Surveillance: Labor Force Growth Is Slowing, Joseph Cohen Says

Alian's global investors strategy in the US. But everybody, mona, everybody yesterday was an EU strategists, weren't we ha That's right, Tom uh Yeah, you know, the dragging press conference was a little bit on the depressing side. You know, he talked about weakness in China, he talked about possible weakness in the US, but then really brought it back to the Euro Area itself, noting German autos in particular, Italy

weakening overall. So um, you know, I think in a week where we are void of you know, news flow, that really kind of took center stage. Why is the ECB always the last of the party. You should never have to cut your forecasts as aggressively as they had to yesterday. And the only reason they had to cut their forecast that aggressively is because they've been dragged, kicking and screaming into delivering the mere cult that we got yesterday. Why are they always the last the party? Mona? Yeah,

you know, that's an interesting question. And we talk about how, you know, the US and Asia really have had a key source of growth u driving their economy over the last ten years, and that was in part technology and innovation. In the US, it was the thanks stocks in the in China and Asia the bad stocks. We looked to Europe and we don't see that same sort of innovation

productivity coming out of that region. Of course, they also mired in political uncertainty and difficulty around being an explot oriented economy, so in some ways they just haven't perhaps picked up on one of the key drivers of growth probably going forward. I mean, I know, Mona, it was a quiet December and then a quiet January and quiet February. John and I aged you didn't. But now, what after drug do you make a strategy adjustment off the market

reaction to drugs? Bombshell Y. You know, I think our strategy even going into this year, had been a bit of a Barbell approach um, and we talked about how in one hand of that Barbell, we still prefer the US as best in the block from a developed market perspective.

The other hand of that Barbell was really China and selective em which were you know, poised to do well with not only potential trade deal but the selective stimulus measures they're facing, and valuations that had really catered our crater last year or so, you know, some attractiveness there In the middle of that Barbell and no man's land was Europe still and I think, um, you know, not only Brexit, but some of the economic uncert until we

talked about was what was driving that decision. You know, at some point Europe may become interesting from a dividend perspective, So I think, you know, with the euro stocks at a three percent yield and foots the flues, uh, you know, we may get some interest from a value or dividend oriented investor, but you know, we're not there yet in terms of really kind of pounding the table. I don't think you're alone moment, that is for sure. I stugged to find a single European equity market ball for the

last few months. We've had a market rally that I think and many others would also agree that has been built on the faith in policymakers and their ability to stabilize the situation. At some point this year we were inevitably going to go through a period where that faith would be tested. Was the ECB news conference the beginning of that. Just the period that we have to go through where the faith in the policymaker's ability to stabilize

the global economy is tested somewhat. And what is your advice to investors listening to this that may experience that in the coming weeks. Yeah, you know, we went through a dramatic fall in December. We fell Pete trough probably around on the SMP, and then we went through dramatic reversal. So now we're up about from the December flows. It's natural after that kind of one way directional upboard movement to get a period of consolidation of profit taking. I

think it's actually healthy. Um. What we have to wait for now is the next set of catalysts to emerge to drive us to perhaps either our next leg upward or maybe some sideways movement. But what we're watching closely is, uh, those two economies that we mentioned earlier, the US and China, to really pull US out of this. So we'll get the jobs number this morning, which may be somewhat telling. If the US is you know, we'll be able to

decouple further. But what we're really looking for is we entered the second half of this year, is whether the Chinese stimulus will be able to be effective and US earnings growth story is effective as well. Nicely framed in mystery here in March mortomaazed, thank you, thank you with Alians. What a perfect time to speak to Kathy Jones of schwab as we look at fixed income and so much of this UH, Cathy is draggy adjust It's got nothing

to do with America. But in the butt in your world, is the terminal value of where the yield is heading? Doesn't it migrate a little bit lower? Yeah, Tom, I would definitely agree. Um, we had been looking at a trading range maybe you know, the in the ten year treasury around two and a half to three percent this year, but I think UH it could break below two and a half based on some of the weakness we've seen in global UH economic activity, particularly those horrible numbers out

of China overnight. So um, yeah, we think that it it drifts lower from here, and that the FETE has done raising rates to seventy five just seems to be the line in the sin Now the upper end of a really narrow trading range. Are you saying we're going to be back into trading rights, Cathy? But it shifts Ilowa. Yeah. Um. We had our call had been that we had peaked last year at three and a quarter for the cycle, and the probably holding about a two and a half

