WEBVTT - New China Tariffs Would Quickly Hurt Economy: Hufbauer 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg P and L 0:00:20.840 --> 0:00:33.720 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Nafter 0:00:33.840 --> 0:00:39.720 renegotiations with Mexico and Canada, how are those two countries 0:00:39.800 --> 0:00:42.080 dealing with demands from the United States. Here to tell 0:00:42.159 --> 0:00:46.479 us more is Gary Clyde Huffbauer, non Resident Senior Fellow 0:00:46.520 --> 0:00:51.200 for the Peterson Institute for International Economics. Joining us from Washington. 0:00:51.800 --> 0:00:55.920 Gary Huffbauer, What exactly are the sticking points between the 0:00:56.000 --> 0:01:02.080 United States and Canada UH? There are three. First of all, 0:01:02.080 --> 0:01:08.640 the United States President Trump wants Canada to dramatically increase 0:01:08.800 --> 0:01:12.440 access for the US dairy farmers, and Canada has a 0:01:12.560 --> 0:01:18.360 rather protected so called supply management system. Secondly, President Trump 0:01:19.120 --> 0:01:23.200 wants to get rid of UH, an arbitration system for 0:01:23.560 --> 0:01:29.120 handling or for reviewing anti dumping and countervating duty cases, 0:01:29.160 --> 0:01:33.240 and that UH. Canadians have described that as a red 0:01:33.319 --> 0:01:40.240 line and Thirdly, Uh, the agreement with Mexico provides for 0:01:40.360 --> 0:01:46.640 a review in six years and possible termination in sixteen years, 0:01:47.160 --> 0:01:52.360 and the Canadians strongly prefer an indefinite life of the 0:01:52.440 --> 0:01:56.640 new agreement. So those are the three big sticking points. Dairy, 0:01:57.480 --> 0:02:02.360 as a senior fellow at the Peterson Institute, you often 0:02:02.840 --> 0:02:05.440 Peterson Institute is is often thought of as putting forward 0:02:05.520 --> 0:02:09.320 a pro trade, pro free trade type of agenda, and 0:02:09.320 --> 0:02:13.400 I'm curious on your perspective coming from that, given your 0:02:13.400 --> 0:02:16.160 experience as a Deputy Assistant Secretary for International Trade and 0:02:16.160 --> 0:02:19.520 Investment Policy at the U s. Trejury in the nineteen seventies. Uh, 0:02:19.760 --> 0:02:23.079 I'm just wondering, is there a corollary to the time 0:02:23.120 --> 0:02:25.520 that we're living in in terms of the anti free 0:02:25.520 --> 0:02:31.440 trade sentiment in your in your experience. Oh, oh yes, 0:02:31.600 --> 0:02:34.840 this is a very strong anti free trade mood after 0:02:34.919 --> 0:02:40.480 about sixty years of progressive pre er trade by both 0:02:40.520 --> 0:02:43.639 by the United States and other countries. But this particular 0:02:43.680 --> 0:02:47.040 agreement is reading a backward step and a big backward 0:02:47.080 --> 0:02:52.760 step in terms of of preer trade in three important 0:02:52.800 --> 0:02:58.320 sectors autos. Firstly, um textiles to some extent, and then 0:02:58.400 --> 0:03:02.120 steal and Alma because a side agreement here will put 0:03:02.240 --> 0:03:06.440 quotas on imports of steel and aluminum from Mexico and 0:03:06.520 --> 0:03:10.000 possibly from Canada as well. So those are those are 0:03:10.040 --> 0:03:14.840 steps backwards. Guard do you believe the technology and innovation 0:03:15.160 --> 0:03:18.320 will and I I guess it is a pun trump 0:03:18.960 --> 0:03:22.200 the the the the sort of conflict that you just 0:03:22.280 --> 0:03:25.600 described having to do with free trade. That the fact 0:03:25.600 --> 0:03:28.240 that you can move money as well as material all 0:03:28.280 --> 0:03:30.840 around the world with a click of a button, is 0:03:30.880 --> 0:03:33.560 that going to make it much more difficult to kind 0:03:33.560 --> 0:03:39.120 of enforce trade restrictions. It does, It does, And you 0:03:39.840 --> 0:03:43.320 can also add the digital revolution note we're in, which 0:03:44.160 --> 0:03:48.480 is really a big pathway to freer trade. But the 0:03:48.520 --> 0:03:52.240 comp administration just to its best to plug, you know, 0:03:52.360 --> 0:03:56.280 loopholes that might be created by technology. And in the 0:03:56.280 --> 