Daybreak Holiday: Stock Market Records, Fed Independence, The Future of DEI

Thanks for joining us on this special edition of Bloomberg Daybreak.
US markets are closed for the Martin Luther King Day holiday.
I'm Nathan Hager and coming up this hour on this
day honoring doctor King. Well, look at the current state
of diversity, equity and inclusion initiatives, where DEI stands in
corporate America today. Plus we'll preview the Fed's first rate
policy decision of the year with the Central Bank and
Chair J. Powell under investigation. But we begin with the markets.
Stocks are coming off three straight years of double digit gains?
Could this one be the fourth? Joining us now our
Cameron Dawson, chief investment officer at New Edgewealth, and RBC
Capital Markets, Head of US equity strategy, Lori Calvesina. It
is great to have both of you with us on
this holiday. And you know, I think a lot of
analysts were expecting that this year would get off to
a choppy start. But Cam, were you expecting this kind
of chop.
Well, it certainly has been a deluge of news, especially
coming out of Washington, which we do expect to continue
through the year. We thought that analysts were rather rosy
in thinking that Washington policy would be just a tailwind
over the course of twenty twenty six, but we do
see it as a source of volatility, and I think
that the reason for that is that we're coming into
this year with high valuations twenty two times forward. We
came into this year with also high earnings expectations fifteen
percent growth three hundred and ten dollars a share. It's
not that these things aren't achievable, but it's just that
it creates a very high bar for returns unless we
forget this is a fourth year potentially of a bull market,
which tends to have a fifty to fifty hit rate
as to whether or not it can continue. And it's
a midterm election yard which tends to carry more volatility
and lower returns than the other years in the election cycle.
So it's not to say that good things can't happen,
but it could be choppy along the way.
Lurie, we'll bring you into this conversation. Now, there had
been a lot of talk at the end of last
year about policy affecting the market, but I think maybe
we were thinking about policy and monetary policy, and then
we've got geopolitical risk and pressure on the FED as well.
How does that affect your focus right now.
Sure, So you know, I would say generally we agree
with cam right. You know, we have a thirteen percent
target on the S and P five hundred this year,
but we you know, very much said we expected a
five to ten percent draw down within the context of that.
That's a garden variety, Tier one type pulldown. But you're
dead right on the policy issue, Nathan. I mean, when
I was seeing clients in December, I was getting an
earful about stimulus past, present and future. And in the past,
you know, that was the one big beautiful bill tax
refunds coming in April, and then perhaps getting some additional
stimulus for the consumer because of midterm dynamics and kind
of the affordability issues that had had an impact on
the November results. And I don't think that anyone really
had it on their Bingo card to get hit over
the head with geopolitical risk to start the year. We
did actually flag in terms of some of the risks
headwinds that we were monitoring this year, the impulse towards
geographic diversification, and just pointed out that last year the
doors did seem to open to that where investors were
more willing to look outside the US. We're having trouble
focusing on other specific geographies, and did you know kind
of the move we saw out of the US into
Europe proved pretty fleeting, and you know, when we've sort
of looked at some of the issues that we've had
to start the year, and you know, in terms of
geopolitics fed independence, we have pointed out that that sort
of may end up raising the risk for that geographical diversification.
We'll have to wait and see, but that's you know,
kind of how it's played into our thinking so far
this year.
Yeah, it is interesting, isn't it that just these last
few days of events or a couple of weeks of
events have led to this new debate about whether the
Cell America trade is back. How are you thinking about
that right now, Cameron?
Well, certainly, by America was such a consensus trade at
the beginning of twenty twenty five, and you could see
that in dollar positioning people were max long the dollar.
And so now there's this notion of sell America and
expecting a weaker dollar in twenty twenty six. That's actually
one of the most consensus trades that we can see.
But what'sas fascinating is that dollar positioning is starting the
year already negative. It's not quite at extreme negative levels,
but just to say that consensus is already reflected in
the positioning. So as we learned in twenty twenty five
to be surprised when everybody's on the same side of
the boat, we should probably have that same notion in
twenty twenty six. And I'd say that that sell America
has also come with this notion of a global reacceleration.
People are pointing to really strong performance out of some
of the commodities, out of some of the more cyclical
sectors of the global equity market, expecting a reacceleration the challenges.