to three percent range. But now I'm I'm looking at maybe two in a quarter to two and three quarters has more likely range. Um, A lot's going to depend, of course on whether we bounce back um some of this weakness, but it is looking more more on the downside than the upside. Kith. We talked to equity types like Liziane Saunders about the single digit world, and of course we've had many years of bowl market migrating to high single digit and some would psychologically frame double digit

in your world, that's not the case. Tell me that savers are going to get used to a nominal return of three or four percent? Is that true? Oh? Yeah, I think so. Um, it's would be very difficult to get a lot above that, given the aging of the population, the level of growth at we're expecting. It wouldn't make a lot of sense to get to expect much. Okay, so is dividend growth my new yield, Well that has been for quite some time. But I would say now

there's real competition. I mean, you can get two and a half percent in a very short term risk free piece of paper, So that is stiff competition for the volatility the equities john to be a good property for you. The real dividend growth. Oh thanks, I think it's just that's just an extra show. It's a show. It's got a tone to it. Six basis points. German tenure, Kathy, just phenomenal. It's this security that everybody wants to be able to show up but just gets the face ripped

off every tron they try and do it. Kathy, what is going on in Germany? Well, I think what we're seeing, as DROGGI pointed out, is just the real impact of all this trade conflict that we've had. So we have the slowdown in growth. It's coming out of both China and now out of Europe as a result of all these trade business that's going on. And I think that

that is the issue for the FED. Now you know, we can't be isolationist in the sense that we were open enough to global trade to feel its impact as well. But I think, yeah, Germany is so dependent on on trade, and particularly trade with China, that that's really what's affecting UM the boone market. So, Cathy, I was watching your dollar yesterday break down, then breakdown again, then keep breaking down into the end of yesterday's session, and I was

asking myself a couple of questions. How much of this move as a percentage was about the policy that the ECB had introduced, and how much of it as a percentage was just a total lack of belief that the policy will actually work. What he's driving about right now?

The former of the letter, Yeah, I would say it's probably the latter, because although um drawing, you introduced some easier policy that should you know, is designed to help the banking system, designed to help me A to me, I don't think there's a lot of faith that there's enough firepower there to really do it. I look, I think it where we are after draggy and it's clearly a reaffirmation of lower rates as well. Give me a schwab prediction on inflation and that what that does to

my lovely total return. Well, we're actually saying a little bit of an optick in inflation this year, but we think some of that is driven by energy that not only flows through the top line, but we'll flow through a little bit to the underlying core rate. But we're still saying it pretty tame. I mean, I don't think that we're looking for anything above two percent in core inflation.

What do you recommend for somebody desperate for you, gentlemen the yesterday on loans and he's you know, he's spouting seven and eight percent coupons, I mean above high yield. I mean, what do you recommend for someone who says, Cathy, this is all great, but I can't get it done

at four percent? Yeah, the the only way you can get above four percent is to take a certain amount of risk, And so we just try to be realistic with people and say, sure, you can get seven percent, but you're going to have to be in very low credit quality towards the end of the business cycle. You know, you probably don't want to have your whole portfolio in high yield our loans at this stage of the mind.

And we don't we don't talk enough about this, John, right now, are are you comfortable, Cathy saying that we've seen the tights in high yield after the rally over the last couple of months at about four basis points over? Is that it? Yeah? I still think so. I mean, I've been really surprised by the magnitude of the rally since you know, Christmas Eve, uh in high yield and and generally speaking in all the spreads, But I'm pretty comfortable that we've probably seen the tights. You see, Okay,

Cathy's if you say tights, It's okay. Farrell gets like this on Fridays because he's preparing for the real yield. John wise, guy, I'm not gonna was Jones to explain this, Would you explain what the leotard is? So typically in any given market, Europe, the United States, and let's talk about the United States for that matter, you'll have a benchmark, so you'll be four hundred basis points over the benchmark

of a similar maturity. So basically, when you say that we're really tight, you're looking at high yield over treasuries at about four hundred basis points um. For the other all different four hundred basis points. Can you go to percentage points for percentage points, which which is pretty tight, Tom, given to how wide things have got through December. Big V shaped recovery, Cathy in High Yield, Big V shaped

