WEBVTT - Bloomberg Surveillance: Julie Su on Jobs Data 0:00:05.120 --> 0:00:08.480 This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along 0:00:08.480 --> 0:00:12.319 with Jonathan Farrell and Lisa Abramowitz. Join us each day 0:00:12.360 --> 0:00:16.840 for insight from the best an economics, geopolitics, finance and investment. 0:00:17.280 --> 0:00:22.079 Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 0:00:22.280 --> 0:00:26.600 anywhere you get your podcasts, and always on Bloomberg dot Com, 0:00:26.640 --> 0:00:29.840 the Bloomberg Terminal, and the Bloomberg Business app. 0:00:30.440 --> 0:00:33.120 Joining us now from Washington is Jully Sue, the Acting 0:00:33.280 --> 0:00:36.480 US Labor Secretary, Acting Labor Secretary wander for to catch 0:00:36.520 --> 0:00:38.000 up with you, it always is. I want to go 0:00:38.040 --> 0:00:40.360 back to eight thirty, just briefly, if we can. I 0:00:40.440 --> 0:00:43.480 got a lot of feedback at eight thirty Eastern time 0:00:43.680 --> 0:00:46.559 about not being able to access the BLS website to 0:00:46.640 --> 0:00:49.879 get this information, to get this data. I'm told that 0:00:49.960 --> 0:00:51.879 the message they got on the screen was you were 0:00:51.920 --> 0:00:54.920 blocked from the BLS website. What was going on at 0:00:54.920 --> 0:00:56.480 eight thirty? What was the difficulty? 0:00:58.280 --> 0:01:00.480 I don't know what happened with the website. 0:01:00.520 --> 0:01:03.960 I will say that our jobs numbers today show that 0:01:04.000 --> 0:01:07.639 one hundred and ninety nine thousand jobs were added last month. 0:01:08.440 --> 0:01:12.000 That we have the lowest unemployment rate for the longest 0:01:12.040 --> 0:01:14.840 period of time since Diana Ross was at the top 0:01:14.840 --> 0:01:19.920 of the charts, and it reflects continued steady growth in 0:01:20.000 --> 0:01:22.839 our economy. I'm sorry to hear that you weren't able 0:01:22.880 --> 0:01:25.440 to get that, but I'm happy to talk about any 0:01:25.440 --> 0:01:26.120 of the data. 0:01:25.880 --> 0:01:26.440 That's come out. 0:01:26.560 --> 0:01:28.760 Well, let's talk about it coming out next month, and 0:01:28.800 --> 0:01:30.720 the month after that and a month after that. Can 0:01:30.760 --> 0:01:34.720 we revisit the lockup, Julie and have a lockup and 0:01:34.760 --> 0:01:37.440 make sure this data gets out efficiently and effectively, given 0:01:37.440 --> 0:01:40.240 it's probably the most important data point on the planet. 0:01:41.880 --> 0:01:45.400 I completely agree on the importance of the data. You know, 0:01:45.440 --> 0:01:48.760 we come out to talk about it every time because 0:01:48.960 --> 0:01:52.000 it demonstrates the health of the economy. 0:01:52.160 --> 0:01:53.560 It demonstrates, you. 0:01:53.520 --> 0:01:56.240 Know, whether our economic policies are working. And what we've 0:01:56.240 --> 0:02:00.600 seen is steadily since President Biden came into office, fourteen 0:02:00.640 --> 0:02:05.680 point one million jobs created, again broad based across numerous sectors, 0:02:05.960 --> 0:02:10.359 low unemployment rates, and real wages rising. So we're very 0:02:10.400 --> 0:02:12.280 happy to make sure that you were getting the information 0:02:12.360 --> 0:02:14.600 that you need to help us tell the story about 0:02:14.639 --> 0:02:17.080 the impact of Bidenomics across the country. 0:02:17.120 --> 0:02:18.720 You really don't want to talk about this to you. 0:02:20.240 --> 0:02:21.480 No, no, I'm not trying to avoid it. 0:02:21.639 --> 0:02:24.920 I obviously believe that the data has to be available, 0:02:25.280 --> 0:02:25.840 but it's not. 0:02:25.960 --> 0:02:28.160 To all of you, and it wasn't, So how can 0:02:28.200 --> 0:02:29.440 we fix that for next month? 0:02:31.520 --> 0:02:32.359 I hear you on that. 0:02:33.080 --> 0:02:35.440 Okay, maybe you should can respond to me in the 0:02:35.440 --> 0:02:37.480 future at some point in the next week or so, 0:02:37.560 --> 0:02:39.760 and I can share that answer to our listeners and 0:02:39.760 --> 0:02:42.320 our viewers. Let's talk about the data. On the surface, 0:02:42.360 --> 0:02:45.080 it looks great. This is from Catholic Economics this morning. 