WEBVTT - Surveillance: US adds 187,000 jobs

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<v Speaker 1>This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along

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<v Speaker 1>with Jonathan Farrow and Lisa Abramowitz. Join us each day

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<v Speaker 1>for insight from the best and economics, geopolitics, finance and investment.

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<v Speaker 1>Alex Steele, I'm.

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<v Speaker 2>Joining us now from Washington, DC. Is Julie Sue, Acting

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<v Speaker 2>US Secretary of Labor Secretary. Pleasure to speak with you.

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<v Speaker 2>Thank you for joining you too. The market sees this

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<v Speaker 2>is a good report. Good news is good news for

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<v Speaker 2>the market. How long can this good news continue? From

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<v Speaker 2>where you sit?

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<v Speaker 3>Right, that's right, that's the right characterization of this.

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<v Speaker 1>Right.

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<v Speaker 3>This is exactly what you'd want to see if you're

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<v Speaker 3>looking for a soft landing. This is the if you

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<v Speaker 3>average the last three months, it's about one hundred and

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<v Speaker 3>fifty thousand jobs each month being created. This is the

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<v Speaker 3>transition from the breakneck speed of the fast recovery we

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<v Speaker 3>saw initially when President Biden first came into office, to

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<v Speaker 3>the consistent steady, stable growth that you want to see

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<v Speaker 3>in a strong economy.

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<v Speaker 2>The one really big acts here, Secretary, is what's happening

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<v Speaker 2>with the unions. You have the Hollywood strike still ongoing,

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<v Speaker 2>the actors strike still ongoing. You have a potential autoworker

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<v Speaker 2>strike that could hit the Big Three. You have trains,

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<v Speaker 2>you have doc workers. There's a lot of union action

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<v Speaker 2>right now is the White House and active conversations with

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<v Speaker 2>these unions.

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<v Speaker 3>Right So, we're continuing to see the effects of a

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<v Speaker 3>tight labor market. Right We continue to have now unemployment

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<v Speaker 3>at less than four percent. This is the longest stretch

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<v Speaker 3>since the nineteen sixties. And in a tight labor market,

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<v Speaker 3>workers have more power. We've seen workers come back to

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<v Speaker 3>the labor market and make choices about what it means

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<v Speaker 3>to have a good job, good family sustaining job, a

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<v Speaker 3>good job where they can, you know, make demands to

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<v Speaker 3>improve their lives and their working conditions. And the unions

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<v Speaker 3>are part of that.

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<v Speaker 4>Now. You mentioned some.

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<v Speaker 3>Unions where you know, through those demands they've resolved issues

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<v Speaker 3>that were long standing, that have raised wages and address

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<v Speaker 3>certain conditions. You mentioned the ports. That's one area you know,

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<v Speaker 3>we saw that with the Teamsters in ups last month.

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<v Speaker 3>We continue to see workers making these demands, and these

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<v Speaker 3>are not just like a a sort of an accident

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<v Speaker 3>in an administration that supports working people. This is really

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<v Speaker 3>part and parcel of workers being able to demand their

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<v Speaker 3>fair share.

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<v Speaker 2>Sure, but when you take a look at the auto workers,

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<v Speaker 2>for example, how does the administration avoid Sean Faine, as

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<v Speaker 2>the head of the United Auto Workers, overplaying his hand.

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<v Speaker 2>The increases in demands that union is asking are tremendous

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<v Speaker 2>forty five percent wage increase, thirty two hour work week,

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<v Speaker 2>things that many say are very unrealistic, and if those

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<v Speaker 2>workers strike, we could be looking at a recession. That's

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<v Speaker 2>what some are saying. How does the President Biden handle that?

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<v Speaker 1>Yeah?

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<v Speaker 3>I mean we have definitely seen wage increases in contracts

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<v Speaker 3>that have been signed. We've seen them wage increases you know,

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<v Speaker 3>over six year periods, right, multiple year periods. I think

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<v Speaker 3>for a president who believes as I do in the

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<v Speaker 3>collective bargaining process, we trust the process.

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<v Speaker 5>Right.

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<v Speaker 3>We allow the parties to stay at the table. They

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<v Speaker 3>are staying at the table. That's a good sign. Party

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<v Speaker 3>sectors stay apart until they're not the secretary.