You're not quite seeing it in the data yet, but
always do remember that price does lead data.
It's an interesting dynamic when you think about the potential
for further dollar weakness that could possibly be a tailwind
for stocks. It's it's kind of been that way in
the past, Hesnant Lourie.
You know, it's interesting whenever these issues come up on
currency in particular, we always, you know, sort of use
the phrase complex dynamics for equities, and I think that's
exactly right. I mean, sometimes these issues right that can
push the dollar down, you know, seam risk off you know,
and our risk off you know, and kind of us negative.
But at the same time, what we see from an
earnings perspective is that the rate of upward revisions tends
to rise. When you see the dollar weekend year over
year and you see it, you know, the impact hits
different sectors differently, So you don't see as much of
an impact on say financials and utilities, but you do
on things say like industrials, materials, consumer staples. Even the
tech companies have a fair amount of international revenue exposure,
though they don't usually call it out quite as much.
So it's you know, it's always tricky when these issues
come up that yes, there are positives, there are there
are negatives, but there are also some positives as well.
Speaking with Lori Calvcin, ahead of US Equity Strategy at
RBC Capital Markets along with Cameron Dawson, chief investment officer
at New Edge Wealth, Cameron, given all these dynamics, how
are you thinking about sector plays right now? And the
debate around the artificial intelligence trade as well. It's been
such a dominant theme over the last couple of years
in the market. How are you thinking about that right now?
I think it's really interesting and maybe even peculiar that
some of those weaker parts of the market are the
parts that you would expect to be the strongest in
a period when we are seeing a secular change in technology.
If you look at the overall technology sector, it has
been trading heavier despite the fact that it's earning sestements
are still going up, and a lot of that weakness
is coming down into the software line of things. Meaning
if you look at the big software weights like a
Microsoft and a Palanteer, they both have been trading heavy,
and what's fascinating is that it's all multiple compression. Earning
sestments in fact are still going up. So the fact
that we are still in this technology renaissance and yet
the names that are supposed to be benefiting from it
most are not participating to the same degree in this
rally does cause us to raise a bit of an eyebrow.
But what we would say is that if you see
enough multiple compression, enough derating in these areas, they start
to look a lot more attractive. Given the resilient earnings picture.
What kind of opportunities are you looking at Lorie in
terms of the rotation trade, and whether you know, any
of these risks that we've been talking about affect the
idea of investors looking past tech into some of the
less loved sectors in the market.
So the one thing we saw in our December meetings, Nathan,
that I think has really carried over into January is
that when it comes to sectors, people's eyes absolutely light
up when I get to the page in my deck
that shows what's cheap or at least what's reasonably valued.
And if you look at that page right now, what
you're going to see is Industrials, utilities, and technology are
three of the four expensive sectors in the market right now,
and they were sort of on the first wave of
the AI trade, right the build out the foundation of
that trade. And when you look at sectors like financials,
healthcare materials, those are three of our overweights. You've got
very reasonable valuations there, not cheap you know, by on
certain metrics, but looking very very reasonable. And investors also
have really, you know, wanted to explore things like consumer
staples which look a bit cheaper, come services we just upgraded,
which has looked much cheaper on our metrics, and I
would say as we talk about some of those sectors,
you know, healthcare is probably a good example where Earning's
revisions have been strong, Revenue revisions have been strong. Again,
the valuations look good, flows look good. But often the
conversation will turn to AI and you know, clients will
bring up the idea, is this a sector that can
see benefits from AI in the coming year? And I think,
you know, that is something that is a question, you
know that people have on their minds as they're looking
maybe not to abandon the AI trade, right, but maybe
just to take it to its next iteration.
And Cameron, how are you looking at some of those
sectors outside of big tech given the economic backdrop and
the idea of something of a case shaped economic growth picture.
Yeah.
