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Speaker 1: Broadcasting live to New York, Gloomberg eleventh to Washington, d C,

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Speaker 1: Bloomber to Boston, Bloomberg twelve, Monders to San Francisco, Bloomberg

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Speaker 1: to the Country Channel one, and around the globe the

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Speaker 1: Bloomberg Radio, blust and Bloomberg dot Com. This is Bloomberg Surveillance.

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Speaker 1: Good Morning and A thirty on Wall Street and Michael

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Speaker 1: McKee along with Tom Keene Economic Indicators brought to you

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Speaker 1: by Commonwealth Financial Network. When it's time to change the conversation,

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Speaker 1: talk with the Rooker Dealer r I A that's ready

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Speaker 1: to listen with call six six for six creator is

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Speaker 1: it Commonwealth dot Com to learn more? Well, no economic

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Speaker 1: indicators at eight thirty this morning. At ten o'clock this morning,

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Speaker 1: we get the Jolts numbers. The problem with the Jolts numbers,

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Speaker 1: of course, is that they are somewhat stale at this point.

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Speaker 1: They tell you about job openings and labor turnover. But

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Speaker 1: there for the bunth of April. But we need to

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Speaker 1: stop here. Why you let's be honest, you okay, Michael

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Speaker 1: McKee way out front on the signals and importance of

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Speaker 1: the Jolts numbers, and Mike the answer is they're like,

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Speaker 1: it's morning in America. Good am, I right on them. Yeah,

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Speaker 1: we're at record and near In March we were at

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Speaker 1: near record levels for job openings in the United States.

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Speaker 1: The problem is is the jobs weren't being filled because

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Speaker 1: it appears qualifications don't match up. But the question for

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Speaker 1: the FAT is does it continue. Do we see that

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Speaker 1: kind of job opening level continuing? Do we see the

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Speaker 1: quit rate continue? If you are feeling better about the

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Speaker 1: labor market, you're much more likely to quit your job

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Speaker 1: and seek another one that pays more money. Jenny Yellen

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Speaker 1: talked about that on Monday, but she also talked about

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Speaker 1: how the momentum in the labor market seems to have slowed.

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Speaker 1: So the question we'll be looking for this morning is

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Speaker 1: do we get a name back up from that from

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Speaker 1: jolts Uh. Dean Mackie is at point seventy two. He's

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Speaker 1: chief economists at the Point noy Do Asset Management, and

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Speaker 1: he keeps a very close eye on the labor market. Dean,

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Speaker 1: what what is your view of what's happening in labor

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Speaker 1: If you look at the FEDS Labor Market Indicator Index,

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Speaker 1: which came out to not a lot of fanfare. On

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Speaker 1: a Monday, our Francie Lackawaw pointed out on Bloomberg Surveillance

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Speaker 1: that it has crossed in the negative territory. Momentum seems

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Speaker 1: to have really slowed, but has it really well? Certainly,

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Speaker 1: the which one looks at things like job growth momentum

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Speaker 1: did slow over the over the last couple of months,

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Speaker 1: and I think that's really what that labor market conditions

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Speaker 1: indicator is telling us. I don't think there's really a

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Speaker 1: new message in that. We we already knew that on Friday,

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Speaker 1: that that things had weakened. So I think that's partly

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Speaker 1: why markets don't pay a lot of attention to that.

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Speaker 1: That that indicator, well, the labor market itself turned in

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Speaker 1: a rather digtional performance last Friday. Do we see that

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Speaker 1: continue or are you in the camp that says there's

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Speaker 1: something odd about that number and it's likely to be

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Speaker 1: reversed somewhat. I don't think that's a signal that we're

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Speaker 1: now going into an extremely weak job growth period. I

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Speaker 1: think the telltale signs of that would be that jobless

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Speaker 1: claims would be spiking. If we were going into an

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Speaker 1: extremely weak payroll period, we'd see things like the Non

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Speaker 1: Manufacturing I s M survey depended below fifty, which it's not,

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Speaker 1: and we wouldn't be seeing consumer spending picking up in

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Speaker 1: the way that it that it has so far in

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Speaker 1: the second quarter. So I think it. You know, we

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Speaker 1: have these ups and downs and job growth. Uh, this

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Speaker 1: is one of those down periods, but I'm quite confident

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Speaker 1: that in the third quarter things will pick back up again.

