WEBVTT - Surveillance: Jobs Report Bolsters Stimulus Bets 0:00:06.320 --> 0:00:13.040 Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. 0:00:13.480 --> 0:00:17.560 Daily we bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.640 --> 0:00:27.360 Bloomberg dot Com, and of course on the Bloomberg. Right now, 0:00:27.440 --> 0:00:30.680 Jeffrey Rosenberg joining us the Black Rock, their portfolio manager 0:00:30.760 --> 0:00:35.320 of Systematic multi Strategy. Jeff, how is the black Rock 0:00:35.400 --> 0:00:39.080 called nuanced in the last two weeks, the cacophony of 0:00:39.200 --> 0:00:42.120 noise and what we see within this job's report, how 0:00:42.240 --> 0:00:47.600 is the yield call morphed for black Rock? Well, it's 0:00:47.600 --> 0:00:49.959 really as Jonathan was just talking about, you know, the 0:00:50.040 --> 0:00:53.640 changes that the focus is less on what the FETE 0:00:53.720 --> 0:00:56.680 is going to do and on monetary policy and much 0:00:56.720 --> 0:00:59.120 more on the fiscal policy. And when you look at 0:00:59.120 --> 0:01:02.200 this report, there's a little bit of good news, there's 0:01:02.200 --> 0:01:04.560 a little bit of bad news, but I don't think 0:01:04.560 --> 0:01:09.640 it really changes the overall narrative from fiscal policy and importantly, 0:01:10.040 --> 0:01:13.319 market expectations for fiscal policy. It appears that we're going 0:01:13.360 --> 0:01:16.960 to go to the bigger plan. Uh, and with that 0:01:17.160 --> 0:01:21.440 you've had this return to a pretty significant bear steeping 0:01:21.480 --> 0:01:24.360 in in the curve UH, and that's a reflection of 0:01:24.400 --> 0:01:28.839 the impact the expected impact of these very significant fiscal policies. 0:01:29.000 --> 0:01:31.200 I'll use the plural here because the focus is on 0:01:31.240 --> 0:01:33.720 the first one, UH, the one point one point nine 0:01:33.720 --> 0:01:37.240 trillion the fiscal plan to address COVID, but it will 0:01:37.280 --> 0:01:40.560 be followed by a second one, which is further economic 0:01:41.319 --> 0:01:46.560 UH fiscal interventions. And so that's really the focus here, 0:01:46.760 --> 0:01:49.760 and that's what's changing the outlook. It's steeping of the curve, 0:01:49.880 --> 0:01:54.200 increasing inflation expectations, modestly higher interest rates. Let's talk about 0:01:54.240 --> 0:01:55.600 that a little bit more. Front end of the Yeld 0:01:55.600 --> 0:01:57.560 curve pin to the floor ten eleven basis points on 0:01:57.560 --> 0:01:59.600 a two year old that's going nowhere for a long time, 0:01:59.760 --> 0:02:02.520 and the FED changes course. Jeff, As you say, all 0:02:02.560 --> 0:02:05.080 the flexibility is the long end through the belly out 0:02:05.120 --> 0:02:07.600 of tends out to thirties. That's where you get this flexibility, 0:02:07.640 --> 0:02:11.079 this ability to shift higher in yields. How self limiting 0:02:11.120 --> 0:02:14.320 do you think of SALF could be? Well, you know 0:02:14.360 --> 0:02:16.680 it's about the pace of the of the increase in 0:02:16.800 --> 0:02:19.600 terms of it being self limiting. Right, what what limits 0:02:19.639 --> 0:02:23.240 it is? Is there a degree of increase in long 0:02:23.360 --> 0:02:26.560 term interest rates that starts to have a meaningful impact 0:02:26.960 --> 0:02:30.440 to expectations in the real economy. Where does that mostly 0:02:30.480 --> 0:02:33.560 show up. It's through the transmission to the housing market, right, 0:02:33.760 --> 0:02:37.440 the big story in the real economy, the big beneficiary 0:02:37.520 --> 0:02:40.560 of this interest rate structure has been housing. And so 0:02:40.680 --> 0:02:43.600 if you had a significant disruption there in terms of 0:02:43.600 --> 0:02:46.760 the steepening of the curve, that's when it becomes self limiting, 0:02:46.800 --> 0:02:49.320 because then the market starts to worry that it's gone 0:02:49.360 --> 0:02:52.680 too far that the FED would then ramp up its intervention. 