Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day
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Speaker 2: writing a print of one fifty or higher and the
Speaker 2: federal likely cut twenty five in November. Payrolls around one
Speaker 2: hundred k or below means fifty basis points, bad news
Speaker 2: on jobs, bad news for risk assets, and the curve
Speaker 2: should ball steepen. Pre it's with us around the table, Prey,
Speaker 2: good morning, going to see you. I've got one question
Speaker 2: in the bomb market, and then we can go broad
Speaker 2: and we can talk about payrolls. Why is so much money,
Speaker 2: so much going into money market funds right now?
Speaker 3: Great question as we hit another record yesterday, I would
Speaker 3: say one word valuations. You know the fact that you're
Speaker 3: still getting four and a half to five percent on
Speaker 3: money funds. The Eiger is still inverted. Every asset class
Speaker 3: is priced for a soft landing. So I think people
Speaker 3: are staying in cash, waiting for better levels and bonds,
Speaker 3: better levels. On stocks, I will say we're seeing significant
Speaker 3: inflows into bond funds, but people who are waiting for
Speaker 3: a while, I'll buy. When the tenure treasury is at
Speaker 3: five percent, you're not getting that. You know, inflation's coming down.
Speaker 3: The Fed's telling you they're going to cut. We don't
Speaker 3: have to read between the lines on the Fed put
Speaker 3: they're telling you it's there. If things weaken, they're going
Speaker 3: to cut much faster. And I think people who've been
Speaker 3: sort of you know, there might be a melt up
Speaker 3: move because if you get a short period of volatility,
Speaker 3: we are absolutely going to be in there buying if
Speaker 3: if there is a risk off. But I think, you know,
Speaker 3: there's a sense of everything is so well priced, everything's
Speaker 3: done well, let me just stay in cash. It's still
Speaker 3: giving me four and a half. Well, within a year
Speaker 3: it's going to give you two andough half or three percent,
Speaker 3: And you know that's when I think a lot of
Speaker 3: that money is going to start to move.
Speaker 4: Out, although it comes at a time when people are
Speaker 4: taking a look at what's going on with the oil prices,
Speaker 4: They're taking a look at what's going on with the
Speaker 4: resilience and a number of different indicators. Yesterday we had
Speaker 4: ism services data that came in better than anyone expected
Speaker 4: who is surveyed by Bloombird. And you have to wonder
Speaker 4: whether people are questioning this idea that the Fed is
Speaker 4: willing to go fifty basis points so quickly you hurt
Speaker 4: a sew of people lining up twenty five, twenty five,
Speaker 4: twenty five, and then Nil Tata saying no, why I
Speaker 4: stop it? Guys? How much do you see this as
Speaker 4: sort of a given? Even though you are seeing signs
Speaker 4: of strength in so many places.
Speaker 3: So I think the data has really mixed. You can
Speaker 3: see signs of strength, then you can see signs of weakening.
Speaker 3: Look at that unemployment rate increase, look at labor differential
Speaker 3: in consumer confidence. I think this is where the earnings report,
Speaker 3: details of the job report. You've been talking about revisions.
Speaker 3: I think revisions look at dispersion within jobs. Is it
Speaker 3: really only two or three sectors that is creating all
Speaker 3: the job growth, what happens with margins? So I think
Speaker 3: there is you know, a lot of uncertainty. The data
Speaker 3: is not giving a it's a clear picture, and every
Speaker 3: market's price for soft landing. So I think this is
Speaker 3: where I would push back. The reacceleration risk seems to
Speaker 3: be off the table. I think we've got really a
Speaker 3: bimodal world. You've got these binary risks, and there's a
Speaker 3: lot between the election, between geopolitical risks, between payrolls frankly,
Speaker 3: or the entire jobs report, where either stay in soft landing,
Speaker 3: everything is priced in, but can rates fall some marshal
Speaker 3: can spread titan absolutely if we stay in soft lining,
Speaker 3: or we go much worse. And I think that's the
Speaker 3: world that we're sort of grappling with.
