WEBVTT - Jobs, Amazon, and Trade 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:26.960 us live on YouTube. 0:00:27.160 --> 0:00:28.720 Claudia Sam with us right now. 0:00:28.720 --> 0:00:32.320 And the squishing of the numbers, Claudia, are they squishy 0:00:32.400 --> 0:00:36.519 now because of the pandemic or because of immigration trends 0:00:36.800 --> 0:00:38.360 or do we just need to get used to this 0:00:38.440 --> 0:00:39.400 at the turn of the year. 0:00:42.360 --> 0:00:45.800 Today's data. There's a lot of moving pieces with today's data, 0:00:45.920 --> 0:00:48.680 just because we had large revisions to both the payroll 0:00:48.720 --> 0:00:52.199 employment and the household employment, and you know, and some 0:00:52.280 --> 0:00:55.000 things aren't as comparable from December to January and household 0:00:55.040 --> 0:00:57.120 so this is just a really tricky one to get 0:00:57.160 --> 0:00:59.440 down into the details of it. 0:00:59.480 --> 0:01:00.760 So I wouldn't So it's kind of. 0:01:00.680 --> 0:01:02.840 More of a January effect with like bringing a lot 0:01:02.880 --> 0:01:03.760 of data in. 0:01:03.880 --> 0:01:07.119 But it brought brush. I mean, I agree with your 0:01:07.160 --> 0:01:08.440 characterization the payrolls. 0:01:08.440 --> 0:01:10.080 You got to take that, you know, a set of 0:01:10.080 --> 0:01:12.840 them together, not focus on just this latest number, because again, 0:01:12.920 --> 0:01:15.399 hitting consensus with all these moving pieces was going to 0:01:15.400 --> 0:01:18.600 be tricky today. And those payrolls look good. 0:01:18.600 --> 0:01:19.240 I think it is. 0:01:19.920 --> 0:01:24.720 You know, that's kind of a warm average hourly earnings 0:01:25.200 --> 0:01:27.320 number on the wages. But the other wage data that 0:01:27.360 --> 0:01:30.440 we've gotten has has looked more moderate, So you know, 0:01:30.480 --> 0:01:32.360 there's plenty here to pour through. 0:01:32.520 --> 0:01:34.760 I'm struggling for news here, Paul. I got d x 0:01:34.920 --> 0:01:37.199 Y back to one away, so I got a stronger dollar, 0:01:37.360 --> 0:01:40.080 stronger dollars. Claudia Simon is saying, nobody cares. 0:01:39.800 --> 0:01:43.040 But you know we SMP futures down just thirteen points, 0:01:43.400 --> 0:01:45.880 nasnack down fifty six and to your treasure yield. Iss 0:01:45.920 --> 0:01:48.720 Chonnis is reporting for basis points four and a quarter 0:01:48.760 --> 0:01:53.360 percent right here, Claudia, So what's the next data point here? 0:01:53.440 --> 0:01:57.320 If you have a sense that the labor markets remains solid, 0:01:57.360 --> 0:01:59.640 what's the next data point that you will be looking for? 0:01:59.680 --> 0:02:01.120 And you think the Fed will be looking at. 0:02:02.480 --> 0:02:02.640 Right? 0:02:02.680 --> 0:02:05.400 Well, this very much continues the Feds. You know, the 0:02:05.480 --> 0:02:08.040 labor market's in a good place. We have the luxury 0:02:08.080 --> 0:02:10.240 of time we can wait and see. So what are 0:02:10.240 --> 0:02:12.200 they waiting to see? They're waiting to see what happens 0:02:12.200 --> 0:02:15.359 with inflation? Right, So the next most important data are 0:02:15.360 --> 0:02:17.200 with the CPI and to see if we continue to 0:02:17.240 --> 0:02:20.720 make progress and everything they've got here today kind of 0:02:20.840 --> 0:02:23.639 lets them stay in that, you know, on that trajectory. 