MANUS:
FROM NEW YORK CITY, A VERY GOOD MORNING.
WE ARE GOING TO CAP YOU DOWN TO THE IT IS THE SLOWEST JOBS
GROWTH IN SIX MONTHS AND A DOUBLE DIGIT DROP IN TWOS.
THE COUNTDOWN TO THE OPEN KICKS IN RIGHT NOW. COMING UP, IT WAS A DOWNSIDE
SURPRISE IN THE U.S. PAYROLLS REPORTS, SENDING
FUTURES HIGHER AND TREASURY YIELDS LOWER.
APPLE ANNOUNCES THE BIGGEST BUYBACK IN U.S. HISTORY.
WE BEGIN WITH A BIG ISSUE. THE JOBS DATA IN THE USA.
LET'S GET TO MIKE MCKEE TO BREAK THESE NUMBERS DOWN.
WAGES WERE LIGHTER ON THEIR FEET. GOOD MORNING. MIKE:
GOOD MORNING. IT IS A GOOD MORNING IN
WASHINGTON, WHERE THE FED HAS TO BE HAPPY ABOUT THESE NUMBERS.
OBVIOUSLY WALL STREET IS. 175,000, THE LOWEST IN SIX
MONTHS. IT IS A BIG DROP FROM 313,000
LAST MONTH. LAST MONTH DOES SEEM TO BE AN
OUTLIER. WE ALSO SAW THE UNEMPLOYMENT
RATE RISE TO 3.9%. BUT THAT IS BASICALLY PUSHING
IT OUT TO THREE DIGITS. TWO ONE HUNDREDTHS OF A
PERCENTAGE POINT MADE THE DIFFERENCE.
AVERAGE HOURLY EARNINGS, ALSO A PLEASANT SURPRISE.
THEY COME IN LOWER THAN ANTICIPATED.
IT PUSHES THE YEAR-OVER-YEAR NUMBER DOWN TO 3.9%.
THE JOB BREAKDOWN IS BASICALLY WHAT IT HAS BEEN FOR MONTHS,
WITH A FEW CHANGES. HEALTH CARE AND SOCIAL
ASSISTANCE ALWAYS THE BIG GAINER. 87,000 JOBS. RETAIL, 20,100.
TRANSPORTATION AND WAREHOUSING, THIS HAS BEEN A CATEGORY LOSING
JOBS, AND NOW IT IS UP 21,800. THE BIGGEST LOSER?
ADMINISTRATION AND SUPPORT. WE HAVE SEEN IN THE LAYOFF
ANNOUNCEMENTS WE HAVE GOTTEN RECENTLY THAT IT HAS BEEN THESE
MID-LEVEL PEOPLE WHO HAVE BEEN GETTING THE AXE.
THE FED IS GOING TO BE PLEASED WITH THIS.
MARKETS ARE GOING TO BE PLEASED WITH THIS.
YOU LOOK AT WHAT HAS HAPPENED OVER THE LAST YEAR AND YOU CAN
SEE THE BLUE LINE IS THE 2-YEAR NOTE, THE WHITE LINE IS THE FED
TARGET. THE FED HAS NOT DONE ANYTHING,
BUT THESE NUMBERS PUSHED THE MARKETS AROUND.
JUST DOESN'T KNOW WHAT IT IS GOING TO DO, BUT IT LOOKS LIKE
IT'S BED ON HOLDING STEADY IS GOING TO PAY OFF. MANUS:
THANK YOU VERY MUCH. HOW DOES IT TRANSFER TO MARKETS?
THIS IS ABOUT REPRICING. REPRICING FROM
VIRTUALLY NO CUTS TO A RATE CUT IN SEPTEMBER.
DOUBLE DIGIT DROP IN YIELDS ACROSS THE BOARD.
THIS IS THE TWO-YEAR, DOWN BY 11 BASIS POINTS.
EQUITIES FLYING HIGHER. THE WAGE GROWTH MIGHT BE
SLOWER, AND THEREFORE THIS LONG VARIABLE LAG MAY BE COMING TO
EFFECT IN TERMS OF THE REAL ECONOMY.
HAVE GONE FROM SEVEN RATE CUTS TO ZERO, AND WE ARE POTENTIALLY
PRICING UP TO TWO. THERE IS A SIGH OF RELIEF IN
THE BANK OF JAPAN AS THAT CURRENCY HAS RALLIED BY 2%.
ANNMARIE HORDERN JOINS US NOW. ANNMARIE:
JOINING US IS ACTING U.S. LABOR SECRETARY JULIE SU.
THANK YOU SO MUCH FOR YOUR TIME THIS MORNING.
WE HAVE HEARD FROM THE REPORTS, THE FED WOULD SEEM TO BE HAPPY
WITH THIS KIND OF JOBS REPORT. THE MARKET IS CERTAINLY HAPPY.
IT IS THIS GOLDILOCKS, POTENTIALLY SOFTENING, TO HAVE
A SOFT LANDING. WHAT WE ARE SEEING WITH THIS
SOFT REPORT, AND THE MARKETS CERTAINLY TAKING IT IN STRIDE,
IS THAT THE CONSENSUS IN THE READER FROM THE BIDEN
ADMINISTRATION? SEC. SU: THAT IS EXACTLY RIGHT.
THIS IS ANOTHER STRONG JOBS REPORT, AND THESE NUMBERS KEEP
SHOWING US MONTH AFTER MONTH AND PRESIDENT BIDEN'S ECONOMIC
STRATEGY IS WORKING. IT IS EVERYTHING YOU SAID.
HE CONTINUES TO BE STRONG, STABLE GROWTH.
SUSTAINABLE GROWTH AS WELL. THE UNEMPLOYMENT RATE IS STILL
UNDER 4%. THAT IS THE 27-MONTH STRAIGHT
THAT THAT IS THE CASE. THE PRIME AGE PARTICIPATION
RATE REMAINS STRONG. AND FOR WOMEN IT IS THE HIGHEST
IT HAS BEEN SINCE THIS NUMBER HAS BEEN RECORDED, WHICH WAS
BEGUN IN 1948. THIS IS A STRONG JOBS REPORT
THAT CONTINUES TO BE INDICATIVE OF A STRONG ECONOMY. SEC. SU:
-- ANNMARIE: THIS IS WHAT WE HEARD FROM JAY
POWELL. REFLECTING INCREASES IN
PARTICIPATION AMONG INDIVIDUALS 25 TO 54 YEARS, AND THEY
CONTINUE TO STRONG PACE OF IMMIGRATION.
HOW MUCH DO YOU SEE IMMIGRATION PLAYING INTO THE SUPPLY SIDE OF
THIS LABOR MARKET? SEC. SU: IT IS ALL PART OF THE STORY.
IMMIGRANT WORKERS HAVE, THROUGHOUT OUR NATION'S
HISTORY, HELPED POWER OR ECONOMIC STRENGTH.
AT THE SAME TIME WHAT THESE NUMBERS SHOW IS THAT THE JOBS
FOR NATIVE-BORN WORKERS REMAINS VERY STRONG AS WELL. SO, WHEN YOU HAVE SUCH
SUSTAINED JOB GROWTH, IT IS BENEFICIAL FOR EVERYBODY.
