1 00:00:00,040 --> 00:00:02,640 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:02,680 --> 00:00:07,000 Speaker 1: their trust and independent registered investment advisors to the two 3 00:00:07,280 --> 00:00:11,360 Speaker 1: four trillion dollars Why Learn more at find your Independent 4 00:00:11,400 --> 00:00:26,960 Speaker 1: advisor dot com. Welcome to the Bloomberg Surveillance Podcast. I'm 5 00:00:27,040 --> 00:00:30,920 Speaker 1: Tom Keene with David Gura. Daily we bring you insight 6 00:00:31,000 --> 00:00:35,560 Speaker 1: from the best in economics, finance, investment, and international relations. 7 00:00:35,960 --> 00:00:40,559 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:40,640 --> 00:00:48,080 Speaker 1: of course on the Bloomberg again. About niney minutes to 9 00:00:48,080 --> 00:00:50,000 Speaker 1: go until we get the October job support. Joining us 10 00:00:50,000 --> 00:00:54,200 Speaker 1: in studio is Ellen Center, chief US economist at Morgan Stanley. Morning. Ellen, 11 00:00:55,240 --> 00:00:58,680 Speaker 1: what's the relative importance of this report? We had the 12 00:00:58,680 --> 00:01:00,640 Speaker 1: FED meeting this week that the two a FED meeting, 13 00:01:00,960 --> 00:01:02,960 Speaker 1: a dead meeting as we as we characterized it, looking 14 00:01:02,960 --> 00:01:05,520 Speaker 1: ahead here to December. This is the first of two 15 00:01:05,600 --> 00:01:09,399 Speaker 1: jobs reports will get before the next FED meeting in December. 16 00:01:09,480 --> 00:01:11,400 Speaker 1: Put this into some context for us, Well, I hope 17 00:01:11,440 --> 00:01:16,360 Speaker 1: that it's an unexciting report. Uh, but there's always with 18 00:01:16,400 --> 00:01:20,360 Speaker 1: the employment reports, there's always the scope for a big surprise. UM. 19 00:01:20,400 --> 00:01:22,759 Speaker 1: I think the sense is that, uh, you know, these 20 00:01:22,800 --> 00:01:26,760 Speaker 1: employment reports are supposed to be that very important incoming 21 00:01:26,840 --> 00:01:29,240 Speaker 1: data that the FED is watching as their data dependent 22 00:01:29,800 --> 00:01:32,360 Speaker 1: UH and making decisions meeting by meeting. But they have 23 00:01:32,440 --> 00:01:36,360 Speaker 1: lowered the bar so much for going in December. Uh. 24 00:01:36,600 --> 00:01:39,560 Speaker 1: I can't say it's a foregone conclusion because everything can 25 00:01:39,640 --> 00:01:44,399 Speaker 1: fall apart between now and then, But the employment report 26 00:01:44,880 --> 00:01:47,760 Speaker 1: has a very low bar UH that it needs to 27 00:01:48,640 --> 00:01:51,080 Speaker 1: rise above UM. And I think as long as we 28 00:01:51,200 --> 00:01:54,760 Speaker 1: get UH anywhere between a hundred thousand and two hundred thousand, 29 00:01:54,840 --> 00:01:57,720 Speaker 1: that's right in the pocket UM. And that's fine for 30 00:01:57,800 --> 00:02:00,360 Speaker 1: the FED. And will it'll be sort of a hum 31 00:02:00,360 --> 00:02:02,720 Speaker 1: report because it's going to come in not far from expectations. 32 00:02:02,840 --> 00:02:06,200 Speaker 1: Is this report more important in the political context again? 33 00:02:06,240 --> 00:02:09,480 Speaker 1: The election here next Tuesday. This is something that could 34 00:02:09,520 --> 00:02:12,640 Speaker 1: be Trumpet died or bally hood or or the opposite 35 00:02:12,680 --> 00:02:15,000 Speaker 1: here in the coming days. Is it more important how 36 00:02:15,040 --> 00:02:17,560 Speaker 1: this is consumed by the political side of things in 37 00:02:17,560 --> 00:02:20,360 Speaker 1: the FEDOM? Yeah, Well, you know, good data is always 38 00:02:20,400 --> 00:02:25,120 Speaker 1: good for the incumbent party, and it's it's not unique. 39 00:02:25,160 --> 00:02:28,880 Speaker 1: This happens every election cycle, where if the data looks 40 00:02:28,919 --> 00:02:32,359 Speaker 1: really good and it's benefiting seems like it's benefiting one 41 00:02:32,400 --> 00:02:35,160 Speaker 1: party the other party will exclaim that the government is 42 00:02:35,280 --> 00:02:38,400 Speaker 1: manufacturing the numbers and that they are fake. You know 43 00:02:38,520 --> 00:02:40,600 Speaker 1: what happens this morning, if we get a blowout three 44 00:02:40,680 --> 00:02:46,240 Speaker 1: hundred thousand payrolls, you might see Uh, Republicans step up 45 00:02:46,240 --> 00:02:49,560 Speaker 1: and say this data is manufactured in order to make 46 00:02:49,600 --> 00:02:54,320 Speaker 1: a Hillary presidency look better. Um, And of course that's 47 00:02:54,360 --> 00:02:56,399 Speaker 1: not the case. But we also want to be fair 48 00:02:56,440 --> 00:02:59,160 Speaker 1: and say this is not different than any other election cycle. 49 00:02:59,720 --> 00:03:03,359 Speaker 1: We always have these exclamations of of falsehood, if you will. 50 00:03:03,400 --> 00:03:05,560 Speaker 1: If the data is looking one way or the other, 51 00:03:06,040 --> 00:03:07,920 Speaker 1: looking ahead to that that next FED meeting on the 52 00:03:08,919 --> 00:03:12,720 Speaker 1: of December, what are the near term risks that they 53 00:03:12,720 --> 00:03:15,040 Speaker 1: could crop up aside from from an election result that 54 00:03:15,040 --> 00:03:17,960 Speaker 1: maybe goes against what people expect. Well, I think certainly 55 00:03:18,000 --> 00:03:21,919 Speaker 1: if you if you had some sort of collapse in 56 00:03:21,960 --> 00:03:25,440 Speaker 1: the hiring rate, Um that that we came. We just 57 00:03:25,480 --> 00:03:28,520 Speaker 1: got very weak job growth in this report, and we 58 00:03:28,560 --> 00:03:32,079 Speaker 1: get another job's report before that December meeting. Um, if 59 00:03:32,080 --> 00:03:34,600 Speaker 1: the job growth is weak enough that the unemployment rate 60 00:03:34,639 --> 00:03:37,080 Speaker 1: starts to tick back up. Uh. That is something that 61 00:03:37,200 --> 00:03:39,720 Speaker 1: Janet Yellen indicated in her Q and A after the 62 00:03:39,760 --> 00:03:43,160 Speaker 1: September meeting that she was laser focused on the unemployment 63 00:03:43,200 --> 00:03:46,040 Speaker 1: rate needed to fall further. Uh. So job growth just 64 00:03:46,120 --> 00:03:48,400 Speaker 1: isn't strong enough in order to get the unemployment rate 65 00:03:48,440 --> 00:03:51,320 Speaker 1: to continue to take down. Uh. That might be something 66 00:03:51,320 --> 00:03:54,040 Speaker 1: that leads to softer expectations of December, and then the 67 00:03:54,080 --> 00:03:56,840 Speaker 1: Fed has a big decision to make. Uh do they 68 00:03:56,880 --> 00:03:59,720 Speaker 1: get out there and and talk down expectations for December 69 00:03:59,800 --> 00:04:03,080 Speaker 1: high on those reports, or do they continue to guide 70 00:04:03,120 --> 00:04:05,880 Speaker 1: towards a December and just say, but we're not going 71 00:04:05,920 --> 00:04:08,120 Speaker 1: to do much on the other side of it. Evidence 72 00:04:08,320 --> 00:04:10,680 Speaker 1: Ellen Zenter with us with Morgan Stanley. What a spirited 73 00:04:10,720 --> 00:04:14,280 Speaker 1: conversation we just had. Ellen over with surveillance on television 74 00:04:14,280 --> 00:04:17,120 Speaker 1: with Peter Navarro and support of Trump economics. I want 75 00:04:17,120 --> 00:04:21,440 Speaker 1: to back up and talk about this strange word mercantile 76 00:04:21,480 --> 00:04:25,880 Speaker 1: is um, which comes over to a zero sum worldview, 77 00:04:26,480 --> 00:04:29,960 Speaker 1: and maybe we get a zero sum America, whether it's 78 00:04:30,080 --> 00:04:35,000 Speaker 1: President Trump or President Clinton. Help our audience understand what 79 00:04:35,279 --> 00:04:38,680 Speaker 1: zero sum means in a center world. Well, zero sum 80 00:04:38,720 --> 00:04:41,800 Speaker 1: would mean that no one's running a current account deficit, 81 00:04:41,920 --> 00:04:45,640 Speaker 1: and that trade is completely fair and balanced on both sides, 82 00:04:45,680 --> 00:04:50,679 Speaker 1: and that uh, we we have a basically a neutral 83 00:04:50,760 --> 00:04:54,200 Speaker 1: trade balance with everyone. Right, we export a lot to others, 84 00:04:54,200 --> 00:04:56,320 Speaker 1: and we import a lot from others, and at all 85 00:04:56,800 --> 00:04:59,920 Speaker 1: evens out. But that's never the case, right or ever 86 00:05:00,120 --> 00:05:03,520 Speaker 1: one's currencies would be on par Uh. Currencies are the 87 00:05:03,560 --> 00:05:07,360 Speaker 1: great equalizer, and it just so happens that, yes, growth 88 00:05:07,400 --> 00:05:09,440 Speaker 1: doesn't feel great in the US, but you know what, 89 00:05:09,760 --> 00:05:12,839 Speaker 1: it's better than elsewhere, and our currency reflects that, and 90 00:05:12,839 --> 00:05:14,800 Speaker 1: it means that we do have to take one for 91 00:05:14,839 --> 00:05:16,920 Speaker 1: the team, so to speak. If there's a global team, 92 00:05:16,920 --> 00:05:19,240 Speaker 1: we're taking one for the team right now because we 93 00:05:19,279 --> 00:05:23,279 Speaker 1: are on stronger footing than our major global trading partners. 94 00:05:23,279 --> 00:05:26,560 Speaker 1: What that's done, though, is make it very difficult um 95 00:05:26,640 --> 00:05:31,000 Speaker 1: to digest when we ourselves are not growing that strongly. 96 00:05:31,600 --> 00:05:33,400 Speaker 1: We don't have a strong of a labor market as 97 00:05:33,440 --> 00:05:36,120 Speaker 1: we like, businesses are not investing as much as they like. 98 00:05:36,600 --> 00:05:39,680 Speaker 1: And the easiest thing to point a finger two is 99 00:05:39,680 --> 00:05:42,920 Speaker 1: is that somebody else's fault, and it's because they're stealing 100 00:05:43,200 --> 00:05:48,160 Speaker 1: share uh from from from our well being UM. And 101 00:05:48,200 --> 00:05:51,080 Speaker 1: that leads to this populous sentiment, which is a global 102 00:05:51,120 --> 00:05:54,520 Speaker 1: phenomenon now in rising right, and that has been the 103 00:05:54,520 --> 00:05:57,480 Speaker 1: trend here in the US as well. How long are 104 00:05:57,480 --> 00:05:59,000 Speaker 1: we going to have to take one for the team. 105 00:05:59,000 --> 00:06:00,680 Speaker 1: Do you think looking at the dollar your ninety seven 106 00:06:00,760 --> 00:06:03,920 Speaker 1: to fIF Uh, it's been strong for a while. How 107 00:06:03,920 --> 00:06:05,640 Speaker 1: long do you think that's going to persist? Well, I 108 00:06:05,640 --> 00:06:09,719 Speaker 1: think it's going to depend on the global business cycle. Um, 109 00:06:09,920 --> 00:06:14,960 Speaker 1: how close or other major global central banks to uh 110 00:06:15,080 --> 00:06:17,960 Speaker 1: coming off that easing bias. Right, we are on a 111 00:06:18,000 --> 00:06:20,359 Speaker 1: tightening bias. The Fed hasn't done much, but we're on 112 00:06:20,400 --> 00:06:23,120 Speaker 1: a tightening bias because we're just a different place in 113 00:06:23,160 --> 00:06:25,919 Speaker 1: our business cycle. Um. But you have the the e 114 00:06:26,040 --> 00:06:28,000 Speaker 1: c B and the b o J, you know major 115 00:06:28,400 --> 00:06:31,120 Speaker 1: global central banks out there, um that are still on 116 00:06:31,200 --> 00:06:34,000 Speaker 1: an easing bias, and that's going to continue to keep 117 00:06:34,279 --> 00:06:37,640 Speaker 1: pressure upward pressure on the dollar. So to the extent 118 00:06:37,680 --> 00:06:40,360 Speaker 1: that their economies start to bear the fruits of that 119 00:06:40,440 --> 00:06:43,800 Speaker 1: labor and those central banks can come off at easing bias, 120 00:06:44,120 --> 00:06:46,560 Speaker 1: then you start to take some of the pressure off 121 00:06:46,560 --> 00:06:49,320 Speaker 1: the dollar. Um. But this is a global cycle that's 122 00:06:49,320 --> 00:06:52,520 Speaker 1: taking a long time to play out. And uh, you know, 123 00:06:53,360 --> 00:06:56,279 Speaker 1: areas of of Europe are years behind us in terms 124 00:06:56,320 --> 00:07:00,040 Speaker 1: of where they are in reparation post financial crisis. In 125 00:07:00,120 --> 00:07:02,520 Speaker 1: the radio, I didn't get to this before. What does 126 00:07:02,560 --> 00:07:05,560 Speaker 1: Hans Hdecker say about dollar for this year. How does 127 00:07:05,680 --> 00:07:10,680 Speaker 1: Hans Rhdecker at Morgan Stanley dovetail a Zentner vision into 128 00:07:10,720 --> 00:07:14,320 Speaker 1: his dollar call? Well, it's it's it's a Zentner vision. 129 00:07:14,440 --> 00:07:16,160 Speaker 1: I like the way you put that, Tom makes me 130 00:07:16,200 --> 00:07:18,480 Speaker 1: feel very important. Excuse me. It's a red Hans. I 131 00:07:18,480 --> 00:07:22,080 Speaker 1: know you're listening. It's a Hdecker vision. Well, but it's 132 00:07:22,240 --> 00:07:26,760 Speaker 1: it's so uh So Hans Rhdecker sits down with our 133 00:07:26,920 --> 00:07:29,240 Speaker 1: the global economists, right, so it's not just my team 134 00:07:29,240 --> 00:07:31,000 Speaker 1: and says, well, what is your what is your thinking 135 00:07:31,040 --> 00:07:34,880 Speaker 1: around monetary policy? If if if the feed is going 136 00:07:34,920 --> 00:07:37,800 Speaker 1: to continue to tighten, other global central banks are going 137 00:07:37,840 --> 00:07:40,160 Speaker 1: to continue to ease. Well, that's going to play into 138 00:07:40,200 --> 00:07:44,560 Speaker 1: how he feels about flows into the dollar UM and 139 00:07:44,640 --> 00:07:47,600 Speaker 1: driving the dollar higher. I will tell you that. And 140 00:07:47,640 --> 00:07:50,520 Speaker 1: you've talked to Rhedecker plenty of times. UM. If you 141 00:07:50,560 --> 00:07:53,600 Speaker 1: want to have an hour long program, he can. He 142 00:07:53,640 --> 00:07:57,480 Speaker 1: can bring you to tears talking about current account deficits 143 00:07:57,960 --> 00:08:01,360 Speaker 1: matters for his forecasts. But but let's keep it simple. 144 00:08:01,600 --> 00:08:03,680 Speaker 1: Let's keep it simple. A lot of that global central 145 00:08:03,680 --> 00:08:07,480 Speaker 1: bank divergence matters for his calls. When he's thinking about 146 00:08:07,480 --> 00:08:11,240 Speaker 1: the dollar. Just to me, it's an extraordinary jumble here. 147 00:08:11,240 --> 00:08:13,560 Speaker 1: And again we want to congratulate you on your call 148 00:08:13,600 --> 00:08:15,360 Speaker 1: of eighteen months ago that this would be a FED 149 00:08:15,400 --> 00:08:18,160 Speaker 1: that would delay and delay the dots, don't come down 150 00:08:18,200 --> 00:08:20,840 Speaker 1: next year all that much. Well, here's the thing, and 151 00:08:20,880 --> 00:08:23,360 Speaker 1: this is something that our clients have been very, very 152 00:08:23,400 --> 00:08:26,840 Speaker 1: focused on. Last year, the Fed hiked in December, and 153 00:08:26,880 --> 00:08:29,200 Speaker 1: they hiked because they said, look, you're expecting it. It's 154 00:08:29,240 --> 00:08:32,880 Speaker 1: been extremely well communicated. We expect little market reaction. What 155 00:08:32,960 --> 00:08:37,280 Speaker 1: they underestimated was the global reaction to the perceived promise 156 00:08:37,320 --> 00:08:39,440 Speaker 1: that they were going to follow it up with four hikes. 157 00:08:39,920 --> 00:08:42,400 Speaker 1: Here we are today. Have they delivered one of those 158 00:08:42,760 --> 00:08:46,840 Speaker 1: no um at the September meeting that we've just had, 159 00:08:46,880 --> 00:08:49,280 Speaker 1: they lowered the path of the dots quite a bit, 160 00:08:49,960 --> 00:08:52,120 Speaker 1: and now they're showing us that they would like to 161 00:08:52,200 --> 00:08:55,320 Speaker 1: hike in December, and they, at best, which is how 162 00:08:55,320 --> 00:08:58,079 Speaker 1: we should look at it, at best, intend to follow 163 00:08:58,120 --> 00:09:01,920 Speaker 1: it up with two hikes next year. That's a much 164 00:09:01,960 --> 00:09:04,000 Speaker 1: slower pace than what they were showing last year. Our 165 00:09:04,040 --> 00:09:06,120 Speaker 1: clients are asking us, so do we get the global 166 00:09:06,160 --> 00:09:08,920 Speaker 1: fallout that we did last year? Same as last year 167 00:09:09,080 --> 00:09:10,960 Speaker 1: last year, or is everybody going to digest it better? 168 00:09:11,240 --> 00:09:14,040 Speaker 1: Showing us already that the path at best is going 169 00:09:14,080 --> 00:09:17,280 Speaker 1: to be much slower. I think we'll go far and 170 00:09:17,320 --> 00:09:22,240 Speaker 1: trying to appease global markets. Gotta leave it there, Ellen Saner, 171 00:09:22,280 --> 00:09:25,319 Speaker 1: thank you so much. With Morgan Stanley, it is Job's day. 172 00:09:25,440 --> 00:09:40,839 Speaker 1: Much coming up on economics. It is Job's day. It 173 00:09:41,000 --> 00:09:44,200 Speaker 1: is Job's day. Four days before the matter of an election. 174 00:09:45,000 --> 00:09:47,040 Speaker 1: He is darkened the door of the Oval Office and 175 00:09:47,120 --> 00:09:49,240 Speaker 1: Public Service to the Nation of the former Chairman of 176 00:09:49,280 --> 00:09:53,640 Speaker 1: the President's Council of Economic Advisors, Alan Krueger. Are you 177 00:09:53,800 --> 00:09:58,400 Speaker 1: overtly in supportive Secretary Clinton? Are you you know? Neutral? 178 00:09:58,600 --> 00:10:00,280 Speaker 1: Are you? Are you going to come out for Trump 179 00:10:00,280 --> 00:10:03,320 Speaker 1: economics this morning? What are you doing? Ellen? Next? News here? 180 00:10:04,400 --> 00:10:08,000 Speaker 1: The uniformity of the economics profession against Donald Trump has 181 00:10:08,040 --> 00:10:10,760 Speaker 1: been truly spectacular. I have to say I I am 182 00:10:10,840 --> 00:10:14,319 Speaker 1: Tom and informal advisment to the Clinton campaign. Okay, very 183 00:10:14,400 --> 00:10:16,600 Speaker 1: very good. I want to rip up the script here, folks, 184 00:10:16,600 --> 00:10:18,400 Speaker 1: it's job today. We're gonna get to that in fifty 185 00:10:18,400 --> 00:10:21,880 Speaker 1: minutes with all of our usual good guests. Professor Krueger, 186 00:10:22,840 --> 00:10:26,400 Speaker 1: Jacob Winer in the forties, wrote the definitive piece on 187 00:10:26,480 --> 00:10:30,240 Speaker 1: middle twentieth century mercantil is um. We didn't want to 188 00:10:30,240 --> 00:10:33,000 Speaker 1: go back to that. We didn't want to repeat history, 189 00:10:33,080 --> 00:10:36,400 Speaker 1: and a lot of courageous people from Atlantic Charter on said, 190 00:10:36,440 --> 00:10:38,200 Speaker 1: we're not going to do it like we used to 191 00:10:38,240 --> 00:10:42,600 Speaker 1: do it. Do we risk from Secretary Clinton and from 192 00:10:42,720 --> 00:10:48,160 Speaker 1: Mr Trump tending towards zero sum America and an inward 193 00:10:48,160 --> 00:10:53,600 Speaker 1: America that replicates the nineties. I think that's certainly a 194 00:10:53,679 --> 00:10:57,079 Speaker 1: risk from the Trump campaign. I think Secretary Clinton has 195 00:10:57,160 --> 00:10:59,920 Speaker 1: voted for a trade expansion in the past and voted 196 00:11:00,000 --> 00:11:02,600 Speaker 1: against trade, so I think she's had a more nuanced view. 197 00:11:03,120 --> 00:11:05,720 Speaker 1: But a candidate like Donald Trump, who says he wants 198 00:11:05,720 --> 00:11:08,199 Speaker 1: to tear up long standing trade agreements, I think is 199 00:11:08,240 --> 00:11:11,880 Speaker 1: a real risk to the global trading system that we have, 200 00:11:11,960 --> 00:11:15,120 Speaker 1: and more importantly, to the stability that we've built up 201 00:11:15,120 --> 00:11:19,600 Speaker 1: since World War Two. This overlays on your true expertise 202 00:11:20,320 --> 00:11:23,679 Speaker 1: on the minimum wage and on labor in America to 203 00:11:23,800 --> 00:11:27,840 Speaker 1: find how you hear the primal scream from Senator Sanders 204 00:11:27,880 --> 00:11:32,680 Speaker 1: and Mr Trump's supporters well, the passion for doing more 205 00:11:32,800 --> 00:11:34,560 Speaker 1: to help those who have been left behind in the 206 00:11:34,640 --> 00:11:36,720 Speaker 1: economy I think is real and I think needs to 207 00:11:36,720 --> 00:11:39,240 Speaker 1: be addressed. But I don't think the right solution is 208 00:11:39,280 --> 00:11:42,680 Speaker 1: to turn inward to build walls. UH. That hasn't helped 209 00:11:42,720 --> 00:11:44,280 Speaker 1: us in the past, and that will not help us 210 00:11:44,280 --> 00:11:47,560 Speaker 1: going forward. I think that we need to look for 211 00:11:47,600 --> 00:11:50,480 Speaker 1: solutions that grow the size of the pie and for 212 00:11:50,640 --> 00:11:55,080 Speaker 1: solutions that lead to more equal sharing of the benefits 213 00:11:55,080 --> 00:11:57,320 Speaker 1: of economic growth, and I think those are out there. 214 00:11:57,400 --> 00:12:01,480 Speaker 1: For example, of responsible increase in theminum and wage would help. UH, 215 00:12:01,960 --> 00:12:06,960 Speaker 1: A greater UH wide, more widespread program of trade adjustment 216 00:12:06,960 --> 00:12:09,920 Speaker 1: assistance would help. We've seen we've seen the minimum wage 217 00:12:10,200 --> 00:12:13,360 Speaker 1: rise at the local level at some state levels. UH. 218 00:12:13,520 --> 00:12:15,040 Speaker 1: Is it at all likely that we would see it 219 00:12:15,160 --> 00:12:16,920 Speaker 1: rise at the federal level? Or is that ship sale? 220 00:12:16,920 --> 00:12:18,960 Speaker 1: And is this something that is percolating is happening at 221 00:12:19,160 --> 00:12:22,080 Speaker 1: a more local level? Now, Well, we we've seen this 222 00:12:22,120 --> 00:12:27,880 Speaker 1: movie before in the nineties when Congress didn't raise the 223 00:12:28,040 --> 00:12:31,480 Speaker 1: federal minimum wage, the states acted and then remember a 224 00:12:31,520 --> 00:12:34,440 Speaker 1: new Gang Ridge led Congress raised the federal minimum wage. 225 00:12:35,080 --> 00:12:37,920 Speaker 1: So I think that there's UH some hope that will 226 00:12:37,960 --> 00:12:40,400 Speaker 1: see a reasonable increase in the minimum wage in the future. 227 00:12:41,160 --> 00:12:43,720 Speaker 1: What's the what's the one thing say that Hillary Clinton 228 00:12:43,720 --> 00:12:46,200 Speaker 1: took away from the the economic platform that Bernie Sanders 229 00:12:46,320 --> 00:12:48,240 Speaker 1: espoused when when he was when he was still running 230 00:12:48,240 --> 00:12:51,360 Speaker 1: for president. How would she bent? Uh? In response to 231 00:12:51,400 --> 00:12:55,080 Speaker 1: what what Tom called that primal scream, Well, I think 232 00:12:55,120 --> 00:12:59,720 Speaker 1: there are a number of areas where Uh she took 233 00:12:59,760 --> 00:13:02,920 Speaker 1: on his ideas and they infused her ideas. I think 234 00:13:02,920 --> 00:13:06,000 Speaker 1: the most prominent has to do with access to post 235 00:13:06,000 --> 00:13:11,640 Speaker 1: secondary schooling, making college affordable, making college debt free, which 236 00:13:11,720 --> 00:13:15,000 Speaker 1: was a major theme for Bertie Sanders and one that 237 00:13:15,120 --> 00:13:18,880 Speaker 1: Secretary Clinton has adopted an espoused and seems passionate about. 238 00:13:19,559 --> 00:13:21,520 Speaker 1: I want to just quickly hear close a loop and 239 00:13:21,600 --> 00:13:24,200 Speaker 1: we were talking about earlier to the Chinese want a 240 00:13:24,240 --> 00:13:28,760 Speaker 1: bigger pie. We're talking mercantilism. You supose that we need 241 00:13:28,800 --> 00:13:32,280 Speaker 1: a larger pie, dude, The Chinese want a larger pie 242 00:13:32,280 --> 00:13:36,440 Speaker 1: of trade. I think clearly trade has been beneficial for 243 00:13:36,520 --> 00:13:39,000 Speaker 1: their economic development. I think what they need to do 244 00:13:39,040 --> 00:13:43,679 Speaker 1: in the future is to generate their own demand, particularly 245 00:13:43,720 --> 00:13:48,000 Speaker 1: with household consumption um. But as an economic advisor, I 246 00:13:48,040 --> 00:13:50,560 Speaker 1: would advise them that they benefit from from from a 247 00:13:50,559 --> 00:13:53,800 Speaker 1: bigger pie. No question. Jobs day, oh forty minutes or so. 248 00:13:53,880 --> 00:13:56,920 Speaker 1: We'll get to that, and among other worthies, William Gross 249 00:13:56,920 --> 00:14:00,160 Speaker 1: of Jenna's Capital will join chief worthy right now was 250 00:14:00,200 --> 00:14:03,120 Speaker 1: Alan Krueger of Princeton, the former chairman of the President's 251 00:14:03,120 --> 00:14:07,600 Speaker 1: Council of Economic Advisors, were waxing political Professor Krueger let's 252 00:14:07,600 --> 00:14:10,559 Speaker 1: now wax more job market. I did a chart today 253 00:14:10,559 --> 00:14:14,199 Speaker 1: of the man's session, the idea of twenty four to 254 00:14:14,280 --> 00:14:17,320 Speaker 1: fifty four year old men. Uh boy, it was good 255 00:14:17,320 --> 00:14:19,600 Speaker 1: in the sixties and the structural change of women in 256 00:14:19,640 --> 00:14:24,080 Speaker 1: the labor force, and it was ugly and they've come back, 257 00:14:24,200 --> 00:14:27,520 Speaker 1: but they can't get back further. Give us your research 258 00:14:27,640 --> 00:14:33,280 Speaker 1: now on that interesting separation and combination of men and 259 00:14:33,320 --> 00:14:36,240 Speaker 1: women in the workforce. What's the dynamic you're focused on? 260 00:14:37,480 --> 00:14:41,040 Speaker 1: Labor force participation rate trends are really fascinating in the US. 261 00:14:41,080 --> 00:14:44,560 Speaker 1: In the post war period, labor force grew because more 262 00:14:44,560 --> 00:14:47,720 Speaker 1: and more women joined the labor force. Men have been 263 00:14:47,760 --> 00:14:52,560 Speaker 1: on this long term downward trend and that trend has continued. 264 00:14:52,720 --> 00:14:56,240 Speaker 1: What's changed is that women are now mirroring men in 265 00:14:56,360 --> 00:14:59,840 Speaker 1: terms of labor force. Participation of women peaked into thousand 266 00:15:00,680 --> 00:15:05,040 Speaker 1: UM and that I think is significant because it means 267 00:15:05,080 --> 00:15:08,960 Speaker 1: unless we have more population growth, primarily through immigration, it's 268 00:15:09,040 --> 00:15:11,240 Speaker 1: unlikely we're going to see a major rebound in labor 269 00:15:11,320 --> 00:15:14,480 Speaker 1: force participation. But now getting to the men, I have 270 00:15:14,720 --> 00:15:17,080 Speaker 1: a new study that I presented at the Boston Federal 271 00:15:17,120 --> 00:15:22,440 Speaker 1: Reserve Conference on October four where I found that around 272 00:15:22,560 --> 00:15:24,840 Speaker 1: half of the prime working age men are out of 273 00:15:24,840 --> 00:15:29,280 Speaker 1: the labor force suffer from a serious disability UH, either 274 00:15:29,360 --> 00:15:33,240 Speaker 1: mental or physical. Almost half are taking pain medication on 275 00:15:33,280 --> 00:15:35,920 Speaker 1: a daily basis. So I think we need to address 276 00:15:35,960 --> 00:15:39,520 Speaker 1: the health concerns UH in order to raise labor force 277 00:15:39,560 --> 00:15:44,000 Speaker 1: participation for for for that group in particular, when when 278 00:15:44,040 --> 00:15:45,920 Speaker 1: when you look at the numbers today, what will they 279 00:15:45,960 --> 00:15:49,040 Speaker 1: tell us about where the jobs your your your paper 280 00:15:49,040 --> 00:15:51,720 Speaker 1: at that Boston Fed cards, Where the jobs? Where all 281 00:15:51,760 --> 00:15:54,320 Speaker 1: the workers gone? Where the jobs today? Who is hiring? 282 00:15:54,400 --> 00:15:56,440 Speaker 1: Is this still hiring? That's largely confined to the to 283 00:15:56,480 --> 00:16:01,040 Speaker 1: the service sector. Well, we largely have a service sector economy. 284 00:16:01,280 --> 00:16:03,920 Speaker 1: One of the interesting developments, however, is that in the recovery, 285 00:16:03,960 --> 00:16:09,920 Speaker 1: manufacturing has started to increase jobs. I was talking with 286 00:16:10,000 --> 00:16:14,600 Speaker 1: the CEO at Party City yesterday, and they're bringing jobs 287 00:16:14,600 --> 00:16:17,840 Speaker 1: back because expenses are getting higher or abroad so I 288 00:16:17,880 --> 00:16:21,640 Speaker 1: think we're seeing reassuring and manufacturing, but certainly it's the 289 00:16:21,640 --> 00:16:24,440 Speaker 1: case that the bulk of job growth currently and in 290 00:16:24,480 --> 00:16:26,720 Speaker 1: the future is going to come from the service sector. 291 00:16:27,480 --> 00:16:29,200 Speaker 1: Take a quick diversion here for a sect. You mentioned 292 00:16:29,240 --> 00:16:31,080 Speaker 1: the Boston FED conference. You were there, of course, Jenny 293 00:16:31,120 --> 00:16:33,880 Speaker 1: Ellen giving that speech on on running a high pressure eccunty, 294 00:16:33,920 --> 00:16:36,000 Speaker 1: suggesting that it could be done, not committing to it 295 00:16:36,040 --> 00:16:38,680 Speaker 1: by any means, but introducing the concept. How did that 296 00:16:38,720 --> 00:16:41,960 Speaker 1: play in the room. That's a good question. I spoke 297 00:16:42,040 --> 00:16:43,960 Speaker 1: right after her, so I was kind of focused on 298 00:16:44,000 --> 00:16:46,880 Speaker 1: my remarks, but I did read her remarks that I 299 00:16:46,920 --> 00:16:50,200 Speaker 1: was there for them. UM economists have known for a 300 00:16:50,240 --> 00:16:52,520 Speaker 1: long time that there are benefits of a high pressure economy. 301 00:16:52,560 --> 00:16:55,000 Speaker 1: There's a famous paper by Arthur Oakin and the Brookings 302 00:16:55,000 --> 00:16:58,400 Speaker 1: Papers with the title the high Pressure Labor Market. Larry 303 00:16:58,440 --> 00:17:01,080 Speaker 1: cats and I wrote a paper nine on the high 304 00:17:01,120 --> 00:17:03,760 Speaker 1: pressure labor market of the nineties, which I was actually 305 00:17:03,800 --> 00:17:06,200 Speaker 1: pleased to see that Cherry Ellen had cited. So I 306 00:17:06,240 --> 00:17:09,080 Speaker 1: think there are many benefits of the high pressure economy. 307 00:17:09,560 --> 00:17:12,640 Speaker 1: UM wage growth is one. I think we see more 308 00:17:12,680 --> 00:17:16,800 Speaker 1: opportunity for disadvantaged workers, for younger workers, I don't think 309 00:17:16,840 --> 00:17:19,439 Speaker 1: it has that big an effect on labor force participation, 310 00:17:19,480 --> 00:17:20,879 Speaker 1: but I do think there are many benefits of a 311 00:17:20,960 --> 00:17:23,840 Speaker 1: high pressure labor market. Professor Krueger ellen Sander was on 312 00:17:23,960 --> 00:17:26,440 Speaker 1: earlier and she I believe made the statement. I don't 313 00:17:26,440 --> 00:17:28,480 Speaker 1: want to put words in her mouth, but she suggested 314 00:17:28,520 --> 00:17:31,639 Speaker 1: that too many of the jobs today are what we 315 00:17:31,680 --> 00:17:35,479 Speaker 1: would call less quality jobs. Are they? I mean, how 316 00:17:35,520 --> 00:17:37,119 Speaker 1: do I you know, I know when you're you know, 317 00:17:37,800 --> 00:17:39,600 Speaker 1: darker than the door of the Oval Office. You got 318 00:17:39,600 --> 00:17:42,120 Speaker 1: to say a certain tune. And Jason Furman has done 319 00:17:42,160 --> 00:17:45,960 Speaker 1: that with terrific research at the White House. But help me, 320 00:17:46,040 --> 00:17:49,280 Speaker 1: here are these quality jobs. I think the job growth 321 00:17:49,320 --> 00:17:51,920 Speaker 1: that we've seen looks a lot like the makeup of 322 00:17:52,000 --> 00:17:53,959 Speaker 1: jobs that we have, and I think what we need 323 00:17:54,000 --> 00:17:56,320 Speaker 1: to focus on is how do we raise wages? In fact, 324 00:17:56,640 --> 00:17:58,320 Speaker 1: Jason Furman and I have an op ed in the 325 00:17:58,320 --> 00:18:02,400 Speaker 1: Wall Street Journal this morning where we uh point out 326 00:18:02,680 --> 00:18:06,359 Speaker 1: that in many cases, companies are taking non competitive practices 327 00:18:06,440 --> 00:18:09,239 Speaker 1: to keep wages low. There was an example of a 328 00:18:09,240 --> 00:18:13,560 Speaker 1: court case in Detroit where eight hospitals settled a suit 329 00:18:13,680 --> 00:18:17,120 Speaker 1: for non competitive practices where they raised nurses pay, gave 330 00:18:17,119 --> 00:18:19,239 Speaker 1: out a settlement of ninety million dollars because they had 331 00:18:19,240 --> 00:18:22,959 Speaker 1: suppressed pay. Non compete classes are far too common. So 332 00:18:23,080 --> 00:18:25,400 Speaker 1: I think that there are steps that we can take 333 00:18:25,440 --> 00:18:27,960 Speaker 1: to make the labor market more competitive. Little rays pay 334 00:18:28,040 --> 00:18:34,119 Speaker 1: across the board. Thank you monopson No, no, this is 335 00:18:34,160 --> 00:18:37,280 Speaker 1: a major deal, folks. I go One of the great 336 00:18:37,320 --> 00:18:40,399 Speaker 1: tests I have of an economics textbook is I literally 337 00:18:40,440 --> 00:18:43,680 Speaker 1: go to the index and see if they even mention 338 00:18:44,320 --> 00:18:48,880 Speaker 1: monopsony because Monopsony, to me, Professor Krueger is white underrated 339 00:18:50,640 --> 00:18:53,280 Speaker 1: political debate. This is not monopoly. We're not trying to 340 00:18:53,320 --> 00:18:57,600 Speaker 1: get Oriental and I don't want Baltic Mediterranean, Professor Krueger, 341 00:18:57,640 --> 00:19:00,440 Speaker 1: we need a clinic right now on how man opsity 342 00:19:00,600 --> 00:19:04,400 Speaker 1: is important and it's not monopoly? Is it? To me? 343 00:19:04,640 --> 00:19:08,760 Speaker 1: It is rubber plantations in Singapore. That's always a model 344 00:19:08,760 --> 00:19:12,240 Speaker 1: I'm used where your price you just you get the 345 00:19:12,240 --> 00:19:15,960 Speaker 1: price you get. Monopsony is the flip side of monopoly, 346 00:19:16,320 --> 00:19:19,640 Speaker 1: means that there's one buyer as opposed to one seller. Now, 347 00:19:19,680 --> 00:19:21,880 Speaker 1: one of the things that we've learned in economics research 348 00:19:22,119 --> 00:19:24,960 Speaker 1: is that you can have monopsony apart from a company town, 349 00:19:25,320 --> 00:19:29,320 Speaker 1: not only in those rubber plantations. But companies can reduce 350 00:19:29,400 --> 00:19:33,359 Speaker 1: competition by requiring their workers to sign on compete agreements. 351 00:19:33,960 --> 00:19:35,760 Speaker 1: Adam Smith, if you go back to the Wealth of 352 00:19:35,840 --> 00:19:38,760 Speaker 1: Nations and which you wrote an incredible introduction for within 353 00:19:39,240 --> 00:19:42,200 Speaker 1: the world that at the moment, but thank you. If 354 00:19:42,200 --> 00:19:44,080 Speaker 1: you go back to the Wealth of Nations, Adam Smith 355 00:19:44,080 --> 00:19:46,760 Speaker 1: said that employers, whenever they get together, they tacitly talk 356 00:19:46,840 --> 00:19:49,800 Speaker 1: about how do they collude to keep wages low. So 357 00:19:50,040 --> 00:19:52,159 Speaker 1: there's been this pressure in the job market for a 358 00:19:52,200 --> 00:19:56,480 Speaker 1: long time, and I think that's one of the reasons 359 00:19:56,560 --> 00:20:00,479 Speaker 1: why we've seen job vacancies rising. Company he's saying they 360 00:20:00,480 --> 00:20:03,080 Speaker 1: can't get enough workers, but they've been reluctant to wages. 361 00:20:03,240 --> 00:20:07,320 Speaker 1: The price economics think in Chicago. Here Chicago is his school. 362 00:20:07,440 --> 00:20:11,440 Speaker 1: It's out West, Professor Krueger, it's just just sell of 363 00:20:11,520 --> 00:20:14,960 Speaker 1: the cubs. You're the white sox um. If you look 364 00:20:14,960 --> 00:20:18,200 Speaker 1: at the price theory of Monopsony, our listeners are saying, 365 00:20:18,200 --> 00:20:20,800 Speaker 1: Professor Krueger, you don't know what you're talking about. If 366 00:20:20,840 --> 00:20:23,320 Speaker 1: we have to raise wages, we're going out of business. 367 00:20:23,359 --> 00:20:27,400 Speaker 1: How do you respond to entrepreneurs in America who say, 368 00:20:27,480 --> 00:20:31,040 Speaker 1: we've got a collude, whether it's direct, indirect, monopsusy whatever, 369 00:20:31,480 --> 00:20:33,320 Speaker 1: or we go out of business. How do you respond 370 00:20:34,119 --> 00:20:35,919 Speaker 1: This clearly isn't the case. I mean, we hear this 371 00:20:35,960 --> 00:20:38,160 Speaker 1: whenever the minimum wage goes up, and we only see 372 00:20:38,200 --> 00:20:40,960 Speaker 1: more and more job growth. If workers have more wages, 373 00:20:41,000 --> 00:20:42,879 Speaker 1: that's going to help the macro economy, that's going to 374 00:20:42,960 --> 00:20:45,840 Speaker 1: help consumption, and the whole economy will grow. I was 375 00:20:45,880 --> 00:20:48,760 Speaker 1: astonished reading your your piece with Jason from this morning. Uh, 376 00:20:49,320 --> 00:20:53,359 Speaker 1: the portion about non compete clauses you write of American 377 00:20:53,359 --> 00:20:55,480 Speaker 1: workers have signed them. Why Why are we seeing so 378 00:20:55,560 --> 00:21:00,119 Speaker 1: many noncompete clauses in employment contracts today? What's remark well 379 00:21:00,119 --> 00:21:01,800 Speaker 1: to me as we're seeing him in places where they 380 00:21:01,800 --> 00:21:07,119 Speaker 1: clearly don't belong, for warehouse workers, for fast food restaurant workers. 381 00:21:07,160 --> 00:21:10,160 Speaker 1: And it's I think a very clear example of companies 382 00:21:10,200 --> 00:21:12,680 Speaker 1: trying to restrict competition to make it so that they 383 00:21:12,680 --> 00:21:14,639 Speaker 1: have more of a tied workforce, to make it so 384 00:21:14,680 --> 00:21:16,919 Speaker 1: that they don't leave for higher wages down the street. 385 00:21:17,320 --> 00:21:22,000 Speaker 1: And that's restricting competition. Uh, and that has really run 386 00:21:22,040 --> 00:21:24,120 Speaker 1: a muck and I think it's a sign of the 387 00:21:24,160 --> 00:21:27,639 Speaker 1: imbalanced and bargaining power between workers and companies help us. 388 00:21:27,760 --> 00:21:30,080 Speaker 1: Let's circle around here the minute a half we've got 389 00:21:30,160 --> 00:21:33,040 Speaker 1: left with you, Professor Krueger. If we have an election 390 00:21:33,520 --> 00:21:35,639 Speaker 1: in both candidates say we don't want to be a 391 00:21:35,720 --> 00:21:40,040 Speaker 1: rubber plantation in Singapore. We don't want to have monopsimistic 392 00:21:40,119 --> 00:21:44,679 Speaker 1: tendencies in the United States. State the case for your candidates, 393 00:21:44,720 --> 00:21:50,480 Speaker 1: Secretary Clinton, how is she going to make us less monopximistic. Well, 394 00:21:50,560 --> 00:21:52,600 Speaker 1: I think she got both the positive and the negative. 395 00:21:52,640 --> 00:21:55,119 Speaker 1: I mean, Donald Trump has stiffed his workforce in the past, 396 00:21:56,000 --> 00:21:59,600 Speaker 1: has really shown no commitment to raising wages for middle 397 00:21:59,600 --> 00:22:03,399 Speaker 1: class workers. Certainly his tax plan wouldn't help middle class 398 00:22:03,440 --> 00:22:07,960 Speaker 1: compared to high income folks. Uh. Secretary Clinton has spent 399 00:22:08,000 --> 00:22:11,280 Speaker 1: her career trying to provide more opportunities for disadvantaged workers. 400 00:22:11,840 --> 00:22:13,639 Speaker 1: And there's a lot that the administration could do. One 401 00:22:13,640 --> 00:22:16,199 Speaker 1: of the things we point out in our ed. In 402 00:22:16,240 --> 00:22:18,240 Speaker 1: addition to raising the minimum wage, which I think would 403 00:22:18,280 --> 00:22:21,119 Speaker 1: help to counteract some monopsny power as long as it's 404 00:22:21,200 --> 00:22:24,840 Speaker 1: raised to a reasonable level, the administration can more actively 405 00:22:24,920 --> 00:22:30,240 Speaker 1: enforce antitrust laws which prevent companies from or legally should 406 00:22:30,480 --> 00:22:33,760 Speaker 1: prevent companies from occluding to keep pay low One of 407 00:22:33,760 --> 00:22:36,240 Speaker 1: the things the Obama administration and the Justice Department just 408 00:22:36,320 --> 00:22:40,240 Speaker 1: did was to announce a hotline for human resource professionals 409 00:22:40,280 --> 00:22:45,200 Speaker 1: to call in and report instances of uh illegal competitive 410 00:22:45,240 --> 00:22:48,600 Speaker 1: behavior in the labor market. And I think that could 411 00:22:49,320 --> 00:22:51,560 Speaker 1: help identify these cases and we could bring more court 412 00:22:51,600 --> 00:22:54,640 Speaker 1: cases like the one in Detroit. Does that move jobs abroad? 413 00:22:54,840 --> 00:22:58,600 Speaker 1: Does that move jobs to states that are more sympathetic 414 00:22:58,720 --> 00:23:03,080 Speaker 1: to ober plantation psychology? You know, that's a great question, 415 00:23:03,160 --> 00:23:05,359 Speaker 1: and this is really a win win solution because the 416 00:23:05,400 --> 00:23:09,520 Speaker 1: answer that is no. If companies are colluding to keep 417 00:23:09,560 --> 00:23:12,040 Speaker 1: pay load, they can't get enough workers. That's why they 418 00:23:12,080 --> 00:23:15,760 Speaker 1: have vacancies. Um. And what you see with monopsony is 419 00:23:15,800 --> 00:23:18,359 Speaker 1: if you do raise pay if you do force the 420 00:23:18,400 --> 00:23:21,680 Speaker 1: cartel to break down, employment actually rises. So it could 421 00:23:21,720 --> 00:23:24,520 Speaker 1: be a win win situation where we raise wages and 422 00:23:24,640 --> 00:23:27,399 Speaker 1: raise jobs. David, did we get them fired up enough? Sugar? 423 00:23:28,680 --> 00:23:31,200 Speaker 1: I'm going to send out on Twitter a whole bunch 424 00:23:31,240 --> 00:23:33,800 Speaker 1: of attachments on this. This happens to be a pet 425 00:23:33,800 --> 00:23:38,960 Speaker 1: project of my monopsionistic dynamics. Furman Krueger, the Wall Street 426 00:23:39,040 --> 00:23:52,080 Speaker 1: Journalist Morning on your rubber plantation. Who you put your 427 00:23:52,119 --> 00:23:56,040 Speaker 1: trust in matters. Investors have put their trust in independent 428 00:23:56,160 --> 00:23:59,960 Speaker 1: registered investment advisors to the tune of four trillion dollars. 429 00:24:00,160 --> 00:24:03,760 Speaker 1: Why they see their roles to serve, not sell. That's 430 00:24:03,760 --> 00:24:07,320 Speaker 1: why Charles Schwab is committed to the success over seven 431 00:24:07,359 --> 00:24:13,679 Speaker 1: thousand independent financial advisors who passionately dedicate themselves to helping 432 00:24:13,720 --> 00:24:18,560 Speaker 1: people achieve their financial goals. Learn more at find your 433 00:24:18,600 --> 00:24:29,679 Speaker 1: Independent Advisor dot com. Joining us now, Bill Gross will 434 00:24:29,760 --> 00:24:33,120 Speaker 1: join us, and we welcome Bloomberg Television as well. Bill, 435 00:24:33,200 --> 00:24:36,840 Speaker 1: Good morning to you. The basic idea I would I 436 00:24:36,880 --> 00:24:40,240 Speaker 1: would suggest is this does not derail December, and it 437 00:24:40,359 --> 00:24:44,280 Speaker 1: certainly doesn't affect the election. It's another good report, and 438 00:24:44,359 --> 00:24:49,120 Speaker 1: yet you continue to counsel caution I do. I would 439 00:24:49,160 --> 00:24:51,280 Speaker 1: admit it's a it's a good report. I zeroed in 440 00:24:51,400 --> 00:24:55,280 Speaker 1: on two important factors. That work week was a point four, 441 00:24:55,320 --> 00:24:59,359 Speaker 1: which is higher than average, and earnings. You know, we're 442 00:25:00,040 --> 00:25:02,639 Speaker 1: growing more than a normal as well, and so you 443 00:25:02,800 --> 00:25:06,439 Speaker 1: combine those together and that's good for the consumer going forward. 444 00:25:06,480 --> 00:25:10,880 Speaker 1: But I counsel caution on the basis of structural changes, 445 00:25:10,960 --> 00:25:14,119 Speaker 1: on the basis of a recent report by the Federal 446 00:25:14,119 --> 00:25:18,200 Speaker 1: Reserve itself done over you know uh six to twelve 447 00:25:18,200 --> 00:25:21,280 Speaker 1: month period of time. That spoke to demographics and a 448 00:25:21,840 --> 00:25:25,080 Speaker 1: negative influence on growth over the past several decades and 449 00:25:25,119 --> 00:25:29,000 Speaker 1: the potential for it to continue to be negative. UM. 450 00:25:29,160 --> 00:25:32,240 Speaker 1: I focus on structural items such as a high debt 451 00:25:32,320 --> 00:25:36,320 Speaker 1: and leverage and technology displacement of jobs over a longer 452 00:25:36,440 --> 00:25:40,280 Speaker 1: term basis, and so UM, you know, the economy tamed 453 00:25:40,119 --> 00:25:42,840 Speaker 1: to me is in a one to one and a 454 00:25:42,880 --> 00:25:46,359 Speaker 1: half percent real growth mode. And you know, as we 455 00:25:46,400 --> 00:25:49,520 Speaker 1: shift to markets and the influence of that growth on markets, 456 00:25:49,600 --> 00:25:55,159 Speaker 1: which is an important consideration. UM. Earnings not earnings per share, 457 00:25:55,280 --> 00:25:58,280 Speaker 1: but earnings don't really grow at one to one and 458 00:25:58,320 --> 00:26:01,160 Speaker 1: a half percent growth rates. And that's been the case 459 00:26:01,200 --> 00:26:04,040 Speaker 1: for the past five quarters. GDPs average one and a 460 00:26:04,040 --> 00:26:07,800 Speaker 1: half percent, and we've had an earnings recession mild as 461 00:26:07,840 --> 00:26:10,680 Speaker 1: it is, So UM, you know, markets had better look 462 00:26:10,760 --> 00:26:15,240 Speaker 1: to real growth as opposed to unemployment and unemployment which 463 00:26:15,320 --> 00:26:19,080 Speaker 1: Janet Yell intends to do for an accurate forecast as 464 00:26:19,119 --> 00:26:22,560 Speaker 1: to where asset prices headed, Bill, you bring up growth. 465 00:26:22,600 --> 00:26:24,639 Speaker 1: We got those GDP numbers a few days ago that 466 00:26:24,720 --> 00:26:27,040 Speaker 1: the headline number there of two point nine percent. Look 467 00:26:27,119 --> 00:26:30,000 Speaker 1: under the hood, maybe some worrying signs there. What does 468 00:26:30,040 --> 00:26:35,679 Speaker 1: that say? How does that influence the FEDS path forward? Well, um, 469 00:26:36,080 --> 00:26:39,000 Speaker 1: I think they're not necessarily sensitive to GDP. I heard 470 00:26:39,000 --> 00:26:42,040 Speaker 1: your discussion with Jim Glassman in terms of the FED 471 00:26:42,119 --> 00:26:46,200 Speaker 1: not necessarily focusing on a specific growth measure, and that's true. 472 00:26:46,240 --> 00:26:50,000 Speaker 1: They focus on two percent inflation. But you know, ultimately 473 00:26:50,119 --> 00:26:53,040 Speaker 1: that type of growth rate to influences financial markets, and 474 00:26:53,040 --> 00:26:55,240 Speaker 1: I do think the FED is focused on financial markets. 475 00:26:55,280 --> 00:26:58,159 Speaker 1: Should we get a shock, for instance, in terms of 476 00:26:58,160 --> 00:27:02,480 Speaker 1: an election, should we get an ultimate realization that the 477 00:27:02,840 --> 00:27:06,040 Speaker 1: major reason and equity markets are being held up is 478 00:27:06,119 --> 00:27:09,480 Speaker 1: due to the magic of central banks and quantitative easing, 479 00:27:09,640 --> 00:27:12,800 Speaker 1: then you know, at some point, if markets start to 480 00:27:12,840 --> 00:27:15,120 Speaker 1: decline and the FED will back off, the FED as 481 00:27:15,160 --> 00:27:19,720 Speaker 1: a slave to the financial markets as opposed to vice versa, 482 00:27:19,800 --> 00:27:23,359 Speaker 1: which is what I experienced and many of you have 483 00:27:23,440 --> 00:27:26,440 Speaker 1: experienced over the past ten, twenty and thirty years. Been 484 00:27:26,480 --> 00:27:28,520 Speaker 1: a few weeks back, you made the analogy of central 485 00:27:28,520 --> 00:27:32,320 Speaker 1: bankers to Martin Gale gamblers. Here, Macau is Frankfort, I suppose, 486 00:27:32,400 --> 00:27:35,520 Speaker 1: and the strip is thread Needle Street. From what we've 487 00:27:35,520 --> 00:27:38,159 Speaker 1: seen here in the intervening couple of of weeks. Do 488 00:27:38,240 --> 00:27:42,560 Speaker 1: you see central bankers now taking stock reevaluating, becoming introspective 489 00:27:42,560 --> 00:27:45,360 Speaker 1: they've been all of these policy reviews. Are central bankers 490 00:27:45,440 --> 00:27:48,720 Speaker 1: coming to think about or maybe accept the limits to 491 00:27:48,760 --> 00:27:52,399 Speaker 1: what they're doing? I think, I think to some extent, 492 00:27:52,760 --> 00:27:55,399 Speaker 1: you know, to me, the ultimate question, uh, is what 493 00:27:55,560 --> 00:27:57,919 Speaker 1: is the new neutral policy right? Not just for the 494 00:27:57,960 --> 00:28:02,000 Speaker 1: real economy and it's reflection and financial markets and asset prices, 495 00:28:02,040 --> 00:28:06,360 Speaker 1: but for savers and savings institutions such as life insurance companies, 496 00:28:06,400 --> 00:28:10,000 Speaker 1: pension funds for one k individual savers. And I think 497 00:28:10,000 --> 00:28:12,600 Speaker 1: an increasing number of FED members as well as uh, 498 00:28:12,840 --> 00:28:17,640 Speaker 1: you know, other spokes men and women for other central 499 00:28:17,760 --> 00:28:21,960 Speaker 1: banks are coming over to the side gradually. We've seen 500 00:28:22,000 --> 00:28:24,639 Speaker 1: two descents three descents recently in the in terms of 501 00:28:24,640 --> 00:28:27,159 Speaker 1: the FED statement, but they're coming over to the side 502 00:28:27,200 --> 00:28:31,000 Speaker 1: that considers savers and return on savings instead of just 503 00:28:31,040 --> 00:28:33,960 Speaker 1: a rate that stabilizes asset markets. Bill, who are you 504 00:28:34,000 --> 00:28:35,840 Speaker 1: going to support for president? I mean, I don't want 505 00:28:35,840 --> 00:28:38,640 Speaker 1: to be direct, but it's four days to go here, uh, 506 00:28:38,840 --> 00:28:41,400 Speaker 1: Mr gross And and I look at the job economy. 507 00:28:41,440 --> 00:28:45,040 Speaker 1: I look how prescient you've been on our financial repression. 508 00:28:45,280 --> 00:28:48,600 Speaker 1: Do you have a preferred candidate that can give us 509 00:28:48,840 --> 00:28:54,080 Speaker 1: less bill gross financial repression. I don't you know. Trump 510 00:28:54,160 --> 00:28:58,920 Speaker 1: is uh minor ely attacked the FED, and I don't 511 00:28:58,960 --> 00:29:03,160 Speaker 1: think I'm quite sure what would happen if he became president, 512 00:29:03,240 --> 00:29:07,000 Speaker 1: whether yelling would be asked to leave or not. So 513 00:29:07,520 --> 00:29:10,480 Speaker 1: that's that's not positive, But it doesn't speak to financial 514 00:29:10,520 --> 00:29:13,840 Speaker 1: repression and the fact that interest rates may gradually move 515 00:29:13,920 --> 00:29:16,960 Speaker 1: higher and remove some of that repression. I think, um, 516 00:29:17,040 --> 00:29:20,400 Speaker 1: Hillary is a status quote type of candidate, and therefore 517 00:29:20,480 --> 00:29:24,080 Speaker 1: the financial repression that's existed for seven or eight years 518 00:29:24,120 --> 00:29:26,880 Speaker 1: now in terms of low interest rates would be part 519 00:29:26,880 --> 00:29:29,280 Speaker 1: of our mantra to my way thinking. But he hasn't 520 00:29:29,280 --> 00:29:32,720 Speaker 1: really spoken to that, has you Bill very quickly? Here? 521 00:29:32,800 --> 00:29:35,080 Speaker 1: I spoke with Nicholas Comfort and farm for today the 522 00:29:35,080 --> 00:29:38,840 Speaker 1: effects of negative interest rates on commerce Bank of Germany. 523 00:29:38,920 --> 00:29:41,080 Speaker 1: Negative interest rates are out there. You know, it's a 524 00:29:41,200 --> 00:29:45,120 Speaker 1: raging debate. Do we need to pull ourselves away from 525 00:29:45,120 --> 00:29:48,680 Speaker 1: this experiment of negative rates? Do we maintain it in 526 00:29:48,720 --> 00:29:51,280 Speaker 1: the next year? What would be your counsel to global 527 00:29:51,360 --> 00:29:54,280 Speaker 1: leaders now? I think we need to pull away. I 528 00:29:54,280 --> 00:29:56,680 Speaker 1: think that's one of the reasons, uh you know, yeah, 529 00:29:56,960 --> 00:30:01,080 Speaker 1: has been influenced, but some of the the Fed members 530 00:30:01,200 --> 00:30:05,000 Speaker 1: in terms of just that, uh, you know, consideration. I 531 00:30:05,880 --> 00:30:09,960 Speaker 1: think it's an experiment, uh to raise interest rates in 532 00:30:10,200 --> 00:30:13,880 Speaker 1: a period of time in which you know, inflation is quiescent, 533 00:30:13,960 --> 00:30:18,880 Speaker 1: so to speak. But you know, subjectively, as I've spoken 534 00:30:18,880 --> 00:30:21,360 Speaker 1: for the last year or two and others. Um, you know, 535 00:30:21,440 --> 00:30:25,000 Speaker 1: negative interest interest rates have a influence on the real economy, 536 00:30:25,040 --> 00:30:27,600 Speaker 1: and it's not always positive. It's not always trickled down. 537 00:30:27,720 --> 00:30:31,560 Speaker 1: And to the extent that bank interest rate margins are 538 00:30:31,640 --> 00:30:35,560 Speaker 1: narrowed and profits uh in that sector aren't doing well. 539 00:30:35,600 --> 00:30:38,400 Speaker 1: And to the extent that pensions and four one case 540 00:30:38,400 --> 00:30:42,600 Speaker 1: and insurance companies are hurt by negative and narrow interest 541 00:30:42,680 --> 00:30:46,160 Speaker 1: rate margins, then ultimately that affects the real economy, and 542 00:30:46,400 --> 00:30:49,200 Speaker 1: it has for the last year or so. David Gurr 543 00:30:49,240 --> 00:30:52,600 Speaker 1: and Tom Keene worldwide and joining us now in the studio. 544 00:30:52,640 --> 00:30:55,040 Speaker 1: He's not wearing a wig like the justices in England. 545 00:30:55,440 --> 00:30:58,239 Speaker 1: John Farrell with us this morning, and uh they will 546 00:30:58,320 --> 00:30:59,960 Speaker 1: jump in here in a moment with do Good, Bill 547 00:31:00,080 --> 00:31:04,520 Speaker 1: Gross of Janice Capital of David David Gray here on 548 00:31:04,560 --> 00:31:07,600 Speaker 1: Bloomberg Surveillance. Greetings to our listeners on Bloomberg Radio around 549 00:31:07,600 --> 00:31:09,760 Speaker 1: the world, our viewers on Bloomberg Television as well. John Fair, 550 00:31:09,800 --> 00:31:12,520 Speaker 1: the anchor of Daybreak Americas on Bloomberg Television, Daybreak Europe 551 00:31:12,560 --> 00:31:15,120 Speaker 1: on Bloomberg Radio, joins me. But we're with Bill Gross 552 00:31:15,120 --> 00:31:17,680 Speaker 1: of Janis Capital and Bill, let me ask you about 553 00:31:18,400 --> 00:31:21,360 Speaker 1: how the clarion call for more fiscal stimulus is ringing 554 00:31:21,360 --> 00:31:23,800 Speaker 1: out in Newport Beach. How are how are you responding 555 00:31:23,840 --> 00:31:27,360 Speaker 1: to the growing chorus of cries for physical stimulus from 556 00:31:27,400 --> 00:31:31,520 Speaker 1: central bankers around the world. Well, we don't have that 557 00:31:31,600 --> 00:31:35,080 Speaker 1: many potholes and new Form beachs. The Irvane company ceased 558 00:31:35,120 --> 00:31:37,880 Speaker 1: to that, and uh, you know, the infrastructure seems to 559 00:31:38,400 --> 00:31:42,240 Speaker 1: request seems to be just that, a a plea for 560 00:31:43,120 --> 00:31:46,160 Speaker 1: fixing our bridges and fixing our potholes, and that's fine. Uh. 561 00:31:46,360 --> 00:31:49,760 Speaker 1: You know what amazes me, though, is that the word 562 00:31:50,000 --> 00:31:53,760 Speaker 1: canes rarely comes up on either side, rarely comes up 563 00:31:53,760 --> 00:31:56,520 Speaker 1: in the press. It's almost like he's um, you know, 564 00:31:56,600 --> 00:32:00,800 Speaker 1: been disked in history, and that the canes in solution 565 00:32:00,960 --> 00:32:06,560 Speaker 1: to economic growth when it lags significantly in terms of 566 00:32:06,560 --> 00:32:10,560 Speaker 1: fiscal spending, it is never addressed. It's addressed in terms 567 00:32:10,560 --> 00:32:15,960 Speaker 1: of infrastructure shovel ready. Even Obama has suggested that his 568 00:32:16,080 --> 00:32:18,640 Speaker 1: shovel ready program didn't really do much and took one 569 00:32:18,680 --> 00:32:21,480 Speaker 1: to two years to get going. So, you know, to 570 00:32:21,560 --> 00:32:24,760 Speaker 1: my way of thinking, it's it's vastly insufficient on either side. 571 00:32:24,840 --> 00:32:28,360 Speaker 1: And what we really need is a fiscal spending program 572 00:32:28,400 --> 00:32:32,400 Speaker 1: of significant proportions, perhaps as much as one to two 573 00:32:32,760 --> 00:32:34,760 Speaker 1: of g d P on an annual basis, in order 574 00:32:34,800 --> 00:32:36,960 Speaker 1: to pull us out of this thing. We'll play it 575 00:32:36,960 --> 00:32:39,480 Speaker 1: out for us here real quick. Tom Keene asking you if, 576 00:32:39,520 --> 00:32:41,320 Speaker 1: if if you have a candidate in this election, both 577 00:32:41,320 --> 00:32:44,560 Speaker 1: of them promising to do significant infrastructure spending, looking at 578 00:32:44,560 --> 00:32:46,560 Speaker 1: how that will affect the markets. If we have many 579 00:32:46,600 --> 00:32:49,240 Speaker 1: billions of dollars spent on infrastructure, any measurable effect that 580 00:32:49,240 --> 00:32:51,640 Speaker 1: you see in the near term and even in the 581 00:32:51,640 --> 00:32:55,240 Speaker 1: long term, sure on the markets. You know, in a 582 00:32:55,360 --> 00:32:59,640 Speaker 1: large Kansian stimulation, if it went that way, even infrastructure 583 00:32:59,640 --> 00:33:02,400 Speaker 1: spending of you know, hundreds of billions of dollars is 584 00:33:02,440 --> 00:33:06,080 Speaker 1: a is a negative for for the bond market. Bond 585 00:33:06,160 --> 00:33:10,200 Speaker 1: the bond market likes to see monetary stimulation, a fiscal stimulation, 586 00:33:10,240 --> 00:33:14,640 Speaker 1: and so you know, I would expect after next week 587 00:33:14,720 --> 00:33:18,160 Speaker 1: any result that that came out in the form of 588 00:33:18,880 --> 00:33:21,800 Speaker 1: larger government spending as a percentage of g d P 589 00:33:22,040 --> 00:33:25,880 Speaker 1: would be slightly bond negative. On the other hand, let 590 00:33:25,920 --> 00:33:30,720 Speaker 1: me suggest that interest rates the tenure treasury for instances 591 00:33:31,240 --> 00:33:34,320 Speaker 1: this sort of pinned by what other countries and other 592 00:33:34,360 --> 00:33:36,280 Speaker 1: central banks are doing. But with the b o J 593 00:33:36,560 --> 00:33:40,920 Speaker 1: at zero percent on their tenure, that's a significant magnet 594 00:33:41,120 --> 00:33:45,640 Speaker 1: for US interest rates to stay relatively low. Japanese investor 595 00:33:45,760 --> 00:33:48,520 Speaker 1: can sell a j g B to their central bank 596 00:33:48,640 --> 00:33:51,920 Speaker 1: at UH at minus six basis points for the tenure 597 00:33:52,000 --> 00:33:56,360 Speaker 1: and reinvested in treasuries at a currency hedged level of 598 00:33:56,480 --> 00:33:59,120 Speaker 1: maybe forty or forty five basis points pick up. So 599 00:33:59,200 --> 00:34:01,840 Speaker 1: it's import and where in Japan is. It's important where 600 00:34:02,120 --> 00:34:04,640 Speaker 1: the e c B is, and it's obviously important what 601 00:34:04,720 --> 00:34:06,920 Speaker 1: happens in the election. But you have to blend all 602 00:34:06,960 --> 00:34:10,200 Speaker 1: of that into consideration, and that to me speaks to 603 00:34:10,840 --> 00:34:13,880 Speaker 1: interest rates. Take the tenure being in a relatively tight 604 00:34:14,120 --> 00:34:18,239 Speaker 1: range because of the Japanese magnet and because of the 605 00:34:18,239 --> 00:34:23,040 Speaker 1: potential for higher government spending after the election. So let's 606 00:34:23,040 --> 00:34:26,120 Speaker 1: break out of the six months range and talk about 607 00:34:26,120 --> 00:34:28,960 Speaker 1: a thirty year bull market. Are you seeing anything on 608 00:34:29,000 --> 00:34:34,359 Speaker 1: the horizon that suggests the thirty year bull market is over. Well, 609 00:34:34,400 --> 00:34:37,480 Speaker 1: I see a suggestion that perhaps the rates bought them. 610 00:34:37,840 --> 00:34:40,919 Speaker 1: That's not the definition of a bull market being over. 611 00:34:41,040 --> 00:34:43,879 Speaker 1: I I would suggest a definition of bull market being 612 00:34:43,920 --> 00:34:46,120 Speaker 1: over would be the initiation of a bear market. And 613 00:34:46,239 --> 00:34:49,320 Speaker 1: I I simply don't see that. As long as central 614 00:34:49,320 --> 00:34:52,440 Speaker 1: banks continue to do what they do. Uh. You know 615 00:34:52,520 --> 00:34:55,439 Speaker 1: the three banks that are actively engaged now in the UK, 616 00:34:56,080 --> 00:34:58,600 Speaker 1: the e c B and the Bank in Japan. Yeah, 617 00:34:58,600 --> 00:35:01,759 Speaker 1: it's a hundred and eighty billion dollars a month in 618 00:35:01,880 --> 00:35:08,200 Speaker 1: terms of spending towards towards bonds that ultimately flows into equities, 619 00:35:08,239 --> 00:35:12,280 Speaker 1: and even those countries are buying equities and corporate bonds. 620 00:35:12,320 --> 00:35:15,759 Speaker 1: So as long as that continues, it's very hard for 621 00:35:15,800 --> 00:35:18,200 Speaker 1: a bear market. It doesn't mean, and I will put 622 00:35:18,239 --> 00:35:20,320 Speaker 1: it right out front, as I have for the past 623 00:35:20,680 --> 00:35:24,239 Speaker 1: twelve to twenty four months, that this artificial stimulation one 624 00:35:24,320 --> 00:35:28,920 Speaker 1: day will end in in ruin. But as long as 625 00:35:28,960 --> 00:35:31,160 Speaker 1: the money keeps being pumped out and you have a 626 00:35:31,160 --> 00:35:35,000 Speaker 1: buyer for bonds in the face of higher inflation, uh, 627 00:35:35,160 --> 00:35:36,879 Speaker 1: you know, whether it's two or two and a half 628 00:35:36,920 --> 00:35:40,759 Speaker 1: percent still to be defined. In various countries, then it's 629 00:35:40,800 --> 00:35:42,960 Speaker 1: hard for a bear market to begin. We'll belly you 630 00:35:43,080 --> 00:35:45,319 Speaker 1: that buyer. What we've seen recently is a steepening of 631 00:35:45,320 --> 00:35:47,520 Speaker 1: the yield curve. I just wonder whether the flattener returns. 632 00:35:47,560 --> 00:35:49,439 Speaker 1: You came on too Limberg television a couple of months 633 00:35:49,480 --> 00:35:53,520 Speaker 1: ago and set the shortened duration as you portfolio changed. 634 00:35:53,560 --> 00:35:57,960 Speaker 1: Since then, yeah, the duration has been short you know, 635 00:35:58,000 --> 00:36:01,359 Speaker 1: centering around zero my point, and I've talked to Tom 636 00:36:01,400 --> 00:36:04,520 Speaker 1: about this and Mike about this over the past uh, 637 00:36:04,640 --> 00:36:08,000 Speaker 1: you know several quarters. Is that in this type of environment, 638 00:36:08,040 --> 00:36:12,440 Speaker 1: If if your main theory is that yields a range 639 00:36:12,440 --> 00:36:16,560 Speaker 1: bound within a basis point range, then it's not the 640 00:36:16,600 --> 00:36:21,640 Speaker 1: buying or selling um on a trading basis that that 641 00:36:21,920 --> 00:36:26,200 Speaker 1: you know, produces a total return, but it's the the 642 00:36:26,280 --> 00:36:29,480 Speaker 1: selling of volatility around those ranges that produces a much 643 00:36:29,560 --> 00:36:32,239 Speaker 1: higher yield and a much higher return. You have to 644 00:36:32,239 --> 00:36:34,440 Speaker 1: be right on that range. And if the ranges are broken, 645 00:36:34,480 --> 00:36:37,520 Speaker 1: obviously um, you're not making money. But the selling of 646 00:36:37,600 --> 00:36:41,760 Speaker 1: calls and puts on a range bound market is perhaps 647 00:36:41,800 --> 00:36:46,000 Speaker 1: the most attractive way to make money in that type 648 00:36:46,000 --> 00:36:47,960 Speaker 1: of market, and that's what Janice has been doing. And 649 00:36:48,000 --> 00:36:50,960 Speaker 1: that's why we're you know, had by five point three 650 00:36:51,000 --> 00:36:54,000 Speaker 1: percent this year, beating stocks and beating bonds. So you've 651 00:36:54,000 --> 00:36:56,719 Speaker 1: written with with alarm and in sweeping terms about what 652 00:36:56,840 --> 00:36:59,920 Speaker 1: central bank policy is going to mean for for capitalism, 653 00:37:00,080 --> 00:37:04,240 Speaker 1: transformation of capitalism. Uh, do you see that transformation underway 654 00:37:04,320 --> 00:37:07,200 Speaker 1: right now? Is it inevitable? Where does that stand? Oh? 655 00:37:07,280 --> 00:37:11,160 Speaker 1: We do, and you can see it. Uh, there's a 656 00:37:11,239 --> 00:37:15,080 Speaker 1: there's a counter argument to what I'm about to disclose, 657 00:37:15,160 --> 00:37:17,480 Speaker 1: but there's you can see it. I think in the 658 00:37:17,520 --> 00:37:21,399 Speaker 1: form of capital expenditures relative to g d p UM. 659 00:37:22,239 --> 00:37:25,560 Speaker 1: You know what what zero interest rates and negative interstrs 660 00:37:25,600 --> 00:37:30,080 Speaker 1: rates do is bring consumption forward in a multitude of fashions. 661 00:37:30,200 --> 00:37:33,320 Speaker 1: And to the extent that consumption has been brought forward, 662 00:37:33,400 --> 00:37:37,440 Speaker 1: and corporations since that, in other words, they sense that 663 00:37:37,600 --> 00:37:43,720 Speaker 1: future consumption will not match past consumption. Then capitalism itself, 664 00:37:43,760 --> 00:37:48,400 Speaker 1: the willingness to invest money in capital, plant and equipment, 665 00:37:48,560 --> 00:37:51,680 Speaker 1: you know, is diminished, and we've seen that. We also 666 00:37:51,719 --> 00:37:54,359 Speaker 1: see it in terms of productivity numbers. Yes, they were good, 667 00:37:54,800 --> 00:37:57,440 Speaker 1: Uh this week around three percent, but year on year 668 00:37:57,480 --> 00:38:01,360 Speaker 1: it's a flat zero percent, you know, productivity increase, and 669 00:38:01,480 --> 00:38:04,719 Speaker 1: so yeah, we're beginning to see capitalism as we once 670 00:38:04,840 --> 00:38:08,200 Speaker 1: knew it, Uh, you know, fade at the margin? Um 671 00:38:08,320 --> 00:38:11,640 Speaker 1: and and is it because of zero percent interest rates? 672 00:38:11,760 --> 00:38:14,759 Speaker 1: Or is it because of some savings glad as a 673 00:38:15,360 --> 00:38:19,920 Speaker 1: ex chairman Bernanke would describe, I think it's the former 674 00:38:19,960 --> 00:38:23,560 Speaker 1: as opposed to the latter. I don't think any economists 675 00:38:23,560 --> 00:38:27,200 Speaker 1: with common sense as opposed to you know, uh university 676 00:38:27,200 --> 00:38:31,640 Speaker 1: trained modeling, would deny that the zero percent interest rates 677 00:38:31,719 --> 00:38:36,880 Speaker 1: distroyed capitalism. Capitalism can't can't function. Uh, if there's no 678 00:38:36,960 --> 00:38:40,799 Speaker 1: return on short term money or low return on long 679 00:38:40,920 --> 00:38:44,440 Speaker 1: term money, just is common sense. Let's return here your 680 00:38:44,520 --> 00:38:47,600 Speaker 1: lastly to the jobs numbers today. I'm curious about how 681 00:38:47,640 --> 00:38:49,920 Speaker 1: that factors into your investment strategy. What you're looking at 682 00:38:49,920 --> 00:38:53,440 Speaker 1: these job numbers for. Uh. Your sense of the role 683 00:38:53,440 --> 00:38:55,759 Speaker 1: of central banks here seems very well well established. When 684 00:38:55,760 --> 00:38:58,000 Speaker 1: we get a monthly report like this one doesn't change 685 00:38:58,000 --> 00:39:02,640 Speaker 1: anything measurably for you, Well, it does it from December 686 00:39:03,040 --> 00:39:06,960 Speaker 1: the December is to mess slam dunk. This is a good, 687 00:39:07,800 --> 00:39:12,239 Speaker 1: good report and there's no reason now for yelling to 688 00:39:12,280 --> 00:39:14,839 Speaker 1: continue to bluff and to bluff and to suggest that 689 00:39:15,719 --> 00:39:18,879 Speaker 1: at the next meeting they would consider it seriously. They 690 00:39:18,920 --> 00:39:23,000 Speaker 1: will raise the funds rate in December. The question becomes 691 00:39:23,280 --> 00:39:25,440 Speaker 1: how often will they raise it after that? What is 692 00:39:25,480 --> 00:39:28,560 Speaker 1: the pace of normalization? And I know that the markets 693 00:39:28,600 --> 00:39:31,960 Speaker 1: only believe that FED funds in short rates will be 694 00:39:32,000 --> 00:39:35,520 Speaker 1: raised by twenty five or even less over a twelve 695 00:39:35,520 --> 00:39:39,160 Speaker 1: month period of time. But but in any case, um, 696 00:39:39,200 --> 00:39:42,000 Speaker 1: you know, what today's reports suggested is that the Feds 697 00:39:42,000 --> 00:39:45,640 Speaker 1: on the move, But I suggest they'll move very very slowly, 698 00:39:45,680 --> 00:39:52,000 Speaker 1: and that interest rates and financial uh intermedial intermediation will 699 00:39:52,239 --> 00:39:57,399 Speaker 1: continue to exist as it has. Bill Gross, thank you 700 00:39:57,480 --> 00:40:00,320 Speaker 1: so much. Just remember Bill Gross, it's a great Southern 701 00:40:00,360 --> 00:40:05,000 Speaker 1: California tradition. Vote early, vote often. I'm sure you will 702 00:40:05,640 --> 00:40:08,480 Speaker 1: assist in the Mr Gross, thank you so much. Here 703 00:40:08,560 --> 00:40:11,239 Speaker 1: is with Jannis Capital, and of course I do urge 704 00:40:11,280 --> 00:40:15,879 Speaker 1: you to read his essays at Jannis Capital widely available 705 00:40:15,960 --> 00:40:18,840 Speaker 1: and of course, with his great influence on the bond market. 706 00:40:18,920 --> 00:40:29,680 Speaker 1: People pay attention. Thanks for listening to the Bloomberg Surveillance podcast. 707 00:40:30,040 --> 00:40:35,160 Speaker 1: Subscribe and listen to interviews on iTunes, SoundCloud, or whichever 708 00:40:35,280 --> 00:40:39,720 Speaker 1: podcast platform you prefer. I'm out on Twitter at Tom Keene. 709 00:40:39,800 --> 00:40:43,600 Speaker 1: David Gura is at David Gura before the podcast. You 710 00:40:43,640 --> 00:41:00,080 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio. Who you 711 00:40:59,800 --> 00:41:02,560 Speaker 1: put your trust in matters. Investors have put their trust 712 00:41:03,000 --> 00:41:06,919 Speaker 1: and independent registered investment advisors to the two and four 713 00:41:06,960 --> 00:41:11,920 Speaker 1: trillion dollars. Why Learn more and find your independent advisor 714 00:41:11,960 --> 00:41:12,920 Speaker 1: dot com