0:02:24.080 --> 0:02:27.760 Okay, Claudia, thank you so much. Claudiam just love having 0:02:27.800 --> 0:02:30.920 you with us. Honored around this job's report with New 0:02:31.000 --> 0:02:35.120 Century Advisors. Ellen Zenner's ad a little time to ponder 0:02:35.840 --> 0:02:38.000 the data. I'm going to go back to what the 0:02:38.080 --> 0:02:41.280 hitters are doing. Like in late winter, you don't go 0:02:41.320 --> 0:02:44.520 to Patagonia for fly fishing. You go to the Trinity 0:02:44.600 --> 0:02:49.680 River in California, or the you know, Schinunck or Salmon 0:02:49.760 --> 0:02:54.160 or whatever in Oregon or that. Ellen Zenner. Morgan Stanley 0:02:54.240 --> 0:02:58.280 joins us on the wealth effect. This is where I 0:02:58.320 --> 0:03:02.920 met you years ago was a consumer effect, which is 0:03:03.040 --> 0:03:09.080 now a wealth effect supporting this GDP in this labor economy. 0:03:09.240 --> 0:03:11.520 Have you ever seen a wealth effect like this? 0:03:12.440 --> 0:03:14.760 It's pretty large, it's pretty large. 0:03:14.800 --> 0:03:15.320 I agree. 0:03:15.360 --> 0:03:18.000 Do you want to venture to say how long ago. 0:03:17.800 --> 0:03:23.800 It was that we met three or four years ago? Okay? 0:03:24.000 --> 0:03:25.840 But I'll tell you what I love most about the 0:03:25.880 --> 0:03:28.600 report this morning is listening to the dulcet tones of 0:03:28.720 --> 0:03:31.720 John Tucker read off the numbers I mean, I want 0:03:31.800 --> 0:03:34.440 him to read me payroll numbers each night so that 0:03:34.520 --> 0:03:36.119 I can go to bed like a lullaby. 0:03:36.360 --> 0:03:38.080 Yes, he puts us to sleep here too. 0:03:39.200 --> 0:03:42.440 What do you see in the jobs report around this 0:03:42.640 --> 0:03:46.440 misgust on growth and the wealth effect that we're living. 0:03:46.560 --> 0:03:50.720 Well, the thing is, look, we've been really surprised at 0:03:50.760 --> 0:03:55.000 just how strong the economy has remained even through all 0:03:55.120 --> 0:03:57.960 the FED hikes. And yes, they cut rates one hundred 0:03:58.000 --> 0:04:00.760 basis points, but then you have this tremendous and yields 0:04:00.760 --> 0:04:03.280 which would tighten financial conditions, and you'd think we'd get 0:04:03.320 --> 0:04:04.240 some slowing. 0:04:03.920 --> 0:04:04.360 Out of that. 0:04:05.080 --> 0:04:08.160 And so now you get these revisions and you look 0:04:08.200 --> 0:04:11.040 at the second half of twenty twenty four and it 0:04:11.080 --> 0:04:13.880 looks even stronger in the labor market than what we 0:04:13.920 --> 0:04:16.320 had thought, and looks a bit more in line with 0:04:16.400 --> 0:04:19.400 the strong GDP growth that we were getting. So there's 0:04:19.440 --> 0:04:22.680 just there's just no slowing here. And you know, I 0:04:22.760 --> 0:04:26.360 have to give props to my former team, the US 0:04:26.440 --> 0:04:30.160 economics team at Morgan Stanley Research, because they had one 0:04:30.240 --> 0:04:32.680 forty on. Okay, now, if they were way off, I 0:04:32.680 --> 0:04:35.080 wouldn't mention that, of course, but they had one forty 0:04:35.080 --> 0:04:36.600 because of wild fires. 0:04:36.240 --> 0:04:40.000 And you could definitely, I mean I would be at 0:04:40.040 --> 0:04:41.040 a higher number. 0:04:40.760 --> 0:04:42.920 On Oh I'm sure I would have been way off, 0:04:43.000 --> 0:04:48.040 thanks Tom. But but the you know, these these numbers 0:04:48.520 --> 0:04:51.200 even have the weather effects in there. I mean, you 0:04:51.200 --> 0:04:53.279 can look at the number of people that were right 0:04:53.320 --> 0:04:55.680 the fire that's and the and so you look at 0:04:55.680 --> 0:04:57.960 the number of people that were not at work due 0:04:57.960 --> 0:05:01.039 to natural disaster, weather or that sort of thing, and 0:05:01.080 --> 0:05:03.440 it was outside. So you know that this would have 0:05:03.440 --> 0:05:07.280 been a stronger number without it. And we've just got 0:05:07.320 --> 0:05:09.960 a great trajectory on the labor market. Now. The FED, 0:05:10.600 --> 0:05:14.880 I believe, took a hard pause last year. They