recovery inequities. Do you see this being a story that goes beyond credit, that we've had the V shaped recovery and that we've exhausted the federal reserve fueled rally of the last couple of months. Well, I think at leads for the time being. UM. I think total return year to date and high yield is something like seven seven and a a half percent. I mean, it's a whole year worth of performance right there. So I think we have

to back and fill to some extent. I certainly don't see the impetus from moving a lot further from here unless you really really think that the you know, a that the economy is going to turn around and go sharply higher, but the Fed's going to sit back and allow it to do that. Very good Cathy Jones, thank you so much for an important update for US investors on all the drama we saw yesterday in your Let us begin and let's really focus here on the fabric

of the American labor economy. We can do that with Juliet Cornado. And the reason that Dr Cornados with this John is she was loving the nickelback and the choice of picking out the one with zz tops Billy Gibbons in it. As Juliet, Dr Cornado, are you a large nickelback fan? I am not a nickelback fan. I'm sorry to disappoint you, Tom, I'm I'm I am astonished that it is being debated on the floor of it was. I think I'm well astonished it made an appearance on

this program. Julia equally astonishing. Julia is too young for this. But we played Kansas and Sticks earlier in the weeks. We finished Strong Memories of that the bar Is Show. This week, I'm sure you do. Let us go out to the broad midwest of Kansas. Carry on my wayward son. Forget about the East coast, the west coast, Julia, what's the employment fabric of the great middle west of this nation.

The employment fabric is the service sector. And we're going to be relying on that turvice sector as we moved through the year, because I think we're going to see a fading in the manufacturing and energy sector hiring that has been a powerhouse in the last couple of years. That's got to fade. With the global slowdown. We're we're starting to see the cracks there, and that's where we should feel the pain. The service sector is what's likely

to carry us through. It was resilient in the last global slowdown during twenty sixteen, and it's largely domestically oriented. As long as consumers keep the phase, that can be a virtuous cycle with consumers spending supporting the service sector and the service sector continuing to add jobs. John This is so important. If we're in a virtuous cycle, that's how you get to where the optimus are. This is a big, big issue right now, not just for the

United States, but for Europe. To even in Europe, the service sector is pretty resilient. Got these two economies. Global manufacturing Abadankie is largely in a recession at the moment. It is not looking good at all, especially in China and Europe and hitting the United States. It is two economies as well, Julius. So essentially you're saying that the service sector can pull up the arrest of the economy and won't be brought down by what is happening with

manufacturing worldwide. Well, I think we will be brought down. We will see growth moderate. I think there's no doubt about the fact that is likely to be much lower than But the service sector dynamics can be resilient to that slowdown. Uh. And we've seen that before and and that will be you know that that's that's going to be our saving grades. It's not going to necessarily accelerate to offset the slowing manufacturing, but it will be a

buffer to that slowdown. Julia, on the global basis and the cliche the Chairman Powell is a central banker to the world. Maybe Chairman Draggy is central banker to the world. I M. Currencies have had a real tough go of it the last ten twelve training sessions with even Argentinean pays so knocking out to new weakness yesterday. I mean the drag effect or the Powell effect. They're global, aren't they? Oh? Absolutely,

Central banking is a global game now and uh. I think the FED certainly is has gotten on board with that in the last few years. They're talking and keeping their eye very closely on global development. But yes, primarily the E c D and the FED really set the tone for global market. What is your observation on the jobs report? What will you look for? Well, we've seen kind of a disconnect between a lot of the high frequency job market indicators and other indicators of demands in

the economy and payrolls. Payrolls have been accelerating in the last few months and everything else has been moderating. So I expect a number I'm a little bit below consensus. I'm looking for one fifty k. It looks like we're due for some correction down again. One, you know, a healthy number, it's nothing to worry about, but we should see some either a combination of downward revisions and slower

higher and John, this shows a variance. It's out there because we've got many others two fifty or two as well. There's a there's a real variance, folks going into this number in eighteen minutes. I've gotta get you thought some white scot to j D of a Whatmently, I think the consensus for you now is even with white growth getting towards decade highs of three something per cent, that that's not going to bleed into headline price pressures. That we won't see a big pick up inflation off the

back of that. Do you agree with that? Julia, Yeah, I'm I'm I'm in that camp. We just really haven't seen much passed through. It's not to say we're not seeing cyclical pressures in inflation. We are seeing, for example, goods prices pick up, goods inflation pick up, but there's a lot of other structural factors from from housing, from technology, UH, from healthcare that are offsetting that in weighing inflation down. So it's going to be really hard to see a