0:04:00.200 auto industry they've they've really put all out to well 0:04:00.920 --> 0:04:02.720 to restrict and we haven't seen the end of it, 0:04:02.760 --> 0:04:06.440 because after this agreement is reached, they will try to 0:04:06.480 --> 0:04:12.880 reach agreements with Europe and Japan restricting US auto imports 0:04:12.920 --> 0:04:16.720 from those two areas as well. So you know, you're right, 0:04:16.839 --> 0:04:22.040 technology is liberalizing and then the uh, the administration is 0:04:22.120 --> 0:04:24.520 trying to catch up with some more thumbs in the 0:04:24.720 --> 0:04:27.279 in the dyke, Gary, do you think that this wave 0:04:27.320 --> 0:04:30.960 of protection ism, an anti free trade sentiment stems from 0:04:31.000 --> 0:04:35.400 a failure in free trade to accomplish certain things that 0:04:35.440 --> 0:04:39.680 people were hoping for. Uh, well that's what they say, 0:04:39.720 --> 0:04:43.159 but that's not in fact what's happening. What's happening, going 0:04:43.240 --> 0:04:47.120 back to the technology point, is that technology is is 0:04:47.160 --> 0:04:50.800 replacing labor and a lot of different sectors, a lot 0:04:50.800 --> 0:04:54.320 of different labor activities, not only blue collar, but but 0:04:54.480 --> 0:04:58.440 white collar as well. And uh, that's having an effect 0:04:58.520 --> 0:05:02.680 on average weight grow. Politicians need something to blame that on. 0:05:03.279 --> 0:05:08.280 So hey, blame it on the foreigner. That's the simple politics. Um, 0:05:08.320 --> 0:05:12.960 so it's not free trade, its technology, which is with 0:05:13.160 --> 0:05:17.000 its uh you know, rough spots, which is causing having 0:05:17.080 --> 0:05:20.240 most of his angst speak if you can about the 0:05:20.320 --> 0:05:23.560 US Mexico agreement as you know it, what are some 0:05:23.640 --> 0:05:25.920 of the good and what are some of the bad points. 0:05:27.960 --> 0:05:32.239 The good points are lifted from the Transpacific Partnership Agreement, which, 0:05:33.160 --> 0:05:36.640 as you know, President Trump rejected right on his first 0:05:36.680 --> 0:05:41.440 day in office. So digital trade. Actually, they are very 0:05:41.480 --> 0:05:45.280 pro liberalization and digital trade, and that's important to the 0:05:45.360 --> 0:05:52.080 United States, which is a digital superpower. Intellectual property protections, uh, 0:05:52.120 --> 0:05:54.920 and there are some good features there searting from the 0:05:55.000 --> 0:06:00.440 standpoint of US companies. Biologic data gets protected for ten years, uh, 0:06:00.480 --> 0:06:04.520 copyrights for life of creative plus seventy five years, and 0:06:04.560 --> 0:06:07.960 a lot of strong stuff on enforcement. There will be 0:06:08.360 --> 0:06:12.440 a chapter on state on enterprises. That's that's a modest 0:06:12.480 --> 0:06:16.400 issue with Mexico. Obviously it's a big issue with China. 0:06:16.520 --> 0:06:18.960 And this chapter meant to be a template. There will 0:06:19.000 --> 0:06:23.480 be something on currency again, more a template for China 0:06:23.560 --> 0:06:27.520 talks going forward in for Mexico today. So those are 0:06:27.520 --> 0:06:30.360 all you know, those are all good things and uh, 0:06:30.600 --> 0:06:34.520 the administration needs to be congratulated who are modernizing in 0:06:34.560 --> 0:06:37.760 those respects. Gary, you were quoted in a recent article 0:06:37.920 --> 0:06:41.520 in Axis saying that if Trump President Trump imposes fresh 0:06:41.520 --> 0:06:44.440 TIFFs and two billion dollars in Chinese goods, uh, that 0:06:44.480 --> 0:06:48.000 will trigger a trade war with huge financial repercussions because 0:06:48.080 --> 0:06:52.120 China will not back down. One key question as we 0:06:52.160 --> 0:06:55.080 look at markets, how long will it take for those 0:06:55.200 --> 0:06:58.120 financial repercussions? How long will it take for those to 0:06:58.200 --> 0:07:01.240 be felt in the United States once this trade work 0:07:01.279 --> 0:07:06.120 gets going. Oh, the finance markets move ahead of the 0:07:06.120 --> 0:07:09.800 real markets, and then it will happen, I think, very quickly. 