used 0:05:14.920 --> 0:05:18.120 boilerplate language that was basically, we'll let you know when 0:05:18.120 --> 0:05:22.839 we're going to move again. And clearly there's no consensus 0:05:22.880 --> 0:05:25.640 on the FED to do anything but sit here, and 0:05:25.720 --> 0:05:28.479 so that's going to make it even difficult, more difficult, 0:05:28.560 --> 0:05:30.360 or raise the bar for them to see the kind 0:05:30.360 --> 0:05:33.159 of data that would mean they need to cut. So 0:05:33.240 --> 0:05:35.560 I completely agree with Claudia. They're just going to hang 0:05:35.600 --> 0:05:38.680 out here. They're looking golden for making that decision to stop. 0:05:38.880 --> 0:05:40.800 And do we get to the point where I've heard 0:05:40.839 --> 0:05:44.120 some people suggest that the longer they do wait, the 0:05:44.200 --> 0:05:46.400 odds actually go up that the next move would be 0:05:46.440 --> 0:05:49.480 a rate hike. Are you in that camp or I 0:05:49.520 --> 0:05:51.400 have a hard time thinking about hiking rates. 0:05:51.400 --> 0:05:54.800 Well, there's an odd there's odds on it. I don't 0:05:54.800 --> 0:05:58.120 know that they're very high. But you know, think about 0:05:58.320 --> 0:06:00.440 back in the mid nineties, we had a mid cycle 0:06:00.520 --> 0:06:04.159 growth correction and the Fed cut rates and then held 0:06:04.279 --> 0:06:06.960 steady at that time about seventy five basis point cut 0:06:06.960 --> 0:06:09.320 and rates we cut rates one hundred basis points this time. 0:06:09.800 --> 0:06:12.720 Then they held steady, the economy started strengthening again, and 0:06:13.880 --> 0:06:18.200 rates increased again at some point, right, And so I 0:06:18.240 --> 0:06:21.479 don't know that it raises the odds, Like just pausing 0:06:21.480 --> 0:06:23.560 for this long means we're going to get a reacceleration 0:06:23.600 --> 0:06:28.359 in the economy. But that is that's a plausible outcome. 0:06:28.400 --> 0:06:30.479 I would put a lower probability than the next move 0:06:30.560 --> 0:06:33.159 being a cut. And we still have a tremendous amount 0:06:33.160 --> 0:06:34.479 of policy uncertainty. 0:06:34.560 --> 0:06:38.560 Right, is the unemployment rate four point one percent down 0:06:38.640 --> 0:06:40.960 a tick to four point zero percent, I mean three 0:06:41.000 --> 0:06:44.480 point nine is a lot lower from four than four 0:06:44.480 --> 0:06:45.960 point one to four point zero. 0:06:46.320 --> 0:06:48.640 Does that matter to you that you know it's going 0:06:48.680 --> 0:06:49.920 in the way nobody expected. 0:06:50.080 --> 0:06:53.080 Now, I think what matters is looking at the underlying 0:06:53.120 --> 0:06:56.200 details and saying what caused the drop and the unemployment rate? 0:06:56.720 --> 0:06:59.680 Is it lower labor force participation? People just left the 0:06:59.760 --> 0:07:06.400 labor Is it because more people joined and were able 0:07:06.440 --> 0:07:07.599 to find jobs? 0:07:07.680 --> 0:07:07.880 Right? 0:07:07.920 --> 0:07:11.120 So that comes down to that household employment. 0:07:10.600 --> 0:07:12.400 Report and a lot of deeper data. 0:07:12.680 --> 0:07:14.960 Yeah, a lot of deeper data. Unemployment rates one of 0:07:14.960 --> 0:07:17.240 the hardest things to parse. It takes a lot of 0:07:17.240 --> 0:07:19.600 time because there's a lot of undercurrents and what drives. 