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The global push into infrastructure, breaking the IPO logjam in text.
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Through the eyes of the most influential voices.
Ten Rogueff economists at Harvard, former FDIC had Shiela Bert ge CEO, Larry Kulp, San Francisco FED President Mary Daily, Bloomberg.
Wall Street Week with David Weston from Bloomberg Radio.
Great Britain gets a snap election, the FED debates whether it's gone high enough, and Nvidia shoots the lights out again. This is Bloomberg Wall Street Week. I'm David Weston. This week, former New Jersey Governor Christine Todd Whitman tells us that small nuclear reactors may be the answer for our AI data center needs.
The manas for power of these data centers is in enormous.
Nobel Prize winning economist Paul Kruman on why he doesn't know where interest rates are headed.
On interest rates, I am fanatically confused.
And Henry McVay KKR reports on his trip to China and what needs to come.
Next, they can actually encourage more urbanization.
We start with the week in the markets, where equities ended strong after a sag in the middle of the week.
The S and P five hundred ended up just.
A bit at fifty three h four, which keep them above the Bloomberg Els median year and number of fifty two hundred. The Nasdaq added one point four percent for the week, while the yield on the tenure was up just over four basis points to end the week at four point four to six percent. To take us through what we've seen this week, welcome back now, Scott Kroner. He's City US equity strategist. Scott, always a delight to have you with us. So give us a sense of
what we think you saw this week. As I say, it's sagging the length and it came back at the end.
What's going on? Right?
So I think what's going on is the market continues to navigate where we think we are regarding economic conditions and the read through to FED policy.
Okay, so we're back.
And forth between stronger economic data which would signal a higher for longer FED versus signs of softening and ongoing deceleration and.
Inflation, which gives a little bit more confidence.
That you get a FED pivot.
So we're back and forth between this ongoing debate and the data. It tends to be supportive on a transitory basis on both sides. In the meantime, we continue to have this new growth driver in town. We're now a year into this generative AI craze, if you will, and it was reinforced this week. So a number of things going on in both the macro and then let's call it the micro and new growth paradigm approach as well.
Well, Scott, as I listened to you, I wonder if that's a little bit of microcosmic with a year so far, because we go back and look the first quarter, the equies were really on the march off the S and P of five hundred. Then it dipped at the beginning of the second quarter and it's come back up again. Now we went into the year expecting what was it, six rakes cuts and now we're down to maybe one one and a half.
Yeah, So it's really interesting the way the market is navigating this. The way we tend to think of it, and the data tends to show this is that the growth profile and the growth influence on equities can often outweigh the interest rate influence as it pertains to the
discounting mechanism and expectations for economic activity. What's been happening is that growth has been winning as more and more companies are now getting on this generative AI phase and really going more aggressively down the path of investing in future opportunities that should support longer term growth drivers for the broader US equity markets.
And what about your views, because you are delighted to say one of our elves, as we call you, the Bloomberg elis here one of the analysts. You set it out that year toward the top of the pack of elves, and now you're.
Sort of toward the did you move or did the rest of the pack move?
I say, essentially, what's happening is the rest of the pack has been marketing with the market move and is
leapfrogging us a bit, which is fine. I think the way we're looking at it is that we're still expressing a very constructive view on the fundamental setup for US equities at this point, particularly the S and P five hundred, But we do have to recognize it a lot has happened pretty quickly from a performance perspective, and more recently, our ongoing panic euphoria model is tripped into euphoria, which is usually not a great sign for forward performance.
At the same time, we've seen valuations.
Move higher to a point where the implied growth expectations supporting this market are getting pretty aggressive, so put us in an ongoing fundamentally constructive view, but shorter term, we think the risk rewards pretty balanced right now.
David, what about the breadth of the market going into the year, We were really concerned it was so narrow. There was some hope that we're broadening out. Is it brought out from that Magnificent seven or whatever you want to call them?
I think it is, but not in the way that many were expecting from a performance perspective.
Off of the rally that began.
Last November, we saw areas such as industrials and financials participate quite strongly as this year unfolded.
Then as we hit the middle part.