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<v Speaker 2>If they stay at the table and then eventually they

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<v Speaker 2>strike they don't get what they want, like a one

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<v Speaker 2>hundred and fifty thousand plus people out of work that

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<v Speaker 2>is going to have a tremendous drag.

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<v Speaker 3>Yeah, I mean that's right, and so that's why we're

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<v Speaker 3>we remain hopeful that the parties will resolve their issues.

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<v Speaker 3>We trust their process to do that. Obviously, you know,

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<v Speaker 3>strike is a part of that too, and everybody you know,

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<v Speaker 3>would love to see a path forward where the union

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<v Speaker 3>and the employers do the right thing. You know, these

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<v Speaker 3>are you know, a moment in which union members are

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<v Speaker 3>seeing historic profits coming out from you know, a pandemic.

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<v Speaker 3>So you know, to that point, the parties have to

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<v Speaker 3>remain talking.

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<v Speaker 2>So to that point, do you think that the Big

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<v Speaker 2>three are negotiating in good faith? Jean Fain doesn't think so.

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<v Speaker 3>Do you think so, I'm at the bargaining table, you know,

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<v Speaker 3>I'm not there. I do think that some of the

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<v Speaker 3>you know, what gets said is reflective of what's happening

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<v Speaker 3>at the bargetin table. Some of it is not right.

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<v Speaker 3>There's there's lots of things that happen during the process

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<v Speaker 3>of a negotiation. I think it's important for us to

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<v Speaker 3>allow the parties to do what they what they need

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<v Speaker 3>to do, and that's you know, yeah, that's what we're

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<v Speaker 3>doing here.

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<v Speaker 2>I totally get it, and there is a process. But

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<v Speaker 2>if President Biden is facing something like three big auto

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<v Speaker 2>strike working so one hundred and fifty thousand people maybe

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<v Speaker 2>out of jobs, plus or forty five percent increase in wages,

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<v Speaker 2>both of those are difficult. On the one hand, you

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<v Speaker 2>have a recession fear. On the other hand, that's going

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<v Speaker 2>to lead to higher inflation with wages. Which side are

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<v Speaker 2>you going to come down on?

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<v Speaker 3>Well, I think overall right, as we talked about with

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<v Speaker 3>the jobs numbers, we are seeing really solid job growth

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<v Speaker 3>and a solid strong economic picture. I think it's important

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<v Speaker 3>not to make too much of any one one part

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<v Speaker 3>of that. And I know each time there's been a

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<v Speaker 3>contract that is about to expire, there's been a whole

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<v Speaker 3>lot of handing over what's going to happen. I think

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<v Speaker 3>it's prettymature. I think the contract is not yet expired.

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<v Speaker 3>It's important to allow the parties to do what they

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<v Speaker 3>want to do. But I will say, you know this, President,

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<v Speaker 3>one of the pillars of Bidenomics is to believe it

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<v Speaker 3>that workers empowered workforce is a good thing for working people,

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<v Speaker 3>and that is something that he's been unwavering about.

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<v Speaker 2>So that really does feel like support the wage gains,

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<v Speaker 2>even if it might come at the expense short term

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<v Speaker 2>of the economy. Is that a fair characterization.

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<v Speaker 3>Well, it's really about supporting the parties, negotiating in good

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<v Speaker 3>faith to grapple with heart issues and arrive at a

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<v Speaker 3>place where, you know, the President often says, when workers

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<v Speaker 3>do well, employers profit, and the economy is stronger, that's

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<v Speaker 3>what we'd like to see.

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<v Speaker 2>But before I let you go, and I'm saying this

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<v Speaker 2>and Jess, but I actually mean it, Taylor Swift has

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<v Speaker 2>truly driven economy in many ways. Just look at AMC

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<v Speaker 2>and I'm wondering, do you talk to Taylor Swift like

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<v Speaker 2>when she stops going on tour, are you actually going

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<v Speaker 2>to be looking at like a weakening labor market and

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<v Speaker 2>a weakening economy. I'm joking, but I'm also kind of serious.

