Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley.
Speaker 1: We bring you insight from the best in economics, finance, investment,
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Speaker 1: Caane back in the studio with me here in New
Speaker 1: York City. Very plase to say that. Mark Shannon joins us.
Speaker 1: You've got a new shop. Mark, just talk to me
Speaker 1: about what you're up to now. Yeah. So I recently
Speaker 1: joined our Bannockburn Global Foreign Exchange, which is based in Cincinnati.
Speaker 1: They specialize financial services private equity midsize corporates. I'll get
Speaker 1: to do a lot of the same kind of thing
Speaker 1: that I do analyzing the global capital markets, but for
Speaker 1: a different client base, more private equity corporations, as opposed
Speaker 1: to where I was before, where I'd be focusing more
Speaker 1: on the asset managers. Talked to me about what you
Speaker 1: tell them about the mess that's emerging in Europe. Once again,
Speaker 1: it's kind of a classic European confrontation between populace and
Speaker 1: this time in Italy, and between unelected officials in the
Speaker 1: European Union. We have the finance minister Germanic tria Um
Speaker 1: go up against some of the other finance ministers in Europe.
Speaker 1: In the last twenty four hours his country's fiscal push
Speaker 1: meeting a European Commission head that compared what was happening
Speaker 1: to taken us towards a Greek style crisis. Yeah, I
Speaker 1: think it's a bit over the topic. That's younger for you.
Speaker 1: I think he often has these kind of over the
Speaker 1: top type of comments. I do think that there is
Speaker 1: a confrontation brewing, but I'm not sure it's really going
Speaker 1: to be on the on the level of Greece. I
Speaker 1: think that both the Italians have learned something, but also
Speaker 1: the EU has learned something from Greece, and that is
Speaker 1: that the fiscal austerity could be counter productive. And I
Speaker 1: was saying before, is that what I think that Italy
Speaker 1: needs the most is growth and can and that means
Speaker 1: that Austeria might not help growth because here's what really happened.
Speaker 1: When you look at the different charts and you compare
Speaker 1: what happened in Italy, growth is really the deficit. That
Speaker 1: is to say that they really under forming in growth.
Speaker 1: And if this new fiscal plan can help stimulate growth
Speaker 1: by having a flatter tax for something like a million
Speaker 1: households fifteen percent tax, and if they can have some
Speaker 1: more social spending the ideas that can lift growth and
Speaker 1: thereby reducing the debt to GDP through stronger growth. The
Speaker 1: market right now is not pricing a positive outcome. We
Speaker 1: haven't had a day of games for the euro since
Speaker 1: last Tuesday, so it's been about a week. Has just
Speaker 1: been weaker Euro story bleeding through. Italian bonds are taking
Speaker 1: a bit of pain as well. The class half full
Speaker 1: approach to all of this is that maybe the moves
Speaker 1: outside of Italian bonds are mild. Maybe the moves outside
Speaker 1: of Italy are mild. But the glass half empty approach
Speaker 1: to all of this is that correlations are picking up,
Speaker 1: and you can see the correlations picking up with Italy
Speaker 1: and what's happening in Italy? Does that concern you? Concerned me?
Speaker 1: But I would really tell the story a little bit differently.
Speaker 1: The key thing I think that made the dollar turn
Speaker 1: last week was not what was going on in Italy
Speaker 1: that didn't happen until the very end of the week.
Speaker 1: Would happen was a Federal Reserve met and confirmed that
Speaker 1: they will not only tighten another time in December this year,
Speaker 1: but they're sticking with three hikes new next year, and
Speaker 1: the e c B says, sorry, we're not gonna be
Speaker 1: able to raise rates until the end of next summer
Speaker 1: at the earliest, and the Bank of Japan seems nowhere
Speaker 1: near close to raising interest rates. So I think that
Speaker 1: what the Federal Reserve did was singnal the continued divergence.
