Bank Earnings Begin as Traders Digest Fed Speak

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This is Bloomberg Businessweek 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 Businessweek Daily Podcast. With Carol Masser and Tim Stenebeck.

As you know, big banks kicking off earnings season earlier this morning. JPM, JP Morgan, Goldman Sachs shares, a little change we've seen. Keep in mind, JPM rallied 3% at its intraday high. Goldman rallied 4% at its intraday high. And then, Tim, there's Wells Fargo down about 1.7%, down as much as 3.6% at its intraday low today. Citi dropping back two after an earlier 1% gain, but now down roughly about 4%. I just point that out because I just feel like investors have been trying to kind of read the tea leaves or make sense of these reports, it feels like.

Well, help us make sense of this. We've got Herman Chan with us, Senior U.S. Banks Analyst at Bloomberg Intelligence. He joins us here in the Bloomberg Businessweek studio. Here are some of the headlines. JP Morgan posts surprise drop in fixed income trading revenue. Goldman's equity traders post big haul as credit rates miss. Wells Fargo beats its resilient customers curtail loan losses. That's just a handful of what we've learned so far today. How would you characterize this group as a whole?

Lots of puts and takes, and you see this in today's trading action. Equity trading was the highlight for the group.

Goldman Sachs led.

We say Goldman was the gold standard for the third quarter, particularly with equity trading up 72% year over year.

J.P.

Morgan also strong on the equity trading front, but fixed income lagged. The higher for longer rate backdrop, it seems like, everybody in the market is coalescing to that view. So there's less trading opportunity on the fixed income side. Questions on the economy, but credit's still holding up really strong.

But there are questions if we're in this higher for longer rate backdrop for an extended period of time, what does that mean for unemployment and the like? So those are the things that the banks are continuing.

Herman, when it comes to fixed income, like people say, hey, there's opportunities that we haven't seen in fixed income in a long time. Is that just a case of, During the quarter, those opportunities weren't as clear or banks weren't ready to kind of lean into it?

That's right.

So we were facing the summer months. So that in itself causes some slowdown in activity. And the banks flagged September as really soft, particularly given the sharp upturn in interest rates. And that just put a lot of folks on the sidelines and there was less market action because of it.

We will hear from Bank of America tomorrow. They're a good view on the consumer. JP Morgan, though, should also be a really good view on the consumer, given the credit card and the banking activity that they have across the country.

That's right.

Any commentary there about the health of the consumer?

Yeah.

Cracks in credit really haven't really formed.

We were hoping to hear, we were looking to hear for something in terms of anecdotal shifts and changes in the bank's stance that we're seeing really resilient consumer. Wells Fargo in particular talked about historically low delinquencies on their consumer lending.

So that just speaks to the strengths.

And- Who are their customers though? Who are their customers? Yes.

So customers are, you're talking about the growth that's really happening in the auto lending side for Wells Fargo, your typical mortgage, and they're growing their credit card book as well. So Those are the type of customers that are going to be prime, near prime customers. So you're not going to see the bottom part of the K-shaped economy for a lot.

Of these spaces.

Where will you see that?

Yeah, that's a good question.

You'll probably see it more on the fintech side of things, where banks historically, ever since the GFC, have steered away from some of the weaker credit on the consumer side. So you see it in some of the personal lending that's being done by the folks like SoFi and the like.

So JP Morgan's CEO, Jamie Dimon, did say we're tightening up a little bit on credit. Some credit terms have gotten a bit loose. What is he talking about specifically when he says that?

It sounds like that's really more related to what's happening with AI and the AI build-out. So you've seen some headlines over the past few days where the banks have been a bit more judicious in how they underwrite AI credit because there's questions on the underlying risk and the layering of risk when they're doing these deals. So they just want to be sure that they're underwriting these loans and securities properly so they're not surprised if we're in a bubble and things really turn sour.

So one of the things that certainly the banks care about is the interest rate environment. We know that it plays into net interest income and JP Morgan sees fourth quarter net interest income of about $ 28 billion, which just kind of blows my mind. On that, we just have a story crossing the Bloomberg terminal that Fed Bank of New York President John Williams says he still sees one more interest rate hike as appropriate this year. How does that play in? How does that fuel some of the good stuff at the bank?

