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Speaker 1: Global business news twenty four hours a day at Bloomberg

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

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Speaker 1: This updates brought to you by Sector Spider E t F.

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Speaker 1: So I buy a single stock when you can invest

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Speaker 1: European shares are falling with copper and zinc, while the

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Speaker 1: dollar in German bonds climb as investors assess the impact

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Speaker 1: of China's growth plans and the potential for European Central

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Speaker 1: Bank stimulus measures. This week, we check the markets every

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Speaker 1: fifteen minutes throughout the trading day on Bloomberg U S

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Speaker 1: Dock index futures are lower. SNP eveny futures down nine

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Speaker 1: points now eveny futures down, fifties six and NASDAC E

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Speaker 1: many futures down twenty two. Tax in Germany's down one

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Speaker 1: point one per cent, CAC in Paris and f T

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Speaker 1: one hundred both down more than one percent as well.

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Speaker 1: Ten Your treasury down eight thirty seconds. The yield one

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Speaker 1: point nine zero percent yield on the two year point

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Speaker 1: eight eight percent, Nimex Screwed Oil up six tenths percent

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Speaker 1: or twenty one cents to thirty six thirteen A barrel

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Speaker 1: comes Gold is down three tenths per cent or three

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Speaker 1: dollars forty cents to twelve sixty seven an ounce. The

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Speaker 1: euro atollar oh nine six one, the yen one thirteen

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Speaker 1: point five zero, and seld X Therapeutics of Nita, Massachusetts

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Speaker 1: is now down fifty one percent in early trading after

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Speaker 1: saying it will stop a final stage study of an

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Speaker 1: experimental brain cancer vaccine. That's a Bloomberg Business flash. Tom

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Speaker 1: and Michael turn thanks so much. Futures negative nine A

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Speaker 1: bit of a deterioration in the tape on this Monday,

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Speaker 1: it is on Wall Street. The following is from Bloomberg View.

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Speaker 1: Opinions and commentary from Bloomberg columnists. I'm Paula Dwyer, a

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Speaker 1: columnist with Bloomberg View. The Republican establishment, with Mitt Romney

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Speaker 1: in the lead, is hitting back against Donald Trump. Yet

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Speaker 1: no matter how many party elders pile on, Trump keeps winning,

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Speaker 1: and poles show forty percent of Republican vote to support him.

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Speaker 1: Let's face it, the Republican elite has lost control of

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Speaker 1: the agenda. To win it back, author and social scientist

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Speaker 1: Charles Murray says the GOP should rethink bedrock policies, including

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Speaker 1: a relentless focus on tax cuts, endless attempts to repeal Obamacare,

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Speaker 1: and opposition to improvements in the social safety net. Such

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Speaker 1: ideas are heresy among the Republican elite, yet they'd be

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Speaker 1: good for Trump's supporters, mostly white, non college educated, and

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Speaker 1: lower income voters. They haven't seen wages go up since

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Speaker 1: the nineteen seventies, the factories that once employed them have

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Speaker 1: shipped out. Seen through his base, Trump's anti immigrant and

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Speaker 1: anti free trade views makes some sense, yet the GOP

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Speaker 1: has done little to help them. Trump exposes the ineffectiveness

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Speaker 1: of Republican policy, but he does so by manipulating and

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Speaker 1: encouraging racial and ethnic animosities. To the condemnation of Mitt

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Speaker 1: Romney and many other party elders, Let's hope they're not

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Speaker 1: too late. I'm Paula Dwire, a columnist with Bloomberg View.

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Speaker 1: For more commentary in opinion, please go to Bloomberg View

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Speaker 1: dot com. This has been Bloomberg View and bloom Review.

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Speaker 1: Commentary is comm here in hourly weekdays on Bloomberg Radio.

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Speaker 1: Michael always going to talk to Ian Shepherdson. Yes, it's

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Speaker 1: terrific to have him on with us. And you were

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Speaker 1: talking in as of course the chief economists at Pantheon.

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Speaker 1: You were talking before the break about the outlook for

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Speaker 1: the economy picking up as the year goes on and

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Speaker 1: for earnings rebounding. But we're not seeing the same thing

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Speaker 1: in corporate earnings. I'm wondering how whether whether the growth

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Speaker 1: pickup actually translates to earnings and whether companies can continue

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Speaker 1: to give raises if we don't see earnings rise. Yeah,

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Speaker 1: it kind of depends where you are really. I mean,

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Speaker 1: if you're a manufacturing exporter and you're selling things to

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Speaker 1: Asia and you're competing with export of some other countries,

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Speaker 1: it's going to be very difficult for you because the

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Speaker 1: dollars the problem. It's very strong. Um you're suffering weak

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Speaker 1: demand and some of your key markets obviously China's one

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Speaker 1: of them, but others as well, and for you, things

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Speaker 1: are going to be a real struggle. So unfortunately for

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Speaker 1: those sort of businesses, the pick up and wage growth

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Speaker 1: which they can't really avoid because they're all competing for

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Speaker 1: the same pool of labor. That's just a margin hit.

