Why Working Women Are At A Tipping Point: Former SBA Head

Matt Miller's out today, but we're joined by Lisa A. Bromwi's Lisa, thanks so much for joining us. It's always great to be back with you, and it's for a really interesting day. Today is International Women's Day, and I gotta say, Paul, it couldn't come on a more powerful moment. One that has been the She Session where women have disproportionately found themselves out of work as a result of the pandemic. And this comes as a whole host of

reasons fuel it. And yet here we are at a pivotal moment for women entering the labor force and Karen Mills joining us now has vast experience both from the female perspective of being an entrepreneur, but also of what it is to be in the in the labor market, particularly with small business. She's a senior fellow at Harvard Business School, the former Small Business Administrator for President Obama from two thousand nine to two tho thirteen. Joining us

from Karen from Boston, not Karen. I apologize, Karen, thank you so much for being with us. I just want to start with just the vast pain experience in the pandemic by women. How deep is the she session. First of all, I'm so pleased to be with you today because it's International Women's Day and you know we're marking

this moment, and you ask exactly the right question. Women were a lot harder hit by, uh, this pandemic in terms of, you know, the economic impact, and that is true in two ways that I worry about a lot. One is a lot of women dropped out of the workforce because of the increased pressures. And the number are tough. Two point three million women dropped out one point eight men. So you can just see there, you know they're going

to be more impacted. And we can talk about small businesses they've been much harder hit in the smallest and the women and minority owned businesses. So that's a problem too, all right, So, Karen, as we begin to approach, I guess what a lot of people feel like is a reopening of the US economy. Here, what can women do to try to get back into the market, get back into the labor force, get perhaps their businesses back, reopen

to that type of thing. Well, thank goodness, we passed another round of the Small Business Aid the p p P around Christmas time, and there's more in this package that's going through Congress because small businesses are really devastated. And I just looked at these numbers before I came on, because women owned businesses, fifty eight percent of them say they're running out of cash. They're either out of cash or they're about to run out of cash at fifty

eight compared to of the men owned businesses. And why is that? Because a lot of these customer facing businesses that had to shut and these very small non employer businesses sold proprietorships. This is where the women have gained some economic grounds. You know, when I ran the s b A, women particularly actually Hispanic women were the fastest growing part of our small business world, and now we've

given them a real setback. So they've got to take advantage of every single thing that is out there for them because there's a lot of grant money coming out through these p p P programs, there's low interest loans, and they've got to stay with us because if they shut their doors, it's going to take the economy a really long time to recover, and it's going to recover disproportionately, which we know is a problem. Or you know that hurts everybody. Well, Karen, do you talk a little bit

about why women have suffered so disproportionately. Some people say because they have more jobs in certain areas like education that have been hit hard, but there's also the childcarrish. You can you talk a little about that. Yeah, you know, all across um being a woman, you know, trying to prosper economically, there are frictions and barriers that you know, I hope in my lifetime will get better and go away.

And it's it's true we've made progress, but I actually think we're at the tipping point all of these kinds of frictions and barriers where more burdens fall on the women and also employers don't do enough. We we know right now we need all the women in our workforce, and we know we want to create a culture that works for them, and we want to create uh, you know, help for them because they have children. Having children is the absolute the best thing thing. I have three boys,

best thing ever. But you know, it's a lot of work, and especially when they're young. So we need to make sure that employers step up and not do this as a nice to have. This is a must have if you are going to be competitive all right along that front, Karen, You know, we see more and more talk, We hear more and more talk about diversity from some of the larger corporations. Is that real? Is you see real change occurring or is it more in the department lip service?

You know, we're not quite at that inflection point in terms of the corporate diversity programs. I just wrote a case for Harvard Business School and one of the big tech companies, one of them you know whose name you say every day and it you know it is really focused on doing a real diversity, equity and inclusion program. And they're philosophy is that's where they're going to get

competitive advantage. It was very interesting to go deep in this because it was a persuasive argument that if you want to make your customers happy, you have to have a happy and inclusive workplace. If you want to have diverse customers, you want to have a diverse and inclusive workplace and people who are not spending any of their mind share worrying about am I being left out of this meeting for some reason? So I am persuaded that, uh, the ones who get it, which is not everybody, will

