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Speaker 1: Global business news twenty four hours a day. If Bloomberg

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Speaker 1: dot Com, the Radio plus Mobile Act and on your radio,

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Speaker 1: He's a Bloomberg Business Flash and I'm Karen Moscow. The

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Speaker 1: number of Americans applying for unemployment benefits rose last week

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Speaker 1: to a level that's consistent with steady improvement in the

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Speaker 1: labor market, while Jova's claims unexpectedly climbed by six thousand

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Speaker 1: to two hundred seventy eight thousand in the week that

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Speaker 1: ended February seven, The four week average dropped to the

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Speaker 1: lowest since the end of November, European stocks halting their

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Speaker 1: longest rally since October, oil falling from an eight week high,

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Speaker 1: and bonds in the region rising as investors await fresh

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Speaker 1: indications of the strength of the U S economy. We

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Speaker 1: checked the markets every fifteen minutes throughout the trading day

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Speaker 1: on Bloomberg SNP E Many futures are little changed to

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Speaker 1: lower down one and a half points, DOWI mini futures

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Speaker 1: down ten NAZDACI Many futures down less than a point.

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Speaker 1: The decks in Germany's down two tenths per cent. The

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Speaker 1: tenure treasury is down one thirty second. The yeld one

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Speaker 1: eight four percent yelled the two year point eight four percent.

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Speaker 1: Nimex Screwed Oil down six tenth percent or twenty cents

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Speaker 1: to thirty four or forty seven of barrel comics. Gold

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Speaker 1: is little changed a fifty cents at twelve forty two

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Speaker 1: thirty announced the euro at all our oh nine oh

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Speaker 1: four the N one thirteen point eight five. Kroger down

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Speaker 1: almost eight percent in early trading after a fourth quarter

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Speaker 1: comps store sales missed analysts estimates, and Herba Life is

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Speaker 1: down six percent. The nutrition company, under federal investigation for

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Speaker 1: allegations of fostering a pyramid scheme, said it overstated growth

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Speaker 1: of new customers and distributors last year because of database errors.

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Speaker 1: That's a Bloomberg business flash, Tom and Mike Karen, thanks

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Speaker 1: so much, greatly appreciated Bloomberg Surveillance folks worldwide. We say

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Speaker 1: good morning, Michael McKee and Tom Keane. It is eight

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Speaker 1: forty nine on Wall Street. The following is from Bloomberg View.

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Speaker 1: Opinions and commentary from Bloomberg columnists. I'm Jonathan Bernstein, a

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Speaker 1: columnist for Bloomberg View. Ben Carson has finally d opped

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Speaker 1: out of the Republican presidential race. Ted Cruz is presumed

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Speaker 1: most likely to benefit, since he and Carson do best

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Speaker 1: among Christian Conservatives. Although Carson supporters may not have been

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Speaker 1: a monolithic block. Still, small shifts and votes can make

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Speaker 1: a huge difference. In Tuesday's Arkansas primary, for example, Carson

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Speaker 1: received six percent of the vote, while Donald Trump beat

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Speaker 1: Cruise by two percentage points. If Carson hadn't been in

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Speaker 1: the race, would Cruise of one Perhaps true proportional allocation

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Speaker 1: is rare on the Republican side, winning even if I

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Speaker 1: just one vote is disproportionately rewarded. That system of winner

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Speaker 1: take more, winner take most, and winner take all delegate

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Speaker 1: distribution explains why Cruz and Marco Rubio could still easily

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Speaker 1: gather enough delegates to win the nomination, even though both

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Speaker 1: Rubio especially are off to slow starts. All one of

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Speaker 1: them has to do now is win consistently. A four

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Speaker 1: candidate field with Ben Carson out doesn't hand Cruise or

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Speaker 1: Rubio anything, but Carson's exit gives both of them a

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Speaker 1: slightly better fighting chance. I'm Jonathan Bernstein. For more view

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Speaker 1: please go to Bloomberg View dot com or view go

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Speaker 1: on the bloom Burg terminal. This has been Bloomberg View

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Speaker 1: and Bloomberg View commentaries can we heard hourly weekdays on

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Speaker 1: Bloomberg Radio. Jonathan Bernstein has been very strong recently. He's

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Speaker 1: written short, pungent, immediate notes out on Bloomberg View with

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Speaker 1: all that we've seen. I'm sure he'll do that. As

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Speaker 1: we moved to Michigan and onto Florida in less than

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Speaker 1: two weeks. When I write on that, Mike, less than

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Speaker 1: two weeks, I guess Tuesday and the Tuesday after that

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Speaker 1: is it's not It's not just Florida, it's Illinois and

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Speaker 1: a whole bunch of other states as well. Our next

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Speaker 1: guest was smart on Tuesday. It sounds like that old

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Speaker 1: what were the cure their song? Monday Tuesday Wednesday. Data

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Speaker 1: Data Stephen Stanley has been just outstanding on a centrist,

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Speaker 1: cautious tendency on American GDP. He works with Robert sinch

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Speaker 1: at AMers Pierpont and joins us. Now, Steve, you've been

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Speaker 1: dead on on a more muted yet okay economic growth.

