WEBVTT - Bloomberg Surveillance TV: June 7, 2024 0:00:02.440 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.240 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.840 Terminal and the Bloomberg Business App. 0:00:36.320 --> 0:00:37.120 Let's get to the panel. 0:00:37.200 --> 0:00:40.479 Joining Usnaws Mohammad al Erin of Queen's College, Cambridge, alongside 0:00:40.520 --> 0:00:43.159 Black Rocks Jeff Rosenberg. Gent's great to catch up with 0:00:43.200 --> 0:00:43.880 you both, Muhammed. 0:00:43.920 --> 0:00:44.280 First to you. 0:00:44.280 --> 0:00:46.120 You've had a bit of time to pour over this one. 0:00:46.240 --> 0:00:47.280 What's the big one for you? 0:00:48.800 --> 0:00:51.240 So I'd like to look at this in four ways. 0:00:51.280 --> 0:00:54.040 One the very narrow sense, this is a really strong 0:00:54.600 --> 0:00:57.240 report on the demand side, not on the supply side, 0:00:57.280 --> 0:00:59.920 on the demand side, but strong in terms of the 0:01:00.400 --> 0:01:05.720 for h employees, strong in terms of wages paid, et cetera. 0:01:06.800 --> 0:01:10.279 It does close the door on a July weight cut. 0:01:11.000 --> 0:01:12.600 I think that is it. 0:01:12.640 --> 0:01:15.840 We almost regardless of what the CPI number says next week. 0:01:16.560 --> 0:01:20.280 But then step back and ask the question of reconciliation 0:01:20.440 --> 0:01:23.800 with other data, and then the story gets a lot 0:01:23.840 --> 0:01:27.839 more interesting. We have this situation where the backward looking 0:01:27.920 --> 0:01:31.520 data is strong, the forward looking data is weak. So 0:01:31.560 --> 0:01:33.680 we've got to sort of reconcile these two things, which 0:01:33.760 --> 0:01:36.520 leaves us to the point that Lisa raised, which is 0:01:36.560 --> 0:01:38.880 what is your view of the economy, Because if you 0:01:38.959 --> 0:01:41.360 don't know have that view, you're going to continue to 0:01:41.360 --> 0:01:44.040 get whibsored for quite a few months, and you're going 0:01:44.080 --> 0:01:47.120 to miss windows of opportunity that are really important. 0:01:47.240 --> 0:01:48.600 Yeah, Jeff, this is really difficult. 0:01:48.600 --> 0:01:51.160 It's a question we both asked my mckaid, can you 0:01:51.240 --> 0:01:54.080 reconcile this data this morning with the data we've had 0:01:54.520 --> 0:01:57.520 or week, First of all, your view on this morning's number, 0:01:57.640 --> 0:01:59.960 And second of all, to Muhammed's point, can you reckon 0:02:00.080 --> 0:02:02.120 saw this with what we're looking at elsewhere? 0:02:03.920 --> 0:02:04.800 Yeah, a couple of things. 0:02:04.800 --> 0:02:07.200 I mean, the big market reaction is not only because 0:02:07.200 --> 0:02:09.520 this is a strong report on its own, but it 0:02:09.639 --> 0:02:12.760 is stronger than what people were expecting going in. And 0:02:12.800 --> 0:02:16.000 there were two things that were kind of undermined relative 0:02:16.000 --> 0:02:16.880 to those expectations. 0:02:17.000 --> 0:02:18.280 Number one, as Mike was. 0:02:18.200 --> 0:02:22.400 Talking about the seasonal flows expected to push down, we 0:02:22.520 --> 0:02:25.640 overwhelmed those. And then there was a pull forward argument 0:02:25.760 --> 0:02:28.640 around warm weather and the construction number that Mike just 0:02:28.760 --> 0:02:31.520 mentioned was very strong. So you didn't see either of 0:02:31.560 --> 0:02:32.200 those things. 0:02:32.480 --> 0:02:34.200 Muhammad mentioned closing. 