notable acceleration. How do you and Julia Cornado with his folks macro policy perspectives as we moved to jobs today, Jim Glassman with us in a bit, and then every Joseph Cohen as well. Dr Coronado, how do you study retail America? Do you like partition bricks and mortar and Amazon ors or a different Coronado method. There's been such a disruption and retail in the last couple of years, an accelerated disruption, and that actually I think it adds

to the noise in the data. For example, what we saw on retail sales UH in December was overstated because we just can't do the things like we like to do, like seasonally adjusted data, because all the patterns have been disrupted. So taking the temperature of the retail sector is a lot harder than it used to be. And you need to be more patients, and you need to sort of smooth through some of the noise and the data because it's just all over the map now. And that's true

both for measures of inflation and measures of sales. Julia, if we get another take higher in the participation, right, do we have some people on the FOMC that start looking back at the policies over the last couple of years and say, you know what, maybe we got this wrong. You know, it's second guessing is hard to do. Uh. You know. I think say they were making the decisions coming off the zero lower bound. Uh, you know, with a healthy labor market and a falling unemployment rate, it

didn't make sense to stay at zero. Uh. You know. And I think right now the debate is more around Okay, now that we are closer to something that looks like a neutral interest rate, now we can let this run a little bit and see how far we can go with it. But I think, you know, second guessing getting off the zero lower bound when the economy was doing well. You know, I don't think many people are going to regret that decision, per se. Julia Karnata, thank you so much.

Macro policy perspectives of the look at the job economy, and we'll continue with discussion this discussion. This is a joy and extensive conversation this morning with Abbey Joseph Cohen. She's been a wonderful friend of Bloomberg on the economy and Bloomberg surveillance, and she joins US futures at negative eighteen down futures negative one seventy three. Abby, wonderful to

have you with us this morning. Is Jim Blastman was alluding to within the synthesis of your work as a senior investment strategists and advisory director at Goldman Sachs, can you say that America stands alone, separate from draggy and separate from the challenges of e M and China. Clearly, Tom, the United States has many advantages, and one of the things I am concerned about is that these disparities that we have benefited from in the US are beginning to

ease up a little bit. So for example, he talked about the importance of immigration to the United States. Let's keep in mind that while we always focus on the quarterly GDP numbers, I think long term economists look at potential growth rate of GDP and that has come down in the United States. There are two key reasons. One is that productivity of our workers has come down. Maybe we've not been infesting enough in terms of capex. But the other thing that's happened is that labor force growth

is now slowing UM. And one key component of that growth and labor force had been immigration. If we look at at some early indicators, they're not looking good. So, for example, if we look at approved student visas, this is for foreign students coming to the United States, either for university studies or graduate level, that has declined double digit UM. And in addition, there has been a sharp decline in the number of those special visas that we

grant workers who have special skills and categories. And this is something I hope it's not the canary in the

coal mine, but we need to watch it carefully. I want to I want I want to say broader here and and then go more micro later, but on a broader theme, from what we heard from Mr Draggy yesterday and his illusion late in the press conference to protectionism, are you working at this point at Goldman Sachs around wrapped around a mercantilistic America, and we see the effect on the labor economy, we see the effect from Mr Dragging indeed a mercantilistic America. We see the effect for

an ascendant Asia. You've raised so many different interesting points in that question. Let me try to respond briefly. I can First of all, the United States, in many ways does stand alone UM. We have the most productive workers on the planet. My concern is that productivity impetus is slowing. Number one, number two UM. From a standpoint of our exposure to foreign trade, the United States is not as exposed many of these other countries Germany, Japan, and so on.

More than of their GDP is related to foreign trade. For the United States it's roughly fifteen percent. So those are different factors as well. But nevertheless, over the last decade, the single fastest growing sector of the United States has been exports, and if our main customers outside the United States, which are developed economies, but also economies who have been

buying our agricultural goods as China has been doing. If those economies are slowing or in the case of China consciously not buying soybeans from the United States, that's not good for our g d P, or for our farmers or for our other workers. You're Jeffrey Curry does brilliant work on commodities. I know he's been long gold, but he's always looking at the more the greater complexities of

commodities as well. Abby. If China walks away in some form from these trade negotiations, what will be the ramification on the stock market and what will be the ramification on commodity China. Well, the simple answer, Tom is something we've already seen in the equity markets. We have seen daily volatility related to whether the headline news is good or bad with regard to those trade talks. But let's talk more basics, and that is the issue properly has