0:02:52.720 --> 0:02:55.200 That's the first area. The second area, real quickly is 0:02:55.240 --> 0:02:58.560 financial conditions. Right, A two aggressive move in terms of 0:02:58.560 --> 0:03:01.120 the back end of the curve steepening, taper, tantrum kind 0:03:01.160 --> 0:03:05.520 of concerns that starts to disrupt financial intermediation and the 0:03:05.560 --> 0:03:09.720 stock market most importantly, probably triggers some kind of first 0:03:09.800 --> 0:03:12.840 verbal intervention and maybe you know, a larger intervention if 0:03:12.880 --> 0:03:15.119 the disruption is larger. So that's the way in which 0:03:15.160 --> 0:03:18.600 itself limiting. This kind of gradual bear steepening that doesn't 0:03:18.600 --> 0:03:21.480 disrupt those two elements you know, can be absorbed. The 0:03:21.520 --> 0:03:24.680 bear stepening that we're talking about, the longer term yield 0:03:24.720 --> 0:03:27.320 going up Is it because that the supply of treasuries 0:03:27.320 --> 0:03:29.120 that the US is going to be selling is going 0:03:29.160 --> 0:03:31.520 to be going up so significantly to pay for all 0:03:31.600 --> 0:03:34.920 of this fiscal stimulus. Or is it because inflation is 0:03:34.960 --> 0:03:37.240 expected to tick up with all the money circulating in 0:03:37.240 --> 0:03:41.040 the economy. Well, it's a little bit of both, you know. 0:03:41.080 --> 0:03:45.000 The supply demand uh imbalances or or balance I should 0:03:45.080 --> 0:03:48.240 call it, because uh, it gets met. The question is 0:03:48.280 --> 0:03:51.120 at what price? And that's really a reflection of the 0:03:51.160 --> 0:03:53.480 total of the demand. The key is is that the 0:03:53.480 --> 0:03:57.520 FED is is uh the major purchaser there, and so 0:03:57.760 --> 0:04:01.440 the expectations are that they will maintain that. You know 0:04:01.960 --> 0:04:03.840 this year through this year a lot of question and 0:04:03.880 --> 0:04:07.880 debate about the pace of tapering and eventually halting those purchases. 0:04:07.920 --> 0:04:10.160 But what we've seen from FED officials recently is you know, 0:04:10.200 --> 0:04:13.200 no hurry to talk about and really tamping down any 0:04:13.200 --> 0:04:15.760 discussion about that. So that FED support really helps to 0:04:16.240 --> 0:04:19.240 offset the increase and expected supply, and then the long 0:04:19.360 --> 0:04:22.839 term inflation expectations are taking up. We've seen that certainly 0:04:22.880 --> 0:04:25.520 in terms of break even inflation, UH. And that's a 0:04:25.560 --> 0:04:29.839 modest increase in a return to some term premium in 0:04:29.839 --> 0:04:31.400 the back end of the curve, but it's a very 0:04:31.400 --> 0:04:35.440 modest increased relative to historical levels. Jeff Frozenberg, thank you 0:04:35.480 --> 0:04:38.120 so much, greatly appreciate it. With black Rock this morning, 0:04:41.520 --> 0:04:44.080 I'm policy. We went out in our rolodex and said, 0:04:44.120 --> 0:04:46.320 who was someone who did not sleep last night? That 0:04:46.360 --> 0:04:49.400 would be Henrietta Treas a Veta partners looking at the 0:04:49.440 --> 0:04:52.479 festivities of the Senate and the path towards a new 0:04:52.560 --> 0:04:57.320 kind of stimulus. Henrietta first Principles explained to our audience 0:04:57.400 --> 0:05:03.200 the distance that the Democrats are from filibuster Um. Well, 0:05:03.240 --> 0:05:06.680 technically speaking, they are very far from the filibuster, but 0:05:06.800 --> 0:05:09.760 practically they are right up on it um and getting 0:05:09.800 --> 0:05:12.880 closer every day as we go through UM. What I 0:05:12.920 --> 0:05:16.320 expect will be a very generous interpretation of something called 0:05:16.360 --> 0:05:20.200 the Bird Rule, which prohibits any policy agenda items from 0:05:20.240 --> 0:05:23.600 passing with just votes. So we're very close. At about 0:05:23.680 --> 0:05:27.880 five o'clock this morning, the Democrats unlocked reconciliation authority, which 0:05:27.920 --> 0:05:30.760 will allow them to get their stimulus out sometime in 0:05:30.800 --> 0:05:35.880 the next just four weeks here um, maybe five, to 0:05:36.000 --> 0:05:38.760 provide as much as one point nine trillion dollars in 0:05:38.839 --> 0:05:42.240 stimulus to the U S Economy UM with only Democratic 0:05:42.279 --> 