US Adds 130,000 Jobs and Unemployment Falls After Tepid 2025

22:07They're going to go into things like generators and HVAC equipment and cabling and all the things that make these centers real. Aaron, we only have about 30 seconds left, but a lot to hit just in the last bit of time that we have with you. All the challenges of doing this in the United States, doing this domestically, finding labor for this, the biggest challenge for you as you're running this business right now? Absolutely. The biggest challenge for us is, you know, the continuing shortage of labor. There's no question that, you know, in terms of the number of people that are going into manufacturing from a career standpoint, that continues to be a real challenge.

22:39And of course, now with trade policy being what it is, you know, there's a lot of things that are coming back on shore, which is great, but it just puts a lot more, that much more pressure on the labor force.

22:49Carol Massar:It's a shame you're not optimistic, Aaron. I try not to be. I try to be conservative. Listen, we so appreciate it all the time you always give us. Be well. Aaron Junkfeld, he's chairman, presidency of Generac. Stay with us. More from Bloomberg Business Week Daily coming up after this.

23:11Hello, hello. I'm Malcolm Gladwell, host of the podcast Smart talks with IBM. I recently sat down with IBM's chairman and CEO, Arvind Krishna, and I asked him, how can companies use AI to its fullest potential to create smarter business?

23:27Carol Massar:My one advice to them, pick areas you can scale. Don't pick the shiny little toys on the side. For example, if anybody has more than 10 % of what they had for customer service, 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30 % more productive today with the goal of being 70 % more productive. Yeah, wow. So we are not asking our clients to be the first experiment on it. We say, you can leverage what we did. We're happy to bring out all our learnings, including what needs to change in the process, because the biggest change is not technology.

24:13It's getting people to accept that there's a different way to do things. To listen to the full conversation, visit ibm.com slash smarttalks.

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25:40Carol Massar:Being a small business owner isn't just a career. It's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now, and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools. Looking for tips and advice? Their online resources are always available to give you the solutions you need to help your business thrive.

26:18Carol Massar:See how your business can get stronger and go farther with Chase for Business. Learn more at Chase.com slash business. Chase for Business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Let's get to the most read story on the Bloomberg in the past eight hours.

26:58Carol Massar:It is an exclusive by Bloomberg's Josh Wingrove. It's about how President Donald Trump is privately musing about exiting the North American trade pact. This is according to people familiar with the matter, injecting further uncertainty about the deal's future into pivotal negotiations involving the U.S., Canada, and Mexico. We don't need to tell you this is a key trade relationship. We're talking about the USMCA trade pact. Remember, the president was the one who actually signed it into law. We continue to look at this hour around the globe, the challenging alliances that's something investors are watching closely, of course.

27:31And for that, we bring in Jordan Fabian. He's in our Bloomberg, Washington, D.C. News Bureau. Jordan, what's going on and what is the president considering when it comes to this agreement that he renegotiated during his first term? Yes, really good point you raised, Tim. His anger over the previous NAFTA agreement is what produced this USMCA agreement during its first term. And now he's saying it's not good enough. And so there's a few actions he could take. The first most drastic action, which he has asked aides about, according to our sources, is withdrawing the U.S. from that agreement. That would be done with six months notice and would, of course, send shockwaves through the global economy.

28:12It would really cause a lot of uncertainty for North American trade. Short of that, there's a July 1st deadline where the parties need to decide whether to renew this agreement for another 16 years. And if they don't, they would essentially enter into these annual reviews and negotiations on the terms of that agreement. So not necessarily going away immediately if they don't renew it, but it would certainly cause more uncertainty to hang over the pact.

28:42Carol Massar:So, Jordan, you know, so it sounds like a little bit of a clock kind of ticking here. So maybe that's why this is happening. Or I kind of was making some notes. Is this a distraction, a serious consideration? Is the White House looking to provide, you know, kind of create some kind of distraction here? What's really the goal? What does the White House want here? President Trump has always been about leverage, and right now he's been angry at Canada. He's angry at Canadian Prime Minister Mark Carney for a variety of reasons. Most recently, that speech he gave at Davos where he took aim at global superpowers without naming the United States, It's certainly implying it was one who used economic coercion to gain power over mid-sized power.

