WEBVTT - Surveillance: U.S. Jobs Report With Kudlow 0:00:09.880 --> 0:00:12.960 Welcome to the Bloomberg Surveillance Podcast, and I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Leie. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.400 Bloomberg dot Com, and of course on the Bloomberg from 0:00:27.400 --> 0:00:29.680 New York City for our audience worldwide. For the White 0:00:29.680 --> 0:00:31.760 House is gear on the jobs report, I'm very pleased 0:00:31.760 --> 0:00:34.320 to say. On Bloomberg TV and Bloomberg Radio. We're joined 0:00:34.360 --> 0:00:38.800 by Larry Cardlo, National Economic Council Director Larry fantastic to 0:00:38.840 --> 0:00:41.120 catch up with you. Sir. You're looking well, let's get 0:00:41.159 --> 0:00:44.240 straight to it. Payrolls looking good. What does that payrolls 0:00:44.280 --> 0:00:47.040 report mean for the talks that you guys are having 0:00:47.080 --> 0:00:51.480 on Capitol Hill on the next steps of the fiscal policy. Well, look, 0:00:51.600 --> 0:00:54.360 I think the continued rise in payrolls and and bear 0:00:54.360 --> 0:00:57.720 in mind, Jonathan, you know this is a hotspot par 0:00:57.800 --> 0:01:01.720 Row report. This is July twining it to eighteen, and 0:01:01.800 --> 0:01:04.480 the surging hotspots in the South and West and some 0:01:04.600 --> 0:01:08.119 other places began in the back end of June and 0:01:08.280 --> 0:01:11.160 lasted through July. You know, there was some pullback of 0:01:11.240 --> 0:01:14.880 reopenings and so forth, and yet, and yet we still 0:01:14.920 --> 0:01:18.080 got one point eight million with a big decline, almost 0:01:18.120 --> 0:01:21.640 a full percentage point drop in the unemployment rate, which 0:01:21.680 --> 0:01:26.000 will move to single digits easily in the summer and fall. 0:01:26.240 --> 0:01:28.960 So I think that's a very key point just in 0:01:29.080 --> 0:01:32.040 terms of the economy. Now, how that reacts, how that 0:01:32.120 --> 0:01:36.959 reflects on the talks. The talks are rather stalemated right now. 0:01:37.240 --> 0:01:40.640 It was a better tone earlier this week, but through 0:01:40.760 --> 0:01:45.120 last evening there hadn't been any breakthroughs. That's unfortunate. However, 0:01:45.160 --> 0:01:48.000 the President has said several times in the last forty 0:01:48.040 --> 0:01:50.280 eight hours, and I can attest to it because I'm 0:01:50.280 --> 0:01:55.320 working on it. He's going to use executive orders, administrative discretion, 0:01:55.680 --> 0:01:58.360 the full powers of the fellow government in order to 0:01:58.400 --> 0:02:02.480 get certain priorities through, for example, a payroll tax cut, 0:02:02.680 --> 0:02:07.280 which will incentivize work returning to work, uh and also 0:02:07.840 --> 0:02:10.840 give a bonus to those stalwarts who stayed on the job. 0:02:11.440 --> 0:02:14.880 We'd like to reform unemployment. We'd like to put in 0:02:15.400 --> 0:02:20.560 benefits for reemployment or some kind of business retention credits. 0:02:21.040 --> 0:02:25.120 We want to make sure the eviction moratorium continues a pace. 0:02:25.680 --> 0:02:29.120 We think the executive branch can do that. We think 0:02:29.160 --> 0:02:32.040 he has the authority to do that. We are exploring 0:02:32.120 --> 0:02:35.280 and drafting documents as you and I speak this morning, 0:02:35.760 --> 0:02:38.800 and people should take it very, very seriously. If the 0:02:38.840 --> 0:02:42.720 Democrats side don't want to get it done certain essentials, 0:02:42.760 --> 0:02:45.880 we will get it done to make sure that folks 0:02:45.960 --> 0:02:49.000 go back to work, to make sure that kids can 0:02:49.040 --> 0:02:51.639 go back to school, and to make sure that this 0:02:51.840 --> 0:02:56.000 V shaped recovery continues well through this year. Well, Arry, 0:02:56.000 --> 0:02:57.919 I'll stay away from the V shape predictions. Let's stick 0:02:57.919 --> 0:02:59.960 to policy and what you kind suprupt to with the money. 