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Speaker 1: Runt You by Bank of America Mary Lynch. With virtual reality,

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Speaker 1: virtually everything will change. Discover opportunities in a transforming world.

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Speaker 1: Be of a, mL dot Com, slash VR, Mary Lynch,

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Speaker 1: Pierced Fenner and Smith Incorporated. Welcome to the Bloomberg Surveillance Podcast.

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Speaker 1: I'm Tom Keene with David Gura. Daily we bring you

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Speaker 1: insight from the best of economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com,

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Speaker 1: and of course on the Bloomberg. We begin our job

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Speaker 1: coverage in this hour with Alan Krueger of Princeton University,

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Speaker 1: truly giant of modern economics, particularly his work on the

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Speaker 1: hourly wage. We can talk about that in a bit.

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Speaker 1: You're piling through one of my books of the summer

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Speaker 1: a couple of years ago, Leonard Oiler Mathematical Genius in

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Speaker 1: the Enlightenment, which is really heavy reading, a lot of

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Speaker 1: math in it, a lot of formulas. Fortunately, Tom, it's

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Speaker 1: the beginning of the summer. Yeah. But and it's it's

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Speaker 1: it's a tough book to get through because it's got

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Speaker 1: a lot of theory in it. It's a very significant book.

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Speaker 1: I was more interested in his life, which very little

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Speaker 1: about um. And it's tough going. I have to say,

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Speaker 1: to get through the physics and the math, well that's

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Speaker 1: where I wanted to do. It is the physics in

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Speaker 1: the math and the era. Then the mystery why is

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Speaker 1: our central banking now any different? I mean, do we

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Speaker 1: have an understanding of the physics in the math of

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Speaker 1: our central banking? Thinking you know what it's remarkable for

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Speaker 1: me and thinking about the book is humans have been

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Speaker 1: thinking about developing math for millennia and the progress was slow.

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Speaker 1: Yet in the early eighteenth century they know far more

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Speaker 1: than typical college student knows today. And when it comes

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Speaker 1: to central banking, were you know much earlier in this period,

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Speaker 1: so we're sort of pre Newton. I'd say, I want

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Speaker 1: I'll put a question you. Tom often puts to two

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Speaker 1: folks who are who are academics, that is, are how

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Speaker 1: engaged with the mathematics or students in your department today

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Speaker 1: students who are studying economics. Are they as engaged with

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Speaker 1: mathematics as they used to be? Oh? Probably more so.

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Speaker 1: I don't think, David, I'd be able to get into

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Speaker 1: graduate school with the math that I had at Cornell today.

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Speaker 1: But I would say this economics is more logic and

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Speaker 1: more analysis than math, and I think the math is

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Speaker 1: a proxy for someone who can think analytically. There used

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Speaker 1: to be on the g R E exam an analysis part,

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Speaker 1: and that was a stronger predictor of how well economists performed,

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Speaker 1: how well they fared, than the math component. Yeah. But

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Speaker 1: we had a great debate this week with Adam Posen,

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Speaker 1: who defended the orthodoxy of Phillips curvics or etcetera, and

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Speaker 1: John Riding who took him more Neil Viccellian view. It's

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Speaker 1: the markets, it's we need to improve regulation, we need

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Speaker 1: to change corporate texts, etcetera. More market based, more flow based.

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Speaker 1: Which where's the tendency right now? Are we going to

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Speaker 1: end up back to the orthodoxy of ten years ago?

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Speaker 1: In ten years I don't know. Those are so inconsistent,

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Speaker 1: to be perfectly honest, If you think about where the

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Speaker 1: Phillips curve comes from, I think of it more is

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Speaker 1: coming from my dynamic view of the economy. So I

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Speaker 1: don't see a conflict. I can tell you I uh

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Speaker 1: put some weight on historical estimates of the Phillips curve,

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Speaker 1: and I also think making sure that we've got a

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Speaker 1: proper regulatory regime for a financial system is important to

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Speaker 1: make UH the economy work for everyone. Let's get to

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Speaker 1: this job support. What are you gonna be looking for today?

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Speaker 1: What's this report going to indicate to you about the

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Speaker 1: health of the U s economy? Well, you know, the

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Speaker 1: most important number in the jobs report is the top

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Speaker 1: line UH peril growth number. But under the surface labor

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Speaker 1: force participation, what's happening with wages? It seems pretty clear

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Speaker 1: that job growth has been moderating the first six months

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Speaker 1: of this year. That's not surprising given where we are

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Speaker 1: in the business cycle, given that the unemployment rate is

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Speaker 1: below four and a half percent. So I'll be looking

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Speaker 1: closely to see if their further science of moderation, focusing

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Speaker 1: on manufacturing, which has been pretty much moving sideways, although

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Speaker 1: with the decline in auto sales, I'm concerned that could

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Speaker 1: pull down all of manufacturing. UM. So those are the

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Speaker 1: main aspects of the report. I'll look at from a

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Speaker 1: policy perspective, what what could what could improve those manufacturing numbers?

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Speaker 1: That do you think? Um, that's a good question. I

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Speaker 1: think fundamentally we need to invest more in research and development, manufacturing,

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Speaker 1: and what drove manufacturing is developing new products, products that

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Speaker 1: can do new things. Uh. Also what drove manufacturing is

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Speaker 1: productivity growth, and that's continuing. It's driving down employment. So

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Speaker 1: I think we need to think more on the product

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Speaker 1: side and how can we leverage our technology to create

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Speaker 1: products that improve people's lives and put people to work.

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Speaker 1: I think we need to rip up the script. We're

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Speaker 1: coming back and talk to Alan Krueger about everybody wants

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Speaker 1: to hear about. I'm gonna guess Professor Krueger, correct me,

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Speaker 1: Card Krueger. Krueger Card a definitive paper on the labor

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Speaker 1: economy of this nation. There is no other topic in

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Speaker 1: labor economics now about the efficacy and result of twelve,

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Speaker 1: thirteen and fifteen dollars per our minimum wage. Something everyone's

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Speaker 1: been waiting for. Alan Krueger of Princeton on the minimum wage. Okay,

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Speaker 1: here's the debate. The Washington Examine or conservative rag comes

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Speaker 1: out and says liberals hate this report. And then the

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Speaker 1: Washington Post comes out liberal rag and says, wait, the

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Speaker 1: Washington Examiner's got a point. Essentially correct me if I'm wrong.

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Speaker 1: Professor Seattle and others are finally getting the minimum wage

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Speaker 1: back up to its inflation adjusted level from another time

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Speaker 1: and place. In recent decades, a minimum wage has been

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Speaker 1: set below that inflation adjusted glide path from before, and

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Speaker 1: now at eleven fifteen dollars an hour, we're really beginning

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Speaker 1: to test what's the best minimum wage. How's the test going? Well,

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Speaker 1: I think it's very preliminary, so I will go with that.

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Speaker 1: I would reserve judgment. I've looked at the studies from Seattle.

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Speaker 1: There's more than one, and I think that the conventional

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Speaker 1: wisdom which has become that modest increases in the minimum

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Speaker 1: wage don't have a noticeable impact unemployment is still correct,

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Speaker 1: and we don't know where the turning point is. UM.

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Speaker 1: The UH evidence that we're going to start to get

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Speaker 1: from Washington State, from Los Angeles, from a few other cities,

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Speaker 1: I think might help us to determine where that turning

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Speaker 1: point is. I've been concerned that fifteen dollars and hours

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Speaker 1: beyond what we've experienced. UM. On the other hand, adjusted

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Speaker 1: for inflation, that would put us throrom eleven twelve dollars

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Speaker 1: an hour. Every business person listening to this right now

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Speaker 1: is going Professor Greg go back to Princeton. We gotta

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Speaker 1: live in the real world. We can't wait for more data,

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Speaker 1: more time, more responsible economic studies. What do you say

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Speaker 1: to the person going, wait, I gotta go from X

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Speaker 1: to fifteen or thirteen eleven, and the only way I'm

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Speaker 1: gonna do this is productivity, efficiency, robots and depreciate labor

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Speaker 1: unit count. I mean, it's just fewer people employed, right, Well,

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Speaker 1: I think it's more complicated than that. Um. I think

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Speaker 1: what many individual businesses miss is that their competitors are

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Speaker 1: also facing higher prices. So one of the things we've

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Speaker 1: seen in the past is that minimum wage increases are

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Speaker 1: often passed on in the form of higher prices. UM.

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Speaker 1: And given how low inflation is at the moment, Uh,

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Speaker 1: there might be some who actually think that it's not

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Speaker 1: not the end of the world. But I think that

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Speaker 1: the impact on an individual business is is not as

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Speaker 1: great as often as perceived because it's affecting the entire market.

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Speaker 1: Let me ask you a broader question about policy making

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Speaker 1: in the year two thousand and seventeen. Tom brings up

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Speaker 1: the minimum wage, but you see a lot of decisions

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Speaker 1: being made at the state and local level that in

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Speaker 1: the past have been made at the federal level. What

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Speaker 1: does that city about the role of the federal government

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Speaker 1: if you have UH cities and states tackling regulatory issues

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Speaker 1: minimum wage issues. So what's changed. We've seen this before

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Speaker 1: with the minimum wage in the nineteen eighties, when the

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Speaker 1: federal government didn't raise the minimum wage, the states stepped up.

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Speaker 1: That's what's been taking place since two and nine, the

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Speaker 1: last time the federal minimum wage increased. Donald Trump proposed

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Speaker 1: raising the minimum wage to ten dollars an hour when

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Speaker 1: I ran for office. That struck me as a reasonable compromise,

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Speaker 1: a reasonable level. I don't believe he's ever brought that

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Speaker 1: up again, um and I think that's something which consensus

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Speaker 1: could be formed behind and might lead to a national floor,

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Speaker 1: which is UH leading to UH more people to be

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Speaker 1: able to earn a living that they can survive. On

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Speaker 1: one other thing, I wanted to point out time we're

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Speaker 1: in a strange time now because job openings have been

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Speaker 1: growing very quickly, much faster than hiring, and it raises

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Speaker 1: the question why aren't we seeing more more wage growth?

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Speaker 1: And historically in that kind of environment, I think we

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Speaker 1: would have seen stronger wage growth. One of the reasons

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Speaker 1: why this is taking place now, I think is because

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Speaker 1: companies have imposed non compete clauses on their workers make

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Speaker 1: it harder for them to switch. Even McDonald's has a

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Speaker 1: requirement that franchisees can't hire away employees from other McDonald's

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Speaker 1: unless they've been out of work for more than six months.

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Speaker 1: So I think this is chilling the labor market and

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Speaker 1: putting a lid on wages, and it's one of the

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Speaker 1: reasons why we're not seeing wage growth, which the minimum wage.