ANNMARIE: WE DO HAVE A LOT OF IMMIGRATION. THE CBO LOOKS AT 2023, AND
MAYBE THEY THOUGHT IT WAS GOING TO BE ONE MILLION.
IMMIGRATION ACTUALLY AT 3.3 MILLION.
BUT HOW DO YOU MATCH THAT SUPPLY TO DEMAND?
HOW DO WE MATCH THE SUPPLY OF POTENTIALLY ARE THEY GOING TO
THE RIGHT JOBS, AND DEMAND THE U.S.
LABOR MARKET ACTUALLY NEEDS? SEC. SU: THIS IS SOMETHING THE
DEPARTMENT OF LABOR IS LASER FOCUSED ON.
MAKING SURE WE ARE CONNECTING PEOPLE TO THE GOOD JOBS THEY
WANT AND NEED, ESPECIALLY IN THE MIDST OF THIS HISTORIC JOB
GROWTH. IT IS HAPPENING BECAUSE OF THE
RESILIENCE OF THE AMERICAN PEOPLE, BECAUSE OF THE SMALL
BUSINESS BOOM WE ARE SEEING, BECAUSE OF WORKING PEOPLE.
THE PRESIDENT SAYS ALL THE TIME IT IS THE MIDDLE CLASS THAT
BUILT AMERICA. IT IS ALSO HAPPENING BECAUSE WE
ARE SEEING PEOPLE COMING INTO THE LABOR MARKET.
SO, THIS IS A MOMENT WHERE WE HAVE TO BE ABLE TO CONNECT
PEOPLE TO THOSE JOBS, AND EMPLOYERS TO THE PEOPLE THEY
NEED. THAT IS WHY OUR WORKFORCE DEVELOPMENT SYSTEM IS SO
IMPORTANT AND WHY WHEN I TRAVEL THE COUNTRY AND SEE TRAINING
PROGRAMS BURSTING AT THE SEAMS, IT IS ANOTHER INDICATION THAT
THIS ECONOMY IS MOVING IN THE RIGHT DIRECTION AND THAT
BIDENOMICS IS HAVING A POSITIVE EFFECT IN COMMUNITIES ALL
ACROSS AMERICA. ANNMARIE: THE SURVEY RESPONSE RATE FOR
THIS REPORT WAS 54 POINT 9%, THE LOWEST SINCE 2002.
HOW ACCURATE ARE THESE NUMBERS? SEC. SU:
THE BUREAU OF LABOR STATISTICS REMAINS THE GOLD STANDARD FOR
REPORTING ON UNEMPLOYMENT, ON JOB GROWTH, ON DIFFERENT
INDUSTRIES. IT IS THE LARGEST BODY OF DATA
THAT EXISTS. LET ME JUST SAY, THE NUMBERS
TELL PART OF THE STORY. THE NUMBERS REMAIN RELIABLE. THE NUMBERS REMAIN WHAT IS
RELIED UPON TO EVALUATE OUR POLICIES AND ALSO LOOK AT WHAT
POLICIES WE SHOULD BE PURSUING. THE NUMBERS ARE PART OF THE
STORY. THE OTHER IS THE PRESIDENT
PROMISED HE WOULD BUILD AN ECONOMY FROM THE BOTTOM UP AND
MIDDLE OUT. UNDER HIS LEADERSHIP WE HAVE
RESTORED THE 40 HOUR WORK WEEK FOR MILLIONS OF AMERICANS.
WE ARE MAKING SURE RETIREMENT SECURITY IS SOMETHING AMERICAN
PEOPLE CAN ENJOY. WE ARE LOOKING OUT FOR WORKERS
WHO HAVE BEEN LEFT BEHIND. I HAVE BEEN IN UNIONTOWN,
PENNSYLVANIA, TALKING TO MINE WORKERS WHO HAVE BEEN EXPOSED
TO SILICA DUST. I HAVE SPOKEN WITH FARMWORKERS IN CALIFORNIA
WHO PUT FOOD ON OUR TABLES BUT HAVE TO DIE IN VEHICLES WITHOUT
SEATBELTS. WE ARE
ADDRESSING THOSE, SO THE NUMBERS ARE PART OF THE
STORY IN WHICH PRESIDENT BIDEN IS DELIVERING. ANNMARIE: BACK TO THIS SURVEY, THAT WOULD
PUT THE STANDARD ERROR AT 130,000.
IT COULD BE 305,000 OR 45,000. ANYWHERE IN THAT RANGE IS
STATISTICALLY ACCURATE. HOW CONCERNING IS THAT, GIVEN
THIS DATA IS HIGHLY IMPORTANT NOT JUST TO THE FED, BUT ALSO
THE PRESIDENT? SEC. SU: THAT IS RIGHT.
OF COURSE, THE NUMBERS ARE RELIABLE.
WE CONTINUE TO WORK ON SURVEY RESPONSE.
PEOPLE SOMETIMES THINK, THE NUMBERS GET ADJUSTED EACH
MONTH, WHAT IS THAT ABOUT? THAT IS VERY MUCH PART OF WHAT
WE DO. IT IS PART AND PARCEL OF MAKING
THE NUMBERS AS ACCURATE AS POSSIBLE.
SOMETIMES NUMBERS COME IN LATER, AND THAT IS WHY WE MAKE
ADJUSTMENTS. AGAIN, THIS IS THE GOLD
STANDARD FOR A REASON, AND WE WANT TO CONTINUE TO INCREASE
THE RESPONSE RATE WE GET. ANNMARIE:
I WANT TO END ON THE FACT THAT WAGE GAINS ARE LESS THAN WHAT
IS EXPECTED. WHEN WE CONTINUOUSLY PULL THE
AMERICAN ELECTORATE THEY ARE NOT WORRIED ABOUT JOBS SO MUCH.
THEY ARE WORRIED ABOUT INFLATION.
HOW CONCERNING IS THAT TO YOU? SEC. SU:
WAGE GAINS CONTINUE TO OUTPACE INFLATION.
THAT MEANS THERE IS MORE MONEY IN WORKERS' POCKETS.
AS YOU SAY, THIS IS A SIGN OF HOW GOOD PEOPLE FEEL AND A GOOD
JOB CHANGES LIVES, AND GOOD JOBS WITH WAGES THAT ARE ENOUGH
TO SUSTAIN A FAMILY ARE IMPORTANT.
AND WE CONTINUE TO COMBAT INFLATION AND HIGH PRICES.
THAT IS WHY THE PRESIDENT IS SO FOCUSED ON COMBATING JUNK FEES,
MAKING SURE THAT PRESCRIPTION DRUGS ARE AFFORDABLE. IT IS A HOLISTIC APPROACH TO
INVESTING IN THE AMERICAN PEOPLE, AND WE ARE ON THE RIGHT
TRACK AND WILL CONTINUE WITH THE WORK. ANNMARIE:
THANK YOU SO MUCH FOR YOUR TIME THIS MORNING.
ACTING LABOR SECRETARY JULIE SU. MANUS: THANK YOU VERY MUCH.
RAY CONVERSATION THERE, IN TERMS OF THE ROUNDING ERRORS.
THE POTENTIAL IS FOR SOMETHING UP IN THE 300 THOUSAND'S, BUT A
SPIRITED DEFENSE BY THE ACTING SECRETARY THERE.