never really been the size of the trade deficit. In fact, we've seen the trade deficit balloon in part because of worry about what's going on with regard to tariffs. More on that later. If you wish, the real issue with regard to our conversations with China really should be where Mr Leightheiser is focusing, and that is protection of intellectual property, no more forced technology transfers and so on. And it's not quite clear to anyone not directly involved in those

negotiations how that is going. One of the things we'd obviously like to see is the Chinese to say, Okay, we're gonna come back and we're gonna buy us soybeans, We're going to buy us pork production and so on. That would be an obvious public signal to me. It is the less public signals having to do with this transfer of our research and development to China, that to me, is the real crux of these trade talks. If you're just joining us, Abby Joseph Cohen with us with Golden SAG,

their advisory director and senior investment strategist. This on a job's day, with a stunning number off the corrected three hundred thousand plus number of a month ago, coming in very light twenty thousand, but as our John Farrell mentioned,

the bondom market really not moving all that much. A ten year yield now in two basis points two separate from a discussion with the Abbey Joseph Cohen, there's right now something really remarkable in terms of American technology and innovation, and that is we're seeing the Dragon, the crew Dragon coming back from space where we're actually going to see a landing in the Atlantic Ocean. This is some two hundred miles off the Florida coast involved as a SpaceX

recovery ship, and it really hearkens back to another time. Abby. That's a good jump off to your life work studying technology and innovation in America. Elon Musk, who SpaceX is trying to get that done, but give us the Golden SAX report card and how America is doing on technology. We're doing well, Tom, but we could be doing better. Um.

We have been the global leader for decades. And one of the things that is very interesting to watch is that many other countries China included, but there are many others who have made a more conscious effort on the part of government policy to do the following things. Number one, make sure that enough students are educated in STEM. Number two to provide funding for the basic research and the

development which needs to follow. I'll also point out that while we all applaud the great success of SpaceX, so much of this is based upon NASA developed technology. They're using NASA telemetry, NASA communications, NASA launch pads and so on. And I think this is great. I think this kind of combination of public and private sector in a way

is the way we've almost always done the space program. Um. And and by the way, for people who say, why are we spending money on this, well, we're spending money in the United States to get this done. In terms of what we're actually accomplishing in space. It's extraordinary to see, uh,

something that harkens back the decades ago. And I really, just as an aside, folks, I can't say enough about seeing Ryan Gosling in the First Man of Neil Armstrong and the challenges SpaceX now coming in with the classic the parachutes coming down with the capsule, and we'll see on that here in a bit. Abby, let us bring it over to the stock market. Everybody wants to know the call, um, did you go a triple leverage David

costan Long on December? Um, Well, I have to say we all now know with hindsight that Christmas Eve was a gift. Was a gift. It was a gift. Um. But it also tells us not to worry terribly much about noise. And I'd say the same thing about the employment data for example. So what what the markets took away in December they gave back in January. It's a do over, um. And when we take a look at what's going on, we're looking at a US economy that

we don't think we'll see a recession. But there has been a moderation in g d p our potential growth rate is down now below two percent. Uh. There will be a moderation in profit growth. Obviously, the sugar high of those tax cuts UM is now gone, and we're going to be seeing mid single digit profit gains. And what this basically says to me is that within the fixed income markets, you better be very careful. UM. I don't think you're going to see another move lower in

interest rates. UM. I think the opportunities are as many people have already said on your show and elsewhere. Uh, the opportunities that do exist are in risk markets. But the valuation, since they are okay, not wonderful, is the trap. And I go back to your wonderful work with the

cf A Institute. Is the trap. And have you talked about a name from your in my past, the wonderful Tom Galvin when he was at Donaldson Lovekan Generette sales become ever more precious, a precious If we're in a single digit bond, single digit ectuery world, people growing revenue at double digit levels, that's of an extraordinary value, isn't it. It certainly is, Tom, And what we are advising our

clients really falls into that category. Number One, we're looking at companies that are generating good top line growth number one. Number two, we're encouraging owners of assets to think not so much about passive approaches index oriented approaches, but really active management UM. As I mentioned a few moments ago, the valuation is k not great overall in a lot of the risk markets, but there has been so much