Speaker 1: And then the other factor that I would about to
Speaker 1: put as part of this story is the huge ralliant
Speaker 1: oil prices another leg up today, and this is because
Speaker 1: I primarily supply concerns, and here's you know, people are
Speaker 1: talking about how Trump is succeeding with his tactics with
Speaker 1: South Korea NAFTA two point oh, but one area that
Speaker 1: has been very successful is getting countries to participate in
Speaker 1: this embargo when it's not just countries around Iran, but
Speaker 1: we're talking about France and the Netherlands cutting back on
Speaker 1: their oil from from the Iranians a month ahead of time.
Speaker 1: And so I think that the supply concerns, So what's
Speaker 1: the problem here? Strong dollar because of fed higher oil prices,
Speaker 1: wagon emerging markets, and the Italian story. I mean, is
Speaker 1: Chairman Paul's central banker to the world, central banker to
Speaker 1: emerging markets, but it's also sent banker to the oil cartel.
Speaker 1: I mean again the professor, he alluded to that in
Speaker 1: the press conference. Maybe we'll talk more about it in
Speaker 1: speech today at the National Association for Business. But he
Speaker 1: is central banker to all these interplaying features, isn't he. Well,
Speaker 1: I I don't know if he'd say he's central banker
Speaker 1: to that, but I would say, is that what happens
Speaker 1: in the US still matters for a lot of these
Speaker 1: contest I mean, it does not have to take into
Speaker 1: account what happens to Saudi politics as a Saudi real
Speaker 1: when it makes policy. I mean, John, let me do this.
Speaker 1: I mean, you know how how on what I'm doing brand?
Speaker 1: I'm trying to bring it up here just a log
Speaker 1: chart of of of brand and I'm sorry, since the
Speaker 1: middle of August, it's a straight line up. Yeah, I mean,
Speaker 1: there's a little bit of persistence to the trend. Is
Speaker 1: this drip drip going on? It's like the Chinese water
Speaker 1: torture on emerging markets. And what it is is a
Speaker 1: stronger royal price, stronger dollar and just the heel to
Speaker 1: the United States just keep climbing, and the Federal was
Speaker 1: of is not backing away from great hikes. Do you
Speaker 1: have a more constructive view on AM with that as
Speaker 1: your backdrop? Unfortunately it's difficult to write I think so,
Speaker 1: I think that, But here's what it gives me the
Speaker 1: idea though, that why I think I'm still pretty negative
Speaker 1: on EM. It's not just because of these macro forces,
Speaker 1: but every so often I hear from my emerging market
Speaker 1: analysts and context that time to pick a bottom. And
Speaker 1: so we just had one of those phases, maybe it
Speaker 1: was about three or four weeks ago where the emerging
Speaker 1: where a lot of these emerging market alliss said, oh,
Speaker 1: we're cheap value now, so let's uh, emerging markets are goodbye,
Speaker 1: and so the same thing with Italian bonds. I think
Speaker 1: it was one of the largest asset managers had had
Speaker 1: up there up there portfolio investment in Italian bonds just
Speaker 1: for just in time for this to happen. But there
Speaker 1: is a price of the story. In the price of
Speaker 1: the story in the m has got pretty cheap. And
Speaker 1: within sort of emerging markets, you've had some pretty aggressive
Speaker 1: rallies and pockets of emerging markets in various securities, various
Speaker 1: foreign exchange markets, various currencies, and Mark there must be
Speaker 1: some opportunities there that you've identified. There are opportunities, but
Speaker 1: from from from my point of view, I think medium
Speaker 1: term investors, it's too early to go back into emerging markets.