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Speaker 1: Can you move the vector up? No? I don't think so.

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Speaker 1: I mean, and I think the productivity numbers this morning

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Speaker 1: speak to that as well. Even though there was a

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Speaker 1: small upward division the fourth quarter. Productivity for the year

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Speaker 1: last year was a half percent. So you just with

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Speaker 1: population growth slowing down and productivity not really doing much,

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Speaker 1: you're not going to get a ton of trend growth.

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Speaker 1: What what does that imply for the longer for for

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Speaker 1: the I want to say longer run, but for this year, well,

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Speaker 1: I think you know, from the fence perspective, it's it's

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Speaker 1: a mixed bag, right, because the economy doesn't look as strong.

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Speaker 1: But at the same time, if if potential is lower

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Speaker 1: than we thought it was, then we've probably made more

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Speaker 1: progress in terms of taking up slack than we thought.

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Speaker 1: And that's exactly what we're seeing in the economy now.

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Speaker 1: The labor markets have gotten pretty tight, even though growth

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Speaker 1: has been at a pace that we would have considered

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Speaker 1: very mediocre throughout this expansion. What's the than the forecast

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Speaker 1: for your forecast for the pace of expansion at this point, Well,

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Speaker 1: you know, we've been growing at her a little bit

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Speaker 1: two percent for several years, and I think we may

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Speaker 1: kick up a little bit from there in two thousand

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Speaker 1: and sixteen. I think there are a couple of things

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Speaker 1: that were drags last year that are not going to

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Speaker 1: be quite as as big a deal. I think once

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Speaker 1: we get past the early part of the year, this

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Speaker 1: inventory correction is probably going to be mostly behind us.

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Speaker 1: So I don't think inventories are going to continue to

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Speaker 1: drag on growth as they have over the last few quarters. Um.

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Speaker 1: And I think the other thing is we're probably getting

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Speaker 1: much closer to the bottom in terms of UH oil

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Speaker 1: and gas drilling activity. That's been a huge drag on

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Speaker 1: GDP over the last several quarters, and and certainly not

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Speaker 1: done yet. But I think, you know, certainly as the

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Speaker 1: year progressist will probably um see less of a drag

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Speaker 1: there as well. Is the markets in tune. We had

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Speaker 1: a little bit of a respipe here the last two

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Speaker 1: weeks or so. For you as an economist, when you

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Speaker 1: argue with Bob Station, throw coffee, upset him, is Bob

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Speaker 1: stinches world more in tune with Steven Stanley's world. Um,

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Speaker 1: we're coming into somewhat better alignment. I think if you

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Speaker 1: go back a month, the markets were thinking that the U.

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Speaker 1: S economy was absolutely positively headed right into a recession,

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Speaker 1: and you know, I think that was a gross over

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Speaker 1: reaction and people are kind of stepping back from the

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Speaker 1: precipice a little bit. On that UM and as a

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Speaker 1: result of that, UM FED expectations have moved up a

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Speaker 1: little bit and the markets are almost pricing one whole

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Speaker 1: for the entire year now, whereas there was a brief

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Speaker 1: period of time UM last month where there was basically

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Speaker 1: nothing baked into the cake. So we're moving in that direction.

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Speaker 1: Um My guesses there's still more to go to get

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Speaker 1: us into better alignment, but you know, we're at least

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Speaker 1: not quite as divergent as we were UM a month ago. Well.

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Speaker 1: It's interesting because there have been a lot of people

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Speaker 1: in the bond markets who have suggested that maybe the

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Speaker 1: markets aren't prepared for what the FED is going to

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Speaker 1: have to actually do. Are you in that camp? Yeah,

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Speaker 1: I mean that's a that's a theme UM and and

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Speaker 1: certainly have been very early on that, unfortunately. But I

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Speaker 1: think that's that's something that I've talked about for several years,

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Speaker 1: that once the FED finally did get going, they're likely

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Speaker 1: to have to move faster and buy more than the

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Speaker 1: markets are expecting. I think the first inkling of that

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Speaker 1: really was the was the inflation data for January, where

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Speaker 1: we got point three increases for both of the core measures. Um,

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Speaker 1: that's the one thing that could press the FED, I think,

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Speaker 1: into acting more aggressively than what they'd like to do

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Speaker 1: along that line. I'm glad you bring it up. If

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Speaker 1: there's twenty eight flavors of measuring inflation, Mike, I have

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Speaker 1: a tendency to the Cleveland CPI, which is core like

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Speaker 1: but with the adjustable outliers every month months a month,

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Speaker 1: a month, the mixed changes that's elevated above some of

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Speaker 1: the measures are the are the other measures catching up?