focus on these passive index oriented approaches. The opportunities are probably away from there, not just in equities, but also in sixth income, and I would argue as well in commodities. Uh. You know, we are blessed to have Jeff Curry and his excellent work UM in terms of telling us which way commodity markets are likely to go, But there are also individual opportunities to do well or by the way, to do really poorly. Uh, but we we think two

thousand nineteen in all markets is a year for active management. Okay, I'll go with that, Abbey, But our listeners go, that's all great, But only the fancy people like Abby, Joseph Cohen and Golden Sas have access to those unique active opportunities. Can the public take advantage of active management here? Or

they squeezed out by the private elite markets. I believe that many individual investors Tom, in response to your extraordinarily important question, ought to be looking at some of the mutual fund complexes, uh, the ones that have had a long history of providing funds that are not index oriented. Um. I think I shouldn't be listing what those companies are.

People know what they are. My concern is that over the last eight to ten years, so much of the new inflow into the equity market by individual investors has gone into index oriented products. And I think that's something that always feels good because you have lots of company that's the problem you at this point. I want to be invested in places where somebody is selecting companies, where there's not quite so much competition to be buying those securities.

If you're just joining us, Abby Joseph Cohen was an exceptionally generous half hour. Today she is advisory director, Senior investment strategist at Olban Sacks. I like what Ian Lincoln wrote out at BMO Capital Markets his title of his jobs report that is not a typo, and that of course of payrolls increasing twenty thousand to zero Comma zero

zero zero. We did get some bond market move but a little bit ten ure yield down to two point six zero back to two point six to Futures have deteriorated negative fourteen ish now negative twenty on the SMP future. So there was a I want to say, a reaction uh to this job report, but I would call it more measured than maybe what that stunning statistic would UH

suggest as well. Separately, a real moment for space and I can tell you on the radio it's tough to convey the beauty of the images of the SpaceX dragon that just uh fell down from space with four gorgeous parachutes, and Abby, what was amazing about it was it was totally different than anything you and I remember from Mercury Gemini, A Mercury Gemini and Apollo. It's all new you really see that it's all new technology that they're dealing with.

ABBY in the time that we have left, I want to synthesize in here what retirees should do, and then I want to move on to education in America. Retirees have been trapped. I thought Bill Gross's uh phrases for it over the last ten years really captured the repression that retirees are in. What do you recommend They're not at Goldman Sachs, they're not doing fancy stuff at Goldman. What does savers and retirees need to do to prepare for the next ten years? Tom By using the word prepare,

I think that is really the key. One of the things that disturbs me a great deal about individual investors today is that they're not prepared. Um. We see that young and middle aged workers are saving way below with need to be. And so while you and I and others on your program can talk about specific securities and products, the number one concern is how much money is actually being set aside for retirement, and it is extremely low. It's also extremely low even at companies that are providing

some sort of payroll match. UM. I don't quite understand it. I think this represents some financial illiteracy on the part of our nation and and this to me is is very problematic. But let me ask answer the specific question you asked, which is what about the next ten years UM. I believe over the next ten years UM investors are well served to be in UM. Let's call them equity

or equity like assets rather than fixed income. I believe that the thirtysom year bullmarket in bonds is over, not expecting interest rates to gallop higher, but nor am I expecting great returns. So I think that there are some UM place is within the fixed income market for some

individuals to go. They're also a dividend generating equities to look at, but not to focus on high yield dividend generators because the high yields often indicate that there's an underlying fundamental problem, but rather companies that offer dividend growth. And let me hasten to add that this should not be viewed as specific advice gesticular individual. I'm just providing a sort of overview. Abby, You're the only one I know that can think with a clear thought on the

tobacco of own stocks. We can turn to Craft, where I grew up with Velvita cheese, and I'm sure it was never ever in your household as a child. But when you see the right down of goodwill in a true ancient blue chip like craft, conservative retirees say, that's why I don't want to own stocks the corporations. Is there a transparency now or is it all just financial engineering? Wonderful question, and the answer is it depends, um and. And one of the things we always need to remind

ourselves of is that good management is essential. Um and. Managers that have assets that are valuable but don't use them appropriately are not helping anybody. Um So we need to focus again on what are the metrics by which we measure whether a management is doing a good job, the one that we've often looked at, or things like return on equity. My concern has been that equity itself is shrinking, which means that returns on equity look like

they're getting better. Number one. Number two. The point that you raised is an essential one and it's not new. If we go back and we look at the the treatise from the Dow Jones Industrial average from the a T nineties, what we basically see is that there were many so called blue chip companies that did not survive. And I think investors need to recognize that every economy shifts um and we just don't know for sure what's

going to happen. Uh. The analogy that I love to point to is UH in the late nineteenth century when of Americans worked on farms and there was enormous concern about what we're going to happen with this gosh darn newfangled equipment that was going to come into the farms and people were going to use their jobs. Well, they did lose their jobs, but we do see it was also the beginning of this normo century of of American prosperity. So well, my answer simply is as a nation, we

need to be prepared. We need to make sure that our children in particular have the skills to be flexible UM and have the skills to think and and that

