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Speaker 1: This is Bloomberg survey and see overall US macro economic

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Speaker 1: outlook right now is very good, and that's why John

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Speaker 1: Allen is moving towards the second rate increase. I think

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Speaker 1: for those a fanger place for investors, they're in a

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Speaker 1: proper old fashioned depression with huge political programs. Near term,

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Speaker 1: this markets I can remain tight, staying that forty five

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Speaker 1: to fifty range, but as we moved towards the end

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Speaker 1: of this year, this market is likely to start to stop.

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Speaker 1: In against Bloomberg surveillance. Your link to the world of Economics,

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Speaker 1: Cliinance and Investment on Bloomberg Radio. Never adult moment. A

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Speaker 1: stunning jobs report with major market moves, and there's been

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Speaker 1: no retrench retracement. Rather in the recent minutes Michael McKee

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Speaker 1: and Tom Keane worldwide coast to coast in this our

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Speaker 1: explanation of a stunning report. Future is flat on negative

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Speaker 1: ten down futures negative seventy five. That barely describes what

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Speaker 1: we see linked in fixed income commodities and particularly in

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Speaker 1: foreign exchange Yen one O seven sixty ten ure yield

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Speaker 1: one point seven two percent in a two year in

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Speaker 1: a solid UH is genormous. The proper word Mike ten

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Speaker 1: basis points seven, eight, five five. You always go back

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Speaker 1: to that cf A ideas genormous is the correct word

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Speaker 1: for UH today. The Forex brief brought to you by

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Speaker 1: Interactive Brokers Forex traders focus on tightness of spreads of

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Speaker 1: cost manners. Visit ib k R dot com slash four

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Speaker 1: x to learn about their four x e c and

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Speaker 1: which includes fourteen of the largest inner bank dealers. Right now,

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Speaker 1: we are thrilled to bring you someone who has been

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Speaker 1: miles out front pushing against the hawks. Shall we say

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Speaker 1: he disagrees with Mr Gross? No, I would say it's

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Speaker 1: nuanced with Mr Gross, But with others, I would say

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Speaker 1: that Professor blanch Flower has been prescient to use a

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Speaker 1: word from Sherman Greenspan from Dartmouth College, UH formerly with

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Speaker 1: the Bank of England. David blanche Flower, Professor ab absolutely

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Speaker 1: stunning results. I'm going to assume you have seen them.

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Speaker 1: You have seen this before. How does smart people like

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Speaker 1: you rationalize a one off like today's report. Well, we've

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Speaker 1: had one data point. We do not know whether it's

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Speaker 1: a one off. We have a single data point. We

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Speaker 1: may well have more than this. We certainly cannot assume

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Speaker 1: that it assume it's away. Yes, there is a big

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Speaker 1: standard error to which but you know, one data point

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Speaker 1: is pretty important, especially and we've heard all these hawks

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Speaker 1: on the FED say, oh, it's okay if we have

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Speaker 1: some number just below two hundred thousands. So when you

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Speaker 1: have a bad number, you ignore it and you carry

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Speaker 1: on with your view that the US economy is very

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Speaker 1: close to full employment. I just plotted this morning producing

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Speaker 1: a non supervisory wage growth back to nineteen to sixty five,

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Speaker 1: and basically, at every other point when unemployment rates or

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Speaker 1: about this level, wage growth was in the orders of

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Speaker 1: four five six percent, and here we are at two

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Speaker 1: point four. The answers, this is just different. And when

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Speaker 1: you hear commentaries by John Williams saying there's a positive outpook,

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Speaker 1: we're really at full employment, that's just that true. We

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Speaker 1: have lots of slack in the labor market from non

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Speaker 1: participants and from under improvement. And what we saw today

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Speaker 1: was a four hundred and seventy thousand increase in under

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Speaker 1: employment part time for economic reasons, and I actually use

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Speaker 1: six despite the fact that the unemployment rate fell, use

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Speaker 1: six remained the same it was a month ago, and

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Speaker 1: well above the levels that why'd argue this endlessly? And

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Speaker 1: basically I think the commentaries of Bill Growth and others

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Speaker 1: relate to periods in the past. Well be specially the

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Speaker 1: common point and well professor of the common point. Mike

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Speaker 1: McKee to David blanche for in Bill Gross, as we

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Speaker 1: heard Bill Gross say we need a new keys. Bill

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Speaker 1: Gross was adamant about a fiscal effort to jump start

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Speaker 1: things that might right on that, Mike, did I hear that?

