WEBVTT - Bloomberg Surveillance TV: July 5, 2024 0:00:00.120 --> 0:00:08.640 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify, or 0:00:31.320 --> 0:00:33.920 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.840 Terminal and the Bloomberg Business App. 0:00:36.159 --> 0:00:36.839 John Bieber of. 0:00:36.800 --> 0:00:40.160 Your Rasier Group writing this that President Joe Biden's inability 0:00:40.200 --> 0:00:43.479 to team the story about his cognitive decline has prompted 0:00:43.479 --> 0:00:45.960 your Razor group to increase the odds that he will 0:00:46.000 --> 0:00:49.760 exit the race from fifteen percent to twenty five percent. 0:00:50.159 --> 0:00:52.720 John joins us. Now, John, good morning to you. You 0:00:52.800 --> 0:00:55.640 heard it there from Tyler. The strategy of Team Biden. 0:00:55.720 --> 0:00:57.920 Get him out there as much as you can. Put 0:00:58.000 --> 0:01:01.000 him in front of different interviews with ABC. Later tonight 0:01:01.040 --> 0:01:02.960 we'll hear that, have him do Q and a's, give 0:01:03.040 --> 0:01:04.440 him a grueling schedule. 0:01:04.959 --> 0:01:05.520 Is it enough? 0:01:07.080 --> 0:01:07.280 Yeah? 0:01:07.280 --> 0:01:09.560 I'm concerned that twenty five percent odds might be low. 0:01:09.640 --> 0:01:11.880 I mean, Biden has not looked good for a while 0:01:11.959 --> 0:01:15.040 in public appearances. The debate was just one of many 0:01:15.160 --> 0:01:18.679 reports we're hearing about what happens behind the scenes at 0:01:18.680 --> 0:01:22.240 the G seven meeting, a meeting with congressional leaders. There's 0:01:22.280 --> 0:01:24.639 just a lot of signs that he's losing a step 0:01:24.840 --> 0:01:27.960 or three. And his appearance yesterday at the fourth July 0:01:28.040 --> 0:01:30.800 at the White House was fine, was competent, but didn't 0:01:30.800 --> 0:01:33.040 seem like a politician that was at the exactly at 0:01:33.040 --> 0:01:35.080 the top of his game. And the stakes of this 0:01:35.120 --> 0:01:38.360 interview tonight are going to be incredibly high for Biden. 0:01:38.720 --> 0:01:40.800 But even if he gets through this, he's got to 0:01:40.840 --> 0:01:43.160 go through another three or four months of campaigning where 0:01:43.200 --> 0:01:45.800 he's got to be out there publicly making the case 0:01:45.840 --> 0:01:48.480 that he's vigorous enough to last another four years. And 0:01:48.520 --> 0:01:50.760 if he doesn't, he's going to be in big trouble 0:01:50.840 --> 0:01:54.160 and probably hand the election back over to former President Trump. 0:01:54.760 --> 0:01:58.720 John, good morning, What is this smart, political, graceful way 0:01:58.880 --> 0:02:02.720 out of this? Is this filler kill weekend? In terms 0:02:02.920 --> 0:02:05.280 of going head to head with Trump, there are the 0:02:05.320 --> 0:02:08.280 Post forty eight percent to Trump forty two percent to 0:02:08.360 --> 0:02:12.560 Biden is a smart, graceful way right now to try 0:02:12.600 --> 0:02:15.400 and find a graceful exit because he doesn't sign like 0:02:15.440 --> 0:02:16.680 a president that is ready to do that. 0:02:16.720 --> 0:02:17.799 No one's pushing me out. 0:02:19.040 --> 0:02:22.440 Well, every day he doesn't exit the race, the anger 0:02:23.160 --> 0:02:26.040 if and when he eventually does, at him is going. 0:02:25.800 --> 0:02:27.600 To be higher and higher and higher. 0:02:27.680 --> 0:02:31.600 So he should move quickly to preserve his legacy. If 0:02:31.800 --> 0:02:34.560 he's going to step aside, and you know it's possibly 0:02:34.600 --> 0:02:37.000 he blows us away tonight, the way he blew everyone 0:02:37.000 --> 0:02:39.080 away at the State of the Union, making this question 0:02:39.200 --> 0:02:42.320 go away at least for until the next incident happens. 