I think will protect them. Rather than saying here is the specific profession or specific job for what you need to prepare, it would be inappropriate, Abbey Joseph Cohen for you to comment on other banks or even individual banks, but I must have you comment off of draggy and the challenges of Europe Europe on their Japanification and particularly the inability to clear their financial system, to clear is a broad sense, their banking system. What is the catalyst

that Europe needs. Is it a political catalyst, Is it simply a courage and will or is there another path that you see for Europe to get its act back together? And we must recognize that the United States after the financial crisis benefited enormously from the tough love that we got from our regulators, the FED, through the stress tests, the other regulators basically say when don't hide here. In fact, for the first few years, the major failures on the

stress tests were the American subsidiaries of European banks. So we turn now to your question and basically to say, it's taken them a long time to get religion and they still don't have it. Uh. In some cases with regard to this, and I think part of it is that the potential growth rate itself in Europe is lower than it is in the United States. We were able to ultimately move forward here because we have a strong economy,

vibrant labor force and so on. Uh. Europe has, as you've pointed out before, a labor force that in some countries is not growing. And it is also um a Europe where there is disparity in results um good returns uh for workers in terms of wages and companies in Germany. Um. But let's take it to the next step. Some of the German companies, some of the German banks are still facing some difficulty. So UM, I'm going to kick the question you you said, does it take a political solution?

The answer, in my view is yet Abby one uh more moment if we could with you in your generous time today it is International Women's Day. It's a heritage folks that at least goes back to nineteen o nine in what the Socialist Party of America did with Women's Day, uh in another time and place. And what I find so interesting, Abbey, is the idea of women and rigor. You had the courage years ago to take what so

many would suggest as a different path. I lump in with your excellent Sally craw Check at Bernstein years ago on Wall Street. Give us a window into the first day you walked in the door. How difficult was it to be a woman? At Goldman Sachs. The question I think should be, how difficult has it been to be

a woman in financial services. And I would back it up a little bit and say, for example, that women remain dramatically underrepresented on university At universities in economics, UM, they basically are, you know, less than a quarter of the number of students. How fix that women faculty are

less than ten percent, And I think that's the issue. Uh, there is a real bias that has been proven in terms of both economics and finance at the graduate level, which means that we are not producing enough women pH d s and professors in these categories. So there aren't those sort of role models number one, but number two, there have been blatant um instances of gender harassment UM in in economics. Interestingly UM in terms of our industry.

The thing that I love to point to our various studies that have been done that show, for example, morning Star has some results that show equity mutual funds managed by women outperform um fixed come mutual funds managed by women outperform. And I think it's because women have proven that on a risk adjusted basis, they are better long term investors. They're less likely to be caught up in the statistical noise of day to day action. Or week to week action in the markets. Um, women tend to

be more diligent when it comes to the numbers. And I know what I just said may sound um, maybe somewhat offensive to some of your listeners. I don't mean it to be, um, but but those are with it. I got thirty seconds left. Isn't it fun watching the Washington Capitals? It's a delight watch watching the Capital. Can they do it again? I mean folks to review this. Ms. Cohen as a direct personal relationship with Mr Kin and it was magical. Last year's Abbe Joseph Cohen partied with

Mr Ovechkin into May and June and July. Can they do it again? Abbey? They have a great team. Um, there's some other good teams elsewhere, but you know, I'm I'm already invested in Washington Capital's paraphernalia. Um, so I'll go with it, Okay, Abbe Joseph Cohen, thank you so much New Jersey Devil's Abbe Joseph Cohen's Washington Capitals. Tonight, we thank Abbe Joseph Cohen of Goldman, Sex. Thanks for

listening to the Bloomberg Surveillance Podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane before the podcast. You can always catch us worldwide. I'm Bloomberg Radio