So it is part of the good stuff.

That's the positive story for banks in terms of their balance sheets are tilted towards higher interest rates. So as the Fed continues to raise rates and potentially another one by the end of this year. That really sets up for good NII growth for 2027. And we're also seeing really strong balance sheet growth, deposits, lending still growing across consumers and commercial lending. So all of that bodes well for continued net interest income growth for 2027 for the likes of JP, Wells Fargo, B of.

A and beyond.

Just 20 seconds, no concerns?

No concerns so far. We're always looking for an exit. Everything is awesome.

Everything is awesome. Everything is good, just like the Lego movie. But we're happy with the results. There's just some expectations on where things are going to go from the trading side. And there's going to be some seasonal declines in the fourth quarter.

Stay with us. More from Bloomberg Businessweek Daily coming up after this. Sometimes when we're out on the road, we meet someone for the first time and we're kind of blown away and we're like, listen, next time you're in New York, come by our studio.

Yeah. And we really do mean it if we say it.

Yeah. Sometimes they actually show up.

Which is how we get to.

Our next guest.

We're so glad he did show up.

Mamadou Abousar is here. We met him at Future Proof in Huntington Beach just last month, pretty much exactly a month ago at this point. He's founder and president of V Squared Quantitative Management. It's based in Chicago. He joins us here in the Bloomberg Interactive Brokers Studio. Mamadou Abou, welcome to New York. How are you? Fantastic.

Thanks for having me back.

Yeah, thank you so much for joining us. We wanted to get you on the program. When we had you a month ago, it was a little bit of a different environment. There was this so much concern about, well, I guess what was front and center was the so-called AI apocalypse. That has not gone completely into the background.

I mean, it's almost every day that we hear about Some rogue agent going and doing something. But the markets feel more stable than they did. And I think that was buttressed a little bit by today's bank earnings. So the word I will use today will be resilient.

Because if you think about the overnight trade, we've seen the cost peak going down by 5%. So when I woke up this morning taking my flight from Chicago, I had my notes written. This is a sell-off and a recall on AI, more or less. And I'm looking at S & P 5 right now. I'm like, we're pretty much flat. But I think it's important to kind of double-click on the number and look at the discrepancy at the sector level. So the bank's a bit of a mixed bag today. We've seen some positive earnings surprises, but the market hasn't overreacted to the banking sector. But in the AI part of it, you see that concern in the morning faded in the afternoon. which means that for me there is a positive sentiment that's still holding the

hope that all this investment will pay off at some point. And that's the big part. Valuation is one thing. I think at some point we get a bit overstretched on valuation, but I think there is a desire for these investments to turn out, and I think it's more like the market sentiment that drives that, momentum forward from our perspective.

But can we build on sentiment? I mean, yes, we can certainly get a lot of momentum in the market, but the reality is what matters. And I know everyone will say, look at a lot of these big AI related names and look at the revenues and look at the business that they're doing and look at the bookings and so on and so forth. I get that. But how do you manage expectations with Potential for risk.

Yeah. And I think this year is just a step up year. If you think about the number of issuances by the hyperscaler, by August, we were at 219 billion of new issuances by hyperscaler, more than in 2020.

You're talking about debt in particular?

Yes, debt in particular, investment grade. Right. So for these to pan out, you need a bit of time to see if these investments are yielding and adding value and bring cash flow. But this year was not a cash flow expectation. It was more of an investment rollout. And I think from 2027 onwards, it will be about, okay, now we build all these data centers.

Where are we?

How is the valuation and cash flow coming up? And that's the real testament. I mean, this year is more for gauging and investment deployment. Next year, for me, is the money time, so to speak.

Yeah, I don't know.

Early in the year?

Like when?

Early in the year.

Because we do have a lot of folks saying, well, this build continues until like 2030. We kept hearing 2030 a lot. So I'm just curious, like, To me.

But there's no visibility out that far.

