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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: Michael Green joins you strategists, simplify asset manager. Mike, let's

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Speaker 2: start with you first principles. Why is the vixit twenty

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Speaker 2: one in a bull market?

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Speaker 3: Well, I mean, the simple answer is that we've been

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Speaker 3: realizing relatively high volatility, particularly amongst the megacap names, and

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Speaker 3: that is affecting the composition of the index. The other

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Speaker 3: thing is the vixit highs or VIC moving higher in

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Speaker 3: the face of the equity markets moving higher. Part of

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Speaker 3: that is simply a mechanical process, the reflection news strikes

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Speaker 3: being brought in, and so the width of the variant

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Speaker 3: swap actually in increases that mechanically can push it up.

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Speaker 3: About a third of the time when you're making new

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Speaker 3: all time highs, you're pushing higher on the vix So.

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Speaker 2: Do you assume that it will dampen it down and

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Speaker 2: come in under nineteen under seventeen at some point.

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Speaker 3: Yeah, that would be my core expectation. Unless exogenous events occur.

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Speaker 3: The VIX has spiked significantly, It was very primed for

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Speaker 3: that sensitivity. What we call the implied correlation, which is

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Speaker 3: the relationship of the index to those individual stocks, had

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Speaker 3: pressed it down to very very low levels. Most of

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Speaker 3: what we've seen in this pop has actually been that phenomenon.

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Speaker 3: The increased concern about some of the stocks is now

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Speaker 3: manifesting itself into is.

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Speaker 2: This a bigger broader issue?

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Speaker 3: That implied correlation rose in the past couple of weeks,

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Speaker 3: but we're not realizing those levels of volatility, and the

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Speaker 3: pressure is always there to sell all If the implied

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Speaker 3: are well above the realized, i'd expect to see that

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Speaker 3: pressure coming down.

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Speaker 4: What about in the credit space? That's what I was

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Speaker 4: reading all of the whole weekend because I was wondering

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Speaker 4: whether this is isolated or not.

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Speaker 5: You get conflicting answers.

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Speaker 4: Some are saying maybe this will be signs of more

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Speaker 4: further stress to come, but others are saying it's isolated.

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Speaker 5: What is your take on that?

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Speaker 3: My take on it is is that this is actually

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Speaker 3: indicative of a much broader problem we've been seeing bankruptcies

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Speaker 3: themselves have actually been elevated in the corporate space those

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Speaker 3: with assets above fifty million dollars. Bankruptcies for assets above

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Speaker 3: fifty million dollars have actually been surging in our levels

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Speaker 3: that are consistent with a much higher level of credit spreads.

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Speaker 3: The biggest story in credit spreads continues to be exactly

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Speaker 3: what you guys were referring earlier to from the sock

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Speaker 3: Gen observation.

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Speaker 2: People are piling money in.

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Speaker 3: There's not a lot of issues, particularly in high yield,

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Speaker 3: because they resist the higher yields. That means they're chasing

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Speaker 3: the secondary of securities and pressuring credit spreads.

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Speaker 2: Do you noticed Isabelle that he dresses up for Charles

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Speaker 2: Pain over at Fox Business, but he doesn't dress up

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Speaker 2: for us.

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Speaker 5: He did?

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Speaker 1: You know?

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Speaker 5: I saw that.

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Speaker 2: Slides in seven am in the morning. You were talking

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Speaker 2: to the wonderful Charlie Pain and you're going to talk

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Speaker 2: to us now about translate the private credit banks that's

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Speaker 2: out there. It's it's not a frenzy, but it's fermenting,

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Speaker 2: is how i'd put it. Discuss the fermenting of our fears. Well,

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Speaker 2: the biggest.

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Speaker 3: Thing to remember about private credit and private equity is

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Speaker 3: at the end of the day, these are just really

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Speaker 3: allocators in another form. Right, you are taking a private

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Speaker 3: credit firm, they are receiving an equity investment from their

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Speaker 3: end investors. They are then levering that with bank loans.

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Speaker 3: This comes through the banking system of what we call

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Speaker 3: the non depository financial institution lending, which is absolutely exploded.

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Speaker 3: So what you're really seeing is banks lending to non

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Speaker 3: banks where then lending to operating companies that are running

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Speaker 3: on a lege.

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Speaker 2: I got to interrupt. This is really important. What do

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Speaker 2: you perceive as a leverage ratio of private credit as

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Speaker 2: a lever up versus two thousand and sixty seven relative

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Speaker 2: to where the banks were in two thousand and six.

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Speaker 2: Two thousand and seven is well below that.

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Speaker 3: NDFI also captures hedge fund lending that in some situations,

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Speaker 3: particularly in the treasury basis, trade is running quite high.

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Speaker 3: So the overall leverage ratio in that sector is probably

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Speaker 3: in the ten to filaus.

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Speaker 2: It's pretty high. I say, Isabel, save me.

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Speaker 4: And so you said that this is a sign of

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Speaker 4: broader stress, So then will that mean we should be

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Speaker 4: on the lookout for further blowout?

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Speaker 5: And how cautious.

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Speaker 4: Will that make lenders because that will have ramifications for

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Speaker 4: the economy.

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Speaker 3: That's really the critical observation is about is the fact

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Speaker 3: that when you start to start asking questions, you become

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Speaker 3: less willing to extend credit. When you are less willing

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Speaker 3: to extend credit, you suddenly discover that people that desperately

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Speaker 3: needed that credit no longer have it.

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Speaker 2: The stresses begin to emerge. It's Warren Beffett's.

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Speaker 3: Expression, you find out who's naked when the tide is

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Speaker 3: going out right. It's the same underlying phenomenon where less

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Speaker 3: money available means it's easier to miss that payment.

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Speaker 4: Tom, can I ask about Vanguard? You wrote a paper

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Speaker 4: about Vanguard. It's called setting the record straight retraious questions

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Speaker 4: about passive investing, which is you know, an interest out

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Speaker 4: for everyone. I mean, yes, a big question always asking

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Speaker 4: the team is the S and P actually passive? Because

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Speaker 4: when they rebalance there's a committee in charge of it

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Speaker 4: which asked this question. Anyway, what do you make of that?