Speaker 1: You say, well, there's value there. I say, yes, there's value,
Speaker 1: but it's going to give be more value shortly. Well,
Speaker 1: I guess it depends what how you wear and give
Speaker 1: you a short term sort of FX trade to date trade,
Speaker 1: and then maybe there's some opportunities out there. You're thinking
Speaker 1: more about digging a hole and starting a business in
Speaker 1: some of these countries at the moment, Mark, I would
Speaker 1: put I I take your point that for short term
Speaker 1: traders there there's I mean, there's enough volatility and emerging
Speaker 1: market currencies to have a short short term punt. But
Speaker 1: for long term people are thinking about their pension funds,
Speaker 1: people are thinking about endowments. I think too early for
Speaker 1: emerging markets. I'd be more comfortable maybe the middle of
Speaker 1: next year, but I think the Federal Reserve will be
Speaker 1: darned nearly done with the great hikes. Mark Chandler grant
Speaker 1: To can't shove the Banic Burnt Global for X, Chief
Speaker 1: market strategist and managing partner. Some of our guests are deceptive.
Speaker 1: They like to drive things down to simple concepts, usually
Speaker 1: simple concepts that provide couraging crisis, that provide UH, the
Speaker 1: ability to be in the market when you should be
Speaker 1: in the market, and even if there's pain, you're there
Speaker 1: and you're organized. But what is very deceptive is underneath
Speaker 1: the simplicity, there's a lot of first order principles in
Speaker 1: a lot of academics. He's out of Lehigh University, out
Speaker 1: of Wharton, UH, and he's not only a c f A,
Speaker 1: but also very cool a certified public accountant as well,
Speaker 1: and that would be Robert Dahl of Duvin Bob. I
Speaker 1: mean c f A, c p A. What how did
Speaker 1: your brain get through that? I mean, I've never gotten
Speaker 1: debits and credits, right, I guess I have nothing else
Speaker 1: better to do but read a book and study and
Speaker 1: take it. That's my friend. Well, it's a very cool
Speaker 1: set of academics around it. Take the academics now to
Speaker 1: this market at it. I mean in terms of like
Speaker 1: like cap em and all the rest of the mumbo jumbo.
Speaker 1: How do you stay in this market. You stay in
Speaker 1: because you recognize that we've got an amazing earnings profile. Yes,
Speaker 1: for the Bears, it's a decelerating but it's still gonna
Speaker 1: be plus twenty instead of plus twenty five. That's all
Speaker 1: pretty good news. Um. Look, they're gonna be bumps along
Speaker 1: the way. Valuation is no longer cheap. We've got a
Speaker 1: little competition. We're getting little expensive versus the rest of
Speaker 1: the world. So you know these things that will bite
Speaker 1: at the edges, I think without question, But you still
Speaker 1: want to be there. This bullmark is okay, Okay, fancy guy.
Speaker 1: Let's John, let's dazzle people here with the y intercept
Speaker 1: on the y axis. Okay, I'm talking to Courtney down
Speaker 1: to Georgetown and we're talking lord linear cap M theory.
Speaker 1: The fact is it's hinged on a straight line, sitting
Speaker 1: on the Y axis, and that is the anchor called
Speaker 1: the risk free rate. I think a lot of our
Speaker 1: our listeners understand the risk free rate. Bob dal do
Speaker 1: you have a clue where the risk free raiders? Does
Speaker 1: Jerome Powell know where the risk free rate is? I
Speaker 1: think no one knows, and it does seem to be
Speaker 1: moving around. Um, and we're getting closer to it. That's
Speaker 1: why the Fed conversations are getting harder. We've been in
Speaker 1: a period for the last couple of years, as you know,
Speaker 1: where um, the Feds in the process of normalizing, so
Speaker 1: you know, next meeting, they're gonna meet and they're gonna
Speaker 1: raise rates next meeting, and then went on or on.
Speaker 1: We're getting to the point now we're approaching neutral, whatever
Speaker 1: that number is, and therefore these conversations get a little tougher.
Speaker 1: What told to me about the competition for capital that
Speaker 1: just comes from vanilla generic tea bills two more than
Speaker 1: on a one month tea bill a five year note
Speaker 1: now with a yield of almost three percent? Bob, is
Speaker 1: there some real competition for capital in a white that
Speaker 1: it wasn't twelve months ago. Yeah, it's emerging competition. Look,
Speaker 1: I think I'll get better than that in the stock market.