0:02:42.720 --> 0:02:44.640 But if he does drop out, he's going to have 0:02:44.680 --> 0:02:46.680 to do it soon. The Democrats, you know, they're they're 0:02:46.840 --> 0:02:49.440 almost likely, almost certainly going to replace him with Kamala Harris, 0:02:49.480 --> 0:02:51.960 the vice president. If he does step aside, that can 0:02:52.000 --> 0:02:54.560 really happen at any moment, be now an election day, 0:02:54.800 --> 0:02:57.760 But the momentum loss they're going to face from him 0:02:57.800 --> 0:03:01.240 staying in here not exactly throughilling the voters is going 0:03:01.280 --> 0:03:03.160 to be massive. So the earlier he does this, the 0:03:03.200 --> 0:03:05.120 better off he is, and his legacy is. 0:03:05.280 --> 0:03:07.840 In many ways. If he does choose to go or 0:03:07.880 --> 0:03:09.800 if he's forced to go, or if he's advised to 0:03:09.840 --> 0:03:11.560 go by his family. As you say, you think it's 0:03:11.600 --> 0:03:13.359 the family and the inner court of Biden that will 0:03:13.440 --> 0:03:15.720 drive him to make this decision to exit rather than 0:03:15.800 --> 0:03:19.320 the Democratic Party. How much of a poison chalice is 0:03:19.320 --> 0:03:20.919 that for anybody else who takes it a part from 0:03:20.960 --> 0:03:23.720 Kamala Harris. She gets the money, she gets the money transfer, 0:03:23.960 --> 0:03:26.160 she can get the black vote, the female vote. She 0:03:26.280 --> 0:03:28.639 is strong, she's strong as polling strongly. 0:03:29.360 --> 0:03:29.800 She is the. 0:03:29.800 --> 0:03:32.640 Obvious condidate because everybody else this is a poison chalice. 0:03:34.320 --> 0:03:35.240 Yeah, I think that's right. 0:03:35.280 --> 0:03:38.360 I mean, I don't think you're better off picking somebody 0:03:38.360 --> 0:03:41.280 with lower name recognition than Harris who has not been 0:03:41.320 --> 0:03:44.960 tested on the campaign trail. So for somebody like Gretchen Whitmer, 0:03:44.960 --> 0:03:47.680 who's got a really promising political career in front of her, 0:03:47.880 --> 0:03:50.280 or Gavin Newsom, who you know, this would have been 0:03:50.320 --> 0:03:52.840 his moment in to run in a normal cycle where 0:03:52.920 --> 0:03:55.560 Biden decided to drop out earlier. You know, these people 0:03:55.600 --> 0:03:58.480 have long political careers ahead of them. Losing to Donald 0:03:58.480 --> 0:04:01.120 Trump in twenty twenty four not exactly a way to 0:04:01.160 --> 0:04:04.160 set that up, and they they probably start off at 0:04:04.200 --> 0:04:06.840 a disadvantage because no one knows who they are. Whereas 0:04:06.880 --> 0:04:09.520 Harris can kind of step into the race, she can 0:04:09.560 --> 0:04:12.160 sort of mop up the mess, you know, clean up 0:04:12.160 --> 0:04:14.680 on Ale Biden. I get there whether or not she wins. 0:04:14.720 --> 0:04:17.400 And she wins, that's fantastic. If she loses, you can't 0:04:17.440 --> 0:04:19.080 really blame her. She did what she had to do. 0:04:19.320 --> 0:04:20.360 She can always come back. 0:04:20.200 --> 0:04:21.080 In twenty twenty eight. 0:04:21.160 --> 0:04:23.800 So I think, for just thinking about the personal incentives 0:04:24.000 --> 0:04:26.719 of any of these people, Harris has the least to 0:04:26.800 --> 0:04:28.280 lose from being the dominiee. 0:04:28.360 --> 0:04:30.120 John May I have only a minute here, but the 0:04:30.160 --> 0:04:34.760 strategy from Donald Trump has been stay quiet, will relatively quiet, 0:04:34.839 --> 0:04:38.120 and let the Democratic Party implode if Biden steps down 0:04:38.279 --> 0:04:41.400 and someone else takes the rain. Can Trump still afford 0:04:41.440 --> 0:04:43.719 to do that? Can he make this a referendum on 0:04:43.760 --> 0:04:45.360 a chaotic Democratic Party? 0:04:46.440 --> 0:04:47.080 Yeah? Absolutely? 0:04:47.120 --> 0:04:47.320 I think. 0:04:47.480 --> 0:04:50.000 I mean Trump's drowning a very disciplined campaign so far. 0:04:50.240 --> 0:04:52.960 He hasn't really been drawing attention to himself the way 0:04:53.000 --> 0:04:55.719 he would even say twenty sixteen, and he's let Biden 0:04:55.800 --> 0:04:57.720 be the main character of the election. 0:04:57.600 --> 0:04:59.480 Which is exactly what he needs to do to win. 0:05:00.400 --> 0:05:02.920 Harris comes in he's going to have to quickly define 0:05:02.960 --> 0:05:05.800 her in the eyes of the American people as too progressive, 0:05:06.120 --> 0:05:08.560 as you know, a party to all the inflation they've 0:05:08.560 --> 0:05:11.520 been experiencing, and basically Biden part two. I don't think 0:05:11.560 --> 0:05:13.880 that's going to be terribly hard for him, but you'd 0:05:13.880 --> 0:05:16.200 expect to be him out there more vigorously trying to 0:05:16.200 --> 0:05:17.680 define her in that situation. 0:05:18.040 --> 0:05:21.960 John, appreciate it. Enjoy your weekend. John Lieber of Eurasior Group. 0:05:32.000 --> 0:05:36.000 Could you TD Securities is our guest this morning. Could 0:05:36.040 --> 0:05:38.039 you good to have you with us. I mean, here 0:05:38.080 --> 0:05:42.400 we are, we're looking at significant change about to hit 0:05:42.440 --> 0:05:46.159 the United Kingdom. For the moment, markets, the pine, the 0:05:46.240 --> 0:05:49.279 guilt markets, same steady on the feet. 0:05:49.760 --> 0:05:51.599 Will that honeymoon endure? 0:05:53.880 --> 0:05:56.760 Oh when it comes to I mean yes, as you said, Labored, 0:05:56.960 --> 0:05:58.880 right now, we are just done with the easy part 0:05:58.920 --> 0:06:01.440 of the election. It was pretty expected that Labor will 0:06:01.440 --> 0:06:04.360 get the win, and I think after a long time 0:06:04.400 --> 0:06:06.960 after Brexit, we are basically entering the phase where there'll 0:06:06.960 --> 0:06:09.640 be much more political stability that we have not seen. 0:06:09.720 --> 0:06:13.159 So yes, it's great for the market, but again, as 0:06:13.200 --> 0:06:17.160 we mentioned that, it's very Labor is ending has a 0:06:17.160 --> 0:06:19.800 lot of challenges to actually meet up to. But on 0:06:19.839 --> 0:06:23.280 the positive side, they're actually coming in when growth has 0:06:23.320 --> 0:06:25.880 started to improve in UK as well as we do 0:06:26.040 --> 0:06:29.159 expect BOI to actually start cutting rates, which means that 0:06:29.320 --> 0:06:32.880 generally interest expenditure is also going down. But definitely there's 0:06:33.000 --> 0:06:35.120 lots for labor to live up to right now. Given 0:06:35.160 --> 0:06:36.880 the kind of strong win they've seen. 0:06:37.360 --> 0:06:39.280 It certainly a sixty percent probability that the Bank of 0:06:39.279 --> 0:06:43.520 Pinioning goes in August that may well be ahead of 0:06:43.560 --> 0:06:46.440 the Fed. In terms of the guilt market. This is 0:06:46.440 --> 0:06:48.800 going to be critically important the fiscal plan that they lay. 0:06:48.960 --> 0:06:51.120 They have an autumn statement in the United Kingdom and 0:06:51.160 --> 0:06:54.000 then they have a budget later in the first quarter 0:06:54.000 --> 0:06:56.839 of twenty twenty five. You would say that the flow 0:06:56.880 --> 0:06:58.800 of money and this is what we've hired from Goldman Sachs. 0:06:58.800 --> 0:07:01.680 I want to understand from you, to flow from international 0:07:01.760 --> 0:07:04.280 parts into the guilt market. You think it is supportive 0:07:04.800 --> 0:07:08.000 when this labor administration will be supportive to the guilt 0:07:08.040 --> 0:07:09.160 market with right cuts. 0:07:09.320 --> 0:07:11.520 How supportive? Yes? 0:07:11.560 --> 0:07:14.600 Now, totally this left is very different from the left. 0:07:14.640 --> 0:07:17.120 We are talking in France right now, so they do 0:07:17.200 --> 0:07:20.440 not want to actually do the trust thing. Again, I 0:07:20.520 --> 0:07:22.480 doubt they are going to change much in terms of 0:07:22.520 --> 0:07:25.680 their fiscal when we are head to the autumn's statement. 