WEBVTT - China's Next Move In Trade War? Target U.S. Companies (Podcast) 0:00:02.640 --> 0:00:05.360 Welcome to the Bloomberg Penel Podcast. I'm Paul Sweene. You, 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma wits each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:25.079 at Bloomberg dot com. Time to check in with Bloomberg Opinion. 0:00:25.079 --> 0:00:28.160 We're joined by Andy Brown, editorial director for the Bloomberg 0:00:28.240 --> 0:00:32.040 New Economy. So, Andy, let's trade is right back on 0:00:32.200 --> 0:00:35.400 the front burner for the market's given President Trump's treet 0:00:35.760 --> 0:00:39.239 tweet yesterday. Just give us your sense of kind of 0:00:39.280 --> 0:00:42.199 what we've experienced so far with the tariffs. Are the 0:00:42.240 --> 0:00:47.239 tariffs working? Is it advancing our trade goals? Do you believe? No, 0:00:47.840 --> 0:00:51.559 they're not working. So what we're learning we just heard 0:00:51.560 --> 0:00:54.440 from Larry Cudlo that they were working right well, if 0:00:54.480 --> 0:00:59.080 they were working, China would have bent by now, and 0:00:59.440 --> 0:01:03.720 China has not budged at all. In fact, what we're 0:01:03.760 --> 0:01:07.560 hearing is that China didn't make any additional offers at all. 0:01:08.160 --> 0:01:12.240 UH in the latest round of talks, and this latest 0:01:12.280 --> 0:01:16.000 temper cent threatened temper cent tariffs on three D billion 0:01:16.080 --> 0:01:19.080 will have about as much effect as the last bunch 0:01:19.080 --> 0:01:22.479 of tariffs on two D and fifty billion dollars. Trump 0:01:22.560 --> 0:01:24.440 is a is a one trick pony as tarots or 0:01:24.480 --> 0:01:28.000 tariffs or tariffs, he's tariff man, and he's doubling down 0:01:28.040 --> 0:01:31.200 on them. So I guess that I want to just 0:01:31.959 --> 0:01:34.400 offer up the other view to this. People would say 0:01:34.400 --> 0:01:37.600 that it has been working, that China's economy has slowed 0:01:37.640 --> 0:01:42.360 more than people would have otherwise predicted based on the tariffs, 0:01:42.360 --> 0:01:44.880 and that they've had to engage in further stimulus to 0:01:44.959 --> 0:01:48.440 counteract that, which leaves them with less ammunition to counter 0:01:48.480 --> 0:01:51.000 their slow down going forward. I mean, what do you 0:01:51.000 --> 0:01:53.000 say to those arguments? Well, I would say, as look 0:01:53.040 --> 0:01:55.480 at the Chinese economy. Sure that the economy is slowing, 0:01:55.480 --> 0:01:59.000 it probably would have slowed anyway it needed to slow. Um. 0:01:59.040 --> 0:02:01.440 I would also say, look at the resilience of the 0:02:01.520 --> 0:02:04.360 Chinese economy, and there's a lot more that they can do. 0:02:04.520 --> 0:02:07.240 They can cut interest rates, they can ramp up lending, 0:02:07.600 --> 0:02:10.720 they can offer support to small medium sized enterprises, the 0:02:10.720 --> 0:02:12.400 ones that are going to be hurt by this latest 0:02:12.480 --> 0:02:15.720 round of tariffs. They've got plenty of ammunition left. But 0:02:15.760 --> 0:02:18.800 more to the point, they're just not going to bend 0:02:18.960 --> 0:02:22.840 to Trump's will. So right now, the entire Chinese leadership 0:02:22.880 --> 0:02:24.959 has decamped for the summer to Bay die Her, this 0:02:25.040 --> 0:02:28.000 seaside resort near Beijing, to talk about strategy. You can 0:02:28.040 --> 0:02:30.160 guarantee that this is going to be right at the 0:02:30.200 --> 0:02:33.680 top of their agenda. Can you imagine at this point 0:02:33.720 --> 0:02:37.800 a conversation she jimping, standing up and saying to this group, Okay, guys, 0:02:37.840 --> 0:02:40.519 the game is up right. We don't have any option. 0:02:40.639 --> 0:02:44.240 We're just going to have to force ourselves to undertake 0:02:44.440 --> 0:02:48.399 really painful adjustments to our economy which Trump is demanding, 0:02:48.440 --> 0:02:50.960 even though we think this is going to be a 0:02:51.080 --> 0:02:53.440 really bad idea and could be and could be damaging. 