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Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane

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Speaker 1: jay Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg I've decided, Paul,

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Speaker 1: I'm not going to read any of the report. The

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Speaker 1: world does not the world is not advantaged if I

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Speaker 1: read one page or four right, and there's a lot

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Speaker 1: of there's a lot of analysis out there because there

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Speaker 1: are a lot of people reading all ones. So uh,

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Speaker 1: you know, a lot of analysis coming out over the

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Speaker 1: weekend on on the Sunday shows as well. So the

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Speaker 1: question is what are the Democrats do now? Well, what

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Speaker 1: are the Democrats do now? And how do the Republicans

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Speaker 1: regroup off of this? And of course the president saying

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Speaker 1: he's exonerated, Chris Rupkes exonerated, he has been looking as

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Speaker 1: a general statement, Chris, correct me if I'm wrong, for

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Speaker 1: a more normalization of yields to a higher yield. He

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Speaker 1: does this in a brilliant research report linking in interest

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Speaker 1: rates into the greater economy for m U F g uh.

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Speaker 1: The ginormous Bank of Japan. Chris Roski, Good morning. Let's

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Speaker 1: talk first about m U f G. They're the biggest

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Speaker 1: bank in Japan. Yeah, still the biggest bank in Japan,

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Speaker 1: formed by Bank of Tokyo and Mitsubishi Bank. What the

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Speaker 1: announcement is, Mrs one ton of me? Does she bank? There?

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Speaker 1: Is that the basic idea? Uh? Yeah, there was, there

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Speaker 1: was that, of course, talking about the m dynamics, it's

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Speaker 1: out there. Let's get an update right away on your

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Speaker 1: yield call. Because you've been acclaimed for folding and yield analysis.

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Speaker 1: There's always been this own to higher interest rates and

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Speaker 1: we just haven't done it. Why now it's the Federals.

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Speaker 1: I mean they're kind of leading the market by the

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Speaker 1: nose here. I mean, in this environment, I don't really

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Speaker 1: feel comfortable, uh putting out a ten year yield forecast

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Speaker 1: above where the top of the Fed funds rate target is,

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Speaker 1: which is two and a half percent right now. But nevertheless,

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Speaker 1: I'm assuming the Fed will re engage start to raise

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Speaker 1: rates maybe later this year. In December, we had a

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Speaker 1: bit of a scare. Retail sales were pretty weak in December.

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Speaker 1: The Fed was concerned they screwed to the sidelines. But

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Speaker 1: right now unemployment claims are back at the lows. You

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Speaker 1: saw the president's tweet, and it's accurate at that tweet,

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Speaker 1: it's the lowest level since nineteen sixty nine. I had

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Speaker 1: a good time in nineteen sixty nine. I don't know

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Speaker 1: about you, but the best years of my life gone.

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Speaker 1: But you know, the economy is strong here, it looked

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Speaker 1: like unemployment claims were going up. It's never been more

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Speaker 1: true that. You know, companies can see reduction and sales revenues,

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Speaker 1: they can throttle back their production, but until they fire workers,

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Speaker 1: there's no serious economic weakness. So I don't think the

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Speaker 1: FED should warn people about downside risks when everyone has

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Speaker 1: a job and there's no sign of any layoffs. It's

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Speaker 1: just that they're going too far here. And in trying

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Speaker 1: to say that we could potentially do something for risk

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Speaker 1: management reasons and cut rates, I don't buy. You know,

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Speaker 1: I was guess in ninety nine slying the family Stone

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Speaker 1: getting people. Oh you were there. Yeah, they're the first

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Speaker 1: time you heard sugar, sugar, but the archies the last time.

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Speaker 1: Absolutely so, Chris. I mean, the consumer clearly is you know,

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Speaker 1: very strong, has been very strong. Um really over the

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Speaker 1: last several years, and you mentioned full employment about the

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Speaker 1: manufacturing sector not quite as strong. Yeah, we're still okay.

