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Speaker 1: Gloobal business news twenty four hours a day. It's Bloomberg

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Speaker 1: This is a Bloomberg Business Flash and I'm Cameron Moscow.

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Speaker 1: This updates brought to you by Sector Spider e t

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Speaker 1: index futures are higher amid optimism. Interest rates will rise

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Speaker 1: at a slower pace. Oil rising for the first time

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Speaker 1: in five days in New York. Check the markets every

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Speaker 1: fifteen minutes throughout the trading day. On Bloomberg snp E

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Speaker 1: mini futures up twelve and a half points, Dowie mini

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Speaker 1: futures up a hundred seven and NAZDACI mini futures up

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Speaker 1: thirty five decks. In Germany's up one point eight percent

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Speaker 1: ten Your treasury down four thirty seconds, the yield one

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Speaker 1: point eight one percent. Nimex screwed oil of one and

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Speaker 1: a half percent, or fifty six cents at thirty eighty

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Speaker 1: four of barrel called Mexico little change at twelve thirty

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Speaker 1: seven fifty an ounce. The euro a dollar thirteen twenty nine.

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Speaker 1: That's a Bloomberg business flash. Tom Barry Karen, thanks so much.

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Speaker 1: This is a real thrill. Dean Hubbard, Glenn Hubbard of

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Speaker 1: the Columbia Business School is always pression, always a value

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Speaker 1: adding someone the right the left always listened to. And

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Speaker 1: he killed it. I mean folks killed it yesterday over

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Speaker 1: that lousy lunch at the Marriott with Cherry Dean Hubbard.

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Speaker 1: Did you like your lunch? It was pretty bad. Okay,

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Speaker 1: you had the same weiter that I had, Um Dean Hubbard.

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Speaker 1: You talked about regression rather reaction functions, and I thought

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Speaker 1: Cherry Yelling's answer was brilliant on shifting from predictable models

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Speaker 1: and reaction functions to the challenge of factors of in

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Speaker 1: the three dimensional space, factors that are unpredictable, some indogenous,

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Speaker 1: some outside the model. It was very subtle. Academics, describe

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Speaker 1: how Cherry Yelling answer your question on reaction functions. Well,

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Speaker 1: what I was trying to get at is if the

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Speaker 1: forecasts aren't changing, but policy is becoming more devish, either

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Speaker 1: policy itself is changing its reaction to different variables, or

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Speaker 1: maybe we all got confused what they were saying in

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Speaker 1: the first place I interpreted our answer is saying we

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Speaker 1: have a complicated model. You're asking about a simple model.

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Speaker 1: The problem with that answer is what's in that model?

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Speaker 1: And it appears to keep changing over time. I think

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Speaker 1: the FED is operating a little bit without a hinge.

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Speaker 1: I thought that what it reminded me of, sitting in

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Speaker 1: the cheap seats three rows behind you, was was Stephen

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Speaker 1: Ross of m i T, the original Madiglianic professor at

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Speaker 1: m I T. In just the certitude of our models,

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Speaker 1: which Professor Ross is always pushed against. I mean, how

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Speaker 1: outside the textbook our Janet Yelling and other central bankers

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Speaker 1: working right now? Well, I think they're quite outside the

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Speaker 1: realm of models. The problem is, of course they may

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Speaker 1: need to be at some point. They obviously have to

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Speaker 1: look holistically of a lot of factors. The question is

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Speaker 1: they're not really telling us what they're doing. So when

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Speaker 1: they talk about inflation and unemployment, well those are sending

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Speaker 1: one signal. Then she talked about the world economy, but frankly,

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Speaker 1: the U. S economy is weathering the global storm. So

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Speaker 1: I'm not quite sure where the crisis is that the

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Speaker 1: FED is worried about doing. That raises a fascinating question.

