1 00:00:09,840 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:28,800 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg John 5 00:00:28,840 --> 00:00:31,080 Speaker 1: fer and I now to dive into a real discussion 6 00:00:31,120 --> 00:00:35,000 Speaker 1: here on the American labor economy. You can do that 7 00:00:35,040 --> 00:00:37,600 Speaker 1: with Ellen Sentner, and you can particularly do that John, 8 00:00:37,640 --> 00:00:41,400 Speaker 1: because within our research notes there's always that one chart. 9 00:00:41,520 --> 00:00:44,760 Speaker 1: I remember when Ellen years ago owned the tarot part 10 00:00:44,800 --> 00:00:48,199 Speaker 1: of consumers spending. It was the same thing. You have 11 00:00:48,320 --> 00:00:54,000 Speaker 1: a killer chart, Ellen, on the labor differential jobs out there, 12 00:00:54,160 --> 00:00:58,040 Speaker 1: plentiful jobs, jobs are hard to get. This is the 13 00:00:58,120 --> 00:01:03,120 Speaker 1: most perfect American labor enemy since time began, isn't it. Yeah, 14 00:01:03,120 --> 00:01:05,640 Speaker 1: it's it's pretty strong. I mean, which it came with 15 00:01:05,680 --> 00:01:08,920 Speaker 1: a stronger wage growth as well, but markets pretty strong. 16 00:01:09,160 --> 00:01:11,800 Speaker 1: Why why can't we dovetail this and do I happy 17 00:01:11,800 --> 00:01:16,000 Speaker 1: America with wage growth? Tom? Because I'm an economist, I'm 18 00:01:16,040 --> 00:01:17,920 Speaker 1: supposed to be the disnal scientist, so I have to 19 00:01:17,959 --> 00:01:21,360 Speaker 1: find something bad and everything. My husband will tell you 20 00:01:21,400 --> 00:01:24,400 Speaker 1: I'm really good at that, but you know the look 21 00:01:24,480 --> 00:01:30,000 Speaker 1: the consumer households obviously think the labor market was great 22 00:01:30,600 --> 00:01:34,480 Speaker 1: in August based on the results from the Conference Boards survey. 23 00:01:34,600 --> 00:01:38,040 Speaker 1: And you know, we trust households, um you know, if 24 00:01:38,160 --> 00:01:41,160 Speaker 1: if layoffs were rising, uh, if they weren't able to 25 00:01:41,240 --> 00:01:43,199 Speaker 1: find a job when they jump into the labor market, 26 00:01:43,240 --> 00:01:45,320 Speaker 1: they usually let us know. And so I think that 27 00:01:45,360 --> 00:01:49,640 Speaker 1: has helped lift effectations for today's number. And this goes 28 00:01:49,680 --> 00:01:51,960 Speaker 1: to your hours work analysis and just what's in the 29 00:01:52,000 --> 00:01:55,560 Speaker 1: paycheck after inflation. A lot of people are really focused 30 00:01:55,560 --> 00:01:57,520 Speaker 1: on that number today, on and hours worked. If you're 31 00:01:57,560 --> 00:01:59,120 Speaker 1: going to see science of weakness, you want to see 32 00:01:59,120 --> 00:02:01,240 Speaker 1: it immediately in lay else you'll see it in ours work. 33 00:02:01,320 --> 00:02:04,320 Speaker 1: Just how important is that data point for you today, Allen? Yeah, 34 00:02:04,320 --> 00:02:07,200 Speaker 1: so I think it's extremely important actually, and and uh, 35 00:02:07,240 --> 00:02:09,520 Speaker 1: you know, consensus is looking for it to tick back 36 00:02:09,600 --> 00:02:12,560 Speaker 1: up after having ticked down last month, and and so 37 00:02:12,600 --> 00:02:14,040 Speaker 1: there is going to be a lot of focus there 38 00:02:14,040 --> 00:02:18,160 Speaker 1: because uh, it's it's uh, it leads other jobs data. 39 00:02:18,240 --> 00:02:22,880 Speaker 1: It's coincidence with h GDP growth in the economy. Uh. 40 00:02:22,919 --> 00:02:25,360 Speaker 1: And we can see hours worked are always sort of 41 00:02:25,400 --> 00:02:27,680 Speaker 1: the pipeline is slowing that you look for in the 42 00:02:27,760 --> 00:02:30,919 Speaker 1: labor market. You know, investment is down hours worked or 43 00:02:30,960 --> 00:02:34,040 Speaker 1: down because companies will cut the hours of existing workforce. 44 00:02:34,160 --> 00:02:38,440 Speaker 1: First we know that the pace of hiring has slowed, uh, 45 00:02:38,480 --> 00:02:40,520 Speaker 1: and the final thing is laying off, and we just 46 00:02:40,560 --> 00:02:42,919 Speaker 1: haven't seen that. So hours worked I look at it 47 00:02:43,000 --> 00:02:45,440 Speaker 1: is just uh, you know, the precursor, one of the 48 00:02:45,840 --> 00:02:49,640 Speaker 1: several precursors we see to finally getting to layoffs. And 49 00:02:49,680 --> 00:02:51,640 Speaker 1: so everyone will be watching it. And then we were 50 00:02:51,639 --> 00:02:54,560 Speaker 1: watching ice MS earlier this week manufacturing ice M sub 51 00:02:54,600 --> 00:02:58,640 Speaker 1: fifty non manufacturing, I M pretty decent to America's ellen 52 00:02:58,880 --> 00:03:02,040 Speaker 1: almost and two globe economies at the moment. One's manufacturing, 53 00:03:02,480 --> 00:03:05,000 Speaker 1: the other is services, and one seemingly more important than 54 00:03:05,040 --> 00:03:07,720 Speaker 1: the other at this point, try and reconcile the differences 55 00:03:07,720 --> 00:03:09,480 Speaker 1: that we're seeing in the dates at the moment. Just 56 00:03:09,520 --> 00:03:11,800 Speaker 1: how do you get a read on the U. S economy? 57 00:03:12,280 --> 00:03:15,400 Speaker 1: So I think clearly the manufacturing survey being under more 58 00:03:15,440 --> 00:03:18,679 Speaker 1: pressure is reflecting the fact that it's more beholden to 59 00:03:18,760 --> 00:03:22,280 Speaker 1: what's going on with global growth. Uh, it's picking up 60 00:03:22,360 --> 00:03:25,280 Speaker 1: the trade risks and how companies have had to change 61 00:03:25,360 --> 00:03:29,959 Speaker 1: behavior around trade tensions and the uncertainty there. The fact 62 00:03:30,040 --> 00:03:31,919 Speaker 1: that the service side of the economy is holding up 63 00:03:32,080 --> 00:03:35,080 Speaker 1: much better is encouraging because it is the lion's share 64 00:03:35,080 --> 00:03:37,200 Speaker 1: of the economy and the lions share of the labor market. 65 00:03:37,600 --> 00:03:39,520 Speaker 1: So one can say, well, why do we care about 66 00:03:39,520 --> 00:03:42,960 Speaker 1: manufacturing at all? Then we care because the leading parts 67 00:03:43,000 --> 00:03:46,320 Speaker 1: of the economy sit in the manufacturing sector. Uh. And 68 00:03:46,400 --> 00:03:49,920 Speaker 1: so it's only a matter of time, uh that manufacturing 69 00:03:50,040 --> 00:03:53,560 Speaker 1: is weak before whatever is causing that weakness starts to 70 00:03:53,560 --> 00:03:55,920 Speaker 1: bleed over into the rest of the economy. So really 71 00:03:55,960 --> 00:04:00,720 Speaker 1: that service side, service sector jobs, consumers spend, you know, 72 00:04:00,840 --> 00:04:03,200 Speaker 1: that's the shoe to drop, and for that you need 73 00:04:03,280 --> 00:04:06,000 Speaker 1: layoffs and we just have not begun to see that yet. 74 00:04:06,160 --> 00:04:07,960 Speaker 1: What are we doing for the overtime? I mean one 75 00:04:08,000 --> 00:04:10,680 Speaker 1: of the backstories your folks, and it's almost anecdotal. And 76 00:04:10,680 --> 00:04:13,920 Speaker 1: we talked about minimum wage increase. It means less overtime 77 00:04:13,920 --> 00:04:16,680 Speaker 1: because people are paying for a new higher minimum wage. 78 00:04:17,000 --> 00:04:20,680 Speaker 1: But what's the overtime or almost the worker exhaustion that 79 00:04:20,720 --> 00:04:25,159 Speaker 1: we're seeing in America? Well, I think that uh, well, 80 00:04:25,200 --> 00:04:29,320 Speaker 1: we had been having a big increase in overtime hours 81 00:04:29,360 --> 00:04:32,839 Speaker 1: as we've seen hiring slow and so we're trying to 82 00:04:32,839 --> 00:04:35,920 Speaker 1: get more existing the workforce. But but that is the 83 00:04:36,200 --> 00:04:39,600 Speaker 1: worrisome trend that we've seen now start to reverse, right, 84 00:04:39,720 --> 00:04:43,520 Speaker 1: is that we're actually cutting overtime hours, we're cutting temporary exactly. 85 00:04:44,080 --> 00:04:47,640 Speaker 1: And so again talking about the precursors, you know, those 86 00:04:47,680 --> 00:04:50,320 Speaker 1: are some of the precursors that we look for that 87 00:04:50,440 --> 00:04:54,000 Speaker 1: tell us further weakness or or real weakness is coming. 88 00:04:54,320 --> 00:04:55,760 Speaker 1: I mean, and Ellen, I don't want to get all 89 00:04:55,800 --> 00:04:57,760 Speaker 1: David Blanche Flower and you we say good morning to 90 00:04:57,880 --> 00:05:01,280 Speaker 1: Dr blanch for no doubt listening up in the handover bubble. 