0:07:19.640 --> 0:07:21.600 Okay, I want to go back to wealth effect because 0:07:21.600 --> 0:07:24.040 this is something the American consumer, folks, is what Ellen 0:07:24.120 --> 0:07:27.720 Zentner knows. For those of you on YouTube and across 0:07:27.720 --> 0:07:30.360 this nation in your commute, Ellen Zenner and Morgan Stanley 0:07:30.360 --> 0:07:32.520 with us right now, Christiana cat Many. 0:07:32.360 --> 0:07:33.280 Scheduled to be with us. 0:07:33.280 --> 0:07:37.240 Thrilled to Rebecca Patterson with this as well, but right 0:07:37.280 --> 0:07:41.960 now Zentner of Thematic Macro Investing at Morgan Stanley. Okay, 0:07:42.000 --> 0:07:47.920 just suggesting seven nights, six days, single occupancy boat package, 0:07:48.360 --> 0:07:53.120 Belize fly fishing. You sell some shares of Nvidia and 0:07:53.160 --> 0:07:57.840 for eight and twenty five dollars you're fishing in belize, 0:07:57.880 --> 0:08:00.960 which I'm sure you've done. I mean, the answer here 0:08:01.120 --> 0:08:04.760 is the wealth effect to me is enormous right now 0:08:04.760 --> 0:08:07.400 when I look at the idiocy of some of these stock. 0:08:07.240 --> 0:08:09.800 Books, yea, and believe you can do uh, you could 0:08:09.800 --> 0:08:11.840 do fishing from the beach for rooster fish. 0:08:12.080 --> 0:08:17.440 Look that up? See what that crazy looking skillet? 0:08:17.760 --> 0:08:22.720 No, you slap them and send them back on their way. 0:08:23.600 --> 0:08:26.760 So look, the wealth effect is, as you said. 0:08:26.640 --> 0:08:27.360 It's really strong. 0:08:27.640 --> 0:08:33.680 Now the the it's much stronger than it's been in 0:08:33.720 --> 0:08:36.800 my memory of practicing as an economist to get it. 0:08:36.920 --> 0:08:38.880 And so there are a couple of things here. 0:08:39.440 --> 0:08:42.880 Is it so one we have created a tremendous amount 0:08:42.880 --> 0:08:46.439 of wealth, and so one are we spending the same 0:08:46.520 --> 0:08:48.839 amount out of that wealth that we normally do? 0:08:48.920 --> 0:08:49.600 It's just wealth? 0:08:49.640 --> 0:08:53.920 Is that high? That is one possibility? Or is the 0:08:54.080 --> 0:08:58.679 still some lingering effects of COVID which taught us we're 0:08:58.679 --> 0:09:01.360 all going to die tomorrow and so spend it? 0:09:01.360 --> 0:09:02.080 If you got it? 0:09:02.200 --> 0:09:02.640 Interesting? 0:09:02.760 --> 0:09:05.000 So is it that the marginal propensit you consume. 0:09:05.120 --> 0:09:08.320 That's a great economist term, tom You like that marginal 0:09:08.320 --> 0:09:11.160 propension to consume out of wealth may just be higher? 0:09:11.920 --> 0:09:13.840 And so does that fade the further we get away 0:09:13.840 --> 0:09:17.200 from COVID further it's in the rear view mirror. Or 0:09:17.240 --> 0:09:19.160 does it just stay that high because now we've had 0:09:19.160 --> 0:09:20.040 some structural shift. 0:09:20.240 --> 0:09:22.040 You've seen research on this. I mean, you're in a 0:09:22.120 --> 0:09:23.600 casperg seat to see research. 0:09:24.120 --> 0:09:25.320 We have done this research. 0:09:25.440 --> 0:09:27.400 Well do you see that? To me, it's it's an 0:09:27.480 --> 0:09:29.280 unspoken huge deal. Am I wrong? 0:09:29.440 --> 0:09:31.920 Yeah? So what what I see, what I what I 0:09:31.920 --> 0:09:32.439 believe I. 0:09:32.400 --> 0:09:35.120 See in the numbers is that it's just the amount 0:09:35.160 --> 0:09:38.480 of wealth that has been created has just been that large. 0:09:39.200 --> 0:09:42.319 I think that, well, we're seeing we're in the midst 0:09:42.320 --> 0:09:44.880 of seeing the data is quite lagged on this, that 0:09:44.880 --> 0:09:48.120 that the marginal propensity you consume out of wealth is 0:09:48.120 --> 0:09:52.439 returning back to normal, but that the wealth we've created is. 0:09:52.440 --> 0:09:53.000 Just that high. 0:09:53.120 --> 0:09:54.800 Yeah, it's just I mean, and it kind of goes 0:09:54.840 --> 0:09:57.600 back to that issue in this US consumer. If this 0:09:57.679 --> 0:10:02.280 consumer owns assets, stocks by on real estate, feeling very 0:10:02.320 --> 0:10:04.120 good about the world. Yeah, and think about it, don't 0:10:04.200 --> 0:10:07.439 that inflation kick has been even more pronounced. 