0:07:09.960 --> 0:07:14.400 And China is not Mexico. I mean, Mexico is is 0:07:14.440 --> 0:07:17.400 in very difficult situation. It's a weak country compared to 0:07:17.400 --> 0:07:20.320 the United States. China is not going to back down. 0:07:20.840 --> 0:07:22.600 China is going to go with kit for tax. So 0:07:23.400 --> 0:07:30.280 if Trump does two undred billion, will's another billion. They'll 0:07:30.320 --> 0:07:35.880 start restricting US companies doing business in China. Caterpillar, uh mowing, 0:07:35.960 --> 0:07:39.760 you name it, They'll restrict them. So I think the 0:07:39.800 --> 0:07:45.840 financial repercussions from that will happen within you know, within 0:07:45.880 --> 0:07:48.800 a week or two or even quicker and in a 0:07:48.840 --> 0:07:52.920 few days. And it's because of those financial repercussions that 0:07:53.040 --> 0:07:56.920 I remain skeptical. Even though Trump keeps saying it's gonna 0:07:57.280 --> 0:08:00.280 go after the Chinese, that he will do it riar 0:08:00.400 --> 0:08:03.360 to the November election, I just can't see this as 0:08:03.400 --> 0:08:08.440 being good politics for the Republicans come November. Gary, thank 0:08:08.480 --> 0:08:11.560 you so much for being with us today. Hey, thanks 0:08:11.560 --> 0:08:14.560 a lot. Take care, Take care. Gary. Clyde Huffbauer is 0:08:14.640 --> 0:08:18.840 nonresident Senior Fellow at the Peterson Institute for International Economics 0:08:18.920 --> 0:08:22.640 in Washington, d C. He has a pretty deep knowledge 0:08:22.800 --> 0:08:24.640 of all things having to do with trade. I mean, 0:08:24.680 --> 0:08:26.640 I just want to give you some sense of what 0:08:26.720 --> 0:08:29.600 this background is. He was the Deputy Assist and Secretary 0:08:29.640 --> 0:08:32.480 of International Trade and Investment Policy at the US Treasury 0:08:32.520 --> 0:08:34.679 and Director of the International Tax Staff at the U 0:08:34.760 --> 0:08:53.280 S Treasury during the nineteen seventies. Talking of Ford, It's 0:08:53.360 --> 0:08:57.120 created credit rating was lowered yesterday by Moody's Investors Service, 0:08:57.160 --> 0:08:59.520 And I want to bring in Tad Ravelle, chief investment 0:08:59.559 --> 0:09:02.720 officer for fixed income at TCW Group. Tad, You're the 0:09:02.720 --> 0:09:05.679 perfect person to have on given the fact that Ford 0:09:05.760 --> 0:09:09.199 was just downgraded one notch above the junk rating, the 0:09:09.240 --> 0:09:12.480 highest junk rating, and Ford has a ton of debt. 0:09:13.200 --> 0:09:15.760 Is this a buying opportunity for you since prices on 0:09:15.800 --> 0:09:18.960 the debt are falling, are falling or is it a 0:09:19.000 --> 0:09:23.640 selling a sort of need to sell kind of moment. Well, 0:09:23.800 --> 0:09:27.200 in our view, the market I think is beginning to 0:09:27.559 --> 0:09:30.920 maybe more properly priced the risk associated with Ford. As 0:09:30.960 --> 0:09:33.440 you point out, they have a lot of debt. I 0:09:33.440 --> 0:09:36.960 believe Ford the company has about ninety billion in long 0:09:37.080 --> 0:09:40.320 term debt and as you also pointed out, Moody's dropped 0:09:40.320 --> 0:09:42.920 the rating to the lowest level of investment grade, the 0:09:43.000 --> 0:09:46.840 b A A three, and they also indicated a negative outlook, 0:09:46.840 --> 0:09:49.600 which means that officially, or according to the usual way 0:09:49.640 --> 0:09:52.280 people look at these things, for it is a perspective 0:09:52.320 --> 0:09:55.200 fallen angel it makes any additional missteps, that runs the 0:09:55.280 --> 0:09:58.280 risk of being junked in terms of its rating by 0:09:58.280 --> 0:10:02.000 by Moodies. There's about a hundred twenty basis points um 0:10:02.120 --> 0:10:06.959 of spread currently in that Forward trades wider to General Motors. UH. 0:10:07.000 --> 0:10:10.360 Given our inclination and our our belief about the relative 0:10:10.400 --> 0:10:13.880 merits of the two businesses, we would rather express a 0:10:13.960 --> 0:10:16.240 view in the autos in the General Motors name rather 0:10:16.280 --> 0:10:19.600 than the Ford