0:05:47.039 votes Henrietta, does the Senator from West Virginia apply the 0:05:47.120 --> 0:05:50.960 Bird rule or the marginal Bird rule? And can Republicans 0:05:51.000 --> 0:05:56.200 the minority adjust the Bird rule to steer reconciliation in 0:05:56.279 --> 0:06:00.440 their direction. Well, the most important person technique here is 0:06:00.440 --> 0:06:03.800 going to be the parliamentarian, woman Elizabeth McDonough, and she 0:06:04.040 --> 0:06:06.520 is going to be the one to who UM tells 0:06:06.560 --> 0:06:08.919 the Democrats how much they can get away with in 0:06:09.640 --> 0:06:13.400 practical purposes. Though Senator Mansion is absolutely someone who is 0:06:13.400 --> 0:06:15.880 going to be able to say, you know, maybe you can, 0:06:16.040 --> 0:06:17.960 you know, twist the arm of the parliamentarian, but I'm 0:06:18.000 --> 0:06:19.960 still not going to vote for it. That would apply 0:06:20.040 --> 0:06:23.599 to things like UM getting the direct payment to individuals 0:06:23.600 --> 0:06:26.320 out to people who he thinks are in an upper 0:06:26.400 --> 0:06:29.960 income threshold, or moving the minimum wage to fifteen dollars 0:06:30.000 --> 0:06:33.480 an hour. Last night there was a vote that got 0:06:33.600 --> 0:06:37.400 rejected or supported rather from the Republican side saying you know, 0:06:37.440 --> 0:06:40.000 we're not going to increase the minimum wage and potentially 0:06:40.080 --> 0:06:43.960 hurt small businesses during a pandemic, and there was Democratic 0:06:44.000 --> 0:06:47.119 support for that, which points the picture of even if 0:06:47.720 --> 0:06:50.839 UH Budget Community Chairman Bernie Sanders and his chief of 0:06:50.880 --> 0:06:55.840 staff Bill Downstair, who has extraordinarily experienced in the reconciliation process. 0:06:55.839 --> 0:06:57.400 If Mansion is not going to vote for it, or 0:06:57.440 --> 0:07:02.360 Senator Cinema or Warner, Tester or Kelly, there is nothing 0:07:02.360 --> 0:07:04.400 the bird rule or tweaking the Bird ule could do 0:07:04.440 --> 0:07:06.840 to overcome what they will not do. UM. So the 0:07:07.920 --> 0:07:10.840 restrictions there on policy are still very much in fit 0:07:10.880 --> 0:07:13.840 in place by the Moderates and the Democratic Conference. So basically, 0:07:14.160 --> 0:07:17.360 Biden's hope for a bipartisan Washington seemed to be fading 0:07:17.720 --> 0:07:20.440 as time goes on, rapidly fading. And there is a 0:07:20.520 --> 0:07:24.520 question of whether people's hopes for a second round of 0:07:24.600 --> 0:07:28.040 stimulus after this one that perhaps they've gotten a little 0:07:28.040 --> 0:07:31.240 ahead of themselves given the lack of willingness to really 0:07:31.240 --> 0:07:34.520 work together to push something through. Henrietta, do you think 0:07:34.720 --> 0:07:37.000 that it's less likely that we're going to get some 0:07:37.080 --> 0:07:41.760 sort of infrastructure spending if the Democrats push this through unilaterally. 0:07:42.960 --> 0:07:45.560 I think it's really difficult. Um. One of the things 0:07:45.600 --> 0:07:47.800 the Street is factoring in is that Democrats are going 0:07:47.840 --> 0:07:50.720 to plow through the stimulus bill moved to an infrastructure 0:07:50.760 --> 0:07:54.400 package and offset it with tax increases on corporations and individuals. 0:07:54.800 --> 0:07:57.400 There's just no planet where you have the votes for that. UM. 0:07:57.440 --> 0:08:00.800 So I think the difficulty of getting their budget through 0:08:00.840 --> 0:08:04.280 holding another all nighter on vote a rama at this time, 0:08:04.320 --> 0:08:07.240 doing it on infrastructure spending is going to be even 0:08:07.320 --> 0:08:09.640 more complicated than this package. So if we have a 0:08:09.720 --> 0:08:12.880 hundred percent that this bill will eventually go through, whether 0:08:12.960 --> 0:08:15.840 Republicans vote in favor of another stimulus bill or not, 0:08:15.960 --> 0:08:18.800 it's going to pass. The infrastructure package is going to 0:08:18.880 --> 0:08:21.320 be even harder. UM. And then some Democrats you talked 0:08:21.320 --> 0:08:22.920 to would say, and then