Lots More on the Big Problem With the Monthly Jobs Report

We've been in a strange labor market for a while now. The unemployment rate is still nice and low at 4.2%. But the pace of job creation has been slowing markedly. And furthermore, not only has the pace of job creation been slowing, it seems almost every monthly Non-Farm Payrolls number ends up getting revised lower. Of course, this comes at a time of some big transitions in the workforce — whether we're talking immigration changes, aging demographics, or AI. As such, just understanding the monthly data has never been more difficult. And because it's so difficult, it's also challenging to get a read-through from data to policy. On this episode we speak with Steven Englander, global head of G10 FX research and North America strategy at Standard Chartered Bank. In addition to talking about the state of the labor market, we also discuss the goings-on in bond markets, and why the stress is particularly acute in Europe. Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.

• 0:16Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 0:59Speaker 01

  But according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:39Speaker 02

  When you own your own business, you need to keep things moving. Need to book a last-minute flight? Earn a $300 travel credit to cover that.

• 1:47Speaker 02

  Need to take a meeting before takeoff? Do it from the comfort of the Chase Sapphire Lounge by the Club. Need to catch your breath before you board?

• 1:54Speaker 03

  Huh.

• 1:55Speaker 02

  Done. Chase Sapphire Reserve for Business. The business card that gives back all you put in. Visit chase.com/reservebusiness to learn more. Cards issued by JP Morgan Chase Bank, N A member FDIC. Subject to credit approval. Terms apply.

• 2:12Speaker 04

  Bloomberg Audio Studios.

• 2:14Tracy Alloway?

  Podcasts, radio, news. Joe, I have an embarrassing confession.

• 2:19Joe Weisenthal?

  Go on.

• 2:20Tracy Alloway?

  You know the birth death adjustment?

• 2:22Joe Weisenthal?

  I have the same confession.

• 2:24Tracy Alloway?

  I used to think it was something about like the population of people and the labor supply, but it's not. It's about business formation.

• 2:31Joe Weisenthal?

  Yes, that's right. Oh, my, my confession is even more embarrassing, which is that I literally always forget what it is.

• 2:39Joe Weisenthal?

  I did a deadlift.

• 2:40Tracy Alloway?

  I am both the most popular trader and most successful trader at Citadel.

• 2:45Joe Weisenthal?

  Fed is going viral.

• 2:46Tracy Alloway?

  Uh, barges.

• 2:47Joe Weisenthal?

  This is an after school special, except.

• 2:49Tracy Alloway?

  I've decided I'm going to base my entire personality going forward on campaigning for a strategic pork reserve in the U S. Black gold. These are the important questions. Is it robots taking over the world?

• 2:59Joe Weisenthal?

  No, I think that like in a couple of years, the AI will do a really good job of making the Odd Lots podcast. One day that person will have the mandate of heaven.

• 3:08Tracy Alloway?

  How do I get more popular and successful?

• 3:11Joe Weisenthal?

  We do have.

• 3:14Tracy Alloway?

  You're listening to Lots More, where we catch up with friends about what's going on right now.

• 3:19Joe Weisenthal?

  Because even when Odd Lots is over, there's always lots more.

• 3:22Tracy Alloway?

  And we really do have the perfect guest.

• 3:28Joe Weisenthal?

  When people are listening to this, it is Job Day. We're recording this September 4th, Job Day, September 5th. The important thing to know right now is that to some extent, that monthly non-farm payrolls report that everyone depends on and relies on has never felt to me like more of a moving target in terms of what I'm supposed to be looking at. For many years, it's like, okay, how many jobs were created this month? Yeah, it's going to get revised a little bit, but that tells you something. Now between seasonality, post COVID sort of normalization that's still processing. And then of course, this sort of changes in immigration policy, which have swung dramatically. In a year, these numbers, it's not clear that you actually have to put in some work to understand these.

• 4:08Tracy Alloway?

  No, totally. And also, I mean, the BLS itself seems to have some difficulty with the numbers because the trend that we've seen is they put out a non-farm payroll, like an initial estimate on a Friday. And then a few weeks later, you get the revisions and the revisions always seem to be downwards lately.

• 4:27Joe Weisenthal?

  Lately, they've been mostly downwards. And then there's annual revisions and those are coming up, I believe, next week. And, you know, we are at a time when, setting aside the collection, and of course, setting aside the fact that the BLS chief has been fired, and there's going to be a new one at some point, setting aside all of these things. We're also at a time when there are significant questions about just the macro state of the economy and whether the sort of low hiring, low firing mode, which is characterized for a while now, is at risk of deteriorating further. I don't know. It's a tough, it's a tough read.

• 4:58Tracy Alloway?

  You know who we should ask? Steve Englander.

• 5:00Speaker 03

  Okay, but let me start with, with a broader question.

• 5:04Joe Weisenthal?

  Excellent, excellent.

• 5:05Speaker 03

  And the thing is that the question has changed. Like, in the past, we used to say, okay, last month, or, you know, last 12 months, NFP growth was 200,000, looks like 100,000 now, things have slowed down. That's all we had to know. This time around, because supply is so important, everyone is making an estimate and kind of saying, well, native born workers, you know, maybe 70,000. If you're pessimistic, if you think we have net immigration from foreign born workers, you have a view of 50. And if you think that there's still some legal immigration coming in, maybe you're at 100. And that means that getting the level right is really important. And the problem with the NFP numbers, that it actually has two components.

• 5:48Speaker 03

  One of which is the one that we all think about. They survey about 160,000 businesses, maybe 600,000 establishments, and basically say, okay, how many workers did you have last month? How many did you have this month? And through their statistical analysis, they say, okay, this is a change. So that's for firms that are in continual operation that gives them that number. The problem is that they have no handle on firms that have just opened and very little handle on firms that have just closed. So they use something called the burst death adjustment to adjust for employment by those latter two categories of firms, you know, net job creation from new firms minus closing firms.

• 6:31Speaker 03

  And the problem is that they have a very simple model. And it was fine in the past when all you cared about was the direction, but now when you're saying it really matters if NFP growth is 50, having a bias in that number really affects things. And what you see is that that number has through thick and thin has stayed about 100,000 jobs, you know, when you seasonally adjust it because they publish a not seasonal adjustment, but you can do a rough and ready seasonal adjustment. It's very stable at about every month, 100,000 jobs or almost 100,000 jobs are coming from that burst death adjustment in terms of what we see on Bloomberg page Friday morning at 8:30.

• 7:13Speaker 03

  We have another source of information on that, which lags, but which is far more accurate. This is something called the business employment dynamics. It lags by about eight months, but it's based on the quarterly census of employment and wages. And what that shows is that in 2024, like Q4 2024, say the four quarters, both the employment growth coming from continuing firms in continuing operation and the employment growth from newly opened firms less just closed firms, they've tanked. So you're sort of looking at a reliable source because it's not even a sample. This is the entire population. They know what opened and what's closed, saying, hey, there just isn't any significant

• 7:56Speaker 03

  jobs creation from newly formed firms. And the NFP number keeps telling you that there's 100,000 jobs coming from that.

• 8:05Joe Weisenthal?

  This is already excellent. Next week, we are getting yet another one of these QC quarterly.

• 8:11Tracy Alloway?

  QC.

• 8:12Joe Weisenthal?

  Q. What do you call it?

• 8:14Tracy Alloway?

  I call it QC, but I'm pretty sure that's not right.

• 8:16Joe Weisenthal?

  What do we call it?

• 8:17Speaker 03

  I call it Q C E W.

• 8:18Joe Weisenthal?

  Okay, we get a new Q C E W. That's the ninth, September 9th, we get that. Right. Tell us what this is. Let's walk through this part again in terms of what is it that's high quality about this data, why we expect it to show further downward revisions, and why there continues to be this sort of downward bias in this initial snapshot versus latter better insight.

• 8:39Speaker 03

  Okay, first, NFP has a big sample, but it's a sample. There's sampling errors and people who don't report, and you don't know if there's a bias and who's reporting and who's not reporting. So there's always some inherent error there. Q C E W is basically the universe. It's not a sample. They get administrative data from the Labor Department saying how many people paid into unemployment insurance. And that's basically everybody, because everybody does. Everybody who's working does pay into unemployment insurance. And so when they come up with a number, there's a bit of revision, because there's sometimes some firms don't report in time, but there's not much. And it's very authoritative. And so if you sort

• 9:20Speaker 03

  of say, oh, Q C E W and the business employment dynamics tell us that in 2024, there was almost no job creation from newly opened, let's just close firms, you believe it because there's, you're not going to get a better source. There's no other source to that. And so that's why it's used for the benchmark. It probably should be used to re-benchmark employment more frequently in the year, because they do publish it quarterly. But, you know, when it comes out, it's a big deal. And we think it's likely to tell us that somewhere between 750 and maybe 1.1 million jobs, that's the overstatement between Q1 2024 and Q1 2025.

• 10:01Tracy Alloway?

  Wow.

• 10:02Speaker 03

  And that would knock off a lot in terms of headline employment growth. The key point is that there's no reason to believe that the bias has really shifted.

• 10:11Tracy Alloway?

  One of the other unusual things that's going on at the moment is we have this new head of the BLS installed by the Trump administration and that new head suggested initially that the BLS could just stop publishing jobs numbers altogether, or maybe they could publish them less frequently, like on a quarterly basis or something. Is the quarterly idea, maybe that's reasonable, given the lag with the QCEW data?

• 10:40Speaker 03

  I think that they can do things that are far less dramatic to improve the quality of the monthly numbers, because we do have some information that's relevant for jobs creation by newly opened firms. Going back to business employment dynamics, if you look at how job creation from existing firms, continuing firms, and job creation from new firms move, they tend to move together. The amplitude is different, but the direction is very much the same. They can use the sample data that they get from the 160,000 firms, 600,000 plus establishments that they sample, and say, look, if continuing firms are telling us that job creation is 20,000 a month, it's very unlikely that job creation from new

• 11:23Speaker 03

  firms is going to be 100. We can use a variety of statistical methods to sort of make a guesstimate. It won't be perfect, but it'll be a lot better.

• 11:44Speaker 00

  What's next for virtual assets? I'm Jacob Grease, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from the Dubai-based Virtual Assets Regulatory Authority has this to say.

• 12:00Speaker 07

  We're seeing a lot of institutional players come in, digital asset dedicated hedge funds, high frequency traders and that sort of thing, and folks who service institutional clients.

• 12:09Speaker 00

  As more capital enters the market, adaptive regulation is likely to become increasingly key. Reece Merrick of Ripple.

• 12:16Speaker 08

  A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80-year-old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.

• 12:36Speaker 00

  Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.

• 12:46Speaker 01

  This is the Bloomberg Tech Minute, brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 13:29Speaker 01

  But according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at chatgpt.com.

• 14:08Speaker 09

  The world of business is constantly evolving. Every day, new challenges, new opportunities, new ways of working. Comcast Business keeps you totally in step with secure AI-backed networking built to power the way modern business gets things done today in more than 100 countries around the world. That's some serious muscle. And get this, Comcast Business powers over 90% of the Fortune 500 and millions of small businesses. Behind it all, network engineers, cybersecurity specialists, support teams, thousands of experts answering your call at 2:00 a.m. like it's 2:00 p.m. Always on, always ready. That's a lot of coffee.

• 14:51Speaker 09

  One partner powering how business gets done for companies of every size, all around the globe. When you add it all up, no one does business like Comcast Business.

• 15:02Tracy Alloway?

  Speaking of the new BLS person, Joe. I saw the most worrying sentence in an analyst note this week. So the sentence was, I have it on my screen. The sentence is, because Trump has his own BLS person now, I don't necessarily see a bad number on Friday.

• 15:21Joe Weisenthal?

  I'm not that pessimistic. I think, I don't know. But I don't know. I don't have a view on this. But who said this?

• 15:29Tracy Alloway?

  I don't want to say because I'm not sure it's public or not.

• 15:32Joe Weisenthal?

  But this is a notable person?

• 15:34Tracy Alloway?

  Yes, it's someone you know, actually.

• 15:36Joe Weisenthal?

  Okay, fine. And not me.

• 15:38Tracy Alloway?

  And not Steve.

• 15:39Joe Weisenthal?

  Not Stephen. Let's talk about, the conversation has focused on these levels and pace of job creation and so forth. We recently did an episode with Austin Goolsbee, the Chicago Fed President, and he was like, so much is in flux, I'm not really looking at levels. And he called what he's like, he used this term very dramatic, the four horsemen of truth. He's interested in rates. He's interested in the unemployment rate, which is still at 4.2%. He's interested in the hiring rate, which we had the Jolts report come out this week. It's at 3.3%. He's interested in the firing rate, which I think has still been fairly low. Maybe he's looking at like the rate of wage growth. I don't remember what the fourth horseman was. In a time of volatility, what do you think about this idea? Like, let's just forget about levels and just focus on rates because they don't get revised as much.

• 16:23Joe Weisenthal?

  You go out and you ask thousands of people, are you employed or unemployed right now? And if 4.2% say they're unemployed, that is probably a reasonable proxy for whether people are employed or not.

• 16:34Speaker 03

  Right, but Joe, if you turned out to be the next person named to the FOMC, to the board, and you see payroll number and it comes out at 75,000, like tomorrow's consensus, is that a strong number or a weak number?

• 16:48Joe Weisenthal?

  Well, that's what I'm saying. I just look at the, I don't know. I mean, I don't know. Let's say, so right now, just for what it's worth, the unemployment rate is at 4.2%. Economists expected it to tick up to 4.3%. Let's say it comes at 4.2%. Let's say we have a weak NFP number, but the unemployment rate stays at 4.2%. Why don't I say, okay, things are still more or less fine?

• 17:09Speaker 03

  Well, let me say this. I like rates, but I like the employment to population ratio.

• 17:13Joe Weisenthal?

  Okay.

• 17:13Speaker 03

  Because we know that participation rate is cyclical. And if you look to the employment to population ratio, all these comments that unemployment rate is stable, and it looks in balance, nothing's changed, they don't hold up very well. We've had pretty consistent drop, not a 2008 type of drop, but you know, where it's like over 60 a year ago, now it's 59.6.

• 17:38Joe Weisenthal?

  Okay.

• 17:38Speaker 03

  It's telling us that there's kind of increased softening. I think you can't be choosy about which rates you look at, but I think in cyclical periods, probably employment to population is telling you more, and this time it's more on Waller's side than it is on Powell's side.

• 17:54Tracy Alloway?

  I know we've been talking about weaknesses in the NFP estimates, but what's your expectation for the official number?

• 18:02Speaker 03

  Well, I wrote, we're a little bit split brained on this, left brain, right brain. Because we live in a world where we have to get the market reaction right.

• 18:10Tracy Alloway?

  Right.

• 18:10Speaker 03

  So our forecast is 75,000. This is very close to consensus, you know, nothing dramatic. I'd just say this, that you gotta realize there's so much randomness in the number. It could be 125,000 and not be meaningful, but it's just the way it goes. You know, what we've argued, if you look at the range of forecasts, almost everybody is between like 40,000 and 100,000, 105,000. So you get a number like 30. I think that will be a very dramatic number.

• 18:38Tracy Alloway?

  If it's outside the range of expectations.

• 18:40Speaker 03

  Yeah, I mean, because this range is really tight in terms of market expectation. And I think it would put 50 on the table for the Fed because I think the argument would be that if you get a number that's so low, you probably should have cut in June or July. And so you're not saying, oh, my God, the world's coming to an end, everything's falling apart. But you're saying, yeah, well, we kind of missed it. The data weren't there at the time. In retrospect, had we had those data, we probably would have cut in June or July. So we're just doing catch up now. Now, for us, the real issue is how do you interpret like 100,000? Because we would say, OK, 100,000 less our bias of 70,000 means real job creation of 30,000. So you should be talking about 50. I don't think we've convinced the market yet that that's the way you should look at

• 19:25Speaker 03

  it.

• 19:26Joe Weisenthal?

  By the way, just before going on, so on the eco page, consensus is 75K. Consensus is for the unemployment rate to tick up to 4.3%. Also, average our earnings of 0.3% month-over-month growth. So that's sort of like what we're looking at. This week, we've had some sort of soft data. We had initial claims today come in at 237K. That was ahead of the estimate of 230K. ADP employment, take it or leave it, 54K versus estimates of 68K, down significantly from the 106K revised last month. ISM services employment, 46.5, that was a little bit shy of expectations. So soft, and there's this risk of softening. I just think it's really interesting, the range of possibilities for September, because,

• 20:09Joe Weisenthal?

  you know, we were just in Jackson Hole, and you're talking about, oh, maybe there's a case for 50, but there's also still a lot of residual concern about inflation, and the inflation dragon has yet to fully be slayed.

• 20:21Speaker 03

  The reason I would focus on the labor market is because if it's as weak as we think it is, incorrectly measured, the slack in the labor market will take care of inflation.

• 20:30Joe Weisenthal?

  Okay.

• 20:31Speaker 03

  Again, I serve more on Waller's side, that you're not going to have any kind of power on the labor side. If I can make one comment, I mean, some people get their pleasure from banging their head against the wall. The wall I bang my head against once or twice a year is taking all of these incoming data on labor market indicators and trying to predict non-farm payrolls.

• 20:50Tracy Alloway?

  You gotta have a hobby.

• 20:52Speaker 03

  You gotta have a hobby, and this one might be the definition of insanity, and none of them work a bucket of spit.

• 20:59Joe Weisenthal?

  I'm looking at the Band-Aid on your forehead. See, this is, when you talk about banging your head against the wall for pleasure, you're actually talking, literally, it would appear.

• 21:07Speaker 03

  Well, you should see the wall.

• 21:08Tracy Alloway?

  Okay. Okay, we would be remiss if, when we have you in the studio, if we did not ask about what's going on with bonds. So, one of the things that's happening today is because of that softening jobs data that Joe just laid out, we are seeing a little bit of a recovery in bonds because there's more expectation that the Fed might cut. But, the big story in recent days has been this huge sell-off in bonds, particularly at the long end, and it does seem-

• 21:39Joe Weisenthal?

  Particularly in Europe.

• 21:40Tracy Alloway?

  Particularly in Europe, but also in the US. It does seem kind of weird that we're talking about the economy slowing, and meanwhile, the long end of the curve just keeps going up. What's going on?

• 21:53Speaker 03

  Markets' attention span is maybe not as long as you give it credit for, and I think the problem is this, that you look at fiscal situations that are deteriorating globally, and likely to deteriorate in the US, especially if anything happens with the tariffs to pull them back.

• 22:11Joe Weisenthal?

  Oh, yeah.

• 22:12Speaker 03

  And markets are kind of saying, look, in the long term, this doesn't look good. It looks like there's a lot of borrowing out there. But the long term in market terms can be six weeks and it can be six years. You don't know when those forces are going to matter. So absent anything else, the market pays attention to it. Then you sort of come in this week and every number seems to be soft. You say, oh, my God, the Fed's going to cut. And all of a sudden, this sort of selling of bonds, especially because the market probably got reasonably short, worrying itself about the fiscal situation. They say, oh, my God, maybe not so short. And people are buying back the bonds that they've sold. And you get the kind of dramatic movement we've seen this week. We've argued in the short term, both FX and bonds are going to be driven by the Fed and the US economy.

• 22:56Speaker 03

  And by short term, I mean the next month or six weeks. I think once you get past that, we're, we don't think inflation is going to disappear. And even outside of the tariff induced inflation, the non tariff goods and services seem to be, at best, they're steady and even, maybe even edging up a bit. There's a bit of fiscal stimulus in Trump's fiscal package. Tickets possible that the economy is not as bad as it might look based on the employment numbers that we're getting, especially if there is a productivity pickup in the data that's not really recognized. So we see a possibility, or we actually see more than a possibility. We expect dollar weakness in the next couple of weeks.

• 23:40Speaker 03

  But by the time we get to the end of the year, we could see the dollar strengthening, positioning this kind of short dollars in our view. And same with the bond market. You know, while the market serves saying, oh, my God, last week was debating zero on 25, this week I suspect they'll be debating 25 and 50. While the market's debating that, bond yields are going to come down. Once that's kind of settled in terms of market expectations, I think they'll look at the fiscal picture and kind of say, you know, low fours maybe not.

• 24:07Joe Weisenthal?

  It's interesting. It occurs to me when you say how, when we talk about how bad the economy is, that there's actually two different ways of what bad could mean. So one is bad could just mean a sort of where you are on the cycle. We're in a deceleration cycle. We're not creating as many jobs, therefore we have to have a lower rate of interest to get things. Going again, but then bad could also mean more sort of qualitatively where what's really bad is slackening growth and also a firm inflation picture such that traditional measures of policy stimulus or de stimulus don't work as well they'd like because there is some sort of deeper rot. And it sounds like what you're saying, if I can put all

• 24:47Joe Weisenthal?

  this together, is that cyclically, there's a slowdown, there may be a case for 50 basis point cut very soon, case for lower rates, but not so bad in the case of the US economy is broken and therefore policy measures won't work to get it revived again.

• 25:04Speaker 03

  Yeah, I think that's right. We actually don't think they'll do much more than 50. They'll say, okay, we've caught up, time to wait and see. And our baseline, because we're not yet sure about what the employment number is, is 25 and stop. But, you know, we've been talking about the choice being between 25 and 50.

• 25:21Joe Weisenthal?

  Just adding one more. It really is just on the Europe situation. We mostly talk about the US. Like, France has also, their 10 year yield has been shooting higher.

• 25:30Tracy Alloway?

  Yeah, this is the crazy thing. I think if we didn't have everything that was going on in the US at the moment, like the France story would be huge in the market.

• 25:38Joe Weisenthal?

  Yeah. So give us your, talk to us about Europe for a minute.

• 25:40Speaker 03

  Yeah, look, there's a France story. I'm actually scheduled to go to France, but it looks like they might be on strike next week. So I'm not sure how that's going to play out. The structural problems that they face are kind of enormous. I mean, the French deficit's about as large as the US deficit and their interest rates are way lower than US interest rates. They have a very fragile government. They're trying to do some sort of fiscal consolidation because it's like, it's not just a minority. It's like a tiny government. The opposition parties are kind of saying, no way. And so that's, setting the US aside, the French and broadly speaking, the European situation, isn't that good? And in some cases, you're seeing sterling trade like a emerging markets economy

• 26:23Speaker 03

  in that the correlation of interest rates and the currency is not the normal G10 one, where higher rates lead to a stronger currency because people look at the return. The higher rates are viewed as risk premium and they're associated with a weaker currency.

• 26:38Joe Weisenthal?

  I mean, yeah, you can look at levels, sorry, just to keep going. You can look at levels of debt to GDP or ratios, et cetera. But it sounds like the common thread here, at least to me, and this is the bias or this is my lens. When you talk about what's going on in France, maybe you won't even be able to visit there because of a strike. When you talk about, we had Liz Truss on the podcast recently, politically, these are not well functioning politicians right now, are they?

• 27:02Speaker 03

  Yes, and I'd say that the ability particularly to get through unpopular measures like fiscal consolidation is very limited. And that's why they're all sort of have their backs against the wall. And the markets are looking at this and kind of saying, you don't really have a source of growth and you have to do austerity, but you're not. So we're looking at these ratios and where they're going to go. I think the one advantage the US has is that here, you know, at least you can ask, tell the story where you say, look, some of the productivity numbers look pretty good on the ground. You sense that AI is making inroads. We don't know when it's going to matter in terms of actual realized productivity, but it could. You can tell a story that's somewhat optimistic.

• 27:44Speaker 03

  Whereas if you look at Europe, they kind of have, they have high energy costs. Their capital markets aren't as well developed for financing these kind of innovative firms. And they're kind of lagging on the technology side. So the battle seems to be between the US and China and other countries sort of really lagging, which doesn't mean the US outcome is going to be great, but at least you can tell the story. Whereas it's much harder to tell the story, a European story of, say, private sector induced growth.

• 28:13Tracy Alloway?

  What's that line again, Joe? It's like the US innovates, China iterates and Europe writes the regulation.

• 28:21Tracy Alloway?

  Do you remember that?

• 28:21Joe Weisenthal?

  Yeah, and they also get tons of vacation and they have this amazing life.

• 28:25Tracy Alloway?

  And put out think pieces.

• 28:27Joe Weisenthal?

  Yeah, but it sounds great. So many people would kill for a job writing think pieces.

• 28:32Speaker 03

  I lived in France for a number of years, and I'd say the quality of life of the median French worker is well above that of the median US worker.

• 28:40Joe Weisenthal?

  That's what I'm saying. We need to have some, um, this is an important point. You observed that.

• 28:46Speaker 03

  Yeah.

• 28:46Joe Weisenthal?

  Yeah.

• 28:47Speaker 03

  And the question is whether it's sustainable. It's like living on your credit card.

• 28:50Joe Weisenthal?

  We need to regulate more. We need to, instead of innovating, let's try regulating.

• 28:54Tracy Alloway?

  No, we should go, we should go drink some wine for lunch.

• 28:57Joe Weisenthal?

  Yeah, sounds great.

• 28:58Speaker 03

  Great suggestion.

• 29:03Joe Weisenthal?

  Lots More is produced by Carmen Rodriguez and Dashil Bennett with help from Moses Andam and Kale Brooks.

• 29:09Tracy Alloway?

  Our sound engineer is Blake Maples. Sage Baumann is the head of Bloomberg Podcasts.

• 29:14Joe Weisenthal?

  Please rate, review, and subscribe to Odd Lots and Lots More on your favorite podcast platforms.

• 29:20Tracy Alloway?

  And remember that Bloomberg subscribers can listen to all our podcasts ad-free by connecting through Apple Podcasts. Thanks for listening.

• 29:31Speaker 10

  If you're a business owner, you need a card that can keep up. With the Delta Sky Miles Reserve Business American Express Card, everyday purchases transform into miles you can use towards future travel. So business as usual can lead to a well-deserved getaway. And for a limited time, card members can earn 200,000 bonus miles, the highest miles offered this year. Whether you're traveling for business or planning your next adventure, now's a great time to make every purchase go further. Apply today at www.delta.com/podcast. Offer ends November 4th. Minimum spending requirements and terms apply.

• 30:07Speaker 09

  The world of business is constantly evolving, and Comcast business keeps you totally in step with secure AI-backed networking in more than 100 countries. They're powering over 90% of the Fortune 500 and millions of small businesses. That's a lot of muscle. And behind it all, thousands of experts answering your call at 2:00 AM like it's 2:00 PM. One partner powering how business gets done for Companies around the globe. When you add it all up, no one does business like Comcast business.

• 30:36Speaker 11

  Most meeting note takers get the easy words right and the important ones wrong. The client's name, the acronym. Whisper Flow Note Taker is built to get the hard words right. It takes notes on any meeting platform, Zoom, Google Meet, Teams, even WhatsApp calls. Keeps every meeting searchable and connects to Claude or ChatGPT so you can ask, "What did we agree to last Tuesday?" Free to try on Mac and Windows at whisperflow.ai. That's W I S P R flow dot A I.

• 31:06Speaker 12

  Wise is the smart way to manage the currencies you need around the globe. When you send money abroad using your bank, you could get hit with hidden fees and exchange rate markups. There's a better way. Try Wise. Wise uses the exchange rate you'd usually find on Google with no unwelcome surprises. Plus, most transfers happen in under 20 seconds, which means your money arrives in less time than you've been listening to me. It's simple and free to sign up when you download the Wise app. Be smart. Get wise. Ts and Cs apply.