No, but you're saying that tomorrow, I'm sorry, 2027 is going to be like, we're going to get some real news about.

We'll have some blowout from our perspective because I'll look at it this way. When I was reading the news this morning and reflecting on it, I think the concern was twofold. One concern was about overstretched valuations. The other one was a competition coming from China and having their own AI model taking more space and probably developing at a hyper speed than some of the US competitors. All that will be clear as we go forward, we'll see if there is new listing coming up, new valuation, but I think the real testament is are we gonna see the same type of valuation or a revision down based on what we've seen.

So that valuation possible downgrade, if you will, Is that, are you thinking OpenAI and Anthropic we might see it in?

Yeah, yeah. All right, yeah.

Any concern about how they look as potential publicly traded companies?

For me, the concern is more about the old security of what AI means and what is impact. Actually, I attended a great presentation by Neuralink about a week ago, and I left the room excited, but also concerned about what it means in terms of security.

Obviously, Neuralink- This is Neuralink, Elon Musk's brain chip implant. Yeah, and that's very specific.

Yeah, that's one use of AI.

So there is real application to it.

But the point I'm going to highlight here, Tim, for me, it's more about Are we going too far on stretch valuation not backed by the balance sheet health and the quality of these ventures?

We don't know because we don't have that type of visibility into these two large privately held companies.

And as a systematic manager, what I like about my approach as being more cynical and skeptical by nature is that I need a lot of quarterly earnings to judge if the stock is overvalued versus peers. But I think companies now tend to remain private longer. And so it is kind of all that old sentiment.

So what is overvalued right now?

Well, overvalued in terms of on the cost of the balance sheet?

No, overvalued stocks, overvalued publicly traded companies that you would not invest in because they're too rich.

So I invest in every sector. That's why I'll answer to you. I don't look at that as a silo alone, right? So my answer is twofold. Well, when your valuation is above a trillion, you're getting in a thin air club. And you need to justify why that valuation is what it is. You asked earlier about JP Morgan. Why is JP Morgan 3X city? That was your ask earlier. Is it because of the quality of the client they have?

Is it because of the private wealth side of it? As a quant, I'm more skeptical and double-click on the drivers, right? So one is the factor. The second one is the demand and the uniqueness of the company. That's the way I look at it, Tim.

How important is what we get from the Fed? I mean, obviously, that plays into valuation. It plays into a lot of things. And actually, if we have some kind of clarity in terms of maybe is the Fed done at some point, John Williams of the Fed talking to Bloomberg and saying maybe another one this year, maybe we're done. What would that mean for various asset classes? And let's start with something like stocks.

So when you have a 10-year at 5.2 and a change, it moves your holder rate. So whenever you issue a corporate bond and now you are competing with, you know, 5% on a 10-year, you have a higher claim rate you have to clear to justify investing on that bond.

So for me, there is twofold.

First of all, the core CPI number on a one-day stay is very important. We keep saying that every time it's an important number, but for me, this one will tell us if we need it on the hike or are we actually... seeing inflation tippering down. I think the end, the big one, will be the delta based on energy and what happened over the summer. And for me, I'm more pricing one hike between now and the end of the year. And I think it may not happen right now.

I think it's going to be more for December call.

Okay.

And then like John Williams says, done completely?

Yes, that's my take.

So you agree with him?

Yeah.

No need for a rate hike in 2027. You'll be done this year. So it's not really a rate hiking cycle. It's two red hikes.

It's a short one.

So the cycle, I mean, the term cycle requires actually longer patterns here. The concern was twofold when we heard Kevin Walsh coming and said, well, inflation has multiple legs. One was about employment and labor. We feel it's under control. The other one was what drives inflation now. And that environment was One side is towards a concern in the Middle East and geopolitical risks. And the other one is also what is happening in AI and so on. So you have two layers that drive that inflation. But if they temper down, I think we're going to see less of an inflation environment and more stabilized environment.