we want to do a 0:08:23.000 --> 0:08:26.600 third bill after that, propecially your three, And it's really 0:08:26.640 --> 0:08:29.280 hard to thread the needles for for that component, especially 0:08:29.320 --> 0:08:33.400 as we get into midterm elections, which are just going 0:08:33.440 --> 0:08:36.600 to start around March of next year. So I think 0:08:36.640 --> 0:08:40.679 that each subsequent path forward on a partisan basis does 0:08:40.720 --> 0:08:43.439 get more difficult. But what we've seen from this president 0:08:43.520 --> 0:08:48.080 is that they're extraordinarily um rigorous in their messaging. And 0:08:48.120 --> 0:08:50.600 so there's no question that we're in you know, COVID 0:08:50.640 --> 0:08:53.480 relief week, and I would be eager to see what 0:08:53.520 --> 0:08:56.160 infrastructure Week looks like under this president, just on a 0:08:56.200 --> 0:08:59.040 technical note, Henriette, you were talking about taxation, and when 0:08:59.040 --> 0:09:01.839 can you talk about the wreck inciliation process and whether 0:09:01.920 --> 0:09:05.680 Congress has to pay for some of the measures that 0:09:05.760 --> 0:09:08.960 they pass if they go through reconciliation rather than a 0:09:09.040 --> 0:09:13.600 bipartisan a measure. Great question, a major source of can 0:09:13.640 --> 0:09:16.120 confusion on the street. What happened last night is that 0:09:16.200 --> 0:09:20.000 Democrats authorized one point nine trillion dollars in deficit increases. 0:09:20.640 --> 0:09:22.880 That is over a ten year budget window, and that 0:09:22.920 --> 0:09:26.640 means that over ten years, Democrats or Republicans, if they 0:09:26.640 --> 0:09:29.040 want to vote for the bill, can authorize one point 0:09:29.160 --> 0:09:32.000 nine trillion dollars of deficit increases and they do not 0:09:32.240 --> 0:09:34.440 have to pay for it. Do not. There are no 0:09:34.520 --> 0:09:38.280 taxes in this bill. Indeed, there was a vote offered 0:09:38.280 --> 0:09:40.800 by a couple of Republicans that said we will not 0:09:40.880 --> 0:09:43.920 raise taxes on small businesses during a pandemic, and it 0:09:43.960 --> 0:09:47.520 passed one hundred to zero. So there are no taxes. 0:09:47.559 --> 0:09:50.120 The bill will not be offset by tax increases, either 0:09:50.160 --> 0:09:53.440 at the corporate or individual level. The deficit spending will 0:09:53.760 --> 0:09:57.040 be incurred during that tenure budget window, and no taxes 0:09:57.080 --> 0:09:59.320 will be increased. As a result of this spill, some 0:09:59.400 --> 0:10:02.160 of the detail there. Henrietta Treys a pro Invada partners 0:10:02.160 --> 0:10:05.880 there on fiscal and many conversations to come forward as well. 0:10:10.000 --> 0:10:14.640 Christopher low Over at f H and Financial makes the 0:10:14.679 --> 0:10:18.040 really important point that most of the drop and the 0:10:18.080 --> 0:10:21.080 good news unemployment rate six point seven and six point 0:10:21.120 --> 0:10:26.880 three was four hundred thousand fewer people who stopped looking 0:10:26.960 --> 0:10:31.319 for work. Tiffany Wilding joins at PIMCO with acute analysis 0:10:31.720 --> 0:10:35.200 at Tiffany. There's so many moving parts here. Is this 0:10:35.480 --> 0:10:40.280 unemployment report of almost desolation where people are just giving 0:10:40.360 --> 0:10:45.520 up looking. Um, well, yeah, so it certainly could be that, 0:10:45.679 --> 0:10:47.720 but but I also think there could be just some 0:10:47.720 --> 0:10:51.880 some pandemic related distortions here where you actually had people 0:10:51.960 --> 0:10:54.920 that the reason why they're they dropped out of the 0:10:55.000 --> 0:10:57.640 labor force and they're not looking and the reason is 0:10:57.640 --> 0:10:59.959 is maybe because they think they're going to get the 0:11:00.160 --> 0:11:03.120 jobs back soon. So this is sort of a temporary phenomenon, 0:11:03.520 --> 0:11:05.720 you know. And I think overall, what what the labor 0:11:05.760 --> 0:11:09.360 force reports sort of showed us though, was that pandemic 0:11:09.520 --> 0:11:12.120 related weakness in the economy at the end of the 0:11:12.240 --> 