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Speaker 1: Global business news twenty four hours a day, Bloomberg dot Com,

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Speaker 1: the Radio plus mobile app and on your radio. This

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Speaker 1: is a Bloomberg Business Flash and I'm Karin Moscow. This

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Speaker 1: updates brought to you by Sector Spider e t F S.

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Speaker 1: Why buy a single stockman you can invest in the

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Speaker 1: entire sector. Visits sector sp d r S dot com

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Speaker 1: are called on six six Sector et F European stocks

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Speaker 1: halting their longest rally since October and U S stock

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Speaker 1: index futures are little change to lower this morning. We

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Speaker 1: check the markets every fifteen minutes throughout the trading day.

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Speaker 1: On Bloomberg SNP E mini futures down about two points,

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Speaker 1: Dowie mini futures down ten, Nas documny futures down one

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Speaker 1: and a half, the decks in Germany's down two tenths

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Speaker 1: per cent ten, Your treasury down three thirty seconds. The

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Speaker 1: yield one pot eight five percent yield on the two

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Speaker 1: year point eight three percent. Nimax screwed oil up to

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Speaker 1: tenths per cent or eight cents at thirty four seventy

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Speaker 1: five of barrel brand is lower, down four ten percent

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Speaker 1: of fourteen cents to thirty six seventy seven of Barrel

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Speaker 1: comex School. It is up two tenths per cent, or

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Speaker 1: two dollars ninety cents at seventy announced the euro a

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Speaker 1: dollar oh nine oh five the end one thirteen point

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Speaker 1: eight nine herb a Life down almost eleven in early trading.

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Speaker 1: It said it overstated growth of new customers and distributors

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Speaker 1: last year because of database errors and Costco Wholesale also

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Speaker 1: lower down to it a half percent after posting second

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Speaker 1: quarter earnings that trailed analysts estimates. That's a Bloomberg business flash.

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Speaker 1: Tom and Mike Karena, thanks so much. I asked the

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Speaker 1: question this morning of good Carl, Rickadana and Mike. I

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Speaker 1: thought of John Herman of Mitsubishi UFJ when I asked

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Speaker 1: the question, which is simply that I believe there's a

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Speaker 1: job's report tomorrow, Mike's, and there's a productivity report today

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Speaker 1: in like forty three minutes. John Herman will now do

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Speaker 1: the impossible. Sherman. Greenspan couldn't do it. I flew up

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Speaker 1: with cha Chairman Bernankey on the airplane. He can't do it.

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Speaker 1: We're gonna ask John Herman to do with Greenspan and

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Speaker 1: burn Yankee can't do how do you link Sherman Herman

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Speaker 1: jobs in productivity together? How do you link those two

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Speaker 1: key ideas together. The you know, normally, what we had

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Speaker 1: for a long time we had strong business risk appetite,

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Speaker 1: so businesses expanding businesses, growing businesses, a lot of confidence

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Speaker 1: in the economy, confidence in the future. And what businesses

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Speaker 1: did in that case was they built plants, they built equipment,

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Speaker 1: they made investment, and then they said, now we need

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Speaker 1: the people to man that investment, and they brought on

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Speaker 1: the people. The people's skill sets rose, their productivity rose,

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Speaker 1: their wages grew, their incomes grew. Then turn their families

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Speaker 1: grew in size, they grew bigger homes, and that was

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Speaker 1: the virtue cycle. We somehow hit a little bit of

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Speaker 1: a stagnant patch in the last several years where you know,

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Speaker 1: some of that confidence is missing, and it's just some

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Speaker 1: you know, a question of can we get it back,

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Speaker 1: and if we do, you know the thing, you know,

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Speaker 1: it's still you know, it's still relatively at a decent

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Speaker 1: part in the cycle where we can actually you know,

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Speaker 1: we may outperform for the next several years, but we've

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Speaker 1: got to bring back that confidence. And that's the missing

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Speaker 1: that's the missing ingredient. So it's it's a tough spot

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Speaker 1: right now. The forecast is for little change in the productivity.

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Speaker 1: Now these are the these are revisions, not new numbers.