0:10:07.200 --> 0:10:11.319 Exactly exactly, And well, we're a service's economy. Sixty percent 0:10:11.320 --> 0:10:14.760 of all spending as services. So you slap tariffs on goods, 0:10:15.160 --> 0:10:17.280 and you're going to deepen that trend that good spending 0:10:17.280 --> 0:10:20.640 has been slowing and that services spending has been taking share, 0:10:20.720 --> 0:10:22.800 and we're going to still go out and spend on 0:10:23.000 --> 0:10:24.240 all the services we can. 0:10:24.559 --> 0:10:26.679 So how do you think about over there? Morgan standing 0:10:26.800 --> 0:10:29.680 this whole terariff discussion over the last couple of months. 0:10:29.880 --> 0:10:33.400 So I think it's it creates an extremely uncertain backdrop. 0:10:33.520 --> 0:10:35.280 We are just starting to see a lot of the 0:10:35.320 --> 0:10:39.920 business surveys show sentiment damage from the uncertain around tariffs. 0:10:39.920 --> 0:10:42.679 It's awfully hard to make business decisions in this environment. 0:10:43.720 --> 0:10:45.319 And so as this. 0:10:45.360 --> 0:10:48.600 Volatility around tariffs, do we or don't we put them 0:10:48.640 --> 0:10:51.760 on continues? I think even if you're not, if your 0:10:51.800 --> 0:10:54.240 bottom line isn't hit from tarrafs, you're going to start 0:10:54.840 --> 0:10:57.120 You're going to start building precaution. 0:10:57.520 --> 0:10:59.920 Every time you're on I learned something. A rooster fish 0:11:00.120 --> 0:11:03.040 is four feet lawn, sometimes one hundred pounds. 0:11:03.040 --> 0:11:03.840 Have you caught one? 0:11:03.920 --> 0:11:04.079 Now? 0:11:04.080 --> 0:11:07.240 I haven't caught one hundred pounds four foot rooster fish? 0:11:07.280 --> 0:11:08.360 Are they like barracuda? 0:11:08.880 --> 0:11:13.240 They're just one hell of an ugly looking fish. 0:11:13.559 --> 0:11:14.880 But you're in belieze, so who cares? 0:11:15.200 --> 0:11:16.839 Yeah, you're in belieze. 0:11:17.480 --> 0:11:20.160 That's the wealth effect. With Ellen Zender, thank you so much. 0:11:20.559 --> 0:11:24.000 With Morgan Stanley, just absolutely extraordinary. I've got a little 0:11:24.280 --> 0:11:26.839 Zenner driving the market higher. We were reading the screen 0:11:26.880 --> 0:11:29.240 and now a little bit of green. Critically, the VIX 0:11:29.320 --> 0:11:33.160 comes in fifteen point zero zero on the Vicks you 0:11:33.240 --> 0:11:35.160 gotta I'll tell you a fourteen. I don't see a 0:11:35.200 --> 0:11:38.840 fourteen yet. Maybe we're there and I missed it. Yields 0:11:38.880 --> 0:11:41.640 higher three basis points in the ten year yield four 0:11:41.640 --> 0:11:44.360 point four to six percent. And yes I followed the 0:11:44.400 --> 0:11:47.880 ten year really yield fraction on two point zero two 0:11:47.960 --> 0:11:51.760 out to two point zero four. We had some dollar 0:11:51.920 --> 0:11:54.640 strength off of this. What a treat to go from 0:11:54.640 --> 0:11:58.280 Claudia sam and Ellen Zenner over to the wonderful efforts 0:11:58.280 --> 0:12:02.880 of Rebecca Patterson tying it all together and particularly with 0:12:03.000 --> 0:12:06.480 her expertise on foreign exchange. She's a senior fellow at 0:12:06.520 --> 0:12:10.240 the Consul on Foreign Relations and had parchment out at 0:12:10.280 --> 0:12:12.720 Bridgewater and at Best in her trust as well. 0:12:12.920 --> 0:12:17.400 Rebecca, good morning, the prost morning, the prosperous America. 0:12:17.480 --> 0:12:20.960 That is the backdrop for this four point zero percent 0:12:21.000 --> 0:12:22.080 on employment rate. 0:12:22.720 --> 0:12:23.840 Does it continue? 