name. Hold on a second, have you 0:10:19.640 --> 0:10:22.640 are you actively selling Forward in order to buy General 0:10:22.679 --> 0:10:25.160 Motors or you just aren't buying any Ford and are 0:10:25.160 --> 0:10:29.200 adding General Motors. We actually have we we have repositioned 0:10:29.200 --> 0:10:32.760 ourselves to emphasize General Motors at the expense of Ford 0:10:32.800 --> 0:10:36.040 in the portfolios. We we haven't done it so much reactively, 0:10:36.200 --> 0:10:38.600 I think we we have held to the view that 0:10:38.720 --> 0:10:42.600 General Motors has made some more difficult choices. It's made 0:10:42.600 --> 0:10:45.480 it the tougher decisions, and as a result, it's in 0:10:45.520 --> 0:10:48.040 a better position visa v. Ford. But of course it 0:10:48.080 --> 0:10:50.320 should be pointed out that there tends to be a 0:10:50.400 --> 0:10:54.000 significant amount of correlation in the way General Motors and 0:10:54.080 --> 0:10:57.160 Ford trade with one another. That correlation has broken down 0:10:57.480 --> 0:11:00.240 recently with the widening out in the Ford spreads, and 0:11:00.280 --> 0:11:02.679 as I indicated, I think that that's that's that is 0:11:02.720 --> 0:11:05.840 a fair market reaction. It is not, in our in 0:11:05.920 --> 0:11:09.559 our view, a proper time to be adding for it exposure, 0:11:09.880 --> 0:11:14.400 given its prospective risk profile and the potentiality of it 0:11:14.440 --> 0:11:16.920 becoming a fallen angel. It would become a rather large 0:11:16.920 --> 0:11:21.120 fallen angel. By the way, Ted Ravell speak about the 0:11:21.320 --> 0:11:26.320 sales by corporate holders of bonds, and I'm thinking of 0:11:26.440 --> 0:11:31.800 companies such as Apple and Oracle. They were big bond buyers. 0:11:32.200 --> 0:11:36.080 Now they seem to be big bond sellers. What happens 0:11:36.679 --> 0:11:40.720 when they sell well, we saw some of that happen 0:11:40.800 --> 0:11:42.960 in the first quarter of this year. As you quite 0:11:43.040 --> 0:11:46.400 rightly pointed out, the large cash piles that some of 0:11:46.440 --> 0:11:51.839 these large tech franchises held, many of which were being 0:11:51.880 --> 0:11:56.160 held in effect in overseas. Types of accounts were um 0:11:56.480 --> 0:11:59.200 were largely or significant amounts of them were liquidated in 0:11:59.240 --> 0:12:01.560 the first quarter this year. So what had been a 0:12:01.600 --> 0:12:05.520 long accumulation process mostly of short term corporate debt, turned 0:12:05.520 --> 0:12:09.400 into a buying opportunity actually in the first quarter of 0:12:09.440 --> 0:12:13.760 this year as those positions that came into the marketplace. 0:12:15.240 --> 0:12:18.360 I don't think that we've seen much activity over the 0:12:18.360 --> 0:12:21.640 course of the last couple of quarters. However, as I said, 0:12:21.679 --> 0:12:24.360 that was a really early two thou eighteen type of event. 0:12:24.760 --> 0:12:26.720 But I think if we look at the more general 0:12:26.800 --> 0:12:30.120 question about, uh, what is the direction the next direction 0:12:30.160 --> 0:12:32.920 of the corporate bond market, in our view, it's a 0:12:33.200 --> 0:12:35.040 it's going to a bad place that you're in a 0:12:35.080 --> 0:12:37.600 late cycle type of environment. Yeah, you're in a late 0:12:37.640 --> 0:12:40.120 cycle type of environment. There's a very high level of 0:12:40.240 --> 0:12:43.760 leverage that exists in the corporate bond market. Generally. There 0:12:43.800 --> 0:12:46.880 are other forms of market internals, if that's the word 0:12:46.880 --> 0:12:49.520 for it, that are probably bear watching, and they have 0:12:49.600 --> 0:12:53.679 been um they have been mentioned by a number of folk. 0:12:53.800 --> 0:12:58.000 But UH Moody's for instance, called out the percent of 0:12:58.080 --> 0:13:01.160 issue ince in the the loan market that has now 0:13:01.200 --> 0:13:05.760 become covenant light. This is obviously a new phenomenon or 0:13:05.760 --> 0:13:08.800 a phenomenon that is representative only of this cycle, and 0:13:08.800 --> 0:13:11.360 it means that the types of bank loans that are 0:13:11.400 --> 0:13:14.959 widely syndicated and trading in the capital markets are particularly 0:13:15.040 --> 0:13:19.120 risky the hold on but leverage loans are different than 0:13:19.720 --> 0:13:22.040 fixing come debt. And I'm just wondering, I mean, have 0:13:22.160 --> 0:13:24.960 you gotten rid of your leverage loan exposure almost entirely? 