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Speaker 1: But basically I think they're gonna be a little bit

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Speaker 1: better than what the street is thinking. There's the streets

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Speaker 1: looking for a small revision. I think it's gonna be

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Speaker 1: a little bit better than than that. But yeah, but overall,

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Speaker 1: the trend of the last seven or eight years, unfortunately,

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Speaker 1: it's been very meager. Productivity games businesses have not really

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Speaker 1: made as Chairman Greenspan said a few months back, and

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Speaker 1: in our in our data sets show this has been

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Speaker 1: the weakest capital investment cycle since the nineteen fifties. And

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Speaker 1: Chairmon Greenspan says, no, no, no, since the thirties. So

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Speaker 1: that's the you know, why is it so weak? It's

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Speaker 1: the lack of confidence in the future businesses just you know, see,

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Speaker 1: it's it's it's what Chairman Greenspan isolated is he said,

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Speaker 1: it's due to businesses not being confident with the government's

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Speaker 1: taking us, whether the government's getting in front of the

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Speaker 1: problems that are out there, you know, whether it's retirement

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Speaker 1: of baby boomers, funding the baby boomers and so on,

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Speaker 1: whatever it is, he said, They just businesses are just

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Speaker 1: very hesitant right now, and we're gonna change it. We're

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Speaker 1: looking John at as part of the productivity report, we

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Speaker 1: get unit labor costs are four and a half percent. Uh.

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Speaker 1: Are they getting to the point where it's going to

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Speaker 1: be financially worthwhile start making these investors, to start making

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Speaker 1: these whether no matter what the government's doing. So that's

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Speaker 1: so that's a good point. But Mike, what Mike and

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Speaker 1: saying is saying, Look, we went back in every session,

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Speaker 1: businesses let go so many people that you know, in

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Speaker 1: the early years of the recovery is the businesses would say, Okay, look,

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Speaker 1: I'm not gonna make investments. I'm just gonna bring back

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Speaker 1: some of these people and meet my output objectives by

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Speaker 1: hiring on people. Well, now we're getting to the point

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Speaker 1: where labor markets are definitely tightening. We have four currently

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Speaker 1: unemployment rate. We're probably gonna drift down to around four

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Speaker 1: point five percent over the course of this year. Labor

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Speaker 1: markets are tightening up and in businesses are saying themselves, Okay,

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Speaker 1: where am I going to find the productive workers that

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Speaker 1: I need? Uh? You know, we either need them homegrown

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Speaker 1: or we definitely have to go overseas. Whether people like

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Speaker 1: that or not, We've got to get these smart kids

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Speaker 1: from overseas and bring them over here. So that's what

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Speaker 1: we have to do. But if we don't do that,

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Speaker 1: then businesses like Mike suggesting or put in a pickle

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Speaker 1: and they're gonna have to go out and say, I'm

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Speaker 1: gonna have to invest a little bit more, boost of productivity,

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Speaker 1: boost the outpit potential of my workers, and then use

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Speaker 1: that to grow grow the economy. So that's you know,

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Speaker 1: hopefully we're getting closer stretch. But you know it would

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Speaker 1: be if businesses really felt confident in the leadership of

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Speaker 1: the CREPY, then I don't think I think would be

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Speaker 1: a slam dunk. Help us brief tomorrow. This is really

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Speaker 1: crept up, honest. I'm calling today March three, the reset

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Speaker 1: after Super Tuesday and all the politics that we've been

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Speaker 1: looking for in Michigan onto Florida. But John Herman reset

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Speaker 1: tomorrow morning. What will you look for. We're gonna be

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Speaker 1: so wired, it's gonna be unbelievable. But here's where here's

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Speaker 1: where we see. Uh, there's gonna be a couple of

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Speaker 1: interests things. One, we did a lot of discovery on

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Speaker 1: what happened in January. January was a soft number. One

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Speaker 1: soft number because, believe it or not, some quirky timing

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Speaker 1: issues around four year college payroll staffing and stuff like that,

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Speaker 1: and for your universities plus in the so education was

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Speaker 1: weak because it's just some timing calculus. So this month,

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Speaker 1: these guys come back. So we're looking for you know,

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Speaker 1: thirty five to forty thousand recovery public and private sector

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Speaker 1: jobs bouncing. That's gonna start propelling the number. So your

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Speaker 1: baseline numbers, you gotta say, Okay, we've got forty thousand

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Speaker 1: right there. What else are we gonna get? Well, we

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Speaker 1: look across the country and we say, okay, construction sectors

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Speaker 1: still adding jobs, more, the vehicle sectors still learning jobs.