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Speaker 4: Why did you write the paper? What do you see

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Speaker 4: as Vanguard's central blind spot?

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Speaker 3: Well, I think the core issue is is that passive

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Speaker 3: investing is, first of all, not passive So the definition

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Speaker 3: of passive in the academic literature is somebody who never transacts.

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Speaker 2: That means you can't get in. It means you can't get.

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Speaker 3: Out, right, So they are not passive strategies, But it

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Speaker 3: turns out they are as systematic algorithmic strategies that simply say,

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Speaker 3: did you give me cash? If so, then by did

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Speaker 3: you ask for cash? If so, then sell. Any systematic

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Speaker 3: strategy can get crowded. And what we're experiencing now is

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Speaker 3: the impact of crowding into a strategy that most people

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Speaker 3: had presumed had nearly unlimited capacity.

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Speaker 4: You can see crowding about a lot of things like

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Speaker 4: AI or gold.

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Speaker 2: Now, well, what.

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Speaker 3: You actually are seeing is a little bit even more perverse,

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Speaker 3: so things like the rising concentration. This is actually the

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Speaker 3: subject of my first academic paper, which I will send

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Speaker 3: a copy over to you.

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Speaker 2: Yes, as soon as it's ready.

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Speaker 3: But what you actually have with passive investing because you

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Speaker 3: are allocating on the basis of market capitalization. That means

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Speaker 3: when a stock goes up, the next dollar in gets

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Speaker 3: a larger allocation. And the perverse thing that we are

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Speaker 3: now finding out is that markets are not nearly elastic

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Speaker 3: enough to take in the scale of the flows that

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Speaker 3: we're sending them from passive vehicles, It has a really

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Speaker 3: perverse impact. The largest stocks in many situations are the

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Speaker 3: least elastic stocks and are therefore actually being inflated more

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Speaker 3: than the rest of the market. That creates a feedback

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Speaker 3: loop that really plays through in the types of concentration

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Speaker 3: that we're seeing and unfortunately lowers the threshold.

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Speaker 2: This is what the paper is about.

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Speaker 3: It lowers the threshold at which we discover that passive

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Speaker 3: becomes a negative feature in the market.

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Speaker 2: Can you quantify a set of PE points where it's

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Speaker 2: overvalued because of passive internal dynamics. Walmart's at forty should

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Speaker 2: it be at thirty eight or thirty six or fifteen?

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Speaker 3: So this is one of the real challenges tom, because

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Speaker 3: if you think about what should be happening when companies

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Speaker 3: are experiencing extraordinary levels of profitability, we should expect those

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Speaker 3: profit margins to mean revert at some point in the future.

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Speaker 3: That would actually tell you the valuation should be even

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Speaker 3: lower than you would otherwise expect. I know this sounds

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Speaker 3: absolutely crazy, but my estimate for Walmart is probably somewhere

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Speaker 3: in the teens.

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Speaker 2: Oh that's I can't say I agree with that because

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Speaker 2: I'm not allowed to have an opinion, But there it is.

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Speaker 2: I got to squeeze a sentence to important. We have

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Speaker 2: a planum in Beijing. It's off the radar for the

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Speaker 2: American people, the American business community. I don't buy it

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Speaker 2: for a minute. And you watched China in this development

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Speaker 2: of a five year plan forward. What are you watching for?

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Speaker 3: Well, the single most important thing that's happening at this

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Speaker 3: planet is the relative lack of news about gi going

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Speaker 3: into it and the wholesale replacement of many of his

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Speaker 3: loyalists that we've seen in the million terry in the

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Speaker 3: past couple of weeks.

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Speaker 2: There's nine nine and well that's just in the last week.

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Speaker 3: I believe about seventeen that have been replaced over the

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Speaker 3: past couple of months. It's unclear whether this is driven

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Speaker 3: by g or whether this is a loss of power

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Speaker 3: for G.

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Speaker 2: Right.

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Speaker 3: We look at American politics, We're very familiar with the

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Speaker 3: travails between the Trump administration and the Democratic Party, et cetera.

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Speaker 3: Every other country has those as well, the simple reality

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Speaker 3: as they are largely concealed from us, but there very

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Speaker 3: much appears to be a significant power struggle underway in

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Speaker 3: China right now. What the implications of it, Whether these

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Speaker 3: generals are being replaced because they're saying we're not ready

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Speaker 3: to go for Taiwan and G is pushing for it

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Speaker 3: when he's trying to find somebody who says, yes, I'll

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Speaker 3: ah putin with the invasion of Ukraine, or whether this

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Speaker 3: is more a verdict.

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Speaker 2: On G himself. We just don't know yet. Brilliant synopsis.

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Speaker 2: Michael Green, thank us so much. Is simplify asset management

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Speaker 2: something we'll be watching through the week. Here are these

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Speaker 2: important meetings in China. Stay with us. More from Bloomberg's

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Speaker 2: Surveillance coming up after this.

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Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live

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Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

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Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or

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Speaker 1: watch us live on YouTube.

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Speaker 2: We now turn, incredibly importantly, turn to Henrietta Trees joining

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Speaker 2: us from Veda Partners here on the shutdown. Henriette, I

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Speaker 2: look at the Washington Post this morning and there is

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Speaker 2: not a single article on the shutdown. I'm sort of

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Speaker 2: shocked by that. Give us an update X number of

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Speaker 2: days in to the agony of our federal workers.

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Speaker 6: Yeah, that tells me pretty much everything you need to know.

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Speaker 6: There's not going to be any resolution this week. I

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Speaker 6: wouldn't even expect one next week. The White House is

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Speaker 6: not engaged. It's clear to me for my conversations with

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Speaker 6: Republicans on the House and set outside, that they're waiting

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Speaker 6: for the White House to decide what they want to

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Speaker 6: do here, whether there's anything that they want to offer

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Speaker 6: to Democrats to make anything shake loose.