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Speaker 1: You need to make a do a victory lap. I

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Speaker 1: don't know, you know, maybe Steve Cohen can give you

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Speaker 1: one of his pieces of artwork, but you need to

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Speaker 1: do a massive victory lap on your call to four

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Speaker 1: point zero percent unemployment rate. I literally have a chart

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Speaker 1: folks on television we call the Macki chart. Dean, is

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Speaker 1: we migrate now? You need to sell me? Why is

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Speaker 1: it a bad unemployment rate? Why are we so miserable

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Speaker 1: for four point seven unemployment? I think that one reason

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Speaker 1: is that we aren't seeing tremendous wage games at this point.

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Speaker 1: You know, wage gains have hourly learnings have picked up

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Speaker 1: to two and a half percent, but by the standards

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Speaker 1: of past cycles, that's that's not all that impressive. So

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Speaker 1: I think that's one of the reasons why people are saying, yes,

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Speaker 1: unemployment slow, but but it's not an extremely robust labor market.

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Speaker 1: I think that we will continue to see those wage

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Speaker 1: games pick up as the unemployment rate keeps falling. And

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Speaker 1: I continue to believe that unemployment rate is going to

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Speaker 1: follow a lot a lot faster than others believe. How fast,

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Speaker 1: how far? I think we are going to drop close

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Speaker 1: to four percent by the end of the year. We'll

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Speaker 1: we'll have a three handle on the unemployment rate in

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Speaker 1: twenty team. Does that suggest inflation then? Is in other words,

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Speaker 1: is the FED falling behind the curve? If if they

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Speaker 1: don't get going here, well, I think it's too early

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Speaker 1: to say they're behind the curve. Now, you know, inflation

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Speaker 1: still below their objective, so that in a sense, the

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Speaker 1: FED wants to see a bit of a wage price

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Speaker 1: spiral upwards at this point, and I do think they

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Speaker 1: will get that. I think the real key is going

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Speaker 1: to be are they able to move in it gradually

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Speaker 1: enough manner that you know, once inflation is up to

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Speaker 1: two or somewhat above it, or are they able to

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Speaker 1: keep it from continue to accelerate beyond them? Your comment

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Speaker 1: of a three handle on unemployment is a stunning half

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Speaker 1: century statement. Are those good jobs that drive us to

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Speaker 1: that nirvana? Well, I think it's it's as as usual.

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Speaker 1: It's a mix of good and high paying and low

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Speaker 1: paying jobs. You know, it's it's not possible for the

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Speaker 1: economy to create all high paying jobs. Okay, yeah, I

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Speaker 1: get that, but Klan, the basic site guist is we're

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Speaker 1: doing hamburger flippers. Is the basic site geist. Yeah, I

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Speaker 1: don't think the evidence really supports that. Certainly we are

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Speaker 1: generating those kind of jobs, but when people have broken

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Speaker 1: it up into high paying and well paying sectors, uh,

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Speaker 1: In fact, we high paying sectors are are growing a

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Speaker 1: bit faster than the lower paying sectors. So you know,

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Speaker 1: there there's a big, broad economy and there's lots of

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Speaker 1: different types of jobs being created, but I don't see

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Speaker 1: any evidence that it's particularly low paying job growth created.

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Speaker 1: We're going to dive into this with Dr mackie and

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Speaker 1: get his views, will take the Stanford economics and beat

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Speaker 1: it out of him Michael McKee as we talk, these

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Speaker 1: are huge statements that Dan mckis made, and folks, I

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Speaker 1: can't convey he was really the first one I heard

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Speaker 1: to say four point zero and you just heard him.