91 00:05:01,839 --> 00:05:05,600 Speaker 1: But but Allen helped me with the under employed in America, 92 00:05:05,720 --> 00:05:09,080 Speaker 1: and that starts with a dearth of full time jobs. 93 00:05:09,440 --> 00:05:12,680 Speaker 1: What's the vector right now on full time jobs versus 94 00:05:12,760 --> 00:05:16,480 Speaker 1: part time jobs? So I think, uh, you know, part 95 00:05:16,520 --> 00:05:19,640 Speaker 1: time jobs. We we like to see, Uh, if people 96 00:05:19,640 --> 00:05:21,240 Speaker 1: are going to work part time, we want them to 97 00:05:21,279 --> 00:05:24,680 Speaker 1: work part time because they choose to work part time. Uh. 98 00:05:24,760 --> 00:05:28,599 Speaker 1: And in this post financial crisis world, those being forced 99 00:05:28,600 --> 00:05:30,359 Speaker 1: to work part time because full time is just not 100 00:05:30,440 --> 00:05:34,480 Speaker 1: available had surge. Now since that time, their overall numbers 101 00:05:34,520 --> 00:05:37,680 Speaker 1: are higher, but the the incidents of those working part 102 00:05:37,720 --> 00:05:40,320 Speaker 1: time forced part time has come down, and it's actually 103 00:05:40,800 --> 00:05:43,919 Speaker 1: back to more normal levels. I mean, this is really 104 00:05:43,920 --> 00:05:46,159 Speaker 1: the point in the labor market where the unemployment rate 105 00:05:47,080 --> 00:05:51,160 Speaker 1: has stopped coming down. UH. It's pretty much leveling off. 106 00:05:51,440 --> 00:05:53,960 Speaker 1: And and ironically, what does that tell us? It tells 107 00:05:54,000 --> 00:05:56,960 Speaker 1: us the labor market is probably about as tight as 108 00:05:57,000 --> 00:06:00,520 Speaker 1: it was able to get UH in this expansion UH 109 00:06:00,520 --> 00:06:02,599 Speaker 1: and can either hold in here or it can start 110 00:06:02,640 --> 00:06:07,120 Speaker 1: to weaken from here. But that's what the various UH 111 00:06:07,200 --> 00:06:10,040 Speaker 1: unemployment rate measures tell me. And when I look at 112 00:06:10,120 --> 00:06:13,279 Speaker 1: metrics like you're talking about the part time for economic reasons, 113 00:06:13,839 --> 00:06:15,440 Speaker 1: you know, it's telling me that there's not a whole 114 00:06:15,480 --> 00:06:18,719 Speaker 1: lot more excess we can squeeze out of this labor market. 115 00:06:18,720 --> 00:06:21,960 Speaker 1: And oftentimes that's when things turn, is when they can't 116 00:06:21,960 --> 00:06:24,880 Speaker 1: get any better. The jobs are ports thirty six minutes away. 117 00:06:24,960 --> 00:06:28,279 Speaker 1: Several hours after that twelve thirty Eastern time over in Zurich, 118 00:06:28,320 --> 00:06:30,880 Speaker 1: the fete Cham and J. Powell having the final word 119 00:06:30,880 --> 00:06:32,800 Speaker 1: ahead of the fetes, blank out, what do you think 120 00:06:32,800 --> 00:06:35,880 Speaker 1: the objective is for Cham and Power today on I 121 00:06:35,920 --> 00:06:38,159 Speaker 1: think his objective is going to be too It is 122 00:06:38,160 --> 00:06:41,560 Speaker 1: a really good question, I think, just given the evidence 123 00:06:41,600 --> 00:06:44,080 Speaker 1: from the data, the balance of risks that still remain. 124 00:06:44,400 --> 00:06:46,839 Speaker 1: I think there's enough there for him to maintain the 125 00:06:46,880 --> 00:06:51,440 Speaker 1: easing bias that he clearly Jackson hole. Well, Ellen, we're 126 00:06:51,520 --> 00:06:56,760 Speaker 1: going friends. Nobody's listening, Ellen, they're all taking their childrenbody 127 00:06:56,839 --> 00:06:59,720 Speaker 1: listens when I'm on your show. They excuse me when 128 00:06:59,720 --> 00:07:06,200 Speaker 1: I'm comes on. But Tom, I'm trying to be realistic 129 00:07:06,200 --> 00:07:08,440 Speaker 1: here right, there are those on the FED that are 130 00:07:08,440 --> 00:07:11,200 Speaker 1: still pushing hard against the need to cut any further. 131 00:07:11,360 --> 00:07:13,440 Speaker 1: This is a very divided FED, and the reason why 132 00:07:13,480 --> 00:07:16,080 Speaker 1: it's divided. You should be happy that it's divided. When 133 00:07:16,120 --> 00:07:19,640 Speaker 1: it's divided, they don't see a emergency to respond to, 134 00:07:20,200 --> 00:07:22,640 Speaker 1: and so it's going to be easier probably to pull 135 00:07:22,680 --> 00:07:25,200 Speaker 1: more on board with a cut. But we're not talking 136 00:07:25,240 --> 00:07:29,840 Speaker 1: about fifty. Is he going to bring up Mr Dudley? 137 00:07:29,920 --> 00:07:31,720 Speaker 1: Is he going to bring up No, I don't care 138 00:07:31,760 --> 00:07:35,000 Speaker 1: about fifty. He's got to respond to the two essays 139 00:07:35,280 --> 00:07:40,200 Speaker 1: and Bloomberg opinion by William Dudley. Doesn't he know why not? 140 00:07:40,240 --> 00:07:42,640 Speaker 1: He's got to put a sentence sitting there. No, you 141 00:07:42,640 --> 00:07:45,880 Speaker 1: don't go there. That's the FED has to fly above that, right, 142 00:07:46,120 --> 00:07:49,920 Speaker 1: take the high road. Okay, No, he will absolutely not. 143 00:07:50,680 --> 00:07:52,280 Speaker 1: That was going to be the name of our show. 144 00:07:52,320 --> 00:07:57,000 Speaker 1: By the way, before surveillance of your show should be 145 00:07:57,080 --> 00:08:01,480 Speaker 1: two men dangerously unsupervised. Oh I like that, and I 146 00:08:01,520 --> 00:08:04,920 Speaker 1: should come and trying to fill the saint next time. 147 00:08:05,000 --> 00:08:08,520 Speaker 1: I think so the next day I take off. I 148 00:08:08,680 --> 00:08:12,239 Speaker 1: love that. Would you fill in for Tom next time? Seriously, 149 00:08:13,000 --> 00:08:15,400 Speaker 1: that would be very cool. I come over to Bloomberg 150 00:08:15,440 --> 00:08:18,320 Speaker 1: for the free food, great coffee, and I'll get you 151 00:08:18,320 --> 00:08:20,560 Speaker 1: some free food. You know even you know, not the 152 00:08:20,640 --> 00:08:22,520 Speaker 1: day old stuff. We have to We should do this, 153 00:08:22,800 --> 00:08:25,360 Speaker 1: We should do this. I agree, we should do this. 154 00:08:25,440 --> 00:08:27,640 Speaker 1: Next payrolls Friday, I get Ellen to come with you. 155 00:08:27,760 --> 00:08:29,800 Speaker 1: She may have a day coundar. It's a little do 156 00:08:29,880 --> 00:08:32,439 Speaker 1: the morning with us. Just ahead of the number. I'll 157 00:08:32,440 --> 00:08:34,800 Speaker 1: call James Gorman and see what he says. Ellen Sner, 158 00:08:34,880 --> 00:08:50,760 Speaker 1: thank you so much. With Morgan Stanley, what we love 159 00:08:50,760 --> 00:08:53,440 Speaker 1: about our Bloomberg abilities is to find people that have 160 00:08:53,520 --> 00:08:57,360 Speaker 1: cross national experience. That would be James Omeger. He is 161 00:08:57,400 --> 00:09:00,640 Speaker 1: in Beijing, our deputy bureau chief there, but with really 162 00:09:00,800 --> 00:09:06,720 Speaker 1: exquisite experience linking Japan to China is well. James, let 163 00:09:06,720 --> 00:09:10,360 Speaker 1: me start with an outball question. How enthused is Japan 164 00:09:10,480 --> 00:09:14,400 Speaker 1: this morning that China has moved to a more accommodative 165 00:09:14,760 --> 00:09:20,560 Speaker 1: banking strategy. I think that the Japanese economy is pretty 166 00:09:20,600 --> 00:09:22,480 Speaker 1: dependent on on China's economy. I mean a lot of 167 00:09:22,480 --> 00:09:24,120 Speaker 1: their I think about a third of their exports go 168 00:09:24,280 --> 00:09:26,360 Speaker 1: to China. So anything the Chinese government or the central 169 00:09:26,400 --> 00:09:29,160 Speaker 1: banking too stimulate command in the economy is obviously gonna 170 00:09:29,160 --> 00:09:31,880 Speaker 1: be good for Japanese companies. I mean, I think, you know, 171 00:09:32,000 --> 00:09:34,480 Speaker 1: this is what what the PBUC has done today was 172 00:09:34,520 --> 00:09:38,280 Speaker 1: pretty pretty expected. So Matthew in Fox are stimulus. But 173 00:09:38,559 --> 00:09:41,640 Speaker 1: if this does provide support to Chinese companies, you know 174 00:09:41,679 --> 00:09:44,360 Speaker 1: that's going to obviously see more demands for Japanese industrial products, 175 00:09:44,440 --> 00:09:46,880 Speaker 1: Japanese exports, and and also you know, demand for things 176 00:09:46,960 --> 00:09:49,199 Speaker 1: like Japanese cars sold in China as well. So it's 177 00:09:49,200 --> 00:09:51,640 Speaker 1: good for what's good for China is probably going to 178 00:09:51,720 --> 00:09:53,120 Speaker 1: be a pretty good It's going to be good for 179 00:09:53,200 --> 00:09:55,000 Speaker 1: Japan down the line as well. James talked to us 180 00:09:55,000 --> 00:09:58,200 Speaker 1: about the significance of the reserve of climate ratio versus say, 181 00:09:58,480 --> 00:10:00,600 Speaker 1: the one year lending rate or the one year deposit rate. 182 00:10:00,640 --> 00:10:03,080 Speaker 1: We haven't seen those main rates being cut. I don't 183 00:10:03,120 --> 00:10:06,160 Speaker 1: think since can you walk US through while they're choosing 184 00:10:06,200 --> 00:10:09,440 Speaker 1: to use the reserve requirement ratio over some of the 185 00:10:09,440 --> 00:10:13,839 Speaker 1: other benchmark rates of the PBOC, I mean, the central 186 00:10:13,840 --> 00:10:16,160 Speaker 1: banks and the government's here's main fear is is sort 187 00:10:16,160 --> 00:10:18,800 Speaker 1: of stoking another housing bubble on a stock bubble. And 188 00:10:18,840 --> 00:10:21,319 Speaker 1: so the thinking is that by cutting the amount of 189 00:10:21,360 --> 00:10:23,719 Speaker 1: money that banks have to hold in reserve, they'll lend 190 00:10:23,760 --> 00:10:27,720 Speaker 1: more money to companies to know, to provide to you know, 191 00:10:27,920 --> 00:10:32,679 Speaker 1: stimulate company investment. Is there evidence of that? There is? 192 00:10:32,720 --> 00:10:34,920 Speaker 1: There is, I mean previous cuts that happened in January 193 00:10:34,920 --> 00:10:37,640 Speaker 1: and May did lead to more lending temporarily through through 194 00:10:37,640 --> 00:10:39,319 Speaker 1: the company. So there was a big boom in lending 195 00:10:39,320 --> 00:10:42,079 Speaker 1: in the first quarter after the cut that happened in January, 196 00:10:42,440 --> 00:10:44,600 Speaker 1: but since then those effects are sort of taped it 