Liz Hoffman on the jobs report, Gulf capital flight, and why prediction markets could replace investing

have to study this tortoise and implement it into our daily lives.

Oh, we have Liz Hoffman here.

We have Liz Hoff Hoffman. Let's bring her in. Liz, how are you doing?

Hey guys, I'm good. How are you?

Thank you so much for joining. Uh

a big couple days for TVP.

It's been a huge couple days. Uh but

we logged off by the weekend. I will say that.

Listen, as you noted, we just launched a podcast, so I just appreciate the good the good exit comp.

Yes. I uh Yes, we're very excited. Uh tell us about the podcast. Where can they find it? What's the what what what's the flow, the philosophy, the the the topics of conversation, the structure?

Yeah, it's a weekly interview show. Um you can find it wherever you find all your podcasts. Like everything, you know, I started calling it a podcast and I was told don't. it's a show cuz everything as you guys know is video now

um or whatever the next platform is going to be. But no, it's I mean these are conversations that you know we're having all the time as reporters where you're trying to like squeeze five minutes and shake some information out of someone. But there's a really interesting seat that they're in that they can talk about maybe a company but also just like why do big chunks of the economy work the way they do? And so we've had you know we had the partner from Andre Horowitz um David Dulovich who's like kind of running their defense tech. I've just been obsessed with like why is venture all of a sudden playing in big heavy things to blow up. So that's been really fun. Um you know tomorrow's episode we'll drop it's co of aura talking about sort of the future of wearables and and really why he's actually running towards really regulated health stuff which is like sort of counterintuitive. So it's been a lot of fun. You guys look like you were having a lot of fun. So we decided to join you.

Yeah. Or is a monster of a business. Absolutely huge.

Whoop.

Yeah. And I a lot of people were skeptical about these companies. They're like Yeah, Gadget, 100 mil revenue maybe, and now they're like a billion in revenue or something like that.

It's they're big businesses, but it's funny, you know, to me, you've been covering, you know, business for a long time, and this is about as wide open a space as I've ever seen. Like, it's clear that something is going to win the intersection of AI, hardware, and wearables, but it's not at all obvious to me what it is.

Yeah. Also, I mean, crazy to go after this while the Apple Watch already like killed Pebble and like totally dominated and became, I think, like tens of billions of dollars in revenue. Just absolutely massive product. Uh, but then there's been all these different form factors that have snuck through with different value props. It's been good. Uh, anyway, let's talk about the jobs report. The US added 178,000 jobs in March, but weak wages and falling participation signal a softening in the labor market.

How do you even process a new jobs report? We were saying earlier on the show, I believe nothing. You know, every time there's a jobs report for the last 12 months, it feels like we're hitting the gong and then, you know, the revision comes out later. You have to retract the gong hit.

It's the worst.

Yeah. Obviously with the big big asterisk that like we will see what the revisions are. This was pretty good. It's come on the heels of a couple of bad ones.

Yeah. Um, but I actually think the that the way to think about the job market right now is that we've we've sort of been programmed to expect a certain number of jobs every month. And you have to think like, well, why? And part of that is that we expect the economy to keep growing. But the input into growing economy in history has been people

and and we're not growing the people. You know, mostly because of immigration and demographic shifts lot, you know, fewer babies started getting born about 15 or 20 years ago. So we have fewer people coming in and at the same time that AI has just totally scrambled what we need those people to be doing. I actually would like to see less focus on the monthly jobs report but the market's just so addicted to it.

Yeah. So where would you focus?

Yeah.

I mean I think probably the unemployment rate if you if you're trying to stay in the in the labor market land that's probably a more helpful thing and particularly the cohorts in it right like I think you are going to see youth unemployment that like you know 18 to 25 just skyrocket mostly for AI related reasons. I think boy that class of 2026 2027 like I do not know. Um and then sort of like socioeconomic bands within that. But you know this is this is like maybe the first tech revolution in history that benefits blue collar workers over white collar workers. And so just the way we think about the economy and what we're looking for. You know JPAL in this last press conference said you know the labor market's in a balance. It's a pretty uncomfortable balance but it is a balance. And I kind of compared the US to a a lifestyle business and like a dig that will land with your

with your listeners. Like it's okay to not be growing as long as the supply and the demand of of the things kind of balance out. And that's sort of where we are. But it but it's not comfortable.