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Speaker 1: You know, historically when we were in this type of

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Speaker 1: a labor market, we would see an increase in the

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Speaker 1: federal minimum wage. Somebody's nine and they go to eleven

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Speaker 1: dollars to any five cents in our minimum wage, whatever

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Speaker 1: the geography is, whatever the state does. Everybody else go

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Speaker 1: up a buck or two as well. There is often

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Speaker 1: a big spell over. There's a debate in the profession

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Speaker 1: now about how high that spellover goes. Um that's one

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Speaker 1: of the issues they are looking for. It does tend

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Speaker 1: to ratch it up the whole wage distribution, which makes sense.

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Speaker 1: Workers care about their relative their relative pay. That's one

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Speaker 1: of the reasons why employers resist pay increases because it's

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Speaker 1: not just the individual employee. It's the whole pace will

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Speaker 1: be effective. This is this is desperately important. You just

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Speaker 1: stated there's a lot of job openings. Why don't they

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Speaker 1: just raise the wage? Money talks. I can't get welders,

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Speaker 1: I can't get economics professors like you know, I can't

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Speaker 1: get why you yet you know, just raise the wage

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Speaker 1: and why you en right? I think employers have gotten

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Speaker 1: used to an environment which were no longer in, but

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Speaker 1: an environment where we had a surplus of labor. And

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Speaker 1: I think we're heading more towards a labor shortage economy,

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Speaker 1: partly because of our demographics, partly because of our new

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Speaker 1: immigration policy. UM and I think that employers need to

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Speaker 1: adjust to this new environment. And I think the more

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Speaker 1: enlightened ones will see it's in your interests to respond

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Speaker 1: to these market conditions. What do we need to know

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Speaker 1: about the skills gap are calling? Michael McKee was in Cambridge,

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Speaker 1: Massachusetts yesterday. He spoke with a darn a smugglof of

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Speaker 1: m I t about this very issue. It struck me

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Speaker 1: talking to Mike Boston. Cambridge in a very privileged place.

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Speaker 1: They're surrounded by great academic institutions and have their pick

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Speaker 1: of a lot of those graduates becoming tougher and deffort

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Speaker 1: to get those graduates to stick around the greater Boston area.

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Speaker 1: What do we need to know about the skills gap

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Speaker 1: and how to how to narrow that divine? Well, I

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Speaker 1: think there is a skills gap, and I think we

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Speaker 1: need to start early. I think it's a long term problem.

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Speaker 1: I think it's been a problem for a long time

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Speaker 1: for the US. But that can't explain the entire puzzle

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Speaker 1: that we're facing because the fastest growth in job openings

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Speaker 1: has been for restaurant workers, for hotel workers, retail um work,

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Speaker 1: which has relatively low credentials uh generally lower education levels.

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Speaker 1: So I don't think it's only a matter of skills.

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Speaker 1: I think it's partly a matter of employer policy and

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Speaker 1: reluctance to pay more for for both high and low skills.

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Speaker 1: Are we exporting our skilled jobs? I mean you just

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Speaker 1: mentioned three job categories or everybody's going I don't want

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Speaker 1: my kid to do that. You know they can you know,

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Speaker 1: minimum wage, fine, and go get a summer job. Great,

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Speaker 1: But are we struggling with our skilled jobs because they're

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Speaker 1: going abroad? Is that the new globalization? Well, that's a

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Speaker 1: risk I think with our new immigration policy, because, uh,

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Speaker 1: if you look at the mix of immigrants coming to

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Speaker 1: the US, it's both a highly skilled and the low skilled.

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Speaker 1: It's a barbell and also very ambitious people at all levels.

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Speaker 1: Um And to the extent we're making the US less

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Speaker 1: friendly for immigrants, that's gonna hurt employers. It's gonna hurt

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Speaker 1: employees across the spectrum be cause, uh, the jobs that

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Speaker 1: the skilled workers would help create for less skill workers

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Speaker 1: won't be here, some of them. David mentions Michael Michael mckem.

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Speaker 1: Meeting it up at m I M I T. You

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Speaker 1: may not know the l A M I T is

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Speaker 1: a school up on a river in Boston. I was

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Speaker 1: very impressive. You can both pronounce as I have Smart.

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Speaker 1: The one that I can pronounce smart. Crumpton helps you

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Speaker 1: know what people don't know. The only reason I can

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Speaker 1: pronounce these names is Crumpton is in my ear telling

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Speaker 1: me how to pronounce it. He's the best. Okay, long

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Speaker 1: term growth and his research up at m I T

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Speaker 1: is institutions, institutions, institutions. Where are we on an institutional

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Speaker 1: flexibility that gives us a better long term growth? I

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Speaker 1: think their own their own smog is an excellent work

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Speaker 1: in this area. UM. And historically, I think one of

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Speaker 1: the great strengths of the U S has been our institutions,

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Speaker 1: our institutions of free press or institutions of UH Central Banking,

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Speaker 1: Congressional Budget Office, UH checks and balances. That we have

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Speaker 1: a government and UH. Frankly, I'm worried that UH they're

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Speaker 1: they're under stress now with the new administration. UM. I

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Speaker 1: think we need to really praise our our institutions. By

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Speaker 1: the way, I was listening to your show last week

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Speaker 1: and I heard you both you listen to us. I

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Speaker 1: was driving into work and I just broke and he

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Speaker 1: heard you both mentioned the CBO executive summaries. I think

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Speaker 1: probably on the healthcare bill. UH. CBO's an institution where

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Speaker 1: you have to cherish even when I disagree with him.

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Speaker 1: I think it's an institution that I have tremendous regard for.

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Speaker 1: We're up to seven listeners in New Jersey. That's unbelievable.

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Speaker 1: Why you unreal? Alan Krueger, thank you so much. We'll

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Speaker 1: leave it there with the fact that you listen to us.

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Speaker 1: I'm Bloomberger eleven three oh in serious XM Channel one nineteen.

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Speaker 1: We said good morning one or six one FM Boston,

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Speaker 1: Good morning to all of Sloane at Massachusetts Institute. What's

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Speaker 1: the name of the schools up river? I can't I

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Speaker 1: can't remember Leslie University. Watch yourself younger. That will get

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Speaker 1: us into trouble as well. Really, really, thank Jim Glassman

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Speaker 1: for joining us today from scenic Glendale, calif waking up

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Speaker 1: early for yes, you really appreciate your early morning hours.

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Speaker 1: How important is this job's report? Dr Glassman? You know,

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Speaker 1: it's always important because it's yet another view of what's

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Speaker 1: really going on in the economy. But I think we

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Speaker 1: got to remember these things can be very volts a

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Speaker 1: month to month, and May, June July have tend to

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Speaker 1: be really volatile in the last couple of years. Remember

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Speaker 1: last year we had a really weeked May, then we

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Speaker 1: got this booming June number. Last month we've got a disappointment,

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Speaker 1: And so you know, you have to sort of lick

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Speaker 1: through the noise. And I think we got the idea

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Speaker 1: the U s economy is back on its feet. Unapployments

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Speaker 1: quite low. There may be still a few pockets of

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Speaker 1: hidden unemployment. Inkly, Uh, this report is important because it

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Speaker 1: backs up what we already know that the US economy

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Speaker 1: isn't pretty good shape. It doesn't mean we're doesn't mean

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Speaker 1: we solved all the problems, but we're pretty much there.

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Speaker 1: I agree that months a month there seems to be

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Speaker 1: a good metric, but also a new metric where is

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Speaker 1: normal non farm payroll growth? You and I used to

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Speaker 1: be one eight was terrible, two was okay, to twenty

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Speaker 1: was great. You've got a whole new mathematics now, don't you.

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Speaker 1: Exactly because of the demographics. And you know, the thing

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Speaker 1: to remember is that the population has been growing about

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Speaker 1: one percent a year since over the last ten years,

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Speaker 1: but our labor force has been growing about a half

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Speaker 1: percent past sixty a month. So this is why economists

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Speaker 1: tell you we really as long as we're getting employment

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Speaker 1: growing set you almill, say seventy five hundred thousand a month,

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Speaker 1: that's considered to be pretty normal with this slow demographics

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Speaker 1: that we have, the demographics I'm referring, who is the

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Speaker 1: baby boom generation moving to retirement. So it's a real

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Speaker 1: big deal. It's we've had to change our mind about

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Speaker 1: what kind of growth you need to get the economy

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Speaker 1: back on its feet. That's what we've been learning over

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Speaker 1: the last decade or so, and I think that's what

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Speaker 1: we're watching here, and that's why I think it's going

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Speaker 1: to be a tough story to figure out what's good

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Speaker 1: and what's not good. I think the key thing is

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Speaker 1: as long as employment is holding steady at a low level,

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Speaker 1: no matter what the job growth is, it means that

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Speaker 1: we're kind of in steady state. Jim, I know you've

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Speaker 1: been looking at layoffs. What do those numbers tell you

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Speaker 1: about the state of the labor economy? Pretty darn good,

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Speaker 1: you know. To me. To me, you're getting a lot

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Speaker 1: of news, pockets of news that are kind of squishy

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Speaker 1: and soft, and yet that's just the piece of the economy.

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Speaker 1: The layoffs are telling you something about the entire economy,

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Speaker 1: every corner of the economy that we don't see in

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Speaker 1: the numbers. A lot of it, and those trends that

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Speaker 1: that layoff pace jumping around week a week, But basically

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Speaker 1: we're floating around two fifty thousand per week, which is

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Speaker 1: a really steady. It just tells you we're holding high

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Speaker 1: and there's nothing really bad happening. Uh. If there are

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Speaker 1: pockets of weakness, there are other pockets that are offsetting it.

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Speaker 1: So it looks pretty good to me, and we've got

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Speaker 1: you know, at this time of the most summer months,

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Speaker 1: the auto industry goes through a lot of adjustments and

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Speaker 1: it could be really noisy, but frankly, these layoff trends

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Speaker 1: are pretty steady and in a really good zone. What

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Speaker 1: are you gonna learn about the confidence of employers from

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Speaker 1: from this report about the momentum in this US economy?

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Speaker 1: I'm not sure, because as the economy gets on his

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Speaker 1: feet and we get close and closer to full employment,

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Speaker 1: it's gonna be harder for people to hire folks, and

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Speaker 1: so the job growth may slow down. The way you

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Speaker 1: see the confidence is the wage trends start doing better.

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Speaker 1: People have had to pay up. The interesting thing to me,

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Speaker 1: this is music to economists ears employers everywhere complaining about

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Speaker 1: not being able to find people, not being able to

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Speaker 1: find people with the right skills. So that to me,

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Speaker 1: the fact that that companies are actually hiring and they're

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Speaker 1: having to and they had to pay up for it

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Speaker 1: means to me the businesses are pretty confident of what

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Speaker 1: lives ahead, and that's why they're doing this. That's why

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Speaker 1: they're hiring aggressively, and you see more and more signs

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Speaker 1: around of people needing help. Help on the signs the

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Speaker 1: old fashioned way. Pretty interesting. Market is not a problem.