197 00:10:44,600 --> 00:10:47,400 Speaker 1: off and credit demand credit supply has been sort of 198 00:10:47,400 --> 00:10:49,680 Speaker 1: tapering off. And one of the problems is obviously there's 199 00:10:50,240 --> 00:10:52,360 Speaker 1: one of the problems is with less demand from the 200 00:10:52,440 --> 00:10:54,720 Speaker 1: US because of the trade war, there's less demand for 201 00:10:54,840 --> 00:10:56,960 Speaker 1: credit from Chinese companies. They're just not wanting to borrow 202 00:10:57,000 --> 00:10:59,240 Speaker 1: as much. So one problem in the government and the 203 00:10:59,360 --> 00:11:01,640 Speaker 1: central bank is having is even if you push down 204 00:11:01,679 --> 00:11:03,560 Speaker 1: rates Further, if people don't want to borrow money, they're 205 00:11:03,559 --> 00:11:05,080 Speaker 1: not going to borrow money, no matter how cheap it 206 00:11:05,120 --> 00:11:08,360 Speaker 1: is in Europe. Put that in the United States too. 207 00:11:08,400 --> 00:11:10,120 Speaker 1: So James talked to me about whether this is a 208 00:11:10,200 --> 00:11:12,800 Speaker 1: change of approach or not. Because we've seen incrementally, this 209 00:11:12,880 --> 00:11:16,360 Speaker 1: gradual approach towards stimulus from the Chinese and policymakers and 210 00:11:16,440 --> 00:11:19,640 Speaker 1: officials over there for more than twelve months now, we're 211 00:11:19,640 --> 00:11:21,560 Speaker 1: trying to get our hands around whether we're about to 212 00:11:21,600 --> 00:11:23,959 Speaker 1: make a shift into another gear. James, what do you 213 00:11:24,000 --> 00:11:26,320 Speaker 1: see happening. I don't think it's gonna be I don't 214 00:11:26,320 --> 00:11:28,280 Speaker 1: think there's a huge step up in their stimulus. I 215 00:11:28,280 --> 00:11:29,719 Speaker 1: mean it's going to have an effect. But one of 216 00:11:29,760 --> 00:11:31,760 Speaker 1: the things I'm talking about their statement today was this 217 00:11:31,800 --> 00:11:34,000 Speaker 1: is going to help us September's tax season when companies 218 00:11:34,040 --> 00:11:36,560 Speaker 1: have to pay their quarterly taxes. So those are the 219 00:11:36,640 --> 00:11:38,600 Speaker 1: kind of that's the level of that that the Central 220 00:11:38,600 --> 00:11:40,920 Speaker 1: Bank is not thinking about. It's not a massive increase 221 00:11:40,920 --> 00:11:43,200 Speaker 1: in the economy. It's like helping companies get through the 222 00:11:43,200 --> 00:11:46,280 Speaker 1: next quarter, making sure they have enough money to pay 223 00:11:46,280 --> 00:11:49,280 Speaker 1: their taxes. So it's not really, you know, a game changer. 224 00:11:49,400 --> 00:11:51,680 Speaker 1: In what they're trying to do. How is the tradeward 225 00:11:51,720 --> 00:11:55,600 Speaker 1: treated in the domestic newspapers of Beijing that you and 226 00:11:55,679 --> 00:11:58,480 Speaker 1: your team look at every day, I mean feelingly in 227 00:11:58,600 --> 00:12:02,600 Speaker 1: Hong Kong's been abulous about the pulse of Chinese writing 228 00:12:02,960 --> 00:12:09,160 Speaker 1: in Hong Kong. How is the trade war written about domestically? Yeah, 229 00:12:09,160 --> 00:12:11,160 Speaker 1: it's it's interesting to look at what gets reported and 230 00:12:11,240 --> 00:12:13,480 Speaker 1: what doesn't get reported. Obviously, you know there is reporting 231 00:12:13,480 --> 00:12:15,880 Speaker 1: about the trade war, is it's it's a premial topic 232 00:12:15,880 --> 00:12:18,000 Speaker 1: of discussion in the media here. But you know when when, 233 00:12:18,160 --> 00:12:20,840 Speaker 1: for example, when President Trump tweeted a couple of weeks ago, 234 00:12:21,160 --> 00:12:23,160 Speaker 1: whether the biggest enemy of the US is your own 235 00:12:23,200 --> 00:12:25,679 Speaker 1: power or hijim ping, that just wasn't reported at all 236 00:12:25,720 --> 00:12:28,240 Speaker 1: in any media in China. So there was there was 237 00:12:28,559 --> 00:12:30,160 Speaker 1: it was reported that, you know, he had said some 238 00:12:30,200 --> 00:12:32,760 Speaker 1: stuff about China and reported that there had been comments, 239 00:12:32,840 --> 00:12:35,720 Speaker 1: but there's no detail provided. And then when it is reporting, 240 00:12:35,720 --> 00:12:38,760 Speaker 1: obviously it's gonna it holds to the Chinese line that 241 00:12:39,040 --> 00:12:41,120 Speaker 1: China is making real efforts to try and come to 242 00:12:41,160 --> 00:12:44,679 Speaker 1: an accommodation and the US is being unreasonable. So you 243 00:12:44,760 --> 00:12:47,040 Speaker 1: know obviously that you can't ignore that subject. But I 244 00:12:47,040 --> 00:12:49,199 Speaker 1: mean the reporting that does go out, at least in 245 00:12:49,240 --> 00:12:53,920 Speaker 1: the domestic media is is often skewed or just certain 246 00:12:53,920 --> 00:12:56,200 Speaker 1: things just don't don't appear at all, it seems. Thank 247 00:12:56,240 --> 00:12:58,400 Speaker 1: you so much, thanks in your Friday and you really 248 00:12:58,440 --> 00:13:18,000 Speaker 1: appreciate it. Mr Meger's and aging with Bloomberg News with 249 00:13:18,160 --> 00:13:21,480 Speaker 1: us sound Jeffrey Rosenberg he is with black Rock with 250 00:13:21,559 --> 00:13:25,920 Speaker 1: a synthesis here of the markets into our economy, Jeff, 251 00:13:26,000 --> 00:13:29,480 Speaker 1: are we going to have an ugly ninety days days 252 00:13:29,640 --> 00:13:33,400 Speaker 1: in our bond ownership? Is it going to be yield up, 253 00:13:33,640 --> 00:13:37,960 Speaker 1: price down? You know, you know, Tom, it's hard to say. 254 00:13:38,000 --> 00:13:42,160 Speaker 1: I mean, I agree. You look at this payroll report 255 00:13:42,480 --> 00:13:44,600 Speaker 1: and you know it's it's a mixed report. As you 256 00:13:44,600 --> 00:13:46,640 Speaker 1: guys were just saying, you got a little bit weaker 257 00:13:46,679 --> 00:13:51,679 Speaker 1: in terms of market expectations, not not horribly disappointing, but 258 00:13:51,760 --> 00:13:54,760 Speaker 1: you had stronger payrolls. You know, you're getting kind of 259 00:13:54,800 --> 00:13:58,320 Speaker 1: a muted reaction in the market and that gets us, 260 00:13:58,679 --> 00:14:04,040 Speaker 1: you know, more online with the FED cutting interest rates 261 00:14:04,080 --> 00:14:06,360 Speaker 1: and the expectations for the Fed cutting interest rates, that 262 00:14:06,440 --> 00:14:09,720 Speaker 1: doesn't really alter that environment. Hard to see how you 263 00:14:09,840 --> 00:14:14,679 Speaker 1: have significant bond losses in an environment where the FED 264 00:14:14,840 --> 00:14:19,160 Speaker 1: is basically saying they're leaning towards cutting interest rates rather 265 00:14:19,240 --> 00:14:22,720 Speaker 1: than doing nothing, or a different kind of environment altogether 266 00:14:22,720 --> 00:14:24,880 Speaker 1: where they're raising interest Right. I mean, we can look 267 00:14:24,920 --> 00:14:27,800 Speaker 1: at this any number of ways. How short employment changes 268 00:14:27,840 --> 00:14:33,280 Speaker 1: one survey, nonfarm employment, another survey, and I'm looking all 269 00:14:33,280 --> 00:14:38,600 Speaker 1: in all, it's three solid months of job development. I mean, 270 00:14:38,920 --> 00:14:41,120 Speaker 1: I get the idea we're all gaming out of vector 271 00:14:41,160 --> 00:14:44,280 Speaker 1: that's going to go south. But doesn't the FED have 272 00:14:44,360 --> 00:14:47,400 Speaker 1: to look at the three months moving average of whatever 273 00:14:47,520 --> 00:14:50,360 Speaker 1: labor survey they want to look at. Yeah, well that 274 00:14:50,520 --> 00:14:54,440 Speaker 1: the backstory here is that you have weakness in areas 275 00:14:54,480 --> 00:14:58,479 Speaker 1: of the global economy that have been so far outside 276 00:14:58,480 --> 00:15:01,000 Speaker 1: of the labor market. Right. So this morning's headline and 277 00:15:01,040 --> 00:15:04,160 Speaker 1: the focus of the data is on the strongest part 278 00:15:04,440 --> 00:15:07,880 Speaker 1: of the economy, and the concern is is the strongest 279 00:15:07,880 --> 00:15:10,840 Speaker 1: part of the economy going to start to see some 280 00:15:11,000 --> 00:15:13,920 Speaker 1: of the impact of the weaker parts. The weaker parts, 281 00:15:13,920 --> 00:15:17,280 Speaker 1: of course, are global growth slowing and the trade uncertainties. 282 00:15:17,480 --> 00:15:20,440 Speaker 1: And you know, while someone might say a one thirty 283 00:15:20,520 --> 00:15:24,120 Speaker 1: headline that's showing some weakness, I think I think it's 284 00:15:24,240 --> 00:15:27,600 Speaker 1: it's not as weak as feared. Where you might have 285 00:15:27,640 --> 00:15:31,440 Speaker 1: had a downside surprise of a much much weaker report. 286 00:15:31,800 --> 00:15:36,720 Speaker 1: That's really the story, and the story is maintained out 287 00:15:36,760 --> 00:15:40,640 Speaker 1: of this payroll report where the consumer side, particularly with 288 00:15:40,720 --> 00:15:44,040 Speaker 1: this wage growth number, the consumer side, the job market 289 00:15:44,200 --> 00:15:48,200 Speaker 1: side that's still strong and holding up. And that's where 290 00:15:48,240 --> 00:15:51,640 Speaker 1: you get this dissonance between depending on which Fed official 291 00:15:51,760 --> 00:15:54,920 Speaker 1: you're you're reading a quote from, why are they cutting? 