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App hapecs orders today, we would have expected to see a much larger decline in business investment with such high rates. So the data that's coming in is pretty good, but it's spectacular compared to where people thought we'd be now a year ago. Over year ago and red started rising.
So when you talk to your companies here, what's the challenge they have to attracting retaining talent here? Because I look at a Jolt's number that's still really high, and I'm like, I don't know all the Sweeney off Springs. They're all employed here. What are your employers that you talk to?
Tell Paul, you're the only father east of the Mississippi River whose children are all employed gainfully.
It's a domain set of one.
Well, we have had twenty six months now of unemployment atten below four percent. That's the longest period since the sixties. Really, so this is still an incredibly tightly market. Employers thought things would get easier, They thought leverage would swing all the way back to employers. Hasn't really happened. They're still struggling out there, and they're still finding that our attention is fairly low. People are job hopping and finding better things.
I get to me, and I could be wrong.
There's so much hot era out there now about this new how you get a job?
What do you see in the day to day grind and Zip recruiter?
Like does a resume matterner anymore? Do you have to master all this digital You got someone here. I needed a change to be able to make more money and have a life.
Outside my job.
Who doesn't Zip recruiter helped me discover something better. I think our audience worldwide is fascinated by this new method. How's a method work within our economy, and.
So for years, job search was centered around search right people typing in a job title and finding the few jobs that were in their area. Now, with AI matching technology, people create a profile, they answer a couple of questions and say what they want and what they're interested in, and then a technology instantly alerts them to jobs that match their skills and experience and shows them jobs they
wouldn't even have considered. And that is where the sort of exciting new discovery is taking place.
I just wanted to be the bad boy for the Rochester Reds aim back then, ya back then? So what are the sectors?
I mean, what are the sectors that are just really in dire need of just workers.
So there are many sectors where the workforce is aging, where people are retiring in huge numbers, and where the talent pipeline is drinking. People are not enrolling in accounting anymore, They're not enrolling in the skilled trades in the kinds of numbers. I have a whole theory on this, and so a lot of jobs are just seen as kind of old.
Why Paul and I are asking, because we've survived this in school, what does the accounting industry do it's a broad statement, not the big four, but what do they do well?
So, so companies like KPMG, you're saying, wow, we've got an image problem. Young smart people want to go into tech, they want to go into AI and do all these fun jobs.
They don't want to pay accounts.
They aft, So what is to pay?
Is the paul. It's a tough job, but.
The bigger issue is the perception that it's really hard and stressful. So the number one reason people give us for having quit a job is stress. People are increasingly young people especially are prioritizing work life balance, and so what KPMG and other companies that are strongly.
Account are prioritizing work, like are you kidding me? An account what's an accountant make nowadays? Six fres dificult six figures and twenty you pop them one hundred and eighty. Nobody's worried about stress.
That's what companies that What industries that are very seasonal like accounting, are doing now is increasing staffing generally across the year, right, so that you don't have people who are mostly kind of idle for several months and then who have these massive rushes when they're working twenty four to seven. They're the companies are absorbing that seasonal risk and kind of overstaffing during during parts of the year and then giving people an easier time.
I'm jerk, taxis, how does this back to home thing? How is it playing out here? We're four or five years into it here? How do you think it's How is it shaking out? And we still have more room to go in terms of that shacking.
Out, Very very resilient. Remote work is just about stabilized in job hostings now at around eleven percent. There's still a huge mismatch though, between demand for remote work and remoters at hybrid remote and hybrid okay hybrid, sixty five percent of job seekers say they would prefer to find a remote or hybrid job. So there's huge.
Demand for remote work.
We know eleven percent of the people who just quit jobs are looking for remote work, and that's why they quit.
One final question is just so so important. You got to come back.
Where's she She's like West Coast, right, She's like working like a twenty hour day going down to Santa.
Monica surfing, surfing and all that.