All right, so if that settles down, stabilizes, what about the political environment? So we've got midterms just around the corner. And we're trying to strategize what it means and whether or not we do see that blue wave and what it means for various policies, the President can still do a lot from his position there in the White House, and certainly with executive orders, or do stuff in terms of foreign affairs. What's the risk that the midterm outcome poses for investors?

I've looked at it, actually, I put a nice chart of the week on that, Is it impacting truly markets? The answer is no. I wish I could bring you a different news today.

No matter what the outcome?

No matter what is the outcome in the long run. And it's just based on history, right? So I think there is the announcement effect, the concern. You will see the markets kind of treading low volume about close to the midterm. But a lot of that will be pricey of what we expect as an outcome. And after you move out a few weeks out, it's already old news.

Unless you have massive policy.

Are you going to prediction markets?

I knew it.

How did you know?

She knew exactly what I was doing. I'm looking at Kalshi. Well, that's the whole genesis of Kalshi. It's like, how do you trade on an election? Well, now you can. And what is priced in, at least in prediction markets, is that Democrats are going to dominate.

That's what it's priced.

I'll be more cautious. Is that priced into financial markets?

There's a couple of key races that will dictate that. But is it fully priced in the markets? Well, as you get closer to that date, I think it will be priced in. And that's why my point is that over the medium term, it doesn't really fully impact the markets unless you have major policy changes. We were expecting this to happen pre-midterm, especially around private investments for retail or crypto markets. And all these big reforms that were meant to actually create a different landscape, they never pan out as per se. That's why my cautious statement is about reality here.

Stay with us.

More from Bloomberg Businessweek Daily coming up after this.

I have to call an audible here.

What?

Go.

As we were doing our simulcast, this story crossed the terminal. I put it in our chat, okay?

Did you?

I did, yeah.

Oh, OpenAI.

OpenAI has discovered a, quote, sophisticated recording device that was hidden inside one of our offices. End quote. The company says in a post on X, OpenAI models used to identify that a specific employee had planted it a few days earlier. The employee was terminated. OpenAI referred the matter to the FBI. Agents and prosecutors moved quickly to make an arrest, the company says.

OpenAI says no indications of this individual inappropriately accessing or exfiltrating model weight, source code, or customer data. The company goes on to say that the company takes protecting our technology data and people seriously and as a matter of national importance. Our security program is designed to protect against a wide range of threat actors. from insider risk to cyber criminals to nation states. And this case is an example of how AI can help address these sophisticated security threats.

Whoa.

Whoa, it's actually a perfect segue to bring in Gautam Mukunda, Bloomberg Opinion columnist. He's a lecturer at the Yale School of Management. Yeah, this isn't the AI apocalypse we planned to talk to you about. I think this is really notable, though, because you write about something different. And I just want to read from your story, Gautam, before we get to you.

Executives at leading AI companies expect a major AI-caused disaster over the next six to 12 months, this is according to Axios, and are already planning for the aftermath, not by stocking up on freeze-dried food, but by lobbying members of Congress. You write that such an approach, preparing for hearings instead of hazards, fails both the public and the industry.

I do want to toss it over to Gautam Mukunda, Bloomberg Opinion columnist, and again, lecturer at the Yale School of Management. The idea of the worst case scenario here, before we get into how they're preparing for this, lay it out for us and how you've been looking at this industry over the last few months, Gautam.

Right.

So there is some evidence that AI is making cybersecurity threats more dangerous, right? So we just saw in Korea, you had a bunch of Korean banks that got hacked and had a lot of user data revealed. AI tools seem to have been used extensively in that, primarily open source Chinese ones, but also clawed And I think the most troubling thing about this hack is it doesn't seem to have been the work of some kind of a cyber genius because we found Claude chat transcripts in which the hacker, at least this is the allegation at the moment, asked Claude to create a resume boasting about his achievements that sort of revealed all of his personal information. You know, that's probably not a James Bond villain who's doing that

kind of thing. So there's some evidence, and it's not certain, I want to be very clear on that, but there's some evidence that That it's just that these tools are making it easier for people to launch cyber attacks without the sort of long sort of training that they needed before.

And that if that is true, then the.