0:02:45.400 --> 0:02:48.320 The response from them this morning, just going beneath the surface, 0:02:48.360 --> 0:02:51.359 respectable organization saying this. The one ninety nine increase in 0:02:51.400 --> 0:02:55.800 November payroll employment included forty seven workers forty seven thousand 0:02:55.800 --> 0:02:58.720 workers returning from strikes, stripping out that one off boost. 0:02:58.800 --> 0:03:00.720 The one fifty two game was roughly the same as 0:03:00.720 --> 0:03:04.520 the mutant increase in October. Moreover, of that one fifty two, 0:03:04.639 --> 0:03:07.359 forty nine thousand, with government jobs a further seventy seven 0:03:07.440 --> 0:03:10.920 k in healthcare. Excluding those non cyclical sectors, the economy 0:03:10.960 --> 0:03:13.960 added only twenty six thousand jobs, which adds to the 0:03:14.000 --> 0:03:16.560 evidence that after a very strong third quarter, growth is 0:03:16.600 --> 0:03:20.760 slowing to a crawl. In the fourth quarter, Ginny, what 0:03:20.760 --> 0:03:21.480 would you make of that? 0:03:23.200 --> 0:03:26.200 I think what we're seeing is, again we look at 0:03:26.240 --> 0:03:30.040 overall trends in the economy. We've seen job growth at 0:03:30.040 --> 0:03:33.000 record rates, certainly faster than anybody predicted coming out of 0:03:33.000 --> 0:03:35.720 the pandemic. But it wasn't just like you know, one 0:03:35.760 --> 0:03:38.640 time boost in the immediate post pandemic months. It's been 0:03:39.400 --> 0:03:44.760 year over year growth. We're also seeing it across numerous industries, 0:03:44.840 --> 0:03:47.720 and we're seeing it in you know, overall, right, over 0:03:47.760 --> 0:03:52.040 eight hundred thousand jobs created in construction, over six hundred 0:03:52.080 --> 0:03:56.760 thousand in manufacturing since President Biden came into office. And yes, 0:03:56.920 --> 0:03:59.840 we also saw workers come back on the payroll after 0:04:00.200 --> 0:04:05.000 strikes that resulted in record wage increases and other kinds 0:04:05.000 --> 0:04:10.000 of benefits, retirement benefits, health benefits that we really associate 0:04:10.040 --> 0:04:11.840 with what we want for working people. 0:04:11.960 --> 0:04:12.080 Right. 0:04:12.120 --> 0:04:15.160 It's what gives families a sense of security. It's what 0:04:15.320 --> 0:04:18.239 gives individuals what the President always talks about, which. 0:04:18.040 --> 0:04:18.960 Is some breathing room. 0:04:19.480 --> 0:04:22.000 And that's the kind of economy that we want to 0:04:22.040 --> 0:04:24.360 build that we are seeing. We have more work to do, 0:04:24.400 --> 0:04:26.760 and we'll continue to build on the progress that we've made. 0:04:26.880 --> 0:04:29.760 Many of the investments that the President has helped to 0:04:29.800 --> 0:04:33.880 make possible are showing up in communities. Forty thousand some 0:04:33.960 --> 0:04:38.040 infrastructure projects across four thy five hundred communities all across 0:04:38.080 --> 0:04:40.640 the country. But we're just beginning with that, and so 0:04:40.680 --> 0:04:43.239 we'll continue to see more of that, and the jobs 0:04:43.320 --> 0:04:48.960 numbers are just another indicator of that growth and what 0:04:49.000 --> 0:04:50.039 its impact means. 0:04:50.160 --> 0:04:52.039 What do you think this is not resonating with the 0:04:52.080 --> 0:04:54.680 elector our share and pos CNN more than four and 0:04:54.760 --> 0:04:57.960 ten saying that seriously concerned rising costs could push them 0:04:57.960 --> 0:05:01.400 at their own community Splimberg together with Morning Conso only 0:05:01.480 --> 0:05:04.440 thirty five percent of voters in seven swing states trust 0:05:04.480 --> 0:05:08.200 Binden on the economy. Where's that disconnect coming from? 0:05:08.960 --> 0:05:09.120 Right? 