WEBVTT - Ryding: U.S. productivity is not acceptable

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>This is a Bloomberg Business Flash and I'm Karen Moscow.

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<v Speaker 1>Futures are higher this morning. Let's go to the First

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<v Speaker 1>Word Breaking news desk for today's morning call, and here's

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<v Speaker 1>Bill muloney. Good morning, Bill, Good morning Karen. US futures

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<v Speaker 1>are maintaining their games. Since the last time we spoke down,

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<v Speaker 1>Futures currently hired by eighty seven point says futures gained

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<v Speaker 1>ten and as at futures rise by twenty three. The

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<v Speaker 1>US ten yield at one point eight eight percent. In Europe, France, Germany,

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<v Speaker 1>Italy and Spain are hired by at least one percent,

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<v Speaker 1>and global bond yields and crude features are also trading

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<v Speaker 1>higher this morning. On the US economic front, at ten o'clock,

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<v Speaker 1>hostale inventories and a ten thirty energy inventories. After de

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<v Speaker 1>Bellas night, Bill Ackman raised the possibility Valley may sell.

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<v Speaker 1>It's Bausch and Lome Steak and Shapulti close at Massachusetts

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<v Speaker 1>restaurant after workers became sick. In other news, is rail

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<v Speaker 1>CSX SES macro economic challenges persisting through finally some of

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<v Speaker 1>your Wall Street upgrades and downgrades, ross stores, cutting neutral

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<v Speaker 1>Colman Sacks fire, I raised overweight over at Piper bah

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<v Speaker 1>B built and cut a hold of Jeffreys Yelp and

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<v Speaker 1>group On cut the cell over at Ubs, and finally

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<v Speaker 1>CBS raised outperform over at Wells Fargo live on the

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<v Speaker 1>first Breaking News Desk on Bill Maloney. Karen, thanks Bill

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<v Speaker 1>and to hear live breaking news over your Bloomberg type

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<v Speaker 1>squawk a goo on your terminal, that's s Q you

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<v Speaker 1>a w K go when that's a Bloomberg business flash.

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<v Speaker 1>Tom and Mike Churn, thanks so much. Bloomberg Surveillance brought

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<v Speaker 1>Too short a time this morning with John at writing

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<v Speaker 1>of r d Q Economics to go back X number

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<v Speaker 1>of years to your great phrase, where's the pudding green? Well?

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<v Speaker 1>Just for negative, Just for those who aren't amongst Tom

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<v Speaker 1>is referring back to two thousand four piece when the

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<v Speaker 1>Federal Reserve was raising rates at the quarter point of meeting,

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<v Speaker 1>and we argued that they were not getting close to

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<v Speaker 1>uh the green, they were just starting off on the

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<v Speaker 1>path and manage neutrality. Look, we've had one move and

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<v Speaker 1>now we've see installed by the FED and by all

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<v Speaker 1>logic that the FEDS laid down in data dependency, they

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<v Speaker 1>should be raising interest rates next week, but it would

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<v Speaker 1>be such a shock to the markets. It's not in

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<v Speaker 1>this Fed's DNA, I think to do that. So, um,

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<v Speaker 1>we know the pudding green's out there, but the FED

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<v Speaker 1>is still just got out of the clubhouse and there's

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<v Speaker 1>it hit the ball once maybe on the And I

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<v Speaker 1>gotta give that new headline to John's next essay. Are

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<v Speaker 1>we on the golf course? This is well? I mean,

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<v Speaker 1>what are we going from punch bowl to putting green

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<v Speaker 1>to golf course? Here? Um, you just don't want to

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<v Speaker 1>be out of bounds. Uh. The economy, the is at

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<v Speaker 1>least matching what the FED said it would do uh

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<v Speaker 1>this year. Um, but the FED is not matching what

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<v Speaker 1>it said it would do this year in terms of

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<v Speaker 1>of interest rates. We've talked a lot about the markets

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<v Speaker 1>and the economy, the markets and the FED not being

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<v Speaker 1>on the same page and having to come together. What

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<v Speaker 1>about the Fed in its own forecast. Well, that that's

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<v Speaker 1>the real challenge next week. Look, any one move doesn't matter,

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<v Speaker 1>but the Feed is laid out the path of raising

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<v Speaker 1>rates about a quarter point per quarter UH for at

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<v Speaker 1>least the next two years, and then a little bit

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<v Speaker 1>more after that. UH. And we have to ask, has

