WEBVTT - Paulsen: economic data is improving

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<v Speaker 1>Global business news twenty four hours a day. If Bloomberg

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<v Speaker 1>This is a Bloomberg Business Flash and I'm Karin Moscow.

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<v Speaker 1>This updates brought to you by cbo E VIX Options

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<v Speaker 1>and Futures. Volatility can be harnessed with CBOE VIS Options

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<v Speaker 1>and Futures. See disclosures and learn more at cbo e

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<v Speaker 1>dot com. Slash Powerful outcomes vix iron or arose nine

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<v Speaker 1>dollars ninety nine cents or nineteen percent to sixty three

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<v Speaker 1>dollars seventy four cents a ton, according to a price

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<v Speaker 1>index compiled by Metal Bulletin, and that's the biggest one

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<v Speaker 1>day gain on record. Futures this morning, meanwhile, are lower,

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<v Speaker 1>with SMP Mini futures down six and a half points

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<v Speaker 1>DOWNIE Many futures down thirty five and NASH Documuti futures

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<v Speaker 1>down seventeen and a half decks. In Germany's down nine

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<v Speaker 1>tenths percent ten Your treasury down seven thirty seconds, the

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<v Speaker 1>yield one point eight nine percent. Nimex hered oil up

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<v Speaker 1>one point nine percent or sixty nine cents to thirty

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<v Speaker 1>six sixty two A barrel comes gold is changed up

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<v Speaker 1>thirty cents to Twe announced the euro and dollar in

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<v Speaker 1>six five and again one thirteen point five six. That's

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<v Speaker 1>a Bloomberg business flash, Tom and Mike Karen Muskin, thank

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<v Speaker 1>you very much. Well for the year, stocks overall down

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<v Speaker 1>more than two percent, the Dow and SMPA stocks down

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<v Speaker 1>almost six percent, still in spite of the rally that

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<v Speaker 1>we have seen over the last couple of weeks, and

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<v Speaker 1>then today the futures suggesting a lower day ahead. Jim

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<v Speaker 1>Paulson is chief investment strategist at Wells Capital Management. Jim, Uh,

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<v Speaker 1>we have not had a great earning season for the

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<v Speaker 1>fourth quarter, and the forecasts are for the next couple

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<v Speaker 1>of quarters companies are still going to be struggling to

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<v Speaker 1>make money, particularly on the top line. What do you do,

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<v Speaker 1>uh if if you're an investor, you're down for the

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<v Speaker 1>year already? Uh, do you take a chance that things

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<v Speaker 1>come back? Or do you want to be sidelined for

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<v Speaker 1>a while and see where the central banks, the political campaigns,

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<v Speaker 1>the threats to Europe take us. Yeah? Um, well, I've

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<v Speaker 1>had a I've had a target price this year since

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<v Speaker 1>you're in a basically well in the year where we

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<v Speaker 1>started it again, Mike, and but I have also arranged

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<v Speaker 1>from eight SMP. I think we might see that full range.

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<v Speaker 1>I think we saw hundred. I think we might still. UM.

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<v Speaker 1>My guess is that economic data is improving UM and

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<v Speaker 1>will not only back away from recession fears. Will we'll

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<v Speaker 1>maybe get to the point of where we embrace an

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<v Speaker 1>idea of a synchronized bounce globally and there could be

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<v Speaker 1>some excitement that might take us up to the old

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<v Speaker 1>highs and it maybe slightly above sometime this year. Yet UM.

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<v Speaker 1>I think though, if once we do that, we may

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<v Speaker 1>come back very quickly to the concern about inflation and

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<v Speaker 1>cost pressures and how fast the Fed has to raise

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<v Speaker 1>rates and how much the tenure you go, and it

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<v Speaker 1>might bring us back by a year end to that

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<v Speaker 1>unchanged level. One thing I would do is I would

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<v Speaker 1>I would manage domestically to that unchanged level of year

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<v Speaker 1>in UH my portfolio exposure. But I think the outside

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<v Speaker 1>the United States has a different investment pictures. If they

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<v Speaker 1>get a bouncing growth UH internationally, I don't think they're

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<v Speaker 1>going to face imminent rate pressures like we will here

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<v Speaker 1>in the United States. So I would take this opportunity

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<v Speaker 1>to remain invested in stocks, but to move more increasingly

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<v Speaker 1>outside of the United States. You know, on Friday, I

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<v Speaker 1>was thinking, Jim paulse is that Monday cool explained to

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<v Speaker 1>me the certitude that wage growth of some nominal, minimal

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<v Speaker 1>amount affects the income statement of a multinational. I don't,

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<v Speaker 1>but you know, I never give my opinion, folks, But

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<v Speaker 1>no where do I see that in the literature. Can

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<v Speaker 1>we just assume wage growth means less, you know, challenges

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<v Speaker 1>on the income statement unless operating income ebit don down

