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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus global business finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio.
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Speaker 2: So let's get to it, and let's get to the labor market and that report we got this morning at eight thirty am Eastern.
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Speaker 3: Here's just kind of some of the details.
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Speaker 2: US employers unexpectedly cut jobs in the month of July, and hiring the prior to months was revised lower, suggesting that the labor market here in the US is weaker than previously thought after surprising strength tim earlier this year.
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Speaker 4: The decline in jobs, driven by cuts and government leisure and hospitality, also retail. Private sector payrolls rose by thirty thousand dollars for a second month, was led by healthcare and social assistants. Manufacturing and construction perils those continue to climb.
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Speaker 3: And then there was the participation rate.
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Speaker 2: The share of the population working or looking for work fell to sixty one point four percent, which excluding the pandemic, was the lowest since the nineteen seventies. Among those between the ages of twenty five and fifty four, known as prime age workers, participation edged higher, but remained near the lowest levels of the fast of the last few years. White House, Director of the National Economic Council. We're talking about Kevin Hasse and Hassett. He spoke earlier on Bloomberg TV and Radio on Open Interest with Danny Berger and Michael McKee, and.
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Speaker 5: Labor force participation is kind of on a downward trajectory, which means that the break even jobs number, that is that the job's number you need so the unemployment rate doesn't go up, has gone from maybe one hundred twenty hundred, thirty thousand a few years ago to maybe about.
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Speaker 6: Forty thousand now.
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Speaker 5: And so what it means is that what the market is used to looking at, oh, it's like a normal tread the water kind of jobs number, if it's around one hundred, is no longer.
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Speaker 2: True, all right, That, of course is white House, Director of the National Economic Council, Kevin Hassett earlier on Bloomberg joining us with more is there on Michael McKee, who was talking to mister Hassett earlier on Bloomberg. He is, of course Bloomberg TV and Radio International Economics and Policy course, joining us here in studio along with and back with us Matt Lazetti, he's chief economist at Deutsche Bank.
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Speaker 3: Guys, thank you so much.
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Speaker 2: I do want to kick it off with you, though, Mike, we've had a few hours for the dusk to settle. Is this a report that was weaker? Like, what's the assessment here?
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Speaker 7: I think the bottom line, to just skip to the end of the book, is that the labor market is weaker than it had appeared, but it's not weak. It's not a problem for the FED to have to deal with. And there were, as you mentioned, some quirks in the data this time, and everything Kevin said was true about with the labor force declining, you need fewer jobs to employ people, so the unemployment rate can go down, and that is something the Fed's going to have to think about in terms of what is the level of interest rates that keeps the unemployment rates steady.
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Speaker 4: We'll dig into all of this and more in just a min at. First, I want to bring in Matt Lazetti, chief economist over at Deutsche Bank. Do you agree with Mike's assessment here that, Yeah, on the surface, it looks weaker, but it's not as bad as sort of the headline number.
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Speaker 8: Yeah, I think absolutely you got a downside surprise on payrolls you had the one hundred thousand of download divisions to prior months. But I think what it does is it confirms that that breaking number is just lower. So there's various FED estimates out there suggesting that the breaking even number could be as low.
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Speaker 6: As zero per month.
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Speaker 8: Over the past three or six months, we're running at twenty to forty five thousand on headline payroll numbers. With that backdrop, we've seen the auntoplane rate decline to the lowest level in eighteen months. We've seen other measures of labor Marcus slack actually tighten on the margins as well, and so I think it actually fits more with a story where the breaking number is quite low. We see payroll gains trending kind of around those levels, maybe a little bit above labor market slack tightening at the margins, But it takes away some of the upside risks of the labor market that the fed might have been contemplating.
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Speaker 2: All right, So when it comes to we've got to actually a question I want to bring in from a viewer and listener. It's Mark in Toronto, and he says, what impact do boomers retiring have on the labor participation rate in unemployment make and if we.
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Speaker 3: Could address that.
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Speaker 2: I have to say, I have some rumors in my family who've retired recently and or in the last few years, and they have at least three or four of them that have left the labor market. Matt, is that something that is certainly at play here?
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Speaker 6: Absolutely?
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Speaker 8: So if you look at the labor force participation of recent months in June, there's a big decline in prime age, which I think you alluded to, and specifically the twenty five to thirty four age.
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Speaker 6: Group that partially reversed.
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Speaker 8: I think the bigger structural trend is labor force participation for fifty five plus continues to collapse.
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Speaker 6: There's a question about whether or not that's worrying or not.
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Speaker 8: I would actually argue that it's really in line with what you would expect from demographics. So if you look at different age groups with fifty five plus, their participation rates are actually not moving around all that much. So what's happening is people are just aging into buckets where they work a lot less, where their participation rates are much lower, and we're in fact much closer to what I would expect from a demographics implied trend from the labor market.
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Speaker 4: Mike, what about the other end of the demographic spectrum, and that would traditionally be new entrance to this country, entering the labor force and younger immigrants. We've seen that dry up significantly over the past few months, and it's certainly by design with this administration. You address that with Kevin Hasset a little bit in one of the questions that he answered, does that work in our economy when we're not having enough kids?
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Speaker 7: It isn't good news for the overall economy. As we were talking about with Kevin Acid, the size of the labor force is one input into what potential growth is. And if the labor force isn't growing, you've got to get more out of productivity. Kevin in worsh thinks you will eventually, not yet, so it is it is a problem for the economy overall, and you could see that in the overall participation numbers as well, although prime age has ticked up a little bit. Things have loosened up a little bit compared to where they were. But the demographics at the other end, as Matt was saying, that's been going on for quite a while, as baby boomers from nineteen forty six started retiring, and now we're past the peak of baby boomers being sixty five, so that'll be less and less of an issue going forward, But it still takes a lot of people out of the labor force.
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Speaker 3: Is it too soon?
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Speaker 2: Well, I feel like there's a million things I want to talk about because demographics things. I know we've talked with you about it, But I do think about longer term, if we don't allow immigration into the country and we have an older workforce, you know how much the economy here in the US is at risk in terms of growth, Matt.
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Speaker 3: Is that something you guys are thinking about a lot or studying.
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Speaker 6: Sure?
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Speaker 8: I mean, I think if you look at projections for population growth in the size of the US population, as you look out five or ten years, without positive net ration flows, you have a declining labor force.
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Speaker 6: You have a declining population.
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Speaker 8: The US is not the only economy global economy that is dealing with We've seen this movie, right, We see these issues in various parts of Asia, Europe. Many of these economies are actually worse place than the US is from that perspective, but no doubt, we rely on positive net immigration flows as we look ahead, I think, as Mike mentioned, you know, the hope is that productivity growth can pick up. It has been pretty robust over these past two to three years, and that that can be the supporting mechanism for overall growth so far as it's working out. Okay, Yeah, that's a bigger question as you look.
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Speaker 6: At Okay, I promise we oh, go ahead, Mike. I was just going to add on to this.
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Speaker 7: There is one aspect of this that the productivity can't really solve, and that is the fewer people that are working, the lower the dependency ratio is. And so social Security gets less funding, Medicare gets less funding, and that is an ongoing issue and nobody has any idea and Congress is going to address this.
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Speaker 2: I keep saying, if you know, robots are going to replace us, or AI makes us more productive, but you know, robots don't buy lunch, or robots don't need their shoes shined or robots don't need to go shopping for shoes, you know, like I just just.
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Speaker 4: They need to be oiled. Though it depends sometimes it depends.
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Speaker 2: It depends, Mike, I want to get to the conversation with Hassett. Kevin Hassett this money at one point talking about early earnings, and he then brought up weekly earnings.
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Speaker 3: She said something like, I don't know if.
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Speaker 2: The president's watching the Oval office saying you got your point though, and Kevin, good job, good job. And Kevin said, I don't know if he's watching, but I'll find out. And I want to get both of your perspectives. But let's Mike speaks to the president who watches a lot of TV. We know that, and respond, is that typical.
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Speaker 3: Of a president?
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Speaker 2: Is it shows his involvement in what the messages that's getting out.
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Speaker 7: I think it's just unique to this president that he likes to do that, and he likes to hear people talking about him, and he spends a lot from all the reports we get from the White House, he spends a lot of time watching television, the various news programs. I don't know that he was watching Kevin Hasset today putting.
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Speaker 3: Pressure on then his members of his team when they're on air.
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Speaker 7: Well, yes, but every White House does that in a sense that you're sending out a spokesman for the White House, so that person is not going to say, yeah, we blew it, this was a bad policy or something like that. They're always going to try to present the best numbers. And I was thinking when Kevin and I were having that conversation, you know the old saying about you can torture the statistics any way you want to get the numbers that you want.
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Speaker 6: The bottom line for.
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Speaker 7: The White House, though, is that we are average hourly earnings are falling behind inflation. And whether you use one measure or another doesn't really matter because the public thinks that's happening, and that's their political problem.
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Speaker 4: Well, speaking of communications, you and Danny Berger asked Kevin Hassett about the communications between the President and Kevin Worsh.
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Speaker 6: Let's listen to what he had to say.
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Speaker 5: There have been some new stories that the President's talking to Kevin Worsh, and of course he is, you know, and he talked to Jay Powell too. But the other thing is that that Kevin Worsh and the President have a very close, long term relationship from New York City, from Florida, and they talk about the economy all the time. It's very very natural for the President to do something like say, hey, you know, Chairman worsh what do you think about today's job number. That's a very normal thing for him to do. But I think that's the way you should think about the balance of the conversations.
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Speaker 4: Earlier on Bloomberg TV with Danny Berger and Mike McKee, Matt, I want to toss this over to you because Kevin ass had also said that the President respects the independence of the Federal Reserve. And I'm curious, based on the reporting that we've seen around the conversations happening between the FED Chair and the President and what the President said publicly and on social media throughout this term in his previous term, is the view now is the market viewing that the president respects the independence of the FED?
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Speaker 8: Look, I think we don't really know that the context of the conversations that are happening. It seems like it might be more frequent than what has the interactions between the President and the FED Chair than in the past. If you look at market measures, I think what we like to look at our inflation expectations showing anything that is worrying. Are they suggesting that the Fed's credibility is at risk? I think last week you did see a notable rise in inflation expectations. I don't know that there was anything kind of tied to the President or but if I think it was tied to Chairwash's specific comments around willingness to potentially raise rates, unwillingness to say that they were targeting two percent PCE price inflation, and just the overall conversation I think and the language that he use, I think raise some risks from a market perspective about whether or not the FED would do what's necessary to keep inflation in check.
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Speaker 2: President Trump did an interview with punch Bowl today and he reiterated his preference for lower interest rates, but acknowledge it is not the central bank chief's decision alone. So kind of making our taking a little bit of a softer tone in some of the criticisms. I mean, when it comes down to it, I know we are already thinking, Okay, what does the FED do next? We've got inflation prints to get through, right, Mike, We've got more economic data who knows where the FED will be and Kevin Walsh and everybody on the FOMC at the next meeting.
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Speaker 7: So clearly, you don't trade FED fund's futures. You're right, we don't know. But the people who do trade these things have to decide on a minute to minute basis what they're going to do. And they have backed off the idea of a September rate hike. But the important thing is we're going to have two more inflation reports, two more, well one more after this jobs report, and so there will be a lot of data for them to hang a decision on. We don't know what that data is going to say, and so at this point it's too early to speculate. I mean, it's been going into this, everybody was saying, well, if we get a bad number, then the FED might have to back off. And we got a bad number, so they're saying the Fed's going to back off. Now we're all onto, Well, let's see what we get on Wednesday with CPI and we'll make a decision.
