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Speaker 1: Broadcasting live to New York, Bloomberg eleven to Washington, d C,

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Speaker 1: bloom to Boston, Bloomberg dwelve honeers to San Francisco, Bloomberg

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Speaker 1: to the Country, Channel one, and around the globe the

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Speaker 1: Bloomberg Radio, Bust, Bloomberg dot Com. This is Bloomberg Surveillance.

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Speaker 1: The job's numbers are out, and it does look like

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Speaker 1: employers took a pause. In the month of April, one

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Speaker 1: hundred and sixty thousand jobs total created, a hundred and

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Speaker 1: seventy one thousand in the private sector, manufacturing payrolls up

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Speaker 1: by four thousand. The unemployment rate holds at five percent.

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Speaker 1: The only thing that matched estimates average hourly earnings up

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Speaker 1: three tenths now uh they say on an year over

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Speaker 1: year basis that pushes average hourly earnings up to two

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Speaker 1: and a half percent. Some numbers out of the lower

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Speaker 1: levels of the report, we can tell you that we

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Speaker 1: had a net vision of negative nineteen thousand. So the

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Speaker 1: month of February was revised lower, the month of March

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Speaker 1: revised lower, and it looks like at this point um

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Speaker 1: disappointing jobs report, and with the revision in Mike McKee

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Speaker 1: seven thousand to fifteen O two oh eight as we

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Speaker 1: print out the report for King Blast Economic Indicators, brought

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Speaker 1: to you by Commonwealth Financial Network. When it's time to

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Speaker 1: change the conversation, talk with a broker dealer r I

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Speaker 1: A that's ready to listen call eight six six four

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Speaker 1: six two three six three eight or visit Commonwealth dot

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Speaker 1: com to learn more. We can note that the civilian

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Speaker 1: labor force fell by three and sixty two thousand, not rise,

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Speaker 1: so this was one of those increases in the unemployment

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Speaker 1: right that was not necessarily. The U six came in fractually,

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Speaker 1: as did the yields. We've seen a real market move here.

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Speaker 1: The tenure yield was one point seven four. We're into

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Speaker 1: one point one in a good almost three basis points

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Speaker 1: on the tenure and Mike critically, the two year yield

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Speaker 1: point six nine six is in solid two basis points. Mike,

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Speaker 1: let me ask you and I'll let you go to

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Speaker 1: Jim Blastman. How June affecting is this report? Uh, it's

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Speaker 1: going to affect market psychology about June. It won't affect

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Speaker 1: the Fed as much because they don't have to make

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Speaker 1: a decision for another month and a half and they'll

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Speaker 1: wait but Jim, this certainly would suggest that there's not

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Speaker 1: pressure on them to move. Yeah, right now. I mean, um,

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Speaker 1: we got a couple of months ago, and I think

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Speaker 1: the to me, the most relevant, the most credible information

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Speaker 1: we're beginning is coming from jobless claims, which has been

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Speaker 1: holding very steady at low levels. So you know, any

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Speaker 1: one month in payrolls can be can be off base

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Speaker 1: a little bit. But I think you know, over time,

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Speaker 1: we're going to see more reports like this because we're

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Speaker 1: gonna see job grow slowing down because the labor market

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Speaker 1: is in slightly better shape than it was, pay trends

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Speaker 1: moving a little better, and so it may be difficult

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Speaker 1: for the market to process that. But if if we're

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Speaker 1: getting signals from the economy that we're getting there, um,

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Speaker 1: then you know, the questions rates at zero forever. Jim Glassman,

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Speaker 1: thank you so much for coming in again. Mike the

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Speaker 1: mathematics a hundred and sixty thousand, hundred and sixty with

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Speaker 1: a negative nineteen revision this morning, and we welcome now

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Speaker 1: Bloomberg Television worldwide with Bloomberg Radio. Welcome to all of you,

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Speaker 1: Michael McKee and Tom Keenan within the Jobs Report UH

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Speaker 1: today we have Jim Glasson with his villain Bowder with us, before,

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Speaker 1: Alan Krueger with us, and right now joining us, Bill

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Speaker 1: Gross of Jane's Capital. Mr. Gross, first of all, congratulations

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Speaker 1: on the philanthropy of selling the Swiss stamp collection that

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Speaker 1: you sold for gazillions of dollars. Why did you sell

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Speaker 1: your stand collections? Yeah? Why did you sell your stand collection? Franks? Well,

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Speaker 1: I've been selling it for nine years. You know, once

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Speaker 1: you're fill in all the spaces, Tom, it's time to

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Speaker 1: let some of it go. And so I've been letting

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Speaker 1: it go for charity for about the million over the

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Speaker 1: past nine years. Did you did you sell the stamp?