0:03:00.240 --> 0:03:02.160 For a threat to be credible, we have to test 0:03:02.200 --> 0:03:05.240 the credibility of that threat. Now I'm trying to understand 0:03:05.240 --> 0:03:07.280 if you can do this, why haven't you done it? 0:03:07.600 --> 0:03:10.000 If you can do something with executive powers, what are 0:03:10.000 --> 0:03:13.639 you waiting for? Well, stay tuned. I mean, look, we've 0:03:13.639 --> 0:03:17.280 been in a negotiation that has to come first. I'll 0:03:17.320 --> 0:03:20.680 say is stay tuned. The President, I'm sure we'll be 0:03:20.720 --> 0:03:23.560 weighing in with his own views as the day goes on. 0:03:23.600 --> 0:03:25.200 Would you have a deadline, Larry, is at the end 0:03:25.240 --> 0:03:27.519 of the day the talk scheduled for today. If they're 0:03:27.520 --> 0:03:29.480 not successful, I need some color hit do you have 0:03:29.560 --> 0:03:33.520 talk scheduled for today on Capitol Hill. I'm sure there 0:03:33.560 --> 0:03:36.840 will be talks, whether formally or informally. I have no 0:03:36.880 --> 0:03:41.320 doubt about that. Uh, Chief Mark Meadows. So the other day, 0:03:41.320 --> 0:03:43.200 if we didn't get it done by Friday, we may 0:03:43.200 --> 0:03:45.800 not get it done at all. Um, I think he's 0:03:45.840 --> 0:03:49.240 just being realistic about that. Secretary Manuchtion is in their 0:03:49.320 --> 0:03:51.960 pitching away. But you know a lot of the other 0:03:52.040 --> 0:03:56.720 teams asks are just not realistic. They lack common sense 0:03:57.200 --> 0:04:00.320 and um a lot of it. You know, probably as 0:04:00.400 --> 0:04:03.920 much as a trillion dollars was obligated that unspent through 0:04:03.960 --> 0:04:07.080 the March Cares Act. So we've been able to repurpose that. 0:04:07.400 --> 0:04:10.600 So look, we're you know, there's a process here understud 0:04:10.640 --> 0:04:13.960 sesses negotiations. But the President is said with great clarity 0:04:14.000 --> 0:04:16.599 in the last two days, if need be, he is 0:04:16.640 --> 0:04:19.680 more than happy. Indeed, I think he would like to 0:04:19.800 --> 0:04:23.520 use executive authority to get things done. Look, we stand 0:04:23.560 --> 0:04:29.080 for lower taxes and rollback of regulations and fair loves. 0:04:29.080 --> 0:04:32.320 There our principles I'm going to get He is not 0:04:32.480 --> 0:04:36.360 going to give that back because of the Calcagant House 0:04:36.400 --> 0:04:41.960 of Representatives. Executive authority, executive authority. If you don't have 0:04:42.000 --> 0:04:44.599 a successful breakthrough by the end of today, are you 0:04:44.640 --> 0:04:46.520 going to do it or not? Are we're going to 0:04:46.600 --> 0:04:51.400 carry on having this conversation through to next week? Well, Jonathan, 0:04:51.480 --> 0:04:53.840 we might. You know, I'm always willing to talk to 0:04:53.880 --> 0:04:55.800 you if you want to talk next week. I'd love 0:04:55.839 --> 0:04:58.799 to talk next week. I don't want to second guess 0:04:58.800 --> 0:05:01.440 what the President is going to do. Uh, he's a 0:05:01.560 --> 0:05:04.719 very good communicator, and you can be assured he will 0:05:04.760 --> 0:05:08.440 be out and about today and probably tomorrow talking about this. 0:05:08.520 --> 0:05:11.560 It will beyond his time. I'm not here to announce anything. 0:05:11.720 --> 0:05:13.400 It's up to him. Well, it's not in our time, 0:05:13.480 --> 0:05:14.560 is it. And to be fair, it's not on the 0:05:14.560 --> 0:05:17.240 presidency either, Larry, because the real deadline was last week 0:05:17.279 --> 0:05:20.520 when the enhanced unemployment benefits expired. This south impost Friday 0:05:20.560 --> 0:05:24.160 deadline was about politicians too scared to go home and 0:05:24.200 --> 0:05:26.359 face the embarrassment of not getting a deal done on 0:05:26.480 --> 0:05:28.560 Capitol Hill. So we can talk about the scope for 0:05:28.600 --> 0:05:31.400 compromising now. So let's do that. As far as I understand, 0:05:31.880 --> 0:05:34.360 the Republicans in the White House has offered four hundred 0:05:34.360 --> 0:05:37.680 dollars per week. It enhanced unemployment benefits. Democrats are a 0:05:37.760 --> 0:05:40.359 six hundred. They're pushing back. As far as I understand, 0:05:40.360 --> 0:05:43.200 you're offering two hundred billion for state aid. The Democrats 0:05:43.240 --> 0:05:45.599 want a trilliant they're pushing back. The spread right now 0:05:45.720 --> 0:05:49.479 is still two trillion dollars. Where's the scope for compromise? 