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Speaker 1: Our team just put it out on Twitter a three

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Speaker 1: handle on unemployment next year. That is an outlier call.

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Speaker 1: Mts like Steve Major and hsdc's calling one zero percent

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Speaker 1: the yen stronger in the last twenty minutes through one

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Speaker 1: oh seven one oh six on end the euro one

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Speaker 1: this morning, This hour of Surveillance bought by BMW mont Kisco.

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Speaker 1: Visit BMW mont Kisco dot com. Here's John Tucker with

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Speaker 1: the latest headlines. And Hillary Clinton solidified her position as

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Speaker 1: presumptive Democratic presidents of nominee with wins in four of

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Speaker 1: six day primaries. Both Clinton and Donald Trump have now

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Speaker 1: zeroed in on one another, with Clinton sat Trump is

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Speaker 1: temperamentally unfit to be commander in chief. Trump blasted Clinton

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Speaker 1: as the defender of what he called a rigged political system.

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Speaker 1: And there's no doubt outgoing California Democratic Senator Barbara Boxer

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Speaker 1: will be replaced by another Democrat. In a historic first,

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Speaker 1: California voter sent two Democrats to a November runoff for

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Speaker 1: the state's open US Senate seat. A criminal complained about

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Speaker 1: a Tokata airbag, saying injuries in a crash, has been

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Speaker 1: filed in Japan, the first such case in the nation

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Speaker 1: where the earbag maker is headquartered, and while the animals

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Speaker 1: in South Africa's national parks being run over at an

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Speaker 1: increasing rate. That's because growing numbers of tourists are speeding

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Speaker 1: to cluster around big game after learning of the animal's

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Speaker 1: location on mobile apps. The South African national Parks, whose

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Speaker 1: Kruger reserves the size of Israel, is now exploring legal

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Speaker 1: options to curtail the use of game setting apps on smartphones.

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Speaker 1: Global News twenty four Hours to Day, powered by a

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Speaker 1: John Tucker, thank you. Now it's time for land Over

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Speaker 1: Percifiti Bloomberg NBC Sports Update with Rob Bush. Good morning, Mike, Tom.

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Speaker 1: The Yankees t off at the Angel's expense for the

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Speaker 1: second time in as many games. Swung on hit high

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Speaker 1: in the air to right field, Calhoun going back toward

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Speaker 1: the line, toward the wall. Chee's gone. Now we had

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Speaker 1: heard that about as show that he is well the

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Speaker 1: right bill, and that's exactly what he did. Star Light

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Speaker 1: start bright as Yankees Radio is Castro Homer's in back

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Speaker 1: to back games, as does Carlos Beltron. Yankees win at

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Speaker 1: six to three. Michael Pineda his third way, Andrew Miller

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Speaker 1: his seventh saved game three of the four game sets

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Speaker 1: tonight when Nathan who all the hosts Jared Weaver. Mets

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Speaker 1: lost both games of a twin bill and Pittsburgh by

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Speaker 1: three one score. Stephen Matt's and Jacob deGrom were pinned

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Speaker 1: with the loss. Curtis Granderson homeward in the losing effort

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Speaker 1: Noah Synderguard. He gets the nod tonight to try and

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Speaker 1: avoid the sweet Mets are three and a half back

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Speaker 1: of Washington NBA Finals Game three tonight at nine o'clock

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Speaker 1: from Cleveland. Warriors are up two games and none. Phil

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Speaker 1: Jackson met the press on Tuesday, commenting on why he

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Speaker 1: chose Jeff hornes sect coach the Knicks. When I first

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Speaker 1: made the call was just right off the bat, a

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Speaker 1: communication level that went on forward from there, so that

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Speaker 1: comfort zone was impossible. And I think the basketball knowledge

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Speaker 1: that he has in the from the year he has

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Speaker 1: with playing basketball are things that attracted us. Hornestake did

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Speaker 1: win just a forty seven percent of the time while