0:02:33.919 --> 0:02:37.160 The door on July, opening the door or reopening the 0:02:37.200 --> 0:02:39.720 door a little bit wider on the debate about whether 0:02:39.800 --> 0:02:43.080 or not policy is indeed as restrictive as the FED 0:02:43.520 --> 0:02:46.120 thinks it is. And this is a little more evidence 0:02:46.200 --> 0:02:50.320 to bring that debate back into the fore that you 0:02:50.400 --> 0:02:55.240 have the big financial conditions easing that's offsetting the tightening, 0:02:55.280 --> 0:02:56.720 and we may not be as tight as we think 0:02:56.720 --> 0:02:57.000 we are. 0:02:57.120 --> 0:02:58.680 Mohammed, I'd love your thoughts on that. 0:02:58.800 --> 0:03:01.600 At a time where your framework does expect some more 0:03:01.600 --> 0:03:03.120 significant weakening. 0:03:03.040 --> 0:03:04.880 Does this data change that to you? 0:03:04.960 --> 0:03:06.919 Does slamming the door in a July rate cut seem 0:03:07.240 --> 0:03:09.520 reasonable to you? Or are you concerned that this is 0:03:09.919 --> 0:03:13.160 basically the wrong signal at a time where what comes 0:03:13.200 --> 0:03:14.919 next looks different than what came before. 0:03:16.240 --> 0:03:18.720 Look, it's reasonable for a FED that is over the 0:03:18.800 --> 0:03:23.160 data dependent, There's no way that can cut or signal 0:03:23.200 --> 0:03:26.640 a cut in July with this data, they would have 0:03:26.880 --> 0:03:31.320 to change their reaction function and be public about it. 0:03:31.360 --> 0:03:32.919 And I don't see the FED doing this. So that's 0:03:32.960 --> 0:03:36.000 why the door is shut. Now should it be shut 0:03:36.200 --> 0:03:39.400 is a much more interesting debate. You know, my view, 0:03:40.000 --> 0:03:44.480 we are in a weakening economy. There are no spad 0:03:44.520 --> 0:03:48.000 tires to speak of anymore. There's no pandemic savings, there's 0:03:48.040 --> 0:03:51.200 no fiscal huge new fiscal impulse coming. 0:03:51.400 --> 0:03:53.520 There are no spad tires in this economy. 0:03:53.920 --> 0:03:57.960 So if you get it wrong and you weaken too quickly, 0:03:58.200 --> 0:04:00.680 it's going to be a very difficult mistake to correct. 0:04:00.800 --> 0:04:03.960 The problem is which is the other bit of my 0:04:04.120 --> 0:04:06.480 view that you know, is we are living in a 0:04:06.640 --> 0:04:10.920 secularly inflationary world. Secularly inflation is going to be higher 0:04:10.960 --> 0:04:13.880 because of all the transitions going on. Domestically, we no 0:04:13.960 --> 0:04:18.760 longer talk about liberalization, deregulation, fiscal prudence, We talk about 0:04:19.200 --> 0:04:22.839 trade restriction, we talk about industrial policy, we talk about 0:04:22.839 --> 0:04:27.120 fiscally responsibility, and globally we talk about fragmentation. All that 0:04:27.279 --> 0:04:30.960 means a more inflationary world, which then raises the question 0:04:31.640 --> 0:04:33.720 as to what should be the right inflation target. So 0:04:33.760 --> 0:04:36.360 if you put all this together, it does shut the 0:04:36.360 --> 0:04:39.719 door for this FED, but it will not shut the 0:04:39.760 --> 0:04:42.520 door on a very active debate that's going on that 0:04:42.680 --> 0:04:44.239 tries to look forward not back. 0:04:44.480 --> 0:04:46.640 Well, we'll get to Jeff for one second, but Mohammed, 0:04:46.680 --> 0:04:48.600 just to follow up on that, are you basically saying 0:04:48.600 --> 0:04:53.040 that the chance of a harder landing increases the longer 0:04:53.080 --> 0:04:56.039 the FED does not cut rates even if it appears 0:04:56.080 --> 0:04:57.080 strong on the surface. 0:04:58.040 --> 0:04:59.920 I do because I focus a lot on the forward 0:05:00.080 --> 0:05:06.239 looking data and that is weakening significantly. So yes, that's 0:05:06.320 --> 0:05:10.960 where I am. But I understand that if you're data dependent, 0:05:11.560 --> 0:05:14.240 there's no way you're going to come anywhere near my 0:05:14.360 --> 0:05:17.960 view because you would have to completely change your paradigm. 