0:13:25.000 --> 0:13:26.559 I would you see the same risk in the high 0:13:26.559 --> 0:13:31.960 old bond market? Well? Um, right, So, technically speaking, what 0:13:32.040 --> 0:13:35.280 you say is correct that leverage loans are not strictly 0:13:35.320 --> 0:13:39.720 speaking bonds. Um. However, they are an alternative form of 0:13:39.760 --> 0:13:44.679 financing that exists for leveraged companies. So leverage companies generally 0:13:44.679 --> 0:13:47.800 speaking have a choice as to whether or not they 0:13:47.880 --> 0:13:50.400 prefer to access the high old bond market or the 0:13:50.480 --> 0:13:53.920 leverage loan market. In that sense, they are actually close 0:13:54.480 --> 0:13:58.640 siblings of one another. Um. So, I guess what I 0:13:58.640 --> 0:14:01.280 would put forward is that many of the dynamics as 0:14:01.760 --> 0:14:06.160 underwriting standards have softened loosened in the leverage loan market. 0:14:06.600 --> 0:14:09.360 Something comparable has also occurred in the high yield market. 0:14:09.679 --> 0:14:12.560 The fact that credit is is so accessible and on 0:14:12.640 --> 0:14:15.640 such poor terms from the point of view of a lender, 0:14:15.840 --> 0:14:18.840 in our opinion, is a very significant red flag in 0:14:18.960 --> 0:14:21.320 the context, as they mentioned, a moment ago of a 0:14:21.400 --> 0:14:24.680 late cycle environment where leverage is already high and the 0:14:24.680 --> 0:14:29.800 potentiality for a growth recession or a generalized slow down 0:14:30.880 --> 0:14:33.880 definitionally is rising. Okay, so just twenty seconds, are you 0:14:33.880 --> 0:14:38.320 buying emerging markets in the sell off? Not yet? Uh? 0:14:38.560 --> 0:14:41.360 The If you look at the longer term spreads of 0:14:41.360 --> 0:14:44.520 the emerging market asset class, while the spreads are wider, 0:14:44.720 --> 0:14:48.600 it is still based upon the historical spread levels, still 0:14:48.720 --> 0:14:52.120 fairly tight. And um, I think the dynamics that we've 0:14:52.160 --> 0:14:54.440 seen over the course of the last several weeks should 0:14:54.480 --> 0:14:56.600 give one quite a bit of pause in an environment 0:14:56.600 --> 0:14:59.840 of quantitative tightening. What is seems to be occurring as 0:14:59.880 --> 0:15:02.440 a the weaker borrowers are being revealed in the market. 0:15:02.760 --> 0:15:04.560 So what we've seen so far, of course is Turkey, 0:15:04.680 --> 0:15:08.560 Argentina and more recently Indonesia. There may be others. Thanks 0:15:08.640 --> 0:15:10.960 very much for being whether US tad revels the Chief 0:15:11.000 --> 0:15:16.280 Investment Officer for Fixed Income for TCW, helping to manage 0:15:16.280 --> 0:15:35.560 more than a hundred and eighty billion dollars. How satisfied 0:15:35.560 --> 0:15:39.240 are you with your job? Gad Levanon is the Conference 0:15:39.280 --> 0:15:42.440 Board's Chief US economist, and he's here to discuss their 0:15:42.520 --> 0:15:46.320 new survey just in time for Labor Day. It is 0:15:46.360 --> 0:15:50.560 called the Labor Day Survey of US employees overall are 0:15:50.640 --> 0:15:53.520 satisfied with their job. Gad, thanks very much for coming 0:15:53.520 --> 0:15:56.359 into the studio. What are some of the big takeaways 0:15:56.400 --> 0:15:59.880 from this report? Well, I think the main takeaway it's 0:16:00.120 --> 0:16:02.920 seven years in a road that we're seeing an improvement 0:16:03.000 --> 0:16:06.080 in jobs, in job satisfaction, and I think a lot 0:16:06.160 --> 0:16:10.120 of it is related to the improving labor market. We're 0:16:10.160 --> 0:16:15.440 seeing improvement in satisfaction, especially in components related to the 0:16:15.520 --> 0:16:20.880 labor market like job security and wages, and so as 0:16:20.880 --> 0:16:23.400 long as the labor market continues to improve, I think 0:16:23.440 --> 0:16:27.320 we'll see stronger job satisfaction. It's interesting to me that 0:16:27.360 --> 0:16:30.320 there's job satisfaction with wages when we look at the 0:16:30.360 --> 0:16:33.840 real wages that haven't gone up at all in the 0:16:33.880 --> 0:16:36.400 past year. In fact, by some measures have gone down 0:16:36.440 --> 0:16:39.560 if you counter and inflation, So can you square these 0:16:39.600 --> 0:16:43.240 two Well, there are a lot of wage measures, and 0:16:43.400 --> 0:16:46.320 some of them tell different stories from others. But I 0:16:46.360 --> 0:16:48.920 think it is true that the overall wages are not 0:16:49.120 --> 0:16:53.000 accelerating as one would expect given how tied the labor market. 0:16:53.080 --> 0:16:56.280 But if you look at wages for blue color versus 0:16:56.280 --> 0:17:00.000 white color workers, you do see an interesting gap. Dere's 0:17:00.080 --> 0:17:03.880 In blue color and low paid services occupations you see 0:17:03.880 --> 0:17:07.879 already a significant acceleration in wages, but in white color 0:17:08.000 --> 0:17:13.480 the hiring hyping professionals and management positions there you don't 0:17:13.560 --> 0:17:17.000 see as much wage growth. Yet this is fascinating to 0:17:17.040 --> 0:17:18.719 me because a lot of people think of it as 0:17:18.760 --> 0:17:21.640 being the other way around, right, that the wealth gap 0:17:21.880 --> 0:17:24.479 between rich and poor has been widening. That you can 0:17:24.520 --> 0:17:26.840 see this with respect to what's been going on with 0:17:26.880 --> 0:17:29.600 those who can invest in stocks who who can't um 0:17:29.640 --> 0:17:32.199 But what you're saying is from a wage perspective, that 0:17:32.400 --> 0:17:35.560 is not the case in the last two or three years. 0:17:35.600 --> 0:17:38.240 That's not the case. And I know it is contrary 0:17:38.280 --> 0:17:43.200 to to what a lot of people you know and 0:17:43.200 --> 0:17:45.480 and what was the case for many decades. But now 0:17:45.520 --> 0:17:48.760 there are several factors that are really tightened in labor 0:17:48.800 --> 0:17:52.720 markets for blue color and low paid services occupations. One 0:17:52.760 --> 0:17:56.160 of them is the fact that the US labor force 0:17:56.280 --> 0:17:59.600 is becoming more and more educated, and fewer people are 0:17:59.600 --> 0:18:03.119 willing to take those blue color low paying services jobs. 0:18:03.640 --> 0:18:07.600 Yet they're sharing. Employment is continuing to go up or 0:18:07.680 --> 0:18:12.240 continuing to remain the same, so fewer people are interested 0:18:12.280 --> 0:18:16.440 in those jobs even though they're growing rapidly. That's one thing. 0:18:16.480 --> 0:18:21.680 The second is the disability and developments in the United States. 0:18:21.680 --> 0:18:23.560 There have been a huge increase in the share of 0:18:23.640 --> 0:18:25.919 people who are saying that they are not in the 0:18:26.000 --> 0:18:29.240 labor force because of disability, and almost all of them 0:18:29.240 --> 0:18:34.679 are concentrated in the less educated population, so people with 0:18:34.760 --> 0:18:37.399 no high school degree. But even with high school degree 0:18:37.480 --> 0:18:40.879 and some college it's almost no none of that is 0:18:40.920 --> 0:18:45.080 happening in the population with a college degree. God. There 0:18:45.080 --> 0:18:50.480 are twenty three survey components what people say about their 0:18:50.520 --> 0:18:55.719 commute to and from their place of work. So as 0:18:55.800 --> 0:18:58.800 a New Yorker, you will probably be surprised that this 0:18:58.880 --> 0:19:01.720 is one of the top ranking elements. So most people 0:19:01.800 --> 0:19:05.600 are more satisfied with their commute than other parts of 0:19:06.240 --> 0:19:09.720 their job. It's probably not people in the New York area, 0:19:09.840 --> 0:19:12.520 but in other parts of the country people are pretty 0:19:12.560 --> 0:19:14.840 satisfied with their commute. How do you get to work? 0:19:15.760 --> 0:19:19.359 How do you get to work? I walk mostly and 0:19:19.400 --> 0:19:23.200 take one stop subway or a tramp from Roosevelt Island 0:19:23.240 --> 0:19:26.360 so for me, I can't complain about my compunity. He's 0:19:26.440 --> 0:19:30.760 one of those three. I would never complain. I want 0:19:30.800 --> 0:19:33.919 to know about job disappointment. What's the greatest disappointment that 0:19:33.960 --> 0:19:39.080 people are expressing in the survey? People don't like their bones. 