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<v Speaker 3>Right, So I'll respond with, you know, women are powering

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<v Speaker 3>this economic recovery. You know, women are at the highest

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<v Speaker 3>levels of you know, percent of women in jobs for

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<v Speaker 3>the fifth month straight, record breaking. And remember during the pandemic,

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<v Speaker 3>women were really devastated by you know, the lack of

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<v Speaker 3>pay leave and the lack of care. We've seen women

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<v Speaker 3>come back in really high numbers and get jobs, and

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<v Speaker 3>we need to continue with that trend, make sure that

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<v Speaker 3>women get to participate fully in the economy and the

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<v Speaker 3>good jobs that are being created.

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<v Speaker 2>Yeah, don't think Taylor Swift had a problem with that.

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<v Speaker 2>I don't think her roadies though.

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<v Speaker 4>Are women.

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<v Speaker 2>But okay, thank you very much, Secretary, appreciate. Julie Shoe,

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<v Speaker 2>acting us the Secretary of Labor.

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<v Speaker 1>Alex Steele with the acting director Julie Sue of Labor

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<v Speaker 1>Randall Kraser with with perspective here and we've better forget

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<v Speaker 1>about the economic mambo jumbo and go to the FED.

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<v Speaker 1>Professor Krasler, can you glean here a FED that will

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<v Speaker 1>change its attitude towards the November meeting?

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<v Speaker 6>So I think, as we're talking about before, this is

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<v Speaker 6>kind of, you know, roughly what the FED was expecting.

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<v Speaker 6>You've seen a little bit less wage pressure, which is

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<v Speaker 6>good from the Fed's perspective. We've seen greater labor force participation,

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<v Speaker 6>which the FED also also likes. That's likely what is

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<v Speaker 6>accounting for the increase in the in the unemployment rate.

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<v Speaker 6>So you're seeing the kind of goldilock scenario that the

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<v Speaker 6>FED wants that the liber market is gradually softening but

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<v Speaker 6>not cratering. It's taking some of the pressure off, and

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<v Speaker 6>so that'll take the pressure off the FED from raising rates.

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<v Speaker 6>I think it'd be really unlikely that they're going to

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<v Speaker 6>move in at the next meeting, And obviously there's going

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<v Speaker 6>to be a lot more data that they'll come out

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<v Speaker 6>between now and then, but unless there's some major surprise,

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<v Speaker 6>they're probably likely going to hold through the rest of

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<v Speaker 6>the year.

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<v Speaker 1>Randy, we've got to run. But one more quick question,

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<v Speaker 1>if I may. It's a dual mandate. Is it really

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<v Speaker 1>a dual mandate for this federal reserve system?

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<v Speaker 6>Well, this is the big pivot that came last year

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<v Speaker 6>at Jackson Hole when j Powell said there's one thing

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<v Speaker 6>that we're going to do, and he said that eight times,

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<v Speaker 6>that we're going to fight inflation. So he basically said, sure,

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<v Speaker 6>we have a dual mandate, but the inflation part is

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<v Speaker 6>the most important. This year was kind of more back

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<v Speaker 6>to normal that we have to worry about both the

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<v Speaker 6>part as well as the employment part. And so that's

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<v Speaker 6>where the fed's looking so carefully at data to make

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<v Speaker 6>sure that they don't raise rates so much that they

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<v Speaker 6>bring the unemployment rate zooming up. It's hard to get

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<v Speaker 6>that perfect. A lot of people think, oh, the FIT

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<v Speaker 6>can engine perfectly engineer this soft landing, that they have

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<v Speaker 6>so much control that they can move the unemployment rate

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<v Speaker 6>up just one or two percent, a tens of a

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<v Speaker 6>percent and leave it there. It's not so easy, is that.

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<v Speaker 6>There are a lot of other factors that come in.

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<v Speaker 1>Governor Krausner, thank you so much for joining us today.

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<v Speaker 1>Professor Krausner at the Boot School in the Chicago Katie,

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<v Speaker 1>Why don't you bring in Jeffrey Rosenberg here? It's a

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<v Speaker 1>bond market shifting, Well, let's do it.

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<v Speaker 7>Jeff Rosenberg. He is portfolio manager of the Systematic Multi

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<v Speaker 7>Strategy Fund over at Blackrock. Jeff, it's great to talk

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<v Speaker 7>to you. You look at the first blush in the markets.