COMING UP, MORE ON THE LABOR MARKET. SIGNS OF COOLING? >> WE HAD 27 STRAIGHT MONTHS.
WE HAVE NOT SEEN THAT SINCE THE 1960'S.
WE HAVE BEEN AN EXCEPTIONAL ECONOMY. DOES IT SURPRISE ME? NO, BUT IF THE INCREASE
ACCELERATES, THAT WOULD REALLY WORRY ME. MANUS:
BLACKROCK'S RICK RIEDER JOINTS ME NEXT TO DIG INTO THE DATA. >> WE HAVE HAD 27 STRAIGHT
MONTHS OF THE UNEMPLOYMENT RATE LOW 4.4%.
WE HAVE NOT SEEN THAT SINCE THE 1960'S.
WE HAVE BEEN AN EXCEPTIONAL ECONOMY, AND DOES IT SURPRISE
ME? NO, BUT IF THE INCREASE ACCELERATES, THAT WOULD REALLY
WORRY ME. REMEMBER, ESPECIALLY AT THE LOW
INCOME SIDE, WAGES ARE KEY TO CONSUMPTION AND KEY TO ECONOMIC
GROWTH. PANDEMIC SAVINGS HAVE BEEN RUN
DOWN. CREDIT CARD BALANCES HAVE BEEN
RUN UP. WAGE INCOME IS ABSOLUTELY
CRITICAL TO THE WELL-BEING OF THIS ECONOMY. MANUS:
THOSE OF THE CONCERNS OF MOHAMED EL-ERIAN IN TERMS OF
AN ACCELERATION OF THE EMPLOYMENT RATE.
MY GUEST TODAY IS RICK RIEDER. YOU SHOULD BE SITTING WITH A
SMILE ON YOUR FACE, AND YOU ARE. THE BOND MARKET IS LIKE THE
HOUNDS HAVE BEEN UNLEASHED. DOUBLE-DIGIT DROP IN YIELDS.
THE BOND MARKET BELIEVES NOT ONLY ARE RATE CUTS COMING ON
THIS SOFTER JOBS NUMBER, BUT THEY ARE COMING EARLIER AND
POTENTIALLY IN MORE SIZE. GOOD MORNING. RICK:
THANKS FOR HAVING ME. LISTEN, I THINK IT IS AMAZING
HOW MARKETS CAME IN IN THE BEGINNING OF THIS YEAR,
EXPECTING SIX OR SEVEN CUTS. NOW WE ARE PRICING IN TWO CUTS
FOR THE YEAR. I THINK THAT IS ABOUT RIGHT.
LISTEN, WE STILL HAVE TO SEE THE INFLATION NUMBERS COME DOWN.
I'M PRETTY BLOWN AWAY BY THIS NUMBER.
BY THE WAY, THE THREE-MONTH MOVING AVERAGE IS 242,000.
IF YOU ACTUALLY ADD UP THE LAST TWO MONTHS, YOU COME UP TO
245,000. IT IS PRETTY UNBELIEVABLE.
THE ECONOMY IS STABLE, BUT AT THE MARGIN -- AND I THINK THIS
IS WHAT IS A BIG DEAL FOR THE FED -- IT IS STARTING TO
DECELERATE. THAT IS A GOOD THING.
I THINK THE FED WOULD LIKE TO GET A CUT OR TWO IN THIS YEAR
AND TODAY OPENED THE DOOR FOR THEM TO GET THAT DONE. BUT YOU STILL HAVE TO SEE SOME
BETTER INFLATION PRINTS OVER THE NEXT COUPLE OF MONTHS.
WE ARE GOING TO BE FOCUSED ON THAT. MANUS: YEAH, I MEAN, EVERYONE HAS
PARADED INFLATION PRINTS AND TOLD US IT IS NOT ENOUGH TO
ESTABLISH A FULL TREND. HERE WE ARE, ONE SLIGHTLY LOWER
READING ON JOBS AND WE ARE OFF TO THE RACES.
YOU TALK ABOUT THE OVERALL TREND. AGAIN, DO YOU THINK THAT POWELL
-- THEY SAY HE POTENTIALLY HAD ACCESS TO THIS DATA.
HE PUSHED BACK AGAINST THE CONCEPT OF A HIKE AND SOUNDED
PARTICULARLY DOVISH. AND HE WAS CONVINCED WE WERE IN
RESTRICTIVE TERRITORY. DO YOU THINK THIS IS THE
BEGINNING OF UNDERSTANDING WHAT THE INCREMENTAL IMPACT OF
RESTRICTIVE RATES IS? RICK: SO, YES.
I WOULD SAY COUPLE OF THINGS TO THAT. I THINK THE CHAIR WAS VERY
CLEAR ABOUT THE BAR FOR HIKING RATES WAS EXTREMELY HIGH.
AND I THINK THAT WAS A BIG DEAL FOR THE MARKETS.
I THINK HE BASICALLY TOOK OFF THE TABLE THAT THEY ARE
CONSIDERING THAT ANYTIME SOON. AND THAT YOU SHOULD JUST SIT
BACK AND WAIT AND SEE, AND THE DATA WILL START TO MOVE IN A
DIRECTION THAT ALLOWS THEM TO START THE CUTS.
I THINK THAT IS A BIG DEAL FOR MARKETS.
PARTICULARLY IN FIXED INCOME, PEOPLE ARE SITTING ON AN
IMMENSE AMOUNTS OF CASH. YOU SEE THIS IN MONEY MARKET
DEPOSIT. IT GIVES YOU A SENSE THAT THEY
ARE NOT CONSIDERING RATE HIKES ANYTIME SOON, I CAN FEEL A
LITTLE BIT BETTER ABOUT PUTTING MONEY TO WORK.
THE INCOME YOU CAN GENERATE IS SUBSTANTIAL.
YOU WERE TALKING ABOUT EARLIER, ABOUT UNLEASHING THE HOUNDS.
I DON'T KNOW ABOUT HOUNDS, BUT THERE ARE A LOT OF PEOPLE
SAYING, I JUST DON'T WANT TO GET BLUDGEONED BY RATES MOVING
HIGHER. WHEN YOU LOOK AT SOME OF THESE
NUMBERS, HEALTH CARE IN TODAY'S NUMBER -- HEALTH CARE AND
EDUCATION, 95,000, 175,000. IF YOU STRIP OUT HEALTH CARE
AND EDUCATION, WE ARE TALKING ABOUT AN ECONOMY THAT IS
SLOWING AND ALLOWS THE FED TO MOVE. IT GETS PEOPLE COMFORTABLE
THAT, I CAN PUT SOME MONEY TO WORK. MANUS:
LET'S TALK ABOUT THE YIELD MOVES TODAY AND THIS WEEK. TUESDAY DOWN
11 BASIS POINTS. TENS DOWN NINE
BASIS POINTS ON THE WAY. WOULD YOU BE DEPLOYING?
WOULD YOU BE AN ADVOCATE OF ACTIVE DEPLOYMENT INTO THE
MARKET THIS WEEK? THE ECB WAS A COUPLE OF DAYS
AGO, AND WE WERE FREAKING OUT. CONTEXTUALIZE THOSE MOVES TO ME
THIS WEEK AND TODAY. RICK: I THINK THERE IS SOMETHING
PRETTY SPECTACULAR IN MARKETS TODAY, IN FIXED INCOME THAT IS
WORTH SITTING BACK AND TAKING NOTE OF.