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Speaker 5: They'll have their eleventh vote.

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Speaker 6: It will fail again, and we'll just keep repeating the

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Speaker 6: same thing, knocking our heads against the wall for a while.

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Speaker 2: What part of our federal government will we observe failing?

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Speaker 2: Don't tell me like national parks. Okay, there's twelve people

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Speaker 2: out there, I get it. But within the real day

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Speaker 2: to day of our listeners and viewers, what will fail

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Speaker 2: because of the shutdown?

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Speaker 6: Well, I think we already have seen the data releases fail,

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Speaker 6: so we're already in the thirds of that. The market's

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Speaker 6: already had to adapt to that. But the next big one,

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Speaker 6: as everybody always knows, is going through the airport and

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Speaker 6: trying to travel. It's very scary to be concerned about

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Speaker 6: whether or not you're going to be able to get through,

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Speaker 6: whether or not the flights are going to get shut down.

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Speaker 6: That's generally the main branch of AACK.

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Speaker 2: Okay, but Isabelle at the golf stream. So I had

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Speaker 2: to take thank you Delta for a great trip down

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Speaker 2: to Houston. And the answer is it was seamless andry.

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Speaker 2: There was no problem. Are there really problems with TSA

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Speaker 2: and air controllers?

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Speaker 6: Now they're starting to register upticks in folks calling in

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Speaker 6: sick from work, And the longer it goes, and as

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Speaker 6: you miss those pay cycles, you'll start to see more

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Speaker 6: of that. And I think that's really the story of

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Speaker 6: the shutdown. It's not one being silver bullet. It's a

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Speaker 6: compounding of a bunch of little things. No military pay,

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Speaker 6: no federal employee pay, that starts to weigh on members

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Speaker 6: and districts and starts to get painful. And we're going

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Speaker 6: to need to be shut down for probably another two

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Speaker 6: weeks before we get there.

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Speaker 4: You said that in your note that polling shows that

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Speaker 4: Republicans are bearing the blunt of the blame, but most

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Speaker 4: of their ads are actually targeted towards the Democrats. And

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Speaker 4: I've seen some of them. Where do you see the

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Speaker 4: breakdown and messaging is why isn't one party more effective

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Speaker 4: than the other when it comes to the blame game?

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Speaker 6: Yeah, I asked staff across the aisle both sides about

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Speaker 6: this last week on Capitol Hill, and Republicans are a

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Speaker 6: little bit split. There's some who think that none of

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Speaker 6: this matters. Voters are totally disengaged and therefore it's not

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Speaker 6: a big deal. The President can keep tweeting, you know,

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Speaker 6: AI images if he wants to and it doesn't move

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Speaker 6: the needle. Then there are others who are saying, look,

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Speaker 6: when I go back to my district in Alabama or wherever,

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Speaker 6: they see that the president controls the White House, Republicans

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Speaker 6: control the House. In the Senate, it's difficult to then

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Speaker 6: have to layer on yet, but we need sixty votes

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Speaker 6: in the Senate, you know. And then on the Democratic side,

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Speaker 6: they're just waiting it out. They think that they're winning

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Speaker 6: as well.

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Speaker 2: And had one final question here to get the week started.

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Speaker 2: It's October. How many people what's the level of Henrietta

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Speaker 2: Tre's radar on retirement of representatives and senators? Are we

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Speaker 2: going to see a wave of people retire.

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Speaker 6: We already have seen the announcements come there from all

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Speaker 6: over as well, so from farming states. I think that

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Speaker 6: the next round of elections, this midterm cycle is going

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Speaker 6: to be really telling. Everybody's sort of already in twenty

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Speaker 6: twenty eight, even on Capitol Hill, which is really fascinating.

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Speaker 2: You know.

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Speaker 6: The main story is Jadie Vance will be, you know,

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Speaker 6: deemed to be the onner op and the follower to

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Speaker 6: President Trump. Who are the Democrats going to pick?

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Speaker 5: We're focused on that.

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Speaker 6: A lot more in conversation than even the midterms. It's

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Speaker 6: kind of interesting to see that we just move ahead

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Speaker 6: to that.

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Speaker 2: Henrietta, Thank you so much. A Monday Brief with Henrietta

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Speaker 2: Tray's Beta partners stay with us. More from Bloomberg Surveillance

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Speaker 2: coming up after this.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

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Speaker 1: starting at seven am Eastern on Apple Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. You can also listen

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Speaker 1: live on Amazon Alexa from our flagship New York station,

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Speaker 1: Just say Alexa Play Bloomberg eleven thirty.

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Speaker 2: Stephen Angler joins us. He's with a standard charter bank

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Speaker 2: and it can't be a normal day. When you see

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Speaker 2: the headlines coming out of Argentina. Oh, I guess we

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Speaker 2: booked Yeller. Darius Dale was just in all ivy football

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Speaker 2: at Yale. Were you on the football team? Ill, Stephen Englander?

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Speaker 7: I had to turn them down because they would be

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Speaker 7: unfair if I joined the team.

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Speaker 2: It's great to go from darius Dale to Stephen Englander

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Speaker 2: of Yale. At University Argentina, we have the stereo Troy

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Speaker 2: uh stereotype Avia Pirona and that maybe we have a

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Speaker 2: Germanic history, and then coming out the prosperity of Argentina

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Speaker 2: fading away within standard charter. Where is Argentina right now?

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Speaker 2: How chaotic is it? Well?

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Speaker 7: You know I should preface anything I say by saying

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Speaker 7: I'm not an expert, as you know, I do G

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Speaker 7: ten mostly.

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Speaker 2: Well, it's G eleven. Okay, Well, you know, maybe let

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Speaker 2: me rephrase this. When you look at Argentina dealing with

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Speaker 2: the Secretary of Treasury and the President of the United States,

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Speaker 2: his swap agreement this morning is unusual, right.