0:02:53.639 --> 0:02:55.400 And then, by the way, we're going to have to 0:02:55.520 --> 0:03:00.320 explain this historic capitulation to the Chinese people won't have happened. 0:03:00.680 --> 0:03:03.400 So you mentioned that you recently came back from Hong Kong, 0:03:03.639 --> 0:03:05.840 So do you have a sense, I'm guessing you're spending 0:03:05.840 --> 0:03:07.120 time over that part of the world, you have a 0:03:07.160 --> 0:03:10.960 sense of what the Chinese really want in a deal 0:03:11.280 --> 0:03:13.760 realistically what they want and that they think they can 0:03:13.800 --> 0:03:18.120 actually get. Well, the the you know, the the Hong Kong, 0:03:18.320 --> 0:03:22.440 the Hong Kong situation is now aggravating everything else. So 0:03:22.600 --> 0:03:25.560 what you're hearing, the rhetoric you're hearing from the Chinese 0:03:25.560 --> 0:03:31.200 propaganda outlets is that the American black hands are behind 0:03:31.440 --> 0:03:35.160 this protest. And by the way, Trump very unhelpfully yesterday 0:03:35.280 --> 0:03:38.680 picked up all kinds of Chinese communist body talking points 0:03:38.720 --> 0:03:41.960 describing these protests in Hong Kong where two million people 0:03:42.280 --> 0:03:45.520 took to the streets against this extradition law, as riots, 0:03:45.600 --> 0:03:47.440 and he said, basically, it's nothing to do with us. 0:03:47.680 --> 0:03:50.040 China can fix it. Hong Kong is a part of China. 0:03:50.480 --> 0:03:53.280 Uh and and and so the worst possible thing he 0:03:53.280 --> 0:03:56.880 could have said at this point. So we're now getting 0:03:56.880 --> 0:04:00.000 a sense that China does plan to retaliate against any 0:04:00.000 --> 0:04:03.440 sational tariffs at President Trump does implement them. What do 0:04:03.480 --> 0:04:06.680 you expect in terms of how that retaliation will look. Yeah, well, 0:04:06.800 --> 0:04:09.600 you see, they can't really retaliate in kind because they 0:04:09.760 --> 0:04:12.800 run out of goods to to put tariffs on. America 0:04:12.880 --> 0:04:15.640 just doesn't sell enough stuff to China's So what we 0:04:15.680 --> 0:04:19.720 can expect is American companies to take a look at 0:04:19.720 --> 0:04:21.919 Look at the Boeing share price right there there in 0:04:21.960 --> 0:04:25.240 the middle now, or the end stages of negotiating a 0:04:25.360 --> 0:04:29.119 huge fleet sale to the Chinese. Don't hold your breath. 0:04:29.160 --> 0:04:31.800 I mean, you know, I can't see that being signed 0:04:31.960 --> 0:04:35.360 under the present circumstances. Companies like FedEx, for instance, which 0:04:35.400 --> 0:04:38.960 are already in hot water for mishandling this package that 0:04:39.040 --> 0:04:41.799 was supposed to have been sent to Huawei. Maybe maybe 0:04:41.800 --> 0:04:44.880 they come, Maybe they roll out there so called Unreliable 0:04:45.080 --> 0:04:48.800 Entities list, essentially a hit list of American companies. FedEx 0:04:48.839 --> 0:04:52.640 may well be on such a list. Uh, forget about 0:04:52.640 --> 0:04:56.920 purchases of oil seeds, grains, cottons. China had just started 0:04:56.960 --> 0:04:59.679 to buy a bit of that. That won't be happening either, 0:05:00.120 --> 0:05:03.640 so you know, and just generally making life really miserable 0:05:03.720 --> 0:05:06.560 for American companies and the lot they can do without 0:05:06.760 --> 0:05:10.120 formal sanctions. I'm just looking right now at some of 0:05:10.400 --> 0:05:13.600 the share prices and the commodities that you're mentioning. Interestingly, 0:05:13.640 --> 0:05:17.880 Bowing shares are slightly up, soybean prices are slightly up. 0:05:18.000 --> 0:05:22.360 So either markets are not taking this seriously or people 0:05:22.400 --> 0:05:25.880 think that this has already been priced in. Well, I mean, 0:05:26.080 --> 0:05:28.800 you know, these prices are up and down. Bowing took bowing. 