Of this year thus far, we began to see other areas. Energy kicked in for a period of time, and more recently it's been utilities. So while tech communications services are still your leading sectors.
You are seeing different pockets of.
The market kick in at different times, and it ends up supporting this broader index move.
So, Scott, you mentioned actually a year ago you pointed out it was just a year ago that a company, I know you don't talk individual companies, I'll name the company, and Vidia came out with those blockbuster numbers. We had some more this week, but it sped out from Nvidia. There are all other companies as well that seem to get along for the ride. At the same time, a
lot of other companies are spending money right now. They're investing money, so why does that buttress their stock because they actually haven't spent coming in.
Yeah, So I think the way this is setting up, we're spending a lot more time now talking about capital expenditures, and I think one of the dynamics that is at hand right now is that you're seeing a lot of the investment into AI and related applications, and the semiconductor comportion component of that feels that quite quite directly, as does the software component. But so we're watching this AI narrative unfold through two paths. The first is you're going
to have companies that are directly exposed. These tend to be your mag seven or Big seven components, where we're going to be measuring them directly on the way AI is feeding their fundamentals in the months to come. On the other hand, the bigger picture, and perhaps the more important longer term picture, is that now as more and more companies embrace the opportunity in generator of AI, they're putting a lot of effort into establishing their own ways
of of benefiting from AI. What this is going to mean over time is that the investment and spending that's unfolding right now should translate into various forms of productivity enhancement, perhaps margin improvement, and ultimately what we really want to see is profitability enhancement, which in turn leads to higher valuations. All told, the setup is very clear right now. It's going to play out as I mentioned, months and perhaps in some cases over the next couple of years.
But what it's doing is providing.
The broader market, as we mentioned at the outset, a very compelling longer term growth opportunity that is taking fundamental expectations over and above traditional economic sensitivities.
How much time do we have before they have to deliver on that productivity.
It's going to vary.
We think for some of the more direct beneficiaries, they need to start showing it in the months in quarters to come. For companies where it's going to be more of a prot activity enhancing application, we're going to be watching for that. I think probably is twenty twenty five kicks in and beyond, so it's going to be in some cases months, quarters and other cases. We have to give companies a couple of years to build these these products and services in product Tooty, thanks so much.
Set's got Chronic City US equity strategies. China is on everyone's minds right now. Where it's going, where it's the economy, is where investment opportunities may be. Henry k Vay, he's the CIO of KKR balance Sheet, goes around the world and travels to places like China, comes back with reports. And he's just come back from China right now. We're welcoming back now to Wall Street weeks. So Henry, great
to have you back with us. We've done different countries that Japan, we've done Indian, now let's do China.
Great just coming back would you learn you know, I'd say.
On the positive the economy is bottoming. We heard a couple of different data points, I think from companies in the logistics business that are seeing the US consumer pick up a bit, So that was a positive, and I do think we're things have bottomed also in Europe and there's a little bit more demand. But overall it's still a pretty sluggish economy post COVID, with very low inflation.
And the growth that is there is not evenly distributed. There's some areas growing much more than others.
As I understand it, We've spent a lot of time. I've actually been to China four times in the last five quarters, so I'll give you how I think the evolution of the economy is changing. Really, a lot of people focus on fixed investment, they focus on exports. I think the Chinese government is really repositioning the economy towards a couple of different things. One is this whole idea of digitalization, particularly as it relates to the industrial sector.
They're trying to automate that sector be more effective and more competitive globally. In the past, I think a lot of people thought about China in terms of e commerce Ali Baba, domestic consumption. The focus right now from the government really is on industrial automation. China today actually has about half the world's robots on the industrial side, which
is an amazing statistic. The second big driver is around the green effort, and they're trying to really dominate batteries, evs and solar panel that and they're trying to export some of that globally. So those are really the growth drivers. The offset, which is still problematic is around housing and our estimate as they have somewhere between kind of twenty and thirty million too many homes and so they're trying
to clean that out right now. But that's a disinflationary force and it clearly has an impact on domestic psychology as well.
Someone What China is investing in the green transition has gotten the attention of places like the United States and Europe, whether it's solar panels or batteries or evs, because there's a concern of a build of overcapacity.