0:05:49.560 --> 0:05:54.520 Larry Well, Jonathan, much as I might like to, um, 0:05:54.600 --> 0:05:57.320 I'm really not here this morning to negotiate with you. 0:05:57.520 --> 0:06:00.919 All right, I'm gonna let the negotiators fully understood, but 0:06:01.000 --> 0:06:04.040 send a message to the American You guys are going 0:06:04.080 --> 0:06:06.680 to do the right thing. And while you're willing to 0:06:06.720 --> 0:06:10.760 get something done instead of nothing. Uh well, it looks 0:06:10.920 --> 0:06:14.640 that something has to be good. It has to be smart, 0:06:15.200 --> 0:06:17.680 it has to be efficient, and it has to have 0:06:18.160 --> 0:06:23.760 job and economic growth incentives. That's something. And again, the 0:06:23.800 --> 0:06:28.919 President has a clear set of growth principles and he 0:06:29.040 --> 0:06:32.920 is more than willing to help where help is necessary. 0:06:33.000 --> 0:06:36.240 Throughout the economy, there's still hardship. You know, good jobs 0:06:36.320 --> 0:06:38.120 numbers Today we have a lot of numbers. I s 0:06:38.279 --> 0:06:42.400 m s are booming, inventories are falling, car sales are surging. 0:06:42.640 --> 0:06:45.600 That tells you this is a self sustaining recovery. We 0:06:45.680 --> 0:06:48.160 want to keep it that way. His message is gonna 0:06:48.240 --> 0:06:54.240 be lower taxes, smart spending, and uh continued deregulation as 0:06:54.240 --> 0:06:57.200 well as fair trade deals. So that's his principles, and 0:06:57.279 --> 0:06:59.760 we could use a lot of executive authority. As I said, 0:07:00.120 --> 0:07:03.000 it's being drafted right now. I'm not going to negotiate here. 0:07:03.120 --> 0:07:09.520 I'm just saying, if you just want to, that's what 0:07:09.640 --> 0:07:12.720 I want to understand. The balance of risk is is 0:07:12.760 --> 0:07:15.800 one of those amorphous phrases about let me put it 0:07:15.840 --> 0:07:17.880 better way, then what's the biggest risk for you? Now? 0:07:18.160 --> 0:07:24.120 The risk? Please let me finish my sense. I'm just saying, 0:07:24.760 --> 0:07:30.080 if if the Congress does not act, if there's no deal, 0:07:30.280 --> 0:07:33.600 and right now it doesn't look that great, then the 0:07:33.640 --> 0:07:37.600 president will take his own actions. The solution here is 0:07:37.640 --> 0:07:42.720 to come to a pro growth, the common sense, pragmatic compromise. 0:07:43.200 --> 0:07:46.560 Thus far that has been elusive, And in that case, 0:07:46.920 --> 0:07:50.200 the president, who is a great leader and makes good 0:07:50.200 --> 0:07:54.080 on his promises, will exercise his leadership and all of 0:07:54.160 --> 0:07:57.440 his executive federal authorities. You can count on that. You 0:07:57.480 --> 0:07:59.600 can take that to the bank. The one thing you 0:07:59.600 --> 0:08:02.200 didn't though, Larry, was what you guys would do with 0:08:02.320 --> 0:08:06.760 executive powers on state aid. I've spoken to New York State. 0:08:06.920 --> 0:08:08.720 They've told me, if they don't get the aid, the 0:08:08.760 --> 0:08:12.720 austerity begins immediately. Now, you're an economisty, it's got way 0:08:12.720 --> 0:08:15.560 more experience than Night on Wall Street going back decades. 0:08:15.680 --> 0:08:18.080 You know that the federal government is the only one 0:08:18.160 --> 0:08:21.120 right now that cann act countercyclically. States do not have 0:08:21.280 --> 0:08:24.120 that benefit. They do not have that option. And you 0:08:24.200 --> 0:08:26.280 also know if they don't get that aid, the austerity 0:08:26.320 --> 0:08:29.720 starts immediately. So as the administration of the government, we've 0:08:29.720 --> 0:08:32.760 got to understand what's the federal strategy when the state 0:08:32.840 --> 0:08:36.040 level austerity kicks in because we can't find an agreement 0:08:36.240 --> 0:08:39.920 on state aid. You know, it's hard to say, Jonathan, 0:08:40.880 --> 0:08:44.640 that the Cares Bill and other bills in the last 0:08:44.679 --> 0:08:47.920 three or four months is austerity. I mean, we've put 0:08:47.960 --> 0:08:51.920 out right three and a half trillion dollars of fiscal 0:08:51.960 --> 0:08:56.200 assistance in many forms. The Federal Reserve all in has 0:08:56.240 --> 0:09:00.600 put out over seven trillion dollars through the any supply 0:09:00.880 --> 0:09:04.079 and their lending facilities. This is not austerity. I mean, 0:09:04.520 --> 0:09:06.959 that's what from the federal government. Larry, I'm not suggesting 0:09:06.960 --> 0:09:10.120 it will be I'm saying from states, they will have 0:09:10.240 --> 0:09:14.440 to come the states. The states, I will say this 0:09:16.040 --> 0:09:21.280 because of the pandemic contraction. The income statements of state 0:09:21.320 --> 0:09:25.560 and local governments and the federal government have deteriorated absolutely. Now, 0:09:26.000 --> 0:09:29.400 what is the solution. Some of the solution is an aid. 0:09:30.000 --> 0:09:33.720 Some of the solution is economic growth, where the revenues 0:09:33.760 --> 0:09:36.560 will start pouring in and more people go back to 0:09:36.640 --> 0:09:40.680 work and they pay taxes and so do businesses. We 0:09:40.800 --> 0:09:45.280 have given the states, through prior deals, literally hundreds and 0:09:45.360 --> 0:09:48.280 hundreds of billions of dollars. Now I don't want to 0:09:48.320 --> 0:09:51.840 second guess. I'm not here to negotiate. We are looking 0:09:51.960 --> 0:09:55.600 at all of these asks from our friends across the aisle. 0:09:56.040 --> 0:10:00.079 I know the President is especially interested in make be 0:10:00.240 --> 0:10:03.640 sure there are sufficient resources to get the kids back 0:10:03.640 --> 0:10:08.240 to school. If we apply the guidelines of distancing and 0:10:08.400 --> 0:10:13.040 masking and testing and good hygiene, the kids can get 0:10:13.040 --> 0:10:15.600 back to school. If the school need more equipment, if 0:10:15.600 --> 0:10:20.480 there's COVID related expenses, I think there's a chance to 0:10:20.600 --> 0:10:23.280 President would be happy to pitch in. But the bill 0:10:23.360 --> 0:10:27.480 that we have been given from the other team goes way, 0:10:27.520 --> 0:10:31.040 way way beyond that, and there's a lot of Democrat 0:10:31.200 --> 0:10:34.800 asks that simply don't make sense. Uh, certainly not in 0:10:34.840 --> 0:10:38.080 the present context, and so we have to separate that out. 0:10:38.280 --> 0:10:41.320 It's not so simple to just say there's fiscal austerity 0:10:41.320 --> 0:10:45.320 in the states. Hundreds and hundreds of billions trillions of 0:10:45.360 --> 0:10:49.280 dollars have now passed from federal to states. So let's 0:10:49.280 --> 0:10:53.480 try to be smart and efficient, and let's target again. 0:10:53.800 --> 0:10:57.000 I want to target people getting back to work, target 0:10:57.080 --> 0:10:59.719 kids going back to school. I want to target and 0:11:00.000 --> 0:11:03.400 o woymen incentives, not unemploying incentives. I want to target 0:11:03.760 --> 0:11:06.880 reemployment incentives. I want to make sure that people do 0:11:06.960 --> 0:11:10.120 not get evicted from their apartments or their homes. These 0:11:10.160 --> 0:11:13.280 are things we may be able to do through executive 0:11:13.320 --> 0:11:16.280 authority because the Congress can seem to get together for 0:11:16.320 --> 0:11:19.080 a Bible. Let's let's see if it happen to get 0:11:19.080 --> 0:11:24.160 it done, grows, grows, schools, jobs, kids. Let me make 0:11:24.200 --> 0:11:27.440 this real simple, and we will do whatever federal levels 0:11:27.480 --> 0:11:30.480 we have at our disposal. That is the President's pledge, 0:11:30.640 --> 0:11:33.360 and you'll hear plenty from him. Larry coming hours and 0:11:33.440 --> 0:11:35.480 days I've set across from you. I know you're a 0:11:35.480 --> 0:11:37.920 good man. I know that you want the best for 0:11:37.960 --> 0:11:40.920 the American people. I've also watched what it's like to 0:11:40.920 --> 0:11:42.719 watch your dad come home because the business has got 0:11:42.720 --> 0:11:45.480 to close. I've watched what happened when the house has 0:11:45.520 --> 0:11:47.760 to be sold and your family has got to move in, 0:11:47.880 --> 0:11:49.960 and moving with the relevant with a relative. I know 0:11:50.040 --> 0:11:53.360 that feels like the economic pain that people are going 0:11:53.440 --> 0:11:56.280 through in this country at the moment. And Larry, what 0:11:56.400 --> 0:12:00.439 really upsets me, and I think it's borderline embarrassing, is 0:12:00.480 --> 0:12:04.280 that this equity market was lower. I think you and 0:12:04.320 --> 0:12:06.920 i'd have a different conversation, wouldn't we There'd be much 0:12:06.960 --> 0:12:10.360 more urgency. And what I don't understand is the lack 0:12:10.400 --> 0:12:13.880 of urgency right now, Larry, I just don't understand it. 0:12:14.280 --> 0:12:17.160 If you can do these things to make the lives 0:12:17.200 --> 0:12:21.840 of people better, why weren't they done yesterday? Jonathan, let 0:12:21.880 --> 0:12:26.760 me say this. Look, Uh, I'm a bleeding hard to Okay, 0:12:26.800 --> 0:12:30.839 I'm a Jack Kemp bleading hard conservative on the supply side. 0:12:31.400 --> 0:12:35.920 You can't measure these things and just dollars spent. I mean, 0:12:36.000 --> 0:12:38.880 we know this, we know this. You put in three 0:12:38.880 --> 0:12:42.000 and a half trillion dollars already. The other team wants 0:12:42.040 --> 0:12:45.360 another three or four trillion dollars. Is that the answer? 0:12:45.840 --> 0:12:49.440 There are other better targeted ways. I want everybody to 0:12:49.480 --> 0:12:52.080 go back to work. You know, we've created over nine 0:12:52.080 --> 0:12:57.000 million jobs. We're clawed back about of the terrible laws 0:12:57.240 --> 0:12:59.200 from the pandemic to Larry if you wanted to go 0:12:59.240 --> 0:13:01.360 and eat with me, to like we can't even inside 0:13:01.400 --> 0:13:04.160 a restaurant in New York City. Come on, you gotta 0:13:04.960 --> 0:13:07.280 the only ask I have right now? Sure you let 0:13:07.280 --> 0:13:10.600 me finish my car. You had a little you had 0:13:10.600 --> 0:13:12.920 a little sermon at and I enjoyed it very much. 0:13:13.120 --> 0:13:16.160 And I respectfully that wasn't a sermon. That was meeting person. 0:13:16.679 --> 0:13:20.080 And you understand, Please, can are many other ways to 0:13:20.280 --> 0:13:23.920 deal with these problems. Okay, throwing money at them is 0:13:23.960 --> 0:13:28.080 not only the answer. You have to create economic growth incentives. 0:13:28.080 --> 0:13:31.280 But look, we are willing to spend money. I mean, 0:13:31.280 --> 0:13:35.240 that's not the point. The President himself has endorsed another 0:13:35.360 --> 0:13:39.600 round of direct mail checks. He has endorsed that. He 0:13:39.679 --> 0:13:45.240 has also endorsed continued unemployment assistance. The question is what 0:13:45.480 --> 0:13:49.480 is the overall policy to make sure that it makes 0:13:49.520 --> 0:13:52.440 sense that there are incentives to go back to work. 0:13:52.920 --> 0:13:55.480 And we have a very full fledged plan to do 0:13:55.559 --> 0:13:59.760 exactly that. We want to reward people and the businesses 0:13:59.840 --> 0:14:03.560 that work for to go back to work. We will 0:14:03.960 --> 0:14:08.200 extend the p P P. That is part of our package. Again, 0:14:08.280 --> 0:14:10.600 I'm not going to negotiate, but that's in our mix. 0:14:10.920 --> 0:14:14.600 We have retention credits for new jobs, we have benefits 0:14:14.640 --> 0:14:18.000 for reemployment. We want to cut the payroll tax, which 0:14:18.000 --> 0:14:21.720 would give existing workers a tremendous boosting income. I think 0:14:21.720 --> 0:14:23.880 with even in five months it would still be twelve 0:14:24.360 --> 0:14:27.280 dollars a year or more. All Right, people who are 0:14:27.280 --> 0:14:30.160 not working can go back to work and realize they're 0:14:30.200 --> 0:14:34.680 after tax wage is higher than the unemployment. That's a 0:14:34.760 --> 0:14:37.440 good thing. So we gotta be smart. It's not just 0:14:37.480 --> 0:14:40.920 a question. You know, I'm not gonna seed the ground 0:14:41.200 --> 0:14:45.320 of compassion. We are all compassion, We all want everybody. 0:14:45.480 --> 0:14:51.560 We all know people, families, cousins, kids, neighbors who have 0:14:51.640 --> 0:14:56.720 been damaged by this terrible pandemic. Correction, Uh, that's we 0:14:56.880 --> 0:14:59.560 know that. And we've been working on this now for 0:14:59.680 --> 0:15:02.880 five months at warp speed. We are even at the 0:15:02.960 --> 0:15:07.360 point now where six or seven companies aided by federal money, 0:15:07.560 --> 0:15:12.280 large chunks of it, are in phase three of vaccination testing. 0:15:12.440 --> 0:15:14.840 Which is a huge part of the story. And as 0:15:14.880 --> 0:15:17.800 far as getting the kids back to school, in addition 0:15:17.840 --> 0:15:20.800 to the masking and the distancing and the hygiene and 0:15:20.840 --> 0:15:23.160 so forth, we are willing. We have it in our 0:15:23.280 --> 0:15:26.640 negotiating position, a good deal of money, well over a 0:15:26.720 --> 0:15:29.240 hundred billion dollars to happen got to school. So we're 0:15:29.280 --> 0:15:32.040 trying to target things, but we're not going to allow 0:15:32.640 --> 0:15:37.960 a transformation of the economy whereby the government and its 0:15:38.040 --> 0:15:43.240 planners run everything, healthcare, energy, you name. We are not 0:15:43.320 --> 0:15:45.840 going to go down that road. We've tried that in 0:15:45.880 --> 0:15:48.360 the past and it does not work. You have to 0:15:48.400 --> 0:15:51.360 be smart. You have to focus on the incentive model 0:15:51.400 --> 0:15:55.160 of growth, and then we will see the successes. We've 0:15:55.160 --> 0:15:59.160 had plenty of economic comebacks in this country. Throwing money 0:15:59.200 --> 0:16:02.720 at every problem of them is not the best course 0:16:02.760 --> 0:16:06.200 of action. Let's be smart, let's be efficient, and let's 0:16:06.200 --> 0:16:09.640 provide incentives. And again, if we can't get a compromise 0:16:09.680 --> 0:16:12.200 the way we did last March, then the President will 0:16:12.240 --> 0:16:15.240 act with his own executive powers. And let me tell 0:16:15.280 --> 0:16:17.760 you it's not a bluff funny question, because I'm gonna 0:16:17.800 --> 0:16:19.160 get in trouble with the White House for keeping you 0:16:19.240 --> 0:16:21.040 too long, Glarry. What am I going to see first 0:16:21.080 --> 0:16:24.320 executive action on all the things you describe or sanctions 0:16:24.360 --> 0:16:30.480 on Carrie Lamb Jonathan, those are completely disconnected. I'm not 0:16:30.560 --> 0:16:33.360 going to respond to that to expect annotment on that 0:16:33.360 --> 0:16:38.040 a little bit later. Jonathan, I'm not here to talk 0:16:38.080 --> 0:16:42.120 about those. We have already UH done an executive order 0:16:42.840 --> 0:16:47.600 with respect to UM sanctions on Hong Kong and China 0:16:48.080 --> 0:16:52.240 for their many misdeeds, not only taking away the freedom 0:16:52.240 --> 0:16:55.160 of Hong Kong and breaking a fifty year deal. But 0:16:55.920 --> 0:16:59.880 Chinese have to be held accountable on their bad behavior 0:17:00.040 --> 0:17:03.680 during the pandemic. They're bad human rights records, what they're 0:17:03.680 --> 0:17:07.240 doing militarily in the China in the South China Sea. Uh. 0:17:07.280 --> 0:17:10.439 And we are putting out as you probably know, we 0:17:10.480 --> 0:17:13.679 are going to protect American investors with a much tougher 0:17:13.720 --> 0:17:17.960 approach with respect to the auditing of Chinese public companies 0:17:18.280 --> 0:17:21.840 and the Public Accounting Board and the SEC. We had 0:17:21.880 --> 0:17:24.840 a treasury or we're a financial working group. We just 0:17:24.920 --> 0:17:28.919 published this stuff. We're gonna give one year to shape 0:17:29.000 --> 0:17:32.840 up on the audits and on the working papers behind 0:17:32.840 --> 0:17:36.359 the audits to see if they deserve a listing on 0:17:36.480 --> 0:17:40.480 American exchanges. We have to protect our own investors, we 0:17:40.560 --> 0:17:45.320 have to protect our national security. Those are tough, gritty issues, 0:17:45.520 --> 0:17:48.920 and we're making progress. Those are separate issues, however, from 0:17:48.960 --> 0:17:52.280 these fiscal negotiations. Larry, I know you remand with a 0:17:52.320 --> 0:17:55.600 good hop and I appreciate your time every First Friday 0:17:55.600 --> 0:17:57.440 whenever we get the pay rolls report. I'm ready to 0:17:57.760 --> 0:17:59.600 a good sport. Thanks for you wanting us, and I 0:17:59.640 --> 0:18:01.240 hope for the best a little bit like to as well. 0:18:01.640 --> 0:18:08.560 Larry caldlaf nationally Canomy Council's director. Right now linking much 0:18:08.600 --> 0:18:11.480 of this report back into the financial Marcus Jeffrey Rosenberg 0:18:11.560 --> 0:18:16.640 joins US portfolio manager of the Systematic Multi Strategy Fund. Jeff, 0:18:16.720 --> 0:18:21.439 let's get systematic right now. And that I see higher yields. 0:18:21.760 --> 0:18:24.679 Is it a modest adjustment or can you say that 0:18:24.720 --> 0:18:27.840 we will pull back from those lower nominal yields of 0:18:27.920 --> 0:18:31.280 the last number of days. I think it's a really 0:18:31.400 --> 0:18:34.560 modest adjustment, Tom, and I think earlier you really nailed 0:18:34.560 --> 0:18:38.400 it when you linked the report not to the implications 0:18:38.440 --> 0:18:42.080 for monetary policy, but to the implications for fiscal policy. 0:18:42.440 --> 0:18:44.359 So when you're looking at the bond market, and the 0:18:44.440 --> 0:18:47.280 yield reaction. You really got to go out a lot 0:18:47.320 --> 0:18:49.920 of decimal points to see a reaction to this report, 0:18:49.960 --> 0:18:54.440 because this isn't really about influencing monetary policy, because monetary 0:18:54.480 --> 0:18:57.320 policy has been very clear that it is going to 0:18:57.359 --> 0:19:01.520 be highly accommodated, that they're going back to trying to 0:19:01.560 --> 0:19:04.239 get the economy to run hot. So you needed to 0:19:04.280 --> 0:19:07.040 have a very very big number here, and even if 0:19:07.040 --> 0:19:08.920 you had a big number, I'm not sure that would 0:19:08.920 --> 0:19:11.560 have changed the monetary policy outlook. This is much more 0:19:11.600 --> 0:19:15.920 about influencing the market direction is taking its direction from 0:19:16.400 --> 0:19:19.800 fiscal policy and and to what you talked about earlier. 0:19:19.840 --> 0:19:21.640 You know, I think this is a little bit more 0:19:21.640 --> 0:19:24.040 of a positive report that makes it a little bit 0:19:24.119 --> 0:19:28.399 harder to argue for the really big project, the really 0:19:28.440 --> 0:19:31.280 big program, Well we'll see where that plays out, but 0:19:31.320 --> 0:19:33.240 it is much more about fiscal policy. We welcome all 0:19:33.280 --> 0:19:37.000 of you on Bloomberg Radio, Bloomberg Television. It is Bloomberg Surveillance. 0:19:37.040 --> 0:19:40.360 It's about conversation. Jeffrey Rosenberg with us with black Rock. 0:19:40.480 --> 0:19:43.440 David blanche Flower of Dartmouth College will join us here. 0:19:43.800 --> 0:19:46.639 Really looking forward to talking to blanch Flower about the 0:19:46.720 --> 0:19:50.000 quality of these jobs. Lisa, Yeah, I gotta say, Jeff, 0:19:50.040 --> 0:19:52.760 you were talking about the idea of Washington, d C 0:19:52.920 --> 0:19:54.840 And the need for fiscal stimulus and time. We've been 0:19:54.840 --> 0:19:57.399 talking about that all morning. But Jeff, right now, it 0:19:57.440 --> 0:19:59.520 seems like there isn't a ton of urgency based in 0:19:59.560 --> 0:20:02.040 the fact that Republicans are going home and there might 0:20:02.040 --> 0:20:04.600 be some sort of executive order. This report isn't going 0:20:04.680 --> 0:20:07.600 to light of fire. Is the market to sanguine about 0:20:07.640 --> 0:20:11.600 the idea of another round of fiscal support? Well, I 0:20:11.880 --> 0:20:14.720 think there's a lot of uncertainty now, and I think 0:20:14.760 --> 0:20:17.159 if anything, you look at the report and it adds 0:20:17.200 --> 0:20:20.400 to that uncertainty. You know, the market is expecting some 0:20:20.520 --> 0:20:23.239 kind of compromise, some kind of deal. Perhaps they were 0:20:23.320 --> 0:20:25.600 leaning towards the higher end. I think that's going to 0:20:25.800 --> 0:20:29.480 challenge this. I think eventually the market is expecting some 0:20:29.560 --> 0:20:32.919 kind of next round program to come through. And today's 0:20:32.960 --> 0:20:36.359 payroll report, you know, it still gives a bit of ammunition. 