have competitive advantage. Interesting, We will follow up on that. Karen Mills, thank you so much for joining us. We appreciate that. Karen Mills, Senior fellow Harvard Business School, former small business administrator for President Obama as well getting her thoughts on women in the workplace and the sheet session in which women have been hit harder and Karen shared some statistics there. Women have been hit harder in terms of unappoyment and other economic metrics during this pandemic and

during the recession, insulting well. In the equity markets, it's really been about the rotation trade really since about September of last year. Some of those more cyclical sectors such as energies such as banking have been out performing some of the typical drivers of this market, some of the large kept technology names. The question is how much more does that trade have left and where should we be looking in the markets these days? Lisa Schaalett, she's a

chief investment officer at Morgan Stanley Wealth Management. She joins us, we always appreciate Lisa's opinion. So, Lisa, again, the rotation trade has been a really interesting trade for a lot of investors. Um, how much more do you think has

left to go here in that type of portfolio? Look, our perspective is that, you know, a lot of these sectors, whether we're talking about financials, energy, industrials, infrastructure, you know, parts of consumer services and consumer durables have really been left behind, not only uh during the recession, but we're left behind for the entire last business cycle. Uh. You know that we saw from from you know, the post pandemic. Uh. And so we think that there's you know, quite a

lot more to go. And uh, you know, this is not simply about economic growth and and that's especially true of uh, some of the services, more cyclical services businesses. And you know, one of the things that we've talked a lot about is that in this new business cycle that we're entering, the opportunities for some of these UH cyclicals to really embrace and optimize on digitization, optimize on some of the lessons learned from the pandemic on contactless

business models. Means that they're not just going to benefit from a pickup in economic growth, but they're gonna pick up, uh benefit from a pickup in margins and return on assets. I really think some of these companies are gonna, uh, you know, see some some very big improvements uh in in moving towards asset light business models. Well, here's the tension, though, Lisa, is that people see very fast growth, at least in the near term, and yet we've got a FED that's

talking about inflation remaining low. Janet Yellen was speaking at MSNBC moments ago and Treasure Secretary, and she said that she doesn't think that the stimulus bill will be uh something that will cause inflation problems. Do you buy this? I mean, isn't there sort of an uncomfortable reality here

of fast growth yet no inflation, which is sort of unsustainable. Look, it's it's it's always a daunting thing to disagree with with people like you know, the head of the bed and your own fowel, and and certainly do you know Janet yelling at at Treasury and so you know what my comments are are obviously made with a huge degree

of humility, uh and respect for for them. Uh. But look, I do think that while certainly, uh, there's lots of evidence that that some of the inflationary pressures, especially those related to the supply chain, um, are are probably going to be transitory. And we know that very often, you know, big moves we've seen commodity prices are transitory. Uh. The reality is that we think that there are some other

things going on here. Uh. The degree to which fiscal stimulus uh, you know, in this recession has gone directly uh too small businesses and directly to households is relevant. Um. It's coming at a time when there is behavioral pent up demand for consumer services, for travel, for leisure, for entertainment,

and there is household balance sheet capacity to spent. And so what's different for us this time is that we actually are believers that monetary velocity is going to be uh picking up, is going to be one of the drivers of inflation. Uh. And we don't think that this is going to be a cycle like like uh the last one where deleveraging among the banks and deleveraging among households prevented money velocity from picking up. And that's why you were able to see the Fed print money but

not have inflation. So that's that's the thing that's different to us this time is is fiscal and it's the directness of the fiscal right, It's it's not CAx cuts, Lisa. I'm gonna let you go. But before I do, how high can yields go before it stops the equity rally? Just twenty seconds? Uh? Yeah, So unfortunately I probably don't

have a twenty second answer on that. Uh. As running at a time, I wish we had more time with your I know, but but look, uh, you know our our senses that um, you know this is all about equity risk for me. Um. And that means uh that you know, rates can continue to go up and not hurt stocks if earnings estimates are also going up. Uh. And so our our our our our our cents however, is that we're reaching a peak and earnings revisions bread uh And therefore, you know, any further move higher in rates.

If we were to get, you know, into the one seventy five range, it starts becoming problematic unless unless we really can can start looking to two and much much higher earnings. So we've got up as the bookcase on SMP index. Uh, you know, but but not a lot more from here. Lisa Shalit, chief investment officer at Morgan Stanley Wealth Management, thank you so much. Let's turn our

attention to the global energy markets. I'm looking at w t I crew here, sixty five dollars, fifty five cents, down about fifty five cents today, but of course oil has been on a major move higher. A w t I we touched almost sixty eight dollars today, so a big move, presumably a play on higher global demand going forward. And then we also had OPEC kind of holding supply steady. Let's get the latest on the global energy markets. We do that with Regina Mayor, Global Energy head for KPMG.