Do you see over capacity and what does that do to margins?
I think what's going to happen around the world right now is that industries such as autos are going to become of national interests. We've already seen that in technology could expand into two other sectors, so there's definitely going to be sensitivity. You saw President Biden talked about increasing the tariff there. Europe, I think is going to do a similar a similar type of strategy. So you can have capacity. The question is is where can that capacity go.
I think probably if you're China, you'll see more of it go into places such as Latin America, other places maybe Eastern Europe or where they have partners that maybe there's increasing kind of bilateral trade. That doesn't seem to be the case in the US and Europe right now.
So there is growth.
You found growth there, as you said, it's bottomed. At the same time when you're take into account the disinflation, the nominal GDP actually is not growing at the same rate as that some other places like Europe and the United States.
If I could give an insight to your viewers, KKR typically has one hundred and fifty businesses around the world, you know upwards of two hundred now where we operate. You've got to focus on nominal revenues. Nominal GDP what does that mean? It's real GDP plus inflation. A lot of times the cell side focuses on real GDP and what you've seen in China. When I started going there in nineteen ninety five and when I started at KRE,
nominal GDP was in the teens and twenty percent. There's a lot of growth and a lot of profit that comes with that. Today that number is probably about a third of that. So really that inflation component has come down. And then second thing.
Is on the real GDP.
The productivity has come down in concert with slower labor force growth, so it is a big deal. At the same time, the Western world has put a huge amount of fiscal stimulus into the system and that's driving a little more inflation, a little more nominal GDP.
Thank you so much, Henry, Always love having you on.
That's henryk vay Cio of the KKR balance Sheet.
Coming up.
If we're all going to use generative AI, then we're going to need a lot more power. We talk with former New Jersey governor and EPA administrator Christine Todd Whitman about whether nuclear power could be part of the answer.
But this is where small module reactors can be perfect because you just can put them there right next to those data centers.
That's next on Wall Street Week on Bloomberg.
This is Bloomberg Well Street Week with David Weston from Bloomberg Radio.
This is Wall Street Week. I'm David Weston.
The sprint toward generative AI has turbocharged the move to build data centers, and every one of them needs power, lots of it, with some believing they provide a good use case for those small modular nuclear reactors we've heard so much about.
To take us through the.
Possibilities, we welcome now Christine Todd Whitman, co founder and co chair of the States United Democracy Center MSSUS.
Whitner, of course earlier.
Served as EPA administrator and as Governor of the State of New Jersey. So Governor Werner, thank you so much for joining us here on Wall Street Week. As you know, generative AI is all the rage these days, at least on paper, and as we talk about that, we talk about a lot of data centers, the need for them and the need for power, and that has really spurred to the forefront the discussion of those small modular reactors,
something you've talked about in the past. Is this a spur to actually get us going on those SMRs?
I certainly hope. So, because it is true those data centers pull of power, and most people aren't thinking about that. They don't know what they're beginning to now to understand just how much they draw down on the grid. So this is where small modular actors can be perfect because you just can put them there, right next to those data centers and provide the power for that particular center.
And it makes a whole bunch of sense when you look at the issues that we're facing and the economic price we're paying for what's going on with Mother Nature and the environment, and it is due to changing climate, and I think we all have to recognize that now, and so we need to do what makes sense. But that doesn't creator our economy, and this certainly wouldn't. We can build these things, we can distribute these things, and it makes a great deal of sense. They're mutually supportive, so.
It increases the demand the opportunity for these What are the hurdles because as I say, you and I have talked about this in the past. You've been an advocate for experimenting and using these in the past.
We haven't gotten there.
As I under said, there are a lot of plans for them, but I'm not sure any have gotten built yet.
No, they haven't Canada. They're moving forward. It's obviously the regulatory hurdles because we want to make sure that they're absolutely safe, and not all of those are federal. A lot of those regulatory roadblocks, as it were, or things that slow it down, which is we all know costs money, our local or state regulations and we've got to respect those.