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Speaker 1: Last I checked, the FED had a dual mandate, not

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Speaker 1: a triple mandate. How significant significant should global unrest be

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Speaker 1: to the issues of full employment and monitoring inflation? Well,

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Speaker 1: I think global problems are important to the extent that

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Speaker 1: they're disrupting the US economy. If it were the case

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Speaker 1: that US growth were severely depressed by global growth or inflation,

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Speaker 1: that that's course an issue. But core inflation is rising,

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Speaker 1: the unemployment rate is in full employment territory, at least

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Speaker 1: by the fed's own definition, And so I'm not quite

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Speaker 1: or why policy is starting to become more dubbish. Well,

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Speaker 1: when you say inflation is rising, the most recent data

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Speaker 1: point we got year over year one point seven percent,

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Speaker 1: we're still below the FEDS two year target. Are the

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Speaker 1: risks asymmetrical? Are they? And I don't believe this, but

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Speaker 1: I'm just gonna throw the question out there. Are they

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Speaker 1: better off being too late than too early? I don't

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Speaker 1: think so. I mean it's we've learned this lesson many

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Speaker 1: times in monetary policy, that when you wait to see

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Speaker 1: the whites of the eyes of inflation, you've waited too late.

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Speaker 1: The real question, And I thought she did a very

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Speaker 1: good job in answering this is that we need better

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Speaker 1: fiscal policy, not just in the States but around the world.

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Speaker 1: Of course that's not her department. The government has refused

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Speaker 1: to act. It's just stunning. I'm so glad you bring

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Speaker 1: that up. The idea of Alan Greenspan or Arthur Burns

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Speaker 1: standing at the Economic Club of New York and turning

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Speaker 1: to you and saying ripping fiscal policy as she did

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Speaker 1: yesterday would be unthick couple. What's the new new of

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Speaker 1: how we don't do fiscal policy in America? What's different

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Speaker 1: now versus how we didn't do fiscal policy in two

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Speaker 1: thousand and eight. Well, I think fiscal policy is two issues. One,

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Speaker 1: if we were to inner a recession, we would need

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Speaker 1: to think hard about the use of fiscal policy, and

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Speaker 1: that's hard politically, that's what she's pointing out. But the

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Speaker 1: other is the long term. You know, we need to

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Speaker 1: get our long term house in order so that we

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Speaker 1: do have room to act. And again, the President and

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Speaker 1: the Congress have just not done that. When I look

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Speaker 1: Glenn at the other point where her folks, chery Yellin

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Speaker 1: speaks in very moderate, measured terms, and then the Brooklyn

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Speaker 1: clicks in when she gets upset. I believe it was

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Speaker 1: Blinder that asked the question, but I'll say, Dan Hubbard,

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Speaker 1: it was you, and she was full Brooklyn on productivity.

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Speaker 1: That was it was. It was Vice Chairman Blinder. Um

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Speaker 1: he asked about productivity and she didn't mince any words.

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Speaker 1: How confused are are we? Is it a record confusion

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Speaker 1: over productivity? Well, you know it's it's not just the FED.

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Speaker 1: I wouldn't blame her or the Federal reserves. A big

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Speaker 1: debate right now to how right now? What we do

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Speaker 1: know is productivity growth in the here and now is abysmal.

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Speaker 1: The question is will it return to a better level.

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Speaker 1: I actually think it will. I am I'm more of

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Speaker 1: an optimist, a bit like the FED forecast, but that

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Speaker 1: is clearly uncertain. What was a little unusual to me

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Speaker 1: is that she thinks that the real interest rate going

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Speaker 1: forward would be very low, but she also thinks productivity

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Speaker 1: is going to be high. I'm not sure how you

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Speaker 1: reconcile that. Do we really have abysmal productivity growth or

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Speaker 1: do we have abysmal productivity measurements? As someone who runs

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Speaker 1: a small business, I'm astonished at what I can do

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Speaker 1: with a relatively small staff was impossible. You're quite right.

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Speaker 1: We the problem with productivity is we're really good at

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Speaker 1: measuring things in the goods economy, but of course the

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Speaker 1: US is largely a services economy, and measurement is a

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Speaker 1: huge issue. And certainly every business leader I talked to

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Speaker 1: feels that he or she has plenty of room to

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Speaker 1: grow in productivity. We just I'm I'm an optimist, but

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Speaker 1: I do think it's curious to fed both as a

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Speaker 1: high productivity forecast and a low interest rate forecast. I

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Speaker 1: just don't know how to hang together ten seconds. I

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Speaker 1: want to. I just gotta, I gotta ask the question, Glen,

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Speaker 1: because of your supporting Republican um theory. Is Mr Trump

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Speaker 1: spoken to you? Have you advised him on economic theory?