0:07:26.320 --> 0:07:28.840 More changes are likely to happen in the mark statement. 0:07:28.920 --> 0:07:31.520 So I think right now Gilts in a very nice position, 0:07:31.600 --> 0:07:34.960 given the fact that you have so much turmoil when 0:07:34.960 --> 0:07:37.960 it comes to politically uncertainty in France as well as 0:07:37.960 --> 0:07:40.880 in US as we head towards whether it's Trump versus Widen. 0:07:40.960 --> 0:07:44.520 So I think from fiscal perspective, cross market wise, GILTS 0:07:44.640 --> 0:07:46.400 is in a very good place, and we actually like 0:07:46.480 --> 0:07:48.240 holding Gilts on a cross market basis. 0:07:48.240 --> 0:07:50.800 Here you do make a good point, poocha, And this 0:07:50.840 --> 0:07:52.520 is what are trying to manus about that it is 0:07:52.520 --> 0:07:56.880 not just France, it is election upsets throughout the globe, 0:07:57.000 --> 0:07:59.280 as it is a world that moves more right and 0:07:59.320 --> 0:08:03.520 potentially more protectionist and more isolated. What does it mean 0:08:03.560 --> 0:08:05.720 for the market to grapple with that, Because at the 0:08:05.720 --> 0:08:08.760 moment we've been trading this is just idiosyncratic stories between 0:08:08.800 --> 0:08:11.520 each individual and nation. It matters for the PAESO, it 0:08:11.560 --> 0:08:14.240 matters for French bonds. But what happens when this global 0:08:14.320 --> 0:08:18.320 story comes together and globalism the engine of growth takes 0:08:18.320 --> 0:08:18.920 a back seat. 0:08:20.760 --> 0:08:23.960 That is definitely the scary part. That is a it 0:08:24.040 --> 0:08:26.840 impacts growth, it's also inflationary, and I think that is 0:08:26.880 --> 0:08:29.240 something that those are the effects we actually going to 0:08:29.360 --> 0:08:32.160 see going forward, and that especially the woods for Europe, 0:08:32.200 --> 0:08:35.840 because Europe has created this strong integration and that is 0:08:35.960 --> 0:08:39.840 definitely at risk risk as we head towards Sunday elections. 0:08:40.520 --> 0:08:43.200 And as we head towards Sunday elections. Pouja again, this 0:08:43.240 --> 0:08:45.959 is a market that is treating this like a near myss. 0:08:46.000 --> 0:08:48.360 The spreads are still wider, but they have come in 0:08:48.760 --> 0:08:51.600 because you don't have Marine Lopenz Party the national rally 0:08:51.679 --> 0:08:54.680 securing as much as a majority, is it the all 0:08:54.720 --> 0:08:55.760 clear for you as well? 0:08:57.480 --> 0:08:59.280 So I know, I mean, we are going to these 0:08:59.320 --> 0:09:02.920 elections a bit complacent at this stage. Markets are viewing 0:09:03.000 --> 0:09:06.079 a hung parliament as positive for OITIS, just given the 0:09:06.120 --> 0:09:08.720 fact that no decisions will be being made, just given 0:09:08.760 --> 0:09:11.520 the fact that they won't be any clear majority. But 0:09:11.600 --> 0:09:14.400 I do feel that it's not good for France growth 0:09:14.440 --> 0:09:18.240 as well as deficits. They won't go lower, but I 0:09:18.280 --> 0:09:20.480 don't see them improving, just given the fact that we 0:09:20.520 --> 0:09:23.400 are basically the options right now is either to be 0:09:23.480 --> 0:09:26.000 hung parliament with Aran as a majority, or a hung 0:09:26.040 --> 0:09:29.720 parliament with a severe breakdown right now, which could also 0:09:29.720 --> 0:09:32.440 mean we get head into a technocratic government, which is 0:09:32.440 --> 0:09:36.640 definitely negative growth and not positive for France. So even 0:09:36.640 --> 0:09:39.880 though Oiti's versus bond spread, the general levels are pretty 0:09:39.920 --> 0:09:42.280 much contained. I don't think we are getting back to 0:09:42.320 --> 0:09:44.920 the forty five level that we saw ahead of the 0:09:44.960 --> 0:09:46.280 snap elections. 0:09:47.760 --> 0:09:50.440 In terms of just stepping back from a moment Danny 0:09:50.520 --> 0:09:53.320 framed this I think very well early on, which is 0:09:53.600 --> 0:09:58.640 the discontent with the status quote in many democracies, not 0:09:58.880 --> 0:10:02.600 just the United king them, not just in France and 0:10:02.760 --> 0:10:06.440 in Germany. There is also discontent here in the United 0:10:06.440 --> 0:10:08.679 States of America with the status quo. We're seeing that 0:10:08.720 --> 0:10:11.320 in the polls at the moment between Biden and Trump. 0:10:11.360 --> 0:10:13.880 From the global capital flow, and this is what I'm 0:10:13.960 --> 0:10:18.400 curious to understand, there is this suggestion that with a 0:10:18.400 --> 0:10:21.400 new form of government and taxation in the United Kingdom 0:10:21.559 --> 0:10:24.560 and coming potentially in France, that you will see a 0:10:24.600 --> 0:10:30.200 material dislocation of global wealth flows from the UK. 0:10:30.640 --> 0:10:32.040 And from France. 0:10:32.120 --> 0:10:36.320 How might that play out on the stage of global investing? 0:10:36.400 --> 0:10:39.319 Do all roads ultimately then lead back to the United 0:10:39.360 --> 0:10:40.280 States of America. 0:10:43.800 --> 0:10:46.080 I mean, I think there will be. There is already 0:10:46.080 --> 0:10:49.280 a shift of flows happening since COVID crisis, where all 0:10:49.320 --> 0:10:51.840 countries had to active were forced to be self dependent 0:10:51.880 --> 0:10:54.520 than actually being dependent on others, and that also happened 0:10:54.600 --> 0:10:57.320 during the Ukraine crisis. So I'm not thinking of a 0:10:57.360 --> 0:11:00.280 big majorship, but that's the way we are going into. 0:11:00.400 --> 0:11:02.760 I totally agree with your point, but I think I 0:11:02.800 --> 0:11:05.280 don't exp I mean, UK is still a market which 0:11:05.320 --> 0:11:08.199 is basically owned by non domestics, especially when I talk 0:11:08.240 --> 0:11:10.760 about the fixed income space. As long as we are 0:11:10.840 --> 0:11:14.480 able to show that kind of stability, I do see 0:11:14.480 --> 0:11:25.040 a lot of flows coming into UK for sure. 0:11:27.280 --> 0:11:30.120 Joining US now is black Rocks Jeff Rosenberg and former 0:11:30.160 --> 0:11:33.080 Fed Governor Randy Krosner is still with us. Jeff, let 0:11:33.160 --> 0:11:35.480 me start with you. What's your face first take on 0:11:35.520 --> 0:11:36.120 these figures. 0:11:37.160 --> 0:11:39.680 My first take is was your first take that it's 0:11:39.720 --> 0:11:43.480 the revisions and a little bit the unemployment rate figure 0:11:43.520 --> 0:11:46.920 that the markets are most focused on here today. Like 0:11:47.080 --> 0:11:50.760 I think this is supportive to the story of slow 0:11:50.800 --> 0:11:54.120 down in the labor markets the powers looking for I 0:11:54.120 --> 0:11:56.840 think you see that in the bond market reaction, and 0:11:56.880 --> 0:11:59.760 I think this keeps September on the table. 0:12:00.160 --> 0:12:01.720 The other story here and why the. 0:12:01.600 --> 0:12:04.720 Market reactions to the revisions is there's a bigger story 0:12:04.800 --> 0:12:07.880 that there's more manas that it is a beautiful turn 0:12:07.920 --> 0:12:14.040 of phrase, the foothills of substantial revisions. I think there's 0:12:14.040 --> 0:12:16.120 a big story there in the market that there are 0:12:16.200 --> 0:12:21.280 revisions coming, that they're the established MINTS survey is overstated. 0:12:21.880 --> 0:12:24.920 You do get the benchmark revisions, and there's an expectation 0:12:25.120 --> 0:12:29.760 here that you're seeing an overstatement, and that is a 0:12:29.800 --> 0:12:32.120 little bit fed into the market narrative. 0:12:31.720 --> 0:12:34.560 With the two month revision number that you highlighted. 0:12:34.080 --> 0:12:37.040 Earlier, Randy, would you agree with that some slowness in 0:12:37.080 --> 0:12:39.800 these numbers, a slow down potentially confirmed. 0:12:41.200 --> 0:12:44.040 I wouldn't say it's confirmed. I mean, obviously that was 0:12:44.080 --> 0:12:46.960 something that I'm looking for. I think, as we were 0:12:47.040 --> 0:12:50.120 describing before, you know, and Spike picked up on, we've 0:12:50.160 --> 0:12:52.640 got the different pieces of the Picasso and it's hard 0:12:52.640 --> 0:12:54.880 to put the image together right now. 0:12:55.200 --> 0:12:57.319 And I think this is very much consistent. 0:12:56.840 --> 0:13:01.760 With the fed's focus and Jay's focus on the labor market, 0:13:01.800 --> 0:13:04.000 watching it very carefully. 0:13:04.040 --> 0:13:05.439 This is really consistent. 0:13:05.480 --> 0:13:08.760 This is broadly consistent with kind of the slow cooling 0:13:08.960 --> 0:13:12.160 of the of the labor market that they want. But 0:13:12.200 --> 0:13:14.679 I think it's going to be difficult to just say, ah, 0:13:14.720 --> 0:13:17.280 we can stop the cooling whenever we want with just 0:13:17.480 --> 0:13:20.800 a with a couple of recuts. Because of the long 0:13:20.840 --> 0:13:23.199 and variable lags, it's going to be hard to do 0:13:23.240 --> 0:13:26.920 that just at the right time. And so I think, 0:13:28.000 --> 0:13:30.160 just as Jeff said, if that's not going to move 0:13:30.200 --> 0:13:33.240 at the at the end of this month, but September 0:13:33.320 --> 0:13:36.000 is live because we'll see how the labor market. 0:13:36.000 --> 0:13:37.240 They'll get a couple more labor. 0:13:37.000 --> 0:13:41.120 Market reports before that, before that meeting, and I think 0:13:41.200 --> 0:13:45.160 that'll be really a key thing. But the wage inflation 0:13:45.240 --> 0:13:48.200 has not come down. It's it's basically in the same 0:13:48.280 --> 0:13:50.120 range that they were expecting it to be. 0:13:50.760 --> 0:13:53.040 So if that drops significantly. 0:13:52.559 --> 0:13:55.640 That would give them the okay to go ahead. 0:13:56.080 --> 0:13:57.320 Now they're going to be cautious. 0:13:57.800 --> 0:14:00.640 Is it, Randy Goodmore into good to see? 0:14:00.760 --> 0:14:01.120 Randie? 0:14:01.320 --> 0:14:05.439 Is this going to come down to the part of 0:14:05.480 --> 0:14:08.040 the curve where the jobs are lost? In other words, 0:14:08.440 --> 0:14:10.840 forgive me for being so brutal, but the quality of 0:14:10.920 --> 0:14:15.959 jobs that are lost in this next unemployment cycle that's 0:14:15.960 --> 0:14:17.800 going to be critically important here, isn't it. 0:14:18.920 --> 0:14:21.000 Well, let's certainly be looking at the types of jobs, 0:14:21.080 --> 0:14:24.920 because obviously, depending whether you lose jobs at the higher 0:14:24.960 --> 0:14:28.400 pay or lower pay, that's going to affect the average wage. 0:14:28.200 --> 0:14:30.840 The so called composition effect. They'll be looking at that. 0:14:31.320 --> 0:14:35.600 They'll be looking at potential pockets of weakness in certain 0:14:35.640 --> 0:14:38.280 areas that may be more interest rates sensitive, and so 0:14:38.320 --> 0:14:40.800 they will be looking not just at the overall numbers, 0:14:40.840 --> 0:14:44.160 but kind of digging deep into where they see monetary 0:14:44.160 --> 0:14:45.480 policy having an effect. 0:14:45.720 --> 0:14:47.800 Well, when you look deep into those numbers, Jeff, let 0:14:47.840 --> 0:14:49.440 me bring you back into this because you mentioned this 0:14:49.600 --> 0:14:50.800 a wages growth. 0:14:50.560 --> 0:14:53.480 Point three percent. There is still growth here. 0:14:53.480 --> 0:14:55.920 You can even look at the week iom services number, 0:14:56.080 --> 0:14:58.040 so that we got earlier in the week and still 0:14:58.200 --> 0:15:00.320 prices paid are higher. If I want to to make 0:15:00.360 --> 0:15:03.120 an argument for why the Fed should hold, I could 0:15:03.200 --> 0:15:06.120 make an argument about this that, look, wages and prices 0:15:06.160 --> 0:15:06.920 are still high. 0:15:06.960 --> 0:15:10.000 It is too soon to move. Is it an error to. 0:15:10.080 --> 0:15:12.840 Air on that side to say, look, we need to 0:15:12.880 --> 0:15:15.120 continue to hold where things are until some of those 0:15:15.200 --> 0:15:16.800 factors start to come back in line. 0:15:17.840 --> 0:15:20.240 You're pointing out the part of the labor markets that 0:15:20.360 --> 0:15:24.760 has been the least that has shown the least progress 0:15:25.200 --> 0:15:29.360 in terms of showing the normalization. So whether it's age 0:15:30.080 --> 0:15:33.960 wages that we're seeing today ECI, Atlanta FED Wage Tracker, 0:15:34.160 --> 0:15:40.920 our own private estimates through scraping jobs posting data, you know, 0:15:40.960 --> 0:15:43.400 they all point to a similar story, which is the 0:15:43.440 --> 0:15:47.160 pace of slow down and the pace of normalization hasn't 0:15:47.200 --> 0:15:51.080 really kept up. We've kind of normalized to a pre 0:15:51.240 --> 0:15:56.320 COVID tight level of labor market conditions and elevated wages 0:15:56.360 --> 0:15:59.240 relative to productivity. So that's the one thing that kind 0:15:59.280 --> 0:16:02.720 of keeps the thing at a little bit at worry 0:16:02.760 --> 0:16:06.040 in terms of moving too quickly. But it's the broader 0:16:06.120 --> 0:16:09.480 price data you know, we'll get next week that is 0:16:09.840 --> 0:16:12.000 really going to be more determined and I think they'll 0:16:12.040 --> 0:16:17.320 be okay with wages US stabilizing and if as long 0:16:17.360 --> 0:16:20.520 as you're seeing the broader wage pressures continue to normalize 0:16:21.160 --> 0:16:23.280 and certainly you know, not a repeat of what we've 0:16:23.320 --> 0:16:25.760 got in the first three months of this year over reacceleration, 0:16:26.600 --> 0:16:28.520 that's going to be the backdrop for the FED to 0:16:29.280 --> 0:16:33.520 open up the door towards you know, slow normalization. Maybe 0:16:33.600 --> 0:16:35.440 quarterly pace of twenty five. 0:16:35.280 --> 0:16:38.120 Basis point cuts and for those just joining us this morning, 0:16:38.120 --> 0:16:40.520 we just moments ago got the jobs figures. Two hundred 0:16:40.520 --> 0:16:43.280 and six thousand is where we landed. The estimate was 0:16:43.320 --> 0:16:46.360 for one ninety also a revision for April and May 0:16:46.720 --> 0:16:50.360 down by one hundred and eleven thousand. Unemployment rate goes 0:16:50.360 --> 0:16:53.280 from four percent to four point one percent. Mike McKee 0:16:53.360 --> 0:16:55.600 is still with us, digging through the numbers. Mike, what's 0:16:55.640 --> 0:16:57.000 some of the other takeaways you're seeing here. 0:16:57.440 --> 0:16:59.840 Well, there's a lot in here that addresses the idea 0:16:59.840 --> 0:17:02.480 of how serious has slow down this is, and it 0:17:02.560 --> 0:17:05.280 might have a bearing on inflation as well. First of all, 0:17:05.320 --> 0:17:09.080 the unemployment rate, it goes up because we saw a 0:17:09.160 --> 0:17:11.600 large rise in the labor force two hundred and seventy 0:17:11.640 --> 0:17:15.160 seven thousand. Now what's interesting is that we have seen 0:17:15.200 --> 0:17:18.480 a decline in immigration. People have been giving immigration a 0:17:18.520 --> 0:17:22.080 lot of credit for the job's numbers, and in this case, 0:17:22.320 --> 0:17:25.639 it didn't translate. The decline didn't translate into fewer people 0:17:25.640 --> 0:17:28.359 coming into the labor force, but it only pushed up 0:17:28.400 --> 0:17:29.920 the unemployment rate by a little bit. 0:17:30.240 --> 0:17:33.240 It was four point zero five four. 0:17:33.080 --> 0:17:35.359 When you take it out to three digits. So just 0:17:35.600 --> 0:17:39.520 barely rounding up to four point one percent. And you 0:17:39.520 --> 0:17:41.760 look at the number of people who lost jobs and 0:17:41.800 --> 0:17:44.840 got jobs in the household survey employment and unemployment, they're 0:17:44.840 --> 0:17:47.600 almost exactly the same, one hundred and sixteen, one hundred 0:17:47.600 --> 0:17:48.640 and sixty eight thousand. 0:17:49.040 --> 0:17:51.280 What really stands out is. 0:17:51.600 --> 0:17:57.120 A very weak performance for service providing industries and manufacturing. 0:17:57.160 --> 0:18:00.520 Manufacturing lost eight thousand, construction gained twenty seven thousand, but 0:18:00.600 --> 0:18:04.840 for service industries only one hundred and seventeen thousand jobs created, 0:18:05.160 --> 0:18:07.560 and most of that was in the healthcare field that 0:18:07.640 --> 0:18:11.840 we normally see adding a lot of jobs. Instead the 0:18:11.840 --> 0:18:17.359 big number is government seventy thousand, and so the loss 0:18:17.359 --> 0:18:20.399 of service sector jobs suggests that maybe we'll see some 0:18:20.480 --> 0:18:25.119 inflation come down in the service industries because labor costs 0:18:25.160 --> 0:18:26.440 are the biggest issue there. 0:18:26.760 --> 0:18:27.879 And it also may. 0:18:27.800 --> 0:18:32.440 Mean that the government the government hiring maybe a seasonal 0:18:32.440 --> 0:18:36.359 adjustment problem, and it could end up being revised lower. 0:18:36.480 --> 0:18:40.480 So at this point, it's definitely, as Randy said, kind 0:18:40.480 --> 0:18:42.879 of a picasso here. A lot of different things in 0:18:42.920 --> 0:18:45.560 here that tell you the economy has slowed. 0:18:46.040 --> 0:18:47.720 But where we go from here is going to be 0:18:47.760 --> 0:18:48.639 the interesting question. 0:18:48.760 --> 0:18:50.199 I think there's a couple of other numbers that are 0:18:50.200 --> 0:18:53.080 coming through on the tea love that various colleagues are 0:18:53.160 --> 0:18:56.320 pointed nine temporary help is done a massive forty eight 0:18:58.000 --> 0:19:01.360 nine hundred gene that is the most in twenty twenty one. 0:19:01.640 --> 0:19:03.560 And the time that it takes you to get a job, 0:19:04.359 --> 0:19:06.520 the median time that it takes to get a job 0:19:06.800 --> 0:19:09.959 has gone to nine point eight weeks, and that's up 0:19:09.960 --> 0:19:12.840 from eight point nine weeks now. Look, these are idiosyncratic 0:19:12.880 --> 0:19:15.240 in those revisions. The powerful message is going to be 0:19:15.240 --> 0:19:16.920 in the revisions, and it's going to be in the 0:19:17.000 --> 0:19:21.399 unemployment numbers. But that temporary help, that's quite quite a 0:19:21.440 --> 0:19:26.440 flashing amber number, especially given services dropping so significant into 0:19:26.480 --> 0:19:27.160 a four year low. 0:19:27.200 --> 0:19:28.159 Going into this. 0:19:28.400 --> 0:19:31.239 Well, temporary help is usually sort of thought of as 0:19:31.240 --> 0:19:33.800 a sort of Canarian the coal mine, because if you're 0:19:33.800 --> 0:19:36.359 going to be adding workers, you go to temporary workers first. 0:19:36.720 --> 0:19:39.280 In this case, that doesn't seem to be the case. 0:19:39.600 --> 0:19:43.639 The interesting counterpoint to that is average weekly hours didn't change, 0:19:43.680 --> 0:19:46.159 and you would expect that to start to go down 0:19:46.680 --> 0:19:50.080 if companies were seeing business slow. 0:19:50.200 --> 0:19:51.960