IF YOU WERE HOLDING INCOME TODAY IN, LET'S SAY THE FRONT
TO THE BELLY OF THE YIELD CURVE, SO,
LET'S SAY THAT RATES STAY HERE. LET'S SAY THAT RATES MOVE UP A
BIT. IN MY ETF WE ARE CARRYING ALMOST 7% YIELD.
THINK ABOUT WHAT THAT MEANS. EVERY SINGLE MONTH I AM
THROWING 60 BASIS POINTS. LET'S SAY RATES MOVE UP A BIT
MORE. YOU ARE TAKING A MONTH TO WORK
THROUGH THAT BECAUSE OF YOUR INCOME LEVEL IS SO HIGH.
HAVE YOU SENT TO ME, HAVE WE BEEN DOING THINGS? YES.
DO I LIKE OWNING THESE YIELDS AND INCOME?
SOME SECURITIZED ASSETS, HIGH QUALITY ASSETS?
YOU THROW IN A BIT OF HIGH-YIELD, BOY, I HAVE BEEN
DOING THIS A LONG TIME. A DECADE OR LONGER THAN THAT.
YOU ARE SAYING, I HAVE TO OWN SOME RISKY ASSETS BECAUSE
YIELDS ARE CLOSE TO ZERO. TODAY YOU CAN FEEL COMFORTABLE
BECAUSE YOUR INCOME AND KERRY IS SO SUBSTANTIAL, AND YOUR
RETURN WILL BE PRETTY HARD. UNLESS YOU THINK RATES ARE
GOING MUCH HIGHER, WHICH IS ALMOST INCONCEIVABLE GIVEN THE
MODERATE DECELERATION IN THE ECONOMY.
YOU FEEL PRETTY GOOD ABOUT OWNING THAT PART OF THE YIELD
CURVE. LONGER IN INTEREST RATES, TOUGHER STORY.
I DON'T THINK YOU NEED A LOT OF LONG INTEREST RATE EXPOSURE.
MANUS: THE MARKET HAS DECIDED TO PUT
ITS STAKE IN THE GROUND TODAY. I WOULD SAY THE MARKET HAS
DECIDED TO TURN THE PAGE ON HIGHER FOR LONGER AND REFLECT.
IS IT TOO EARLY TO DO THAT? RICK:
SO, LISTEN, I THINK YOU HAVE TO ASSUME THERE IS AN
EXTRAORDINARY AMOUNT OF, WE ARE IN THIS ERA OF INFRASTRUCTURE
SPEND, CLIMATE SPEND, AI SPEND, THE ENERGY THAT HAS TO GO IN
AROUND IT. THERE IS A LOT OF CAPITAL THAT
HAS TO BE PUT TO WORK TO SUPPORT THIS SORT OF CAPEX AND
R&D SPEND. SECONDLY, YOU HAVE A DYNAMIC
WHERE, WHEN YOU LOOK AT THESE PAYROLL NUMBERS, IF YOU GO BACK
AND THINK ABOUT, WHY ARE WAGES THIS ELEVATED?
THERE IS ACTUALLY NOT ENOUGH PEOPLE, WITHOUT IMMIGRATION
CERTAINLY THERE IS NOT ENOUGH PEOPLE FOR THE ROLES OUT THERE.
I THINK YOU HAVE TO ASSUME WE ARE GOING TO BE AT A HIGHER --
BY THE WAY, THE TREASURY HAS TO ISSUE AN AWFUL LOT OF DEBT.
YOU CAN ASSUME WE ARE AT A HIGHER INTEREST RATE THRESHOLD
THEN WE HAVE BEEN HISTORICALLY. BUT IT IS WHY YOU ARE SEEING A
LOT OF ASSET ALLOCATION. EVERY DAY PEOPLE SAY, I OWN
EQUITIES, BUT I CAN CREATE A BIT MORE BALANCE IN MY
PORTFOLIO CLIPPING SOME INCOME, AND THESE YIELDS ARE PRETTY
ATTRACTIVE. THINK ENDOWMENTS, FOUNDATIONS,
PENSIONS. THEY HAVE A RETURN TARGET IN
AND AROUND 7%. YOU HAD TO GET IT THROUGH
EQUITIES. TODAY YOU CAN GET IT THROUGH
SOME FIXED INCOME. THAT IS A PRETTY UNIQUE POINT
IN TIME. MANUS: I CAME ACROSS A LOVELY FACE
FROM BANK OF AMERICA THIS MONEY. BEAR WITH ME ON THIS. CRASHES IN COCO, CORRECTIONS IN
CRYPTO, AND WOBBLES IN GOLD. THOSE BUBBLY ASSETS OF 2024
SHOWING HIGHER FOR LONGER STANDS, IS NOW PERCOLATING
THROUGH THE MARKET. YOU EXTRAPOLATE THAT FURTHER.
TALK ABOUT NON-INTEREST RATE PAYMENTS. BUBBLEICIOUS COULD BE BUBBLING
UP. DO YOU HAVE A SLIGHTLY MORE INTELLECTUAL TAKE? RICK:
I DON'T KNOW. I HAVE DONE
A BUNCH OF PRESENTATIONS RECENTLY.
WHAT IS HAPPENING, WHEN YOU KEEP THE INTEREST RATE THIS
HIGH YOU ARE ACTUALLY PUTTING PRESSURE ON LOWER INCOME,
PUTTING PRESSURE ON LOCAL BANKS, PUTTING PRESSURE ON
COMMERCIAL REAL ESTATE, SMALL BUSINESS. HAVE AN ECONOMY THAT IS VERY
DISPARATE, AND PART OF THE ECONOMY THAT IS THE
BORROWER IS GETTING HURT. YOU SEE THAT IN THE EARNINGS
REPORTS. YOU SEE THE DISPERSION IN SOME
OF THE SMALL BUSINESSES VERSUS THE BIG BUSINESSES. LOOK AT BIG TECH,
BUYING BACK STOCK. YOU HAVE WHAT IS A TWO-PART
ECONOMY, AND PART OF WHY I THINK THE FED NEEDS TO BRING
THAT RATE DOWN OVER THE NEXT, CERTAINLY THE NEXT FEW MONTHS,
IS, GOSH, IT IS PRESSURING, AND I THINK WHERE CHAIR POWELL IS
RIGHT IN A LOT OF WAYS IS, THERE IS SOME REAL RESTRICTIVE
BEHAVIOR HERE, BUT IT IS IMPACTING A PART OF THE
ECONOMY, AND THE PRESSURE THERE HAS BECOME PRETTY THANK YOU.
YOU ARE STARTING TO SEE THAT IN THE NUMBERS. MANUS:
IN 30 SECONDS, THEY MUST BE MOPPING THEIR BROWS AND RAISING
A GLASS OF SAKE IN JAPAN TONIGHT. RICK:
JAPAN IS REALLY INTERESTING -- THE YEN
MOVE THIS WEEK HAS KEPT ME UP DURING THE NIGHT, TO SAY THE
LEAST. IT IMPACTS RATE MARKETS. OTHERWISE JAPANESE EQUITIES
HAVE BEEN A PRETTY GOOD STORY. HOW THE CENTRAL BANK MOVES THE
CURRENCY IS GOING TO BE INTERESTING RELATIVE TO THAT.