0:05:18.120 --> 0:05:19.200 Jeff, would you agree with that? 0:05:21.080 --> 0:05:24.680 Well, I think there's a little bit of a segmentation 0:05:24.880 --> 0:05:29.640 going on in terms of where is interest rate policy biting, 0:05:30.000 --> 0:05:34.080 and it is in the lower end of the consumer side. 0:05:34.160 --> 0:05:36.719 The flip side of that is the wealth effect. 0:05:36.920 --> 0:05:37.080 Right. 0:05:37.120 --> 0:05:40.080 This is a FED that is basically said, if inflation 0:05:40.680 --> 0:05:44.440 is stronger, if growth is stronger, we'll just wait. They've 0:05:44.440 --> 0:05:48.200 given us a very asymmetric outlook with regards to their 0:05:48.480 --> 0:05:50.400 reaction to their data dependence. 0:05:50.600 --> 0:05:52.880 What that has done is basically. 0:05:52.360 --> 0:05:55.240 Given the green light for financial market conditions to be 0:05:55.400 --> 0:05:58.760 very easy, and the transmission of that into the economy 0:05:59.040 --> 0:06:03.800 is a very strong wealth effect for the predominant sources 0:06:03.839 --> 0:06:06.320 of where most of consumption comes from. So you do 0:06:06.360 --> 0:06:09.720 see the weakening that Muhammad's talking about, but the waiting 0:06:09.839 --> 0:06:12.479 of that weakening I think is less. And so yes, 0:06:12.520 --> 0:06:14.919 growth is slowing, but it's slowing to a level that 0:06:15.000 --> 0:06:18.520 is still well above trend, and so you don't get 0:06:18.560 --> 0:06:22.400 as much of the constraint and the push down on inflation. 0:06:22.800 --> 0:06:26.279 The FED is basically saying we're okay with that. And 0:06:26.360 --> 0:06:29.839 I think that's why you're pushing back with this data 0:06:29.880 --> 0:06:33.080 today on this notion of we're really restrictive. I'm not 0:06:33.080 --> 0:06:35.600 sure they're as restrictive as they think they are, and 0:06:35.640 --> 0:06:39.040 the policy of asymmetry to data reaction is kind of 0:06:39.200 --> 0:06:43.080 pushing against that by pushing up or easing financial condition. 0:06:52.839 --> 0:06:54.679 If you want just joining us, welcome to the program. 0:06:54.760 --> 0:06:58.760 Fourteen minutes ago, a blowout jumps report a big monster 0:06:58.839 --> 0:07:01.800 upside surprise to seventy two is the number one eighty 0:07:02.240 --> 0:07:04.960 was the estimate. Two standouts here not just the headline number, 0:07:05.120 --> 0:07:07.560 also wage growth coming in hotter than expected at zero 0:07:07.600 --> 0:07:10.480 point four percent versus the estimate in our survey of 0:07:10.640 --> 0:07:14.200 zero point three percent month over month. Straight away market reaction, 0:07:14.400 --> 0:07:16.640 equities gap in lower equity features on the s and 0:07:16.680 --> 0:07:19.080 P five hundred, down by zero point five percent, on 0:07:19.120 --> 0:07:21.920 the NASTAG down by point five on the Russell down 0:07:21.960 --> 0:07:24.080 more than one percent. Turn a page and get to 0:07:24.080 --> 0:07:26.320 the bomb market. And here's your why. Bigger pricing at 0:07:26.320 --> 0:07:28.800 the front end up by eleven or twelve basis points 0:07:28.800 --> 0:07:30.720 on a two year, up eleven on a ten year, 0:07:30.760 --> 0:07:33.280 as well to four thirty nine eighty one. You have 0:07:33.360 --> 0:07:35.360 to point out, though, Lisa, when you look at these moves, 0:07:36.240 --> 0:07:38.360 this is below where we were a week ago, because 0:07:38.360 --> 0:07:41.040 we had a string of weaker than expected data going 0:07:41.040 --> 0:07:43.840 into this print, and this bond market rallied hard coming 0:07:43.880 --> 0:07:44.640 into this morning. 