Speaker 1: But the number you gave me is no longer zero.
Speaker 1: You know, it was a while where where cash returned
Speaker 1: close to zero and I could get a two percent
Speaker 1: yield in the stock market, plus capital appreciation as earnings
Speaker 1: came through. And we're beginning to creep in with some
Speaker 1: other conversations it's not the only asset in town anymore. Well,
Speaker 1: let's talk about the portfolio construction then, Bob, and coming forward,
Speaker 1: Tom talks about the risk free Right, there's some real
Speaker 1: talk that the risk might be in the risk free asset,
Speaker 1: which is the treasury market, another bond market as well.
Speaker 1: And then the next down to maybe they won't offer
Speaker 1: you that hedge, bobbab we are we having that discussion now?
Speaker 1: Is it's still too early to have that discussion. I
Speaker 1: think it's early because I can't see a recession out
Speaker 1: my window. Um, you know, we'll get another recession, but
Speaker 1: I'm enjoying and trying to figure out where to be
Speaker 1: where the earnings are going to come from. But yeah,
Speaker 1: we're unlikely to get in the next downturn, returns on
Speaker 1: cash like we typically do. Rates will peek at a
Speaker 1: lower level than we're used to. All they say, Bob Doll,
Speaker 1: if you look outside Bob Doll's window, he's got checked
Speaker 1: up the ibbots and chart back to up X. But
Speaker 1: to that point, Bob and the one of the most
Speaker 1: famous good morning Mr Ibbots and Professor Ibbotson. If you're
Speaker 1: listening up Yale, Bob Doll, what's really serious here is
Speaker 1: we've forgotten what a correction is. We've got we've forgotten
Speaker 1: what a bear market is explained to our audience. Where
Speaker 1: part of the game is you have to withstand the
Speaker 1: emotion of bear markets. You and I haven't had that
Speaker 1: conversation in about fourteen and a half years now. We haven't, thankfully,
Speaker 1: we haven't had to the bottom line and the most
Speaker 1: simple way to put his thocks do go down um,
Speaker 1: and it's usually accompanied by, uh, some sort of problem
Speaker 1: with the economy, which I repeat is not visible yet,
Speaker 1: but we will get there. And uh, you have to
Speaker 1: know what you own. You have to know what your
Speaker 1: time frame is. You know, somebody said to me recently,
Speaker 1: you know, can you tell me what to buy um
Speaker 1: if my time horizon is to the end of the year,
Speaker 1: And I said, yeah, cash, because because in lots of
Speaker 1: short term period stocks go down. Um. You'll look at
Speaker 1: those same ibits and charts and you look at the
Speaker 1: annual numbers and you'll find out stocks go down um
Speaker 1: more than of the years um. So we are so
Speaker 1: so spoiled because it's been such a beautiful ride. And
Speaker 1: it brings to mind financial advisors some who say, you know,
Speaker 1: I'm just buying the index fun or I'm just buying
Speaker 1: the ETF because they're safe. This word is really important.
Speaker 1: John Farrells spoiled. It's unfortunately accurate. I'm as guilty of
Speaker 1: it as anyone all of us. I mean, we've had
Speaker 1: six straight years of valuation appreciation. He's going up six
Speaker 1: straight years. We're breaking that trend this year. Six in
Speaker 1: a row has never happened before. The fixes back to
Speaker 1: oh no, what a world. Yeah, I'm just a round
Speaker 1: thing down, even though I've come back and forth on
Speaker 1: this before. There's a difference between peat margins and peak markets.
Speaker 1: Is that something that you're kind of pushing the clients
Speaker 1: at the moment as well? Yes, yes, yes, I hear
Speaker 1: a lot of bearish people say, well, peak earnings, we've
Speaker 1: grown twenty five percent, that's going to decelerate. Therefore I
Speaker 1: should sell stock careful. If plus twenty five earnings goes
Speaker 1: to minus five, yes, sell some stocks. But if we're
Speaker 1: going from place to plus twenty, not so fast. Can
Speaker 1: you own the banks here, and Mr Doll, I can.