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Speaker 1: Did you sell the stamp of the upside down airplane?

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Speaker 1: You can see I'm a pro. Oh no, never never

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Speaker 1: sell the Jenny Jenny keep the invertedge. Did you sell

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Speaker 1: it because you felt that the economy is slowing down

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Speaker 1: enough you needed to raise cash. What's your reaction to

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Speaker 1: the jobs numbers? We were talking with Jim Glassman and

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Speaker 1: the suggestion is that, yeah, the Fed doesn't have to

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Speaker 1: decide now, but the market's going to decide. June is

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Speaker 1: out well at the moment. The last three minutes, the

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Speaker 1: market is deciding that June's out, and I think much

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Speaker 1: depends on the stock market, the FED, in other central banks,

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Speaker 1: but the FED, especially as the global central banker, is

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Speaker 1: uh fixated on the stock prices and equity prices and

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Speaker 1: K spreads into the extent that the stock market holds.

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Speaker 1: I'm not so sure that the June is out. I mean,

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Speaker 1: we've we've heard from Bullard, We've heard from stan Fisher,

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Speaker 1: We've heard from Williams in San Francisco, and they all

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Speaker 1: seem to get it. They all seem to know that,

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Speaker 1: you know, at some point they should be raising interest

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Speaker 1: rates in order to preserve a semblance of profitability for

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Speaker 1: savers and pension funds, insurance companies and the like. Yeah,

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Speaker 1: except you in your most recent economic letter to you

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Speaker 1: to your clients. So just we're gonna see q. E four.

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Speaker 1: So you don't seem convinced that the FED should be

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Speaker 1: raising rates or will be raising rates. Well, no, I

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Speaker 1: think they should raise rates in order to give savers

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Speaker 1: a break at the bank and savers a break at

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Speaker 1: their money markets. Um. But I think at the same

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Speaker 1: time that the FED probably has to support the market,

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Speaker 1: that is, the bond market. The long bond market via

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Speaker 1: you know, quantitative easing. You know, this has to be

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Speaker 1: a very slow, delicate process if they are going to

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Speaker 1: raise rates, and there can't be a lot of volatility,

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Speaker 1: and so I think, you know, que has to come

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Speaker 1: back at some point if only you know, to provide

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Speaker 1: funds for fiscal spending. And there's the thrust. You know,

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Speaker 1: when you talk about helicopter money in Milton Freeman and

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Speaker 1: Ben Bernanke and dropping cash from helicopters, what they're really

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Speaker 1: talking about is fiscal spending and pain for it with

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Speaker 1: quantitative easing, and that's not usually done, but it's more

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Speaker 1: reously done via the FED as opposed to the private market.

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Speaker 1: Now we need to move mention the markets right here,

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Speaker 1: right now, the two year yield was has moved dramatically

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Speaker 1: in three basis points. That's a huge move point six

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Speaker 1: eight six too on the two year Michael McKee I

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Speaker 1: just put out on Twitter and and we'll put out

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Speaker 1: for Bloomberg Radio. Plus that two year chart is well

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Speaker 1: over to standard deviations, lower yield than the trend that

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Speaker 1: the Fed is seen for a good seventeen eighteen months. Well,

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Speaker 1: let's ask Bill uh, you do see these knee jerk

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Speaker 1: reactions in the markets when you have a surprising data point,

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Speaker 1: is point six eight percent priced correctly for the two

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Speaker 1: year yield or is it going to come back? I

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Speaker 1: don't think so. I mean point six eight percent us

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Speaker 1: certainly at the low end of the range. If if

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Speaker 1: you speak to the last six to twelve months, and

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Speaker 1: if FED funds does increase by twenty five basis points

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Speaker 1: in June, then you're talking about a FED funds level

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Speaker 1: a short term rate higher than the two to your note,

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Speaker 1: And so I don't think it's appropriately priced. It is,

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Speaker 1: of course dependent upon what the Fed, doesn't they suggest

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Speaker 1: their data dependent if this is the data that they

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Speaker 1: used to uh support a lack of a hike than training.