But I think what we're seeing now is the pressure coming that is going to, I believe, as you mentioned, perhaps spur an effort to move these things through, not to cut may corners, but to make sure that you're not holding anything up unnecessarily. Because they have a proven technology, they are easier to build, they're much safer to use or easier to use, and they can be used in discrete ways, such as putting them next to a data center and having them supply the power for that data center.
You're very familiar with the regulatory structure, and it was put in place for various reasons with the very large nuclear Do those same considerations apply with the small modular reactors. Should it be the same regulatory system or should it be an entirely different way of approaching regulation.
It wouldn't be entirely different, but certainly the way these things are constructed is entirely different and that needs to be regulated, be recognized from the regulatory perspective, so that there are vast differences. But because you're talking nuclear and people are very concerned, even though our history with nuclear has been extremely safe, you have to answer those questions.
And so the NRC needs to take a step back and say, Okay, let's really look at the SMRs, the small module reactors, and identify they use a different kind of material. Some of them are molten salt reactors. That's entirely different way of producing the nuclear power. They're done in one place, which again is entirely different. You're not moving pieces sequentially to a site. You move the whole
thing to a site. All those things. It is a different process and it does need to be handled differently. I'm just not sure that the NRC at the moment, and I don't know. I'm not saying they're not looking at what they need to do to update the regulations, but they certainly should be.
I'm going to put this in the larger context of the climate, something you've been very outspoken on when you were governor of New Jersey when you're a mystery of VPA. And since then, if we in fact buy build all of these data centers and do not use something like small moduor reactors, what is the possible risk for the environment to respect the use of fossil fuels.
It's huge because the demand for power of these data centers is enormous, and you're going to go to the fastest, cheapest power, and that's going to put more pressure on opening more coal and not closing coal. And you know the thing that I think you and I have talked about this, David. The thing that we're missing here is the understanding that nuclear can be the bridge if we ever get to making the making our renewable power base power.
It's going to take a long time before we can rely solely on whens various forms of green power, and so we need a bridge and this is the best way to my mind to.
Do this pretty quickly.
Many thanks to Christine Todd Whitman of the state's United Democracy Center.
I thought Hamilton had it right. He said a national debt could be a national blessing, and the national debt having a liquid market there provides a good benchmark for the private sector. It probably underpins the role of the dollar in the world. It allows the Fed to conduct monetary policy easily. I think we have to keep in
mind the costs of paying down the debt. There is among some people a single minded focus on it, but there's no free lunch in this world, and eliminating the national debt, while it may sound.
Attractive, has its costs as well.
The President, by the way, in his program, is paying down as much debt as we can retire in the next ten years.
We're moving in that direction.
But whether we should pay it all off, I think this is a more open question.
That was Larry Lindsay, director of the National Economic Council under President George W. Bush, appearing on Wall Street Week back in March of two thousand and one, back when the concern was about possibly having too little federal debt rather than too much to take us through our current very different situation. Welcome back now, Nobel Prize winning economists and New York Times columnist Paul Krugman of the City University of New York. So, doctor Pruy, thank you so
much for being back with us. As I say, it was a very different time then when they thought we may eliminate the national debt. But now we're hearing a lot from people saying they're concern has gotten to be too big?
Is it too big? Is it a problem for our economy right now?
Okay, So, first of Allen, that was silly even then.
I mean, there were you know, revenues were temporarily swollen by the dot com bubble and all of that, and you know, even in two thousand and one, knew that people like me were eventually going to hit sixty five and start collecting benefits. So you know, it's so that was a little bit silly to be concerned about that back then.
Right now, the debt per se is not really a serious problem.
I mean, you know, it's a bay number very four trillion dollars or something like that. But if we actually look at, you know, what does it cost to service that debt, Well, interest rates are still below the economy's growth rate, and so as long as other non interest spending and tax receipts are more or less in line, then the debt is really not you know, it's not a problem to continue servicing it. There's no really no
reason why that should be an issue. But what is a problem, of course, is that government spending and tax receipts are not in line. And so the fundamental problem is not the debt. The fundamental problem is that we are not managing to to pay our way. We're not actually adjusting our inflow with our outflow.