Speaker 1: Here's my problem. They're still so over owned and overbelieved. Yes,
Speaker 1: they're pretty cheap. Yes, the fundamentals are reasonably good. They're
Speaker 1: not perfect, but there as they've been since the first
Speaker 1: of the year, overbelieved and overall. I can't get out
Speaker 1: of a meeting with a bunch of financial advisors where
Speaker 1: they don't ask what about the banks? I need that
Speaker 1: question to stop being asked before I can really get interested.
Speaker 1: Bob Doll, thank you so much, greatly appreciate it. With
Speaker 1: vine Ford, you know, it's for them to say that
Speaker 1: about the hurricanes is a big deal. It's got to
Speaker 1: be a huge to tell people. This is about the
Speaker 1: decline in sales last month eleven percent down versus the
Speaker 1: estimate for nine Once again, Ford Motor September, US vehicle
Speaker 1: sales decline eleven point two seventy F series trucks made.
Speaker 1: And you wonder how much of that has made in Canada,
Speaker 1: how much is made in Mexico or the United States?
Speaker 1: Trade yesterday Here is Christine Leguard. The impact is there already.
Speaker 1: And if you think of, you know, the the the
Speaker 1: impact that all the measures that have been floating around
Speaker 1: would have on global growth, then you're really talking about
Speaker 1: a major risk that would impact particularly China, because it's
Speaker 1: obviously one of the targets and the main target, but
Speaker 1: also all the other countries that are part of the
Speaker 1: supply chain or that provide raw materials. So you're talking
Speaker 1: about emerging market economies and many low income countries as well.
Speaker 1: Were a lot of the hardship and the difficult decisions,
Speaker 1: and the financing is so badly needed. You know, how
Speaker 1: can we advocate domestic revenue mobilization in countries of sub
Speaker 1: Saria and Africa if they can no longer participate in
Speaker 1: trade or supply chain organizations because of the threat applying
Speaker 1: to trade at large, the larger threat. And to bring
Speaker 1: it to this weekend in Canada and the United States,
Speaker 1: the U S m c A. I read to write
Speaker 1: it down here, it's such a new phrase for me,
Speaker 1: and I understand becomes Y m c A. It's US
Speaker 1: okay within this and within U S m c A.
Speaker 1: Now I got the song in my head. Now I'm
Speaker 1: not going to dance. That won't work out. And I
Speaker 1: would take um if I look at US m c
Speaker 1: A and I look at the dictate of what President
Speaker 1: Trump is very clearly advocated. It is an effort that
Speaker 1: brings in Canada, brings in Mexico, and I don't want
Speaker 1: to get you in trouble. You're gonna ask, did Canada
Speaker 1: and Mexico came into the rhetoric of President Trump? And
Speaker 1: is that something we're going to see in the coming
Speaker 1: years as a president looks at multilateral and brings it
Speaker 1: over to a unilateral approach. You know, It's it's hard
Speaker 1: for me to say and to make any comment about
Speaker 1: the agreement because we haven't had a chance to review
Speaker 1: It's I've read the same articles as you, but it's
Speaker 1: been in the making for thirteen months, so it's it's
Speaker 1: it's obvious that there must have been back and forth
Speaker 1: bargaining trade off and that's it's the whole point about negotiations.
Speaker 1: Two things that I'm quite pleased about. One is um
Speaker 1: it ex ists, and to have this tree lateral agreement
Speaker 1: trilateral agreement between Mexico, US and Canada, is I think
Speaker 1: a very positive I'm encouraged with that because not so
Speaker 1: long ago, many but many of us were in fear
Speaker 1: that there would be nothing. So there is an agreement.