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Speaker 1: We're just talking to Allen Krueger about this. Where's the

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Speaker 1: wage growth? It's not there yet, but I think you know, uh,

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Speaker 1: inflation is pretty low too, So you said, I had

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Speaker 1: to look at things relative to inflation and productivity. But

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Speaker 1: it's it's been a little disappointing right in the last

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Speaker 1: particularly the last several months. But all of us economists

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Speaker 1: sort of hold on to this idea that the closer

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Speaker 1: we get, the tighter labor market gets, the lower unemployment follows.

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Speaker 1: It's just a matter of time before workers start to

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Speaker 1: see better pay increases because companies are having to work harder.

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Speaker 1: So you're seeing a lot of you're seeing really good

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Speaker 1: gains in areas that are strong that the technology sectors. Uh,

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Speaker 1: we just hadn't seen a real convincing up trends. It

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Speaker 1: looked like he was moving in the right direction, moving

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Speaker 1: up from two and a half percent. Then it kind

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Speaker 1: of stalled out. But I suspect I would be really

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Speaker 1: shocked if this time next year we're not looking at

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Speaker 1: faster gains and in errors in in wage rates. And

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Speaker 1: you know, the other thing to keep in mind is

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Speaker 1: average genially learnings aren't the only part of the labor

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Speaker 1: pay story. Companies have to pay for all kinds of benefits,

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Speaker 1: health care, insurance and things like that, and so if

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Speaker 1: they have to pay more for that kind of stuff,

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Speaker 1: they can't be as generous with average gerially learnings. And

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Speaker 1: that's part of what may be going on with the

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Speaker 1: health insurance premiums moving up. I'm not underemployment. How much

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Speaker 1: attention should we pay to that figure when we get

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Speaker 1: it this morning? You know, I think the trends, you know,

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Speaker 1: it's always been worth paying attention to because there's a

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Speaker 1: lot of unemployment that is not reflected in the uneployment rate.

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Speaker 1: So we watch that trend pretty carefully. I look at

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Speaker 1: the involuntary part time guys and the young adults, and

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Speaker 1: the thing that's interesting is all those signs of undeployment

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Speaker 1: really getting better. And that's that's not visible in the

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Speaker 1: headline numbers when we you the payroll numbers, but it's

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Speaker 1: really something that's been going on in the background which

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Speaker 1: tells you. But you know, whether it's people who are

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Speaker 1: unemployed for very long periods of time, or people who

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Speaker 1: are working part time, or young adults. All of those

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Speaker 1: trends are getting better. So you know, it doesn't in

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Speaker 1: my book when you take it all into account, I

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Speaker 1: think you could argue despite the fact that the undeployment

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Speaker 1: rate is for I think you could argue that we're

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Speaker 1: still in the top of the ninth inning. We still

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Speaker 1: have a little bit more work to do because there

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Speaker 1: are these pockets of hidden unemployment and underemployment. But I

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Speaker 1: think we're doing a pretty good job getting there. Is it?

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Speaker 1: Is it okay, Dr Glassman? If I steal your spectacular

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Speaker 1: chart of non farm payrolls and claims inverted, which shows

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Speaker 1: that we are we are. We are in a tenally

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Speaker 1: unusual time. Yeah, we really are. And and I think

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Speaker 1: to think to remember about this. I mean, I love

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Speaker 1: Hayte nonfarm payrolls and job Day because you're getting a

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Speaker 1: real good picture of the economy. But we don't know

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Speaker 1: what's really going on with small businesses. It takes the BLS,

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Speaker 1: you know, a little while to figure this out. The

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Speaker 1: thing I like about jobless claims is it catches everybody,

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Speaker 1: no matter where you are. No matter who you work for,

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Speaker 1: you're in those numbers. So it's good to compare both

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Speaker 1: and and and Uh. They're both impressive trends. What's the

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Speaker 1: why the claims are as good as they've ever been, Well,

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Speaker 1: there's I think there is a like everything else, we're

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Speaker 1: surprised that the economy is doing as well as it

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Speaker 1: is with slow growth. But I think the useful thing

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Speaker 1: about claims is it doesn't care what our potential growth

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Speaker 1: is. Is Is just telling you the economy doing well, and

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Speaker 1: it's picking up pockets that we don't see in the

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Speaker 1: in the numbers day to day. And I think what

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Speaker 1: it tells you is companies are now focused on trying

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Speaker 1: to get staffing levels up so no one wants to

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Speaker 1: lay off. They may be having a harder time hiring people.

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Speaker 1: That's what you would expect as we get closer and

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Speaker 1: closer to full employment. But I think what I think

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Speaker 1: what the claims number tells you is that people are

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Speaker 1: pretty optimistic about the outlook and they're not willing to

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Speaker 1: lay off. And even when their pockets of weaknesses, companies

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Speaker 1: may be willing to ride through that because it's difficult

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Speaker 1: to find people in a tight labor markets, so you

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Speaker 1: don't want to lay off unless you really share your

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Speaker 1: business is in trouble. I'm gonna get this chart on

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Speaker 1: folks on Twitter. I'll probably feature it on television on Monday.

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Speaker 1: It's extraordinary chart from Dr Glassman about how non firm

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Speaker 1: payils are doing what they're doing, and they're hugely linked

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Speaker 1: to claims up until exactly June of two thousand and fourteen,

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Speaker 1: and then claims have a life of their own. And

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Speaker 1: it's my pleasure this morning to present the Plummest Byline

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Speaker 1: Award d Win Matthew Bosler fedwis Ri reporter here at

429
00:23:47,800 --> 00:23:51,240
Speaker 1: Bloomberg News reporting from Vineyard Haven, Massachusetts. Stanley Fisher, the

430
00:23:51,320 --> 00:23:55,080
Speaker 1: vice chairman, speaking there last night, talked a bit about uncertainty,

431
00:23:55,080 --> 00:23:58,000
Speaker 1: and he said a cautious approach to investment by US

432
00:23:58,080 --> 00:24:01,960
Speaker 1: companies may in part reflect the unser about the policy environment.

433
00:24:01,960 --> 00:24:05,000
Speaker 1: The vice here saying mitigating the dampening effect of uncertainty

434
00:24:05,000 --> 00:24:07,439
Speaker 1: by providing more clarity on the future direction of government

435
00:24:07,480 --> 00:24:11,640
Speaker 1: policy is highly desirable. Jim Glassman, how much is uncertainty

436
00:24:11,680 --> 00:24:16,159
Speaker 1: policy uncertainty weighing on employers right now? Well, you know,

437
00:24:16,400 --> 00:24:18,520
Speaker 1: I mean uncertainty is always with us, right, I mean,

438
00:24:18,560 --> 00:24:20,760
Speaker 1: I can't remember time when we were uncertain about things.

439
00:24:20,800 --> 00:24:23,119
Speaker 1: And frankly, you have to ask yourself, we had a

440
00:24:23,160 --> 00:24:25,440
Speaker 1: lot of uncertainty in the last ten years, and yet

441
00:24:25,640 --> 00:24:28,040
Speaker 1: here we are. The economy has recovered from our pretty

442
00:24:28,040 --> 00:24:32,320
Speaker 1: devastating downturn and the underwater problem is largely gone. And

443
00:24:32,400 --> 00:24:35,359
Speaker 1: so you got to say, despite all of this uncertainty,

444
00:24:35,359 --> 00:24:39,520
Speaker 1: I think businesses they run things by looking at the possibilities,

445
00:24:39,720 --> 00:24:41,760
Speaker 1: and there's a lot of a lot of opportunity out there,

446
00:24:41,760 --> 00:24:44,639
Speaker 1: and I think that's that really helps to dampen the

447
00:24:44,760 --> 00:24:48,040
Speaker 1: worries that you have about uncertainty. So uncertainty is always

448
00:24:48,080 --> 00:24:49,879
Speaker 1: a way of life, but frankly, I don't think it

449
00:24:49,920 --> 00:24:52,760
Speaker 1: gets in the way. And uh, I think the economy

450
00:24:52,760 --> 00:24:55,199
Speaker 1: has done a pretty good job despite all this. Let

451
00:24:55,280 --> 00:24:56,840
Speaker 1: me ask you just how you think that the federals

452
00:24:56,880 --> 00:24:59,040
Speaker 1: of policymakers like Mr Fisher are going to be viewing

453
00:24:59,040 --> 00:25:01,680
Speaker 1: what they see to day, we have testimony from a

454
00:25:02,040 --> 00:25:04,240
Speaker 1: yellow Capitol Hill, two days of testimony. Next week we're

455
00:25:04,240 --> 00:25:07,200
Speaker 1: gonna get a monetary policy a report as well. How's

456
00:25:07,200 --> 00:25:09,879
Speaker 1: the FED going to be processing these numbers? You know?

457
00:25:09,920 --> 00:25:13,440
Speaker 1: I think I think they're pretty uh encouraged by what's

458
00:25:13,440 --> 00:25:15,720
Speaker 1: been going on, and I think, uh, you know, even

459
00:25:15,760 --> 00:25:17,720
Speaker 1: if the numbers are whether it's a little higher or

460
00:25:17,720 --> 00:25:19,600
Speaker 1: a little low, I don't think it's going to change

461
00:25:19,600 --> 00:25:21,600
Speaker 1: their mind about what they need to do because the

462
00:25:21,840 --> 00:25:24,359
Speaker 1: basic idea is we've already got the economy close to

463
00:25:24,400 --> 00:25:28,840
Speaker 1: full employment, and they've got policy very accommodative, and they'd

464
00:25:28,840 --> 00:25:31,560
Speaker 1: like to normalize things gradually. And I think they're doing

465
00:25:31,600 --> 00:25:33,400
Speaker 1: a good job with this, and the fact that inflation

466
00:25:33,480 --> 00:25:35,879
Speaker 1: is quite low gives them lots of room to do it.

467
00:25:35,960 --> 00:25:38,560
Speaker 1: So I don't think they're going to be disputed from

468
00:25:39,119 --> 00:25:41,199
Speaker 1: the little surprises. I don't think they're gonna change their

469
00:25:41,200 --> 00:25:43,240
Speaker 1: mind about what they need to do. We saw that

470
00:25:43,320 --> 00:25:46,399
Speaker 1: last months too. They they they continue to talk about

471
00:25:46,440 --> 00:25:49,600
Speaker 1: needing to normalize the balance sheet and interest rates, even

472
00:25:49,680 --> 00:25:53,840
Speaker 1: though we had a weakish employment numbers. So, you know,

473
00:25:54,000 --> 00:25:56,760
Speaker 1: I think, particularly when you put this report together with

474
00:25:56,840 --> 00:26:00,960
Speaker 1: other things we're watching, jobless claims, trends various, Eddie, I

475
00:26:01,160 --> 00:26:05,719
Speaker 1: think if you see surprises today, you tend to you

476
00:26:05,760 --> 00:26:08,919
Speaker 1: tend to put in another box. It's not you know,

477
00:26:09,200 --> 00:26:10,960
Speaker 1: you know, things are volatile. I don't think it's going

478
00:26:11,000 --> 00:26:13,760
Speaker 1: to change their mind. Are we creating full time jobs?

479
00:26:13,840 --> 00:26:17,720
Speaker 1: Are we deluding ourselves into a set of part time

480
00:26:17,800 --> 00:26:21,040
Speaker 1: jobs to keep going. I think there's both. I mean

481
00:26:21,359 --> 00:26:24,760
Speaker 1: the fact that overall unemployments down means I mean that

482
00:26:24,800 --> 00:26:26,840
Speaker 1: there's a lot of people who like to work voluntarily

483
00:26:27,080 --> 00:26:30,000
Speaker 1: part time jobs voluntarily, there's a there's a lot who

484
00:26:30,000 --> 00:26:33,639
Speaker 1: have been forced to work part time that's disappearing pretty quickly.

485
00:26:33,760 --> 00:26:36,200
Speaker 1: So I think the jobs are pretty good, pretty good

486
00:26:36,280 --> 00:26:40,399
Speaker 1: jobs all around. And you see, uh, you see signs

487
00:26:40,400 --> 00:26:43,359
Speaker 1: of that everywhere. And you know, we haven't. You haven't

488
00:26:43,359 --> 00:26:46,880
Speaker 1: seen real confirmation yet in broad trend up in wages.

489
00:26:46,920 --> 00:26:50,359
Speaker 1: But I think when we when we see that, we

490
00:26:50,400 --> 00:26:52,320
Speaker 1: won't be shocked by it because we have a pretty

491
00:26:52,320 --> 00:26:55,040
Speaker 1: good idea that the state of the job market is

492
00:26:55,119 --> 00:26:57,960
Speaker 1: quite good. But if average all the earnings here every

493
00:26:58,040 --> 00:27:02,280
Speaker 1: year at two point six percent today, are you just

494
00:27:02,359 --> 00:27:06,600
Speaker 1: assuming with rates up, inflation goes up? How do how

495
00:27:06,600 --> 00:27:10,520
Speaker 1: does wage growth stay ahead of rising inflation? You know,

496
00:27:10,560 --> 00:27:13,400
Speaker 1: I don't. I don't think wages drive inflation. I think

497
00:27:13,600 --> 00:27:16,640
Speaker 1: in the old days, when companies have a lot of protection,

498
00:27:16,800 --> 00:27:19,719
Speaker 1: you would agree to certain deals. You figure you can

499
00:27:19,760 --> 00:27:21,520
Speaker 1: just raise your prices to cover. I don't think people

500
00:27:21,720 --> 00:27:25,040
Speaker 1: operate that way anymore. So if wages aren't doing well,

501
00:27:25,080 --> 00:27:29,280
Speaker 1: it's because productivity is slow or because they can move

502
00:27:29,440 --> 00:27:34,120
Speaker 1: operations elsewhere. So, but I think you know increasing when

503
00:27:34,119 --> 00:27:37,480
Speaker 1: you hear when you hear people complain and and wring

504
00:27:37,480 --> 00:27:40,600
Speaker 1: their hands about not finding workers, you just know what's coming.

505
00:27:40,840 --> 00:27:42,800
Speaker 1: You know that. Well. The way you solve that problem

506
00:27:42,880 --> 00:27:46,000
Speaker 1: is you offer better pay. I don't think companies are

507
00:27:46,000 --> 00:27:48,080
Speaker 1: going to be offering pay that puts them out of business,

508
00:27:48,600 --> 00:27:50,560
Speaker 1: but so when you if you so, if you see

509
00:27:50,840 --> 00:27:52,760
Speaker 1: wage trends not doing as well as you just think

510
00:27:52,800 --> 00:27:56,160
Speaker 1: you should, it might be because the underlying fundamentals aren't

511
00:27:56,160 --> 00:27:59,760
Speaker 1: there yet companies. Companies can't do things that make them

512
00:27:59,800 --> 00:28:03,360
Speaker 1: on rosket ball. But I think slowly, over time we're

513
00:28:03,359 --> 00:28:07,040
Speaker 1: going to see better trends here. And the labor side

514
00:28:07,040 --> 00:28:08,520
Speaker 1: is the job market is really the best part of

515
00:28:08,520 --> 00:28:10,840
Speaker 1: the economy so far. Jimmy last one, stay with us.

516
00:28:10,840 --> 00:28:12,680
Speaker 1: We'll have you with us as we break the numbers

517
00:28:12,720 --> 00:28:15,520
Speaker 1: and then move on to Mr Grosser's well, David Garrow,

518
00:28:15,560 --> 00:28:19,639
Speaker 1: we've gotta again pay homage to G twenty just amazing

519
00:28:19,760 --> 00:28:23,800
Speaker 1: shots earlier of world leaders gathered in a bright lit,

520
00:28:24,119 --> 00:28:28,480
Speaker 1: yellow and white room, very bright, cheerful room, a big, large,

521
00:28:28,520 --> 00:28:33,080
Speaker 1: correctable Prime Minister May over to the left, sitting to

522
00:28:33,119 --> 00:28:37,600
Speaker 1: the left, facing into the rectangle from Chancellor Miracle. President

523
00:28:37,640 --> 00:28:42,040
Speaker 1: Trump two seats away from Chancellor Miracle. When do they meet?

524
00:28:42,120 --> 00:28:46,800
Speaker 1: When does Fruiting and Trump? They've they've had their handshake.

525
00:28:47,080 --> 00:28:49,160
Speaker 1: I spoke with the German ambassador of the US yesterday,

526
00:28:49,160 --> 00:28:51,680
Speaker 1: asked him about that famous handshake between the German Chanceman

527
00:28:51,680 --> 00:28:53,280
Speaker 1: the President the White House. He said that the two

528
00:28:53,360 --> 00:28:56,040
Speaker 1: leaders have a good and productive relationship. We've made too

529
00:28:56,120 --> 00:28:58,440
Speaker 1: much of the body language. We watch what we can.

530
00:28:58,600 --> 00:29:01,160
Speaker 1: When Bill Gross visited our old headquarters here a couple

531
00:29:01,200 --> 00:29:03,920
Speaker 1: of weeks ago, we did the Russian toast thing, locked

532
00:29:03,920 --> 00:29:07,160
Speaker 1: elbows with a with a stole nia, you know, the

533
00:29:07,240 --> 00:29:18,400
Speaker 1: Russian toasting. Maybe they'll maybe they'll do that today. Brunch

534
00:29:18,480 --> 00:29:22,000
Speaker 1: you by Bank of America Mary Lynch. With virtual reality,

535
00:29:22,240 --> 00:29:27,640
Speaker 1: virtually everything will change. Discover opportunities in a transforming world.

536
00:29:28,040 --> 00:29:32,360
Speaker 1: Be of a mL dot Com, slash VR. Mary Lynch

537
00:29:32,440 --> 00:29:41,480
Speaker 1: pierced Fenner and Smith Incorporated and now joining us on

538
00:29:41,600 --> 00:29:45,240
Speaker 1: Bloomberg Radio and Bloomberg Television worldwide. We welcome William Gross

539
00:29:45,280 --> 00:29:47,840
Speaker 1: of Janice Anderson as well. Bill, I want to go

540
00:29:47,880 --> 00:29:50,360
Speaker 1: over the job market and then get right to the turmoil,

541
00:29:50,960 --> 00:29:54,320
Speaker 1: the idea that we see higher rates and lower bill

542
00:29:54,400 --> 00:29:57,920
Speaker 1: note and bond heields as well. This looks like a

543
00:29:58,040 --> 00:30:01,760
Speaker 1: yelling friendly jobs report. It looks like a jobs report

544
00:30:02,160 --> 00:30:04,680
Speaker 1: that let's have FED gives them them some room to

545
00:30:04,760 --> 00:30:07,800
Speaker 1: raise interest rates. What will be the effect when the

546
00:30:07,800 --> 00:30:11,800
Speaker 1: Fed raises interest rates? Well, they've been raising interest rates

547
00:30:11,800 --> 00:30:15,680
Speaker 1: in the effect depends, I suppose, Tom, on how much

548
00:30:15,720 --> 00:30:18,960
Speaker 1: they raise and when they raise. I still think despite

549
00:30:19,000 --> 00:30:24,120
Speaker 1: this rather strong jobs report from the standpoint of jobs

550
00:30:24,160 --> 00:30:28,600
Speaker 1: gain not necessarily from wages, which is what the Yellow launches.

551
00:30:29,040 --> 00:30:32,920
Speaker 1: UH seriously as well, um that the Fed has one

552
00:30:33,200 --> 00:30:36,400
Speaker 1: hike perhaps left in the year, and that's probably in December.

553
00:30:36,840 --> 00:30:39,600
Speaker 1: I think to a significant accent. It depends, as I've

554
00:30:39,640 --> 00:30:44,240
Speaker 1: mentioned in prior UH discussions with you, it depends significantly

555
00:30:44,240 --> 00:30:46,920
Speaker 1: on what other central banks do, and if the ECB

556
00:30:47,080 --> 00:30:48,960
Speaker 1: and the b o J and others, UH, you know,

557
00:30:49,160 --> 00:30:52,680
Speaker 1: tend to change their policies and the FED must um

558
00:30:52,720 --> 00:30:55,760
Speaker 1: not respond. But as a leader, as the central bank

559
00:30:55,800 --> 00:30:58,880
Speaker 1: global leader, you know they've got to be cognizant of

560
00:30:58,920 --> 00:31:01,920
Speaker 1: what it might do to currency levels, and so they're

561
00:31:01,960 --> 00:31:04,320
Speaker 1: all in the pot at the same time. And I

562
00:31:04,720 --> 00:31:07,600
Speaker 1: think your question about the FED is important, but it's

563
00:31:07,600 --> 00:31:10,440
Speaker 1: also important about other central banks around the world with

564
00:31:10,560 --> 00:31:13,000
Speaker 1: what we've observed in the last number of weeks, and

565
00:31:13,000 --> 00:31:14,760
Speaker 1: of course we've got rising grades and we'll get the

566
00:31:14,840 --> 00:31:18,000
Speaker 1: bonds and investment here in a moment, Mr Gross is

567
00:31:18,040 --> 00:31:21,840
Speaker 1: the idea of a FED that is coordinated and yet

568
00:31:21,840 --> 00:31:26,160
Speaker 1: at the same time constrained. How coordinated are the central banks?

569
00:31:26,440 --> 00:31:30,560
Speaker 1: And how constrained is chair yelling because she's limited by

570
00:31:30,640 --> 00:31:35,480
Speaker 1: other global activities. Yeah, I don't think they're coordinated at all.