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Speaker 1: But but the problem is just co operating an environment

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Speaker 1: where that's not going to happen. So then that last

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Speaker 1: and so Danny you suggested that they won't. The next

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Speaker 1: FED move won't be an increase, it will be a

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Speaker 1: rate cut. Uh do does that help? I mean, what

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Speaker 1: what are we getting out of rates at you know,

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Speaker 1: thirty eight basis points an effective FED funds rate or

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Speaker 1: something like that. If this is the kind of number

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Speaker 1: that you associated with it, well, well, Mike, that's right.

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Speaker 1: I mean I said that this was singers cost and

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Speaker 1: hoping economics didn't decemberling. They in the FED, in my view,

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Speaker 1: mistakenly raised ready and you're right. Organizations around the world,

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Speaker 1: including the O E. C. D An I'm at the

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Speaker 1: talking do you have about the needs for fiscal authorities

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Speaker 1: to step up? Obviously the views of Congress isn't going

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Speaker 1: to do that. I keep saying to people, So what

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Speaker 1: are you going to do to prepare yourself for the

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Speaker 1: next shock that's coming? Rates are close to zero, and

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Speaker 1: the business cycled churns UM and the stead and the

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Speaker 1: and the Congress seemed unready for what's coming. So I

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Speaker 1: am fearful, as you said, about what you would do. Obviously,

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Speaker 1: a rate cut UM would not achieve a huge amount.

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Speaker 1: That's not that far you can go. Maybe you should

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Speaker 1: go negative. But I guess the real point is, so

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Speaker 1: why is everybody talking about another rate rise? I mean

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Speaker 1: rate rise in June? And you're like, you're just going

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Speaker 1: to ignore the fact that we actually have a disastrous

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Speaker 1: report today. Well, we have two data points. We have

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Speaker 1: a thirty eight Thouste job creation, but we have a

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Speaker 1: four point seven unemployment rate. If you if if that

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Speaker 1: was your headline number the first thing that was reported,

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Speaker 1: you'd be saying, we're getting past full employment and we

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Speaker 1: need to act. Well, I wouldn't say that, it's all

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Speaker 1: I don't look at one single data point. I would

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Speaker 1: certainly look at the fact that the employment of population

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Speaker 1: rate is three basis points belok, you know, three percentage

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Speaker 1: points below what it was in two thousand and eight.

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Speaker 1: My work suggests that we're well several million people into

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Speaker 1: employment terms above full employment UM and I would not

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Speaker 1: focus on those single numbers. I mean, just look at

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Speaker 1: comparisons to the past. If it was true what you said,

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Speaker 1: we should be seeing wage growth in the four or

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Speaker 1: five percentage point range, and we aren't so as a

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Speaker 1: central as a central bank, and my view would be,

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Speaker 1: you look at this and you say this is very worrying.

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Speaker 1: I don't know what to make of it. But the

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Speaker 1: big error I would make would be to do what

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Speaker 1: Bill Growth said. A huge error would be to raise

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Speaker 1: rates again. And my finger would be on the button,

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Speaker 1: thinking perhaps we should, especially with the risk of Brexit

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Speaker 1: and other things, perhaps what we should be doing is

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Speaker 1: actually storing up some sort some room by cutting now.

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Speaker 1: David Blanche for our Dartmouth College with us Alan Ruskin,

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Speaker 1: Deutgia Bank simply says, unbiguous highlights of a very disappointing employee, Mike,

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Speaker 1: I would notice, I got it here. My eyes are

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Speaker 1: failing me. The surveillance eyes are failing me. Right now.

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Speaker 1: I had it right here. This is the breadth of data.

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Speaker 1: The labor force, the civilian labor force a professor has

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Speaker 1: gone from one to one nine to one eight four.

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Speaker 1: We have three months in a row of decline in

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Speaker 1: the civilian labor force. What does that signal? What the

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Speaker 1: signals is actually quite a lot of slack. The danger

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Speaker 1: is actually this indicate that people have been unable to

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Speaker 1: find work and they've ended up withdrawing from the labor force.

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Speaker 1: So this might well contrary to what Mike was saying,

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Speaker 1: It might well tell you US economy is flowing as

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Speaker 1: the global economy, and the danger will be that you know,

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Speaker 1: they're a global force is srying. I'm what I'm doing breakfast.

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Speaker 1: So this would say caution, worry, single data points. But um,

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Speaker 1: there's a lot of slack in the US labor markets.

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Speaker 1: And I just think the comments from the from the

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Speaker 1: Bank president is about ideology rather than actually watching the data.