The absolute thing I hear from everybody older, is that young kids won't work.
Is that true?
What do you see at ZIP recruiter, Well, prime age labor force precipation is the highest it's been since two thousand and one, right, so it's it's it's not exactly true, but yes, there is a bit more priority placed on work life balance and companies are having to improve and that pandemic.
I think part of that's a pandemic. A lot of people just said, man, life is short.
I need to read. I strongly agree.
I think that is.
And I don't know.
I think that's here for a while.
Don't be a strange.
I think.
And we would love to come out to La to have you and you. We could do it.
We could, we could do it right by the pool of the Sunset Tower Hotel. Nobody's there at seven, it's three or four. We got Julie over there for early morning cockcaills. Julia Pollock, thank you so much for Zipper.
This was fascinating joining us. Now. This is the interview.
Of the day with good perspective on the frenzy of the moment. Paul, I'm embarrassed to say this, but I got to rip up the script short with bitdog at fifty six thousand with liz Anne Saunders at Charles Schwabs. She and I are on the same page on this. Lizanne, you know you've done fiscal advice to our government. You've been involved in new administrations and giving them counsel on.
How to be responsible. As a five you were like seventeen, I remember twenty years ago.
But liz Anne, did Gary Gensler screw this up? How do you feel about the SEC green lighting bitcoin within our retirement plans?
Well, there's there's always caution around this, and as you know, Tom don't we don't offer it. We do provide the opportunity for some of the you know, ETF vehicles to be purchase a soul, but it's always with a wrapper around about under standing the risk associated with this. It's not a currency. It doesn't really provide and has it provided an inflation hedge per se, and that you have to treat it like a very speculative trade or investment
in your portfolio. But you know, beyond that, we we can't control what all of our investors want to do. But I'm a skeptic and I am just on crypto in general.
Paul, I'm going to get in trouble here. But I'm upset every time I go to the Bloomberg and do the symbol for bitcoin that we have, which is xbt x ray void Tom, and I have to hit the famous yellow currency button.
Yes, you do next, it's not I don't care where they put it. Yeah, but it's not.
I think it's more like an equity almost. But continue, I just will talk.
Lizanne's right.
I know a guy of six floor we can talk to about that work on the Hey, listen.
It's become very correlated to indexes like the Nasdaq one hundred, So I think you're absolutely right.
Hey, Lizene, we're just kind of through the earning season here, a couple more of the retailers left to come here. What's your takeaway?
Maybe yet again, but to a more significant degree. You saw analysts forced to lower the bar to a more significant degree than was actually necessary, and as a result, you've had almost a perfect round trip. If you go back to October of last year, the expectation was about eleven percent earn its growth for the fourth quarter. You started the reporting season down sub two percent, but then you've seen analysts have to ratchet things back up and last I looked yesterday or Friday, it was back up
in the ten percent and change now. In fairness, though, because of the way base effects work, that increase that we're now seeing in Q four twenty twenty three, because the bar gets set too low, You've seen analysts have to ratchet down estimates for Q four twenty twenty four because the year over years is not going to be robust because you got that bigger pop in Q three.
But I think analysts have been admittedly flying a little more blind in this environment called the pandemic era, where even though there's fewer companies that are not providing guidance at all, the guidance is just not quite as maybe it was never precise, but it's a little the guidance is a little more loosey goosey right now, leaving analysts to have to kind of finagle things on their own and also not adjust earnings too far out.
So one of the things Luzan as people try to get a handle on those earnings is we need to see a broadening out of this market. We saw a little bit of a November December last year, but it still feels like this market may be a little too thin in terms of maybe the magnificent seven or five or however many are left are kind of really driving the performance here, and a lot of folks say that makes them nervous. How do you think about it?