So Regina again, big move up here in global crude. What's your takeaway? Well, we're at a nearly two year high. We haven't seen prices like this since April, and I think we're going to continue to see a pretty buoyant price for the next few months. US shale producers are committed to staying the course and not radically increasing production, and it's sort of a low risk, high reward strategy for OPEC plus to pursue to keep the supply out of the market and continue to drive the price closer

to seventy dollars per barrel. They need that oil revenue most of them still isn't that doesn't meet their budgetary needs for their countries, and so right now they're going

to play it for as long as possibly can. Although you know, the move overnight was really interesting and I'm wondering on a larger scale, there were these attacks in Saudi Arabian oil production sites that are some of the richest in the worlds that I believe produced something like seven of all the oil consumed UH any year have that capacity, and there was nobody injured, there were no production sites actually taken offline, and yet oil prices searched

in particular, Brent, what do you make of that in terms of what it means about the supply demand dynamic. Well, I think it means that the market is starting to worry about the potential coming together of demand and supply. There was a view that we would hit a point in the market where things would get pretty tight, that's the supply overhang would be gone, demand would return to post a pre pandemic levels, and that we would get a spike in the crude price. What we're seeing now

is the reality of that potential coming together. But from what I see, the fundamentals don't actually require the price to go that high. I think it's still overly frothy um and a little bit overly worried because the supply of a million and a half barrels per day that open plus is currently keeping off the market can pretty quickly come back into the market. But again, the industry is grateful for the higher price, so we'll take it

for as long as we can get it. All right, Regina, talk to us about our good friends in the US shell patch here with w t I, it's sixty bucks a barrel. Are they making money? Are they fixing their balance sheets? What are they doing here? They're definitely making money now. Most of them have even made commitments at any dollars over forty per barrel would be would be given back to shareholders as UM dividends or being used for debt repayments, or being used for stock buy backs,

so we're talking about it differential. At this point, that's a lot of cash that they'll be able to figure out what to do with. I think they're going to stay the course relative to little to no production increases because they've told us to rights to the street that they're going to be fiscally disciplined cash preservation, returning those dollars to shareholders, and they have to continue to tell

that story. There may be fringe producers that will get pretty excited and try to go drill, baby, drill, but I don't think we'll see that in well, and that's been kind of the bet right. I mean, a lot of people have kind of dismissed the swing production factor of shale producers, the idea that they won't come online that quickly because they've you know, found light the light

and I have now production discipline. Do you think that there are any signs to challenge that assumption that perhaps we could see the shale producers rampant production back up far beyond what people are expecting, not in the short term, Lisa, because it's not a tap that they can turn on and off, and we'd have to start seeing rig counts go up pretty dramatically UM and flows coming coming up

pretty dramatically. We've been study at eleven million barrels per day in production in the US UM, but we were off two million barrels per day with the storm, and so I think we'll stay steady at eleven million barrels per day, and I think the industry will stay disciplined

at least through the next couple of quarters. I'm not saying they're gonna stay disciplined even through the end of the year, because it's just too hard to resist drilling at at a sixty plus dollar per barrel, But that's when I think OPEC plus returns that supply to the market, so they sort of keep it at this goldilocks price. It's not too hot, it's not too cold, and it maintains maximum revenue for the OPEC plus. Producers were surprised up just quickly surprised by OPEC plus kind of keeping

supply steady. I was not, actually, I know a lot of analysts had predicted that at least a million barrels per day would come back. I didn't see the rationale for that because they had been I mean, the Saudias in particular have demonstrated they have their hand on the steering wheel relative to how well they're managing crude price. They're not ready to take their hands off the steering wheel and lease things up for grabs again. So I wasn't surprised, but um I am surprised by the significant

buoyancy in the price. Regina Mayor, thank you so much for being with us. Regina Mayor, Global Energy head at KPMG talking about some of the massive greens that we've seen in oil prices and really some pretty big swings overnight and Paul, it was interesting to see that production wasn't taken offline and yet still there was a pretty