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Speaker 1: on the job three seasons for Phoenix and soccer. The

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Speaker 1: U S shot out Costa Rica four ill in Copa

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Speaker 1: America Play, while Columbia edged Paraguay two to one. And

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Speaker 1: that is your NBC Bloomberg Sports Update. Michael Ton, thank

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Speaker 1: you so much, greatly appreciated. We're thrilled you with this worldwide,

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Speaker 1: fifty one oh three of barrel coll MIxS Gold up

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Speaker 1: one point one percent or or up one percent now

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Speaker 1: or thirteen dollars ten cents to twelve sixty ten. Announced

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Speaker 1: the euro a dollar thirty eight, then one oh six

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Speaker 1: point nine six Lulu leven Athletic as shares have turned around.

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Speaker 1: They're up two point two percent now. It said. Sales

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Speaker 1: in the first quarter rose seventeen percent, and that beat

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Speaker 1: analysts average estimates. As a Bloomberg Business flash, Tom and

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Speaker 1: Mike Karen, thanks so much. June Beacons are John michels Waite,

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Speaker 1: editor in chief in London, spoke with the Prime Minister,

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Speaker 1: not Prime Minister Cameron, for Prime Minister Blair on Brexit.

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Speaker 1: Remember back at two thousand and five, you went on

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Speaker 1: what some people called the massochism strategy, where he went

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Speaker 1: out there and let people to something extents attack you.

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Speaker 1: We'll ask you questions. Do you think he's done enough?

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Speaker 1: But yeah, I think he he's He's fought the campaign

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Speaker 1: you would expect from him and you'd want from him.

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Speaker 1: I mean, there's nothing more he can do as Prime minister,

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Speaker 1: and he's put himself out there, he's put the arguments

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Speaker 1: out there, and you've got to say he's taken a

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Speaker 1: strong and clear position. And on the other side, Boris

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Speaker 1: Johnson as you've gone too far. Do you think he's

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Speaker 1: someone who's who would be fit to be a prime minister? Look,

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Speaker 1: I think whether he's fit or not to be prime

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Speaker 1: ministers not dependent on on this vote. Um. But I

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Speaker 1: find it well, I find it. I just find it

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Speaker 1: hard to understand how someone who's been a mayor in

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Speaker 1: London can seriously think it's not going to be economically

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Speaker 1: damaging if if Britain leaves the European Union. And you know,

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Speaker 1: one of the things I find strange is when people say, look,

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Speaker 1: I had to agonize over this decision. You know, I'm

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Speaker 1: not quite sure, but now I've come down on the

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Speaker 1: side of room main. This is not one of those decisions.

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Speaker 1: This is a decision which you should only be four

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Speaker 1: remain if you're for leave, rather is if you're absolutely clear.

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Speaker 1: You know, if you're not clear, don't do it and

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Speaker 1: you're not gonvinced he is, well, if you look back

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Speaker 1: on some of the things he said in the past,

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Speaker 1: it's indicated that he thinks it would be wrong for

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Speaker 1: Britain to leave the European Union. So now he's you know, frankly,

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Speaker 1: the most out there campaigner of the Leave campaign. I

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Speaker 1: think it's it's a strange position to find yourself in

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Speaker 1: when you look at you know, if you've been in

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Speaker 1: government and in a sense being Mary London, you're in

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Speaker 1: some sort of situation of government. You know how big

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Speaker 1: this decision is with its consequences. I mean, if Britain

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Speaker 1: leaves the day after, you are going to get the

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Speaker 1: beginnings of what will be in a serious economic shop

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Speaker 1: for the country you've got. You literally cannot dispute that

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Speaker 1: because you will put them on the table. Your entire

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Speaker 1: relationship with the European Union, that's going over four decades

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Speaker 1: of interlocking trade agreements, service agreements, all of that has

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Speaker 1: then got to be renegotiated or scrapped. And given that

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Speaker 1: half of trade is with the European Union, how can

