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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is a breaking news update from Bloomberg instant reaction

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Speaker 2: and analysis from our three thousand journalists and analysts around

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Speaker 2: the world, and.

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Speaker 3: The May unemployment report hitting the Bloomberg terminal, and it

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Speaker 3: shows a big jump in the number of jobs added

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Speaker 3: to this economy. In the month of May, we added

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Speaker 3: one hundred and seventy two thousand jobs. This is blowing

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Speaker 3: away estimates of eighty eight thousand, even the whisper number

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Speaker 3: which was for ninety nine thousand, and this is compared

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Speaker 3: to the one hundred and fifteen thousand jobs we added

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Speaker 3: in the prior month. Going through this report, we've got

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Speaker 3: the unemployment rate holding steady at four point three percent

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Speaker 3: that was expected. As for average hourly earnings, not much

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Speaker 3: movement there at all, up three point four percent, right

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Speaker 3: in line with estimates and a bit lower than the

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Speaker 3: month prior when we saw that move up three point

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Speaker 3: six percent. So again wage is not keeping pace with inflation,

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Speaker 3: which is now at three point eight percent. And we

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Speaker 3: have got also want to take a look the labor

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Speaker 3: force participation rate, again in line with estimates at six

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Speaker 3: point sixty one point eight percent, so unchanged from the

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Speaker 3: prior month, but again the headline number here the economy

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Speaker 3: adding many more jobs than expected one hundred and seventy

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Speaker 3: two thousand in the month of May. The estimate was

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Speaker 3: for eighty eight thousand, the unemployment rate holding steady at

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Speaker 3: four point three percent. And that's a look at the

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Speaker 3: May jobs report, Tom and Paul.

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Speaker 4: Alexis, think so much Bloomberg surveillance on this job today

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Speaker 4: across this nation. Brought you by IBKR. For the past

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Speaker 4: three years, Interactive Brokers individual clients average twenty four point

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Speaker 4: three percent annually, beating the standard and pores five hundred

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Speaker 4: lower costs and access to one hundred and seventy plus

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Speaker 4: global markets.

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Speaker 5: It matters.

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Speaker 4: Visit ibkr dot com slash performance. So Paul, I go

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Speaker 4: to the yield space. You got to off this. It's

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Speaker 4: a jump condition five basis points five to two on

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Speaker 4: the ten year, five point zero one on a thirty

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Speaker 4: year bond. Basically, Priam Miser said, you know X number

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Speaker 4: of minutes ago, like you're one third of the way

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Speaker 4: to her tension exactly right.

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Speaker 6: And on the short end, Tom, which is kind of

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Speaker 6: reflects worth. Maybe the Fed's thinking about up six basis

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Speaker 6: points on it to your treasury four point one percent,

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Speaker 6: and futures sp all forty five times.

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Speaker 4: Claudius, I'm with us here for a few minutes of perspective, Claudia.

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Speaker 4: I get the idea that non firm payrolls are tough

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Speaker 4: to call. But I got a ninety three thousand plus

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Speaker 4: two months payroll revision. And what really pauses me is

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Speaker 4: even the under employment rate came down from eight point

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Speaker 4: two to eight point one percent. How does a chairman

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Speaker 4: respond to this when he's cutting the curtains for the

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Speaker 4: new office.

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Speaker 7: Right, Well, I mean, you know it's good news on

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Speaker 7: adding jobs. I think one for the FED, this isn't

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Speaker 7: such a worrisome print, and that wage growth was still

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Speaker 7: pretty moderate. We're still seeing slowing in wage growth, so

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Speaker 7: you know, the Fed is not anti jobs, they're anti inflation,

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Speaker 7: right like, So you know, if you're not seeing those

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Speaker 7: cost pressures push in, you know this can be. These

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Speaker 7: are still pretty modest numbers in terms of adding payrolls.

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Speaker 7: They're much better than what we saw last year. But

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Speaker 7: so I think this is this looks like solid report.

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Speaker 7: Right Unemployment stays low, Like you said, underemployment ticks down

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Speaker 7: a bit and wage growth is still slowing. So you know,

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Speaker 7: in terms of this, you know, being some inflationary pressure,

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Speaker 7: I just don't see it here.