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<v Speaker 7>You have short end yields absolutely plunging, you of futures

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<v Speaker 7>getting a bit of a bid when you go through

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<v Speaker 7>these numbers. Is that the correct reaction?

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<v Speaker 5>I think it is, and I think this was the

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<v Speaker 5>report that the market was looking for. You might have

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<v Speaker 5>had a bigger reaction if it was a stronger than

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<v Speaker 5>expected report. But this is the reaction of pricing out

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<v Speaker 5>the last hype that the Fed suggested they might have

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<v Speaker 5>to deliver, you know, And so I think that market

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<v Speaker 5>reaction makes a lot of sense. The front end of

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<v Speaker 5>the curve, both in reels and nominals, is where you're

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<v Speaker 5>seeing the biggest reaction, and that prices in the near term.

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<v Speaker 4>Expectations for Fed policy.

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<v Speaker 5>So the labor markets are normalizing, and that's the main

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<v Speaker 5>message from today's payroll report.

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<v Speaker 4>Wages are softening a little.

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<v Speaker 5>Bit on the margin, not really much movement in the

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<v Speaker 5>three month averages.

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<v Speaker 4>The point two. It just missed rounding up to point three.

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<v Speaker 4>It's a point two. So you're seeing still the slowness

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<v Speaker 4>in the last piece of the puzzle here, which is

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<v Speaker 4>the slowdown in the wages. And so the Fed's going

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<v Speaker 4>to still talk about that. But when you look at

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<v Speaker 4>labor force participation, that's a big change.

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<v Speaker 5>That's what the FED wants to see, as Randy said,

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<v Speaker 5>that's the reason for the increase in the unemployment rate.

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<v Speaker 5>But as we saw earlier in the JOLT data, this

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<v Speaker 5>is exactly what the FED is looking for in terms

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<v Speaker 5>of getting the normalization in the labor market, seeing that

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<v Speaker 5>reduction in the vacancies to unemployment coming through the vacancies

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<v Speaker 5>less from the pain in the unemployment, and that's a

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<v Speaker 5>good outlook for the market. And that's why you see

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<v Speaker 5>the equity and the risky side also positively responding here.

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<v Speaker 4>So pretty much a very nice number for everyone to

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<v Speaker 4>go into their last holiday weekend.

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<v Speaker 5>Yes, and if you.

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<v Speaker 7>Talk about the labor market normalizing here, extrapolate this into

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<v Speaker 7>Fed policy because at a certain point the Fed is

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<v Speaker 7>going to have to cut interest rates just to bring

0:12:00.800 --> 0:12:05.000
<v Speaker 7>rates back to more normal neutral levels. Does this report

0:12:05.360 --> 0:12:08.480
<v Speaker 7>push those rates further into the future or does it

0:12:08.480 --> 0:12:09.319
<v Speaker 7>bring them forward?

0:12:10.600 --> 0:12:13.240
<v Speaker 5>Well, you know, it's a really important point which you

0:12:13.400 --> 0:12:18.000
<v Speaker 5>just highlighted about the need to be cutting interest rates,

0:12:18.080 --> 0:12:20.600
<v Speaker 5>not necessarily to bring them to more normal levels. But

0:12:20.679 --> 0:12:24.520
<v Speaker 5>go back to Powell speech last week. It's about restrictive

0:12:24.920 --> 0:12:29.440
<v Speaker 5>policy for longer, not higher for longer, and so as

0:12:29.480 --> 0:12:33.080
<v Speaker 5>inflation falls, and that's really about the wage inflation picture.

0:12:33.080 --> 0:12:36.640
<v Speaker 5>From today's report, the Fed has to cut rates to

0:12:36.800 --> 0:12:41.040
<v Speaker 5>avoid the real interest rate from increasing. And that's really

0:12:41.120 --> 0:12:44.280
<v Speaker 5>what the bond market has priced in for next year.