29:28So the president didn't take kindly to that, and he's retaliating. He's made a series of threats over the past few weeks, saying that he would raise tariffs on Canadian goods if they did a trade deal with China, threatening to not refuse to open the new bridge connecting Ontario and Michigan unless the U.S. gets some sort of concession, among others. And so you can see this as him perhaps amassing leverage in order to gain more trade extractions or concessions or concessions on other issues like migration or defense from the Canadians in this ongoing renegotiation of USMCA. Look, we've got to point out that these are the U.S.'s two largest trading partners.

30:11They're top buyers of American goods. Because of the trade negotiations, a lot of the goods that go between these countries are actually exempted from the, you know, quote unquote, Liberation Day tariffs that were announced. And you've got to wonder what this means for companies that are trying to navigate this right now. If you're running one of these companies or you handle supply chains for, let's say, an automaker and you wake up to news like this Bloomberg exclusive, what do you do in order to adjust to make sure that you can pull this off? Well, Tim, I would imagine there's a lot of behind-the-scenes lobbying going on, especially in the wake of this report, because it's hugely consequential for these businesses.

30:54In the immediate term, if the deal goes away in the next year or so, they would remove all those exemptions that you just mentioned. And so Canadian goods and Mexican goods are all of a sudden facing much higher tariffs than they do now. And then over the long term, you could see Canada, Mexico perhaps integrating their economies more closely or looking to other powers like China to form trade packs with. And you've already seen that happening with Canada cutting this limited trade deal with China that involved electric vehicles. They're trying to form closer trade ties with the European Union.

31:31So you would have this breaking apart, perhaps, of this North American integration over the last three decades where companies have really tied their supply chains together across the continent. You could see that begin to unravel if this trade deal falls apart.

31:47Carol Massar:Well, that's what I think about, Jordan, right? Right. It's about trade and an important trade relationship, no doubt about that. But it's also about backing one another on other global issues. So you do wonder, you know, as the U.S. keeps jockeying and changing kind of its rules and relationships, the world is moving on. Right. And so if you have Canada doing deals with perhaps China or Europe, you see Europe doing deals with Latin America. And Trump has heralded the end of the international order, saying that basically he wants to have a more protectionist economy. A lot of other powers might not agree.

32:24And so you see perhaps other free trading blocks being set up while the U.S. builds a tariff wall around its own economy. And I think it'll take years for the economic consequences of that to bear out. But it certainly would herald a huge change. Jordan, in the past, the president has, look, I think, you know, quote unquote, Liberation Day was a great example of this. The initial news about something doesn't end up being what ultimately happens. And in the meantime, there is sort of a scramble. He's been referred to as tacoing on certain things. You can't predict the future here, but is there any chance this is an opening salvo?

33:06There's a major chance, Tim. And our story is caveated to say that he hasn't telegraphed flatly that he's going to pull the U.S. out. But the mere threat of it is a big deal. And it certainly could be a negotiating tactic. During the first Trump administration, he used the threat of withdrawing the U.S. from NAFTA to get the U.S., or excuse me, the Canada and Mexico to sit down and negotiate what eventually became USMCA. And so perhaps he's turning to this tactic again to try and force more concessions from Mexico and Canada. The problem is that Trump is an unpredictable leader. And so it's tough for these counterparts to really figure out where his head is at.

33:46Claudia Scheinbaum, the Mexican president, I should add, said today she doesn't think Trump will withdraw. But we'll have to see how that works out.

33:52Carol Massar:I think, Jordan, it's because USMCA is an acronym that just doesn't work. And they just need to figure something else out new. So just going to say, NAFTA worked. This one? What would you say? I mean, it's been around now for this is the third president. Asklanga? Like, what do you say? No, I mean, this is what it's called. Crazy stuff. Anyway, great reporting and great analysis by our Jordan Fabian. He's, of course, Bloomberg News White House editor. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

34:26Hello, hello. Hello, I'm Malcolm Gladwell, host of the podcast Smart Talks with IBM. I recently sat down with IBM's chairman and CEO, Arvind Krishna. And I asked him, how can companies use AI to its fullest potential to create smarter business?

34:42Carol Massar:My one advice to them, pick areas you can scale. Don't pick the shiny little toys on the side. For example? If anybody has more than 10 % of what they had for customer service 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30 % more productive today with the goal of being 70 % more productive. Yeah. Wow. So we are not asking our clients to be the first experiment on it. We say you can leverage what we did. We're happy to bring out all our learnings, including what needs to change in the process, because the biggest change is not technology.

35:28It's getting people to accept that there's a different way to do things. To listen to the full conversation, visit ibm.com slash smart talks.

35:43Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth. On Public, you can build a portfolio of stocks, options, bonds, crypto, without all the bugs or the confetti. Retirement accounts? Yep. High-yield cash? Yes, again. They even have direct indexing. Public has modern design, powerful tools, and customer support that actually helps.

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36:42Carol Massar:Being a small business owner isn't just a career. It's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools. Looking for tips and advice? Their online resources are always available to give you the solutions you need to help your business thrive.

37:20Carol Massar:See how your business can get stronger and go farther with Chase for Business. Learn more at chase.com slash business. Chase for Business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Real estate services stocks. Yeah. Sank today.

37:59Investors assessing the company's vulnerability to the newest crop of AI, apps and tools that threaten to disrupt leaders. CBRE plunged as much as 15%. Jones Lang LaSalle, JLL, 13 % to the downside. Cushman and Wakefield down 15%.

38:12Carol Massar:Welcome to the AI scare trade. Let's see what our next guest has to say about it. I'm curious if she's hearing this from clients as she travels around the country. Lauren Sanfilippo, a senior investment strategist for Maryland Bank of America Private Bank. She joins us right here in our Bloomberg Interactive Broker Studio. Welcome back. Good to have you. This AI scare trade. Are people bringing this up? Or how do you, like, I'm just curious what the communications you guys are having around this, if at all. Yeah, well, you don't know who's next, right? We don't know who's next. But the idea around sort of the client's thinking coming into the year, right?

38:46This is a very concentration type risk thing that they were talking to us about. No one was anticipating these sort of scare sector to sector. But now it's more like, where's my exposure? But what tomorrow will bring? Who knows on this AI scare trade, right? Yeah, I mean, Anurag on our Bloomberg Intelligence team, he argues that it's overdone, that the market leaders now will come out of this even stronger. I guess the big question that a lot of people have is what this looks like on the other side and the way that we should be thinking about this technology, not just from a microeconomics perspective and the effect on individual companies, But what's the effect on the actual economy, on productivity?

39:24How are you looking at that? Right. And I think, too, the other thing, like when we first saw the software meltdown, as an example, you didn't know what the inflection point would be on the other side. Like, when would this stop? When would the flush stop? So that's a little bit scary. But from the productivity angle, we've always liked what AI could probably complement a workforce. That was sort of like the near-term impact, at least, right? Productivity, that's the long-term story. We're not really sure yet on what AI will bring. the hyperscalers that raised or reaffirmed their commitments. So we're going with that, right?

39:54Carol Massar:Well, what does that mean though, Lauren? Like if you've got investors who say this AI trade, everybody says they're spending, we see the spend that's happening, but then we also see companies getting hit. Like what do you guys advise for investors who want to take advantage of the opportunity? I feel like last year we talked a lot about the energy story, but I'm just curious how you guys are advising clients on that front. Yeah. Energy and utilities, that story hasn't run its course, right? I mean, there's still a dearth of energy out there to power this AI data center build out, right? It just got surprisingly physical, even though we were advising around, you know, utilities and industrials and how you actually build out that AI build out.

40:33There was still sort of scarce materials and, you know, there's more to go with that trade. There's no reason to give up hope on that, right? Most clients are at least market weight, if not overweight tech generally. So we're more neutral in that sector right now, but I think for all the right reasons. What about portfolio positioning in this environment and the rotations that we're seeing? A couple of weeks ago, it was small caps. Now there's been concern about some of the laggards, especially among mega cap tech. What's the rotation that you're advising right now? This has been significant. I mean, really since what, the beginning of November, right?

41:05So it didn't start at the turn of the year, but we have liked emerging markets as an example for some time. And it would have been an opportunity cost to not be involved in emerging markets last year. So it's more regional than it is in terms of sectors. Oh, well, we do like the cyclical trade here in the U.S., right? We still think U.S. equity is generally best in class. So we have liked a lot of the industrials, for example, utilities. Look, in the U.S. market, you've been right for the past 15 years or so. But if you look at broader history, it does tend to be more global. Does the more global trade come back?

41:40And sometimes those cycles last longer, right, than one year. So, yeah, we're not giving up on EM. And actually, that market performance developed a little bit less positive on. But I like a lot of those structural stories. I mean, there is a lot to like. Defense, as an example, of course, NATO bringing up their targets. There's a lot going on. I would follow those cyclical, excuse me, the structural stories abroad. I want to go back to emerging markets because if you look at the MSCI Emerging Markets Index, it's up almost 12 % year to date.

42:11Carol Massar:So definitely some outperformance. S &P is just up about 1.5 % year to date. And then I looked at the MSCI World Index up a little bit more than 3%. Emerging markets can be volatile. We know that's like, right, the basics when it comes to emerging, you know, investing. Is it a longer term trend? Like how much longer, or if you advise somebody, a client, to put some more exposure. I mean, it was up 30 % last year. So I'm just curious, like how much or how long a trade might this be? So that's a good question. Last year, it was a large part of that story was the dollar, right? The beginning dollar added like seven and a half percent on a trade weighted basis.

42:53It was down last year. A lot of that was the first half of the year.

42:56Carol Massar:The weakness in the US currency. That's correct. So we still see the US dollar weakening into year end. But I think the more important part is fundamentally, have you seen the EM earnings chart? It's like best in class. I mean, really, that EM chart is impressive. So we like that fundamental story. So increasingly, the fundamentals are there. Yeah, actually. And that's backing up the performance of last year. And global growth is re-accelerating. Trade is re-accelerating, right? And so there's actually a really great setup. And then to your point, boom, bust, that happens with EM, right? Particularly the commodity producers.

43:28So you can expect to see that in Latin America, as an example. How do you, I mean, some of the volatility that we've seen, I think has been surprising to people early on in this year. But as somebody who deals with the folks over in the private banking side of things, how are they not necessarily asking you questions, but people on your team questions? Like when the phone rings, what are they asking? What do they want to know? Yeah, I do not want to pick up depending on the day. Well, I would say first, I mean, other than last week, right before just year to date before last week, the VIX really hadn't spiked above 20.

44:08I mean, so you had to put it in perspective first on just that one point on volatility, because it seemed like sub-themes were getting hit. It was just software for a moment. And then it was Bitcoin. Yeah. And so it seemed more orderly at first, I would say. And it wasn't really until last week did things to that calculus change.

44:28Carol Massar:Real quickly, 20 seconds, Bill Ackman, And 10 % of his portfolio now, Meta. Do you guys still like the big cap tech names, the hyperscalers, the Mag7? We still like hyperscales. Yeah, like I said, we are equal weight, but that's just because of their growing weight in the index, right? But I mean, best in class for sure. Lauren, always good to see you. Thanks for coming by the studio. Lauren Sanfilippo, Senior Investment Strategist for Merrill and Bank of America Private Bank joining us here in the Bloomberg Interactive Brokers Studio. This is the Bloomberg Business Week Daily Podcast. available on Apple, Spotify, and anywhere else you get your podcasts.

45:05Carol Massar: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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