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Speaker 1: I mean it's kind of ironic right now the orders

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Speaker 1: for new equipment, capital goods equipment, which was investment on

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Speaker 1: the part of corporation. It's it's running at a very

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Speaker 1: high level. These are like monthly flows durable goods orders,

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Speaker 1: and they're pretty high. I mean, they came down a

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Speaker 1: tiny bit in December, January, February maybe with the cold weather,

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Speaker 1: but there's nothing significant. If I put a chart up

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Speaker 1: of durable goods orders, you you would laugh. It's like

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Speaker 1: that's the weakness. There's no serious business investment in America.

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Speaker 1: That's important. Well, Uh, there's different things. I mean, there

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Speaker 1: are things that look like we're at the end of

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Speaker 1: the cycle, right I mean, we're not building a lot

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Speaker 1: of new factories. The President wants factories to bring them

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Speaker 1: home from overseas, but manufacturing facilities were not constructing a

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Speaker 1: lot right now. It's it's kind of near cycle high.

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Speaker 1: How many more offices do we need? Offices are kind

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Speaker 1: of high, so business investment of companies on structures, you know,

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Speaker 1: offices where well, warehouses are going up. Uh, you know

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Speaker 1: that investment isn't there, but equipment orders are still there. Uh,

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Speaker 1: intellectual property meaning business software, computers, that sort of spending

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Speaker 1: still ongoing. There's no sign I mean recession, there's no

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Speaker 1: there's no collusion, there's no recession. There's no reason. I

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Speaker 1: just keep saying there's no recession. Just keep repairing, repeating it.

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Speaker 1: There's nothing out, but it is. Our colleague John Farrell,

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Speaker 1: remember John Sweeney. He mentions about every third interview was

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Speaker 1: a great certitude about recession. I mean that's a fact. Well,

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Speaker 1: people are very worried about it. But if you're a CEO,

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Speaker 1: aren't you supposed to be worried about stuff like that.

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Speaker 1: How about the trade war seemed to be you know,

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Speaker 1: that was an issue obviously back in December. In the

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Speaker 1: fourth quarter, that seems to be less of an issue.

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Speaker 1: What is your sense of whether we're gonna get a

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Speaker 1: headline type of trade negotiation with China in terms of

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Speaker 1: resolution or something more substantive. Yeah, I don't care about

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Speaker 1: the substance. I'm a headline reader myself. I just want

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Speaker 1: them to take it off the table, eliminate the uncertainty,

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Speaker 1: say there's an agreement, we'll worry about compliance with the

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Speaker 1: agreement later on. Just get the markets to stop focusing

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Speaker 1: on China, which they have at the moment, because they're

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Speaker 1: assuming something's coming in the next thirty days. You mentioned

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Speaker 1: retail sales were a little moldy. I think it was December, remember,

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Speaker 1: and then we've seen recent data as well. You must

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Speaker 1: take three three months moving average of the control group,

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Speaker 1: you caause that I don't really get into the control

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Speaker 1: group that much. I mean, just take the headline number. Yeah,

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Speaker 1: so what do you see enough, it's it's at a

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Speaker 1: new high. It's at a new high. But the bottom

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Speaker 1: line is we're consuming. Yeah, there's there's definitely like Amazon

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Speaker 1: and all that, there's nothing wrong. We're creating roughly two

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Speaker 1: hundred thousand new jobs per month. Uh so the number

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Speaker 1: of people with paychecks is going up what one point

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Speaker 1: seven one point eight one point nine percent per year?

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Speaker 1: That's a you know that, that's a that keeps growth

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Speaker 1: near two percent at the very hot No recession, no recession,

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Speaker 1: Chris Rupki, thank you so much. Bank of Tokyo, BC

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Speaker 1: m U f G, Union Bank greatly appreciate that. Uh

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Speaker 1: this morning, joinning is now Todd Mariano. You raise your group,

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Speaker 1: and of course we've got to speak about Washington and

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Speaker 1: way we can touch on Sri Lanka as well, But Todd,

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Speaker 1: I've got to start with ice hockey. You're very Are

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Speaker 1: the Capital's done? I mean they got wiped out yesterday

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Speaker 1: by the Hurricanes and Washington Capitals go out and do

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Speaker 1: it last year? Are they done? Uh? This is my

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Speaker 1: favorite topic. I'm very glad that you brought it up.

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Speaker 1: I definitely do not believe that they're done. I like

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Speaker 1: I like my Caps chances and stay tuned. That's all

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Speaker 1: I can say. It is dynamic to watch for those

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Speaker 1: of you that don't follow hockey. If there's one team

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Speaker 1: to watch just for the op of a guy named

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Speaker 1: old Vetchigan, it is the Washington Capitals. I mean it's

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Speaker 1: going to be exciting at the Verizon Center in Washington.

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Speaker 1: Is there any excitement on Capitol Hill? Or is Gridlock

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Speaker 1: going to take the Stanley Cup of politics? You know

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Speaker 1: that's uh. I think that a lot of people here

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Speaker 1: in Washington expected a Russian of Ovechkin size coming at

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Speaker 1: them in the in the Mueller report, and uh, you

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Speaker 1: know it's it's a bit less than that. I would say, Um,

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Speaker 1: I mean, certainly there's there's still going to be uh,

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Speaker 1: quite a bit of of debate. Certainly expect that to

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Speaker 1: be acrimonious hearings, investigations. UM. I don't think that the

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Speaker 1: you know, especially the Democrats can exactly just let this go.

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Speaker 1: But for us, it it falls far short of you know,

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Speaker 1: a worst case scenario that you might have imagined, where

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Speaker 1: you know, you see odds of impeachment rising and you

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Speaker 1: have to start thinking about, you know, getting to sixty

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Speaker 1: seven votes in the in the Senate. That really appears

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Speaker 1: to us to be um way off the table now.

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Speaker 1: So I think I think from markets that the removal

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Speaker 1: of a pretty big potential headwind. So Todd, you mentioned

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Speaker 1: that you know, this was not the worst case obviously

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Speaker 1: for the administration. What do you think that Democrats will

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Speaker 1: do now? How aggressive will they be with us some

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Speaker 1: new information? I think some of them will be quite aggressive.

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Speaker 1: I think if you look to the committee chairman, and

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Speaker 1: certainly um, you look to the trail, and you look

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Speaker 1: to the you know, where things are shaping up in

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Speaker 1: the primary, I think you're going to see some some

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Speaker 1: quite aggressive rhetoric there some aggressive actions in the House

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Speaker 1: uh to sort of you know, keep this in the headlines,

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Speaker 1: keep the pressure on the president. But in terms of

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Speaker 1: the Democratic leadership, I think that's the more important signal.

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Speaker 1: It's probably going to be a lot quieter. I think

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Speaker 1: that Speaker Pelosi's comments, uh, which was also corroborated by

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Speaker 1: her by her number two Stenny Hoyer. Um, you know,

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Speaker 1: not really looking to impeachment. It's it's so divisive. You

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Speaker 1: need a really strong bipartisan majority of Americans behind you.

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Speaker 1: It's gonna be tough for them to build that case. Okay,

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Speaker 1: the dumb question in the morning, I'll go with it

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Speaker 1: because it's beneath Sweeney to ask this question, is dumb?

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Speaker 1: Is the basic idea of impeachment that the Democrats in

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Speaker 1: the House work their process, but they know even if

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Speaker 1: they work their process, it dies in the Senate whatever happens.

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Speaker 1: I mean, basically that's the thinking, right, that's right, and

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Speaker 1: that you know that that works for them in terms

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Speaker 1: of you know, messaging, especially to their base, to you know,

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Speaker 1: to turn out in Um, you know, it works for

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Speaker 1: them in in the sense of trying to h take

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Speaker 1: up room for the administration to push its own agenda,

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Speaker 1: you know, to get to get its own messaging out there.

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Speaker 1: It works, But as as you say, it's not, it's

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Speaker 1: not a maneuver that that's really going to result in

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Speaker 1: constitutional crisis. Well, Todd, certainly one lever that they that

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Speaker 1: Democrats could pull is to compel Mr Muller to testify.