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Speaker 4: Unfair here with you know, two minutes into this to

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Speaker 4: parse it in all. But I got a three months

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Speaker 4: moving average of non farm payrolls folks from another.

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Speaker 5: Time in place one hundred and eighty eight thousand.

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Speaker 4: Do you assume, doctor some that this will be revised

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Speaker 4: down in six months or twelve months.

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Speaker 7: No, and I don't think we should, even though we've

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Speaker 7: seen in the last few years our annual revisions have

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Speaker 7: been pretty substantial down revisions. There's you know, research coming

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Speaker 7: out of Cleveland FED that says, you know, these aren't anomalies.

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Speaker 7: We haven't broken the model in terms of these surveys

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Speaker 7: always being you know, prone towards down revision. And actually

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Speaker 7: we've gotten some indication from administrative data that we might

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Speaker 7: actually get an upward revision for last year when that

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Speaker 7: comes in the in the spring. So I think we

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Speaker 7: can take these numbers for what they are. And in particular,

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Speaker 7: if you look past three months averaging up around one

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Speaker 7: hundred thousand, we saw some upward revisions. I mean, this

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Speaker 7: really does look if nothing else really puts the exclamation

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Speaker 7: point on a stabilization in the labor market relative to

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Speaker 7: last year.

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Speaker 4: How can I do a shout out to our selective

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Speaker 4: set of guests. Yeah, and that they have been talking

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Speaker 4: for two or three weeks.

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Speaker 5: The directional tone of this report.

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Speaker 6: Yep, the labor consensus are pretty solid there. So, Claudie,

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Speaker 6: you called out wages three point four per sent kind

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Speaker 6: of annualized growth. But then I look at next Wednesday,

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Speaker 6: we're going to get a CPI print. Its sense is

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Speaker 6: theres for like four point two percent growth in CPI.

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Speaker 6: So wages are not keeping up with inflation. What's the

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Speaker 6: thought there?

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Speaker 7: So wages are not keeping up with inflation, that's going

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Speaker 7: to limit the purchasing power. I mean, what when I

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Speaker 7: talk about this not having the inflationary risk is often

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Speaker 7: if it might be concerned about kind of second round

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Speaker 7: effects workers bargaining up their wages to try and cover

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Speaker 7: those prices, and that creates another round of inflation. Like

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Speaker 7: that's you know, that's not what we're seeing in this data. So,

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Speaker 7: and what we're really concerned about is, you know, does

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Speaker 7: this inflation have legs of its own? Does it really

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Speaker 7: start to kind of feed on itself, and that's not

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Speaker 7: the sign here from this data. Of course, the flip

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Speaker 7: side of that is this is, you know, puts a hardship,

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Speaker 7: puts the screws on workers that are seeing their paychecks

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Speaker 7: be eaten up, and it limits the ability of businesses

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Speaker 7: to pass on some of these costs. So yeah, limits inflation.

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Speaker 7: But like there's kind of pain being fed into the system,

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Speaker 7: it's going to go.

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Speaker 5: Somewhere negative real way is going to be the heart

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Speaker 5: of the matter.

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Speaker 4: Claudia, we got to go, Shawn emails in, says Claudia,

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Speaker 4: Thank you so much for mentioning Granville, Ohio. Sean went

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Speaker 4: to Dennison, played lacrosse. Go Big Red, Sean, thank you

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Speaker 4: so much, Go big Red. Claudia, Thank you so much.

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Speaker 5: Claudia.

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Speaker 4: Some our definitive market economist across this nation all over

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Speaker 4: work at the FED, at Michigan, at New Century Advisors,

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Speaker 4: and as well in a studio right now with equity

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Speaker 4: perspective on this summing in the total market, working with

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Speaker 4: Lezanne Saunders.

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Speaker 5: Is Kevin Gordon here? What's the chart you put together

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Speaker 5: this morning? I want to get out front of the

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Speaker 5: Kevin Gordon tweet. What's on your mind? Well, for the

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Speaker 5: equity market.