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Speaker 1: Professional services there, Angels healthcare is adding service lead. Your

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Speaker 1: hospitality is Jamie Diamonds. That's on the tube fan. You know,

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Speaker 1: people are spending all these gasoline savings on travel and

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Speaker 1: entertainment expenses, so legion hospitalities of transportation, people are still

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Speaker 1: shopping online, Transportations of people flying like crazy, you know, wholesales.

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Speaker 1: So we're gonna get a broad based, we're gonna get

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Speaker 1: some weakness. Mining sector absolutely unfortunately continues to get pummeled.

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Speaker 1: Manufacturing sector outside of motor vehicles with food with soft retail,

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Speaker 1: could be a little bit of a soft pocket. But

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Speaker 1: in general, broad base things look pretty good. Well, the

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Speaker 1: bage book yesterday seemed to suggest that it may it

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Speaker 1: may not be good as the characterization there may they're

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Speaker 1: not bad, but certainly didn't suggest improvement over the last

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Speaker 1: month or so. So yes, so that's what the bage

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Speaker 1: book is telling you. But again, some of the gain

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Speaker 1: that we're gonna get tomorrow. Tomorrow's number is just the

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Speaker 1: putting in the correct calculation on headcount at the four

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Speaker 1: year colleges and universities in America. That's just you know,

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Speaker 1: that's thirty thousand plus right there. So that's the kind

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Speaker 1: of thing, you know, so they're right, But when you

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Speaker 1: strip that out, it kind of looks like one seventy

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Speaker 1: five is one, which is good. But it's it's Mike suggesting,

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Speaker 1: you know, we when you have a potential of you know,

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Speaker 1: you think of think of children in America, you think

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Speaker 1: of athletes. When you say yourself, you've got the potential

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Speaker 1: to go to the top school and the potential again

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Speaker 1: into Olympics, and then you don't reach your potential. That's

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Speaker 1: not a good thing. And that's kind of like what

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Speaker 1: people feel about the US. We have the potential and

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Speaker 1: we're not meeting it and that's why we've got so

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Speaker 1: much frustration bottled up here. But we can do it.

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Speaker 1: I mean, it's just we've got to get the right

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Speaker 1: mix and then we've got to you know, people just

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Speaker 1: have to have the confidence amply go forward and because

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Speaker 1: you're you're gonna be in good shape. John, thank you

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Speaker 1: so much for the briefing, John Herman with Missubishi. As

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Speaker 1: we look forward to tomorrow's jobs report, got a whole

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Speaker 1: host of people joining us. Alan Krueger will be with

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Speaker 1: us in Bill Gross and so speaking of that, Mike

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Speaker 1: John Getlson writing up a nice summary of a report

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Speaker 1: just out for Mr Gross at Janice with to be

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Speaker 1: kind of prorocative headline to say, the the least our

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Speaker 1: banks quote permanently damaged quote is credit expansion expands. And

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Speaker 1: this touches over into what Neil Cash Curry and a

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Speaker 1: Minnesota's talking of and reviewing our banking system that is

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Speaker 1: indirect conflict with what Jamie Diamond told our John Mickelthwaite,

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Speaker 1: great article in the Bloomberg Markets magazine and it's it's

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Speaker 1: on the terminal if you if you want to look

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Speaker 1: it up. Mr Diamond relatively sanguine about the outlook, saying

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Speaker 1: good managed banks will do well. We don't have a

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Speaker 1: helment on this, but I will suggest, as you point out, Mike,

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Speaker 1: there's a stark opposing views on banks. I mean just

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Speaker 1: within share purchase by banks, don't buy banks huge polarity. Well,

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Speaker 1: the only thing we can say is from an economic

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Speaker 1: point of view, um bank lending continues to rise. Now

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Speaker 1: whether they can make money doing that is the question

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Speaker 1: for the economy. So far, it's okay. Yea. We heard

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Speaker 1: this along the lines of utility banking friend Sat mcquaan,

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Speaker 1: I speaking with Sergio Roddy. The bank's future looks more

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Speaker 1: like utilities, and there have been people since the crisis

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Speaker 1: who've been suggesting that is the way we should go

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Speaker 1: with banks. We thank you all for listening. That's what

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Speaker 1: we like here is a set of opinions, whether it's

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Speaker 1: with an equity investment. You heard Scott random Wells Fargo

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Speaker 1: earlier enthusiastic about larger blue chip companies or some people

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Speaker 1: that push against that all of these interviews. I'm Bloomberg

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Speaker 1: Radio Plus, love the app, thank you for listening worldwide,

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Speaker 1: you get Mike McKee and Tom Keane downloaded every one

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