0:05:09.200 --> 0:05:11.240 So one thing President Biden does talk a lot about 0:05:11.279 --> 0:05:13.359 to your point, is we want to make sure that 0:05:13.400 --> 0:05:17.440 there are jobs in communities so people can get jobs 0:05:17.480 --> 0:05:19.840 and build, you know, build a family, and join the 0:05:19.839 --> 0:05:22.239 middle class without leaving the place that. 0:05:22.080 --> 0:05:25.760 They work they live. I was with. 0:05:25.760 --> 0:05:28.560 Him when we went to Velvedere, Illinois, where a plant 0:05:28.600 --> 0:05:32.120 that had been shuttered is now being reopened because of 0:05:32.200 --> 0:05:35.840 the agreement between the UAW and the Big Three. 0:05:36.120 --> 0:05:38.560 I do think some of this is still you know, 0:05:38.760 --> 0:05:42.080 we had global uh you. 0:05:42.040 --> 0:05:45.760 Know, pandemic, and you know, and the economic wreckage that 0:05:45.839 --> 0:05:48.240 resulted immediately in the aftermath of that. 0:05:48.279 --> 0:05:49.680 Again, we've grown back. 0:05:49.560 --> 0:05:52.560 From it, but the sense of insecurity I think remains, 0:05:52.560 --> 0:05:54.359 and that's that's legitimate. 0:05:54.680 --> 0:05:55.640 The other thing. 0:05:55.680 --> 0:05:57.320 I you know, just from traveling on the country and 0:05:57.360 --> 0:05:59.800 talking to folks, is I think that part of this 0:06:00.279 --> 0:06:05.120 is that people really do see there's jobs being created, 0:06:05.160 --> 0:06:07.880 there's training programs that are connecting them to those jobs. 0:06:08.080 --> 0:06:11.360 But there remains deep inequities in our society. And part 0:06:11.440 --> 0:06:15.159 of that is the huge gap between CEO pay and 0:06:15.200 --> 0:06:17.919 frontline worker pay. So I talked about Diana Ross, I 0:06:17.920 --> 0:06:21.080 talked about the good news that we are having unemployment 0:06:21.200 --> 0:06:25.360 levels at record lows for the longest stretches since nineteen seventy. 0:06:25.640 --> 0:06:29.640 In nineteen seventy, the disparity between CEO pay and frontline 0:06:29.640 --> 0:06:31.400 pay was something like twenty percent. 0:06:32.279 --> 0:06:34.920 Today it's over. 0:06:35.720 --> 0:06:40.480 It was seventeen times hire the ceopay from worker pay. 0:06:40.680 --> 0:06:43.039 Today it's something like three hundred and forty four times. 0:06:43.960 --> 0:06:46.160 That doesn't feel fair to people, it doesn't feel good, 0:06:46.360 --> 0:06:49.240 and that's why President Biden talks about building an economy 0:06:49.400 --> 0:06:52.239 from the middle out and the bottom up, where working 0:06:52.279 --> 0:06:56.480 people and working families do well, not just the wealthy. 0:06:56.560 --> 0:06:58.400 Yeah, he's had a lot to say about corporate America 0:06:58.440 --> 0:07:00.359 as well. I'm going to share a tweet from the 0:07:00.400 --> 0:07:03.520 President with you, and I want your thoughts on it. 0:07:03.600 --> 0:07:05.280 A way to translate it if you can, because I 0:07:05.279 --> 0:07:07.240 don't understand it. It says, let me be clear, to 0:07:07.279 --> 0:07:10.040 any corporation that hasn't brought their prices back down even 0:07:10.080 --> 0:07:12.640 as inflation has come down, it's time to stop the 0:07:12.680 --> 0:07:16.200 price gouging. Give American consumers a break. What is the 0:07:16.200 --> 0:07:17.520 president talking about. 0:07:20.000 --> 0:07:23.000 The President is saying that we have a job to 0:07:23.040 --> 0:07:28.280 do this country, and we want working people and middle 0:07:28.280 --> 0:07:32.200 class families and every community across the country to have 0:07:32.600 --> 0:07:35.120 for things that they need to live a decent life. 0:07:35.200 --> 0:07:37.560 We want safe roads and new bridges. 0:07:37.680 --> 0:07:39.960 We want clean drinking water to flow out of every 0:07:39.960 --> 0:07:40.960 Fara's great. 