0:19:39.400 --> 0:19:44.359 They don't like a promotion policy because you know, I 0:19:44.400 --> 0:19:47.479 think part of it is that more than fifty percent 0:19:47.560 --> 0:19:49.880 of people think that they are above average, so they 0:19:50.080 --> 0:19:53.360 think they can do better. But you can only promote 0:19:54.000 --> 0:19:56.399 so many people, and so that's something that people are 0:19:56.480 --> 0:20:00.359 unhappy about. They're unhappy with their training opportunity, is with 0:20:00.480 --> 0:20:03.800 the performance review process. Those are some of the things 0:20:03.800 --> 0:20:07.000 that people are unhappy. But when we talk about training programs, 0:20:07.000 --> 0:20:09.280 because there's been a lot of focus on that recently, 0:20:09.320 --> 0:20:12.159 how to retrain employees who might have outdated skills to 0:20:12.280 --> 0:20:16.160 make them more compatible with what's needed today. What types 0:20:16.200 --> 0:20:17.840 of training are we talking about? I mean, is it 0:20:17.880 --> 0:20:22.320 with computer software? Is it with understanding the assembly of 0:20:22.680 --> 0:20:24.840 new components? I mean, what what? What training are we 0:20:24.920 --> 0:20:27.960 talking here? I mean the question is just general training. 0:20:28.520 --> 0:20:33.440 But I suspect there aren't a good statistics about training. 0:20:33.480 --> 0:20:37.040 But kind of common knowledge is that companies are over 0:20:37.119 --> 0:20:39.760 time spending less on training because they don't want to 0:20:39.760 --> 0:20:43.760 commit resources to workers who may live in a year 0:20:43.880 --> 0:20:48.679 or two. So that's um. I think it's across the board. 0:20:49.080 --> 0:20:51.760 Are there any spots that are less bright than with 0:20:51.920 --> 0:20:56.800 the seems which is a unabashedly positive rosy report. Well, 0:20:56.840 --> 0:21:01.400 I think if you compare the results now too when 0:21:01.440 --> 0:21:04.320 we began doing the survey in the mid eighties, and 0:21:05.359 --> 0:21:08.040 you see that it's a level difference in the last 0:21:08.119 --> 0:21:11.920 decade or even more. Job satisfaction is much lower than 0:21:11.920 --> 0:21:14.120 it used to be in the eighties, for example, and 0:21:14.160 --> 0:21:17.040 I think that that's probably not We're not going to 0:21:17.160 --> 0:21:19.080 go back to the eighties. I think that the kind 0:21:19.119 --> 0:21:25.280 of fundamental relationship between employees and employers changed significantly during 0:21:25.359 --> 0:21:29.400 that time. And for example, if in the past you 0:21:29.440 --> 0:21:32.520 didn't lay off people unless there was a crisis in 0:21:32.560 --> 0:21:36.440 the company, now layoffs are part of the regular toolbox 0:21:36.480 --> 0:21:40.639 of companies, so there is much less loyalty from the 0:21:40.680 --> 0:21:44.760 employer side and from the employee side, and that I 0:21:44.840 --> 0:21:48.439 think reduces job satisfaction. God love and and thank you 0:21:48.480 --> 0:21:51.200 so much for being with us chief Economist for North 0:21:51.240 --> 0:21:55.000 America for the conference Board in New York. Him. I 0:21:55.040 --> 0:21:57.720 am really interested in the idea that blue collar workers 0:21:58.000 --> 0:22:01.080 are seeing much faster wage gains than white color workers. 