0:12:44.400 --> 0:12:47.959
<v Speaker 5>The gradual decline and inflation leading the FED to have

0:12:48.000 --> 0:12:51.360
<v Speaker 5>to cut rates, not because it's a hard landing or

0:12:51.400 --> 0:12:54.440
<v Speaker 5>because they're cutting rates because they're overly tight, but they're

0:12:54.480 --> 0:12:59.960
<v Speaker 5>cutting rates to avoid becoming overly late tight, to maintain restrictiveness.

0:13:00.200 --> 0:13:03.000
<v Speaker 5>And I think today's report just feeds into that market

0:13:03.040 --> 0:13:04.600
<v Speaker 5>consensus and that market expectation.

0:13:05.120 --> 0:13:09.439
<v Speaker 1>Jeff, I find this absolutely extraordinary, which is we had

0:13:09.480 --> 0:13:13.840
<v Speaker 1>a failure of transitory and then dare I say, and

0:13:13.960 --> 0:13:18.559
<v Speaker 1>granted there's an ambiguity here, folks, if we actually get

0:13:18.640 --> 0:13:22.720
<v Speaker 1>price up, yield down, but we're almost back to a

0:13:22.800 --> 0:13:26.480
<v Speaker 1>successful victory lap for the FED. Do you agree that

0:13:26.600 --> 0:13:29.760
<v Speaker 1>this is a FED on the edge of a victory lap.

0:13:31.720 --> 0:13:33.920
<v Speaker 5>Well, I think one thing we have to be a

0:13:33.960 --> 0:13:37.160
<v Speaker 5>bit careful about, Tom, is that we've certainly seen the

0:13:37.280 --> 0:13:43.920
<v Speaker 5>victory from these very aggressive, very historically distorted levels of

0:13:44.280 --> 0:13:48.120
<v Speaker 5>inflation due to the COVID supply side shock. Yeah, that's

0:13:48.320 --> 0:13:52.120
<v Speaker 5>very different than claiming victory that the damage that had

0:13:52.160 --> 0:13:55.840
<v Speaker 5>occurred as a result of those policies, as a result

0:13:55.880 --> 0:14:02.680
<v Speaker 5>of the fiscal and monetary policy over stimulus, has completely

0:14:02.720 --> 0:14:05.439
<v Speaker 5>been wrung out. And so that's about the victory from

0:14:05.760 --> 0:14:09.880
<v Speaker 5>three percent to two percent you remember from last week

0:14:09.960 --> 0:14:12.559
<v Speaker 5>Powell one of the main takeaways. Two main takeaways where

0:14:12.679 --> 0:14:15.840
<v Speaker 5>data dependence, yes, but the other big one was we

0:14:15.920 --> 0:14:18.880
<v Speaker 5>are not abandoning the FED said Powell said, we are

0:14:18.920 --> 0:14:22.080
<v Speaker 5>not abandoning the two percent inflation target.

0:14:22.440 --> 0:14:22.960
<v Speaker 4>A lot of.

0:14:22.960 --> 0:14:26.960
<v Speaker 5>Discussion around, Hey, just accept three percent, It'll be okay.

0:14:27.200 --> 0:14:29.640
<v Speaker 5>So I think before you can claim victory and do

0:14:29.720 --> 0:14:32.040
<v Speaker 5>the victory lab right, we really are going to be

0:14:32.080 --> 0:14:34.200
<v Speaker 5>talking about what does it take to get.

0:14:34.000 --> 0:14:35.000
<v Speaker 4>You from three to two?

0:14:35.240 --> 0:14:38.680
<v Speaker 5>What's the cost versus the benefit of just leaving it

0:14:39.560 --> 0:14:40.760
<v Speaker 5>at a higher lady.

0:14:40.520 --> 0:14:43.520
<v Speaker 1>And now pre labor day, pre labor day Carnegie Melon math.

0:14:43.520 --> 0:14:45.400
<v Speaker 1>We're going to do this is Jeffrey Rosenberg, Come on,

0:14:45.520 --> 0:14:49.080
<v Speaker 1>Jason Furman's out doing this correctly. Jeff talking about the

0:14:49.160 --> 0:14:53.760
<v Speaker 1>ecumenical PCE index. And you know, Jeff Rosenberg, it's how

0:14:53.800 --> 0:14:57.200
<v Speaker 1>you pick your duration of the vector. Are you looking

0:14:57.200 --> 0:15:01.880
<v Speaker 1>at a one year annualized or a six month annualized

0:15:02.360 --> 0:15:05.120
<v Speaker 1>or what I do, which is a ninety day annualized,

0:15:05.160 --> 0:15:10.120
<v Speaker 1>three month annualized vector for inflation. What is the rapidity

0:15:10.560 --> 0:15:13.520
<v Speaker 1>of the decline and inflation right now?

