WEBVTT - Bloomberg Surveillance TV: August 1st, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.400 with Lisa Bromwitz and am Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify, 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:35.840 Bloomberg Terminal and the Bloomberg Business App. 0:00:36.680 --> 0:00:40.479 Jamison Greer is joining us now, Jamison, Ambassador, Thank you 0:00:40.520 --> 0:00:42.360 so much for being with us. I know you've been 0:00:42.400 --> 0:00:45.839 incredibly busy. I can imagine you haven't slept much. I 0:00:45.880 --> 0:00:49.520 am curious how much we're seeing the end of negotiations 0:00:49.840 --> 0:00:52.400 or the beginning of the end, as there still seem 0:00:52.440 --> 0:00:54.440 to be some loose ends to be tied up. 0:00:56.080 --> 0:00:58.360 Well, I would say that, you know, we've spent the 0:00:58.400 --> 0:01:02.000 past one hundred and twenty days negotiating with dozens and 0:01:02.040 --> 0:01:05.120 dozens of countries, and with some of these countries, the 0:01:05.120 --> 0:01:07.039 deals have been good enough that the President's been willing 0:01:07.080 --> 0:01:09.920 to accept them. With other countries, they're just going have 0:01:10.000 --> 0:01:13.160 a tariff. But we have you know, you can look 0:01:13.160 --> 0:01:14.840 at some of the information that's gone out there. We 0:01:14.880 --> 0:01:16.959 have fact sheets, we have a joint statement with Indonesia 0:01:17.000 --> 0:01:19.160 that give some details. You know, we'll be finishing the 0:01:19.160 --> 0:01:22.119 paperwork in the next weeks and maybe a couple of months, 0:01:22.400 --> 0:01:24.479 but these deals are pretty much set. 0:01:25.120 --> 0:01:26.000 They are set, right. 0:01:26.000 --> 0:01:28.160 We wouldn't make an agreement unless we all knew the 0:01:28.160 --> 0:01:30.280 contours of it and the countries knew it. And it's 0:01:30.280 --> 0:01:32.840 an exciting time because the president has essentially reset the 0:01:32.840 --> 0:01:36.039 global trading system, and so we'll be you know, finalizing 0:01:36.080 --> 0:01:39.040 everything that's been agreed to on paper and then monitoring 0:01:39.040 --> 0:01:40.040 compliance going forward. 0:01:40.080 --> 0:01:42.319 And Messagre, Can you help us understand how you landed 0:01:42.360 --> 0:01:45.200 on some of these rates, Specifically a country like Switzerland, 0:01:45.240 --> 0:01:48.480 it went from thirty one percent on Liberation Day, April 0:01:48.520 --> 0:01:51.600 second to now thirty nine percent, even though you and 0:01:51.960 --> 0:01:56.920 your colleagues were in negotiations with the Swiss trading partners. 0:01:58.120 --> 0:01:58.720 Sure well. 0:01:58.720 --> 0:02:01.920 So, first of all, the rates are largely determined by 0:02:01.960 --> 0:02:04.720 the trade deficit of a country with the United States 0:02:04.960 --> 0:02:06.920 and what the country is willing to do to address 0:02:06.960 --> 0:02:10.400 that trade deficit Switzerland. You know, this is surprising to 0:02:10.440 --> 0:02:12.600 some to hear, but we have nearly forty billion dollar 0:02:12.720 --> 0:02:15.800 trade deficit with Switzerland for a country of nine million. 0:02:16.320 --> 0:02:19.440 Now we value our relationship with Switzerland certainly, but during 0:02:19.440 --> 0:02:22.120 our discussions with them, you know, we weren't able to 0:02:22.520 --> 0:02:24.720 reach agreement on the best way to reduce that trade 0:02:24.720 --> 0:02:28.680 deficit at all. Right, they ship enormous amounts of pharmaceuticals 0:02:28.720 --> 0:02:31.120 to our country. We want to be making pharmaceuticals in 0:02:31.120 --> 0:02:34.640 our country. So this is a challenging situation. And so 0:02:34.720 --> 0:02:36.760 we have, you know, high tariffs not just on Switzerland, 0:02:36.800 --> 0:02:39.320 but many countries where we weren't able to fully resolve 0:02:39.320 --> 0:02:41.960 a path forward on reducing the trade deficit and opening markets. 0:02:42.120 --> 0:02:44.799 My understanding was that the US in Switzerland actually had 0:02:44.840 --> 0:02:47.480 a negotiated text and it was just waiting on sign 0:02:47.520 --> 0:02:48.720 off from President Trump. 0:02:48.800 --> 0:02:49.520 Is that accurate? 0:02:50.440 --> 0:02:51.720 I think that's an overstatement. 0:02:51.919 --> 0:02:53.880 I mean, the reality is all of these countries you 0:02:53.919 --> 0:02:56.760 trade back and forth paperwork and then you take it 0:02:56.800 --> 0:02:59.600 back to your leaders to get guidance from them, and 0:02:59.760 --> 0:03:02.239 so nothing's agreed, and tell everything's agreed. That's what every 0:03:02.240 --> 0:03:05.480 trade negotiator knows. So you know, the reality is we 0:03:05.560 --> 0:03:07.480 negotiate with lots of countries. Listen, there are a lot 0:03:07.480 --> 0:03:08.840 of countries that didn't get a deal that we've been 0:03:08.880 --> 0:03:11.119 negotiating with, and they, of course, they all want a deal. 0:03:11.240 --> 0:03:13.760 They all want to deal with the United States. So 0:03:13.800 --> 0:03:16.680 I can understand that. You know, folks may want to 0:03:16.720 --> 0:03:19.560 try to manifest a deal in the last minutes, but 0:03:19.600 --> 0:03:21.040 we just have to do it's right for America, and 0:03:21.040 --> 0:03:22.080 the President stands that too. 0:03:22.280 --> 0:03:24.600 I'm thinking of other countries like Taiwan, which that rate 0:03:24.639 --> 0:03:28.240 went down, India, Switzerland. Of course we know you are 0:03:28.240 --> 0:03:32.200 in negotiations with So between now and August seventh, could 0:03:32.280 --> 0:03:34.320 some of these countries that you spent a lot of 0:03:34.360 --> 0:03:36.800 time with your counterparts get a deal. 0:03:38.040 --> 0:03:39.760 Well, that's not my focus. 0:03:40.040 --> 0:03:42.840 I feel like we've been able to get everything set 0:03:42.880 --> 0:03:45.840 on August first. Of course, any country that wants to 0:03:45.880 --> 0:03:47.360 talk to us, they can always talk to us, and 0:03:47.400 --> 0:03:49.160 I'm sure some will be eager to find ways to 0:03:49.200 --> 0:03:51.080 reduce the deficit, open their markets, etc. 0:03:51.880 --> 0:03:55.640 But we're really focused right now on implementing the deals 0:03:55.640 --> 0:03:57.080 that have been reached, well. 0:03:57.000 --> 0:04:01.080 On implementing those deals. Representative, you meant that you would 0:04:01.080 --> 0:04:04.480 be looking and monitoring them for any violations. How will 0:04:04.520 --> 0:04:07.000 this administration judge what is a violation and what the 0:04:07.040 --> 0:04:08.440 consequences of that would be. 0:04:09.520 --> 0:04:13.520 So, for example, you know, we put out a fairly 0:04:13.560 --> 0:04:17.600 detailed joint statement with Indonesia and we're finalizing the underlying agreement, 0:04:17.760 --> 0:04:19.839 and in there you can see that they've made commitments 0:04:19.839 --> 0:04:22.080 on tariff levels where they're going to remove all of 0:04:22.120 --> 0:04:25.039 their tariffs. They've made commitments on non tariff barriers with 0:04:25.080 --> 0:04:28.480 respect to you know, agricultural inspections and the way they 0:04:29.400 --> 0:04:31.919 treat certain digital trade. And so our office, which has 0:04:32.040 --> 0:04:34.320 hundreds of people, the Office of the gust Trade Representative, 0:04:34.760 --> 0:04:36.920 they watch this and they make sure that Indonesia actually 0:04:36.920 --> 0:04:39.120 does what it's supposed to do, and if they don't, 0:04:39.160 --> 0:04:41.520 the President has his teriff authority. I mean, all of 0:04:41.560 --> 0:04:44.440 the deals are premised and the modified rates for these 0:04:44.440 --> 0:04:47.880 countries are premised on them actually opening their market, making 0:04:47.880 --> 0:04:50.400 the investment and purchase commitments they've agreed to, and if 0:04:50.440 --> 0:04:52.559 you don't, you can have the tariffs go back into place. 