292 00:15:55,000 --> 00:15:58,040 Speaker 1: What is the recession risk? Because you have cross currents 293 00:15:58,040 --> 00:16:02,400 Speaker 1: in the economy. Some parts which are basically global trade 294 00:16:02,680 --> 00:16:06,280 Speaker 1: manufacturing parts of the economy are showing clear slow down, 295 00:16:06,520 --> 00:16:12,080 Speaker 1: clear weakness, clear follow through from the trade uncertainty, the consumer, 296 00:16:12,480 --> 00:16:16,160 Speaker 1: the household, the jobs market that remains okay. So this 297 00:16:16,240 --> 00:16:19,160 Speaker 1: is a FED that is has its divisions. Does any 298 00:16:19,240 --> 00:16:23,360 Speaker 1: central bank the chairman will speak today and is he 299 00:16:23,480 --> 00:16:26,040 Speaker 1: just simply going to say we need more data to 300 00:16:26,120 --> 00:16:29,920 Speaker 1: get the September eighteen Well, I think that what he 301 00:16:30,080 --> 00:16:34,520 Speaker 1: has been doing is is clearly leaving the window, leaving 302 00:16:34,520 --> 00:16:40,480 Speaker 1: the degree to to not pushing back on market expectations. 303 00:16:40,560 --> 00:16:45,400 Speaker 1: Market expectations are pricing for in September. The Powell had 304 00:16:45,440 --> 00:16:49,200 Speaker 1: they had the payroll report ahead of putting together his speech. 305 00:16:49,680 --> 00:16:52,760 Speaker 1: Uh he's not going to do anything to change those 306 00:16:52,800 --> 00:16:56,560 Speaker 1: market expectations. He's going to try to reinforce those market expectations. 307 00:16:56,680 --> 00:16:59,120 Speaker 1: The Fed doesn't want to surprise the market. If that 308 00:16:59,240 --> 00:17:02,280 Speaker 1: doesn't want a guy the market differently than I think 309 00:17:02,280 --> 00:17:06,399 Speaker 1: they're happy to deliver. There's a big debate back do 310 00:17:06,520 --> 00:17:10,520 Speaker 1: they do fifty? Do they do? They? So they're going 311 00:17:10,560 --> 00:17:13,879 Speaker 1: to do another twenty five in September. That's what the 312 00:17:13,880 --> 00:17:16,879 Speaker 1: market expects and Powell to want to say anything one 313 00:17:16,920 --> 00:17:21,119 Speaker 1: way to disrupt that. Fishres up eleven, death features up 314 00:17:21,480 --> 00:17:25,640 Speaker 1: UNTI right now, I'm gonna call it a buoyant day. 315 00:17:25,680 --> 00:17:28,280 Speaker 1: And then we pulled back before the report churned a 316 00:17:28,320 --> 00:17:31,320 Speaker 1: little bit negative tone off the report, but we're bringing 317 00:17:31,359 --> 00:17:34,040 Speaker 1: that back right now with the futures up eleven, Town 318 00:17:34,040 --> 00:17:36,119 Speaker 1: futures up ninety seven, a lift to the market, the 319 00:17:36,240 --> 00:17:39,960 Speaker 1: VIX fifteen point seven three. We're advantaged by Jeffrey Rosenberg 320 00:17:40,280 --> 00:17:42,080 Speaker 1: of black Rock. Jeffrey, I want to come back, but 321 00:17:42,160 --> 00:17:45,360 Speaker 1: just one time for one more uh question, if if, 322 00:17:45,480 --> 00:17:48,280 Speaker 1: if we can, how do you link all this into 323 00:17:48,320 --> 00:17:52,200 Speaker 1: the equity markets on a cross asset basis? Just Powell, 324 00:17:52,440 --> 00:17:56,560 Speaker 1: the Powell put in place to support equities you know, 325 00:17:56,640 --> 00:17:59,760 Speaker 1: it's a it's a really interesting development what's going on. 326 00:18:00,280 --> 00:18:03,200 Speaker 1: Most of the time we're focused on the overall level 327 00:18:03,280 --> 00:18:06,879 Speaker 1: of the equity market, but you get the bigger change. 328 00:18:06,960 --> 00:18:13,520 Speaker 1: You know, equities had almost a five percentage reversal yesterday. Now, 329 00:18:13,520 --> 00:18:17,520 Speaker 1: what am I talking about talking about the sectoral contributions 330 00:18:17,720 --> 00:18:20,080 Speaker 1: of what has been driving this market, and what has 331 00:18:20,119 --> 00:18:25,520 Speaker 1: been driving this market has been a defensive equity market rotation. 332 00:18:25,960 --> 00:18:30,320 Speaker 1: Equity managers have been moving into the most defensive areas 333 00:18:30,320 --> 00:18:32,359 Speaker 1: of the stock market, and a lot of that is 334 00:18:32,400 --> 00:18:35,119 Speaker 1: related to trade uncertainty. So when you had the rally 335 00:18:35,200 --> 00:18:38,080 Speaker 1: and the overall index up, you know, one little over 336 00:18:38,119 --> 00:18:41,480 Speaker 1: one percent on the easing of the trade concerns, which 337 00:18:41,480 --> 00:18:43,840 Speaker 1: you really see is a much much bigger, not a 338 00:18:43,840 --> 00:18:47,920 Speaker 1: one percent, but a five percent move in relative valuations 339 00:18:48,000 --> 00:18:52,159 Speaker 1: between what had been the defensive part where people have 340 00:18:52,200 --> 00:18:56,440 Speaker 1: been hanging out UH and the less defensive, more trade 341 00:18:56,520 --> 00:18:59,280 Speaker 1: exposed sectors, and you saw a much bigger rotation away 342 00:18:59,320 --> 00:19:03,439 Speaker 1: from that. So it's really these intrasector performance that is 343 00:19:03,520 --> 00:19:07,520 Speaker 1: really driving the equity market much more than the overall level. Obviously, 344 00:19:07,600 --> 00:19:11,199 Speaker 1: overall level matters, UH, and that's where people focus. But 345 00:19:11,320 --> 00:19:15,880 Speaker 1: a lot of performance is going in in this Jeffrey 346 00:19:15,920 --> 00:19:31,440 Speaker 1: Rosenberg with a black rock. Tiffany wild Enjoys down from 347 00:19:31,440 --> 00:19:35,960 Speaker 1: Pimco looking at the economy and advising fixed income on 348 00:19:36,040 --> 00:19:38,800 Speaker 1: the American economy with green on the screen to deal 349 00:19:38,880 --> 00:19:42,359 Speaker 1: up forty four points. Tiffany, what do you say to 350 00:19:42,560 --> 00:19:49,680 Speaker 1: fixed income animals after the mixed report we just saw. Yeah, 351 00:19:49,720 --> 00:19:51,439 Speaker 1: I think there was a little bit of something for 352 00:19:51,560 --> 00:19:54,440 Speaker 1: everyone in this report. Um, you know. And I guess 353 00:19:54,480 --> 00:19:56,960 Speaker 1: what I would say is is that every report, you know, 354 00:19:57,000 --> 00:19:59,320 Speaker 1: can be a bit noisy, you know, So we try 355 00:19:59,359 --> 00:20:01,480 Speaker 1: to look at kind of the broader trends and not 356 00:20:01,640 --> 00:20:04,600 Speaker 1: anyone anyone given report. And I think those broader trends 357 00:20:04,720 --> 00:20:07,520 Speaker 1: were confirmed in this report, and that is that labor 358 00:20:07,560 --> 00:20:10,760 Speaker 1: markets are slowing, um, you know, again trying to kind 359 00:20:10,760 --> 00:20:13,760 Speaker 1: of smooth through some of the noise. Um. The the 360 00:20:14,720 --> 00:20:18,200 Speaker 1: average kind of moving average of payroll growth has declined 361 00:20:18,240 --> 00:20:21,880 Speaker 1: down to a hundred forty k UM for private payrolls, 362 00:20:21,880 --> 00:20:25,399 Speaker 1: for example, versus over two hundred last year. Yeah. And 363 00:20:25,800 --> 00:20:27,520 Speaker 1: I think one important thing to remember there is too, 364 00:20:27,560 --> 00:20:30,560 Speaker 1: is that you know, this data does get revised. Um. 365 00:20:30,600 --> 00:20:33,720 Speaker 1: The Bureau of Labor Statistics actually just recently released its 366 00:20:34,200 --> 00:20:38,200 Speaker 1: preliminary what it calls benchmark revisions, and those benchmark revisions 367 00:20:38,200 --> 00:20:41,399 Speaker 1: actually suggested that total payrolls in the economy are actually 368 00:20:41,400 --> 00:20:45,679 Speaker 1: five hundred less uh than they were previously believing. So 369 00:20:45,720 --> 00:20:49,000 Speaker 1: that data doesn't get incorporated and until early next year, 370 00:20:49,080 --> 00:20:51,160 Speaker 1: but that would suggest that the you know, that six 371 00:20:51,200 --> 00:20:53,320 Speaker 1: month moving average of forty that I just suggested is 372 00:20:53,359 --> 00:20:55,760 Speaker 1: maybe you know, even less than that, closer to one twenty. 373 00:20:55,880 --> 00:20:58,439 Speaker 1: So I mean, we are decelerating here. So Tiffany, how 374 00:20:58,440 --> 00:21:00,840 Speaker 1: do you think this Job's report and just the trend 375 00:21:00,920 --> 00:21:06,560 Speaker 1: that you've been just discussing will play within the federal reserve? Um? Yeah, 376 00:21:06,600 --> 00:21:10,399 Speaker 1: I mean I certainly think that, you know, it confirms 377 00:21:10,480 --> 00:21:15,520 Speaker 1: I think that you do need more accommodative monetary policy, 378 00:21:15,600 --> 00:21:18,119 Speaker 1: and there is downside risk to the forecast, you know. 379 00:21:18,119 --> 00:21:20,399 Speaker 1: So something that we've been very focused on is is 380 00:21:20,440 --> 00:21:24,679 Speaker 1: the manufacturing sector which is in uh in recession in 381 00:21:24,720 --> 00:21:27,439 Speaker 1: the US, um in a mini recession. You know, I 382 00:21:27,440 --> 00:21:29,560 Speaker 1: think the key question is the extent to that to 383 00:21:29,600 --> 00:21:32,680 Speaker 1: which that spills over into the broader economy. You know, 384 00:21:32,720 --> 00:21:35,600 Speaker 1: I think we are seeing early indications of that. Uh. 385 00:21:35,720 --> 00:21:38,880 Speaker 1: There have been other service sectors, for example, that are 386 00:21:38,880 --> 00:21:41,960 Speaker 1: tied to global trade, which has also been very weak 387 00:21:41,960 --> 00:21:45,640 Speaker 1: and decelerating. Those service sectors are are starting to are 388 00:21:45,680 --> 00:21:48,280 Speaker 1: starting to contract as well, you know. And then and 389 00:21:48,320 --> 00:21:51,040 Speaker 1: then you have some idiosyncratic issues, you know, like retail, 390 00:21:51,240 --> 00:21:54,400 Speaker 1: the retail trade industry which continues to you know, shed 391 00:21:54,480 --> 00:21:57,159 Speaker 1: jobs at brick and mortar. There's issues with with malls 392 00:21:57,160 --> 00:22:00,159 Speaker 1: and things like that that it's impacting structures, you know, 393 00:22:00,200 --> 00:22:02,040 Speaker 1: So that that's gonna be the thing that we watch, 394 00:22:02,160 --> 00:22:03,760 Speaker 1: you know. I guess the other important thing to note 395 00:22:03,840 --> 00:22:06,320 Speaker 1: here is just you know, as the economy decelerates, you're 396 00:22:06,320 --> 00:22:09,240 Speaker 1: gonna get slower corporate revenues, You're gonna get slower profits. 397 00:22:09,240 --> 00:22:11,800 Speaker 1: So really, again, the question is what do corporations do 398 00:22:12,280 --> 00:22:14,080 Speaker 1: in order to kind of readjust their inputs, you know, 399 00:22:14,160 --> 00:22:16,920 Speaker 1: do they focus on cutting back labor or investment or both? 400 00:22:16,960 --> 00:22:21,160 Speaker 1: And how much? So, Tiffany, it's just a sense of 401 00:22:21,320 --> 00:22:25,040 Speaker 1: you know what I think the market obviously is discounting 402 00:22:25,200 --> 00:22:30,640 Speaker 1: multiple uh FED cuts. Is that something that you think 403 00:22:30,960 --> 00:22:36,439 Speaker 1: is a fair discount by the market? Um? Yeah, I do. Um. 404 00:22:36,520 --> 00:22:38,359 Speaker 1: And the reason is is if you just sort of 405 00:22:38,480 --> 00:22:41,119 Speaker 1: maybe benchmark the recent slowing to kind of what we 406 00:22:41,160 --> 00:22:43,879 Speaker 1: saw in sixteen, just kind of as a broad benchmark, 407 00:22:44,040 --> 00:22:47,720 Speaker 1: US GDP growth slowed to one percent UM on a 408 00:22:47,760 --> 00:22:50,080 Speaker 1: trailing year over your basis at that time. You know, 409 00:22:50,119 --> 00:22:53,080 Speaker 1: if you look at that kind of growth shock to 410 00:22:53,119 --> 00:22:56,199 Speaker 1: the U S economy using the Fed's own model, they 411 00:22:56,280 --> 00:22:59,560 Speaker 1: provide market participants with their own model, fancy name called 412 00:22:59,600 --> 00:23:01,960 Speaker 1: farb us. If you use that model to to kind 413 00:23:01,960 --> 00:23:04,240 Speaker 1: of look at what that means for the FED funds rate, 414 00:23:04,480 --> 00:23:06,200 Speaker 1: and you know, it actually suggests that the FED funds 415 00:23:06,240 --> 00:23:08,880 Speaker 1: rate should be seventy five basis points or maybe even 416 00:23:08,880 --> 00:23:10,920 Speaker 1: a little bit more lower to kind of offset that shock. 417 00:23:11,280 --> 00:23:13,280 Speaker 1: You know. So I think the markets are are certainly 418 00:23:13,280 --> 00:23:15,680 Speaker 1: pricing in um, you know, some some more of a 419 00:23:15,800 --> 00:23:18,240 Speaker 1: dubbish turn from the FED and more easing, and I 420 00:23:18,240 --> 00:23:21,640 Speaker 1: think that's certainly appropriate. It's appropriate. But it comes down 421 00:23:21,680 --> 00:23:24,000 Speaker 1: to business investment as well. I mean I looked through 422 00:23:24,960 --> 00:23:26,879 Speaker 1: the job survey and I can see a little bit 423 00:23:26,880 --> 00:23:31,320 Speaker 1: of trade analysis there. What is your synthesis of what 424 00:23:31,440 --> 00:23:36,680 Speaker 1: business investment is actually doing in America? Well, yeah, I 425 00:23:36,680 --> 00:23:38,800 Speaker 1: mean I think I think business investment could I mean, 426 00:23:38,840 --> 00:23:43,160 Speaker 1: it's been it's certainly been slowing since last year, UM, 427 00:23:43,240 --> 00:23:46,639 Speaker 1: and it's been actually pretty weak but still positive the 428 00:23:46,680 --> 00:23:49,320 Speaker 1: first couple of quarters this year. We actually think that 429 00:23:49,359 --> 00:23:51,960 Speaker 1: it will contract, you know, outright in the third quarter 430 00:23:51,960 --> 00:23:53,639 Speaker 1: and will continue to be weak in the in the 431 00:23:53,640 --> 00:23:55,399 Speaker 1: back half of the year. And so you know, what 432 00:23:55,440 --> 00:23:58,440 Speaker 1: we've seen is that businesses are are slowing their investment 433 00:23:58,520 --> 00:24:00,960 Speaker 1: and things like heavy equipment. Now this is this can 434 00:24:01,000 --> 00:24:04,639 Speaker 1: be tied to the you know, the industrial manufacturing sector, 435 00:24:04,720 --> 00:24:07,359 Speaker 1: so heavy equipment and machines and things like that. The ones. 436 00:24:07,720 --> 00:24:10,120 Speaker 1: The one bright spot I think on the investment side 437 00:24:10,200 --> 00:24:14,040 Speaker 1: has been intellectual property investment, technology type of investments. We 438 00:24:14,119 --> 00:24:16,680 Speaker 1: saw that a lot last year. We're seeing that kind 439 00:24:16,680 --> 00:24:18,600 Speaker 1: of slow as well, but I think that's one bright spot. 440 00:24:18,920 --> 00:24:21,920 Speaker 1: Oh and the president tweeting a Larry Cudlow and Varney 441 00:24:21,960 --> 00:24:24,959 Speaker 1: and Company now for further questions. John Farrell will be 442 00:24:24,960 --> 00:24:29,360 Speaker 1: with Mr Cudlow here in a bed in a bit 443 00:24:29,480 --> 00:24:31,600 Speaker 1: as well. The present is very active today. I don't 444 00:24:31,600 --> 00:24:35,959 Speaker 1: think a schedule schedules open. Yeah, it's executive time. Executive time. 445 00:24:35,960 --> 00:24:38,920 Speaker 1: There's a lot of executive time. I'm counting the tweets 446 00:24:39,000 --> 00:24:46,040 Speaker 1: and uh one, two, three, four, five, six, seven, eight, nine, 447 00:24:46,320 --> 00:24:49,360 Speaker 1: I think nine, but maybe ten. The days are early days. 448 00:24:50,520 --> 00:24:52,800 Speaker 1: The day is young. So Tiffany, you know, one of 449 00:24:52,840 --> 00:24:54,800 Speaker 1: the concerns out there, and you know, I kind of 450 00:24:54,800 --> 00:24:57,720 Speaker 1: ebbs and flows is the kind of the R word. Um, 451 00:24:57,760 --> 00:25:01,080 Speaker 1: where does the recession UH fit into your outlook if 452 00:25:01,160 --> 00:25:03,640 Speaker 1: at all? Yeah, Yeah, I mean I think I think 453 00:25:03,640 --> 00:25:06,439 Speaker 1: it's reasonable. I mean, so we would say the recession risks, 454 00:25:06,720 --> 00:25:09,840 Speaker 1: you know, are elevated now if you just look historically, 455 00:25:10,560 --> 00:25:13,960 Speaker 1: you know, any given year kind of has a probability 456 00:25:14,000 --> 00:25:16,120 Speaker 1: of recession of around fifteen percent just if you look 457 00:25:16,119 --> 00:25:18,520 Speaker 1: at the historical instances of a recession. So we would 458 00:25:18,520 --> 00:25:21,600 Speaker 1: say that it's elevated relative to that historical average now 459 00:25:21,600 --> 00:25:23,760 Speaker 1: and and and the reasons are is because you know, 460 00:25:23,800 --> 00:25:26,280 Speaker 1: like I said before, the U. S economy, it is decelerating, 461 00:25:26,320 --> 00:25:28,680 Speaker 1: and we have you know, weakness and global growth that 462 00:25:28,840 --> 00:25:31,119 Speaker 1: is spilling over. They're starting to be questions around if 463 00:25:31,160 --> 00:25:33,720 Speaker 1: that will spill over into into consumption. You know, So 464 00:25:33,800 --> 00:25:36,200 Speaker 1: that just sets up for you know, a very weakend 465 00:25:36,280 --> 00:25:39,320 Speaker 1: kind of fragile state. And and that means that any 466 00:25:39,359 --> 00:25:42,159 Speaker 1: sort of other you know, negative shock, you know, it 467 00:25:42,200 --> 00:25:46,320 Speaker 1: can can push the economy over UH into recession potentially. 468 00:25:46,359 --> 00:25:48,040 Speaker 1: So you know, that's why we would think it's elevated, 469 00:25:48,280 --> 00:25:49,840 Speaker 1: you know, and I guess again that's why it calls 470 00:25:49,880 --> 00:25:53,040 Speaker 1: for more more phanezing. I think to buffer them. Tiffany, 471 00:25:53,080 --> 00:25:55,080 Speaker 1: Thank you so much, Tiffanty welding with us with PIMCO 472 00:25:55,520 --> 00:25:58,920 Speaker 1: on the labor economy, and it's folding in to what 473 00:25:58,960 --> 00:26:17,360 Speaker 1: we see. For here is John Ferrell with Lawrence Cudlow 474 00:26:17,480 --> 00:26:19,720 Speaker 1: Rump Administration's views on the job for report. I'm pleased 475 00:26:19,760 --> 00:26:22,000 Speaker 1: to say, well now joined on Bloomberg Television and on 476 00:26:22,080 --> 00:26:26,240 Speaker 1: Bloomberg Radio by Larry Cudlow, National Economic Council Director. Larry. 477 00:26:26,359 --> 00:26:29,000 Speaker 1: Always great to have you with us. Let's just put 478 00:26:29,000 --> 00:26:31,919 Speaker 1: the labor market together with that trade dispute. How do 479 00:26:32,040 --> 00:26:35,400 Speaker 1: you frame the transmission mechanism for the trade friction right 480 00:26:35,440 --> 00:26:40,120 Speaker 1: now into the labor market into the U. S. Economy. Well, look, 481 00:26:40,440 --> 00:26:46,120 Speaker 1: today's labor market story was very strong. Um, the payroll 482 00:26:46,200 --> 00:26:49,520 Speaker 1: job is a hundred thirty thousand, but you know, August 483 00:26:49,680 --> 00:26:52,920 Speaker 1: is a quirky month. Usually the number comes in low 484 00:26:52,960 --> 00:26:56,240 Speaker 1: and then it's revised upwards. But Jonathan, I want to 485 00:26:56,280 --> 00:26:59,760 Speaker 1: raise a point that I don't think anyone's really discussed. 