. Remote work. The cat is out of the bag. And even though a lot of companies are going back into the office, which is great, you know, every company is going to find their place on the spectrum of remote work, whether it's in office,
whether it's hybrid, or whether it's fully remote. The norms and the capabilities that every company figured out over the pandemic are things that will serve them well as they now tap into some variety of room workers on a platform like ours, you know, we serve the world with freelance talent that they can access globally. These are professionals on our platform, you know, doing one hundred and twenty
five plus categories of work. And every business, whether they're back in the office or not, is tapping into these types of professionals to augment and accelerate their work strategies. So I think this is a long term trend that's not reversing, even though there will be you know, fits and starts as companies kind of navigate, you know, this new normal.
I have to ask just quickly about your stock price because it was soaring during the pandemic. You're one of the darlings of the markets. It was up to sixty dollars a share a few different times. Now it had come back down to earth, but now it's heading back up again. It was back down below ten and now we're up above fourteen. How much do you have to watch this? As an agent? I guess of the owner's right of the company and what's influencing it.
You know, we are here building a business for the long term through durable, profitable growth, and I think that's really the story. This is a company that's still in its early innings. Frankly, you know, we went public in twenty eighteen and we are going after a trillion dollar TAM. So this is TAM total addressable market. Okay, okay, So we're unlocking a huge addressable market opportunity for our customers, for our shareholders, and I think that's really the headline.
We did have a great quarter, you know, raised our guidance for the year on both the top line and the bottom line, but this is still a business that's in its early innings, and I think that's what's really exciting is we are executing well, we're performing well, and yet we have a ton of runway ahead of us.
I mean, I see kind of a discrepancy here, right because these companies are asking their workers to return to the office because they believe they collaborate better. Yet you're saying freelance on the rise and that there's a future
for this. Are there certain places where you're seeing a particular uptake and demand with respect to the clients that you know, the corporate clients that are looking for talent, are there things that they're going to just want to keep out of their business in the long term and just kind of turn to outsource to freelance folks when they need it.
You know, we serve every kind of company that is looking for freelance talent, whether they're in office, whether they're back working remotely, and also small companies through large enterprises are turning to this model. You know, freelancing was a secular trend that was on the rise prior to the pandemic, and it only accelerated through the pandemic because workers figured
out that they really want to work this way. You know, they are excited to have the freedom the flexibility to do this, and we see younger generations of workers leaning into this even more. Forty three percent of Generation Z is freelancing right now. So companies are realizing if they want to tap into the workers they need with the skills they need, they absolutely have to be tapping into
the freelance economy. So this is why companies of all sizes are tapping into this workforce, and certainly as they're looking at things like generative AI, which is a huge and growing category. For US, we saw these jobs increase one thousand percent in Q two versus Q four. Companies that need these types of workers with these types of very current skills have to tap into freelancers to get this type of work done.
I recently learned about traveling nurses. I had never realized that it was such a massive industry. And I talked with somebody who ran a company that helped you helped them administrate their their jobs. It's interesting they make more money than the nurses that are actually installed permanently at the hospital. I'm wondering what the freelancers that you bring in are making. I mean, my initial thought would be they must not make very much money because they're freelancers,
But then maybe they do. It's the opposite that's amazing.
This is a this is a very lucrative career. And I mean so in AI, for example, we're seeing people with these skills are making fifty percent more than the average. And again to your point, folks are joining the freelance economy because this is a better way for them. It's actually more safe and secure. They know they can't get laid off, so this is something where they've got multiple steady clients, and it really insulates them from the vagaries
of the normal economy and they're earning more. We've heard from our talent frequently they say no amount of money would pay them to go back into a full time, normal job because they make more, they have more freedom, they more flexibility, they have control over their schedule. So everything about the work arrangement as a freelancer is actually working better for them.
Now.
Of course, this isn't a way of work that's going to be suitable for everybody, but everyone has to do this.