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Speaker 1: What's been on our mind, and this was sort of

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Speaker 1: essential to the equity component of our midyear outlook that

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Speaker 1: we just published, is this divergence that you're seeing in Brett,

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Speaker 1: the fact that you know, the average stock when you

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Speaker 1: look at the percentage of companies above their two undred

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Speaker 1: day moving average, when you look at percentage of companies

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Speaker 1: outperforming the S and P five hundred on a rolling

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Speaker 1: three month basis, that's where pretty weak because you've gone through,

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Speaker 1: you know, another kind of bout of AI hype, especially

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Speaker 1: within the semiconductors. So that in and of itself is

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Speaker 1: not a horrible you know, omen for the market. We've

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Speaker 1: seen it actually resolve itself. Those divergences resolve themselves in

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Speaker 1: a positive way over the past couple of years when

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Speaker 1: they have happened.

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Speaker 5: Yeah, I like even in the past three days.

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Speaker 4: I mean, I got when I got the Dow move

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Speaker 4: it up, but I see some of the mutual funds giving.

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Speaker 5: Me better returns than Broadcom. Yes, yeah, there's something going

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Speaker 5: on out there is Yeah. And the new and I

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Speaker 5: will say, the new norm.

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Speaker 1: You know, the last time that you actually saw a

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Speaker 1: lower percentage of that metric I mentioned the percentage of

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Speaker 1: companies that are outperforming the index on a rolling three

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Speaker 1: month basis. The last time you saw a lower percentage

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Speaker 1: so sub twenty three percent was twenty three and twenty four.

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Speaker 5: Before that, you have to.

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Speaker 1: Go back to nineteen seventy three, so, of course, very

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Speaker 1: different market backdrops. Seventy three the start of a horrible

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Speaker 1: bear market, twenty three and twenty four more consistent with corrections.

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Speaker 1: So it is more of the norm these days, you know,

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Speaker 1: given the concentrated market, well.

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Speaker 4: Let's just say future is negative fifty right now, Kevin,

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Speaker 4: We're in a time here, very active equity, new issuance

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Speaker 4: in the marketplace.

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Speaker 6: We had this monster mega deal from Goldman, I mean,

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Speaker 6: from Google this week, from Alphabet. The market took it

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Speaker 6: in seemingly very well. And then of course we've got

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Speaker 6: all these IPOs centered tune up SpaceX on the road.

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Speaker 5: As we speak.

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Speaker 6: Then maybe some of these AI plays come huge transactions.

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Speaker 5: What does that tell you about this market here? How

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Speaker 5: do you guys think about it? So?

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Speaker 1: I think it does underscore of course, that the sentiment

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Speaker 1: environment is certainly getting frothier, you know, whether you think

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Speaker 1: of it as frothy or not. I think that's always

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Speaker 1: just kind of up for you know, whoever's whatever the

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Speaker 1: person's perspective is. I will say, you know, I've been

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Speaker 1: traveling the past four weeks almost NonStop all over the country,

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Speaker 1: also in Korea, but you know, in the US when

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Speaker 1: I've been speaking with our investors, there's actually been a

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Speaker 1: sort of an elevated degree of skittishness or hesitation around

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Speaker 1: just the environment of megacap IPOs in general. So the

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Speaker 1: attitudinal sentiment is not necessarily matching up with the behavioral

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Speaker 1: sentiment that we've been seeing in terms of really stretched

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Speaker 1: fun flows and how much you know has been going

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Speaker 1: into tech and how well semis have been doing. So

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Speaker 1: to me, that sort of lays the framework, i think,

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Speaker 1: or the groundwork for maybe a little bit more room

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Speaker 1: for sentiment to get stretched to the upside. Of course,

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Speaker 1: you know, well, I think the game will change a

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Speaker 1: little bit after we do get a lot of these

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Speaker 1: companies coming online into public markets. But I haven't yet

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Speaker 1: felt at least that on the attitudinal side, there's been

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Speaker 1: a lot of that hype that has matched what we've

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Speaker 1: been seeing with people, you know, what they've been doing

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Speaker 1: with their actual.

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Speaker 6: Dollars and I guess, you know, if you want to

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Speaker 6: take the bullish side here, which is probably the right

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Speaker 6: way to be, Earnings have been there, Earnings have supported

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Speaker 6: this market. Yeah, it seems like and how do you

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Speaker 6: think about that going forward?

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Speaker 1: I mean, I think you know, of course, the breadth

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Speaker 1: of earnings is actually if you just want to look

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Speaker 1: at the number of industries that are seeing their earnings grow, yes,

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Speaker 1: the breadth is there. Of course, the magnitude in terms

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Speaker 1: of concentration, it is a little bit more skewed towards

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Speaker 1: the large caps and the megacaps. Take the I do

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Speaker 1: take the optimistic side and angle of that where if

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Speaker 1: you look over the past several decades, the growth and

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Speaker 1: that earning share for that cohort has grown, So it's

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Speaker 1: not like it's been totally unjustified. But on the flip side,

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Speaker 1: you do have more reliance on a smaller share of

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Speaker 1: company so to the extent that they can't keep up

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Speaker 1: with expectations, to the extent there is a disappointing you

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Speaker 1: know quarter, a series of quarters where kepex estimates for

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Speaker 1: some reason have to come down. Earnings estimates, you know,

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Speaker 1: get revised, get revised lower. Of course, you always run

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Speaker 1: the risk. But that's why we make the case for

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Speaker 1: a diversification within the equity market, because you've been able

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Speaker 1: to you know, that's that's been the best way to

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Speaker 1: play this, especially with even a sector like healthcare.

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Speaker 5: Over the past couple of weeks.

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Speaker 4: Well, and with the new Schwab commitment to wealth advisors

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Speaker 4: and all that, a huge announcements from Schwab over the

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Speaker 4: last ten days on this.

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Speaker 5: On the road in the trenches, Paul and I it's cushion.

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Speaker 4: You know. Paul gets in the Gulf stream again and

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Speaker 4: he goes out to San Francisco, and you know, he

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Speaker 4: takes the ferry home and sits there with the beverage

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Speaker 4: of his choice.

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Speaker 5: It's kind of Budweiser.

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Speaker 4: And you know, I'm in the Bentley going up Madison

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Speaker 4: Avenue complaining about the traffic.

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Speaker 5: You're in the real world.

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Speaker 4: Yeah, How do you respond to people who raise their

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Speaker 4: hand and say, I love all your optimism, we love

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Speaker 4: liz Ane Sanders, but we're scared stiff.

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Speaker 5: How do you respond to them?

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Speaker 1: Well, frankly, you know, we don't get a lot of

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Speaker 1: clients who exhibit a lot of fear, especially if they're

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Speaker 1: working with an advisor. And taking an advised approach. I mean,

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Speaker 1: you know, I've always been a believer that is the

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Speaker 1: benefit of working with somebody taking your personal emotion out

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Speaker 1: of it. But seriously, I mean that is that is

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Speaker 1: actually the biggest split I see, especially when I talk

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Speaker 1: to people, you know, who are newer to markets, this

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Speaker 1: kind of newer retail cohort that you know, just is

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Speaker 1: getting still getting into this, still getting into investing and

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Speaker 1: learning it, not necessarily working with somebody. That's where you

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Speaker 1: see some skittishness around. You know, what do I do

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Speaker 1: with a big drop in the market. What do I

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Speaker 1: do when I see a particular stocker industry go up

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Speaker 1: by twenty or thirty percent.

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Speaker 5: You know, in a day.

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Speaker 1: So I haven't been met with as much fear, but

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Speaker 1: as my you know, to my point around some of

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Speaker 1: these larger IPOs and just the sentiment environment, that is

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Speaker 1: where there's been some I guess CanCERN over whether this

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Speaker 1: is you know, too hyped up. And I think it

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Speaker 1: comes back to I mean, my favorite quote ever about

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Speaker 1: markets is from the late great John Templeton's or John Templeton,

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Speaker 1: you know, both markets being born out of pessimism, growing

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Speaker 1: on skepticism, maturing on optimism.

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Speaker 5: Dying on euphoria.

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Speaker 1: I mean that is, I think the perfect way to

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Speaker 1: sort of the perfect overlay that you can apply to

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Speaker 1: really any cycle doesn't say anything about earnings, doesn't say

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Speaker 1: anything about valuation.

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Speaker 6: When you're on the road seeing your clients, are they

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Speaker 6: looking to embrace these markets here, or like as Tom said,

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Speaker 6: maybe a little bit skittish.

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Speaker 5: Are they looking at maybe reposition.

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Speaker 6: Maybe I should own some more bonds, Maybe I should

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Speaker 6: own some gold, Maybe I should maybe a little bit

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Speaker 6: more cash.

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Speaker 5: Yeah.

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Speaker 1: I haven't seen the willingness to embrace markets fade materially.

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Speaker 1: If anything, I think the bigger concern has been more

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Speaker 1: on the economic side, And actually the dominant question I've

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Speaker 1: been getting in the first question I've been getting at

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Speaker 1: every event is the concerns over AI.

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Speaker 5: And the labor market.

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Speaker 1: That has actually been and from from all age groups

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Speaker 1: across the whole spectrum, from gen Z you know, to

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Speaker 1: people who have been investing for decades, that has been

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Speaker 1: the dominant question that, of course nobody knows the answer to.

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Speaker 1: I tend to have a relatively optimistic view, you know,

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Speaker 1: in the end, you know, the endgame of this not

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Speaker 1: necessarily being tens of million jobs just fading, you know,

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Speaker 1: out of the economy. But that has definitively been the

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Speaker 1: main question.

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Speaker 4: I got to go seventy three to seventy five negative

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Speaker 4: forty five percent yep, on the doubt the percentage of

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Speaker 4: people in this country they have not enjoyed that, yep.

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Speaker 4: Or Bob Seeger at the time, huge amount. Kevin Gordon,

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Speaker 4: thank you so much. I really really appreciate it. We

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Speaker 4: take huge advantage of the way all of our guests

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Speaker 4: travel travel, the romance of the business. Let me tell

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Speaker 4: you Christina camp Manny is out traveling, got to get home.

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Speaker 4: Her children are well mannered somewhat, but you know she's

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Speaker 4: stuck at DFW and can't get home for a six

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Speaker 4: hour delay. I mean that's the room, the romance of

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Speaker 4: working for Invesco across this great nation. Right.

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Speaker 5: Of course, of course, the travel's brutal.

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Speaker 4: I mean it's just it's just you get one delay

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Speaker 4: in three days are ruined.

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Speaker 8: At least we've moved past our tsa expedition at the

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Speaker 8: beginning of the year with all those lines, feel like

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Speaker 8: you enjoy their now. I was very fortunate my mom

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Speaker 8: missed a flight going back. Maybe in my house. I

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Speaker 8: don't think she was too happy with me.

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Speaker 5: Thank you for joining us.

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Speaker 4: Christina Kne, senior portfolio manager at Invesco. Let me ask

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Speaker 4: a Paul Sweeney question off of this, I got a

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Speaker 4: yield shift, price down, yield up. Kevin mentioned, Sir John Templeton,

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Speaker 4: are bonds on sale today, You've.

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Speaker 8: Definitely seen a bit of a reprice across the front end,

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Speaker 8: and I think, I mean, we keep chopping in these ranges.

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Speaker 8: Right in the last month, we thought maybe four fifty

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Speaker 8: would contain tens and five percent, and we pushed to

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Speaker 8: five excuse me, five twenty and four seventy, and then

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Speaker 8: you saw very quickly money get put back to work there.

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Speaker 8: And I think once we've tested those levels, we'll probably

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Speaker 8: repush them. And it does keep changing the narrative. Right

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Speaker 8: before we thought it was somewhat balanced. If we've had

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Speaker 8: this energy shock and we have an inflation shock, but

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Speaker 8: we're still a little bit concerned about are there going

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Speaker 8: to be cracks in the labor market when we're talking

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Speaker 8: about payroll break even maybe zero to fifty K and

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Speaker 8: you have one hundred and seventy or one hundred and

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Speaker 8: eighty plus positive revisions like, it's hard to say that

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Speaker 8: there is weakness in the labor market, but right, like,

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Speaker 8: where where does it feed through?

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Speaker 4: Right?

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Speaker 8: You still have a consumer led economy, and I think we,

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Speaker 8: I mean, we're all sick of talking about this case shape,

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Speaker 8: but it's so true. Like there, I feel like there

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Speaker 8: is pain out there in kind of oh, this is

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Speaker 8: certainly the bottom half.

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Speaker 5: Do you get we get lucky here, folks? When you

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Speaker 5: have Christina Kantmany in the turret, she can respond.

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Speaker 4: Traders fully price in quarter point FED rate hike by

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Speaker 4: year end.

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Speaker 5: That changes? That changed?

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Speaker 8: Yeah, yeah, I mean again, when we had this flip

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Speaker 8: in posts the Middle East shock, we flipped from and

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Speaker 8: easing bias pricing to a hiking bias pricing, and I

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Speaker 8: think it's very hard to go back. I think the

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Speaker 8: market is grappling. Whereas other global central banks, like we

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Speaker 8: expect the ECB hikes next week, I think it's clear

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Speaker 8: that the BOJ is still going to hike. I think

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Speaker 8: the market is pricing for the FED to go. We

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Speaker 8: have priced more and we've taken out a little bit

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Speaker 8: of it, and now we're retesting that again with a

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Speaker 8: five to six seven basis point sell off in the

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Speaker 8: front end, But I don't know that where anyone has

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Speaker 8: high high conviction that the FED is certainly going because

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Speaker 8: it's just still this shift. I think even they want

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Speaker 8: they don't want to make the mistakes that they made

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Speaker 8: with the inflation shock post COVID, but they also want

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Speaker 8: to see like is it more broad based? Are you

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Speaker 8: going to see wage pressures materialized? And we haven't seen

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Speaker 8: that bit yet.

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Speaker 6: What do you think about just the opportunities globally in

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Speaker 6: your credit markets? Where do you see the value these days?

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Speaker 8: Credit or rates are both both sure, So I think

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Speaker 8: when we look at credit, credit still remains really tight,

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Speaker 8: so it's hard to get really excited.

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Speaker 4: But you look at it.

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Speaker 8: And you say varies clearly, and I think you guys

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Speaker 8: spoke about it earlier. Today there's clearly money going into

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Speaker 8: credit funds more so than rates, and I think that

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Speaker 8: there's that question out there of spreads are so tight,

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Speaker 8: but like what's your comfort with the with there's more

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Speaker 8: government fiscal issues than some of these big hyperscalers and

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Speaker 8: that people are comfortable putting money with, so I think

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Speaker 8: money will continue to go there. So within credit, we

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Speaker 8: probably have a bias for the US over Europe and

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Speaker 8: shorter higher quality paper and shorter demand paper within global

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Speaker 8: rates markets. I think there is still value in the

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Speaker 8: front end across course, even in the US right because

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Speaker 8: we're not so convinced that the FED really goes on

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Speaker 8: a massive hiking cycle, because I think the financial markets

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Speaker 8: don't tell you. But but but there are other places

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Speaker 8: that are interesting. Australia, Canada, Okay, before before we go,

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Speaker 8: I think it's.

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Speaker 4: Just so important is your market functioning functioning normally? I

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Speaker 4: got a SpaceX ip O. Fortunately I don't have to

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Speaker 4: ask you about that, you know, I mean she's in

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Speaker 4: the balls bracket, yes, Christina JP, Morgan Stanley and Christina

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Speaker 4: kampmany there, you know.

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Speaker 5: But it's a crazy time. Is your when you sit

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Speaker 5: at the desk.

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Speaker 4: Is operationally the huge international bond space that you're in

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Speaker 4: charge of?

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Speaker 5: Is it working quote unquote normally?

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Speaker 8: I think the markets themselves are functioning, there's liquidity. But

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Speaker 8: when you say, like are things and I guess it

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Speaker 8: goes to is your question about is it logical or

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Speaker 8: is it like functioning? Because to say, with all of

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Speaker 8: the macroeconomic things that have developed in the last three

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Speaker 8: months and stocks are where they are, you would It's

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Speaker 8: like a head scratcher of how are we here? It

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Speaker 8: feels like we live in two different worlds, and there's

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Speaker 8: a lot of things you can placency about, even what

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Speaker 8: goes on with this Middle East situation, but we're all

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Speaker 8: sitting here with the expectation was that this would be

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Speaker 8: resolved in three weeks, and here we are three months later,

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Speaker 8: and even from when we speak to commodity experts across

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Speaker 8: the street, feels like it's been this rolling three weeks out.

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Speaker 8: We're going to have this severe pressure point. Should all

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Speaker 8: of these things matter, Like should there be flow through

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Speaker 8: to the US consumer? They're absolutely should, but we're not

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Speaker 8: seeing it yet and that could just be the AI

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Speaker 8: CAPEC spend. It's just overwhelming it for now, but I

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Speaker 8: think it does have to show up.

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Speaker 5: Can you come back more often than just job state?

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Speaker 2: I would love to