571
00:31:36,000 --> 00:31:38,280
Speaker 1: Yet you know, obviously in the last few weeks there

572
00:31:38,280 --> 00:31:41,880
Speaker 1: have been hints from uh, the ECB and hence from

573
00:31:42,560 --> 00:31:45,200
Speaker 1: the Bank of England that they're on the move or

574
00:31:45,240 --> 00:31:48,400
Speaker 1: potentially on the move at some point six, twelve, eighteen

575
00:31:48,400 --> 00:31:50,640
Speaker 1: months down the road. But they're still you know, a

576
00:31:50,680 --> 00:31:53,400
Speaker 1: long way back from when we stopped qui in a

577
00:31:53,400 --> 00:31:55,440
Speaker 1: long way back when when we started to raise our

578
00:31:55,800 --> 00:31:59,120
Speaker 1: short term interest rates and so um, they were beginning

579
00:31:59,120 --> 00:32:02,160
Speaker 1: to be coordinated from the standpoint of philosophy, perhaps in

580
00:32:02,200 --> 00:32:05,680
Speaker 1: the direction, but certainly not in terms of timing and magnitude,

581
00:32:05,680 --> 00:32:10,840
Speaker 1: and I think ultimately that does have a significant impact

582
00:32:11,000 --> 00:32:14,480
Speaker 1: or will on currency levels, and central banks want to

583
00:32:14,560 --> 00:32:19,480
Speaker 1: keep those currency levels relatively static. Admittedly, each wants to, uh,

584
00:32:19,640 --> 00:32:22,400
Speaker 1: you know, to lower their currency a little bit so

585
00:32:22,440 --> 00:32:25,280
Speaker 1: that it gives a push to their real economy, but

586
00:32:25,840 --> 00:32:29,719
Speaker 1: they got to keep things steady. And so the future

587
00:32:29,760 --> 00:32:32,600
Speaker 1: coordination is I think it's important. It hasn't been coordinated

588
00:32:32,600 --> 00:32:34,160
Speaker 1: to this point. Bill, We're seeing a bit of a

589
00:32:34,240 --> 00:32:35,560
Speaker 1: race here up to the top of the hill to

590
00:32:35,600 --> 00:32:37,720
Speaker 1: declaring end of the bull market in bonds. I wonder

591
00:32:37,760 --> 00:32:39,760
Speaker 1: if you're vying with Ray Dolly of Bridgewater to put

592
00:32:39,760 --> 00:32:41,080
Speaker 1: a flag there at the top of the hill to

593
00:32:41,120 --> 00:32:45,920
Speaker 1: say that we're entering a bear market. What say, well,

594
00:32:45,920 --> 00:32:48,479
Speaker 1: my bear market level and now six months ago, so

595
00:32:48,680 --> 00:32:52,200
Speaker 1: that isn't really applical one anymore was up at sixty five.

596
00:32:52,280 --> 00:32:55,600
Speaker 1: You know, I've looked at the long term trend since

597
00:32:55,640 --> 00:32:59,000
Speaker 1: the early nineteen eighties, and interest rates on the tenure

598
00:32:59,000 --> 00:33:03,640
Speaker 1: have been falling by twenty basis points a year since then. Um,

599
00:33:03,680 --> 00:33:07,120
Speaker 1: you know, is that a technical mumbo jumbo Really not,

600
00:33:07,320 --> 00:33:11,240
Speaker 1: because it's an indication of what an economy needs in

601
00:33:11,320 --> 00:33:13,600
Speaker 1: terms of lower interest rates in order to keep going.

602
00:33:13,680 --> 00:33:16,360
Speaker 1: And so I think ultimately, although we're probably a two

603
00:33:16,400 --> 00:33:18,600
Speaker 1: thirty five at the moment, you know that to six

604
00:33:19,480 --> 00:33:22,720
Speaker 1: level is the critical level for interest rates going forward.

605
00:33:22,760 --> 00:33:25,120
Speaker 1: Do we get there in the next few weeks? Uh?

606
00:33:25,560 --> 00:33:28,240
Speaker 1: Probably not. You know, we've had a thirty basis point

607
00:33:28,360 --> 00:33:31,240
Speaker 1: increase or twenty basis point increase over the last few

608
00:33:31,280 --> 00:33:35,719
Speaker 1: weeks due to the bund taper so to speak. So um,

609
00:33:35,720 --> 00:33:37,960
Speaker 1: but I think we're moving higher. Creeman wants you to

610
00:33:37,960 --> 00:33:40,600
Speaker 1: come over here for Bloomberg Television. I'm gonna show this chart.

611
00:33:40,680 --> 00:33:43,040
Speaker 1: We'll show it out on radio. Go to Twitter with

612
00:33:43,160 --> 00:33:45,440
Speaker 1: that as well. Bill, for the first time in ages,

613
00:33:45,480 --> 00:33:49,120
Speaker 1: I'm showing bond price. Here's part on the Germany tenure.

614
00:33:49,480 --> 00:33:51,800
Speaker 1: Down we go, Bill, As you know, looking at your

615
00:33:51,840 --> 00:33:55,320
Speaker 1: Monro trader, we're down about three percent on full faith

616
00:33:55,360 --> 00:33:59,160
Speaker 1: and credit, higher yield. Did you know this bill? Higher yields,

617
00:33:59,560 --> 00:34:06,000
Speaker 1: lower bond prices. When does it begin to hurt? Mr? Gross, Well,

618
00:34:06,000 --> 00:34:09,239
Speaker 1: that's my old teen or todder Thomas. Obvious interest rates up,

619
00:34:09,280 --> 00:34:12,160
Speaker 1: prices down, and that's what you've talked about. Boons up

620
00:34:12,200 --> 00:34:15,439
Speaker 1: by thirty basis points with the direction of about nine. Yeah,

621
00:34:15,440 --> 00:34:18,480
Speaker 1: it's about three points. When does it begin to hurt? Um,

622
00:34:19,040 --> 00:34:22,040
Speaker 1: I think it begins to hurt at the margin here

623
00:34:22,040 --> 00:34:25,680
Speaker 1: in the United States on mortgages. Ultimately it begins to hurt.

624
00:34:25,719 --> 00:34:28,239
Speaker 1: And this is an unobserved fact. I guess by the

625
00:34:28,640 --> 00:34:32,400
Speaker 1: by the street that that interest payments as a percentage

626
00:34:32,400 --> 00:34:37,960
Speaker 1: of expenses, corporate expenses are significant, perhaps thirty and so

627
00:34:38,239 --> 00:34:43,920
Speaker 1: it begins to hurt lower yielding corporations, junk bond corporations

628
00:34:44,000 --> 00:34:45,920
Speaker 1: when they try to roll over their dead in two

629
00:34:46,000 --> 00:34:49,640
Speaker 1: thousand and seventeen late and two thousand and eighteen early.

630
00:34:49,960 --> 00:34:53,640
Speaker 1: And so as interest rates rise generally, and as interest

631
00:34:53,719 --> 00:34:57,520
Speaker 1: rates and spreads widen, you know, the hurt begins to

632
00:34:57,520 --> 00:35:01,120
Speaker 1: to affect those lower quality corporations as well as individuals.

633
00:35:01,120 --> 00:35:03,520
Speaker 1: I want to buy a home bill gross, You're unconstrained.

634
00:35:03,600 --> 00:35:07,600
Speaker 1: How do you adapt within your portfolio? Janis Anderson? How

635
00:35:07,640 --> 00:35:10,239
Speaker 1: do you adapt to a higher rate environment? Do you

636
00:35:10,239 --> 00:35:12,360
Speaker 1: get under the desk? Do you start rooting for the

637
00:35:12,400 --> 00:35:19,759
Speaker 1: New York Patriots? What's what do you do New York? Well,

638
00:35:19,840 --> 00:35:21,919
Speaker 1: of course, the way to adapt if you were sure

639
00:35:22,080 --> 00:35:23,960
Speaker 1: of higher interest rates, and if you were sure that

640
00:35:24,000 --> 00:35:26,040
Speaker 1: those rates would be higher than what we call the

641
00:35:26,080 --> 00:35:30,120
Speaker 1: forward yield curve, which isn't much um than what you

642
00:35:30,160 --> 00:35:33,800
Speaker 1: do is you go negative duration. The problem with negative duration,

643
00:35:33,840 --> 00:35:36,080
Speaker 1: and it sounds very hedgy, Tom, but the problem with

644
00:35:36,160 --> 00:35:40,719
Speaker 1: negative duration meaning's short bonds, basically is that you give

645
00:35:40,840 --> 00:35:45,040
Speaker 1: up the valued carry, the carry of a positive interest rate,

646
00:35:45,160 --> 00:35:47,960
Speaker 1: limited though it maybe, and so investors for the past

647
00:35:48,000 --> 00:35:51,040
Speaker 1: thirty or thirty five years have been reluctant to give

648
00:35:51,120 --> 00:35:53,799
Speaker 1: up carry. It's been a carry trade as interest rates

649
00:35:53,800 --> 00:35:56,720
Speaker 1: have come down and stock prices have gone up. Carry

650
00:35:56,800 --> 00:35:59,440
Speaker 1: is a function of not only interest rates, but spreads

651
00:35:59,480 --> 00:36:02,839
Speaker 1: and risk taking, and so giving up carrying going into

652
00:36:02,880 --> 00:36:05,319
Speaker 1: the negative column is a very difficult thing to do

653
00:36:05,400 --> 00:36:08,480
Speaker 1: because you need higher interest rates in order to justify

654
00:36:08,520 --> 00:36:11,160
Speaker 1: your position. But that's what you do. And the Jenison

655
00:36:11,239 --> 00:36:16,080
Speaker 1: Constraint Fund has been you know, short carry and negative

656
00:36:16,440 --> 00:36:19,560
Speaker 1: perhaps by half a year relative to its bogey. And

657
00:36:19,560 --> 00:36:21,839
Speaker 1: and the bogey, by the way, is live or three

658
00:36:21,880 --> 00:36:25,440
Speaker 1: months paper, so it's basically an effective duration of a

659
00:36:25,520 --> 00:36:28,200
Speaker 1: minus half a year at the moment. Build very quickly here,

660
00:36:28,239 --> 00:36:29,960
Speaker 1: what did you take away from the meeting in Central

661
00:36:30,040 --> 00:36:31,680
Speaker 1: last week? All these central bankers, there are a lot

662
00:36:31,719 --> 00:36:35,239
Speaker 1: of confusion surrounding what the ECB president Mario Drag had

663
00:36:35,280 --> 00:36:37,520
Speaker 1: to say, the market interpreting what he had to say differently.

664
00:36:37,560 --> 00:36:41,160
Speaker 1: What was your takeaway? Yeah, I think there's a lot

665
00:36:41,239 --> 00:36:43,360
Speaker 1: of confusion, and that's typical. There's a lot of confusion

666
00:36:43,400 --> 00:36:44,960
Speaker 1: now at the FED in terms of what they're going

667
00:36:45,080 --> 00:36:48,080
Speaker 1: to do as well in terms of UH the lack

668
00:36:48,160 --> 00:36:52,759
Speaker 1: of quantitative easy in or buying back selling treasure is

669
00:36:52,800 --> 00:36:56,560
Speaker 1: basically into the market. I think Drag is focused on

670
00:36:56,800 --> 00:37:01,160
Speaker 1: containing volatility. I think other central anchors within the e

671
00:37:01,360 --> 00:37:04,400
Speaker 1: c B and members within the ECB are focused on

672
00:37:04,560 --> 00:37:07,600
Speaker 1: the negative aspects of interest rates and what they're doing

673
00:37:07,680 --> 00:37:11,280
Speaker 1: in terms of German insurance companies. So, um, it's pluses

674
00:37:11,320 --> 00:37:13,520
Speaker 1: and minuses. It does our privilege to bring you William

675
00:37:13,560 --> 00:37:16,960
Speaker 1: Gross of Janice Henderson right now. Is he always joins

676
00:37:17,040 --> 00:37:21,000
Speaker 1: us on jobs today? We love that opportunity Bill Gross. Um. Yeah.

677
00:37:21,000 --> 00:37:23,440
Speaker 1: I look at the whole mix here, the cocktail of

678
00:37:23,560 --> 00:37:26,040
Speaker 1: you will of investment, and I guess it comes to

679
00:37:26,520 --> 00:37:28,640
Speaker 1: when do we get a bear market in bonds? Let's

680
00:37:28,680 --> 00:37:33,520
Speaker 1: begin with can you predict a bear market in bonds? Well,

681
00:37:34,080 --> 00:37:37,160
Speaker 1: predicting bear markets bonds are are used to be a

682
00:37:37,239 --> 00:37:40,840
Speaker 1: function tom of inflation and the potential for higher inflation

683
00:37:41,239 --> 00:37:46,320
Speaker 1: followed by FED tightening these days with the extraordinary provisions

684
00:37:46,360 --> 00:37:49,120
Speaker 1: on the part of central banks, quantitative e s and

685
00:37:49,200 --> 00:37:50,960
Speaker 1: so on, you know, the ECB and the b o

686
00:37:51,080 --> 00:37:54,080
Speaker 1: J and the Fed of purchase thirteen trillion dollars with

687
00:37:54,200 --> 00:37:57,640
Speaker 1: the bonds and stocks via que over the last four

688
00:37:57,719 --> 00:37:59,640
Speaker 1: or five years. And so it becomes a function of

689
00:37:59,719 --> 00:38:04,440
Speaker 1: their persuasion as much as inflation, and um, what we

690
00:38:04,560 --> 00:38:07,960
Speaker 1: know from their ideas in terms of future inflation are

691
00:38:08,040 --> 00:38:10,759
Speaker 1: there that it hasn't gone up to their targets. All

692
00:38:11,480 --> 00:38:13,960
Speaker 1: central banks are looking at a two percent target and

693
00:38:14,800 --> 00:38:17,680
Speaker 1: most are dismayed that they haven't reached those targets. So

694
00:38:18,040 --> 00:38:20,000
Speaker 1: a bear market and bonds is a function of what

695
00:38:20,200 --> 00:38:24,240
Speaker 1: central bankers believe and at the moment, because they're pumping

696
00:38:24,280 --> 00:38:26,839
Speaker 1: in so much money and because the inflationary targets haven't

697
00:38:26,880 --> 00:38:29,560
Speaker 1: been hit, Yeah, we probably don't have a bear market

698
00:38:29,640 --> 00:38:32,240
Speaker 1: and bonds until we see the whites of the central

699
00:38:32,239 --> 00:38:34,440
Speaker 1: bankers eyes. That's a nice way of putting it in

700
00:38:34,440 --> 00:38:37,160
Speaker 1: a military basis. In the attack and battle that we're in,

701
00:38:37,840 --> 00:38:41,920
Speaker 1: when does the public catch up with the new normal

702
00:38:42,280 --> 00:38:47,000
Speaker 1: of low yields. Psychologically, I haven't observed that yet. We're

703
00:38:47,040 --> 00:38:49,719
Speaker 1: still trying to get back to a decent nominal in

704
00:38:49,840 --> 00:38:53,320
Speaker 1: really yield return. And I respectfully say, Mr Gross, it

705
00:38:53,400 --> 00:38:57,719
Speaker 1: ain't there. No when I've said that for a few years.

706
00:38:57,760 --> 00:39:00,800
Speaker 1: To have that, I that I've that. I feel that

707
00:39:01,200 --> 00:39:04,800
Speaker 1: real interest rates and nominal rates, uh, you know, themselves

708
00:39:04,920 --> 00:39:07,880
Speaker 1: have to go up in order to afford the small

709
00:39:08,400 --> 00:39:11,880
Speaker 1: saver and large savers, by the way, insurance companies, pension

710
00:39:11,920 --> 00:39:15,800
Speaker 1: funds and so on, to earn satisfactory return. What is

711
00:39:15,960 --> 00:39:20,560
Speaker 1: that return? Well, you know, based upon historical historical examples,

712
00:39:20,600 --> 00:39:23,640
Speaker 1: individuals probably think that they're in a six to seven

713
00:39:23,680 --> 00:39:26,480
Speaker 1: to eight percent return world in terms of a fifty

714
00:39:26,560 --> 00:39:30,759
Speaker 1: fifty portfolio. I don't think so. Insurance companies and pension funds,

715
00:39:30,800 --> 00:39:33,200
Speaker 1: as we know with the State of Illinois and others,

716
00:39:33,560 --> 00:39:36,160
Speaker 1: you know, expect a seven to seven and a percent

717
00:39:36,280 --> 00:39:39,600
Speaker 1: return from their diversified portfolio. I don't think that's going

718
00:39:39,640 --> 00:39:41,719
Speaker 1: to happen, and that's why they're having problems. And so,

719
00:39:42,360 --> 00:39:45,680
Speaker 1: you know, ultimately, despite the fact that tightening and higher

720
00:39:45,760 --> 00:39:51,360
Speaker 1: interest rates has a negative impact historically unemployment and potentially

721
00:39:51,400 --> 00:39:54,040
Speaker 1: could produce a recession, I think we have to get

722
00:39:54,160 --> 00:39:57,560
Speaker 1: up there in order to avoid a future recession. You know,

723
00:39:57,640 --> 00:40:00,600
Speaker 1: they're one last point. They've been studies by uh, you know,

724
00:40:00,719 --> 00:40:04,080
Speaker 1: Princeton and others now in academia to point out that

725
00:40:04,640 --> 00:40:07,120
Speaker 1: once you drop below two percent in terms of the

726
00:40:07,200 --> 00:40:09,600
Speaker 1: short term rate, it really doesn't do much or hasn't

727
00:40:09,640 --> 00:40:12,200
Speaker 1: done much in terms of stimulating the economy. And so

728
00:40:12,719 --> 00:40:14,600
Speaker 1: I think ultimately we have to get back up to

729
00:40:14,680 --> 00:40:18,800
Speaker 1: a level that stimulates savings investment in the real economy

730
00:40:18,840 --> 00:40:22,799
Speaker 1: as opposed to simply channel funds into the financial economy.

731
00:40:23,040 --> 00:40:25,359
Speaker 1: We've seen the German ten year an eighteen month high.

732
00:40:25,360 --> 00:40:27,719
Speaker 1: We've seen the emerging market to sovereign dollar bonds posting

733
00:40:27,719 --> 00:40:30,160
Speaker 1: their worst weeks since since November. What are the Bill

734
00:40:30,200 --> 00:40:32,359
Speaker 1: Gross bell Weather bonds when you look around the world,

735
00:40:32,360 --> 00:40:33,839
Speaker 1: what are the ones that you look to to tell

736
00:40:33,840 --> 00:40:38,480
Speaker 1: you what's happening in the bond market overall? Well, I

737
00:40:38,840 --> 00:40:43,960
Speaker 1: follow the Bund very seriously relative to tenure treasuries. I

738
00:40:44,040 --> 00:40:47,480
Speaker 1: think there's a has been a rather dramatic correlation in

739
00:40:47,560 --> 00:40:50,200
Speaker 1: the past few months, and indeed it makes sense that

740
00:40:50,280 --> 00:40:53,839
Speaker 1: there should be a correlation period when the ten year

741
00:40:54,000 --> 00:40:58,320
Speaker 1: German Bund exceeded fifty basis points yesterday or the day before.

742
00:40:58,719 --> 00:41:00,400
Speaker 1: You know. To me, that was the say know that

743
00:41:01,080 --> 00:41:04,080
Speaker 1: you know their yields are moving higher um, and that

744
00:41:04,239 --> 00:41:07,560
Speaker 1: means that treasuries would be under pressure as well. The

745
00:41:07,600 --> 00:41:10,360
Speaker 1: Bank of Japan has this ten basis point cap on

746
00:41:10,520 --> 00:41:13,120
Speaker 1: their tenure rates, and we've gone up to the ten

747
00:41:13,200 --> 00:41:17,360
Speaker 1: basis points, and I assume they're doing some easy policies

748
00:41:17,400 --> 00:41:20,040
Speaker 1: in order to keep it there. But the ten basis

749
00:41:20,080 --> 00:41:23,040
Speaker 1: points in Japan, the fifty basis points in Germany UH,

750
00:41:23,120 --> 00:41:26,640
Speaker 1: and ultimately, as I mentioned, the two sixty level on

751
00:41:26,840 --> 00:41:29,560
Speaker 1: ten years are critical in terms of determining whether or

752
00:41:29,600 --> 00:41:32,040
Speaker 1: not bonds are in a bear market or not. It's

753
00:41:32,080 --> 00:41:33,879
Speaker 1: going back to the minutes that we got this week

754
00:41:33,920 --> 00:41:35,640
Speaker 1: from the Fed. Yes, but also from the the e

755
00:41:35,760 --> 00:41:38,319
Speaker 1: c B. There was this by any means necessary line,

756
00:41:38,400 --> 00:41:40,520
Speaker 1: or at least a version of that implicit in the

757
00:41:40,600 --> 00:41:42,640
Speaker 1: in those in the policy of the e c B

758
00:41:42,760 --> 00:41:45,480
Speaker 1: for so along. What do you make of its removal?

759
00:41:45,520 --> 00:41:47,160
Speaker 1: Do do we see a change in tack here from

760
00:41:47,160 --> 00:41:50,920
Speaker 1: the e c B? Well, I think ultimately, I know

761
00:41:51,080 --> 00:41:54,800
Speaker 1: drug is very very devilsh and doesn't want to upset markets.

762
00:41:54,920 --> 00:41:58,800
Speaker 1: It doesn't adhere to my particular philosophy that have just

763
00:41:59,320 --> 00:42:02,399
Speaker 1: discussed in terms of their negative aspects of rates UM.

764
00:42:02,760 --> 00:42:04,960
Speaker 1: I think ultimately we have to wait until two thousand

765
00:42:05,000 --> 00:42:08,040
Speaker 1: and eighteen before they begin to taper um. You know,

766
00:42:08,560 --> 00:42:12,080
Speaker 1: at what pace will that be? Probably limited? You know.

767
00:42:12,120 --> 00:42:14,560
Speaker 1: I continue to see the e c B buying and

768
00:42:14,680 --> 00:42:18,040
Speaker 1: increasing their balance sheet from perhaps four trillion to five

769
00:42:18,120 --> 00:42:21,960
Speaker 1: trillion over the next eighteen months, and that's a stimulative

770
00:42:22,160 --> 00:42:27,680
Speaker 1: type of monetary policy. So yes, taper is beginning probably

771
00:42:27,760 --> 00:42:30,080
Speaker 1: next year, but it's going to be slow and gradual,

772
00:42:30,120 --> 00:42:32,920
Speaker 1: and that's just the way Droggy does it. Within the

773
00:42:33,280 --> 00:42:37,960
Speaker 1: movement in bonds. Bill Gross remember this idea. Bill youngera

774
00:42:38,040 --> 00:42:41,440
Speaker 1: doesn't remember this. There was a point where yield actually

775
00:42:41,560 --> 00:42:45,280
Speaker 1: competed with dividends. This happened long ago and far away.

776
00:42:45,680 --> 00:42:48,920
Speaker 1: How close are we to where we return to the

777
00:42:49,080 --> 00:42:55,719
Speaker 1: day to day battle of yield competing with equity dividends? Well,

778
00:42:55,800 --> 00:42:59,239
Speaker 1: I think we have to get beyond the two particular

779
00:43:00,600 --> 00:43:07,000
Speaker 1: factors that lie underneath that historical comparison. Tom One, we

780
00:43:07,160 --> 00:43:10,040
Speaker 1: have to observe the amount of buybacks on the part

781
00:43:10,080 --> 00:43:13,600
Speaker 1: of companies, and to date, although they've been coming down,

782
00:43:13,680 --> 00:43:16,759
Speaker 1: they've been moving at a billion dollar a year pace,

783
00:43:16,880 --> 00:43:20,240
Speaker 1: and and many investors consider, and I think there's logic

784
00:43:20,320 --> 00:43:23,480
Speaker 1: to it that that five billion dollars a year is

785
00:43:23,719 --> 00:43:26,520
Speaker 1: akin to the dividend, and so you can increase the

786
00:43:26,600 --> 00:43:29,320
Speaker 1: dividend rate that we see by that amount, and that

787
00:43:29,400 --> 00:43:33,640
Speaker 1: amounts to perhaps another one to one and a half percent. Uh. Secondly, though,

788
00:43:33,840 --> 00:43:38,480
Speaker 1: I think that the corporations in terms of their dividends

789
00:43:39,120 --> 00:43:41,759
Speaker 1: ultimately are a reflection of the potential for growth and

790
00:43:41,800 --> 00:43:44,840
Speaker 1: the expectations for growth. And to the extent that growth

791
00:43:44,960 --> 00:43:47,759
Speaker 1: is now moving down and investors are beginning to look

792
00:43:47,800 --> 00:43:50,920
Speaker 1: at two as opposed to three and less fiscal stimulation

793
00:43:51,000 --> 00:43:53,320
Speaker 1: on the part of Trump and tax policies and so on,

794
00:43:53,840 --> 00:43:58,880
Speaker 1: that ultimately, uh, you know, stock yields as a reflection

795
00:43:58,960 --> 00:44:02,080
Speaker 1: of growth. Um, you know have to have to start

796
00:44:02,160 --> 00:44:05,160
Speaker 1: to increase in terms of immediate return as opposed to

797
00:44:05,239 --> 00:44:08,600
Speaker 1: a future return. How will reached it, We'll be How

798
00:44:08,600 --> 00:44:11,959
Speaker 1: worried are you about the contagion associated with this route

799
00:44:12,000 --> 00:44:13,600
Speaker 1: that this could get into that we could see this

800
00:44:13,680 --> 00:44:16,600
Speaker 1: move into other Uh, this is not a route that's

801
00:44:16,640 --> 00:44:22,680
Speaker 1: being inflammatory. Gross Gross Bill Gross remembers the day where

802
00:44:22,680 --> 00:44:26,520
Speaker 1: Alexander Hamilton wanted to coalesce all the state bonds into

803
00:44:26,600 --> 00:44:31,160
Speaker 1: a federal bond bill. Gross Seriously, this is important, folks,

804
00:44:31,200 --> 00:44:33,319
Speaker 1: for the hysteria we're all going to read about over

805
00:44:33,360 --> 00:44:36,240
Speaker 1: the weekend bill. Gross. This is not a bound route,

806
00:44:36,400 --> 00:44:41,080
Speaker 1: is it? No? Not yet? You know, thirty basis points

807
00:44:41,120 --> 00:44:44,400
Speaker 1: in Germany is not a bound route. And uh, you know,

808
00:44:44,520 --> 00:44:47,560
Speaker 1: we've come down from very low levels in terms of

809
00:44:48,000 --> 00:44:51,520
Speaker 1: term premium and in terms of compressed volatility, and the

810
00:44:52,040 --> 00:44:54,520
Speaker 1: volatility that we've seen in the last few days UM,

811
00:44:54,760 --> 00:44:58,600
Speaker 1: even as expressed in the VIX, is certainly not a route. UM.

812
00:44:58,719 --> 00:45:01,960
Speaker 1: You don't have to see volatil in double and triple

813
00:45:02,440 --> 00:45:05,399
Speaker 1: UM and and and prices declined by two or three

814
00:45:05,440 --> 00:45:08,840
Speaker 1: points a week in terms of a bond route. So no,

815
00:45:09,520 --> 00:45:15,080
Speaker 1: not yet. But ultimately, inflationary expectations and central bank policies

816
00:45:15,160 --> 00:45:21,120
Speaker 1: will try to contain volatility, will try to dampen interest rates. UM.

817
00:45:22,000 --> 00:45:25,839
Speaker 1: Whether the market agrees with him forever, I think will

818
00:45:25,880 --> 00:45:29,359
Speaker 1: be the ultimate question. Yields to my way of thinking,

819
00:45:29,440 --> 00:45:31,719
Speaker 1: should move higher? David, get one more question here. I

820
00:45:31,800 --> 00:45:34,640
Speaker 1: do want to point out Grosser's portfolio in the last

821
00:45:34,719 --> 00:45:38,799
Speaker 1: thirty days is in the percentile. So he's being very

822
00:45:38,960 --> 00:45:41,600
Speaker 1: rowdy because David's being very as I moved to the

823
00:45:41,600 --> 00:45:45,879
Speaker 1: surveillance time out share from our mispeak. There, there you go, Phil,

824
00:45:45,960 --> 00:45:48,399
Speaker 1: Let me just ask you lastly what you're going go ahead.

825
00:45:50,080 --> 00:45:51,880
Speaker 1: I was gonna say that's that's a function of being

826
00:45:51,920 --> 00:45:54,360
Speaker 1: negative on German interest rates and to the extent that

827
00:45:54,400 --> 00:45:57,040
Speaker 1: they've gone up by thirty and prices down, and then

828
00:45:57,160 --> 00:45:59,120
Speaker 1: Janice has done well, there you go. Bill. Let me

829
00:45:59,160 --> 00:46:01,080
Speaker 1: ask you lastly, here's push ahead to next week, we

830
00:46:01,120 --> 00:46:03,279
Speaker 1: get a monetary policy report, we hear from the FED chair.

831
00:46:03,280 --> 00:46:04,880
Speaker 1: What are you gonna be listening for when she speaks

832
00:46:04,920 --> 00:46:06,880
Speaker 1: on Capitol Hill two days next week? I believe on

833
00:46:06,920 --> 00:46:13,520
Speaker 1: Wednesday and Thursday, Well, the doverishness, hawkishness, uh, you know,

834
00:46:13,840 --> 00:46:18,080
Speaker 1: focus on inflation and financial conditions. I guess that's the

835
00:46:18,200 --> 00:46:21,280
Speaker 1: debate that I see. I mean, yelling suggests that financial

836
00:46:21,360 --> 00:46:26,279
Speaker 1: conditions aren't important. Others such as the you know, the

837
00:46:26,360 --> 00:46:29,440
Speaker 1: president of New York Fed, um, you know, suggest that

838
00:46:29,960 --> 00:46:33,160
Speaker 1: stock prices and financial conditions are important. So I'd like

839
00:46:33,280 --> 00:46:37,680
Speaker 1: to see answers between that those two heavyweights, uh, in

840
00:46:38,280 --> 00:46:41,480
Speaker 1: terms of whether stock prices are key or not key?

841
00:46:41,920 --> 00:46:44,480
Speaker 1: Bill Gross, thank you, so much, greatly appreciate it. Mr

842
00:46:44,560 --> 00:46:59,879
Speaker 1: Gross is with Jamie Anderson. It's been a remarkable day

843
00:47:00,160 --> 00:47:02,759
Speaker 1: and we've now got a nice move in the bond

844
00:47:02,840 --> 00:47:05,920
Speaker 1: market off the jobs report of better jobs report yields

845
00:47:06,000 --> 00:47:09,680
Speaker 1: higher I guess h two point nine and the thirty

846
00:47:09,760 --> 00:47:13,160
Speaker 1: year bond. A lot of the different American media maybe

847
00:47:13,200 --> 00:47:16,920
Speaker 1: has moved away from Hamburg and the meetings, but to

848
00:47:17,040 --> 00:47:22,040
Speaker 1: be honest, David Gura, across the Bloomberg, the headlines continue

849
00:47:22,680 --> 00:47:25,080
Speaker 1: and they're really pretty important. The President meeting with the

850
00:47:25,600 --> 00:47:30,319
Speaker 1: leadership of Mexico UH. Trump says Mexico should quote absolutely

851
00:47:30,520 --> 00:47:34,200
Speaker 1: unquote pay for border uh wall. There's headlines on China

852
00:47:34,360 --> 00:47:38,800
Speaker 1: China blast G twenty overtrade hands were shaken uh and

853
00:47:39,120 --> 00:47:41,880
Speaker 1: Hamburg is calling in a little more security. So as

854
00:47:41,920 --> 00:47:45,359
Speaker 1: we go to our next guest, David Gura, it's sort

855
00:47:45,400 --> 00:47:51,520
Speaker 1: of a stew here in Germany on this Friday. Well done,

856
00:47:52,480 --> 00:47:54,680
Speaker 1: A pleasure here to bring an ambassador, Max Bauchi's former

857
00:47:54,800 --> 00:47:56,960
Speaker 1: US Ambassador to China, former US Senator of course, from

858
00:47:56,960 --> 00:47:58,920
Speaker 1: the great state of Montana. He joins us on our

859
00:47:58,920 --> 00:48:00,960
Speaker 1: phone lines. Since let me get your respective ambassadory if

860
00:48:00,960 --> 00:48:03,560
Speaker 1: I could, from your time in Beijing. I imagine this issue,

861
00:48:03,600 --> 00:48:06,319
Speaker 1: the North three issue, loomed large while you were there.

862
00:48:06,560 --> 00:48:09,560
Speaker 1: What changed for you? Earlier this week July four, I

863
00:48:09,600 --> 00:48:12,040
Speaker 1: went North three, attested this new missile. How did the

864
00:48:12,400 --> 00:48:18,640
Speaker 1: political calculus change? Well? First, um, not much changed, because

865
00:48:19,200 --> 00:48:23,480
Speaker 1: even though we Americans, including President Obama and Secretary of

866
00:48:23,600 --> 00:48:27,840
Speaker 1: State Carry others, spoke very frequently as that I with

867
00:48:28,000 --> 00:48:31,680
Speaker 1: the Chinese leadership about North Korea. Um, the birth Koreans

868
00:48:31,719 --> 00:48:34,799
Speaker 1: with excuse me, the Chinese, but come back with platitudes,

869
00:48:34,960 --> 00:48:38,000
Speaker 1: they wouldn't say anything. Meanwhile, Kim Jong un proceeds and

870
00:48:38,520 --> 00:48:42,080
Speaker 1: develops his missiles. In a certain sense, nothing changed. What's

871
00:48:42,760 --> 00:48:47,160
Speaker 1: more imminent now though, is that how far he's developed

872
00:48:47,200 --> 00:48:50,759
Speaker 1: his missils capability and and how Also it's becoming more

873
00:48:50,880 --> 00:48:54,200
Speaker 1: clear than China is not only not willing to help

874
00:48:54,360 --> 00:48:58,160
Speaker 1: very much, but maybe even sat in with Brusha and

875
00:48:59,000 --> 00:49:02,480
Speaker 1: opposition some degree to United States ways to try to

876
00:49:02,560 --> 00:49:05,400
Speaker 1: solve this issue. So it's it's it's becoming more ominous

877
00:49:05,440 --> 00:49:08,680
Speaker 1: in my judgments, help us with with urgency and diplomacy.

878
00:49:08,760 --> 00:49:10,920
Speaker 1: We we heard from the President this week via Twitter

879
00:49:11,480 --> 00:49:13,279
Speaker 1: we had to try with China. It sounded like he

880
00:49:13,400 --> 00:49:15,680
Speaker 1: was given up on applying pressure to China on the

881
00:49:15,760 --> 00:49:20,120
Speaker 1: issue of North Korea. You've lived this, how how difficult

882
00:49:20,200 --> 00:49:24,160
Speaker 1: is it to get things to move faster diplomatically? Well,

883
00:49:24,280 --> 00:49:27,040
Speaker 1: I think it's a mistake for him to conduct foreign

884
00:49:27,120 --> 00:49:33,000
Speaker 1: policy Vida's twitter. Um, it's um, it's it one hand.

885
00:49:33,040 --> 00:49:36,719
Speaker 1: His statements are inconsistent, sometimes it's bombastic, and sometimes it

886
00:49:36,840 --> 00:49:40,880
Speaker 1: were reasonable. And foreign leaders therefore, including Kim Jong and

887
00:49:41,800 --> 00:49:44,520
Speaker 1: President she really don't know what to expect. It's it's

888
00:49:44,560 --> 00:49:48,719
Speaker 1: inconsistency rather, and a second is all public Rather, I

889
00:49:49,120 --> 00:49:52,520
Speaker 1: think it's it's such the United States to buckle down,

890
00:49:52,760 --> 00:49:55,720
Speaker 1: dig down really deep, work with other countries and figure

891
00:49:55,719 --> 00:49:59,480
Speaker 1: out much more solid planned It puts a lot more

892
00:49:59,560 --> 00:50:02,600
Speaker 1: pressure on all countries. In this case, it's not just

893
00:50:02,800 --> 00:50:05,560
Speaker 1: North Korea, but it's on China and on other allies

894
00:50:05,600 --> 00:50:08,600
Speaker 1: of ours who interned and put pressure on China and

895
00:50:08,719 --> 00:50:11,520
Speaker 1: on Russia to get a solution. Near all countries now

896
00:50:11,719 --> 00:50:15,239
Speaker 1: or involved, if can can shued an, I GBM that

897
00:50:15,560 --> 00:50:19,799
Speaker 1: threatens the world, and it says stays it's be presidential

898
00:50:19,920 --> 00:50:22,839
Speaker 1: beast dates but like and not do not conduct all

899
00:50:22,880 --> 00:50:25,880
Speaker 1: these sweets. Let me ask a senator from Montana question,

900
00:50:26,400 --> 00:50:29,160
Speaker 1: did you ever go home you know, I mean, I know,

901
00:50:29,320 --> 00:50:31,279
Speaker 1: I know Max Bock has only took five or six

902
00:50:31,400 --> 00:50:33,839
Speaker 1: days a year off. But when you did go home

903
00:50:33,920 --> 00:50:37,759
Speaker 1: to Montana, did were you ever greeted with the emotion

904
00:50:38,680 --> 00:50:42,040
Speaker 1: in anger that you see your colleagues greeted with. Now,

905
00:50:42,480 --> 00:50:44,400
Speaker 1: is this a new thing or do this used to

906
00:50:44,480 --> 00:50:49,839
Speaker 1: happen to you? Well? No, I got it um when

907
00:50:49,880 --> 00:50:53,640
Speaker 1: I took my trips home to very frequently, remember two

908
00:50:53,719 --> 00:50:57,080
Speaker 1: or three healthcare meetings, And I also found that it

909
00:50:57,239 --> 00:51:01,200
Speaker 1: worked if I just stood there. I totally respected if

910
00:51:01,239 --> 00:51:04,359
Speaker 1: people are asking the questions and respected that people are

911
00:51:04,400 --> 00:51:07,120
Speaker 1: pretty angry, kind of ticked off, and listen. You gotta

912
00:51:07,160 --> 00:51:09,200
Speaker 1: really listen. And after about an hour and an hour

913
00:51:09,239 --> 00:51:11,160
Speaker 1: and a half of meetings, but maybe if it's a

914
00:51:11,280 --> 00:51:14,319
Speaker 1: hundred people, two hundred people potend you to calm down

915
00:51:14,440 --> 00:51:16,840
Speaker 1: a lot, and I think there's a lot more mutual

916
00:51:16,880 --> 00:51:19,960
Speaker 1: self respect. Now. They may not really like the health

917
00:51:20,000 --> 00:51:22,040
Speaker 1: care ability we passed that much, but at least there

918
00:51:22,120 --> 00:51:24,600
Speaker 1: was a strong communication that we talked to a lot

919
00:51:24,760 --> 00:51:28,480
Speaker 1: of with with American with with my constituents. Second in

920
00:51:28,480 --> 00:51:30,360
Speaker 1: issue really came up a lot as a second amendment

921
00:51:30,719 --> 00:51:34,760
Speaker 1: gun control Man oh Man that's that's hot, and in Montana,

922
00:51:35,120 --> 00:51:38,120
Speaker 1: and so again I just listened to people and be

923
00:51:38,280 --> 00:51:41,200
Speaker 1: very respectful. I started meeting by saying, Hey, Okay, I

924
00:51:41,280 --> 00:51:43,399
Speaker 1: know you're upset. All I ask you give me five

925
00:51:43,440 --> 00:51:46,840
Speaker 1: minutes and let me speak uninterrupted. Then we'll let let

926
00:51:46,920 --> 00:51:50,600
Speaker 1: the roof blown off a letter riff and center backus.

927
00:51:50,680 --> 00:51:52,480
Speaker 1: We treasure when you're on with us. I'm gonna ask

928
00:51:52,520 --> 00:51:55,960
Speaker 1: you a deeply emotional question for a national audience, and

929
00:51:56,040 --> 00:51:58,759
Speaker 1: particularly our audience in New York. Can we have gun

930
00:51:58,920 --> 00:52:04,480
Speaker 1: legislation that meets the constituencies of your Montana and at

931
00:52:04,560 --> 00:52:09,000
Speaker 1: the same times meets the constituencies of our urban areas,

932
00:52:09,040 --> 00:52:13,080
Speaker 1: and particularly after this horrific I use this word folks

933
00:52:13,120 --> 00:52:17,080
Speaker 1: with immense respect for NYPD for the assassination of a

934
00:52:17,160 --> 00:52:20,680
Speaker 1: police officer in the last forty eight or seventy two hours.

935
00:52:20,960 --> 00:52:26,200
Speaker 1: Can we have two gun policies? Max pocus, I frankly

936
00:52:26,280 --> 00:52:29,719
Speaker 1: don't see it. I mean, um, if we had one

937
00:52:29,800 --> 00:52:34,320
Speaker 1: gun policy in Montana, where people are hunters outdoors respect

938
00:52:34,400 --> 00:52:37,399
Speaker 1: guns of our crime rates very low, and another gun

939
00:52:37,520 --> 00:52:41,480
Speaker 1: policy in New York where handguns aversely banned, that might

940
00:52:41,520 --> 00:52:45,120
Speaker 1: work in New York as well as uh the outline

941
00:52:45,200 --> 00:52:48,440
Speaker 1: the approach I outlined from Montana. The trouble is guns

942
00:52:48,520 --> 00:52:51,640
Speaker 1: go across the lines, and I answer your questions. I

943
00:52:51,840 --> 00:52:54,480
Speaker 1: just don't see how they can combine these two. We

944
00:52:54,640 --> 00:52:56,600
Speaker 1: have to leave it there. Too many as you always

945
00:52:56,680 --> 00:53:00,319
Speaker 1: enjoy to speak to you Inbassador Bocas. Thank you, uh something, David.

946
00:53:00,440 --> 00:53:03,480
Speaker 1: There's never enough time with Max. Bob always great to

947
00:53:03,480 --> 00:53:06,880
Speaker 1: get on healthcare, on finance, indeed on China relations as well,

948
00:53:07,160 --> 00:53:19,600
Speaker 1: China relations as well. Thanks for listening to the Bloomberg

949
00:53:19,680 --> 00:53:26,000
Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

950
00:53:26,360 --> 00:53:30,160
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

951
00:53:30,239 --> 00:53:34,880
Speaker 1: Tom Keene. David Gura is at David Gura. Before the podcast,

952
00:53:35,200 --> 00:53:49,720
Speaker 1: you can always catch us worldwide. I'm Bloomberg Radio. Brunt

953
00:53:49,800 --> 00:53:53,280
Speaker 1: You by Bank of America Mary Lynch. With virtual reality,

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