0:11:15.760 year um was actually you know, quite a bit more 0:11:15.800 --> 0:11:18.720 acute than than we had initially thought so, but I 0:11:18.720 --> 0:11:21.040 think that there maybe is some you know, some good 0:11:21.040 --> 0:11:24.080 news here in the sense that, um, you know, the 0:11:24.120 --> 0:11:26.600 reason why people might not be looking and dropped out 0:11:26.640 --> 0:11:28.400 of the labor forces because they think they're going to 0:11:28.440 --> 0:11:30.920 get their jobs back. Um, you know. And if that's 0:11:30.920 --> 0:11:33.040 the case, you know that that would be an I 0:11:33.080 --> 0:11:35.040 love what Chrysalis says in his report. I want you 0:11:35.080 --> 0:11:36.920 to come on us. Word it's such a delicate and 0:11:37.000 --> 0:11:41.240 unused word. He says, the forty nine thousand was scant, 0:11:41.800 --> 0:11:45.560 and it was just a whisper of an improvement. Did 0:11:45.600 --> 0:11:50.800 you extend your timeline, Tiffany today two so called employment 0:11:50.920 --> 0:11:55.520 recovery because of what you observed? Um? Yeah, I mean 0:11:55.559 --> 0:11:58.679 so the report was a little bit weaker than we thought. 0:11:58.760 --> 0:12:00.720 But but you also have to keep in mind again 0:12:00.760 --> 0:12:02.960 there you know, there's some quirks in the data. UM. 0:12:03.000 --> 0:12:06.760 I think seasonal factors um were unable to fully adjust 0:12:06.800 --> 0:12:10.439 for some of the issues. So things like warehousing and 0:12:10.440 --> 0:12:14.640 and retail temporary jobs, they're related to the holidays, they've 0:12:14.679 --> 0:12:17.200 become more pronounced. Um you know, so you kind of 0:12:17.240 --> 0:12:20.160 get these seasonal separations that you know, the seasonal factors 0:12:20.160 --> 0:12:23.160 don't fully account for UM, you know, so I think 0:12:23.200 --> 0:12:25.920 that's actually probably good. You know, I think the bottom 0:12:25.920 --> 0:12:27.400 line is all that is to say that, you know, 0:12:27.840 --> 0:12:30.600 forty or fifty thousand's not great, UM, you know, but 0:12:30.679 --> 0:12:32.959 this doesn't really change our outlook that much, you know. 0:12:33.000 --> 0:12:34.959 I think the other thing really that's important to keep 0:12:35.000 --> 0:12:39.720 in mind here is that UM spending did pick up 0:12:39.880 --> 0:12:44.160 in UM in January as a result of the UM 0:12:44.200 --> 0:12:47.400 you know, the payments that the Treasury payments to households 0:12:47.480 --> 0:12:51.400 that came with the gut COVID COVID relief bill, you know. So, 0:12:51.600 --> 0:12:54.480 and we expect more legislation, you know, from the Widen 0:12:54.520 --> 0:12:58.480 administration by March for more stimulus. So I think, you know, overall, 0:12:58.520 --> 0:13:00.680 this doesn't really change the outlook UM. You know, we 0:13:00.760 --> 0:13:03.120 know that things were a bit more acute, the weakness 0:13:03.120 --> 0:13:05.400 was a bit more acute at your end. But but 0:13:05.480 --> 0:13:07.680 I think that the outlook is still, uh, you know, 0:13:07.760 --> 0:13:11.800 towards a pretty decent size acceleration. Tiffany, what's the concern 0:13:11.880 --> 0:13:14.400 or what's the level of concern about some of this UM. 0:13:14.440 --> 0:13:17.240 Some of these folks, I've been unemployed for a very 0:13:17.280 --> 0:13:21.480 long time than perhaps this is more maybe more permanent, 0:13:21.480 --> 0:13:25.240 maybe than maybe we initially thought. Yeah, I mean, so 0:13:25.320 --> 0:13:28.000 that's that's the concern, right, is that you basically, the 0:13:28.120 --> 0:13:31.400 longer that people are unemployed, UM, you have you know, 0:13:31.480 --> 0:13:33.880 sort of longer term effects happening. So you have skills 0:13:33.880 --> 0:13:36.600 that atrophy. UM. You know, you know, have training that 0:13:36.679 --> 0:13:39.800 people that people get on the job that stops happening 0:13:39.840 --> 0:13:43.440 because they're unemployed. UM. And effectively what happens is is that, 0:13:43.480 --> 0:13:46.080 you know, the longer they're unemployed, it's almost like the 0:13:46.280 --> 0:13:48.800 less likely they are to to get