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Speaker 1: And if you look back at two thousand and eight September,

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Speaker 1: this is what they said and did. Then they said

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Speaker 1: everything's fine. The worry growth going to continue to be fine,

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Speaker 1: and they missed the big one so the worry is

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Speaker 1: the same people that missed the big one calling it

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Speaker 1: roll and right, Mike, the German tenure just broke down

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Speaker 1: to a new law that is an inter day low

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Speaker 1: beneath the daily closed low of months and months ago,

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Speaker 1: point zero seven one. It's a free fall off of

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Speaker 1: this jobs report. But it's a little confusing technically, but

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Speaker 1: a point zero seven on German tenure gets everyone's attention.

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Speaker 1: Jeffrey Rosenberg from Blackrock writing though that there's an overreaction

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Speaker 1: in the market. Okay, we'll get something. We saw that

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Speaker 1: with Jim Vogel a little bit. Uh, Danny, I guess

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Speaker 1: it comes back to my question comes still back to

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Speaker 1: once proposition. You look at the numbers, you look at

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Speaker 1: your theory that we're slowing down is the Fed? Is

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Speaker 1: the Fed's interest rate? The answer to the problem, well,

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Speaker 1: if you if the only thing you've got is a hammer, Um,

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Speaker 1: then you're kind of stuck. I mean the problem is,

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Speaker 1: as you said that earlier, the Congress is kind of

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Speaker 1: gone to sleep. Um. The issue is what could the

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Speaker 1: FED do? And actually it's limited in what it can purchase.

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Speaker 1: It's not clear that it can go to negative rates. Um.

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Speaker 1: It has some room to cut rates back to zero

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Speaker 1: if it wanted to. But I guess the answer is no,

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Speaker 1: that's not enough. But the warrior, it seems to me

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Speaker 1: for the US economy is that the shock that's coming

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Speaker 1: the US is unprepared for and hasn't spent any time

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Speaker 1: over the last eight years preparing to be resilient to

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Speaker 1: the oncoming shops from the business cycle. So you're right

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Speaker 1: being me worried. You'd like rates to be five and

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Speaker 1: a half percent now so that when the shot comes

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Speaker 1: you could cut them. Recall that this horrible shock we

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Speaker 1: had in two thousand and eight was tempered by the

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Speaker 1: fact rates were cut, quantitative eavening was done, and there

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Speaker 1: was a huge global fiscal stimulus. Imagine if a shot

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Speaker 1: comes which is half as bad and we do, it

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Speaker 1: might end up being more. We gotta leave it here, Professor.

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Speaker 1: We look forward to speaking you as we moved towards

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Speaker 1: the United Kingdom. David blanche For, former member of the

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Speaker 1: Bank of England and at Dartmouth College, my Capital economics,

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Speaker 1: always writing with spirit quote that sound you here is

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Speaker 1: fed share Janet Yell and furiously rewriting her speech that

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Speaker 1: she scheduled to give on Monday. We will continue Michael

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Speaker 1: McKee and I'm keen with futures in negative eight. All right,

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Speaker 1: let's check in with Michael byright now and get the

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Speaker 1: latest world in national headlines. Mike Tom, thank you very much.

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Speaker 1: Four soldiers remained missing after an Army troop carrier over

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Speaker 1: turn in the rain swollen creek at Ford Hood, Texas.

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Speaker 1: Five of the soldiers were killed and three were injured.

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Speaker 1: Parts of Texas have been inundated with rain in the

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Speaker 1: past week. More than half of the state is under

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Speaker 1: flood watches or warnings, including the counties near Fort Hood.

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Speaker 1: We now know what caused the death of Prints. According

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Speaker 1: to the Corners report, the pop star had toxic levels

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Speaker 1: of the opiate fentinel that is more powerful than morphine.

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Speaker 1: Michelle Obama is in New York to deliver the final

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Speaker 1: commencement speech as First Lady at City College. Mrs Obama

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Speaker 1: will address more than three thousand members of the class

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Speaker 1: of the school's president will present an honorary doctorate to

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Speaker 1: the first Lady. Global News twenty four hours a day,

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Speaker 1: powered by our four hundred journalists and more than a

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Speaker 1: hundred fifty news bureaus around the world, Michael Barr and Michael,

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Speaker 1: thanks so much. B and P. Perry bar with a

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Speaker 1: very cautious view. They reaffirm their view for no rate

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Speaker 1: hike this year, and that's an outlier call. Michael McKee

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Speaker 1: and Tom Keane. We continue to stay with us Bloomberg Surveillance.

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Speaker 1: Market drivers are brought to you by Bank of America

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