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Speaker 1: This is Bloomberg Surveillance. From this point forward, all the

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Speaker 1: economics can tell you that once the unemployment rate dips

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Speaker 1: down below five percent, that wages should pick up. Monetary

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Speaker 1: policy cannot high stimulate and create permanent jobs, and it

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Speaker 1: can't lift long run potential growth. If the unemployment rate

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Speaker 1: keeps falling in the way that I think it will,

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Speaker 1: at some point the ft is probably going to have

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Speaker 1: to tighten more aggressively than may expect. Bloomberg Surveillance your

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Speaker 1: link to the world of economics, finance, and investment on

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Speaker 1: Bloomberg Radio. Good running everyone this job today Michael McKee

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Speaker 1: and Tom Keane from New York, where our world headquarters.

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Speaker 1: We welcome all of you worldwide to an hour focused

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Speaker 1: on the American labor economy. Mr mckeow berry holds of

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Speaker 1: Bloomberg View and Masters in businesses with us today, Barry,

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Speaker 1: who do you have this weekend? The Masters in Business weekend?

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Speaker 1: Is Tom Dorsey of Dorsey Wright now part of the

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Speaker 1: next that group really fascinating wide. Why you want to

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Speaker 1: hear from Mr Dorsey? Right as he owns relative analysis

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Speaker 1: in the equity markets, he essentially has invented it. Uh

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Speaker 1: invented that careful analysis. I'm a huge fan of his work.

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Speaker 1: Looking for that with Barry ridholds Uh this weekend, this

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Speaker 1: job Today, This important hour with Jim Glassman and Bill

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Speaker 1: Gross brought to you by Cone Resnick Accounting, tax Advisory

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Speaker 1: and the affordable housing industry. Your business needs transformative advice

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Speaker 1: from the industry leading experts at Cone Resneck. Find out

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Speaker 1: why at cone resnec dot com. Oh n are e

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Speaker 1: z an I c K. We love doing this and

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Speaker 1: we've got our two grizzled veterans where this Bill Gross

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Speaker 1: to join us here in a bit, and yes, we'll

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Speaker 1: focus on the bond market in Central Bake. But right

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Speaker 1: now we need a reality check, which is what Jim

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Speaker 1: Glassman calls it when he looks at our economy Atlanta.

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Speaker 1: GDP now has a zero point six percent statistic. Many

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Speaker 1: economists angling down their global and their American economic views,

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Speaker 1: and yet the unemployment rate could drop today. Confused, Yeah, no,

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Speaker 1: I think this is uh been going on for a while.

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Speaker 1: And frankly, by the way, there is a big distortion

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Speaker 1: in the first quarter. It's very consistent. GDP numbers tend

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Speaker 1: to be on the low side by a couple of

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Speaker 1: percentage points and then they pop back in the second

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Speaker 1: quarters because of Texas I had I was cornered yesterday

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Speaker 1: with the Quidi Pick event thanks to David Sour. You know,

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Speaker 1: I think when when I when I look at it,

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Speaker 1: I think it's coming from two things. The trade sector,

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Speaker 1: and this is really the rise of trade with Asia

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Speaker 1: is becoming much more important. But the problem is Asia

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Speaker 1: figures get really distorted by the Chinese New Year, and

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Speaker 1: so they could be but that's part of the story.

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Speaker 1: The other party comes from the government sector. So honestly,

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Speaker 1: I think the bigger story is ask yourself, why are

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Speaker 1: we getting so much hiring when GDP growth has been

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Speaker 1: so slow. From the point of view of the job market,

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Speaker 1: this is one of the strongest recovery as we've seen

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Speaker 1: in a very long time in terms of job growth

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Speaker 1: relative to labor force. I think one thing that's going

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Speaker 1: on in the background you might want to think about.

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Speaker 1: Ask yourself, why is there so much hiring going on Seattle,

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Speaker 1: San Francisco, provo technology sector right, So think about it.