employed because they 0:13:48.840 --> 0:13:51.760 don't have those skills. You know. Now you know the 0:13:52.040 --> 0:13:54.360 this is the one thing or one of the um 0:13:54.640 --> 0:13:59.040 the conclusions that came out of the Federal Reserves UH 0:13:59.160 --> 0:14:01.520 FEDS LISTENS and Monetary policy review that happened in the 0:14:01.600 --> 0:14:03.600 last couple of years is that if you can get 0:14:03.600 --> 0:14:06.480 back to a hot labor market, then those people that 0:14:06.520 --> 0:14:09.960 were you know, unemployed for long periods of time they 0:14:10.120 --> 0:14:13.400 actually benefit. So, you know, the hot labor market with 0:14:13.559 --> 0:14:17.440 few labor supply that's low really draws those types of 0:14:17.440 --> 0:14:20.360 people back in. They start getting the training again, and 0:14:20.400 --> 0:14:22.320 that's better for the broader economy. So, you know, I 0:14:22.360 --> 0:14:25.120 think we really want to focus here on on bringing 0:14:25.160 --> 0:14:28.040 the labor market back to potential, creating kind of a 0:14:28.040 --> 0:14:30.800 hot situation as soon as possible, you know, so you uh, 0:14:30.920 --> 0:14:32.480 you know, to the extent that you do have those 0:14:32.520 --> 0:14:34.840 longer term unemployed, you can really draw them back into 0:14:34.880 --> 0:14:38.680 the labor market. So, Tiffany, it appears that we're getting 0:14:38.720 --> 0:14:41.240 some movement on fiscal stimulus here. We take a look 0:14:41.280 --> 0:14:45.000 at the jobs data today, the uh, the employment data today. 0:14:45.360 --> 0:14:48.840 What don't you think this economy really needs from Washington 0:14:48.920 --> 0:14:52.640 here in terms of fiscal stimulus, including this package however 0:14:52.640 --> 0:14:54.440 it may come out, and then maybe even something more 0:14:54.440 --> 0:14:57.480 permanent down the road. Yeah, I mean, I think I 0:14:57.480 --> 0:15:00.240 think the focus should be here first and foremost on 0:15:00.240 --> 0:15:02.080 on pandemic relief. I mean, you have to keep in 0:15:02.120 --> 0:15:05.520 mind that that we still have labor market slack. You know. 0:15:05.520 --> 0:15:08.440 Now we can argue about the size that's needed for 0:15:08.480 --> 0:15:11.400 that pandemic relief, um, you know, and exactly how to 0:15:11.480 --> 0:15:13.640 do that, but I think overall, first and foremost that 0:15:13.680 --> 0:15:16.640 should still be the focus. Um. But then after that 0:15:16.720 --> 0:15:18.960 we need to focus on some of these longer term 0:15:18.960 --> 0:15:22.760 initiatives and investments in the economy. Um. You know that 0:15:22.760 --> 0:15:28.560 that creates supply, create longer term growth you know, productivity growth, infrastructure, 0:15:28.920 --> 0:15:30.920 um and things like that. And keep in mind, if 0:15:30.920 --> 0:15:34.360 the focus on these longer term investments is more towards 0:15:34.360 --> 0:15:37.400 the supply side of the economy, that's actually not inflationary. Um, 0:15:37.400 --> 0:15:40.400 that's a good thing, Tiffany welding with us with Pimcoe. Tiffany, 0:15:40.440 --> 0:15:42.640 how do you share holes? Of course, writing it up 0:15:42.640 --> 0:15:45.800 on the labor economy the Economic Policy Institute, Folks, this 0:15:45.880 --> 0:15:48.960 is a liberal thing to tank. The conservatives read because 0:15:49.000 --> 0:15:52.240 it's smart, smart, smart, even if you disagree with the articles. 0:15:52.720 --> 0:15:56.840 She has a working number of high of excuse me, Tiffany, 0:15:56.880 --> 0:16:00.720 of twenty six to seven million workers of team percent 0:16:00.720 --> 0:16:04.480 of the workhorse workforce is in some way affected by 0:16:04.560 --> 0:16:09.000 all this. What's the Pimco working number of the number 0:16:09.040 --> 0:16:13.520 of people struggling in this labor economy? Yeah, I mean clearly, 0:16:13.560 --> 0:16:15.960 it's it's it's high. Um. I mean I think I 0:16:16.000 --> 0:16:18.080 think that's the that's the issue here, is that there's 0:16:18.120 --> 0:16:21.120 a lot of people, um, that that were affected. And 0:16:21.200 --> 0:16:24.640 even if you if even if you didn't