WEBVTT - Instant Reaction: Employers Unexpectedly Shed Jobs; Unemployment Rate Falls 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, radio News. 0:00:09.160 --> 0:00:13.800 This is a breaking news update from Bloomberg, instant reaction 0:00:14.080 --> 0:00:17.960 and analysis from our three thousand journalists and analysts around 0:00:17.960 --> 0:00:20.079 the world, and. 0:00:20.000 --> 0:00:23.000 The July jobs report crossing the Bloomberg terminal right now, 0:00:23.040 --> 0:00:26.680 and it shows that the US economy actually lost twenty 0:00:26.720 --> 0:00:30.760 three thousand jobs in the month of July. This is 0:00:30.800 --> 0:00:33.760 a lot less than the eighty thousand we were expecting 0:00:33.800 --> 0:00:36.640 to be added, and we added fifty seven thousand in 0:00:36.720 --> 0:00:38.920 the month of June. Moving to the unemployment rate, it 0:00:39.000 --> 0:00:41.960 dipped to four point one percent versus the prior month's 0:00:41.960 --> 0:00:45.240 four point two percent. The expectation was for four point 0:00:45.280 --> 0:00:48.400 two percent. Labor force participation rate coming in at sixty 0:00:48.400 --> 0:00:51.680 one point four percent. The month before it was sixty 0:00:51.680 --> 0:00:53.920 one and a half percent, and that's a bit lower 0:00:54.160 --> 0:00:57.120 than the expectation. Want to move over to the wage 0:00:57.160 --> 0:01:01.080 component here, which provides more clues on inflame. Average hourly 0:01:01.120 --> 0:01:03.880 earnings a month over month up just a tenth of 0:01:03.920 --> 0:01:06.880 a percent, a scant tenth of a percent. Average hourly 0:01:06.920 --> 0:01:10.080 earnings year over year up three point two percent. The 0:01:10.160 --> 0:01:12.759 expectation was for three and a half percent, so again 0:01:12.800 --> 0:01:17.040 a big surprise to the downside the economy losing twenty 0:01:17.080 --> 0:01:19.640 three thousand jobs in the month of July. The expectation 0:01:19.880 --> 0:01:22.960 was for an edition of eighty thousand. I want to 0:01:22.959 --> 0:01:24.960 take a quick look at how the market is reacting. 0:01:25.000 --> 0:01:25.200 Here. 0:01:25.440 --> 0:01:28.280 Looks like futures, guys, at least for the moment, hanging 0:01:28.319 --> 0:01:29.800 on to those earlier games. 0:01:29.840 --> 0:01:32.720 Back over to you, Alexis, thank you so much. 0:01:32.760 --> 0:01:35.839 The markets movie as you can imagine, equities lift here, 0:01:36.319 --> 0:01:38.760 thinking free money will be out there in a lower 0:01:38.880 --> 0:01:42.640 rate environment. The yield space is the most elastic, and 0:01:42.720 --> 0:01:45.080 you see it in the two year yield in a 0:01:45.240 --> 0:01:49.160 solid nine basis points four point one six percent, basically 0:01:49.200 --> 0:01:52.920 halfway back to that coveted three point ninety nine thirty 0:01:53.000 --> 0:01:55.120 year bond. Doesn't come in as much as you'd expect, 0:01:55.200 --> 0:01:59.240 but nevertheless, from a five twenty two into five point 0:01:59.280 --> 0:02:01.560 one to nine two percent. Damien, your thoughts on the 0:02:01.640 --> 0:02:04.680 set of numbers here the revisions extremere. 0:02:04.840 --> 0:02:07.080 Yeah, yeah, no, I mean exactly. We have a revised 0:02:07.120 --> 0:02:09.120 down for the last for the last print of twenty 0:02:09.120 --> 0:02:11.640 thousand from fifty seven and this negative twenty three print. 0:02:11.680 --> 0:02:14.760 You would think we'll get some people's attention, but to well, 0:02:14.800 --> 0:02:16.400 let's see this point. It looks like equities are kind 0:02:16.400 --> 0:02:18.280 of looking through it for the minute. And I don't 0:02:18.280 --> 0:02:20.079 want to call this a nothing burger by any stretch. 0:02:20.200 --> 0:02:22.560 I mean, Claudia, I mean you know this. This, I'm 0:02:22.560 --> 0:02:23.760 wonderful it is going to move markets. 