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Speaker 7: You know, all of these types of agreements are unusual,

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Speaker 7: and you know ultimately they get decided, you know, in

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Speaker 7: the course of years by whether or not they're consistent

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Speaker 7: with the fundamentals, and what they're trying to achieve is,

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Speaker 7: you know, sort of makes sense. You know, does the

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Speaker 7: exchange rate make sense? Do the policies make sense? And

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Speaker 7: you know, aid like that can be a bridge. It's never,

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Speaker 7: it's never the entire edifice itself.

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Speaker 5: What about let's talk about the quality of the US data.

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Speaker 4: You've said that it's now a risk to the market

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Speaker 4: and the policy itself. How much is it actually distorting

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Speaker 4: the FED decision.

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Speaker 7: If it is, well, I think it distorted it pretty much.

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Speaker 7: I mean, if you compare the comments that the FED

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Speaker 7: was making about the labor market may June July into

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Speaker 7: August and what we now know about the labor market

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Speaker 7: and the fact that the data are still wrong in

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Speaker 7: the sense that they overstate the contribution of new firms consistently.

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Speaker 7: You know, I think it probably the more hawkish than

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Speaker 7: they ought to have been.

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Speaker 4: So the FED aal always sys their data dependent. If

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Speaker 4: the data is flawed, it was it that What does

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Speaker 4: that say about policy reliability then, especially around employment inflation readings.

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Speaker 2: I think there's risk there.

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Speaker 7: I think what ultimately the data are probably correct over

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Speaker 7: a period of say four quarters two years. But I

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Speaker 7: think in terms of making real term, real time policy

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Speaker 7: and in terms of market participants, you know, pricing assets,

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Speaker 7: the fact that there's so much volatility and error and

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Speaker 7: the short term numbers is a big deal.

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Speaker 2: Steve Dangler wrote is the standard Charter Bank and extended

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Speaker 2: conversation for Global Wall Street. This morning, we said good

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Speaker 2: Morning around the world on YouTube, in your office, at home,

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Speaker 2: even in your car. Don't look at the screen while

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Speaker 2: you're driving. Subscribe to Bloomberg podcasts Good Morning across the

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Speaker 2: nation ticularly ninety nine one FM in Washington, ninety two

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Speaker 2: nine FM in Boston, and Bloomberg eleventh three to zero.

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Speaker 2: Here in a perfect New York this morning, Steven, I

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Speaker 2: look at the great call of dollar weakness and flat

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Speaker 2: out it just hasn't happened. Then I look at cross rates,

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Speaker 2: which you are expert at, Euro Yen, euro swissy and

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Speaker 2: the rest. Which cross rate do you look at away

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Speaker 2: from a G ten analysis.

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Speaker 7: Well, lately we've been looking at things like euro Brazil

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Speaker 7: or sterling Brazil as a gauge of you know, Brazil

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Speaker 7: being a very risk on type of currency and sort

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Speaker 7: of a gauge of how kind of willing the market

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Speaker 7: is to take on risk and buy Carrie.

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Speaker 2: Europe a kind of a very mixed.

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Speaker 7: Bag and getting sort of slightly more negative mixed than

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Speaker 7: positive mixed.

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Speaker 2: So Zabelle to translate this into the real world, I

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Speaker 2: punch up EU BRL euro Brazil on the Bloomberg. I

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Speaker 2: take it back twenty years and there's just been a

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Speaker 2: massive Brazilian weakness and euro strength until now. And that's, folks,

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Speaker 2: just as a window into the Steve Englander world. Are

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Speaker 2: you suggesting go long Brazil versus more dominant economies?

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Speaker 7: You know, we we have some sympathy to that view.

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Speaker 7: I mean we you know, you look at some of

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Speaker 7: the risk negative events of the last week.

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Speaker 2: They are a couple of weeks.

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Speaker 7: They look as if they're likely to fade, and we

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Speaker 7: do think that the markets could well go back to

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Speaker 7: looking at Carrie and a, you know, as the risk

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Speaker 7: environment becomes more favorable.

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Speaker 4: I do see that this is a stunning chart. Actually,

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Speaker 4: it's almost like, I don't know, how do you draw it?

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Speaker 4: A day, I'm gonna liigne the EU RBRL go.

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Speaker 2: That's Steven Englander's world across right as well. Tell me

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Speaker 2: about Swiss Frank, I mean, for America. We perceive Swiss

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Speaker 2: Frank is strong, strong, strong, and they've got their own

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Speaker 2: unique issues. I mean, Nestley makes headlines with sixteen thousand

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Speaker 2: people out the door. But the flow of money into

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Speaker 2: Switzerland with dollars Swiss or EuroSwiss, how does that ultimately

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Speaker 2: play out?

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Speaker 7: You know, over time, I've changed my view on Swiss

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Speaker 7: because you know, I was always focused on overvaluation.

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Speaker 2: But you take a look at it.

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Speaker 7: They continue to have a trade surplus, so you know,

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Speaker 7: they and they tend to be in product segments where

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Speaker 7: it's not you know, there's some product differentiation, so the

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Speaker 7: you know, there's interlastic sleeve demand there, so prices go up,

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Speaker 7: man doesn't collapse. And at the same time, you know,

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Speaker 7: they have a surplus in their income account and at

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Speaker 7: the same time money wants to come into Switzerland. That's

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Speaker 7: a very powerful driver. What's your trade this morning? What

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Speaker 7: is the intelligent trade out three months?

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Speaker 2: Six months? For steven Ing?

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Speaker 7: Well, you know, we we like our euroview your weakness,

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Speaker 7: and we think and dollars think, we think it will

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Speaker 7: play out over that time horizon, and we think that

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Speaker 7: it's you know, we think that the market consensus is

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Speaker 7: still very dollar bearish.

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Speaker 4: You mentioned dollar strength, So if the US is overstating

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Speaker 4: it's labor growth, labor growth and market growth strength, then

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Speaker 4: is the US dollar miss price?

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Speaker 7: The dollar is mispriced, but not for that reason, I think,

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Speaker 7: I think what you know, what we're seeing. I mean,

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Speaker 7: if you think of it, the GDP now before the

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Speaker 7: shutdown was running three eight three nine, it looks like

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Speaker 7: labor input and correctly measured was probably down one percent.