0:20:36.400 --> 0:20:38.240 You know, we talked about the ten point to percent 0:20:38.320 --> 0:20:41.560 unemployment rate. You know, we're making progress, but it also 0:20:41.680 --> 0:20:45.040 highlights just the significant amount of damage that has been 0:20:45.080 --> 0:20:48.760 done and continues to impact people. That is the argument 0:20:48.760 --> 0:20:51.600 for another program here, how do you use the economic 0:20:51.680 --> 0:20:55.920 data that we get to decide how to trade? So, 0:20:56.119 --> 0:20:59.360 you know, it's been a big challenge because the economic 0:20:59.440 --> 0:21:02.520 data is just so dramatic. Let's just take the payroll 0:21:02.600 --> 0:21:05.760 report itself here. You know, we came in kind of 0:21:06.080 --> 0:21:10.120 pretty close to the expectations, but the range of those 0:21:10.160 --> 0:21:15.040 expectations is greater than than anything you've seen in any time. 0:21:15.160 --> 0:21:19.440 That the inflows and outflows are orders of magnitude greater, 0:21:19.520 --> 0:21:22.919 and the variability around the expectations ranged from you know, 0:21:22.960 --> 0:21:26.600 minus six over three million. So what it means is 0:21:26.680 --> 0:21:29.639 that when you look at economic data relative you know, 0:21:29.680 --> 0:21:32.880 what we what we emphasize is the surprise. Well, what 0:21:32.920 --> 0:21:36.760 what the uncertainty means is it's much harder to gauge 0:21:37.080 --> 0:21:40.639 what is that surprise level? And so your your impact 0:21:40.840 --> 0:21:44.280 of any economic data relative to expectations because you don't 0:21:44.280 --> 0:21:46.720 know how to anchor those expectations all have to be 0:21:46.840 --> 0:21:51.400 very dampened relative to two kind of more normal periods, Jeff. 0:21:51.560 --> 0:21:54.240 Within the mathematics of all this is a point where 0:21:54.280 --> 0:21:57.679 you shift from a yield study to a price study. 0:21:57.680 --> 0:22:00.080 And certainly in the tension this week, I've seen that 0:22:00.640 --> 0:22:02.639 are we now at a point where people are just 0:22:02.720 --> 0:22:05.679 buying full faith and credit just because they're buying it 0:22:05.720 --> 0:22:08.800 and they'll take it at any price, and price matters up, 0:22:08.880 --> 0:22:12.240 Up we go in the bid well in terms of 0:22:12.320 --> 0:22:14.840 the safe assets. When you talk about you know, full 0:22:14.840 --> 0:22:18.120 faith and credit is really about treasuries and treasury yields, 0:22:18.359 --> 0:22:23.159 you know, it's it's about monetary policy and monetary policy expectations. 0:22:23.200 --> 0:22:27.720 We we've really changed the functioning of fixed income markets. 0:22:27.960 --> 0:22:31.600 How we set prices is a lot less about you know, 0:22:31.680 --> 0:22:36.080 what do these economic numbers mean about expected inflation and 0:22:36.400 --> 0:22:39.560 short term movements. It's much more first about what does 0:22:39.600 --> 0:22:42.479 it mean to the policy response, because the policy today 0:22:42.840 --> 0:22:47.920 is moving towards a contemplation of full outright control called 0:22:48.040 --> 0:22:51.680 yield curve control of the bond market, and so it's 0:22:51.760 --> 0:22:54.919 really much more about our assessment of what does this 0:22:55.040 --> 0:22:59.679 do about the change in policy, less about the economic 0:22:59.760 --> 0:23:02.919 data a directly impacting trading, and so it's it's a 0:23:03.040 --> 0:23:06.720 very different kind of environment for setting of interest rates 0:23:07.080 --> 0:23:09.639 by the bond market. Is that where are you on 0:23:09.720 --> 0:23:11.560 a call on the bonds? I mean you're running a 0:23:11.600 --> 0:23:15.080 systematic portfolio and there's the Carnegie Mellon matthewist to it. 0:23:15.160 --> 0:23:18.679