So I do think there's still is risk associated with the concentration, but it's nowhere near as cute as it was last year. To your point that we've had to start whittling down from the magnificent seven to the sensational six to the fabulous five, because we've seen that move from in the case of Tesla, just out of the seven in terms of the largest seven stocks recently dropped down to number ten. And you've had stocks outside of the sort of techy world like Brickshire Hathaway, like Eli,
Lilly leapfrog Tesla. But I think what's happening and you don't pick it up necessarily by traditional breath statistics or just looking at the MAGS seven is there's more churn under the surface. So the Nasdaq Index overall, at the index level, the maximum draw down this year from a year to date high is only three percent, But the average member maximum draw down again year to date from a year to date high within the Nasdaq is negative twenty two percent, so there's a lot more churn going
on under the surface. And I think in this kind of market environment, to get the true story, the narrative that the market is telling, you have got to leave aside just index level analysis.
Lizanne four equity types in a room, you're going to get seventeen answers.
On a rebalance.
What is the liz Ane Saunders formula.
For REBOUNDCE So I think to the extent investors can do it based on the implications of turnover, tax bracket, et cetera. I think portfolio based rebalancing versus calendar based rebalancing. Letting actual moves in your portfolio, whether it's at the individual stock level or some group like the Magnificent seven,
or at the sector asset class level. Let the moves up and down as a share of your portfolio, dictate the timing associated with rebalancing, versus say, what the mutual fund complex does, which is last quarter, I mean last week of every quarter. It's very calendar based, and I think that's just a beneficial way for individual investors to stay in gear not have to make all or nothing decisions. And as I always say, do a version of BI low cell high, which is you know, at low trim high.
I suppose boring to talk about. I love when you guys ask me about that, but for the most part, it's not maybe what it's not the bomb bass that is more intriguing to people, but it's actually what matters.
Hey, Liz, and thinking about this market here, a lot of folks are saying, yeah, earnings are fine, but we've got to focus on what the Fed's going to do. And I'm an old self side I don'tlyt so earnings still matter to me, but we can't escape that this FED is really a key driver of this marketplace. What do you expect our freeder reserve to do this year?
Well, as you guys know, we've talked about this a lot on this program and on TV in advance of the better than expected job most recent job support, the hotter than expected CPI report. We were not in the March camp, felt that that was just too aggressive an assumption, not to mention the six to seven cuts priced in at that point, and that's now shifted to an outlook that's a little more in line with the fed's dots, but I think it's still too soon to tell the
FED is data dependent. I think this is a FED that took the elevator up, the opposite of what they normally do, which is take the escalator up. And I think they're going to take the sc later down in the interest of making sure that inflation has come down
as staying there. The other really important thing, and this is what you need to watch for in all the upcoming inflation data reports is Powell's emphasis, not at the FOMC meeting or the presser, but in the sixty minutes interview when he somewhat suddenly mentioned the twelve month rate of change as being a key as opposed to the thick six month rate of change or the three month
rate of change. That's another way of saying, we want to sort of elongate the analysis period to feel confident that inflation has come down and it's likely to stay down.
Li'sand a little weight to the tape here of the magnificent whatever they are, a little saggy. Microsoft goes from a four to twelve over the last couple of days down to four oh seven right now, even in vidio breaking down a little bit, do you still model out it is completely normative to have a ten percent correction? Is that still part of the Saunders playbook?
Sure, and a lot of people forget we had one. In the latter of last year, there was a ten percent correction in the S and P more for the NASDAC from the late July to late October ten year yield spike from subforida to up five. So it's incredible how short memories are, as if the most recent correction was way back in the twenty twenty covid era. And I think to some degree, not on a day to day basis or maybe week to week, but I think the bond market is to some degree still in the
driver's seat for the equity market. And I think if we were to get an outsized move, especially tied to inflation on the upside and yields, I think that that would be to the detriment of the equity market.
Lizanne Saunders, thank you so much. In honor of Lizanne, Tomorrow all of our music.
Will be led Zeppelin. This is really cool.
I mean, he was with Steve Cohen over to SEC and then Cohen bought the Mets.