0:22:01.080 --> 0:22:02.920 I feel like that is not something we hear a lot, 0:22:02.960 --> 0:22:04.320 and I feel like it is an important thing to 0:22:04.359 --> 0:22:08.560 recognize fry finding an electrician or a slumber. Well, this 0:22:08.600 --> 0:22:26.520 is what it goes to. Very interesting. Well, yesterday Bloomberg 0:22:26.680 --> 0:22:29.920 got a chance to sit down with the President Donald 0:22:30.080 --> 0:22:34.000 Trump in the Oval Office, our own Margaret Tulla, Jennifer Jacobs, 0:22:34.040 --> 0:22:38.240 and John Michael Thwaite interviewing President Donald Trump. Here to 0:22:38.320 --> 0:22:41.920 tell us more about that and the president's Labor Day 0:22:41.920 --> 0:22:46.800 weekend perhaps is to Larudipa. He is our Bloomberg White 0:22:46.800 --> 0:22:50.000 House correspondent. To lou what do you think the biggest 0:22:50.040 --> 0:22:54.760 takeaway from the interview was? Wow? That It's a hard question. 0:22:54.840 --> 0:22:57.680 This was a great interview by my colleagues Jennifer Jacobs, 0:22:57.720 --> 0:22:59.920 Margaret Talive and our editor in chief John Michele the 0:23:00.080 --> 0:23:02.360 and they covered so much ground in about an hour. 0:23:02.400 --> 0:23:04.359 It's hard to know what the biggest takeaway might be. 0:23:04.480 --> 0:23:07.800 I think his remarks on the w t O, the 0:23:07.800 --> 0:23:11.040 President basically saying that if the w t O, the 0:23:11.040 --> 0:23:14.000 World Trade Organization does not shape up that he would 0:23:14.040 --> 0:23:16.359 be willing to move the U s out of the 0:23:16.480 --> 0:23:18.760 w t O. If you were actually to follow up 0:23:18.760 --> 0:23:21.159 on that, that would be a pretty major bombshell in 0:23:21.359 --> 0:23:25.840 US trade policy and US foreign policy. He also commented 0:23:25.880 --> 0:23:29.600 about Europe and the European Union, saying that the Europeans 0:23:29.600 --> 0:23:31.760 are just as bad as China on trade and that 0:23:31.840 --> 0:23:35.439 he is willing to potentially put car tariffs on the 0:23:35.480 --> 0:23:38.960 Europeans if they do not accede to his various requests. 0:23:38.960 --> 0:23:41.800 So uh, there were so much groundcovered, but the trade 0:23:41.880 --> 0:23:45.920 comments were pretty remarkable, and it shows that the President 0:23:46.000 --> 0:23:48.879 is moving full speed ahead in this trade war. Just 0:23:48.920 --> 0:23:51.600 to sort of give some context to that, auto stocks 0:23:51.760 --> 0:23:54.760 in Europe are down one and a half percent today 0:23:54.800 --> 0:23:58.000 following those comments. There was a little bit of optimism 0:23:58.080 --> 0:24:01.119 yesterday sort of baked into these share that perhaps there 0:24:01.160 --> 0:24:03.040 would be some kind of agreement between the US and 0:24:03.080 --> 0:24:05.480 Europe after Europe offered to drop all tariffs of the 0:24:05.560 --> 0:24:09.879 US did the same, President Trump rebuffing that in our interview. 0:24:10.080 --> 0:24:13.399 So definitely moving markets to this morning. One thing that 0:24:13.440 --> 0:24:17.400 I'm wondering is about the capital gains aspect of the interview. 0:24:17.520 --> 0:24:21.919 The idea that President Trump is entertaining allowing people to 0:24:22.080 --> 0:24:27.760 pay taxes on inflation adjusted returns for their equity portfolios. Basically, 0:24:27.800 --> 0:24:29.879 this would amount to what would most likely be a 0:24:29.920 --> 0:24:34.199 tax cut for the wealthier individuals in the country. What 0:24:34.320 --> 0:24:37.159 kind of attraction is that getting today as you speak 0:24:37.200 --> 0:24:41.160 to other representatives and other people around the White House. Yeah, 0:24:41.200 --> 0:24:44.399 it's still very much in a holding pattern as the 0:24:44.440 --> 0:24:47.320 research is done by the administration. They're looking at whether 0:24:47.400 --> 0:24:49.960 or not they can do this unilaterally and not go 0:24:50.040 --> 0:24:52.920 through Congress. President Trump and the interview said that he 0:24:53.080 --> 0:24:55.280 is looking at this very strongly and he views it 0:24:55.320 --> 0:24:58.040 as a stimulus for the economy. So he talked about 0:24:58.040 --> 0:25:00.240 it in the very positive terms. But he did say 0:25:00.240 --> 0:25:03.399 that he's gonna wait. He's gonna see if his administration 0:25:03.680 --> 0:25:06.320 can look into it and do some research and report 0:25:06.320 --> 0:25:09.040 back to him about both whether he can do it 0:25:09.119 --> 0:25:11.880