That's like a gig economy.
No, no, not at all. I mean these are independent workers. These are professionals. They set their own rates, they set their own schedule, they negotiate all of this for themselves. And these are independent entrepreneurs, you know, really working on their own terms.
Do benefits kind of offset that at all? I mean, these are people who have to go and probably get their own healthcare, all that sort of thing.
I mean, it depends on the geography.
Of course.
In the US, you know, we have a certain benefit setup and also we you know, serve customers all over the globe, so some of them are buying their own benefits. Some of them obviously are in you a relationship with a spouse who has those benefits, So it really depends on the worker, but that is absolutely not in heediment for them to being able to work this way.
It definitely lays bare, I'm sure for you the stark differences between the healthcare system in this country and those in other countries.
It totally does. But when you think about it, you know, no one should be barred from working the way they want and doing the job they want just because of a benefits issue, right, And that's just the saddest thing. But that's what we see people saying. You know what, even if the benefits are more challenging, I still want to go and work this way, and absolutely they should be empowered to do that, all.
Right, Hayden, thanks so much for coming in. Fascinating conversation, fascinating business as well. Hayden Brown is the CEO of Upwork, the ticker on the Nasdaq up WUK, and I, you know, I think this is all part of the way the economy changed post pandemic. It's not like we're going to go back to normal. We're progressing into the future.
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Lisa Donahue joins US co Head of the Americas in Asia at the global consultancy firm Alex Partners. Lisa, thanks so much for joining us. A lot going on on this Friday that we thought was going to be a slow day in August, but in terms of the markets, it really is still slow and it has been all week. Even though we got inflation data. It just kind of proved what we thought we already knew. How do you look at the current US economic and Wall Street market situation right now?
First, thanks for having me, and yes, very busy day today. You know, I think some of the market information that we're getting continues on the trend of confusing. Right If you look at the consumer debt and you look at the credit card debt, it's up to one trillion, and that would suggest that the consumer is feeling comfortable, and perhaps they are, but also seeing signs of a little bit of a pullback which continues on the trend of
push pull, which I think your reporter had just said. So, what we're seeing is, you know, companies and leaders are thinking ahead and they are taking this confusion time as an opportunity to really work on the hygiene of their businesses and think about what they should be doing to be prepared for the continued disruption and the continued you know, lack of clarity on where we're going from inflation, interest rates, disruption, you know, war in Ukraine, et cetera.
Well, Lisa, before we get some of the product geopolitical issues, you talk about hygiene of the business. Cost cutting layoffs has been a theme we've seen across tech and finance. To a degree, have we gone have business has gone too far at this point?
You know, when I say hygiene, I don't necessarily mean layoffs. I mean taking a look at non core assets, taking a look at your employee base and is there upskilling that you have to do? Are you is your organization and the way you're aligned does it fit for purpose? You know, in some cases it might mean layoffs, but in a lot of cases it doesn't. It could mean just taking a look strategically at what you're doing and should you be doing things differently In terms.
Of the geopolitical issues US China, I mean President Biden already kind of ratchet those ratchet of those up last night saying that they're bad folks, and he called the Belton Roade initiative the debt and noose initiative. Now we've got, you know, us more problems in US politics. Does this unrest play into your strategy at all?
You know it does in some ways. What we're seeing some of our clients doing is is looking at alternatives and parallel supply chains. Because if one thing COVID and that major disruption to actually getting product taught us is that yes, low cost is important, but surety of products
is as important, if not more important. So what we're seeing as a result of the political uncertainty, you know, the relations with China, some of the Russian concerns, is we're seeing more on shoring and more alternative sourcing for where to put your supply chain. We're seeing folks go to Japan as an alternative from an APAC perspective, and we're seeing folks really looking at shortening the supply chains and looking, as I said, at other considerations instead of just price.