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Speaker 1: We're inventing a lot of new platforms here. You gotta

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Speaker 1: have the people in place to do that before we

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Speaker 1: actually see the products that are spinning out the apps

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Speaker 1: and all the things that are coming out of the

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Speaker 1: tech sector. So I think part of the issue here

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Speaker 1: why productivity looks so slow, Why are we're getting such

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Speaker 1: good hiring when GDP is not doing much, is partly

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Speaker 1: because we're inventing a new frontier and it takes a

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Speaker 1: lot of work to get there. And I hear, you know,

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Speaker 1: when I'm at in San Francisco, I hear about speculative hiring.

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Speaker 1: To me, that's a sign that's sort of an aspect

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Speaker 1: of this, so, you know, and the other the other

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Speaker 1: things going out. By the way, the demographics are changing

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Speaker 1: in the US, so we don't need as much growth

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Speaker 1: as we're used to thinking in order to get the

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Speaker 1: unemployment rate to come down. It's so you look at

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Speaker 1: population growing have been growing one percent, but the labor

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Speaker 1: for it's been growing half a percent over the last

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Speaker 1: nine ten years. And what that's telling you is the

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Speaker 1: as the demographics, as the Baby boom generation retires, there's

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Speaker 1: a huge slowdown in the working age population, and so

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Speaker 1: it makes it easier to get the unemployer rad to

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Speaker 1: come down with the kind of easier than what you

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Speaker 1: would think given the kind of growth rates were used

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Speaker 1: to sing. Jim, you started out saying Portland, Seattle, California, Denver.

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Speaker 1: I thought you would go into legal Marijuan. I'm glad

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Speaker 1: you you made a lift turn away from that. They

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Speaker 1: absolutely are, but being serious for a moment, that raises

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Speaker 1: the question why haven't wages ticked up? If there's such

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Speaker 1: a mass demands for employees and specialized skilled employees, why

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Speaker 1: have we seen such a punk waved You know, I

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Speaker 1: think behind the scenes you are seeing very strong gains

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Speaker 1: and specialized skills. The problem is folks that have in

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Speaker 1: a hard time finding all these people. But if you

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Speaker 1: look at the tech sector, wage trend is doing quite

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Speaker 1: well relatively. We've got a lot of mixed currents here,

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Speaker 1: and so with the oil sector now hunkering down, um,

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Speaker 1: some of those patrons have been coming down. But I

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Speaker 1: think the bigger story on wages is less about the

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Speaker 1: cycle and more about a secular thing that's been going

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Speaker 1: on for a couple of decades. Also, innovation. Well, all

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Speaker 1: this innovation is displacing routine work, and so if you

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Speaker 1: look at the share of income that's going to workers

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Speaker 1: in the economy, it's been sliding. It's been coming down

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Speaker 1: when you're looking at the total numbers, but what's actually

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Speaker 1: happening is there are a fewer people making more money

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Speaker 1: because that that that's the economy. Yeah, that's really a

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Speaker 1: symptom of the major destructions that are going on from technology.

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Speaker 1: So you know, it's for an economist, Um, we are

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Speaker 1: not as pessimistic about this because we think technology opens

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Speaker 1: up new opportunities and eventually people figured out and Jenny

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Speaker 1: Yellen danced around this week. We did not hear the

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Speaker 1: words slack as much, but it is. There's a lot

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Speaker 1: of people who constructively worry about all this, uh said,

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Speaker 1: And I do think it's important to the basic The

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Speaker 1: basic idea is, uh, it's a job economy with a

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Speaker 1: lot of frictional unemployment. Is it a new frictional unemployment,

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Speaker 1: a new permanent unemployed? You know, I think I'm not

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Speaker 1: as pessimistic about the unemployment picture because we are getting

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Speaker 1: people back to working. Unemployment is coming down, and the

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Speaker 1: hidden unemployment problem is is slowly disappearing as we pull

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Speaker 1: people back into the market. I think Janet Jones issue

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Speaker 1: and I think I really think there may be a

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Speaker 1: subtle shifting strategy going on. When interest rates are at

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Speaker 1: very low levels. It's close to a zero bound. The

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Speaker 1: FED has fewer options in the event of a crisis.