lose your job, um, 0:16:24.680 --> 0:16:26.520 you know that. I think that there, um, there are 0:16:26.520 --> 0:16:30.240 effects in terms of uh, you know, education and things 0:16:30.280 --> 0:16:33.240 like that being disrupted, So you still have to to 0:16:33.400 --> 0:16:35.880 do you know, you have to have more flexible working environment, 0:16:35.960 --> 0:16:38.040 things like that. So I think there are certainly a 0:16:38.080 --> 0:16:40.760 lot of people that are impacted by this, you know, 0:16:40.800 --> 0:16:43.200 And I think that's the point here, is that um 0:16:43.200 --> 0:16:46.360 for the fiscal policy measures, you know, you still have 0:16:46.440 --> 0:16:48.560 to focus on pandemic relief as a result of that, 0:16:48.600 --> 0:16:50.480 We're not out of the out of the woods yet 0:16:50.720 --> 0:16:53.280 in terms of the pandemic, although the outlook is much 0:16:53.320 --> 0:16:55.600 better now than it was, you know, six months ago. 0:16:55.800 --> 0:16:57.880 Timing Wild you needed that update, thank you so much. 0:16:57.920 --> 0:17:00.440 With the Pacific Investment man, I love saying that Sack 0:17:00.560 --> 0:17:08.679 Investment Management Company very place to say that giving us 0:17:08.680 --> 0:17:10.240 some of that time is how to Bushek of the 0:17:10.320 --> 0:17:12.879 U S Council of Economic Advisors had the great to 0:17:12.960 --> 0:17:15.560 catch shove you thankfully time this morning. Just help me understand, 0:17:15.560 --> 0:17:17.840 just to begin with, how the incoming dates is informing 0:17:17.840 --> 0:17:20.800 the decision that you're making around fiscal stimulus in the 0:17:20.800 --> 0:17:24.200 package is set to deliver down in d C. Well, 0:17:24.680 --> 0:17:28.040 the numbers that we got this morning really do underscore 0:17:28.240 --> 0:17:31.840 the cost of inaction. The January numbers are quite disappointing. 0:17:32.080 --> 0:17:35.200 They show that the pace of job growth has is slow, 0:17:35.600 --> 0:17:37.879 and it's certainly over the past three months, it's a 0:17:37.880 --> 0:17:40.960 lot slower than it was earlier at the end of 0:17:43.080 --> 0:17:47.440 and it just it underscores that without further aid, our 0:17:47.480 --> 0:17:49.919 economy is going to continue to struggle. We need to 0:17:49.920 --> 0:17:52.520 get that aid out to the families and businesses that 0:17:52.600 --> 0:17:54.919 need it. We need to make sure that we spend 0:17:54.920 --> 0:17:57.359 the resources we need to contain the virus so that 0:17:57.400 --> 0:17:59.560 we can all get back to work. And this report 0:17:59.600 --> 0:18:01.800 really is make that quite clear. How they you use 0:18:01.880 --> 0:18:04.800 that word aid, but given the size of the package, 0:18:04.840 --> 0:18:07.480 some people would just call it stimulus. It's huge. Why 0:18:07.560 --> 0:18:10.119 is that word a different to the word stimulus and 0:18:10.119 --> 0:18:13.440 why do you think it's a not stimulus. Well, at 0:18:13.480 --> 0:18:16.879 this point in this crisis, our first goal is to 0:18:16.920 --> 0:18:19.639 contain the pandemic. So a lot of the funds that 0:18:19.680 --> 0:18:22.280 are in the American Rescue Plan are about making sure 0:18:22.320 --> 0:18:24.439 that schools can reopen, making sure that we get the 0:18:24.520 --> 0:18:27.160 vaccine now, making sure that all the things we need 0:18:27.200 --> 0:18:30.720 to do to keep Americans safe and healthy our first priority. 0:18:30.840 --> 0:18:33.119 And while we do that, we need to make sure 0:18:33.440 --> 0:18:36.520 that businesses have the resources they need, and importantly families 0:18:36.560 --> 0:18:39.280 have the resources they need so they can weather this crisis. 