Threat profile gets a lot worse and you start to see, like, you know, could there be an attack on a power plant or things like that? That's what the AI companies seem to be really worried about. Not a bank going down here or there, but a real dislocating catastrophe.

And you're right. The industry is betting it can emulate Wall Street, make money with behaviors that cause a crisis, then use the influence that money buys to stymie the crackdown afterward. You really go there. So you're taking us back to the great financial crisis, right, where they made a ton of money. And then we had an incredible crisis that really almost brought down the financial system or brought it certainly to its knees and brought down the global economy.

I am.

I mean, at some level, in the most purely cynical of ways, you kind of have to admire what the American financial sector managed to pull off there, right? There was a set of behaviors that destroyed the world economy, and the way the American government punished them was by giving them enormous amounts of money in a bailout. You can– almost everything that's happened in American politics since 2008 makes a lot more sense when you remember that that was the defining economic event for an entire generation of Americans.

But that is a strategy that works for the financial sector because it is uniquely powerful. It is both– has a political influence that nothing else comes close. And it is the heart of the American economy. When the financial sector is in trouble, the U.S. government doesn't have a choice but to bail it out. You know, it is that or apocalypse, so they're going to pick the bailout no matter how unpopular that becomes.

AI is not like that. It's not anything close to that.

It doesn't have anything approaching that level of political power.

And even if it did, it doesn't have.

The centrality to the economy yet that would require that sort of response. So if there is a crisis, you've got an industry that is already incredibly unpopular and, you know, It's worth emphasizing this over and over again. Data centers are so unpopular that Americans would rather live next to a nuclear power plant than next to a data center.

So the idea that after some kind of an AI-caused crisis, the lobbying efforts of these companies would convince Congress not to go after them in some sort of draconian fashion, I don't know whether to call that arrogant or absurd, but it's definitely not going to work out that way.

Well, so what do you make then of the leaders of OpenAI and Anthropic, right? We saw it during UN week, you know, saying, let's slow things down and let's all do this together. Do you take them at face value? Are they right? Is that the answer?

Or I don't know.

So I don't have to take them at face value to say that this is something we should be concerned about, right? So there's clearly a marketing component to this. Ooh, my technology is so powerful that it might destroy the world. Please invest in me. It's a counterintuitive approach, but, you know, it seems to be working. But if you look, say, at the history of Anthropic, Anthropic was founded by people who left OpenAI because they were afraid it wasn't taking safety seriously enough. There is literally nothing in the history of these people that makes you think that they are not serious about safety, that they may be wrong. I'm not arguing that it's definitely right that these things have, as they themselves have said, a 10 percent chance of

ending the world.

I don't believe that. You don't. But I do not. Like, I don't.

One of the things I think that we see a lot with the AI people is they know a lot about AI, but maybe not that much about things that are outside of AI. So, for example, there was just in the last, I think, 24 hours, Anthropic had said that, well, our agents are not that far away from being able to propagate across to sort of less primitive systems and remain alive.

That's not new, right?

There are cyber threats that do that already all the time. A decent chunk of the, you know, your Internet of Things home products that have some Internet capability have been colonized by cyber attackers. And, you know, a lot of the failures that we saw with, for example, with OpenAI, where their systems broke out, was because they just did not pay attention to even elementary cybersecurity precautions that people who had more experience in that area would have told them to work on.

Certainly. So we've only got about 40 seconds left here. So what would you suggest? You say the AI industry, at least the title on the column, AI industry is not ready for the coming crisis. What would you suggest that they need to do? If you could say one thing, do it and do it now, what would it be?

Stop lobbying against regulation. Stop giving money to people who do not take these threats seriously and get behind a real serious regulatory effort that looks basically like what the FAA does for airlines.

Stay with us. More from Bloomberg Businessweek Daily coming up after this.

Let's get to it, though. We have a great guest with us, Natalia Emanuel. She's a research economist at the New York Federal Reserve Bank. She's got a new book out. We've all been reading it on our team in person, how working together fuels creativity, productivity, and growth. And as we said, she joins us in person here in our Bloomberg Interactive Broker Studio.

Welcome, welcome.

We have an environment where being here is a big part of the culture. You're preaching to the choir. You are preaching to the choir. Your first few pages, though, take us to Pixar because that's how you kick it off. And I want to go there because I, years ago, visited their campus and was kind of blown away. But start there.

So this is back in the 1990s where Steve Jobs happened to be the CEO of Pixar, and he was invested in making sure that there was continued creativity among his workers. And his thought was that the crucial element was arbitrary collisions, lots of people bumping into each other all the time. So his first move was get everyone in the same building, but that wasn't enough, right? He needed to make sure people got up out of their seats so that they would meet not just their person sitting next to him, but everybody else. And his incentive of choice was the bathroom. So he proposed having a single set of bathrooms all in the main atrium. So multiple times a day, you'd have to get up and wind your way across. And that's when you would really

encounter new people who would show you a different perspective.

So for people who haven't been to our office here in New York City, that bathroom is instead the pantry.

Correct.

Where it is filled with chocolate and other snacks healthy snacks too fruits as well right and that's where you run into people we.

Run into everybody from different divisions and.

Yes from different offices around the world right and there's.

Something to that that like all of a sudden you're like oh my god i haven't seen you what are you working on and.

All this cross-pollination exactly and they had a big atrium and it was just kind of amazing but this for us this is anecdotal and this is anecdotal as a research economist you don't deal in the anecdotal you deal in the actual hard data you did so it works for us Does it work for everybody?

So what we see is that in-person connection, face-to-face, is really important for boosting creativity and boosting mentorship. And that mentorship then turns into higher quality work. So yes, it does. You can see in randomized control trials, when you have two people coming up with what should their company do next, you end up with 14% more ideas and, in fact, more creative ideas when those people are brainstorming in person rather than in Zoom.

Are they good ideas that actually turn into something? I only bring that up because we all talk about, and maybe it's a newsroom and it's just nonstop, that when somebody takes a vacation or gets some quiet time or a long weekend, it's like an idea really comes that they can kind of enact upon. So I'm just curious.

I don't think you need to be in person 24-7, but there is definitely time when having space for your shower thought, that makes sense. But if you are brainstorming together, you will have more of those creative ideas.

What?

No, I think what's so notable about this is there's been this push in recent years for people to work remotely. And the I wouldn't say the excuse, but the impetus, of course, it started with the pandemic. And we can go back and look at what shares of Zoom and other companies did during that time, the acquisition of technology companies like Blue Gene Software, for example, video conferencing software that was bought early on in the pandemic and the like.

But has that been an impediment to productivity in the U.S.

People are very good at checking off their to-do list when they're working from home, right?

You have a lot more focus.

I'm really good at doing the laundry when I work from home. Yeah, yeah, yeah.

Fair enough.

But there is also a, even for the people who are good at ignoring laundry, they are good at doing their to-do list, but the real place where you see the consequences is in the quality of the work.

Uh-huh.

Studies where you can see how good is what you're doing, that goes down. And it goes down particularly for your junior workers.

Okay. I want to throw a wrench in all this. Great.

Okay.

I come into work every day. And Carol does too because we have this in-person show that we do that we cannot do remotely. One thing that I don't get to do as a result of that is bring my son to soccer practice on Monday afternoons. And he actually doesn't get to go to soccer practice because both mom and dad work.

Because she can't do it.

In Manhattan. Sometimes we can try to get a neighbor to take him, but that's like a quality of life thing that is a bummer for me. And like, I would love to be able to see him play soccer with a bunch of his friends.

The number one group that loves remote work tend to be caregivers and parents. And so I think this is an area where you could have a lot of scope for remote work, but it ends up being a question about structuring it, right? If your issue is that you want to do soccer practice, then one day a week remote, maybe that'll help you on Mondays, but that won't necessarily help with pottery on Wednesdays or whatever other activities you have.

And so sometimes it's a matter of, could you just work remotely a few hours? Could it be that you're doing some of your prep work in the afternoon from home? And so you are able to stop your job Go do pickup, dinner, soccer, whatever, and then log back on. And so there are sort of more creative structures that actually get that balance a little bit better.