And Nicholes said forget it, see.
You and you know this is a guy who writes a memo and it's read religiously on Wall Street because of his work, And like Mario Gibelly, I'm gonna take it back to there's something about being an auto securities analyst as Nick Colis was at First Boston a few years ago.
Is just hugely read Data Trek.
Again, we protect the copyright of all of our guests looked at Data Trek to get Nick Colis's brilliant work.
Yeah, Temmy had a pretty good career on Wall Street. But here's a guy. It goes to Haverford College, great school outside of Philly. He majors in Near Eastern archaeology. Are you kidding me? If one of your offspring came to you, Thomason, I'm going to major near Yeah, let's go there.
Right now, Nick Colis, how about that Near Eastern archaeology to get you through?
But how did that work?
Oh?
Very very slowly, very slightly.
But he made up for it by getting his MBA at the Chicago Hey, Nick, thanks so much for joining us here. Warren Buffett out with his annual letter. You know what he didn't even talk about once was AI. What do we read into that if Buffett doesn't care about AI. Is he missing something? Are we overplaying something?
Yeah, it's fascinating.
You're right. He didn't mention AI even once in his letter, which is one of the most widely read portfolio manager letters in the world.
And I just take it as kind of Warren being Warren.
He cares about fundamentals, and he cares about company management, and he cares about return of capital. AI is probably just a footnote for him.
Are you concerned or to what level are you concerned?
Nick?
About? This is still a very concentrated market. There's not a lot of breadth that there, whether it's the Magnificent seven or five, or whether it's just a handful of names pushing this market higher. The technicians telling me that's not really a healthy market. How do you think about it?
It's I totally take a point that it's probably not a healthy market, but it's the market that we have and to some degree at least forgetting some movement out of names besides tech. So Lily is helping healthcare, Berkshire is helping financials, and those are two groups that are performing here to date. So while we're having some amount of narrowness at least it's narrowness in some sectors, it's
besides tech and tech adjacent. So I put that in the win column versus say last year, where it was really almost all tech for the first half of the year.
So when you think about this market here, Nick, I mean, do we have to be smart on earnings? Do we have to be smart on the FED? I mean, I'm not even sure what's really driving this mark.
That's the smartest question I've heard this month, Paul. The month's ending, the month's ending. I mean, this is really really important.
Fos. Paul Sweening nails it.
Nicholas, am I a FED watcher or a street watcher?
I think you've got to be a street watcher. I think it is said to a first degree of magnitude. Rates don't really matter anymore. It comes down to what's the story, what's the theme. If it's tech, that it's AI, if it's outside of tech, that it's organic growth, So a lily for example, being for the best example. It comes down to stocks, It comes down to sectors. We've got three winning sectors year to date, financial, healthcare, and tech, and that's the way it's going to be most of
the year. This is kind of a mid cycle market. This is a market where we're caring about growth, not Rachel.
You a guy that I miss, miss miss each and every day. He was so kind to me, Clayton Christiensen in disruption. This morning, we're seeing disruption at Macy's, Nick coolis are we going to see a lot more disruption of the have nots of corporate enterprise in the next five years?
Boy?
I miss Christensen as well. It's a good point.
And you know his thesis was that disruption happens in perpetuity. It happens every day in every way, and so I think it's the single most important theme in investing, frankly, not just day to day, in week to week, but year and year and decades a decade.
So, Nick, if that is in fact the case in terms of disruption, is there any scenario where I'm not overweight tech? Just like forever?
Our basic take on this has been, no, you have to be overweight tech and tech adjacent because tech is now about, you know, in four different sectors.
But you do have to be long tech. And we actually done.
Maths compared XLK to Berkshire Hathaway and XLK usually beats Berkshire Hathaway on any given rolling one year basis back for twenty thirty years. Innovation trumps everything, Technology trumps everything. It's been that way for forever. I don't think it'll change.