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Speaker 1: But if you are a domestic facing business, as a

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Speaker 1: service sector business in particular with mostly domestic customers not

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Speaker 1: worried about the strength of the dollar, then for you

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Speaker 1: it's much more manageable because the pick up and wage growth,

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Speaker 1: of course, just means your customers have got more money

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Speaker 1: to spend. Now. It doesn't mean you're going to be

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Speaker 1: able to recruit recoup every dollar of extra wage growth,

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Speaker 1: because you may lose a bit of market share somebody

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Speaker 1: else might come into your space. But in aggregate it

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Speaker 1: should be okay. And so for those businesses, which remember

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Speaker 1: are the overwhelming bulk of US corporations in that domestic

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Speaker 1: consumer facing space, the wage pressure is not the end

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Speaker 1: of the world. But certainly there's a minority of companies

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Speaker 1: externally focused dollar sensitive and for those it's going to

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Speaker 1: be extremely difficult. It already is extremely difficult. This is

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Speaker 1: not a news story. It's just likely to intensify over

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Speaker 1: the course of the year. But I got to say,

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Speaker 1: it doesn't mean that the whole manufacturing sector, which of

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Speaker 1: course has most of the export is in it is

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Speaker 1: going to perform as badly as it did last year,

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Speaker 1: because one of the big drags last year was the

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Speaker 1: massive collapse in capital spending in the oil business. And

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Speaker 1: that's pretty much over now. You know, it's fallen so

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Speaker 1: far that it cannot fall again as far as it

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Speaker 1: did last year. We we we've probably taken capex in

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Speaker 1: oil from a peak of about two billion annualized down

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Speaker 1: to about fifty so it cannot fall as far again.

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Speaker 1: And that was a really big hit on manufacturer, so

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Speaker 1: less pain from that source. But they're going to have

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Speaker 1: to deal with that wage problem. Yeah. I don't want

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Speaker 1: to catch you by surprise, your ian, but you're so

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Speaker 1: good at this. When I look at full and part

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Speaker 1: time employment, Joe Molinsky writes it up at Advisor Perspectives,

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Speaker 1: and the bottom line is part time employment is better.

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Speaker 1: There's less of it, and we're full time, but part

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Speaker 1: time employment is is thirty five higher than it was

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Speaker 1: at the bottom. We're thirteen point five million years ago.

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Speaker 1: We get up into the twenties and we come back

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Speaker 1: to eighteen point two percent, So we've moved from thirteen

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Speaker 1: point five percent to eighteen of America. Which way is it?

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Speaker 1: Is it part time America or are we actually moving

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Speaker 1: in the right direction. Well, we we are moving in

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Speaker 1: the right direction, but there's still an enormous legacy from

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Speaker 1: from the crash period which distorted so many of these

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Speaker 1: labor market numbers, and not all of them, many of

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Speaker 1: them haven't yet reverted to where they were before the

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Speaker 1: Great crash um. This is a you know, there still

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Speaker 1: an awful lot of people in these part time jobs

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Speaker 1: who want full time jobs. But at the very same time,

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Speaker 1: the surveys of businesses are telling us that they're saying

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Speaker 1: they can't find the people they want to hire. And

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Speaker 1: this is one of these apparent contradictions that we can't

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Speaker 1: really resolve with the data that we've got. I mean,

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Speaker 1: why would it be if you've got millions of people

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Speaker 1: who want to work full time, they're currently employed. It's

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Speaker 1: not like they, you know, dead, be two, I'm going

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Speaker 1: to get a job. They've got a job, they want

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Speaker 1: to work full time, and at the same time employers

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Speaker 1: are saying we can't find the people we want to hire.

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Speaker 1: So I don't know whether nobody knows whether this is

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Speaker 1: a geographic problem that the people are in the wrong place,

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Speaker 1: or whether it's a skills problem. I think that's more likely,

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Speaker 1: or maybe it's a sector problem that you know, we've

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Speaker 1: got a lot of people maybe working part time insectors

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Speaker 1: where the growth isn't very strong and where growth is

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Speaker 1: stronger they don't have the right skills. We don't know,

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Speaker 1: but certainly there's there's several million people who would love

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Speaker 1: to have a full time job and several hundred thousand

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Speaker 1: companies who want more full time employees. You would think

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Speaker 1: it would work out, but it isn't. So something's a

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Speaker 1: mismatch somewhere. Well, the one thing that is clear is

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Speaker 1: that even with all that, the FED is pretty much

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Speaker 1: there with the employment part of their mandate. What do

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Speaker 1: you see happening with inflation going forward? Well, here's the thing.