0:05:28.880 --> 0:05:31.960 Bowing took a hit yesterday on the New Spin its 0:05:32.000 --> 0:05:38.520 Own World of Hurt. Sure. Look, I mean China will 0:05:38.760 --> 0:05:42.280 have to respond in some fashion. And and you know, 0:05:42.360 --> 0:05:45.039 since they since they honestly cut, since they cannot even 0:05:45.240 --> 0:05:48.400 if they wanted to put on more tariffs. I think 0:05:48.440 --> 0:05:52.600 these direct threats to individual US companies to make them 0:05:52.640 --> 0:05:55.240 feel the pain is probably what we should expect. You 0:05:55.240 --> 0:05:57.480 can read more on all of these things and other 0:05:57.520 --> 0:06:00.520 stories from the Brook Opinion, a Bloomberg dot com slash opinion. 0:06:00.960 --> 0:06:03.480 Uh Andy Brown, thank you so much for being with us. 0:06:16.400 --> 0:06:20.920 We have been getting earnings out of the big gas giants. 0:06:21.000 --> 0:06:23.839 I guess you would say, I know, Paul, they're giving 0:06:23.839 --> 0:06:27.080 me a look. I mean, honestly, between the solar system 0:06:27.120 --> 0:06:29.919 studying in my home household and the fact that I 0:06:29.960 --> 0:06:32.080 have two young boys, that's that's where my mind goes. 0:06:32.320 --> 0:06:34.760 I do want to talk, though, more broadly, about what's 0:06:34.800 --> 0:06:38.279 going on in oil, because it's been frankly a wild ride, 0:06:38.279 --> 0:06:40.720 and to help us pass through not only the earnings 0:06:40.760 --> 0:06:44.400 from Chevron and Exxon and others. But also what we're 0:06:44.400 --> 0:06:47.320 seeing in the crude market is John Kilda, founding partner 0:06:47.360 --> 0:06:50.960 of Again Capital, joining us on the phone. John. Let's 0:06:50.960 --> 0:06:53.320 just start with the wild ride. Yesterday we saw the 0:06:53.320 --> 0:06:58.320 biggest plunge and crewed in four years, dropping about eight percent. 0:06:58.400 --> 0:07:00.839 Today you're seeing a bit of a rebound. How much 0:07:00.839 --> 0:07:06.680 would additional tariffs really crimp the value of oil? First 0:07:06.680 --> 0:07:09.479 of all, good morning, but very much. I mean, I've 0:07:09.480 --> 0:07:11.400 been saying for a while that the the U. S. 0:07:11.480 --> 0:07:15.000 China trade war has had an outsized effect on the 0:07:15.040 --> 0:07:19.440 oil market, on energy pricing because it's been hitting the 0:07:19.480 --> 0:07:25.880 Asian economic region Japan, South Korea, China, Singapore, Indonesia, UH 0:07:25.920 --> 0:07:31.400 the hardest and the slowed slowing economic activity there, Every 0:07:31.440 --> 0:07:34.360 measure that comes out manufacturing, p M, I, S, G, D, 0:07:34.480 --> 0:07:37.800 p S, exports, you name it, all have been really 0:07:37.840 --> 0:07:40.840 on a on a terrific down slope, and that goes 0:07:40.960 --> 0:07:43.840 to the heart of the energy demand growth outlook. It's 0:07:43.840 --> 0:07:49.400 been hollowed out to a great degree by this economic slowing. So, uh, 0:07:49.480 --> 0:07:52.200 you want to ratchet up the trade war more, it's 0:07:52.240 --> 0:07:55.480 going to ratchet down demand growth more. And that's why 0:07:55.520 --> 0:07:58.160 you're seeing these prices come under such pressure, and John, I, 0:07:58.400 --> 0:08:01.160 you know, we've all seen I think reports that Iranian 0:08:01.160 --> 0:08:04.800 oil tankers have been quietly offloading their supply into Chinese ports. 0:08:05.520 --> 0:08:10.040 That seems like a risky strategy for the Chinese. What 0:08:10.120 --> 0:08:13.920 do you think is going on there? It's actually, um, 0:08:13.960 --> 0:08:16.800 they're being quite clever about it while they're they're what 0:08:16.880 --> 0:08:19.400 they're doing is the the Iranian tankers, not to get 0:08:19.440 --> 0:08:22.640 too technical here, are unloading the oil into what they 0:08:22.640 --> 0:08:25.960 call bonded storage or storage facilities that are actually owned 0:08:25.960 --> 0:08:29.360 by Iran. So it doesn't count yet as an actual 0:08:29.440 --> 0:08:32.480 transfer or transaction that would be that would be violative 0:08:32.760 --> 0:08:36.040 of the U S sanctions. But what that's doing is 0:08:36.080 --> 0:08:39.120 creating this huge overhang of millions of barrels of oil. 0:08:39.200 --> 0:08:42.240 Literally that if there's some kind of easing or if 0:08:42.240 --> 0:08:44.400 the Chinese want to throw down and say, you know, 0:08:44.480 --> 0:08:46.120 we don't care about your sanctions, We're going to buy 0:08:46.160 --> 0:08:47.920 the oil, all of a sudden we have a new 0:08:47.960 --> 0:08:51.360 flood of oil that goes into the Chinese market, which 0:08:51.360 --> 0:08:54.920 would displace obviously other salady barrels and other supply that 0:08:55.000 --> 0:08:58.760 would again cause the potential, you know, further cratering of 0:08:58.800 --> 0:09:01.960 the price so um, it's actually something we're all watching 0:09:01.960 --> 0:09:05.559 because it's it's oil. It's almost like a mini strategic 0:09:05.559 --> 0:09:08.520 petroleum reserved that it's being built up into that if 0:09:08.520 --> 0:09:11.520 it gets tapped or called on, would obviously be another 0:09:11.760 --> 0:09:15.560 price break opportunity. So, John, you've nailed it with respect 0:09:15.640 --> 0:09:18.360 to your calls on oil prices. I'm looking right now, 0:09:18.880 --> 0:09:22.079 crew treated on the night Max currently treading at fifty 0:09:22.160 --> 0:09:25.440 five two cents a barrel, up two and a half 0:09:25.480 --> 0:09:28.920 percent today after yesterday's eight percent plunge. Where will this 0:09:29.080 --> 0:09:32.439 price be? What should it be? Should the tariffs, the 0:09:32.440 --> 0:09:36.560 additional tariffs at President Trump discussed yesterday get implemented and 0:09:36.600 --> 0:09:39.439 there is some sort of retaliatory move by the Chinese government, 0:09:41.280 --> 0:09:43.160 you know, we're heading back down towards fifty dollars a 0:09:43.240 --> 0:09:46.079 barrel at this point. That's where major support is on 0:09:46.080 --> 0:09:49.160 on the chart. It's not just around psychological number. There's 0:09:49.160 --> 0:09:52.960 some real um you know math if you will involved 0:09:53.080 --> 0:09:58.199 with that, with that level um. And it's remarkable right 0:09:58.240 --> 0:09:59.920 if you think about it, that with all the ten 0:10:00.160 --> 0:10:03.440 the surrounding Iran, with all the efforts by Saudi Arabian, 0:10:03.520 --> 0:10:06.640 some mothers in OPEC, including Russia to try to reduce 0:10:06.679 --> 0:10:08.560 supplies and get the price back up. That it's just 0:10:08.600 --> 0:10:12.400 not reacting. It shows you just how you know, the 0:10:12.640 --> 0:10:15.840 delitarious this situation is. And the fallout from the trade 0:10:15.880 --> 0:10:18.800 war is on the demand outlook. And that's what's just 0:10:18.880 --> 0:10:21.400 key right now. And you know, we're gonna be heading 0:10:21.400 --> 0:10:24.120 down to that fifty barrel level and we'll see if 0:10:24.160 --> 0:10:26.960 that doesn't prompt another response from the Saddie's or the 0:10:27.000 --> 0:10:30.960 rest of OPEC in Russia, UM or even the other 0:10:31.120 --> 0:10:33.200 show that could fall here. What we're going to start 0:10:33.240 --> 0:10:36.400 to watch out for is our own shale players. UM. 0:10:36.559 --> 0:10:39.880 The they're here in footsteps from the financial markets about 0:10:40.440 --> 0:10:45.000 you know, persisting in their money losing endeavors here and uh, 0:10:45.120 --> 0:10:48.360 we've seen US domestic productions stall out of about twelve 0:10:48.400 --> 0:10:50.679 million barrels. It could very well start to go back 0:10:50.720 --> 0:10:53.719 on the decline. Uh if this doesn't improve. So that's 0:10:53.760 --> 0:10:55.880 the other thing to watch out for. So John, just 0:10:55.920 --> 0:10:59.000 real quickly, in thirty seconds, we heard from Chevron and 0:10:59.080 --> 0:11:01.800 Exxon reported earnings today. What are the big oil companies 0:11:01.800 --> 0:11:06.720 saying about trade and how that risks their business? Well, 0:11:06.800 --> 0:11:09.080 it's it's a problem for them. The only bright spot 0:11:09.120 --> 0:11:12.120 they've had recently is their petrochemical businesses at the bigger 0:11:12.120 --> 0:11:15.200 companies X and Chevron and some of the others. Now 0:11:15.240 --> 0:11:18.040 that's going to face an economic slowdown, and those businesses 0:11:18.080 --> 0:11:20.360 are highly cyclical, So if you get a downturn in 0:11:20.360 --> 0:11:23.439 the global economy, that's the that's their last vestage is 0:11:23.520 --> 0:11:26.000 now going to get hit too. So there's a reason 0:11:26.000 --> 0:11:27.960 why the energy sector is less than five percent of 0:11:28.000 --> 0:11:30.720 the S and P five hundred um. They're they're really 0:11:30.800 --> 0:11:34.480 uninvestable at this point. Uninvestable. That's hard, yeah, because they 0:11:34.600 --> 0:11:38.160 both eat expectations and their share prices are down. So 0:11:38.240 --> 0:11:40.680 I think a lot of people probably agree with John absolutely. 