0:12:23.880 --> 0:12:27.679 Do you have a sustaining nature to our real GDP. 0:12:29.600 --> 0:12:32.600 Well, you know, when I think about the economy, and 0:12:32.640 --> 0:12:35.280 we know that consumption is the majority of what drives 0:12:35.280 --> 0:12:38.439 our growth. To understand what the consumer does, you have 0:12:38.520 --> 0:12:40.800 to think about their ability to spend. Do they have 0:12:40.840 --> 0:12:43.959 the money and the job, which today underscored that they do, 0:12:44.480 --> 0:12:46.600 and do they have the confidence to spend. They might 0:12:46.640 --> 0:12:48.319 have money, but they don't want to spend it. That's 0:12:48.360 --> 0:12:51.040 what we've seen in China. In the case of the US, 0:12:51.240 --> 0:12:54.520 I think we do still have both confidence and ability. 0:12:54.960 --> 0:12:59.439 The latest confidence surveys, although very bifurcated by political affiliation, 0:13:00.160 --> 0:13:03.800 still trending higher. So for the short term at least, 0:13:04.000 --> 0:13:06.679 I think that the consumer continues to drive this, and 0:13:06.720 --> 0:13:10.200 that's clearly very positive for the stock market broadly speaking. 0:13:11.200 --> 0:13:13.600 That said, what we know has driven the wealth effect 0:13:13.679 --> 0:13:18.360 housing equities primarily. Anything that happens that really spokes the 0:13:18.400 --> 0:13:22.000 stock market could cause this higher income consumer to pause 0:13:22.080 --> 0:13:24.840 as well quickly, and we know there's risks to that 0:13:24.920 --> 0:13:29.199 from possible policy announcements from the new administration or even 0:13:29.360 --> 0:13:31.080 things like we saw in the last week or so. 0:13:31.160 --> 0:13:33.839 A deep seek you it doesn't take much at these 0:13:33.920 --> 0:13:38.000 valuations to cause equities to get a little bit skittish. 0:13:38.440 --> 0:13:41.439 So, Rebecca, if you step back here and think about it, 0:13:42.040 --> 0:13:44.240 put the jobs number in context. It's what we're seeing 0:13:44.240 --> 0:13:46.679 from some of the policy decisions of this Trump administration. 0:13:46.760 --> 0:13:48.920 The economy right now is in pretty good shape on 0:13:49.000 --> 0:13:52.440 it as which to the labor market inflation. Yet to 0:13:52.480 --> 0:13:56.679 talk about tariffs continues to be an uncertainty. And what 0:13:56.720 --> 0:13:58.439 do you make of some of the economic policies and 0:13:58.520 --> 0:13:59.800 rhetoric we're hearing out of Washington. 0:14:00.840 --> 0:14:03.240 Well, there's four that I think we're all focused on 0:14:03.440 --> 0:14:08.960 in terms of the economy and markets, and that is trade, taxes, immigration, regulation, 0:14:09.679 --> 0:14:11.840 And at the end of the day, what happens to 0:14:12.040 --> 0:14:15.360 these markets and to our economy will depend on the 0:14:15.360 --> 0:14:20.160 timing of those and the magnitude. And unfortunately we don't 0:14:20.160 --> 0:14:21.160 have a lot of clarity. 0:14:21.640 --> 0:14:22.120 Regulation. 0:14:22.240 --> 0:14:24.800 We probably have a little more I think that will 0:14:24.800 --> 0:14:28.360 becoming deregulation, But the problem with it is it doesn't 0:14:28.400 --> 0:14:31.720 happen overnight. There is a process that this administration will 0:14:31.720 --> 0:14:34.040 have to follow and it'll take a couple of quarters 0:14:34.080 --> 0:14:37.520 to actually be felt in the economy. On immigration, we 0:14:37.600 --> 0:14:40.320 know the trend, but we don't know the magnitude, and 0:14:40.320 --> 0:14:43.600 the magnitude will matter for the labor force and for wages. 0:14:44.800 --> 0:14:45.120 Trade. 0:14:45.600 --> 0:14:48.080 I mean again, I don't know, No one knows. My 0:14:48.200 --> 0:14:50.160 gut is we are going to see more tariffs and 0:14:50.200 --> 0:14:52.080 it's a matter of time. I think once we get 0:14:52.120 --> 0:14:55.800 those April reports back to the President's desk, that'll give 0:14:55.880 --> 0:14:56.760 him the green light. 