Speaker 1: Number one. Number two, what I hear is that the
Speaker 1: services are also partly or entirely I don't know. I
Speaker 1: haven't read it yet. Covered and I think that is
Speaker 1: really showing the way that TPP, for instance, was was doing,
Speaker 1: in other words, expanding beyond the products that cross borders
Speaker 1: to services that also do, but not physically because many
Speaker 1: of them are are digital. There is a lot of
Speaker 1: upside to be had from services being included in the
Speaker 1: reduction of barriers. Christian Leaguard at the International Monetary Phone PIM,
Speaker 1: this was a really interesting meeting. This was the kickoff
Speaker 1: to their annual meeting in Indonesia in three years. It's
Speaker 1: in Marrakech, with Indonesian authorities in the front row in
Speaker 1: their embassy as well, of course, shattered by the earth
Speaker 1: by natural disaster. We're literally in the in the green
Speaker 1: room in the back, and the Ambassador of Indonesia sentence
Speaker 1: regrets because he had an emergency meeting with their foreign
Speaker 1: minister as well. So there was a whole overlay of emotion.
Speaker 1: And you had one part the i m F brass
Speaker 1: one part i m F staffers, and also a lot
Speaker 1: of Bloomberg surveillance guests and hosts in Economics and Politics
Speaker 1: of Washington, Douglas Holds Econ among others of the CBO
Speaker 1: there listening for the nuances you know the speech, Um,
Speaker 1: they're listening there for one or two sentences of what's
Speaker 1: the tone towards the world economic outlook next week? And
Speaker 1: of course her thoughts on all this trade issue, film
Speaker 1: Flis and Tom Keane on Amazon, and on the state
Speaker 1: of our labor economy. Without question, our interview of the day,
Speaker 1: if not of the week, is Alan Krueger of Princeton University.
Speaker 1: I put him in a category with a Nobel laureate
Speaker 1: Michael Spence, in that there's an exceptionally broad spectrum of
Speaker 1: economics and social studies that Professor Krueger does, but he
Speaker 1: is definitive Card and Krueger on the minimum wage, Alan Krueger,
Speaker 1: were you surprised at Jeff Bezos set a fifteen dollar
Speaker 1: minimum wage level for Amazon nationwide. I think he did
Speaker 1: the right thing. Um. I think what Amazon has done
Speaker 1: is what one expects of a responsible large company, especially
Speaker 1: at a time and the economy is doing so well.
Speaker 1: I think this is also an indication that wages are
Speaker 1: determined by more than just the blying demand, that companies
Speaker 1: have a lot of discretion over how much they pay
Speaker 1: their workers. Within this, Alan, is that maxim and the
Speaker 1: fear that if you raise the minimum wage, all other
Speaker 1: wages grow up, go up rather and labor and employer's
Speaker 1: lose control of their income. Statement, is that a legitimate fear,
Speaker 1: Whether it's a success of Amazon or it's a mom
Speaker 1: and pop shop in New Jersey barely getting by well,
Speaker 1: I think it's a sign of a healthy economy that
Speaker 1: we're going to see wages rise. Wages are gradually picking
Speaker 1: up flower than you would expect given the unemployment rate
Speaker 1: below four percent, And of course you need to balance.