486 00:26:59,840 --> 00:27:05,240 Speaker 1: Yeah on the air. Actually, the big story here is 487 00:27:05,320 --> 00:27:11,080 Speaker 1: the blowout number in the household employment survey, from which 488 00:27:11,200 --> 00:27:17,000 Speaker 1: unemployment derives, that was up five hundred and ninety thousand, 489 00:27:17,640 --> 00:27:21,520 Speaker 1: five hundred and ninety thousand, and that's the third straight 490 00:27:21,600 --> 00:27:25,480 Speaker 1: months of outsized numbers. The average is three hundred and 491 00:27:25,520 --> 00:27:30,040 Speaker 1: seventy three thousands. So hundred thirty thousand non farm payrolls 492 00:27:30,080 --> 00:27:34,119 Speaker 1: is fine, it's fine, probably be revised up. But the 493 00:27:34,160 --> 00:27:37,920 Speaker 1: household survey at five ninety Now you know why is 494 00:27:37,960 --> 00:27:40,200 Speaker 1: that important? Well, first of all, that's where the unemployment 495 00:27:40,280 --> 00:27:44,160 Speaker 1: rate comes from. The unemployment rate remains low, and UH 496 00:27:44,280 --> 00:27:49,560 Speaker 1: in some of these subcategories African Americans, African American women, UH, 497 00:27:49,880 --> 00:27:52,960 Speaker 1: their rock bottom historical lows. I want to make one 498 00:27:53,040 --> 00:27:56,119 Speaker 1: other point, Jonathan, in this number that I haven't seen discussed, 499 00:27:56,520 --> 00:28:01,080 Speaker 1: the civilian labor force increase. I gotta look at my 500 00:28:01,119 --> 00:28:04,320 Speaker 1: sheet to get this number right. By five hundred and 501 00:28:04,400 --> 00:28:08,600 Speaker 1: seventy one thousand. Now, that's like think of it, people 502 00:28:08,800 --> 00:28:13,320 Speaker 1: coming out of the woodwork and rejoined the labor force. UH. 503 00:28:13,440 --> 00:28:16,959 Speaker 1: That number has been rising steadily for the last three months. 504 00:28:17,320 --> 00:28:23,520 Speaker 1: The average is four hundred twenty five thousand. And finally, UH, 505 00:28:23,800 --> 00:28:27,960 Speaker 1: labor force wages average hourly earnings three two percent for 506 00:28:28,040 --> 00:28:33,320 Speaker 1: the twelve months, Jonathan, but um for the last three months, 507 00:28:33,880 --> 00:28:37,000 Speaker 1: the wage rate is above four. So let me just 508 00:28:37,800 --> 00:28:43,240 Speaker 1: recalibrate this. We are seeing blowout numbers and household survey 509 00:28:43,320 --> 00:28:46,160 Speaker 1: that's your small business a leading indicator by the way 510 00:28:46,160 --> 00:28:50,400 Speaker 1: of payrolls point number one. We are seeing blowout numbers 511 00:28:50,440 --> 00:28:56,080 Speaker 1: of people returning to work and they are getting paid well, Jonathan. 512 00:28:56,120 --> 00:28:59,920 Speaker 1: If I may, America is working and America is get 513 00:29:00,000 --> 00:29:04,720 Speaker 1: being paid and the economy is very strong, probably much 514 00:29:04,760 --> 00:29:09,240 Speaker 1: stronger than all this rumor mill media narrative would suggest. 515 00:29:09,320 --> 00:29:12,440 Speaker 1: These are very very strong numbers today. So, Larry, I 516 00:29:12,520 --> 00:29:14,360 Speaker 1: know you watched this program religiously, but you were probably 517 00:29:14,360 --> 00:29:16,880 Speaker 1: busy about an hour ago and Muhammadalarian came up on 518 00:29:16,920 --> 00:29:19,880 Speaker 1: this program and he said that actually, the participation rate 519 00:29:19,880 --> 00:29:22,920 Speaker 1: looks pretty good, average as worked looks pretty good, wages 520 00:29:23,040 --> 00:29:25,520 Speaker 1: looks pretty solid. We just can't get away from this 521 00:29:25,600 --> 00:29:28,000 Speaker 1: anxiety around the trade story, Larry, and I think people 522 00:29:28,040 --> 00:29:30,920 Speaker 1: found it encouraging this week that talks are going to happen. 523 00:29:31,160 --> 00:29:33,440 Speaker 1: Can you just walk me through the timeline for these talks. 524 00:29:33,440 --> 00:29:36,600 Speaker 1: And I'm trying to understand whether these talks are contingent 525 00:29:36,960 --> 00:29:40,120 Speaker 1: on tariffs not going up again in October. Have the 526 00:29:40,200 --> 00:29:43,840 Speaker 1: Chinese asked for that? Uh No, not at the moment. Look, 527 00:29:43,880 --> 00:29:48,600 Speaker 1: all's that's happened, and and it's very positive developments. Um. 528 00:29:48,720 --> 00:29:52,360 Speaker 1: Sar Jerry Manusia and Bassador Lightheizer on the phone with 529 00:29:52,800 --> 00:29:57,360 Speaker 1: Vice premierly or Hey. They decided that they Chinese team 530 00:29:57,400 --> 00:30:00,520 Speaker 1: would in fact come to the US. That will be 531 00:30:00,640 --> 00:30:06,800 Speaker 1: preceded Jonathan A Deputy's meeting. Chinese deputies team will come 532 00:30:06,880 --> 00:30:09,160 Speaker 1: to the US. I guess in a week or two 533 00:30:09,240 --> 00:30:13,520 Speaker 1: in September to meet with our deputies. They will hammer 534 00:30:13,560 --> 00:30:18,240 Speaker 1: out an agenda with key discussion points, and then I 535 00:30:18,280 --> 00:30:20,960 Speaker 1: guess in early October. The precise date has yet to 536 00:30:21,000 --> 00:30:26,320 Speaker 1: be said. Our principal negotiators against sectary munition, Bestler Lightheiser 537 00:30:26,400 --> 00:30:29,760 Speaker 1: will sit down with Vice Premier leu Hey and his 538 00:30:29,920 --> 00:30:34,560 Speaker 1: others h At to talk about the deal. Look, Um, 539 00:30:34,920 --> 00:30:38,360 Speaker 1: I have maintained, or I have tried to maintain through 540 00:30:38,560 --> 00:30:42,800 Speaker 1: a kind of long summer here that while President Trump 541 00:30:42,880 --> 00:30:46,280 Speaker 1: continues his defense of the American worker in the American economy, 542 00:30:46,640 --> 00:30:49,640 Speaker 1: President Trump is a very tough negotiator. I hope people 543 00:30:49,720 --> 00:30:54,280 Speaker 1: appreciate that. Now the other part of the story is 544 00:30:54,880 --> 00:30:58,480 Speaker 1: that we're talking, and Cudlow axiom it's always better to 545 00:30:58,520 --> 00:31:02,520 Speaker 1: talk than not to talk. President Trump is indicated he 546 00:31:02,560 --> 00:31:05,720 Speaker 1: would he would take a deal as long as it's 547 00:31:05,880 --> 00:31:09,280 Speaker 1: a good deal for this country. President also believes that 548 00:31:09,400 --> 00:31:11,800 Speaker 1: China wants a deal. You know, coming back to the 549 00:31:11,880 --> 00:31:14,320 Speaker 1: job numbers, you you made that linkage, and it's an 550 00:31:14,320 --> 00:31:19,960 Speaker 1: important linkage. Our economy is humming, the Chinese economy is not, 551 00:31:20,920 --> 00:31:24,160 Speaker 1: and we believe that they want to make a deal. 552 00:31:24,680 --> 00:31:28,440 Speaker 1: And so let us see how these negotiations turn out. 553 00:31:28,440 --> 00:31:30,560 Speaker 1: I don't want to forecast, I don't want to predict. 554 00:31:30,760 --> 00:31:34,280 Speaker 1: All I can say is sitting down and talking is 555 00:31:34,360 --> 00:31:38,000 Speaker 1: always a good thing. And the phone calls were very constructive. 556 00:31:38,040 --> 00:31:40,800 Speaker 1: So so let's see, let's keep an open mind, let's 557 00:31:40,840 --> 00:31:43,320 Speaker 1: even try to be optimistic. So, Larry, I just want 558 00:31:43,320 --> 00:31:45,200 Speaker 1: to get a bit more clarity on the process the 559 00:31:45,200 --> 00:31:47,720 Speaker 1: ministerial level talks that will happen in the coming weeks 560 00:31:47,720 --> 00:31:50,160 Speaker 1: here in the United States. Do you need to see 561 00:31:50,200 --> 00:31:52,800 Speaker 1: anything come from them to get to the next level 562 00:31:52,840 --> 00:31:54,520 Speaker 1: to get to the talks in October? Or do the 563 00:31:54,520 --> 00:31:57,520 Speaker 1: talks in October happened regardless of what happens at the 564 00:31:57,560 --> 00:32:01,240 Speaker 1: ministerial level in the coming weeks. Well, no, there are 565 00:32:01,280 --> 00:32:04,880 Speaker 1: no conditions. There are no conditions. We're they're coming to 566 00:32:04,960 --> 00:32:08,240 Speaker 1: talk and we welcome them with open arms to talk. 567 00:32:08,840 --> 00:32:14,840 Speaker 1: Look a bit of context here, Jonathan. We I thought 568 00:32:14,920 --> 00:32:17,720 Speaker 1: we were close last May. You may recall you and 569 00:32:17,760 --> 00:32:19,880 Speaker 1: I have talked about this in the interim. We thought 570 00:32:19,960 --> 00:32:24,640 Speaker 1: we were close. Maybe there. Uh. The key issues remain 571 00:32:24,720 --> 00:32:27,640 Speaker 1: on the table right the so called structural issues I 572 00:32:27,800 --> 00:32:34,280 Speaker 1: P theft, force, transfer of technology, cloud technology, cyber interference, 573 00:32:34,640 --> 00:32:37,680 Speaker 1: and of course the trade, the tariff and non tariff 574 00:32:37,720 --> 00:32:44,360 Speaker 1: barriers regarding commodities, UH, energy, agriculture, UH and so forth. 