WEBVTT - Weisman: Labor force increases are pretty minimal

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<v Speaker 1>Broadcasting live to New York, Gloomberg to Washington, d C,

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<v Speaker 1>Bloomberg to Boston, Bloomberg twelve hundreds, to San Francisco, Bloomberg

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<v Speaker 1>nine six to the country. When he said Sam channel

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<v Speaker 1>one ninety and around the globe, the Bloomberg Radio BLUs happened.

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<v Speaker 1>Bloomberg dot Com. This is Bloomberg Surveillance. Good morning, eight

0:00:25.239 --> 0:00:28.000
<v Speaker 1>thirty on Wall Street and Michael McKee along with Tom

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<v Speaker 1>Keene Economic Indicators brought to you by Commonwealth Financial Network.

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<v Speaker 1>When it's time to change the conversation, talk with the

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<v Speaker 1>broker dealer r I A that's ready to listen Call

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<v Speaker 1>eight six two three six three eight or is it

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<v Speaker 1>Commonwealth dot Com to learn more? No economic indicators in

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<v Speaker 1>the United States at eight thirty. But Canada has just

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<v Speaker 1>reported it added forty thousand, six hundred jobs in March.

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<v Speaker 1>The jobless rate their falls. NHL players, all NHL players

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<v Speaker 1>who weren't going to the Stanley thank you. Yeah, they've

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<v Speaker 1>all gotten their their part time jobs. There. Bill Dudley

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<v Speaker 1>just about to speak up in Bridgeport, Connecticut, and uh,

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<v Speaker 1>we're we're watching to say, well here you here are

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<v Speaker 1>the headlines. Um, he's still concerned about low inflation expectations. Uh,

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<v Speaker 1>there is significant uncertainty about growth prospects abroad, and he's

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<v Speaker 1>calling for a cautious, gradual approach to rate hikes. No

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<v Speaker 1>UH fundamental change, I would say Tom in the in

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<v Speaker 1>no deviation from the FED line there Um, he does

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<v Speaker 1>see the jobless rate falling to around four or three

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<v Speaker 1>quarters present for in two s. This is the money

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<v Speaker 1>headline that none of our audience, including me, is mentally

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<v Speaker 1>set for. And I'll you bring in our esteem guests,

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<v Speaker 1>who's expert on this. The president of the New York

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<v Speaker 1>Fed sees United States growth of about two percent this

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<v Speaker 1>year above potential. Above potential is nobody's framing that to

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<v Speaker 1>or two point to ur two point x well is

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<v Speaker 1>quote unquote above potential. Let's bringing bringing a man who

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<v Speaker 1>went to uh Duke University and got a degree also

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<v Speaker 1>from the University of Michigan uh to to wield his

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<v Speaker 1>framing hammer and tell us what this all means. Obviously,

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<v Speaker 1>UH potential growth is how fast you can grow without

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<v Speaker 1>touching off inflation. But two percent Eric Westman is very

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<v Speaker 1>different from what we have seen in the past. He

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<v Speaker 1>has UH fixed income portfolio managered MFS well, I mean,

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<v Speaker 1>you're looking at different dynamics out there, especially in the

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<v Speaker 1>labor market, and in terms of how we measure productivity,

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<v Speaker 1>we think productivity is less than one percent, and we

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<v Speaker 1>know that labor force UH increases are pretty minimal here

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<v Speaker 1>and are likely to be low for the next five

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<v Speaker 1>to ten years. Were we know that. So potential growth

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<v Speaker 1>at two percent doesn't sound that off base to me.

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<v Speaker 1>And certainly it is a sea change relative to the

0:03:09.440 --> 0:03:13.280
<v Speaker 1>Reagan and Clinton expansions, where we would have considered potential

0:03:13.280 --> 0:03:18.560
<v Speaker 1>growth to be above three. So is this a permanent condition,

0:03:19.200 --> 0:03:22.840
<v Speaker 1>the permanent new normal? Are we just still trying to

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<v Speaker 1>figure out a way to raise it a little higher.

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<v Speaker 1>I don't think we can say it's permanent. I mean,

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<v Speaker 1>it may be semi permanent for a while. It sort

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<v Speaker 1>of depends on whether you believe in Robert Gordon's view

0:03:34.920 --> 0:03:37.520
<v Speaker 1>of the world from Northwestern is new book out there

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<v Speaker 1>talking about how we've seen a four hundred year one

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<v Speaker 1>off in productivity growth and all of the low hanging

0:03:44.720 --> 0:03:47.080
<v Speaker 1>fruit has been picked and that's the end of that,

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<v Speaker 1>or whether you believe that this next technological advancement only

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<v Speaker 1>takes time to run itself through the economy as have

0:03:54.560 --> 0:03:57.760
<v Speaker 1>previous advancements, and we will see it over the course

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<v Speaker 1>of time. I'm more in the ladder camp. I think

0:04:00.640 --> 0:04:03.160
<v Speaker 1>we will see higher productivity. Whether it we'll see two

0:04:03.160 --> 0:04:05.760
<v Speaker 1>percent productivity, I don't know, but I think we'll see

0:04:05.760 --> 0:04:09.000
<v Speaker 1>something significantly higher than one. Do we see it into

0:04:09.360 --> 0:04:14.880
<v Speaker 1>into President Dudley's shocking headline of where a potential is?

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<v Speaker 1>Is it a potential of a bimodal to America economy

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<v Speaker 1>or frankly, a nice part of America's doing a lot

0:04:23.080 --> 0:04:26.600
<v Speaker 1>lot better than potential and there's another part of America

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<v Speaker 1>flattener back or has that always been our economic condition?

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<v Speaker 1>I think that's always been the case to some degree,

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<v Speaker 1>but it seems to be more the case today. And

0:04:35.600 --> 0:04:38.920
<v Speaker 1>that happens during these paradigm shifts. Right. So, we have

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<v Speaker 1>this new artificial intelligence and digitalization that's really disrupting an

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<v Speaker 1>awful lot of the economy. And there is a school

0:04:47.200 --> 0:04:50.599
<v Speaker 1>of thought out there that as many companies transition to

0:04:50.800 --> 0:04:54.960
<v Speaker 1>this more technologically advanced methodology, that they're sort of doing

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<v Speaker 1>two things at once. They're using the prior dynamics of

0:04:58.920 --> 0:05:02.440
<v Speaker 1>managing their business while they're trying to bring online this

0:05:02.520 --> 0:05:06.840
<v Speaker 1>new digitalization, and that's sort of doubling efforts and that

0:05:06.839 --> 0:05:10.039
<v Speaker 1>will be the case for a while. That's productivity detracting

0:05:11.279 --> 0:05:14.400
<v Speaker 1>in Greenspan made the case last night that the productivity

0:05:14.440 --> 0:05:17.040
<v Speaker 1>is the real issue here, that if you were going

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<v Speaker 1>to do anything to try to fix the economy to

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<v Speaker 1>get potential up, it would be fiscal policy aimed at

0:05:23.839 --> 0:05:30.040
<v Speaker 1>raising investment to raise productivity. Hard to disagree with that, certainly.

0:05:30.040 --> 0:05:32.040
<v Speaker 1>If you look at small business, which tends to be

0:05:32.080 --> 0:05:35.920
<v Speaker 1>a driver of productivity, if you look at startups, we're

0:05:35.920 --> 0:05:39.040
<v Speaker 1>not seeing that. We're not seeing credit go into that

0:05:39.160 --> 0:05:41.920
<v Speaker 1>part of the economy. Some of that could be demographics,

0:05:42.080 --> 0:05:44.760
<v Speaker 1>some of that could be regulatory, some of that could

0:05:44.800 --> 0:05:48.120
<v Speaker 1>be just the aftermath of the global financial crisis. But

0:05:48.200 --> 0:05:50.560
<v Speaker 1>we need to get money back into the system, and

0:05:50.680 --> 0:05:54.080
<v Speaker 1>especially sort of new money with new businesses. To come

0:05:54.120 --> 0:05:58.040
<v Speaker 1>back and talk about the fixed income business, Are you

0:05:58.120 --> 0:06:03.640
<v Speaker 1>managing the various extincome efforts at MFS For any sense

0:06:03.720 --> 0:06:08.039
<v Speaker 1>of rising inflation, I think that you're probably likely to

0:06:08.040 --> 0:06:11.560
<v Speaker 1>see inflation creep a little bit higher than where it

0:06:11.640 --> 0:06:15.320
<v Speaker 1>has been. Oil prices fell by and then they fell

0:06:15.400 --> 0:06:19.280
<v Speaker 1>by another. There's only so many times that can happen

0:06:19.360 --> 0:06:21.560
<v Speaker 1>unless they're going to start to actually give away the stuff.

0:06:21.960 --> 0:06:24.880
<v Speaker 1>So at some point those base effects will kick in,

0:06:25.200 --> 0:06:28.279
<v Speaker 1>and I think you'll see headline inflation rates a little

0:06:28.279 --> 0:06:31.120
<v Speaker 1>bit higher. But core rates are already somewhat high. If

0:06:31.120 --> 0:06:34.800
<v Speaker 1>you look at core CPI, that's running above two. So

0:06:35.000 --> 0:06:37.159
<v Speaker 1>I think we'll see the headline converge to the core

0:06:37.560 --> 0:06:39.680
<v Speaker 1>over the course of the next couple of years. But

0:06:39.760 --> 0:06:42.560
<v Speaker 1>it's going to be a long slog. Let's come back

0:06:42.600 --> 0:06:44.640
<v Speaker 1>here quite soon with us with the MFS as we

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<v Speaker 1>consider Really they're the synthesis of what we do every

0:06:48.160 --> 0:06:51.200
<v Speaker 1>day economics, finance, invest Mike, what else do you see

0:06:51.200 --> 0:06:55.040
<v Speaker 1>in the Dudley comments. I'm fixated. I'm Bill Dudley saying

0:06:55.080 --> 0:06:59.960
<v Speaker 1>about two is above potential. I can almost look at

0:06:59.960 --> 0:07:01.880
<v Speaker 1>the don't think this is a type of Well, if

0:07:01.880 --> 0:07:04.800
<v Speaker 1>you're a FED watcher and you're parsing his comments, he says,

0:07:05.160 --> 0:07:09.440
<v Speaker 1>the balance of risks tilted slightly to the downside. Our

0:07:09.520 --> 0:07:12.760
<v Speaker 1>balance of risk is tilted to a data check futures

0:07:12.880 --> 0:07:19.040
<v Speaker 1>up seventeen. Michael bar is here. Now let's get the

0:07:19.080 --> 0:07:21.840
<v Speaker 1>latest world in national headlines. Mike, Tom, thank you very much.

0:07:21.840 --> 0:07:24.680
<v Speaker 1>Secretary of State John Kerry made an unannounced stop and

0:07:24.720 --> 0:07:26.800
<v Speaker 1>bagged at today to meet with the Racks Prime Minister

0:07:26.920 --> 0:07:29.920
<v Speaker 1>and other top officials. It comes at a time of

0:07:29.960 --> 0:07:33.360
<v Speaker 1>increased military momentum against the Islamic State group and deep

0:07:33.400 --> 0:07:37.480
<v Speaker 1>political uncertainty in the unstable country. It is a major

0:07:37.600 --> 0:07:41.600
<v Speaker 1>document called The Joy of Love. The document, which is

0:07:41.600 --> 0:07:44.840
<v Speaker 1>two hundred fifty six pages, was released today by Pope

0:07:44.880 --> 0:07:48.600
<v Speaker 1>Frances about the complexities of sex, marriage and family. The

0:07:48.640 --> 0:07:52.080
<v Speaker 1>Pope has insisted that individual conscious should be the guiding

0:07:52.120 --> 0:07:55.320
<v Speaker 1>principle for Catholics and rejects the emphasis on black and

0:07:55.360 --> 0:07:58.800
<v Speaker 1>white rules for the faithful. Frances makes no change in

0:07:58.880 --> 0:08:01.920
<v Speaker 1>the church doctrine, but says the Church must no longer

0:08:02.080 --> 0:08:05.480
<v Speaker 1>sit in judgment and throw stones against those who failed

0:08:05.520 --> 0:08:08.560
<v Speaker 1>to live up to the Church's ideals of marriage and

0:08:08.760 --> 0:08:11.600
<v Speaker 1>family life. It looks like any snow the New York

0:08:11.640 --> 0:08:13.680
<v Speaker 1>City area we'll get over the weekend we has turned

0:08:13.720 --> 0:08:15.840
<v Speaker 1>out to be a Yeah, it would be much less

0:08:15.880 --> 0:08:19.600
<v Speaker 1>than first expected. According to the National Weather Service, the

0:08:19.640 --> 0:08:22.440
<v Speaker 1>New area knew it will get only about an inch

0:08:22.600 --> 0:08:25.320
<v Speaker 1>of snow or less. That's down from about one to

0:08:25.360 --> 0:08:30.240
<v Speaker 1>three inches of snow. That's good news. Did you see

0:08:30.600 --> 0:08:34.120
<v Speaker 1>three inches? We're going to get but now it's Track

0:08:34.240 --> 0:08:39.240
<v Speaker 1>South and now it's a something Global News twenty four

0:08:39.280 --> 0:08:43.160
<v Speaker 1>hours a day. Michael Blarm, All right, thank you, Michael.

0:08:43.160 --> 0:08:45.920
<v Speaker 1>Time now for the Bloomberg NBC Sports Update, which traces

0:08:45.960 --> 0:08:49.240
<v Speaker 1>the question John Stash, how is the Master's gonna get

0:08:49.280 --> 0:08:51.800
<v Speaker 1>affected by the cold weather. Yeah, they had a lot

0:08:51.800 --> 0:08:53.920
<v Speaker 1>of wind yesterday, but they're not getting any snow down

0:08:53.960 --> 0:08:56.800
<v Speaker 1>in Augusta. But a lot of struggles yesterday. Mickey Fowler

0:08:57.040 --> 0:08:59.760
<v Speaker 1>had an eighty two time winner, Bubba Watson a back

0:09:00.320 --> 0:09:03.160
<v Speaker 1>forty one. Jason Dave ranked first in the world, triple

0:09:03.200 --> 0:09:05.640
<v Speaker 1>bogey the sixteen foal. How about Ernie Else a nine

0:09:05.679 --> 0:09:08.640
<v Speaker 1>on the opening hole. He six putted from three feet,

0:09:08.679 --> 0:09:11.320
<v Speaker 1>but Jordan Speed trying to join Jack Nicholas tagger Woods

0:09:11.320 --> 0:09:12.959
<v Speaker 1>and Nick Foul That was the only back to back winners.

0:09:13.000 --> 0:09:15.520
<v Speaker 1>The Green Jacket fired a bogie free six under sixty six.

0:09:15.520 --> 0:09:17.680
<v Speaker 1>He will bring it two shot leader today second round,

0:09:17.679 --> 0:09:19.920
<v Speaker 1>which can be heard on Bloomberg eleven free today starting

0:09:19.920 --> 0:09:23.920
<v Speaker 1>at four fifteen. If Guarden Islanders completed an unprecedented seasons

0:09:23.920 --> 0:09:26.160
<v Speaker 1>sweep with the Rangers four one, they won the second

0:09:26.160 --> 0:09:28.839
<v Speaker 1>period three nothing, This might be an outshot sixteen to nine.

0:09:28.880 --> 0:09:31.760
<v Speaker 1>Two teams are tied. The one that finishes ahead places

0:09:31.800 --> 0:09:34.720
<v Speaker 1>Pittsburgh in the playoffs. The team that doesn't plays Florida

0:09:34.760 --> 0:09:36.520
<v Speaker 1>Penguins just one the eighth in a row four three

0:09:36.520 --> 0:09:39.640
<v Speaker 1>at Washington and a Sidney Crosby golding overtime Tamma Baby

0:09:39.640 --> 0:09:41.880
<v Speaker 1>at the Devil's four to two, seventieth win for Golden

0:09:41.880 --> 0:09:44.280
<v Speaker 1>State one twelve, one on one over San Antonio. If

0:09:44.280 --> 0:09:46.360
<v Speaker 1>the Warriors win their last three games, they break the

0:09:46.400 --> 0:09:48.760
<v Speaker 1>record for most wins ever at the stadium. In last

0:09:48.760 --> 0:09:51.800
<v Speaker 1>than twenty four hours, Yankee scored twenty four runs twenty nine.

0:09:51.800 --> 0:09:54.079
<v Speaker 1>They had six homers eight five over Houston. Mark to

0:09:54.160 --> 0:09:56.840
<v Speaker 1>Shara Broke Tar with a three run opposite field homer

0:09:56.840 --> 0:09:59.480
<v Speaker 1>in the seventh inning. He says, everyone's hitting on Tarl

0:10:00.000 --> 0:10:03.199
<v Speaker 1>top to bottom has been um producing these first few games,

0:10:03.240 --> 0:10:06.199
<v Speaker 1>so especially last night and today, you know, we had

0:10:06.280 --> 0:10:09.480
<v Speaker 1>contributions from one three nine again like Darland Castro, believed

0:10:09.520 --> 0:10:11.600
<v Speaker 1>to be the best start to a Yankee career ever,

0:10:11.800 --> 0:10:13.839
<v Speaker 1>three games in three homers, eight r b I s

0:10:13.880 --> 0:10:17.280
<v Speaker 1>A five eight three average Yanks in Detroit today and

0:10:17.320 --> 0:10:19.280
<v Speaker 1>the Mets have their home opener coming up against the

0:10:19.280 --> 0:10:23.320
<v Speaker 1>Billings with the Bloomberg NBC Sports Update. I'm John Stapsha John,

0:10:23.440 --> 0:10:27.959
<v Speaker 1>thanks so much. Mike McKee minim suits, just walking around

0:10:28.000 --> 0:10:34.880
<v Speaker 1>taller the last few days. The Orioles are undefeated. The

0:10:34.920 --> 0:10:37.240
<v Speaker 1>cold weather must be the cold We're gonna we're gonna

0:10:37.280 --> 0:10:39.319
<v Speaker 1>get a report on that fairly soon. I think in

0:10:39.360 --> 0:10:42.040
<v Speaker 1>the next few days we're gonna be talking with John Angelos. Oh,

0:10:42.080 --> 0:10:45.520
<v Speaker 1>I did not know that. Wonderful in contact with him yesterday.

0:10:45.559 --> 0:10:47.360
<v Speaker 1>We're excited by that. We're excited that they've had a

0:10:47.360 --> 0:10:50.439
<v Speaker 1>good start, and we're always excited since she's our boss,

0:10:50.440 --> 0:10:53.520
<v Speaker 1>that Mindy is happy. David Price will start the Red

0:10:53.559 --> 0:10:58.679
<v Speaker 1>Sox home opener. That's wonderful. Coast to coast Bloomberg Surveillance.

0:10:58.679 --> 0:11:02.560
<v Speaker 1>Good morning, Bloomberg Surveilance, brought to you by Flushing Bank.

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<v Speaker 1>Mobile Act and on your radio is a Broomberg Business

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<v Speaker 1>Flash and I'm Karen Moscow. This updates brought to you

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<v Speaker 1>by Sector Spider e t F S. Why buy a

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<v Speaker 1>single stock when you can invest in the entire sector?

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<v Speaker 1>Visits sector spd r S dot com or call six

0:11:37.520 --> 0:11:41.400
<v Speaker 1>Sector e t F Global stocks rebounding with oil, while

0:11:41.400 --> 0:11:44.000
<v Speaker 1>bonds of Europe's most intended countries rose on the final

0:11:44.080 --> 0:11:46.559
<v Speaker 1>day of a week that saw markets whips on currency

0:11:46.640 --> 0:11:50.400
<v Speaker 1>volatility approach the high since twenty eleven. Futures this morning

0:11:50.440 --> 0:11:53.920
<v Speaker 1>are higher SNP mini futures of fifteen points, DOWNI miny

0:11:54.000 --> 0:11:57.360
<v Speaker 1>futures of one eleven, and NAZ DOCU mini futures have

0:11:57.520 --> 0:12:00.480
<v Speaker 1>thirty two The tenure Treasury down nine thirty seconds, the

0:12:00.559 --> 0:12:03.600
<v Speaker 1>yield one point seven two percent nom X screwde oil

0:12:03.640 --> 0:12:07.040
<v Speaker 1>of five percent of a dollar eighty six atteen of

0:12:07.080 --> 0:12:09.800
<v Speaker 1>barrel comics gold is down to tens percent or two

0:12:09.800 --> 0:12:12.480
<v Speaker 1>dollars fifty cents to twelve thirty five an ounce. The

0:12:12.559 --> 0:12:14.960
<v Speaker 1>euro at dollar thirteen fifty nine. The n one oh

0:12:14.960 --> 0:12:18.040
<v Speaker 1>eight point six five uncertainty over the outlook for the

0:12:18.080 --> 0:12:20.600
<v Speaker 1>U S economy is higher than usual, which calls for

0:12:20.640 --> 0:12:24.040
<v Speaker 1>a conscious and gradual approach to interest rate increases. Not

0:12:24.240 --> 0:12:26.880
<v Speaker 1>from Federal Reserve Bank of New York President William Dundley,

0:12:26.880 --> 0:12:29.720
<v Speaker 1>who's speaking in a speech in Connecticut City Grooves head

0:12:29.720 --> 0:12:32.720
<v Speaker 1>of equity trading, Derek Van Deen will leave after almost

0:12:32.800 --> 0:12:35.880
<v Speaker 1>eight years at the firm. And that's a Bloomberg business flash.

0:12:36.000 --> 0:12:41.000
<v Speaker 1>Tom and Mike Karen, thanks so much. Fisture a risk

0:12:41.120 --> 0:12:46.080
<v Speaker 1>field to the screen. It is on Wall Street. The

0:12:46.160 --> 0:12:50.720
<v Speaker 1>following is from Bloomberg View opinions in commentary from Bloomberg columnists.

0:12:50.800 --> 0:12:53.640
<v Speaker 1>I'm Frank Berry, an editor with Bloomberg View, waiting on

0:12:53.679 --> 0:12:55.800
<v Speaker 1>line to board a bus for the Donald Trump rally.

0:12:55.920 --> 0:12:58.400
<v Speaker 1>Mustache showed older man with a big board of Trump

0:12:58.400 --> 0:13:01.360
<v Speaker 1>buttons sauntered by five dollars each. She said, two for

0:13:01.480 --> 0:13:04.120
<v Speaker 1>six dollars, said at twenty something man. The peddler didn't

0:13:04.160 --> 0:13:07.320
<v Speaker 1>budge the prospective buyer. Let's call him buttons. Raised his

0:13:07.400 --> 0:13:10.440
<v Speaker 1>offer two for seven dollars. The peddler kept walking. This

0:13:10.480 --> 0:13:14.040
<v Speaker 1>guy said, buttons, you believe him? Two expletives deleted. Buttons

0:13:14.080 --> 0:13:16.319
<v Speaker 1>eventually left and came back with the goods. You get

0:13:16.320 --> 0:13:19.199
<v Speaker 1>two for seven dollars, asked his friend. No, said buttons

0:13:19.280 --> 0:13:23.360
<v Speaker 1>two for eight. Gotta say, smart businessman. One expletive deleted.

0:13:23.559 --> 0:13:26.240
<v Speaker 1>A man in a knit cap turned around the art

0:13:26.280 --> 0:13:28.640
<v Speaker 1>of the deal, he said buttons and his friend eventually

0:13:28.640 --> 0:13:30.440
<v Speaker 1>made a run for the venue and one of their

0:13:30.480 --> 0:13:32.760
<v Speaker 1>buttons fell to the street. I picked it up, thinking

0:13:32.760 --> 0:13:34.960
<v Speaker 1>I might see them inside, but I never made it

0:13:35.000 --> 0:13:37.080
<v Speaker 1>into the rally. The crowd was too big. But at

0:13:37.160 --> 0:13:40.480
<v Speaker 1>least I got a good expletive deleted souvenir. I'm Frank

0:13:40.520 --> 0:13:44.119
<v Speaker 1>Barry edited with Bloomberg View. For more Bloomberg opinion and commentary,

0:13:44.160 --> 0:13:46.800
<v Speaker 1>please go to Bloomberg View dot com or Bloomberg Go

0:13:46.920 --> 0:13:50.960
<v Speaker 1>on the Bloomberg terminal. This has been Bloomberg View and

0:13:50.960 --> 0:13:56.520
<v Speaker 1>Bloomberg View Commentary can be heard hourly weekdays. I'm Bloomberg Radio.

0:13:57.040 --> 0:14:01.439
<v Speaker 1>This morning Bloomberg Surveillance. We bought you by Columbia University's

0:14:01.480 --> 0:14:08.439
<v Speaker 1>Executive Technology Management Graduate program. It prepares technology professionals to

0:14:08.520 --> 0:14:14.719
<v Speaker 1>drive business performance information and SPS dot Columbia dot E

0:14:14.880 --> 0:14:20.600
<v Speaker 1>d U slash tech One more time, SPS dot Columbia

0:14:20.840 --> 0:14:25.200
<v Speaker 1>dot E d U slash tech. Eric Wison with us

0:14:25.200 --> 0:14:28.720
<v Speaker 1>with MFS. As we consider the bond market, Eric frame,

0:14:29.200 --> 0:14:32.440
<v Speaker 1>how you manage a bond portfolio? Right now? Is it

0:14:32.520 --> 0:14:37.120
<v Speaker 1>for coupon? Since things are priced to perfection. Is total

0:14:37.200 --> 0:14:41.520
<v Speaker 1>return out well, still all got to be about total return,

0:14:41.560 --> 0:14:43.200
<v Speaker 1>But you have to know you're not getting a whole

0:14:43.200 --> 0:14:46.120
<v Speaker 1>lot of income from your coupons, so you're looking for

0:14:46.160 --> 0:14:48.680
<v Speaker 1>countries that can offer you a little bit of extra spread.

0:14:49.120 --> 0:14:52.520
<v Speaker 1>So you look at a country like in New Zealand Australia.

0:14:53.080 --> 0:14:58.520
<v Speaker 1>Things are relatively weak. Their inflation is popish and declining

0:14:58.960 --> 0:15:00.840
<v Speaker 1>growth is middle ish, so you might be able to

0:15:00.920 --> 0:15:03.840
<v Speaker 1>get some spread compression there. And in Europe maybe you

0:15:03.840 --> 0:15:07.720
<v Speaker 1>look at a Norway where it's still beholden to oil.

0:15:08.120 --> 0:15:11.120
<v Speaker 1>Inflation has room to come down and the central bank

0:15:11.200 --> 0:15:13.760
<v Speaker 1>still has a little bit of room to cut rates.

0:15:13.800 --> 0:15:17.360
<v Speaker 1>But there's not a lot out there that's offering you, uh,

0:15:17.480 --> 0:15:21.120
<v Speaker 1>compelling spread. Well, you gotta put money somewhere where, do

0:15:21.120 --> 0:15:25.400
<v Speaker 1>you right? You see how Mike said, so subtly until

0:15:25.400 --> 0:15:29.560
<v Speaker 1>you get your mattress etf up and go yes indeed,

0:15:29.720 --> 0:15:31.880
<v Speaker 1>so you know, I mean, I'll sound a little bit

0:15:31.880 --> 0:15:34.560
<v Speaker 1>like a broken record from last time, but high yield

0:15:34.720 --> 0:15:36.920
<v Speaker 1>not quite as compelling as the last time we spoke,

0:15:37.080 --> 0:15:39.480
<v Speaker 1>where it might have been around eight hundred over, but

0:15:39.520 --> 0:15:42.160
<v Speaker 1>it's still six fifty over. It's still a hundred hundred

0:15:42.160 --> 0:15:47.080
<v Speaker 1>and twenty cheap two sort of where it averages um.

0:15:47.120 --> 0:15:51.560
<v Speaker 1>You know, we like that. E M still offers some spread.

0:15:51.600 --> 0:15:54.520
<v Speaker 1>It's a little dicey. You gotta pick your points. It's

0:15:54.600 --> 0:15:57.600
<v Speaker 1>cheap to high grade, and high grade offers you a

0:15:57.640 --> 0:16:00.600
<v Speaker 1>little bit of a pickup over sort of. It's it's

0:16:00.640 --> 0:16:03.080
<v Speaker 1>mean over the course of this business cycle. So there

0:16:03.160 --> 0:16:05.360
<v Speaker 1>is some spread out there, and you have to take

0:16:05.360 --> 0:16:09.200
<v Speaker 1>a look at what your risk tolerance is. Away from

0:16:09.560 --> 0:16:14.200
<v Speaker 1>the bond world, there's the idea of equity dividend is

0:16:14.320 --> 0:16:18.760
<v Speaker 1>yield equivalent. All the radar goes up when that kind

0:16:18.840 --> 0:16:22.400
<v Speaker 1>of idea is said. Now we have dividend paying dividend

0:16:22.400 --> 0:16:27.000
<v Speaker 1>growing consumer stocks price to nineteen sixties perfection. Folks. We

0:16:27.040 --> 0:16:31.520
<v Speaker 1>say this to the Massachusetts Financial Service, which basically invented

0:16:32.000 --> 0:16:35.160
<v Speaker 1>the diversified equity portfolio. Eric, you were there, what was

0:16:35.200 --> 0:16:40.480
<v Speaker 1>that eight? Sometimes was the last time the red sox won?

0:16:41.000 --> 0:16:45.400
<v Speaker 1>Um A. But but Eric, the basic the basic idea

0:16:45.440 --> 0:16:48.840
<v Speaker 1>of a dividend is a yield proxy. Discussed that. That's

0:16:48.840 --> 0:16:52.240
<v Speaker 1>a difficult thing, isn't it. I think that's in a

0:16:52.320 --> 0:16:56.040
<v Speaker 1>moment in time. It's a nice narrative, but I don't

0:16:56.040 --> 0:16:59.080
<v Speaker 1>think that that's particularly compelling over the course of time.

0:16:59.240 --> 0:17:00.880
<v Speaker 1>You know, if you look at dividends and you look

0:17:00.920 --> 0:17:03.359
<v Speaker 1>at yield, you look at dividends and you look at spreads,

0:17:03.840 --> 0:17:08.520
<v Speaker 1>my sense would be the correlations over lengths of time

0:17:08.720 --> 0:17:11.879
<v Speaker 1>are are not going to match that narrative. So I

0:17:11.880 --> 0:17:16.639
<v Speaker 1>would be suspect of comparing the two like that. The

0:17:16.680 --> 0:17:21.639
<v Speaker 1>noted bond investor and we have some music playing in

0:17:21.680 --> 0:17:26.240
<v Speaker 1>the background here. Um. The noted bond investor Jamie Diamond

0:17:26.960 --> 0:17:29.760
<v Speaker 1>suggested earlier this week that the bond market is not

0:17:29.880 --> 0:17:34.000
<v Speaker 1>ready for the FED. Uh, you're in charge of keeping

0:17:34.040 --> 0:17:37.920
<v Speaker 1>track of the bond market. Is MFS ready for the FED?

0:17:38.600 --> 0:17:41.520
<v Speaker 1>Or do you think he's too pessimistic. I'm not sure

0:17:41.520 --> 0:17:43.680
<v Speaker 1>how anybody can be ready for the FED right now.

0:17:43.840 --> 0:17:46.720
<v Speaker 1>I mean, it seems as though we're lost in terms

0:17:46.720 --> 0:17:49.680
<v Speaker 1>of trying to figure out what the Fed's reaction function is.

0:17:50.000 --> 0:17:51.879
<v Speaker 1>They used to not care about the rest of the world.

0:17:51.920 --> 0:17:54.360
<v Speaker 1>They used to not talk about the dollar, and now

0:17:54.400 --> 0:17:57.360
<v Speaker 1>that's all they talk about. So in September they surprised

0:17:57.400 --> 0:17:59.359
<v Speaker 1>us saying the rest of the world is too tighty

0:17:59.680 --> 0:18:01.680
<v Speaker 1>and we don't want to raise rates. And March they've

0:18:01.720 --> 0:18:05.240
<v Speaker 1>done the same thing yelling speech last week. Uh, and

0:18:05.280 --> 0:18:09.239
<v Speaker 1>it now seems very whimsical. And I think that's not

0:18:09.359 --> 0:18:12.080
<v Speaker 1>a term that any central banker would want attached to them,

0:18:12.160 --> 0:18:16.439
<v Speaker 1>especially in a world where ever, growing transparency tends to

0:18:16.440 --> 0:18:18.919
<v Speaker 1>be a goal. You probably don't want to be transparent

0:18:18.960 --> 0:18:23.400
<v Speaker 1>about your capriciousness. But that's where the central banks are

0:18:23.560 --> 0:18:27.560
<v Speaker 1>right now in terms of raising rates. Uh. You know,

0:18:27.640 --> 0:18:29.240
<v Speaker 1>I think the feed is damned if they do, and

0:18:29.320 --> 0:18:31.560
<v Speaker 1>damned if they don't. If they raise rates and the

0:18:31.640 --> 0:18:34.760
<v Speaker 1>dollar increases in values, you wind up getting into that

0:18:34.840 --> 0:18:38.000
<v Speaker 1>kind of vicious cycle all over again. And if the

0:18:38.000 --> 0:18:40.399
<v Speaker 1>FEED says they're on ROLD, then it forces the e

0:18:40.440 --> 0:18:42.880
<v Speaker 1>c B in the Bank of Japan to go yet

0:18:42.960 --> 0:18:46.640
<v Speaker 1>further into negative yielding territory, and that has its own problems.

0:18:47.160 --> 0:18:50.560
<v Speaker 1>One final question, if we we could, Eric, and I

0:18:50.640 --> 0:18:52.720
<v Speaker 1>say this with great respect for the heritage of Bob

0:18:52.760 --> 0:18:57.320
<v Speaker 1>Dennis and John Jamison NFS explained to me leverage is

0:18:57.320 --> 0:19:00.840
<v Speaker 1>a suitable yield and answer for retirees, is there any

0:19:00.880 --> 0:19:04.760
<v Speaker 1>proof it works? Well, that's a heck of a good question.

0:19:05.040 --> 0:19:08.240
<v Speaker 1>I think that in an environment like this, Uh, that's

0:19:08.280 --> 0:19:11.840
<v Speaker 1>a kind of a scary thought to some degree, we're

0:19:11.880 --> 0:19:17.520
<v Speaker 1>already highly leveraged. Uh you know where Yeah, I mean,

0:19:17.600 --> 0:19:20.320
<v Speaker 1>we're We're in a world here where leverage makes a

0:19:20.320 --> 0:19:23.000
<v Speaker 1>good deal of sense if you have visibility out into

0:19:23.000 --> 0:19:27.280
<v Speaker 1>the future and you feel good about domestic demand, international demand,

0:19:27.320 --> 0:19:30.720
<v Speaker 1>a little bit of inflation. Levering up in an environment

0:19:30.760 --> 0:19:33.359
<v Speaker 1>where you can't see that demand, where the demographics are

0:19:33.440 --> 0:19:36.600
<v Speaker 1>less favorable where they've been, where there's more regulation, where

0:19:36.640 --> 0:19:40.040
<v Speaker 1>tax policy is uncertain, that may not be the best

0:19:40.359 --> 0:19:42.920
<v Speaker 1>prescription going forward. And I want to make clear, folks,

0:19:42.960 --> 0:19:45.080
<v Speaker 1>there's two kinds of leverage there. There's a leverage within

0:19:45.119 --> 0:19:47.760
<v Speaker 1>the system, the macro leverage and the leverage on the

0:19:47.800 --> 0:19:52.600
<v Speaker 1>accounting statements, and then the actual use of leverage within

0:19:52.600 --> 0:19:56.040
<v Speaker 1>a diversified portfolio. To any answer, yield. It's a little

0:19:56.119 --> 0:19:59.439
<v Speaker 1>complex there, but I thought Eric's question was great. Dr Weisman,

0:19:59.720 --> 0:20:03.600
<v Speaker 1>thank so much. He is with the Massachusetts Financial Services

0:20:03.840 --> 0:20:07.520
<v Speaker 1>MF asked, Mike, I want to bring it back right here,

0:20:07.560 --> 0:20:10.399
<v Speaker 1>just to get a window into our next hour about

0:20:10.440 --> 0:20:13.520
<v Speaker 1>what we learned this week. What I learned this week

0:20:14.119 --> 0:20:17.480
<v Speaker 1>is a real global real economic effects are having profound

0:20:18.080 --> 0:20:22.359
<v Speaker 1>influence on markets, and markets having a profound in influence

0:20:22.480 --> 0:20:27.080
<v Speaker 1>on global economies as well. You know, hour long discussion

0:20:27.160 --> 0:20:30.560
<v Speaker 1>last night among the four FED former chairs, and I

0:20:30.560 --> 0:20:33.800
<v Speaker 1>think Alan Greenspan probably had the most trench and comment

0:20:33.880 --> 0:20:37.080
<v Speaker 1>of all when he talked about productivity being the key

0:20:37.119 --> 0:20:40.440
<v Speaker 1>to why we're seeing such slow growth and that he said,

0:20:40.560 --> 0:20:43.680
<v Speaker 1>is uh, slow because there is no investment out there?

0:20:43.680 --> 0:20:46.600
<v Speaker 1>And why is there no investment out there? Well, companies

0:20:46.600 --> 0:20:49.520
<v Speaker 1>are are uncertain. And just to paint the picture, folk,

0:20:49.600 --> 0:20:52.720
<v Speaker 1>Mike and I are with Sherman Greenspan and he comes

0:20:52.760 --> 0:20:55.159
<v Speaker 1>into the room and he's walking a little, you know,

0:20:55.200 --> 0:20:58.480
<v Speaker 1>a little fragile for you know, ninety sits down, sharp

0:20:58.560 --> 0:21:01.520
<v Speaker 1>as attack, and he leans over his says, Tom, can

0:21:01.600 --> 0:21:05.040
<v Speaker 1>we please talk about productivity? Yeah, I mean that's front

0:21:05.119 --> 0:21:08.879
<v Speaker 1>center for him. Yeah, I mean he and he made

0:21:09.280 --> 0:21:12.520
<v Speaker 1>a very cogent point last night about that. Interesting to

0:21:12.560 --> 0:21:15.600
<v Speaker 1>hear from Paul Volker again. You know, the audience was

0:21:15.640 --> 0:21:19.240
<v Speaker 1>students most weren't even born when he was with Care

0:21:19.280 --> 0:21:22.040
<v Speaker 1>of the Ft exactly. But reminding us that all this

0:21:22.200 --> 0:21:26.359
<v Speaker 1>handwringing over the political criticism of the FEED is nothing new. Uh.

0:21:26.520 --> 0:21:29.160
<v Speaker 1>He reminded us that you know, builders sent him two

0:21:29.160 --> 0:21:32.520
<v Speaker 1>by four's into mail and he raised interest rates and

0:21:32.640 --> 0:21:36.080
<v Speaker 1>farmers demonstrated outside the Fed and hung him in effigy.

0:21:36.160 --> 0:21:38.720
<v Speaker 1>So uh, it goes with the territory. I hope you

0:21:38.720 --> 0:21:42.280
<v Speaker 1>guys like how we do economic history here. We really

0:21:42.280 --> 0:21:44.720
<v Speaker 1>believe you have to have a look back to look forward,

0:21:44.760 --> 0:21:47.439
<v Speaker 1>and sometimes there's not enough of that in our rushed

0:21:48.040 --> 0:21:51.080
<v Speaker 1>modern world. We're gonna continue our dialogue on this Friday

0:21:51.400 --> 0:21:55.520
<v Speaker 1>after yesterday. It's a decidedly better feel with le Yen

0:21:55.960 --> 0:21:59.240
<v Speaker 1>is the global proxy A one oh seven and change

0:21:59.480 --> 0:22:02.200
<v Speaker 1>yesterday A and then really in the low one o eight,

0:22:02.240 --> 0:22:04.480
<v Speaker 1>one o eight ten, one oh eight two, one oh

0:22:04.560 --> 0:22:07.520
<v Speaker 1>eight fifteen, and we have a weaker end one oh

0:22:07.520 --> 0:22:12.439
<v Speaker 1>eight point six nine, but still that's massively strong compared

0:22:12.480 --> 0:22:15.479
<v Speaker 1>to where we were a week or two ago. We're

0:22:15.480 --> 0:22:19.560
<v Speaker 1>gonna continue that discussion Robbie Feldman of Morgan Stanley with

0:22:19.640 --> 0:22:22.480
<v Speaker 1>us earlier this morning. We're going to continue that smart

0:22:22.520 --> 0:22:25.920
<v Speaker 1>discussion with John Vale. He will join us. So Nico

0:22:26.040 --> 0:22:29.200
<v Speaker 1>Asset Management can't do better than that. This is Bloomberg

0:22:29.240 --> 0:22:29.760
<v Speaker 1>surveillance