0:07:41.000 --> 0:07:44.080 I want that too, But just this tweet specifically, inflation 0:07:44.280 --> 0:07:46.720 is slowly but it's still positive, so prices are going up. 0:07:46.720 --> 0:07:49.520 But the President's saying inflation has come down, why corporation 0:07:49.600 --> 0:07:54.080 is still price gouging. That's just economically speaking, just absolutely flawed. 0:07:54.440 --> 0:07:57.480 So Acting Labor Secretary who writes these tweets, what's he 0:07:57.560 --> 0:07:58.200 talking about. 0:07:59.240 --> 0:08:01.240 I mean, he's saying that we're all in this together, 0:08:01.480 --> 0:08:05.240 and we will pursue economic policies that help to bring 0:08:05.280 --> 0:08:06.760 down prices and control inflation. 0:08:07.040 --> 0:08:08.560 But everyone's got a job to do on that. 0:08:08.720 --> 0:08:13.320 And you know, when there are record profits by companies 0:08:13.400 --> 0:08:18.080 who are continuing to keep prices high, we'd like them 0:08:18.080 --> 0:08:20.800 to play their role in making sure that people can 0:08:21.040 --> 0:08:22.559 afford the basics they need in life. 0:08:22.680 --> 0:08:26.440 Appreciate it. JNS. Thank you, the Acting us LEBIS Sancitary. 0:08:36.679 --> 0:08:40.560 We continue our conversation with Michael Darta, chief economist macro 0:08:40.600 --> 0:08:45.200 strategist at Roth mkm Michael, once again, it is a 0:08:45.240 --> 0:08:51.200 confounding report of somewhat towards a fully employed America. Is 0:08:51.240 --> 0:08:55.960 this the productivity overlay? Is this the technology overlay in 0:08:56.040 --> 0:09:00.000 the non technological sectors where things are just simply better 0:09:00.000 --> 0:09:00.959 mother than we perceive. 0:09:01.440 --> 0:09:03.640 Well, it's hard to say, Tom. I mean, the productivity 0:09:03.679 --> 0:09:06.560 statistics have been really strong over the last two quarters, 0:09:06.600 --> 0:09:10.880 but they were insanely weak before that. So on productivity, 0:09:10.920 --> 0:09:15.360 we just vaulted back to the to the pre pandemic 0:09:15.520 --> 0:09:19.760 trend so far, which was one point six percent per annum, 0:09:19.840 --> 0:09:22.600 so to be determined on that question, this is a 0:09:22.640 --> 0:09:25.080 good report, you know, almost two hundred k with the 0:09:25.120 --> 0:09:29.120 downward revisions you know, were added just below the consensus expectation. 0:09:29.360 --> 0:09:32.440 But we were talking about the unemployment rate moving up 0:09:32.440 --> 0:09:35.280 to the cusp of a recession signal. Now we've pulled 0:09:35.320 --> 0:09:38.719 back to three seven on the unemployment rate. So this 0:09:38.760 --> 0:09:41.000 is a report the Fed is going to look at 0:09:41.040 --> 0:09:43.720 and not really feel compelled that they need to embrace 0:09:43.800 --> 0:09:46.360 these early rate cuts next year that the market has 0:09:46.440 --> 0:09:48.880 priced in. Now, this could change again, and you know 0:09:48.920 --> 0:09:54.040 with the December data obviously, but at face value, strong report, 0:09:54.320 --> 0:09:57.520 almost two hundred k on payrolls, unemployment ticks by two 0:09:57.600 --> 0:09:59.720 tents to three seven. That's going to be viewed as 0:09:59.720 --> 0:10:03.600 still a very tight fully employed labor market. And so 0:10:04.000 --> 0:10:06.640 you know, it makes sense that we're seeing a bit 0:10:06.679 --> 0:10:09.240 of risk off here and a bit of a bounce. 0:10:08.880 --> 0:10:09.920 In bond yields. 0:10:10.040 --> 0:10:13.160 Michael, does this make you rethink any of your thesis 0:10:13.200 --> 0:10:14.600 about the business cycle rolling over? 0:10:16.800 --> 0:10:19.440 Not so far. I mean, certainly it's not a you know, 0:10:19.520 --> 0:10:22.480 it's not an additive decisive signal. It Okay, this is 0:10:22.559 --> 0:10:24.760 you know, if we're up at you know, up above 0:10:24.840 --> 0:10:29.080 four in the you know for this report, then you know, 0:10:29.120 --> 0:10:32.320 to me, that would suggest that perhaps we've fallen into recession. 0:10:32.440 --> 0:10:35.880 So this says we're not in recession right now, but 0:10:36.280 --> 0:10:39.960 it's not necessarily an all clear signal for for next 0:10:40.040 --> 0:10:40.600 year either. 