Speaker 4: And that's the reason why I think good news is
Speaker 4: good news for risk assets, because ultimately you do think
Speaker 4: that that reacceleration is off the table. I want to
Speaker 4: pick up on that. Are you're basically saying that this
Speaker 4: headfake that we're saying in oil prices is a headfake
Speaker 4: and that any kind of take up in yields is
Speaker 4: a buying opportunity right now, because ultimately inflation is dead,
Speaker 4: I think so.
Speaker 3: I mean oil price increased through supply related issues, which
Speaker 3: is what this is. That's actually at taxed on consumers.
Speaker 3: So I think if it's geopolitical related, I would not
Speaker 3: buy it. If there's massive fiscal easing in China or
Speaker 3: significant fiscal easing in the US which actually creates growth,
Speaker 3: then it's a different question. But I think oil prices
Speaker 3: is negative. Bonds are a diversifier for risk asses. We
Speaker 3: saw it the last two payroll reports. We had slightly
Speaker 3: weaker numbers. You've got, you know, the market pricing in
Speaker 3: this higher chance of fifty rates fell and that's why
Speaker 3: I think, you know, if you get weak numbers, we're
Speaker 3: going to price in fifty. And the whole idea of
Speaker 3: why did the FED go fifty, all those reasons are
Speaker 3: still present today. Monetary policy is restrictive. What's one to
Speaker 3: fifty basis points really going to do? I think, well, exactly.
Speaker 3: I think for the housing market, you need mortgage rates
Speaker 3: much lower. We're talking four percent, four and a half.
Speaker 3: We're not you know, at six percent, you're not going
Speaker 3: to have that happen. You're not going to create a
Speaker 3: big positive on the housing market. So when I think
Speaker 3: about reacceleration, I look at where are the drivers. It's
Speaker 3: not rates, you need much lower rates. It's not really
Speaker 3: fiscal so far. This is where the election, This is
Speaker 3: where China becomes important. So right now, I would say
Speaker 3: oil prices and that's resulted in this and rates. It's
Speaker 3: absolutely a buying opportunity. If you've got risk on your
Speaker 3: portfolio anyway, and we do, we get a little nervous
Speaker 3: about all these binary risks. I think owning some hedges,
Speaker 3: be it steepeners, owning some duration, especially given this backup,
Speaker 3: it's an opportunity. Rayo. Let's talk about the election.
Speaker 5: You went there. You say after the job's report, the
Speaker 5: market's going to be solely focused on the US election,
Speaker 5: And you say the market will move in any scenario,
Speaker 5: since it is not priced for any scenario. But if
Speaker 5: you have conviction that you think Harris is going to
Speaker 5: win with a sweep or Trump is going to win
Speaker 5: with a sweep, how should you be pricing that?
Speaker 3: It's very hard. I mean, I would say your key
Speaker 3: point was the sweep. I think what happens if it's
Speaker 3: not a sweep. But I love that you bring up
Speaker 3: sweep because I think everyone focuses on the White House,
Speaker 3: not you all. I know y'all have talked about Congress.
Speaker 3: Congress is very very important. So what happens with the House,
Speaker 3: and this is where the House is at a knife edge,
Speaker 3: the presidency. Look at Poles. I mean, I'm not even
Speaker 3: sure we can trust Poles a whole lot, but the
Speaker 3: Poles are very close. So and then look at all
Speaker 3: the policies we're talking about right from which actually doesn't
Speaker 3: need Congress as much. Fiscal policy absolutely needs Congress, immigration regulation.
Speaker 3: There is so much out there that we're going to
Speaker 3: have to see, you know, what's the maker? Will we
Speaker 3: know the result on election night? I hope for all
Speaker 3: our sakes that we do. But what if we don't
Speaker 3: know that, what if it's a divided government. Then we
Speaker 3: have to see what is priority number one? And there's
Speaker 3: something on the campaign trail, and then there's actually what
Speaker 3: they talk about. So I think for the market pricing,
Speaker 3: we're going to move in either direction because there's so
Speaker 3: many unknowns around the makeup of Congress, around the presidency,
Speaker 3: and then what policies are their number one priority?
Speaker 5: And what happens when the FOMC NEETs and we don't
Speaker 5: potentially have an election result.
Speaker 3: I think they look at financial conditions and the economy. Clearly,
Speaker 3: if monetary policy is still restrictive, which is likely to be,
Speaker 3: we're going to be in the four handle. We can
Speaker 3: debate our star and say maybe neutral rate is not
Speaker 3: two and a half but three and a half. It's
Speaker 3: not four and a half or five. So I think
Speaker 3: they continue to cut. They're going to try and be
Speaker 3: as a political as they can. Look at the data,
Speaker 3: the entirety of the data, inflation and growth. I think
Speaker 3: Governor Walla tells us inflation is also important, so we
Speaker 3: have to look at both and then look at financial conditions.
Speaker 3: In the scenario where we don't have an election result,
Speaker 3: financial conditions will tighten because markets don't like uncertainty. You
Speaker 3: don't want binary outcomes which you don't know how to price.
Speaker 3: In that scenario, I think they cut, and they tell us, well,
Speaker 3: if financial conditions continue to tighten, we'll cut more. I
Speaker 3: think that's the message we'll want to hear.
Speaker 2: So final message from you, I'm saying, in cash, like
Speaker 2: so many other people, what do I do? Where do
Speaker 2: I go?
Speaker 3: I think you buy bonds? Okay, I mean I don't
Speaker 3: want to talk my book, but I think what I.
Speaker 2: Had to say that you might turn around and say
Speaker 2: it might be the coll plus bond.
Speaker 3: Bts if you're getting you know, investment rates, securitize, you know,
Speaker 3: high yield bonds, high quality height. I think high quality
Speaker 3: fixed income is sort of the best place to be
Speaker 3: in right now. Spreads are tied, but look at all
Speaker 3: in needs. You're getting five to five and a half
Speaker 3: percent higher than money market rates. So if you're in
Speaker 3: money funds, you're getting four and a half or you
Speaker 3: get five and a half, and it's going to be
Speaker 3: a diversify, especially if one of these events. When we
Speaker 3: talk about October Surprise, we have multiple contenders for the
Speaker 3: October Surprise, any of them ban out, You've got that
Speaker 3: yield and you've.
Speaker 2: Got that hedge, so massive month ahead prayer is going
Speaker 2: to say, as always, thank you prayers for of JP
Speaker 2: mort Let's get to the market view. Jeff Rosenberg of
Speaker 2: black Rock with us, Mohammed al Aaron of Queens College,
Speaker 2: Cambridge with us as well. Jeff, I want to come
Speaker 2: to you first, your thoughts on this and as a
Speaker 2: market participant, what do I do with this?
Speaker 6: Yeah, I mean clearly it was just described, this is,
Speaker 6: you know, across the board, a very strong report. You know,
Speaker 6: if you look in the under components retail, professional services,
Speaker 6: education and health services, you know all significantly beat above
Speaker 6: their three month running average, and you know across the
Speaker 6: earnings and the household survey, you know, this is this
Speaker 6: is a very strong report. As was mentioned before, the
Speaker 6: revisions in terms of August was kind of expected. The
Speaker 6: home based data and the alternative data. You had some
Speaker 6: people looking at that as well, maybe not to the
Speaker 6: extent you know Bloomberg and Analong did and emphasizing it,
Speaker 6: but you certainly saw, you know, some data points that
Speaker 6: were pointing towards you know, the potential here for a
Speaker 6: stronger report. But this is stronger than anyone expected. And
Speaker 6: as Lisa said, and I think this will be the
Speaker 6: longer run debate, and it's something we've talked about on
Speaker 6: this on this program a lot that the debate about
Speaker 6: not only where kind of policy is, how restrictive it
Speaker 6: really is where you know, our star and neutral stands,
Speaker 6: but but something else that that has really been missing
Speaker 6: from this fed's conversation that was present in past cycles.
Speaker 6: They've abandoned it, and that is the impact of financial conditions.
Speaker 6: Financial conditions say that this is a much easier monetary policy,
Speaker 6: and you look at where growth is and it's it's
Speaker 6: kind of a it's a concurrent signal. But growth is
Speaker 6: running well above potential, and that really tells you that
Speaker 6: this is not as tight of a Fed as the market,
Speaker 6: or really as the FED thinks it is. But today
Speaker 6: is maybe another data point kind of in support of
Speaker 6: that view.
Speaker 2: Mark Rowan Apollo earlier this week. Financing is available, real
Speaker 2: estate prices are going up. It's not clear we need
Speaker 2: more right cuts to the extent we accelerate the economy
Speaker 2: and have to come in the other direction. That would
Speaker 2: not be a good day. Muhammed, I want your early
Speaker 2: views on this job's report and what on earth does
Speaker 2: the FED do with this one?
Speaker 1: So thanks John. Four takeaways, including for the Fed. One
Speaker 1: on the labor market. This is not just a solid
Speaker 1: labor market, but if you take these numbers at face value,
Speaker 1: it's a strong labor market late in the cycle. Two
Speaker 1: for the economy, it speaks to US economic exceptionalism, something
Speaker 1: we've seen and something that's continuing. Three for the Fed,
Speaker 1: it means pushback much harder against pressure from the markets
Speaker 1: to put you in the single mandate box. Enough talk
Speaker 1: about inflation is dead, inflation is not dead. Enough talk
Speaker 1: about the Fed should only be concerned about maximum employment.
Speaker 1: It should still be concerned about this dual mandate. And finally,
Speaker 1: for the markets, I think this is pushing back against
Speaker 1: what has been, in my view, and you've heard me
Speaker 1: say it over and over again, an overly aggressive expectation
Speaker 1: of weight cuts by the FED. I think this will
Speaker 1: will get the market closer to what's likely, and then
Speaker 1: we're going to have a debate on two things. One
Speaker 1: is where's the neutral rate? And two is how do
Speaker 1: you think about this economy in terms of growth and
Speaker 1: employment and how are these two things coming together. So
Speaker 1: you know, at face value, this is a report that
Speaker 1: will cause a lot of both revision both in analysis
Speaker 1: and in market pricing. But I stress it is part
Speaker 1: of a much bigger picture of mixed data and that's
Speaker 1: where the complications arise.
Speaker 4: John. As you know, Mohammad Emory nailed it when she
Speaker 4: started saying how much does this have to do with
Speaker 4: a fifty basis point rate cut? And it's somewhat tongue
Speaker 4: in cheek, of course, but at the same time, there
Speaker 4: is a real question how much have the easier financial
Speaker 4: conditions that have basically been manufactured by this Federal Reserve
Speaker 4: helped boost a market that wasn't maybe in need of
Speaker 4: such a big boost.
Speaker 1: Look, you know my view. We've been living in a
Speaker 1: world of liquidity dominance. It has been all about liquidity.
Speaker 1: That world was reinforced by fifty basis points scut Let's
Speaker 1: also remember that the market didn't expect the fifty basis
Speaker 1: point cut based on data. It expected it based on
Speaker 1: a reporting on the Thursday before the FED Board meeting,
Speaker 1: So there was no economic conditions that would justify fifty
Speaker 1: basis points, but there was a leak to newspaper that
Speaker 1: moved market expectations. I worry that we continue to feed this,
Speaker 1: this monster of liquidity dominance, and at some point we
Speaker 1: may regret it, either because inflation will not settle two
Speaker 1: percent and or because financial stability will result from excessive
Speaker 1: risk taking.
Speaker 5: Muhammad, is there a chance that we can have a
Speaker 5: no landing scenario?
Speaker 1: Sure, there's a chance that we can have a world
Speaker 1: in which we there are positive things happening on the
Speaker 1: supply side, and we can be quote bigger but not hotter. Yes,
Speaker 1: that is part of the distribution of potential outcome. I
Speaker 1: think a soft landing is still the fifty five percent probability.
Speaker 1: Bigger but not hotter is fifteen percent. So add them
Speaker 1: to to up, you get seventy and then you have
Speaker 1: a thirty percent probability that either becomes up or because
Speaker 1: of weakness in low income households or because of FED
Speaker 1: policy mistake, we end up in a recession.
Speaker 2: Looking at these numbers and Mohammad, thanks for being with us.
Speaker 2: You're going to stick with us. If you are just
Speaker 2: joining us, Welcome. It's about eight forty five Eastern time
Speaker 2: this morning here in New York, and about fifteen minutes
Speaker 2: ago we got to blum out Jobs Report two hundred
Speaker 2: and fifty four thousand. The median estimate our survey was
Speaker 2: one fifty. Lisa's talked about the revisions repeatedly. The revisions
Speaker 2: were good, they were positive. If a look at the
Speaker 2: unemployment rate, we've dropped back to four point one percent
Speaker 2: from four point two, Mike McKee suggesting we came very
Speaker 2: very close to drop into four point zero. Wage growth
Speaker 2: was hot as well. A lot of this was very unexpected.
Speaker 2: We've said it repeatedly through this morning, the range of
Speaker 2: estimates stretching from anywhere between seventy at the low side
Speaker 2: and two twenty at the high end. Nowhere near this one.
Speaker 2: I want to throw this one at you. There will
Speaker 2: be a lot of people in this country that don't
Speaker 2: believe these numbers. They will look at them, and some
Speaker 2: will say sarcastically, snarkily, they will say, if you're the
Speaker 2: Harris campaign, you can have written this Job's report any better,
Speaker 2: even if you wanted to. There are others who look
Speaker 2: at this, perhaps a little bit more sophisticatedly, and say
Speaker 2: that even the chairman himself is mentally marking these numbers
Speaker 2: down by let's say fifty or sixty thousand, should we
Speaker 2: be doing the same thing this morning.
Speaker 7: I think that's fair. And if it was a week report,
Speaker 7: that would have been the initial thing of okay, well,
Speaker 7: now if you subtract out the sixty eight thousand that
Speaker 7: we got from annual revisions last year, now we're in trouble.
Speaker 7: The initial reaction to this Job's print isn't necessarily that,
Speaker 7: but it should be. So perhaps the conclusion shouldn't be
Speaker 7: the economy's on fire or there's no landing. It's probably
Speaker 7: that we're actually hitting the soft landing. If you take
Speaker 7: a straight three month average, you're a little above one
Speaker 7: hundred eighty six thousand. Then if you subtract the QCUW,
Speaker 7: then you're at a trend that's kind of normal. So
Speaker 7: I think the market reaction is probably going to be
Speaker 7: a bit extreme on the back of this. We should
Speaker 7: probably look through it a couple Last night, the concern
Speaker 7: was we're headed for a recession. Now the concern is
Speaker 7: no landing. It's probably somewhere in between.
Speaker 2: Jeff Rosenberg, is good news good news.
Speaker 6: Good news is good news here, and I think that
Speaker 6: key going back to what Mohammad said is the market
Speaker 6: had been very aggressive in terms of its pricing for
Speaker 6: the FED. You know, partly maybe that pushed them into
Speaker 6: the fifty. You had more than two twenty fives for
Speaker 6: the November and December priced in. That's obviously pricing out here.
Speaker 6: And you know, next week when we get the CPI number,
Speaker 6: you know you may have As Muhammad was suggesting more
Speaker 6: of a debate as opposed to a one sided debate
Speaker 6: where we shifted completely away from inflation as the focus
Speaker 6: back to growth. Having a little bit more balance here
Speaker 6: is going to make the outlook a little bit more challenging,
Speaker 6: and I think for the bond market, it's going to
Speaker 6: have to reassess its pricing in terms of how aggressive
Speaker 6: it has been pricing, as Muhammad pointed out, very aggressive
Speaker 6: from the get go here in terms of expecting, you know,
Speaker 6: the most extreme in terms of in terms of what
Speaker 6: the Fed was going to be able to deliver. Hard
Speaker 6: to say whether next week you get that surprise. I
Speaker 6: don't think we're talking about here inflation going back up
Speaker 6: and an inflation scare.
Speaker 4: That's not the point.
Speaker 6: The point about no landing is that the last mile
Speaker 6: from two point six percent inflation down to two percent
Speaker 6: may be harder to achieve. And why it's harder to
Speaker 6: achieve is because growth and financial conditions are not as
Speaker 6: tight as the nominal rate suggests, and so you don't
Speaker 6: have to necessarily be as aggressive on securing the soft
Speaker 6: landing because the inflation side is pushing back. That's what
Speaker 6: you're seeing here this morning in terms of pricing. It
Speaker 6: makes the front end here a bit more rational in
Speaker 6: terms of pricing in less than two fifties to the
Speaker 6: end of the year, and I think that's starting to
Speaker 6: be more of the story pricing out of the bond market.
Speaker 4: Jeff, how off sides is this market? And we saw
Speaker 4: this being sort of sniffed out earlier this week, this
Speaker 4: idea that people were thinking, wait a second, maybe we
Speaker 4: overplayed just how many rate cuts there would be, just
Speaker 4: what kind of dollar weakness there would be.
Speaker 3: How much does that trade.
Speaker 4: The steepening curve all have to unwind as people reassess
Speaker 4: with this data.
Speaker 6: Yeah, as you pointed out, it started earlier this week,
Speaker 6: you've had some better data. The labor market data hasn't
Speaker 6: been as one sided in terms of the fears. In
Speaker 6: terms of negativity, there's still a preponderance of the steepener
Speaker 6: view because when you're in a FED cutting cycle, and
Speaker 6: we're in the beginning of the FED cutting cycle, it's
Speaker 6: about how fast and how frontloaded it's going to be.
Speaker 6: It's also about the terminal rate and where it ends up.
Speaker 6: But generally, when you're in that time period, the steepener
Speaker 6: market reaction is what you're going to get, and you're
Speaker 6: starting from a very flat point of the curve. The
Speaker 6: problem for the steepener trade is timing. You need the
Speaker 6: pace of steepening to overcome the negative cost of carry,
Speaker 6: and fast levered players don't have a lot of patience
Speaker 6: for that negative carry, and so that can, as we're
Speaker 6: potentially seeing this morning, kind of exacerbate the moves on
Speaker 6: the headline, you know, going back to the birth death
Speaker 6: model and what Bloomberg Economics has been highlighting. Yes, this
Speaker 6: may be overstated in terms of the headline impact, and
Speaker 6: therefore may be overstated in terms of the impact of
Speaker 6: the market move, But the overall message here is that
Speaker 6: this is still a normalizing labor market, but not necessarily
Speaker 6: normalizing to the point where the FED has to deliver
Speaker 6: consistent fifties to secure that.
Speaker 3: Soft landing Muhammaded.
Speaker 4: One thing that you've talked about is that this is
Speaker 4: an overly data dependent and data point dependent federal reserve.
Speaker 4: It seems like everyone expects this FED to still cut
Speaker 4: at least twenty five basis points. Do you think that
Speaker 4: they have moved to a framework that is less data
Speaker 4: dependent if the data actually suggests that the labor market
Speaker 4: is doing just fine.
Speaker 1: Yes, I think that moving that way. It started with
Speaker 1: Chairman pals jackson whole speech, it continued in his press conference,
Speaker 1: and I think they are moving away from being overly
Speaker 1: data dependent to also trying to have a forward looking
Speaker 1: view of where the economy is going to settle.
Speaker 5: Muhammad, does next week's CPI report matter to you at all?
Speaker 4: Now?
Speaker 1: It matters me to me and Marie and the one
Speaker 1: that's going to matter even more to one after that. Yes,
Speaker 1: it does matter to me. I think Jeff is absolutely right.
Speaker 1: This notion that the last mile was going to be easy,
Speaker 1: this notion that inflation is dead, this notion that we
Speaker 1: are mission accomplished, came way too early, and I think
Speaker 1: we're going to see from core inflation why certain parts
Speaker 1: we made sticky. Meanwhile, headline inflation is going to start
Speaker 1: moving up after a after not this month, but the
Speaker 1: next month. So yes, these CPI points still matter, and
Speaker 1: of course they matter a great deal to the American people.
Speaker 2: Mohammi talked to me about what kind of numbers do
Speaker 2: you think we have to get accustomed with. Are we
Speaker 2: talking about stabilizing at these levels for inflation or are
Speaker 2: we talking about the real risk of reacceleration given what's
Speaker 2: happening in the commodity market, what we've seen out of
Speaker 2: China and the easing has come from the Federal Reserve.
Speaker 2: But after a jobs report like this, some people are
Speaker 2: think it has come prematurely. How real is that reacceleration
Speaker 2: risk for inflation?
Speaker 1: So to the extent we have an equilibrium rate of
Speaker 1: inflation for today's economy, it would be two and a
Speaker 1: half to three percent if the FED had the option,
Speaker 1: which it does not. If the FED had the option
Speaker 1: to set a new inflation target, that is where it
Speaker 1: would make sense. We will settle, I suspect somewhere towards
Speaker 1: the upper end of that, because, as Jeff said, financial
Speaker 1: conditions are extremely loose. There are two factories of credit,
Speaker 1: two factories of liquidity. You heard it in the interview
Speaker 1: with Mark Rowan. There is not just the official factory
Speaker 1: which has produced a ton of this, but there's the
Speaker 1: private factory that's getting more and more efficient and producing
Speaker 1: more and more credit and leverage and looser conditions. And
Speaker 1: we are living in a world where these two factories
Speaker 1: are still operating at quite a high level. So there
Speaker 1: is a risk, John, that we will settle towards the
Speaker 1: higher end of that two and a half to three percent.
Speaker 4: Stephanie, I'm struck by the fact that given this report,
Speaker 4: we've all been thinking about organized labor working on the
Speaker 4: dock workers straw strike with the Boeing strike as being
Speaker 4: sort of at the end of labor having the leverage.
Speaker 4: Is that a wrong way to look at this, especially
Speaker 4: given the fact that wages went up. Is it actually
Speaker 4: that employees have still the upper hand when it comes
Speaker 4: to demanding work and demanding to be paid.
Speaker 7: I don't think that's an entirely fair way to look
Speaker 7: at it, in the sense that if you look at
Speaker 7: ECI for union versus non union workers, there's a clear
Speaker 7: lag from union to from non union to union, in
Speaker 7: that you get a big acceleration in non union wages
Speaker 7: and then unions tend to follow. I think this is
Speaker 7: really just a catchup, but a catchup from a really
Speaker 7: big acceleration in wages. So this is kind of a
Speaker 7: lagging indicator. The wage number, yes, it was point four,
Speaker 7: but it was if you look at the three digits,
Speaker 7: it was point three sixty nine. So yeah, it was strong,
Speaker 7: but it you know, if you look at an average page,
Speaker 7: you're still running a little bit below four percent, in
Speaker 7: which case it's not really concerning.
Speaker 2: Final question for you all, and I'm going to say
Speaker 2: it up front, So you all don't have to, and
Speaker 2: you can answer with just one word.
Speaker 3: There's a lot that.
Speaker 2: Can still change in the next month, but as things stand,
Speaker 2: your best guest for November seventh, for this federal Reserve,
Speaker 2: and these are the choices, fifty twenty five or no
Speaker 2: cut at all. First to you, Jeff Rosenberg.
Speaker 6: I'm gonna go with twenty five.
Speaker 2: Gentlemen, Mohammad twenty five, Stephanie twenty five. Let's see how
Speaker 2: much changes in the next month or so. This is
Speaker 2: the Bloomberg Surveillance podcast, bringing you the best in markets, economics,
Speaker 2: angiot politics. You can watch the show live on Bloomberg
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Speaker 2: Subscribe to the podcast on Apple, Spotify or anywhere else
Speaker 2: you listen, and as always, on the Bloomberg Terminal and
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