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Speaker 4: It's a favorite part of well, Matt, what is what should you know? It's the FED is a duel mandate. But and I for a lot of people last few months have said, Okay, the labor market is strong, so the focus should be on getting inflation down. After today's print is does that view change? Should the Fed still be squarely focused on on that part of the dual matter?
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Speaker 6: I think it changes.
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Speaker 8: You know, clearly you had a downside surprise and payrolls, but if you think the break even numbers close to zero, you're actually running at or near those levels. The underplanning rates at four point one percent, it is below well below what the Fed thought it was going to be at the end of this year. It remains our best measure of labor market slack. I think you have a shift of risk distribution around the labor market. Now there's not as much upside risk. But September will be about the inflation data that we get over the next two months, especially we get a bounce back in payrolls next month.
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Speaker 3: Reinflation is still a problem.
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Speaker 6: Right, so in our view it is.
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Speaker 8: I mean, if you look at PC inflation, which is what the FED targets, it is the highest that it's been since nineteen ninety two, if you strip out COVID and we agree with an evolving FED assessment from many officials that it is more broad based, is more demand driven AI related an investment as a source of inflationary pressures. Underlying inflation is stuck closer to three percent. None of that changed today. We'll get an update on that next week from the CPI.
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Speaker 4: Okay, I want to just throw this last one at you, even though we don't have enough time, Mike Lisa Cooke, because in the conversation right independse of the Fed, since we heard from Kevin Hassett this morning, our Bloomberg News team reporting that President jump has revived this threat to file fire Federal Reserve Governor Lisa Cook over those unproven allegations.
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Speaker 6: Update us here on.
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Speaker 7: This, Well, they apparently sent Lisa Cook a letter that said the President is considering firing you because of the allegations of mortgage fraud, and you have three weeks to respond to this letter. Remember, the Supreme Court said that the President couldn't fire her, but because she didn't get due process, they didn't decide the legality of her particular case.
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Speaker 6: And so now the White.
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Speaker 7: House is coming back and trying to follow the dictate of the court and give her the opportunity to respond. And we don't know how this will low play out, because even if she's found not guilty, the president could come back and say, well, yeah, but she was implicated or something. So this is just it's Friday. Put it that way, and this is the kind of thing you get on Friday.
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Speaker 3: Hey for the lawyers, that's all I'm going to say.
00:15:15
Speaker 2: Matt Lezetti, chief US economist at Deutche Bank, thank you so much. And of course, our own Mike McKee, Bloomberg TV and Radio International Economics and Policy correspondent, do more on a labor market.
00:15:25
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from two to five e's during Listen on Applecarplay and Android Otto with the Bloomberg Business app, or watch us live on YouTube.
00:15:39
Speaker 2: We have been reporting US employers unexpectedly unexpectedly cut jobs in the month of July, and hiring the prior two months was revised lower, suggesting the labor market is weaver weaker than previously thought.
00:15:51
Speaker 3: Man, do I need a weekend?
00:15:53
Speaker 2: This is after some surprising strength earlier this year. We're going to stay on the labor market. We've been trying to look at this from different vantage points, and that's where our next guest comes in.
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Speaker 4: We've got Laura Ulrich with US Director of Economic Research in North America at Indeed Hiring Lab. She's also a former senior Regional economist and senior manager at the Federaliserve Bank of Richmond, primarily focused on research related to higher education and workforce dynamics, which, by the way, we got some great questions from our audience coming in just about this. She was also an economics professor and associate dean for undergraduate programs at Winthrop University. She joins US from North Carolina. Welcome, Welcome, Welcome. How would you describe today's payrolls report and how it changes your view of the labor market if at all?
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Speaker 9: I wouldn't say it necessarily changes my view of the labor market. We at the Hiring Lab and Indeed have been kind of describing the market as a market that is cooled, not necessarily that is cooling, and we're kind of bouncing along the bottom. And I see that as the same today as I really did yesterday.
00:16:52
Speaker 10: However, I do think it is.
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Speaker 9: Important to acknowledge that the payroll employment report came in about one hundred thousand jobs below consensus today and so that's notable, right, It was much softer than what people were expecting.
00:17:06
Speaker 2: So I am curious too, and tell us a little bit more if you would, Laura, about the activity you are seeing on the platform. What are the job listings, what are the jobs people are looking for? Give us an idea and how it gives us some context about data today versus maybe six months ago or just trends, because you guys see a lot we do.
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Speaker 6: We do.
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Speaker 9: We have access to a lot of data both on labor supply and labor demand.
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Speaker 10: I would tell you that we've been in kind of.
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Speaker 9: A I wouldn't call it a steady state, because there has been a bit of turbulence, right, We've been balancing a bit. But we've been at about a job posting index of one hundred and two ish, between about one hundred and one and one hundred and two since about September of last year. So that's kind of what leads partially to our viewpoint in that this is kind of a cool market that's bumping on on the bottom.
00:18:01
Speaker 10: One interesting point, though, and you did see.
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Speaker 9: This reflected potentially in today's job payroll employment report. We have seen some strength in some sectors where we were seeing considerable weakness before.
00:18:13
Speaker 10: So software development.
00:18:14
Speaker 9: Jobs, for example, are up fifteen percent since early twenty twenty five, and we had seen considerable cooling in tech jobs and in the payroll employment report, jobs in both information and professional business services were up today. So we are starting to see some of those I would say sectors that maybe are more AI exposed that we had seen a lot of softness to turn the corner a.
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Speaker 4: Bit, okay, you know, Brendan down in Maryland sent us a question during our last segment that would be great for you to weigh in on. It's about sort of these different areas of the economy and what you're seeing in terms of different sectors. He writes that it seems many jobs were lost in education. To what extent do you think these are permanent job locked is as many municipal school districts have exhausted and no longer can use the massive federal funding they received during the pandemic era.
00:19:09
Speaker 10: Here's a great question. I did take note of that data point this morning.
00:19:14
Speaker 9: I think that the loss of those local education government jobs that could be a bit of an anomaly with some issues with the seasonal adjustments. I think it'll be interesting to see what the number looks like next month.
00:19:26
Speaker 10: I will say though, much.
00:19:27
Speaker 9: Of my background is an education as you mentioned, and there is considerable pressure both on higher end but also K through twelve, partially because of the federal funding cuts, but also because there are have just been fewer and fewer and fewer students enrolled in public schools, and so if you look at enrollment for many of those districts, it's been declining, and so there's less need for staff and teachers at some of those districts as well.
00:19:52
Speaker 2: Hey, I want to get too, because one of the things we talk about, Laura, when it comes to the labor market is the impact of AI.
00:19:58
Speaker 3: Right, we're still trying to figure all.
00:19:59
Speaker 2: Of that out, and we thought, both Tim and I when you talked about strength and software development jobs, we kind of were surprised.
00:20:05
Speaker 4: At that Thoughtcus, we're going to do it.
00:20:07
Speaker 3: Yeah, So that was that was interesting to us.
00:20:10
Speaker 2: You have done a new survey, the Indeed Hiring Lab Labor Market Outlook Survey. You talked to more than one hundred US economists and labor market experts. Tell us about the findings and what you heard.
00:20:21
Speaker 9: Absolutely, So we're really excited. This is a brand new product for us. We released it earlier this week. So we'll be doing this on a quarterly basis where we ask over one hundred very well respected labor economists to predict what they think is going to happen both to unemployment rates but also our own job postings that indeed, and along with that, we're going to be asking.
00:20:41
Speaker 10: Them some special questions. This time, we had a lot of questions on AI.
00:20:45
Speaker 9: It was really interesting for us to see the results because from a macro point of view, there wasn't a lot of disagreement amongst economists. Many of them did see that there would be a slight decline in job postings and unemployment and a slight increase in unemployment rates over the next.
00:21:00
Speaker 10: Here, but not a lot of movement.
00:21:02
Speaker 9: But the AI question got a much broader array of answers. I will say a little over fifty percent of the economists that we're surveying, I think it's fifty seven percent believed that AI would lead to.
00:21:16
Speaker 10: Job losses on net.
00:21:19
Speaker 9: About in the thirty percent thought it would lead to job gains on net.
00:21:22
Speaker 10: And then some are unsure, and I think that wide.
00:21:26
Speaker 9: Array of responses from like I said, this group of very well respected labor economists, really shows how much uncertainty there is in what path this might go in. But I will say, and indeed we're starting to see I mentioned that growth in software development. Those jobs where we are seeing growth do tend to be what we're calling AI touch jobs. These are jobs they either have AI at the titles, so think like AI engineer or machine learning.
00:21:51
Speaker 10: Specialists, something like that.
00:21:53
Speaker 9: Data center technicians another one that's growing a lot, or they mention AI as being a skill or or a characteristic of the job in the job description. So those jobs are on the rise on our platform for sure. They're also on the rise in terms of what people are seeking. And so really from our vantage point right now, I would say today, from my perspective, it's much easier for me to point to some growth that we're seeing from AI in the labor market to actual destruction from AI doing people's jobs.
00:22:24
Speaker 2: But as you pointed out in the press release, you guys said, when a group like this converges on something like AI, as they did, right in terms of the impact, it's worth paying attention when it splits that tells us something too.
00:22:35
Speaker 3: In this quarter, it did both. Is that fair in terms of how I'm reading it?
00:22:39
Speaker 10: It did.
00:22:40
Speaker 9: We asked one really interesting thing was we asked the economists exactly what sectors do you think there'll be the largest decline in jobs and what sector do you think they'll be.
00:22:48
Speaker 10: The largest increase. And there were two occupational sectors from our data that ended up on both lists. That was selfware development and data and analytics.
00:22:56
Speaker 9: So some of the economists thought, this is where we're actually going to see the most laws and others thought, this is where we're going to see.
00:23:01
Speaker 10: The most gain. That was a surprise to me.
00:23:04
Speaker 9: I didn't expect to see the same sectors end up on both lists.
00:23:07
Speaker 2: It's just it's a reminder that we're figuring our way. People say we're early in on this right and understanding really the impact. I mean, we're trying to figure this out and we don't really know right longer term exactly how it plays out.
00:23:20
Speaker 10: I totally agree.
00:23:21
Speaker 9: I think one thing that we do know, and we did another survey internally and indeed where we asked employers if they were seeking what we defined as AI native or AI fluent talent AI native talent has nothing to.
00:23:33
Speaker 10: Do with age.
00:23:34
Speaker 9: You can be a gen xer like me and BAI native, but it basically means that you default to AI technology to help you across multiple workflows.
00:23:43
Speaker 10: AI fluent is you still feel.
00:23:45
Speaker 9: Comfortable across workflows, but you don't necessarily default to it. And forty five percent of employers said they were actively recruiting AI native talent, but only fourteen percent of workers in the survey considered themselves AI natives. I think one thing we do know right now is people who do have AI related skills and talent are being hotly demanded in the labor market.
00:24:09
Speaker 4: Well, let's make this a little personal because our team told us that you have a couple of kids. I guess they're not kids anymore, but they're young men entering the labor market right now. And this is, I think, I think it's fair to say, a really interesting time to enter the labor market. You're talking about this AI fluency and being AI native. What do you tell them about the skills that they need to succeed in this market.
00:24:37
Speaker 10: It's a great question. And yes, I have three sons, sixteen, nineteen and twenty two one.
00:24:41
Speaker 4: I'm sorry for the third one that I did not mention it.
00:24:45
Speaker 10: If you don't know who you are, you won't mind.
00:24:48
Speaker 9: But the oldest just finished graduate school in data science, which in R and D data has been one of our softest areas.
00:24:54
Speaker 10: So you can.
00:24:55
Speaker 9: Imagine for me and the work that I do, doing the research that I do, but also living life as a mom, trying to.
00:25:00
Speaker 10: Help this young adult.
00:25:01
Speaker 9: He has landed his first full time job, which is excellent news for our household, but it was very tough, and what I kept stressing to him was that, in my opinion, it's really important for young job seekers to prove to companies that they are better off.
00:25:18
Speaker 10: The company is better off.
00:25:20
Speaker 9: With AI plus them than AI without them, and that's a tough road to navigate right now, but I do think it's extremely important.
00:25:30
Speaker 10: So I think being an AI native is very important. I have stressed that to my.
00:25:34
Speaker 9: Sons and have stressed to myself too, as someone who is older. Only eleven percent of Gen xers in our survey even define themselves as AI fluent, and I've had to work hard as an older worker myself to become an AI and native and to really dig into it. So I think it's something that in my view, is extraordinarily important as we do go into this period that is going to be so uncertain, because I've believe that for my children's generation, one of the most important skills they can have is adaptability.
00:26:05
Speaker 2: I got to ask you about one more data point from your survey finding. We've only got about a minute or so left, but it's you guys found a larger majority fifty seven percent of panelist, so they expect downward pressure on the wages of college educated workers over the next year versus thirty four percent who said the same for workers without a degree.
00:26:22
Speaker 3: Forgive me, but just about forty seconds. Why do you think that is?
00:26:26
Speaker 10: Yeah, I think that.
00:26:27
Speaker 9: The sectors that are most likely to be impacted, especially in the short run, are many white collar sectors that college educated people flow into. I'll say too, We've done some work in indeed, looking at how that collides with the demographic shifts that you guys were talking about before, and what we've kind of predicted through this is that we might have an excess of workers moving into the white collar roles with the combination of demographic shifts and AI and so if that happens and supply exceeds demand. Seeing downward pressure on wages would be be pretty pretty rational to expect.
00:27:03
Speaker 3: All right, great stuff. Please please come back and join us again. We would love to have you. Have a good weekend.
00:27:09
Speaker 2: Laura Ulrich's director of economic research in North America at Indeed Hiring Lab.
00:27:14
Speaker 4: Stay with us. More from Bloomberg Business Week Daily coming up after this.
00:27:22
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from two to five e's during this Listen on Apple Karplay and Android Auto with the Bloomberg Business app, or watch us Live on YouTube.
00:27:36
Speaker 3: This story definitely caught our attention. Tim set it up so well.
00:27:38
Speaker 2: It's about one sports fan and what he's paying to watch all of the streaming channels and sports that he loves on streaming channels, and it turns out to be more than two thousand dollars a year.
00:27:49
Speaker 3: He's got to share some passwords like.
00:27:52
Speaker 11: What is he doing?
00:27:53
Speaker 3: We know what goes on at the stent of bic ausehole?
00:27:55
Speaker 6: Okay?
00:27:56
Speaker 4: Why so much? As our team reports out, the rise of streaming services has made it difficult for US sports fans to follow their favorite teams without special subscriptions with pro league signing deals with multiple services and creating a bewildering schedule and some steep costs. We've got Randall Williams, bloomberg new senior reporter and the co host of the Bloomberg Business of Sports podcasts. That podcast is available at Bloomberg dot com, Apple, Spotify or wherever you get your podcasts.
00:28:19
Speaker 2: Also means it's the weekend because it's dropped.
00:28:21
Speaker 3: Hey, good to have you here. Lots of talking. Well, it's great to have you. We're going to get into the streaming cost. I feel like we have to go to FIFA though, you start there, because last.
00:28:31
Speaker 2: Week we talked about and it looked like they were trying to get outside investors and all this stuff.
00:28:35
Speaker 3: That's done right, it's dead.
00:28:37
Speaker 6: The sign after we talked to you shortly.
00:28:40
Speaker 12: Shortly after it died, and I think I was reporting on it like maybe three hours after, which is nuts. The thing that is going to that remains to be seen is if Giohnny Infantino, the FIFA president, is going to win his reelection next year. He was I would say, reaffirmed as president this week in Morocco, where I believe he said the final is probably going to be played there, but UEFA has not. They have not said anything different. They still are not supporting him.
00:29:06
Speaker 4: I maybe many people who are just sort of joining the conversation right now about FIFA and post World Cup sure might not understand. I certainly don't detention paint a picture the tension between UEFA and FIFA was Was this just the you know, straw that broke the camel's back or have there been tensions for a while.
00:29:26
Speaker 12: Well, there have been tensions for a while. I think that when Gianni and Fantino of course is looking at FIFA as a business, as most executives do, but there's also a pure, a purest mentality in all sports, in golf and tennis and football and basketball and everything else. And so you think about the innovations that Jihanna and Fantino that's what he would call it, and say like such as hydration breaks, commercial breaks that are used to sell ads, that's not typical in football. UEFA is very strongly opposed to that, and it's even said in the Euros that they won't be doing it. But that is something that if UEFA was trying to maximize TV dollars, that they could sell, but they're talking about the purity of the game of soccer and they're saying no, absolutely not. So then you you, you know, relay that into what's happened recently. FIFA may fifteen billion dollars from the World Cup and then after that they're going to be like, you know, we're going to sell stakes, We're going to do this with Thrive Capitals Joshua Krishner, and UEFA is like, listen, no, we've had enough of you and we're going to be trying to probably get rid of you come next year.
00:30:26
Speaker 3: Yeah.
00:30:26
Speaker 4: Do they have the power to do that?
00:30:28
Speaker 12: I think it's going to take some rallying, and they need they need. There has to be another potential candidate. I have not seen any reports that someone has been trying to rally against them. It's just that they do not support him. I also don't anticipate that Johnny Infantino in four months is going to be able to change UEFA's mind. So who can UEFA find to really go up against Jihanny Infantino? And the reality is Infantino, as much as he has done with the Trump administration and for the World Cup, it's hard to argue that he hasn't done a good job.
00:31:00
Speaker 6: Fifteen billion dollars the most.
00:31:01
Speaker 12: Ever, it's going to be hard to get rid of anybody who's just made record setting profits.
00:31:06
Speaker 2: And won't there always be that tension between FIFA and kind of the regionals, of.
00:31:09
Speaker 12: Course, because FIFA owns the World Cup, which is the you know, it's over the entire world. Whereas you know, you have your CONCA, CAF, you have your your soccer federation in South America, you have UEFA, and each of them have their own tournaments. You have the Euro, you have Copa America. But the World Cup is when everybody competes. So there's always going to be some tension there.
00:31:29
Speaker 3: We gotta be a little jealous of this one, so well, just a little bit.
00:31:33
Speaker 2: So listen, there was a story on the Bloomberg too, the next World Cup and the money deals Randall FIFA exploring selling US media rights for the next two World Cups together, which will keep the hydration breaks that.
00:31:44
Speaker 3: We didn't right. Yes, they're not going away, are they?
00:31:46
Speaker 6: I don't think so.
00:31:47
Speaker 12: I mean once once you get a chase of advertiser money in thirty seconds and all, and you got to think about this is exclusivity. At the Super Bowl and at other events, those thirty second ads sell for eight million dollars a piece, but they never really rerun. When you're watching the World Cup, you see the same ads over and over and over and over again.
00:32:05
Speaker 4: Well, yeah, my son's like talking to me about Bank of America home depot and like he's seven years old and never watches other commercials and he knows. And by the way, David Beckham's in all of these, of course, So this is great news for David Beckham.
00:32:16
Speaker 12: I guess it's great news for all of FIFA's partners is because it really is one of the most exclusive, you know, advertisements that you can possibly have, because it's going to run in every single match across various continents and in regions. So they are going to take this to market. They're probably going to shop around to whoever's willing to pay the most. But of course you want to reach angle of this.
00:32:37
Speaker 4: There's not one inch of that screen that is not taken up by an ad, even when the game.
00:32:41
Speaker 12: Is going absolutely not everything is an ad in there. It's so much, so so much so that even the stadiums think about the stadiums, we're not calling MetLife Stadium MetLife. We're calling a New York New Jersey stadium.
00:32:52
Speaker 3: Pum blew my mind. How the heck did they get that done.
00:32:55
Speaker 12: I mean, they obviously have an insurance partner, and you know they SOFI Stadium became Sandelo State and so on and so forth. I just could not believe that they're willing to go that far to protect sponsors. But as sponsors are paying a premium, and that's what.
00:33:08
Speaker 6: They're asking, So that's why they did it. I think it's part of it because.
00:33:11
Speaker 4: Those those but the naming rights that you know, you naming rights for a stadium, you expect that that those that name to be used when the stadium is mentioned.
00:33:23
Speaker 6: It's it's twofold.
00:33:24
Speaker 12: The stadiums and their owners were willing. They wanted the World Cup and they wanted those matches in that revenue that came from FIFA, and so they were willing to cover up the names. At the same time, FIFA is like, we don't want anybody profiting off the World Cup except for US and our partners. And so even if it's Mercedes Benz Stadium in Atlanta, you know, Hard Rock Stadium in Miami, there were banners that were hung up that said New York New Jersey Stadium, and it's it's hard for me to say New York New Jersey Stadium when the stadium is in New Jersey.
00:33:53
Speaker 3: We we saw it. It came down to the fact in our backyard.
00:33:59
Speaker 12: The the host committee is called New York New Jersey Host Committee, and so that's why the stadium was named that. But nonetheless it is a bit far fetched. I'm like, that's too far But anyways.
00:34:11
Speaker 2: We mentioned streaming costs coming into this. METEA rights what were they for the past World Cup? What might they be for the future World Cup?
00:34:16
Speaker 12: Believe the media rights are around four hundred eighty five million around that half a million dollars half a billion dollar mark. I believe they will probably go for double that. I mean this is this was probably one of the most successful World Cups.
00:34:29
Speaker 3: So they sell them for two you're talking about a two billion dollar deal.
00:34:32
Speaker 12: I'm saying at minimum a billion. I could see two billion dollars, but it depends on who shows.
00:34:37
Speaker 4: Up for who shows up and once that's US meteorites. Yes, but the challenge with that is going to be the time zone for the.
00:34:42
Speaker 12: Next time zone it's yeah, it's five hours, six hours ahead. I believe in Spain, Portugal and.
00:34:48
Speaker 3: Morocco that I think it's doable.
00:34:51
Speaker 12: They have to figure out the schedule and when the players are going to be playing.
00:34:55
Speaker 6: We're not going to see it.
00:34:56
Speaker 12: I would be shocked unless the US somehow ends up in the final in twenty thirty. I would be shocked that if the number surpasses what it was this year, which was I believe sixty four million viewers, which is probably the most watch soccer ever here in the US.
00:35:10
Speaker 4: I think you're going to go.
00:35:12
Speaker 10: I probably will.
00:35:13
Speaker 12: Yeah, Bloomberg grants make permission.
00:35:17
Speaker 4: Four years to make.
00:35:17
Speaker 3: Are you listening to anybody?
00:35:19
Speaker 2: Branda Williams, Bloomberg News Senior reporter, co host of the Bloomberg Business of Sports podcast.
00:35:24
Speaker 3: Check it out, Stay with us.
00:35:26
Speaker 4: More from Bloomberg Business Week Daily coming up after this.
00:35:34
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from two to five eastering. Listen on Apple Karplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
00:35:47
Speaker 4: We are trying to figure out what's going on with AIDBT. So far, they see your Amazon, Alphabet in video, Meta, Oracle and SpaceX. Check this out and I know it's together. They raised more than two hundred billion dollars from dollar bond sales that dwarfs thirteen billion from high grade tech companies in the same period last year.
00:36:03
Speaker 2: Think about the Alphabet offering yesterday, ten tranches over so much investor interest and they're not done. That's at least all the analysis that we've been seeing. But there's a little bit of a chill.
00:36:16
Speaker 6: I don't get it.
00:36:17
Speaker 3: I don't know.
00:36:18
Speaker 2: It's a chill in golfing AI linked debt. As tech borrowing surges, buyers have grown weary that nassave AI spending will not pay off.
00:36:26
Speaker 4: We've got a dabby day. Barbousha with us Bloomberg News Corporate finance reporter. He joins us here in the Bloomberg Interactive Brokers studio. Can you just settle for us the distinction between what Carol mentioned that Thursday offering from Alphabet attracting rough one hundred and fifteen billion dollars of peak demand. That's according to people with knowledge.
00:36:44
Speaker 3: Of it, and they raised only.
00:36:46
Speaker 4: Yes, Love, you were on this byline, by the way, so you know about this. Then today you have this story out that talks about the chill that's in golfing. As we talked about this on our editorial call this morning. Yeah, each of these companies is different and has different offerings.
00:36:59
Speaker 11: What did you So it's kind of interesting so that the Google deal comes after a string of well, there were three deals between June and July essentially, where we had space X, we had Nvidia, we had Amazon raising twenty five billion each. And these deals did not do particularly well in the secondary market, which you know, traders and investors care very much about, because if if a bond doesn't do well and secondary market, then it becomes sort of difficult to pull sales of going forward.
00:37:31
Speaker 2: We'll explain that, right, It's an important to see like kind of the movement, right these investments, no, explain that, That's what I'm saying.
00:37:38
Speaker 11: Yeah, Well, essentially, if when a bond is issued, there is a primary market where it gets absorbed and there are books or orders for that for that bond sale, and then the bond just starts changing against in the secondary market, and if it loses value, then the narrative around the asset in question, you know, becomes problematic.
00:37:58
Speaker 2: Right, and harder for that entity right to come back and do another issue.
00:38:01
Speaker 4: Exactly exactly, Okay, So enter the banks and sort of the narrative or like the narrative that's emerging around the attempt to sort of rekindle demand for at least part of this debt.
00:38:12
Speaker 6: So raupen.
00:38:12
Speaker 11: After these three deals, there was a different deal by black Croc. It was for a data center, so it was by Black Rock, but not just a corporate deal. It was still AI essentially. And with this deal, which was smaller in size about half of those a half billion, the well, the banks on the deal essentially kept the orders limited to so called buy and hold investors. So institutional investors that are let's say, strategically invested in these assets or like these assets, don't plan to essentially make a quick profit by selling these assets. The moment that they start trading was.
00:38:51
Speaker 3: It like relying on the secondary market, right.
00:38:53
Speaker 11: Well, the idea of this was essentially to make sure that it wouldn't be like an offloading in the secondary market immediately. And so what happens is that they created what in a sort of banker linguis called scarcity value. So the bonds were not easily available and that made them more valuable.
00:39:10
Speaker 2: As somebody who watches this market, are they creating an environment and so it's not reflecting the real trade and demand that's out there, Like it's kind of I don't want to say covering it up right, You're allowed to do this. There's nothing illegal, but I mean it speaks to the difficulty with some of these issues.
00:39:32
Speaker 6: Definitely.
00:39:32
Speaker 11: It definitely does the fact that I mean everyone knows that there's going to be there has been already a ton of that issue ones to finance the I built out. There's going to be even more. So there's no doubt that the market is aware of that. There are still questions as to the pace and the cadence, like the frequency of these bonds. And so those three deals one after the other said between the end of June and July kind of spook the market a little bit, and so there wasn't there wasn't needing a market for a deal that did well essentially, and so the Blackroad deal upened and then after that we saw the Google deal yesterday, which is particularly.
00:40:09
Speaker 4: Well, where do I mean, do we think about this from a yields perspective too? On what these investors are being paid for taking on this risk, Like how does it vary from one company to another?
00:40:22
Speaker 6: Well, that's the thing.
00:40:23
Speaker 11: So yes, there was an order book or you know, the let's say, the quality of investors participated in the Black Coat deal was, as I said, more buy and hold. Let's not forget that. You know, what these bonds were offering in terms of yields was particularly high. So we're looking at like in the case of Black Road, it was like seven and a half percent, which right, yeah, which makes it closer to a high held credit rather than an investment grade, you know, blue chip type of credits.
00:40:51
Speaker 3: What did Alphabet offer.
00:40:54
Speaker 11: I don't remember, but it was like something like, if I'm not mist taking fifteen basis points above their existing curve, so that that is a premium that makes the new bonds essentially attractive.
00:41:07
Speaker 2: Is it important to like what Blackrock did? This was a data center deal, so was this real estate? Was this like what versus what we're getting from Alphabet or you know, or what SpaceX or Amazon was doing. I mean, like, where do we think about Okay, these buckets are similar versus this. I'm trying to figure out too what this means in terms of the AI spend and trade and how investors are getting much more discriminatory.
00:41:38
Speaker 11: Yeah, it's I mean data center that, particularly in the investment grade market is a new thing. Essentially it started the I think DCA actually, and it's essentially project bonds, So it's bonds to finance the actual project, as opposed to, for instance, a corporate straightforward corporate deal, senior and secured bonds issued by a company where the use of proceeds can include, for instance, AI investment, but it can also be refinancing of debt or any other thing. In this case, it's especially project bonds, where in the case for Black Crop, for instance, it was black Rock Funds taking an ownership stake in the project company that is going to develop this data center, META at the other part of the ownership, and then the black Rock Funds raised the financing to essentially back their stake in the project.
00:42:30
Speaker 4: We're speaking with David Barbousha, Bloomberg News Corporate Finance Reporter joints us here in the Bloomberg Interactive Broker studio. Here we are, Oh, you wanted to say something, I just do you.
00:42:37
Speaker 2: Think it's interesting that META was part of this because people are questioning the meta strategy.
00:42:43
Speaker 11: Well, this is let's just this is not the first data center of meta. They actually sort of inaugurated the data center trend with a very large transaction late last year. It was like the Hyperiod data Center Louisiana. Okay, Yeah, a blue Hour which was much larger than this one. So you know the first time that is okay.
00:43:06
Speaker 4: So I was going to say, here we are going into We're done seven months of the year. So we a little over halfway down with this year, and so far already we've seen what two hundred billion, more than two hundred billion dollars in pond sales. What do your sources tell you about what the rest of the year is going to look like?
00:43:23
Speaker 11: So like, as I said, everyone knows there's going to be a ton of that coming up. Forecasts keep changing, like.
00:43:29
Speaker 4: Two hundred billion more, one hundred and fifty billion more.
00:43:32
Speaker 11: There is a Bucklass estimate which with total hyperscaler that so large tech companies at two hundred and eighty billion for the total of this year. So we're looking potentially at a hundred eight hundred eighty billion dollars. But if you look at the whole space, Like, so including data centers, including the you know, the broader tech sector. There are estimates I think fresh GP organized says that put it at about five hundred billion dollars.
00:43:58
Speaker 2: So what do you watch in terms of you know, the big question that's out here? David A Like, we're just trying to figure out again going back to you know, for here we are three years in right getting ready to i think enter our fourth year when it comes to the AI spend and build and just trying to figure out when is it overdone? And I'm just curious the things that you watch or what you hear when you are reporting this stuff out. What are you hearing from folks in the industry.
00:44:23
Speaker 11: I mean, there is a there is a concern obviously around that It's mainly driven by the pace of issuance and the pace of the financing. There is a concern of you know, capacity overbuild. There is a concern that the technology may become obsolete, obsolete relatively soon.
00:44:44
Speaker 6: Yeah, so that's another Yeah.
00:44:46
Speaker 4: What are we going to do. Let's say that it is not to be answered right now, but let's say that happens. What do we do with all these data centers?
00:44:51
Speaker 6: And I turn them off.
00:44:53
Speaker 2: I mean there, well, this is why you know, you think about just other rushes, the energy market or two, and they overbuild and to drill, drill, drill. You know, they have seen their cycles where rooms and bus if rooms and busts in a big way, and anybody in the industry is just very cautious.
00:45:10
Speaker 3: And I feel like, is there are people being cautious?
00:45:14
Speaker 11: Well, I mean it does. It does have feelings like it does remind people of previous you know, technology driven boomen bus cycles. But we'll see, like we've seen the tech earnings recently was relatively well, we're positive and so they were positive also for this Google bond for instance.
00:45:31
Speaker 4: So okay, this just got me thinking. And Carol, we've talked about this before. But you know, if we think about this from the perspective of the l elms that people use just to chat, the chatbots. You know, I woke up yesterday morning and asked Claude a question, but it was like, you need to upgrade in order to ask this question. So I just went to open AI and chat GPT and asked the same question there. And when I run out of space there, I just used you know, the Google one.
00:45:53
Speaker 3: You have no loyalty to anything, no loyalty I know.
00:45:56
Speaker 2: And this is where like like this is what we're trying to figure out or where we think about companies and to spend are saying, wait, you don't really need to use this expensive tool to do what you are doing. Like there's going to be a point where people are not maybe necessarily offering it to everybody, right, employees, Like we're trying to figure this out.
00:46:15
Speaker 11: Yeah, we'll see. Sorry we're doing this to you, but I understand. But like the scale of the finances suggest that there's a lot of demands.
00:46:22
Speaker 4: Yes, that's that's what.
00:46:23
Speaker 2: They wouldn't do it unless they thought, which is what we talk about with Mandeep Sing from Bloomberg Intelligence.
00:46:29
Speaker 3: There's the demand, there's the backlog.
00:46:30
Speaker 4: The customers.
00:46:31
Speaker 2: The customers, right, so there's the sales on the revenue. You just wonder can it all come to a quick start stop at some point?
00:46:38
Speaker 3: I don't know, that's the big question.
00:46:39
Speaker 4: Dobby Day, this is a great story. Thank you for stopping by the Bloomberg INTERACTI Brokers Studio. Dabby Day Barb Busha. He's corporate finance reporter for Bloomberg and US You can check out his reporting and the entire team's reporting on the Bloomberg Terminal and at Bloomberg dot com.
00:46:53
Speaker 1: This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from two to five pm Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal
Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus global business finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio.
00:00:32
Speaker 2: So let's get to it, and let's get to the labor market and that report we got this morning at eight thirty am Eastern.
00:00:37
Speaker 3: Here's just kind of some of the details.
00:00:39
Speaker 2: US employers unexpectedly cut jobs in the month of July, and hiring the prior to months was revised lower, suggesting that the labor market here in the US is weaker than previously thought after surprising strength tim earlier this year.
00:00:52
Speaker 4: The decline in jobs, driven by cuts and government leisure and hospitality, also retail. Private sector payrolls rose by thirty thousand dollars for a second month, was led by healthcare and social assistants. Manufacturing and construction perils those continue to climb.
00:01:05
Speaker 3: And then there was the participation rate.
00:01:07
Speaker 2: The share of the population working or looking for work fell to sixty one point four percent, which excluding the pandemic, was the lowest since the nineteen seventies. Among those between the ages of twenty five and fifty four, known as prime age workers, participation edged higher, but remained near the lowest levels of the fast of the last few years. White House, Director of the National Economic Council. We're talking about Kevin Hasse and Hassett. He spoke earlier on Bloomberg TV and Radio on Open Interest with Danny Berger and Michael McKee, and.
00:01:36
Speaker 5: Labor force participation is kind of on a downward trajectory, which means that the break even jobs number, that is that the job's number you need so the unemployment rate doesn't go up, has gone from maybe one hundred twenty hundred, thirty thousand a few years ago to maybe about.
00:01:52
Speaker 6: Forty thousand now.
00:01:53
Speaker 5: And so what it means is that what the market is used to looking at, oh, it's like a normal tread the water kind of jobs number, if it's around one hundred, is no longer.
00:02:02
Speaker 2: True, all right, That, of course is white House, Director of the National Economic Council, Kevin Hassett earlier on Bloomberg joining us with more is there on Michael McKee, who was talking to mister Hassett earlier on Bloomberg. He is, of course Bloomberg TV and Radio International Economics and Policy course, joining us here in studio along with and back with us Matt Lazetti, he's chief economist at Deutsche Bank.
00:02:22
Speaker 3: Guys, thank you so much.
00:02:23
Speaker 2: I do want to kick it off with you, though, Mike, we've had a few hours for the dusk to settle. Is this a report that was weaker? Like, what's the assessment here?
00:02:33
Speaker 7: I think the bottom line, to just skip to the end of the book, is that the labor market is weaker than it had appeared, but it's not weak. It's not a problem for the FED to have to deal with. And there were, as you mentioned, some quirks in the data this time, and everything Kevin said was true about with the labor force declining, you need fewer jobs to employ people, so the unemployment rate can go down, and that is something the Fed's going to have to think about in terms of what is the level of interest rates that keeps the unemployment rates steady.
00:03:09
Speaker 4: We'll dig into all of this and more in just a min at. First, I want to bring in Matt Lazetti, chief economist over at Deutsche Bank. Do you agree with Mike's assessment here that, Yeah, on the surface, it looks weaker, but it's not as bad as sort of the headline number.
00:03:24
Speaker 8: Yeah, I think absolutely you got a downside surprise on payrolls you had the one hundred thousand of download divisions to prior months. But I think what it does is it confirms that that breaking number is just lower. So there's various FED estimates out there suggesting that the breaking even number could be as low.
00:03:37
Speaker 6: As zero per month.
00:03:39
Speaker 8: Over the past three or six months, we're running at twenty to forty five thousand on headline payroll numbers. With that backdrop, we've seen the auntoplane rate decline to the lowest level in eighteen months. We've seen other measures of labor Marcus slack actually tighten on the margins as well, and so I think it actually fits more with a story where the breaking number is quite low. We see payroll gains trending kind of around those levels, maybe a little bit above labor market slack tightening at the margins, But it takes away some of the upside risks of the labor market that the fed might have been contemplating.
00:04:06
Speaker 2: All right, So when it comes to we've got to actually a question I want to bring in from a viewer and listener. It's Mark in Toronto, and he says, what impact do boomers retiring have on the labor participation rate in unemployment make and if we.
00:04:21
Speaker 3: Could address that.
00:04:22
Speaker 2: I have to say, I have some rumors in my family who've retired recently and or in the last few years, and they have at least three or four of them that have left the labor market. Matt, is that something that is certainly at play here?
00:04:33
Speaker 6: Absolutely?
00:04:34
Speaker 8: So if you look at the labor force participation of recent months in June, there's a big decline in prime age, which I think you alluded to, and specifically the twenty five to thirty four age.
00:04:43
Speaker 6: Group that partially reversed.
00:04:45
Speaker 8: I think the bigger structural trend is labor force participation for fifty five plus continues to collapse.
00:04:51
Speaker 6: There's a question about whether or not that's worrying or not.
00:04:54
Speaker 8: I would actually argue that it's really in line with what you would expect from demographics. So if you look at different age groups with fifty five plus, their participation rates are actually not moving around all that much. So what's happening is people are just aging into buckets where they work a lot less, where their participation rates are much lower, and we're in fact much closer to what I would expect from a demographics implied trend from the labor market.
00:05:17
Speaker 4: Mike, what about the other end of the demographic spectrum, and that would traditionally be new entrance to this country, entering the labor force and younger immigrants. We've seen that dry up significantly over the past few months, and it's certainly by design with this administration. You address that with Kevin Hasset a little bit in one of the questions that he answered, does that work in our economy when we're not having enough kids?
00:05:42
Speaker 7: It isn't good news for the overall economy. As we were talking about with Kevin Acid, the size of the labor force is one input into what potential growth is. And if the labor force isn't growing, you've got to get more out of productivity. Kevin in worsh thinks you will eventually, not yet, so it is it is a problem for the economy overall, and you could see that in the overall participation numbers as well, although prime age has ticked up a little bit. Things have loosened up a little bit compared to where they were. But the demographics at the other end, as Matt was saying, that's been going on for quite a while, as baby boomers from nineteen forty six started retiring, and now we're past the peak of baby boomers being sixty five, so that'll be less and less of an issue going forward, But it still takes a lot of people out of the labor force.
00:06:32
Speaker 3: Is it too soon?
00:06:33
Speaker 2: Well, I feel like there's a million things I want to talk about because demographics things. I know we've talked with you about it, But I do think about longer term, if we don't allow immigration into the country and we have an older workforce, you know how much the economy here in the US is at risk in terms of growth, Matt.
00:06:49
Speaker 3: Is that something you guys are thinking about a lot or studying.
00:06:51
Speaker 6: Sure?
00:06:52
Speaker 8: I mean, I think if you look at projections for population growth in the size of the US population, as you look out five or ten years, without positive net ration flows, you have a declining labor force.
00:07:03
Speaker 6: You have a declining population.
00:07:05
Speaker 8: The US is not the only economy global economy that is dealing with We've seen this movie, right, We see these issues in various parts of Asia, Europe. Many of these economies are actually worse place than the US is from that perspective, but no doubt, we rely on positive net immigration flows as we look ahead, I think, as Mike mentioned, you know, the hope is that productivity growth can pick up. It has been pretty robust over these past two to three years, and that that can be the supporting mechanism for overall growth so far as it's working out. Okay, Yeah, that's a bigger question as you look.
00:07:36
Speaker 6: At Okay, I promise we oh, go ahead, Mike. I was just going to add on to this.
00:07:39
Speaker 7: There is one aspect of this that the productivity can't really solve, and that is the fewer people that are working, the lower the dependency ratio is. And so social Security gets less funding, Medicare gets less funding, and that is an ongoing issue and nobody has any idea and Congress is going to address this.
00:08:01
Speaker 2: I keep saying, if you know, robots are going to replace us, or AI makes us more productive, but you know, robots don't buy lunch, or robots don't need their shoes shined or robots don't need to go shopping for shoes, you know, like I just just.
00:08:12
Speaker 4: They need to be oiled. Though it depends sometimes it depends.
00:08:17
Speaker 2: It depends, Mike, I want to get to the conversation with Hassett. Kevin Hassett this money at one point talking about early earnings, and he then brought up weekly earnings.
00:08:26
Speaker 3: She said something like, I don't know if.
00:08:27
Speaker 2: The president's watching the Oval office saying you got your point though, and Kevin, good job, good job. And Kevin said, I don't know if he's watching, but I'll find out. And I want to get both of your perspectives. But let's Mike speaks to the president who watches a lot of TV. We know that, and respond, is that typical.
00:08:42
Speaker 3: Of a president?
00:08:43
Speaker 2: Is it shows his involvement in what the messages that's getting out.
00:08:48
Speaker 7: I think it's just unique to this president that he likes to do that, and he likes to hear people talking about him, and he spends a lot from all the reports we get from the White House, he spends a lot of time watching television, the various news programs. I don't know that he was watching Kevin Hasset today putting.
00:09:04
Speaker 3: Pressure on then his members of his team when they're on air.
00:09:06
Speaker 7: Well, yes, but every White House does that in a sense that you're sending out a spokesman for the White House, so that person is not going to say, yeah, we blew it, this was a bad policy or something like that. They're always going to try to present the best numbers. And I was thinking when Kevin and I were having that conversation, you know the old saying about you can torture the statistics any way you want to get the numbers that you want.
00:09:28
Speaker 6: The bottom line for.
00:09:30
Speaker 7: The White House, though, is that we are average hourly earnings are falling behind inflation. And whether you use one measure or another doesn't really matter because the public thinks that's happening, and that's their political problem.
00:09:45
Speaker 4: Well, speaking of communications, you and Danny Berger asked Kevin Hassett about the communications between the President and Kevin Worsh.
00:09:52
Speaker 6: Let's listen to what he had to say.
00:09:55
Speaker 5: There have been some new stories that the President's talking to Kevin Worsh, and of course he is, you know, and he talked to Jay Powell too. But the other thing is that that Kevin Worsh and the President have a very close, long term relationship from New York City, from Florida, and they talk about the economy all the time. It's very very natural for the President to do something like say, hey, you know, Chairman worsh what do you think about today's job number. That's a very normal thing for him to do. But I think that's the way you should think about the balance of the conversations.
00:10:24
Speaker 4: Earlier on Bloomberg TV with Danny Berger and Mike McKee, Matt, I want to toss this over to you because Kevin ass had also said that the President respects the independence of the Federal Reserve. And I'm curious, based on the reporting that we've seen around the conversations happening between the FED Chair and the President and what the President said publicly and on social media throughout this term in his previous term, is the view now is the market viewing that the president respects the independence of the FED?
00:10:50
Speaker 8: Look, I think we don't really know that the context of the conversations that are happening. It seems like it might be more frequent than what has the interactions between the President and the FED Chair than in the past. If you look at market measures, I think what we like to look at our inflation expectations showing anything that is worrying. Are they suggesting that the Fed's credibility is at risk? I think last week you did see a notable rise in inflation expectations. I don't know that there was anything kind of tied to the President or but if I think it was tied to Chairwash's specific comments around willingness to potentially raise rates, unwillingness to say that they were targeting two percent PCE price inflation, and just the overall conversation I think and the language that he use, I think raise some risks from a market perspective about whether or not the FED would do what's necessary to keep inflation in check.
00:11:37
Speaker 2: President Trump did an interview with punch Bowl today and he reiterated his preference for lower interest rates, but acknowledge it is not the central bank chief's decision alone. So kind of making our taking a little bit of a softer tone in some of the criticisms. I mean, when it comes down to it, I know we are already thinking, Okay, what does the FED do next? We've got inflation prints to get through, right, Mike, We've got more economic data who knows where the FED will be and Kevin Walsh and everybody on the FOMC at the next meeting.
00:12:06
Speaker 7: So clearly, you don't trade FED fund's futures. You're right, we don't know. But the people who do trade these things have to decide on a minute to minute basis what they're going to do. And they have backed off the idea of a September rate hike. But the important thing is we're going to have two more inflation reports, two more, well one more after this jobs report, and so there will be a lot of data for them to hang a decision on. We don't know what that data is going to say, and so at this point it's too early to speculate. I mean, it's been going into this, everybody was saying, well, if we get a bad number, then the FED might have to back off. And we got a bad number, so they're saying the Fed's going to back off. Now we're all onto, Well, let's see what we get on Wednesday with CPI and we'll make a decision.
00:12:54
Speaker 4: It's a favorite part of well, Matt, what is what should you know? It's the FED is a duel mandate. But and I for a lot of people last few months have said, Okay, the labor market is strong, so the focus should be on getting inflation down. After today's print is does that view change? Should the Fed still be squarely focused on on that part of the dual matter?
00:13:13
Speaker 6: I think it changes.
00:13:14
Speaker 8: You know, clearly you had a downside surprise and payrolls, but if you think the break even numbers close to zero, you're actually running at or near those levels. The underplanning rates at four point one percent, it is below well below what the Fed thought it was going to be at the end of this year. It remains our best measure of labor market slack. I think you have a shift of risk distribution around the labor market. Now there's not as much upside risk. But September will be about the inflation data that we get over the next two months, especially we get a bounce back in payrolls next month.
00:13:41
Speaker 3: Reinflation is still a problem.
00:13:43
Speaker 6: Right, so in our view it is.
00:13:45
Speaker 8: I mean, if you look at PC inflation, which is what the FED targets, it is the highest that it's been since nineteen ninety two, if you strip out COVID and we agree with an evolving FED assessment from many officials that it is more broad based, is more demand driven AI related an investment as a source of inflationary pressures. Underlying inflation is stuck closer to three percent. None of that changed today. We'll get an update on that next week from the CPI.
00:14:12
Speaker 4: Okay, I want to just throw this last one at you, even though we don't have enough time, Mike Lisa Cooke, because in the conversation right independse of the Fed, since we heard from Kevin Hassett this morning, our Bloomberg News team reporting that President jump has revived this threat to file fire Federal Reserve Governor Lisa Cook over those unproven allegations.
00:14:29
Speaker 6: Update us here on.
00:14:29
Speaker 7: This, Well, they apparently sent Lisa Cook a letter that said the President is considering firing you because of the allegations of mortgage fraud, and you have three weeks to respond to this letter. Remember, the Supreme Court said that the President couldn't fire her, but because she didn't get due process, they didn't decide the legality of her particular case.
00:14:51
Speaker 6: And so now the White.
00:14:52
Speaker 7: House is coming back and trying to follow the dictate of the court and give her the opportunity to respond. And we don't know how this will low play out, because even if she's found not guilty, the president could come back and say, well, yeah, but she was implicated or something. So this is just it's Friday. Put it that way, and this is the kind of thing you get on Friday.
00:15:12
Speaker 3: Hey for the lawyers, that's all I'm going to say.
00:15:15
Speaker 2: Matt Lezetti, chief US economist at Deutche Bank, thank you so much. And of course, our own Mike McKee, Bloomberg TV and Radio International Economics and Policy correspondent, do more on a labor market.
00:15:25
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from two to five e's during Listen on Applecarplay and Android Otto with the Bloomberg Business app, or watch us live on YouTube.
00:15:39
Speaker 2: We have been reporting US employers unexpectedly unexpectedly cut jobs in the month of July, and hiring the prior two months was revised lower, suggesting the labor market is weaver weaker than previously thought.
00:15:51
Speaker 3: Man, do I need a weekend?
00:15:53
Speaker 2: This is after some surprising strength earlier this year. We're going to stay on the labor market. We've been trying to look at this from different vantage points, and that's where our next guest comes in.
00:16:02
Speaker 4: We've got Laura Ulrich with US Director of Economic Research in North America at Indeed Hiring Lab. She's also a former senior Regional economist and senior manager at the Federaliserve Bank of Richmond, primarily focused on research related to higher education and workforce dynamics, which, by the way, we got some great questions from our audience coming in just about this. She was also an economics professor and associate dean for undergraduate programs at Winthrop University. She joins US from North Carolina. Welcome, Welcome, Welcome. How would you describe today's payrolls report and how it changes your view of the labor market if at all?
00:16:34
Speaker 9: I wouldn't say it necessarily changes my view of the labor market. We at the Hiring Lab and Indeed have been kind of describing the market as a market that is cooled, not necessarily that is cooling, and we're kind of bouncing along the bottom. And I see that as the same today as I really did yesterday.
00:16:52
Speaker 10: However, I do think it is.
00:16:53
Speaker 9: Important to acknowledge that the payroll employment report came in about one hundred thousand jobs below consensus today and so that's notable, right, It was much softer than what people were expecting.
00:17:06
Speaker 2: So I am curious too, and tell us a little bit more if you would, Laura, about the activity you are seeing on the platform. What are the job listings, what are the jobs people are looking for? Give us an idea and how it gives us some context about data today versus maybe six months ago or just trends, because you guys see a lot we do.
00:17:26
Speaker 6: We do.
00:17:27
Speaker 9: We have access to a lot of data both on labor supply and labor demand.
00:17:32
Speaker 10: I would tell you that we've been in kind of.
00:17:37
Speaker 9: A I wouldn't call it a steady state, because there has been a bit of turbulence, right, We've been balancing a bit. But we've been at about a job posting index of one hundred and two ish, between about one hundred and one and one hundred and two since about September of last year. So that's kind of what leads partially to our viewpoint in that this is kind of a cool market that's bumping on on the bottom.
00:18:01
Speaker 10: One interesting point, though, and you did see.
00:18:03
Speaker 9: This reflected potentially in today's job payroll employment report. We have seen some strength in some sectors where we were seeing considerable weakness before.
00:18:13
Speaker 10: So software development.
00:18:14
Speaker 9: Jobs, for example, are up fifteen percent since early twenty twenty five, and we had seen considerable cooling in tech jobs and in the payroll employment report, jobs in both information and professional business services were up today. So we are starting to see some of those I would say sectors that maybe are more AI exposed that we had seen a lot of softness to turn the corner a.
00:18:38
Speaker 4: Bit, okay, you know, Brendan down in Maryland sent us a question during our last segment that would be great for you to weigh in on. It's about sort of these different areas of the economy and what you're seeing in terms of different sectors. He writes that it seems many jobs were lost in education. To what extent do you think these are permanent job locked is as many municipal school districts have exhausted and no longer can use the massive federal funding they received during the pandemic era.
00:19:09
Speaker 10: Here's a great question. I did take note of that data point this morning.
00:19:14
Speaker 9: I think that the loss of those local education government jobs that could be a bit of an anomaly with some issues with the seasonal adjustments. I think it'll be interesting to see what the number looks like next month.
00:19:26
Speaker 10: I will say though, much.
00:19:27
Speaker 9: Of my background is an education as you mentioned, and there is considerable pressure both on higher end but also K through twelve, partially because of the federal funding cuts, but also because there are have just been fewer and fewer and fewer students enrolled in public schools, and so if you look at enrollment for many of those districts, it's been declining, and so there's less need for staff and teachers at some of those districts as well.
00:19:52
Speaker 2: Hey, I want to get too, because one of the things we talk about, Laura, when it comes to the labor market is the impact of AI.
00:19:58
Speaker 3: Right, we're still trying to figure all.
00:19:59
Speaker 2: Of that out, and we thought, both Tim and I when you talked about strength and software development jobs, we kind of were surprised.
00:20:05
Speaker 4: At that Thoughtcus, we're going to do it.
00:20:07
Speaker 3: Yeah, So that was that was interesting to us.
00:20:10
Speaker 2: You have done a new survey, the Indeed Hiring Lab Labor Market Outlook Survey. You talked to more than one hundred US economists and labor market experts. Tell us about the findings and what you heard.
00:20:21
Speaker 9: Absolutely, So we're really excited. This is a brand new product for us. We released it earlier this week. So we'll be doing this on a quarterly basis where we ask over one hundred very well respected labor economists to predict what they think is going to happen both to unemployment rates but also our own job postings that indeed, and along with that, we're going to be asking.
00:20:41
Speaker 10: Them some special questions. This time, we had a lot of questions on AI.
00:20:45
Speaker 9: It was really interesting for us to see the results because from a macro point of view, there wasn't a lot of disagreement amongst economists. Many of them did see that there would be a slight decline in job postings and unemployment and a slight increase in unemployment rates over the next.
00:21:00
Speaker 10: Here, but not a lot of movement.
00:21:02
Speaker 9: But the AI question got a much broader array of answers. I will say a little over fifty percent of the economists that we're surveying, I think it's fifty seven percent believed that AI would lead to.
00:21:16
Speaker 10: Job losses on net.
00:21:19
Speaker 9: About in the thirty percent thought it would lead to job gains on net.
00:21:22
Speaker 10: And then some are unsure, and I think that wide.
00:21:26
Speaker 9: Array of responses from like I said, this group of very well respected labor economists, really shows how much uncertainty there is in what path this might go in. But I will say, and indeed we're starting to see I mentioned that growth in software development. Those jobs where we are seeing growth do tend to be what we're calling AI touch jobs. These are jobs they either have AI at the titles, so think like AI engineer or machine learning.
00:21:51
Speaker 10: Specialists, something like that.
00:21:53
Speaker 9: Data center technicians another one that's growing a lot, or they mention AI as being a skill or or a characteristic of the job in the job description. So those jobs are on the rise on our platform for sure. They're also on the rise in terms of what people are seeking. And so really from our vantage point right now, I would say today, from my perspective, it's much easier for me to point to some growth that we're seeing from AI in the labor market to actual destruction from AI doing people's jobs.
00:22:24
Speaker 2: But as you pointed out in the press release, you guys said, when a group like this converges on something like AI, as they did, right in terms of the impact, it's worth paying attention when it splits that tells us something too.
00:22:35
Speaker 3: In this quarter, it did both. Is that fair in terms of how I'm reading it?
00:22:39
Speaker 10: It did.
00:22:40
Speaker 9: We asked one really interesting thing was we asked the economists exactly what sectors do you think there'll be the largest decline in jobs and what sector do you think they'll be.
00:22:48
Speaker 10: The largest increase. And there were two occupational sectors from our data that ended up on both lists. That was selfware development and data and analytics.
00:22:56
Speaker 9: So some of the economists thought, this is where we're actually going to see the most laws and others thought, this is where we're going to see.
00:23:01
Speaker 10: The most gain. That was a surprise to me.
00:23:04
Speaker 9: I didn't expect to see the same sectors end up on both lists.
00:23:07
Speaker 2: It's just it's a reminder that we're figuring our way. People say we're early in on this right and understanding really the impact. I mean, we're trying to figure this out and we don't really know right longer term exactly how it plays out.
00:23:20
Speaker 10: I totally agree.
00:23:21
Speaker 9: I think one thing that we do know, and we did another survey internally and indeed where we asked employers if they were seeking what we defined as AI native or AI fluent talent AI native talent has nothing to.
00:23:33
Speaker 10: Do with age.
00:23:34
Speaker 9: You can be a gen xer like me and BAI native, but it basically means that you default to AI technology to help you across multiple workflows.
00:23:43
Speaker 10: AI fluent is you still feel.
00:23:45
Speaker 9: Comfortable across workflows, but you don't necessarily default to it. And forty five percent of employers said they were actively recruiting AI native talent, but only fourteen percent of workers in the survey considered themselves AI natives. I think one thing we do know right now is people who do have AI related skills and talent are being hotly demanded in the labor market.
00:24:09
Speaker 4: Well, let's make this a little personal because our team told us that you have a couple of kids. I guess they're not kids anymore, but they're young men entering the labor market right now. And this is, I think, I think it's fair to say, a really interesting time to enter the labor market. You're talking about this AI fluency and being AI native. What do you tell them about the skills that they need to succeed in this market.
00:24:37
Speaker 10: It's a great question. And yes, I have three sons, sixteen, nineteen and twenty two one.
00:24:41
Speaker 4: I'm sorry for the third one that I did not mention it.
00:24:45
Speaker 10: If you don't know who you are, you won't mind.
00:24:48
Speaker 9: But the oldest just finished graduate school in data science, which in R and D data has been one of our softest areas.
00:24:54
Speaker 10: So you can.
00:24:55
Speaker 9: Imagine for me and the work that I do, doing the research that I do, but also living life as a mom, trying to.
00:25:00
Speaker 10: Help this young adult.
00:25:01
Speaker 9: He has landed his first full time job, which is excellent news for our household, but it was very tough, and what I kept stressing to him was that, in my opinion, it's really important for young job seekers to prove to companies that they are better off.
00:25:18
Speaker 10: The company is better off.
00:25:20
Speaker 9: With AI plus them than AI without them, and that's a tough road to navigate right now, but I do think it's extremely important.
00:25:30
Speaker 10: So I think being an AI native is very important. I have stressed that to my.
00:25:34
Speaker 9: Sons and have stressed to myself too, as someone who is older. Only eleven percent of Gen xers in our survey even define themselves as AI fluent, and I've had to work hard as an older worker myself to become an AI and native and to really dig into it. So I think it's something that in my view, is extraordinarily important as we do go into this period that is going to be so uncertain, because I've believe that for my children's generation, one of the most important skills they can have is adaptability.
00:26:05
Speaker 2: I got to ask you about one more data point from your survey finding. We've only got about a minute or so left, but it's you guys found a larger majority fifty seven percent of panelist, so they expect downward pressure on the wages of college educated workers over the next year versus thirty four percent who said the same for workers without a degree.
00:26:22
Speaker 3: Forgive me, but just about forty seconds. Why do you think that is?
00:26:26
Speaker 10: Yeah, I think that.
00:26:27
Speaker 9: The sectors that are most likely to be impacted, especially in the short run, are many white collar sectors that college educated people flow into. I'll say too, We've done some work in indeed, looking at how that collides with the demographic shifts that you guys were talking about before, and what we've kind of predicted through this is that we might have an excess of workers moving into the white collar roles with the combination of demographic shifts and AI and so if that happens and supply exceeds demand. Seeing downward pressure on wages would be be pretty pretty rational to expect.
00:27:03
Speaker 3: All right, great stuff. Please please come back and join us again. We would love to have you. Have a good weekend.
00:27:09
Speaker 2: Laura Ulrich's director of economic research in North America at Indeed Hiring Lab.
00:27:14
Speaker 4: Stay with us. More from Bloomberg Business Week Daily coming up after this.
00:27:22
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from two to five e's during this Listen on Apple Karplay and Android Auto with the Bloomberg Business app, or watch us Live on YouTube.
00:27:36
Speaker 3: This story definitely caught our attention. Tim set it up so well.
00:27:38
Speaker 2: It's about one sports fan and what he's paying to watch all of the streaming channels and sports that he loves on streaming channels, and it turns out to be more than two thousand dollars a year.
00:27:49
Speaker 3: He's got to share some passwords like.
00:27:52
Speaker 11: What is he doing?
00:27:53
Speaker 3: We know what goes on at the stent of bic ausehole?
00:27:55
Speaker 6: Okay?
00:27:56
Speaker 4: Why so much? As our team reports out, the rise of streaming services has made it difficult for US sports fans to follow their favorite teams without special subscriptions with pro league signing deals with multiple services and creating a bewildering schedule and some steep costs. We've got Randall Williams, bloomberg new senior reporter and the co host of the Bloomberg Business of Sports podcasts. That podcast is available at Bloomberg dot com, Apple, Spotify or wherever you get your podcasts.
00:28:19
Speaker 2: Also means it's the weekend because it's dropped.
00:28:21
Speaker 3: Hey, good to have you here. Lots of talking. Well, it's great to have you. We're going to get into the streaming cost. I feel like we have to go to FIFA though, you start there, because last.
00:28:31
Speaker 2: Week we talked about and it looked like they were trying to get outside investors and all this stuff.
00:28:35
Speaker 3: That's done right, it's dead.
00:28:37
Speaker 6: The sign after we talked to you shortly.
00:28:40
Speaker 12: Shortly after it died, and I think I was reporting on it like maybe three hours after, which is nuts. The thing that is going to that remains to be seen is if Giohnny Infantino, the FIFA president, is going to win his reelection next year. He was I would say, reaffirmed as president this week in Morocco, where I believe he said the final is probably going to be played there, but UEFA has not. They have not said anything different. They still are not supporting him.
00:29:06
Speaker 4: I maybe many people who are just sort of joining the conversation right now about FIFA and post World Cup sure might not understand. I certainly don't detention paint a picture the tension between UEFA and FIFA was Was this just the you know, straw that broke the camel's back or have there been tensions for a while.
00:29:26
Speaker 12: Well, there have been tensions for a while. I think that when Gianni and Fantino of course is looking at FIFA as a business, as most executives do, but there's also a pure, a purest mentality in all sports, in golf and tennis and football and basketball and everything else. And so you think about the innovations that Jihanna and Fantino that's what he would call it, and say like such as hydration breaks, commercial breaks that are used to sell ads, that's not typical in football. UEFA is very strongly opposed to that, and it's even said in the Euros that they won't be doing it. But that is something that if UEFA was trying to maximize TV dollars, that they could sell, but they're talking about the purity of the game of soccer and they're saying no, absolutely not. So then you you, you know, relay that into what's happened recently. FIFA may fifteen billion dollars from the World Cup and then after that they're going to be like, you know, we're going to sell stakes, We're going to do this with Thrive Capitals Joshua Krishner, and UEFA is like, listen, no, we've had enough of you and we're going to be trying to probably get rid of you come next year.
00:30:26
Speaker 3: Yeah.
00:30:26
Speaker 4: Do they have the power to do that?
00:30:28
Speaker 12: I think it's going to take some rallying, and they need they need. There has to be another potential candidate. I have not seen any reports that someone has been trying to rally against them. It's just that they do not support him. I also don't anticipate that Johnny Infantino in four months is going to be able to change UEFA's mind. So who can UEFA find to really go up against Jihanny Infantino? And the reality is Infantino, as much as he has done with the Trump administration and for the World Cup, it's hard to argue that he hasn't done a good job.
00:31:00
Speaker 6: Fifteen billion dollars the most.
00:31:01
Speaker 12: Ever, it's going to be hard to get rid of anybody who's just made record setting profits.
00:31:06
Speaker 2: And won't there always be that tension between FIFA and kind of the regionals, of.
00:31:09
Speaker 12: Course, because FIFA owns the World Cup, which is the you know, it's over the entire world. Whereas you know, you have your CONCA, CAF, you have your your soccer federation in South America, you have UEFA, and each of them have their own tournaments. You have the Euro, you have Copa America. But the World Cup is when everybody competes. So there's always going to be some tension there.
00:31:29
Speaker 3: We gotta be a little jealous of this one, so well, just a little bit.
00:31:33
Speaker 2: So listen, there was a story on the Bloomberg too, the next World Cup and the money deals Randall FIFA exploring selling US media rights for the next two World Cups together, which will keep the hydration breaks that.
00:31:44
Speaker 3: We didn't right. Yes, they're not going away, are they?
00:31:46
Speaker 6: I don't think so.
00:31:47
Speaker 12: I mean once once you get a chase of advertiser money in thirty seconds and all, and you got to think about this is exclusivity. At the Super Bowl and at other events, those thirty second ads sell for eight million dollars a piece, but they never really rerun. When you're watching the World Cup, you see the same ads over and over and over and over again.
00:32:05
Speaker 4: Well, yeah, my son's like talking to me about Bank of America home depot and like he's seven years old and never watches other commercials and he knows. And by the way, David Beckham's in all of these, of course, So this is great news for David Beckham.
00:32:16
Speaker 12: I guess it's great news for all of FIFA's partners is because it really is one of the most exclusive, you know, advertisements that you can possibly have, because it's going to run in every single match across various continents and in regions. So they are going to take this to market. They're probably going to shop around to whoever's willing to pay the most. But of course you want to reach angle of this.
00:32:37
Speaker 4: There's not one inch of that screen that is not taken up by an ad, even when the game.
00:32:41
Speaker 12: Is going absolutely not everything is an ad in there. It's so much, so so much so that even the stadiums think about the stadiums, we're not calling MetLife Stadium MetLife. We're calling a New York New Jersey stadium.
00:32:52
Speaker 3: Pum blew my mind. How the heck did they get that done.
00:32:55
Speaker 12: I mean, they obviously have an insurance partner, and you know they SOFI Stadium became Sandelo State and so on and so forth. I just could not believe that they're willing to go that far to protect sponsors. But as sponsors are paying a premium, and that's what.
00:33:08
Speaker 6: They're asking, So that's why they did it. I think it's part of it because.
00:33:11
Speaker 4: Those those but the naming rights that you know, you naming rights for a stadium, you expect that that those that name to be used when the stadium is mentioned.
00:33:23
Speaker 6: It's it's twofold.
00:33:24
Speaker 12: The stadiums and their owners were willing. They wanted the World Cup and they wanted those matches in that revenue that came from FIFA, and so they were willing to cover up the names. At the same time, FIFA is like, we don't want anybody profiting off the World Cup except for US and our partners. And so even if it's Mercedes Benz Stadium in Atlanta, you know, Hard Rock Stadium in Miami, there were banners that were hung up that said New York New Jersey Stadium, and it's it's hard for me to say New York New Jersey Stadium when the stadium is in New Jersey.
00:33:53
Speaker 3: We we saw it. It came down to the fact in our backyard.
00:33:59
Speaker 12: The the host committee is called New York New Jersey Host Committee, and so that's why the stadium was named that. But nonetheless it is a bit far fetched. I'm like, that's too far But anyways.
00:34:11
Speaker 2: We mentioned streaming costs coming into this. METEA rights what were they for the past World Cup? What might they be for the future World Cup?
00:34:16
Speaker 12: Believe the media rights are around four hundred eighty five million around that half a million dollars half a billion dollar mark. I believe they will probably go for double that. I mean this is this was probably one of the most successful World Cups.
00:34:29
Speaker 3: So they sell them for two you're talking about a two billion dollar deal.
00:34:32
Speaker 12: I'm saying at minimum a billion. I could see two billion dollars, but it depends on who shows.
00:34:37
Speaker 4: Up for who shows up and once that's US meteorites. Yes, but the challenge with that is going to be the time zone for the.
00:34:42
Speaker 12: Next time zone it's yeah, it's five hours, six hours ahead. I believe in Spain, Portugal and.
00:34:48
Speaker 3: Morocco that I think it's doable.
00:34:51
Speaker 12: They have to figure out the schedule and when the players are going to be playing.
00:34:55
Speaker 6: We're not going to see it.
00:34:56
Speaker 12: I would be shocked unless the US somehow ends up in the final in twenty thirty. I would be shocked that if the number surpasses what it was this year, which was I believe sixty four million viewers, which is probably the most watch soccer ever here in the US.
00:35:10
Speaker 4: I think you're going to go.
00:35:12
Speaker 10: I probably will.
00:35:13
Speaker 12: Yeah, Bloomberg grants make permission.
00:35:17
Speaker 4: Four years to make.
00:35:17
Speaker 3: Are you listening to anybody?
00:35:19
Speaker 2: Branda Williams, Bloomberg News Senior reporter, co host of the Bloomberg Business of Sports podcast.
00:35:24
Speaker 3: Check it out, Stay with us.
00:35:26
Speaker 4: More from Bloomberg Business Week Daily coming up after this.
00:35:34
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from two to five eastering. Listen on Apple Karplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
00:35:47
Speaker 4: We are trying to figure out what's going on with AIDBT. So far, they see your Amazon, Alphabet in video, Meta, Oracle and SpaceX. Check this out and I know it's together. They raised more than two hundred billion dollars from dollar bond sales that dwarfs thirteen billion from high grade tech companies in the same period last year.
00:36:03
Speaker 2: Think about the Alphabet offering yesterday, ten tranches over so much investor interest and they're not done. That's at least all the analysis that we've been seeing. But there's a little bit of a chill.
00:36:16
Speaker 6: I don't get it.
00:36:17
Speaker 3: I don't know.
00:36:18
Speaker 2: It's a chill in golfing AI linked debt. As tech borrowing surges, buyers have grown weary that nassave AI spending will not pay off.
00:36:26
Speaker 4: We've got a dabby day. Barbousha with us Bloomberg News Corporate finance reporter. He joins us here in the Bloomberg Interactive Brokers studio. Can you just settle for us the distinction between what Carol mentioned that Thursday offering from Alphabet attracting rough one hundred and fifteen billion dollars of peak demand. That's according to people with knowledge.
00:36:44
Speaker 3: Of it, and they raised only.
00:36:46
Speaker 4: Yes, Love, you were on this byline, by the way, so you know about this. Then today you have this story out that talks about the chill that's in golfing. As we talked about this on our editorial call this morning. Yeah, each of these companies is different and has different offerings.
00:36:59
Speaker 11: What did you So it's kind of interesting so that the Google deal comes after a string of well, there were three deals between June and July essentially, where we had space X, we had Nvidia, we had Amazon raising twenty five billion each. And these deals did not do particularly well in the secondary market, which you know, traders and investors care very much about, because if if a bond doesn't do well and secondary market, then it becomes sort of difficult to pull sales of going forward.
00:37:31
Speaker 2: We'll explain that, right, It's an important to see like kind of the movement, right these investments, no, explain that, That's what I'm saying.
00:37:38
Speaker 11: Yeah, Well, essentially, if when a bond is issued, there is a primary market where it gets absorbed and there are books or orders for that for that bond sale, and then the bond just starts changing against in the secondary market, and if it loses value, then the narrative around the asset in question, you know, becomes problematic.
00:37:58
Speaker 2: Right, and harder for that entity right to come back and do another issue.
00:38:01
Speaker 4: Exactly exactly, Okay, So enter the banks and sort of the narrative or like the narrative that's emerging around the attempt to sort of rekindle demand for at least part of this debt.
00:38:12
Speaker 6: So raupen.
00:38:12
Speaker 11: After these three deals, there was a different deal by black Croc. It was for a data center, so it was by Black Rock, but not just a corporate deal. It was still AI essentially. And with this deal, which was smaller in size about half of those a half billion, the well, the banks on the deal essentially kept the orders limited to so called buy and hold investors. So institutional investors that are let's say, strategically invested in these assets or like these assets, don't plan to essentially make a quick profit by selling these assets. The moment that they start trading was.
00:38:51
Speaker 3: It like relying on the secondary market, right.
00:38:53
Speaker 11: Well, the idea of this was essentially to make sure that it wouldn't be like an offloading in the secondary market immediately. And so what happens is that they created what in a sort of banker linguis called scarcity value. So the bonds were not easily available and that made them more valuable.
00:39:10
Speaker 2: As somebody who watches this market, are they creating an environment and so it's not reflecting the real trade and demand that's out there, Like it's kind of I don't want to say covering it up right, You're allowed to do this. There's nothing illegal, but I mean it speaks to the difficulty with some of these issues.
00:39:32
Speaker 6: Definitely.
00:39:32
Speaker 11: It definitely does the fact that I mean everyone knows that there's going to be there has been already a ton of that issue ones to finance the I built out. There's going to be even more. So there's no doubt that the market is aware of that. There are still questions as to the pace and the cadence, like the frequency of these bonds. And so those three deals one after the other said between the end of June and July kind of spook the market a little bit, and so there wasn't there wasn't needing a market for a deal that did well essentially, and so the Blackroad deal upened and then after that we saw the Google deal yesterday, which is particularly.
00:40:09
Speaker 4: Well, where do I mean, do we think about this from a yields perspective too? On what these investors are being paid for taking on this risk, Like how does it vary from one company to another?
00:40:22
Speaker 6: Well, that's the thing.
00:40:23
Speaker 11: So yes, there was an order book or you know, the let's say, the quality of investors participated in the Black Coat deal was, as I said, more buy and hold. Let's not forget that. You know, what these bonds were offering in terms of yields was particularly high. So we're looking at like in the case of Black Road, it was like seven and a half percent, which right, yeah, which makes it closer to a high held credit rather than an investment grade, you know, blue chip type of credits.
00:40:51
Speaker 3: What did Alphabet offer.
00:40:54
Speaker 11: I don't remember, but it was like something like, if I'm not mist taking fifteen basis points above their existing curve, so that that is a premium that makes the new bonds essentially attractive.
00:41:07
Speaker 2: Is it important to like what Blackrock did? This was a data center deal, so was this real estate? Was this like what versus what we're getting from Alphabet or you know, or what SpaceX or Amazon was doing. I mean, like, where do we think about Okay, these buckets are similar versus this. I'm trying to figure out too what this means in terms of the AI spend and trade and how investors are getting much more discriminatory.
00:41:38
Speaker 11: Yeah, it's I mean data center that, particularly in the investment grade market is a new thing. Essentially it started the I think DCA actually, and it's essentially project bonds, So it's bonds to finance the actual project, as opposed to, for instance, a corporate straightforward corporate deal, senior and secured bonds issued by a company where the use of proceeds can include, for instance, AI investment, but it can also be refinancing of debt or any other thing. In this case, it's especially project bonds, where in the case for Black Crop, for instance, it was black Rock Funds taking an ownership stake in the project company that is going to develop this data center, META at the other part of the ownership, and then the black Rock Funds raised the financing to essentially back their stake in the project.
00:42:30
Speaker 4: We're speaking with David Barbousha, Bloomberg News Corporate Finance Reporter joints us here in the Bloomberg Interactive Broker studio. Here we are, Oh, you wanted to say something, I just do you.
00:42:37
Speaker 2: Think it's interesting that META was part of this because people are questioning the meta strategy.
00:42:43
Speaker 11: Well, this is let's just this is not the first data center of meta. They actually sort of inaugurated the data center trend with a very large transaction late last year. It was like the Hyperiod data Center Louisiana. Okay, Yeah, a blue Hour which was much larger than this one. So you know the first time that is okay.
00:43:06
Speaker 4: So I was going to say, here we are going into We're done seven months of the year. So we a little over halfway down with this year, and so far already we've seen what two hundred billion, more than two hundred billion dollars in pond sales. What do your sources tell you about what the rest of the year is going to look like?
00:43:23
Speaker 11: So like, as I said, everyone knows there's going to be a ton of that coming up. Forecasts keep changing, like.
00:43:29
Speaker 4: Two hundred billion more, one hundred and fifty billion more.
00:43:32
Speaker 11: There is a Bucklass estimate which with total hyperscaler that so large tech companies at two hundred and eighty billion for the total of this year. So we're looking potentially at a hundred eight hundred eighty billion dollars. But if you look at the whole space, Like, so including data centers, including the you know, the broader tech sector. There are estimates I think fresh GP organized says that put it at about five hundred billion dollars.
00:43:58
Speaker 2: So what do you watch in terms of you know, the big question that's out here? David A Like, we're just trying to figure out again going back to you know, for here we are three years in right getting ready to i think enter our fourth year when it comes to the AI spend and build and just trying to figure out when is it overdone? And I'm just curious the things that you watch or what you hear when you are reporting this stuff out. What are you hearing from folks in the industry.
00:44:23
Speaker 11: I mean, there is a there is a concern obviously around that It's mainly driven by the pace of issuance and the pace of the financing. There is a concern of you know, capacity overbuild. There is a concern that the technology may become obsolete, obsolete relatively soon.
00:44:44
Speaker 6: Yeah, so that's another Yeah.
00:44:46
Speaker 4: What are we going to do. Let's say that it is not to be answered right now, but let's say that happens. What do we do with all these data centers?
00:44:51
Speaker 6: And I turn them off.
00:44:53
Speaker 2: I mean there, well, this is why you know, you think about just other rushes, the energy market or two, and they overbuild and to drill, drill, drill. You know, they have seen their cycles where rooms and bus if rooms and busts in a big way, and anybody in the industry is just very cautious.
00:45:10
Speaker 3: And I feel like, is there are people being cautious?
00:45:14
Speaker 11: Well, I mean it does. It does have feelings like it does remind people of previous you know, technology driven boomen bus cycles. But we'll see, like we've seen the tech earnings recently was relatively well, we're positive and so they were positive also for this Google bond for instance.
00:45:31
Speaker 4: So okay, this just got me thinking. And Carol, we've talked about this before. But you know, if we think about this from the perspective of the l elms that people use just to chat, the chatbots. You know, I woke up yesterday morning and asked Claude a question, but it was like, you need to upgrade in order to ask this question. So I just went to open AI and chat GPT and asked the same question there. And when I run out of space there, I just used you know, the Google one.
00:45:53
Speaker 3: You have no loyalty to anything, no loyalty I know.
00:45:56
Speaker 2: And this is where like like this is what we're trying to figure out or where we think about companies and to spend are saying, wait, you don't really need to use this expensive tool to do what you are doing. Like there's going to be a point where people are not maybe necessarily offering it to everybody, right, employees, Like we're trying to figure this out.
00:46:15
Speaker 11: Yeah, we'll see. Sorry we're doing this to you, but I understand. But like the scale of the finances suggest that there's a lot of demands.
00:46:22
Speaker 4: Yes, that's that's what.
00:46:23
Speaker 2: They wouldn't do it unless they thought, which is what we talk about with Mandeep Sing from Bloomberg Intelligence.
00:46:29
Speaker 3: There's the demand, there's the backlog.
00:46:30
Speaker 4: The customers.
00:46:31
Speaker 2: The customers, right, so there's the sales on the revenue. You just wonder can it all come to a quick start stop at some point?
00:46:38
Speaker 3: I don't know, that's the big question.
00:46:39
Speaker 4: Dobby Day, this is a great story. Thank you for stopping by the Bloomberg INTERACTI Brokers Studio. Dabby Day Barb Busha. He's corporate finance reporter for Bloomberg and US You can check out his reporting and the entire team's reporting on the Bloomberg Terminal and at Bloomberg dot com.
00:46:53
Speaker 1: This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from two to five pm Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal
