WEBVTT - Instant Reaction: US Payrolls Marked Down a Record 911,000 in Preliminary Estimate 0:00:02.520 --> 0:00:07.680 Bloomberg Audio Studios, Podcasts, radio News. 0:00:09.200 --> 0:00:13.840 This is a breaking news update from Bloomberg instant reaction 0:00:14.120 --> 0:00:17.959 and analysis from our three thousand journalists and analysts around 0:00:18.000 --> 0:00:18.480 the world. 0:00:20.480 --> 0:00:23.000 Good morning everyone, Scarlet fo In, Tim Keene and A 0:00:23.120 --> 0:00:26.640 Scarlett who predicted it didn't come in. But there is 0:00:26.680 --> 0:00:30.040 the first print of this preliminary number, and it is 0:00:30.080 --> 0:00:32.960 toward what we heard from doctor Englander. Scarlett. I'm going 0:00:33.040 --> 0:00:36.000 to suggest a negative nine to one one is a 0:00:36.040 --> 0:00:39.240 wow statistic. We begin strong in the special edition of 0:00:39.280 --> 0:00:44.479 Bloomberg Surveillance with Ira Jersey of Bloomberg Intelligence. Ira, I 0:00:44.479 --> 0:00:48.159 guess we see an economic statistic three hundred thousand or 0:00:48.200 --> 0:00:52.000 so off the mark. What does it mean for a 0:00:52.120 --> 0:00:55.760 bond market to see our labor so beleaguered? 0:00:57.000 --> 0:00:59.400 Well, I think the You know that these revisions are 0:00:59.440 --> 0:01:03.279 very hard to forecast, I mean by definition, because they 0:01:03.800 --> 0:01:07.200 cover such a long period of time, and you know, 0:01:07.240 --> 0:01:10.720 but the fact that we had even slower employment growth 0:01:10.760 --> 0:01:15.800 than we thought and had forecasted, clearly the market took 0:01:15.800 --> 0:01:17.800 that as bad for the economy, and that's the reason 0:01:17.800 --> 0:01:20.440 why you saw bond yields go from up a little 0:01:20.440 --> 0:01:22.679 bit in the front end to flat to maybe a 0:01:22.680 --> 0:01:26.640 little bit a little bit lower in the front end. Importantly, 0:01:26.680 --> 0:01:29.039 I think here it just shows that, you know, the 0:01:29.080 --> 0:01:31.800 Federal Reserve has to take this into consideration when they 0:01:31.840 --> 0:01:34.400 deliberate next week what to do with interest rates. And 0:01:34.440 --> 0:01:37.000 it just solidifies even more that they're going to cut 0:01:37.000 --> 0:01:39.600 next week. And I suspect that it might actually give 0:01:39.680 --> 0:01:42.360 some of the people are on the fence about the 0:01:42.400 --> 0:01:45.040 timing of cuts to not only cut in September, but 0:01:45.120 --> 0:01:48.480 also do a string of cuts and cut again in October, December, 0:01:48.480 --> 0:01:49.440 and January as well. 0:01:49.680 --> 0:01:52.040 To your point about how it's very difficult to forecast this. 0:01:52.640 --> 0:01:55.800 In a survey of economists that Bloomberg has compiled, the 0:01:55.920 --> 0:01:59.360 lowest estimate for this revision was nine hundred thousand, and 0:01:59.400 --> 0:02:02.560 the actual number reported was nine hundred and eleven thousand 0:02:03.120 --> 0:02:05.520 reduction in the number of jobs over the twelve months 0:02:05.720 --> 0:02:09.400 to March twenty twenty five. So we had expected a 0:02:09.440 --> 0:02:12.640 negative revision, perhaps not this sizeable. How much of this 0:02:12.800 --> 0:02:16.079 was totally baked in to the point where a fifty 0:02:16.120 --> 0:02:20.000 basis point raycut is something that is now becoming more 0:02:20.160 --> 0:02:21.720 of the default scenario. 0:02:23.400 --> 0:02:25.880 Yeah, well, you know, I don't think that the Fed's 0:02:25.919 --> 0:02:28.240 going to go fifty, and the market's not fully priced 0:02:28.240 --> 0:02:30.280 for that, not even fifty percent price for a fifty 0:02:30.320 --> 0:02:33.520 basis point raycut. At least it wasn't when I walked 0:02:33.520 --> 0:02:35.080 in here. I haven't checked in the last two minutes, 0:02:35.120 --> 0:02:37.600 but I doubt that it's really changed. And one of 0:02:37.639 --> 0:02:39.960 the big reasons for that is there still is this 0:02:40.240 --> 0:02:43.960 inflation overhang, right, the fear about tariffs may be still 0:02:43.960 --> 0:02:46.120 adding to some inflation. We haven't seen all of it. 0:02:46.160 --> 0:02:46.720 You've heard a. 0:02:46.639 --> 0:02:50.480 Lot of Fed speakers talk about the net effect of 0:02:50.560 --> 0:02:53.079 tariffs hasn't yet been seen. So I think the Federal 0:02:53.120 --> 0:02:55.960 Reserve wants to be cautious, right, and the idea that 0:02:56.000 --> 0:02:58.320 they don't have to go at every meeting. I think 0:02:58.320 --> 0:03:00.960 that's what this takes off the table that unless you 0:03:01.080 --> 0:03:05.160 see a you know, insanely low CPI print, and you know, 0:03:05.200 --> 0:03:10.000 tomorrow's PPI winds up being very low as well, at 0:03:10.080 --> 0:03:14.040 least below consensus, then the Federal Reserve probably just does 0:03:14.080 --> 0:03:16.880 their twenty five. Then they guide, right, and it's that 0:03:17.000 --> 0:03:19.800 guidance I think that will ultimately move the bond market 0:03:20.600 --> 0:03:23.359 and does that guide and say, hey, we're going to 0:03:23.440 --> 0:03:25.799 cut you know, one hundred and fifty hundred and twenty 0:03:25.840 --> 0:03:29.359 five fifty basis points. Maybe that's where the updated dot 0:03:29.360 --> 0:03:31.800 plots going to matter, as well as their general summary 0:03:31.800 --> 0:03:32.840 of economic projection. 0:03:33.440 --> 0:03:36.119 In terms of the reaction in markets, I mentioned how 0:03:36.120 --> 0:03:38.680 the tier yield the tenure yield went negative briefly, but 0:03:38.720 --> 0:03:40.600 they're back up again, and we're now seeing the two 0:03:40.640 --> 0:03:43.440 year yield higher by one point eight basis points, tenure 0:03:43.520 --> 0:03:46.320 yield four point zero six percent up higher by two 0:03:46.320 --> 0:03:49.280 point two basis points. What do you see in terms 0:03:49.280 --> 0:03:52.080 of the direction of yields Because a lot of people 0:03:52.120 --> 0:03:55.560 were saying that this revision would be would unlock the 0:03:55.640 --> 0:03:57.760 trajectory for yields for the rest of the year. 0:03:58.200 --> 0:04:00.680 Was that asking too much imports on it? Yeah? 0:04:00.720 --> 0:04:04.360 I think so, I don't see that. You know, ultimately, 0:04:04.480 --> 0:04:06.920 the market's trying to be forward looking, right, and these 0:04:07.000 --> 0:04:10.760 these are revisions to pass data not and don't necessarily 0:04:11.160 --> 0:04:13.080 reflect how the economy is going to do over the 0:04:13.120 --> 0:04:16.400 next three to twelve months, right, And and that's but 0:04:16.400 --> 0:04:18.320 but it does show the trend, and I think that 0:04:18.320 --> 0:04:21.360 that's important, and that trend maybe is a little bit 0:04:21.360 --> 0:04:24.560 more severe than we thought. So that's where I think 0:04:24.600 --> 0:04:27.640 a twenty five basis point move is kind of your 0:04:27.640 --> 0:04:30.440 base case. And then and then you know how what's 0:04:30.480 --> 0:04:33.760 the follow on from that? Uh, that base case for 0:04:34.080 --> 0:04:35.919 the long end of the curve. And you know, I 0:04:35.920 --> 0:04:38.080 think that we are a little bit overbought. You know, 0:04:38.120 --> 0:04:41.400 we we have rallied very far, very quickly, so it 0:04:41.400 --> 0:04:43.680 wouldn't surprise me if we can solidate it a little 0:04:43.680 --> 0:04:46.280 bit here. I think, Tom, you asked if we were 0:04:46.279 --> 0:04:48.360 going to see sub four percent. Yeah, you know, we've 0:04:48.360 --> 0:04:51.160 had We've had this since February. We've had our forecast 0:04:51.200 --> 0:04:53.640 for year end has been three point ninety five percent 0:04:53.760 --> 0:04:56.960 or thereabouts on the ten year field. So we're effectively there. 0:04:57.240 --> 0:04:59.960 Special edition and extended edition, I should say, a bloom 0:05:00.279 --> 0:05:03.800 Surveillance Scarlett Foo and Paul Sweeney and Bloomberg Intelligence will 0:05:03.839 --> 0:05:06.600 pick that up at near a quarter after the hour, 0:05:06.680 --> 0:05:08.920 right now, Scarlet fuh in time key for you and 0:05:08.920 --> 0:05:14.080 without commercial interruption across the nation efforting a number of 0:05:14.120 --> 0:05:17.200 voices here will stay with Ira Jersey and move on 0:05:17.240 --> 0:05:19.880 to other conversations. In a moment, I'm going to ask 0:05:19.920 --> 0:05:22.960 you and all our guests this question. Is a simplistic 0:05:23.600 --> 0:05:25.640 way to look at this is to take nine to 0:05:25.680 --> 0:05:30.080 eleven and divide up by twelve, and we take seventy 0:05:30.200 --> 0:05:35.360 six thousand jobs off non farm payrolls looking back twelve months. 0:05:36.360 --> 0:05:39.000 Yeah, that's basically what you do. I mean, obviously it's 0:05:39.040 --> 0:05:41.920 not going to be as linear as that, but sure, effectively, 0:05:41.960 --> 0:05:45.120 what you're saying is seventy five thousand dollars seventy five 0:05:45.360 --> 0:05:50.400 thousand less jobs per month were created, and that doesn't 0:05:50.440 --> 0:05:53.520 paint a rosy picture for the economy at the moment. So, 0:05:54.000 --> 0:05:56.919 you know, now some people are suggesting that perhaps this 0:05:57.080 --> 0:05:59.440 is the low and that will wind up seeing some hiring. 0:06:00.080 --> 0:06:02.000 Not as convinced of that. When you look at you know, 0:06:02.240 --> 0:06:04.760 the NFIB survey and a lot of the other sentiment 0:06:04.839 --> 0:06:08.120 surveys around the corporate world, it does seem that people 0:06:08.120 --> 0:06:11.400 are kind of pausing their hiring plans. So if you, 0:06:11.400 --> 0:06:13.360 you know, if no one's being hired and you have 0:06:13.760 --> 0:06:17.200 still have layoffs, then the hurdle to get positive payroll 0:06:17.240 --> 0:06:18.839 growth is that's even that much higher. 0:06:18.880 --> 0:06:21.480 Ira, Thank you so much, Ira Jersey with Bloomberg Intelligence. 0:06:21.600 --> 0:06:24.080 I stopped by Michael McKee's desk this morning. I had 0:06:24.080 --> 0:06:26.800 to fight through his people got through, and I said 0:06:26.800 --> 0:06:30.839 to him, is there a whisper number on preliminary benchmark 0:06:30.920 --> 0:06:34.160 payroll revision joining us. Now, Michael McKee, you said there 0:06:34.200 --> 0:06:37.760 was no whisper number. There's no whisper I'm surprised by 0:06:37.839 --> 0:06:40.200 negative nine to eleven. That's a lot of jobs. 0:06:40.279 --> 0:06:44.840 I think we're surprised by the amount, but the fact 0:06:44.839 --> 0:06:47.559 that it was going to be a big number wasn't 0:06:47.560 --> 0:06:51.320 a surprise to most people. The range in the Bloomberg 0:06:51.400 --> 0:06:54.520 survey was from two hundred thousand to nine hundred thousand, 0:06:54.520 --> 0:06:57.080 and there were people who were even suggesting a million, 0:06:57.640 --> 0:07:00.400 and so that's not a surprise. But remember what you 0:07:00.440 --> 0:07:02.799 have to do is take this go back to March. 0:07:03.520 --> 0:07:05.719 One hundred fifty nine million, two hundred and fifty thousand 0:07:05.800 --> 0:07:09.279 jobs were what the BLS had counted on payrolls as 0:07:09.320 --> 0:07:12.440 of March of this year. Now you subtract nine hundred 0:07:12.440 --> 0:07:15.960 and eleven thousand from that in March, and that's where 0:07:15.960 --> 0:07:18.800 you are. So this is really backward looking data. It's 0:07:18.880 --> 0:07:22.880 it's a way to update the data with actual data 0:07:23.360 --> 0:07:26.640 rather than a survey. And it does show that the 0:07:26.680 --> 0:07:29.200 economy was weaker than we thought, but it doesn't have 0:07:29.240 --> 0:07:31.040 a lot of implications going forward. 0:07:31.360 --> 0:07:33.520 Okay, I'm going to ask a really obvious question. For 0:07:33.600 --> 0:07:35.960 people who don't watch or listen. 0:07:36.040 --> 0:07:39.040 Watching, I'm competing with you on that. 0:07:39.320 --> 0:07:42.800 But for folks who don't monitor every single job support 0:07:42.880 --> 0:07:46.120 or every weekly jobless claims, people like that, well maybe 0:07:46.200 --> 0:07:48.320 those who don't listen to Bloomberg Radio, but you know, 0:07:48.440 --> 0:07:51.640 for my mother who might tune in, how come the 0:07:51.680 --> 0:07:53.760 government can't get it right the first time around? Why 0:07:53.960 --> 0:07:56.559 would there be such a large revision, negative nine hundred 0:07:56.600 --> 0:07:59.040 eleven thousand jobs over a twelve month period. 0:07:59.440 --> 0:08:02.240 Well, the sign of the revision is maybe a bit 0:08:02.280 --> 0:08:05.120 of a surprise, but the fact that they are revised, 0:08:05.160 --> 0:08:07.800 that happens every year, and it's hundreds of thousands in 0:08:07.840 --> 0:08:11.400 either direction. Because what the BLS does is take a 0:08:11.440 --> 0:08:15.119 survey every year or every month. They survey one hundred 0:08:15.120 --> 0:08:18.320 and sixty one thousand establishments around the country, which is 0:08:18.360 --> 0:08:22.080 about they say they account for about thirty three percent 0:08:22.120 --> 0:08:25.680 of all payrolls temple. And this is the once a 0:08:25.760 --> 0:08:30.640 year data that they use when they get it in 0:08:30.960 --> 0:08:35.240 unemployment insurance taxes paid by companies, so they can see 0:08:35.280 --> 0:08:39.040 how many people actually are on payrolls, and that is 0:08:39.080 --> 0:08:42.360 about ninety eight percent of all jobs. So this is 0:08:42.400 --> 0:08:44.520 a much more accurate thing, but the numbers don't come 0:08:44.559 --> 0:08:48.080 out at the same time. The surveys the best they 0:08:48.080 --> 0:08:49.600 can do. In the meantime, NERD. 0:08:49.400 --> 0:08:52.760 Fast and Extended edition of Bloomberg Surveillant Scarlett Foh and 0:08:52.800 --> 0:08:55.560 time Key with you. Bloomberg Intelligence coming up here in 0:08:55.679 --> 0:08:58.600 eight or nine. I mean, it's Stephanie. We're authentic. We'll 0:08:58.600 --> 0:09:01.000 get to her in a moment. Going to ask Stephanie 0:09:01.000 --> 0:09:02.960 this question because that would be rude, So I'll ask 0:09:03.000 --> 0:09:05.520 you the rude of question. The President is going to 0:09:05.559 --> 0:09:09.000 respond to this, Does he say these were Biden jobs 0:09:09.240 --> 0:09:09.960 that were lost? 0:09:10.280 --> 0:09:14.160 Well, one would assume politically that would be the move 0:09:14.240 --> 0:09:18.600 for him, but there has been some sort of feeling 0:09:18.679 --> 0:09:20.559 that out there that what he's going to do is 0:09:20.679 --> 0:09:23.400 use this to attack BLS because he's already started that 0:09:24.000 --> 0:09:26.400 and say how could you be that wrong? And we 0:09:26.480 --> 0:09:29.560 need to basically fire y'all and start over again or 0:09:29.600 --> 0:09:32.240 something like that. So we're waiting to see how he responds, 0:09:32.640 --> 0:09:34.199 but don't know yet. 0:09:34.400 --> 0:09:37.120 Malcael McKee, thank if someone stoving all of our economic 0:09:37.160 --> 0:09:42.560 coverage truly knowledgeable on these arcane economic moments joining us 0:09:42.559 --> 0:09:44.600 now Stephanie Roth kind enough to be with us in 0:09:44.640 --> 0:09:49.200 the last forty eight hours, chief economist at Wolf Researched. Stephanie, 0:09:49.200 --> 0:09:52.400 I guess it's a surprise to a worser number from 0:09:52.480 --> 0:09:57.240 this preliminary statistic to the actual statistic. Can there be 0:09:57.320 --> 0:09:58.000 more mystery? 0:09:58.400 --> 0:10:01.280 Yeah? I mean the thing is last year there was 0:10:01.559 --> 0:10:05.800 a bigger initial preliminary than the actual, so eighteen versus 0:10:05.800 --> 0:10:08.280 the actual of five to eighty nine. So I think 0:10:08.720 --> 0:10:11.160 markets are just recognizing that we knew that there was 0:10:11.160 --> 0:10:12.960 going to be a large revision and it might not 0:10:13.040 --> 0:10:16.080 be ultimately as large when we get the actual in 0:10:16.160 --> 0:10:17.240 early twenty twenty six. 0:10:17.720 --> 0:10:20.720 Stephanie, what would you be listening for, watching for when 0:10:20.720 --> 0:10:23.680 the president does eventually respond. As we've been noting, the 0:10:23.720 --> 0:10:26.680 period covers the end of the Biden administration and the 0:10:26.840 --> 0:10:29.800 very beginning of the Trump administration, and the President will 0:10:29.840 --> 0:10:33.320 be quick to say that it is all Joe Biden's fault. 0:10:33.600 --> 0:10:35.360 Yeah, I mean, I think that's probably right, and perhaps, 0:10:35.600 --> 0:10:37.839 as Mike McKee was saying earlier, it's perhaps more of 0:10:38.000 --> 0:10:41.000 just an attack on BLS and not getting the numbers right. Granted, 0:10:41.000 --> 0:10:43.840 this is a really difficult thing to estimate. In real 0:10:43.920 --> 0:10:47.720 time and BLS does their best buy having a survey 0:10:47.760 --> 0:10:50.119 that doesn't represent the full sample. So once they incorporate 0:10:50.440 --> 0:10:53.560 all the data from the unemployment insurance records, then they 0:10:53.559 --> 0:10:56.480 can get the full picture. And it's not always exactly right, 0:10:56.520 --> 0:10:58.920 but what we have seen is the preliminary is larger, 0:10:59.360 --> 0:11:02.319 shows a large revision in recent years in the actual. 0:11:02.160 --> 0:11:05.480 Sephonie wrongs with us and we will continue with ms 0:11:05.600 --> 0:11:10.400 Roth of Wolf Research News. Intrudes oil is surged up 0:11:10.440 --> 0:11:13.600 one dollar, up one point five percent on Brent crude, 0:11:13.960 --> 0:11:17.000 sixty six point five eight on Brent crude gold elevated 0:11:17.080 --> 0:11:21.320 fifteen dollars. Our top Live team, thank you Paul Wallace 0:11:21.320 --> 0:11:25.680 for your leadership in the Middle East. Israel strike and cutter. 0:11:26.080 --> 0:11:29.960 This attack and cutter is unprecedented. It's difficult to overstate 0:11:30.280 --> 0:11:33.280 how angry it could make the leadership in Doha as 0:11:33.320 --> 0:11:36.800 well as other Gulf states such as Saudi Arabia and 0:11:36.840 --> 0:11:39.240 the UAE. And to go over to the headlines, this 0:11:39.320 --> 0:11:43.360 is just breaking now in terms of actual headlines and 0:11:43.400 --> 0:11:48.360 not speculation. And the headline is simply Israel targets Amas 0:11:48.640 --> 0:11:52.440 leadership in strikes on Katari capital. That from our Paul 0:11:52.480 --> 0:11:57.960 Wallace and Alisa Odenheimer as well. Scarlett Foo was Stephanie Roth. 0:11:58.360 --> 0:12:01.439 So let's follow up on that headline. 0:12:01.520 --> 0:12:05.160 With oil prices now rising and you see WTI, for instance, 0:12:05.240 --> 0:12:06.880 up one and a half percent, Brent crued up one 0:12:06.880 --> 0:12:09.760 and a half percent as well, we're talking about approaching 0:12:10.080 --> 0:12:12.600 a high sixty dollars range at some point. 0:12:13.040 --> 0:12:15.160 What does that mean for the inflation picture, Stephanie. 0:12:15.200 --> 0:12:18.240 We get CPI and PPI this week and all focus 0:12:18.280 --> 0:12:21.200 will be on that. But down the road, if this 0:12:21.600 --> 0:12:24.800 war has revived and this becomes a constant pressure point, 0:12:25.040 --> 0:12:27.720 how are you folding that into your analysis of inflation? 0:12:28.200 --> 0:12:30.679 Yeah, I mean there does continue to be more inflation 0:12:30.760 --> 0:12:34.640 pressures than generally expected. So oil prices tend to look 0:12:34.640 --> 0:12:36.320 at a little bit differently, and that's why the said 0:12:36.320 --> 0:12:39.560 looks at core, which excludes good and energy. But when 0:12:39.600 --> 0:12:42.520 we're thinking about the broadways inflation picture, we are worried 0:12:42.520 --> 0:12:44.079 that inflation pressures are going to pick up in the 0:12:44.120 --> 0:12:47.320 next couple months because by our estimates, we only we 0:12:47.400 --> 0:12:49.679 see about thirty five to forty percent of the tear 0:12:49.720 --> 0:12:51.719 of pastor has already happened, in which case a lot 0:12:51.720 --> 0:12:53.360 of it is ahead of US, and it might just 0:12:53.400 --> 0:12:55.480 look like a number of prints where core inflation is 0:12:55.559 --> 0:12:58.520 running in AO point three towo point three five percent range, 0:12:58.520 --> 0:13:01.360 which just poses a challenge. So the energy pricesdent and 0:13:01.440 --> 0:13:03.360 of itself means it's a little bit less important, but 0:13:03.400 --> 0:13:05.959 the broad inflation picture is a bit challenge in the 0:13:05.960 --> 0:13:06.679 next couple of months. 0:13:06.840 --> 0:13:08.040 Stephanie, thank you so much.