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Speaker 1: But we also have same wages move up by point

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Speaker 1: three percent, and I think yelling more than jobs is

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Speaker 1: focused on wages and and at two point five they're

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Speaker 1: moving right, Bill Gross, let me bring in here now

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Speaker 1: the discussion of helicopter money that you wrote about so

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Speaker 1: importantly for Janic's Capital a few days ago. We've had

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Speaker 1: this discussion through the morning. Ben Bernanke talked about reflation

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Speaker 1: in Japan over ten years ago. Olivier Blanchard talked about

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Speaker 1: inflation at the I m F over five or six

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Speaker 1: years ago. Why is Bill Gross talking about inflation now?

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Speaker 1: Why can't we reflate? Why is this so hard? Well,

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Speaker 1: I think in Japan has been difficult. We know they're

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Speaker 1: demographic situation. It's much more severe than anywhere else in

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Speaker 1: the world. Aside from Taiwan. We don't have the same

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Speaker 1: aging problem which leads to less and less demand going forward,

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Speaker 1: and so um, you know in Japan's uh not a

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Speaker 1: typical feature dish. But what I think is necessary in

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Speaker 1: the United States is fiscal spending. And and to be fair,

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Speaker 1: the FED has talked about fiscal spending until they're blew

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Speaker 1: in the face, not only Bernanke but jead Yelling as well,

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Speaker 1: and uh, you know, respected economists such as Summers, etcetera, etcetera.

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Speaker 1: I think we need to spend money. What we spend

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Speaker 1: it on is the question how we elect our president

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Speaker 1: going forward as a question, but infrastructure, healthcare, and to

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Speaker 1: my way of thinking, um, you know, spending it on

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Speaker 1: a universal basic income, which is probably five to ten

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Speaker 1: years in the future. But in order to port an

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Speaker 1: increasing jobless element in the US society, we're seeing a

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Speaker 1: reaction in the dollar to the numbers out today, the

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Speaker 1: d X y index down now by a quarter of

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Speaker 1: a percent at nine fifty six. The yen is gaining,

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Speaker 1: the Euro is gaining. Uh. Are you concerned about the

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Speaker 1: US effect on the rest of the world, the markets

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Speaker 1: effect on the rest of the world, because the US

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Speaker 1: Central Bank hasn't done anything yet, but it does seem

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Speaker 1: to be impacting everyone else's economy. Yeah, it does. And

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Speaker 1: and and currencies are a big mover, Mike, because you know,

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Speaker 1: they're part of a hedge fund portfolio and value at risk.

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Speaker 1: And to the extent that you know hedge funds are

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Speaker 1: on the wrong side of the right side of a

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Speaker 1: significant movement in currency than they adjust other metrics such

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Speaker 1: as a bond duration, or risk spreads or equity percentage holdings.

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Speaker 1: And so once you get something moving in a highly

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Speaker 1: levered market, you see significant moves and other aspects even

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Speaker 1: low Uh. You know, the job's reports seems to be uh,

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Speaker 1: you know, a divergence from what was expected, but not

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Speaker 1: a significant one bill gross So this spill let me

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Speaker 1: squeeze in one more questionnaires, Well, how will you adjust

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Speaker 1: your bond portfolio off of what we've served today and

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Speaker 1: off of the lethargy of the American economy we've seen

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Speaker 1: in data over the last six months. Yeah, I think

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Speaker 1: what a bond investor has to do is recognize that

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Speaker 1: the Fed and other central banks will stay low for

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Speaker 1: a long time. That doesn't mean that interest rates who

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Speaker 1: won't move by two standard deviations on a particular day

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Speaker 1: for the two year. But what it does mean is

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Speaker 1: that you know, UH investors and savers will be repressed

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Speaker 1: and that interest rates will be low despite an increase

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Speaker 1: by the central bank going forward. Where's come back? Bill

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Speaker 1: Gross with this with jazz Capitalist Job's Day. This Job's

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Speaker 1: Day is market moving Futures Negative ten from New York

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Speaker 1: Bloomberg Surveillance. Bloomberg Surveillance Sports Report brought to you by

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Speaker 1: Landrover Parsippany the spring sales event happening now. Visit Landrover

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Speaker 1: Parsippani dot com. Landrover above and Beyond. The Mets lose,

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Speaker 1: the Yankees lose. Global business news twenty four hours a

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Speaker 1: day at Bloomberg dot Com, the Radio plus mobile lap

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Speaker 1: and good morning on John Tucker on This Job's Day.