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Speaker 1: And I think what's going on is the January freak

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Speaker 1: out in the market, although the market is totally back here.

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Speaker 1: I think that was a fire drill for the FED

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Speaker 1: and they said, oh my gosh, what if we do

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Speaker 1: have a big another threat. What choices do we have?

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Speaker 1: And I think this has always been the struggle there.

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Speaker 1: We've always thought they had two choices. They could either

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Speaker 1: start early and go slowly, or wait, drag your feet

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Speaker 1: and then go very quickly. And I think what they

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Speaker 1: may be realizing is that in order to minimize the

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Speaker 1: you know, to maximize their options, they'd be better off

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Speaker 1: if the economy is really flying. So do we want

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Speaker 1: to FED that is this focused on the stock market?

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Speaker 1: I know this is sort of the legacy of Alan Greenspan,

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Speaker 1: that every twitch in the market caught his attention. Shouldn't

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Speaker 1: the FED be thinking bigger picture than day to day market? Mom?

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Speaker 1: You know, I think so myself. But I think when

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Speaker 1: I think about it, I myself was really skeptical when

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Speaker 1: the market was free falling. But we're used to this

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Speaker 1: kind of noise in the market. But I think at

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Speaker 1: the FED it was less about the market. The stock market.

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Speaker 1: The stock market raised an issue for the FED. I

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Speaker 1: think it made people realize that there are risks outside

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Speaker 1: the US economy that could pop up, and it made

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Speaker 1: them think more sharply about what happened? What do you do?

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Speaker 1: There is a problem if they raised rates? Jim Glassman,

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Speaker 1: what would happen? You know? Not fifty basis points? Resolves

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Speaker 1: and cats living together, total, man, what would actually happen?

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Speaker 1: I mean that you kind of wish they'd come in

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Speaker 1: and raise them fifty basis points and then we'd be

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Speaker 1: done one week out and then we get three months out. Yeah,

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Speaker 1: what would happen? I mean the emerging and think about

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Speaker 1: all that hysteria that was going on when the FED

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Speaker 1: was talking about that first move. The emerging markets universe

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Speaker 1: is sensitive to this. But the truth is you've got

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Speaker 1: to run mount monetary policy on the what things look

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Speaker 1: like in your region. And I keep telling people in

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Speaker 1: the emerging markets, if the FED is doing the right thing,

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Speaker 1: a healthy economy with less disruption and interstrate markets is

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Speaker 1: gonna be better for them than having the FED keeping

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Speaker 1: interestrates artificially low. And when you say they're sensitive to rates,

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Speaker 1: you're really indirectly saying they're extremely sensitive to the US dollar. Uh,

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Speaker 1: they are are. But and I think part of that

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Speaker 1: is because there's a lot of fast money that moves

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Speaker 1: in and out from from the US to emerging markets,

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Speaker 1: and modest changing into interstrate structures really change those dramatically.

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Speaker 1: Should that part of it? Should that really be the

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Speaker 1: focus of the thing. So I think the focus out

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Speaker 1: of beyond how's the economy doing great? Uh? Where do

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Speaker 1: you can you make this adjustment process orderly? Uh? Then

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Speaker 1: I think the more they can go slow steps means

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Speaker 1: you can make this whole adjustment process much more orderly.

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Speaker 1: And I think the risk in what's going on is

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Speaker 1: that it becomes more disorderly when they actually have to move.

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Speaker 1: So in the last in the last thirty seconds we have,

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Speaker 1: are we gonna see an increase in June? Is that

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Speaker 1: the expectation? I think that's pretty likely given what's going

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Speaker 1: on the job market and the inflation trends. I'll have

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Speaker 1: to see Jim Glass with us to get us prepared,

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Speaker 1: or spirited conversation to get you ready for the jobs

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Speaker 1: report in twenty minutes. We'll go beneath the headline data

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Speaker 1: and that today that means wage growth is John Herman

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Speaker 1: and others if at wage dynamics or what not there. Frankly,

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Speaker 1: Janet Yelling said that the other day she read John

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Speaker 1: Herman's report and Jim Glassman's for that matter, wage growth

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Speaker 1: is the mystery that's out there, and we will see that.