So, you know, much of this book focuses on kind of the happenstance interactions. So, you know, are we saying that our best productivity gains are just luck?

There is a huge amount of value with interacting with different people. A lot of creative breakthroughs happen because you are encountering new people, new perspectives. And you can even see this. They mapped this in Silicon Valley back before everyone turned off their GPS pings on their phone. So you could see where people were. And when people from, say, Google or Apple happen to have a bar or a climbing gym between their offices, They actually interacted with each other more and you could see the knowledge flowing from one company to another in their patent data.

But the thing is, is a lot of these things now happen on their own siloed campuses. So employees of said companies are interacting with one another rather than employees from other companies. It's something lost there.

And so you can definitely have a lot of creativity that's happening with people on different teams bumping into each other. That's, Definitely possible, but one hopes that maybe when they're after work, they're going to that climbing gym and hopefully getting some of the benefit of being around a network of other people thinking about similar problems.

I remember visiting a friend at Back then it was called Facebook and she's like, that's where the dry cleaners is.

Yeah.

That's where the coffee place is. That's where the wood shop is.

Right.

And you never leave.

Like, you know, we take this bus with all our colleagues from San Francisco every day.

That's a little close for me. No, but having said that, I mean, remote work though can be really helpful. I feel like one of the things we talked about so much during COVID is that, boy, maybe we look at how people can work and do it differently and how it could help parents, you be at home so they could do things with kids or could help women who still tend to, maybe not in your life, because you guys are really good in terms of splitting, you and your wife, but it tends to fall on women a lot, and that kind of holds them back sometimes in terms of career advancement. So remote does make sense for some things.

Absolutely.

And you do see that the sort of rise of remote work does keep more women in the labor market. And so that is a huge benefit. The question is, well, for those families, if they want to be in the labor market. But the question is, can we structure that in a way that sort of allows those women to both be in person with their colleagues some of the time and in person with their kids some of the time?

So given all the research that you and Emma Harrington did, for this book, what would be the suggestions that you would have to somebody to design the perfect workplace where you maximize creativity, maximize happiness, and maximize productivity?

I would say the number one thing is make sure that when people are commuting in, they are commuting in together, that they are going to be seeing each other, that too many times you end up with a person who is going into the office simply to sit on Zoom calls, and that is a waste of their commute. And so making sure that there is a coordination so that when you are in the office, you are also in person, it sounds very basic and it has very often not happened.

Do you work from home?

I'm actually, we are mostly in the office, but I think there's something very important there of I'm actually not in person with Emma. Emma's one of my main collaborators.

We worked on this book.

We look on a lot of research together, but she's in Charlottesville, Virginia, and I'm in New York. And so even though I'm in the office, I am in some ways not in person with her.

I mean, that's what's something I feel like COVID just showed, how we can work remotely and actually do it really well. Like, that was kind of amazing to me. I'm sorry.

Is there a way to fake it in that situation?

So we have the advantage of we were, you know, a few feet away from each other for years and years and years, so we know each other very well. But even so, we still fly to each other, not infrequently, so that we can get doses of being in person together.

You know what's so interesting? So Bloomberg, and again, this is like my sample because this is where I've worked for six years at this point, but we have bureaus all over the world. So we connect with people online. you know, for this program and meetings remotely all over the world. When we meet, when I meet them in person, it is such a different interaction, even if we've known each other for years on zoom calls or, you know, doing down the line interviews.

Cause it's face to, it's just different.

It's completely different.

It's just different. There is something about, I have a daughter who recently graduated from college and is able to work from home if, if we want. And my husband and I both were like, no, you should really try and go to the office. But she even on her own is like, I want to be in the office. Like, I like it. It's just a whole different experience in terms of who you meet with, who you see, who sees you, who you talk to. She'll get better mentorship that way. And especially if she's at the beginning of her career, she'll find a lot of people who will support her and be with her throughout the rest of her career. So I think especially for young people, it is so valuable to be in person.

This is the Bloomberg Businessweek Daily Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

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