With respect to moving business assets around. We had a really great, big take earlier in the week about how trade is and the incentives offered by the Inflation Reduction Act or really shaking things up for where companies put their manufacturing, where they hire groups of new people. How much interest are the executives you're speaking to giving to where can I get the best the best incentives? And how much more is the answer of the United States than it was maybe six months ago.
You know, I think it's it's a big consideration. And we talk with a lot of folks on a global basis, And I was speaking with the CEO of a large energy company that super focused on renewables and you know, green initiatives, and they were talking about the genius of this act and that it is ultimately going to make the US more competitive when it comes to renewable green initiatives because of the incentives that are baked in to it.
So I do think that it is something that leaders are thinking of and should be thinking of as part of the full picture on where you want to put your investment dollars.
Rates are rising obviously five hundred and fifty basis points since last March, and as inflation comes down, the real rates even higher. How much more difficult does this make the investment outlook or does it make things even juicier?
Well, I think it depends on your perspective.
Right.
If you are a private equity firm and you're looking to do deals, which is what they do, it means they have to look at diligence deeper, They have to look at synergistic opportunities more. They have to be a little more creative from a structuring perspective because the cost of capital is so much higher. If you are a semiconduction manufacturer and you're trying to onshore, which we're seeing a lot of in the US, you need to look at alternatives. You need to look at quasi equity type
investments in addition to just that. So I think it's forcing folks to be a bit more creative in how they structure and where their investment dollars are going.
All right, Lisa, thanks so much for joining us. Sorry that we took a little longer to get to you today because of the breaking news, but we really appreciate you sticking with us Lisa Donahue, co head of the Americas in Asia and at the global consultancy firm Alex Partners. Great to have you.
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I want to get back to the breaking news that we have Hunter Biden, the Hunter Biden probe over the DOJ has been assigned a special council. So we saw briefly Merrek Garland come out and make a statement appointing this special counsel to oversee the government's ongoing criminal investigation into President Biden's son over his taxes, as well as a number of other issues. Certainly the Republicans hope there will be another number of other issues there. We have
Nick Ackerman on the phone right now. He's a former assistant special Watergate prosecutor, and Nick, you know, typically we would talk to you about all things Trump. Increasingly these conversations are about the Biden family, certainly about Hunter Biden. We thought it was all going to be over a couple of weeks ago at the plea agreement, and now it's come to this. Are you surprised, Not completely.
I was surprised that the plea didn't go down on the day it was supposed to, but since then this is not at all surprising. I think it was pretty clear at that point that definitely would not have taken care of all the other matters of that might be under investigation. And I think that Merrick Garland did the right thing. Appointed Weiss, had made it official that he's really a special prosecutor in this thing, and that he has complete independence as he had before. And I think
it just solidifies that. Don't forget he was appointed initially as the US Attorney in Delaware, Yeah, by Donald Trump. So I think this just you know, provides more distance between the Department of Justice and the prosecutor, but does it give him.
Any extra tools. I just you know, it seems like an investigation had had been happening for a long time. All the members of the Biden administration had said, you know, Mary Garland's given him a bunch of tools whatever he wants, but now you know the escalation here. June Grassa was just with us, she's a legal analyst at Bloomberg Law and was saying, you know, this looks like political move a plain and simple.
Well, I think it's part of what Merrick Garland has done all around. I mean, he has tried, on these types of cases that affects the administration and particularly Joe Biden, to make sure that the person who's doing the investigation, whether it's Jack Smith or whether it's wise, that they
are completely independent. I mean, I think what Garland is trying to do is basically used the model of Archibald Cox, who has made the first Watergate special prosecutor where he really had total independence, wasn't answerable to the Department of Justice. And I think that's what Merrick Garland is trying to set up, so that there is complete buffer between the
Department of Justice and Joe Biden. I mean, I think that's really the whole purpose of this is to have somebody in there who is truly independent, and I think this was a way to make it more formalized, particularly if there are other areas to be investigated. Now having said that, a question, you know what is left to investigate, mainly because you've got a statute of limitations that goes for five years and most of these matters, and if you take the two tax crimes, they were at a period
of time. Now that's getting beyond a normal statute of limitations for anything, probably other than tax crimes. So I just, you know, I think it's in some senses it is political to the extent that it's set up so that there is no question of politics not being involved. I mean, I think, you know, to the extent you're saying it's political, I'm having complete independence from the Department of Justice and
from Merrick Garland. Just adds to the fact that the person has the independent ability to do what he's doing, and even onto this crazy special prosecutor regulation, it's supposedly the special prosecutor ultimately answers to the Attorney General. I think that Merrick Garland has been and made it clear that he's been totally hands off on all of these matters, whether it's Jack Smith or now it's going to be wise.
I mean, frankly, Nick, wouldn't they have been a lot better off if they've done this from the get go. Because the concerns are on the Republican side, not just the tax crimes or the gun issue, but the the sort of foot dragging, you know, the idea that if the president's son is a tax evader, he can get away with it, or he'll be given a lighter sentence, Like wouldn't President Biden or the administration of Ben smarter to get this out of the way at the at the beginning.
Oh, I totally agree with you, But I think from Merrick Donland's standpoint, appointing somebody who to investigated, who was a Trump appointee as US attorney in Delaware had the same effect, But in some ways it didn't. And I think what he's trying to do is emphasize that now. It also sends a signal that there are other matters to be investigated. He wouldn't be doing this unless there
was something more to investigate beyond the tax crimes. So I think this probably also signals the fact that there's not going to be a plea anytime soon. That I think that there are other matters that they're looking at, and I don't think they're in a position yet to say they're going to put this all behind Hunter Biden.
Yeah.
I mean, so there was this closed door testimony of Hunter Biden's x business partner, Devin Archer, and I think the takeaway from some of the press was that this didn't really back up the Republicans accusing President Biden, you know, of crime and and corruption. But there were some bits and pieces in there. Was there anything there for you that you thought, you know, this might be potentially the subjective of the a probe that could be continued under David Wise.
Yeah, not really. I mean it sounded like Hunter Biden had his dad caught in a couple of times, five times over a long period of time, basically trading off his name but trading off his connection. You know, a lot of other presidents in the past have had the same problem, and Richard Nixon did, Jimmy Carter did, even Hillary Quinton had this problem with her brother that relatives.
You know, if you can pick your friends, but you can't pick your relatives basically, and it's always been something that's be deviled presidents and people in high public office. So I don't think it really reflected that there was any there there. But look, the public has to be assured that everything is being done by the book that everything that's out there is being investigated, and at the end of the day, I think this will give that assurance.
You know, One he's a special made the special counsel on this, and two he was a former Trump appointee Ian a Republican who was the Delaware US attorney who's been kept on and he's the one investigating it. So I really don't see how you can have anybody with any better credentials to do this than Weiss. And I think this, you know, provides exactly what needs.
To be done.
Did we find out who the big guy was?
Nick?
I mean if in the emails that the post got out of the laptop in the quote on the CFC China Energy venture, when they said held by h for the big guy, did we ever figure out who that was? Us? Did we lose Nick?
Oh?
No, I think we might have lost Nick.
I'm looking at the I'm looking at the zoom screen. Oh no, Nick, there you are? So did we did we? Do we care? I mean, is there any there there?
Well, so far they haven't found any there there. But it doesn't mean that they shouldn't investigate it and assure the public that they've looked at everything before they close out the case. I think that is what they've got to do, all right, and that's what Licen's job is.
Yep. Nick, thanks so much for joining us. Really appreciate you jumping in on this breaking news. Nick Ackerman, former special Watergate Watergate prosecutor, talking to us about the breaking news that the Department of Justice will appoint a special prosecutor in the Hunter Biden probe and that that prosecutor is David Weiss. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listens into interviews with 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 Faull Sweeney. I'm on Twitter at pt Sweeney.
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