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Speaker 1: you not think you're at least going to suffer several

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Speaker 1: years of economic uncertainty. Tony Blair with John michaels Waite

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Speaker 1: some of the energy there in the day to day

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Speaker 1: debate of Remain and Brexit as well d mackew where

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Speaker 1: this point seven two Dean. The backdrop of the political

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Speaker 1: discussion in the United Kingdom is no different than any

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Speaker 1: other nation which is subdued. Nominal g d P is

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Speaker 1: everything in the d Macki world, nothing more than a

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Speaker 1: rationalization of a to a new terminal value, a new

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Speaker 1: lower potential growth and things that we need to get

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Speaker 1: used to. But I think that there is a lot

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Speaker 1: of that, and that's the backdrop everyone's trying to get

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Speaker 1: used to. Here, is that we we certainly see lower

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Speaker 1: labor force growth in in almost all major developed countries.

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Speaker 1: We have seen very weak productive growth as well, and

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Speaker 1: you combine that with low inflation, and you know, nominal

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Speaker 1: GDP growth and virtually everywhere is weak, and that creates

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Speaker 1: an environment that's very different from the expansions of prior decades.

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Speaker 1: And I do think that both investors, policymakers and the

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Speaker 1: public is getting used to trying to get used to that. Well,

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Speaker 1: you hear members of the Federal Reserve, including the chair,

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Speaker 1: say we're keeping monetary policy accommodative, and you hear politicians

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Speaker 1: at least wringing their hands, if not actually doing anything.

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Speaker 1: Is there a solution to these issues? There's not an

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Speaker 1: easy solution. And you know, for example, I don't think

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Speaker 1: that labor force growth is suddenly going to pick up absent,

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Speaker 1: you know, a big increase in immigration, which seems off

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Speaker 1: the table right now. Productivity growth is not easy to

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Speaker 1: make suddenly grow faster. There are policy, uh policy moves

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Speaker 1: that can in the medium term perhaps raise productivity growth,

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Speaker 1: but it's hard to see a quick solution that would

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Speaker 1: make you know, next quarters productivity growth much faster. It

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Speaker 1: just doesn't work like that. So I don't think that

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Speaker 1: there's obvious clear near term moves that will will really

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Speaker 1: help a lot. Well, to what extent does the FED

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Speaker 1: help now or or do they hurt There's an argument

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Speaker 1: that nauld raise rates and that we'd be better off. Well,

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Speaker 1: I think the FED really can't control the pace of

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Speaker 1: potential real GDP growth. They don't have much to do

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Speaker 1: with that. So all the FED can do is try

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Speaker 1: to hit their inflation target. And I think it's going

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Speaker 1: to be quite interesting once the FED does get to

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Speaker 1: the two percent target and real GDP growth remains on

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Speaker 1: the sluggish side. What how the conversation shifts at that point,

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Speaker 1: because at that point the FED really has done what

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Speaker 1: it can do. Do you believe that they have to

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Speaker 1: establish a measured path or if they get challenging data folks.

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Speaker 1: I say this with yen one of six nine and

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Speaker 1: the German German yields are actually up a little bit

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Speaker 1: right now. But Dean Mackie, can they do one and

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Speaker 1: done or do they have to establish a measured path

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Speaker 1: as they designed to raise rates? Well, I think the

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Speaker 1: problem is how they've conducted policy so far, and sort

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Speaker 1: of the strategy they've weighed out is that everything needs

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Speaker 1: to be looking up for them to raise rates, so

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Speaker 1: that job numbers have to be looking up, the GDP

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Speaker 1: numbers have to be looking up, the foreign growth numbers

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Speaker 1: have to do the financial markets have to be looking good,

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Speaker 1: and these things all go in cycles. So the probability

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Speaker 1: of all of them moving in the right direction at

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Speaker 1: the same time is actually quite low. So I do

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Speaker 1: think that while there's not a big risk of delaying

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Speaker 1: a meeting or two here or there, if they are