0:18:39.640 --> 0:18:42.639 So it still is it. We're still really thinking about 0:18:42.680 --> 0:18:46.480 this as relief until we can contain the virus. Larry 0:18:46.520 --> 0:18:49.080 Summers is in the Washington Post today asking some important 0:18:49.119 --> 0:18:51.760 questions about the size of this package relative to the 0:18:51.800 --> 0:18:54.120 output gap. How that could you weigh in on that 0:18:54.280 --> 0:18:56.360 if it's all what the right size of the package 0:18:56.520 --> 0:18:58.520 should be relative to the output gap that we need 0:18:58.600 --> 0:19:02.240 to fill. It's certainly you know, this package was built 0:19:02.280 --> 0:19:04.560 from the ground up. We looked at the needs all 0:19:04.600 --> 0:19:07.680 across our economy and calculated how much it was that 0:19:07.720 --> 0:19:10.479 we were going to need to spend again to contain 0:19:10.520 --> 0:19:13.280 the virus, to make sure that schools could reopen, open, 0:19:13.359 --> 0:19:15.679 to make sure that child care centers can reopen, to 0:19:15.720 --> 0:19:18.640 make sure that workers have paid leave, all of those 0:19:18.680 --> 0:19:21.000 sorts of things, and then to make sure that workers 0:19:21.040 --> 0:19:23.920 have those unemployment benefits as long as they need them, 0:19:23.920 --> 0:19:26.680 those direct checks for all the families that need them. 0:19:27.040 --> 0:19:30.800 So so we built that in that way, and um, 0:19:30.840 --> 0:19:33.480 you know, the goal here is to make sure that 0:19:33.640 --> 0:19:37.040 you know, families and businesses can weather this crisis and 0:19:37.119 --> 0:19:40.679 we'll worry. Uh, you know it may be that um 0:19:41.160 --> 0:19:46.160 that uh, this this report from this from January really 0:19:46.200 --> 0:19:50.120 does show that the high unemployment, especially for communities of color, 0:19:50.320 --> 0:19:53.439 the job losses for women, um and then and the 0:19:53.480 --> 0:19:56.280 lower label first participation really do show that we need 0:19:56.320 --> 0:19:58.919 to continue to act, and we need to do so quickly. 0:19:59.440 --> 0:20:02.560 What happens everything goes right, That's the question that Larry Summers, 0:20:02.560 --> 0:20:05.479 I think, is asking what's the contingency plan if everything 0:20:05.560 --> 0:20:09.439 starts to go right and maybe too right? Well, you know, 0:20:11.200 --> 0:20:13.639 was a really rough year, and we know that we 0:20:14.119 --> 0:20:17.080 have a hard time predicting the shape of this pandemic. 0:20:17.600 --> 0:20:21.879 And we know that without aid, families and businesses supper 0:20:22.000 --> 0:20:25.360 and today's jobs report really is the proof of the now. 0:20:25.400 --> 0:20:28.160 The proof is in the pudding here that without continued 0:20:28.160 --> 0:20:31.639 to support, we're going to see an economy that is performing, 0:20:31.960 --> 0:20:35.400 um much much more worse than it needs to be. 0:20:35.640 --> 0:20:38.919 So I am quite frankly, far more worried about the 0:20:38.960 --> 0:20:41.919 cost of an action than I am doing too much 0:20:41.960 --> 0:20:44.359 at this point. I think that echoes what many people 0:20:44.359 --> 0:20:46.000 are talking about down in d C at the moment, 0:20:46.000 --> 0:20:48.280 on both the monetory policy side on the fiscal side. 0:20:48.480 --> 0:20:51.000 In this administration, let's get to one of the policies, 0:20:51.280 --> 0:20:54.760 the checks. If I owned seventy five dollars and I 0:20:54.760 --> 0:20:57.520 can get a big check from the US government, why 0:20:57.600 --> 0:21:00.520 is the aid and not stimulus? Well, that is a 0:21:00.720 --> 0:21:03.320 that is a great question. So here's the thing. You know, 0:21:03.480 --> 0:21:06.600 we saw the checks were an incredibly effective tool when 0:21:06.640 --> 0:21:10.280 they win out last spring. Families used them, They helped them, 0:21:10.320 --> 0:21:13.560 you know, when they experienced unemployment or added expenses because 0:21:13.560 --> 0:21:16.359 of the crisis. And we know that millions of families 0:21:16.359 --> 0:21:18.760 are struggling right now, and that is the purpose of 0:21:18.840 --> 0:21:21.639 topping up the checks from December, to get that two 0:21:21.720 --> 0:21:25.040 thousand dollars out there to um uh to all the 0:21:25.080 --> 0:21:28.199 families that need them. Talk to me about eligibility and 0:21:28.240 --> 0:21:32.760 the conversation within the administration at the moment some concern 0:21:33.240 --> 0:21:35.919 that maybe the pool of people that could receive these 0:21:36.000 --> 0:21:38.919