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Speaker 1: Janet Yellen said back in December that temporary factors, the

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Speaker 1: strong dollar and the drop in oil prices are holding

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Speaker 1: down the core PC deflator, which is a FEDS target

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Speaker 1: measure of inflation, holding it down between a quarter and

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Speaker 1: half a percent. The target too, and the current rate

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Speaker 1: the latest state that we have is one point seven,

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Speaker 1: So you add back in those temporary factors, and core

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Speaker 1: inflation on the fed's own target measure is already at

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Speaker 1: two to two and a quarter. The FEDS forecasts don't

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Speaker 1: show them reaching that two percent target until the fourth

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Speaker 1: quarter of two and a half years from now, and

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Speaker 1: yet the very same data that the FED targets are

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Speaker 1: showing already using yell AND's own calculations, that the underlying

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Speaker 1: rate is already there. This really worries me because I

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Speaker 1: think I said that wasn't so rabid in the headlights,

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Speaker 1: when confronted with slow down in China, would have been

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Speaker 1: hiking rates much more quickly. And the longer that they

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Speaker 1: delay it, and the more they find excuses looking at

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Speaker 1: international developments and worries about overseas economies, none of which

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Speaker 1: are very much bearing on the U S domestic labor market,

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Speaker 1: the more the danger rises that eventually inflation bites them

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Speaker 1: and they have to catch up very quickly with very

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Speaker 1: disruptive and destabilizing right tax. But funny thing is, of

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Speaker 1: course that yell And keeps referring to this danger, saying, well,

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Speaker 1: if we leave it too long, then we'll have to

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Speaker 1: go more quickly, and that could be very damaging. But

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Speaker 1: the action that they're taking seems to me to be

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Speaker 1: raising the very risk that they're setting out in those

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Speaker 1: sort of statements, And I really don't get it. I

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Speaker 1: think they're hugely overplaying the danger post by China slowdown,

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Speaker 1: and overplaying the danger players by the manufacturing slowdown, which

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Speaker 1: is real. No question, manufacturing is very weak, but it's

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Speaker 1: a teeny bit of the economy and the rest of

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Speaker 1: it's doing much better. And the danger is that that

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Speaker 1: tightening in the rest of it is going to catch

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Speaker 1: them underwares. And you know, looking at the data by

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Speaker 1: their own terms, they're already at the sort of rate

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Speaker 1: swear and if your policy should be much nearer and

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Speaker 1: neutral and he isn't. Okay, so quickly, here's summarized for us.

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Speaker 1: Do you agree with more I heard from Michael McKy,

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Speaker 1: you know, my suggesting that with an opinion, But March,

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Speaker 1: no decision, next meeting, no decision because there's no press conference. Unfortunately.

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Speaker 1: You know, it does look to me like if if

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Speaker 1: they don't go in March, and it seems extremely unlikely

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Speaker 1: that they're going to move now, um, then June is

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Speaker 1: the most likely. And the danger is that by the

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Speaker 1: time we get their things have moved on significantly. Uh.

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Speaker 1: You know, they're already at their mandate in terms of

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Speaker 1: the employment picture. And I think they're very close on

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Speaker 1: the inflation front, so I think that that if they

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Speaker 1: do wait till June, then they'll be going very rapidly

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Speaker 1: after that, and they'll have to be a significant adjustment

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Speaker 1: in the markets in terms of thinking about what the

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Speaker 1: FED is going to have to do, and it will

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Speaker 1: be triggered by the wage numbers, because ultimately it always

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Speaker 1: is the added sort of free song, if you like,

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Speaker 1: is that the actual inflation, which was supposed to be

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Speaker 1: something we didn't have to think about for another two years,

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Speaker 1: could also be forcing them to move at the same time.

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Speaker 1: And history tells you that when you've got accelerating inflation

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Speaker 1: and wages at the same time, things get very messy,

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Speaker 1: very quickly. Ian Sherberton is always brilliant. Thank you so much.

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Speaker 1: With pan Young Mike, I'm gonna put out on Twitter

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Speaker 1: on the part time full time question, Jill miss Lynskey.

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Speaker 1: It's important when economic data and reports are constructed by

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Speaker 1: a physics and astronomy major from the University of Chicago.

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Speaker 1: I mean is that qualifications are what jul mss Lynskey.

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Speaker 1: I'll put it. I'll get it out on just super work.

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Speaker 1: Rob Low tweeting out Peyton Manning's retirement times perfectly. He

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Speaker 1: could step in as a candidate at a broker Republican convention.

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Speaker 1: We want IK or whatever the phrase was from fifty

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Speaker 1: to Tom Keen and Michael McKee and Peyton man good morning,