0:14:56.600 --> 0:14:58.280 To take his next step on tariffs. 0:14:58.600 --> 0:15:01.760 And I would expect we will see tariffs on Europe 0:15:02.600 --> 0:15:03.840 and very likely some. 0:15:03.760 --> 0:15:09.320 More on China, Canada, Mexico. We'll see Tea live. 0:15:09.640 --> 0:15:13.720 The Bloomberg Terminal Folks has great analysis leading the charge 0:15:13.760 --> 0:15:17.760 today end Ocurr and Chris Ansey as well in IRA 0:15:17.920 --> 0:15:21.680 Jersey helping out on the unemployment report. Rebecca, here's the 0:15:21.720 --> 0:15:25.320 first line this from end Ocurr in our Global Economy Reporter. 0:15:26.120 --> 0:15:30.600 The annual revisions now showed job growth averaged one hundred 0:15:30.640 --> 0:15:33.640 and sixty six thousand a month. That would be a 0:15:33.680 --> 0:15:36.640 slowdown from an initially report at one hundred and eighty 0:15:36.720 --> 0:15:41.240 six thousand pace. To me, that's pretty much quiescent. I mean, 0:15:41.320 --> 0:15:44.560 they're down, but they weren't the gloom that many people 0:15:44.560 --> 0:15:45.200 were modeling. 0:15:46.160 --> 0:15:49.200 Yeah, I would guess the federal Reserve today is very 0:15:49.240 --> 0:15:52.120 happy and we're seeing a moderation in the pace of 0:15:52.200 --> 0:15:56.360 job growth, but very very resilient labor market data showing 0:15:56.440 --> 0:15:58.880 us that this economy can continue to grow at above 0:15:59.000 --> 0:16:02.520 its potential long term rate. So maybe no rate cuts 0:16:02.560 --> 0:16:06.200 forthcoming in the near term. That's already priced in that 0:16:06.280 --> 0:16:08.680 we don't get a rate cut probably till midyear. But 0:16:08.760 --> 0:16:12.480 at the same time, the normalization of the labor market 0:16:12.560 --> 0:16:14.640 also means they don't need to be too worried at 0:16:14.680 --> 0:16:17.240 this moment about having to go the other way in titan. 0:16:17.480 --> 0:16:18.960 I mean, we're going to have Anna wan on with 0:16:19.000 --> 0:16:20.680 this later. She'll be expert in that, Paul. 0:16:20.760 --> 0:16:25.800 But basically the revision was what Mike McKee talked about was, Yeah, 0:16:25.840 --> 0:16:27.280 it's a revision, but get over it. 0:16:27.280 --> 0:16:28.400 It's just that a revision. 0:16:29.080 --> 0:16:31.000 Yes, agreed, we have them every year. 0:16:31.680 --> 0:16:32.960 Soa. 0:16:33.120 --> 0:16:35.320 We heard from the Secretary of the Treasury, Thank you 0:16:35.360 --> 0:16:37.640 very much, Rebecca. We heard from the Secretary and Treasury 0:16:38.160 --> 0:16:41.240 in an interview saying love to talk down the ten 0:16:41.600 --> 0:16:45.040 year yields. I know you have some thoughts on this. 0:16:45.600 --> 0:16:48.160 How do you think the administration thinks about interest rates? 0:16:48.560 --> 0:16:52.720 Yeah, it was really striking to me. That Treasury Secretary 0:16:52.760 --> 0:16:56.600 best highlighted that they're focused on not letting the ten 0:16:56.680 --> 0:16:59.280 year yield rise too much. I don't remember in my 0:16:59.400 --> 0:17:03.240 career focus on the ten year yield via Treasury Secretary. 0:17:03.640 --> 0:17:05.360 Given the size of our debt, the. 0:17:05.400 --> 0:17:08.359 Increase in our borrowing costs, the interest we have to 0:17:08.400 --> 0:17:10.200 pay on our debt, it makes sense. 0:17:10.640 --> 0:17:12.680 But then how does he do it right? 