Well one we're putting out. Suppose it's not the debt, it is the deficit. It's how much we're actually coming up short each and every year. And I think last year it was something like eight point five eight point eight percent of GDP was in deficit. And this is a time when unemployment was very low, by the way, and the yeah, I some of that was good.
Yeah, some of that was interest payments, and really should it's the primary deficit excluding interest payments, but that is a serious problem. We do have an ongoing large primary deficit. Some of that there were, you know, the year to year fluctuations. There's quirky stuff that can move the deficit around, but at a fundamental in a fundamental sense, we're not living within our means at the federal level. And that doesn't necessarily signal any kind of the media crisis, but
it does say that, hey, something's going to give. But the trouble is you know what's going to give. So yeah, that is the real problem is not the numbers. The real problem is that we are not politically apparently able to reach any kind of agreement on how to live within our means.
Not an immediate crisis, as you say.
At the same time, I remember back in the early nineties when we talked about bond vigilantes, and there was the discussion within the Clinton administration actually about the issues with the bond market. At what point is it possible that the bond market might send a powerful message to us. We talked to Paul Ryan recently who said he thinks that it's quite possible in the next administration, whoever is president, they could be faced with what he would call a debt crisis.
Does that sound reasonable to you?
Not particularly, And I'm not sure I know why Paul Ryan would know this any better than anyone else. But the truth is, I've looked at I've actually put in a fair bit of work myself on when what's the historical record of countries that borrow in their own currency experiencing that kind of debt crisis to strike by lenders something like that what are the historical examples of that happening?
And there's almost no examples of that.
I mean, you start and you end up showing well, maybe France in nineteen twenty six. I mean, Japan has had huge debt for decades now, huge persistent deficits still no crisis. It's actually I think we should focus less on what's the risk of a single dramatic event and more on the kind of gradual erosion of confidence that comes from the fact that we can't seem to get interact together.
There's no doubt that there are a lot of political challenges. But before we get to the political challenges, what about what the right answer would be if we didn't have to worry about the politics. I mean, there were times of which we actually did cut the deficit, right under George Herbert Walker Bush there was a bipart artists and effort that was made Andrews Air Force Base, and then
under President Clinton it is not bipartisan. Actually, the Democrats to themselves they cut back on the deficit.
What is the right thing to do? Is it more taxes, is it less spending, or is it all of the above.
There is no right answer.
What we know from cross national comparisons is that it's certainly possible to have a thriving economy with a lot more taxes than the United States. The United States is near the bottom in terms of tax receipts that are share of GDP among advanced countries, So we could be raising substantially more money and there's no there's no real indication that higher tax rates would be a problem for US economic growth. On the other hand, we don't have
to provide essential healthcare to everybody. That's a that's not a question of economic rightness or wrongness.
It's a question of your values.
We don't have to provide an adequate retirement income to everybody. Again, that's not an economic comparative. So you can't actually divorce this from politics. This is all about the political decision.
What are we going to try to close.
This gap by making mostly the lives of older Americans tougher, or are we going to do it by raising taxes? But probably, I mean that includes raising taxes on the rich, but probably also at least a little bit more taxes on the middle class.
I'm delaighted to say Professor Krugman will be staying with us as we turn from the fiscal issues that will face whomever is chosen to be the next president. So what difference is that choice will make for the economy? That's next on Wall Street Week on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
This is Wall Street Week. I'm David Weston. Doctor Paul Krugman of the City University of New York and the New York Times has remained with us. So doctor Kruman, let's look forward to this election we have coming up in November, and what economic choices the American people will be making as they go to the polls. Give us your sense of how different these two people, that is, Joe Biden and Donald Trump are in their approaches to the economy.
Okay, so this is one of those cases where if you look at past experience, you would say, well, how much difference does it make? I mean, in a lot of ways, the economy of twenty twenty four looks a lot like the economy of twenty nineteen, pre pandemic, full employment, fairly low inflation.
It's you know, worrying a little bit.
But we were worrying about the difference between two and three not not anything major. It's it doesn't look as if it has made a whole lot of difference who's in the White House. But if there's a Trump too, then there's a lot of reasons to believe that it could be very different. There were What's amazing if you go back and look at Trump's first time in the White House was how little he did when all this
said and done. You know, basically he got a moderate sized tax cut through sort of period, end of story.