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Speaker 1: It's more elevated, more malleable measures. Well, I think you're

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Speaker 1: going to see that. Um, we we have the one

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Speaker 1: that's been the outlier to the downside is the one

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Speaker 1: that the FED, of course pays the most attention to,

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Speaker 1: the core PC deflator, and that one has moved in

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Speaker 1: the last three months from one point three to one

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Speaker 1: point seven. So we're starting to see a little bit

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Speaker 1: of convergence there. The gap between the CPI measures and

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Speaker 1: the and the PC deflator measures have been unusually large,

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Speaker 1: and I think those will close begin to close this year,

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Speaker 1: and more than likely closed by the PC deflator measures

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Speaker 1: creeping a little higher. Um, But you're right. I mean,

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Speaker 1: there's an analogous measure for the for the PC two

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Speaker 1: flatter day that comes out of the Dallas FED, and

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Speaker 1: that measure has been running, you know, twenty five basis

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Speaker 1: points are so higher than the than the core PC numbers,

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Speaker 1: so um and I think a lot of people of

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Speaker 1: the FEED have started to emphasize that alternative measures, so

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Speaker 1: I think they're they're understanding of it. I think what's

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Speaker 1: interesting is just at the point where it seems like

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Speaker 1: inflation might be ticking higher, all of a sudden, people

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Speaker 1: de fed are starting to, you know, play the shell

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Speaker 1: game again, and now we're going to talk about inflation next.

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Speaker 1: Infectations which stay fear may be moving lower. So there's

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Speaker 1: always a reason to be devilished, I guess and uh,

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Speaker 1: and we'll see how it goes. But if these inflation

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Speaker 1: numbers continue to be firmer, I think they're going to

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Speaker 1: be forced to uh to respond talk to us from

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Speaker 1: an economic point of view, leaving the FED out of it.

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Speaker 1: But how inflation expectations relate to inflation forecasts, Well, I

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Speaker 1: you know, I think what we've learned in economics over

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Speaker 1: the last twenty or thirty years is that inflation expectations

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Speaker 1: are very important. I still don't think economists have a

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Speaker 1: very good handle on how exactly inflation develops. But I

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Speaker 1: think one thing that people will agree on is that

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Speaker 1: UM one important input is what people expect inflation to be,

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Speaker 1: because there's a certain inertia there. People expect to percent inflation,

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Speaker 1: and you're kind of prespposed to get that in the

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Speaker 1: absence of some sort of a shock. Um. I think

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Speaker 1: for me, I don't think that the average person out

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Speaker 1: there is so sophisticated that they you know that they

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Speaker 1: can give you a ten basis point swing in their

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Speaker 1: invilace and expectations and it's very meaningful. So I take

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Speaker 1: the numbers more qualitatively than quantitatively. But but I certainly

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Speaker 1: think that when the FED runs policy as easy as

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Speaker 1: it's run for several years, that's one example where people

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Speaker 1: may be surprised, but the fact is that that should

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Speaker 1: leave a mark in terms of inflation over time. Steve,

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Speaker 1: if you have a chance to get into Manhattan sometime

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Speaker 1: in the next three or four years, can your people

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Speaker 1: talk to our people. We would love to get you

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Speaker 1: into the studio. We will work on that, Steve. We

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Speaker 1: could do Mike the Nirvana of a one hour Steve

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Speaker 1: Stanley Robert Sinch extravaganza. That would be extraordinary Steven Stanley

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Speaker 1: with Amber's Pierrepont having to put up with Bob Sinch's

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Speaker 1: discussions on end and the rest of it. I Mike,

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Speaker 1: I can't you know, somebody gets it right, and uh,

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Speaker 1: it's pretty pretty impressive how they took Morning in America

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Speaker 1: and brought it down a little bit futures and got

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Speaker 1: to one dolture. Just negative A bonus round, Mike, McKie

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Speaker 1: and I in New York City in one piece after

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Speaker 1: Super Tuesday, your bonus another hour of Bloomberg's surveillance