Yeah. Uh I was having this debate with Sager and Jetty about uh like is AI holding up the economy or is healthcare holding up the economy? And I feel like AI is is holding up like the market and the market caps and it's the reason that market that the markets are up or down on a given day outside of the geopolitical stuff. Uh but in healthcare that's actually where we're adding jobs. Do you have more context on uh the health of the health care market? What those jobs are? Can 18 to 24 year olds slot into the growing health care sector easily? Is that too complicated? Like what's going on there? Yeah, healthcare is messy because we're talking about a lot of different things and it's like 20% of the economy. So, it was both big and fuzzy. Yeah. Um, it tends not to be a very reassuring indicator if you're talking about the job market because it kind of tends to grow no matter what.

Okay.

Um, sort of one of those just like blobs that just keeps getting bigger in part because we're getting older and um, you know, there's certain like the massive shortage of clinicians in certain places, but also this is one of those you know, healthcare is one of those sectors of the economy where the AI the outcomes are really levered, right? like little unclear whether it's going to replace radiologists, you know, reading

reading scans or if you think about I don't know if you have any friends who are doctors, like the amount of their day they spend doing

just really drudge work like literally paperwork and checking the thing and making sure that this application is talking to that one could be a total tailwind for that industry. So that that's a big question mark for me.

Yeah. How are you are you tracking uh the Iran war from a capital flow standpoint at all? how you know I I I think a big question the uh the tech and venture community has had obviously the the war is is you know tragic first and foremost but so much of the funding coming in uh to the technology industry over the last uh 10 years has been from the region and I think a lot of people have questions around um how how durable that will be given how much instability there is in the region. Yeah, I think if you're thinking about the Gulf as a big pot of money, which it has been for a lot of the startup scene and and a lot of like global investment markets for the last 10 or 15 years, I think that was already starting to change anyway. Um, you know, I remember 10 years ago covering the SoftBank Vision Fund and Uber and like there was a sense that the Gulf was frankly dumb money that they were sort of the world's ATMs and they were kind of looking for financial returns, kind of looking to to to get their name out there and ultimately kind of did neither. and they've massively pulled back into okay like yes they are still willing to write checks for the Gulf. You saw they're a big funer of the EA buyout but they really want to see that money come back like literally on the ground in Saudi Arabia in in the Emirates and so the calculus of of doing business in the Gulf I think had already been changing. You know, I was there in December and I was talking to an executive at Mubata who said, you know, very proudly, he was like, you know, when asset managers, when Wall Street guys used to come here 20 years ago, they would end the meeting and say, and this is how much we want from you, and now they say like, where can we partner? What what can we do? How can we help you grow an export economy? So, I think I think that was already starting to shift anyway. And I think look, this really does remind people that these really modernizing economies in the Gulf, they are a nice house in a rough neighborhood.

Sure. Did uh have you how much have you dug into like like the dumb money and how it played out because like one of the big rounds that I think Saudi Arabia did was like Uber and Uber has done very well and yes there's like the Wii works and there's a there's like a you know a smattering of of uh failures but if you were just broadly investing in America or tech over the last decade or two I feel like you should have done well even if you were like just picking randomly. Um, so did they do particularly worse than just random or do they actually feel that way?

It's a good question. They they were so big in the in the biggest pot of this, which was the Soft Bank Vision Fund, which obviously did not go great. That they're sort of one hand tie behind their back on the investment side.

But the answer is that if it was really working for them, they would be doing more of it. And in fact, they're not right. Like the the public investment fund, the PIF, um, has been tilting its portfolio back towards sort of domestic stuff. And by the way, like

they need money, but what they really need, they have a lot of oil, and we'll talk about if you want about where oil goes on all this, but what they really need is is a domestic economy and the knowhow to build that. So like actually a great example is Lucid, right? I think they control Lucid and it is not accident Lucid is building a factory in Saudi Arabia, not because that's like the logical place to to manufacture cars, but because Saudi Arabia wants it.