0:07:44.760 --> 0:07:46.480 You know, I think that the conversation that we've been 0:07:46.520 --> 0:07:50.880 having with both Mohammed really the way he's talking about 0:07:50.880 --> 0:07:53.280 the idea that the weaker data really does point to 0:07:53.640 --> 0:07:56.200 something that is more sustainable that can't be offset from 0:07:56.240 --> 0:07:58.640 these numbers, and then Jeff saying, well, this reintroduces the 0:07:58.720 --> 0:08:02.560 debate really about are we restrictive? This is the seesaw, 0:08:02.680 --> 0:08:04.840 and frankly, the markets are kind of tipping it in 0:08:04.880 --> 0:08:06.600 one way or the other. I mean, that's what we 0:08:06.640 --> 0:08:09.760 heard from Allen Zeenner that basically the more enthusiastic this 0:08:09.880 --> 0:08:12.800 market gets, the harder it is to get to the 0:08:12.800 --> 0:08:15.320 fed's goal. So it becomes a sort of chicken and 0:08:15.320 --> 0:08:17.320 egg race, you know. And this is what's making it 0:08:17.400 --> 0:08:20.720 really difficult to understand where we're at, because it's like 0:08:20.800 --> 0:08:24.080 that scientific experiment that we affect the experiment as we 0:08:24.120 --> 0:08:24.600 observe it. 0:08:24.680 --> 0:08:25.520 That's where we're are right now. 0:08:25.600 --> 0:08:27.880 We shape the events, we anticipate that kind of thing. 0:08:28.000 --> 0:08:30.520 Can just imagine Kashgari walking into the two day meeting 0:08:30.680 --> 0:08:32.960 next week sort of banging the table, told you so, 0:08:33.440 --> 0:08:35.120 how we need to have this conversation right now? 0:08:35.240 --> 0:08:37.320 Well, he would be right at that moment. 0:08:37.520 --> 0:08:39.120 And then they're going to be the people who believe 0:08:39.160 --> 0:08:41.400 what Muhammad Lariat is saying, which is, if you look 0:08:41.440 --> 0:08:44.000 at the data, there is weakening coming down the pike, 0:08:44.040 --> 0:08:45.040 and you can't ignore that. 0:08:45.280 --> 0:08:46.360 It is a fraught moment. 0:08:46.480 --> 0:08:48.840 I actually think it's going to be a very difficult 0:08:49.160 --> 0:08:50.000 debate next. 0:08:49.800 --> 0:08:51.840 Week Mohammed, we know what you think they should do. 0:08:52.000 --> 0:08:54.280 Let's talk about what they will do. How is Sham 0:08:54.320 --> 0:08:56.640 and Powell going to navigate this news conference given the 0:08:56.640 --> 0:08:58.720 information we just received this morning. 0:09:00.040 --> 0:09:03.600 I think he's going to maintain maximum optionality, He's going 0:09:03.720 --> 0:09:08.280 to retain his data dependency mantra, and he's going to say, 0:09:08.360 --> 0:09:10.760 you know, we need more confidence. He's going to use 0:09:10.800 --> 0:09:14.840 the word confidence and patients. I suspect, and I said, 0:09:14.840 --> 0:09:16.560 you know, John, I find it fascinating. Two things I 0:09:16.559 --> 0:09:19.520 find it fascinating. First, I think it's a shame that 0:09:19.559 --> 0:09:22.280 we've broken the record of I think twenty eight straight 0:09:22.360 --> 0:09:25.200 months of the uninformed rate below four percent. That was 0:09:25.240 --> 0:09:28.600 a nice record to have. But what I find really interesting, 0:09:28.640 --> 0:09:31.079 and Lisa referred to it, and you refer to it, 0:09:31.160 --> 0:09:33.760 is that the bond market has been much more volatile 0:09:33.800 --> 0:09:35.840 on the data than the stock market. 0:09:37.000 --> 0:09:38.839 The downce side surprises. 0:09:38.880 --> 0:09:42.559 We had moved yields in a massive way, moved moved 0:09:42.559 --> 0:09:45.760 the commodity complex in a massive way, had where did 0:09:45.760 --> 0:09:46.439 a little. 0:09:46.200 --> 0:09:48.719 Impact on equity, and we're seeing the reverse today. And 0:09:48.760 --> 0:09:50.319 I find this absolutely fascinating. 0:09:50.720 --> 0:09:52.680 And I would be very curious to hear what Jeff 0:09:52.720 --> 0:09:56.640 has to say about you know this, this difference in 0:09:56.760 --> 0:09:58.960 actual volatility between these two segments. 