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Speaker 1: He is not. It's hard for me to believe any

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Speaker 1: economists is advising him giving the crazy economic I don't

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Speaker 1: want to waste time on this, but I thought it

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Speaker 1: just as a form of note, I had to get

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Speaker 1: it out of the way. Okay, so we all agree

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Speaker 1: productivity is mismeasured, and there's a there's a beauty to

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Speaker 1: it right now for Verry Rithold's entrepreneur great, but is

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Speaker 1: it bimodal or even trimodal, or only a portion of

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Speaker 1: America is taking advantage of our new productivity. Well, that's

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Speaker 1: a question about making the gains more inclusive. I think

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Speaker 1: we need to have a much greater discussion about how

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Speaker 1: to support work in this country. I think what Chair

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Speaker 1: Yelling is really worried about is the labor force participation rate.

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Speaker 1: And that's an important problem. Just isn't one for the Fed.

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Speaker 1: It's one for better work support policy, changing the E

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Speaker 1: I T C, changing the way we reward work. We're

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Speaker 1: just not having the conversation. Let's need to this conversation.

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Speaker 1: Bill Gross publishing his April note, we'll try to get

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Speaker 1: Mr Gross on that. Of course, always he joins us

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Speaker 1: on jobs today. We appreciate that, Dean Hubbard, Bill Gross saying,

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Speaker 1: let's go. I mean, in the words of Patrick O'Brien,

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Speaker 1: there's not a moment to lose gross to central bankers

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Speaker 1: get growth humming by two thousand seventeen. How does central

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Speaker 1: bankers create growth? Well, you know, I with due respect

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Speaker 1: to Mr growth Gross, I'm not sure what they could

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Speaker 1: do more At the moment. There are wealth effects from

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Speaker 1: continuing the accommodation but they're not bubbling through the growth.

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Speaker 1: If we want faster growth, we need better fiscal policy,

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Speaker 1: and that's about tax reform. It's about rewarding work. I

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Speaker 1: agreed that should be job one, but somebody needs to

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Speaker 1: send that memo to the President in the Congress, not

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Speaker 1: the jamit. You know, given the state of the US infrastructure.

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Speaker 1: As someone who try levels frequently and occasionally abroad, every

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Speaker 1: time I'm in Europe or Asia and I return home,

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Speaker 1: I'm astonished at the amount of work that's needed here,

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Speaker 1: and I just can't wrap my head around why this

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Speaker 1: isn't happening. Have we lost the political will to do

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Speaker 1: the basic block and tackling that has to be done. Well,

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Speaker 1: I think that we do have to work on this.

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Speaker 1: We needed infrastructure strategy. Infrastructure is not stimulus. It needs

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Speaker 1: to be a long term strategy, and it needs to

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Speaker 1: involve states and local governments and the private sector as

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Speaker 1: well as the federal government. And it is a shame

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Speaker 1: that neither side is taking leadership there. Dean Hubert, thank

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Speaker 1: you so much. Congratulations on smart questions just today, really informed,

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Speaker 1: moved the debate forward with cheer, yell, and he is

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Speaker 1: the Dean of the Columbia Business School. Futures up thirteen down,

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Speaker 1: futures up one oh seven. Very markets move, and then

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Speaker 1: they've continued to move this morning. Futures continue to firm up.

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Speaker 1: We're looking at almost thirteen on the SMP over a

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Speaker 1: hundred on the DOWNMINNI and NASDAK started to move up

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Speaker 1: yesterday and it's continuing today. How do you respond to

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Speaker 1: the doom and gloom of January February. We're all gonna

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Speaker 1: die and we need to start the frame moving out

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Speaker 1: to record highs here. If we get further, you know,

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Speaker 1: you have to go back at the and look at

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Speaker 1: the historical data. You get a ten percent correction a

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Speaker 1: couple of times a year on average. A twenty percent

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Speaker 1: correction comes along just about every eighteen to twenty four months.

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Speaker 1: It's what the market does. It doesn't go straight up.

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Speaker 1: It goes up and down. I know that's a news

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Speaker 1: flash for some people break exclusive, right, That's how markets behave.

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Speaker 1: There's this gains, they get ahead of themselves and then

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Speaker 1: they mean, now the dollar me reverting this morning in

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Speaker 1: a mean way. Weaker weaker, weaker dollar UH this morning,

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Speaker 1: UH the euro one thirteen thirties six yen one twelve forty,

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Speaker 1: a much stronger Japanese yen over the last eighteen hours.

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Speaker 1: Barry Ridholt in time came bonus round two more hours.

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Speaker 1: Bloomberg surveillance