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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Right now.

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Speaker 1: This is wonderful as well. Time. Julia Cardano with US

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Speaker 1: with Mecal Policy Advises. Julia um I look at what

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Speaker 1: John Farrell just said about global accommodation, all the rate

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Speaker 1: cuts out there. What's the long term price of an

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Speaker 1: accommodation by the Fed Central Bank. I refuse to believe

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Speaker 1: that Chairman Powell cutty rates is a free lunch. What's

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Speaker 1: the price out there? Well, actually, Tom, I think what

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Speaker 1: the question for us right now is whether these rate

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Speaker 1: cuts are just central banks moving to a new reality

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Speaker 1: of lower neutral rate that comes with lower global slower

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Speaker 1: global growth, or whether this is actual, you know, new

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Speaker 1: accommodation that's going to spur growth. I think that's an

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Speaker 1: open question because we've seen the global economy slow down

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Speaker 1: pretty dramatically. We don't have the engine that we've come

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Speaker 1: to rely on, that of China. China has been fueled

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Speaker 1: by this massive credit growth in recent years. They don't

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Speaker 1: want to go back down that road. They're being very

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Speaker 1: disciplined about it, and growth is staying very low and

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Speaker 1: likely to slow further. But truly, there's there's a difference

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Speaker 1: between a rate like we have in the US and

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Speaker 1: the negative rates in Europe. That's not adjusting to a

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Speaker 1: new normal, that's just negative. What you mean in Europe? Yes,

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Speaker 1: the negative rates in Europe? Yes, I mean that. I

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Speaker 1: think actually they'll highlights those same structural problems. They don't

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Speaker 1: have an engine of growth. Their demographics are slow, their

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Speaker 1: productivity is low, So what's going to drive growth? And

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Speaker 1: they've relied on They've turned to negative rates, and as

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Speaker 1: we see, they're not particularly effective. Right, They're not a

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Speaker 1: great engine of growth. So I think that their negative

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Speaker 1: rates highlights that they're just sort of out of ammunition. So, Julie,

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Speaker 1: are you leaning towards that? Then? If you had to

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Speaker 1: make a decision on where this is coming, you leaning

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Speaker 1: towards the idea that we are experiencing much lower neutral

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Speaker 1: rights and these central banks adjusting to that reality. Yeah,

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Speaker 1: I do think that. I mean, I think if I

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Speaker 1: had to describe the current policy stance for the said

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Speaker 1: it would be slightly accommodative, but not tremendously so despite

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Speaker 1: the rate being so low. So I do think that

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Speaker 1: a lot of this is the reality of lower neutral

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Speaker 1: interest rates. So square that backdrop with a job's report

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Speaker 1: that is likely to be quite good today. Uh, and

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Speaker 1: the figures that we got out of ADP yesterday that

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Speaker 1: point into such health in the labor market. How can

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Speaker 1: that person is with this backdrop of weakness as you

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Speaker 1: painted well, So I wouldn't say weakness, I just slow

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Speaker 1: growth isn't necessarily weak if that's the reality. And again

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Speaker 1: the job first of all, I don't want to say

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Speaker 1: presume the conclusion of the jobs report. One thing we've

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Speaker 1: been highlighting is the surprises in both directions in the

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Speaker 1: jobs reports. This year has been about fifty percent bigger

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Speaker 1: than the last five years. So you know, we may

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Speaker 1: be surprised in one direction or another this morning. Um,

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Speaker 1: but the but what we've seen is a healthy job market.

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Speaker 1: We have seen job growth slow. We need to generate

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Speaker 1: about a hundred to a hundred and fifteen thousand jobs

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Speaker 1: a month to just absorb population growth, and we're somewhat

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Speaker 1: above that. So we're not exactly roaring. The economy is fine,

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Speaker 1: it's solid, it's healthy. Consumers are feeling pretty good because

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Speaker 1: the job market is good. But we're not in boom times,

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Speaker 1: nor are we seeing weakness. So I think we're we're

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Speaker 1: seeing that kind of steady, moderate growth picture reflected in

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Speaker 1: those jobs. Now, Julia, let me ask you a question

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Speaker 1: that I know RBC's Tom Pauselli has been thinking about

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Speaker 1: and talking to clients about as well, the risk of

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Speaker 1: confusing signs of full employment with evidence that the cyclical

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Speaker 1: peak in the labor market is behind us. What are

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Speaker 1: the risks right now? So, so the risks of thinking

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Speaker 1: that we're overheating, is that what you're asking, you know,

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Speaker 1: The idea being that as GDP comes in in and

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Speaker 1: around trend growth and pay rolls growth starts to desalarate.

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Speaker 1: There's just the belief by some people that we're not

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Speaker 1: returning to trend growth, that the deceleration of payrolls growth

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Speaker 1: is evidence that we've had a cyclical peak in the

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Speaker 1: labor market and we're rolling go over. Instead of sitting

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Speaker 1: here and worry about recess, precisely, instead of sitting here

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Speaker 1: and saying, you know what, quite we're quite constructive we're

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Speaker 1: back at trend and what you are seeing is just

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Speaker 1: the natural consequence of full employment. Payrolls growth will de salarate.

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Speaker 1: Are we confusing one with the others. It's very easy

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Speaker 1: to confuse. And of course you know, when you are

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Speaker 1: at that trend growth, that means that policymakers, for example,

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Speaker 1: don't have a lot of margin for error, which is

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Speaker 1: why the FED moved preemptively. Uh. Now I think that

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Speaker 1: they've been a little bit disciplines. They've now moved to

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Speaker 1: the sidelines and they say, you know, we need to

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Speaker 1: see more evidence of what you're suggesting actual weakness. Uh,

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Speaker 1: to conclude that we need to do more. So, Um,

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Speaker 1: it's easy to confuse. It's hard and real time to

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Speaker 1: disentangle those two. We look at things like the speed

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Speaker 1: of slowing. If we're slowing rapidly and in in a

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Speaker 1: worrisome way, which isn't what we've seen. We've seen sort

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Speaker 1: of a gradual moderation and growth through the year. Are

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Speaker 1: we aggregating too much? I mean, we're gonna come out

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Speaker 1: here in one of and in thirty thirty seven minutes

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Speaker 1: and we're going to aggregate aggregate, aggregate. Can we get

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Speaker 1: away with that? Game given the partitions of the American

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Speaker 1: labor economy. Well, that's a great point, Tom. I mean,

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Speaker 1: when we see the report this morning, it's likely to

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Speaker 1: show a manufacturing sector that's still that is in recession. Um,

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Speaker 1: that's probably going to lose some jobs. Uh, you know,

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Speaker 1: abstracting from the GM strike effect. Um. But uh. And

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Speaker 1: and meanwhile, all the service sector is humming along. And

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Speaker 1: in fact, the health care sector is in sort of

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Speaker 1: a secular growth strate give uh state given our aging economy.

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Speaker 1: So there are different sub economies. We always have to

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Speaker 1: keep that in mind when we're thinking about, for example,

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Speaker 1: Jonathan's question, are we slowing in a broad based way?

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Speaker 1: Are we driven by weakness in one sector? I think

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Speaker 1: it's worrisome in the composition of of growth and hiring

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Speaker 1: that the weakness is in in investment um and in

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Speaker 1: sectors that have high productivity, whereas the resiliency is in

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Speaker 1: sectors with relatively low productivity. That's not a great pattern

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Speaker 1: in terms of thinking about the future. So I think

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Speaker 1: the details do matter a lot um, But we have

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Speaker 1: a gigantic service sector. It's what powers the economy, and

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Speaker 1: it has given us a really solid base where we're

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Speaker 1: an ocean liner of an economy. It's very hard to

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Speaker 1: put an ocean liner of an economy was dancing ocean lining.

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Speaker 1: I love the sort of the noir version of the

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Speaker 1: of the ocean liner of an economy. I am thinking

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Speaker 1: about that, this idea that slow growth could be positive

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Speaker 1: and that we're chugging along and all of these nuances.

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Speaker 1: And I was speaking with David Lafferty yesterday, chief market strategist.

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Speaker 1: It takes this investment managers, and he was saying, honestly,

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Speaker 1: I'm looking at a blank screen for outlook, my blinker blinking.

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Speaker 1: I have nothing that interesting to say with this type

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Speaker 1: of backdrop, because things are going to just sort of

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Speaker 1: chug along. It's kind of a boring market now heading

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Speaker 1: into Julia, be careful what you say. Though. Again, whenever

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Speaker 1: we think it's going to be the most worrying, that's

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Speaker 1: when something can, you know, blindside us. So UM, I

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Speaker 1: wouldn't say a year where we're still going to be

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Speaker 1: grappling with things like trade tensions between the US and

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Speaker 1: China and now a US presidential election that is on

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Speaker 1: the front burner and has consequences for different sectors. Um,

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Speaker 1: I don't think that's going to be a boring year.

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Speaker 1: I'm not too worried about being bored next year. Judaicarnada,

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Speaker 1: great to get your thoughts macro policy perspectives, President and

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Speaker 1: found it. Hey, it is is ny down to John.