0:04:52.680 --> 0:04:55.159 This is basic trade enforcement. That's what we intend to 0:04:55.160 --> 0:04:56.240 do here, Ambassador. 0:04:56.279 --> 0:04:58.039 Right now, there are a number of countries coming out 0:04:58.080 --> 0:05:00.320 and saying this is part of a negotiation, and they 0:05:00.360 --> 0:05:04.039 plan to keep talking with the team over in the 0:05:03.520 --> 0:05:07.240 Trade Organization and trade representatives from the United States. Is 0:05:07.279 --> 0:05:10.760 that just messaging to their own political constituents or is 0:05:10.760 --> 0:05:11.479 that reality? 0:05:12.440 --> 0:05:16.080 Well, listen, they certainly have their domestic constituents they have 0:05:16.680 --> 0:05:19.880 to talk to. You can be sure that I woke 0:05:19.960 --> 0:05:23.240 up this morning to a number of trade ministers texting 0:05:23.240 --> 0:05:25.360 me and emailing me, and I'm sure they're reaching out 0:05:25.400 --> 0:05:28.640 to my colleague, Secretary LATINX, Secretary Beston, et cetera. 0:05:29.640 --> 0:05:31.040 And my job is to talk to these folks. 0:05:31.080 --> 0:05:33.000 I'm always going to talk to these folks, and you know, 0:05:33.000 --> 0:05:34.920 if they have proposals, you know, I'll talk to them 0:05:34.920 --> 0:05:37.560 and I'll brief the president. You know, we're focused on 0:05:37.560 --> 0:05:40.880 implementation and doing, you know, what's right to change the 0:05:40.880 --> 0:05:43.040 trading system to one that benefits American workers. 0:05:43.360 --> 0:05:46.400 How much are you also hearing from US companies concerned 0:05:46.400 --> 0:05:49.719 about certainty and whether they're going to get clarity on 0:05:49.839 --> 0:05:52.000 exactly what the rates are going to be, whether they 0:05:52.040 --> 0:05:54.440 will stick, whether there will be adjustments, and how some 0:05:54.520 --> 0:05:57.839 of these things will work with transcenational shipments of getting 0:05:57.839 --> 0:05:59.560 penalized forty percent. 0:06:00.400 --> 0:06:04.000 So So with respect to certainty, you know, President Trump 0:06:04.080 --> 0:06:07.160 has been talking about a new tariff program. 0:06:06.960 --> 0:06:09.719 For for literally years, decades. 0:06:09.760 --> 0:06:12.039 In some instances, you know, he has tariffs from his 0:06:12.080 --> 0:06:14.320 first term that are still in place. So sometimes when 0:06:14.360 --> 0:06:16.440 companies say we want certainty, what they mean is we 0:06:16.480 --> 0:06:20.320 want a different outcome, right, And you know by by 0:06:20.680 --> 0:06:23.320 putting you know, the market has baked in a lot 0:06:23.360 --> 0:06:25.520 of the tariffs we put in. You know, the new 0:06:25.520 --> 0:06:27.760 tariffs that we issued last night are firm. That's why 0:06:27.800 --> 0:06:29.560 we put it out in a very clear list. Everyone 0:06:29.600 --> 0:06:32.640 can see it and understand. With surotect a transhipment that's 0:06:32.640 --> 0:06:34.920 always been illegal, and so we're just going to put 0:06:34.920 --> 0:06:38.440 an additional forty percent tariff on that. So, you know, 0:06:38.920 --> 0:06:40.839 I understand that there are going to be edge cases 0:06:40.880 --> 0:06:43.200 where companies have to change their supply chains and no 0:06:43.200 --> 0:06:45.120 one wants to do that. They just want status quo. 0:06:45.440 --> 0:06:47.600 But we can't have the status quo. The status quo 0:06:47.720 --> 0:06:49.440 is what led to offshoring and the loss of some 0:06:49.520 --> 0:06:52.480 of our key industries. So during that supply chain shift, 0:06:52.720 --> 0:06:54.919 you know, that can be challenging for some companies. And 0:06:55.000 --> 0:06:56.520 I talk to a lot of these folks. I wanted 0:06:56.520 --> 0:06:59.040 to understand the president's trade policy. I want to hear 0:06:59.080 --> 0:07:01.560 about any you know on in tended consequences. But the 0:07:01.600 --> 0:07:04.640 presence trade policy is moving forward and we're shifting from 0:07:04.680 --> 0:07:07.919 a seventy year policy based on purely efficiency to a 0:07:07.960 --> 0:07:09.000 new policy based. 