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Speaker 1: I just had a email and from Harry. So why

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Speaker 1: don't they raise uh, you know, why don't they raise raids?

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Speaker 1: And for that matter, why don't they raise wages. That's

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Speaker 1: one of the complexities. We'll talk to Jim Glassman about

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Speaker 1: futures negative ten dow, futures negative sixty nine yields fractually

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Speaker 1: higher typical jobs day shore into the screen. One difference

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Speaker 1: oil thirty seven thirty seven and West Texas Intermediates Brent

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Speaker 1: crew down cents as well, so oil saga. You see

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Speaker 1: that in copper um as well. Again, futures of negative

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Speaker 1: ten doll futures negative and out of the news in

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Speaker 1: New York City, here's Michael barr Tom Barry, thank you

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Speaker 1: very much. A major topic for President Obama today at

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Speaker 1: the nuclear security stopping groups like the Islamic State from

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Speaker 1: obtaining nuclear material and of the weapons of mass destruction

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Speaker 1: when U S officials says Islamic state leaders have the

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Speaker 1: intent to use any weapon they can to murder or

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Speaker 1: create fear. Today is the second and final day of

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Speaker 1: the Nuclear's summit in Washington. The reopening of Brussels Airport,

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Speaker 1: even under reduced capacity, has been hampered by demands from

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Speaker 1: police for more security at the terminal. Last week's deadly

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Speaker 1: bombing at the airport destroyed the check in area. Brussels

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Speaker 1: officials hope to have the airport opened by this evening.

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Speaker 1: Police in Richmond, Virginia, say they're not sure why our

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Speaker 1: gunmen fatally shot at Virginia State trooper at a busy

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Speaker 1: downtown bus terminal yesterday. Two other troopers opened fire, killing

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Speaker 1: the shooter. Global News twenty four hours a day, powered

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Speaker 1: by our journalists at Michael Barr, Tom Verry, very good,

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Speaker 1: Michael bar thanks so much. Jim Glassman or this is

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Speaker 1: the JP morgat and then a conversation we'll get jobs.

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Speaker 1: We'll speak to Mr Glassman, Dr. Glassman, and then Bill

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Speaker 1: gross will join us live on radio and television. Stay

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Speaker 1: with us is John's Day. Bloomberg surveillance counting down to

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Speaker 1: the open bell brought to you by the Jep Grand Cherokee,

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

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Speaker 1: dot com, the Radio Plus mobile app, and on your radio.

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

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Speaker 1: U stock Index futures are lower ahead of the March

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Speaker 1: jobs report. Let's go to the First Word Breaking news

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Speaker 1: desk for today's morning call. And here's Bell Maloney. Good morning, Bell,

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Speaker 1: Good morning Karen. That's right. US features are under pressure today.

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Speaker 1: DOUBT futures currently lowered by sixty two points, sp S

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Speaker 1: drop nine and NASA futures declined by eighteen. The U

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Speaker 1: S tenual at one point seven seven per cent over night.

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Speaker 1: In Asia markets, SIK dropped three point six percent. That's

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Speaker 1: the most in seven weeks, while up M markets are

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Speaker 1: also falling, led by two point six percent losses in

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Speaker 1: France and Germany. On the US economic frontday eight thirty,

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Speaker 1: non fon Peril's estimate two d and five thousand unemployee

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Speaker 1: right estimate four point nine percent market US Manufacturing p

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Speaker 1: m I and at ten o'clock is s M Manufacturing,

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Speaker 1: construction spending and Michigan sentiment. After the Bell's Night TESTA

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Speaker 1: unveiled the Model three shares her up six point six

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Speaker 1: percent pre market, and Marvel Technology sees fisically your net

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Speaker 1: revenue significantly lower year over year until news and Bag

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Speaker 1: is walking away from star Ward bid, clearing the way

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Speaker 1: for Marriott. Also another news BlackBerry missed revenue estimates. Found

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Speaker 1: me some of your Wellstreet upgrades and downgrades at City Group.

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Speaker 1: J two Global raised to buy and Viacom cut to neutral.

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Speaker 1: American Airlines, Delta and United Continental all cut the whole

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Speaker 1: versus bya Deutsche Bank. Chipotle cut to neutral at Goldman Sachs,

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Speaker 1: and Capital One raised to overweight at JP. Morgan Live

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Speaker 1: from the first Breaking News Descomb, Bill Maloney, care, Hey,

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Speaker 1: sabill in your life, breaking news over your Bloomberg type skuawka,

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Speaker 1: go on your terminal. Let's sku a w K go

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Speaker 1: and that's a Bloomberg business flash, Tom and Barry Karen,

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Speaker 1: thanks so much Bloomberg surveillance this morning brought you by

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Speaker 1: Investco to the day's headlines. Have you searching for more

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Speaker 1: investment views. Investco's experts can help find the latest thought

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Speaker 1: leadership at the investco Blog. Visit investco dot com slash

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Speaker 1: us to subscribe. We need a reality adjustment. That's what

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Speaker 1: we're doing with Jim Glassman twelve minutes before the jobs report.

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Speaker 1: I love the Economic Policy Institute, Jim Glassman. They write

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Speaker 1: smart informed articles pushing back against elite certitude. Robert Scott,

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Speaker 1: who we've interviewed before, David Cooper. They just bring up

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Speaker 1: a small point. Almost two thirds of people in the

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Speaker 1: labor force do not have a college degree. We forget that.

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Speaker 1: I mean rib Holts, you know, the way he lives

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Speaker 1: the big life out in the suburbs, or the way

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Speaker 1: you and I live within three zip codes of New

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Speaker 1: York City. We don't get this. Two thirds of America

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Speaker 1: doesn't have a college degree. Where do they get jobs? Well,

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Speaker 1: they're pretty smart, is my guests anyway, and they've got

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Speaker 1: jobs all over the country. There's all kinds of jobs

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Speaker 1: getting created in the services sector and the manufacturing sector.

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Speaker 1: A lot of people think, well, we don't make anything

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Speaker 1: here in the US. The truth is, we have a

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Speaker 1: I see a lot of these focus their clients, and

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Speaker 1: we have manufacturing operations all over the place, and these

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Speaker 1: are for there all kinds of jobs to do out there,

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Speaker 1: and these are folks. Uh, there's plenty of jobs out there.

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Speaker 1: Most most jobs actually don't require PhD in economics. And

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Speaker 1: in fact, if you have one in my getting the way, now,

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Speaker 1: aren't we seeing amongst that spread of different educational attainment.

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Speaker 1: If you have a graduate degree or a college degree,

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Speaker 1: your unemployment rate is considerably lower as a group, and

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Speaker 1: your wage games are considerably higher. Is that's still true?

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Speaker 1: That's true, But that may tell you more about the

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Speaker 1: cultural differences in who who tends to have college degrees

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Speaker 1: who doesn't. I I don't think what does it tell

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Speaker 1: us about the nature of our economy where growth is well,

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Speaker 1: we're I don't think it tells you much about that

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Speaker 1: because this has always been going on when whenever, if

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Speaker 1: you have a college degree, you're probably lucky and that

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Speaker 1: you had someone to help you out, or you you

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Speaker 1: thought you you were motivated to get a college education.

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Speaker 1: But the truth is the needs of the job market

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Speaker 1: have less to do with a college degree or not.

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Speaker 1: It's more specific skills that you pick up in the

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Speaker 1: old days. You pick them up from the union shop

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Speaker 1: or from the shop class and apprenticeship mentors, right, and

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Speaker 1: those are the kinds of things that really get you

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Speaker 1: a job. If you know how to weld for a while,

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Speaker 1: you were getting pretty good pay. Um. So I think

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Speaker 1: the unemployment it tells you more. Maybe people who have

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Speaker 1: high on who have low education are less attached to

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Speaker 1: the labor market and so they tend to have a

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Speaker 1: higher unemployment level. But that's always been the case. But

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Speaker 1: the but, but the good thing is as you watch

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Speaker 1: what's evolving here, everybody is doing better. Levels are higher,

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Speaker 1: some some classes have higher some groups have higher unemployment

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Speaker 1: levels and others. But everything about the labor market is

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Speaker 1: getting better. All measures of unemployment are getting better. We're

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Speaker 1: not there yet, but I mean the uneplumber rate is

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Speaker 1: kind of exaggerating what's really going on. And there's a

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Speaker 1: lot of hidden unemployment out there. And I think if

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Speaker 1: you look at the ratio or unemployment part timers, if

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Speaker 1: you look at the ratio of people who were forty

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Speaker 1: five years of the age or younger who have a job,

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Speaker 1: it's coming back, but it's not where we were in

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Speaker 1: two thousand seven, and I think that's the best, gives

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Speaker 1: you the best. We're about two and a half million

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Speaker 1: people shy of where we would have been back into seven,

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Speaker 1: and I think that kind of applies to me. We're

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Speaker 1: still in the seventh inning of economic recovery, even though

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Speaker 1: the unclomer rate take a face value says we're nine.

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Speaker 1: The summary of this is simple, and I go to

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Speaker 1: Jeff the economist, Jeff Emilt of Dartmouth and General Electric.

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Speaker 1: I'm kidding. Jeff m Lt says, look, all we need

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Speaker 1: is three point two g d P. Do you have

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Speaker 1: the gloom of a propelled truly load g d P

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Speaker 1: or as part of this healing of our labor economy,

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Speaker 1: decent American growth? It's it's decent American growth. And I

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Speaker 1: think we're going We're not really sure. Jenny Ellen raised

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Speaker 1: this issue. We've all been puzzling, wondering if maybe the

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Speaker 1: GDP estimates are off base a little bit, uh, and

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Speaker 1: they will get it takes time to get them revised,

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Speaker 1: but I really think, um, I'm expecting to see better

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Speaker 1: trends over the next couple of years. So so from

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Speaker 1: WHENCE does all this angst in the last thirty seconds

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Speaker 1: we have Where is all this political angst coming from. Well,

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Speaker 1: it's really coming out of something that's been brewing for

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Speaker 1: a couple of decades, right because we've had we've had

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Speaker 1: major major changes, sweeping changes innovation that are touching everybody,

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Speaker 1: and it's displacing a lot of jobs, and it takes

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Speaker 1: time for people to get refocused and for some people

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Speaker 1: that can't get retrained. If you're fifty five and lose

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Speaker 1: a job, how can you retrain for some of these jobs?

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Speaker 1: And I think that's really what's going on, that that

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Speaker 1: that there's really something bigger. If it's been sweeping through

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Speaker 1: the economy, it's not about the cycle. The cycles behind us. Basically,

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Speaker 1: who's the most important person at bloombergs of was today Devin.

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Speaker 1: He just came in and fixed the printer for the

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Speaker 1: jobs report. He's the most important get m raised and

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Speaker 1: he's exactly what we're talking about in terms of this

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Speaker 1: place wouldn't go without our staffs and fixes all this

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Speaker 1: technical stuff, including the Bloomberg terminal that we work with

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Speaker 1: every day, futures negative eight down, futures negative again. To

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Speaker 1: help you through the next six minutes and into the

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Speaker 1: rest of surveillance. This morning we'll have the jobs report.

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Speaker 1: Jim Glassman of JP Morgan will help us here with

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Speaker 1: some of those headline statistics. And then is only Dr

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Speaker 1: Glassman will do. We can go beneath it. Unemployment rate

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Speaker 1: four point nine, looking at the wage dynamics stasis two

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Speaker 1: point two percent, maybe a month over a month, a

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Speaker 1: little bit of growth we'll see. Of course we'll give

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Speaker 1: you revised adjusted numbers as well. And then a conversation

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Speaker 1: with Bill Gross. He is scathing about the speed that

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Speaker 1: our central bank is moving at, which and Glassman and

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Speaker 1: later with Bill Gross Bloomberg's surveillance. The all due respect

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