0:15:14.520 --> 0:15:18.040
<v Speaker 5>So on the headline and in even on the core,

0:15:17.840 --> 0:15:23.040
<v Speaker 5>you're seeing good progress, and to the part of the question,

0:15:23.320 --> 0:15:26.200
<v Speaker 5>it's much more relevant to look at kind of the

0:15:26.280 --> 0:15:30.040
<v Speaker 5>near term numbers annualizing what is that pace of decline.

0:15:30.120 --> 0:15:33.480
<v Speaker 5>But it's really about this core core measure that Powell

0:15:33.560 --> 0:15:37.640
<v Speaker 5>talks about in terms of services less housing, that really

0:15:37.680 --> 0:15:42.160
<v Speaker 5>gets to again the wage inflation picture that feeds into

0:15:42.200 --> 0:15:46.000
<v Speaker 5>the more durable aspects of inflation outside of the commodity

0:15:46.000 --> 0:15:49.240
<v Speaker 5>and good sector, which is deflating because of the supply

0:15:49.400 --> 0:15:54.320
<v Speaker 5>side improvement. What has been very supportive over the last

0:15:54.400 --> 0:15:57.320
<v Speaker 5>three months is that that three month level of core

0:15:57.360 --> 0:16:01.080
<v Speaker 5>core inflation has been declining, and so it's feeding into

0:16:01.120 --> 0:16:06.200
<v Speaker 5>this soft landing landing on inflation narrative. It's still a

0:16:06.280 --> 0:16:08.160
<v Speaker 5>slow pace, and I think that's what you see in

0:16:08.200 --> 0:16:11.200
<v Speaker 5>today's wage number, but it is going in the right direction.

0:16:11.840 --> 0:16:14.440
<v Speaker 5>You've brought up the equity market. That's positive for the

0:16:14.440 --> 0:16:17.520
<v Speaker 5>equity market. So everything is looking like it's moving in

0:16:17.560 --> 0:16:20.680
<v Speaker 5>the right directions. It's still a bit slow, but certainly

0:16:20.720 --> 0:16:24.120
<v Speaker 5>the labor market normalization story got a boost from today's report.

0:16:24.400 --> 0:16:27.840
<v Speaker 7>I want to bring this conversations more firmly to the markets.

0:16:27.840 --> 0:16:30.800
<v Speaker 7>Ian Lincoln was on surveillance a couple of days ago

0:16:31.000 --> 0:16:35.120
<v Speaker 7>of VMO calling the ten year treasury a screaming buy.

0:16:35.320 --> 0:16:38.880
<v Speaker 7>I think that made multiple headlines. When you look at

0:16:38.880 --> 0:16:41.200
<v Speaker 7>this report and the totality of data that we've gotten

0:16:41.200 --> 0:16:43.720
<v Speaker 7>in the past couple of months, do you think now

0:16:43.800 --> 0:16:46.400
<v Speaker 7>is the time to really step force fully into duration.

0:16:48.400 --> 0:16:52.200
<v Speaker 5>Well, you know, when we talk about duration, it's not

0:16:52.560 --> 0:16:56.240
<v Speaker 5>so much how much duration you hold, but where in

0:16:56.320 --> 0:16:59.480
<v Speaker 5>terms of the maturity spectrum you hold that duration. So

0:16:59.760 --> 0:17:02.400
<v Speaker 5>I think that the screaming buy is the two year.