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Speaker 1: The jobs nevers crushing the Bloomberg wire, contrary to ordinary,

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Speaker 1: A gain of more than a quarter million jobs in

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Speaker 1: November Topping Wall Street forecast the prior month or Vice

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Speaker 1: higher again November versus October. The unemployment eight down three

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Speaker 1: point five percent, a half century low average. I really

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Speaker 1: earnings meantime, well, they missed the mark up point two

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Speaker 1: percent versus point three percent again. Change in non farm

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Speaker 1: payrolls from the Labor Department a gain of two hundred

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Speaker 1: sixty six thousand Topping forecasts the prior month October revised higher.

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Speaker 1: Unemployment down down at three point five percent. I'm Niel

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Speaker 1: Boomberg Radio. Let's go back to me, ord if any,

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Speaker 1: thank you. Here's the price action. Just wow. Equities advanced

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Speaker 1: futures higher by four tents of one percent, bonds decline,

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Speaker 1: yields up by three basis points on a ten year

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Speaker 1: now to one eighty five yelds were coming in just

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Speaker 1: a little bit so big reversal, especially at the front end,

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Speaker 1: yields up by five basis points to one sixty four

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Speaker 1: and affirm a dollar a big payrolls print John Ferroll

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Speaker 1: to the claims number in Carl Kadona way out front

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Speaker 1: on that among others, I go to three decimal points

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Speaker 1: on the rate and it's what I would call a

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Speaker 1: good three point five percent to three decimals three point

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Speaker 1: five three five, So it's no la statistical fluky flukiness

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Speaker 1: that we got to three point five. You get to

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Speaker 1: Jim Glassman of JP Morgan standing by for reaction to

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Speaker 1: this one. Your thoughts, Jim. Pretty impressive And to keep

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Speaker 1: in mind though, the settlement of the GM strike is

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Speaker 1: driving allow this. You get manufacturing bounced back. We didn't

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Speaker 1: know how much guys were actually on strike. Maybe another

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Speaker 1: thirty thousand were indirectly affected. And I think this is

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Speaker 1: a reminder that all the manufacturer data coming out and

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Speaker 1: that we're going to see over the next several weeks

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Speaker 1: is going to be showing this balance back from the

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Speaker 1: GM strike. So pretty impressive. And I think the unemployment

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Speaker 1: rate is the key to the whole thing, because we

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Speaker 1: just don't know. I think job growth is slowing down

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Speaker 1: very gradually. Not here, but I think for the year

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Speaker 1: it is, and I think we're gonna see you just

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Speaker 1: see his unemployment stay at three and a half. It's

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Speaker 1: going to be a really good story. Jim Glassman, thank

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Speaker 1: you so much for the time we treasure speaking to you,

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Speaker 1: particularly today from Tucson, Arizona. Mr Glassman is with Dr Glassman,

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Speaker 1: I should say it's with JP Moore, John. What is

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Speaker 1: so distinctive here is the U six grim unemployment number

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Speaker 1: comes into recent lows six point nine percent. That's not

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Speaker 1: seven percent. And I also know media duration and average duration.

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Speaker 1: Those are very very good statistics as well. There's a

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Speaker 1: there's a solidity to the data. And look at the

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Speaker 1: yields now out four base points vaulting out to a one. Also,

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Speaker 1: we should say everyone talks about the trend line being important,

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Speaker 1: not necessarily one number. The revisions also were positive, adding jobs,

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Speaker 1: bringing the three month average to a ten month high

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Speaker 1: of two and five thousand. This is key when you

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Speaker 1: talk about the longer term implications. Let's get to the

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Speaker 1: longer term implications in the market moves as well. Really

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Speaker 1: placed to say that you want to us from PAGM

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Speaker 1: it's Mike Collinsy dropped by to the studio to give

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Speaker 1: us his thoughts. Mike, your initial response place, you know,

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Speaker 1: it's the same story. The job market has not been

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Speaker 1: the problem for this economy. Right, it is rock solid um,

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Speaker 1: very robust um. But if you look through the numbers,

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Speaker 1: see the same trend we've seen, which is one of

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Speaker 1: the reasons we haven't seen a big spike in wage growth.

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Speaker 1: And even the wage numbers here, the monthly wage games

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Speaker 1: are actually a little bit lighter than expected because it's

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Speaker 1: all services. It's leisure jobs, it's business services, it's hospitality,

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Speaker 1: it's a lot of second average hourly earnings climbed three

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Speaker 1: point one percent from a year earlier. That exceeded projections

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Speaker 1: of three percent, right, Right, The monthly number was a

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Speaker 1: light but right, so we're running at three percent year

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Speaker 1: over year and that's been where we that's where we've been,

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Speaker 1: so that's not a change. But three percent based on

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Speaker 1: historical expectations is arguably a little bit light. Right. If

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Speaker 1: inflation is to you're talking about one percent real wage growth,

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Speaker 1: which doesn't really pay the bills. So, um, the labor

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Speaker 1: market is not the problem, right, it's the the manufacturing

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Speaker 1: Chector in an international sector and you're still seeing weakness

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Speaker 1: in Europe. We had that yesterday. China is not out

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Speaker 1: of the woods yet. Um. You know, there's there's seems

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Speaker 1: like on a manufacturing side globally you've got a good

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Speaker 1: number and then a bad number. A good number and

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Speaker 1: a bad numbers. So we're kind of bouncing around the box.

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Speaker 1: Talk about it, Mike, the consensus cool gun into next year.

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Speaker 1: You know what it is is by the rest of

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Speaker 1: the world. We've heard it from Bank alfter bank after

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Speaker 1: bank alfter bank. The date to this week, the labor

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Speaker 1: market in America rock solid, the dates US where German

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Speaker 1: industrial production Reminder, as you say, they were not out

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Speaker 1: of woods yet. When you think about that consensus cool

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Speaker 1: gun into next year, what does Mike Collins stand on

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Speaker 1: that debate? Yeah, I mean, you know, I'm a general

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Speaker 1: contrarian and a deep value investor, and if you look

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Speaker 1: at the relationships in valuations globally in equities, for sure, um,

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Speaker 1: it would certainly tilt you to outside the US. But

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Speaker 1: you know, the US economy is clearly the bright spot

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Speaker 1: in the world right now, and we expect that to continue.

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Speaker 1: Right The FED, I think has done a great job.

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Speaker 1: I give them a lot of credit for pivoting when

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Speaker 1: they did, for cutting three times, getting that funds rate

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Speaker 1: back to what I think is probably closer to a

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Speaker 1: neutral rate at least in the near term, and so

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Speaker 1: we're actually poised to continue to do okay in the US.

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Speaker 1: That's actually I'm glad you were up the FED because

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Speaker 1: I'm watching the yield curve right now and it's kind

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Speaker 1: of struggling to find whether or not it's deepening or flattening.

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Speaker 1: On this news you're seeing two year yields increased just

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Speaker 1: a touch more than ten year yields. Here, What is

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Speaker 1: the risk that the federal take data like this and

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Speaker 1: stop cutting rates or even hike them? Uh and sire

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Speaker 1: me the growth. Yeah, so they've definitely stopped cutting for now.

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Speaker 1: They are on perma hold for the time being, and

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Speaker 1: this number solidifies that um as as everybody I think

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Speaker 1: is in consensus view now, the hurdle rate hike is

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Speaker 1: really really high. I mean, they talk about this symmetrical

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Speaker 1: inflation target. What that means is they want to see

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Speaker 1: inflation core pc E well above two before they even

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Speaker 1: think about hiking. And that thing is like one five,

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Speaker 1: one six, right now. There's a long way to go

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Speaker 1: before that thing gets gets above too, So I don't

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Speaker 1: see the risk as being in a hike hike in

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Speaker 1: the next six months. Your view on credit at the moment, Mike,

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Speaker 1: has been fascinating, extremely bifurcated. What we've seen is the

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Speaker 1: spread between the top end of high yield and the

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Speaker 1: bottom end of high yield really start to move out.

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Speaker 1: It's been an upping quality right in high yield. You

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Speaker 1: started to think about rotating the other way anytimes. Absolutely,

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Speaker 1: Just just yesterday in our trade room, we had a

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Speaker 1: big discussion about this. You're seeing actually that relationship. It

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Speaker 1: looks like it's starting to turn the other way again.

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Speaker 1: There's been so much pessimism in the high old market.

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Speaker 1: A lot of it's in the energy sector, of course,

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Speaker 1: and you've got some maybe positive news about OPEC cutting

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Speaker 1: production a little bit, maybe bolsters oil prices, but there's

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Speaker 1: so much negativity, there's so many default so much default

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Speaker 1: risk and recessions priced into that tail of the high

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Speaker 1: old market that there I think there is an opportunity

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Speaker 1: if you believe like we do, that you're not going

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Speaker 1: to be in a recession in two thousand twenty. There's

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Speaker 1: value there. I'm itching to get in and ask you

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Speaker 1: more about this. This is a really important question. We're

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Speaker 1: talking about the triple cs, the bottom of the junk

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Speaker 1: bond market that has really lacked the broader credit market.

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Speaker 1: Through through nineteen, we've had gains of fifteen percent for

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Speaker 1: corporate credit. Triple cs just really haven't been there in

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Speaker 1: the last few months. You're talking about buying triple cs.

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Speaker 1: Some of these really really beaten down credits, right, But

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Speaker 1: it's about it's about perception in psychology and valuation, right,

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Speaker 1: and all those things are pointing in one direction right now,

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Speaker 1: and we tend to like to go the other way there.