BUT, YES, STABILIZING A CURRENCY THAT HAD A SHOCK MOVE
EARLIER IN THE WEEK HAS TO FEEL A BIT BETTER.
OBVIOUSLY A LOT OF INTERVENTION TO GET THERE.
IT WILL BE HOW THE POLICY EVOLVES AWAY FROM INTERVENTION,
GIVEN WHAT WE SAW LAST WEEK OR SO. MANUS: THANK YOU VERY MUCH. COMPRESSED AND TO THE POINT.
IF YOU FOR JOINING ME ON JOBS DAY. RICK RIEDER THERE.
LATER WE HAVE PGIM'S MICHAEL COLLINS TO DISCUSS MARKETS
AFTER THIS SOFTER NUMBER ON BLOOMBERG. MANUS:
YOU'VE GOT TO LOVE PAYROLLS FRIDAY.
IN THEORY IT IS ALL GOING SO WELL. YIELDS ARE DOWN.
APPLE IS RESPLENDENT. MONSTER BUYBACK, 10 BILLION,
THE BIGGEST IN HISTORY. AND THEY DECRIED THOSE NUMBERS.
TAKING IT AWAY, IT IS TECH AS THOSE YIELDS DROPPED.
THE NASDAQ UP 1.5 PERCENT. I COULD SING AT THE GOLDILOCKS
TUNE, BUT I WILL GIVE YOU YOUR CALLS.
DOWNGRADES, PELOTON TO MARKET PERFORM.
MORGAN STANLEY DOWNGRADES ESTEE LAUDER TO EQUAL WEIGHT.
DUE TO NUMEROUS MACRO HEADWINDS. MANUS: WE ARE PRO-RISK AT THE MOMENT,
175,000 JOB GROWTH LESS THAN EXPECTED.
THE NARRATIVE IT CHANGES ABOUT THE TIMING AND POTENTIAL AND
SIZE OF RATE CUTS. APPLE IS UP. THE BID IN EQUITIES IN MANY
WAYS IS LINKED TO THE DROP IN YIELDS.
DOUBLE DIGIT YIELD DROPS FROM TWOS AND COME BACK A LITTLE IN
TENS. ON THE WII, TWO YEAR YIELDS
DOWN BY 23 BASIS POINTS, 10 DOWN BY 19. THREE MONTH UNEMPLOYMENT,
242,000 JOBS. BREATHING A SIGH OF RELIEF IN
JAPAN, THE DOLLAR IS DOWN AND YEN UP OVER THREE PERCENT.
STRENGTHENING IN THE YEN AS THEY UNILATERALLY INTERVENE AND
MANY SAY IT WILL NOT WORK UNLESS YOU GET G2 INTERVENTION.
APPLE, THE TECH GIANT HAS ANNOUNCED THE BIGGEST STOCK
BUYBACK IN U.S. HISTORY OF 10 BILLION AND AN
UPBEAT FORECAST. ED LUDLOW IS WITH ME. THERE IS SOMETHING OF A
MISNOMER, THE APPLE GUIDANCE IN CHINA VERSUS THE DOOMSDAY
SCENARIO WE WERE GIVEN IN THE RUN-UP TO THE DATA FROM APPLE.
ED: WE ARE GOING TO HAVE TO ASK FREQUENTLY THROUGHOUT THE DAY,
WHAT IS THE BIGGEST DRIVER IN THE STOCK AT THE MOMENT?
IS OF THE SHARED BUYBACK THE BIGGEST IN HISTORY OR THE
NARRATIVE ABOUT THE OUTLOOK FOR THE CURRENT PERIOD IN CHINA.
IT IS UP 7% ON TRACK FOR THE BIGGEST JUMP SINCE DECEMBER
2020 TWO. THE STORY TOLD THAT THINGS WERE
NOT AS BAD AS EXPECTED THOUGH STILL BAD.
THE OUTLOOK AND POTENTIALLY LESS WITH THE STOCK THIS
MORNING THAT SALES WILL GROW LOW A SINGLE DIGITS.
THAT IS WHAT THE CFOS TOLD EMILY CHANG.
THE SPECIFICITY OF CHINA IS THAT THE IPHONE IS DOING WELL
AND THE NARRATIVE EXECUTIVES PAINTED BUT CALLED CHINA AND
AN INCREDIBLY COMPETITIVE ECONOMY WHERE
OTHERS ARE NOT DOING SO WELL. THEY HAD A LET LOOSE EVENT,
COMPLETELY VIRTUAL AND IN JUNE WWDC.
MARK GURMAN HAS OUTLINED THE CHRONOLOGY OF WHAT IS GOING TO
HAPPEN. NEXT WEEK WILL BE ABOUT THE
NEXT GENERATION OF IPAD, A PRODUCT LINE THAT HAS NOT HAD A
REFRESH IN ONE POINT FIVE YEARS BUT DID WELL IN THE PANDEMIC.
IF YOU LOOK AT THE EARNINGS CALL TRANSCRIPT, THAT WILL BE A
DRIVER OF GROWTH. IN JUNE, WE WILL GET THE AI
STORY. WHAT IS GENERATIVE AI LOOK LIKE?
HOW OFTEN HAVE YOU SAID THE WORD BUYBACK OR DIVIDEND IN THE
LAST THREE OR FOUR WEEKS AND HOW IMPORTANT IT IS TO THE
PSYCHOLOGY OF INVESTORS. MANUS: IT CERTAINLY WAS A FAIRLY
DIFFERENT STORY FROM WHAT WE THOUGHT WE WERE GOING TO GET. TURNING TO FINTECH, YOU HAVE
BLOCK REVIEWING PLANS TO RELEASE A PORTION OF PROFITS
FROM BITCOIN BACK. HOW WILL THAT WORK? ABIGAIL: THE BIGGER POINT HERE IS THAT
THEIR BUY NOW PAY LATER PLAN HAS DRIVEN PROFITS AND REVENUES
AND SHOULD CONTINUE TO DO SO. THIS AFTER THEY EMERGED AFTER
PAY WITH THE CASH APP AND PUT A 20% EARNINGS BEAT AND REVENUE
BEAT BY 1%, THE SCHOOL YEAR ABOVE THE STREETS.
ANALYSTS LIKE THE COST CONTROLS, SHUTTERING OF SOME
BUSINESSES, INTERNAL CONTROLS. ONE SAYING BLOCK REPORTS SOLID.
AFTER THE BELL THERE WAS AN INTERESTING SHUFFLE TO THE
DOWNSIDE REPORTS OF POTENTIAL REGULATORY INVESTIGATIONS
REGARDING ILLICIT TRANSACTIONS. THE CEO JACK DORSEY SAID THAT
IS NOT THE CASE AND THE STOCK IS UP 6%. DOWN 9% YEAR TO DATE.
MAKING MOVES IN THE RIGHT DIRECTION FOR INVESTORS WHO ARE
LONG BLOCK. MANUS: AMGEN CEO IS HAPPY WITH THE
CURRENT RESULTS OF THE EXPERIMENTAL WEIGHT LOSS DRUG.