0:17:02.520 --> 0:17:05.840
<v Speaker 5>Thank you for bringing it up, because I think there

0:17:05.960 --> 0:17:10.959
<v Speaker 5>you have the best combination of yield and the exposure

0:17:11.040 --> 0:17:14.880
<v Speaker 5>as we're seeing in today's market reaction changes in this

0:17:15.000 --> 0:17:17.920
<v Speaker 5>kind of normalization, That is the part of the yield

0:17:18.040 --> 0:17:21.080
<v Speaker 5>curve where I think you're going to have the best

0:17:21.200 --> 0:17:23.800
<v Speaker 5>risk reward in terms of owning duration. When you start

0:17:23.800 --> 0:17:26.560
<v Speaker 5>talking about the long end, now you've got to start

0:17:26.600 --> 0:17:29.840
<v Speaker 5>considering whether or not the term premium, the long term

0:17:29.840 --> 0:17:33.159
<v Speaker 5>inflation premium, whether the long term real interest rate is

0:17:33.200 --> 0:17:36.159
<v Speaker 5>really priced appropriately. And I think there's a lot of

0:17:36.280 --> 0:17:41.159
<v Speaker 5>questions about whether this post COVID, post normalization yield curve

0:17:41.480 --> 0:17:45.320
<v Speaker 5>at historic levels of inversion is really where you want

0:17:45.359 --> 0:17:48.359
<v Speaker 5>to be concentrating your duration in the long end exposure.

0:17:48.520 --> 0:17:51.160
<v Speaker 5>I think there's much more vulnerability in the long end

0:17:51.480 --> 0:17:55.440
<v Speaker 5>given that degree of inversion the lat which basically says

0:17:55.440 --> 0:17:58.000
<v Speaker 5>you're not getting paid in terms of the yield for

0:17:58.560 --> 0:18:02.199
<v Speaker 5>those fundamental fouls, which all could be increasing in this

0:18:02.240 --> 0:18:03.400
<v Speaker 5>post COVID environment.

0:18:03.480 --> 0:18:10.440
<v Speaker 1>Jeff, thank you. Jeff Rosenberger's with the black Rock. Sarah

0:18:10.520 --> 0:18:15.240
<v Speaker 1>Hunt joins as chief market strategist Alpine Saxon Woods. Sarah,

0:18:15.280 --> 0:18:18.560
<v Speaker 1>It's real simple. I've got an eleven point eight percent

0:18:18.720 --> 0:18:23.760
<v Speaker 1>standard impoor's five hundred return over the last decade. I

0:18:23.800 --> 0:18:27.359
<v Speaker 1>got a lineup of people with fear. How do you

0:18:27.480 --> 0:18:32.159
<v Speaker 1>push away the fear into September into the fourth quarter

0:18:32.760 --> 0:18:36.919
<v Speaker 1>given this economic data and a successful FED soft landing.

0:18:38.920 --> 0:18:40.840
<v Speaker 8>Well, good morning time and thank you for having me.

0:18:41.119 --> 0:18:44.080
<v Speaker 8>I think this is really an interesting report, especially since

0:18:44.080 --> 0:18:46.760
<v Speaker 8>we revised last month negative, and I think that this

0:18:46.960 --> 0:18:48.960
<v Speaker 8>is I mean, I feel like Ira Jersey stole my

0:18:49.160 --> 0:18:51.680
<v Speaker 8>Goldilocks moment. I was going to say, that's a Goldilocks

0:18:51.760 --> 0:18:54.520
<v Speaker 8>number because you've got all the components working in the

0:18:54.560 --> 0:18:56.840
<v Speaker 8>direction that the FED wanted to go. Remember, we were

0:18:56.880 --> 0:19:00.000
<v Speaker 8>looking for on some of the Summary of Economic projections

0:19:00.040 --> 0:19:02.200
<v Speaker 8>four point five percent unemployment by the end of the year,

0:19:02.200 --> 0:19:05.920
<v Speaker 8>and it's been staying so steady that that number looked unachievable.