There wasn't a lot else that that went on.
There were that's largely because there were institutional restraints there were. They couldn't get stuffed through Congress, couldn't couldn't tell the Federal Reserve what to do.
Uh.
That could be very very different right now.
And if you take seriously what the what Trump uh former Trump aids are saying, Uh, it would be very very drastic name Biden would decontinuity.
Biden, If you can do it.
We'll do more, you know, some some further tax increases, some more green industrial policy, but probably not enough to make a huge difference to the macroeconomic numbers.
Big differences in other respects.
Trump well know that one of his former AIDS has been talking a lot about rounding up millions of immigrants supposedly undocumented, though wouldn't be surprising if a lot of legal immigrants got caught up in the net as well in deporting huge economic impacts, huge disruptions to the labor force. Another Peter Navarro, who's being interviewed from jail, but has said that Jay Powell will be fired within one hundred days and that we will basically have the politicization.
Of monetary policy.
And there's a lot of reasons to think that a Trump second term might see him become one of those autocrats who demands that you run the printing presses for his political gain. I mean, think of Urda and Turkey
or something like that. So huge uncertainty. But I think anyone assuming that a second Trump term would look like the first one, with what ended up being fairly conventional, like in our policies, nothing and the Federal Reserve keeping the lid on things could be very in for a very rude shock.
Picking up on your comment about monetary policy and fed SHO J. Powell, we had Ken Rogoff on somebody you know well, a fellow economists, and when.
I asked that question of him.
He said, the markets would not let president new president Trump do that, that they were to react really strong in the treasury markets, and he would not have that option.
Is that plausible.
The markets would certainly react, we would probably see acceleration of inflation, of plunge in the dollar.
But you know, how does he respond to that.
I mean, again, if you look at much smaller countries that are much more exposed to market pressure, like Turkey, authoritarian leaders have a habit of saying, well, the markets are wrong, and I'm going to order them to stop. But you know, you might be surprised at how much you know, socialism or at least in the sense of capital controls and other things might happen. You know, Trump
says to the Fed, I want a booming economy. I want you to roll the printing presses, and the markets respond by driving the dollar.
Down, in inflation up.
He might well then say, well, I'm going to put on rules that stop that from happening. Rather than changing the policy. Remember, you know, we've had one, you know, since the immediate after Matthew World War two, we've had only one episode of price controls in America, and it was Richard Nixon, not some progressive Democrat who did it. So I think you want to be I understand Ken's point. He thinks that the bond vigilantes basically would would discipline Trump.
But I don't think that's a safe bet.
What about the prospect of inflation. Obviously tariffs tend to be inflation area rather than inflationary. At the same time, both President Biden and for President Trump seem to like tariffs pretty well.
Well, there's a big difference. I mean, yes, both are doing terraffs. And Biden has not rolled back most of the Trump tariffs, which is politics, that's uh, you know there doesn't want to be accused of being soft on China or something like that. But if you look at the new proposals, they're actually although they both are proposing TIFFs, they're very different in the both in the details and in the purpose. So Trump's view is clearly he thinks
of trade as a zero sum game. If we we win if we if other people buy our stuff, we lose if we buy other people's stuff. And so he wants to put a ring around the collar. He said, a ten percent tariff on everything, and the uh and maybe more for for some other countries. That's not at all what Biden is doing. What Biden is doing is some selective tariffs aimed at what he perceives as strategic sectors.
And if I'm not mistaken, you generally support the notion we have to do, whoever the president is something to have to do to prevent a second, as you call it, China shock, such as we saw early around the time of the WTO, in order to basically it protect some of our workforce.
Yeah, it's not so much jobs in the aggregate. Sorry it sounding like an ecmmist there, but it's not so much the total employment. We're not having a problem at least at the moment with overall employment. But what we learned rather painfully from the first China Shock was that sudden surges of imports can be disruptive in ways that a lot of standard economic models don't capture, though non
standard models do. They can disrupt communities, they can disrupt strategic industries, and particularly if you are doing what Biden is doing, which is to try to sell climate policy in part by saying it also it creates manufacturing jobs, the political basis for that is going to be undermined if it ends up creating manufacturing jobs in China. So now,
and this is a pride Look China. I don't think the Chinese seem to fully realize, but they they are having a situation of grossly inadequate domestic spending and relatives to their production capacity, and seem unwilling to boost their own demand, and they want to dump both in the sort of common language sense and probably in the in the illegal sense. They want to dump the excess production on the rest.