575 00:32:45,680 --> 00:32:48,600 Speaker 1: We we we thought we were close. Then the talks 576 00:32:48,640 --> 00:32:53,160 Speaker 1: broke off. China pulled back for whatever reason. I'm not 577 00:32:53,240 --> 00:32:55,320 Speaker 1: here to second guess it. I don't even want to 578 00:32:55,360 --> 00:32:58,320 Speaker 1: go into motives. We would like. I can say this, 579 00:32:59,040 --> 00:33:02,440 Speaker 1: our team would like to go back and pick up 580 00:33:02,480 --> 00:33:07,280 Speaker 1: where we left off in the May UH talks. Whether 581 00:33:07,360 --> 00:33:10,880 Speaker 1: that will be possible remains to be seen. I don't 582 00:33:10,920 --> 00:33:13,760 Speaker 1: want to predict it. All I know is we've got 583 00:33:13,760 --> 00:33:16,440 Speaker 1: a new round of talks, and I think that's a 584 00:33:16,520 --> 00:33:19,120 Speaker 1: very hopeful developed. Let me just to jump in because 585 00:33:19,120 --> 00:33:20,480 Speaker 1: I know we're pushed for time. Do you think there's 586 00:33:20,480 --> 00:33:23,400 Speaker 1: any chance of the October tariff increase could be delayed, 587 00:33:23,520 --> 00:33:27,040 Speaker 1: could be pushed back. I don't want to speculate at 588 00:33:27,120 --> 00:33:30,120 Speaker 1: all on that. That, of course, is the President's decision. 589 00:33:30,320 --> 00:33:33,960 Speaker 1: Is that part of the conversation. It may be part 590 00:33:33,960 --> 00:33:36,920 Speaker 1: of the conversation. There'll be a lot of things as 591 00:33:36,960 --> 00:33:39,960 Speaker 1: part of that conversation. I'm sure Taras will enter into it, 592 00:33:40,040 --> 00:33:42,200 Speaker 1: along with the other issues that I just mentioned a 593 00:33:42,200 --> 00:33:44,520 Speaker 1: few moments ago. The reason arsillary is because there would 594 00:33:44,520 --> 00:33:48,000 Speaker 1: be ministerial talks before the high level talks happen in October, 595 00:33:48,000 --> 00:33:49,720 Speaker 1: and of course we would have to make that decision 596 00:33:49,960 --> 00:33:51,560 Speaker 1: in the next couple of weeks. Is that on the 597 00:33:51,560 --> 00:33:53,880 Speaker 1: table for the ministerial level talks in the coming weeks. 598 00:33:54,440 --> 00:33:59,480 Speaker 1: I will simply respond by saying President Trump is, as 599 00:33:59,520 --> 00:34:04,720 Speaker 1: I think we know now, a very tough and crafty negotiator. 600 00:34:05,800 --> 00:34:10,520 Speaker 1: He has shown his willingness to use tariffs as part 601 00:34:10,520 --> 00:34:14,640 Speaker 1: of this whole negotiating process. The best I can do 602 00:34:15,200 --> 00:34:18,399 Speaker 1: is to paraphrase what he has been saying. We want 603 00:34:18,440 --> 00:34:21,640 Speaker 1: to see results. We would like to see results in 604 00:34:21,719 --> 00:34:25,799 Speaker 1: the near term. When we don't see results, we take 605 00:34:25,840 --> 00:34:29,440 Speaker 1: additional actions. On the other hand, if we do see 606 00:34:29,440 --> 00:34:35,200 Speaker 1: results from these upcoming meetings, then progress will be made, 607 00:34:35,760 --> 00:34:40,359 Speaker 1: as best I can tell you. And look, I said 608 00:34:40,400 --> 00:34:44,000 Speaker 1: a few moments ago, from these jobs numbers. Today, America 609 00:34:44,080 --> 00:34:48,280 Speaker 1: is working, America is producing, Our economy is quite strong. 610 00:34:48,480 --> 00:34:52,319 Speaker 1: Things like productivity is rising as well as wages and 611 00:34:52,400 --> 00:34:56,080 Speaker 1: so forth. We need to protect that. We are the 612 00:34:56,120 --> 00:35:03,360 Speaker 1: world's leader in technology, invention, innovation, application, and new business starts. 613 00:35:03,360 --> 00:35:06,520 Speaker 1: We're the world's leader. And Larry, already important topics and 614 00:35:06,520 --> 00:35:07,919 Speaker 1: I know you're going to address them in the talk. 615 00:35:07,960 --> 00:35:12,520 Speaker 1: Technology is our family jewels and we must protect America 616 00:35:12,640 --> 00:35:14,960 Speaker 1: on that. This is a president's point of view. This 617 00:35:15,080 --> 00:35:16,840 Speaker 1: is a take from China, Larry, that I want you 618 00:35:16,880 --> 00:35:19,440 Speaker 1: to weigh in on. The editor of China's Global Times, 619 00:35:19,480 --> 00:35:22,880 Speaker 1: viewed by many as being a mouthpiece for the Communist Party, 620 00:35:23,040 --> 00:35:25,520 Speaker 1: tweeted this earlier this week, and I'd love your input 621 00:35:25,600 --> 00:35:28,120 Speaker 1: on it. Personally, I think the US is worn out 622 00:35:28,160 --> 00:35:30,279 Speaker 1: by the trade war. It may no longer hope for 623 00:35:30,320 --> 00:35:34,080 Speaker 1: crushing trushing China's will. There's more possibility of a breakthrough 624 00:35:34,360 --> 00:35:38,439 Speaker 1: between the two sides. Just how wrong is that statement, Larry? Yeah, Well, 625 00:35:38,760 --> 00:35:45,880 Speaker 1: my response to that is never underestimated, Never underestimate the 626 00:35:45,960 --> 00:35:49,840 Speaker 1: strength of this country or the strength of this president. 627 00:35:50,840 --> 00:35:53,520 Speaker 1: President Trump is doing what presidents have not done in 628 00:35:53,560 --> 00:35:57,880 Speaker 1: the last five years. He sees the unfair trading practices. 629 00:35:58,960 --> 00:36:02,919 Speaker 1: He wants to protect our country, our workforce, our technology, 630 00:36:03,000 --> 00:36:07,440 Speaker 1: are farmers whatever. He is not going to relent. And 631 00:36:07,520 --> 00:36:12,080 Speaker 1: by the way, in sheer political terms, I think the 632 00:36:12,120 --> 00:36:18,120 Speaker 1: President has enormous support with respect to a rebalance and 633 00:36:18,200 --> 00:36:22,879 Speaker 1: a big change in our relationship with China. Jonathan, this 634 00:36:23,040 --> 00:36:29,839 Speaker 1: is an economic issue, This is a technology issue, This 635 00:36:29,960 --> 00:36:35,560 Speaker 1: is a fair trade issue, This is a national security issue. 636 00:36:36,200 --> 00:36:41,160 Speaker 1: This is also a human rights issue. So those people 637 00:36:41,600 --> 00:36:46,400 Speaker 1: in China or any place else who underestimate the strength 638 00:36:46,680 --> 00:36:51,000 Speaker 1: and determination of the United States, they are making a 639 00:36:51,200 --> 00:36:54,919 Speaker 1: very very big mistake. Couple, ID love a final word 640 00:36:54,920 --> 00:36:56,680 Speaker 1: from you on the Federal Reserve, if you may. The 641 00:36:56,760 --> 00:36:59,480 Speaker 1: former New York Fed President Built Dudley White in an 642 00:36:59,520 --> 00:37:01,560 Speaker 1: opinion in the last couple of weeks and was quite 643 00:37:01,560 --> 00:37:04,680 Speaker 1: controversial about the fetes role enabling the President to go 644 00:37:04,800 --> 00:37:08,080 Speaker 1: harder on trade. Larry, I've been wanted to defend the 645 00:37:08,120 --> 00:37:10,360 Speaker 1: federal reserves independence. I came down quite hard on that 646 00:37:10,400 --> 00:37:12,640 Speaker 1: piece and was very critical of it. The President then 647 00:37:12,680 --> 00:37:15,799 Speaker 1: again tweeted once more about where did I find this 648 00:37:15,920 --> 00:37:18,640 Speaker 1: Jerome guy? Just to be balanced here, Larry, I have 649 00:37:18,680 --> 00:37:21,680 Speaker 1: to say, it's incredibly unhelpful to go after the Fed 650 00:37:21,719 --> 00:37:24,319 Speaker 1: in this way. Larry, Just how complex is it right now? 651 00:37:24,360 --> 00:37:27,440 Speaker 1: And the conversations you're having personally? Is this something you're 652 00:37:27,480 --> 00:37:32,000 Speaker 1: pushing back on in the White House? No, Look, the 653 00:37:32,080 --> 00:37:36,879 Speaker 1: President has made his views clear. He's very outspoken, he's 654 00:37:37,040 --> 00:37:42,360 Speaker 1: very well informed. Our view has always been that the 655 00:37:42,400 --> 00:37:46,800 Speaker 1: monetary policy seven rate hikes in the last two years, 656 00:37:46,880 --> 00:37:53,680 Speaker 1: nine rate hikes, way too tight. We've had severe monetary headwinds. 657 00:37:54,200 --> 00:37:56,040 Speaker 1: You know, it's a wonder we're growing at two and 658 00:37:56,120 --> 00:37:59,000 Speaker 1: a half to three percent with these monetary headwinds. Okay, 659 00:37:59,040 --> 00:38:02,479 Speaker 1: that's one key point with respect to Bill Dudley, whom 660 00:38:02,520 --> 00:38:06,080 Speaker 1: I have known for many years. Bill Dudley went over 661 00:38:06,120 --> 00:38:10,360 Speaker 1: the cliff. What Bill dudley statements suggested is that the 662 00:38:10,400 --> 00:38:17,520 Speaker 1: Federal Reserve should adopt a monetary policy geared towards defeating 663 00:38:17,880 --> 00:38:24,480 Speaker 1: President Trump in now. That is the most politicized statement 664 00:38:24,560 --> 00:38:28,200 Speaker 1: I have ever heard, and the current Federal Reserve Board 665 00:38:28,840 --> 00:38:31,959 Speaker 1: disavowted walked away from it, which is a good thing. 666 00:38:32,480 --> 00:38:36,720 Speaker 1: Mr Dudley stepped over the cliff. He's been criticized heavily 667 00:38:36,800 --> 00:38:41,360 Speaker 1: by Democrats, like my friend Larry Summers, for example. I 668 00:38:41,440 --> 00:38:44,840 Speaker 1: will weigh in on that criticism. The idea that you 669 00:38:44,920 --> 00:38:50,480 Speaker 1: conduct monetary policy towards somehow influencing an election outcome is 670 00:38:50,560 --> 00:38:57,000 Speaker 1: just utter nonsense. The FED is an independent agency. We've 671 00:38:57,000 --> 00:39:01,240 Speaker 1: always said that, but then again, we have our opinions 672 00:39:01,280 --> 00:39:05,319 Speaker 1: about the state of monetary policy. Market is telling us 673 00:39:05,800 --> 00:39:09,279 Speaker 1: the Fed is going to lower rate in September and October. 