Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with
Speaker 1: David Gura. Daily we bring you insight from the best
Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance
Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course,
Speaker 1: on the Bloomberg Good Morning everyone, Bloomberg Surveillance Jobs Day.
Speaker 1: In twenty nine minutes, we will bring you the data.
Speaker 1: We'll go beneath the headline data. We are fond of
Speaker 1: doing that, and what we're really fond of is on
Speaker 1: a three day weekend, four day weekend, whatever it is,
Speaker 1: David Gurral, five day weekend, I'm labor day weekend. We're
Speaker 1: pleased to announce that William Gross and Jim Glassman are here.
Speaker 1: They're here, are people talk to their people, and it's
Speaker 1: very We're really honored if Alan Krueger with us earlier,
Speaker 1: James Sweeney really doing well from Credit Sweee with some
Speaker 1: terrific perspective, and then to have Professor Krueger from Venice,
Speaker 1: Italy and to have uh Bill Gross join us in
Speaker 1: a bit from Janet Henderson is great. But we will
Speaker 1: begin with James Glassman of JP Morgan, Jim Glassman here,
Speaker 1: and I want to frame August and wrap it around you. Travels,
Speaker 1: which is everybody's telling us as a job shortage, job
Speaker 1: openings are there, this is that the other wage growth.
Speaker 1: We'll get into all that. And yet there's twelve thousand
Speaker 1: people lined up to fill cardboard boxes at Amazon. And
Speaker 1: the good thing about Jim Glassman is you're on the road,
Speaker 1: not in the three zip codes that straddled James Diamond
Speaker 1: to me and David Gura, what have you witnessed on
Speaker 1: the road about a fully employed America? Are one lined
Speaker 1: up to fill cardboard boxes at Amazon? Yeah? I mean
Speaker 1: there are pockets that are struggling, but they're also pockets
Speaker 1: out there that are just off the charts. Colorado, Nashville, Austin,
Speaker 1: West Coast, East Coast. We're doing fine. Actually, everybody is
Speaker 1: doing pretty well. There are a few areas that are slow.
Speaker 1: I think the problem for a lot of workers is
Speaker 1: there's just been so much change in the workplace. There's
Speaker 1: a lot of automation, there's a lot of innovation. The
Speaker 1: jobs that used to exist ten years ago don't exist anymore.
Speaker 1: So you can find jobs, but the problem is they're
Speaker 1: not paying the same thing unless you can scale up.
Speaker 1: And that's really what our clients are telling us, is
Speaker 1: they that the kind of jobs they need don't have.
Speaker 1: They don't have people to write skills. Well. To me,
Speaker 1: that's music to my ears because that tells me that
Speaker 1: something's changed over the last ten years. There are new
Speaker 1: opportunities opening up, and we just got to figure out
Speaker 1: how to get people steered there. I think a lot
Speaker 1: of community colleges are very focused on this. If you
Speaker 1: go to Miami Dade, all the very big community college systems,
Speaker 1: they've got a lot of programs for training people with
Speaker 1: specific skills. And I suspect that we will figure out
Speaker 1: and then in another few years we'll probably not here
Speaker 1: as much about this story because I think people are
Speaker 1: figuring out that there are things out there. You just
Speaker 1: got to take the initiative to do something about it.
Speaker 1: We were having a conversation with James Swingeing from Credits
Speaker 1: was a little earlier just about what constitutes a skilled worker.
Speaker 1: How much agreement is there on that, what? What what
Speaker 1: what we define as skilled worker as well? I don't know,
Speaker 1: You've got to ask, you know, you need people who
Speaker 1: know how to monitor computer systems and understand what what
Speaker 1: it is that all the stuff that's been mechanized, if
Speaker 1: they've got to understand the process there. So you'll get
Speaker 1: a different story depending on where you look. I think
Speaker 1: what people tell you is you need people who learn
Speaker 1: skills that we used to learn in shop class in
Speaker 1: high school. You've got to have some math skills, you
Speaker 1: gotta know some programming, and honestly, you know, when I
Speaker 1: think of it, I think of when I turned my
Speaker 1: car into the local gas station to do routine maintenance.