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Speaker 1: It looks like disappointment to US index futures extending their losses.

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Speaker 1: This morning, the S and P five hundred trading at

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Speaker 1: its lowest in more than three weeks. The jobs reports

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Speaker 1: showed employers in April adding the fewest number of workers

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Speaker 1: in about a seven months. Labor Department report showing American

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Speaker 1: employers added one hundred sixty workers for the month of

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Speaker 1: April that actually trails the two hundred thousand job that

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Speaker 1: economists estimated, also lower than the revised two hundred eight

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Speaker 1: that was gained in March, the jobless rate remaining at

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Speaker 1: five percent, compared with a four point nine percent that

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Speaker 1: was projected by economist surveyed by Bloomberg Vestor scrutinizing the data.

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Speaker 1: Speculation over the timing of the next Federal Reserve interest

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Speaker 1: rate to increase intensifies. While the Fed Bank chiefs of

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Speaker 1: Atlanta and San Francisco signal this week the prospect of

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Speaker 1: tighter policy next month, traders are pricing it just a

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Speaker 1: ten percent chance of rape rise. Then, February seventeen is

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Speaker 1: now the first month with at least even odds for

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Speaker 1: a rate boost, and SMP futures right now twelve points lower.

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Speaker 1: You check the markets for you every fifteen minutes during

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Speaker 1: the trading day right here on Bloomberg, Tom and White,

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Speaker 1: John Tucker, thank you so much, greatly appreciate it. Again,

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Speaker 1: as John mentioned, futures negative thirteen, we will come out

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Speaker 1: of your Bloomberg Radio worldwide, Bloomberg Television worldwide. John Farrow

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Speaker 1: and the team over Bloomberg go looking at the knock

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Speaker 1: The knock on effects of his jobs report were Bill

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Speaker 1: Gross of Jane's Camp. Bill I spoke last night at

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Speaker 1: length with Steve Eisman a New Burger Berman. What a

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Speaker 1: wonderful event over at New Berger Berman. Of course he

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Speaker 1: was in the big short played by Steve Carrell uh

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Speaker 1: And and he was adamant as you are, Bill about

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Speaker 1: lower for longer, about this financial repression extending out if

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Speaker 1: bond prices go up, up and up and yields come

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Speaker 1: down HSBC suggesting a one point five zero percent full

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Speaker 1: faith and credit tenure yield, How do you position yourself

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Speaker 1: with a new realization of lower for longer. Well, it's

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Speaker 1: not that complicated. And if you take the position not

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Speaker 1: one and a half percent on the tenure necessarily, but

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Speaker 1: in arrange between one and a half and two, which

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Speaker 1: is something that I do for the next six to

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Speaker 1: twelve months. Then you know, what you realize is that

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Speaker 1: there's not much of a capital gain and a tenure

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Speaker 1: treasury or a capital loss, but there can be, you know,

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Speaker 1: a rather substantial yield if you position yourself in terms

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Speaker 1: of telling that range, in other words, selling options, you know,

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Speaker 1: call options and put options that can produce a return

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Speaker 1: of six to seven percent as opposed to one point

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Speaker 1: seven percent in the tenure. It's a little complicated, but

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Speaker 1: it's a key position and a key tenant for an

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Speaker 1: investors that believes that savers will continue to be repressed,

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Speaker 1: you know, for the next several years at least, and

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Speaker 1: that if central banks maintain a relatively tight range in

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Speaker 1: terms of yield, that the way to earn money in

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Speaker 1: the bond market is not by buying bonds and you know,

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Speaker 1: watching them go up a little and done a little bit.

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Speaker 1: By selling the volatility around it, you can earn three

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Speaker 1: to four times as much in terms of actual yield

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Speaker 1: by doing That is the risk, and that, of course,

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Speaker 1: you know, if the tenure went to one percent, or

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Speaker 1: if the tenure went to two and a half percent,

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Speaker 1: then selling options for a one to two month period

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Speaker 1: of time is not a good strategy, but so far

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Speaker 1: as worked very well for the Channis unconstrained. Well, we're

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Speaker 1: looking at the tips yields coming down quite a bit.