0:02:23.919 --> 0:02:26.600 We'll have to see her, Claudia Summer, letting her digest 0:02:26.600 --> 0:02:29.600 the data here a little bit. I do want to say, 0:02:29.760 --> 0:02:32.920 with the ECO screen that we have at Bloomberg, the 0:02:33.040 --> 0:02:37.480 change in non firm payrolls was negative twenty three versus 0:02:37.480 --> 0:02:41.200 a survey of eighty some people were there. But the 0:02:41.360 --> 0:02:44.840 two months payroll adjustment and negative one to ozh three, 0:02:44.880 --> 0:02:48.919 that's combined negative one hundred twenty six. 0:02:49.000 --> 0:02:50.280 I think we've given her enough time. 0:02:50.320 --> 0:02:56.399 Claudia sum joins us here to provide perspective. Claudia, this 0:02:56.760 --> 0:02:58.720 must change the debate at the FED. 0:02:59.080 --> 0:03:02.360 So first, does this remind you of anything? I mean 0:03:02.919 --> 0:03:06.320 a year ago exactly this employment report was when we 0:03:06.440 --> 0:03:09.799 had the very large downward revision, the downside surprise, the 0:03:09.840 --> 0:03:14.320 downward revisions, and the BLS commissioner lost her job. Right, 0:03:14.400 --> 0:03:16.680 So now, just looking quickly and I can't you know, 0:03:16.760 --> 0:03:20.200 do all the details of this government education government education 0:03:20.320 --> 0:03:22.520 was a big decline and one of the things that 0:03:22.560 --> 0:03:24.720 happens in the summer. It can be really tough with 0:03:24.760 --> 0:03:28.000 like the school calendars, and if things slip a little 0:03:28.000 --> 0:03:30.760 bit with the seasonal adjustment, you can get some kind 0:03:30.760 --> 0:03:34.760 of squorely numbers in terms of the education. That certainly 0:03:34.800 --> 0:03:37.440 is at play for the downside MYSS today. That was 0:03:37.480 --> 0:03:40.280 something that was very clear in last year's numbers as well, 0:03:40.600 --> 0:03:42.960 So I don't want to, you know, dismiss this. And 0:03:43.000 --> 0:03:45.360 of course that was a shift from we'd had a 0:03:45.400 --> 0:03:48.080 strong labor market to like, WHOA, maybe it's not so strong. 0:03:48.360 --> 0:03:50.560 So I do think there is signal here. There's probably 0:03:50.640 --> 0:03:52.960 a fair bit of noise and some seasonal issues that'll 0:03:52.960 --> 0:03:56.000 look through. The unemployment rate did tick down, right. I 0:03:56.040 --> 0:03:58.200 think the one thing that for the FED that maybe 0:03:58.240 --> 0:04:00.480 of most interest is wages coming in soft. 0:04:01.080 --> 0:04:05.160 I'm getting out my HP twelve C calculator because Constance Hunter. 0:04:05.200 --> 0:04:08.640 I wouldn't do this for Claudia, but Constance Hunter jumped in, 0:04:08.680 --> 0:04:09.280 here's we're going to do. 0:04:09.320 --> 0:04:10.640 Can we do this in the control room? 0:04:10.760 --> 0:04:13.640 Can we rip up the script that have Claudia and 0:04:13.760 --> 0:04:14.760 Constans together? 0:04:15.520 --> 0:04:17.760 Is that did you check with their people, Yeah, they 0:04:17.839 --> 0:04:18.080 say it. 0:04:18.240 --> 0:04:21.640 Okay, consense hunter getting wired up right now, getting folks 0:04:21.680 --> 0:04:25.680 futures up thirty two the advanced Nasdaq lifts double up 0:04:25.760 --> 0:04:28.440 eight tenths of a percent. Here in the yield again, 0:04:28.520 --> 0:04:30.680 the two year yield is the most elastic in it 0:04:30.760 --> 0:04:34.359 of four point one six percent. Damian ask a smart 0:04:34.440 --> 0:04:37.360 question to doctor some Well, I figure out the three 0:04:37.360 --> 0:04:40.560 months moving average on my HP twelve C. 0:04:40.920 --> 0:04:43.240 Well, Dr Salm, I mean average hourly earning is down 0:04:43.440 --> 0:04:45.760 zero point one percent month over month. I mean, you 0:04:45.760 --> 0:04:47.920 know you mentioned the Beige Book before the break, right, 0:04:48.040 --> 0:04:49.880 and you know what did the Beige Book show us 0:04:49.880 --> 0:04:52.440 that consumers are adjusting by taking on more debt, buying 0:04:52.520 --> 0:04:55.840 less but shopping more frequently trading down to cheaper alternatives. 0:04:56.279 --> 0:04:58.039 Is this really wearing on them now? I mean what 0:04:58.080 --> 0:04:59.279 does this all mean for the consumer? 0:04:59.480 --> 0:05:02.599 So on the consumer side, this this is not good news. 0:05:02.600 --> 0:05:05.320 I mean, paychecks are such a key driver of consumer span. 0:05:05.400 --> 0:05:07.720 I'm not the only driver, but this is a soft 0:05:08.279 --> 0:05:10.479 a soft eating. I think the one where you know, 0:05:10.520 --> 0:05:13.280 the implications maybe come out the strongest for this is 0:05:13.320 --> 0:05:15.640 on the FED side. You know, the thing that would 0:05:15.680 --> 0:05:19.200 get the Fed moving towards rate hikes the fastest. Where 0:05:19.240 --> 0:05:22.680 if there was any sign of overheating in the labor market, 0:05:23.000 --> 0:05:26.479 this is exactly the opposite of overheating. We hadn't seen 0:05:26.520 --> 0:05:29.320 wage growth really picking up, but we really hadn't seen 0:05:29.360 --> 0:05:31.960 it slowing down much. And so this really takes like 0:05:32.040 --> 0:05:36.440 the labor market isn't pushing up inflation, and frankly, if 0:05:36.480 --> 0:05:39.400 it softens it it might help hold down some of 0:05:39.400 --> 0:05:39.960 that inflation. 0:05:40.200 --> 0:05:41.120 We are so advantaged. 0:05:41.160 --> 0:05:44.600 Claudia Samnus Century Advisors and joining us now Constance Hunter, 0:05:44.960 --> 0:05:48.600 chief economists EIU. The two of them together commercial free 0:05:48.640 --> 0:05:52.480 across America in this half hour on yield. Christina kat 0:05:52.640 --> 0:05:55.320 Menu of Investigo will join us here and a bit 0:05:55.440 --> 0:05:58.120 Constant Hunter. You're over there working on the terminal looking 0:05:58.120 --> 0:06:01.080 at the numbers. I got a ninety day average, a 0:06:01.120 --> 0:06:06.320 three month moving average subject to revision, of twenty thousand per. 0:06:06.160 --> 0:06:07.279 Month on jobs. 0:06:07.680 --> 0:06:10.560 You can give me in all your academics, Claudia samac 0:06:10.680 --> 0:06:14.960 I don't care politically in America. In defense of the president, 0:06:15.440 --> 0:06:19.279 that's an unacceptable statistic for America to see a three 0:06:19.400 --> 0:06:23.359 months moving average of twenty thousand jobs per month. It 0:06:23.400 --> 0:06:25.400 doesn't get it done well. 0:06:25.440 --> 0:06:28.000 We don't think it gets it done. I'm gonna take 0:06:28.000 --> 0:06:28.680 off my headphones. 0:06:29.080 --> 0:06:30.360 Please take please take time. 0:06:30.520 --> 0:06:34.120 Okay, I'm echoing in there, echoing. I'm back on to 0:06:34.120 --> 0:06:38.320 hear Claudia. But in any case, you know, last year 0:06:38.400 --> 0:06:41.719 when we had changes to immigration, when we were deporting 0:06:41.720 --> 0:06:45.479 a number of people, there was widespread spread speculation that 0:06:45.680 --> 0:06:50.160 actually the monthly requirement had fallen. This year, what we 0:06:50.200 --> 0:06:54.320 saw with jobs, with payroll numbers increasing monthly, but the 0:06:54.400 --> 0:06:57.840 unemployment really not coming down significantly. Is that well, maybe 0:06:57.880 --> 0:07:02.120 it's higher this year thousand over the last three months, 0:07:02.400 --> 0:07:05.800 and then that fall in the unemployment rate that is 0:07:05.880 --> 0:07:08.400 not That is not a good look for the president. 0:07:08.480 --> 0:07:11.880 You're right, and it bolsters his case to cut rates. 0:07:11.880 --> 0:07:14.240 He's going to keep beating that drum. I think this 0:07:14.360 --> 0:07:17.560 bolsters our call for a hold. This is this is 0:07:17.680 --> 0:07:19.760 definitely a warrants a hold. 0:07:21.120 --> 0:07:24.960 Does this study that we're seeing right now? Can government 0:07:25.000 --> 0:07:28.640 officials in the FED get out front or they colossally 0:07:28.880 --> 0:07:32.400 ex post where they just have to wait for the 0:07:32.560 --> 0:07:35.960 data before they go flat or cut rates. 0:07:36.600 --> 0:07:39.280 So, I mean, policymakers never have a full picture of 0:07:39.320 --> 0:07:41.400 the economy when they make a decision. It just it 0:07:41.720 --> 0:07:43.600 takes too long, and there's always we always want one 0:07:43.600 --> 0:07:45.920 more piece of data, one more piece of information. But 0:07:46.040 --> 0:07:48.280 when you have enough questions or you have enough tension, 0:07:48.360 --> 0:07:50.760 that can that certainly can be you know, a reason 0:07:50.840 --> 0:07:53.240 to move a little more slowly until you get a 0:07:53.280 --> 0:07:56.000 decisive signal. I mean, I don't. I don't think today's 0:07:56.040 --> 0:07:58.640 data are decisive and in reshaping that we've had a 0:07:58.760 --> 0:08:01.480 largely balanced labor market so far this year, but they 0:08:01.560 --> 0:08:04.520 raise some concerns and we'll, you know, get more on inflation. 0:08:04.600 --> 0:08:07.600 We'll see if the distinplation is sticking or not. So 0:08:08.040 --> 0:08:09.400 you get what you have and you have to make 0:08:09.400 --> 0:08:10.480 a decisions. 0:08:09.960 --> 0:08:13.880 She decid, she did, she's such a pro. Today's date 0:08:13.880 --> 0:08:15.040 it wasn't decisive. 0:08:15.520 --> 0:08:18.600 Is there ever an economist who's ever said that today's 0:08:18.640 --> 0:08:23.480 dat has decided? Damien Sasawer with Constants Hunter and Claudius Constant. 0:08:23.560 --> 0:08:25.280 I mean, I'm just looking at so for futures here, 0:08:25.320 --> 0:08:26.920 I mean I see whites up a tick to a 0:08:26.960 --> 0:08:28.480 tick and a half, Reds are up two and a half, 0:08:28.520 --> 0:08:30.920 three ticks. I mean, so you know obviously what we're 0:08:30.920 --> 0:08:33.280 seeing here or yields down, price up, and is that 0:08:33.320 --> 0:08:35.760 the right Uh, you know, is that the right reaction 0:08:35.880 --> 0:08:37.920 to this? And just how much do you think the 0:08:37.960 --> 0:08:40.760 market's going to rush to price September out of the equation. 0:08:40.880 --> 0:08:42.040 Is that what we're looking at here. 0:08:42.280 --> 0:08:44.960 I think the market will begin to price September out 0:08:44.960 --> 0:08:46.920 of the equation. I think Claudia is right. Tom. I 0:08:46.960 --> 0:08:48.680 was almost going to say, you never look at just 0:08:48.720 --> 0:08:51.280 one number, and of course you don't, but you preface 0:08:51.320 --> 0:08:53.480 your question on the three month moving average, right, And 0:08:53.520 --> 0:08:57.160 I think that's what we're talking about here. One piece 0:08:57.200 --> 0:09:00.280 of concern, right, is you saw the unemployment rate fall 0:09:00.960 --> 0:09:04.800 for bad reasons, not good reasons to study participation felt 0:09:05.120 --> 0:09:06.240 people exams? 0:09:06.360 --> 0:09:07.600 Who would that be? Folks? 0:09:07.960 --> 0:09:11.120 Because of that where the unemployment rates goes down for 0:09:11.240 --> 0:09:13.280 bad reasons discuss doctor Hunter. 0:09:13.800 --> 0:09:17.079 Well, certainly, if you see that participation rate decline, it's 0:09:17.120 --> 0:09:20.560 only one tenth, but it's enough that we saw this 0:09:20.720 --> 0:09:24.280 load growth of jobs and we saw the unemployment rate fall. 0:09:24.559 --> 0:09:29.439 It suggests to you that either there's low supply along 0:09:29.480 --> 0:09:33.760 with load demand that is not a robust labor market situation. 0:09:34.640 --> 0:09:36.640 And you know, I was looking before I came on 0:09:36.720 --> 0:09:40.199 last night. I was I got buried in data as 0:09:40.200 --> 0:09:43.280 I as I sometimes do. And if you look at 0:09:43.280 --> 0:09:48.040 the FEDS Financial Conditions Index there, it suggests it suggests 0:09:48.080 --> 0:09:50.320 that we have tailwinds. Now those tailwinds are diminishing, but 0:09:50.360 --> 0:09:54.440 it suggests that monetary policy is loose here. And if 0:09:54.480 --> 0:09:56.960 we have loose monetary policy and a budget deficit of 0:09:56.960 --> 0:09:59.079 six percent and this is the best we can do, 0:09:59.480 --> 0:10:03.679 I think it begs asking some questions about the underlying economy. 0:10:03.760 --> 0:10:06.640 Yeah, I mean, look constant, and the equity market agrees 0:10:06.679 --> 0:10:08.360 with you. I mean, it is rallying here. 0:10:08.440 --> 0:10:10.000 I mean they see exactly what you see. 0:10:10.000 --> 0:10:12.160 This is an excuse for them to price out rate hikes, 0:10:12.160 --> 0:10:14.800 to basically get dubvish, and that is great for high 0:10:15.040 --> 0:10:17.960 for for sky assets. And so you know, shifting to you, 0:10:18.000 --> 0:10:19.640 I mean, Claudia just talked to us a little bit 0:10:19.640 --> 0:10:23.040 more about what's the FOBT. I mean, does this take 0:10:23.120 --> 0:10:25.560 some of the balance out of what next week's inflation 0:10:25.640 --> 0:10:27.080 print is going to look like? I mean, what are 0:10:27.080 --> 0:10:29.400 you looking for next? What's the next big figure that 0:10:29.400 --> 0:10:30.880 you're going to lean into? Data wise? 0:10:31.120 --> 0:10:31.320 Well? 0:10:31.360 --> 0:10:35.480 Absolutely, the inflation data are front and center right and 0:10:35.520 --> 0:10:37.600 you want to see we got a very soft inflation 0:10:37.679 --> 0:10:40.680 read for June. We don't expect that to show up 0:10:40.720 --> 0:10:43.280 again in July exactly that way. But you want to 0:10:43.320 --> 0:10:46.680 see some softness or at least getting back to something 0:10:46.720 --> 0:10:49.720 that's consistent with target right, and so there'll be a 0:10:49.720 --> 0:10:52.480 lot of attention to the CPI, the PPI, the import prices. 0:10:52.480 --> 0:10:54.679 I mean, inflation is still front and center, because inflation 0:10:54.800 --> 0:10:57.600 is still very far from the FEDS target and you 0:10:57.640 --> 0:10:59.720 need and if nothing else, you want to see it 0:10:59.760 --> 0:11:02.760 move in the right direction. Today we're seeing employment move 0:11:02.800 --> 0:11:04.800 and not the right direction. Maybe next week we'll get 0:11:04.840 --> 0:11:08.040 some better news on inflation, but I don't think this 0:11:08.120 --> 0:11:10.640 takes any pressure off of the CPI. And before this 0:11:10.720 --> 0:11:12.960 that meets again, we're gonna get one more payroll and 0:11:12.960 --> 0:11:15.200 we've got next week's CPI and another one. So there's 0:11:15.200 --> 0:11:16.000 a lot of data to. 0:11:15.960 --> 0:11:20.760 Come across America, a real treat together. Claudia sam with 0:11:20.920 --> 0:11:23.640 us today from News Century Advisors and Constance Hunter of 0:11:23.720 --> 0:11:28.280 EIU off the Shock report. We're up, Futures up thirty 0:11:28.360 --> 0:11:31.400 nine now, Nasdaq is up a solid stick one percent 0:11:31.960 --> 0:11:35.840 on the Nasdaq futures, so even Bitcoin vaults up seven 0:11:35.880 --> 0:11:41.679 hundred dollars. Constance demand that I quote Pelly Winners l 0:11:41.840 --> 0:11:44.840 one fifty seven on Brench crude right now in the 0:11:45.000 --> 0:11:47.319 most elastic yield. The two year of four point one 0:11:48.240 --> 0:11:51.320 five percent in a solid nine basis points, I'm going 0:11:51.360 --> 0:11:53.719 to call that a ginormous movement, even the ten year 0:11:54.320 --> 0:11:56.840 in seven basis points. I want to go to your 0:11:56.880 --> 0:12:00.200 two wheelhouses, Claudia. Let me begin with you, with all 0:12:00.280 --> 0:12:04.160 of your deserved acclaim over recession. We've had a pop 0:12:04.160 --> 0:12:09.199 phenomenal GDP. John writing over Breen notes consumption and investment 0:12:09.640 --> 0:12:12.080 eight ish percent, like a banana republic. 0:12:12.520 --> 0:12:14.800 Do you just assume that if. 0:12:14.679 --> 0:12:17.840 We have a tepa job economy and we don't cut 0:12:17.920 --> 0:12:22.320 rates fast enough, that nominal the animal spirit comes. 0:12:21.960 --> 0:12:25.040 Down to a more lower normal rate. 0:12:25.480 --> 0:12:29.600 So I am concerned if the labor market isn't firing 0:12:29.640 --> 0:12:33.000 on all cylinders, and certainly if it weakens, that would 0:12:33.000 --> 0:12:35.400 be an issue. And we've seen we got recent data again, 0:12:35.440 --> 0:12:38.640 I mean the labor share continues to drop, like the 0:12:38.640 --> 0:12:41.199 share of the income and the economy going to workers. 0:12:41.480 --> 0:12:44.600 That does not feel like a good situation. And I 0:12:44.600 --> 0:12:48.000 think to Constance's point, I worry more right now about 0:12:48.040 --> 0:12:52.800 the structure underpinning the economy than maybe the cyclical the boombus, 0:12:52.800 --> 0:12:55.439 the recess. It's like things are moving under the hood 0:12:55.960 --> 0:12:58.079 of the labor market, and I think that's the labor 0:12:58.120 --> 0:13:01.800 force growth, population, aging, what's happening with AI. So there's 0:13:01.800 --> 0:13:05.120 some really big themes that I think we should pay 0:13:05.120 --> 0:13:09.080 attention to, and maybe less to the boom bus cycle, right, 0:13:09.120 --> 0:13:11.600 because I'm not sure that's the biggest thing happening right now. 0:13:12.360 --> 0:13:12.880 Kind of sance. 0:13:12.920 --> 0:13:17.360 The EIU remit is a wonderful global remit. What does 0:13:17.400 --> 0:13:21.120 this job report signal to other central banks? I mean, 0:13:21.160 --> 0:13:24.439 it simply takes away the effervescence, doesn't it. 0:13:25.240 --> 0:13:27.200 You know, I would say other central banks are going 0:13:27.200 --> 0:13:29.840 to look much more closely at CPI data next week 0:13:30.360 --> 0:13:33.360 than they are. The jobs to data agree, But of 0:13:33.360 --> 0:13:37.120 course it does. To Claudia's point, right, it's what's going 0:13:37.160 --> 0:13:40.880 on under the hood here, and we have an aging 0:13:40.960 --> 0:13:44.520 labor market, we have an aging population. We're seeing people 0:13:44.559 --> 0:13:46.160 age out of the labor market. That is not a 0:13:46.240 --> 0:13:48.520 unique problem to the United States, right. We see this 0:13:48.800 --> 0:13:51.199 around the world. This is a challenge for central banks, 0:13:51.320 --> 0:13:53.600 and one could argue that is the biggest challenge for 0:13:53.679 --> 0:13:57.160 Japan and one of the reasons why we have the 0:13:57.200 --> 0:14:00.679 situation in Japan where they have a very high budget 0:14:00.679 --> 0:14:04.079 deficit or debt to GDP ratio, right, and there's concern 0:14:04.120 --> 0:14:06.800 about that fiscal situation and it was getting expressed in 0:14:06.800 --> 0:14:09.920 the currency, and we had the intervention that we had 0:14:10.000 --> 0:14:13.679 last week. So this theme of you know, what, how 0:14:13.720 --> 0:14:17.040 do you grow an economy with an aging population? Does 0:14:17.120 --> 0:14:21.800 AI help or hinder that These are as existential questions. 0:14:21.840 --> 0:14:24.880 I think that all economists, central bankers are not are 0:14:24.880 --> 0:14:27.040 looking at when they're looking at economies right now. 0:14:27.120 --> 0:14:30.440 And yet there's a desire to keep financial conditions loose 0:14:30.440 --> 0:14:32.200 here in the US, like you rightly point out, I mean, 0:14:32.240 --> 0:14:34.680 talk to us about what you learned from yesterday's refunding announcement. 0:14:34.720 --> 0:14:36.520 I mean they just in my mind kick the can 0:14:36.640 --> 0:14:38.800 down the road again, right, I mean, like, so, you know, 0:14:39.080 --> 0:14:42.080 your right to focus on fundamentals like debt to GDP 0:14:42.200 --> 0:14:43.920 here in the US, but the market has not paid 0:14:43.960 --> 0:14:46.560 attention to that for so long. You know, at what time, 0:14:47.080 --> 0:14:49.560 you know, the things at least start to flash amber 0:14:49.600 --> 0:14:50.400 to you constantly. 0:14:50.560 --> 0:14:53.560 So worsh has his task forces, We have our task forces. 0:14:53.600 --> 0:14:55.720 So there's a few things we're looking at that we 0:14:55.760 --> 0:14:58.240 felt we had to really do a deep dive. And 0:14:58.400 --> 0:15:02.240 to your point, Tom, across country comparison right up there 0:15:02.360 --> 0:15:06.680 is what is fiscal space? What constitutes fiscal space? When 0:15:06.720 --> 0:15:07.560 does it get tricky? 0:15:07.920 --> 0:15:08.240 Who? 0:15:08.280 --> 0:15:08.480 Who? 0:15:08.600 --> 0:15:08.800 You know? 0:15:08.880 --> 0:15:13.080 Obviously we see it's not uniform across countries, and so 0:15:14.320 --> 0:15:15.760 I think one of the things we have to think 0:15:15.760 --> 0:15:19.640 about here is are what is expected in fression and 0:15:19.680 --> 0:15:22.760 how does that feed into term premia and then what's 0:15:22.880 --> 0:15:25.240 that back loop to funding the government? 0:15:25.360 --> 0:15:28.280 Christina Campmenian does her people are quite upset, you know, 0:15:28.480 --> 0:15:31.360 I mean she needs more air time, Claudia. So last 0:15:31.400 --> 0:15:35.360 question to you, with immense respect for your academics, and 0:15:35.400 --> 0:15:38.640 it's just simply you're launching forward. I guess the end 0:15:38.680 --> 0:15:42.960 of August Jackson Hole and into September as well. It's 0:15:43.000 --> 0:15:47.720 still to America's the political reality. Kevin Hassett with Bloomberg 0:15:47.720 --> 0:15:50.960 in the ten o'clock our folks, Michael McGee and Danny Berger. 0:15:51.200 --> 0:15:54.880 I'm sorry, Claudia. And in economics on a job's day, 0:15:55.240 --> 0:15:58.000 it's two distinct Americas, isn't it. 0:15:58.680 --> 0:16:01.520 There's a lot of division in the labor market. I 0:16:01.560 --> 0:16:04.440 mean the division I like to focus on is this 0:16:04.520 --> 0:16:07.320 low higher, low fire economy, right for workers who have 0:16:07.400 --> 0:16:09.120 a job, like their job. It's a good job. This 0:16:09.200 --> 0:16:12.080 is this still is a pretty good labor market. Today's 0:16:12.160 --> 0:16:14.560 number is notwithstanding for people trying to get back in, 0:16:14.640 --> 0:16:16.760 trying to get them for the first time. This is tough. 0:16:16.840 --> 0:16:20.880 And this wage growth is not keeping up with the 0:16:20.920 --> 0:16:23.120 price growth, and that's a bigger that's a bigger problem. 0:16:23.160 --> 0:16:24.800 So yeah, there's a lot of divisions here. 0:16:25.040 --> 0:16:27.520 I love the wage growth idea. This is a this 0:16:27.560 --> 0:16:30.560 is why we do this. This is good. 0:16:30.680 --> 0:16:33.440 Thank you so much for the doctor Sam, Thank you 0:16:33.480 --> 0:16:36.560 so much. New Century Advisor. Both of them very active 0:16:36.560 --> 0:16:40.280 on LinkedIn. Look for their publishing out here. Today we 0:16:40.320 --> 0:16:42.840 have also, you know, I love it when world class 0:16:42.880 --> 0:16:44.680 talent calls it and says. 0:16:44.640 --> 0:16:46.960 Me, me, me, me me, Can I get on together? 0:16:47.200 --> 0:16:50.400 Are tentatives Stephanie Roth's schedule to be with us and 0:16:50.440 --> 0:16:54.040 from City Group Andrew holland Orse, who nailed this call. 0:16:54.280 --> 0:16:56.440 We're trying to line them up right now. We have 0:16:56.440 --> 0:16:58.600 to go through a I mean, I mean hollin Ors 0:16:58.720 --> 0:16:59.680 is like, great, you just call. 0:16:59.640 --> 0:17:02.600 A cell phone. I picks right up here. Definitely, Roth, You've. 0:17:02.520 --> 0:17:05.879 Got to go through like six layers of compliance joining 0:17:06.000 --> 0:17:08.880 us right now Christina, thank us for being patient off 0:17:08.880 --> 0:17:13.359 the shock economics. How does this economics play into a 0:17:13.440 --> 0:17:15.439 two year full faith and credit market. 0:17:15.560 --> 0:17:17.640 Look, I mean, the market is sitting here and we've 0:17:17.680 --> 0:17:19.840 been all trying to understand what is the new reaction 0:17:19.920 --> 0:17:23.320 function of the FED. Chair of the FED Committee under wars. 0:17:23.240 --> 0:17:25.560 And he wants it to be data. 0:17:25.720 --> 0:17:27.399 I don't know if we know what he wants it 0:17:27.440 --> 0:17:29.600 to be quite yet. I think the jury is still 0:17:29.640 --> 0:17:32.360 out there, and I think July was very different than June, 0:17:32.440 --> 0:17:34.719 so we'll see. But the market is grappling with all 0:17:34.720 --> 0:17:37.360 of these data prints, and we've taken out, certainly pricing 0:17:37.440 --> 0:17:41.000 for September and you're pricing now what just about one 0:17:41.080 --> 0:17:42.760 full hike only by December? 0:17:42.880 --> 0:17:45.000 So right, So, I mean, I know you guys are 0:17:45.040 --> 0:17:46.879 short duration over there at investment. I know you, like 0:17:46.880 --> 0:17:49.000 Steep Nares talked to us about how does this change 0:17:49.040 --> 0:17:50.960 the the you know, your outlook at all over in 0:17:51.000 --> 0:17:52.440 ear term. 0:17:53.400 --> 0:17:55.879 Look, I think there are a few things. Again, if 0:17:55.880 --> 0:17:58.400 we go back to this new regime from the FED 0:17:58.640 --> 0:18:02.000 right and talking about letting the market do the work, 0:18:02.000 --> 0:18:04.439 I think that introduces a lot more volatility, and especially 0:18:04.520 --> 0:18:06.480 in the back end of the curve. So I think 0:18:06.480 --> 0:18:10.119 that still means that you are looking for higher yields, 0:18:10.200 --> 0:18:14.960 higher yields out the curve and steepercurve. We haven't broadly 0:18:15.000 --> 0:18:16.879 this year, You've seen a lot of flattening of the curves. 0:18:17.440 --> 0:18:20.000 So I think that that still holds. And the tremendous 0:18:20.000 --> 0:18:23.040 amount of AI and hyperscaler issuance weighs on that too. 0:18:23.080 --> 0:18:24.399 And I know you guys have been talking about that 0:18:24.440 --> 0:18:27.480 today and it's been a theme. But you have these 0:18:27.640 --> 0:18:31.480 companies that are issuing the size of government bond deals 0:18:31.800 --> 0:18:35.280 weighing on the market. So I think we are still warranting, 0:18:35.520 --> 0:18:36.800 needing higher yields out the curve. 0:18:36.880 --> 0:18:39.080 So Christina, you know, I'm an emerging market fixed income guy. 0:18:39.080 --> 0:18:40.800 I look at em credit, I look at the basis 0:18:40.800 --> 0:18:42.600 to investment grade spreads, and I look at it and 0:18:42.680 --> 0:18:44.680 I say, wow, ten basis points. Wow, that is as 0:18:44.680 --> 0:18:47.320 tight as I have ever ever seen it. And I 0:18:47.400 --> 0:18:49.359 think you're absolutely right to hit on that. I think 0:18:49.640 --> 0:18:51.960 you're to date what three hundred billion in hyper scale 0:18:51.960 --> 0:18:55.040 we call it AI issuance. Going forward, I mean it's 0:18:55.080 --> 0:18:56.520 not going to go away, right, I mean they just 0:18:56.640 --> 0:18:58.760 roll this over ad to it. I mean at what 0:18:58.840 --> 0:19:02.160 point do you see the crowding out effect that many 0:19:02.840 --> 0:19:04.479 many strategists and analysts are calling for. 0:19:04.520 --> 0:19:07.879 Here, So we have been again when we look at 0:19:07.920 --> 0:19:10.000 our portfolios and we manage global portfolios, we have the 0:19:10.040 --> 0:19:12.640 three lovers of rates, credit and FX. Credit is where 0:19:12.640 --> 0:19:15.000 we've leaned on the least just because of how tight 0:19:15.080 --> 0:19:18.400 spreads are. And I know that's kind of been unpopular opinion, 0:19:18.480 --> 0:19:21.280