Of the world.
And it's not going to happen. We're not going to accept it. The Europeans are not going to accept it. So you have to do.
Something because there's always such a treat to talk to you.
Thank you so much, many thanks to our Nobil prize winging economist Paul Krugman. If opportunity doesn't knock, build a door. That was the advice of comedian Milton burrough For the last few years, employers have been knocking on the doors of job seekers with opportunity.
Growth is slowed, but our labor market continues to be quite strong.
And there are still firms on the hunt for more employees to expand their businesses, like in private credit.
At ares, our differentiator is our ability to be in these local markets developing relationships with companies and assets. So by definition, we have to grow our headcount in order to support the au M target.
And generative AI has brought to life a whole new job category of something called an AI prompt generator.
I think that'll be all kinds of jobs that AI will create that we don't even know about, Like prompt engineer is a new job category. There's already lots of prompt engineers. There's going to be many more engineers now that.
May be changing. Some of those job opportunities are drying up. TikTok employees this week learned there will be about one thousand less of them in their operations and marketing teams. Disney told Pixar that it was laying off fourteen percent of the staff that gave us toy story and Ratituwi.
I need this job.
I've lost so many I don't know how to cook and now I'm actually talking to a rat as if you did, you not.
You understand me?
And Red Lobster.
Employees at restaurants across the country showed up for work only to find locked doors as the chain went into bankruptcy.
Now seafood chain Red Lobster has fought for Chapter eleven bankruptcy after facing higher costs and a disastrous unlimited shrimp promotion.
But at this time of year, we're particularly mindful of our college graduates, for whom that Milton Borough advice about building a door may be all too poignant. Members of the class of twenty twenty four have not had it easy from the beginning. From high school at the height of the pandemic, relegated to virtual graduations with no hope of a senior prom or senior prank. Many of them started college with remote learning and picking up box meals
from closed cafeterias to be sure. They got to see the COVID vaccine turn things around dramatically, But just as they approached their first real graduation one they would be able to attend in person, the war in Gaza interrupted life on many college campuses, leading to graduation ceremonies that have been marred by protests or canceled altogether at places like Columbia.
Columbia University today canceled their main commencement event for this school year following protest on campus in reaction to the war in Gaza.
But however they got here, they now, at least most of them, have their college diplomas, only to be faced with a changed and changing job market, particularly in finance and consulting and technology. Firms are cutting back on their overall hiring, and those who already have the jobs are less likely to give them up. The other question is should be re evaluate how we work and how long
we were. It's easy for those of us at the other end of our careers to say to those starting out that something better lies around the corner of many disappointments. At the beginning of my career, I was working for a judge in New York and wanted nothing more than to be hired as a law clerk for Supreme Court Justice Lewis Powell.
I knew former.
Clerks of his had studied his career and his decisions, that he was the one justice I dreamed of working for. I got an interview at the Court, took the train down to Washington, spent time with him and his clerks in his chambers. He was a reserved man, and I did not get any real sense of whether I had a chance or not. So a couple of weeks later, I was devastated to learn that he'd extended an offer
to another clerk on the second circuit. I was certain that he wouldn't take two of us from the same court. I resigned myself to going in a different direction.
So you can.
Imagine my joy when I eventually got a call and Justice Powell's longtime assistant Sally Smith asked.
Me to hold for the Justice.
It turned out that I got what I'd wanted all along. It just took me a bit longer and a bit of emotional turmoil to get there. Now, I'm not saying it always works out that way. Often it doesn't, but I do know that regularly, in the course of a career, what seems like a wall turns out to be a door. After all, there may be a Sally out there giving us a call when we least expect it.
That does it.
For this episode of Wall Street Week, I'm David Weston. See you next week.