0:10:40.960 --> 0:10:44.319 Michael, you've followed with Bloomberg data your economics into your 0:10:44.360 --> 0:10:47.760 equity coverage. What's the data SPX call for when you're 0:10:47.800 --> 0:10:48.840 fifty one years old? 0:10:50.000 --> 0:10:50.200 Yeah? 0:10:51.200 --> 0:10:54.160 Tom, You know, we were talking before about the market 0:10:54.200 --> 0:10:57.720 really being dominated by two sectors and seven stocks, so 0:10:58.200 --> 0:11:00.840 you know, I think for the overall it's five hundred. 0:11:01.600 --> 0:11:04.800 We're going to have a challenging period. The valuations in 0:11:04.840 --> 0:11:07.600 these leading sectors are simply too high, So I think 0:11:07.640 --> 0:11:09.640 investors are going to have to look to some other 0:11:09.800 --> 0:11:13.520 areas that have been underperforming where the valuations are low 0:11:14.080 --> 0:11:17.080 will have opportunities with rising volatility next year. 0:11:17.200 --> 0:11:19.559 Michael Darter, thank you so much. With Roth MKM. This 0:11:19.760 --> 0:11:30.120 job's Dave Jeffrey Rosenberg's portfolio manager for the Systematic Multi 0:11:30.120 --> 0:11:34.360 Strategy Fund at black Rock. Jeff with great respect, what's 0:11:34.400 --> 0:11:39.240 the strategy that works forward given the treacherous economic water 0:11:39.320 --> 0:11:39.960 as we weighed. 0:11:41.559 --> 0:11:43.880 Yeah, this is a this is a good report, and 0:11:43.960 --> 0:11:47.640 as you know we've been discussing, you know, across the board, 0:11:47.720 --> 0:11:49.360 it's a bit stronger than expected. 0:11:49.400 --> 0:11:50.360 You know, maybe not on the. 0:11:50.320 --> 0:11:54.000 Headline payrolls, but certainly underneath. And I think that he 0:11:54.080 --> 0:11:55.839 really is going to push back, and I think that's 0:11:55.880 --> 0:11:58.319 why you've seen the market reaction. The initial market reaction 0:11:58.400 --> 0:12:03.120 that you just just just describe is markets, bond markets 0:12:03.160 --> 0:12:06.360 in particular, really starting to price in a lot of 0:12:06.440 --> 0:12:09.400 cuts into next year and pricing. 0:12:09.040 --> 0:12:10.559 Them earlier and earlier. 0:12:11.040 --> 0:12:14.199 Three point seven percent on employment rate. Hard to see 0:12:14.440 --> 0:12:20.000 where the restriction, the restrictiveness is coming for this FED policy. 0:12:20.080 --> 0:12:22.040 So I think you're going to have a little bit 0:12:22.080 --> 0:12:24.440 of pushback in that narrative and that you're not really 0:12:24.480 --> 0:12:27.520 seeing the slow down, particularly again with the wage picture. 0:12:27.960 --> 0:12:30.480 You know, most of the support here is coming from 0:12:30.480 --> 0:12:32.960 the inflation side, and we'll have that conversation next week, 0:12:33.000 --> 0:12:35.160 but on the growth side, you know, you're really not 0:12:35.240 --> 0:12:38.400 seeing the level of restrictiveness show up yet in the 0:12:38.480 --> 0:12:40.880 labor markets, and I think that's going to push back 0:12:40.960 --> 0:12:43.240 on how quickly the FED is going to be able 0:12:43.280 --> 0:12:47.200 to to cut rates to keep up with the fall 0:12:47.320 --> 0:12:53.160 and inflation and avoid you know, the unintended increase in real. 0:12:52.400 --> 0:12:55.080 Real rate and the Jeff's observation, Lisa, I miss this 0:12:55.280 --> 0:12:58.760 stunning the Bloomberg financial conditions index. I'm going to use 0:12:58.800 --> 0:13:03.280 this word carefully. It's explodes to an accommodate of point 0:13:03.400 --> 0:13:05.719 six y two. It's Greek, right. All you got to 0:13:05.760 --> 0:13:08.320 know is explodes the right word. This is what Powell 0:13:08.360 --> 0:13:10.000 does not want to see. 0:13:09.720 --> 0:13:11.959 Although he didn't push back as much as some people thought, 0:13:12.080 --> 0:13:15.160 at least last week in his speech. But you're right 0:13:15.280 --> 0:13:18.080 to that point, Jeff, when you say the inflation is 0:13:18.120 --> 0:13:20.760 really the front in the front minds of people who 0:13:20.760 --> 0:13:24.000 are betting on this Goldilock's narrative and even rate cuts 0:13:24.040 --> 0:13:27.280 without the pain. I wonder how much their view is 0:13:27.360 --> 0:13:31.320 damaged by average hourly earnings rising more than expected and 0:13:31.400 --> 0:13:33.920 rising from the prior month. How much does that suggest 0:13:33.960 --> 0:13:36.880 a stickiness to the labor market strength and wage growth 0:13:37.800 --> 0:13:40.800 that really flies against this narrative of FED rate cuts 0:13:40.840 --> 0:13:41.440 next year. 0:13:42.559 --> 0:13:45.720 A little bit, and there certainly goes in the opposite direction. 0:13:45.840 --> 0:13:48.440 But what you've had on the inflation side is really 0:13:48.520 --> 0:13:52.000 this psychotomy between goods and services, and it's the goods 0:13:52.200 --> 0:13:56.040 part that has really been the disinflation that's fueling the 0:13:56.080 --> 0:14:00.760 overall enthusiasm for the cuts into next year. The services 0:14:00.800 --> 0:14:04.040 side is held up, and services inflation is really the 0:14:04.080 --> 0:14:07.800 mapping of today's labor report and the wage picture into 0:14:07.840 --> 0:14:11.400 the broader inflation and so that you know, remains very supportive. 0:14:11.520 --> 0:14:15.360 So again it's kind of the easy disinflation is behind us. 0:14:15.960 --> 0:14:20.880 This report kind of supports continued support for the broad 0:14:20.880 --> 0:14:23.440 inflation picture from the services side, and that debate I 0:14:23.440 --> 0:14:26.360 think will will continue. And obviously what you've seen in 0:14:26.400 --> 0:14:29.640 the market is a little bit of pullback in terms 0:14:29.680 --> 0:14:33.000 of the enthusiasm. You know, as Jonathan says, the first 0:14:33.080 --> 0:14:35.920 reaction isn't necessarily the end reaction. But I do think 0:14:35.960 --> 0:14:39.040 the overall take from this report and the wage picture 0:14:39.160 --> 0:14:43.920 is again very strong. Labor market supportive of services inflation. Yes, 0:14:43.960 --> 0:14:46.280 it's still coming down, but most of that is being 0:14:46.320 --> 0:14:49.360 driven by the good side. You're not seeing that supported 0:14:49.480 --> 0:14:51.360 as much from the services side. 0:14:51.440 --> 0:14:51.560 You know. 0:14:51.600 --> 0:14:55.480 Priam Israe of JP Morgan earlier this morning said does 0:14:55.520 --> 0:14:57.480 it matter? She raised this question, does it matter how 0:14:57.560 --> 0:15:01.000 much the Fed cuts rates next year? Considering the fact 0:15:01.040 --> 0:15:03.440 that it didn't seem to matter how much they raised rates. 0:15:03.480 --> 0:15:06.600 It didn't tighten policy that much. The long lags are 0:15:06.640 --> 0:15:09.160 long in both directions. Do you think that people are 0:15:09.160 --> 0:15:12.000 overestimating whether it matters if they cut rates in March 0:15:12.080 --> 0:15:13.600 or if they cut rates in June, or if they 0:15:13.640 --> 0:15:16.760 cut rates in September, if they have stopped raising rates, 0:15:16.800 --> 0:15:19.000 and if right now what you're seeing as an economy 0:15:19.000 --> 0:15:23.280 that still is chugging along a business is still hiring, well. 0:15:23.120 --> 0:15:25.160 I think the question is does it matter for the 0:15:25.400 --> 0:15:28.760 real economy or does it matter for the financial economy. 0:15:28.920 --> 0:15:31.400 I think the points well taken in terms of the 0:15:31.440 --> 0:15:36.800 sensitivity of the economy to interest rates is a different 0:15:36.960 --> 0:15:39.840 question than the sensitivity to financial markets. And I think 0:15:40.000 --> 0:15:43.080 on the ladder the financial market it matters. It matters 0:15:43.160 --> 0:15:45.480 a lot. And I think that easing in financial conditions 0:15:45.720 --> 0:15:48.000 that you're just talking about has everything to do with 0:15:48.040 --> 0:15:52.320 the expectations of soft landing, the collapse in inflation, the 0:15:52.360 --> 0:15:55.800 immaculate disinflation proving out to be correct, and allowing the 0:15:55.800 --> 0:15:59.960 FED to cut interest rates. That's highly supportive of financial markets. 0:16:00.800 --> 0:16:03.480 The real economy point, yes, I would can side that 0:16:03.640 --> 0:16:06.760 may be less significant, but for investors it's gonna be 0:16:06.800 --> 0:16:08.320 the latter. It's gonna be the financial market. 0:16:08.640 --> 0:16:10.920 Jeff. Let's pretend you're in carnegiemail and you've got to 0:16:10.960 --> 0:16:15.920 sum this over from your financial chat over into the 0:16:16.040 --> 0:16:21.560 GDP chat. Does this good labor economy support a more 0:16:21.680 --> 0:16:24.480 buoyant assessment of our real GDP? 0:16:26.080 --> 0:16:28.040 Well, I think so, Tom, And I think that's, you know, 0:16:28.120 --> 0:16:32.760 kind of the issue here for the monetary policy outlook 0:16:32.880 --> 0:16:37.480 is that there is this question of just what is neutral, 0:16:37.560 --> 0:16:41.480 what is real interest rates? What is restrictive? And we 0:16:41.560 --> 0:16:45.080 think we're there, but you don't know until it shows up. 0:16:45.120 --> 0:16:48.720 And we've had the benefit from the inflation side, but 0:16:48.800 --> 0:16:51.680 the growth side less so. And I think that's been 0:16:51.680 --> 0:16:55.960 the message from labor markets. It's been a steady normalization, 0:16:57.360 --> 0:17:01.280 but we're still seeing very strong labor market prints here, 0:17:01.520 --> 0:17:05.919 very strong wages, strong unemployment rates that are not really 0:17:05.960 --> 0:17:11.720 consistent with restrictiveness. And that's good from the growth side, 0:17:12.160 --> 0:17:14.359 but it may not be good to get that last 0:17:14.520 --> 0:17:17.200 mile of that three percent three and a half percent 0:17:17.280 --> 0:17:19.240 inflation down to the two percent target. 0:17:19.720 --> 0:17:22.960 Jeff, Thank you. Jeffrey Rosenberg most often with us here 0:17:23.080 --> 0:17:25.840 on Jobs Day with Blackrock and his good work in 0:17:26.600 --> 0:17:39.639 shorter term paper as well. What we're going to do 0:17:39.680 --> 0:17:44.280 now is wrap around that important Washington interview with the 0:17:44.440 --> 0:17:48.560 interview that matters for Global Wall Street Jerome Schneider, legendary 0:17:48.720 --> 0:17:52.200 at PIMCO in the short term paper space, and we're 0:17:52.240 --> 0:17:56.760 thrilled he could join us this morning. Jerome, not so 0:17:56.880 --> 0:18:00.840 much what this job report does. How hard is it 0:18:00.920 --> 0:18:04.000 to manage the risks of short term paper right now? 0:18:04.640 --> 0:18:08.040 Good morning, Good morning Tom, and good morning Manus. The 0:18:08.119 --> 0:18:10.280 reality is is that a lot of clients are in 0:18:10.440 --> 0:18:12.919 positioned to be pretty defensive in twenty twenty three. And 0:18:12.960 --> 0:18:15.240 I guess when you see this latest data, we find 0:18:15.240 --> 0:18:18.080 ourselves in a confluence of events which the outlook will 0:18:18.080 --> 0:18:21.600 continue to recalibrate. The issue with short term paper really 0:18:21.680 --> 0:18:25.160 is it's quite attractive, and that issue is one where 0:18:25.280 --> 0:18:29.359 investors may define balance between harvesting the attractive yields at 0:18:29.359 --> 0:18:31.520 the front of the R curve with the opportunity set 0:18:31.760 --> 0:18:34.080 to own a little bit of interest rate exposure and 0:18:34.200 --> 0:18:37.200 income further out the curve, and that challenge will continue 0:18:37.240 --> 0:18:39.480 to be reconciled as we get into twenty twenty four. 0:18:39.600 --> 0:18:42.880 So that's the prospect where you know the challenge from 0:18:42.960 --> 0:18:47.680 understanding the data and more importantly, the investment the investment landscape. Really, 0:18:47.840 --> 0:18:51.080 it will tend to reconcile any one data point as 0:18:51.080 --> 0:18:55.080 a witness this morning isn't necessarily as important. And the 0:18:55.119 --> 0:18:57.800 Federal Reserve will continue to sort of put the emphasis 0:18:57.840 --> 0:19:00.600 on the longer term views when they meet next week. 0:19:00.680 --> 0:19:02.800 So for investors, they should do the same thing. Take 0:19:02.840 --> 0:19:06.320 a longer term view, Understand the industrates have greatly recalibrated 0:19:06.359 --> 0:19:08.840 from where we've come from in twenty twenty two, and 0:19:08.920 --> 0:19:13.119 more importantly, look at the broader landscape of opportunity sets 0:19:13.119 --> 0:19:15.600 that yes, you might have a software economy, but the 0:19:15.680 --> 0:19:18.480 likelihood of a soft landing, while a possibility, isn't a 0:19:18.560 --> 0:19:22.400 high probability, and that pretends to be a fairly attractive 0:19:22.400 --> 0:19:24.520 investment outlook for at least for fixed income over the 0:19:24.520 --> 0:19:25.320 next twelve months. 0:19:25.760 --> 0:19:27.760 Good days here, Jern, good to be on. 0:19:27.840 --> 0:19:28.320 Are with you? 0:19:28.480 --> 0:19:30.600 I mean, we're a wonderful line from Mike McKee a 0:19:30.640 --> 0:19:33.440 moment ago where he said, look, you know, the bond 0:19:33.480 --> 0:19:36.600 market traders and salespeople have the attention span of a 0:19:36.640 --> 0:19:39.040 two year old. Having been slaughtered by the bond market 0:19:39.040 --> 0:19:41.280 in nineteen ninety four. You get moments like this of 0:19:41.359 --> 0:19:45.160 where tens and twos and tens have bolded higher this morning. 0:19:45.240 --> 0:19:47.240 Is it just a bit of a wake up call 0:19:47.320 --> 0:19:50.400 that the trajectory on rates is not one way, It's 0:19:50.440 --> 0:19:52.920 not a collapsing falling knife all the way. There will 0:19:52.960 --> 0:19:56.240 be moments of interruptions which present opportunity. 0:19:56.960 --> 0:19:59.560 Well, yeah, you're trying to get insight to the practitioners 0:20:00.080 --> 0:20:02.840 frame of mind, and then right, honestly, manness, it's one 0:20:02.880 --> 0:20:06.520 of those things that from a data dependent point of view, yes, 0:20:06.600 --> 0:20:08.400 the attention span might be one of a two year 0:20:08.400 --> 0:20:10.320 old if that's the view you take, and that's why 0:20:10.359 --> 0:20:12.440 we suggest a PIMCO to take a longer term view. 0:20:12.840 --> 0:20:16.439 The practicality of it is is that the bond market 0:20:16.560 --> 0:20:19.560 has effectively challenged in many ways. The Feds resolve many 0:20:19.560 --> 0:20:21.920 times this year, probably five or six times by my account, 0:20:22.240 --> 0:20:24.960 and they're going to continue to do so. One of 0:20:25.000 --> 0:20:27.880 the largest challenges will be actually over the next week 0:20:27.880 --> 0:20:29.919 as we take a look at the dot plots that 0:20:29.960 --> 0:20:33.440 will be revealed, and that will ultimately suggest that perhaps 0:20:33.440 --> 0:20:35.880 the Fed only suggests a handful of rate cuts versus 0:20:35.920 --> 0:20:40.040 the Feds remaining five plus versus the markets rather five 0:20:40.040 --> 0:20:42.639 plus rate cuts that they're expecting, and that is a 0:20:42.680 --> 0:20:45.800 fairly big reconcilation that can have fairly large impacts across 0:20:45.800 --> 0:20:47.880 the curve. But where I might have main is, which 0:20:47.920 --> 0:20:49.040 is in the front end of the eal curve. 0:20:49.200 --> 0:20:52.360 How do you respond to risk of reinvestment the idea 0:20:52.760 --> 0:20:56.600 as somebody is picking out a duration and financial advisor site. Oh, 0:20:56.760 --> 0:20:59.199 but the risk of reinvestment, how do you respond to 0:20:59.240 --> 0:20:59.680 that your own? 0:21:00.400 --> 0:21:03.040 Yeah, that's where you have to have a diversified portfolio. 0:21:03.080 --> 0:21:05.240 And while there is attraction to be at the front 0:21:05.240 --> 0:21:07.280 of the YEO curve, and you know Tom that I'm 0:21:07.280 --> 0:21:10.000