Speaker 1: I took it in the other day, they say to me,
Speaker 1: can you come back in about three weeks because our
Speaker 1: mechanic is out of town. He's on vacation. So no
Speaker 1: one no when there. You know, just maintaining a car
Speaker 1: has gotten much more complicated and you need to know
Speaker 1: how to read the diagon gnostics and understand the way
Speaker 1: the car is working to make sense of that. So,
Speaker 1: you know, my suspicion is that it's not It doesn't
Speaker 1: take an awful lot of training. The problem is it
Speaker 1: isn't really in anyone businesses interest to do. I mean,
Speaker 1: if if you spend the money to train somebody up, uh,
Speaker 1: then they become marketable and they jump, they go somewhere else.
Speaker 1: So this is the role for the public sector and
Speaker 1: for the community colleges. It's a partnership that you needed
Speaker 1: to ask you about that because I think this administration
Speaker 1: has been keen to point out the parallel they'd like
Speaker 1: to see between the US training system and that in
Speaker 1: Germany or other parts of Europe, and there it seems
Speaker 1: like you get an apprenticeship company, finances that in part
Speaker 1: or at least in part, and then you stay with
Speaker 1: that company. How do you incentivize somebody who gets those
Speaker 1: skills to stay? How do how do you make it
Speaker 1: so that that person doesn't have those marketable skills and
Speaker 1: wants to leave. Well, you know, when you look to
Speaker 1: South Carolina and North Carolina where the European auto industry
Speaker 1: has come in, you see a lot of that going on.
Speaker 1: And I think you know, to some extent, uh, you're
Speaker 1: not going to lose people if if the skills that
Speaker 1: you're learning are specific to that company. But the way
Speaker 1: you do it is you offer benefits to you know,
Speaker 1: tie people in, and I think people, honestly, I think
Speaker 1: you just people appreciate the opportunities to develop, to know
Speaker 1: something about your company and to learn those skills. I
Speaker 1: don't think people are that quick to jump. A lot
Speaker 1: of folks, you know where they sort of we like
Speaker 1: to stay in our comfort zone. If you give me
Speaker 1: opportunities in my comfort zone, I'm happy to stay there.
Speaker 1: So I don't think this problem is as big as
Speaker 1: you might think it is for the guy that learns
Speaker 1: the welding. Because if there's a hot paying job up
Speaker 1: in North Dakota and you teach me how to do
Speaker 1: welding down here, I'm gonna go. If I can get
Speaker 1: three times, this is really I was going to go
Speaker 1: another wrangler. Well, this is what you do folks with
Speaker 1: Jim Glass and frankly with Mr Gross as well, you've
Speaker 1: got something in your head to go to and they
Speaker 1: say something so damn smart, you gotta go the other way.
Speaker 1: Let's go the other way. On welders. I read a
Speaker 1: paper at Iowa University of Iowa, Iowa State, I think
Speaker 1: the wrestling school Iowa State, and it was about it's
Speaker 1: not about welders, it's about really good welders, average welders,
Speaker 1: and welders that are a joke. Now, let's take that
Speaker 1: across the entire economy. The excellence and the demand for
Speaker 1: jobs is because employers only want the best flight attendants,
Speaker 1: the best radio announcers, the best welders. Right, yeah, and
Speaker 1: you don't get that with the first guy you hire.
Speaker 1: This is something you learn on the job. Is it
Speaker 1: different now than it was when you were at Northwestern
Speaker 1: or Mr? Gore? I don't think so, because I didn't
Speaker 1: know anything when I started a job, and we know that. Yeah, yeah,
Speaker 1: and you know I don't you get hired. God knows.
Speaker 1: You have a great note out where you're looking at
Speaker 1: our sense of worry about this this economy. I want
Speaker 1: to dig into that a little bit if if I could.
Speaker 1: There's a lot of apprehension here, just sort of about
Speaker 1: where we might be headed if we're on the precipice
Speaker 1: of a recession. Uh, the sense of doubt as well,
Speaker 1: that things at least with regard to the economy aren't
Speaker 1: as good or can't be as good for as long
Speaker 1: as we think they will be. How do you process that, Jim? Well,
Speaker 1: you know, it's always the case when you're coming out
Speaker 1: of a really bad time, people are always worried over
Speaker 1: the overcautious. Then when finally we wake up and we
Speaker 1: realize here we are eight years. This is the eighth
Speaker 1: labor Day of recovery from the Great Recession. When you
Speaker 1: realize you've done a good job recovering, then you start
Speaker 1: to worry, oh my god, how can this last? And
Speaker 1: I think, you know, it's legitimate. It's it's legitimate to
Speaker 1: think about this because our history books tell us that
Speaker 1: these recoveries last six and nine years, and and for
Speaker 1: some reason we we trip up and fall and fall
Speaker 1: back again. But if you look at why that happens,
Speaker 1: inflation problems, financial accesses, I don't think there's anything anything
Speaker 1: to worry about. Frankly, myself, I think we've got a
Speaker 1: very good chance that this recovery, now that we've recovered
Speaker 1: the losses from the recession, we're gonna this The longevity
Speaker 1: of this cycle is probably gonna beat anything else we've seen.
Speaker 1: And so you know, it's natural to worry. Frankly, I'm
Speaker 1: happy when people worry because that makes me think expectations
Speaker 1: are low. I'd like to hear people worry. We economists
Speaker 1: should worry when businesses stop worrying, and that makes that's
Speaker 1: what makes me nervous when you look at what might
Speaker 1: be leading to that worry. Is there an indicator that
Speaker 1: stands out to you is something that is reasonable. You
Speaker 1: look at the markets, say, and how how the stock
Speaker 1: market is is, for instance, is that something that gives
Speaker 1: one cause for concern. Stock market to me, is just
Speaker 1: a symptom of all this stuff. The thing that I
Speaker 1: would worry about is if I started to see inflation problems. Well,
Speaker 1: I don't see that those are the things. That is
Speaker 1: the number one thing that always trips us up because
Speaker 1: that forces the FED to step on the brakes, and
Speaker 1: we tend to overdo it, and often that sets the
Speaker 1: stage for a new downturn. The other kind of thing
Speaker 1: that we've been seeing financial access is real estate go
Speaker 1: back ten years, real estate values above what we have
Speaker 1: ever seen before relative to income. There's nothing like that
Speaker 1: out there. Only you know, maybe in the commercial real
Speaker 1: estate sector. You could argue that some assets are little pricing,
Speaker 1: but you know, that's that's something that can correct quickly.
Speaker 1: This is not like the real estate problems we saw
Speaker 1: last The employment employment employment to population ratio has been growing.
Speaker 1: Women's you know, jobs and all that. From the sixties
Speaker 1: up to sixty percent of Americans employed. Then we created
Speaker 1: down to fifty eight percent, dragging themselves back the late
Speaker 1: nineties seventies. We've come back, but we're nowhere near where
Speaker 1: we were. Do you have a hope that we normalize
Speaker 1: it's six from the present, because you know, I don't
Speaker 1: think we'll ever get there, because right now, for the
Speaker 1: next ten years or so, we've got this massive wave
Speaker 1: of people who are approaching retirement. Why are you looking
Speaker 1: at me, I'm looking in the mirror. We've got twenty
Speaker 1: million people who have turned into gone into the fifties
Speaker 1: or sixties. Those guys don't want to work and really
Speaker 1: not think, but they want to retire in And what
Speaker 1: you notice is when people get to about fifty years
Speaker 1: of age, they start scaling bad. Maybe you and I
Speaker 1: put up you know what I mean, had a massive Democrats, David,
Speaker 1: I really suggest to smooth this over with, one of
Speaker 1: our best guests is Dr Glassman should join us for
Speaker 1: a beverage of his choice on my grand Banks down
Speaker 1: in the East River. It's the forty eight foot Grand Banks, Jim,
Speaker 1: it's over your thirty fourth Street. It's called Tuition. He'll
Speaker 1: be able to see it, you know. And I'm making
Speaker 1: a joke here, folks, because I know that Dr Glassman
Speaker 1: is familiar with that boat as well. We'll continue with
Speaker 1: Jim Glassman serious discussion on the state of the American
Speaker 1: labor economy, and then we link it together with Bill
Speaker 1: gross next Worldwide Coast to Coast Bloomberg Surveillance from our
Speaker 1: studios here on Lexington Avenue at fifty Street, right across
Speaker 1: from Bloomingdale's in New York City. Davy girl, what's New
Speaker 1: York about? It's about a justice with her picture on
Speaker 1: the wall down at the Federal Justice Building downtown where
Speaker 1: people become new citizens. And last night in section one
Speaker 1: oh four Yankee Stadium there she was in taking in
Speaker 1: robe in row By might point out in the Judges
Speaker 1: pretty one errand Judge Yes on cinema or in the
Speaker 1: Bronx last night for that game against the Do you
Speaker 1: watch last night? I watched. I watched enough to know
Speaker 1: I wanted to keep watching, but the three am beckoned
Speaker 1: or to thirty am or whatever it was that's running anyways,
Speaker 1: A major shout out to a Supreme Court justice who
Speaker 1: got out with the people in right. Very nice last night. Justice.
Speaker 1: We're with Jim Glassman, who knows about this, and to
Speaker 1: speak of the justice's heritage, which is Hispanic. We have
Speaker 1: a huge announcement today by the President on immigration. Potentially
Speaker 1: I should say you have Toulouse or Na. Thank you
Speaker 1: so much for that perspective from the White House an
Speaker 1: hour ago. Jim Glassman, how does immigration fold into the
Speaker 1: job's report right now? Well, uh, you know, the demographics,
Speaker 1: the US demographics has the working age population slowing down
Speaker 1: a lot. We've had very little immigration in the last decade,
Speaker 1: and that's why we're getting all this recovery in the
Speaker 1: job market with slow growth. Immigration is an important part
Speaker 1: of what makes the US economy strong. And if if
Speaker 1: the economy is doing better and we don't have the
Speaker 1: domestic workers to fill those jobs, we're going to see
Speaker 1: more immigration. So want to give an hundred and fifty
Speaker 1: thousand of non farm payroll ten or twenty years ago,
Speaker 1: if it was two d or two twenty was the
Speaker 1: delta immigration? Yeah, it seems it seems that might be
Speaker 1: fifty or sixty or seventy. This is what's confusing everybody
Speaker 1: because we've never really when we talked about the broad economy,
Speaker 1: we've never really had to talk about immigration because are
Speaker 1: about demographics. Because whatever demographics was going on in the
Speaker 1: US immigration would tend to fill the gap. If we
Speaker 1: had the jobs and we didn't have the local workers,
Speaker 1: we would we would draw people in. This is not
Speaker 1: true in Italy or Japan. Uh demographics dominates and they're
Speaker 1: they're used to this story. We're having to talk about
Speaker 1: demographics because when we've not been getting the immigration, and
Speaker 1: I think if if the economy does really start picking
Speaker 1: up speed, you gotta wonder, when you're getting two thousand
Speaker 1: jobs a month, where is this coming from. It might
Speaker 1: be that we're starting to see a little more immigration.
Speaker 1: You go to Arizona. I mean, one thing you don't know, folks,
Speaker 1: is he's not just a radio star and television star.
Speaker 1: He lives in airports. When you go to Phoenix, what
Speaker 1: do you tell the audience of institutional and high net
Speaker 1: worth jpeoporgan people. Is immigration good for Senator Flank and
Speaker 1: for Senator McCain. Yeah, I mean I think everybody realizes,
Speaker 1: particularly in Texas, immigration is an important part of their economy.
Speaker 1: Arizona has a more negative view of this because of
Speaker 1: the social problems that this brings. I don't really understand it,
Speaker 1: but I think we all deep down realize that we
Speaker 1: are a nation of immigrants, and this is what's made
Speaker 1: our economy strong. I think the issue is more about
Speaker 1: illegal and you know, we gotta we gotta solve this
Speaker 1: issue because immigration can solve a lot of issues. And
Speaker 1: it's not just the people coming in, it's the kids.
Speaker 1: I see this in my neighborhood, the families coming in
Speaker 1: from India and Asia. They're obsessed with education. They drive
Speaker 1: their kids into education. It's the next generation that really
Speaker 1: brings the value to what you know, to the country.
Speaker 1: And we all know this story because our parents and
Speaker 1: our grandparents went through the same process. What can you
Speaker 1: tell us about the Republic of Texas. Our eyes are
Speaker 1: focused on that state right now in light of the
Speaker 1: devastating storm that hit it earlier this week. We're talking
Speaker 1: about immigration, obviously hugely important to that state as well.
Speaker 1: What's the give us? Give us some context. You about
Speaker 1: the importance to the U. S economy of the Texas economy. Well,
Speaker 1: it's hugely important because of the energy sector, right, but
Speaker 1: it's also a really diverse economy. It's a real entrepreneur
Speaker 1: to place and a real dynamic economy. Honestly, they're gonna
Speaker 1: recover from this fashion And people think because it's just
Speaker 1: a really dynamic place. And uh, it's it's important for
Speaker 1: the U s economy. It was the big it's the
Speaker 1: leading edge of the recovery because of the what's going
Speaker 1: on the energy sector. You look at employment growth in Texas,
Speaker 1: it's doing over the last ten years. It's done better
Speaker 1: than anybody except for code during North Dakota. But honestly,
Speaker 1: not many people want to go to North Dakota. So
Speaker 1: it's an important it's an important state. Healthcare is a
Speaker 1: gateway to the global to the to the global world.