674 00:39:09,600 --> 00:39:12,359 Speaker 1: I think that's a good thing. We shouldn't have an 675 00:39:12,360 --> 00:39:15,640 Speaker 1: inverted yield curve. We should normalize that, and I think 676 00:39:15,719 --> 00:39:18,240 Speaker 1: if we get to a normal position, it will actually 677 00:39:18,320 --> 00:39:22,719 Speaker 1: help the economy get back above three. Dudley, who then 678 00:39:22,760 --> 00:39:26,560 Speaker 1: wrote a second article on Bloomberg, which did not recant 679 00:39:26,600 --> 00:39:31,680 Speaker 1: the first article, is trying to politicize this election and 680 00:39:31,880 --> 00:39:35,920 Speaker 1: lead some sort of anti Trump, you know, the revolution 681 00:39:36,040 --> 00:39:38,680 Speaker 1: or whatever the heck is called. That is nonsense. He 682 00:39:38,840 --> 00:39:41,600 Speaker 1: is so far off the charts, he is over the cliff. 683 00:39:41,800 --> 00:39:45,080 Speaker 1: He has no support, I hope. But in any event, 684 00:39:45,280 --> 00:39:49,399 Speaker 1: in any event, the fattest professional they are independent, they're 685 00:39:49,400 --> 00:39:52,560 Speaker 1: gonna do what I think they need to do, and 686 00:39:52,600 --> 00:39:55,000 Speaker 1: that's going to help the economy. And again I go 687 00:39:55,080 --> 00:39:59,960 Speaker 1: back to today's job numbers. America is working in America 688 00:40:00,000 --> 00:40:02,919 Speaker 1: and workers are coming back into the labor force. They're 689 00:40:02,960 --> 00:40:08,360 Speaker 1: getting paid, they're spending, they're saving, they're producing. We're in 690 00:40:08,400 --> 00:40:10,719 Speaker 1: pretty darn good shape if you ask me. Larry, final 691 00:40:10,840 --> 00:40:13,319 Speaker 1: question for you, because Bill Dudley did clarify that piece, 692 00:40:13,320 --> 00:40:15,320 Speaker 1: as you mentioned, he trying to walk it back somewhat. 693 00:40:15,400 --> 00:40:18,360 Speaker 1: That criticism remains, But I'm trying to understand the difference 694 00:40:18,400 --> 00:40:21,520 Speaker 1: between what Larry Cudlo is pushing back on and what 695 00:40:21,600 --> 00:40:23,440 Speaker 1: Larry Cutler in the White House is doing right now 696 00:40:23,480 --> 00:40:26,280 Speaker 1: with regards to respecting the political independence from the Federal Reserve. 697 00:40:26,560 --> 00:40:29,000 Speaker 1: There's not a big gap between that piece and what 698 00:40:29,040 --> 00:40:32,240 Speaker 1: you guys are pushing for. Oh I, I just couldn't 699 00:40:32,280 --> 00:40:36,000 Speaker 1: disagree more with respect, Jonathan. I'm sorry, there's no moral 700 00:40:36,000 --> 00:40:40,160 Speaker 1: equivalence between the two. We have never suggested that FED 701 00:40:40,239 --> 00:40:44,759 Speaker 1: policy should be geared towards elections. What we have suggested 702 00:40:45,600 --> 00:40:52,160 Speaker 1: is that FED policy should be geared towards maximum economic prosperity. 703 00:40:52,480 --> 00:40:56,759 Speaker 1: And we have noted many times there is no inflation. 704 00:40:57,280 --> 00:40:59,759 Speaker 1: I mean the inflation break even as you yourself, no, 705 00:41:00,000 --> 00:41:03,360 Speaker 1: as well as anybody is down around one one a 706 00:41:03,440 --> 00:41:07,279 Speaker 1: quarter percent, which is what Rich Clarena Vice chairs said 707 00:41:07,440 --> 00:41:10,040 Speaker 1: and what the chairman has said. That's a different issue. 708 00:41:10,360 --> 00:41:15,640 Speaker 1: We want maximum prosperity, job creation and stay with the law. Inflation. 709 00:41:16,320 --> 00:41:19,080 Speaker 1: We're not out there talking about a campaign, No, Larry, 710 00:41:19,080 --> 00:41:26,880 Speaker 1: I agree with that. You're not talking about specifically Dudley 711 00:41:26,960 --> 00:41:31,160 Speaker 1: LinkedIn specifically to the election. That is a new law. 712 00:41:31,560 --> 00:41:36,040 Speaker 1: I agree, And he's a former senior FED official. And look, 713 00:41:36,400 --> 00:41:40,319 Speaker 1: the Federal Reserve Board disvowed properly so and I can 714 00:41:40,360 --> 00:41:44,320 Speaker 1: tell you internally from my conversations they were horrified. Larry, 715 00:41:44,360 --> 00:41:47,319 Speaker 1: you get zero pushback from me on that point. But 716 00:41:47,400 --> 00:41:49,720 Speaker 1: where I do see a link because the President himself 717 00:41:49,719 --> 00:41:52,560 Speaker 1: as a linked to Federal Reserve policy to the Democratic 718 00:41:52,600 --> 00:41:55,080 Speaker 1: Party that came before him and suggested that the Fed 719 00:41:55,160 --> 00:41:58,880 Speaker 1: kept policy easy for the Democrats. That's making the political link, 720 00:41:59,160 --> 00:42:03,120 Speaker 1: is it not? No, Look, the President has been very 721 00:42:03,160 --> 00:42:07,279 Speaker 1: consistent and I with my whole hearted support. I mean 722 00:42:07,320 --> 00:42:09,960 Speaker 1: I talked to him almost every day on this and 723 00:42:10,080 --> 00:42:16,160 Speaker 1: other matters. Um, we want to remove obstacles to economic growth. 724 00:42:16,480 --> 00:42:20,640 Speaker 1: We want to remove obstacles to economic growth. An inverted 725 00:42:20,680 --> 00:42:25,040 Speaker 1: Deo curve and a premature hiking of interest rates last 726 00:42:25,080 --> 00:42:29,000 Speaker 1: year and maybe the year before generated an obstacle to 727 00:42:29,120 --> 00:42:33,319 Speaker 1: economic growth. Let's remove that obstacle and you'll see this 728 00:42:33,360 --> 00:42:39,799 Speaker 1: economy with low taxes, low regulations, free trade reforms. Look U, 729 00:42:39,920 --> 00:42:44,640 Speaker 1: S M c A, Japan, Europe. We're making tremendous gains 730 00:42:44,960 --> 00:42:48,840 Speaker 1: on trade while we protect America with respect to China. 731 00:42:49,320 --> 00:42:52,759 Speaker 1: Those are the factors that will lead to three to 732 00:42:52,920 --> 00:42:56,960 Speaker 1: four percent economic growth and keep this job story as 733 00:42:57,040 --> 00:43:00,239 Speaker 1: strong as possible. Those are the issues. This is year 734 00:43:00,320 --> 00:43:03,440 Speaker 1: to help this country. Is not just about an election. 735 00:43:03,600 --> 00:43:06,880 Speaker 1: It never is about election. There's a vision here, Jonathan, 736 00:43:07,160 --> 00:43:11,400 Speaker 1: There's a vision here. The President's vision has always been, 737 00:43:12,440 --> 00:43:17,239 Speaker 1: liberate the economy from unnecessary regulations and taxes. Give us 738 00:43:17,239 --> 00:43:21,040 Speaker 1: a level plan field, give us cheap and plentiful energy, 739 00:43:21,440 --> 00:43:24,879 Speaker 1: let us use our economic resources, let us use our 740 00:43:24,960 --> 00:43:30,080 Speaker 1: God given talents. Let us reward success, not punish it. 741 00:43:30,440 --> 00:43:32,680 Speaker 1: That is an a vision just for a year or two. 742 00:43:33,000 --> 00:43:36,120 Speaker 1: That's a vision that would keep this country on a 743 00:43:36,239 --> 00:43:40,000 Speaker 1: high trajectory for the next twenty years, the next forty years, 744 00:43:40,200 --> 00:43:45,239 Speaker 1: the next several generations. This is a transformational president, and 745 00:43:45,280 --> 00:43:47,960 Speaker 1: I think the early returns are pretty darn good. Not 746 00:43:48,080 --> 00:43:52,160 Speaker 1: everyone agrees with me. I respect that, but that's his reality. 747 00:43:52,200 --> 00:43:55,640 Speaker 1: This other chapter, Dudley, he's playing like a party hack 748 00:43:55,880 --> 00:44:00,000 Speaker 1: on precincts politics for the next election. That is nonsense. 749 00:44:00,280 --> 00:44:04,040 Speaker 1: That is utter nonsense. Never look, my first job at 750 00:44:04,040 --> 00:44:07,960 Speaker 1: the New York Fed in open market operations with nineteen 751 00:44:08,080 --> 00:44:11,400 Speaker 1: seventy three. So I've been watching this story for I 752 00:44:11,680 --> 00:44:14,160 Speaker 1: know whoever, it is almost fifty years. I've never seen 753 00:44:14,160 --> 00:44:17,759 Speaker 1: anything like the Dudley statement. There is no excuse or 754 00:44:17,880 --> 00:44:20,280 Speaker 1: defense for it. Hi, Larry, We've got to leave it there. Apparently, 755 00:44:20,320 --> 00:44:21,759 Speaker 1: I've had two calls from d C, and I've got 756 00:44:21,800 --> 00:44:24,360 Speaker 1: to let you go. Larry Cudlo. Always appreciate and respect 757 00:44:24,360 --> 00:44:26,399 Speaker 1: your efforts to articulate the views from the White House 758 00:44:26,760 --> 00:44:29,200 Speaker 1: every first Friday of the month following the payrolls report. 759 00:44:29,280 --> 00:44:32,600 Speaker 1: Larry Cudlo there the National Economic Council Director, joining us 760 00:44:32,719 --> 00:44:36,200 Speaker 1: from Washington, d C. Thanks for listening to the Bloomberg 761 00:44:36,239 --> 00:44:42,200 Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 762 00:44:42,560 --> 00:44:46,759 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 763 00:44:46,840 --> 00:44:51,040 Speaker 1: Tom Keane before the podcast. You can always catch us worldwide. 764 00:44:51,560 --> 00:44:52,600 Speaker 1: I'm Bloomberg Radio.