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Speaker 1: And again, if the default probability priced in is in

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Speaker 1: that basket and you're only going to get a ten

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Speaker 1: percent to fault right in that basket, there's value. But

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Speaker 1: obviously you have to pick your spots. I mean, credit

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Speaker 1: selection is powamount in that space without a doubt. What

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Speaker 1: would you say to push back that they were cheap

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Speaker 1: earlier this year? Uh, they might be less cheap now,

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Speaker 1: what's changed fundamentally to mean that the risk is so

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Speaker 1: much lower going into the bottom of the bottom When

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Speaker 1: we see the default rate actually taking up in certain sectors.

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Speaker 1: I mean, you've had not only the FED cutting three times,

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Speaker 1: You've had dozens of rate cuts all around the world. Right,

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Speaker 1: Monetary policy has been super stimulative, and now you're finally

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Speaker 1: seeing signs of of potential fiscal policy. You had some

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Speaker 1: in Japan, you you may have more in the US

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Speaker 1: regardless of who wins the election next year, and in

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Speaker 1: Europe you might see more. So I feel like you've

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Speaker 1: seen a bottoming in global economic data for the time being.

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Speaker 1: I think default risk or sushion risk has has moderated

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Speaker 1: for next year, and and everybody's off sides in that space. Tom,

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Speaker 1: is this time now to go out of triple leverage

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Speaker 1: cash and into the year. This is a stunning report.

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Speaker 1: It completely refutes the gloom crew. Does the FED respond

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Speaker 1: to it or do they do what they genetically do,

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Speaker 1: which is just by time they buy time? They are

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Speaker 1: on hold indefinitely right now. I mean, you would need

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Speaker 1: to see five or ten of these reports. You need

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Speaker 1: to see the stock market up another twenty percent. You

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Speaker 1: need to see inflation above two Is that feasible? You're

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Speaker 1: a bond guy, I'm gonna ask you that is dividend

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Speaker 1: growth a proxy for the yield the coupon I can't

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Speaker 1: get Let me extend that forward here in the time

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Speaker 1: we've got, We're gonna keep you through the hour. This

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Speaker 1: is so important, Michael. Do you shift with this report

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Speaker 1: from a two thousand and twenty view of clipping up

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Speaker 1: coupon two back to back years a total return pop

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Speaker 1: you know, in ah in and fixed income. I don't

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Speaker 1: think you're gonna see anywhere near the total returns we

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Speaker 1: had this year. But can I look for any kind

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Speaker 1: of game with coupon? You can? You can clip your

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Speaker 1: coupon in two thousand twenty, I think, I think the

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Speaker 1: long end of the curve, and we've even seen it today,

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Speaker 1: the thirty years barely moving today. It's a bear flatten

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Speaker 1: or the front end is bear in the bear flatteners.

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Speaker 1: So the two year note is rising in yield today

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Speaker 1: because the markets before this number, it was actually pricing

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Speaker 1: in a small probability of a cut next year, and

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Speaker 1: that's being taken out of the mark. Can you stay

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Speaker 1: with us, He's coming to TV with me, He's going

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Speaker 1: to TV with you. He has a few more minutes.

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Speaker 1: I'm going to let you have about ninety more seconds worked.

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Speaker 1: I've got I've forgot worked. That's good to do. Michael

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Speaker 1: Collins was a PGM, and we thank him for being

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Speaker 1: with this. We areing. Uh, the gains get extended as

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Speaker 1: the US markets open on the heels of that blockbuster jobs.

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Speaker 1: There are two hundred and sixties six thousand jobs added

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Speaker 1: well passed expectations joining US now. Tiffany Wilding pimpco U

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Speaker 1: S economists. Tiffany, can you use as a sense of

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Speaker 1: just how big of a surprise this was to the

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Speaker 1: upside when it comes to the job's numbers. Yeah, well,

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Speaker 1: thanks for having me. Well, I think, you know, interestingly,

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Speaker 1: the so Bloomberg obviously has a panel of economists. I

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Speaker 1: think there's maybe a hundred and seventy eight economists on

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Speaker 1: that panel. Um that that has that that present forecasts

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Speaker 1: for each employment report, and and this report was above

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Speaker 1: every one of those economists forecasts on the underlying panel.

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Speaker 1: So that doesn't happen very frequently. I think I can

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Speaker 1: only remember, you know, maybe one other time within the

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Speaker 1: last several years that that's happened. So, I mean, certainly

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Speaker 1: this isn't an important report, you know. Um, you know,

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Speaker 1: I think there's some some interesting things going on underlying

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Speaker 1: the report as well. Um, you know, obviously you had

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Speaker 1: some noise because we had a strike at GM plants

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Speaker 1: that um you know, that happened in October. That was resolved,

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Speaker 1: so people came back to work in November. But even

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Speaker 1: if you exclude those around forty to fifty workers that

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Speaker 1: were coming back to work, this is still a very

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Speaker 1: strong report. Yes, it really was, Tiffany, And I think

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Speaker 1: the markets are reflecting that. What is your sense that's

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Speaker 1: really driving this? Are these what types of jobs are

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Speaker 1: being created at this late stage in the cycle. Yeah,

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Speaker 1: I mean so kind of you know, again, we like

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Speaker 1: to look at um, you know, any any given report

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Speaker 1: obviously as noisy as we like to look at the

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Speaker 1: given trends. So what you're seeing is an interesting bifurcation

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Speaker 1: I think in in services versus good sector jobs. You know,

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Speaker 1: so excluding the kind of the GM you know, sort

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Speaker 1: of one off factors if you will, goods, uh, good

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Speaker 1: sector employment has actually been decelerating this year, and that's

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Speaker 1: you know, manufacturing, construction, other sectors that are related to that,

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Speaker 1: like trade and transport. But on the other side, services,

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Speaker 1: which looked earlier in the year like it was decelerating

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Speaker 1: has actually picked up more recently, um. And and this

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Speaker 1: report healthcare has was really strong. Health care sector has

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Speaker 1: been really strong, you know. And I think the important

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Speaker 1: thing to remember about the services sector is that that's

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Speaker 1: a sector that really economists look at in the employment

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Speaker 1: report because most of the other economic data that we get,

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Speaker 1: at least high frequency economic data is really geared towards

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Speaker 1: the good side of the US economy, you know, So

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Speaker 1: we tend to get service sector data, you know, with

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Speaker 1: the lag other than the employment report, you know. So

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Speaker 1: it's really good news to see service sector hiring UM

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Speaker 1: kind of pick up after dipping earlier this year. Michael

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Speaker 1: Collins from Pigeon was in here earlier, and he was

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Speaker 1: talking about how the type of jobs getting added leaves

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Speaker 1: something to be desired because the job gains have really

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Speaker 1: been made on the lower paying end of the spectrum.

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Speaker 1: Can you give us a sense of how much this

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Speaker 1: matters when people look at this data? I mean, in

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Speaker 1: other words, are all job gains equal? Um? Well, so

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Speaker 1: I agree with that. I think that's kind of a

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Speaker 1: I think that's a bit of a longer term trend

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Speaker 1: that we've seen, um, you know, as manufacturing jobs for example,

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Speaker 1: has decelerated more of a secular trend over the last

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Speaker 1: ten years. You've seen it just a general decline in

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Speaker 1: manufacturing jobs in the US, and and service the service

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Speaker 1: sector side of the economy has UM, you know, kind

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Speaker 1: of picked up or absorbed you know, some of those

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Speaker 1: people that that lost the manufacturing jobs. But I think

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Speaker 1: one of the more interesting trends right now actually is

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Speaker 1: is looking at the jobs created at large companies versus

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Speaker 1: small and mid sized companies. You know, So the real

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Speaker 1: acceleration in labor market growth, you know, in eighteen when

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Speaker 1: growth accelerated was really coming from those small to mid

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Speaker 1: size firms, and we really, UM, you know, hadn't seen

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Speaker 1: that UM prior to UM you know, kind of in

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Speaker 1: the in the wake of the financial crisis. So that's

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Speaker 1: good news, you know, but kind of more recently, UM,

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Speaker 1: that started to slow down a bit. As I mentioned,

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Speaker 1: similarly to the to the good side. UM. You know,

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Speaker 1: So you want to see an economy that has UM

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Speaker 1: job creation across you know, many different sectors obviously, UM,

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Speaker 1: many entrepreneurial, small and mid sized companies increasing jobs. That's

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Speaker 1: good news. UM. So hopefully that picks up as well.

428
00:22:59,520 --> 00:23:02,080
Speaker 1: So toffy. Let's gowk to the wage side of the equation.

429
00:23:02,119 --> 00:23:03,920
Speaker 1: Came in a little bit better than expect at three

430
00:23:03,960 --> 00:23:08,280
Speaker 1: point one percent annual growth. Um. Is that kind of

431
00:23:08,320 --> 00:23:10,760
Speaker 1: where we should get comfortable? Is that kind of the

432
00:23:10,800 --> 00:23:13,639
Speaker 1: best this labor market can give us? There's been some

433
00:23:14,200 --> 00:23:17,960
Speaker 1: questioning that given the low level of unemployment, shouldn't wage

434
00:23:17,960 --> 00:23:21,440
Speaker 1: growth actually maybe be even a little better. Yeah, Well,

435
00:23:21,800 --> 00:23:24,439
Speaker 1: wage growth, even though it was revised higher today. So

436
00:23:24,480 --> 00:23:26,560
Speaker 1: average hourly earnings I think on a year on your basis,

437
00:23:26,560 --> 00:23:30,639
Speaker 1: was around three point one. That's actually below a recent

438
00:23:30,760 --> 00:23:32,959
Speaker 1: peak that we've seen, um, you know, kind of at

439
00:23:32,960 --> 00:23:35,840
Speaker 1: the end of of of of last year of three

440
00:23:35,840 --> 00:23:38,400
Speaker 1: point four. So it looks like average hourly earnings growth

441
00:23:38,520 --> 00:23:41,040
Speaker 1: has peeked out a little bit um. You know, I think,

442
00:23:41,040 --> 00:23:44,320
Speaker 1: which presents a bit of a goldilocks environment because you're

443
00:23:44,320 --> 00:23:47,719
Speaker 1: still seeing the labor market which is able to generate um,

444
00:23:47,720 --> 00:23:49,879
Speaker 1: you know, two hundred and sixty six thousand job gains

445
00:23:49,880 --> 00:23:53,159
Speaker 1: without a lot of wage inflation. You know. No, I

446
00:23:53,160 --> 00:23:56,200
Speaker 1: think there are secular reasons still why that's happening. You know,

447
00:23:56,280 --> 00:23:59,560
Speaker 1: we talk a lot about what we call labor bargaining power. UM.

448
00:23:59,560 --> 00:24:01,560
Speaker 1: You know, you you hope that in a what we

449
00:24:01,600 --> 00:24:04,199
Speaker 1: call a hot economy or a tight labor market, you

450
00:24:04,240 --> 00:24:06,840
Speaker 1: hope that labor bargaining power starts to increase. But of

451
00:24:06,880 --> 00:24:09,200
Speaker 1: course these things take time, you know. Now, I think

452
00:24:09,240 --> 00:24:11,360
Speaker 1: the GM strike, the recent GM strike that we saw

453
00:24:11,480 --> 00:24:14,639
Speaker 1: was kind of an anecdote of more labor market bargaining

454
00:24:14,680 --> 00:24:18,600
Speaker 1: power happening in tight labor markets. But again, this takes time. UM.

455
00:24:18,680 --> 00:24:21,320
Speaker 1: So you know, I think that's that that continues to

456
00:24:21,440 --> 00:24:25,119
Speaker 1: be UM sort of did damp in wage pressures. You know,

457
00:24:25,160 --> 00:24:28,640
Speaker 1: we're we're also just a secular decline in productivity growth. UM.

458
00:24:28,680 --> 00:24:31,800
Speaker 1: That also, uh, you know, dampens wage pressures because you know,

459
00:24:31,800 --> 00:24:33,960
Speaker 1: you should get paid for you know, how much uh

460
00:24:34,760 --> 00:24:37,440
Speaker 1: price inflation that you we're seeing, and then how productive

461
00:24:37,480 --> 00:24:40,240
Speaker 1: we are um on on the job. So those two

462
00:24:40,280 --> 00:24:42,840
Speaker 1: things I think are secular reasons why you know, average

463
00:24:42,840 --> 00:24:45,520
Speaker 1: EARLIE earnings are still um, you know, somewhat below the

464
00:24:45,880 --> 00:24:48,639
Speaker 1: peak that we saw last cycle, UM, and they're probably

465
00:24:48,680 --> 00:24:52,080
Speaker 1: likely to stay there. Tiffany Weilding of PIMCO joining us

466
00:24:52,200 --> 00:24:54,440
Speaker 1: right now. We're speaking with her. She's a U S

467
00:24:54,480 --> 00:24:58,439
Speaker 1: economist about the jobs figures in particular. Tiffany, people are

468
00:24:58,480 --> 00:25:01,880
Speaker 1: wondering what this means for the federal reserve markets now

469
00:25:02,119 --> 00:25:07,919
Speaker 1: discounting any additional rate cuts in I'm wondering whether uh

470
00:25:08,080 --> 00:25:10,639
Speaker 1: FED is right to be on pause here given the

471
00:25:10,720 --> 00:25:13,040
Speaker 1: job gains that we're seeing. In other words, are we

472
00:25:13,119 --> 00:25:17,040
Speaker 1: in a new Goldilocks? Well, yeah, I mean I think

473
00:25:17,119 --> 00:25:20,400
Speaker 1: I think we might be. Um. Certainly, the wage pressures

474
00:25:20,440 --> 00:25:22,240
Speaker 1: would suggest that the FED does not need to be

475
00:25:22,280 --> 00:25:24,600
Speaker 1: in a hurry to hike interest rates, you know, but

476
00:25:24,680 --> 00:25:26,639
Speaker 1: at the same time, you know the fact that the

477
00:25:26,680 --> 00:25:29,600
Speaker 1: US economy and job creation does look like it is

478
00:25:29,640 --> 00:25:32,920
Speaker 1: re accelerating a bit after after dipping more notably over

479
00:25:32,960 --> 00:25:36,280
Speaker 1: the summer or earlier this year, that would suggest that

480
00:25:36,320 --> 00:25:38,760
Speaker 1: it certainly find to be on hold. So the the

481
00:25:38,800 --> 00:25:41,240
Speaker 1: accommodation that the FED has already provided this year is

482
00:25:41,280 --> 00:25:44,440
Speaker 1: starting to support the economy. We're starting to see that, um,

483
00:25:44,480 --> 00:25:46,920
Speaker 1: and it it suggests they don't need to provide additional

484
00:25:46,960 --> 00:25:50,639
Speaker 1: support at this time, and then they can remain on hold. So, Tiffany,

485
00:25:50,680 --> 00:25:55,159
Speaker 1: given that scenario, as you think about your DP outlook,

486
00:25:55,480 --> 00:25:57,040
Speaker 1: give us a sense of kind of how you think

487
00:25:57,119 --> 00:26:04,040
Speaker 1: this maybe strengthening job market may impact economic growth next year. Yeah, well, so,

488
00:26:04,160 --> 00:26:08,560
Speaker 1: labor markets do tend to lag broader economy revenues um

489
00:26:08,640 --> 00:26:10,960
Speaker 1: and and profits and and things like that, you know,

490
00:26:10,960 --> 00:26:12,840
Speaker 1: so you have to be a little bit careful. And

491
00:26:12,960 --> 00:26:14,800
Speaker 1: the reason why economists, as I mentioned, the reason why

492
00:26:14,840 --> 00:26:18,040
Speaker 1: economists look at this so uh so closely is because, um,

493
00:26:18,040 --> 00:26:20,560
Speaker 1: you know, just in terms of the noisiness of this report,

494
00:26:20,560 --> 00:26:22,280
Speaker 1: it is a little bit better you know than some

495
00:26:22,320 --> 00:26:25,680
Speaker 1: of the other revenues or other production type of reports

496
00:26:25,680 --> 00:26:27,240
Speaker 1: that we get. But we do have to remember that

497
00:26:27,280 --> 00:26:29,480
Speaker 1: the labor market lags. So you know, if growth does

498
00:26:29,520 --> 00:26:32,520
Speaker 1: start to decelerate again, um you know, then ultimately the

499
00:26:32,560 --> 00:26:34,920
Speaker 1: labor market will decelerate again with the lag to that

500
00:26:35,200 --> 00:26:36,560
Speaker 1: you know. Now, I think I think just kind of

501
00:26:36,600 --> 00:26:38,560
Speaker 1: thinking about this, you know a little bit more broadly,

502
00:26:38,600 --> 00:26:41,720
Speaker 1: and certainly the labor market has has been stronger, um

503
00:26:41,760 --> 00:26:43,520
Speaker 1: you know, then I think many would have expected in

504
00:26:43,560 --> 00:26:45,840
Speaker 1: the context of some of the uh, you know, the

505
00:26:45,840 --> 00:26:48,840
Speaker 1: trade tensions that we've seen. We've also seen consumer sentiment

506
00:26:48,880 --> 00:26:51,280
Speaker 1: hold up a lot better, you know, So I that

507
00:26:51,359 --> 00:26:54,240
Speaker 1: that's I think also good news, um you know, for

508
00:26:54,240 --> 00:26:56,000
Speaker 1: for the U. S economy, given that there has been

509
00:26:56,080 --> 00:26:59,000
Speaker 1: some some disruption um and and potentially you know some

510
00:26:59,040 --> 00:27:01,720
Speaker 1: negative headlines around that. Tiffany Weilding, thank you so much

511
00:27:01,920 --> 00:27:04,639
Speaker 1: for taking such a time with us this morning. Tiffany Weilding,

512
00:27:04,760 --> 00:27:07,720
Speaker 1: is you as economist at PIMCO joining us on the

513
00:27:07,800 --> 00:27:25,640
Speaker 1: jobs figures. We welcome Bloomberg TV and of course Blomberger Radio.

514
00:27:25,640 --> 00:27:27,720
Speaker 1: I'm Jonathan Faraoh for the White House's views on the

515
00:27:27,760 --> 00:27:30,600
Speaker 1: jobs report were joined by Larry Cudlo, now the National

516
00:27:30,640 --> 00:27:33,840
Speaker 1: Economic Council Director. Larry, it's great to see you a

517
00:27:34,000 --> 00:27:36,520
Speaker 1: stunning payrolls report. I'm sure the day feels a little

518
00:27:36,520 --> 00:27:39,040
Speaker 1: bit better down in d C now these numbers are

519
00:27:39,080 --> 00:27:43,160
Speaker 1: out well. It does it sugny day down here. And

520
00:27:43,359 --> 00:27:48,760
Speaker 1: the key point is America's working. America is working, and

521
00:27:48,960 --> 00:27:52,840
Speaker 1: despite whatever you know, cynicism or criticism, the fact is

522
00:27:53,440 --> 00:27:57,359
Speaker 1: the jobs numbers are actually getting better in recent months.

523
00:27:57,920 --> 00:28:01,840
Speaker 1: And we scored two hundred and sixties this time around.

524
00:28:01,880 --> 00:28:05,159
Speaker 1: Plus you got forty one thousand revision so from the

525
00:28:05,200 --> 00:28:07,520
Speaker 1: two prior months, so they actually get you about three

526
00:28:07,600 --> 00:28:11,520
Speaker 1: hundred thousand. My point is, despite I don't know a

527
00:28:11,560 --> 00:28:16,480
Speaker 1: certain amount of pessimism, uh, the economy is outperforming expectations.

528
00:28:17,320 --> 00:28:22,399
Speaker 1: Economic policies from the President are working and America is

529
00:28:22,600 --> 00:28:25,879
Speaker 1: going back to work. And I just think that's crucial because,

530
00:28:25,880 --> 00:28:29,359
Speaker 1: you know what, Jonathan, I can't remember who wrote the book.

531
00:28:29,440 --> 00:28:34,240
Speaker 1: My pal over at the American Enterprise Institute, Um Brooks, right,

532
00:28:34,280 --> 00:28:38,720
Speaker 1: who was his name Brooks? Anyway, America is a happy

533
00:28:38,840 --> 00:28:43,440
Speaker 1: place when it's working. I mean that, and America is

534
00:28:43,600 --> 00:28:47,640
Speaker 1: a cranky place when it's not working. And I think

535
00:28:47,720 --> 00:28:52,600
Speaker 1: as this new rebuilding of the economy with new incentives

536
00:28:52,640 --> 00:28:57,920
Speaker 1: from taxes and regulations and energy and protecting ourselves on trade,

537
00:28:58,520 --> 00:29:01,040
Speaker 1: as the numbers come in, as people come out of

538
00:29:01,040 --> 00:29:05,560
Speaker 1: the woodwork, as the you know, production workers are getting

539
00:29:05,680 --> 00:29:09,480
Speaker 1: higher wages or faster wages than their bosses are. Anyway,

540
00:29:09,520 --> 00:29:12,480
Speaker 1: all these things, this is a country that's going back

541
00:29:12,520 --> 00:29:15,600
Speaker 1: to work, Jonathan, and I think it's a happier country

542
00:29:15,680 --> 00:29:17,640
Speaker 1: as a result of it. Was just a couple of months.

543
00:29:17,640 --> 00:29:20,440
Speaker 1: Think you said that protecting our sounds on trade? Are

544
00:29:20,440 --> 00:29:22,680
Speaker 1: you saying that the current trade stance you think is

545
00:29:22,680 --> 00:29:25,760
Speaker 1: actually helping the US economy? And with that in mind,

546
00:29:25,840 --> 00:29:27,720
Speaker 1: is there any reason to pull back these terrists if

547
00:29:27,720 --> 00:29:31,400
Speaker 1: that's the case, Well, look, I don't want to. We're

548
00:29:31,400 --> 00:29:35,520
Speaker 1: in negotiations right now. As a president has said, in

549
00:29:35,640 --> 00:29:40,800
Speaker 1: recent days, they're constructive, almost round the clock negotiations. Doesn't

550
00:29:40,800 --> 00:29:42,720
Speaker 1: mean he's going to sign the deal. He hasn't seen

551
00:29:42,760 --> 00:29:47,000
Speaker 1: the final deal yet. He's holding back, but he basically

552
00:29:47,040 --> 00:29:49,600
Speaker 1: likes what he sees. So we'll see how that is

553
00:29:49,640 --> 00:29:51,880
Speaker 1: if you want to pursue that in a moment or two.

554
00:29:52,320 --> 00:29:55,480
Speaker 1: Uh fine, No, I had something different in mind, Jonathan,

555
00:29:55,520 --> 00:30:00,240
Speaker 1: almost psychological. I think that one of press in it

556
00:30:00,640 --> 00:30:04,560
Speaker 1: Trump's most important accomplishments in his first three years in

557
00:30:04,640 --> 00:30:10,760
Speaker 1: office is to change and clarify the narrative on China

558
00:30:11,520 --> 00:30:18,200
Speaker 1: and that this country, the USA, cannot cannot permit unfair

559
00:30:18,880 --> 00:30:26,120
Speaker 1: trading practices either by our allies or are non allies. Technology, innovation,

560
00:30:26,280 --> 00:30:30,080
Speaker 1: invention application, as you well know, this is the heart

561
00:30:30,120 --> 00:30:35,040
Speaker 1: of the American economy. We have the freedom to create,

562
00:30:35,840 --> 00:30:39,320
Speaker 1: and that freedom is what drives our economy forward at

563
00:30:39,360 --> 00:30:42,160
Speaker 1: the fastest rate of any country in the world for

564
00:30:42,200 --> 00:30:46,440
Speaker 1: all these years. So here's my point. His job, as

565
00:30:46,480 --> 00:30:50,960
Speaker 1: he sees it, is to defend America, to protect the workers,

566
00:30:51,240 --> 00:30:56,200
Speaker 1: the farmers, the manufacturers, the people working in technology. That's

567
00:30:56,240 --> 00:30:59,520
Speaker 1: his job. And so when I say people are happy,

568
00:31:00,240 --> 00:31:05,840
Speaker 1: I think the country has come around to the President's narrative, Yeah,

569
00:31:05,920 --> 00:31:09,880
Speaker 1: we must be tough. We must be tough with China

570
00:31:10,240 --> 00:31:14,680
Speaker 1: and anybody else who thinks they can willy nearly steal our,

571
00:31:15,120 --> 00:31:19,600
Speaker 1: not just our technology advances, but our god given creativity.

572
00:31:20,120 --> 00:31:22,800
Speaker 1: I think most people would narrative, you've been with China.

573
00:31:22,960 --> 00:31:25,160
Speaker 1: Most people would argue that you have. You said the

574
00:31:25,200 --> 00:31:29,040
Speaker 1: President likes what he sees. October eleventh, The President said,

575
00:31:29,280 --> 00:31:31,680
Speaker 1: we have come to a deal pretty much, subject to

576
00:31:31,720 --> 00:31:34,160
Speaker 1: getting it written. It will probably take three weeks, four

577
00:31:34,200 --> 00:31:37,360
Speaker 1: weeks or five weeks. That was eight weeks ago. What

578
00:31:37,520 --> 00:31:42,880
Speaker 1: has the president seen, what's been agreed? Well, look, presidents

579
00:31:42,960 --> 00:31:45,440
Speaker 1: up to speed on everything. We're almost in around the

580
00:31:45,440 --> 00:31:51,160
Speaker 1: clock negotiations. The deputy level met um. Let's see not

581
00:31:51,360 --> 00:31:54,800
Speaker 1: last night, but the night before. The final strokes are

582
00:31:54,840 --> 00:31:58,400
Speaker 1: not there were coming down to short strokes. We've been

583
00:31:58,400 --> 00:32:02,120
Speaker 1: there now. Some of the most delicate matters have to

584
00:32:02,160 --> 00:32:07,920
Speaker 1: be adjudicated, discussed, analyzed, and evaluated, and then it will

585
00:32:07,960 --> 00:32:10,920
Speaker 1: be presented to President Trump and he'll take a look

586
00:32:11,000 --> 00:32:12,920
Speaker 1: at it. As he said in London, and he said

587
00:32:12,960 --> 00:32:16,880
Speaker 1: when he got back from London, he thinks the talks

588
00:32:16,880 --> 00:32:20,560
Speaker 1: are moving ahead very nicely. He likes that they're very constructive.

589
00:32:20,640 --> 00:32:24,560
Speaker 1: But but but but he's not ready yet to sign

590
00:32:24,800 --> 00:32:27,880
Speaker 1: or he hasn't seen everything he wants to see. So

591
00:32:28,320 --> 00:32:32,440
Speaker 1: we're moving forward nicely, covering a lot of ground. And

592
00:32:34,200 --> 00:32:37,720
Speaker 1: I've learned never in forecast the outcome. And ultimately it

593
00:32:37,880 --> 00:32:40,479
Speaker 1: is President Trump's gonna make the final call. As you know.

594
00:32:40,720 --> 00:32:42,520
Speaker 1: That's the story, Larry. But I'm still trying to work

595
00:32:42,560 --> 00:32:44,440
Speaker 1: out what's happened in the last eight weeks or so.

596
00:32:44,880 --> 00:32:48,080
Speaker 1: The President on October eleventh said a tremendous deal for

597
00:32:48,120 --> 00:32:51,560
Speaker 1: the farmers, a purchase from forty to fifty billion dollars

598
00:32:51,560 --> 00:32:54,400
Speaker 1: of ACT products. This was his message to the farmers.

599
00:32:54,480 --> 00:32:56,800
Speaker 1: I'd suggest the farmers have to go and immediately buy

600
00:32:56,840 --> 00:33:01,800
Speaker 1: more land and get big attractors. What has been negotiated

601
00:33:02,000 --> 00:33:04,840
Speaker 1: and what has been agreed? Can I just ask you again,

602
00:33:05,200 --> 00:33:08,600
Speaker 1: was there ever any agreement whatsoever in October eleventh that

603
00:33:09,000 --> 00:33:16,760
Speaker 1: involved forty two fifty billion dollars of US and agricultural products. Well, Jonathan,

604
00:33:17,160 --> 00:33:19,720
Speaker 1: as you might guess, I am not going to be

605
00:33:19,840 --> 00:33:24,840
Speaker 1: specific about these details. They're on the table. I think

606
00:33:24,920 --> 00:33:29,600
Speaker 1: your narrative is basically correct. I can't say yes, and

607
00:33:29,680 --> 00:33:32,840
Speaker 1: I can't say no. These are part of the final

608
00:33:32,920 --> 00:33:38,760
Speaker 1: strokes agriculturely agricultural spending by the way, but also opening

609
00:33:38,840 --> 00:33:42,640
Speaker 1: up the ag market so that we are able to

610
00:33:42,720 --> 00:33:45,840
Speaker 1: export a lot of different areas that they had preventice

611
00:33:45,880 --> 00:33:50,000
Speaker 1: in doing so. It's not my place today to reveal

612
00:33:50,600 --> 00:33:54,960
Speaker 1: you know, these um, shall we say secret or you know,

613
00:33:55,160 --> 00:33:59,440
Speaker 1: closely held talks, but I will continue to suggest that

614
00:33:59,480 --> 00:34:04,200
Speaker 1: we are those. Progress has been made, great progress has

615
00:34:04,200 --> 00:34:06,920
Speaker 1: been made, and we'll see how it ends up. It's

616
00:34:07,040 --> 00:34:09,880
Speaker 1: almost around the clock discussions right now. But letty, the

617
00:34:09,880 --> 00:34:12,960
Speaker 1: President did reveal that eight weeks ago, and I'm trying

618
00:34:13,000 --> 00:34:15,040
Speaker 1: to understand whether that is still on the table or not.

619
00:34:15,360 --> 00:34:17,520
Speaker 1: So I'll ask it in vaga terms, perhaps not in

620
00:34:17,600 --> 00:34:22,040
Speaker 1: such specific terms. Has China shown any willingness whatsoever to

621
00:34:22,120 --> 00:34:26,480
Speaker 1: agree to a dollar amount of US agricultural products? Well,

622
00:34:26,520 --> 00:34:29,840
Speaker 1: I sure can't speak for them. And we have not papered,

623
00:34:30,440 --> 00:34:34,160
Speaker 1: you know, we have not codified and papered and translated

624
00:34:34,760 --> 00:34:37,600
Speaker 1: these lengthy documents. So we'll have to wait and see.

625
00:34:37,640 --> 00:34:41,200
Speaker 1: It takes two to tango, so both sides have to agree. Um,

626
00:34:41,480 --> 00:34:46,279
Speaker 1: we're waiting for that, both paperwork and translations, so we

627
00:34:46,320 --> 00:34:48,920
Speaker 1: will see. I might head if I'm not mistaken, Jonathan,

628
00:34:48,960 --> 00:34:52,120
Speaker 1: I don't know whether it was your organization. Somebody reported

629
00:34:52,160 --> 00:34:56,840
Speaker 1: today that China withdrew some barriers to agriculture as a

630
00:34:56,880 --> 00:35:00,400
Speaker 1: good will gesture. I'm not sure on all the d tales,

631
00:35:00,840 --> 00:35:03,439
Speaker 1: but if it's a good will gesture, we appreciate good

632
00:35:03,480 --> 00:35:05,719
Speaker 1: will gestures. They're in the process of way. You think

633
00:35:05,719 --> 00:35:08,399
Speaker 1: returned tree tariffs on some of the imputs off us

634
00:35:08,440 --> 00:35:11,080
Speaker 1: Paul Consoy by domestic companies. That seems to be the

635
00:35:11,520 --> 00:35:13,920
Speaker 1: latest turn of things, Larry, would your message still be

636
00:35:13,960 --> 00:35:16,000
Speaker 1: for the American farmer to go out and buy more land,

637
00:35:16,200 --> 00:35:20,760
Speaker 1: to buy more tractors or would you tell them to wait? Um?

638
00:35:20,800 --> 00:35:26,440
Speaker 1: You know it's funny. I, as a broadcaster and a

639
00:35:26,520 --> 00:35:29,160
Speaker 1: Wall Street economists even before that, used to love to

640
00:35:29,200 --> 00:35:33,600
Speaker 1: make forecasts. I'm kind of, um more cautious now. I

641
00:35:34,040 --> 00:35:36,480
Speaker 1: don't really want to tell the farmers what they should

642
00:35:36,760 --> 00:35:40,640
Speaker 1: and should not do. I'm gonna hold back on that, uh,

643
00:35:40,680 --> 00:35:43,000
Speaker 1: you know, just in case any of them actually followed

644
00:35:43,040 --> 00:35:45,680
Speaker 1: my advice. I I don't want to go there. I'm

645
00:35:45,760 --> 00:35:50,279
Speaker 1: just saying that what I believe the President was inferring

646
00:35:51,160 --> 00:35:55,680
Speaker 1: is that the discussions that we had a month or

647
00:35:55,719 --> 00:35:59,520
Speaker 1: so ago with the top people, you, Hey and so forth.

648
00:36:00,400 --> 00:36:04,560
Speaker 1: Uh certainly had those numbers on the table, and that

649
00:36:04,800 --> 00:36:08,840
Speaker 1: our farm community great patriots that they are. They've taken

650
00:36:08,920 --> 00:36:12,799
Speaker 1: some hits and they've stayed behind us and defending this

651
00:36:13,160 --> 00:36:17,799
Speaker 1: China trade effort. Um. If they get it, then they

652
00:36:17,880 --> 00:36:20,960
Speaker 1: probably will be buying a lot more equipment, and perhaps

653
00:36:21,040 --> 00:36:24,280
Speaker 1: they should buy land. I'm just not good at forecasting

654
00:36:24,400 --> 00:36:28,400
Speaker 1: farm land. I have been Iowa's Jathan. I've covered the primaries,

655
00:36:28,440 --> 00:36:32,120
Speaker 1: and I where the carcasses several times. Iowa nice, it's

656
00:36:32,120 --> 00:36:34,399
Speaker 1: a lovely place. But I'm not going to give them

657
00:36:34,440 --> 00:36:37,839
Speaker 1: any free advice on how they should run their businesses. Okay, Well,

658
00:36:37,880 --> 00:36:40,239
Speaker 1: let's pick up on December fift Investors want to know

659
00:36:40,280 --> 00:36:43,040
Speaker 1: the big one. If there's no Phase one deal by

660
00:36:43,080 --> 00:36:45,719
Speaker 1: December fifteenth, Larry, and we're getting closer and closer to

661
00:36:45,760 --> 00:36:51,560
Speaker 1: that day, what actually happens, what's the next step? Well,

662
00:36:51,600 --> 00:36:55,120
Speaker 1: I wouldn't want to speculate on Matt look Um. On

663
00:36:55,280 --> 00:36:59,239
Speaker 1: the one hand, as sex Terry, Mnusians said, I think yesterday,

664
00:36:59,360 --> 00:37:03,680
Speaker 1: there are no arbitrary deadlines and any of this. On

665
00:37:03,719 --> 00:37:10,200
Speaker 1: the other hand, December is a very important date. Because

666
00:37:10,239 --> 00:37:14,680
Speaker 1: if the trade negotiations or the deal or the agreement

667
00:37:15,440 --> 00:37:20,279
Speaker 1: is not complete, our current law would restore tariffs on

668
00:37:20,360 --> 00:37:22,960
Speaker 1: a number of items, as you probably know, I don't

669
00:37:23,000 --> 00:37:26,759
Speaker 1: know what the exact number is, uh hundred maybe a

670
00:37:26,800 --> 00:37:31,640
Speaker 1: hundred fifty billion. So December is an important date. There

671
00:37:31,680 --> 00:37:35,680
Speaker 1: are no arbitrary deadlines, and we will wait and see

672
00:37:36,040 --> 00:37:39,359
Speaker 1: these of course, our decisions that will be made by

673
00:37:39,400 --> 00:37:43,919
Speaker 1: President Trump, depending on how the talks go between now

674
00:37:44,080 --> 00:37:47,840
Speaker 1: and then, whether we have buttoned down all the buttons,

675
00:37:47,880 --> 00:37:50,920
Speaker 1: and whether it is a satisfactory agreement that is great

676
00:37:50,960 --> 00:37:54,000
Speaker 1: for America. So it's an important date to keep an

677
00:37:54,040 --> 00:37:56,719
Speaker 1: eye on. But I don't want this morning with you.

678
00:37:57,440 --> 00:37:59,880
Speaker 1: I don't want to make any conclusions and anyone of

679
00:38:00,000 --> 00:38:02,279
Speaker 1: a lead anybody. I appreciate that, Larry. So let's just

680
00:38:02,280 --> 00:38:04,480
Speaker 1: talk about process just a little bit. There is the

681
00:38:04,600 --> 00:38:07,640
Speaker 1: December fifty round of tariffs, and then there are the

682
00:38:07,680 --> 00:38:10,920
Speaker 1: October ones that were suspended. With the next move from

683
00:38:10,920 --> 00:38:13,560
Speaker 1: the White House b to look back at the October

684
00:38:13,680 --> 00:38:16,880
Speaker 1: round of tariffs that were suspended or move forward with

685
00:38:16,920 --> 00:38:20,279
Speaker 1: the December fifty tariffs. How should we be thinking about this?

686
00:38:22,040 --> 00:38:26,000
Speaker 1: I didn't want to speculate it's all very hypothetical. I

687
00:38:26,040 --> 00:38:27,920
Speaker 1: was kind of hoping you were going to grill me

688
00:38:28,040 --> 00:38:31,239
Speaker 1: on U S m c A and how I was

689
00:38:31,280 --> 00:38:33,080
Speaker 1: going to work through China one and then get to

690
00:38:33,200 --> 00:38:35,640
Speaker 1: U S m c A last, Larry, So let's finish

691
00:38:35,640 --> 00:38:40,040
Speaker 1: with China just a little bit. It's not it's worth

692
00:38:40,040 --> 00:38:43,440
Speaker 1: a while and it's not speculating though, is it, Larry,

693
00:38:43,480 --> 00:38:45,560
Speaker 1: to try and get an understanding of where the proty is.

694
00:38:45,600 --> 00:38:48,200
Speaker 1: Do we look back to October or is that done with?

695
00:38:48,600 --> 00:38:50,560
Speaker 1: Or do we go forward as the next step? To

696
00:38:50,640 --> 00:38:54,600
Speaker 1: go forward with the December fifteenth round of tariffs, Well, look,

697
00:38:54,719 --> 00:38:57,320
Speaker 1: it's a day at the time, you know, as I said,

698
00:38:57,840 --> 00:39:00,960
Speaker 1: as you noted, we have certain markers in the process.

699
00:39:01,520 --> 00:39:04,800
Speaker 1: I mean, we had an a peck marker, but unfortunately

700
00:39:04,960 --> 00:39:08,680
Speaker 1: all that got canceled a couple of weeks ago, So

701
00:39:08,760 --> 00:39:12,960
Speaker 1: now we have a December marker. As I said, there

702
00:39:13,000 --> 00:39:18,200
Speaker 1: are no arbitrary deadlines. But on the other hand, by

703
00:39:18,520 --> 00:39:25,120
Speaker 1: current agreement and law, the President has suggested tariffs might

704
00:39:25,280 --> 00:39:29,200
Speaker 1: be I say, might be restored on December fifte that's

705
00:39:29,239 --> 00:39:34,239
Speaker 1: the arrangement. These are decisions that are up to the

706
00:39:34,320 --> 00:39:37,800
Speaker 1: Commander in Chief, and he will make those decisions based

707
00:39:37,840 --> 00:39:42,680
Speaker 1: on the available information. How the talks go between now

708
00:39:42,719 --> 00:39:45,600
Speaker 1: and then what's today December four or December five, So

709
00:39:45,920 --> 00:39:48,120
Speaker 1: we got about a week left, a little more than

710
00:39:48,160 --> 00:39:52,040
Speaker 1: a week left, um President She on the other side

711
00:39:52,160 --> 00:39:54,840
Speaker 1: will go through the same process. So one of the

712
00:39:54,880 --> 00:39:57,320
Speaker 1: things I've learned, and you and I have been working

713
00:39:57,360 --> 00:40:00,399
Speaker 1: together on this now for well over year, it very

714
00:40:00,400 --> 00:40:03,239
Speaker 1: hard to make predictions, very hard to make predictions I

715
00:40:03,280 --> 00:40:05,360
Speaker 1: don't expect you to make predictions today. Larry, just a

716
00:40:05,360 --> 00:40:07,759
Speaker 1: little bit of insights of clarity into the discussions that

717
00:40:07,840 --> 00:40:10,160
Speaker 1: you are a part of with the President of the

718
00:40:10,239 --> 00:40:13,879
Speaker 1: United States. We want to understand my audience as well.

719
00:40:13,960 --> 00:40:17,799
Speaker 1: The minimum condition that China needs to meet from the U.

720
00:40:17,920 --> 00:40:20,600
Speaker 1: S side to avoid that December fifteenth from out of tariffs,

721
00:40:20,680 --> 00:40:23,120
Speaker 1: if it's not a deal, what is the minimum condition

722
00:40:23,360 --> 00:40:26,759
Speaker 1: of success, so to speak, to avoid that. I don't

723
00:40:26,800 --> 00:40:31,560
Speaker 1: think that Mr Leightheiser and bastamor Liheiser has ever suggested

724
00:40:31,840 --> 00:40:37,799
Speaker 1: a quote minimum condition. We have a discussion of a

725
00:40:37,880 --> 00:40:45,040
Speaker 1: package that we call Phase one agriculture access, agriculture purchases,

726
00:40:45,880 --> 00:40:53,120
Speaker 1: intellectual property, theft, forced transfer of technology, various tariff and

727
00:40:53,480 --> 00:41:01,600
Speaker 1: non tariff barriers, uh, ownership financial services current see currency manipulation.

728
00:41:02,200 --> 00:41:05,920
Speaker 1: So I probably left stuff out, but that's the package

729
00:41:06,200 --> 00:41:09,439
Speaker 1: that is being discussed. There are big chapters in these

730
00:41:09,480 --> 00:41:13,400
Speaker 1: big documents, as I think you know, so I do

731
00:41:13,520 --> 00:41:18,839
Speaker 1: not want to single one out. There is no certain condition. Uh.

732
00:41:18,960 --> 00:41:24,160
Speaker 1: We will work towards Phase one, and then what is

733
00:41:24,239 --> 00:41:27,760
Speaker 1: left to be done over time would spill over into

734
00:41:27,800 --> 00:41:31,560
Speaker 1: Phase two. I think it was a very sensible approach.

735
00:41:31,960 --> 00:41:36,120
Speaker 1: It reflected a change in President Trump's thinking that he

736
00:41:36,200 --> 00:41:40,839
Speaker 1: was willing to do this in pieces sequentially if you will,

737
00:41:41,560 --> 00:41:44,359
Speaker 1: and Phase two could well be out there, but I

738
00:41:44,440 --> 00:41:48,080
Speaker 1: would not. I would tell you and advise you there

739
00:41:48,239 --> 00:41:51,840
Speaker 1: is no one single condition that would make or break

740
00:41:51,880 --> 00:41:54,960
Speaker 1: the talks. Right now, the talks have been gone gone,

741
00:41:55,080 --> 00:41:57,840
Speaker 1: they've been going on. Many people think perhaps that China

742
00:41:57,960 --> 00:42:00,840
Speaker 1: is still link for the Sember fifth thinks around the tarists.

743
00:42:00,840 --> 00:42:02,680
Speaker 1: To be credible, there needs to be a belief that

744
00:42:02,719 --> 00:42:05,160
Speaker 1: the President of United States will actually go through with it.

745
00:42:05,160 --> 00:42:09,759
Speaker 1: It's on the final one and sixty billion dollars of

746
00:42:09,840 --> 00:42:12,359
Speaker 1: Chinese imports that haven't been hit from tariffs sans yet,

747
00:42:12,360 --> 00:42:15,680
Speaker 1: and they include many many consumer items. As you know, Larry,

748
00:42:15,880 --> 00:42:19,680
Speaker 1: from your understanding does the president that have the appetite

749
00:42:19,719 --> 00:42:25,479
Speaker 1: to follow through on that if the Chinese keeps stalling, well, look,

750
00:42:25,880 --> 00:42:28,920
Speaker 1: the President has proven himself and then there can be

751
00:42:28,960 --> 00:42:35,560
Speaker 1: no doubt that he is a very tough negotiator. He's

752
00:42:35,560 --> 00:42:41,040
Speaker 1: got in his quiver of arrows. He has various tariffs,

753
00:42:41,080 --> 00:42:46,920
Speaker 1: sometimes sanctions, now negotiations. So he has proven to be

754
00:42:47,000 --> 00:42:53,320
Speaker 1: a tough, canny, widely negotiator, and that is his style.

755
00:42:54,840 --> 00:42:56,799
Speaker 1: I believe he wrote a book on the art of

756
00:42:56,800 --> 00:42:59,920
Speaker 1: the deal, and you probably read it. I read it,

757
00:43:00,520 --> 00:43:03,440
Speaker 1: and I don't want to predict what his moves will be.

758
00:43:04,280 --> 00:43:08,719
Speaker 1: He will have the best information that our trade principal

759
00:43:08,760 --> 00:43:12,040
Speaker 1: team gets him, and he will sit down and think

760
00:43:12,080 --> 00:43:15,040
Speaker 1: things through. I do not want to forecast that, but

761
00:43:15,320 --> 00:43:18,520
Speaker 1: I think we've all learned that if he is not

762
00:43:18,719 --> 00:43:25,280
Speaker 1: satisfied with these talks, just as he was not satisfied

763
00:43:25,719 --> 00:43:29,239
Speaker 1: with the China talks last spring and summer, as you

764
00:43:29,280 --> 00:43:34,280
Speaker 1: may recall, then he would not hesitate to increase terrence.

765
00:43:34,520 --> 00:43:37,120
Speaker 1: He's shown that to us. I'm not saying that's going

766
00:43:37,160 --> 00:43:41,200
Speaker 1: to happen. Please don't misunderstand. I'm just saying, in terms

767
00:43:41,200 --> 00:43:44,040
Speaker 1: of your open and the question, he has proven to

768
00:43:44,080 --> 00:43:49,520
Speaker 1: be a very tough and very widely negotiated and Larry,

769
00:43:49,560 --> 00:43:51,200
Speaker 1: what we found is that when the president is face

770
00:43:51,280 --> 00:43:53,480
Speaker 1: to face with someone, that is often when we can

771
00:43:53,520 --> 00:43:56,000
Speaker 1: get a result. When it's the next round of face

772
00:43:56,040 --> 00:44:01,399
Speaker 1: to face talks actually schedule full You mean with me,

773
00:44:01,680 --> 00:44:05,280
Speaker 1: I'm with the United States, I'm with China, with the president,

774
00:44:06,160 --> 00:44:09,000
Speaker 1: with Ambassador Lighthouser, with Secretary Manu Chin. When can we

775
00:44:09,040 --> 00:44:12,000
Speaker 1: get the US delegation together with a Chinese delegation and

776
00:44:12,040 --> 00:44:13,920
Speaker 1: does that need to happen again before we get a

777
00:44:13,960 --> 00:44:17,480
Speaker 1: phase one truce. Well, I don't know the answer to that.

778
00:44:17,560 --> 00:44:21,200
Speaker 1: At the present time. No plans are on the table

779
00:44:21,320 --> 00:44:28,680
Speaker 1: between the two leaders um regarding Secretary Munition and Ambassador Lightheuser.

780
00:44:29,760 --> 00:44:32,480
Speaker 1: So far as I know, they have no plans to travel,

781
00:44:33,239 --> 00:44:37,040
Speaker 1: but but they might travel. You know. Bear in mind

782
00:44:37,120 --> 00:44:40,000
Speaker 1: you that I don't want to emphasize this too much,

783
00:44:40,040 --> 00:44:44,400
Speaker 1: but I want to put it into the mix. If if, if,

784
00:44:44,440 --> 00:44:49,279
Speaker 1: if a discore you have an agreement, the two heads

785
00:44:49,280 --> 00:44:53,759
Speaker 1: of state don't necessarily have to sign it, or at

786
00:44:53,840 --> 00:44:57,840
Speaker 1: least simultaneously in the same room. You could begin the

787
00:44:57,920 --> 00:45:01,839
Speaker 1: signing process at the ministry a real level which I

788
00:45:01,880 --> 00:45:06,279
Speaker 1: think on our side would be Lightheiser and Volution, I

789
00:45:06,400 --> 00:45:10,600
Speaker 1: presume on their side. Vice Premier leu Hey, you could

790
00:45:10,640 --> 00:45:13,600
Speaker 1: do it as a ministerial matter, you could do it

791
00:45:13,680 --> 00:45:17,040
Speaker 1: as a presidential matter, or you can do both. So

792
00:45:17,120 --> 00:45:21,280
Speaker 1: there's options there. I feel I can say to you directly,

793
00:45:21,719 --> 00:45:24,800
Speaker 1: none of those decisions have been made. And to quote

794
00:45:24,800 --> 00:45:29,399
Speaker 1: President Trump, let's get a deal first and then we'll

795
00:45:29,440 --> 00:45:33,880
Speaker 1: figure out how, when, where we all do the signing. So, Larry,

796
00:45:33,920 --> 00:45:35,759
Speaker 1: I understand your people would like us to wrap up

797
00:45:35,800 --> 00:45:38,439
Speaker 1: this interview in if I'm allowed, I'd love to ask

798
00:45:38,440 --> 00:45:40,719
Speaker 1: you just one final question, and it's a delicate one,

799
00:45:40,719 --> 00:45:43,880
Speaker 1: So forgive me for going care. The administration, as you

800
00:45:43,920 --> 00:45:45,560
Speaker 1: point out, and I've agreed with you, has done a

801
00:45:45,600 --> 00:45:48,880
Speaker 1: fantastic job of putting real pressure on China to highlight

802
00:45:48,920 --> 00:45:51,440
Speaker 1: i P theft, to highlight the issues around Falce technology

803
00:45:51,480 --> 00:45:54,840
Speaker 1: transfer as well. You've changed the dialogue around those issues.

804
00:45:55,280 --> 00:45:58,399
Speaker 1: But there there are serious, serious allegations of human rights

805
00:45:58,400 --> 00:46:02,080
Speaker 1: abuses taking place in the country. Why is this a

806
00:46:02,160 --> 00:46:05,399
Speaker 1: country to the United States wants to do a treat

807
00:46:05,440 --> 00:46:12,440
Speaker 1: deal with Well, okay, interstant question, John Um. We have

808
00:46:12,640 --> 00:46:19,960
Speaker 1: made it very clear President Trump, Secretary State Pompeo, Mr. Manutian,

809
00:46:20,120 --> 00:46:24,480
Speaker 1: myself and others. We have made it very clear that

810
00:46:24,719 --> 00:46:29,840
Speaker 1: we America always stand on the side of freedom and democracy.

811
00:46:30,480 --> 00:46:33,000
Speaker 1: We have made that clear. We will that is in

812
00:46:33,080 --> 00:46:37,040
Speaker 1: our bones, that is in America's DNA, that is who

813
00:46:37,080 --> 00:46:40,240
Speaker 1: we are, and we will continue to make that clear.

814
00:46:40,800 --> 00:46:44,560
Speaker 1: That includes not only the Hong Kong story, but as

815
00:46:44,600 --> 00:46:49,440
Speaker 1: you know, disturbances and disruptions on the Chinese mainland with

816
00:46:49,600 --> 00:46:54,319
Speaker 1: various groups as well. Having said that, having said that,

817
00:46:55,200 --> 00:47:00,480
Speaker 1: I don't think those issues are interfering with the trade talks.

818
00:47:01,160 --> 00:47:06,320
Speaker 1: You know, these are complicated relationships. You've got two big powers.

819
00:47:06,960 --> 00:47:10,719
Speaker 1: A lot goes on. There's national security issues which you

820
00:47:10,760 --> 00:47:13,840
Speaker 1: and I could bring up. That's another point. There is

821
00:47:13,840 --> 00:47:17,560
Speaker 1: the human rights, freedom of democracy issues. That's a key point,

822
00:47:17,600 --> 00:47:22,040
Speaker 1: religious freedom particularly, but also political freedom. Uh. Then we

823
00:47:22,120 --> 00:47:25,680
Speaker 1: have the trade freedoms. We're looking to get trade freedoms

824
00:47:26,000 --> 00:47:31,480
Speaker 1: from China. So I don't think at this stage, and

825
00:47:31,520 --> 00:47:37,200
Speaker 1: I'm pretty confident about this, that the difficulties in Hong Kong,

826
00:47:37,280 --> 00:47:39,759
Speaker 1: and again we have come out on the side of

827
00:47:39,840 --> 00:47:43,600
Speaker 1: the freedom fighters, those have not spilled over into the

828
00:47:43,680 --> 00:47:48,200
Speaker 1: trade talks. So the complexity of the issue you can

829
00:47:48,239 --> 00:47:52,560
Speaker 1: still separate one from the other. And I think it's

830
00:47:52,640 --> 00:47:55,840
Speaker 1: fair to say, and I've spoken to the masterd Lightiser

831
00:47:55,840 --> 00:48:01,920
Speaker 1: about this, uh misdimnution, is that really the the difficulties

832
00:48:01,920 --> 00:48:06,560
Speaker 1: in Hong Kong. We signed the Congressional resolution, they had

833
00:48:06,600 --> 00:48:10,160
Speaker 1: their local elections which were a gigantic victory from freedom

834
00:48:10,200 --> 00:48:13,040
Speaker 1: of democracy, but that never really spilled over into the

835
00:48:13,120 --> 00:48:16,279
Speaker 1: trade talks. I think that's where that stands right now.

836
00:48:16,520 --> 00:48:21,200
Speaker 1: But please make no mistake about where America's heart is,

837
00:48:22,239 --> 00:48:26,239
Speaker 1: where our basic soul and DNA are on freedom and democracy,

838
00:48:26,600 --> 00:48:29,760
Speaker 1: and of course where our diplomacy has made the same

839
00:48:29,960 --> 00:48:32,880
Speaker 1: very clear, Larry, I appreciate that authenticity. To wrap up

840
00:48:33,360 --> 00:48:35,399
Speaker 1: this particular interview, Larry, if we don't get to talk

841
00:48:35,440 --> 00:48:36,879
Speaker 1: again before the end of the year, I just wanted

842
00:48:36,880 --> 00:48:38,680
Speaker 1: to take the opportunity to say thank you for your

843
00:48:39,080 --> 00:48:42,000
Speaker 1: regular contributions to to the network into the program, have

844
00:48:42,040 --> 00:48:43,839
Speaker 1: a wonderful Christmas, Larry. If you and I don't get

845
00:48:43,880 --> 00:48:46,920
Speaker 1: to talk again, and saying to you right back at you,

846
00:48:47,040 --> 00:48:49,640
Speaker 1: Johns And it's been my great pleasure, Larry Cudler that

847
00:48:49,719 --> 00:48:52,720
Speaker 1: the National Economic Council director from the White House, guys,

848
00:48:52,760 --> 00:48:56,520
Speaker 1: thank you, Thanks for listening to the Bloomberg Surveillance podcast,

849
00:48:56,880 --> 00:49:01,359
Speaker 1: Subscribe and listen to interviews on Apple, pud cast, SoundCloud,

850
00:49:01,719 --> 00:49:05,960
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

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Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio