1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along 2 00:00:09,240 --> 00:00:13,080 Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Leye. We bring 3 00:00:13,119 --> 00:00:17,159 Speaker 1: you insight from the best and economics, finance, investment and 4 00:00:17,280 --> 00:00:23,280 Speaker 1: international relations. Find Bloomberg Surveillance and Apple Podcast, Suncloud, Bloomberg 5 00:00:23,360 --> 00:00:30,160 Speaker 1: dot Com and of course on the Bloomberg Termament from 6 00:00:30,160 --> 00:00:32,199 Speaker 1: New York City. For our audience worldwide and for our 7 00:00:32,240 --> 00:00:34,839 Speaker 1: audience on TV and on radio. On please to say 8 00:00:34,840 --> 00:00:36,760 Speaker 1: that joining us now is Marty Wolves, the U S 9 00:00:36,760 --> 00:00:39,760 Speaker 1: Secretary of Labor Secondary World's great to catch up, sir, 10 00:00:40,120 --> 00:00:42,280 Speaker 1: Let's just start with this payrolls and port this morning 11 00:00:42,360 --> 00:00:45,239 Speaker 1: and upside surprise. We need to see more numbers like this. 12 00:00:45,360 --> 00:00:48,200 Speaker 1: Do you have the confidence we will? I think we will. 13 00:00:48,240 --> 00:00:50,920 Speaker 1: You know, eight and fifty thousand job gain in one 14 00:00:51,000 --> 00:00:54,040 Speaker 1: month is a really good number, good solid number. We've 15 00:00:54,040 --> 00:00:58,480 Speaker 1: seen more people looking for work. We've seen growth in hospitality, leisure, restaurants. Uh, 16 00:00:58,520 --> 00:01:01,240 Speaker 1: you know so, so it shows at President Biden's economic 17 00:01:01,280 --> 00:01:04,400 Speaker 1: plan certainly is working. The American rescue planing, the investment 18 00:01:04,520 --> 00:01:07,360 Speaker 1: and in this vaccine program, and we just need to 19 00:01:07,360 --> 00:01:10,120 Speaker 1: continue to get people vaccinated and continue to build confidence 20 00:01:10,160 --> 00:01:13,160 Speaker 1: and get more people back to work some Republican governments, 21 00:01:13,200 --> 00:01:15,000 Speaker 1: in fact many of them. As you know, I don't 22 00:01:15,000 --> 00:01:16,800 Speaker 1: think this plant is work, and I think it's holding 23 00:01:16,840 --> 00:01:20,479 Speaker 1: back this labor market, or at least aspects sell psychoty. Wells, 24 00:01:20,520 --> 00:01:23,640 Speaker 1: what do you think happens when the additional unemployment insurance 25 00:01:23,680 --> 00:01:27,240 Speaker 1: ex spas in September. Well, I think what we're seeing 26 00:01:27,360 --> 00:01:29,880 Speaker 1: right now is in those states that have been threatened 27 00:01:29,880 --> 00:01:32,160 Speaker 1: to cut back downemployment insurance or where they have cut 28 00:01:32,200 --> 00:01:35,280 Speaker 1: back unemployment insurance, we're not seeing any additional people getting 29 00:01:35,280 --> 00:01:37,480 Speaker 1: going into the JAW market. The numbers don't dictate that, 30 00:01:37,880 --> 00:01:40,520 Speaker 1: but I do think by the time September comes around, 31 00:01:41,120 --> 00:01:46,360 Speaker 1: when the unemployment rate extra benefit expires, we're seeing it 32 00:01:46,440 --> 00:01:48,760 Speaker 1: now in the last five months since President bid has 33 00:01:48,760 --> 00:01:52,160 Speaker 1: been president, with his averaged six hundred thousand new jobs 34 00:01:52,520 --> 00:01:55,640 Speaker 1: per month, as we continue to move towards the end 35 00:01:55,680 --> 00:01:58,120 Speaker 1: of the pandemic or get towards it through the pandemic, 36 00:01:58,320 --> 00:02:00,480 Speaker 1: we're seeing more people going back to work, a confidence 37 00:02:00,560 --> 00:02:03,120 Speaker 1: with more people traveling. So I think it has nothing 38 00:02:03,160 --> 00:02:04,800 Speaker 1: to do with the three D dollars and everything to 39 00:02:04,880 --> 00:02:07,800 Speaker 1: do with President Biden's economic plan, government pass and the 40 00:02:07,840 --> 00:02:11,440 Speaker 1: Missouri said it's worse than the workforce issues we're facing. 41 00:02:11,880 --> 00:02:13,480 Speaker 1: Secudy wols I spoke to you last time and we 42 00:02:13,560 --> 00:02:16,400 Speaker 1: had a discussion about whether you talked to these Republican governors. 43 00:02:16,440 --> 00:02:19,880 Speaker 1: Have you done that. I haven't talked to any Republican governors, 44 00:02:19,880 --> 00:02:22,200 Speaker 1: but I've been talking to plenty of legislators and I've 45 00:02:22,200 --> 00:02:24,440 Speaker 1: been around the country. I was in Indiana last month, 46 00:02:24,720 --> 00:02:26,959 Speaker 1: uh last week, i should say, and that's one of 47 00:02:27,040 --> 00:02:28,919 Speaker 1: the states that cut back on the unemployment benefits. And 48 00:02:28,960 --> 00:02:30,639 Speaker 1: I talked to people on the grounds that happened to 49 00:02:30,680 --> 00:02:33,400 Speaker 1: be at a vaccination site, so there was a line 50 00:02:33,440 --> 00:02:36,120 Speaker 1: of people getting vaccinated. Uh. And there's lots of people 51 00:02:36,160 --> 00:02:37,760 Speaker 1: that want to go back to work, and some of 52 00:02:37,800 --> 00:02:40,000 Speaker 1: the folks I spoke to that we were challenge we're 53 00:02:40,040 --> 00:02:42,320 Speaker 1: getting back to work. One of the issues with education 54 00:02:42,360 --> 00:02:43,800 Speaker 1: and child kid They didn't have a place for their 55 00:02:43,880 --> 00:02:45,880 Speaker 1: kids to be, so they were home. So I am 56 00:02:45,960 --> 00:02:49,280 Speaker 1: traveling around the country to different states all across America, 57 00:02:49,320 --> 00:02:51,200 Speaker 1: and I'm talking to the people on the ground because 58 00:02:51,240 --> 00:02:53,320 Speaker 1: those are the folks that have the information on what 59 00:02:53,480 --> 00:02:55,760 Speaker 1: I want to hear. Somy Secondary Wolfs, do you think 60 00:02:55,800 --> 00:02:58,239 Speaker 1: this is very much a childcare issue, and we do 61 00:02:58,320 --> 00:03:01,720 Speaker 1: anticipate things like the female participation rate to really start 62 00:03:01,800 --> 00:03:03,880 Speaker 1: picking up in September. Is that the stress test for 63 00:03:03,919 --> 00:03:06,720 Speaker 1: what you're saying, Well, I think we'll see more people 64 00:03:06,760 --> 00:03:09,239 Speaker 1: participating in September because school is going back to work. 65 00:03:09,520 --> 00:03:11,680 Speaker 1: But but again this month, in the month of June, 66 00:03:11,960 --> 00:03:15,280 Speaker 1: we saw eight fifty American workers get back into the workforce. 67 00:03:15,600 --> 00:03:18,160 Speaker 1: That's a good solid number, and we want to continue 68 00:03:18,200 --> 00:03:20,240 Speaker 1: that momentum as we move forward here in the month 69 00:03:20,280 --> 00:03:23,280 Speaker 1: of July and August in September. So I'm hopeful as 70 00:03:23,320 --> 00:03:26,320 Speaker 1: we continue to to to push the Biden economic plan, 71 00:03:26,480 --> 00:03:28,760 Speaker 1: push the vaccines, we were going to see more and 72 00:03:28,800 --> 00:03:31,000 Speaker 1: more Americans back to work. And they fed a reserve 73 00:03:31,480 --> 00:03:33,680 Speaker 1: seems to believe that they can get the participation right 74 00:03:33,720 --> 00:03:36,680 Speaker 1: back to where it was, get the employment to population 75 00:03:36,800 --> 00:03:39,560 Speaker 1: ratio back to where it was, that perhaps there won't 76 00:03:39,600 --> 00:03:42,320 Speaker 1: be this kind of deep scarring the least two huge 77 00:03:42,320 --> 00:03:46,400 Speaker 1: structural change. Do you share that confidence? I mean, I 78 00:03:46,480 --> 00:03:48,440 Speaker 1: think we. I mean, I think it's important upon us 79 00:03:48,480 --> 00:03:50,480 Speaker 1: that to shoot him for that. We want we want 80 00:03:50,520 --> 00:03:53,320 Speaker 1: to get to the goals pre pandemic, and actually we 81 00:03:53,360 --> 00:03:54,600 Speaker 1: want to be better than that. We want to get 82 00:03:54,600 --> 00:03:57,440 Speaker 1: the unemployment rate and people back to work at at 83 00:03:57,480 --> 00:04:00,720 Speaker 1: higher numbers, lower unemployment rate, lower people looking for work 84 00:04:01,280 --> 00:04:03,480 Speaker 1: as we can continue out of this pandemic. So pls 85 00:04:03,480 --> 00:04:05,320 Speaker 1: you want to finish on something just a little bit personal, 86 00:04:05,560 --> 00:04:07,400 Speaker 1: if you'll allow me to. But I think many other 87 00:04:07,440 --> 00:04:10,360 Speaker 1: people are in my position. Some of my colleagues are 88 00:04:10,400 --> 00:04:12,800 Speaker 1: gonna go on a vacation over the next several weeks 89 00:04:12,840 --> 00:04:14,760 Speaker 1: and they'll go to Europe and they'll fly straight back 90 00:04:14,760 --> 00:04:18,720 Speaker 1: into the United States with no problems whatsoever. I myself 91 00:04:18,760 --> 00:04:20,800 Speaker 1: will miss my father's funeral on Tuesday and won't be 92 00:04:20,839 --> 00:04:22,920 Speaker 1: able to fly back at all because I have a 93 00:04:22,960 --> 00:04:25,520 Speaker 1: green card and I'm not an American resident, but I 94 00:04:25,640 --> 00:04:28,960 Speaker 1: do have a permit to work here. Are you guys 95 00:04:29,040 --> 00:04:32,240 Speaker 1: gonna do anything about this stuff? We have to? Uh? 96 00:04:32,480 --> 00:04:35,159 Speaker 1: You know, I first of all, I my my hack 97 00:04:35,200 --> 00:04:37,400 Speaker 1: goes out to you and your family for your loss. Um. 98 00:04:37,600 --> 00:04:40,440 Speaker 1: You know, my family is from Ireland originally. Uh. You know, 99 00:04:40,600 --> 00:04:42,400 Speaker 1: I've had plenty of people. I know plenty of people 100 00:04:42,440 --> 00:04:44,440 Speaker 1: in America that can't go home. I know a young 101 00:04:44,520 --> 00:04:46,200 Speaker 1: man that his father did a few years ago in 102 00:04:46,279 --> 00:04:48,440 Speaker 1: the village my mother was from. He couldn't go home 103 00:04:48,480 --> 00:04:50,599 Speaker 1: to his father's funeral. He didn't have a green card. Uh, 104 00:04:50,760 --> 00:04:53,520 Speaker 1: this is something that that that we we need to 105 00:04:53,600 --> 00:04:57,040 Speaker 1: address in Congress. Congress needs to take up an immigration bill. 106 00:04:57,279 --> 00:04:58,840 Speaker 1: They need to look at this. They need to take 107 00:04:58,880 --> 00:05:01,840 Speaker 1: care of these issues. It's devastating too many families. We 108 00:05:01,920 --> 00:05:04,919 Speaker 1: have good people in this country that are undocumented. They 109 00:05:04,920 --> 00:05:08,440 Speaker 1: are working hard, raising a family, their children are American citizens, 110 00:05:08,680 --> 00:05:11,440 Speaker 1: and they can't get a pathway this citizenship. That's something 111 00:05:11,520 --> 00:05:13,400 Speaker 1: that has to change. And secondly, you've taken it to 112 00:05:13,480 --> 00:05:15,560 Speaker 1: Congress and you've taken it to a different subject. I'm 113 00:05:15,560 --> 00:05:19,200 Speaker 1: talking about travel restrictions. You're in charge of them. The 114 00:05:19,240 --> 00:05:24,000 Speaker 1: administration is in charge of them. The delta, the delta 115 00:05:24,120 --> 00:05:27,440 Speaker 1: variant does not know identify whether someone has a green card, 116 00:05:27,800 --> 00:05:29,400 Speaker 1: or if someone's a tourist, or if they have a 117 00:05:29,480 --> 00:05:32,680 Speaker 1: work permit. These travel restrictions to so many people, so 118 00:05:32,760 --> 00:05:35,599 Speaker 1: many people that still work in this country, don't make sense. 119 00:05:36,000 --> 00:05:37,560 Speaker 1: And I think we're all trying to work out when 120 00:05:37,560 --> 00:05:40,600 Speaker 1: they're going to be fixed. I misunderstood you said you 121 00:05:40,640 --> 00:05:42,200 Speaker 1: said you couldn't go back because you didn't have the 122 00:05:42,279 --> 00:05:44,320 Speaker 1: ability to fly back, because you don't have a green 123 00:05:44,360 --> 00:05:46,360 Speaker 1: card problem. I can't fly back because I don't have 124 00:05:46,360 --> 00:05:48,480 Speaker 1: a green card and your travel restrictions prevent me from 125 00:05:48,520 --> 00:05:51,200 Speaker 1: doing so. Okay, I'm sorry. I apologize. I didn't know that. 126 00:05:51,760 --> 00:05:53,360 Speaker 1: I actually would have to look into that. I don't 127 00:05:53,400 --> 00:05:56,679 Speaker 1: have enough information right now to answer that question correctly, 128 00:05:56,760 --> 00:05:58,240 Speaker 1: but I will look into it and I will get 129 00:05:58,279 --> 00:05:59,920 Speaker 1: you an answer. Well, I hope so, and maybe even 130 00:06:00,000 --> 00:06:03,200 Speaker 1: I could talk offline about it. Secredy Walsh, your time so, 131 00:06:03,279 --> 00:06:06,280 Speaker 1: I know my team is very busy over in Massachusetts 132 00:06:06,320 --> 00:06:09,560 Speaker 1: preparing for the Boston pubs. I myself have never been. 133 00:06:09,800 --> 00:06:13,280 Speaker 1: Do you suggest I should go this weekend? I go to. 134 00:06:13,360 --> 00:06:16,520 Speaker 1: Boston is a great city. Uh. Boomberg is a sponsor. 135 00:06:16,680 --> 00:06:18,640 Speaker 1: You should get there. It's a if you can get there. 136 00:06:18,640 --> 00:06:21,720 Speaker 1: It's a beautiful city, uh. And lots of great restaurants 137 00:06:21,760 --> 00:06:23,880 Speaker 1: and lots of great fund in the city of Boston. 138 00:06:23,960 --> 00:06:25,120 Speaker 1: But I know it's a city that means a lot 139 00:06:25,160 --> 00:06:27,480 Speaker 1: to your secretly Welsh, I appreciate your time, Thank you, sir. 140 00:06:27,600 --> 00:06:30,600 Speaker 1: The U S Labor Secretary on radio and TV from 141 00:06:30,640 --> 00:06:39,960 Speaker 1: the White House, Jeffrey Rosenberg doesn't care about the bigs. 142 00:06:39,960 --> 00:06:43,400 Speaker 1: He's a black Rock portfolio manager. Of their systematic multi 143 00:06:43,520 --> 00:06:47,280 Speaker 1: strategy fund and he is systematically seeing kurve flattening the 144 00:06:47,360 --> 00:06:50,200 Speaker 1: last number of days, perhaps with a view to this 145 00:06:50,400 --> 00:06:53,680 Speaker 1: job's report, Jeff Rozenberg, let's start right away with a 146 00:06:53,720 --> 00:06:57,760 Speaker 1: linkage of a better American employment to a flattening yield curve. 147 00:06:58,080 --> 00:07:01,200 Speaker 1: Why yeah, But it's a great point, Tom, That was 148 00:07:01,240 --> 00:07:03,520 Speaker 1: what I was going to highlight. Interesting market reaction. You know, 149 00:07:03,640 --> 00:07:07,480 Speaker 1: initially you certainly saw that flattening. It's continuing here. You know, 150 00:07:07,560 --> 00:07:10,200 Speaker 1: the report is pretty much on the screws in terms 151 00:07:10,240 --> 00:07:13,160 Speaker 1: of market expectations. I think Mike hit the kind of 152 00:07:13,200 --> 00:07:18,200 Speaker 1: surprising piece right on the head with the unemployment rate higher, 153 00:07:18,720 --> 00:07:21,720 Speaker 1: good news reflection of more people coming back into the 154 00:07:21,840 --> 00:07:24,880 Speaker 1: labor market, you know, the positive report and the curve flattening. 155 00:07:24,920 --> 00:07:26,720 Speaker 1: You know, it reminds me of of what we saw 156 00:07:26,800 --> 00:07:29,480 Speaker 1: after the f O m C, which is that the 157 00:07:29,880 --> 00:07:35,600 Speaker 1: good news brings forward the idea of earlier possible increases 158 00:07:35,680 --> 00:07:38,080 Speaker 1: in interest rates. We saw that after the dot plot, 159 00:07:38,160 --> 00:07:39,840 Speaker 1: and I think you're seeing a little bit of market 160 00:07:39,880 --> 00:07:43,800 Speaker 1: reaction on that. Again here, I wouldn't overstate it. It's 161 00:07:44,120 --> 00:07:46,160 Speaker 1: you know, these are small moves, but if we're looking 162 00:07:46,240 --> 00:07:49,360 Speaker 1: for some kind of message. It's that, you know, continued 163 00:07:49,440 --> 00:07:52,760 Speaker 1: progress on the reopening, on the strength of the economy 164 00:07:53,240 --> 00:07:55,520 Speaker 1: is raising expectations here that the Fed is going to 165 00:07:55,640 --> 00:07:58,680 Speaker 1: raise rates, perhaps faster than what the market had been 166 00:07:58,720 --> 00:08:01,840 Speaker 1: pricing in, and that's getting you to a curve flattening 167 00:08:01,920 --> 00:08:04,520 Speaker 1: where the bulk of the increases in the front end 168 00:08:04,560 --> 00:08:07,200 Speaker 1: of the curve, and then longer term interest rates, which 169 00:08:07,280 --> 00:08:10,920 Speaker 1: have already priced in a fair amount of relative value, 170 00:08:11,160 --> 00:08:13,920 Speaker 1: you know, potentially signaling here that that's gonna, you know, 171 00:08:14,040 --> 00:08:17,000 Speaker 1: look through to the slowdown after the surge of the 172 00:08:17,080 --> 00:08:20,840 Speaker 1: economic activity passes from the from the piscol stimulus. So 173 00:08:20,880 --> 00:08:22,760 Speaker 1: I think that's what the curve flattening is kind of 174 00:08:22,840 --> 00:08:24,840 Speaker 1: the main message from the markets today. It's tough to 175 00:08:24,880 --> 00:08:27,000 Speaker 1: be in this bond market right now, Jeff. Q one 176 00:08:27,120 --> 00:08:29,040 Speaker 1: is where we saw the peak at a ten ure 177 00:08:29,120 --> 00:08:31,720 Speaker 1: yield at the end of March. It's where the yield 178 00:08:31,760 --> 00:08:34,960 Speaker 1: curve pake two and we saw break evens peak potentially 179 00:08:35,360 --> 00:08:37,280 Speaker 1: back in May. So the curve is flatter. And we've 180 00:08:37,320 --> 00:08:39,199 Speaker 1: had calls on this program of tends getting back to 181 00:08:39,240 --> 00:08:41,480 Speaker 1: two percent. Jeff, how difficult would it be for tends 182 00:08:41,760 --> 00:08:45,880 Speaker 1: to get back to two well, that would be a 183 00:08:46,080 --> 00:08:49,040 Speaker 1: you know, there would be a pretty significant reversal. Um. 184 00:08:49,320 --> 00:08:53,319 Speaker 1: I think you're highlighting really the important point that we 185 00:08:53,600 --> 00:08:56,640 Speaker 1: peaked in terms of the reflationary narrative. There was a 186 00:08:56,840 --> 00:08:58,319 Speaker 1: it was kind of a double peak, there was a 187 00:08:58,440 --> 00:09:00,720 Speaker 1: margin that it kind of flattened out. Than mid May 188 00:09:00,920 --> 00:09:05,079 Speaker 1: we saw it again, and in that period since then, 189 00:09:05,240 --> 00:09:09,679 Speaker 1: we've basically been pushing downward this reflation narrative out of 190 00:09:09,760 --> 00:09:12,559 Speaker 1: the bond market. Uh. And it's really quite notable the 191 00:09:12,679 --> 00:09:17,000 Speaker 1: longer and forwards have been falling. As you mentioned, inflation expectations, 192 00:09:17,200 --> 00:09:20,160 Speaker 1: you know, outside of kind of the impact of energy 193 00:09:20,559 --> 00:09:24,719 Speaker 1: really stopped rising. And it's a reflection of kind of 194 00:09:24,800 --> 00:09:27,280 Speaker 1: by the rumors sell the news, that is, the markets 195 00:09:27,320 --> 00:09:30,840 Speaker 1: were moving well ahead of the economic data. The economic 196 00:09:30,920 --> 00:09:33,640 Speaker 1: data has has kind of borne that out, but without 197 00:09:33,880 --> 00:09:37,480 Speaker 1: kind of the breakout of the inflation outside of this 198 00:09:37,600 --> 00:09:40,280 Speaker 1: transitory story. You know, look at something that came out 199 00:09:40,320 --> 00:09:44,320 Speaker 1: earlier this week, the Dallas trimm fed trimmed mean measures 200 00:09:44,559 --> 00:09:48,560 Speaker 1: of inflation. You know, they're they're continuing to basically show 201 00:09:48,800 --> 00:09:53,280 Speaker 1: that the story of transitory inflation is holding up, and 202 00:09:53,440 --> 00:09:56,880 Speaker 1: so you can't really get further curves deepening further inflation 203 00:09:57,000 --> 00:09:59,920 Speaker 1: expectations until we see you know, what we're seeing in 204 00:10:00,000 --> 00:10:02,679 Speaker 1: some of the survey data. You know, the price pressures 205 00:10:02,760 --> 00:10:07,040 Speaker 1: building passed through into a broader array of of of 206 00:10:07,280 --> 00:10:11,000 Speaker 1: prices outside of the pandemic related stories that we've heard 207 00:10:11,040 --> 00:10:13,199 Speaker 1: so much about. That's still you know, going to be 208 00:10:13,280 --> 00:10:15,679 Speaker 1: the future. And until then, you know, the curves are 209 00:10:16,160 --> 00:10:18,319 Speaker 1: and market pricing are really starting to price out some 210 00:10:18,440 --> 00:10:20,680 Speaker 1: of this reflation story that will send the last couple 211 00:10:20,720 --> 00:10:22,839 Speaker 1: of minutes, we've faded some of that flatten egg and 212 00:10:22,880 --> 00:10:24,719 Speaker 1: the treasury curve just a little bit, particularly at the 213 00:10:24,760 --> 00:10:26,559 Speaker 1: long end. We've given some of that move up for 214 00:10:26,640 --> 00:10:29,439 Speaker 1: people just tuning in. It's an upside surprise. Fifty K 215 00:10:29,559 --> 00:10:32,240 Speaker 1: the meeting estimate with seven twenty, that's what we want 216 00:10:32,280 --> 00:10:34,559 Speaker 1: to see. Wages three point six percent, in line with 217 00:10:34,640 --> 00:10:37,599 Speaker 1: expectations to pick up from the previous month. That is 218 00:10:37,640 --> 00:10:39,320 Speaker 1: what we want to see in your recuity market. If 219 00:10:39,320 --> 00:10:41,200 Speaker 1: you're bullish, this is what you want to see. Another 220 00:10:41,280 --> 00:10:44,199 Speaker 1: ten points higher on the SMP, potentially a seventh games. 221 00:10:44,440 --> 00:10:48,079 Speaker 1: Jeff Rozenberger got three point one two million jobs. That's 222 00:10:48,120 --> 00:10:52,160 Speaker 1: with revisions formed in two thousand at one. That's a 223 00:10:52,240 --> 00:10:55,719 Speaker 1: slow motion path to ten eleven, twelve billion jobs to 224 00:10:55,880 --> 00:11:00,360 Speaker 1: fully employed America. How does black Rock frame the goal 225 00:11:01,040 --> 00:11:04,719 Speaker 1: of fully employed America to all the summer emotions of 226 00:11:04,800 --> 00:11:08,920 Speaker 1: FED policy, taper tantrum, Jackson hole and what the yield 227 00:11:09,000 --> 00:11:11,560 Speaker 1: market does? I mean, how do you frame that out 228 00:11:11,600 --> 00:11:15,520 Speaker 1: that X axis? Yeah, the the key is that the 229 00:11:15,679 --> 00:11:20,640 Speaker 1: FED has kind of moved its dual objectives towards more 230 00:11:20,800 --> 00:11:24,960 Speaker 1: favoring of the employment objective relative to the inflation expectations 231 00:11:25,040 --> 00:11:28,839 Speaker 1: and the inflation objective. And so while in past cycles 232 00:11:29,200 --> 00:11:32,880 Speaker 1: this kind of full employment might have led to preemptive 233 00:11:32,960 --> 00:11:37,360 Speaker 1: FED tightening, the movement towards flexible average inflation targeting is 234 00:11:37,440 --> 00:11:41,439 Speaker 1: really a wholesale change in how the market reacts to 235 00:11:41,600 --> 00:11:45,720 Speaker 1: the payroll figures with respect to interest rate expectations. Now, 236 00:11:45,760 --> 00:11:47,959 Speaker 1: that doesn't mean that they're never gonna raise interest rates, 237 00:11:47,960 --> 00:11:50,800 Speaker 1: and that's part of the earlier conversation what followed the dots. 238 00:11:51,160 --> 00:11:53,199 Speaker 1: But what it means is that the kind of the 239 00:11:53,240 --> 00:11:57,640 Speaker 1: way we hung on every payroll report is not quite 240 00:11:57,720 --> 00:11:59,520 Speaker 1: the same as it was when we were kind of 241 00:11:59,559 --> 00:12:03,640 Speaker 1: growing up. And and that's because we've missed on inflation 242 00:12:03,920 --> 00:12:06,839 Speaker 1: for so long that the FED is really focused on 243 00:12:06,960 --> 00:12:10,080 Speaker 1: achieving its inflation target, and they're not going to jump 244 00:12:10,160 --> 00:12:12,760 Speaker 1: the gun when it comes to full employment. They're gonna 245 00:12:12,880 --> 00:12:16,880 Speaker 1: let the labor market run hot. And today is another 246 00:12:17,480 --> 00:12:20,559 Speaker 1: piece of evidence that that's working, that strategy is working. 247 00:12:20,640 --> 00:12:24,040 Speaker 1: The labor market is is improving, and that's what they 248 00:12:24,120 --> 00:12:26,480 Speaker 1: want to see. The risk, of course, you know what 249 00:12:26,600 --> 00:12:29,520 Speaker 1: everybody is worried about is is you know what happens 250 00:12:29,600 --> 00:12:32,120 Speaker 1: if if you let the inflation genie out of the bottle? 251 00:12:32,200 --> 00:12:35,160 Speaker 1: And Powell and and and the Fed policy makers have 252 00:12:35,240 --> 00:12:37,560 Speaker 1: been very clear that they're willing to take that risk 253 00:12:37,720 --> 00:12:41,960 Speaker 1: because the last ten years, the post global financial crisis, 254 00:12:42,200 --> 00:12:45,319 Speaker 1: they've missed on inflation. Inflation has been too low. So 255 00:12:45,720 --> 00:12:48,880 Speaker 1: we've tilted the axis here and it's an important change 256 00:12:49,200 --> 00:12:52,280 Speaker 1: when we read the payroll reports, Jeff, that's what the 257 00:12:52,320 --> 00:12:54,599 Speaker 1: Fed says, that they are willing to look past a 258 00:12:54,679 --> 00:12:57,600 Speaker 1: near term inflation, that they want this economy to run hot, 259 00:12:57,920 --> 00:13:00,280 Speaker 1: that they are not that concerned about runaway and ation 260 00:13:00,960 --> 00:13:03,679 Speaker 1: is your message from the market that the market doesn't 261 00:13:03,720 --> 00:13:06,960 Speaker 1: believe them, because they believe still, as priamister was saying, 262 00:13:07,240 --> 00:13:08,880 Speaker 1: at least priced in and that is sort of the 263 00:13:08,920 --> 00:13:10,520 Speaker 1: flattening and the yield curve, that there will be a 264 00:13:10,600 --> 00:13:13,320 Speaker 1: policy error, that they will taper and then hike rates 265 00:13:13,440 --> 00:13:16,760 Speaker 1: too soon. Is the market misreading what the FETE is saying. 266 00:13:18,720 --> 00:13:21,240 Speaker 1: You know, I I can understand how a little bit 267 00:13:21,600 --> 00:13:24,840 Speaker 1: you might interpret the yield curve flattening, uh that way 268 00:13:24,960 --> 00:13:28,640 Speaker 1: that I think it would overstate how much of a 269 00:13:28,760 --> 00:13:31,599 Speaker 1: concern there is right now on the policy era of 270 00:13:31,679 --> 00:13:35,240 Speaker 1: too fast of tightening. I think right now, mostly the 271 00:13:35,360 --> 00:13:38,599 Speaker 1: read from the market is that they price in the 272 00:13:38,720 --> 00:13:42,000 Speaker 1: transitory story and and perhaps the market got a little 273 00:13:42,000 --> 00:13:44,760 Speaker 1: ahead of itself when it came to the reflationary story. 274 00:13:45,160 --> 00:13:49,199 Speaker 1: You've got some technicals and trading and momentum strategies, and 275 00:13:49,320 --> 00:13:52,679 Speaker 1: that's a little bit behind the flattening as well. But 276 00:13:52,920 --> 00:13:55,360 Speaker 1: mostly when you look at kind of longer term forward 277 00:13:55,440 --> 00:13:58,640 Speaker 1: prices of inflation expectations, they're kind of right on the 278 00:13:58,679 --> 00:14:01,920 Speaker 1: screws of the transitory a story just about two and 279 00:14:02,000 --> 00:14:05,600 Speaker 1: I think so far that's been validated by the data. 280 00:14:05,640 --> 00:14:08,160 Speaker 1: It's still to be seen long term whether it will be, 281 00:14:08,320 --> 00:14:10,560 Speaker 1: but that's where the markets are at. Jeff Frozen Org, 282 00:14:10,640 --> 00:14:19,920 Speaker 1: thank you so much. The black Rock this morning, Prey 283 00:14:19,960 --> 00:14:22,200 Speaker 1: and mis rejoined us. Now see these Securities Global head 284 00:14:22,200 --> 00:14:24,480 Speaker 1: of Right Strategy, Preyer. What a start where we open 285 00:14:24,520 --> 00:14:26,240 Speaker 1: the show and I know you're on the same page. 286 00:14:26,960 --> 00:14:29,680 Speaker 1: Yields and the behavior and how markets are responding to 287 00:14:30,080 --> 00:14:33,240 Speaker 1: economic data yesterday A nice case study. What explains it? 288 00:14:34,480 --> 00:14:36,480 Speaker 1: I think it's the market pricing in a more hawkish 289 00:14:36,520 --> 00:14:39,040 Speaker 1: reaction function. Frankly, I mean, if you look at a 290 00:14:39,120 --> 00:14:42,800 Speaker 1: long and inflation expectations, they've declined. The market's taken the 291 00:14:42,960 --> 00:14:45,960 Speaker 1: terminal rate of the hiking cycle and lower that we're 292 00:14:46,000 --> 00:14:47,560 Speaker 1: pricing in two percent at the end point of the 293 00:14:47,640 --> 00:14:50,760 Speaker 1: hiking cycle in March, it's pricing in less than one 294 00:14:50,800 --> 00:14:53,440 Speaker 1: and a half percent. So the front end, I think 295 00:14:53,480 --> 00:14:56,040 Speaker 1: the market is telling you that the FED is going 296 00:14:56,080 --> 00:14:59,200 Speaker 1: to be forced into hiking for some reason, perhaps inflation, 297 00:14:59,720 --> 00:15:02,720 Speaker 1: and that the economy can't handle it, which is why 298 00:15:02,880 --> 00:15:06,479 Speaker 1: the hiking cycle will be cut short and it could potentially, 299 00:15:06,920 --> 00:15:09,200 Speaker 1: you know, slow down growth going forward. That's why that 300 00:15:09,320 --> 00:15:11,120 Speaker 1: yield curve has been flattening. And I think it's a 301 00:15:11,440 --> 00:15:13,800 Speaker 1: misinterpretation of the June fo m C. I think there 302 00:15:13,880 --> 00:15:16,720 Speaker 1: was a lot of confusion and huge market reaction on 303 00:15:16,880 --> 00:15:19,160 Speaker 1: the back of that meeting. I don't think it was 304 00:15:19,280 --> 00:15:21,560 Speaker 1: a change reaction function. I think it was an acknowledgement 305 00:15:21,600 --> 00:15:23,800 Speaker 1: of the upside risks out here. But I think the 306 00:15:23,880 --> 00:15:27,040 Speaker 1: market sort of running with more Hawky's reaction function, and 307 00:15:27,160 --> 00:15:30,520 Speaker 1: perhaps that the fed's commitment to that f A I 308 00:15:30,640 --> 00:15:35,640 Speaker 1: T approach is weaker here. Does this job's report adjust 309 00:15:35,760 --> 00:15:39,120 Speaker 1: the taper talk or adjust the guestimates of what we'll 310 00:15:39,160 --> 00:15:43,080 Speaker 1: see at Jackson Hall? I think both. I mean they 311 00:15:43,080 --> 00:15:45,200 Speaker 1: are sort of linked because you know, we know that 312 00:15:45,360 --> 00:15:47,160 Speaker 1: the FED has sort of opened the door. Now they 313 00:15:47,200 --> 00:15:49,680 Speaker 1: are discussed at least talking about talking about tapering. So 314 00:15:49,960 --> 00:15:52,880 Speaker 1: now I would argue every data point now is going 315 00:15:52,960 --> 00:15:55,000 Speaker 1: to be a market event. I think, you know, because 316 00:15:55,000 --> 00:15:57,480 Speaker 1: they've put the market on notice. So whether it's Jackson 317 00:15:57,560 --> 00:15:59,320 Speaker 1: or if you get a really strong number, if we 318 00:15:59,400 --> 00:16:02,840 Speaker 1: see high wages, I think the market is going to say, okay, 319 00:16:02,960 --> 00:16:05,800 Speaker 1: maybe Jackson Hole or the July FED, the FED might 320 00:16:05,880 --> 00:16:09,120 Speaker 1: signal tapering sooner. And the issue is tapering and the 321 00:16:09,160 --> 00:16:11,680 Speaker 1: first hike are linked. I mean, you know, what's the 322 00:16:11,760 --> 00:16:14,320 Speaker 1: time period between the end of tapering and hiking. Some 323 00:16:14,400 --> 00:16:16,920 Speaker 1: FED officials think it's a couple of months, others think 324 00:16:16,960 --> 00:16:19,080 Speaker 1: it's it's a year out. We don't know that time 325 00:16:19,160 --> 00:16:21,560 Speaker 1: period um And that's why I think if the tapering 326 00:16:21,680 --> 00:16:24,760 Speaker 1: time frame moves sooner based on today's number, I think 327 00:16:24,800 --> 00:16:27,600 Speaker 1: that hiking timing and the hiking pace could also increase. 328 00:16:27,640 --> 00:16:30,760 Speaker 1: So it could be another flattening reaction, which will seem 329 00:16:30,800 --> 00:16:33,360 Speaker 1: a little bizarre if the if the data is good 330 00:16:33,400 --> 00:16:36,120 Speaker 1: and we really need to see how the FED pushes back, 331 00:16:36,200 --> 00:16:38,400 Speaker 1: do they actually say that they want to see the 332 00:16:38,440 --> 00:16:41,560 Speaker 1: supply chain disruptions and you know, even in the labor market, 333 00:16:41,560 --> 00:16:43,240 Speaker 1: I would argue there's a lot of frictions and they 334 00:16:43,360 --> 00:16:46,160 Speaker 1: want to at least wait until September before they can, 335 00:16:46,280 --> 00:16:48,360 Speaker 1: you know, sort of take the victory lab So just 336 00:16:48,480 --> 00:16:50,200 Speaker 1: to take the flip side of this prayer, that means 337 00:16:50,360 --> 00:16:52,520 Speaker 1: if it's a disappointment on the number, that you could 338 00:16:52,840 --> 00:16:56,480 Speaker 1: see yield curves steepening. I do think so. Yeah, I 339 00:16:56,560 --> 00:16:58,560 Speaker 1: think that front end is going to push out the 340 00:16:58,640 --> 00:17:02,280 Speaker 1: timing of the first hike to potentially early two thowenty three, 341 00:17:02,360 --> 00:17:04,960 Speaker 1: mid two twenty three, and the long and then maybe 342 00:17:05,000 --> 00:17:07,840 Speaker 1: the reflation trade comes back. It seems a little counterintuitive, 343 00:17:07,920 --> 00:17:09,960 Speaker 1: but I would say price action in the last couple 344 00:17:10,000 --> 00:17:13,440 Speaker 1: of weeks is symptomatic off a reaction functions shift, not 345 00:17:13,560 --> 00:17:16,480 Speaker 1: economic data, which is why we're getting weird reactions. I 346 00:17:16,520 --> 00:17:19,080 Speaker 1: would argue to economic data. So yeah, I think a 347 00:17:19,160 --> 00:17:22,000 Speaker 1: weaker number pins the front end a little bit more 348 00:17:22,080 --> 00:17:24,640 Speaker 1: and the long end. Then inflation risks can start to rise. 349 00:17:24,680 --> 00:17:26,600 Speaker 1: In the long end, we can just react, right, your 350 00:17:26,680 --> 00:17:28,399 Speaker 1: year end on its ten year. Now, what is that 351 00:17:29,280 --> 00:17:32,520 Speaker 1: we're looking for two percent on the tenure because we 352 00:17:32,640 --> 00:17:35,359 Speaker 1: we're looking for the Fed by December to actually announced taypring. 353 00:17:35,520 --> 00:17:37,600 Speaker 1: Now it's a long way from hiking. Our hiking call 354 00:17:37,720 --> 00:17:39,360 Speaker 1: is much further out, so you can probably tell why 355 00:17:39,359 --> 00:17:41,520 Speaker 1: I like the steep. Now, I think the bar to 356 00:17:41,720 --> 00:17:43,800 Speaker 1: hike for the Fed is much higher. They want an 357 00:17:43,840 --> 00:17:47,840 Speaker 1: inclusive recovery. They want inflation to persistently, you know, be 358 00:17:48,080 --> 00:17:51,119 Speaker 1: or or or at sustained basis, be at two percent overshoot, 359 00:17:51,400 --> 00:17:53,440 Speaker 1: so I think. But but you know, the tapering bar 360 00:17:53,600 --> 00:17:55,680 Speaker 1: is not that high. So the reason I've got this 361 00:17:55,880 --> 00:17:58,720 Speaker 1: higher rates in the in the long end is this 362 00:17:58,840 --> 00:18:00,840 Speaker 1: idea that the FED will take We have a ton 363 00:18:00,920 --> 00:18:03,000 Speaker 1: of treasury supply that we have to take down. So 364 00:18:03,280 --> 00:18:06,119 Speaker 1: to attract that marginal bio, both real rates as well 365 00:18:06,160 --> 00:18:08,720 Speaker 1: as inflation expectations will need to rise, pray thank you, 366 00:18:08,960 --> 00:18:10,920 Speaker 1: gonna catch out with you on pyrollse Frinda, I pray 367 00:18:10,960 --> 00:18:19,640 Speaker 1: mimsed for that. TV Securities. Paul Sweeney and I look 368 00:18:19,720 --> 00:18:24,679 Speaker 1: in AWE at the survey function for non farm payrolls, 369 00:18:25,200 --> 00:18:27,399 Speaker 1: and I believe last month there were four thousand, three 370 00:18:27,680 --> 00:18:31,240 Speaker 1: or twenty two economists with an opinion. How about we 371 00:18:31,359 --> 00:18:34,560 Speaker 1: talked to somebody Paul who nailed it, who absolutely ned 372 00:18:34,600 --> 00:18:37,240 Speaker 1: the Tiffany Wilding. She was looking for eight and fifty 373 00:18:37,280 --> 00:18:40,240 Speaker 1: thousand jobs and change in the non farm payrolls. And 374 00:18:40,320 --> 00:18:43,880 Speaker 1: guess what, that's exactly what happened. Tiffany Wilding, PIMCO Chief 375 00:18:43,960 --> 00:18:46,240 Speaker 1: US Economists. Tiffany, thanks so much for joining us. I 376 00:18:46,320 --> 00:18:48,439 Speaker 1: usually use a dartboard in the dart but you obviously 377 00:18:48,840 --> 00:18:51,800 Speaker 1: use some more academic rigor here. Gave us your thoughts 378 00:18:51,920 --> 00:18:55,720 Speaker 1: on this June payroll number. Um, you know, well, I 379 00:18:55,960 --> 00:18:57,680 Speaker 1: guess I have to say that you know this was 380 00:18:57,880 --> 00:19:00,520 Speaker 1: I think overall a mixed report. Um. You know, so 381 00:19:00,640 --> 00:19:03,280 Speaker 1: even though non farm payrolls eight and fifty k, they 382 00:19:03,280 --> 00:19:06,040 Speaker 1: were stronger, you know, are our You know, we we 383 00:19:06,119 --> 00:19:08,760 Speaker 1: do have various models that we use the high frequency 384 00:19:08,880 --> 00:19:12,000 Speaker 1: data that we've gotten post pandemic, we found is actually 385 00:19:12,000 --> 00:19:14,159 Speaker 1: a very useful input to kind of see some of 386 00:19:14,240 --> 00:19:16,840 Speaker 1: the fluctuations in the economy, and our models were pointing 387 00:19:16,880 --> 00:19:19,920 Speaker 1: to an acceleration this time. Um. You know, in addition 388 00:19:20,080 --> 00:19:23,520 Speaker 1: to UM, kind of some seasonal noise around education payrolls, 389 00:19:23,520 --> 00:19:24,879 Speaker 1: and I think those are the two things that really 390 00:19:24,920 --> 00:19:28,000 Speaker 1: boosted this report. That's good news, of course, but um, 391 00:19:28,119 --> 00:19:30,399 Speaker 1: you know, that's the establishment survey. I don't want to 392 00:19:30,440 --> 00:19:32,000 Speaker 1: get too wonky here, but if you look at the 393 00:19:32,080 --> 00:19:34,920 Speaker 1: other survey that's included in this report, uh, you know, 394 00:19:34,920 --> 00:19:37,680 Speaker 1: what they call the CPS or the Current Population Survey, 395 00:19:37,800 --> 00:19:40,800 Speaker 1: it was actually much weaker, so employment was little changed 396 00:19:40,840 --> 00:19:43,639 Speaker 1: in that report. We actually the unemployment rate pick up. UM. 397 00:19:43,760 --> 00:19:45,879 Speaker 1: So I think that, you know, overall it you kind 398 00:19:45,920 --> 00:19:47,640 Speaker 1: of have to still take these reports with a little 399 00:19:47,640 --> 00:19:49,280 Speaker 1: bit of grain of salt, um, you know, because they 400 00:19:49,320 --> 00:19:51,840 Speaker 1: can be newsy from month to month. A record on 401 00:19:51,960 --> 00:19:57,880 Speaker 1: a sharply partitions bartenders and waitresses, restaurants service, whatever it's called, 402 00:19:57,920 --> 00:20:01,639 Speaker 1: efficiently with the rest of the American economy. Do you 403 00:20:01,720 --> 00:20:05,720 Speaker 1: make the same demarcation. Yeah, I actually do think it's 404 00:20:05,760 --> 00:20:09,600 Speaker 1: important right now just because this UM, this pandemic has 405 00:20:09,680 --> 00:20:13,520 Speaker 1: produced a very uneven recovery. Um. And that's uneven you know, 406 00:20:13,640 --> 00:20:16,840 Speaker 1: across regions as well as across sectors, as you suggest, 407 00:20:17,480 --> 00:20:19,240 Speaker 1: you know, and I do think that there's you know, 408 00:20:19,480 --> 00:20:22,600 Speaker 1: kind of an uneven recovery happening. You're seeing more people 409 00:20:22,680 --> 00:20:25,080 Speaker 1: come back to the leisure and hospitality sector. Of course, 410 00:20:25,160 --> 00:20:28,200 Speaker 1: that's driving things. At the same time, you know, wages 411 00:20:28,240 --> 00:20:32,240 Speaker 1: are also accelerating more so in that sector than other sectors. 412 00:20:32,640 --> 00:20:34,639 Speaker 1: You know, So I really think you have to, um, 413 00:20:34,840 --> 00:20:38,000 Speaker 1: you sort of have to disentangle, you know, the anecdotes 414 00:20:38,040 --> 00:20:40,760 Speaker 1: and what's happening in that particular sector from kind of 415 00:20:40,880 --> 00:20:43,240 Speaker 1: the aggregate in the labor market, you know, And I 416 00:20:43,280 --> 00:20:46,440 Speaker 1: think although things do look a little bit tighter labor markets, 417 00:20:46,480 --> 00:20:48,200 Speaker 1: do you know, look a little bit tighter in that 418 00:20:48,640 --> 00:20:51,320 Speaker 1: leisure and hospitality sector. There obviously is a lot of 419 00:20:51,320 --> 00:20:53,680 Speaker 1: anecdotes around labor scarcity. I think, you know, you look 420 00:20:53,720 --> 00:20:56,200 Speaker 1: in aggregate across the labor market, you know, we still 421 00:20:56,280 --> 00:20:57,919 Speaker 1: have a lot of people that you know, that are 422 00:20:57,960 --> 00:21:00,119 Speaker 1: looking for jobs or that are out of work. Is 423 00:21:00,160 --> 00:21:03,320 Speaker 1: there anything in this report, Tiffany to cause the Federal 424 00:21:03,359 --> 00:21:06,520 Speaker 1: Reserve and fed Truman Powell to perhaps I think differently 425 00:21:06,760 --> 00:21:09,720 Speaker 1: about their strategic direct direction in terms of kind of 426 00:21:09,800 --> 00:21:12,480 Speaker 1: laying low here and as it relates to tapering indoor 427 00:21:12,800 --> 00:21:15,800 Speaker 1: raising rates. No, And I mean I think the reason 428 00:21:15,960 --> 00:21:18,639 Speaker 1: is is because you can kind of you can kind 429 00:21:18,680 --> 00:21:21,800 Speaker 1: of support your narrative either way with this report. Right. 430 00:21:21,960 --> 00:21:23,920 Speaker 1: So you know, as I mentioned, on the one hand, 431 00:21:24,080 --> 00:21:26,200 Speaker 1: the kind of headline number, the change in payrolls was 432 00:21:26,240 --> 00:21:29,119 Speaker 1: obviously very good. So I'm sure that you know the 433 00:21:29,200 --> 00:21:31,520 Speaker 1: quote more hawkish members of the committee, the people that 434 00:21:32,040 --> 00:21:34,200 Speaker 1: want to hike rates a little bit earlier, you know, 435 00:21:34,240 --> 00:21:37,480 Speaker 1: they want to get tapering of the bond purchases to 436 00:21:37,560 --> 00:21:39,800 Speaker 1: happen a little bit earlier, they'll probably focus on on 437 00:21:39,920 --> 00:21:42,560 Speaker 1: that headline number, you know, whereas as the folks on 438 00:21:42,640 --> 00:21:45,119 Speaker 1: the committee that you know, I think it's maybe a 439 00:21:45,160 --> 00:21:47,040 Speaker 1: little bit better still to wait. They're looking more for 440 00:21:47,080 --> 00:21:50,200 Speaker 1: a December tapering, um, you know, in three rate hike, 441 00:21:50,320 --> 00:21:53,159 Speaker 1: or probably looking at this report also saying this is 442 00:21:53,200 --> 00:21:55,320 Speaker 1: consistent with our view that you know, we do have 443 00:21:55,400 --> 00:21:58,560 Speaker 1: a little bit of room here before we need to tighten. 444 00:21:59,680 --> 00:22:02,879 Speaker 1: So so Tiffany, as we look at the wages, I 445 00:22:02,920 --> 00:22:06,280 Speaker 1: mean again up three points ex percent in line with expectation, 446 00:22:07,160 --> 00:22:11,280 Speaker 1: is there a risking your outlook for meaningful wage inflation 447 00:22:11,359 --> 00:22:14,320 Speaker 1: to find its way into this economy. I mean, look, 448 00:22:14,359 --> 00:22:17,320 Speaker 1: we certainly think it's possible. So I think that, um, 449 00:22:17,480 --> 00:22:19,280 Speaker 1: you know, I think that there's you know, I mentioned 450 00:22:19,560 --> 00:22:22,600 Speaker 1: you know this, these issues kind of around labor scarcity 451 00:22:22,680 --> 00:22:25,040 Speaker 1: that we're hearing in certain sectors. You know, there's a 452 00:22:25,080 --> 00:22:27,520 Speaker 1: lot of what I would call right now labor market frictions, 453 00:22:27,840 --> 00:22:31,439 Speaker 1: you know, and obviously they've been well highlighted by people. Um, 454 00:22:31,480 --> 00:22:34,119 Speaker 1: you know, the unemployment benefits which could be causing some 455 00:22:34,240 --> 00:22:37,560 Speaker 1: distancentive to work. You have school disruptions which could be 456 00:22:37,880 --> 00:22:40,080 Speaker 1: having you know, bringing people out of the labor force 457 00:22:40,119 --> 00:22:41,760 Speaker 1: because they have to take care of kids. And then 458 00:22:41,800 --> 00:22:45,320 Speaker 1: and then obviously you just have anxieties still around COVID. 459 00:22:45,480 --> 00:22:47,320 Speaker 1: You know, we think those are kind of temporary factors 460 00:22:47,359 --> 00:22:50,080 Speaker 1: and they will fade. Uh. So you have labor supply 461 00:22:50,160 --> 00:22:52,600 Speaker 1: that probably will meet labor demand this year that what 462 00:22:52,760 --> 00:22:54,800 Speaker 1: both and you know both will be strong. But next 463 00:22:54,880 --> 00:22:57,639 Speaker 1: year I think is really the question on on on 464 00:22:57,800 --> 00:22:59,720 Speaker 1: really the tightness of the labor market, you know, and 465 00:22:59,800 --> 00:23:02,440 Speaker 1: how much kind of labor supply can can meet demand. 466 00:23:02,480 --> 00:23:03,879 Speaker 1: And the reason why I say that is because you 467 00:23:03,960 --> 00:23:06,359 Speaker 1: had a lot of people retire as a result of 468 00:23:06,400 --> 00:23:09,840 Speaker 1: this pandemic. So really the question is is to prim people, Um, 469 00:23:09,920 --> 00:23:11,879 Speaker 1: did they really start to come back to the labor market, 470 00:23:12,240 --> 00:23:13,840 Speaker 1: you know, in kind of full force next year? And 471 00:23:13,840 --> 00:23:15,560 Speaker 1: I think there's you know, there's a there's some question 472 00:23:15,640 --> 00:23:19,000 Speaker 1: around that. Okay, So I'm in PIMCO and I'm running 473 00:23:19,080 --> 00:23:22,760 Speaker 1: four year paper across three sectors. That's my lowly job. 474 00:23:23,160 --> 00:23:25,200 Speaker 1: I have to share a Bloomberg. I'm so small I 475 00:23:25,680 --> 00:23:28,360 Speaker 1: can't go one. I'm going to turn to Tiffany Wilding 476 00:23:28,840 --> 00:23:31,800 Speaker 1: and say, you've got a crystal ball in the next year? 477 00:23:32,680 --> 00:23:35,320 Speaker 1: Do I mean the bond people are trying to get 478 00:23:35,880 --> 00:23:40,639 Speaker 1: to what Paul August first, you know, September one? What 479 00:23:41,200 --> 00:23:46,160 Speaker 1: what's what? Excuse me? What's your longest view out, Tiffany? 480 00:23:46,280 --> 00:23:49,000 Speaker 1: I mean, can you like even frame out the fourth 481 00:23:49,080 --> 00:23:53,240 Speaker 1: quarter or do you one of next year? Well? You know, 482 00:23:53,760 --> 00:23:57,639 Speaker 1: so we do we do what we call cyclical forecasting, right, 483 00:23:57,720 --> 00:23:59,639 Speaker 1: which is which is kind of like a now to 484 00:23:59,800 --> 00:24:02,840 Speaker 1: eighteen months out kind of window. You're still doing that 485 00:24:04,000 --> 00:24:08,040 Speaker 1: in this historic None of what we're talking about is 486 00:24:08,040 --> 00:24:12,240 Speaker 1: in the textbooks, right, You're trying to look out eighteen months. Yeah, 487 00:24:12,240 --> 00:24:14,520 Speaker 1: I mean, I think that's absolutely fair that there's a 488 00:24:14,680 --> 00:24:17,680 Speaker 1: there's a very high degree of uncertainty right now, you know. 489 00:24:17,760 --> 00:24:19,600 Speaker 1: And I would say that the you know, the kind 490 00:24:19,600 --> 00:24:22,399 Speaker 1: of the short term, the high frequency data that we're getting, 491 00:24:22,440 --> 00:24:24,760 Speaker 1: you know, there's there's uncertainty there as well, because it's 492 00:24:24,800 --> 00:24:26,920 Speaker 1: you know, it's obviously very noisy statistics that we have 493 00:24:27,000 --> 00:24:29,760 Speaker 1: to deal with because of of this pandemic. So you know, 494 00:24:29,840 --> 00:24:31,520 Speaker 1: there's I do you think there's a lot of uncertainty 495 00:24:31,560 --> 00:24:32,760 Speaker 1: out there, but we you know, we do try your 496 00:24:32,800 --> 00:24:36,320 Speaker 1: best to try to get the disentangle that signal from 497 00:24:36,320 --> 00:24:38,920 Speaker 1: the noise to to try to have some sort of 498 00:24:39,040 --> 00:24:42,880 Speaker 1: anchor for people. GDP two thousand twenty one, g DP 499 00:24:43,080 --> 00:24:48,119 Speaker 1: two thousand twenty two, what is lebal Crystal's show. So 500 00:24:48,320 --> 00:24:50,399 Speaker 1: you know, we're so we're still looking for seven percent 501 00:24:50,520 --> 00:24:53,200 Speaker 1: growth this year, uh and for that to to sort 502 00:24:53,240 --> 00:24:54,960 Speaker 1: of settle back down to kind of three to three 503 00:24:55,000 --> 00:24:56,720 Speaker 1: and a half next year, you know. But I would 504 00:24:56,800 --> 00:24:59,520 Speaker 1: say that the data that is kind of coming in 505 00:24:59,640 --> 00:25:02,200 Speaker 1: more re stantly would actually suggest maybe there's some downside 506 00:25:02,280 --> 00:25:05,520 Speaker 1: risk to our seven percent growth forecast um And that's 507 00:25:05,560 --> 00:25:07,879 Speaker 1: really because it looks like higher prices are starting to 508 00:25:07,920 --> 00:25:10,959 Speaker 1: actually eat into and some of these supply bottlenecks are 509 00:25:11,000 --> 00:25:14,200 Speaker 1: really starting and eating into real growth. Um, you know, 510 00:25:14,359 --> 00:25:17,320 Speaker 1: so maybe although nominal growth can can still be as 511 00:25:17,359 --> 00:25:19,200 Speaker 1: strong as we predicted, that might be more on the 512 00:25:19,280 --> 00:25:23,200 Speaker 1: price side than the than the real side. Here we go. Yeah, so, 513 00:25:23,600 --> 00:25:26,480 Speaker 1: but you know, I think ultimately the you know, the conclusion, 514 00:25:26,480 --> 00:25:28,479 Speaker 1: at least in our minds is is that we are 515 00:25:28,640 --> 00:25:31,879 Speaker 1: probably seeing some inflection points right now in growth as 516 00:25:31,960 --> 00:25:34,679 Speaker 1: well as inflation. We've gotten this really big run up 517 00:25:34,680 --> 00:25:37,760 Speaker 1: and acceleration as a result of fiscal policies and and 518 00:25:37,840 --> 00:25:40,080 Speaker 1: everything else in the reopening of the economy, and that's 519 00:25:40,119 --> 00:25:43,280 Speaker 1: probably going to start to decelerate going into back half 520 00:25:43,320 --> 00:25:45,240 Speaker 1: the year and next year. So I think those inflection 521 00:25:45,280 --> 00:25:47,760 Speaker 1: points and pinpointing those are are just as important as that, 522 00:25:47,840 --> 00:25:49,560 Speaker 1: you know, trying to figure out what the level is 523 00:25:50,080 --> 00:25:53,640 Speaker 1: Tiffany on a Friday. If you do differential calculus, you're 524 00:25:53,720 --> 00:26:00,160 Speaker 1: gone wild, pinical. This is the Bloomberg Surveillance Podcast. Thanks 525 00:26:00,160 --> 00:26:03,439 Speaker 1: for listening. Join us live weekdays from seven to ten 526 00:26:03,520 --> 00:26:07,960 Speaker 1: am Eastern on Bloomberg Radio and on Bloomberg Television each 527 00:26:08,080 --> 00:26:11,800 Speaker 1: day from six to nine am for insight from the 528 00:26:11,840 --> 00:26:17,040 Speaker 1: best in economics, finance, investment, and international relations. And subscribe 529 00:26:17,080 --> 00:26:21,960 Speaker 1: to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com, 530 00:26:22,119 --> 00:26:25,359 Speaker 1: and of course, on the terminal. I'm Tom Keene, and 531 00:26:25,480 --> 00:26:27,280 Speaker 1: this is Bloomberg.