0:09:59.080 --> 0:09:59.920 Jeff, what do you make of that? 0:10:00.040 --> 0:10:04.400 Yeah, it's a great point, and I think it's explained 0:10:04.480 --> 0:10:08.120 by this other big topic that in other contexts, it 0:10:08.160 --> 0:10:10.000 would be the only thing we're talking about, and that's 0:10:10.040 --> 0:10:13.240 the AI boom. And so you look at technology as 0:10:13.320 --> 0:10:15.800 a share of the S and P five hundred, it's 0:10:15.800 --> 0:10:17.520 forty three percent market cap. 0:10:19.040 --> 0:10:20.280 This is a different story. 0:10:20.360 --> 0:10:22.080 I think where you want to see or where you 0:10:22.120 --> 0:10:24.400 see or where you want to look for to see 0:10:24.400 --> 0:10:26.400 the interest rate impact is in small caps, and I 0:10:26.440 --> 0:10:29.840 think we'll see that this morning and a much bigger outcome. 0:10:29.880 --> 0:10:34.120 And so it's numerator versus denominator. The numerator effect of technology, 0:10:34.200 --> 0:10:38.280 these incredible amounts of cap X and cash flows is 0:10:38.360 --> 0:10:41.400 just overwhelming the denominator for that index. And you see 0:10:41.400 --> 0:10:44.680 that particularly in growth. You see it in the S 0:10:44.720 --> 0:10:47.439 and P five hundred with a very high weighting. So 0:10:47.600 --> 0:10:51.120 I think that's what explains the higher volatility. 0:10:51.120 --> 0:10:52.680 You also see it in kind of macro. 0:10:53.000 --> 0:10:55.439 Look at the move index, look at interest rate volatility 0:10:55.520 --> 0:10:58.800 relative to VIX volatility, and the VIX volatility is compressed 0:10:58.840 --> 0:11:01.520 because you have the text store. It's also compressed because 0:11:01.520 --> 0:11:04.920 you have a very low degree of cross market correlation 0:11:05.040 --> 0:11:06.520 going on in equities right now. 0:11:06.679 --> 0:11:09.400 So there are some really important differences. 0:11:08.880 --> 0:11:12.640 Going on in the translation of macro data into these indices, 0:11:12.679 --> 0:11:15.120 and the micro stories going on in equities are as 0:11:15.160 --> 0:11:19.360 powerful or overwhelming the macro story of the variability that 0:11:19.400 --> 0:11:21.439 Lisa just mentioned. You know, are we too hot? 0:11:21.480 --> 0:11:24.080 Are we too cold? That you see reflected in the 0:11:24.120 --> 0:11:25.800 bond markets. Every data print and. 0:11:25.760 --> 0:11:28.679 Certainly the macro environment is whipside, and we have been 0:11:28.720 --> 0:11:31.840 talking about the frustration of where to get conviction. Jeff, 0:11:32.120 --> 0:11:34.560 you where you really raise this point about this really 0:11:34.640 --> 0:11:38.760 questions how restrictive we actually are from your vantage point. 0:11:38.920 --> 0:11:41.320 Does this print of two hundred and seventy two thousand 0:11:41.360 --> 0:11:44.240 new jobs being created in the month of may change 0:11:44.280 --> 0:11:46.920 your view about the balance of risks of both the 0:11:47.000 --> 0:11:47.959 FED as well. 0:11:47.800 --> 0:11:52.800 As for rates, Well, it's not my view that really matters. 0:11:53.200 --> 0:11:55.680 I think will the FED change its view and I 0:11:55.720 --> 0:11:59.760 really don't think they will. This asymmetric response that if 0:11:59.760 --> 0:12:03.400 ination slows, if growth slows, and I think the growth 0:12:03.440 --> 0:12:06.240 picture is going to be as important, the FED will 0:12:06.480 --> 0:12:10.480 increase its probabilities it will want to cut rates for 0:12:10.520 --> 0:12:13.920 the reasons that Mohammad said, They're more worried about. 0:12:13.600 --> 0:12:16.720 Now losing the war. 0:12:16.760 --> 0:12:18.880 They won the battle on inflation, they don't want to 0:12:18.920 --> 0:12:21.760 lose the war on the soft landing. And so because 0:12:21.760 --> 0:12:24.720 of the asymmetry, I think that eases some of the 0:12:24.760 --> 0:12:28.440 market reaction, the broader market reaction, obviously not from the 0:12:28.559 --> 0:12:30.480 day reaction to today. 