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Speaker 1: delayed and and don't do anything, for example, for the

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Speaker 1: rest of the year, that you do start to get

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Speaker 1: into some risky territory where they may have to go

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Speaker 1: faster down the line. Well, do they have time to

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Speaker 1: think about it? I mean they want to wait and

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Speaker 1: see what the data tell them. How much time do

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Speaker 1: they have well, they do have time. So none of

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Speaker 1: this the way the economy works, none of this. You know,

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Speaker 1: Let's say that FED did make a mistake, UM, it

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Speaker 1: wouldn't be obvious for for quite some time. It wouldn't

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Speaker 1: be obvious this year, for example, that the FED was

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Speaker 1: falling behind. He would only become clear much later when

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Speaker 1: inflation was starting to rise notably above target. It seems

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Speaker 1: like kind of a remote concern right now, but eventually

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Speaker 1: that would be the cost if if the feed goes

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Speaker 1: too slow. When we have um a FED funds rate

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Speaker 1: that's a three or four percent and inflation running to

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Speaker 1: to three percent or a little bit above. Uh, isn't

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Speaker 1: is that a different thing from one and a half

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Speaker 1: percent inflation and fifty basis points for FED funds rate

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Speaker 1: in terms of how much time you have and and

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Speaker 1: how why the band is for making a mistake. I

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Speaker 1: think that is what's leading to this kind of extreme

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Speaker 1: risk aversion on the part of the set is they

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Speaker 1: are worried that if they make a mistake in the

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Speaker 1: other direction and tightened too quickly, it's hard to provide stimulus.

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Speaker 1: So that's why they are so sensitive to all of

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Speaker 1: these different developments that that I spoke about earlier. Dane,

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Speaker 1: thanks so much, greatly appreciate it. Just congratulations again on

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Speaker 1: you're thinking your theory of how we drive all of

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Speaker 1: five unemployment? Right? You heard Dr Mackie say there earlier.

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Speaker 1: He begins to frame me three point x unemployment rate

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Speaker 1: maybe out a year from now, Michael, that's extraordinary. I

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Speaker 1: can honestly say, in decades of study, the miserable nous

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Speaker 1: of our labor America, given where we are right now,

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Speaker 1: or even where Dr Amerki thinks we're gonna head, is

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Speaker 1: just remarkable, absolutely remarkable. Well, it is an extraordinary time.

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Speaker 1: And these are the debates that are being held at

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Speaker 1: twenty in C Street in Washington. Yeah, very serious debates

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Speaker 1: as well. I got bad news, folks. Tony Dwyer and

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Speaker 1: Michael Welch have published their new Equity Outlook. Uh at

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Speaker 1: canagor jenuity? Tony Dwyer to lead with this sentence, Mike,

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Speaker 1: what scares us the most? That's very Untoony Dwyer. When

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Speaker 1: we were asked this question this week, our immediate answer

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Speaker 1: was the high degree of conviction that SMP would rally

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Speaker 1: fifteen over the next six to twelve months. Even the

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Speaker 1: optimists we talked to suggest that is far outside current consensus,

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Speaker 1: so that gives us a level of conviction. Tony Dwyer

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Speaker 1: just looking at how cautious people are, say the least.

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Speaker 1: I mean there it is well much more. We'll get

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Speaker 1: Anthony Dwyer on to expand on his new market strategy outlook.

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Speaker 1: He's been very good with a dous seventeen thousand, nine

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Speaker 1: thirty eight the SMP five hundred. I'm surprised, I thought

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Speaker 1: two thousand, twenty one twelve on the s n P

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Speaker 1: five hundred with a vix like thirteen point eight to

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Speaker 1: the VIX trading now thirty minutes to the market open

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Speaker 1: in by point to three points a Nirvonic thirteen point

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Speaker 1: eight two on the VIX, the yen under one oh

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Speaker 1: seven stronger yen one oh six ninety five. Another hour

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Speaker 1: of Bloomberg surveillance