One of the key ratios that we watch is the
ratio between equal weight consumer discretionary versus consumer staples. We
see this as the equity markets determination as to whether
or not the consumer should deserve the benefit of the
doubt to the upside. And despite all of the things
that we have thrown at the consumer, what we've seen
is that ratio has continued to remain in an uptrend,
which has coincided with an uptrend in expectations for household
consumptions or upward revisions for GDP and household consumption. That's
important because when we think about the K shaped economy,
it's very much like a market weighted index, meaning that
the largest weights in the index or in the economy
are also the strongest, so they make the aggregate data
look a lot better. It's the lower weights, smaller weights
in the index that are much weaker. Same with being
in the overall consumer that is not affecting the aggregate data,
but it's also why sentiment surveys are so weak, because
the effectively equal weight every vote. So it's a fascinating
kind of complex where we're seeing this. Still consumer data
remain resilient, but consumers on the equal weight basis are
still feeling very poor about the economy.
And Laurie, you mentioned that a lot of the clients
that you've been speaking to are looking for more fairly
valued pockets of the market. Are you finding any opportunities
in MidCap to small cap stocks.
So it's a great question, and small caps are taking
up a fair amount of the conversation. I think every
strategist in the world is out there making a bullish
case on small cap right now. And I'm a former
small cap strategist, so I would say my sort of
criticism of the discussion that's going on is not that
I necessarily think people are completely wrong on their bottom line,
but maybe getting a little bit over their skis, you know,
and maybe oversimplifying what's going on. So if you look
at small cap one of the things we actually called
out in our latest weekly on valuations is that we're
trading at an eighteen and a half times next twelve
months pe Now that's not a terrible pe by any
It is a bit above average, not as much above
average as say the large cap indices or the megacap names.
But the last peak we had in this index was
laid in twenty twenty four at about nineteen point one,
So there's some room, but not a lot of room
right before we go back and test those past peaks. Similarly,
if you look at CFTC positioning on small caps in
terms of just futures exposure, it's a good gauge of
kind of positioning and sentiment that's no longer net short
the way it was, you know, several months back. So
we think things are getting a bit harder to justify
in here on small caps, and of course we've sort
of seen a series of rate cut catalysts propel this
space up. We're you know, outperforming large but those trades
fizzled out very fast, and our team at least is
not looking for any more cuts this year, so we
think that's largely behind us. So what does that leave
you with. It leaves you with the economy, and there's
a lot of cyclical excitement that's building, but consensus GDP
forecasts for four Q are still only at around two
point one percent, and that's really not even back to average.
We also generally need to see ism manufacturing right NFP
data on a monthly bet is the job's number accelerating.
We're not getting either of those things right now. I
do like the earnings dynamics and small caps. We've got
some cool things going on on the rate of upward
revisions inching to new highs. Forecastic growth rates are better.
But at the end of the day, we need this
cyclical excitement to really come through in a much bigger
way than what we're seeing in either kind of the
GDP numbers or some of those more tactical indicators right now,
so we're definitely more interested in this space. What we
do think people need to calm down a little bit
and take it a little bit more day by day.
Our thanks to Lori calvacinahead of US Equity Strategy at
RBC Capital Markets, and Cameron Dawson, chief investment officer at
New Edge Wealth. Up next, we'll look ahead to the
first FED rate decision of the year and the controversy
swirling around FED independence. It's twenty minutes past the hour.
I'm Nathan Hager, and this is Bloomberg. Welcome back to
this special edition of Bloomberg Daybreak. US markets are closed
for the Martin Luther King Holiday. I'm Nathan Hager, and
we want to turn now to the FED lost in
the recent controversy over the investigation into the Central Bank
and share J. Powell is monetary policy. We've got the
first FED rate decision of the year coming up next week.
Ahead of that, we're joined by the man who will
be in the room for the first Powell news conference
of the year. Michael McKee is with us Bloomberg's International
Economics and Policy correspondent, along with Anna Wong, Chief US
economist for Bloomberg Economics. Thanks to both of you for
being with us. Of course, we've heard from Chairman Powell
in just the last few days talking about the probe.
Here's what he had to say.
I have served at the Federal Reserve under four administrations,
Republicans and Democrats alike. In every case, I have carried
out my duties without political fear or favor, focused solely
on our mandate of price stability and maximum employment. Public
service sometimes requires standing firm in the face of threats.
I will continue to do the job the Senate confirmed
me to do with integrity and a commitment to serving
the American people.
Certainly not mincing words there, of course, doctor Wong, what
are the implications of this investigation for the decision coming
up next week?
So you know, Powell often has always been the center
in the committee, or even last year a little bit
more dovish than the center, and always been the one
who you know, pushed back against the hawkish faction that
we have seen in the last year. And now we
have seen in this video response a version of the
Pale that is a bit different from what we have seen.
He he is not as cool as a cucumber he is.
I think he has finally had enough of the intakes
from the White House, and I think he would be
less of a champion of rate cuts than otherwise, even
if you know, marginally so if the data, even if
the data suggests that they should be cut, just because
I think he's now more worried about the optics of
co opting to the administration.
It's an interesting way to frame it that we could
see a FED that may be swayed a little bit
more by the politics than the data itself. Mike, would
you go that far?
I don't know if I would go quite that far.
It's impossible to separate yourself from the headlines, of course,
but for FED officials this is a worrying situation because
of the criminal investigation. Last week, John Williams of the
New York FED was telling us that he thinks this
is a kind of order of magnitude more threat from
the administration, and he of course had praise for Powell
as a man of impeccable integrity. I do think that
in this case we're reasonably be free from suspicion. On
January twenty eighth, because the numbers are saying don't cut
With the PPI inflation that we got last week up
high and retail sales still strong, So there's a reason
why you wouldn't cut that people wouldn't say, oh, this
is political. If they were to cut, then you might
think it was there was somebody trying to bow in
their direction. But I think the market's got it priced
about right now.
It's not just John Williams who's been talking about this investigation.
We've heard it from a number of head speakers who
are going so far as to say they see this
probe from the Justice Department as coercion on them. Given that, Anna,
what is the balancing act for the Fed to show
that its policy decisions are still driven by the data
and not any other outside influences.
Well, I think it will be a tough one because,
first the inflation data that we have seen in the
last two months, well, the data has been very soft. Nonetheless,
there are a lot of controversy over those inflation figures.
In November, many people thought, well, it's just a shutdown,
it's a fluke in the CPI figures. We got a
couple of weeks ago for December it was again soft.
To the surprise of many long time inflation watchers who
you know, really crunched numbers, and we did it as
well in our team, and that surprised us as well.
So I think there are some real signal in the
data about softness in a CPI. And then we have
upcoming jobs data where we are expecting to see pretty
weak non farm payrolls as well. So I think I
think the difficulty for the FED is when you have
the two key data point CPI and also jobs coming
very soft, while all the other other data are moving
other way. So you have a pretty difficult picture there already.
But how do you convince the public that that's what
you are You know, you are really making policy based
on data. When you have soft data like that, I
think they are in a very difficult situation.
Mike, Are you seeing any evidence in the markets that
this pressure on the Fed is affecting pricing within the
market for rate cuts.
No, we really haven't seen that. We saw an immediate
reaction after the Powell video that came out last week,
and then it faded by the end of the day.
It seems to be something of a taco trade. The
old Trump always chickens out the feeling is I think
in the markets that whatever the president's threat level, he
won't follow through with it, and that this whole event
will sort of fade and there won't be any charges
or anything like that, which may be the case, but
there's a feeling that until there's evidence to the contrary
that the administration is following through, that it probably won't happen.
And so it seems like there's a sanguinity in the
markets at the moment towards towards this, even if there's
not the FED.
We're speaking with Mike McKee, international economics and Policy correspondent
for Bloomberg Radio and Television, and Anna Wong, Chief US
economist for Bloomberg Economics. Anna, what's your view on what
the seriousness of this investigation? As Mike puts it, it
could be seen in the bond market as a taco trade.
Is that how you're viewing it as well? Or how
do you view it?
I think as the days goes by, it gets more
and more confusing for the market. And Bartley to the
credit of many of the journalists covering the FED, including
a lot of great work of reporting done by Bloomberg journalists.
So in the in the Trumponomics podcast A couple of
weeks ago, Salaya Motion, our senior White House correspondent, was
talking about how this DOJ probe occurred when Besant was
out of town. Similarly, the Lisa Cook firing also what
happened or the or the charge against Lisa Cook also
happened while Scott Bessant was out of town and and
there was just uh more stories are coming out that
this DOJ probe is seems to be started at the bottom,
and then there's a lot of miscommunication. It's not it
doesn't seems coordinated. Nonetheless, the problem is that this DOJ
prope has happened, and similar to the Lisa Cook incident,
once it happened, you can't really take it back. And
the damage is done and and and make no mistake,
the damage is massive, and I see very few paths
for the administration to offer framp from this mess.
Interesting to that point, I mean, we've seen reports Mike
that Treasury Secretary Scott Bessent ostensibly when he got back
into town, told President Trump that this investigation could make
a mess of markets. Given where that potentially stands, I mean,
what does that mean when it comes to the question
a FED independence. How much of a threat is FED
independence under from an investigation like this.
Well, I think folks at the FED believe the danger
has ramped up with this because it is a potential
of putting somebody in jail as opposed to just criticizing them.
But the overall feeling is that there's nothing there. I
don't think anybody at the FED is particularly concerned that
they would go to jail, and there's not really a
feeling that there's a danger of an indictment. And if
there is an indictment, I suspect that would set the
markets off, because then you get into the real danger
of what could have happened to the chairman of the
FED in court. So we need to see some follow through.
Now.
The interesting thing that happened, and if you've been around
Washington for a long time, Nathan is we had a
statement from Janine Piro, the US attorney who sent out
the subpoenas, and normally they don't comment at all, and
in this case she was careful to say there was
no indictment, this is just a request for documents. And
so I suspect that maybe she got a call from
Scott Peasant and they may just let this lie. I
don't know if the FED is going to comply and
send in any documents, but they may just back off
and then we don't hear any more about it, and
with all a chaos around the Trump administration, it would
probably be forgotten. We'll bring it up. It'll be in
our stories about twelve paragraphs down every day there's a
FED meeting, but it won't be front and center news.
No one of that ask you whether you're going to
bring it up when you're in the room for the
news content.
That's going to be. I'm going to bet you that's
going to be very close. Unless there's a surprise in
the decision, it'll probably be the first question.
Yeah, Anna, do you think that the Trump administration backs
off this investigation? Given that we have seen so many
different pressure points on the FED almost since President Trump
returned to office.
I still think that it will be pretty hard for
them to completely say, Okay, forget it, folks, we are
withdrawing this dog inquiry. They didn't do that for the
Lisa Cook case, even though clearly it's set off something.
I think they're watching the market right now, and that
given that the market has not really reacted much to it.
It sort of emboldened the President to keep on with it.
So I think it depends on the market reaction going
in the next few days, few weeks.
So Mike, what are you going to be watching for
next Obviously we've got a FED decision next week, but
I wonder how much pressure is going to be on
the FED and the potential next chair that President Trump
still has to announce.
It's going to be tough for the next chair, depending
on especially who it is, because they're going to come
in under a cloud of suspicion, people thinking that the
President picked them only to cut interest rates. Now, of
course Anna would tell you, as would anybody who watches
the FED, that the chair just one vote out of
twelve on the nineteen member committee, So they can't come
in and automatically start cutting rates, but they could put
pressure on other parts of the FED. And the question
that goes beyond who the chairman is is how many
seats become available? Does pou leave the FED and they
get another seat and they get to the point where
they would have a majority of members of the Board
of Governors who were appoint did buy Donald Trump? And
who might if they're loyal enough do his bidding, and
that could lead to all kinds of mischief, but that's
down the road, something hopefully won't even come up as
a possibility.
Our thanks to Michael McKee, International economics and Policy correspondent
for Bloomberg News and Anna Wong, Chief US economist for
Bloomberg Economics. Up next on this Martin Luther King Day holiday,
an updated look at DEI in the United States. It's
thirty seven minutes past the hour. I'm Nathan Hager, and
this is Bloomberg. Welcome back to this special edition of
Bloomberg Daybreak. US markets are closed for the Martin Luther
King Day holiday. I'm Nathan Hager, and on this day
honoring a civil rights icon, we thought it would be
a good idea to get an update on diversity, equity
and inclusion initiatives not only under the Trump administration but
across corporate America. To do that, we're joined by Bloomberg
Equality reporter Jeff Green and Bloomberg News Senior editor for
Management and Work Heather Landy. It's great to have both
of you on with us today, and you know, it
really does seem like there's been a pretty big pendulum
swing from where we were after the killing of George
Floyd to where things stand now. So Jeff, I'll start
with you. Where would you say we are when it
comes to DEI at this moment.
Well, I think it's underestimating how much changer has been
to think of this in terms of pendulum swinging. I
mean that's typically how we look at DEI or sort
of the equality topics. However, we want to look at
workplace topics is the pendulum switching back and forth. But
in this case there's been sort of a wholesale dismantling
of a system and process in a way that's going
to be difficult to put back together. If the you know,
so called pendulum is to swing back, you're going to
have to rebuild things. So it's more dramatic, probably of
a shift than I have seen in the noisemal cadence.
I mean normally you see yet like a certain amount
of progress and then a certain amount of backsliding. There's
always a backlash. But this this went beyond a backlash.
It was it was a relative, relatively calculated attempt, you know,
for better or worse. If you support it, you think
it's great but if you're opposed to it, you're horrified.
But this is not just a pendulum. This is this
is destruction on purpose to dismantle something they saw as
a threat. And I say, day, I mean the Trump
administration and the Conservatives.
It's an interesting way to frame it. Is is that
how you would characterize it as well, Heather? And if so,
what was the infrastructure that the Trump administration is dismantling.
Yeah, I'd say it's a series of programs that that
government contractors and other private companies had at their at
their companies to promote DEI initiatives. It's actual roles in
some cases in the c suite chief diversity officers that
were like go and are really struggling to find jobs
in similar areas. So with those kinds of things sort
of weeded out any initiatives to to bring back some
of the spirit of DEI. That started really even before
the murder of George Floyd, at least five or six
years before that, we started to see a major uptick
in in large corporations that we're getting on board with
a DEI agenda before it became a political football. Uh,
you know, you're you're sort of starting from scratch. Now,
if you don't have the people and the programs in
place to build off of.
Well, I guess we could get into the debate about
those programs themselves and whether they really had any substantial
tangible impact. Jeff walk us through some of that, you know,
some of these is the we're out there. Did they
really make a significant impact or were they just sort
of paying lip service to the issue.
Well, I mean that is a kind of a difficult
question to answer. On the one hand, I mean, the
boardroom diversified quickly because it's it's not a typical employment situation.
I mean, it's not hyperbole to say that the S
and P. Five hundred boardroom that we're that we have
in place right now is the most diverse boardroom that's
ever existed. White men, for the first time are not
in the majority. Black directors are around eleven to twelve percent,
from half or less than half of that when this
all got started. So you have representation for members of
the black community in the boardroom, you know, and women
are at thirty five percent kind of stuck there, but
at thirty five percent, which was supposed to be an
important number. So in the boardroom, you've had a dramatic
shift in who's basically in theory calling the shots. But
in the workforce, the demographic change seems to have more
of a factor than DEI did and helping people, you know,
sort of below the bordroom level, the c suite has
seen some changes the I mean, we did several analyses
and it was clear that when things got started, they
companies hired a lot more black workers, and then when
they started to let people go, they let go a
lot of black workers. Net not much change in that
five year period. Despite all of the effort and all
of the focus and everything that happened, it didn't seem
to fundamentally change the workforce in a way that it
was intended to. I mean, that's sort of my take
looking at the data.
Well, what's your take, Heather. Are we seeing any evidence
that companies are trying to further some of the initiatives
that were spelled out explicitly in those DEI programs, but
you know, maybe not under the umbrella of the EI.
In some cases, yes, you see, you know, employee groups
that are being renamed to sound more inclusive, and in
some cases actually are becoming more inclusive. So networks that
were intended for black employees, for women, or now suddenly
for everyone. And and you know you're seeing words like
equality replaced with inclusion or inclusion replaced with balance. So yeah,
in some cases that's happening, but it's probably more commonplace
that you're just seeing more of a whole scale, the
wholesale rollback of those kinds of programs. And you know,
there are some really influential people weighing in on this stuff.
You know, a few months ago, Jamie Diamond at JP
Morgan Chase, who was talked a lot in twenty twenty
about in inclusion and on gender specifically, has been sort
of at the vanguard among big companies and in promoting
women in his c suite and in talking about the
issue at different conferences all around the world. You know,
he stood up at an employee meeting and said that
he realized that when it came to DEI that the
bank was spending money on things that he described as
stupid uh and and said that it really bothered him
and that he was going to cancel it. He saw
it as wasted money in the bureaucracy. So you know,
the question is how much you know, how many babies
get thrown out with the bathwater on this and and
that's where I think the sort of pro DEI movement
is is really smarting from this stuff. You know what,
what was this stuff? Uh, you know, wasteful or not effective?
You know, there's probably a few different buckets here of
things that actually were meaningful to employees, to companies, customers,
whether as a symbol of something or in some cases
tangibly important. If you look at, for instance, Walmart's commitment
on promoting a more diverse slate of people into managerial roles,
into higher paying roles, the numbers that they've provided show
that they did, in fact, over time, do that that
arguably has a much more measurable, measurable effect on closing,
for instance, income gaps in the United States. Then, say
the one hundred million dollar Walmart's Center for Racial Equity
that it quickly stood up in twenty twenty right after
George Floyd's murder. You know that that was something that
the anti DEI camp pointed to is exercise in woke
washing and something that didn't actually benefit employees. I'm sure
you could find lots of different perspectives on whether or
not that was the case. But long story short, Walmart
decided last year to no longer fund that program.
Just to jump in on Walmart as an example, I mean,
one of the key things that happened which kind of
maybe skewed how people saw DEI was Robbie Starbuck and
Walmart was I would say maybe the summit of his
you know, like Walmart and Robbie Starbuck negotiated their retreat
so to speak, in a pretty public way. And what
Robbie Starbuck did is he put out these embarrassing sort
of vignettes of the least effective things you might argue,
that companies were doing, or the ones that were harder
for them to defend. And the glare of you know,
broad public scrutiny to show what was being done under
the auspices of DEI, you know, didn't necessarily paint the fulk.
It did not didn't necessarily didn't paint paint necessarily the
full picture of what was going on in corporate America
around trying to be more fair and such. But it
showed where these programs had gone off the rails. And
you know, if you ask Robbie Starbuck, he thinks Jamie
Diamond was specifically referring to something that he showed him
that JP Morgan was doing. So that was a sort
of a thing that happened, that kind of unprecedented thing
that happened, where this social media personality became kind of
an arbiter of corporate behavior. Companies would just would seek
him out to help them extricate themselves from this, not
just you know, go silent, but they would have public proclamations,
especially once you know, Trump was elected and started to
go after contractors.
Speaking with Bloomberg, a quality reporter Jeff Green and senior
editor for Management and Work Heather Landing, Heather, I wonder
if you think the corporate sector would be rolling back
a lot of these pros, at least on a nominal basis,
if not for the pressure that we've seen from the
likes of Robbie Starbuck and the Trump administration as a whole.
Hard to prove a counterfactual, but I would argue that
the prevailing feeling among a lot of executives at least
that I spoke with over the last decade is that
even where these programs maybe weren't producing tangible results, the
overarching feeling was that they weren't at least hurting anyone. Now,
I would argue in the end they did in fact
hurt the DEI movement because the critics were able to
point to them as not being particularly helpful or showing
returns even in a DEI sense. But I don't actually
know that we would have seen a sort of a review,
an examination of what had been built up over the
last five ten years without this kind of political pressure.
Jeff, I want to bring you in. I mean, what
kind of efforts are being made in the corporate sector
now to promote more equity in the workforce.
Well, they don't say they're trying to promote more equity directly.
What they're will say is like, we're going to promote
within and we're going to do things within our existing workforce.
But as the demographics of this country have shifted, many
of the companies, the bigger companies in particular, have a
majority minority workforce. More and more companies have a majority
female workforce. So what you're starting to see is even
if a company is just saying we're going to promote
from within, we're going to do sort of the normal
block and tackling without any diversity programs that are sort
of singled out, they're getting an outcome that will look
a lot like what was the intent of diversity and
inclusion in the first place.
I'd add that I would add there that that takes
time to work its way through the system.
We did see it in the data recently, and profess
that's why I'm starting to get encouraged.
Thanks to both of you for this very important discussion.
That's Heather Landy, Senior editor for Management and Work for
Bloomberg News, along with Bloomberg Equality reporter Jeff Green. Thanks
as well to Bloomberg's Michael McKee and Anna Wong of
Bloomberg Economics, along with New Edge Wells Cameron Dawson and
Laurie Calvacino of RBC Capital. Thanks to you as well,
of course, for listening on this MLK day. I'm Nathan Hager.
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