0:17:12.960 --> 0:17:16.399 If you can't the treasury market is twenty seven trillion dollars, 0:17:16.480 --> 0:17:19.080 It's not that easy to manipulate. And when I think, 0:17:19.119 --> 0:17:22.280 what can he do If they can limit the unfunded 0:17:22.520 --> 0:17:25.520 increase in our deficit so you get lots of pay 0:17:25.560 --> 0:17:27.960 for us and maybe it doesn't go up as much 0:17:28.000 --> 0:17:31.000 as some of the estimates, that would probably provide some 0:17:31.080 --> 0:17:32.960 relief that we're not going to have to increase bond 0:17:33.000 --> 0:17:37.399 supply a huge amount. He could try, and this is 0:17:37.400 --> 0:17:39.200 something to keep an eye on and we should talk 0:17:39.200 --> 0:17:42.800 more about it in a future date. Stable Coins stable 0:17:42.840 --> 0:17:45.960 coins right now on a decent amount of short term 0:17:46.000 --> 0:17:49.560 treasury securities as their reserves to keep their peg to 0:17:49.640 --> 0:17:54.960 the dollar. And this administration is very focused on increasing 0:17:54.960 --> 0:17:57.280 the use of stable coins around the world, in part 0:17:57.320 --> 0:17:58.960 because they know that's going to be a good source 0:17:58.960 --> 0:18:00.960 of treasury demand. We're on the front end of the 0:18:00.960 --> 0:18:04.200 long end, but still, you know, I think he can 0:18:04.240 --> 0:18:07.919 also look at treasury issuance and even though he posed 0:18:07.960 --> 0:18:10.520 yelling for this, he could issue more debt as needed 0:18:10.720 --> 0:18:14.480 shorter maturity than longer maturity. So he has a few tools. 0:18:14.240 --> 0:18:17.600 It's interesting to see which levers he pulls in the 0:18:17.640 --> 0:18:19.960 coming months and quarters to do this. But if we 0:18:20.000 --> 0:18:23.360 have strong growth like we had today, that's a benign 0:18:23.440 --> 0:18:25.360 reason for the yield to go up, but it will 0:18:25.400 --> 0:18:25.760 go up. 0:18:26.000 --> 0:18:28.280 It's tacking of me, Rebecca, to get out to March 0:18:28.359 --> 0:18:31.560 seven and the next unemployment rate. That's when your beach 0:18:31.600 --> 0:18:35.720 season clicks in. Right, we're getting close to forty fifty, Rebecca. 0:18:36.160 --> 0:18:38.520 I look at March seven, and you mentioned the fiscal 0:18:38.560 --> 0:18:42.120 structure and pegging the tenure yield. I mean we rolled 0:18:42.160 --> 0:18:46.200 into March. Is it correct to say with the nearest 0:18:46.280 --> 0:18:48.000 fiscal crisis. 0:18:49.240 --> 0:18:51.639 That we owe you mean with the debt ceiling or 0:18:51.720 --> 0:18:52.720 just the size of the days? 0:18:52.800 --> 0:18:56.200 Yeah, just as general for our listeners and YouTube viewers. 0:18:56.240 --> 0:18:58.919 The bottom line is we get out thirty days and 0:18:58.960 --> 0:19:00.000 it's a whole new world. 0:19:00.040 --> 0:19:02.440 After all, A fiscal stress. 0:19:03.280 --> 0:19:03.600 Yeah. 0:19:03.680 --> 0:19:08.080 I mean we are facing some major debt related fiscal 0:19:08.160 --> 0:19:10.399 challenges this year. We're going to have to see an 0:19:10.480 --> 0:19:13.640 increase or an abolition of the debt ceiling that's being 0:19:13.680 --> 0:19:16.040 discussed in Congress. I think we will get through that. 0:19:16.200 --> 0:19:19.040 I'm not sure which path they'll take, but I don't 0:19:19.080 --> 0:19:20.560 think we're going to have a crisis this time with 0:19:20.640 --> 0:19:24.879 the Republican controlled Congress. What's more important to me is 0:19:25.240 --> 0:19:28.560 how the reconciliation goes for the budget that they're going 0:19:28.600 --> 0:19:29.600 to try to pass this year. 0:19:29.640 --> 0:19:30.800 They have to pass this year. 0:19:31.680 --> 0:19:34.120 What kind of shenanigans are used to make the math 0:19:34.160 --> 0:19:37.320 look better? Both parties do this, so I'm not pointing 0:19:37.320 --> 0:19:39.879 a finger, but there are going to be some shenanigans. 0:19:39.960 --> 0:19:41.720 And then how much is that increase? 0:19:42.359 --> 0:19:44.280