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Speaker 1: At tips now is at nine basis points and the

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Speaker 1: spreads collapse to one point six percent. Basically, bond market

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Speaker 1: sees no inflation out there, even though today we printed

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Speaker 1: two point five percent for a year over year wages. Yeah,

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Speaker 1: the bond market sees in terms of break evens, Mike,

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Speaker 1: about one point six or one point six percent almost

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Speaker 1: across the board. It is rather incredible. You know, the

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Speaker 1: next year, the next two, the next five thirty, you know,

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Speaker 1: all about one point six percent. And that's markedly different

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Speaker 1: obviously than what Janet Yellen and company want. It's different

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Speaker 1: than what Japan wants. It expresses an inability to inflate

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Speaker 1: going forward. And that's why, you know, I think at

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Speaker 1: some point that fiscal policy, as evidenced by helicopter money

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Speaker 1: is really a solution that the United States will come

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Speaker 1: back to. Let me explain helicopter money for a second.

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Speaker 1: What what the US has done in terms of its

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Speaker 1: four trillion dollar balance sheet the prior quee you know, basically,

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Speaker 1: the FED owns four trillion dollars worth the treasuries and mortgages.

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Speaker 1: What they do is they take the interest, they give

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Speaker 1: it right back to the government, and so in effect,

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Speaker 1: the Treasury is financing for free as long as this

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Speaker 1: Ponzi scheme keeps going, and I think it will and

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Speaker 1: and so you know, it's it's not a burden in

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Speaker 1: terms of debt to the private market. It's a burden

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Speaker 1: of debt in terms of the FED. And the Fed

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Speaker 1: and the Treasury are becoming joined in terms of you know,

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Speaker 1: fiscal and monetary policy. That's something that the FED doesn't like.

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Speaker 1: They like their independence, but I think going forward, you know,

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Speaker 1: they're just gonna have to put up with it, this

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Speaker 1: combination of fiscal and monetary policy that we see in Japan,

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Speaker 1: and we're going to see more and more in the

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Speaker 1: United States. You like it. But could that idea be

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Speaker 1: sold to the bond market without a very volatile reaction, Well,

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Speaker 1: I think so, as long as the Fed is moving

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Speaker 1: short term rates up a little bit again to uh,

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Speaker 1: you know, provide a semblance of money for savers and

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Speaker 1: in the short term portion of the yield curve, if

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Speaker 1: you can buy you know, tens and thirties. You know,

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Speaker 1: through the quantitative easing effect, you can contain basically the

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Speaker 1: volatility going forward, and you can if applied to fiscal policy,

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Speaker 1: you know, you can get the economy going again. On

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Speaker 1: One of the amazing things is is that you know,

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Speaker 1: since Nixon, we're all Keynesians now and then Reagan, we're

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Speaker 1: all supply siders now. You know, basically supply side remains

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Speaker 1: the moving force in terms of you know, fiscal policy

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Speaker 1: going forward. At the fiscal policies needs to flip back

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Speaker 1: and become Keynesian demand side policy because it's the aggregant

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Speaker 1: demand on a global basis that's lacking and and most

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Speaker 1: governments haven't figured that out yet, and certainly their populations

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Speaker 1: haven't figured it out. And then you've been so good,

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Speaker 1: Bill about bringing it over to the real economy and

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Speaker 1: economics speak, folks, the I S curve, and it really

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Speaker 1: hasn't budged, and we've got a moldy economy. One of

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Speaker 1: the outcomes of that has been negative interest rates. Bill Gross,

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Speaker 1: what have you learned about the use and the efficacy

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Speaker 1: of negative interest rates in the last couple of weeks.

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Speaker 1: Challenges for small mid German banks, challenges for Italian banking

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Speaker 1: three standard deviation moving euro dollar. How are negative rates

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Speaker 1: going to play out? Well, that they've been playing out

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Speaker 1: actually point out not only in banking, but in pension funds.

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Speaker 1: We see obviously situations in Puerto Rico and Detroit and

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Speaker 1: potentially in Chicago, and we blame those on individual access

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Speaker 1: in terms of spending. But basically, all savers and all

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Speaker 1: pension funds in the United States and elsewhere are in

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Speaker 1: a situation where if they can't earn six or seven percent,

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Speaker 1: and certainly if they can't earn a positive return on

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Speaker 1: their bonds, then their pension funds become more and more

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Speaker 1: unfunded and they dig a deeper and deeper hole. So

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Speaker 1: negative interest rates are not the way to go. They

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Speaker 1: are proving to be a disaster and certainly not an

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Speaker 1: elixir for economies. And on a global what will you

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Speaker 1: look for then to pull us away from a negative

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Speaker 1: interst rate policy prescription? What action are you are you

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Speaker 1: looking for? Where we say, okay, we're done with that model.