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<v Speaker 1>to the gap in that income. Yeah, yeah, I mean,

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<v Speaker 1>I I do think. I do think Tom that you know,

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<v Speaker 1>for the first time in this recovery, you know, companies

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<v Speaker 1>may start to face cost push pressures. I don't think

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<v Speaker 1>it's just gonna be wages though, and I'd also think

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<v Speaker 1>it's gonna be you know, interest rates and raw materials

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<v Speaker 1>and and and the like. Um, you know, one of

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<v Speaker 1>the most interesting things fastly things about you know, people

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<v Speaker 1>are so focused on oil going up right now, for example,

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<v Speaker 1>but if you look at raw industrial commodity prices, look

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<v Speaker 1>at the c RB raw industrials or even the SNP

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<v Speaker 1>gold sacks industrial they're making their biggest upward moves since

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<v Speaker 1>the collapse and oil started in mid two thousand and fourteen.

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<v Speaker 1>So I think it's gonna be a general interest rate,

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<v Speaker 1>labor cost, materials costs, sort of pressure on margins that

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<v Speaker 1>we haven't seen, uh in this recovery, because we're really

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<v Speaker 1>haven't been a full employment again. If I look offshore, though,

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<v Speaker 1>if I look at Europe, Japan and a lot of

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<v Speaker 1>emerging world companies, they're at an earlier point of their

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<v Speaker 1>earning cycle, just like they're at an earlier point of

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<v Speaker 1>their economic recoveries. And because of that, they don't have

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<v Speaker 1>maximum profit margins by his storage standards, and they probably

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<v Speaker 1>will not feel the pressure of the US companies are

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<v Speaker 1>going to feel in that regard. Jim Paulson, thank you

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<v Speaker 1>so much. Greatly appreciated Well's capital management. Getting started on

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<v Speaker 1>a Monday here. Um, as we look at a better economy,

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<v Speaker 1>the jobs, Mike, I wanted to take some time here

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<v Speaker 1>to summarize you remember remember the jobs report when the

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<v Speaker 1>unemployment rate was like nine point two percent, and we'd

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<v Speaker 1>all go hysterical if it went up or down a

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<v Speaker 1>little bit. Now we're a point which is surreal, and

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<v Speaker 1>I think the data is after three days of thinking

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<v Speaker 1>about it as you and I do, seven what was

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<v Speaker 1>your observation? Mine is we almost got the three thousand

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<v Speaker 1>jobs with the revision. Was a terrific report. It was

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<v Speaker 1>a good report. On the headline, the problem is the

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<v Speaker 1>wage numbers, and we don't know and all at the

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<v Speaker 1>same time, the hour's work went down. We don't know

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<v Speaker 1>exactly why that is. We're gonna have to wait and see,

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<v Speaker 1>but it is true that jobs. We have been adding

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<v Speaker 1>jobs in this country for seventy two months, and you

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<v Speaker 1>keep talking about you you were way out in front

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<v Speaker 1>of this on a tighter labor market, within the job economy.

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<v Speaker 1>I notice the aw meted rate came in and other

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<v Speaker 1>rates came in as well. I mean, it may be

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<v Speaker 1>a lot longer than any of us wanted, but you

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<v Speaker 1>begin to think Dean mckie's not crazy at point seven

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<v Speaker 1>two with his four point zero percent unemployment rate, call

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<v Speaker 1>well a lot of people. I mean, if you keep

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<v Speaker 1>adding jobs, jobs at this rate, you're gonna get there.

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<v Speaker 1>I mean, just mathematically, but be interesting to see the

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<v Speaker 1>follow on of inflation with your your has the ivy hurt.

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<v Speaker 1>I mean, I like that you've got the I V

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<v Speaker 1>Poll next year. You're being medicated this morning. This is

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<v Speaker 1>not during our show, right, Peyton man is retiring officially today. Um,

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<v Speaker 1>but it's good. I think the best line, uh was

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<v Speaker 1>somebody who told me all the weekend It's good he

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<v Speaker 1>didn't signed with some other team just to play for

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<v Speaker 1>another year, because now he goes out with wasn't he

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<v Speaker 1>the greatest? Instead of isn't that? Sad? Moment of silence

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<v Speaker 1>as well for Dwight Evans, who did the same courageous

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<v Speaker 1>thing with the Boston Red Socks a few years ago. Peyton,

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<v Speaker 1>Mr McKee, for the many emails I've gotten. Yes, Mr

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<v Speaker 1>McKee is generally sedated as we go through the show

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<v Speaker 1>as he waits for the retirement of his Peyton Manning

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<v Speaker 1>Future seven down Futures negative thirty seven. We have a

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<v Speaker 1>terrific book on the show today, From Silk to Silicon.

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<v Speaker 1>Jeff Carton will joined us in a bit. Bloomberg's Surveillance.

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