WEBVTT - Surveillance: Jobs Day Miss With Walsh 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast home toom Keene. Along 0:00:09.240 --> 0:00:13.080 with Jonathan Ferrell and Lisa Brownwitz Jay Lee, we bring 0:00:13.119 --> 0:00:17.159 you insight from the best and economics, finance, investment, and 0:00:17.280 --> 0:00:23.280 international relations. Find Bloomberg Surveillance and Apple Podcast, SoundCloud, Bloomberg 0:00:23.360 --> 0:00:30.320 dot Com, and of course on the Bloomberg Tournament Right 0:00:30.360 --> 0:00:32.760 audience worldwide and pleased to say on Bloomberg TV and 0:00:32.760 --> 0:00:35.239 on Bloomberg Radio. Joining us now is the U S 0:00:35.240 --> 0:00:38.479 Secretary of Labor Money Walsh, Secretary wild always greater cash 0:00:38.600 --> 0:00:41.080 up with you, sir, demanding this economy. Just had this 0:00:41.159 --> 0:00:43.920 conversation on this program through the morning on Bloomberg TV 0:00:44.000 --> 0:00:46.720 and radio. Demand seems to be pretty good. Still, it's 0:00:46.760 --> 0:00:50.000 labor supply that's been out back by what Secretary Walsh, 0:00:50.240 --> 0:00:52.640 in your mind and from the view of the administration 0:00:54.520 --> 0:00:56.880 say that one. I'm sorry I missed that question. What's 0:00:56.880 --> 0:00:59.639 something labor supply, Secretary Walsh? What it is holding back 0:00:59.720 --> 0:01:02.800 labor apply? Well, I think what's happening here, and I 0:01:03.160 --> 0:01:05.839 listened to you the previous panelists, and you know, I 0:01:05.920 --> 0:01:08.319 pretty much agree with almost everything that was said. One 0:01:08.319 --> 0:01:10.200 of the things that we're still dealing. What's particularly in 0:01:10.200 --> 0:01:12.840 the month of August was the delta variant. Granted, we've 0:01:12.880 --> 0:01:15.440 seen a level leveling off of the delta variant. UH, 0:01:15.480 --> 0:01:17.440 this in the last couple of days here, the last 0:01:17.480 --> 0:01:19.399 couple of weeks, But in the in the beginning of 0:01:19.760 --> 0:01:22.279 at the end of July, early August, we saw increase 0:01:22.280 --> 0:01:24.280 in delta variant. If you look at these job numbers 0:01:24.440 --> 0:01:26.520 and you look at just look at take the hospitality number, 0:01:26.520 --> 0:01:29.320 in the restaurant number, we had almost zero game this 0:01:29.360 --> 0:01:32.360 month in that area. Meanwhile, the last three job report 0:01:32.520 --> 0:01:34.920 that was leading the way. So I think that that's 0:01:34.959 --> 0:01:37.200 part of what's going on here, and it is a 0:01:37.200 --> 0:01:39.120 long game. We're looking at the long game here. You know, 0:01:39.120 --> 0:01:41.920 we've added four point five million jobs since President Biden 0:01:41.959 --> 0:01:44.880 has taken office. UH. This job report, the one thing 0:01:44.920 --> 0:01:47.320 that I would highlight is we had strong growth in 0:01:47.360 --> 0:01:49.560 the private sector, and I think we've seen growth in 0:01:49.600 --> 0:01:52.120 the public sector and previous reports so and we've seen 0:01:52.120 --> 0:01:55.520 some growth in manufacturing and auto related uses. So again, 0:01:55.560 --> 0:01:58.000 this is a long game. There is some other tools 0:01:58.000 --> 0:01:59.640 that we have to use here. We do have to 0:02:00.000 --> 0:02:01.880 it is the legislation right now that we're moving through 0:02:02.320 --> 0:02:04.960 infrastructure bills that we need to get through. But but 0:02:05.040 --> 0:02:06.840 this is the long game right now, coming out of 0:02:06.880 --> 0:02:09.480 a worldwide pandemic. Well, let's talk about those bills right now. 0:02:09.520 --> 0:02:12.000 Secondary worlds. This from Senator Mansion and the Will Street 0:02:12.040 --> 0:02:15.480 Journal yesterday placing a strategic pause on this budgetary proposal 0:02:15.800 --> 0:02:18.880 by significantly reducing the size of any possible reconciliation bill 0:02:18.919 --> 0:02:21.600 to only what America can afford and needs to spend 0:02:22.120 --> 0:02:24.960 Seconty wh what's the response of the administration to that? 0:02:25.040 --> 0:02:28.720 Our pad from Senator Mansion, I think America needs investment. 0:02:28.919 --> 0:02:32.160 American people need investment. American people need the investment in 0:02:32.240 --> 0:02:35.040 job training. Uh. The American people need the investment in 0:02:35.040 --> 0:02:38.679 the care's economy. We saw again uh in nursing, home care, 0:02:38.720 --> 0:02:41.079 and del care loss of jobs. Again this is a 0:02:41.120 --> 0:02:44.760 second consecutive month. We need investment in childcare, we need 0:02:44.840 --> 0:02:48.680 investment in schools. Uh. These are good investments moving forward. 0:02:48.800 --> 0:02:50.960 And this will just continue to move our economy forward 0:02:51.160 --> 0:02:53.239 and continue to prepare us for the future of America. 0:02:53.919 --> 0:02:55.880 And I would ask you know, I would hope that 0:02:56.360 --> 0:02:57.920 we'll be able to they'll be able to work their 0:02:57.919 --> 0:03:00.960 differences out in Congress and move these two legislation A one. 0:03:01.280 --> 0:03:04.280 Do we need taxes on excess CEO pay to pay 0:03:04.320 --> 0:03:06.880 for that? Yeah, that's one of the one of the 0:03:06.919 --> 0:03:09.320 plans that the President's been talking about, a plan to 0:03:09.320 --> 0:03:11.600 pay for this. He's made it very clear that that 0:03:11.680 --> 0:03:14.680 anyone who earns under for over founder under founder thousand 0:03:14.720 --> 0:03:17.440 excuse me food dollars a year will not be paying 0:03:17.480 --> 0:03:20.560 any additional taxes. And we're looking at adjusting some some 0:03:20.560 --> 0:03:22.520 some of the tax policy in this country and then 0:03:22.600 --> 0:03:25.040 using money and spent money from the American Rescue plans. 0:03:25.040 --> 0:03:27.120 So that's that's what the President's plan. As far as 0:03:27.160 --> 0:03:31.320 paying this with something but directed specifically a corporate executive 0:03:31.480 --> 0:03:33.440 sexty wolves, that's a story we have out at the 0:03:33.440 --> 0:03:37.040 moment that Democrats are discussing that. Have you been discussing that. No, 0:03:37.120 --> 0:03:39.440 I mean, that's a conversation that that's that's above what 0:03:39.480 --> 0:03:41.480 I'm doing right now. I know that this this conversation 0:03:41.520 --> 0:03:44.080 is happening in the halls of Congress, It's happening with 0:03:44.120 --> 0:03:47.120 the leadership, and that that's they will ultimately make decisions 0:03:47.280 --> 0:03:49.360 on on how to pay for the spell. Marty, have 0:03:49.400 --> 0:03:52.400 you spoken to Senator Mansion and talked about your thoughts 0:03:52.480 --> 0:03:55.040 on this labor market and what this economy needs. Do 0:03:55.120 --> 0:03:58.240 you pick up all those conversations with him? Yeah, it's 0:03:58.280 --> 0:04:00.320 actually with the senator a couple of weeks ago and 0:04:00.680 --> 0:04:02.560 we went to a coal mine in West Virginia and 0:04:02.680 --> 0:04:04.200 we had a great day and a great chat, and 0:04:04.240 --> 0:04:06.480 we talked a lot about a lot. You know, in 0:04:06.520 --> 0:04:09.200 the offously center has his ideas and and and in 0:04:09.320 --> 0:04:11.480 recommendations and opinions, and we just need to continue to 0:04:11.480 --> 0:04:13.680 have dialogue. I think the beauty about all this is 0:04:13.720 --> 0:04:16.400 that we continue to have these open conversations as long 0:04:16.440 --> 0:04:19.200 as both do you have two sides willing to have conversations. 0:04:19.240 --> 0:04:21.080 That's a good process and moving things along. Do you 0:04:21.080 --> 0:04:23.280 see it's two sides though, considering you are part of 0:04:23.320 --> 0:04:25.240 the same party, and the reason I asked you this, 0:04:25.320 --> 0:04:27.720 Secretary Walsh, there is a narrative in the meter as 0:04:27.760 --> 0:04:31.320 you know that the administration and your administrations that gender 0:04:31.360 --> 0:04:34.400 has been held hostage by a single senator may be accountable. 0:04:34.440 --> 0:04:36.359 To be kind, it is that how do you characterize 0:04:36.360 --> 0:04:39.880 the situation? No, I mean, listen, I'm a former legislator 0:04:39.880 --> 0:04:43.080 from Massachusetts and there's often times where I was debating 0:04:43.080 --> 0:04:45.840 a bill in the in the Massachu's House representives with 0:04:46.120 --> 0:04:49.760 the other side being my Democratic colleagues. And and you know, 0:04:49.800 --> 0:04:51.760 as long as you have the dialogue, you can move forward. 0:04:51.800 --> 0:04:54.159 I mean, listen, lots of people's have lots of concerns 0:04:54.320 --> 0:04:56.960 and opinions on what we need to do moving forward. Uh. 0:04:57.120 --> 0:05:00.120 And I'm supporting President Biden's plan and President biden as 0:05:00.200 --> 0:05:03.240 American rescue plan. And what that resulted in was over 0:05:03.320 --> 0:05:06.440 two hundred million vaccination shots. With that resulted in was 0:05:06.680 --> 0:05:10.440 investment into childcare. With with that resulted in is moving 0:05:10.480 --> 0:05:12.919 our economy forward four point family and jobs. You know, 0:05:12.960 --> 0:05:15.440 the President has a plan. The plan is working. Uh, 0:05:15.520 --> 0:05:17.120 and we're going to continue to move down down the 0:05:17.200 --> 0:05:20.160 road on that plan. What did Senator Mansion say to you, Marty? 0:05:20.200 --> 0:05:22.360 What was your take on Secondy Walsh, We didn't get 0:05:22.400 --> 0:05:24.600 too much into the We didn't get too much into 0:05:24.640 --> 0:05:27.800 the conversation about about the particulars of these bills. But again, 0:05:27.800 --> 0:05:29.440 I know, I know, send the Mansion cares for his 0:05:29.520 --> 0:05:32.039 constituents and cares for American people. And again, we just 0:05:32.080 --> 0:05:34.280 need to continue to have dialogued to to move these 0:05:34.279 --> 0:05:36.280 bills forward. So you think that that is not a 0:05:36.320 --> 0:05:39.440 hard now a red line from Senator Mansion. Secondary Walsh 0:05:39.440 --> 0:05:41.720 in your opinion, Well, I'm not going to speak for 0:05:41.800 --> 0:05:43.760 sender Mansion. I mean, he certainly is his own person. 0:05:43.839 --> 0:05:45.680 So we'll see as we move forward here over the 0:05:45.680 --> 0:05:47.760 next couple of days, and imagine you devoid that question 0:05:47.760 --> 0:05:49.240 as well. Secondly, well, so allow me to put it 0:05:49.240 --> 0:05:52.640 in different words for you your interpretation of his stance. Currently, 0:05:52.920 --> 0:05:55.400 for some people, they might interpret his words yesterday in 0:05:55.400 --> 0:05:57.600 the Wall Street Journal as a red line hard no. 0:05:58.120 --> 0:06:01.560 Was that your view? I know I wouldn't say it's 0:06:01.560 --> 0:06:03.400 a hot no, But what I would say is that 0:06:03.440 --> 0:06:06.400 we just have to continue to have conversation. Listen, lots 0:06:06.400 --> 0:06:08.960 of people have different ideas on how we move forward 0:06:09.000 --> 0:06:12.159 on these infrastructure bills. Some people think that these investments 0:06:12.320 --> 0:06:14.680 are expenses and we shouldn't be paying this money. All 0:06:14.720 --> 0:06:16.720 I know is that the investments that that in these 0:06:16.760 --> 0:06:19.880 two infrastructure bills, particularly the Kids Economy Bill, are very 0:06:19.920 --> 0:06:23.120 important about moving moving our economy forward. We've seen now 0:06:23.200 --> 0:06:25.240 here in America we're talking about people that are not 0:06:25.279 --> 0:06:28.000 returning to the workforce, and part of that is lack 0:06:28.040 --> 0:06:31.400 of opportunity, lack of experience for different paying jobs. People 0:06:31.440 --> 0:06:33.640 want to get good paying jobs. We need to assist 0:06:33.680 --> 0:06:35.839 them by making the investment there. It's just like building 0:06:35.839 --> 0:06:38.240 a brand new bridge in the city or town in America. 0:06:38.440 --> 0:06:40.520 You build that bridge to get people connected to other 0:06:40.560 --> 0:06:42.960 other locations. We need to continue to build that bridge 0:06:42.960 --> 0:06:46.279 by investing in job training and other important cares. Economy 0:06:46.279 --> 0:06:49.200 issues these secretary flame but Marti well, secretly, well, you 0:06:49.240 --> 0:06:51.400 can't with your times. Thanks for joining us this morning, 0:06:57.760 --> 0:07:02.080 right now victory lab in, folks, in the game of economics, 0:07:02.560 --> 0:07:06.320 it's awfully tough to do this. We suggested surveillance at 0:07:06.360 --> 0:07:09.560 three hundred sixty nine thousand to thirty five plus a 0:07:09.640 --> 0:07:14.679 revision that is the new four hundred thousand. Mezra absolutely 0:07:14.800 --> 0:07:19.400 nailed the call. Today it's seven and fifty jobs per 0:07:19.480 --> 0:07:23.240 month over the last ninety days. How will that affect 0:07:23.360 --> 0:07:28.240 the Powell calculus night, Tom, Thanks for having me back. 0:07:28.560 --> 0:07:30.800 So yes, it's a weaker report, but if you look 0:07:30.840 --> 0:07:32.640 at the three month moving average or look at the 0:07:32.680 --> 0:07:35.600 other data, you know it's it's suggesting that the recovery 0:07:35.640 --> 0:07:37.680 is continue. It's going to be in fits and starts. 0:07:37.760 --> 0:07:39.600 The reopening we knew is not going to be in 0:07:39.600 --> 0:07:42.400 a straight line. So we think tapering is still very 0:07:42.440 --> 0:07:45.160 much on the table, but we're calling for a December taper, 0:07:45.280 --> 0:07:47.680 not a September taper. I mean November as possible if 0:07:47.680 --> 0:07:50.280 the next couple of reports are very strong, but later 0:07:50.360 --> 0:07:53.320 this year they taper and then we see inflation next year. 0:07:53.560 --> 0:07:56.160 We don't think they're hiking well until the end of 0:07:56.240 --> 0:07:59.120 two thousand three, So that's why I think the curve 0:07:59.280 --> 0:08:02.360 is stupid. Just to be clear, period, are you actually 0:08:02.360 --> 0:08:05.840 pushing back your expectation for the startup taper to December 0:08:05.840 --> 0:08:09.320 today based on this report? Now we've we've been calling 0:08:09.320 --> 0:08:12.320 for December because we were looking for a week report today. 0:08:12.680 --> 0:08:14.880 So just looking forward, Preyer, what are you going to 0:08:14.920 --> 0:08:17.200 be looking for to get a sense of just how 0:08:17.280 --> 0:08:21.040 quickly they could potentially readjust their expectations. I mean, we 0:08:21.080 --> 0:08:24.920 know that wages are somewhat skewed by compositional issues, but 0:08:25.040 --> 0:08:27.920 are there other aspects that have you concerned, like the 0:08:27.960 --> 0:08:31.960 labor participation right exactly. So, I think labor participation is 0:08:32.000 --> 0:08:34.800 a key one, particularly for the next couple of reports, 0:08:34.880 --> 0:08:38.040 because we know the supplemental unemployment insurance is running out. 0:08:38.080 --> 0:08:40.880 We know that schools are reopening. So we're really hopeful 0:08:40.920 --> 0:08:43.600 that people re enter the labor force. And that's gonna 0:08:44.120 --> 0:08:46.640 tell the FED, particularly the doves on the FED, I think, 0:08:46.679 --> 0:08:49.800 will feel vindicated that there is a lot of slack 0:08:49.840 --> 0:08:53.480 in the labor market. And until wage inflation properly picks up, 0:08:53.520 --> 0:08:55.600 you know, not because of composition effects, which is what 0:08:55.640 --> 0:08:58.360 we think held the number up, um, you know, or 0:08:58.520 --> 0:09:00.960 or has been for the last few months. Um. You know, 0:09:01.000 --> 0:09:04.440 When it's true underlying reage inflation picks up, that's when 0:09:04.440 --> 0:09:07.280 I think some of that transitory narrative falls off. So 0:09:07.320 --> 0:09:09.280 that's really going to be key the next few months. 0:09:10.360 --> 0:09:13.559 We need to give a very careful shout out to 0:09:13.720 --> 0:09:17.040 James O'Sullivan as well. Jim Sullivan, working with Priam, is 0:09:17.280 --> 0:09:20.559 doing all the heavy lifting here. When you talk to 0:09:20.640 --> 0:09:25.200 Jim O Sullivan about Q four, what do you argue about? 0:09:27.000 --> 0:09:29.720 So we argue a lot about the pace of deceleration. 0:09:30.000 --> 0:09:32.240 Jim's are a great call, great call on the number today. 0:09:32.760 --> 0:09:35.600 You know, I'll be decelerating from a seven percent first 0:09:35.679 --> 0:09:38.960 half GDP to a you know, three or four percent. 0:09:39.120 --> 0:09:41.080 And what's the next step? Are we going down to 0:09:41.600 --> 0:09:44.240 one percent or two percent? And you know Jim is 0:09:44.280 --> 0:09:47.440 in the camp that things are decelerating. Reopening is feeding some, 0:09:47.640 --> 0:09:51.120 the fiscal stimulus impact is feeding. But growth is still 0:09:51.160 --> 0:09:54.079 solid and well well above potential, which will allow the 0:09:54.200 --> 0:09:57.520 fact to exit. It's just the inflation question where Jim 0:09:57.559 --> 0:10:00.800 has a slower or slow down in an inflation So 0:10:00.840 --> 0:10:04.439 that's that's the keep out of extent of deceleration and 0:10:04.480 --> 0:10:08.600 what's the longer term impact on inflation question. Link your 0:10:08.760 --> 0:10:12.560 bond world, your full faith and credit world to the 0:10:12.720 --> 0:10:16.400 equity markets. We don't do that. We do that clumsily. 0:10:16.440 --> 0:10:20.520 I would say within the media. Does the yield mystery 0:10:20.559 --> 0:10:27.280 now support equities or create greater uncertainty for equities? I 0:10:27.280 --> 0:10:29.400 think so I do. I don't think there's such a 0:10:29.440 --> 0:10:31.720 big disconnect between the two. I think the FED is 0:10:31.720 --> 0:10:35.360 telling us they're tatering, but very slowly. The end point 0:10:35.400 --> 0:10:38.000 of the hiking cycle, the market has taken down that 0:10:38.160 --> 0:10:41.200 number significantly. If the fans only hiking to one and 0:10:41.200 --> 0:10:44.280 a half percent, that's a very bullish environment for risk asses. 0:10:44.880 --> 0:10:47.360 So I'm less concerned about the fat aspect. I'm more 0:10:47.400 --> 0:10:50.920 concerned if global growth slows down, then that is something 0:10:50.960 --> 0:10:53.280 that the bond market is somewhat priced for, but the 0:10:53.320 --> 0:10:56.320 equity markets not. I seem more as a growth concerned 0:10:56.400 --> 0:10:59.600 rather than a fat concern. One final question, tell me 0:10:59.600 --> 0:11:03.320 about the X access duration here of all these moves 0:11:03.360 --> 0:11:04.920 that we're going to see. I mean, I know we 0:11:04.960 --> 0:11:07.640 go out to December on taper, but do you begin 0:11:07.679 --> 0:11:12.200 to really extend out yield angst if I can to 0:11:12.280 --> 0:11:16.840 the middle of two thousand twenty, if not later. In 0:11:16.960 --> 0:11:19.680 terms of when we think rates will rise, yeah, when 0:11:19.720 --> 0:11:24.400 price down rates up right? Um, So I think it 0:11:24.480 --> 0:11:27.040 also depends on the fiscal site. Do we get a 0:11:27.120 --> 0:11:29.199 three and a half or two trillion or if send 0:11:29.320 --> 0:11:32.440 a mansion saying nothing without an offset, how much of 0:11:32.480 --> 0:11:33.959 the offsets are we going to get? I think that's 0:11:34.000 --> 0:11:36.559 a that's a key comportant as well. But if the 0:11:36.640 --> 0:11:38.959 FED starts to taper, there's a lot of supply that 0:11:39.040 --> 0:11:41.000 the market is to take down. So I think a 0:11:41.120 --> 0:11:44.080 gradual rate right in, you know, starting at the end 0:11:44.080 --> 0:11:46.200 of the year continuing next year. I can see that 0:11:46.280 --> 0:11:50.920 consistent with tapering. To you and Jim O'Sullivan, congratulations on 0:11:51.080 --> 0:11:54.840 just simply doing market economics. We greatly appreciate your return 0:11:55.440 --> 0:12:03.200 this morning. Standing to see things change at the long 0:12:03.360 --> 0:12:04.880 end of the curve though, tom So, let's have a 0:12:04.880 --> 0:12:07.120 look at that and push through that two thirty five, 0:12:07.200 --> 0:12:09.400 that big down side surprise on a payrolls report against 0:12:09.400 --> 0:12:12.440 an estimate of seven thirty three yield tire on thirties 0:12:12.520 --> 0:12:16.360 now by about three basis points on tens by two. However, 0:12:16.400 --> 0:12:18.079 way you chop this up right now, there is a 0:12:18.120 --> 0:12:21.320 view on the September twenty two meeting that that number 0:12:21.559 --> 0:12:24.320 will just anchor the hawks a little bit and stop 0:12:24.400 --> 0:12:27.679 them flying away and causing too much stock for chairman Power. 0:12:27.760 --> 0:12:30.280 Let's bring in Jeff Rosenberg on that of black Rock 0:12:30.400 --> 0:12:33.839 black Rocks portfolio manager. Jeff, I want to start straight there, 0:12:33.840 --> 0:12:36.160 so with a down side surprise and your first interpretation, 0:12:36.240 --> 0:12:39.800 your first read, Yeah, the first read is definitely this 0:12:39.880 --> 0:12:45.280 has some delta variant on it. The mix shift here 0:12:45.559 --> 0:12:49.720 is retails lower leisure and hospitality, which had been contributing 0:12:49.840 --> 0:12:53.320 you know, four hundred five hundred thousand, doesn't show up 0:12:53.320 --> 0:12:56.440 at all. The wage increase that you guys were talking about. 0:12:56.520 --> 0:12:58.640 That really looks like a mixed shift here. And the 0:12:58.720 --> 0:13:02.520 disappointment is in those two sectors, in particularly leisure and hospitality, 0:13:02.559 --> 0:13:06.480 which speaks to you know, potentially this delta variant impact now, 0:13:06.559 --> 0:13:12.000 because that's the fingerprints, that's a temporary impact. And John, 0:13:12.040 --> 0:13:14.360 as you just highlighted, you know, the initial bond market 0:13:14.400 --> 0:13:16.960 reaction was lower yields, but now you're starting to kind 0:13:16.960 --> 0:13:18.880 of push higher in the back end. To me, that 0:13:19.040 --> 0:13:22.480 says the market's looking through this and seeing, hey, this 0:13:22.559 --> 0:13:25.480 is temporary. You know, we talked about transitory inflation. We're 0:13:25.480 --> 0:13:30.040 gonna talk about transitory uh, delta variant impact here at 0:13:30.080 --> 0:13:33.680 least with regards to the market reaction. Uh. And you 0:13:33.720 --> 0:13:36.320 know a little bit of disappointment as well in terms 0:13:36.320 --> 0:13:40.080 of the labor force participation rate not budging again. You know, 0:13:40.120 --> 0:13:43.480 I think that's more of a temporary factor related to 0:13:43.520 --> 0:13:46.280 the delta variant. So I think you know, you know, 0:13:46.280 --> 0:13:49.120 the market was already you know, pushing back in terms 0:13:49.200 --> 0:13:53.280 of expectations of when the tapering announcement would happen. This 0:13:53.360 --> 0:13:56.560 solidifies that in terms of the folks who were expecting 0:13:56.600 --> 0:13:59.920 something sooner or the hawk ish viewpoint, you know, we'll 0:14:00.000 --> 0:14:03.000 at another month. Everyone will look for that, look for 0:14:03.160 --> 0:14:06.000 the delta variant hopefully you know, to come out of 0:14:06.040 --> 0:14:10.600 the September and even the October reports as we wait 0:14:10.679 --> 0:14:13.520 into later this year. For the Governor Bryant has been 0:14:13.520 --> 0:14:15.720 on the money here for many people waite for the 0:14:15.720 --> 0:14:18.440 September night, to waite to see if the supply side 0:14:18.440 --> 0:14:20.160 of this economy will hail. Do you think they have 0:14:20.200 --> 0:14:22.320 the luxury of time on this side to waite for that. 0:14:24.080 --> 0:14:26.680 You know they do in the sense that you know 0:14:26.840 --> 0:14:30.640 they're really going to be focused on the longer term implications. 0:14:30.880 --> 0:14:34.200 And you know they have talked over and over about 0:14:34.960 --> 0:14:39.200 the necessity you know, particularly Powell speech last week, Uh, 0:14:39.240 --> 0:14:42.240 you know, the need not to react and overreact to 0:14:42.280 --> 0:14:46.160 short term developments. And so you know, from that vantage point, 0:14:46.280 --> 0:14:48.760 they don't need to rush into it. And the most 0:14:48.800 --> 0:14:51.240 important thing not to lose sight of here is the 0:14:51.320 --> 0:14:55.360 emphasis that that tapering is not tightening. And and once 0:14:55.400 --> 0:14:58.040 we get past this tapering announcement and they go on 0:14:58.280 --> 0:15:02.240 kind of an autopilot of each monthly reduction, you know, 0:15:02.280 --> 0:15:04.240 then we're going to shift this conversation and it's going 0:15:04.280 --> 0:15:06.440 to be about, well, what is this due to the 0:15:06.480 --> 0:15:09.880 path of future tightening. But that path of future tightening 0:15:09.920 --> 0:15:13.840 doesn't begin until maybe late in two so they've got 0:15:13.840 --> 0:15:16.400 a lot of time here before we get to that 0:15:16.520 --> 0:15:19.360 how important is the revision upward for the prior month, 0:15:19.360 --> 0:15:23.720 the idea that was revised from two more than a million, 0:15:23.760 --> 0:15:26.560 the idea that there was momentum and that perhaps this 0:15:26.600 --> 0:15:30.240 blip really is just a pause due to the delta variant. 0:15:31.040 --> 0:15:33.120 It's a It's a good point, Lisa, And that's another 0:15:33.600 --> 0:15:38.560 part of this report is it reinforces how strong the 0:15:38.640 --> 0:15:43.440 labor market was going into this delta variant impact. And 0:15:44.000 --> 0:15:46.280 I think you know that maybe what the market is 0:15:46.280 --> 0:15:50.120 looking through you know that this is this is a 0:15:50.160 --> 0:15:53.640 one off slow down and not the beginning of a 0:15:53.680 --> 0:15:56.120 new trend, and that the strength in the in the 0:15:56.240 --> 0:16:00.280 labor markets will re emerge as the reopening re ours 0:16:00.280 --> 0:16:02.640 equity features. Just finding a little bit here. Someone changed 0:16:02.640 --> 0:16:05.480 on the SMP five hundred, basically unchanged the negative on 0:16:05.520 --> 0:16:07.400 the nastack. Now I'll be catching up with Rick read 0:16:07.400 --> 0:16:10.560 at Jeff's colleague at the Tompany alongside Anastasia Amarosa and 0:16:10.600 --> 0:16:12.600 Mike Collins. Will do that on the Open so in 0:16:12.640 --> 0:16:15.720 about twenty minutes time. Sounds good. Lots to talk about 0:16:15.760 --> 0:16:17.680 there as well. I just did the three months moving 0:16:17.760 --> 0:16:20.680 average of where we are with the double revisions, and 0:16:20.720 --> 0:16:23.360 I think away from the gloom of the moment, folks, 0:16:23.720 --> 0:16:27.920 this is a pleasant survived. Jeff Rosenberg to five zero 0:16:28.080 --> 0:16:31.080 jobs over ninety days and that comes out to seven 0:16:31.120 --> 0:16:35.360 hundred and fifty thousand exactly per month. I'm sorry, Jeff Rosenberg. 0:16:35.600 --> 0:16:39.080 That's not a bad number, not not bad at all. 0:16:39.120 --> 0:16:42.120 And you're reinforcing the broader point, which is, if you 0:16:42.160 --> 0:16:45.520 look through the noise, this is a very strong labor market, 0:16:45.600 --> 0:16:49.520 good recovery. You know, is there more room to go? Sure, 0:16:50.000 --> 0:16:52.400 you know, And that's what some of the points, uh, 0:16:52.800 --> 0:16:56.480 many of the more devilish members have been highlighting. Uh. 0:16:56.520 --> 0:16:58.680 And that's I think the broader takeaway is that the 0:16:58.720 --> 0:17:02.320 reopening is happening, that the recovery in the economy, you know, 0:17:02.400 --> 0:17:04.760 the thing that that this isn't talking about, and that 0:17:04.840 --> 0:17:07.280 the Fed is is also going to be concerned about it. 0:17:07.280 --> 0:17:09.040 And I think our focus will shift towards is the 0:17:09.040 --> 0:17:11.840 impact of fiscal policy. You know, we're going to have 0:17:11.920 --> 0:17:14.520 a fiscal tightening, even with a three and a half 0:17:14.560 --> 0:17:17.320 trillion dollar stimulus plan. You know, that is not the 0:17:17.359 --> 0:17:20.600 same kind of stimulus as the stimulus that is rolling off. 0:17:20.640 --> 0:17:23.960 That's long term stimulus over ten year period and so 0:17:24.000 --> 0:17:26.560 the FED is going to be concerned about the impact 0:17:27.520 --> 0:17:31.280 on economic growth of that fiscal tightening. Are you managing 0:17:31.359 --> 0:17:36.040 then twelve months forward, twenty four months forward to a 0:17:36.200 --> 0:17:40.119 three percent American economy or something. You know, we're getting 0:17:40.160 --> 0:17:42.480 back to where potential g d P is is that 0:17:42.840 --> 0:17:46.480 is that your overlay here as you manage bond money. 0:17:46.880 --> 0:17:50.080 That that is tom and and and it's it's in 0:17:50.280 --> 0:17:53.080 most of the longer run forecast. You know, we've had 0:17:53.520 --> 0:17:58.720 an an incredibly uh impactful impact on short term growth 0:17:58.760 --> 0:18:05.000 from the combination of reopening and historic amounts of fiscal stimulus. 0:18:05.040 --> 0:18:07.720 That's going to roll off. And so what is really 0:18:07.760 --> 0:18:11.159 the underlying debate is is or the overriding debate is 0:18:11.200 --> 0:18:14.600 what's the underlying capacity of the economy and the strength 0:18:14.600 --> 0:18:17.320 of the economy and its ability to deliver. And most 0:18:17.359 --> 0:18:19.879 of the consensus views have you going back to that level. 0:18:20.119 --> 0:18:24.480 And the concerns on the downside is that you'll you'll 0:18:24.600 --> 0:18:28.760 you'll press even lower. And that's the argument against moving 0:18:28.800 --> 0:18:33.880 too quickly and overreacting to what might be transitory impacts 0:18:33.880 --> 0:18:35.560 on inflation. Now, of course, the other side of the 0:18:35.640 --> 0:18:39.840 argument is that we've done some serious structural damage to inflation, 0:18:39.920 --> 0:18:43.840 inflation expectations the supply chain. The fet is admitted, you know, 0:18:43.840 --> 0:18:47.720 they've underestimated the degree and length of how long the 0:18:47.840 --> 0:18:51.400 restart economics would impact on the supply side and so 0:18:51.640 --> 0:18:55.120 all that. You know, that's the growth side, but it's 0:18:55.160 --> 0:18:58.960 also the inflation. Some interpretation, here's markets reverse nastac one 0:18:59.320 --> 0:19:01.919 with a spike up earlier comes right back around to 0:19:02.040 --> 0:19:05.560 a modestly negative statistic. The vix out to a sixteen 0:19:05.600 --> 0:19:09.160 point five three lesa three the ten year yield excuse 0:19:09.200 --> 0:19:12.480 me higher now one point three. Yeah, it seems like 0:19:12.480 --> 0:19:14.800 people are looking past the huge headline mess and to 0:19:15.000 --> 0:19:17.800 really reiterate what Jeff was saying, they're looking more at 0:19:17.800 --> 0:19:21.240 the upward revisions. They're looking more at the momentum heading 0:19:21.280 --> 0:19:24.440 into what was a delta poked month that really saw 0:19:24.720 --> 0:19:28.680 zero net jobs in the travel, leisure and hospitality sectors, 0:19:28.720 --> 0:19:31.040 which is really shocking given where we are in the reopening. 0:19:31.040 --> 0:19:33.439 But Jeff, this really goes to the question is the 0:19:33.440 --> 0:19:36.159 FED getting this right and does this data confirm that 0:19:36.280 --> 0:19:38.959 that basically there is a lot of slack in the market, 0:19:39.320 --> 0:19:41.320 or are we starting to get some concern with respect 0:19:41.359 --> 0:19:43.800 the wage data. Albeit you have to pass through it. 0:19:45.359 --> 0:19:49.080 You know, honestly, it's it's too early to know. Um. 0:19:49.240 --> 0:19:51.600 You know, there's a lot of critique on both sides 0:19:51.680 --> 0:19:54.359 of the debate as to whether the FED is is 0:19:54.440 --> 0:19:57.679 making mistakes or not. You know what, what obvious concern is, 0:19:57.680 --> 0:20:01.160 there is a tremendous amount of inflation, but it's not 0:20:01.359 --> 0:20:04.560 in goods and services prices. It's in assets, and you 0:20:04.640 --> 0:20:07.000 see it everywhere, and it's the acid inflation and the 0:20:07.040 --> 0:20:10.160 financial stability concerns, it's in the minutes. There are folks 0:20:10.200 --> 0:20:12.800 who are concerned about it. You know, if that ultimately 0:20:12.840 --> 0:20:15.040 shows up in a negative way, then you know the 0:20:15.480 --> 0:20:18.520 argument will be the FED ministic. But you know, given 0:20:18.560 --> 0:20:21.040 what we know today, it's it's hard to argue that 0:20:21.960 --> 0:20:24.200 is the case right now. And so the Fed's focused 0:20:24.200 --> 0:20:26.480 on what's right in front of them, which is they 0:20:26.480 --> 0:20:31.000 don't feel the need to move preemptively, and that's the 0:20:31.119 --> 0:20:34.480 change in flexible average inflation targeting. So they're going to 0:20:34.520 --> 0:20:38.439 be reactive and that's the kind of FED response function 0:20:38.480 --> 0:20:40.600 that we now live with. Jeffrey Rosenberg, thank you so 0:20:40.680 --> 0:20:49.520 much for black Rock. Market economics will interpret this and 0:20:49.560 --> 0:20:51.920