Speaker 1: You don't want wages to be so high that it
Speaker 1: puts businesses out of business. But I don't think we're
Speaker 1: at much risk of that right now. Alan Cruger, could
Speaker 1: you share with people a little anecdote or story about
Speaker 1: your work comparing restaurant jobs in New Jersey and Pennsylvania
Speaker 1: and what you learned. Sure, what David cart and I
Speaker 1: discovered twenty five years ago was that the traditional UH
Speaker 1: supply and demand model at I was taught, that I
Speaker 1: taught my students is much more complicated in real life,
Speaker 1: and study after study has found that minimum wage increases
Speaker 1: don't reliably have an adverse effect unemployment. The job markets
Speaker 1: much more complicated when employers pay higher wages, they have
Speaker 1: lower turnover, they have higher productivity, they find it easier
Speaker 1: to recruit workers and fill vacancies, and these effects can
Speaker 1: offset the traditional demand side law of demand effect of
Speaker 1: a higher wage, possibly putting downward pressure on employment. If
Speaker 1: that's the case, why don't you see a revision in
Speaker 1: the way experts and economists who advised the government, Why
Speaker 1: don't they revise their description of what a minimum wage
Speaker 1: increase would do. I think this is one error where
Speaker 1: we have seen major change in the economics profession and
Speaker 1: in public policy since our work. The governments in the
Speaker 1: UK and Germany have imposed nationwide minimum wages substantially above
Speaker 1: the US level. I think the way the minimum wages
Speaker 1: presented in textbooks is much more balanced now, much more
Speaker 1: even handed. Explains that the job market is not perfectly competitive,
Speaker 1: that employers have market power, that bargaining power, monopsony power,
Speaker 1: the ability of companies to have disgression over wages influences
Speaker 1: the job market. Professor, as you do so well. You
Speaker 1: mentioned the word which is a confusing word, folks. This
Speaker 1: is how you move from a B minus to a
Speaker 1: C minus under Krueger and economics is try to tackle
Speaker 1: monopsony okay Alan. It's a rubber plantation in Singapore where
Speaker 1: the British plantation owner controls the price, the labor wage
Speaker 1: and everything of all the people pulling the rubber out
Speaker 1: of the trees. That's the classic British model. Bring that
Speaker 1: over to America now, where we read the stories and
Speaker 1: the fabulous stories uh in the Atlantic magazine about the
Speaker 1: gig economy, about moving cardboard boxes around Manhattan, about Uber
Speaker 1: and all that. Is the gig economy so much an
Speaker 1: atomization of labor that it's going to drive us to
Speaker 1: a new minimum wage ethos. Well, I think the gig
Speaker 1: economy is more competitive than uh, say, an Amazon fulfillment center,
Speaker 1: more competitive in the sense that there's much easier entry
Speaker 1: and exit. But the gig economy is still maybe one
Speaker 1: percent of employment in the US. I think it's uh
Speaker 1: not even the tail wagging the dog. It's it's um
Speaker 1: barely having an impact on the aggregate economy. What's much
Speaker 1: more important. Our companies like Walmart and Amazon the largest employers,
Speaker 1: and they have kind of a moat around them, you know,
Speaker 1: they are a bit of an island to themselves, and
Speaker 1: they have the ability to uh influence how much the
Speaker 1: workers are paid. They're not just passively taking so at
Speaker 1: least is critical in the new technology. In my michaelmbusians
Speaker 1: capture by one or two large players. They have monopximistic
Speaker 1: tendencies where Amazon or Apple or others control the wage
Speaker 1: because there's no alternative job. Is that true. I think
Speaker 1: that there's limited alternative jobs. It's costly for workers to
Speaker 1: make make a move. You know, the fact that Amazon
Speaker 1: did this by setting a minimum wage is fascinating because
Speaker 1: they could have said, we're just going to raise wages
Speaker 1: across the board by tem percent, that's what the competitive
Speaker 1: market is. But this is broader than sort of tailoring
Speaker 1: wages to the competitive market. This is UH saying we're
Speaker 1: going to be a responsible employer. We think the low
Speaker 1: wage workers deserve a higher higher income um and I
Speaker 1: think one of the reasons they weren't having that higher
Speaker 1: income in the past is because companies have stronger bargaining
Speaker 1: power over their workers. Alan Kruger just quickly immigration. Do
Speaker 1: you have any thoughts on how immigration affects wages and unemployment,
Speaker 1: especially when the labor markets type. Immigration is an important
Speaker 1: source of labor supply, especially in some fields like construction,
Speaker 1: and I worry that we're going to start to see
Speaker 1: some bottlenecks in the US economy because we're changing our
Speaker 1: immigration policy and making it much more restrictive. Alan Krueger,
Speaker 1: thank you so much. Look for much more on his professor.
Speaker 1: Krueger of Princeton University. Of course, always helping us out
Speaker 1: on matters of economics. Thanks for listening to the Bloomberg
Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at
Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio