1 00:00:02,529 --> 00:00:04,229 Speaker 1: Bloomberg Audio Studios. 2 00:00:04,670 --> 00:00:05,370 Speaker 2: Podcasts. 3 00:00:05,690 --> 00:00:06,210 Speaker 3: Radio. 4 00:00:06,650 --> 00:00:07,070 Speaker 4: News. 5 00:00:09,170 --> 00:00:13,910 Speaker 1: This is a breaking news update from Bloomberg. Instant reaction 6 00:00:14,170 --> 00:00:18,419 Speaker 1: and analysis from our 3,000 journalists and analysts around the world. 7 00:00:18,440 --> 00:00:22,400 Speaker 5: All right, let's get right to it. Big changes here. 8 00:00:22,420 --> 00:00:30,820 Speaker 5: Change in non-farm payrolls. We're expecting 90,000 jobs. We're only getting... $ 29, 000. 9 00:00:28,340 --> 00:00:33,500 Speaker 5: The prior month also revised downward from $ 162, 000 to $. 10 00:00:33,260 --> 00:00:33,500 Speaker 4: 133, 000. 11 00:00:33,380 --> 00:00:42,660 Speaker 5: The unemployment rate rising to 4.2%. The expectation was 4.1%. 12 00:00:42,659 --> 00:00:47,070 Speaker 5: Average hourly earnings on a month-over-month basis coming in much 13 00:00:47,130 --> 00:00:49,610 Speaker 5: less than expected, just a tenth of a percent. The 14 00:00:49,690 --> 00:00:53,830 Speaker 5: expectation was for three-tenths of a percent. You mentioned that 15 00:00:54,010 --> 00:00:59,750 Speaker 5: two-year yield down eight basis points right now, 4.7%. We 16 00:01:00,170 --> 00:01:03,360 Speaker 5: check the market's view all day long right here on 17 00:01:03,380 --> 00:01:05,360 Speaker 5: Bloomberg Radio. I'm John Tucker. 18 00:01:05,400 --> 00:01:05,780 Speaker 3: That's your. 19 00:01:07,000 --> 00:01:11,080 Speaker 5: unemployment report, the jobs report for this Friday. Paul and Tom. 20 00:01:11,140 --> 00:01:14,220 Speaker 4: John Tucker, thanks so much. 4.2% on the unemployment rate. 21 00:01:14,240 --> 00:01:16,160 Speaker 4: There's a lot of noise in there. I got a 22 00:01:16,240 --> 00:01:17,220 Speaker 4: C-minus on this. 23 00:01:17,260 --> 00:01:19,420 Speaker 3: Dr. Sam marked me down years ago. 24 00:01:19,440 --> 00:01:20,490 Speaker 2: Yeah, understandable. 25 00:01:20,630 --> 00:01:24,050 Speaker 4: On this 4.2% here. And you know, everything, folks, as 26 00:01:24,170 --> 00:01:27,530 Speaker 4: I said, it was a real stasis survey. And the 27 00:01:27,650 --> 00:01:33,050 Speaker 4: answer is the numbers are not $ 29, 000 and the two-month 28 00:01:33,130 --> 00:01:40,930 Speaker 4: payroll revision is negative $ 60, 000. 29 00:01:37,410 --> 00:01:40,550 Speaker 3: I'm going to nail this. That's a negative $ 29, 000. 30 00:01:40,069 --> 00:01:40,229 Speaker 1: Okay. 31 00:01:40,430 --> 00:01:47,090 Speaker 4: Negative over, you know, a summation here as well. The 32 00:01:47,150 --> 00:01:53,020 Speaker 4: hourly earnings come in light, light, light, 0.3. And they 33 00:01:53,060 --> 00:01:57,360 Speaker 4: came in substantially below that, 0.1. Average hourly earnings below. 34 00:01:59,040 --> 00:02:04,420 Speaker 4: You know, annualized down a tick, 3.1, down to 3.0. 35 00:02:04,420 --> 00:02:10,310 Speaker 4: Equities lift up 61 on futures, up 30, double up 60. 36 00:02:10,310 --> 00:02:13,990 Speaker 4: NASDAQ up a full stick, 1%. The VIX, as Paul mentioned. 37 00:02:14,669 --> 00:02:16,519 Speaker 4: It's 16, comes in at 15. 38 00:02:16,510 --> 00:02:19,020 Speaker 3: Paul, to let Dr. Sam massage the data, what do 39 00:02:19,040 --> 00:02:19,910 Speaker 3: you see here, Paul, right now? 40 00:02:19,919 --> 00:02:21,540 Speaker 2: I'm just going to the bond market right here, Tom. 41 00:02:21,840 --> 00:02:24,980 Speaker 2: The two years down nine basis points. It was down 42 00:02:25,020 --> 00:02:27,540 Speaker 2: two basis points before this report. So we're now at 43 00:02:27,540 --> 00:02:32,190 Speaker 2: 469 on the two-year. The 10-year, off about 8.5 basis points. 44 00:02:32,450 --> 00:02:36,090 Speaker 2: The 10-year is now at 5.15%, Tom. So yields coming in, 45 00:02:36,150 --> 00:02:37,210 Speaker 2: bonds prices higher. 46 00:02:38,020 --> 00:02:41,560 Speaker 4: In Duluth, Minnesota, I think Gordon Lightfoot in Lake Superior. 47 00:02:41,650 --> 00:02:44,030 Speaker 4: Claudia Somm is with us as she is honored by 48 00:02:44,070 --> 00:02:46,510 Speaker 4: the University of Minnesota. 49 00:02:46,610 --> 00:02:46,950 Speaker 3: Dr. 50 00:02:47,050 --> 00:02:50,480 Speaker 4: Somm, this is a report that a select group of 51 00:02:50,560 --> 00:02:53,440 Speaker 4: people said would happen, would come in light, what David 52 00:02:53,520 --> 00:02:55,100 Speaker 4: Rosenberg called a catch-down. 53 00:02:55,730 --> 00:02:57,750 Speaker 3: What do you do with one month's data? 54 00:02:58,130 --> 00:03:01,430 Speaker 6: Well, I think this does undercut the story that had 55 00:03:01,450 --> 00:03:03,750 Speaker 6: been coming in today that maybe we have some strengthening 56 00:03:03,770 --> 00:03:06,940 Speaker 6: in the labor market, right? That maybe the hiring, picking 57 00:03:07,030 --> 00:03:10,180 Speaker 6: up some. Like this just shows, no, we are, the 58 00:03:10,200 --> 00:03:13,220 Speaker 6: labor market is much more stable. Like job creation has 59 00:03:13,280 --> 00:03:16,140 Speaker 6: stabilized relative to last year when it was really sliding, 60 00:03:16,520 --> 00:03:18,519 Speaker 6: but we are not in an uptrend, right? 61 00:03:18,540 --> 00:03:20,260 Speaker 7: So the August number, it was pop. 62 00:03:20,360 --> 00:03:23,040 Speaker 6: Even with the downward revisions today, it's probably well above 63 00:03:23,100 --> 00:03:25,160 Speaker 6: what it takes to keep the unemployment rate stable. 64 00:03:25,220 --> 00:03:25,430 Speaker 4: Right. 65 00:03:25,650 --> 00:03:28,610 Speaker 7: But we didn't get another month of that, right? It, like, 66 00:03:28,770 --> 00:03:29,750 Speaker 7: popped back down. 67 00:03:29,830 --> 00:03:32,090 Speaker 6: So I think we're just in this place of very 68 00:03:32,210 --> 00:03:35,130 Speaker 6: low job creation in the U.S., which does fit with 69 00:03:35,470 --> 00:03:37,870 Speaker 6: low growth in the labor force. And the unemployment rate, 70 00:03:37,950 --> 00:03:41,530 Speaker 6: it did tick up, but basically it's unchanged. I mean, 4-2, 4-1, 71 00:03:41,640 --> 00:03:42,660 Speaker 6: those aren't big differences. 72 00:03:42,760 --> 00:03:45,280 Speaker 4: I was talking to Veronica Clark about this at Citigroup. 73 00:03:45,520 --> 00:03:48,440 Speaker 4: And the GDP, and I guess it comes into Claudia. 74 00:03:49,180 --> 00:03:54,030 Speaker 4: I'm thinking of the late laureate, Ned Phelps, at Columbia, 75 00:03:54,050 --> 00:03:55,130 Speaker 4: the dynamism. 76 00:03:55,930 --> 00:03:57,330 Speaker 3: Of the American economy. 77 00:03:58,010 --> 00:04:01,580 Speaker 4: Are we getting sclerotic in our non-AI world? 78 00:04:02,290 --> 00:04:05,580 Speaker 6: It is really frustrating to look at the labor market 79 00:04:05,620 --> 00:04:07,600 Speaker 6: at a moment like this where there really isn't a 80 00:04:07,620 --> 00:04:10,440 Speaker 6: lot of dynamism. One thing I watch so closely, in 81 00:04:10,480 --> 00:04:13,980 Speaker 6: addition to the hiring rate, is the quit rate, because. 82 00:04:13,520 --> 00:04:16,260 Speaker 7: That's the opportunity for people to go find better jobs, 83 00:04:16,300 --> 00:04:19,440 Speaker 7: better pay, deal with higher prices. And that quit rate 84 00:04:19,480 --> 00:04:22,219 Speaker 7: is also low. We are just not moving people around. 85 00:04:22,260 --> 00:04:23,460 Speaker 7: So it really is. 86 00:04:23,980 --> 00:04:26,219 Speaker 6: There's so much tension to have a labor market that 87 00:04:26,260 --> 00:04:29,119 Speaker 6: feels kind of stuck. And an economy where we're talking 88 00:04:29,180 --> 00:04:32,539 Speaker 6: about transformative technology, like it's like things are out of 89 00:04:32,600 --> 00:04:34,560 Speaker 6: sync in a way that just doesn't feel like it 90 00:04:34,600 --> 00:04:35,320 Speaker 6: can keep going. 91 00:04:36,000 --> 00:04:36,930 Speaker 7: And yet it has. 92 00:04:37,020 --> 00:04:38,970 Speaker 6: We are like, you know, at least three years into 93 00:04:38,990 --> 00:04:41,390 Speaker 6: this low hire, low fire labor market. 94 00:04:41,470 --> 00:04:42,250 Speaker 3: This is not normal. 95 00:04:42,290 --> 00:04:44,350 Speaker 2: How do you think the Fed is going to view 96 00:04:45,210 --> 00:04:46,250 Speaker 2: this print here this morning? 97 00:04:46,710 --> 00:04:49,120 Speaker 7: I don't think this gives the Fed a lot of information. 98 00:04:49,480 --> 00:04:52,080 Speaker 6: I don't think it'll really change what their approach to 99 00:04:52,100 --> 00:04:56,860 Speaker 6: monetary policy. Right now, they're trying to contain supply-driven inflation, 100 00:04:56,880 --> 00:05:00,310 Speaker 6: like keeping a bad situation from getting worse. Fed officials 101 00:05:00,350 --> 00:05:03,409 Speaker 6: have talked about what's a pretty modest adjustment in interest rates. 102 00:05:03,430 --> 00:05:05,909 Speaker 7: They've done a quarter point. Maybe they do another, maybe 103 00:05:05,990 --> 00:05:06,710 Speaker 7: two more this year. 104 00:05:06,790 --> 00:05:10,870 Speaker 6: That is not a hiking cycle like 2022 when. 105 00:05:10,350 --> 00:05:12,980 Speaker 7: The labor market's overheating. We have 9% inflation. 106 00:05:13,020 --> 00:05:16,440 Speaker 6: We are not in that world. The labor market is 107 00:05:16,520 --> 00:05:19,219 Speaker 6: pretty stable. It's not in a great place. It's not 108 00:05:19,260 --> 00:05:21,940 Speaker 6: the Fed's focus right now. And really, given their mandate 109 00:05:21,960 --> 00:05:24,359 Speaker 6: and their tools, I think it's appropriate for them to 110 00:05:24,400 --> 00:05:27,760 Speaker 6: be focused on the inflation side. But again, they've had 111 00:05:27,800 --> 00:05:31,610 Speaker 6: a pretty modest approach to monetary policy. The markets seem 112 00:05:31,670 --> 00:05:33,970 Speaker 6: to think something a little more aggressive, and maybe they 113 00:05:33,990 --> 00:05:36,230 Speaker 6: should tone it back a little today. But I don't 114 00:05:36,270 --> 00:05:38,630 Speaker 6: think it really shifts the Fed's thinking that much. 115 00:05:39,010 --> 00:05:42,660 Speaker 2: So with a little bit of hindsight here— What is 116 00:05:42,720 --> 00:05:47,620 Speaker 2: the changed, reduced, more limited immigration policy? How is that impacting? 117 00:05:47,640 --> 00:05:49,780 Speaker 2: Do we have any real hard data how that's impacting 118 00:05:49,800 --> 00:05:50,400 Speaker 2: the labor market? 119 00:05:51,260 --> 00:05:54,500 Speaker 6: There have been, I think, first some measurement challenges, right, 120 00:05:54,540 --> 00:05:59,060 Speaker 6: just in both the surveys and also with employers and reporting. 121 00:05:59,140 --> 00:06:02,739 Speaker 6: And we've not just a reduction in immigration. We've had 122 00:06:02,900 --> 00:06:06,169 Speaker 6: temporary visa status revoked, and that revoked some of the 123 00:06:06,200 --> 00:06:08,270 Speaker 6: work status. And then how do employers handle that, and 124 00:06:08,290 --> 00:06:11,170 Speaker 6: when does it get reported? So we have, with a 125 00:06:11,450 --> 00:06:14,390 Speaker 6: pretty big time lag, got a sense of what's actually 126 00:06:14,430 --> 00:06:16,990 Speaker 6: happening in terms of our immigrant workforce. 127 00:06:17,029 --> 00:06:18,510 Speaker 7: So we don't have a good handle of it. 128 00:06:18,790 --> 00:06:21,830 Speaker 6: I think you can go to a few immigrant-intensive industries, 129 00:06:21,870 --> 00:06:24,010 Speaker 6: like maybe in construction, and you see some wage growth 130 00:06:24,029 --> 00:06:26,300 Speaker 6: pick up, which could be labor shortages. But, oh, yeah, 131 00:06:26,330 --> 00:06:28,940 Speaker 6: we're also building a bunch of data centers. So, like, 132 00:06:28,980 --> 00:06:32,420 Speaker 6: that's pushing up construction. So it's really hard to pull 133 00:06:32,440 --> 00:06:35,040 Speaker 6: it out. But it is clear the labor force growth 134 00:06:35,080 --> 00:06:38,120 Speaker 6: is slowing, not just immigration, but that is a piece of, like, 135 00:06:38,140 --> 00:06:39,020 Speaker 6: the sharp change. 136 00:06:39,520 --> 00:06:41,850 Speaker 4: Claudia Somm, Safe Travels, thank you so much for joining 137 00:06:41,910 --> 00:06:46,349 Speaker 4: us today. It's a yeoman's duty here from the University 138 00:06:46,370 --> 00:06:50,210 Speaker 4: of Minnesota at Duluth. We are ever stronger here with 139 00:06:50,250 --> 00:06:54,979 Speaker 4: features up 69%. The VIX 15.60, the 10-year yield in 140 00:06:55,020 --> 00:06:58,070 Speaker 4: a solid seven basis points, 30-year bond even comes in 141 00:06:58,870 --> 00:07:03,070 Speaker 4: as well. I guess a sigh of relief on worries 142 00:07:03,110 --> 00:07:04,549 Speaker 4: of an overheating economy. 143 00:07:04,610 --> 00:07:05,610 Speaker 3: She is an expert at this. 144 00:07:05,670 --> 00:07:10,170 Speaker 4: Rebecca Patterson joins us now, the Council on Foreign Relations. 145 00:07:10,210 --> 00:07:11,370 Speaker 3: Let me go right to your work. 146 00:07:11,470 --> 00:07:14,300 Speaker 4: I was at the Greenspan Memorial, just a fabulous effort 147 00:07:14,340 --> 00:07:17,720 Speaker 4: by Jane Harmon and, of course, Andrea here with all 148 00:07:17,760 --> 00:07:21,200 Speaker 4: of the people showing up in honor. of Alan Greenspan, 149 00:07:21,220 --> 00:07:23,650 Speaker 4: some really frank talk about the arc of his work. 150 00:07:24,290 --> 00:07:27,550 Speaker 4: And I was greeted by Sebastian Malaby, who's booked The 151 00:07:27,590 --> 00:07:30,070 Speaker 4: Man Who Knew the Life and Times of Alan Greenspan. 152 00:07:30,670 --> 00:07:34,400 Speaker 4: You have the privilege of doing a podcast with Sebastian 153 00:07:34,440 --> 00:07:35,240 Speaker 4: at CFR. 154 00:07:35,900 --> 00:07:37,580 Speaker 3: And your recent newly minted. 155 00:07:37,340 --> 00:07:41,130 Speaker 4: Podcast is on central banks. What kind of bind are 156 00:07:41,170 --> 00:07:43,950 Speaker 4: they in, given the drama I just saw on the 157 00:07:43,990 --> 00:07:44,810 Speaker 4: Bloomberg screen? 158 00:07:45,150 --> 00:07:48,290 Speaker 8: I mean, let's put the payroll data aside for a second, 159 00:07:48,470 --> 00:07:51,470 Speaker 8: because the Fed and other central banks are looking not 160 00:07:51,510 --> 00:07:54,310 Speaker 8: just at one number, but at a dashboard of numbers 161 00:07:54,380 --> 00:07:56,820 Speaker 8: when they're making their assessment on labor and inflation. I 162 00:07:56,860 --> 00:07:58,780 Speaker 8: think the challenge for the Fed, the challenge for all 163 00:07:58,820 --> 00:08:02,420 Speaker 8: these developed markets, and even a few emerging central banks today, 164 00:08:03,020 --> 00:08:06,260 Speaker 8: is that a lot of... the pressure coming in are 165 00:08:06,300 --> 00:08:09,860 Speaker 8: supply shocks. And central bank policy changes can't create a 166 00:08:09,880 --> 00:08:13,470 Speaker 8: barrel of oil. They can't create more chips, et cetera. 167 00:08:13,910 --> 00:08:16,270 Speaker 8: So it's hard for them to know how to respond 168 00:08:16,310 --> 00:08:19,170 Speaker 8: to that. Now, some of this is demand-driven, as we know. 169 00:08:19,290 --> 00:08:22,070 Speaker 8: And the way I'm starting to think about the economy 170 00:08:22,130 --> 00:08:25,630 Speaker 8: today and AI in particular is it's too much of 171 00:08:25,670 --> 00:08:30,300 Speaker 8: a good thing. We have Too much capex, literally, going 172 00:08:30,340 --> 00:08:34,880 Speaker 8: in the economy. Brookings put out a paper recently suggesting 3.6% 173 00:08:34,880 --> 00:08:38,560 Speaker 8: of GDP for about a decade. I mean, that's an incredible, 174 00:08:38,740 --> 00:08:39,520 Speaker 8: incredible statistic. 175 00:08:39,540 --> 00:08:41,280 Speaker 3: That's real GDP, folks. 176 00:08:41,420 --> 00:08:41,709 Speaker 1: Yes. 177 00:08:41,900 --> 00:08:46,410 Speaker 3: Okay, folks, let me translate. Paul, banana republic. Continue. Not 178 00:08:46,429 --> 00:08:47,530 Speaker 3: the clothing store. 179 00:08:47,610 --> 00:08:50,170 Speaker 8: So you've got this boost to growth, but as we 180 00:08:50,210 --> 00:08:55,010 Speaker 8: just saw, it's not necessarily translating into an equal number 181 00:08:55,050 --> 00:08:59,350 Speaker 8: of jobs. We have this need for energy that's pushing 182 00:08:59,490 --> 00:09:03,390 Speaker 8: up inflation at the margin. And as Claudia Psalm just mentioned, 183 00:09:03,670 --> 00:09:05,730 Speaker 8: love to see her before me, although it's a lot 184 00:09:05,750 --> 00:09:10,310 Speaker 8: of pressure on me. It sucks away from everything else. 185 00:09:10,410 --> 00:09:12,670 Speaker 8: And when I say sucks away, I mean you don't 186 00:09:12,710 --> 00:09:15,530 Speaker 8: have enough construction workers because they're all building data centers. 187 00:09:16,010 --> 00:09:19,590 Speaker 8: You have pressure higher on treasury yields because you are 188 00:09:19,630 --> 00:09:21,410 Speaker 8: now competing with all that AI debt. 189 00:09:21,670 --> 00:09:23,340 Speaker 4: Paul, let me give you this statistic here. I think 190 00:09:23,380 --> 00:09:26,200 Speaker 4: it's really important. I have a huge affection for Duluth. 191 00:09:26,280 --> 00:09:29,570 Speaker 4: It actually has to do with Rome, Italy. The poverty 192 00:09:29,670 --> 00:09:34,330 Speaker 4: rate in Minnesota is 9%. Booming Minneapolis, data centers, the 193 00:09:34,350 --> 00:09:37,370 Speaker 4: Mayo Clinic, the Minnesota Wild, everything. 194 00:09:37,410 --> 00:09:40,150 Speaker 3: I won't mention the Twins. Brian, I'm sorry. I won't 195 00:09:40,190 --> 00:09:43,670 Speaker 3: mention the Vikings. Okay. In Duluth, the poverty rate is 196 00:09:43,710 --> 00:09:45,050 Speaker 3: almost double, 16.8%. 197 00:09:45,050 --> 00:09:48,950 Speaker 4: That's the part of America flat on their back. 198 00:09:49,190 --> 00:09:49,710 Speaker 3: Absolutely. 199 00:09:50,110 --> 00:09:52,430 Speaker 2: So, Rebecca, what a lot of people are trying to understand, 200 00:09:52,490 --> 00:09:53,950 Speaker 2: there's a lot of people in this market that have 201 00:09:53,970 --> 00:09:56,860 Speaker 2: never seen yields at these levels. It's been a long 202 00:09:56,890 --> 00:09:59,740 Speaker 2: time since we've seen yields at these levels. Is it 203 00:09:59,780 --> 00:10:02,160 Speaker 2: fair to tell them this is kind of the new normal? 204 00:10:02,300 --> 00:10:04,440 Speaker 2: This is actually normal when you look at it historically. 205 00:10:04,770 --> 00:10:06,350 Speaker 2: And you better get used to these levels? Is that 206 00:10:06,370 --> 00:10:07,290 Speaker 2: how you're thinking about the yields? 207 00:10:07,550 --> 00:10:07,809 Speaker 4: Yes. 208 00:10:08,030 --> 00:10:10,370 Speaker 8: I think we are in a higher for longer regime. 209 00:10:10,550 --> 00:10:13,599 Speaker 8: I think government bond yields, again, across a number of 210 00:10:13,679 --> 00:10:15,960 Speaker 8: markets are resetting higher structurally. 211 00:10:16,340 --> 00:10:17,860 Speaker 1: It doesn't mean they won't go up and down with 212 00:10:17,880 --> 00:10:18,880 Speaker 1: the economic cycle. 213 00:10:18,940 --> 00:10:22,140 Speaker 8: But the era that we had for 20 some years 214 00:10:22,380 --> 00:10:25,550 Speaker 8: after the financial crisis in 08, where we had zero 215 00:10:25,610 --> 00:10:28,630 Speaker 8: interest rates and very low yields, that's not coming back. 216 00:10:29,340 --> 00:10:31,820 Speaker 4: Rebecca, you know that when we make a correction here, 217 00:10:31,860 --> 00:10:35,140 Speaker 4: we have to do it immediately because the markets are 218 00:10:35,350 --> 00:10:38,970 Speaker 4: riveted to what we say here in equities, bonds, currencies, commodities. 219 00:10:39,600 --> 00:10:43,319 Speaker 3: Surveillance correction. Brian Belsky, thank you so much for emailing in. 220 00:10:43,800 --> 00:10:47,250 Speaker 4: The Vikings are 3-0, and they got a gimme this 221 00:10:47,290 --> 00:10:50,770 Speaker 4: weekend with the lousy Miami Dolphins. They're going to be 222 00:10:50,790 --> 00:10:52,670 Speaker 4: on the edge of Duke, 4-0 in that. 223 00:10:53,030 --> 00:10:55,930 Speaker 3: Let us continue our conversation on the American economy. 224 00:10:56,250 --> 00:10:58,790 Speaker 2: So should we go in and lock in some yield 225 00:10:58,809 --> 00:11:01,170 Speaker 2: here in the Treasury bond market? I mean, these are 226 00:11:01,190 --> 00:11:04,940 Speaker 2: coupons we haven't seen before. What do you think here? 227 00:11:04,960 --> 00:11:07,730 Speaker 2: Do I— buy the coupon here? Do I try to 228 00:11:07,750 --> 00:11:09,150 Speaker 2: take some credit risk beyond that? 229 00:11:09,170 --> 00:11:10,990 Speaker 3: What would you be doing at Bessemer Trust today? 230 00:11:11,190 --> 00:11:14,380 Speaker 8: If I were still chief investment officer managing your money, 231 00:11:15,059 --> 00:11:18,579 Speaker 8: I would not be adding to treasuries here. Now, if 232 00:11:18,620 --> 00:11:20,860 Speaker 8: you're a very long-term investor and you're going to buy 233 00:11:20,920 --> 00:11:24,080 Speaker 8: it and hold it till maturity, fine. But I still 234 00:11:24,120 --> 00:11:26,640 Speaker 8: think yields have more upside from here. I would be 235 00:11:26,679 --> 00:11:29,719 Speaker 8: looking at other ways to have diversification in my portfolio. 236 00:11:30,360 --> 00:11:32,880 Speaker 8: The problem right now, both of you know this, is 237 00:11:32,970 --> 00:11:35,989 Speaker 8: if you're looking for countries that have better fiscal situations, 238 00:11:36,330 --> 00:11:38,370 Speaker 8: we're talking countries like Singapore and Norway. 239 00:11:38,790 --> 00:11:40,189 Speaker 1: And because they have. 240 00:11:40,050 --> 00:11:42,370 Speaker 8: Good fiscal situations, they don't issue a lot of debt, 241 00:11:42,410 --> 00:11:45,170 Speaker 8: so their debt markets are not very deep. So where 242 00:11:45,210 --> 00:11:47,550 Speaker 8: you want to own the bonds, there aren't enough bonds 243 00:11:47,590 --> 00:11:47,949 Speaker 8: to own. 244 00:11:47,970 --> 00:11:50,130 Speaker 4: So what do you do, as I mentioned to Chris 245 00:11:50,170 --> 00:11:53,180 Speaker 4: Waller at CFR? A year ago, I can't remember. He 246 00:11:53,200 --> 00:11:55,920 Speaker 4: was running for office at the time. It's almost a 247 00:11:56,040 --> 00:11:57,800 Speaker 4: double our starred America. 248 00:11:58,210 --> 00:11:59,170 Speaker 1: Oh, I love that. 249 00:11:59,590 --> 00:12:00,410 Speaker 3: He liked it, too. 250 00:12:00,610 --> 00:12:01,350 Speaker 1: I love that. 251 00:12:01,730 --> 00:12:04,100 Speaker 4: You know, and Waller's game theory is like to die 252 00:12:04,130 --> 00:12:07,560 Speaker 4: for Washington state. But it's a double R, use it 253 00:12:07,580 --> 00:12:11,520 Speaker 4: with Sebastian, it's a double R-starred America. What does the 254 00:12:11,580 --> 00:12:14,870 Speaker 4: Federal Reserve Bank president in Cleveland, what does she do 255 00:12:15,590 --> 00:12:18,729 Speaker 4: worried about runaway inflation and higher rates? 256 00:12:18,929 --> 00:12:19,990 Speaker 3: What does Beth do? 257 00:12:20,150 --> 00:12:22,840 Speaker 8: Yeah, you have to set policy for the whole country. 258 00:12:23,059 --> 00:12:26,520 Speaker 8: So you might have big disparities between Minneapolis and Duluth. 259 00:12:27,059 --> 00:12:31,120 Speaker 8: But you have to set policy for the headline, not 260 00:12:31,179 --> 00:12:33,800 Speaker 8: for certain pockets. That was part of the trouble the 261 00:12:33,880 --> 00:12:36,780 Speaker 8: Fed got into in recent years when they started focusing 262 00:12:36,870 --> 00:12:40,949 Speaker 8: on full employment, remember? And instead of just having a 263 00:12:41,030 --> 00:12:42,550 Speaker 8: neutral employment rate. 264 00:12:42,690 --> 00:12:43,390 Speaker 1: And they wanted to. 265 00:12:44,050 --> 00:12:46,550 Speaker 8: There was a diversity element that came into it, and 266 00:12:46,570 --> 00:12:48,290 Speaker 8: it was seen as the Fed getting out of their lane. 267 00:12:48,710 --> 00:12:51,240 Speaker 8: I think right now, inflation, even though we had a 268 00:12:51,559 --> 00:12:55,520 Speaker 8: benign report earlier and a few days ago on core PCE, 269 00:12:55,540 --> 00:12:57,370 Speaker 8: I think inflation's sticky. 270 00:12:57,540 --> 00:12:59,090 Speaker 1: It's still above— Core service. 271 00:12:59,350 --> 00:13:01,110 Speaker 3: I don't have the number in front of me. Core 272 00:13:01,150 --> 00:13:02,290 Speaker 3: service was outrageous. 273 00:13:03,010 --> 00:13:05,980 Speaker 8: I think you still need to be raising rates right now. 274 00:13:06,050 --> 00:13:10,480 Speaker 8: The economy is strong. Even taking this payroll number out, 275 00:13:10,620 --> 00:13:11,180 Speaker 8: it's strong. 276 00:13:11,260 --> 00:13:13,780 Speaker 4: Get one more question in here because she is wearing 277 00:13:14,020 --> 00:13:15,229 Speaker 4: Viking purple today. 278 00:13:15,330 --> 00:13:18,770 Speaker 2: Exactly. Yields are higher, but stocks are still powering through. 279 00:13:18,790 --> 00:13:21,729 Speaker 2: Is this simply an earnings story driving this market? Well, look. 280 00:13:22,510 --> 00:13:26,520 Speaker 8: At the margin, slightly lower yield. The market's relieved about that. 281 00:13:26,920 --> 00:13:29,000 Speaker 8: But I think what's going on here, you say, well, 282 00:13:29,200 --> 00:13:32,219 Speaker 8: yields are up. Why aren't stocks down? Because part of 283 00:13:32,260 --> 00:13:34,760 Speaker 8: what's driving this is the it's too good to be true. 284 00:13:34,880 --> 00:13:37,200 Speaker 1: It's the AI capex. It's the wealth effect. 285 00:13:37,540 --> 00:13:41,340 Speaker 8: So for now, earnings are providing a nice offset, and 286 00:13:41,380 --> 00:13:44,740 Speaker 8: that's keeping stocks supported. The question is, where is the 287 00:13:44,780 --> 00:13:48,600 Speaker 8: tipping point? Where are yields so high that that discount rate, 288 00:13:48,660 --> 00:13:51,420 Speaker 8: that borrowing rate overwhelms the earnings story? 289 00:13:52,480 --> 00:13:53,340 Speaker 1: We don't know where that is. 290 00:13:53,400 --> 00:13:58,050 Speaker 4: And I beg, with Sebastian Malaby's visceral understanding of the 291 00:13:58,130 --> 00:14:02,270 Speaker 4: continent of Europe, as a kid, his father was ambassador 292 00:14:02,330 --> 00:14:06,130 Speaker 4: to Germany in a very challenging time. I'm begging you 293 00:14:06,170 --> 00:14:10,479 Speaker 4: guys to do a podcast on France, on the continent, 294 00:14:10,860 --> 00:14:13,020 Speaker 4: and on the bizarreness of the United Kingdom. 295 00:14:13,950 --> 00:14:14,809 Speaker 1: That sounds fun to me. 296 00:14:15,030 --> 00:14:18,599 Speaker 8: We did one earlier this week with Adam Posen from Peterson, 297 00:14:18,640 --> 00:14:22,080 Speaker 8: who's wonderful. And we played a game of would you rather. 298 00:14:22,520 --> 00:14:24,750 Speaker 8: Would you rather be a central banker in the UK 299 00:14:24,810 --> 00:14:26,830 Speaker 8: or France today? And we made Adam pick. 300 00:14:27,880 --> 00:14:30,120 Speaker 3: We do that with John Tucker. 301 00:14:30,300 --> 00:14:33,900 Speaker 4: We go, John Tucker, would you rather be Alexis Christophorus 302 00:14:34,280 --> 00:14:35,260 Speaker 4: or Michael Barr? 303 00:14:35,660 --> 00:14:36,600 Speaker 5: Yeah, that's a tough choice. 304 00:14:37,720 --> 00:14:38,920 Speaker 3: Rebecca, thank you so much. 305 00:14:38,940 --> 00:14:39,320 Speaker 1: Thank you. 306 00:14:39,400 --> 00:14:39,840 Speaker 3: Huge V.I. 307 00:14:39,880 --> 00:14:42,979 Speaker 4: On Rebecca Patterson with the Council on Foreign Relations. I 308 00:14:43,000 --> 00:14:46,180 Speaker 4: work at Bridgewater and Bessemer over the years. 309 00:14:46,520 --> 00:14:48,420 Speaker 3: What a joy this is. Our team is just really 310 00:14:49,020 --> 00:14:50,970 Speaker 3: the cadence of Jobs Day folks. 311 00:14:51,000 --> 00:14:53,610 Speaker 4: It's such a privilege here at Bloomberg to go from 312 00:14:53,670 --> 00:15:00,090 Speaker 4: Priya Misra early on, Veronica Clark, as well. Christina Kempman, 313 00:15:00,130 --> 00:15:01,390 Speaker 4: you know, with Invesco. 314 00:15:01,430 --> 00:15:04,610 Speaker 2: Christina hops into the seat, immediately goes into her, logs 315 00:15:04,650 --> 00:15:05,170 Speaker 2: into the Bloomberg. 316 00:15:05,190 --> 00:15:05,970 Speaker 3: Well, she does. 317 00:15:06,250 --> 00:15:07,070 Speaker 2: She's talking to clients. 318 00:15:07,130 --> 00:15:07,570 Speaker 7: I see everything. 319 00:15:07,590 --> 00:15:08,870 Speaker 2: There's too many things moving. 320 00:15:09,310 --> 00:15:11,750 Speaker 4: Should I, should I, everybody today, you can't see this 321 00:15:11,810 --> 00:15:14,330 Speaker 4: on radio. The girls are all decked out in scarves. 322 00:15:14,910 --> 00:15:17,130 Speaker 3: Yes. Like, you know, should I have. 323 00:15:17,070 --> 00:15:17,310 Speaker 4: A silk scarf? 324 00:15:17,330 --> 00:15:17,990 Speaker 2: Get dressed up for radio. 325 00:15:18,170 --> 00:15:20,520 Speaker 3: You know, like the, I think you could. 326 00:15:20,780 --> 00:15:22,320 Speaker 1: If you're bow-tied, you're ready to go. 327 00:15:22,340 --> 00:15:26,120 Speaker 3: John, I'd look like I was on Hollywood Squares. It'd 328 00:15:26,140 --> 00:15:26,560 Speaker 3: be great. 329 00:15:26,840 --> 00:15:28,980 Speaker 5: Yeah, right in the center, the old Paul Lynn Square. 330 00:15:29,320 --> 00:15:34,020 Speaker 4: Is the bond market caught asunder by this jobs report? 331 00:15:34,180 --> 00:15:37,610 Speaker 4: Was there a bet out there that needs to be covered? 332 00:15:38,120 --> 00:15:39,080 Speaker 1: I don't think so, actually. 333 00:15:39,120 --> 00:15:42,840 Speaker 9: I think the markets and for the Fed, it is 334 00:15:43,140 --> 00:15:46,180 Speaker 9: still primarily about inflation. I think the labor market has 335 00:15:46,240 --> 00:15:50,040 Speaker 9: been rather resilient all year. And then I guess two 336 00:15:50,090 --> 00:15:52,490 Speaker 9: months ago, we had that first big negative print. But 337 00:15:52,530 --> 00:15:54,870 Speaker 9: it just kind of brought us like level set us 338 00:15:54,950 --> 00:15:58,190 Speaker 9: back down to kind of this. maybe actually the run 339 00:15:58,230 --> 00:16:00,750 Speaker 9: rate of breakeven payrolls is the 25 to 50 that 340 00:16:00,770 --> 00:16:04,470 Speaker 9: we started the year talking about and not this massive acceleration. 341 00:16:04,510 --> 00:16:06,770 Speaker 9: So I think we're still in this low hire, low 342 00:16:06,830 --> 00:16:11,170 Speaker 9: fire environment that Claudia spoke about. And I think the 343 00:16:11,210 --> 00:16:14,670 Speaker 9: bigger question here is this continued inflation. And I think 344 00:16:14,710 --> 00:16:18,910 Speaker 9: for the bond market, it's about global yields everywhere being higher. 345 00:16:19,130 --> 00:16:22,880 Speaker 9: And how much is that actually? I think over the year, 346 00:16:22,930 --> 00:16:26,380 Speaker 9: we've talked about this individual Japan story and this US story. 347 00:16:26,420 --> 00:16:30,480 Speaker 9: And How much is it the tide that rises all ships? 348 00:16:30,760 --> 00:16:33,680 Speaker 9: And there's a lot of Europe, obviously, you spoke about today. 349 00:16:33,700 --> 00:16:35,820 Speaker 9: There's pain there. There's pain in positioning because people have. 350 00:16:35,760 --> 00:16:36,350 Speaker 1: Had a tough year. 351 00:16:36,520 --> 00:16:36,830 Speaker 8: Yeah. 352 00:16:37,210 --> 00:16:39,330 Speaker 2: And part of that has been so much new issuance 353 00:16:39,530 --> 00:16:41,770 Speaker 2: into the fixed income market. We had the hyperscalers. 354 00:16:41,870 --> 00:16:42,270 Speaker 1: Absolutely. 355 00:16:42,450 --> 00:16:45,630 Speaker 2: This week was a big week. You know, Paramount and SoftBank. 356 00:16:45,650 --> 00:16:46,130 Speaker 4: Yeah. 357 00:16:46,590 --> 00:16:48,660 Speaker 2: How is your market digesting that stuff? 358 00:16:49,700 --> 00:16:52,740 Speaker 9: So, again, I think when we look at global bond 359 00:16:52,760 --> 00:16:56,940 Speaker 9: markets and treasury markets everywhere and some of this higher 360 00:16:56,980 --> 00:16:59,700 Speaker 9: yields across the board, part of it is just the 361 00:17:00,200 --> 00:17:02,900 Speaker 9: glut of supply that's hitting the market and the hyperscaler 362 00:17:02,960 --> 00:17:08,790 Speaker 9: issuance has been huge. Even at we finally, I know, 363 00:17:08,810 --> 00:17:10,970 Speaker 9: I feel like we're like the broken record that we're 364 00:17:11,109 --> 00:17:14,210 Speaker 9: not very constructive on credit, whereas like every credit investor 365 00:17:14,230 --> 00:17:15,250 Speaker 9: is like all in yield. 366 00:17:15,690 --> 00:17:18,220 Speaker 1: But we're finally seeing a little bit of widening. 367 00:17:18,260 --> 00:17:22,180 Speaker 9: Like we've seen, I think, 50 basis points-ish in high-grade 368 00:17:22,200 --> 00:17:25,990 Speaker 9: spreads this week. But still, we're starting from such extremely 369 00:17:26,050 --> 00:17:29,189 Speaker 9: tight levels, even same thing. You look at Italy, Germany 370 00:17:29,260 --> 00:17:31,990 Speaker 9: has moved a lot in the last couple of weeks, 371 00:17:32,340 --> 00:17:38,220 Speaker 9: but we're at 125. In the last two years crisis, 372 00:17:38,580 --> 00:17:41,879 Speaker 9: you were at 250. You can get meaningfully wider in 373 00:17:41,900 --> 00:17:42,440 Speaker 9: these spreads. 374 00:17:42,500 --> 00:17:46,420 Speaker 4: What is the financial media most getting wrong about price down, 375 00:17:46,480 --> 00:17:47,100 Speaker 4: yield up. 376 00:17:47,020 --> 00:17:47,899 Speaker 3: In global bonds? 377 00:17:49,200 --> 00:17:52,050 Speaker 9: Um, I don't know that anyone's... that we're, like, getting 378 00:17:52,109 --> 00:17:53,340 Speaker 9: the story wrong. 379 00:17:53,359 --> 00:17:53,920 Speaker 5: I think. 380 00:17:54,890 --> 00:17:57,930 Speaker 9: there is a much more global nature to it that 381 00:17:58,130 --> 00:18:01,540 Speaker 9: just how, not that it's coordinated, but like that the 382 00:18:01,600 --> 00:18:03,859 Speaker 9: pressure points from one to the other are all feeding 383 00:18:03,940 --> 00:18:07,640 Speaker 9: into each other. And I think if you zoom out 384 00:18:07,680 --> 00:18:10,760 Speaker 9: and look back at the year, maybe originally we didn't 385 00:18:10,780 --> 00:18:13,260 Speaker 9: give as much credence to that of how much the 386 00:18:13,300 --> 00:18:16,380 Speaker 9: initial pressures in Japan was feeding everywhere else. I think 387 00:18:16,420 --> 00:18:19,359 Speaker 9: for the US, we want to talk about bond vigilantes 388 00:18:19,440 --> 00:18:22,780 Speaker 9: and inflation pressure and all of this, but All things considered, 389 00:18:22,800 --> 00:18:25,810 Speaker 9: like post-COVID, you had an inflation period in the U.S. 390 00:18:25,850 --> 00:18:29,270 Speaker 9: with 9% inflation. Breakevens really never did anything. This has 391 00:18:29,290 --> 00:18:33,870 Speaker 9: been a real yield move here. And if you actually 392 00:18:33,970 --> 00:18:38,590 Speaker 9: went to the market really questioning Fed credibility and inflation, 393 00:18:39,369 --> 00:18:41,230 Speaker 9: bonds can be a lot higher than where they are now. 394 00:18:41,730 --> 00:18:44,300 Speaker 9: You know, this was like a let's re-rate where is growth. 395 00:18:45,200 --> 00:18:45,440 Speaker 4: U.S. 396 00:18:45,460 --> 00:18:47,139 Speaker 1: Growth has been much stronger, right? 397 00:18:47,160 --> 00:18:49,199 Speaker 4: I'm begging for you to come back next week if 398 00:18:49,240 --> 00:18:52,040 Speaker 4: you're in town. I would kill to have you back 399 00:18:52,100 --> 00:18:54,220 Speaker 4: next week. Let's make a note of that. Just too 400 00:18:54,260 --> 00:18:56,850 Speaker 4: short a time today. Christina Katmany, thank you so much 401 00:18:57,770 --> 00:19:01,070 Speaker 4: on this job stay as well. Let me summarize here. 402 00:19:02,050 --> 00:19:04,649 Speaker 4: The dollar was a DXY 102. It's come in a 403 00:19:04,730 --> 00:19:07,939 Speaker 4: little bit weaker dollar. But it's just amazing to see 404 00:19:07,980 --> 00:19:13,140 Speaker 4: where levels are. I'd really single out Sterling, a 132.24. 405 00:19:13,140 --> 00:19:18,160 Speaker 4: It's up right now, but it's had a really difficult morning, to. 406 00:19:18,160 --> 00:19:20,060 Speaker 3: Say the least. 407 00:19:20,880 --> 00:19:24,399 Speaker 4: Oil, under $ 100. Brent, West Texas Intermediate. 408 00:19:24,520 --> 00:19:28,020 Speaker 3: Under $ 90 as well. I still have a bid to 409 00:19:28,060 --> 00:19:30,740 Speaker 3: the market. We're away from the opening. We'll see how 410 00:19:30,770 --> 00:19:33,830 Speaker 3: that works out. But futures up 66%. 411 00:19:33,830 --> 00:19:38,500 Speaker 4: Right now, NASDAQ up a large 1.2%. I just can't 412 00:19:38,580 --> 00:19:40,560 Speaker 4: pull the trigger on triple leverage stock.