BlackRock Fixed Income CIO Rick Rieder Talks State of the Markets
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Bloomberg Audio Studios. Podcasts. Radio. News. Joining us now to talk about all that's going on in the markets right now is BlackRock Global Chief Investment Officer of Global Fixed Income, Rick Reeder. And Rick, we book you on every jobs day, but this is yet another Friday when we don't get the jobs report because of a short government shutdown. It looks like we could have another one, partial shutdown, at the end of next week.
What are the current challenges in the job market due to the government shutdown?
What do you make of this sort of muddy data picture when we don't get the things we need in time?
Well, first of all, it hasn't been jobs day in a number of months anyway because we're not getting any of those. I think the last three months we've had negative – we had a government shutdown, but we still had negative jobs. Listen, I mean, it's a little trickier when you don't get the actual published reports. The markets pivot off it. By the way, the volatility markets, you strike a lot of options in and around volatility. those dates. So it does create a little bit of trickiness. That being said, I mean, particularly for jobs, and we've talked about it a number of months on your show, you look at what we got yesterday, you look at the JOLTS report, you look at the Challenger job cuts, you look at the claims data, you look at the ISM services in terms of jobs, like
There's no ambiguity around where we are in the job market.
How is the lack of data affecting market analysis?
We're having a really tough time. We're watching productivity explode higher in terms of growth being really good. But a job market, that's really tricky.
That dichotomy, Rick. is the most fascinating, well, there's a lot of interesting stuff going on, but it's one of the most fascinating things about this economy, because it's difficult for anyone to say, even with jobs looking very challenging, that we're heading anywhere near a recession, as long as the Mag 7 is spending, what, like 2.1% of GDP on CapEx, as long as a government's running a 6% plus deficit, is this economy gonna be okay, even if the jobs market starts to have some cracks in it?
Yeah, the answer is yes. I think people don't look at jobs and look at this economy like it was 20, 30 years ago. You have an extraordinarily different economy, service-oriented versus goods-oriented. But you've got an economy that's operating incredibly well, but only on a couple or three cylinders. Today, you've got, like you pointed out, you've got CapEx that is robust and will continue. You've got consumption that is robust, but it's driven by wealthier, older savers, and it's part of why the interest rate tool is not nearly as effective as it used to be, because that cohort is doing extremely well, where the burden today is is in terms of low income, small business, younger people. But when you aggregate the data, and I hear a lot of people talking about, oh my God, the jobs market is softening, the economy's gonna come under pressure.
It's actually, this is an economy that's more asset-oriented than labor-oriented, and that cohort, I don't want to understate this, we have a problem in terms, we need to employ more people, but that cohort isn't that much in terms of aggregate spend. so the economy can continue to motor along. And productivity, I mean, you watch it play out every day. I mean, now the equity market has taken it on about where is productivity manifesting itself effectively. Some spaces, not other. Who are the winners? Who's building a moat? Who's not going to be a winner in this? But at the core, you're watching something play out that's pretty historic.
Anthropic putting out another AI tool this time for financial analysis. They did earlier this week for legal services, both of them kind of rocking the market. That will affect sales at big companies, I imagine, big and small, as well as the jobs picture, right? We're talking to a lot of people. Yesterday, we were talking to Mike Arrighetti from S&P. Aries, who pointed out that the younger talent, the new hires aren't going to be doing the same work and may not be as plentiful as they once were. In that industry, what do you make of AI changing the way we work or the fact that we work at all?
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