Well, where are you? And Paul was mentioning you're work going back to First Boston.
I look at AI A. I don't know what I'm talking about.
I'm not qualified to opine, but Nick Collis, I look at it where, Okay, people are.
Going to fail it AI, but there's got to be some winners out there. Is that how you look at it?
I look at it kind of in this sort of cliched picks and shovels paradigm where you don't necessarily want to be the person going out to look for the gold. You want to be the person selling the picks and the shovels and the genes and sieves to the people who want to go out and search for the gold. And you know, that's why Nvidia is working so well, that's why other names like Amazon should work fine.
So, Nick, you say that earnings for this market, what's your takeaway from this most recent earning season. We've just kind of just about to conclude here this week.
Yeah, this was kind of a C minus earning season for me. It didn't really knock the cover off the ball. You had some big wins Facebook obviously, Meta, Nvidia obviously, but by and large, this was kind of a very mediocre fourth quarter and the market knew it would be, which is where we had that swoon last year. But I think we're fine the rest of the year. Earnings growth should pick up. But the current earning season was kind of a nothing for me.
So what's the key driver for you through the mainit of the year. Is it going to be earnings? Do you need to see meaningful earnings growth in the back half of this year? Is there earnings risk in this market?
There is some earnings risk versus expectations. I mean, we all know that analysts guests too high and then have to cut down. It was the case when I was doing the job in the nineteen nineties. It's still the case now. So earnings won't meet the streets current expectations, but there will be enough earnings leverage to give us four or five six seven percent earnings on say three percent revenue growth, and that's enough to keep the market going.
The market's not just worried about this year. It's worried about showing Ordnie's leverage for the next two, three, four, five years, and we should get that extra recession. This year just has to show that it has some growth.
Nick, we'red fifty one hundred rounded up. I mean, do you have an XPX target out one year, two years? Are you doing an ed yard any of the Roaring twenties?
No, but I do understand that there is a I do think that there.
Is a very strong tail into this market.
I don't have a nartificial price target, but I'm totally comfortable telling clients belong Us Equities here.
Nichole is hugely valuable. Look at the front pages around the world. She called me up today, she said, I got twenty ideas. I said, keep slash it.
All right, we're talking about the zembic effect. First of all, this is from the New York Times. They're saying a lot of those sele celebrities that kind of you know, posted about their curves and how they're you know, going through all these things, and a lot of fans. They gained a lot of fans. Well, now they have to explain how they dropped weight because some of them are on these weight loss drugs. So it's a back and forth.
The fans are feeling betrayed about it. The social media influencers, they're struggling over well, how do I say this now? Because for so long I was talking about fat shaming and remember.
Bostics walking by right now, Romaine and I are number our fans are not worried about losing our curves. I mean I know that right now, Paul, What do you think of.
It's The effect is everywhere. I mean, you know a lot of people and unfortunately for a lot of folks who really need it, they can't get it right because some people, for.
Me on this it's a diabetic drug, yes, correct, and if I have a serious insulin diabetic issue, I can't get my drug because somebody's trying to figure out correct rounds.
Yeah, yep, that's and it's expensive, expensive scripts.
They're writing the scripts and they're just not enough supply. So a lot of the pharma super manufacturers they're trying to ramp up supply, much like we did, you know, during the COVID and the vaccines.
But it's just gonna take the time next.
All right, Wall Street Journal that's where we going next. The number of private equity firms owned by women minorities, well, that's had a record raising capital the last year. It's starting to downfall, starting to starting to dwindle for their fundraising goals. This it was a report from investment firm Fairview Capital Partners. So they say that in group of firms are diverse fying groups, it's running into the toughest market conditions. So some of those sub segments. Here's who's
seeing a decline. It's the number of funds being raised by Black Asian American women who owned firms last year, that's shrank for the first time. And then women minority own funds their overall have started to decrease their fundraising targets. And the reason they're saying their concern is because bringing diversity into venture, they're saying, is going to help you know, these overlook segments. So that's why this is a concern for them. But they're starting to fall off.
Yeah, i'mazing.
Just you know, as interest rates came moved higher, just became harder to raise capital for everyone, including you know, some of these minority groups. And so I guess it's not surprising from that perspective, but you know, you hear from the folks in the financial services industry. They're trying to be supportive of diversity across all across the industry.
But it's tough. It always has been, quite.
Frankly, most finely.
All right, what else?
Right?
So we got some tech here Meta we have the first true augmented reality glasses could be unveiled this fall, just when you've got the vision pro right, Okay, this it's an internal project to referred to as Orion. It's different from metas they have the ray band smart glasses, it's different from It's not like what you're wearing Thomas got toes. These are a little bit thicker. They're different from the Quest headsets too. So they're kind of going
back to the whole Meta thing. It seems like it's been in the work for so years under their Meta's Reality Labs division. No word on the cost of it, but you know this is from Business Insider. They're saying it's going to be unveiled during their annual Connect conference that comes out this fall, so we'll see.
No.
I mean, the stock has worked, The stock has worked dramatic. It's up one hundred and eighty four percent over the past twelve months, primarily because they're not talking about the metaverse. 're talking about cost cutting, driving profitability of the core advertising business, not letting zuck talk about the metaverse. That's why the stock's working.
So are going to bring it?
You actually hear music with the glasses? No, your kids, you know, I mean, like, you know, Lisa walks around with the AirPods. Cool kids, But do the glasses really like give you good fidelity.
They're supposed I mean, Mark Zuckworth, he posted a photo on threads. You know, we had them in the background, so it's they're there. There are threads, Yes, threads.
That's the other thing.
It's still on my phone, by the way, because that was the thing for a week, literally a week.
Yeah, and for a week. It's kind of a social blurb.
It's not there, no social thing.
All right.
One last thing before we go. This is a this is a doozy Wall Street journal. The see through pants scare of the MLB Spring training. Okay, so the US, yes, apparently they're they're lightweight and lightweight and breatheable. But that causes an issue because the baseball players are worried that the uniforms are too sheer. They're revealing on the body. You know, the tucked in jersey tails, you know how they do that. It makes it look like they're wearing
a diaper. So they're not very excepted. This is apparently Nike's new vapor premiere line. It's like sweat wicking technology, recycled yards, supposed to be lightweight. You know, it's hot out where they are.
I have no idea what they're thinking.
I have.
There was one season I believe in the NHL where they did something as stupid as this.
Is, years and years and years ago. Ye, just fix it, and I understand, we don't want to go back.
I had this is Chilsten's drugs a long time ago. I had a Little League uniform that if I was thrown into water, I would have drowned.
It was so thick it was wool or whatever. I was like, what, this doesn't feel like a uniform.
Well, it's like out of a Seinfeld episode. You remember George Constanzo when he convinced okay, you know Steinbrenner, to change the uniforms, and they.
Here, baby, you can find me under the lights. Diamonds under my eyes turn the rhythm up. Don't you want to just come along for the ride. I'm I the only one in the planet who hasn't seen the Barbie movie.
Me too, you haven't segned? What do you think?
I thought it was okay, that's what I daughter like. My daughter really liked it. It's already girl power.
Steel is a huge fan.
Yeah.
Yeah, it's a very girl power woman.
I mean, you know, she picked it over, picked it off armor, the whole female empowerment thing, that's what it is.
And at my point here where I got to start watching Oscar movies just to keep so I can do the job.
I mean, you know, you do you do the Barbie movie.
And I mean Ken took the you know, Ken's like in the Oscars and all that.
But there's doll like dua lipa, I mean, you know, dance to night.
We're gonna feature We're gonna feature lots of Oscar themes here in the coming days. This is a Bloomberg Surveillance podcast, bringing you the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube.
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