WHAT DO THEY HAVE TO SAY? >> IT IS NOT A GLP-1 IT IS AN
ANTIBODY DRUG CONJUGATE. ONE PIECE OF IT WORKS THE SAME
WAY AS THE GLP-1 DRUGS.
BUT THE ANTIBODY MAY STICK AROUND IN YOUR BLOOD IN YOUR
GUT LONGER AND MAY HELP PEOPLE SEEKING TO LOSE WEIGHT KEEP
THAT WEIGHT OFF. THE CEO SAYING THEY ARE
ENCOURAGED BY EARLY RESULTS. THAT INCREASES THE PROBABILITY
OF THE SUCCESS OF THE DRUG TO 75%. IT HAD EARLIER SEEN 50%. IN A FEBRUARY STUDY, 14 POINT
5% OF BODY WEIGHT PEOPLE LOST IN 12 WEEKS, THE HIGHEST LEVEL.
SOME PEOPLE KEEPING WEIGHT OFF FOR 150 DAYS AFTER STOPPING THE
DRUG. THIS HAS BEEN EXTRAORDINARILY
POSITIVE FOR AMGEN, THE BIGGEST MOVE SINCE JULY 2009 AND TAKING A TOLL ON SHELLS OF NOVARTIS
AND ELI LILLY. MANUS: OTHERS MAY HAVE COMPETITION. TURNING OUR ATTENTION TO
TRAVEL, EXPEDIA MISSING GROSS OF BOOKINGS AND CUTTING SALES
FORECASTS. >> SHARES LOWER BY 12% BECAUSE
OF THE RBL. THEY WERE EXPECTING A BOOST IN
STOCK PROFITS FROM VERBAL BECAUSE IT ALLOWED
VRBO. WALL STREET WASN'T HAPPY.
THEY SAY EXPEDIA QUICKEN GROWTH IS WORSENING AND TECH
IMPROVEMENTS REMAIN ELUSIVE. BOOKINGS IS ALSO HAVING TROUBLE.
RESERVATIONS EXPECTED TO SLOW AS TENSIONS IN THE MIDDLE EAST
CONTINUE TO CURB THE REGIONAL TOURISM.
EXPEDIA SHARES YOUR TO DATE 20% AND TODAY IS DOWN 13%. MANUS: JOINING ME NOW IS MICHAEL
COLLINS FROM PGIM. DOUBLE DIGIT DROPS IN YIELDS.
THIS BOND MARKET REALLY LIKES WHAT IT SEES IN THIS JOBS
REPORT. CANNOT KIND OF MOMENTUM SUSTAIN? MICHAEL: I THINK THAT RATES OVERSHOT
OVER THE LAST FEW WEEKS. IF YOU LOOK AT WHAT WAS PRICED
IN IN TERMS OF THE FUNDS RATE GOING FORWARD, THE LOW TERMINAL
FUNDS RATE FOR THE NEXT 10 YEARS WAS ABOUT 4%. THAT SEEMS TO ME TO BE 50 TO
100 BASIS POINTS TO HIGH AS A PERMANENT LOCATION FOR THE
FUNDS RATE. LIKE TYPICALLY BECAUSE OF HUMAN
BEHAVIOR, THE MARKETS OVERSHOOT AT THESE INFLECTION POINTS.
THE MARKETS HAVE BEEN PRICING IN ALMOST ONE HUNDRED PERCENT
PROBABILITY OF THIS CONTINUATION OF A REALLY STRONG
GROWTH, RELATIVELY HIGH INFLATION AND A PERMANENCE OF
THE HIGH INTEREST RATES. I THINK THAT WAS OVERDONE.
I THINK RATES WILL PROBABLY CONTINUE TO FALL OVER THE NEXT
COUPLE OF YEARS BUT WILL BE CHOPPY.
WELCOME TO DATA DEPENDENCE. MANUS:
THE DEBATE IS TODAY WE HAVE A SLIGHTLY HYSTERICAL RESPONSE IN
THE BOND MARKET, DOUBLE DIGIT DROPS IN TERMS OF YIELDS.
THAT ROLLS ON FROM THE DOVISH NARRATIVE FROM POWELL JUST THE
OTHER DAY. I CAUGHT UP WITH A CEO SAYING
ORDER INTAKE IS STRONG, MAYBE TRIMMING A LITTLE FAT OF
PRODUCTION BUT NOT SEEING ANYTHING LIKE A HARD LANDING OR
RECESSION COMING DOWN THE PIKE. THIS IS REALLY PERPETUATING
THIS SOFT--ISH LANDING
NARRATIVE. MICHAEL: WE CALL IT WATER
DOWN. IT CONTINUES TO MODERATE TOWARD
2% AND LOWER THAN 2% OVER THE NEXT YEAR OR TWO BUT INFLATION
PROBABLY DOES STAY ABOVE THE FED TARGET OF TWO MAYBE THREE
YEARS TO COME. THAT IS NOT A BAD ENVIRONMENT.
THAT IS AN ENVIRONMENT WHERE THE FED PROBABLY HAS ULTIMATELY
CUT RATES 100 OR 200 BASIS POINTS OVER TIME.
THE 200 BASIS POINTS ARE NOT PRICED IN SO ULTIMATELY THE
WHOLE RATE STRUCTURE COMES DOWN A LITTLE BIT, GROWTH DOESN'T
FALL OFF A CLIFF. WE HAVE A VERY LOW PROBABILITY
IN DIFFERENT SCENARIOS OF A HARD LANDING DRIVEN BY THE
BOTTOM UP FUNDAMENTALS. COMPANIES, THE PRIVATE SECTOR
AROUND THE WORLD AND IN THE U.S. HAVE BEEN THE STARS THROUGHOUT
COVID, INFLATION REGIME, THE HIGHER RATE REGIME.
THEY HAVE ADAPTED IT TO THESE SITUATIONS AND WE ARE SEEING
PROFIT MARGINS NOT ONLY SUSTAIN BUT MOVE A LITTLE HIGHER.
IT HAS BEEN A GOOD STORY FROM A BOTTOM CREDIT PERSPECTIVE.
MANUS: AS WE GO TO THE CLOSE OF BUSINESS TODAY, THE MARKET WILL
HAVE HEARD A COUPLE OF THINGS. NO RATE HIKE IS THE OPTIMISTIC
SCENARIO FROM POWELL. THE FED PUT IS LIGHT AND
UNEMPLOYMENT AND WE WILL ACT. WAGES ARE A BIT SOFTER, IT JOB
GROWTH NOT AS VOLUMINOUS AS HAD HOPED.
THIS IS A VERY PROCYCLICAL RISK NARRATIVE TO CLOSE OF THE WEEK,
ISN'T IT? MICHAEL: IT IS. I KNOW YOU THROW THE TERM
GOLDILOCKS LOT AROUND THIS MORNING BUT IT FEELS LIKE A
REALLY GOOD BACKDROP FOR INVESTING.