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Speaker 7: So productivity is booming. Historically that's been a very dollar

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Speaker 7: positive development.

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Speaker 2: I mean, I look at the charter folks a bbd

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Speaker 2: x Y. This is the Bloomberg Dollar Index. Michael Rosenberg

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Speaker 2: and his team invent of this. It was immediately taken

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Speaker 2: up by the IMF. It's more than the d x

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Speaker 2: Y includes China, includes the world of standard charter bank

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Speaker 2: as well. I see one about two bouts three bouts

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Speaker 2: of catharsis move strong dollar? Yes? Yes, yes, yes, yes, reversal.

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Speaker 2: I mean, does that indicate is there a catharsis out there?

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Speaker 2: When the dollar strengthens, that does indicate out there somewhere

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Speaker 2: is dollar weakness.

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Speaker 7: You know, you can look at it both ways. I

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Speaker 7: look at it the other way. I think that exporders

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Speaker 7: to the US. They have less competitive currencies because of appreciation,

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Speaker 7: and then they're facing the tariffs. I think it's hard

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Speaker 7: for the you know, for them to swallow for their appreciation.

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Speaker 7: And you know, i'd say that the you know potential,

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Speaker 7: you know what we're seeing in terms of productivity, productivity

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Speaker 7: potential in the US that's emerging very late in the cycle.

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Speaker 7: We're just not seeing anywhere else. So and that typically

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Speaker 7: generates it's a capital inflow, which ends up being you know,

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Speaker 7: dollar positive or positive for any currency, you're going to

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Speaker 7: get that inflow.

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Speaker 2: Steven Angler are an extensive conversation this morning, Isabelle in time,

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Speaker 2: can we welcome all of you around the world and

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Speaker 2: particularly the standard charter world.

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Speaker 4: Isabelle, you've highlighted that employment population ratio is a more

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Speaker 4: reliable labor metric than headline unemployment.

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Speaker 5: Can you talk to us about why.

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Speaker 7: Well, because the unemployment trade is affected by labor force participation.

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Speaker 7: So if you're losing jobs but you know people are

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Speaker 7: dropping out of the labor force, it doesn't show up,

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Speaker 7: or if you're it doesn't show up as much. But

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Speaker 7: normally you'd say that, well, you know, say people want

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Speaker 7: to work and so if the employment of population goes down,

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Speaker 7: that tells you that there are fewer people working.

442
00:22:49,040 --> 00:22:52,800
Speaker 4: So if all these data are inaccurate, what could Affed

443
00:22:53,040 --> 00:22:56,000
Speaker 4: or the BLS do realistically and urgently to shore up

444
00:22:56,080 --> 00:22:59,840
Speaker 4: data credibility without, of course, massive new funding, given that

445
00:22:59,840 --> 00:23:02,200
Speaker 4: the government is on day twenty of the shutdown.

446
00:23:02,320 --> 00:23:04,440
Speaker 7: Well, I'm not sure they need that much funding. I

447
00:23:04,880 --> 00:23:08,760
Speaker 7: think that the issues are more conceptual. I mean things

448
00:23:08,920 --> 00:23:12,720
Speaker 7: that would be easy, like counting gig workers. Because there's

449
00:23:12,760 --> 00:23:16,560
Speaker 7: so few big gig firms you can they're now not

450
00:23:16,960 --> 00:23:19,639
Speaker 7: picked up at all or virtually not at all. In NFP,

451
00:23:21,000 --> 00:23:23,119
Speaker 7: you know so much RELI there's so much reliance on

452
00:23:23,160 --> 00:23:26,560
Speaker 7: the unemployment rate. But it's a tiny sample compared to

453
00:23:27,080 --> 00:23:30,920
Speaker 7: you know how much policy and markets rely on it.

454
00:23:32,160 --> 00:23:36,120
Speaker 7: The Jewelt's number, again, very imperfect sample. I wouldn't rely

455
00:23:36,200 --> 00:23:36,879
Speaker 7: on that at all.

456
00:23:36,920 --> 00:23:40,320
Speaker 4: But doesn't that require staff though, and that's their main complaint.

457
00:23:41,040 --> 00:23:45,200
Speaker 7: Well, look, I'm not an expert on the inner workings

458
00:23:45,240 --> 00:23:48,840
Speaker 7: of BLS, but I'd say that what it requires. And

459
00:23:48,960 --> 00:23:52,439
Speaker 7: just as an example, the data show that the native

460
00:23:52,440 --> 00:23:55,000
Speaker 7: born population of the US increased two and a half

461
00:23:55,119 --> 00:24:00,240
Speaker 7: million between March and August. Well, that didn't happen because

462
00:24:00,200 --> 00:24:03,080
Speaker 7: there there wasn't a surge of birth sixteen years ago

463
00:24:03,560 --> 00:24:06,720
Speaker 7: to you know that would be reflected now. But there's

464
00:24:06,720 --> 00:24:08,760
Speaker 7: no comment on that, sort of saying, look, you got

465
00:24:08,760 --> 00:24:11,640
Speaker 7: to be careful about this that it may reflect well

466
00:24:11,680 --> 00:24:13,200
Speaker 7: some imperfections in the sample.

467
00:24:13,400 --> 00:24:15,800
Speaker 2: O come on and it's a great work of anaalong

468
00:24:16,200 --> 00:24:17,639
Speaker 2: to help us out. I want to get back in

469
00:24:17,720 --> 00:24:19,560
Speaker 2: the time we've got left, Steve Angler. I want to

470
00:24:19,560 --> 00:24:24,159
Speaker 2: get back to your arch call of euro weakness, and

471
00:24:24,440 --> 00:24:29,200
Speaker 2: it's Robert Schiller at Yale, Marty Feldstein, years and years,

472
00:24:29,280 --> 00:24:33,520
Speaker 2: just a challenged euro experiment. We've got We're looking at

473
00:24:33,520 --> 00:24:37,400
Speaker 2: the six Republic of France, depending on how that works out,

474
00:24:37,840 --> 00:24:41,959
Speaker 2: London and complete chaos in the United Kingdom is well,

475
00:24:43,119 --> 00:24:47,960
Speaker 2: how does that push euro weaker? If there's geopolitical upset

476
00:24:48,240 --> 00:24:50,840
Speaker 2: in euro give us a target there? Are you framing

477
00:24:51,320 --> 00:24:53,560
Speaker 2: one fifteen or do you go back to parody?

478
00:24:53,800 --> 00:24:56,040
Speaker 7: So we have one twelve by the middle of next

479
00:24:56,119 --> 00:24:58,960
Speaker 7: year and we basically keep it there. I think what

480
00:24:59,040 --> 00:25:04,199
Speaker 7: the market is under estimating is the ECB's willingness to

481
00:25:04,240 --> 00:25:07,720
Speaker 7: cut raids. The market basically has things flat. We have

482
00:25:07,800 --> 00:25:11,199
Speaker 7: another cut in in Q four coming or the end

483
00:25:11,200 --> 00:25:14,800
Speaker 7: of Q four. But I think the ECB is likely

484
00:25:14,840 --> 00:25:18,199
Speaker 7: to be much more reactive to weak data than the

485
00:25:18,240 --> 00:25:18,840
Speaker 7: market is now.

486
00:25:18,960 --> 00:25:21,880
Speaker 2: Is that because they enjoy a lower nominal GDP set,

487
00:25:21,920 --> 00:25:25,280
Speaker 2: they just simply have room to move without upsetting the system.

488
00:25:25,680 --> 00:25:29,600
Speaker 7: You know, inflation isn't the problem, but the right wing

489
00:25:29,640 --> 00:25:31,720
Speaker 7: politics are a problem, and I think that they in

490
00:25:31,800 --> 00:25:34,720
Speaker 7: so far as they could push back against it with

491
00:25:34,800 --> 00:25:36,080
Speaker 7: stronger growth, they're going to do it.

492
00:25:36,200 --> 00:25:38,280
Speaker 2: But we have right wing politics in America, and I

493
00:25:38,320 --> 00:25:40,639
Speaker 2: believe we have a financial boom going on.

494
00:25:41,880 --> 00:25:45,439
Speaker 7: I think right now the ECB seeds that, well, a,

495
00:25:45,600 --> 00:25:48,160
Speaker 7: there's not a financial boom in Europe, but I think

496
00:25:48,200 --> 00:25:51,560
Speaker 7: the ECB seeds itself is part of the you know,

497
00:25:51,600 --> 00:25:56,159
Speaker 7: European political framework, and you know they, you know, the

498
00:25:56,400 --> 00:25:59,919
Speaker 7: sort of center of gravity in Europe is for more unification,

499
00:26:00,160 --> 00:26:02,040
Speaker 7: not the sort of right wing agenda, and I think

500
00:26:02,040 --> 00:26:06,480
Speaker 7: that they're trying to make it easier to stay at

501
00:26:06,480 --> 00:26:06,919
Speaker 7: the center.

502
00:26:07,440 --> 00:26:11,240
Speaker 4: So the Eurozone economy continues to underperform. Is the FX

503
00:26:11,280 --> 00:26:14,800
Speaker 4: market then reacting to current data or more forward looking

504
00:26:15,080 --> 00:26:17,320
Speaker 4: expectations in your view?

505
00:26:18,200 --> 00:26:22,360
Speaker 7: You know, I think the the FX market has been

506
00:26:22,680 --> 00:26:25,960
Speaker 7: very focused on what Donald Trump does, and you know

507
00:26:26,240 --> 00:26:28,800
Speaker 7: too much in the sense that even Trump laughs that

508
00:26:28,920 --> 00:26:32,439
Speaker 7: kind of you know, the seriousness, the literal and the

509
00:26:32,520 --> 00:26:35,760
Speaker 7: degree of literal interpretation they take of every policy move

510
00:26:35,840 --> 00:26:38,920
Speaker 7: that he makes, which he knows he's prepared to pull back.

511
00:26:38,960 --> 00:26:41,280
Speaker 2: I got to get this in your frame out right now,

512
00:26:41,320 --> 00:26:43,840
Speaker 2: your euro dollar call, just to give global Wall Street

513
00:26:43,880 --> 00:26:46,320
Speaker 2: scope and skill. Yeah, well, I.

514
00:26:46,240 --> 00:26:48,560
Speaker 7: Think we expect one fifteen at the end of this year,

515
00:26:48,600 --> 00:26:50,240
Speaker 7: when twelve at the middle of next year.

516
00:26:50,280 --> 00:26:50,840
Speaker 2: One twelve?

517
00:26:50,800 --> 00:26:51,040
Speaker 7: Really?

518
00:26:51,760 --> 00:26:55,640
Speaker 2: Okay? Wow? Is that upset that up? This has been wonderful.

519
00:26:55,640 --> 00:26:59,959
Speaker 2: Can you do this tomorrow at your Beckon call? Steven Agler,

520
00:27:00,119 --> 00:27:02,199
Speaker 2: thank you so much for the standard Charter Bank. I

521
00:27:02,240 --> 00:27:06,199
Speaker 2: just can't say enough, folks, his ability to synthesize in

522
00:27:07,040 --> 00:27:10,440
Speaker 2: all of our global system. Stay with us. More from

523
00:27:10,480 --> 00:27:20,200
Speaker 2: Bloomberg Surveillance coming up after this.

524
00:27:20,200 --> 00:27:24,120
Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekday

525
00:27:24,160 --> 00:27:27,480
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

526
00:27:27,560 --> 00:27:30,560
Speaker 1: with the Bloomberg Business app. You can also listen live

527
00:27:30,600 --> 00:27:34,199
Speaker 1: on Amazon Alexa from our flagship New York station, Just

528
00:27:34,240 --> 00:27:37,040
Speaker 1: say Alexa play Bloomberg eleven thirty folks.

529
00:27:37,080 --> 00:27:38,680
Speaker 2: I don't do enough of this. I'm not going to

530
00:27:38,760 --> 00:27:41,960
Speaker 2: mince words. It's the cottage industry up in Boston, the

531
00:27:42,119 --> 00:27:46,119
Speaker 2: leadership up in Boston within the financial business of trying

532
00:27:46,160 --> 00:27:48,280
Speaker 2: to figure out retirement. This goes back well to World

533
00:27:48,359 --> 00:27:53,120
Speaker 2: War Two, back to Arisa of nineteen seventy four as well.

534
00:27:53,280 --> 00:27:57,479
Speaker 2: It's work at Boston College and their retirement work, and

535
00:27:57,640 --> 00:28:01,520
Speaker 2: also at the Massachusetts Institute of Technology. They have the

536
00:28:01,760 --> 00:28:04,480
Speaker 2: mit Age Lab. They're the ones that send me a

537
00:28:04,480 --> 00:28:07,359
Speaker 2: note every year and say you're one year older, joining

538
00:28:07,400 --> 00:28:11,639
Speaker 2: us now driving our study of retirement, Wayne Park. He

539
00:28:11,800 --> 00:28:15,960
Speaker 2: is with Manual Life, John Hancock Retirement. We're thrilled he

540
00:28:15,960 --> 00:28:19,000
Speaker 2: could join us. This morning, Wayne, you got out a

541
00:28:19,040 --> 00:28:22,040
Speaker 2: new report and it's the fact John Tucker and I

542
00:28:22,119 --> 00:28:24,880
Speaker 2: are going to be working here till we're ninety two.

543
00:28:25,440 --> 00:28:29,199
Speaker 2: How bad is our longevity? Longevity? How much do we

544
00:28:29,320 --> 00:28:32,280
Speaker 2: not understand how long we're going to live?

545
00:28:34,119 --> 00:28:35,959
Speaker 8: Good morning, Tom, and thank you for having me and

546
00:28:36,119 --> 00:28:38,680
Speaker 8: I think you'd be working till ninety regardless of this report.

547
00:28:39,000 --> 00:28:42,920
Speaker 8: Having listening to you for a while. So the study

548
00:28:43,000 --> 00:28:46,040
Speaker 8: is a new one. As you mentioned, with mit Age Lab,

549
00:28:46,080 --> 00:28:48,840
Speaker 8: we wanted to take a more holistic look at retirement

550
00:28:48,880 --> 00:28:53,880
Speaker 8: beyond just finance and health. So it's the LPI stands

551
00:28:53,920 --> 00:28:57,440
Speaker 8: for Longevity Preparedness Index, and are we really prepared not

552
00:28:57,560 --> 00:29:00,920
Speaker 8: just to retire as a singular act, but prepared to

553
00:29:00,960 --> 00:29:03,720
Speaker 8: live very long life, which is really good news, But

554
00:29:04,200 --> 00:29:05,560
Speaker 8: some of us are less prepared.

555
00:29:06,040 --> 00:29:08,480
Speaker 2: I've always said there's a kink at age forty two.

556
00:29:08,600 --> 00:29:12,080
Speaker 2: We finally get serious about retirement. At forty two. Are

557
00:29:12,120 --> 00:29:17,160
Speaker 2: the younger kids learning from our lousy retirement history to

558
00:29:17,280 --> 00:29:22,600
Speaker 2: start saving earlier? Is Isabelle leading the way by saving earlier?

559
00:29:24,560 --> 00:29:27,000
Speaker 8: I would like to say yes, but I think they

560
00:29:27,040 --> 00:29:31,640
Speaker 8: trends continue. So the younger generations, just with the immediate needs,

561
00:29:31,800 --> 00:29:34,600
Speaker 8: whether that's student loan or just attention span, is not

562
00:29:34,960 --> 00:29:38,080
Speaker 8: where we see the most prepared. That still continues to

563
00:29:38,080 --> 00:29:41,880
Speaker 8: be just before retirement age pre retirees and retirees having

564
00:29:41,960 --> 00:29:44,160
Speaker 8: been gone through some of the thought process.

565
00:29:44,640 --> 00:29:45,840
Speaker 2: But there's some bright spots.

566
00:29:47,200 --> 00:29:51,200
Speaker 8: There are places where the American score highest is around

567
00:29:51,240 --> 00:29:54,320
Speaker 8: social connections. So great to stay connected, whether that's directly

568
00:29:54,360 --> 00:29:58,480
Speaker 8: in person, phone, social media, what have you, and community.

569
00:29:58,520 --> 00:30:01,640
Speaker 8: Are you at a place where you have access to facilities,

570
00:30:01,680 --> 00:30:06,040
Speaker 8: whether that's healthcare, great food sources, fresh produce and things

571
00:30:06,080 --> 00:30:09,160
Speaker 8: like that, and transportation, which is really important as you

572
00:30:09,200 --> 00:30:10,080
Speaker 8: get older as well.

573
00:30:10,160 --> 00:30:13,480
Speaker 5: Those are lifestyle things as it well, yeah, and how.

574
00:30:13,320 --> 00:30:15,840
Speaker 2: Can you afford it if you can't afford the groceries

575
00:30:15,960 --> 00:30:16,520
Speaker 2: is the heart of them.

576
00:30:16,600 --> 00:30:18,000
Speaker 5: I feel like they're all interconnected.

577
00:30:18,040 --> 00:30:20,520
Speaker 4: And Wayne has made the point that working with a

578
00:30:20,520 --> 00:30:25,120
Speaker 4: financial advisor who discusses longevity planning makes a meaningful difference.

579
00:30:25,160 --> 00:30:28,280
Speaker 4: But what exactly does good longevity planning look like? Because

580
00:30:28,320 --> 00:30:31,360
Speaker 4: as we've pointed out, it's not just I thought it

581
00:30:31,400 --> 00:30:33,520
Speaker 4: was just money to be friend, but it seems like

582
00:30:33,560 --> 00:30:33,840
Speaker 4: it's not.

583
00:30:35,920 --> 00:30:39,200
Speaker 8: Yeah, So our study shows that someone that actually has

584
00:30:39,240 --> 00:30:42,480
Speaker 8: a financial advisor, that's not surprising, is probably better prepared.

585
00:30:43,040 --> 00:30:46,920
Speaker 8: But if that financial advisor talks about longevity planning, they

586
00:30:46,960 --> 00:30:51,440
Speaker 8: score solid seven points higher than the US average. So

587
00:30:51,520 --> 00:30:54,480
Speaker 8: what are those things? And yeah, we typically talk about

588
00:30:54,480 --> 00:30:57,760
Speaker 8: do you have enough money saved? And sometimes health, but

589
00:30:57,800 --> 00:31:01,280
Speaker 8: there's actually six other domains like are you planning to

590
00:31:01,360 --> 00:31:05,360
Speaker 8: have daily activities so that you can get used to networking?

591
00:31:05,680 --> 00:31:09,920
Speaker 8: Is your home prepared so things like you have too

592
00:31:09,960 --> 00:31:12,360
Speaker 8: much stairs or even little things that you can do.

593
00:31:13,840 --> 00:31:15,520
Speaker 2: And you're not going to tell us to get rid

594
00:31:15,560 --> 00:31:19,600
Speaker 2: of the dogs, right, dogs? Yeah, because you trip over

595
00:31:19,640 --> 00:31:22,160
Speaker 2: the dogs. That's how everybody breaks her. Like the first

596
00:31:22,240 --> 00:31:25,120
Speaker 2: time you're saying we can keep the dogs right.

597
00:31:25,400 --> 00:31:28,080
Speaker 8: I think yeah, depends on the size of the house. Actually,

598
00:31:28,080 --> 00:31:30,120
Speaker 8: I was visiting a friend this weekend and I miss

599
00:31:30,480 --> 00:31:33,000
Speaker 8: stepped on the tiny little dog that was constantly on

600
00:31:33,040 --> 00:31:36,880
Speaker 8: my feet. But maybe larger dogs will be better. But

601
00:31:37,000 --> 00:31:42,160
Speaker 8: other things like like I mentioned the community, but place

602
00:31:42,160 --> 00:31:46,040
Speaker 8: where we scored the lowest as Americans was talking about

603
00:31:46,160 --> 00:31:48,560
Speaker 8: care because at one point, one way or the other,

604
00:31:48,680 --> 00:31:51,680
Speaker 8: we will either need care or provide care to somebody else.

605
00:31:52,280 --> 00:31:55,360
Speaker 8: So that's one area I think. As Thanksgiving is coming up,

606
00:31:55,400 --> 00:31:58,320
Speaker 8: maybe if you want to have an awkward, equally awkward

607
00:31:58,360 --> 00:32:01,880
Speaker 8: but more productive conversation with your family who is going

608
00:32:01,960 --> 00:32:05,920
Speaker 8: to take care of you depending on whatever the health

609
00:32:05,920 --> 00:32:07,440
Speaker 8: ailements may be later in life.

610
00:32:07,520 --> 00:32:10,240
Speaker 4: What's one thing every listener should do this week? I

611
00:32:10,280 --> 00:32:13,160
Speaker 4: guess to improve their longevity preparedness so that you know,

612
00:32:13,240 --> 00:32:16,320
Speaker 4: the people in the circular table could take note as

613
00:32:16,320 --> 00:32:16,800
Speaker 4: well as me.

614
00:32:18,240 --> 00:32:20,960
Speaker 8: Yeah, to end on a really hopefully positive note. The

615
00:32:21,000 --> 00:32:23,280
Speaker 8: good news is we're living longer, right, so we want

616
00:32:23,280 --> 00:32:25,520
Speaker 8: to make sure we prepare for that longer life. And

617
00:32:25,560 --> 00:32:29,200
Speaker 8: it's not just longer, but a better life. So simple

618
00:32:29,280 --> 00:32:33,000
Speaker 8: things like making sure you have your annual checkup, planning

619
00:32:33,080 --> 00:32:36,360
Speaker 8: to talk about care, finding some other things to do,

620
00:32:36,400 --> 00:32:38,400
Speaker 8: whether it's a hobby, to make sure that you have

621
00:32:38,480 --> 00:32:44,320
Speaker 8: daily activities, and then just thinking about preparing for a

622
00:32:44,360 --> 00:32:47,640
Speaker 8: life that's not going to just change into retirement as

623
00:32:47,680 --> 00:32:51,080
Speaker 8: a binary event at sixty five, but you'll have a longer,

624
00:32:51,120 --> 00:32:53,360
Speaker 8: hopefully better life, and you want to thrive in those

625
00:32:53,440 --> 00:32:55,880
Speaker 8: later years. So trying to end on a positive note,

626
00:32:56,200 --> 00:32:58,120
Speaker 8: what are those things that you could be thinking about

627
00:32:58,200 --> 00:33:00,280
Speaker 8: and then maybe have a conversation with your life ones.

628
00:33:00,320 --> 00:33:01,680
Speaker 8: I think that's a really good way to end it.

629
00:33:01,760 --> 00:33:03,920
Speaker 2: You gotta run Wing Park. Thank you so much. Please

630
00:33:03,960 --> 00:33:06,080
Speaker 2: come to our studios in New York when you're in

631
00:33:06,120 --> 00:33:08,360
Speaker 2: town with many in your life. Johnny Ncock and the

632
00:33:08,480 --> 00:33:13,480
Speaker 2: mit Age Lab an important study on We're living Forever.

633
00:33:14,840 --> 00:33:19,680
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

634
00:33:19,800 --> 00:33:24,080
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

635
00:33:24,200 --> 00:33:27,680
Speaker 1: seven to ten am Eastern on Bloomberg dot Com, the

636
00:33:27,760 --> 00:33:31,800
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

637
00:33:31,840 --> 00:33:35,200
Speaker 1: can also watch us live every weekday on YouTube and

638
00:33:35,400 --> 00:33:37,120
Speaker 1: always on the Bloomberg Terminal