0:11:41.040 --> 0:11:43.400 John Kilda, thank you so much for joining us once again. 0:11:43.440 --> 0:11:45.960 John is founding partner of Again Capital, based in New 0:11:46.040 --> 0:12:05.360 York City. Giving us an update on the oil markets. Well, 0:12:05.360 --> 0:12:07.800 this may be the dog days of summer, but we 0:12:07.920 --> 0:12:10.800 certainly had a busy week. This week. We had the FED, 0:12:10.920 --> 0:12:14.600 we had trade and tariffs, and today the jobs reports, 0:12:14.600 --> 0:12:17.000 so we actually had plenty for the markets to digest. 0:12:17.040 --> 0:12:19.120 Help us kind of tie it all together. We welcome 0:12:19.240 --> 0:12:22.600 Dr Bob Eisenbeis Bob as a vice chairman and chief 0:12:22.640 --> 0:12:27.280 monetary economist for Cumberland Advisers, and Dr Eisenbeiss was formerly 0:12:27.320 --> 0:12:30.240 executive vice president and director of Research at the Federal 0:12:30.280 --> 0:12:34.000 Reserve Bank of Atlantic joins us on the phone from Sarasota. Bob, 0:12:34.000 --> 0:12:36.760 thanks so much for joining us. Let's kind of work backwards, 0:12:36.840 --> 0:12:39.120 maybe from what has been a very busy week, and 0:12:39.120 --> 0:12:42.520 we'll start with the jobs report that we got this morning. 0:12:42.559 --> 0:12:44.480 What are your key takeaways from what seemed to be 0:12:44.480 --> 0:12:47.720 a pretty solid report. Well, it was a salad report, 0:12:47.840 --> 0:12:51.160 and there's lots of positives. The unemployment rate held constant 0:12:51.160 --> 0:12:54.360 at three point seven percent. There were games in a 0:12:54.480 --> 0:12:58.280 number of different categories, and uh, I noticed that those 0:12:58.360 --> 0:13:03.280 categories aren't necessarily the ones that are low paying jobs. 0:13:03.320 --> 0:13:07.440 We're not saying retail and food services and that sort 0:13:07.440 --> 0:13:12.240 of thing. We're seeing good jobs being created. Um. And 0:13:12.280 --> 0:13:15.640 then I also note the fact that we now have 0:13:16.280 --> 0:13:22.440 about six point one million UH people unemployed, whereas we 0:13:22.480 --> 0:13:27.480 have over seven million job vacancies. So if you're an 0:13:27.520 --> 0:13:30.280 employer and you have a job, and you have a 0:13:30.360 --> 0:13:33.320 job vacancy and you can't hire people, why would you 0:13:33.360 --> 0:13:35.760 create more jobs? The only thing I can think of 0:13:35.880 --> 0:13:39.200 is that you may be creating jobs that have different skills, 0:13:39.600 --> 0:13:41.600 and so part of what we're looking at as a 0:13:41.640 --> 0:13:46.360 skill min mismatch. So, Bob, given the fact that the 0:13:46.480 --> 0:13:50.400 jobs market looks like it's in very solid footing, given 0:13:50.440 --> 0:13:53.520 the fact that the economic expansion, albeit it is slowing, 0:13:53.720 --> 0:13:57.480 it is still chugging along here, how does the Federal 0:13:57.520 --> 0:14:02.160 Reserve Act going forward from your perspective, Well, they've painted 0:14:02.160 --> 0:14:06.280 themselves into a corner as far as I'm concerned. Um, 0:14:06.440 --> 0:14:11.560 they cut once, build it as an insurance cut. I 0:14:11.600 --> 0:14:14.560 saw some commentator make the point that when you don't 0:14:14.559 --> 0:14:17.000 have another rationality, you can always build it as an 0:14:17.000 --> 0:14:21.600 insurance cut. Uh. They were not very convincing as to 0:14:21.720 --> 0:14:26.240 why they were doing it, especially. Uh. Make make two points. First, 0:14:27.280 --> 0:14:30.920 if the problems are slow down in Europe and trade issues, 0:14:31.480 --> 0:14:33.880 it's not obvious to me how a cut in interest 0:14:33.960 --> 0:14:40.440 rates is going to solve those dislocations. It's not so 0:14:40.480 --> 0:14:42.600 I think. I think that's one of the things to 0:14:42.680 --> 0:14:45.360 sort of put in the back of our mind that 0:14:45.400 --> 0:14:48.400 it's just not there's not much of a connection between 0:14:48.840 --> 0:14:52.160 at this juncture the problems they're trying to address and 0:14:52.200 --> 0:14:56.920 the tools that they have to address it. Secondly, German 0:14:56.960 --> 0:15:01.280 power kept referring to uncertainty about trade on certainty about 0:15:01.320 --> 0:15:07.080 the global outlook. Well, to an economist, uncertainty has a 0:15:07.160 --> 0:15:10.440 special meeting. It means that you don't have an idea 0:15:10.560 --> 0:15:13.360 as to what the probabilities are going to be of 0:15:13.400 --> 0:15:17.120 an event occurring. That's different from risk, where you do 0:15:17.240 --> 0:15:20.520 have some way of figuring out what the likelihood of 0:15:20.560 --> 0:15:24.360 these events. I don't know a single theory that says 0:15:24.400 --> 0:15:28.760 that Paul's monetary policy helps to deal with uncertainty. So 0:15:28.880 --> 0:15:31.840 I think I think they've really painted themselves into a corner. 0:15:32.280 --> 0:15:38.120 And I guessed before the meeting that should they make 0:15:38.120 --> 0:15:42.600 a cut, two things will happen. They will be criticized 0:15:42.920 --> 0:15:46.320 by the President and the markets will be crying for more. 0:15:46.440 --> 0:15:50.160 And that that appears to be what's happening. So it's interesting. 0:15:50.400 --> 0:15:52.480 It's interesting, Bob. This week again a pretty busy week 0:15:52.520 --> 0:15:54.920 in terms of data for the marketplace. We had a 0:15:54.920 --> 0:15:57.080 good job report today, we had you know, a good 0:15:57.320 --> 0:15:59.360 we had a rate cut by the Federal Reserve. But 0:16:00.120 --> 0:16:02.560 sell off we've seen in the financial markets yesterday afternoon 0:16:02.560 --> 0:16:04.120 and continuing in today, and we have the dial off 0:16:04.880 --> 0:16:09.920 seven points right now. It shows where trade really fits 0:16:10.000 --> 0:16:12.440 on investors right our screen, I kind of right up 0:16:12.440 --> 0:16:15.360 front and center. So what is your sense as to 0:16:16.000 --> 0:16:18.360 how investors should be pricing in the risk of a 0:16:18.440 --> 0:16:23.760 prolonged trade dispute with China. Well, I think, uh, first 0:16:23.760 --> 0:16:28.280 of all, what that means is trade is not all 0:16:28.320 --> 0:16:31.800 that important to us in terms of the volume of 0:16:31.880 --> 0:16:35.720 trade our exports and imports. Most of our trade is 0:16:35.760 --> 0:16:38.600 with Mexico and Canada, so you need to keep our 0:16:38.600 --> 0:16:42.360 eyes on what's happening in that arena as opposed to 0:16:42.440 --> 0:16:46.880 necessarily worrying about the goods coming in and out of China. Um. 0:16:47.720 --> 0:16:52.400 We've also seen suppliers now moving supply chains to adjust 0:16:52.520 --> 0:16:55.560 to it, so they're taking steps to try to chrishion 0:16:55.640 --> 0:17:00.680 themselves from the impact of those trade wars. But I 0:17:00.720 --> 0:17:04.479 did find it very interesting listening to the broadcast today 0:17:04.960 --> 0:17:08.119 the number of different knock on effects that people have 0:17:08.240 --> 0:17:12.919 been identified that fall out of these trade negotiations. And 0:17:12.960 --> 0:17:17.000 I think in this particular case, uh, those that are 0:17:17.080 --> 0:17:20.960 arguing that the Chinese are in no rush to strike 0:17:20.960 --> 0:17:24.600 a deal is going to be really important because the 0:17:24.680 --> 0:17:27.040 longer we go, the closer we get to the election. 0:17:27.640 --> 0:17:33.240 If there's a downturn in flows of funds to farmers 0:17:33.320 --> 0:17:35.439 and so on in the Midwest. That's going to have 0:17:35.640 --> 0:17:40.880 significant political implications going forward. Uh. I'd like to make 0:17:40.960 --> 0:17:43.240 one more point about the jobs market if I could 0:17:44.320 --> 0:17:48.760 go ahead. Okay, Um, we tend to look at the 0:17:48.880 --> 0:17:52.960 number of jobs created as we assess how good the 0:17:53.040 --> 0:17:56.800 job market is, but we forget that the economy today 0:17:56.920 --> 0:17:59.680 is much bigger than it was in two thousand. It's 0:17:59.720 --> 0:18:03.800 bigger than it was in nineteen sixty. If we were 0:18:03.840 --> 0:18:07.360 to create jobs at the same rate we did between 0:18:07.440 --> 0:18:12.440 nineteen sixty and nineteen seventy, that one and sixty five 0:18:12.480 --> 0:18:15.600 thousand would be four times what it is. If we 0:18:15.600 --> 0:18:18.120 were to create jobs at the same rate we did 0:18:18.160 --> 0:18:22.200 between nineteen eighty and before the financial crisis, that number 0:18:22.240 --> 0:18:25.240 would be twice as big. So while this is a 0:18:25.320 --> 0:18:28.040 nice job number, we need to sort of put it 0:18:28.080 --> 0:18:31.359 in perspective that tells us something's going on in terms 0:18:31.359 --> 0:18:35.000 of the job creation and the nature of how our 0:18:35.040 --> 0:18:40.400 economy is going and growing. That has implications for jobs. 0:18:40.920 --> 0:18:44.160 That's that's an excellent point. Bob Eis and Bias, thank 0:18:44.160 --> 0:18:46.440 you so much for being with us and giving us 0:18:46.480 --> 0:18:49.640 your perspective. Bobby's and Bias's vice chairman and chief monetary 0:18:49.640 --> 0:18:54.320 economist for Cumberland Advisors, joining us from Sarah Study formerly 0:18:54.680 --> 0:18:57.720 was the executive vice president and director of Research at 0:18:57.720 --> 0:19:17.320 the Federal Reserve Bank of Atlanta. Yeah. Car Kadonna of 0:19:17.480 --> 0:19:20.119 Bloomberg Economics q f U S Economists was in here 0:19:20.160 --> 0:19:23.879 earlier saying that the actual numbers of the job's report 0:19:23.920 --> 0:19:27.440 today looked pretty good. You dig under that though perhaps 0:19:27.440 --> 0:19:30.040 they looked a little less good, and again us a color, 0:19:30.320 --> 0:19:32.480 some color of what's happening on the ground. Let's bring 0:19:32.480 --> 0:19:36.440 in Becky Frankoitz, president of Manpower Group North America. Manpower 0:19:36.440 --> 0:19:39.879 Group is the third largest staffing firm in the world. Becky, 0:19:40.000 --> 0:19:41.760 thank you so much for joining us. So I want 0:19:41.760 --> 0:19:45.440 to start there are there signs from your vantage point 0:19:45.560 --> 0:19:48.960 that the US labor market is slowing down? Yeah, So 0:19:49.040 --> 0:19:52.240 we would say that July's job report was pitched perfect. 0:19:52.560 --> 0:19:56.080 There were wage there was wage growth, workforce participation picked up, 0:19:56.400 --> 0:19:59.520 and there were strong job gains. Now the taste of 0:19:59.560 --> 0:20:02.639 growth is slowing. So year to day in eighteen, we 0:20:02.680 --> 0:20:06.159 had about two three thousand jobs this time and now 0:20:06.240 --> 0:20:08.159 we're having about a hundred and sixty five thousand on 0:20:08.240 --> 0:20:10.760 average per month. So the pace of growth is slowing. 0:20:10.800 --> 0:20:12.879 But it makes so much sense, Lisa, because as we 0:20:12.920 --> 0:20:16.240 have fewer qualified workers looking for work because they're all employed, 0:20:16.560 --> 0:20:19.760 of course we're seeing slower job growth. So, Becky, given 0:20:19.800 --> 0:20:24.560 that we are at or near someone's definition of full employment, 0:20:24.760 --> 0:20:27.800 are you surprised that we're not seeing maybe better than 0:20:28.040 --> 0:20:31.880 three low three percent wage growth? Yeah, So July mark 0:20:31.960 --> 0:20:34.520 twelve months of three percent or greater wage growth. So 0:20:34.600 --> 0:20:37.040 we're encouraged by that. But of course, you know, the 0:20:37.040 --> 0:20:39.639 basics of economics would tell you we should continue to 0:20:39.680 --> 0:20:44.479 see wages pick up based on supply demand. So, and 0:20:44.520 --> 0:20:46.719 this is something that we have been expecting for a 0:20:46.720 --> 0:20:49.200 long time, and it's been a little bit uh slower 0:20:49.240 --> 0:20:52.800 to take off than people have expected. Where are the 0:20:52.880 --> 0:20:56.240 main job gains, I mean in what industries? Yes, so 0:20:56.320 --> 0:21:00.480 really encouraging. In July we saw professional and technical services 0:21:00.520 --> 0:21:03.320 add thirty one thousand jobs, and about a third of 0:21:03.320 --> 0:21:06.600 those jobs when computer systems designs and so we're actually 0:21:06.600 --> 0:21:10.280 starting to see these the effects of AI and automation 0:21:10.440 --> 0:21:13.560 come into new jobs in the workforce, which speaks to 0:21:13.600 --> 0:21:16.640 the fact that we have to start upskilling American workers 0:21:16.920 --> 0:21:20.280 now again encouraging that we've seen more companies commit to 0:21:20.480 --> 0:21:23.640 up skilling, so teaching, you know, people new new skills 0:21:23.680 --> 0:21:26.320 for future jobs. We've seen more companies commit in the 0:21:26.400 --> 0:21:29.520 last two months than we've seen in the last two years. 0:21:29.520 --> 0:21:32.920 But upskilling our workers for tomorrow's jobs is mission critical 0:21:32.960 --> 0:21:35.400 for our country. Yeah, that's interesting. That's kind of where 0:21:35.400 --> 0:21:36.920 I wanted to go because Lisa and I speak to 0:21:36.960 --> 0:21:39.280 a lot of h C suite people and they tell 0:21:39.320 --> 0:21:43.640 us one of their challenges is actually finding qualified workers. 0:21:43.720 --> 0:21:45.200 What do you think what are we seeing out of 0:21:45.200 --> 0:21:47.679 corporate American in terms of trying to address what is 0:21:47.720 --> 0:21:49.720 I guess a high class problem that you can't find 0:21:49.800 --> 0:21:53.119 enough qualified workers. Yes, I think I think it's actually 0:21:53.119 --> 0:21:55.719 a problem across all sectors of the economy, Paul. So 0:21:55.960 --> 0:21:57.800 you know what we're seeing is I spend my time 0:21:57.800 --> 0:22:00.440 with CEOs across America like you do, is a ride. 0:22:00.880 --> 0:22:03.760 Almost fifty of American employers are saying they can't find 0:22:03.760 --> 0:22:05.800 the skills that they need, and so we have to 0:22:05.880 --> 0:22:09.520 create the workforce that we need for tomorrow. Our population 0:22:09.560 --> 0:22:11.880 growth in our country hit a thirty two year low 0:22:12.080 --> 0:22:14.840 in in earlier this year March of this year. And 0:22:14.880 --> 0:22:16.879 the challenge with that is the workforce we have is 0:22:16.880 --> 0:22:19.680 the workforce will have. And so we are seeing companies 0:22:19.720 --> 0:22:22.480 commit to upskilling, but that's just one piece of what's 0:22:22.520 --> 0:22:25.840 required for success. To have successful upskilling, we actually have 0:22:25.960 --> 0:22:29.640 to understand the potential of our workers, understand the jobs 0:22:29.640 --> 0:22:32.160 that we're gonna need today and tomorrow, and then map 0:22:32.240 --> 0:22:36.320 people through career paths into those jobs, which industries are 0:22:36.400 --> 0:22:39.840 offering the biggest pay gains right now. Yeah, so again 0:22:39.920 --> 0:22:42.560 encouraged this morning. You know, retail jobs were down about 0:22:42.560 --> 0:22:46.960 three point six or UM, but we saw manufacturing increase, 0:22:47.000 --> 0:22:50.040 so that's exciting UM and the positive of that is 0:22:50.080 --> 0:22:52.199 manufacturing jobs pay a little bit more than retail, so 0:22:52.240 --> 0:22:54.880 good to see growth there. You know, construction was up, 0:22:55.040 --> 0:22:57.679 but we're honestly, we're seeing growth across the economy. With 0:22:57.720 --> 0:23:00.200 the supply and demand we have in our country, it's 0:23:00.200 --> 0:23:03.359 a great time to be an American worker. So, Becky, 0:23:03.400 --> 0:23:06.000 one of the things that one of the uncertainties in 0:23:06.000 --> 0:23:08.600 the marketplaces back kind of front and center. That's trade 0:23:08.600 --> 0:23:13.639 tensions with China. President Trump tweeting that the raising terrorists 0:23:13.680 --> 0:23:16.720 are putting tariffs on additional three billion dollars worth of goods. 0:23:16.720 --> 0:23:20.200