0:07:08.800 --> 0:07:11.000 On fair and bounce trade, and the world is agreeing 0:07:11.000 --> 0:07:11.480 with US. 0:07:11.400 --> 0:07:12.000 Investor agree. 0:07:12.040 --> 0:07:14.720 What about the unintended consequences of what's going on with 0:07:14.800 --> 0:07:17.800 the sectoral tariffs on autos? The Ford CEO was on 0:07:17.800 --> 0:07:22.600 Bloomberg Television yesterday talking about the price disadvantage compared to 0:07:22.840 --> 0:07:26.760 auto companies if they're making a car in Japan because 0:07:26.800 --> 0:07:29.440 of the input costs of twenty five percent on those 0:07:29.440 --> 0:07:31.800 inputs that they need to make the car coming into 0:07:31.800 --> 0:07:35.360 the United States versus the fifteen percent right that Japan 0:07:35.520 --> 0:07:38.760 now has. What's the point of the auto sectoral tariff 0:07:39.040 --> 0:07:42.360 if basically it's going to be bilateral now with country 0:07:42.360 --> 0:07:44.200 by country. 0:07:44.040 --> 0:07:47.720 So first of all, you know, there are only a 0:07:47.760 --> 0:07:50.960 handful of countries that export cars to US, right essentially, 0:07:51.120 --> 0:07:53.560 you know Germany, Japan, in a couple of countries of 0:07:53.600 --> 0:07:56.440 the European Union. We also have Canada, Mexico, and we 0:07:56.480 --> 0:07:59.280 had our domestic producers. You know, choose over a couple 0:07:59.320 --> 0:08:01.760 of decades off for a lot of that production to Mexico, 0:08:02.160 --> 0:08:05.560 and so naturally there is some some challenge as they 0:08:05.720 --> 0:08:09.000 as they continue to reshure that and we understand that, right, 0:08:09.200 --> 0:08:11.400 I mean, our goal is long term. We're not looking 0:08:11.440 --> 0:08:14.000 at quarterly earnings as policy makers. We're looking at a 0:08:14.000 --> 0:08:16.080 way to make sure that we have a strong, robust 0:08:16.120 --> 0:08:19.080 industrial base here that provide good jobs for our workers 0:08:19.320 --> 0:08:22.120 and support the national security. So you know, we're in 0:08:22.160 --> 0:08:25.920 constant contact with the domestics, with the unions and everybody. 0:08:26.280 --> 0:08:28.880 And you know, I understand that the that the auto 0:08:28.920 --> 0:08:33.200 companies are receiving a credit for content that's made in America, 0:08:33.559 --> 0:08:34.400 which is how it should be. 0:08:34.400 --> 0:08:35.880 That's what we're trying to incentivize. 0:08:35.920 --> 0:08:38.160 When you're looking and you're thinking long term, are you 0:08:38.240 --> 0:08:43.199 preparing for Supreme Court ruling against using IEPA for these tariffs? 0:08:43.240 --> 0:08:45.160 And if so, what's the plan be. 0:08:46.960 --> 0:08:49.040 So the case is at the Federal Circuit right now. 0:08:49.080 --> 0:08:52.160 We had the arguments yesterday. You know, lots of questions, 0:08:52.200 --> 0:08:54.760 a lot of preparation. Dog did a great DJ did 0:08:54.760 --> 0:08:56.959 a great job. We had a great team out there. 0:08:57.160 --> 0:08:59.960 We feel very confident in the case. You know, if 0:09:00.040 --> 0:09:02.240 if there's still questions coming out of the Federal Circuit 0:09:02.360 --> 0:09:04.760 or further litigation that goes to the Supreme Court, we're 0:09:04.760 --> 0:09:08.120 confident there that this statue clearly says the President has 0:09:08.120 --> 0:09:09.680 the authority to regulate imports. 0:09:09.800 --> 0:09:10.559 That's the language. 0:09:10.640 --> 0:09:13.439 No, not my words, it's a statute statutes language. 0:09:14.000 --> 0:09:14.160 You know. 0:09:14.320 --> 0:09:17.040 In case there's a national emergency, the Presence declared a 0:09:17.120 --> 0:09:20.280 national emergency, So we feel confident, you know, if it 0:09:20.320 --> 0:09:22.800 goes the other way, then we'll manage that. The reality is, 0:09:23.240 --> 0:09:25.880 the countries understand the type of leverage that President Trump 0:09:25.920 --> 0:09:28.080 has created. That's why they're doing these deals, and they're 0:09:28.120 --> 0:09:30.240 going to stick regardless of what happens in litigation. 0:09:30.800 --> 0:09:32.320 That's where I wanted to finish, And we just have 0:09:32.360 --> 0:09:34.320 a couple of minutes. We are out of time with you, 0:09:34.440 --> 0:09:36.720 I know, but I am curious what the game plan 0:09:36.960 --> 0:09:40.160 is should there be some sort of overruling of IEPA. 0:09:40.240 --> 0:09:42.400 Do you already have section two thirty two and others 0:09:42.440 --> 0:09:42.960 lined up? 0:09:44.400 --> 0:09:46.960 Well, well, listen, we always have all kinds of plans. 0:09:47.000 --> 0:09:49.800 And I'm not going to go deep into our strategy here, 0:09:50.000 --> 0:09:53.480 mostly because we're pretty confident on the current plan. But 0:09:53.559 --> 0:09:55.520 we will do whatever it takes to make sure that 0:09:55.559 --> 0:09:58.440 the President can continue to rectify the trade deficit and 0:09:58.520 --> 0:10:01.079 change the global trading system. This is a historic thing. 0:10:01.600 --> 0:10:02.920 This is once in a hundred years that you have 0:10:02.960 --> 0:10:05.280 the chance to reorder global trade like this, and we're 0:10:05.280 --> 0:10:07.360 doing it, and we'll use whatever tools are necessary to 0:10:07.360 --> 0:10:07.640 do it. 0:10:07.840 --> 0:10:10.440 US Trade Representative Jamison Greer, thank you so much for 0:10:10.440 --> 0:10:23.320 being with it. Stephanie Rothawolf research still here and I'm 0:10:23.320 --> 0:10:25.720 looking right now at some of the internals of this data, 0:10:25.760 --> 0:10:28.920 and it includes average hourly earnings that ticked up to 0:10:29.000 --> 0:10:33.000 three point nine percent from the previous three point seven percent. 0:10:33.080 --> 0:10:36.000 You can see right now across the board there are 0:10:36.080 --> 0:10:38.840 still signs that things are solid, you know, even the 0:10:38.880 --> 0:10:41.320 unemployment rate. Yes, it ticked up, but not to the 0:10:41.400 --> 0:10:44.400 significant degree that some people were worried about. What is 0:10:44.400 --> 0:10:47.839 the inflationary risk here longer term at a time when 0:10:47.880 --> 0:10:50.280 the Fed is being prompted to cut from a number 0:10:50.280 --> 0:10:53.440 of different reasons, and there still are these tariffs in 0:10:53.440 --> 0:10:53.959 the system. 0:10:54.600 --> 0:10:56.640 Yeah, this is a challenge. 0:10:57.400 --> 0:10:59.240 The data that we're seeing is largely appears to be 0:10:59.320 --> 0:11:02.160 rifferent by immigrat and that actually tightens the labor market 0:11:02.160 --> 0:11:03.160 for blue collar workers. 0:11:03.400 --> 0:11:04.560 So what we might. 0:11:04.440 --> 0:11:06.880 See is a labor market, which is something that was 0:11:06.960 --> 0:11:09.480 kind of known heading into this event, but it's now 0:11:09.520 --> 0:11:12.640 the reality. It's kind of painful because what we're seeing 0:11:12.760 --> 0:11:16.120 is job gains that have slowed down tremendously. It results 0:11:16.120 --> 0:11:19.520 in upward pressure on wages and then upward pressure from tariff. 0:11:19.600 --> 0:11:22.679 So it's like a stagflationary type of thoughts shop, which 0:11:22.679 --> 0:11:25.120 we're starting to see play out in the data. It's 0:11:25.200 --> 0:11:27.720 just a really complicated mix for the FED to kind 0:11:27.720 --> 0:11:29.240 of deal with from here. So it looks like the 0:11:29.320 --> 0:11:32.600 labor market is okay, it's not as weak as these 0:11:32.679 --> 0:11:36.480 numbers today suggest. This is largely different by immigration in 0:11:36.480 --> 0:11:38.400 an economy that's hanging in there. 0:11:38.679 --> 0:11:41.600 Mike, to that point, maybe the economy is hanging in there, 0:11:41.640 --> 0:11:44.480 but on the margins, this is by government bonds sell 0:11:44.559 --> 0:11:45.400 corporate bonds. 0:11:46.600 --> 0:11:49.520 You know, corporate bond spreads, as you know, as we've 0:11:49.520 --> 0:11:52.079 all been talking about, are really tight. I mean, you're 0:11:52.080 --> 0:11:54.960 not getting a lot of extra yield to buy corporates 0:11:55.000 --> 0:11:57.680 and high yield bonds, and obviously you're seeing a little 0:11:57.679 --> 0:12:00.520 bit of a knee jerk reaction negative action in the 0:12:00.520 --> 0:12:03.120 stock market as well, and this, you know, this whole 0:12:03.160 --> 0:12:07.400 tariff theme is definitely one of of not only inflationary, 0:12:07.640 --> 0:12:09.760 you know, is you know we just talked about the 0:12:10.240 --> 0:12:14.520 stagflationary risk is real, but it can certainly result in 0:12:14.920 --> 0:12:18.520 margin pressures for companies and I think that is still 0:12:18.559 --> 0:12:21.080 to come, and I think we are starting to see 0:12:21.080 --> 0:12:23.839 some early evidence of that. And obviously that could put 0:12:23.840 --> 0:12:26.920 some pressure on corporate earnings, that could put some pressure 0:12:26.920 --> 0:12:30.280 on credit quality and and on corporate spread. So yeah, 0:12:30.320 --> 0:12:34.200 I think higher quality bonds and adding duration are the 0:12:34.200 --> 0:12:36.520 two themes we've we've been sticking here. The big question 0:12:36.600 --> 0:12:38.560 for the FED, right, and Stephan you kind of talked 0:12:38.559 --> 0:12:41.320 about this. I let's say growth is zero and the 0:12:41.400 --> 0:12:43.720 unemployment rate is you know, four and a half or five, 0:12:44.240 --> 0:12:47.320 but inflation is at three. You know, what does the 0:12:47.360 --> 0:12:49.800 FED do in that world? Right, that that kind of 0:12:49.800 --> 0:12:53.720 stagflationary world. And and my gut is, you know, the 0:12:53.800 --> 0:12:56.800 FED and even Powell, who is is a labor market dove, 0:12:57.000 --> 0:13:01.560 would err on the side of saving the economy, saving jobs, 0:13:01.640 --> 0:13:06.800 saving the labor market and write off this inflationary risk 0:13:07.080 --> 0:13:08.720 as being a one off. So I think that's the 0:13:08.840 --> 0:13:12.400 kind of the risks the way they're skewed. 0:13:12.600 --> 0:13:14.800 My colin Symphijian fixed Income, thank you so much for 0:13:14.840 --> 0:13:17.920 your time. And before we got this number, we saw 0:13:18.000 --> 0:13:21.880 a forty percent chance of a rate cutpying bike bakes 0:13:21.880 --> 0:13:25.319 into the market if for the month of September, And 0:13:25.600 --> 0:13:28.280 right now we have a seventy one percent chance of 0:13:28.320 --> 0:13:31.560 a rate of a rate cut in September. Joining us 0:13:31.559 --> 0:13:33.720 now is Jeff Rosenberg of a Black Rock we heard 0:13:33.720 --> 0:13:36.440 there from Mike Collins by Bonds. Is that your takeaway? 0:13:38.400 --> 0:13:42.160 Well, certainly the market takeaway because the market's repricing September 0:13:42.160 --> 0:13:43.520 and it makes a lot of sense, and you guys 0:13:43.800 --> 0:13:46.040 hit on it, and I think it is the takeaway 0:13:46.120 --> 0:13:49.200 from today's report, which is it's the revision's story. 0:13:49.480 --> 0:13:52.000 Remember there's been this undercurrent. 0:13:51.600 --> 0:13:55.160 Of a debate about whether non farm payrolls in the 0:13:55.200 --> 0:14:00.760 labor market report is really mismeasuring the deterioration, and you 0:14:00.920 --> 0:14:03.680 see that in these first prints versus the revisions. 0:14:04.000 --> 0:14:05.280 Wallers talked about it. 0:14:05.280 --> 0:14:09.599 It's a little bit of vindication here, and that's basically 0:14:09.720 --> 0:14:15.000 saying his argument may hold sway or convince more people 0:14:15.040 --> 0:14:18.120 to come on his side of the argument. And you know, 0:14:18.120 --> 0:14:20.880 maybe they missed the opportunity in July, but it certainly 0:14:21.240 --> 0:14:23.880 raises the odds that you get it in September. And 0:14:23.920 --> 0:14:26.320 that's why you're seeing the big move. As you pointed 0:14:26.360 --> 0:14:27.240 out in the front end. 0:14:27.120 --> 0:14:27.520 Of the curve. 0:14:27.680 --> 0:14:28.840 Well, the President agrees with you. 0:14:28.960 --> 0:14:31.520 He took to true socials had strong descents on the 0:14:31.520 --> 0:14:34.880 FED board and will only get stronger given the revisions. 0:14:34.920 --> 0:14:37.480 The downside revisions, Is this now a trend of this 0:14:37.560 --> 0:14:39.880 fragility we're seeing in the labor market. 0:14:40.960 --> 0:14:43.040 Well, it was one of the numbers that Mike highlight 0:14:43.080 --> 0:14:44.920 it at the beginning. You know, when you take the 0:14:45.040 --> 0:14:49.720 revisions into account, you know, the three month average change 0:14:49.840 --> 0:14:53.080 in non for barrows drops from one hundred and fifty 0:14:53.120 --> 0:14:56.680 thousand average. There's just really a very you know, pretty 0:14:56.680 --> 0:14:59.800 strong labor market to thirty five thousand, which is which 0:14:59.800 --> 0:15:02.720 is you know, a dramatic shift. Now, as Mike just mentioned, 0:15:02.880 --> 0:15:05.120 you know, maybe we need to reset what we think 0:15:05.240 --> 0:15:08.880 is break even. But with the revisions, it's a dramatically 0:15:08.920 --> 0:15:12.640 different picture to what the labor market is saying. And 0:15:12.680 --> 0:15:15.400 as also Mike was talking about, you know, you have 0:15:15.640 --> 0:15:20.360 a pretty strong year over year average hourly earnings figure, 0:15:20.560 --> 0:15:24.160 wage inflation. You know, the market is not caring about 0:15:24.160 --> 0:15:26.800 that because I agree with Mike. I think in the 0:15:27.040 --> 0:15:32.800 debate between the dual mandate of inflation versus full employment, 0:15:33.840 --> 0:15:36.239 they're going to air on the side of full employment. 0:15:36.280 --> 0:15:38.520 And that's why, again, I think you're seeing this big 0:15:38.560 --> 0:15:40.680 move in the front end of the curve despite you 0:15:40.720 --> 0:15:42.560 know what we're not really talking a lot about, which 0:15:42.600 --> 0:15:43.320 is the wage number. 0:15:43.560 --> 0:15:45.880 Jeff, I just wanted to jump in because we had 0:15:45.920 --> 0:15:49.920 heard from Powell this week who de emphasized the nonfarm 0:15:49.960 --> 0:15:54.200 payroll numbers themselves and said pay attention to the unemployment rate, 0:15:54.560 --> 0:15:56.480 and we were just talking with Stephanie about this idea 0:15:56.520 --> 0:15:59.440 of it being impacted more by labor supply and things 0:15:59.480 --> 0:16:02.920 like imm So given that, couldn't you say maybe for 0:16:03.000 --> 0:16:05.560 this bond market, I shouldn't get over my skis in 0:16:05.640 --> 0:16:08.600 joining this rally because we did have things like PCE 0:16:08.920 --> 0:16:11.320 yesterday which showed a stubborn rate of inflation. 0:16:13.080 --> 0:16:15.920 Yeah, it's a really good point, and he did focus 0:16:15.960 --> 0:16:18.880 on that, and the unemployment rate, you know, ticked up 0:16:19.320 --> 0:16:23.240 one tenth and that was kind of aligned with expectations. 0:16:23.920 --> 0:16:28.600 But he also said in that press conference that the 0:16:28.720 --> 0:16:33.400 slowing in the labor markets even if it's both demand 0:16:33.480 --> 0:16:38.320 and supply with the equilibrium raises the risk that the 0:16:38.840 --> 0:16:41.440 downside risk would be to labor markets. 0:16:41.520 --> 0:16:43.280 It was a little bit of a tell on. 0:16:44.000 --> 0:16:47.640 Yes, we're in equilibrium now because you're getting both the 0:16:47.680 --> 0:16:51.040 supply and the demand side falling. But the risk is 0:16:51.040 --> 0:16:54.080 that the supply side sort of stops falling and the 0:16:54.120 --> 0:16:57.000 demand side continues. And I think that's kind of what 0:16:57.120 --> 0:17:01.200 the market is looking through here, particularly around this trend 0:17:01.400 --> 0:17:05.560 with the revisions, you know, more accelerated than say what 0:17:05.600 --> 0:17:08.119 we've seen in terms of labor force participation which you 0:17:08.119 --> 0:17:11.320 mentioned a minute ago, which actually tacked down here again 0:17:11.480 --> 0:17:15.280 a tenth. But maybe you start to see that stabilize 0:17:15.280 --> 0:17:16.880 while the demand side doesn't stabilize. 0:17:16.920 --> 0:17:19.080 And that's the risk that the market's pricing in right now. 0:17:19.200 --> 0:17:19.520 Jeff. 0:17:19.600 --> 0:17:22.280 Not all markets are pricing in things equally. I just 0:17:22.320 --> 0:17:24.719 pulled up what the future session is doing. You actually, 0:17:24.760 --> 0:17:26.760 just looking at the line chart would not even have 0:17:26.840 --> 0:17:29.560 any idea that we had any big economic piece of 0:17:29.640 --> 0:17:32.159 data come out s and P five hundred futures are 0:17:32.200 --> 0:17:34.760 basically at the level they were before. Is this a 0:17:34.800 --> 0:17:37.960 market that's not paying attention to the jobs numbers or 0:17:38.080 --> 0:17:40.520 it's just not bad enough for them to react, or 0:17:40.680 --> 0:17:42.760 maybe it's smooth sailing because it means that we could 0:17:42.800 --> 0:17:45.400 get cuts. What do you make of how risk is not. 0:17:45.440 --> 0:17:50.040 Reacting well, you know, and I looked at some of 0:17:50.080 --> 0:17:53.320 the futures and they looked like they were reacting and down. 0:17:53.359 --> 0:17:56.399 I think when you look cross market, you know, we 0:17:56.440 --> 0:17:59.679 talked a little better about this earlier this week. You've 0:17:59.680 --> 0:18:01.760 got to be a little bit careful about reading into 0:18:01.800 --> 0:18:04.600 the equity market. You know, this is very much sort 0:18:04.640 --> 0:18:10.960 of a macro conversation fed policy macroeconomic performance. The stock 0:18:11.000 --> 0:18:13.879 market is not the economy, and the stock market is 0:18:13.880 --> 0:18:15.800 not even the S and P five hundred. It's really 0:18:15.880 --> 0:18:18.320 the S and P seven or six, and then you've 0:18:18.320 --> 0:18:19.040 got the. 0:18:18.920 --> 0:18:21.800 Four ninety three. There's tremendous differential. 0:18:21.880 --> 0:18:24.800 Look at sort of small cap performance versus you know, 0:18:24.960 --> 0:18:26.960 S and P five hundred performance, which is again it's 0:18:27.000 --> 0:18:28.440 sort of more dominated. 0:18:27.960 --> 0:18:28.840 By the tech story. 0:18:29.160 --> 0:18:32.240 So those stories and we're in the middle of earning season, 0:18:32.480 --> 0:18:36.120 you know, they can be much more dominant and reflective 0:18:36.160 --> 0:18:39.200 of those issues than they are what we're talking about 0:18:39.240 --> 0:18:40.160 here in the macro data. 0:18:40.200 --> 0:18:41.480 I think when you look at the. 0:18:41.520 --> 0:18:45.359 Two year that's mapping to FED expectations, and that's a 0:18:45.359 --> 0:18:46.600 pretty good message. 0:18:46.680 --> 0:18:48.520 I think when you start looking across. 0:18:48.160 --> 0:18:49.840 Into the equity market, you've got to be a little 0:18:49.880 --> 0:18:53.240 bit more aware that you know there's other factors going 0:18:53.280 --> 0:18:58.240 on in this environment of very concentrated equity valuation within 0:18:58.280 --> 0:19:01.600