sizeable move, particularly the price of Brent. Yeah, exactly right, and we did see that spike in the morning, but it's since come back here and again, as Regina was suggesting, shale producers are going to keep disciplined. I interesting to see to watch throughout the year, at least, she said, in the next couple of months. There's a big caveat there. She said, you know, the near term is truly the near term. Right now we are seeing gains throughout the

commodity complex as people foresee stronger growth ahead. Right now, we are foreseeing more legislation and possibly the passage of that one point nine trillion dollars stimulus tomorrow. We're talking about vaccines, We're talking about the pandemic almost ended ending. We're forgetting the energy crisis in Texas, and yet Elon Musk is not. He is working on a potential solution despite the fact the energy of energy officials in that region tried to peg some of the problems on renewable

energy sources. Joining us now to tease out all the different parts of this evolving story, as Marine Malik, a Bloomberg News reporter covering all things energy, Marine, can you just start by laying out the energy crisis in Texas and how it's been connected to the advent and the surge in renewable energies in that state. Yeah, So Texas had a widespread generation failure um last month, and where you had the state and most of the country is

mostly reliant on natural gas. Natural gas plants tripped offline because they were frozen or they couldn't get fuel, So you had, like the US, more reliant on natural gas than ever not able to get get gas lay a pipeline. And this is we've never seen this tested on this level before. Power markets, like the grids Texas, like whichever grid do you think about, is mostly geared towards preparing

for summer. So the demand wasn't was supposed to match or maybe even exceed summer demand in in Texas, which is amazing just to think about that. You'd have more people turning on power in winter than in summer when it's like a hundred plus degrees UM. But you had generation failure across across the board, like wind generation of froze. You had obviously solar when there's no when there's cloud coverage and at night you can't get solar panels to work.

UM and coal piles froze up. And a lot of the blame early on was was placed on wind and UM and solar because they are intimate and resources. The difference is that and and they did see a large chunk of generation shut off, But the difference was the grid operator was expecting that What has been apparent from the last month's events was they now have to rethink how to prepare for winter extremes. If there's another repeat.

All right, So that's kind of a summary, but we appreciate that summary of what occurred now in rides elon Musk. What is Tesla doing in the Texas energy market? So to be fair, um Tesla was likely working on this project for a while, but it's interesting we don't know exactly what what his intention is. But batteries can play several rules. They are seen as a critical part of integrated integrating more renewables, and Texas like doesn't have state

mandates or subsidies. They do like like other states do, to integrate a certain amount. So it's really like costs for solar and wind have plunged so much. You're seeing Texas like adopt these renewable sources in and at an accelerating pace. So as you get more intimit and resources, you need more batteries to back that up. And so there there are a couple of ways at least that tests I can can have a role in in this market.

They can you know, at night, when there's too much um wind or or in the day when there's too much solar, it sends. They call it the dunker Duck curve. When you have too much power and not enough demand

and it causes prices to collapse. So what we've seen battery makers do is come in during those low price periods soak up like that extra power um that is just sitting there really cheap or even being paid to take that power, and they store it in batteries, and then when prices are high, like in the evening like six to eight pm, when you know, like people like the sun is going down and and you have people turning on lights like, then they sell it back at

that point. Batteries can also provide grid stability services, so like make sure power is flowing at this like narrow range it always has to at the hurts, and provide frequency control. So they could play multiple markets. We don't know exactly what they're going to do, but there's definitely

opportunity there well. And the reason why I connected the to the energy crisis a couple of weeks ago in Texas and these batteries is because they kind of go together, this idea that there could be a missing link here of storing renewable energy for times when it's more needed. And I'm just wondering how much that crisis kind of gave umph the c F a term to Elon Musk

to try to get this implemented throughout texas well. As I said, we don't know how big his plans are, but he's coming at the perfect time when this is exactly like when people are trying to figure out what the energy transition could look like. And we definitely need more batteries and need to figure out how to winterize everything.

So it will get like if he has hopes for grander on a grander scale to implement more batteries and and usually you see that if a battery maker comes in, they're not just doing on project there in it and and you get that know how of building one and then you build a lot more. Um So this could definitely help him and he could become a critical part

of the conversation. Noreene Malik, thank you so much for being with us Natural Gas and Power markets reporter for Bloomberg on Elon Musk riding into the Texas energy scene where he already has been anyway to try to take advantage of a situation as well as perhaps add to it. This is Bloomberg. 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 and on fall Sweeney I'm on Twitter at pt sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio