Trump Visa Crackdown Could Ship Work Offshore, Anurag Rana Says

applications for H one B VISs. Well, this year it might be just slightly different for many of the companies seeking to hire people under the H one B VISA program. And here to tell us about it is A rag Rana, our senior analyst of Software and I T Services for Bloomberg Intelligence. On a rag Let's begin with a definition of what the H one B one VISA program is designed to do and then tell us about some of

the confrontations around this program. Yeah, the basic premises that if you are looking for a highly skilled person and you are not able to find it locally, then you would use this program to bring somebody from outside. Now

this is also used for students extensively. It's all and but the biggest controversy I would say is that the opponents of this plan are saying that this these visas are being used by i T services companies from India to bring largely from India and other areas, also to bring um, you know, engineers at a much lower cost and displaced workers. So that's really the controversy or the

or the issue around it. So that so just to put this into perspectives of the use of administration under President Trump just made a change to basically double check essentially, if I'm understanding this correctly, applicants to get h one P visas. How much does this shift change the game? This one does not change you know, a whole lot

in my view. If when we looked at this thing after the elections, we thought there would be a lot more stricter regulations, maybe on the you know, on the on the salary minimums or possibly you know, something which we saw a couple of years ago. There was a there was a clock call called the class called the outplacement clause, which prevented companies I T outsourcing companies to bring in people and then put it at somebody else's site to work. But none of those things have happened.

And in fact, UM, you know, perhaps they're still working on, you know, coming up with a new order for the next filing season, but for this filing season, which you know is ongoing right now, it doesn't look like it's going to have that big of an effect. Just to put it into context, sixty five thousand, h one b visas are available to workers that have bachelor's degrees. Twenty thousand additional visas are available with those with master's degrees.

But I like the number of people that applied last year, two hundred and thirty six thousand people applied for what are arguably eighty five thousand places. Yeah, one of the things I think this will happen this time would be kind of a mixed shift in the in the kind

of applications that go in UM. In the prior years, a large portion of these applications were made by I T services companies, but this time they have said themselves that they're not going to be filing for a lot of these visas UM, which will give let's say that the you know, the likes of Microsoft, Apple, Google, uh, you know, more visas to file from, so their portion of this whole pool may increase into this season compared

to the last several seasons. Do we have visibility into just how dominant with respect to H one visas the lower wage kind of more road to workers are in other words, how much how many of these jobs, how many of these visas are going to people who are doing work that isn't as specialized as you would think given the parameters set out by by the idea. At least, you know, the salary minimum is about sixty dollars or so,

so it's not really anything a below that. Usually a lot of them have technology background or a science background, so you would have you know, some kind of a bachelor's degree for sure. Now it could be people with finance,

or it could be actually any degree. But one of the things that happens, and I don't think people realize this when you're when you're filing for an h N and and B, you have to go through a labor certification process, which means for that particular job posting, you have to go to the Department of Labors database to see how much is that person getting paid, and you have to make sure it's not below that certain amount. Now, let's

say that you know, I'm just making this up. Let's say software engineer one is getting paid somewhere between seventy five and eighty five thou dollars. The company might decide to pay that person on the lower end, but they can't just pay them twenty dollars and you know completely,

you know, bypass the whole system. That's not possible. And for a lot of the I T services companies, even if they pay at the lower end, let's say between this band, if you add the visa application cost and the cost to bring them from an offshore location to the US, the net cost is the same. The big issue over here is, at least for engineering and science, we have a massive shortage of those people in the US.

You also have a shortage of those people in research institutions. Correct, absolutely, But there are certain nonprofits and other areas they can actually fall into a different visa category, so they might not be, you know, part of that same pool. Top recipients of these visas are Tata Consultancy Services, Infosis, and whip Pro, all based in India. Although I will say it's very hard to know who the real beneficiaries are because those are outsourcing companies and it's unclear where exactly

they're going to place some of their staff. Correct. I mean they could end up at a big bank or you know somewhere or something like that. So there are two pieces of it. One is large banks have been outsourcing their ID divisions for multiple yers for fifteen twenty years now, so they're skeleton you know, they're on I T departments on a skeleton basis, and some of these

companies are working on their behalf. Second thing, there is a ratio of what we call an onshore offshore ratio, where if you have a legacy I T project, that work is done in an in a low cost country and thirty in the high cost One of the unintended consequence of something like this could be you could ship all of that work off shore because with communications with high connectivity, you really don't need to be sitting at

that client's location to do some work. Now, if you're looking at some emerging technology work, whether cloud or analytics, you would still require a high on site presence. But if pressure like this continues, I expect a lot portion of some legacy work to go more offshore. Than then then what's intended to so may have unintended consequences, maybe the exact opposite of what the current administration is hoping

to do with the H one b vs A program. Yes, because I don't think any bank is going to spend more money on it than they are currently doing right now, that that growth rate is not going to be very good operate, But just to be clear, to reiterate your point from earlier, this particular change won't necessarily move the needle that much, but it's sort of proceeds. What could be something that would be more substantial, substantive and have

a more significant effect. Correct, Yeah, that could be. That's possible. An Grana, thank you so much for joining us. Always a pleasure on our Granda is senior analyst of software and I T Services here at Bloomberg Intelligence. A battle against Amazon in the vending machine business. Tom Mern is the founder and the chief executive of Via Touch Media, and he joins us now to explain his effort to push Amazon aside. Tom Urin, thanks very much for being

with us. Thank you, good morning, good morning. You know, I was looking at some information about vending machines because this is the topic at hand, and I noted. You know, Japan of course has this love of vending machines, and you can buy Umbrella's eggs, surgical masks, you can even buy puppies from a vending machine. Now, I know you're not gonna go this far, but okay, right headline, right headline, tell us about your your business and how you put

this together and what you're trying to accomplish. Oh sure, so we You know, we're a local New York company doing Manhattan and Connecticut and Long Island UM for years, so a lot of experience in major companies City Bank, Goldman, Sachs, Home Depot, Costco UM. So you know, we get a lot of feedback from what people wanted and the old experience and vending where you kind of have to bend down put your hand through a door. Uh, that's not

what people liked anymore. They were looking more for the experience they get every day they can open a door, pick up a product, look at it, then decide if they want to buy it, you know, not have to be stuck with what you know, they pushed the button. So we developed technology where through biometrics, through your thumb or Apple pay, you can open the door, look at the item, decide if you like it. If you close

the door, you've now purchased it. And then we also added media where when you pick up an item, we deliver content about the item in your hand. So you're not seeing media about things you don't care about, your seeing media about the item you've picked up. So, Tom, I mean, is this is this what's old is new again?

I mean, is this sort of like a return of the automat where all of a sudden there's this future of the new real world of just you know these doors line wall to wall doors that you could open up and get stuff. Uh, I mean, I guess in one respect, yes, you know, sometimes returning to old is what what works. But when we take the Internet of Things and bring technology and today to it. So the difference between that on this one, if you use your thumb, we know it's you. We say like two would say hi,

it does say. It says hi hi Tom, when I opened the door, and then it kind of remembers over time which you buy and it makes different offers based on it. It's an IoT device, so it's connected all the time. And that's our lease of version, our Vicky version, which comes out in August, has artificial intelligence in it where as you pick, but you can have a two

way conversation about the item. So I don't think the automats did that give us a little detail of how much the machines cost and how they're all networked and connected to your supply chain. Okay, so, uh, they are all network there on the you know, the web based, so they do communicate to each other. Um, they retail for seven thousand. If somebody bought one, and I am they dropped a little five thousand. How much interest have

you got? How many? How big is your business? Um? Well, my present vending business is about forty million in sales UM in this category. Um, it's we're getting calls worldwide. Um, there's no one that we brought it to. In the prototype version, we sold a quarter million of prototypes and

we didn't even want to sell them. UM. Quarter million dollars, not a quarter million units and just gathering information, research and development, um and any when we've brought it, they want it food as a vending machine item, specifically coffee. Is that the high margin business you want to be in? Uh, well, we're looking to change it. It's like autal retail. So

it's a great question. Coffee is definitely something we're interested in, like selling curis and things like that, so people can UM swipe their card or again, like I said, you'll be able to UM look at the machine and it will recognize your eye believe or not. The door open, So we want to we want to be able to open it during let the let the supplier decide what they want to sell. UM. You know curates disappear in our machine. They would not because as you take it out,

you paid for it. So the things that get left out in the past UM will be now counted. It Autal inventories itself through cameras and sensors, so it virtually eliminates stuff. So Tom, how big do you think this business could get? UM in the billions? So it's not going to take on Amazon, but it might be a way for some investors to or some some retailers to at least uh cater to people's wish to just get stuff on demand to and sort of be able to pull it out and not have to deal with a

human being. Yes, it's it's that, or you can it can take on Amazon in a way that the unit. Since they're online, you can see what inventories wear and we can direct you so you don't have to wait overnight. You don't have to wait till the next day. Do I have it? What's the close unit? Where can I pick it up? Um? Not? Not? You know, not everybody can get a package delivered to them they're not home. You know, there's a large population. Even New York City

doesn't have dormant um. So it opens a whole new market of um. You know, maybe I want to pick up something and not, you know, not everybody know I'm getting it. It's a surprise gift or something. So uh, it enables the small guy to go into business, you know. Tom Martin, thank you so much for joining us, founder and chief executive officer of via Touch Media based in New York City. Talking about the vending machine and we're all going to see automats springing up all of it.

I just like the name, Lisa tam you said. Now you know. In December, then President Barack Obama he signed legislation that ended in nearly forty year ban on the export of crude oil from the United States. The US currently produces over nine million barrels of oil a day. And here tell us more about the oil and energy sector is John Grotten. He is a director of equity research at a thrive Vent asset Management, helping to manage more than fifteen billion dollars. He's based in Minneapolis, but

he joins us here in our studio. John, thank you very much for being with us. Give people the picture of the US oil production and how it fits in to the different refinery It's parts of the story because it's different kinds of crude require different kinds of refining processes. That's right, Pam, thank you for having me. US production

is incredibly important right now to global balances. During the down cycle that started in two thousand fourteen and continue through two thousand and sixteen, production dropped off over one million barrels per day. That is now starting to rebound. Demand globally is robust. It's up one point for million barrels per day, and we expect that to go for ward. In the US, supply is an important component to make

sure that demand is is adequately compensated for. There is some concern amongst investors, and this is one reason why energy stocks have not been terrific so far this year is that we're growing production too fast. We'll see how that goes. Some of the data that's been shared so far from the Department of Energy it doesn't look to be as robust as some of the companies are talking about.

So we do have demand growth that will continue. We can talk about OPEC separately, but to your question directly, the US supply is very, very important. You do bring up an important point also, though there's different kinds of cruise, there's actually dozens of different varieties and they have different characteristics. Our refining system is optimized to to burn and distill more complicated, heavier crudes, whereas most of our new production

is like crudes. And that's one reason why we are exporting for the first time in decades is that we produced the wrong kind of crude for what our refineries you. So it's a little bit of an odd dynamic that we're both an importer and an exporter at the same time. And that's the key reason why that the difference in crude that that our refiners require. Yeah, Jason Shanker of Prestige Economics actually wrote a column for bloom Review on exactly this issue, that perhaps we're looking at the wrong

inventory data because of just what you're talking about. That people overestimate just how much the stockpiles have grown and aren't considering exactly what you're talking about, which is the light crude um. You know you oversee about fifteen billion

dollars of assets at thrive in right um. How are you positioning and how have you changed your position with respect to energy related companies in the wake of some of the bouncing around of the oil price this year, as well as so such diverse speculation with some people saying it's poised for another crash and other people saying

we're headed toward eighty dollars a barrel. To be precise, the fifteen billion dollars is for a mutual fine group Thriving Financial and total has over one billion dollars in asset under management. As far as what we're doing an energy we are positively biased towards it. We are an investment organization. We look out two and three years, not two in three months, and with that especially our view

of where supply demand will be in twenties favorable. Having said that, we don't get too far away from our benchmarks. So most of our work. Especially in some of our our balanced funds. We tend to stay close to sector neutral and we fancy ourselves stock stock pickers, and our own attribution show that's that's where we've done bestins picking stocks. So we do have a positive energy view. But having said that, we don't make a massive bet in any sector.

That's just our how we managed funds regardless of the sector. Increases in production in this high quality crew that you're talking about comes mainly where from Texas, from the Permian and the Eagle Forward basin. If you're an investor and you want to participate, what do you do? That's correct. The biggest increases are from the Permian basin. Activity will pick up in the Eagleford in South Texas as well as the Box in Shail in North Dakota, close to

our hometown. But the Permian really is a driver, and the reason for that is it's been around for fifty plus years, but it's a layer cake of different geologic formations that are still being explored. So we still have the upside for companies that operate there. That's less of the case in Eagleford and Baking. Every oil play has a life cycle, whether it's ontore offshore conventional unconventional baking. Eagle Ford are further along in that life cycle, but

Permian it's still early. So two of our favorite exploration companies do operate in the Permian. One Pioneer Natural Resources, second Parsley Energy. Curious thing is the CEO of Parsley Energy is the son of the chairman of Pioneer Natural Resources and the family has been working in the basin for literally since nineteen sixty six. Predecessor organizations a Pioneer, so they have an advantage in that they have worked there,

they know the rocks better, they have cheap releases. Some other companies are paying thirty to thirty five thou dollars per acre for rights to drill. Pioneer doesn't have an issue because they've already been there, so they have a permanent advantage and there's a key reason why that's one of our favorite companies. John, you know you live, you said near North Dakota and some of the drilling boom that we we here talk about, how has the area

changed in the past ten years? Um Western North Dakota, it's completely different. UM rigcount went from twenty riggs drilling for oil to two back to twenty, so it was a Western boom town. Unfortunately, this industry always cycles. Some people talk about new normals of lower prices. We don't accept that argument. Energy is all as a cyclical industry, and now we're coming out of one of those down cycles. So the backing will pick up from where it is currently.

Recounts are increasing, but that one, like I said, the life cycle of what's available in the backing is a little bit longer in the tooth, and when that happens, the rocks can only give you so much oil. It doesn't matter how much better the technology gets. The industry is fantastic. The engineers are brilliant, the scientists are brilliant. Even the guys out the rake hands, drilling wheels, they're

always getting better and better. But there's you can't squeeze blood from a turn up, and you're running out of time with um in the back in particularly what opportunity remains there. You can't squeeze a blood out of a sugar beet. I used to live in farther North Dakota, and I've heard a lot from my former co workers how much it has changed. So it's interesting. I wonder how the boom and the bust and you know, has

has affected the whole area. Really fascinating stuff. Thank you so much for joining us, John Grotten, director of equity researcher Thrive into Asset Management. We're spending a lot of time talking about US and job growth there and political developments here in South Africa. There is a and has been a pretty dramatic situation unfolding with a quite a bit of political turmoil going on there and SMP downgrading

that nation to junk. This matter are is tremendously to the global bond markets, since this country has one point seven trillion dollars of outstanding obligations. To get better perspective on what the implications are, I want to bring in Damien Sassaur, who is a fixed income strategist for Bloomberg Intelligence and is here with us. Uh Damien, what do you make of this? I mean, do you do you think that the market was just surprised by some of

the political turmoil? Why? Why was there such a rapid sell off in the bonds and uh as a pretty substantial move in the currency as well. Yeah no, I mean, thank you lie so well. Um, I don't think the markets with that surprise. Quite frankly, I think a lot of this was priced in. I think what did surprise UM bond investors, certainly hard currency Emerging market bond investors, is that SMP maintained its negative outlook and then just today this morning, Moody's UM put put the country on

review for they put them on negative credit watch. So that implies that at some point of the next one to three months Moody's as well maybe downgrading UM the country's UM issue or ratings. So so, yeah, I think markets are trying to digest the at that, you know, fundamentally, the economic situation in South Africa's deteriorating. The President of South Africa, Jacob Zuma, fired the finance minister, Prava Gord him.

Why did that take place and what are the implications? Sure, well, I mean Gordon UM and Zuma had been feuding for some time UM. I think, you know, more recently it was over the management of state owned companies and quite frankly the affordability of nuclear power plants. UM. But far be it from me to kind of comment on that. I think what is sort of you know, being kind of pushed under the rug is the replacement. Melussy Gegaba was the former Home Affairs minister and she has very

little experience in finance. And so now it's about, you know, the credibility of the South African government and of the the finest ministry to you know, implement policy, you know, Davy And I'm struck by this sort of divergence, divergence in sentiment between what's going on right now in South after Africa and the repercussions in the nation's securities, paired with the incredible rush to emerging market stat which we've

seen pretty dramatically this year. It's been a record quarter of issuance for emerging markets debt selling dollar bonds this quarter. Can you square the two? I mean, our people just overly exuberant right now. Um, well, yeah, March was a blowout month. Um on the hard currency side. I think you saw something on the order of ninety billion in hard currency indexceligible new issues come to market. I mean that is a record I think was the previous record.

But by and large, yeah, I mean it's just been demand has been their risk sentiment is uh is on. Animal spirits are are there, But is this gonna scare it is this going to scare people away? Um, you know, as SNP and the rating agencies take it, they give it as well. Um, just this morning they upgraded Argentina from B minus to single B. I think there's talk now with tax amnesty that Indonesia's UM perhaps going to

be upgraded by SNP and the Nazi distant futures. So you know, I think, you know, you out a kind of um differentiate between certain countries where fundamentals are weakening and others where they're improving. They mean, one of the pictures that we look at is the bank stocks in South Africa they got killed earlier today declined based on this S and P global ratings cut. Is there a bargain perhaps because I understand that the capital cushion that

the banks have is substantial. Well, the problem, I guess, um, in terms of from a from a fixed income investor standpoint is you just have to look back with African Bank, which was, you know, one of the largest issuers of credit to low and middle income households in South Africa, and when they went bankrupt, that left a lot of foreign investors with a bad taste in their mouth. I

think and so Standard Bank, ned Bank, Ran Merchant. I mean they're all some wonderful, you know, very conservative, high, highly regarded banks in South Africa and that sector. I mean I haven't looked. I'm sure there is value there, um, but you know, from a fundamental standpoint, you know, household leverage has gone down, but public debt in South Africa is at the highest point since the turn of the century.

It's fifty percent of GDP. So speaking about that, I mean, is there a potential opportunity uh in South African local currency debt with yields above nine point two percent that's up from eight point five percent earlier in March. Um, Yeah, no, so I mean yields have definitely um rocketed higher. Uh you know the ten ure I think it's forty pct over where it was just five trading days ago. It's almost half a percentage point. Yeah, yeah, I mean at almost nine percent, and I think at a touch nine

percent at some point. So, so certainly there was opportunity, but not without its fair share of risk. Well that risk. Also it should take into account what the gold industry, because isn't that really what underpins South Africa's Uh, that is an excellent point. The a a depreciating rand, which is what we're seeing right now, is actually good for South African mining companies, right because they export you know, platinum dissold in dollars and their costs are in rand.

So you're talking about the many idiosyncratic stories. Are there any other flashpoints for political risk that you're seeing right now that you're kind of watching more closely in the wake of South Africa's issues? So within South Africa, I mean I think you I mean, my goodness, you've had some of the large labor unions calling on Zooma to resign. Um, you've had the former president you know, calling for that

as well. Um, you've got labor strikes, you've got power outages. Um, you've got South African corporates which quite frankly or finding more opportunities abroad just because the operating conditions locally are so challenging. And so look, you know it's going to take some time for you know, whoever is in power to right the ship. And I think we have in December. Um. I think that, in fact, is what zoom is kind of priming for by sort of surrounding himself with people

that he trusts hence the outsting of Gordon. But yeah, you know, we'll see, we'll see how things kind of play through the end of the year. UM. The a n C is not altogether happy with um where things are at right now, though. I want to thank you very much for spending time with us. Staying and Sassaur is a fixed income strategist for Bloomberg Intelligence, providing a unique in real time research and context for a variety of industries, also markets and government factors that affect business.

Thanks for listening to the Bloomberg pen L podcast. You can subscribe and listen to interviews at iTunes, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm out there on Twitter at pim Fox. I'm out there on Twitter at Lisa Abramo. It's one before the podcast. You can always catch us worldwide on Bloomberg Radio.