Yeah. And that uh feels like a really big give for a motor company that will probably deliver most of those cars to America or Europe or somewhere far away and so you have to pay the transit. But for data centers in particular uh you know inference takes time. I don't really care if my tokens come from across the world. I know that uh a number of companies have already been using data centers in different time zones because the American data centers are really busy during the day. And so during the day if you can go and generate an image in Malaysia and then have it sent back it's fine. So maybe that becomes more of the give. But again big questions about like is just having a bunch of data centers in the desert like the backbone of a new economy or is it just like one step towards

I mean it does it does nothing for employment which like we're starting to learn here. But also I I had a story the other day that the cost to insure an insurance policy on a single asset in the Gulf right now. You could literally you can buy war and terrorism insurance. It's gone up 1,900% in the last 6 weeks. So if you can't insure it, you can't build it. So, you know, to see that shake out.

That's Yeah, that's really brutal. Uh what what are you tracking on prediction markets? Is have this been useful in in the uh actually understanding what's going on in the rest of the economy? Are you are you a fan of them as a data source? Like do they help you in your day-to-day?

I think as a journalist, you're always looking for more inputs and you know, aggregated intelligence is always a good one. As a social force, I don't love it. Like I think the long tale of nonsense is

sort of sucking up attention and frankly and capital that could go to be doing more useful things.

One thing that I am interested there is that I think it's going to replace huge portions of investing. Like if I'm an investor and I think that Coca-Cola is going to beat its earnings next week, it's going to do better than the market thinks. Right now, my options are like, "All right, I can go buy a call on Coca-Cola." Yeah.

Short Pepsi. Yeah.

And hope that there's not like a weird weather thing at the bottling plant in in Atlanta or whatever. Right. There's a lot of weird risk there. And actually, if you can just hit yes on that contract, it feel seems to me that a lot of investing is going to move that way.

Interesting.

And I think that's why, you know, New York Stock Exchange put $2 billion in a poly market. I think they think so, too.

Yeah. Yeah. There there is uh as as like democratized as like option trading has become like it is still complicated to understand like exactly how like how you should even express something as simple as like I think the war will end quickly or I think Coca-Cola will beat earnings. Um there there's a lot of different uh ways to actually build that option strategy. People obviously sometimes really enjoy that aspect of the intellectual pursuit of making the right trade, but it can be uh it can be hairy sometimes,

but I'm sure someone like made and lost money on the desert on the tortoise that you guys were talking about on the way in, right? Maybe.

But um but actually a human went outside. I think it was like the governor of the island, wherever it is, went outside and said, "The tortoise is just sleeping

on the tortoise." Wait, so

I think it's fascinating that suddenly pe everyone, you know, the these mention mentioned markets seem to be some of some of the like the biggest distractions. It's hard to make the case for why the information is important or necessary. And I think if people want to trade it, that's fine. But I think it's generally, you know, we saw something yesterday. Trump had a had a pretty odd post saying, you know, praise, I think he said, praise be a law.

Uh, and it seemed very out of place and so people assumed like, hey, maybe maybe that uh is because it had, you know, somebody either in the ad, you know, who who knows how that could have happened, the draft or something,

but yeah, some somebody out there uh thought may maybe benefited from that. And the and the and the problem is like it just creates this big question with like everything that people say in the world in certain uh in in certain settings. So

yeah, I don't love it.

Well, I'm sure you'll be

Well, please say Bitcoin. Please say Bitcoin right now before you leave.

I'm sure you have plenty of time to unpack.

I'm just joking. Uh so Compound Interest is the show uh launched yet or it is about to launch?

Yeah. Uh we're in week six. Oh, amazing.

Congratulations.

Well, thank you so much for taking the time to come chat with us and congrats on the new show. We'll talk to you soon.

Thank you.

Yeah, great. Cheers.

Bye.

Up next, we have Brad Taylor from