0:19:06.080 --> 0:19:08.680
<v Speaker 8>Three point eight is not four point five, but directionally

0:19:09.080 --> 0:19:11.479
<v Speaker 8>that's what that's what the FED was looking for. I

0:19:11.520 --> 0:19:14.280
<v Speaker 8>also think that the softening in wage gains is also

0:19:14.320 --> 0:19:16.800
<v Speaker 8>something that the FED was looking for. The interesting thing

0:19:17.080 --> 0:19:18.880
<v Speaker 8>is about the number of people who have come back

0:19:18.920 --> 0:19:21.280
<v Speaker 8>into the labor force, and you have to wonder if

0:19:21.320 --> 0:19:24.320
<v Speaker 8>some combination of the fact that that pandemic surplus is

0:19:24.359 --> 0:19:27.600
<v Speaker 8>being spent down student loans are coming back may be

0:19:27.800 --> 0:19:30.000
<v Speaker 8>part of what is shifting the labor force, because the

0:19:30.080 --> 0:19:31.919
<v Speaker 8>question has been whether or not as structural to have

0:19:32.000 --> 0:19:34.840
<v Speaker 8>so many viewer workers, or it's possible that so many

0:19:34.880 --> 0:19:36.639
<v Speaker 8>people didn't have to go look for a job, and

0:19:36.640 --> 0:19:38.800
<v Speaker 8>all of a sudden they're staring down what is not

0:19:38.880 --> 0:19:41.119
<v Speaker 8>as rosy an economic picture without as much of a

0:19:41.160 --> 0:19:42.080
<v Speaker 8>savings backdrop.

0:19:42.720 --> 0:19:44.760
<v Speaker 7>And Sarah, like you said, this is good news for

0:19:44.800 --> 0:19:47.000
<v Speaker 7>the FED. That seems to be the narrative in markets

0:19:47.119 --> 0:19:50.400
<v Speaker 7>right now. But how noisy is this data. You look

0:19:50.400 --> 0:19:53.040
<v Speaker 7>at some of the specifics from the BLS film industry,

0:19:53.080 --> 0:19:56.080
<v Speaker 7>payrolls fell by seventeen thousand, then you take a look

0:19:56.119 --> 0:20:00.680
<v Speaker 7>at trucking payrolls fell by thirty seven and how much

0:20:00.840 --> 0:20:03.400
<v Speaker 7>of a piece of the conversation will some of those

0:20:03.840 --> 0:20:04.600
<v Speaker 7>nuances be.

0:20:06.200 --> 0:20:06.360
<v Speaker 4>Well.

0:20:06.359 --> 0:20:08.040
<v Speaker 8>I think this also goes to one of your earlier

0:20:08.080 --> 0:20:10.320
<v Speaker 8>guests this morning was talking about the fact that the

0:20:10.400 --> 0:20:13.040
<v Speaker 8>economy is rolling in cycles and nothing is moving at

0:20:13.040 --> 0:20:16.360
<v Speaker 8>the same time. Historically, in a recession, everything goes down

0:20:16.400 --> 0:20:18.399
<v Speaker 8>and then everything comes back at once. And we've been

0:20:18.400 --> 0:20:20.879
<v Speaker 8>through such an odd period of time during this pandemic

0:20:21.080 --> 0:20:23.520
<v Speaker 8>where you've had rolling recessions in some sectors and not

0:20:23.640 --> 0:20:26.040
<v Speaker 8>in others. And I think that those labor numbers just

0:20:26.080 --> 0:20:28.760
<v Speaker 8>speak to that that you've got different places where you're

0:20:28.760 --> 0:20:31.679
<v Speaker 8>experiencing either a boom and labor or a slowdown. And

0:20:31.720 --> 0:20:33.919
<v Speaker 8>I think that the labor hoarding that's going on is

0:20:33.960 --> 0:20:37.000
<v Speaker 8>probably slowing down as companies are getting a little bit harder.

0:20:37.000 --> 0:20:38.760
<v Speaker 8>It's harder for them to put price a little bit

0:20:38.800 --> 0:20:41.280
<v Speaker 8>in this environment. So I think that that's where you're

0:20:41.280 --> 0:20:43.520
<v Speaker 8>going to start to see movement where you've pretty much

0:20:43.560 --> 0:20:45.560
<v Speaker 8>have not seen a lot of it here today.

0:20:46.040 --> 0:20:50.200
<v Speaker 1>Sarah Hunt in the market. Subscribe to the Bloomberg Surveillance

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0:20:55.040 --> 0:20:59.600
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0:21:03.720 --> 0:21:07.800
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0:21:12.200 --> 0:21:14.760
<v Speaker 1>Tom Keen, and this is Bloomberg