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Speaker 1: We got to move on to the next. Well, central

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Speaker 1: banks should give up on the Philip's curve, they should

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Speaker 1: give up on the tailor rule which posits a you know,

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Speaker 1: a two percent real rate of interest. Um, they should

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Speaker 1: start moving towards it as opposed to moving in the

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Speaker 1: opposite direction. And at the same time, yes, in order

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Speaker 1: to prevent a downdraft and equity markets and risk markets

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Speaker 1: and long term bond markets, they should support it via

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Speaker 1: quantitative easing. You know. To me, monetary policy has to

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Speaker 1: reverse course, and fiscal policy certainly has to get off

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Speaker 1: the dime. They have to start spending some money for jobs,

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Speaker 1: for UH, for infrastructure, for healthcare. There's a trillions of

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Speaker 1: dollars worth of needs that aren't being met because we're

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Speaker 1: still in a supply side, you know, deficit cutting type

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Speaker 1: of mode. Almost on a global basis. I have to

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Speaker 1: ask you, because you trade more bonds than anybody. Market

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Speaker 1: tells us over and over again that accommodation, fed policy

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Speaker 1: and new regulation means treasury liquidity is much lower and

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Speaker 1: it's difficult to trade. Treasury Department coming out with a

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Speaker 1: new gauge today, it's gonna argue completely the opposite that

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Speaker 1: liquidity is within historical norms. They're taking a look at

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Speaker 1: trading volume, bidass spreads, market depth, and they say the

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Speaker 1: market's got this wrong. How do you see it? Well,

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Speaker 1: anybody who looks at a screen, uh, you know, every

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Speaker 1: other second, and I've got six Bloomberg screens you know knows.

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Speaker 1: I mean, I think you're welcome. The long bond you know,

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Speaker 1: moves one or two texts. Uh, you know every other second.

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Speaker 1: You can't sneeze without you know, seeing a liquidity break

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Speaker 1: uh in today's market. And so it's not just the treasures,

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Speaker 1: but obviously in corporates and I yield to the extent

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Speaker 1: that bond investors. Whether there's uh other central banks selling

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Speaker 1: reserves or whether they're um, you know, funds on a

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Speaker 1: global basis, there's just not the liquidity to support it.

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Speaker 1: And have you ever spoken to Mr Trump about economics

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Speaker 1: in finance? No. I spoke with Mr Trump at a

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Speaker 1: Duke basketball game about ten years ago, and we're talking

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Speaker 1: about Carolina versus Duke, but nothing about the economics. I

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Speaker 1: hope to engage at some point in the future. Well,

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Speaker 1: we'd like to see that. Bill Gross, thank you so much.

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Speaker 1: I think a shout out there to the Trump people.

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Speaker 1: Maybe give Bill Gross a call Jans Capital. Well, maybe

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Speaker 1: Bill Gross might learn something at you. I'm not that

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Speaker 1: but we do make notice we did at the beginning

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Speaker 1: of the conversation. Mr Gross is without question the world

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Speaker 1: stamp collector and has been partitioning off. As he's mentioned

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Speaker 1: his efforts in stamp collecting for the good money to charity.

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Speaker 1: We should point yeah, much of it to the PIMCO Foundation,

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Speaker 1: which of course is important UH Sue and others founded

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Speaker 1: for a Pacific investment management company. Mr Gross is with

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Speaker 1: Janice Capital yields move shocking off a jobless report with

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Speaker 1: a negative revision one sixty less a negative nineteen. I

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Speaker 1: think that takes me down to a hundred forty nine

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Speaker 1: thousand is a round number. But we've come back a

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Speaker 1: little bit the yield from a point six nine to

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Speaker 1: point seven one on a two year the tenure yield

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Speaker 1: at one seven he goes back to one seventy three.

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Speaker 1: So a calumnists off of the shack and aw of

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Speaker 1: eight thirty. This morning, Michael McKee and Tom Key, we

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Speaker 1: continue the job's day discussion. I hope you stay with

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Speaker 1: us another hour of Bloomberg's surveillance