0:12:30.679 --> 0:12:32.360 So I don't think much has changed there. 0:12:32.400 --> 0:12:34.760 I think if they were to start talking a little 0:12:34.800 --> 0:12:38.160 bit more about the concerns about maybe we're not restrictive, 0:12:38.240 --> 0:12:41.120 if you had more growth data, they'll get the question 0:12:41.679 --> 0:12:44.200 eventually again, you know what about hiking rates. 0:12:44.320 --> 0:12:45.200 He'll dismiss it. 0:12:45.240 --> 0:12:47.520 And I think that asymmetry is still with us, and 0:12:47.559 --> 0:12:49.840 I think that's supportive to the financial market outlook. 0:12:51.200 --> 0:12:53.040 And so I don't think there's a huge change there. 0:12:53.280 --> 0:12:55.120 Jeff just at a record We care what you think. 0:12:55.200 --> 0:12:57.319 We care a lot about what you think. I think 0:12:57.640 --> 0:13:00.960 this story written yesterday by Rich Miller ally care at Bloomberg. 0:13:01.200 --> 0:13:02.880 Got to share this with you because there will be 0:13:02.960 --> 0:13:04.960 some of you out there asking do these numbers this 0:13:05.000 --> 0:13:08.679 morning overstate the strength of this economy? Are we measuring 0:13:08.720 --> 0:13:12.400 things the right way? Is this accurate. Data published Wednesday 0:13:12.480 --> 0:13:15.200 by the Bureau of Labor Statistics suggests payrolls might have 0:13:15.240 --> 0:13:18.000 grown about sixty thousand less per month on average last 0:13:18.040 --> 0:13:20.520 year than the roughly two hundred and fifty thousand run 0:13:20.600 --> 0:13:24.600 rate derived from the agency's monthly employment report. Mike McKay, 0:13:24.679 --> 0:13:27.600 that question is going to reverberate through the weekend after 0:13:27.640 --> 0:13:28.880 that number this morning. 0:13:29.440 --> 0:13:30.320 Yeah, it's interesting. 0:13:30.440 --> 0:13:32.120 You're going to have a lot of debate over this 0:13:32.240 --> 0:13:36.960 because Steve Stanley from Zen Tandeer points out that we 0:13:37.040 --> 0:13:40.319 had basically the same situation at this time last year, 0:13:40.600 --> 0:13:44.120 and then the QCW numbers, the ones you're referring to, 0:13:44.240 --> 0:13:47.280 were revised down and we basically didn't have much of 0:13:47.280 --> 0:13:50.679 a significant change in payrolls overall. They don't give us 0:13:50.679 --> 0:13:54.439 the number until August, so we'll be waiting for that. 0:13:54.600 --> 0:13:57.800 It's just before Jackson all. So it may be that 0:13:57.920 --> 0:14:01.520 it's not as bad as these numbers suggests, but if 0:14:01.559 --> 0:14:04.400 it is, this doesn't fit with that. 0:14:04.760 --> 0:14:07.160 It race is the question, Lisa, we having the right conversation. 0:14:07.520 --> 0:14:08.600 Something we have to think about. 0:14:08.640 --> 0:14:10.560 Well, here's the thing you got to worry about is 0:14:10.840 --> 0:14:12.320 the FED has to deal with. 0:14:12.240 --> 0:14:14.960 The numbers that it has, and so if. 0:14:14.840 --> 0:14:18.120 These numbers come in much weaker when they're revised later on, 0:14:18.360 --> 0:14:20.680 everybody's going to say, well, the FED missed it, but 0:14:21.360 --> 0:14:21.840 they don't know. 0:14:21.920 --> 0:14:24.160 Well, this is a reason why, and it's actually wonderful 0:14:24.160 --> 0:14:26.120 to have muhammadan this is a reason why. He says, 0:14:26.160 --> 0:14:28.880 this is one of the fatal flaws of data dependency, especially. 0:14:28.560 --> 0:14:31.360 When the data is messy. And that is the moment that. 0:14:31.320 --> 0:14:33.400 We are clearly in, Mohammad, Let's get to it. Do 0:14:33.440 --> 0:14:35.680 you think we are having the right conversation? Obviously, based 0:14:35.680 --> 0:14:37.440 on what you've told us over the last few weeks, 0:14:37.640 --> 0:14:38.440 you don't think we are. 0:14:39.640 --> 0:14:42.400 Now, Look, I think we're having the right conversation on 0:14:42.480 --> 0:14:44.720 based on the data we have. It's very difficult to 0:14:44.800 --> 0:14:49.080 have a conversation on contrafactual data. But what we are 0:14:49.080 --> 0:14:53.520 being reminded over and over again is how difficult this 0:14:53.640 --> 0:14:57.040 economy has become to understand, you know, John, go back 0:14:57.280 --> 0:15:03.280 to August twenty twenty, twenty twenty two, the famous eight 0:15:03.320 --> 0:15:07.040 minute speech with pain. Go back to the Bloomberg headline 0:15:07.120 --> 0:15:10.280 of October twenty twenty two, one hundred percent of probability. 0:15:10.320 --> 0:15:13.200 The US goes into recession and then look what actually happened. 0:15:13.960 --> 0:15:17.560 It just gives you a sense of if. 0:15:17.040 --> 0:15:20.160 You become two data dependent and don't take longer term views, 0:15:20.760 --> 0:15:24.239 you end up risking real mistakes. 0:15:24.320 --> 0:15:26.120 And that's what I'm really worried about. John. 0:15:26.720 --> 0:15:29.880 There are some very clear secular trends going on. Jeff 0:15:29.920 --> 0:15:32.600 mentioned what's going on in AI. That's one of several 0:15:33.120 --> 0:15:34.760 secular trends that are going to be with us for 0:15:34.800 --> 0:15:37.640 a while that we've got to incorporate and stop looking 0:15:37.720 --> 0:15:40.240 simply at the view mirror. You have to both look 0:15:40.240 --> 0:15:42.880 at the wave from mirror and through the windscreen. 0:15:43.320 --> 0:15:43.560 Jeff. 0:15:43.760 --> 0:15:48.320 Final word, your big takeaway. 0:15:47.200 --> 0:15:50.400 Well, it's just clearly a big surprise, down big downside 0:15:50.440 --> 0:15:55.120 surprise relative to expectations. July's door is closed, opening the 0:15:55.200 --> 0:15:58.880 door on a debate about how restrictive FED policy really is. 0:15:58.960 --> 0:16:01.160 Can I just ask you both your best guest for 0:16:01.200 --> 0:16:04.160 the doubt plum next week to a one to a 0:16:04.240 --> 0:16:05.360 one on that doubt plot. 0:16:05.360 --> 0:16:10.160 It cuts this year Hammed first to you one, Jeff. 0:16:11.920 --> 0:16:15.440 Just for contrast, I'll go with two, okay, Jeff Rosen 0:16:15.480 --> 0:16:18.920 fact black rop, Mohammad Larian Jens appreciate it. I know 0:16:19.000 --> 0:16:22.040 you would as you trouble, Muhammad. We know that Jeff 0:16:22.120 --> 0:16:23.240 is too appreciate it. 0:16:23.320 --> 0:16:32.520 Gents, thank you. 0:16:34.080 --> 0:16:37.800 Welcome to our TV and radio audiences worldwide. Welcome to 0:16:37.840 --> 0:16:39.920 the Labor Department today. We are here with the acting 0:16:40.000 --> 0:16:42.640 Labor Secretary, Julie Sue At Secretary is great to see 0:16:42.640 --> 0:16:44.880 you this morning. Thank you for joining us on another 0:16:45.000 --> 0:16:47.720 job's day. We've got a bit of a mixed signal 0:16:47.720 --> 0:16:51.200 here in this job's report. More payrolls than expected and 0:16:51.240 --> 0:16:54.640 a higher unemployment rate than expected, which survey household or 0:16:54.680 --> 0:16:56.760 establishment is reflecting reality. 0:16:57.160 --> 0:16:59.800 Well, this is another very strong jobs report. 0:17:00.120 --> 0:17:01.520 I'm not going to get tired of coming here and 0:17:01.520 --> 0:17:05.640 telling you that we are continuing to experience very strong, 0:17:05.800 --> 0:17:08.000 stable and steady growth. So it's two hundred and seventy 0:17:08.000 --> 0:17:11.560 two thousand jobs created last month. The unemployment rate has 0:17:11.600 --> 0:17:16.240 remained at or below four percent for thirty months straight. 0:17:16.560 --> 0:17:19.880 That's still the longest since the nineteen sixties. And at 0:17:19.880 --> 0:17:22.360 the same time, real wages you know, over the year 0:17:22.440 --> 0:17:24.280 are up four point one percent, So. 0:17:24.720 --> 0:17:26.840 Workers are doing better in. 0:17:26.800 --> 0:17:29.200 An economy in which the President has said, when we 0:17:29.240 --> 0:17:31.720 focus on workers and worker well being, we're going. 0:17:31.640 --> 0:17:34.280 To do what's right for the economy and for the country. 0:17:34.400 --> 0:17:36.080 When you look under the hood, do you find that 0:17:36.160 --> 0:17:38.560 four hundred thousand, even more than four hundred. 0:17:38.320 --> 0:17:40.800 Thousand people left the labor force in May. 0:17:40.920 --> 0:17:44.840 The participation rate is not back where it was before 0:17:44.880 --> 0:17:46.800 COVID right now, how do you explain that? 0:17:47.040 --> 0:17:49.320 Well, so let's say, you know, the prime. 0:17:49.080 --> 0:17:52.919 Age labor force participation rate remains very, very strong, and 0:17:53.000 --> 0:17:57.480 it's worth noting that again women's labor force participation rate hit. 0:17:57.359 --> 0:17:58.840 Another historic high. 0:17:58.880 --> 0:18:01.400 So last month we said it was the highest since 0:18:01.480 --> 0:18:05.080 nineteen forty eight when this data was begun to be collected. 0:18:05.359 --> 0:18:07.000 It's now a little bit higher than that. 0:18:07.119 --> 0:18:12.120 Even so, women continue to power our economic recovery. At 0:18:12.119 --> 0:18:15.199 the same time, you know, we are seeing again strong participation. 0:18:15.280 --> 0:18:17.240 People are in the job market. People have come off 0:18:17.240 --> 0:18:20.240 the sidelines. People are looking for jobs and they're finding them. 0:18:20.480 --> 0:18:22.600 Where there has been a little bit of you know, 0:18:23.480 --> 0:18:26.520 of a very small uptick in the unemployment rate again 0:18:26.680 --> 0:18:29.560 still out or below four percent for the longest stretch 0:18:29.840 --> 0:18:34.320 in decades, but has to do with young people ages 0:18:34.320 --> 0:18:37.600 twenty to twenty four, who are a bit of transition. Really, 0:18:37.640 --> 0:18:39.280 if we think about what may right may as a 0:18:39.280 --> 0:18:40.400 period of transition for all. 0:18:40.280 --> 0:18:44.600 Of us parents with kids who graduate and maybe. 0:18:44.440 --> 0:18:48.080 Move and you are looking for different jobs during that time. 0:18:48.200 --> 0:18:49.640 You can tell a great story and put a great 0:18:49.640 --> 0:18:52.440 headline number on that unemployment. 0:18:51.840 --> 0:18:53.440 Story as you are right now. 0:18:53.720 --> 0:18:55.640 But when you look under the hood, you do see 0:18:55.680 --> 0:18:58.879 some elements of weakness compared to the payroll Survey, And 0:18:58.920 --> 0:19:00.719 I wonder, while you're happy where it is now, if 0:19:00.760 --> 0:19:02.480 you worry about where we're going to be six months 0:19:02.480 --> 0:19:05.280 from now, if this is a slowing job market. 0:19:04.960 --> 0:19:07.840 Well, the payroll survey really is the gold standard when 0:19:07.840 --> 0:19:10.160 it comes to the unemployment rate, right, this is the 0:19:10.600 --> 0:19:13.680 you know, it's the largest by far of any data set, 0:19:13.760 --> 0:19:15.400 including the household survey. 0:19:15.280 --> 0:19:17.880 That is used. And so again, I don't think there's. 0:19:17.760 --> 0:19:21.760 Any way to paint this as other than continued strong, 0:19:21.880 --> 0:19:25.800 stable and steady growth under President Biden's leadership and proof 0:19:25.880 --> 0:19:28.959 of his theory that if we invest in America, we 0:19:29.000 --> 0:19:32.959