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Speaker 1: Do you think that is on the table? I do

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Speaker 1: think it's on the table um And I certainly you

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Speaker 1: think that. I thought that for a while, even even

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Speaker 1: before the release of the report. It's you know, it's

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Speaker 1: it's the kind of thing where you know, it's it's

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Speaker 1: not included in any statute, there's no there's no legal

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Speaker 1: requirement for him to testify, and you know he may,

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Speaker 1: in fact, he may in fact decline. But it's it's

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Speaker 1: similar to the release of bars summary of the report,

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Speaker 1: the release of the report itself. This has become such

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Speaker 1: an important um event in American politics that I think

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Speaker 1: it's actually better to have, you know, more transparency, more

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Speaker 1: information here. I think he will um likely testify, and

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Speaker 1: that's an event in and of itself. But whether that

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Speaker 1: testimony differs materially from the report that that, I don't

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Speaker 1: think we can go to this in a moment. Paul

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Speaker 1: an important headline out Iran to close straight of Hormuz

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Speaker 1: if prevented from using it. I believe, among others Admiral

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Speaker 1: Stevitas and General kimm It have made clear to us

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Speaker 1: in conversations that the straight of Hormuz is narrower then

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Speaker 1: we perceive. It is narrow, Yes, that in front of me.

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Speaker 1: But is it the Panama Canal. No, but it is

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Speaker 1: in a big hunker water around a close strait of Hormoor.

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Speaker 1: Is if prevented from using it, will have much more.

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Speaker 1: Why don't you continue with Todd? Marianna? Yeah, so, Todd.

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Speaker 1: One thing that became very clear in the report is

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Speaker 1: the extent of the Russian interference in the election. What

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Speaker 1: is the administration's view towards Russia? Now, do you believe

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Speaker 1: well the administration struggle with Russia policy is that it's

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Speaker 1: not been of one mind on it. Um. I think

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Speaker 1: the Congress is is very clearly been tilting in a

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Speaker 1: more hawkish direction on on Russia for for many years.

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Speaker 1: The President has been at odds with you know, folks

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Speaker 1: within his own White House and certainly within UM you know,

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Speaker 1: some grandees in in his own party, especially in the Senate,

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Speaker 1: on on Russia policy. But largely see that behind us,

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Speaker 1: largely the administration, you know, not talking about as Trump

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Speaker 1: did on the campaign trail, you know, cooperating with Russia

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Speaker 1: and Syria, you know, trying to get along better. Um.

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Speaker 1: You know, certainly after the Helsinki summit last summer. Um,

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Speaker 1: I all that talk has really been curtailed from the

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Speaker 1: White House. So I think that, um, it's a very

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Speaker 1: hot stance. We don't necessarily see that as you know,

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Speaker 1: yielding broad new sanctions against against Russia. But all you

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Speaker 1: need is a little bit of spark, because there's a

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Speaker 1: lot of tinder. One more theme, if you will, one

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Speaker 1: more question, uh, Todd, how did Attorney General bar do?

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Speaker 1: Besides his dashing escape from the press conference? I read

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Speaker 1: a number of things where it were, you know, maybe

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Speaker 1: harshly critical is not the right phrase, but it it

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Speaker 1: gets the color of it. Can you compare and trash

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Speaker 1: Bar with previous attorney generals or is it unique to

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Speaker 1: Attorney General Bar? I don't. I don't think it's unique.

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Speaker 1: And his his escape was uh. I think Mueller's escape

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Speaker 1: from the press after church services that uh yesterday was

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Speaker 1: also of note. Um. But you know, the the attorney

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Speaker 1: general is is usually seen as a law enforcement official

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Speaker 1: rather than you know, um, a political appointee. The reality

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Speaker 1: is that there's there's both aspects to the job. I mean,

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Speaker 1: the attorney general needs to, of course, I think, really

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Speaker 1: stay above the political fray, but previous attorneys general have

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Speaker 1: not have not always held to that standard. Um. You know,

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Speaker 1: you can think of you know, Clinton Bush Obama administration.

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Speaker 1: There's certainly ways in which the attorney general is a

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Speaker 1: law enforcement official, but also um, protecting the president and

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Speaker 1: protecting the president's agenda. So by that standard, I think

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Speaker 1: that um, I think that bar is sort of right

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Speaker 1: in the wheelhouse of of what you'd expect for for

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Speaker 1: the a g. Thank you so much, Todd Mariano. Would

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Speaker 1: you raise your group of the briefing on a Washingtonday.

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Speaker 1: Our next guest Liz Young from Melon Investment Management. She's

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Speaker 1: a director of market strategy. She joins us on the phone.

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Speaker 1: So Liz is Tom was saying, this has kind of

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Speaker 1: been a you know, tech has really been the star here.

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Speaker 1: We're having a lot of earnings coming up in the

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Speaker 1: next week or so. Where does the market go from here?

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Speaker 1: Given this tremendous start of the year we've had, we

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Speaker 1: have a lot of earnings coming up this week. I

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Speaker 1: think there's something like a hundred and fifty SMP components

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Speaker 1: reporting this week and twelve DOW components, So we'll have

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Speaker 1: a much better picture by the end of the week

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Speaker 1: about where the market is headed and what earning Stephen

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Speaker 1: is going to look like. And coming into this season,

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Speaker 1: we were expecting negative three point nine percent growth, and

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Speaker 1: I think I heard a stat today that if every

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Speaker 1: company in the SMP reports as expected, going forward will

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Speaker 1: be down one. Still still negative, but better than what

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Speaker 1: we expect. Did So, to answer your question about tech,

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Speaker 1: from the beginning of the year, that big V shaped

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Speaker 1: bounce in the early couple of months of the year,

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Speaker 1: everything was pretty broad based, and we really like to

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Speaker 1: see that. You like to see a broad based rally.

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Speaker 1: Now things are getting a little bit more narrow and

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Speaker 1: that's that's something that can be concerning and it's actually

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Speaker 1: concerning me right now because when you have more animal spirit,

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Speaker 1: I know you're not going to extrapolate on a log

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Speaker 1: chart Microsoft out per year, But how does a grizzled

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Speaker 1: pro like you extrapolate such excellence? What do you what

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Speaker 1: do you say to somebody who says I want to

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Speaker 1: be very microsofty. Do you just headget split it into

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Speaker 1: and say you're only going to make eleven percent per year?

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Speaker 1: I think you have to be careful when you see

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Speaker 1: stocks like that that are beating the broad market, beating

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Speaker 1: certain sectors of the market, because Keck isn't necessarily a

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Speaker 1: bell weather for economic health. And when you want to

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Speaker 1: look at something that's a bell weather for economic help,

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Speaker 1: you look at industrial, if you look at how financials

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Speaker 1: are doing, how margins are doing in those two specters.

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Speaker 1: And what you don't want to do is jump on

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Speaker 1: a bandwagon that's headed fast, faster than everything else, because

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Speaker 1: what what will happen And you mentioned this earlier in

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Speaker 1: the segment is exactly what we saw in eighteen Right.

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Speaker 1: You jump on that bandwagon as it's going up, something

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Speaker 1: like tech, and then it leaves you all the way

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Speaker 1: down when the market correct. So yes, I think you

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Speaker 1: do want to stay diversified. You don't want to be

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Speaker 1: a victim to to that fomo trade, and you want

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Speaker 1: to make sure that you have allocations to things that

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Speaker 1: aren't quite as beta heavy. So, Liz, how concerned are

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Speaker 1: you about US economic growth? You just kind of look

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Speaker 1: around the world and if we just did, the US

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Speaker 1: economy seems to be kind of a beacon of stability,

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Speaker 1: if you will, relative to what we're seeing in Europe

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Speaker 1: and you know, the slowing but still growing economy and China.

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Speaker 1: How concerned are you about US economic growth in the

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Speaker 1: back half of this year. We're really not concerned about

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Speaker 1: US economic growth at all. And what you've seen already

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Speaker 1: this year is that estimates have come up earlier this year.

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Speaker 1: We were we weren't concerned earlier this year either, but

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Speaker 1: now it's even less of a concern. And both economic

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Speaker 1: growth and earnings growth are already expected to be heavier

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Speaker 1: in the back end of the year, so they're supposed

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Speaker 1: to be stronger in the back end of the year.

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Speaker 1: So if we're already beating estimates and already estimating things

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Speaker 1: upward early in the year, I think that bodes well

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Speaker 1: for the remainder of How about valuations UM any concern there,

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Speaker 1: I know we've just to take a lot of the

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Speaker 1: broader markets. They're just trying to retrace the declines UH

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Speaker 1: that were in the fourth quarter. Any concerns about valuation here, well,

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Speaker 1: So evaluations it's a it's a tricky question because then

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Speaker 1: you get into the conversation of are we identifying asset

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Speaker 1: price bubbles? And you can argue all day long about

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Speaker 1: whether or not bubbles are a real thing and valuations

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Speaker 1: at this point, I think the concerning piece for investors

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Speaker 1: is that if you look at something like the CAPE,

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Speaker 1: the cyclically adjusted PE, what it does is it suggests

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Speaker 1: what returns will be going forward. Now that's a measure

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Speaker 1: of that isn't really effective over short term periods, but

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Speaker 1: over long term periods it has a little bit more

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Speaker 1: predictive power. And what it suggests right now is that

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Speaker 1: returns going forward are are pretty uninspiring. And the concern

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Speaker 1: I think also for investors is when you have a

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Speaker 1: portfolio that's showing stocks and bonds, with stocks at this

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Speaker 1: level and if there's a chance that they could correct,

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Speaker 1: let's say a regular correction of ten to fifteen, bond

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Speaker 1: yields are so low still that they can't rally enough

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Speaker 1: to offset set downside of stocks. I mean, well said,

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Speaker 1: but the issue is we had predictions of single digit performance.

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Speaker 1: And granted it's been a year here, a year there

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Speaker 1: where that's been true. But the answer is it's been

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Speaker 1: a double digit world amid single digit predictions. Let's review

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Speaker 1: why did that occur? Part of it this year, if

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Speaker 1: we just focused on the last three months or so,

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Speaker 1: has completely been monetary policy pivots and the expect ptation

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Speaker 1: that the set is going to back off if the

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Speaker 1: market corrects like it did in the fourth quarter. I

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Speaker 1: don't know that that is something that's going to persist

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Speaker 1: because as we moved through the year, and if we

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Speaker 1: go back to what I said earlier in the segment,

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Speaker 1: if we have a strong back end loaded year and

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Speaker 1: we have data that comes in and I said that

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Speaker 1: continues to stay we're data dependent, we actually see the

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Speaker 1: possibility for a hike later this year. I mean I

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Speaker 1: mentioned Microsoft for the eight point three gazillion shares and

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Speaker 1: four years ago and now seven point seven. From eight

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Speaker 1: point three down to seven point seven number of shares,

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Speaker 1: I mean share buy back really the reason strategists have

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Speaker 1: learned from single digit to double digit reality. I don't

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Speaker 1: think that that's the main driver, because the other thing

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Speaker 1: that you're seeing, I mean, even if there's share buy backs,

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Speaker 1: what we've seen already this year is is so much

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Speaker 1: money flowing into fixed income. But if that were the

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Speaker 1: main driver, if it were a supplied demand dynamic in

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Speaker 1: the equity market, we wouldn't be seeing so much money

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Speaker 1: going into fixed income. You would be seeing more money

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Speaker 1: going into equities, which would drive the prices up supply falls.

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Speaker 1: So I don't think that's the main component. So it's

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Speaker 1: given that you're forecasting or expecting a better growth in

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Speaker 1: the in the year and not too concerned about earnings,

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Speaker 1: and it looks like the FED remains on the sidelines,

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Speaker 1: what is the risk to the equity market outlook? Well, actually,

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Speaker 1: the FED remaining on the sidelines is what the equity

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Speaker 1: market is expecting right now. So we've moved from the

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Speaker 1: market pricing and a cut to the market really pricing

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Speaker 1: in a full pause for the remainder of So one

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Speaker 1: of the biggest risks is that the FED comes back

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Speaker 1: or starts to signal maybe halfway through the year or

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Speaker 1: maybe sometime in fall, that they would have to raise

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Speaker 1: rates again. And complacency up until that point is one

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Speaker 1: of the biggest risks. But you don't want to see

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Speaker 1: the market ignoring that. You also don't want to see

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Speaker 1: the market ignoring some of the international risks that we

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Speaker 1: think still remain. So breggsit has been extended and that

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Speaker 1: one kind of is one of the most boring risks

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Speaker 1: talk about at this point. But we still have to

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Speaker 1: make sure that China stimulus is effective. We've seen the

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Speaker 1: earliest indications that the trend is improving, as long as

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Speaker 1: that stays on a positive died past and I think

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Speaker 1: we're fine. But there's there's also some overhanging risks with Italy.

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Speaker 1: I mean, Italy remains in recession, Germany kind of flirting

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Speaker 1: with that boundary, and you have that doom loop scenario

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Speaker 1: that's possible with bank Anybody that says doom loop scenario

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Speaker 1: has to come back. Liz Young will join us for

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Speaker 1: another section here and we'll have a conversation on specific

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Speaker 1: sectors plus minus and that after a big picture of you,

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Speaker 1: Liz Young would be and why Melan investment. Right now,

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Speaker 1: we want to dive into one little theme, Anyboddy theme

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Speaker 1: of this economy, and we can do that because it's

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Speaker 1: what I get the most manl On. We do this

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Speaker 1: with Tom's Porcelli. Tom Porcelli with RBC Capital Markets. Tom,

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Speaker 1: I know you're too young to remember Sugar Sugar by

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Speaker 1: the Archies, but that was nineteen sixty nine. This fully

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Speaker 1: employed economy is not the fully employed economy of nineteen

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Speaker 1: sixty nine. I get more mail on this than anything else.

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Speaker 1: It drives listeners nuts when people like Tom Porcelli say

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Speaker 1: it's a fully employed economy, is it? I mean, I

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Speaker 1: don't know how you can make the argument that, uh,

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Speaker 1: where we're very far away from that. Um. So, you know,

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Speaker 1: even want to get into the splitting hair is part

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Speaker 1: of the conversation. Um, But I think it's really reasonable

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Speaker 1: to make the case that you're you're within the range

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Speaker 1: of it. Okay, but and I think that's again. But nevertheless,

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Speaker 1: I think that's an idea of that I think is

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Speaker 1: probably not very embraced. You know. It's funny, um, what

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Speaker 1: one leading into the segment, what one of your reporters said,

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Speaker 1: claims were a multi decade low, that it is not

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Speaker 1: it's it's it's fair on the face of it. But

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Speaker 1: I think you have to look at it in a

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Speaker 1: different way. You have to look at it, um in

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Speaker 1: labor force adjusted terms, right, And when you do that,

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Speaker 1: when you adjusted for the fact that the labor force

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Speaker 1: has grown so much, claims are actually sitting at all

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Speaker 1: time lows. And I think that's the right sort of

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Speaker 1: perspective on this, this broader labor market question. Then here then,

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Speaker 1: how do you respond to whatever the report was last

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Speaker 1: week of the percentage of Americans in fully defined contribution

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00:24:33,640 --> 00:24:37,240
Speaker 1: for O n K programs versus thirty years ago. I mean,

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00:24:37,640 --> 00:24:41,240
Speaker 1: are the fully employed Americans of two thousand and twenty

433
00:24:41,280 --> 00:24:44,320
Speaker 1: are they benefited like we were the last time around?

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Speaker 1: You know, look, and you know, I've talked about this

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Speaker 1: many times. I think there's always going to be people

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00:24:50,560 --> 00:24:53,520
Speaker 1: that are sort of um, that are left off, right,

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00:24:53,560 --> 00:24:56,240
Speaker 1: that that that that don't benefit as much that That's

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00:24:56,240 --> 00:24:59,200
Speaker 1: always true, um, you know, and and that's an unfortunate

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00:24:59,280 --> 00:25:01,720
Speaker 1: reality and not that's something that you know, politicians need

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Speaker 1: to sort of have a discussion about, which they clearly do. Um.

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Speaker 1: But as as a macro guy, right, as a macro economist,

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00:25:08,320 --> 00:25:11,200
Speaker 1: what I what I feel really comfortable saying is things

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00:25:11,240 --> 00:25:13,920
Speaker 1: continue to move along, you know, a really constructive way

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Speaker 1: from a U S perspective, whether it's from a labor perspective,

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00:25:16,600 --> 00:25:20,520
Speaker 1: a wage perspective, growth perspective, jobs, I mean, you know,

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Speaker 1: in in in almost any iteration, economic activity, um excuse

447
00:25:25,119 --> 00:25:29,040
Speaker 1: my voice, uh is performing really quite well at this

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00:25:29,119 --> 00:25:32,200
Speaker 1: juncture and that's not a very debatable point. So Tom,

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00:25:32,240 --> 00:25:34,240
Speaker 1: when we think about the you know, whether we're at

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00:25:34,240 --> 00:25:37,119
Speaker 1: a very near full employment wage growth in kind of

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Speaker 1: the low three percent range, are you surprised it's not

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00:25:39,040 --> 00:25:43,040
Speaker 1: even stronger than that? Um? You know. And again that

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Speaker 1: gets into like sort of the sort of the philosophical

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Speaker 1: view of things to some extent. Um. So you know,

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Speaker 1: can you make the argument that, um, you know, wages

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00:25:51,960 --> 00:25:55,240
Speaker 1: should be better. Um. Sure, we can always make that argument.

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Speaker 1: I mean I would even say I wish my wages

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Speaker 1: were better. UM. So you know that that's there's the

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Speaker 1: philosophy go part of it. Then there's the practical part

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00:26:01,840 --> 00:26:04,040
Speaker 1: of it, right, and you know, we can pinpoint a

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00:26:04,080 --> 00:26:07,200
Speaker 1: couple of things that sort of really drive home, um,

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00:26:07,320 --> 00:26:10,560
Speaker 1: why wages haven't really performed nearly as well as as

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00:26:10,640 --> 00:26:13,000
Speaker 1: as you might think. I mean you can point to, um,

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00:26:13,040 --> 00:26:16,080
Speaker 1: you know, sort of wage rigidity, right, the the percent

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00:26:16,280 --> 00:26:20,000
Speaker 1: of people that are experiencing zero UM wage games. I mean,

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00:26:20,000 --> 00:26:22,880
Speaker 1: that number is still pretty elevated, um. And we think

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00:26:22,880 --> 00:26:25,159
Speaker 1: that that is certainly an impediment at that number. And

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00:26:25,560 --> 00:26:27,080
Speaker 1: don't quote me on this, but I think that number

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00:26:27,080 --> 00:26:30,360
Speaker 1: is sort of roughly around or so um, and and

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00:26:30,359 --> 00:26:32,920
Speaker 1: and that's an elevated number. Now, the interesting thing about

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Speaker 1: that as you sort of think about how that evolves is,

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Speaker 1: you know, right now people are being rewarded for leaving

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Speaker 1: a job and taking another job uh with a higher

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00:26:43,560 --> 00:26:45,760
Speaker 1: wage rate um and so what tends to happen is,

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00:26:45,960 --> 00:26:49,000
Speaker 1: you know, they tend to lead people that stay at

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00:26:49,080 --> 00:26:53,840
Speaker 1: jobs UM where uh managers finally realized, hey, you know,

477
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Speaker 1: I gotta this person, we have to pay them a

478
00:26:55,880 --> 00:26:58,360
Speaker 1: little bit more um and and and that's a dynamic

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Speaker 1: that continues to play out in the United States. So

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Speaker 1: you know, maybe you chip away at that to some extipt,

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Speaker 1: but that's an absolute impediment that that is. Again, it's

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Speaker 1: not a debatable point. Let's come back to Tom Percelly,

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Speaker 1: RBC Compital Markets on the Greater American economy. Thanks for

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00:27:13,640 --> 00:27:18,000
Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to

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00:27:18,160 --> 00:27:23,919
Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.

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Speaker 1: I'm on Twitter at Tom Keane before the podcast. You

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Speaker 1: can always catch us worldwide. I'm Bloomberg Radio