WHETHER YOU ARE INVESTING IN FIXED INCOME WHICH WE ARE
POUNDING THE TABLE ON WITH OUR CLIENTS AND GENERALLY ADVISING
THEM TO ADD TO PUBLIC FIXED INCOME AND TO LEAD INTO THE
DURATION TRADE AS RATES BACK UP TOWARD THE HIGHER END OF THE
RANGE. WE ARE PUTTING 4.5 TO FIVE AS
SEEMINGLY THE HIGH END OF THE LONGER TERM RANGE BUT EVEN FOR
REC -- EQUITIES AND RISK ASSETS, CREDIT SPREADS IN THE
CORPORATE HIGH-YIELD MARKET CONTINUE EVEN AFTER TODAY AND
GOING BACK TO THE NEW CYCLICAL IN YOUR TODAY AT LOWE'S. MAYBE THEY STAY AT THESE TYPE
LEVELS FOR YEARS AND I HAVE LIVED THROUGH THESE CYCLES.
WE HAVE SEEN PERIODS WHERE CREDIT SPREADS STAY LOW FOR
YEARS AS YOU ARE IN A RELATIVELY BENIGN CREDIT
ENVIRONMENT. THAT IS WHERE WE ARE HEADED.
MANUS: THE PROPOSITION BACK FROM ADAM
POZEN YESTERDAY SAID CREDIT SPREADS ARE WHERE THEY ARE
SUGGEST WE ARE NOT AT EIGHT RESTRICTIVE AND OF TERRITORY
WHICH PLAYS MORE TO THE HIGHER FOR LONGER THAN WE ARE
CURRENTLY PRICING TODAY. MICHAEL:
FINANCIAL CONDITIONS ARE EASY. THIS RESET IN RATES HIGHER WILL
DEFINITELY TIGHTEN FINANCIAL CONDITIONS IF THEY STAY AROUND
THESE LEVELS OVER TIME. THAT IS SOMETHING THAT IS
WORRISOME. I THINK IT IS NOT A FINANCIAL
CONDITIONS STORY, I THINK IT IS MORE OF JUST A GENERAL
MODERATION IN GROWTH OVER TIME AND SOME JOBS GAINS, SEEING
BASICALLY 40,000 JOBS A MONTH STEADY FOR A YEAR
OR TWO AND IT IS ALMOST UNBELIEVABLE.
WHERE ARE THEY COMING FROM? A LOT HAVE BEEN GOVERNMENT AND
HEALTH CARE. AS YOU STRIP THEM OUT, THE
CYCLICAL PART OF JOB GAINS HAVE BEEN CLOSER TO THE RUN RATE OF
100,000. THAT IS JUST A SIGN THAT THE
ECONOMY DOES HAVE A SPEED LIMIT AND I THINK WE HAVE HIT IT.
I THINK MODERATION AND LOWER GROWTH BUT NOT HARD LANDING ARE
IN THE CARDS. THAT IS MICHAEL COLLINS OVER AT
PGIM. WE HAVE AN EXCLUSIVE INTERVIEW AN INTERVIEW WITH AUSTAN
GOOLSBEE AT 10:30 IN NEW YORK AND 3:00
IN LONDON. ♪ MANUS: THE HEALTH OF THE
CONSUMER IS IN FOCUS AS EARNINGS SEASON IS IN FULL
SWING. HOST HOTELS & RESORTS POSTING.
WE ARE TALKING WITH THE PRESIDENT AND CEO, JAMES
RISOLEO . TALK TO ME ABOUT HOW RESILIENT
AND STRONG AND ROBUST THE UPPER END OF YOUR MARKET IS IN YOUR
HOTELS. JAMES: WE HAVE SOME TERRIFIC
PROPERTIES. WE HAD A GOOD EARNINGS PRINT
AND I WILL TELL YOU THAT THE RESILIENCE OF THE CONSUMER IS
VERY STRONG. WE HAVE THREE BUSINESS
SEGMENTS, LEISURE, TRAVEL AND BUSINESS AND LEISURE
CONTINUES TO BE STRONG. WE SAW LEISURE RATES
THAT WERE 52% GREATER THAN THE FIRST QUARTER OF 2019.
BUSINESS TRANSIENT TRAVEL IMPROVES, A 5% IMPROVEMENT IN
BUSINESS TRANSIENT IMPROVEMENT. THE REAL STRENGTH IN OUR
BUSINESS IS GROUP. IT IS RESILIENT AND STRONG AND
CONTINUES TO GROW. WE PICKED UP 500,000 BOOKINGS
IN THE QUARTER FOR 20 24. WE ARE REALLY EXCITED ABOUT THE
WAY HOST IS SET UP FOR THE BALANCE OF THIS YEAR AND INTO
2025. MANUS: THAT IS A CLEAR TREND EVERYBODY
IS TELLING ME ABOUT. BUT WE ARE ALL USED TO PAYING
MORE. WE UNDERSTAND THERE IS INFLATION AND TOUGH FREE TO GET
STAFF OVER THE COUPLE OF YEARS. ARE YOU STILL ABLE TO RAISE
PRICES AS THE RESILIENCE IN THE FACE OF HIGHER PRICES ACROSS
THE THREE SEGMENTS. JAMES:
THE BUSINESS TRANSIENT AND GROUP PIECE OF THE BUSINESS ARE
PACING VERY NICELY. OUR TOTAL GROUP REVENUE PACE IS
UP 7% AND FOR THE BALANCE OF THE YEAR OVER THE SAME TIME
LAST YEAR. THAT INCLUDES AN INCREASE IN
ROOM NIGHTS AND ADR. WHAT WE ARE SEEING WITH THE LEISURE
TRAVELER, AND WE HAVE A UNIQUE PORTFOLIO OF ASSETS, 17
TERRIFIC PROPERTIES. WE CATER PRIMARILY TO THE VERY
AFFLUENT LEISURE TRAVELER. WE ARE STILL ABLE TO RAISE
RATES BUT NOT AT THE SAME PACE WE HAVE OVER THE LAST COUPLE OF
YEARS WHEN WE CAME OUT OF COVID. WE JUST REOPENED LAST JULY THE
RITZ-CARLTON NAPLES BEACH RESORT THAT WAS CLOSED AS A
RESULT OF HURRICANE IAN. OUR LEISURE ADR IN THE QUARTER
WAS 500. OUR LEISURE ADR AT THE FOUR
SEASONS ORLANDO WAS $2000. SO CLEARLY THE AFFLUENT
CONSUMER IS STILL PRIORITIZING EXPERIENCES OVER THE PURCHASE
OF GOODS. WE HAVE A REALLY GOOD PRODUCT
AND WE PROVIDE VERY GOOD SERVICE.
SO THEY ARE WILLING TO PAY THE RATES. MANUS: I CAUGHT UP WITH SOME HIGH-END
SIMILAR HIGH SCALE BUSINESSES AND THE CONSUMER IS CHANGING.
THEY WANT MORE IN HOTEL AND RESORTS.
WHAT ARE YOU GOING TO HAVE TO ADD ON TO THE PRODUCT AND WHAT
ARE YOU DOING TO DEVELOP THE PRODUCT?
IS THAT THE NEXT EVOLUTION FOR YOU? JAMES: IT IS. A GOOD EXAMPLE IS THE RECENT
ACQUISITION IN NASHVILLE. IT IS A TWO PROPERTY COMPLEX,
ONE HOTEL AND AN EMBASSY SUITES. NEW PROPERTY AND WE JUST
ACQUIRED IT LAST MONTH. IT IS LOCATED RIGHT ACROSS THE
STREET FROM THE MUSIC CITY CONVENTION CENTER.
THE HOTEL WAS DIFFERENTIATED. IT HAS SEVEN OUTLETS ON THE PROPERTY AND HAS A SPA, A YOGA
STUDIO, AN INCREDIBLE ROOFTOP BAR AND LOUNGE THAT OFFERS
UNPARALLELED VIEWS OF THE MUSIC CITY. IN THE RITZ IN NAPLES WE ADDED
ADDITIONAL CABANA, OUTLETS. THAT IS WHAT THE CONSUMER WANTS
AND IF YOU GIVE THEM THE PRODUCT THEY ARE CERTAINLY
PREPARED TO PAY. MANUS: I'M AT THE CABANA IN NAPLES
ALREADY. YOU PAY 530 MILLION
DOLLARS AND IN CASH WOULD LOWER INTEREST RATES HAVE ENCOURAGED
YOU TO BORROW MONEY TO DO THIS? JAMES:
WE ARE UNIQUELY POSITIONED IN THE WORLD OF LODGING RATES.
OUR BALANCE SHEET IS A FORTRESS BALANCE SHEET.
WE CAME INTO 2024 ONE POINT NINE TIMES LEVERAGED, THE ONLY
INVESTMENT GRADE BALANCE SHEET IN THE LODGING SECTOR.
WE HAD THE LIQUIDITY ON THE BALANCE SHEET.
WE USED THE CASH AND NOTWITHSTANDING PAYING $530
MILLION FOR THE ACQUISITION WHICH WE WERE DELIGHTED TO GET
DONE. WE STILL HAD .7 BILLION IN
LIQUIDITY AND OUR LEVERAGE RATIO IS 2.3 TIMES.
WE ARE WELL-POSITIONED TO CONTINUE TO BE AN INQUISITIVE
COMPANY OVER THE COURSE OF 2024. WE CAN ACQUIRE ANOTHER .1
BILLION OF ASSETS AND ONLY TAKE OUR LEVERAGE RATIO UP TO THREE
TIMES, WHICH IS VERY MUCH IN THE INVESTMENT-GRADE. MANUS: ARE YOU IN A HUNGRY MOOD TO DO
MORE AND TELL ME YOU WANT TO DO SOMETHING MORE THAN A BUILDUP
OF ACQUISITION. ARE YOU INTERESTED OVERSEAS?
GIVE US A LIFT OF THE HOOD OF WHAT YOU WANT TO DO. JAMES:
I WANT TO PUT THE BALANCE SHEET TO WORK AND ELEVATE THE GROWTH
PROFILE OF THE COMPANY.
IT WILL BE DOMESTIC AND IN MAJOR MARKETS WHERE WE SEE A
STRONG RECOVERY. IT MAY BE AN ADDITIONAL RESORT
IF WE CAN FIND ONE THAT WORKS FOR US. WE ARE AN OPEN BOOK WHEN IT
COMES TO WHERE WE WANT TO DEPLOY CAPITAL.
IT IS WHERE WE CAN GET THE BEST RETURNS. MANUS: 175,000 JOBS CREATED.
HAVE YOU HAVE ALL THE PEOPLE YOU NEED HIGHER?
IS IMMIGRATION GOOD FOR YOUR BUSINESS?
HAVE YOU GOT THE STAFF AND DO YOU WELCOME THE IMMIGRATION?
JAMES: WE ALWAYS WELCOME THE IMMIGRATION AND WE HAVE THE
STAFF. WE ARE FORTUNATE THAT OUR PROPERTIES ARE PRIMARILY
MANAGED BY MARRIOTT AND HYATT, TO TOP-NOTCH EMPLOYERS THAT
MAKE HOSPITALITY CAREERS. WE WERE ABLE TO BRING STAFF
BACK ON A LOT SOONER THAN THE INDEPENDENT HOTEL COMPANIES.
MANUS: WE HEARD IT LIVE AND YOU ARE
READY TO DO MORE. GOOD TO HAVE YOU WITH US.
I AM ALWAYS LOOKING FOR A BARGAIN.
I WILL BE ON THE LOOKOUT. THAT IS JAMES RISOLEO, HOST
HOTELS AND. PMI JUST CROSSED AND WHAT HAVE
WE GOTTEN? MICHAEL: WE ARE DOING THINGS BACKWARDS.
THE MAIN EVENT WAS ALREADY THIS MORNING WITH THE JOBS REPORT.
SNP PMI'S FOR SERVICES AND COMPOSITE BOTH COME IN AT 51.3,
UP FROM 50.9 FOR BOTH OF THEM IN THE PRIOR MONTHS.
IT SUGGESTS STRENGTH IN THE ECONOMY EVEN IF NOT TOTALLY
REFLECTIVE IN THE OVERALL JOBS NUMBERS.
20,000 PEOPLE ADDED ON THE RETAIL SIDE.
WE HAVE ISM SERVICES AT THE TOP OF THE HOUR.
WE WILL WATCH THAT CLOSELY BECAUSE THE ISM MANUFACTURING
NUMBERS WENT DOWN ON WEDNESDAY. LET'S SEE WHAT HAPPENS WITH
SERVICES. MANUS: PRETTY BIG MOVES ACROSS THE
ASSET CLASSES. TIME FOR YOUR TRADING DIARY.
ISM SERVICES COMING UP AT THE TOP OF THE HOUR.
AND SPREAD IT FEET FROM HAB AUSTAN GOOLSBEE.
NEXT WEEK, EARNINGS FROM DISNEY. AND THE BANK OF ENGLAND AND THE
RATE DECISION NEXT THURSDAY. QUICK SNAPSHOT.
THIS IS THE EQUITY MARKET REACTION FUNCTION TO THE LOWER
THAN ESTIMATED JOBS REPORT. WHAT YOU HAVE IS A REACTION TO
THE LOWER RATES. APPLE BARNSTORMING AWAY WITH
THE BIGGEST BUYBACK IN AMERICAN HISTORY, 10 BILLION. AND THE DATA ON CHINA LESS THAN
A DIP ANTICIPATED. I WANT TO REFLECT ON THE IMPACT
OF THE LOWER THAN EXPECTED JOBS REPORT, JOBS GROWTH AT 175000
AND WAGES RAISING BY .2%. THE CONSEQUENCES OF THAT WAS A
FURIOUS MOVE LOWER IN YIELDS. WE HAVE GIVEN A COUPLE BACK IN
SOME OF THE MARKETS. AT ONE JUNCTION IT WAS AT 11
BASIS POINTS BUT THE MARKET IS MOVING FORWARD FROM DECEMBER TO
NOVEMBER AND NOW POTENTIALLY FOR A RATE CUT.
THE RATES MARKET IS REPRICING A LITTLE BIT EARLIER THAN WAS
ORIGINALLY ANTICIPATED AS WE HAD A HOT REPORT.
THE BLOOMBERG TEAM WILL TAKE YOU THROUGH THE REST OF THE
JOBS DAY REPORTING AND MOVEMENT ON THE MARKETS.
FROM NEW YORK, A VERY GOOD MORNING FROM ME AND THE TEAM.