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<v Speaker 1>the Fed laid out a new rationale for running monetary

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<v Speaker 1>policy other than looking at the labor market and looking

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<v Speaker 1>at the inflation numbers. And you say, labor market numbers

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<v Speaker 1>four point nine unemployment, we've averaged tunes from twenty and

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<v Speaker 1>jobs per month over the last three months. On inflation,

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<v Speaker 1>core inflation is now one point seven percent. It's not

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<v Speaker 1>at the one point three percent level it was back

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<v Speaker 1>in December. So the Fed, unless they roll out a

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<v Speaker 1>new rational, if they don't move next week, they should

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<v Speaker 1>on their own logic. But it seems very unlikely. They

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<v Speaker 1>can't change the outlook too much. Except there's if you

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<v Speaker 1>look at the speeches by stan Fisher, probably the lower

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<v Speaker 1>the neutral rate of interest, the rest of the neutral

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<v Speaker 1>rate of interest nudget down maybe a quarter point maybe

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<v Speaker 1>take one move out of that. But a radical move

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<v Speaker 1>would require a radical new form of policy something of

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<v Speaker 1>the kind. I don't believe the argument. But the only

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<v Speaker 1>person is really laying out that case right now as

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<v Speaker 1>Lyle Brainerd, which is saying we can't have this great

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<v Speaker 1>divergence between US manager policy and eat easy be in

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<v Speaker 1>the Bank of Japan. And I disagree with that for you,

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<v Speaker 1>because I don't think we're a small open economy. We're

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<v Speaker 1>a large still relatively closed economy, and U s should

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<v Speaker 1>set monetary policy based on the US needs. But there's

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<v Speaker 1>no one else really out there in the FED who's

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<v Speaker 1>laying out a different way of looking at monetary policy.

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<v Speaker 1>So I can't see how they changed the dots too much. Well,

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<v Speaker 1>what when do you think they act? And how are

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<v Speaker 1>they gonna be at the end of the year force

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<v Speaker 1>to act more quickly? They could do UM. I if

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<v Speaker 1>they don't move UH next week, I think it's June.

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<v Speaker 1>The problem with Judie is what happens on June. We

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<v Speaker 1>have a vote, We have the Brexit votes, so you

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<v Speaker 1>have another potential global thing for the FED to worry about. UM.

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<v Speaker 1>The markets are saying one move a year, the Feds

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<v Speaker 1>saying one move per quarter. UM. That is a huge divergence.

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<v Speaker 1>And I really hope that those of you who are

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<v Speaker 1>at the press conference next week ask press the Fed

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<v Speaker 1>on that divergence, because it's not trivial. I want to

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<v Speaker 1>talk to you about productivity. We spoke with Dominique Constant.

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<v Speaker 1>He was at Cambridge as your city, Sussex. He was

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<v Speaker 1>at St John's, and he's adamant that this time is different.

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<v Speaker 1>It's not a nine nineties dearth of productivity before the

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<v Speaker 1>technological progress of the Internet. There's something different now. Are

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<v Speaker 1>are you concerned about low productivity and should it amend

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<v Speaker 1>or adjust what Cherryellen does. I'm very concerned about low productivity.

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<v Speaker 1>We're running the lowest productivity growth over the last five

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<v Speaker 1>years that we've done since and that was in the

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<v Speaker 1>depths of a of a really deep procession um and

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<v Speaker 1>without productivity gains. The wage increases that people at the

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<v Speaker 1>FAT and elsewhere in government want to see and workers

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<v Speaker 1>want to see can only come at the expense of

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<v Speaker 1>profits which would undermine the expansion, or at the expense

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<v Speaker 1>of higher inflation. There's no free lance. You cannot higher

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<v Speaker 1>wages and maintain profit margins and keep low inflation and

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<v Speaker 1>have this low productivity growth. And for so long people

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<v Speaker 1>people people talk about economy and slow growth and things

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<v Speaker 1>a demand problem. We really have a supply side problem

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<v Speaker 1>and we don't understand it. But stam Fisher said, it

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<v Speaker 1>doesn't like its measurement. Tarry. You gotta come back. We

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<v Speaker 1>need a longer time with you at some point. You're

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<v Speaker 1>John writing for for to shorter time today with already

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<v Speaker 1>two already Q Economics just fantastic. We're gonna look at

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<v Speaker 1>politics next. I believe there's a horse race yesterday. This

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<v Speaker 1>is Bloomberg's surveillance coming up there. With all due respect.

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