Speaker 1: It's energy sector is pretty dynamic. It's pretty critical to
Speaker 1: the US economy. Jim Glass, wind with US will continue.
Speaker 1: We'll go beneath the headline data here, David Gurr, we
Speaker 1: should say to our people because we're we're full disclosure.
Speaker 1: There are technical deficitions. This is this is interesting. We're
Speaker 1: gonna pull back the curtain here just a little bit. Uh.
Speaker 1: You know, the data comes across the Bloomberg at eight
Speaker 1: thirty when those numbers are released, in part because some technicians,
Speaker 1: some people within Bloomberg and other outlets are able to
Speaker 1: get those numbers first in put them into the system.
Speaker 1: There apparently are some technical difficulties across the board at
Speaker 1: the Labor Department preventing that from happening today. So at
Speaker 1: eight thirty, we you, everybody will go to the web
Speaker 1: to get those data from the Labor Department. And that's
Speaker 1: going to cause a bit of a delay here as
Speaker 1: we have to sort of pass through the numbers outside
Speaker 1: of the usual framework that we get them in. So
Speaker 1: it may be that we don't get the numbers right
Speaker 1: at eight thirty. My be a few seconds afterwards today.
Speaker 1: Could you turn around, David and turn on the studio lights. Yes,
Speaker 1: we'll be here worldwide on minutes. Yeah, yeah, I gotta
Speaker 1: get the orange going on the skin. You know, where's
Speaker 1: Mr Bayner when I knew? Uh? Futures up, six down,
Speaker 1: futures up sixty five Jobs today with Jim Glass one in,
Speaker 1: Bill Gross, stay with us. Welcome morning, David Gurra and
Speaker 1: Tom Keene in New York, Bluebrick Surveillance on Bloomberg Radio.
Speaker 1: On Jobs Today, we go out door colleague Vine Delle
Speaker 1: Judas at the first Word desk for the latest jobs
Speaker 1: numbers against some quirkiness here this morning, Vinney, Yes, David,
Speaker 1: job unemployment. Let's let me just start over payroll growth
Speaker 1: slowed in August one hundred and fifty six thousand the
Speaker 1: prior month, an increase of one hundred eighty nine thousand,
Speaker 1: the unemployment rate meantime creeping up to four point four percent,
Speaker 1: Private payrolls up by one hundred sixty five thousand, looking
Speaker 1: at average hourly earnings, a sore point up just point
Speaker 1: one percent. Yes, there were some problems. The government had
Speaker 1: a little trouble getting the news out this morning, but
Speaker 1: that hit on time just the same at eight thirtiesome
Speaker 1: computer issues again. The Labor Department reporting non farm payrolls
Speaker 1: rose by one hundred fifty six thousand. That's slower than
Speaker 1: a prior month. That is below Wall Street forecasting. Unemployment
Speaker 1: rate up a notch four point four percent, and average
Speaker 1: hourly earnings. I can't over emphasize this. This is a
Speaker 1: sore point up just point one percent in August, and
Speaker 1: I might add the July earnings increased revised down. I'm finite,
Speaker 1: s Bloomberg Radio. Let's go back to New York. These
Speaker 1: are extraordinary numbers. We think our team in Washington, particularly
Speaker 1: this morning, led by Brendan Murray, forgetting this out. There
Speaker 1: was some technical difficulties but we're acting normal with yields in.
Speaker 1: You equity futures don't do much, David Guru, but yields
Speaker 1: in with curve flattening, it's just it's just a lighter
Speaker 1: tone to the data. With the unemployment rate again up
Speaker 1: four point for sind you know you look at moving averages,
Speaker 1: Jim Blaste, which I know you love, and again this
Speaker 1: pushes against the moving average vector that we want to
Speaker 1: go up a hundred and fifty six thousand. With negative
Speaker 1: forty one revision that gets you down to a hundred
Speaker 1: and ten thousand. Yeah, I think the what you're going
Speaker 1: to hear from my community is don't trust the initial
Speaker 1: estimate of August because in the past seventeen years, with
Speaker 1: the exception of three years, you've seen this August number
Speaker 1: get revised up by an average of seventy five thousand
Speaker 1: by the time it's all in. So I think you've
Speaker 1: got to be a little leery of this kind of stuff.
Speaker 1: People were saying even when we saw the ADP number,
Speaker 1: they were telling you this, The information we're getting from
Speaker 1: the labor market is frankly quite good. The jobless claims
Speaker 1: trend is gotten lower, ADP is finding an awful lot
Speaker 1: of employment. So I think with these monthly numbers, you
Speaker 1: have to be a little careful, particularly August, particularly August. Yeah,
Speaker 1: just to continue to process what we're seeing here. How
Speaker 1: big a deal is that headline? Miss said, do you think, Jim,
Speaker 1: I don't think it's that big of deal. I've I've
Speaker 1: got people worth sort of in the one two D
Speaker 1: thousand range, and the people who thought one fifty were saying,
Speaker 1: there is this series. There's a significant bias that shows
Speaker 1: up in August. The things tend to get revised up,
Speaker 1: so don't be surprised if you see a two D
Speaker 1: number out of this. Jim Glass, thank you so much.
Speaker 1: It's JP Morgan as well. And now in Bloomberg Radio,
Speaker 1: Bloomberg Television, Good morning, Alex. Still looking forward to the
Speaker 1: comments of Gary Cohen from the White House Law and
Speaker 1: I know, Alex, you'll do that here in a bit.
Speaker 1: Now we welcome William gross Off, Janet Snderson our coverage
Speaker 1: of this job's report, how it folds into markets, and
Speaker 1: particularly how it folds into a most interesting September in Washington.
Speaker 1: I guess Bill gross I look at this and I
Speaker 1: see the revisions down in a little soggy report. It's
Speaker 1: once again putting a good month back together with another
Speaker 1: good month and another good month after that. We can't
Speaker 1: seem to get there. I think that's true. And I
Speaker 1: think August, you know, historically has has been different and
Speaker 1: been a little bit weak. But nonetheless, um, you know,
Speaker 1: the wage revisions I think strike me the most, and
Speaker 1: the point one in terms of the wage growth strikes
Speaker 1: me as well. You know it inflation tongue, not job
Speaker 1: growth dominates central bank thinking these days. And uh, well,
Speaker 1: I think low unemployment percentages historically have led the higher
Speaker 1: wages and inflationary pressures, and the fabled Phillips curve which
Speaker 1: assumes this, Um, I think it appears to be broken.
Speaker 1: And and your are of your core inflation, which is
Speaker 1: what the film looks at, is increasing only at one
Speaker 1: point four percent, and it's down from the two point
Speaker 1: one percent only six six months ago. So I think
Speaker 1: the fit is focused on wages and uh certainly inflation
Speaker 1: to the extent that wages are reflective in that. Let's
Speaker 1: try and and and this is a weak report, Let's
Speaker 1: synthesize Mr Gross's outlook their folks into what we see
Speaker 1: on the Bloomer I've seen a two point one one
Speaker 1: percent ten year bill in the angst of Korea. Five
Speaker 1: days ago, we got down to two point zero nine percent.
Speaker 1: Steve major Over at HSBC says we can go below
Speaker 1: two percent. Do you agree that there's a set of
Speaker 1: news or a set of economic data that get will
Speaker 1: give Janet Yelling at one point nine nine percent and
Speaker 1: year yield. Well, geo political, perhaps, you know, North Korea
Speaker 1: is certainly important, and uh, you know, money moves to
Speaker 1: quality in the safety when when global events threatened. Uh,
Speaker 1: you know, global bonds have rallied tended fift thirty basis
Speaker 1: points over the past few months due to in my opinion,
Speaker 1: not necessarily ding in North Korea, but unprecedented liquidity from
Speaker 1: the ECB and the b O G B o J.
Speaker 1: They've they've written one trillion dollars worth of free checks
Speaker 1: per month. It keeps investors happy and economies humming for now.
Speaker 1: But uh, we see Japanese tenure race now at zero
Speaker 1: percent and buns at thirty five basis points, and that
Speaker 1: makes our tenure attractive at to ten and you know,
Speaker 1: perhaps it can go down to two percent because these
Speaker 1: other alternatives are extremely low and moving lower bill. We're
Speaker 1: making our annual pilgrimage to the edge of the fiscal cliff.
Speaker 1: It seems we're gonna be talking about the debt ceiling
Speaker 1: here over these next few weeks. Is Congress endeavors to
Speaker 1: raise it, whether cleanly or with some other stuff attached
Speaker 1: to it. Of course, there's the issue of government funding
Speaker 1: as well. How much have you perfected your playbook with
Speaker 1: how to deal with this kind of disaster again? We
Speaker 1: faced it time and time again. Well, this one's extraordinary
Speaker 1: and the numbers still aren't certain in terms of how
Speaker 1: much it will cost. Is it a hundred billion? Isn't more?
Speaker 1: As a little bit less? Over what time period does
Speaker 1: it occur? But certainly, uh, it extends the budget deficit,
Speaker 1: and it's something that has to be reckoned with. How
Speaker 1: do they do that politically? Hopefully Republicans this time sort
Speaker 1: of avoid it with a special type of measure and
Speaker 1: then you know, renore realize the budget in the next
Speaker 1: few weeks as as uh as we move along. But
Speaker 1: the uh, you know, Harvey is is very important, and
Speaker 1: it absorbs money and absorbs credit and put supply into
Speaker 1: the treasuring market. So uh, no doubt that that's important,
Speaker 1: as is the tax cut situation, which presumably will be
Speaker 1: addressed in the next two or three months. But when
Speaker 1: when you look at the dead ceiling in particular there
Speaker 1: do do you have any level of anxiety that it's
Speaker 1: not going to be raised or raised on time? Oh?
Speaker 1: None at all. And you know I wrote yesterday, I
Speaker 1: tweeted yesterday that it was a sham. Um. You know,
Speaker 1: it's just a political maneuver. Congress spends money and uh,
Speaker 1: you know, of course the the Treasury has to raise
Speaker 1: that type of money. It's a one to relationship. It's symbiotic.
Speaker 1: And uh, to the extent that the Congress wouldn't approve
Speaker 1: their own spending, to me is ridiculous. It's just a
Speaker 1: political maneuver to get something. And I think there's no
Speaker 1: doubt that the US out of this solvent will be
Speaker 1: for as long as I'm on this good earthing, we
Speaker 1: shouldn't worry about it. And Bill Gross, you have been
Speaker 1: brilliant about the idea of financial repression, about you're gonna
Speaker 1: get a low yield and when you take out inflation,
Speaker 1: nothing's gonna be there. All sorts of people we talked
Speaker 1: to are talking about better wage growth. It didn't happen
Speaker 1: this month. They're talking about vectors that move upward. Do
Speaker 1: you have any hope that America gets out of the
Speaker 1: financial repression you so well predicted, well, not typically at
Speaker 1: a financial repression tom to the extent that you might
Speaker 1: define it. By zero percent real short term interest rates
Speaker 1: versus two to three percent historically over the past ten
Speaker 1: twenty thirty years. That's a huge gap. And I don't
Speaker 1: think that's gonna be narrowed. I don't think central banks,
Speaker 1: not only the FED, but the e c P and
Speaker 1: the b o J, they can't raise interest or it's
Speaker 1: back to normal simply because there's a lot of debt
Speaker 1: and increasing the amount of debt and the cost of
Speaker 1: cover that debt if increased by two to three percent,
Speaker 1: not just for the government, the government and the right checks,
Speaker 1: but with corporations, it's probably just never going to happen.
Speaker 1: And uh, go ahead, Well, no, I just don't. I
Speaker 1: don't want to cut you off. But this is so critical,
Speaker 1: Bill Goes, because you live this, and you live this
Speaker 1: with a Monroe trader on your desk at a shop
Speaker 1: at Newport Beach a few years ago, and that is
Speaker 1: the deficit to g D P growing out. If we
Speaker 1: get back to what you and I recall the days
Speaker 1: of Monroe traders in early Bloomberg's a five or six
Speaker 1: percent deficit to g d P, I would suggest, respectfully,
Speaker 1: bad things happen. Are we going to revisit that in
Speaker 1: the next twenty four or thirty six months. Well, it
Speaker 1: depends on the tax cut program. I don't think it's
Speaker 1: going to be that radical. I don't think you know,
Speaker 1: Democrats will will permit that type of increase. But you know,
Speaker 1: you make a good point. The US current account balance,
Speaker 1: which is reflective of the stuffs, not one for one,
Speaker 1: but close has been and deficit by three to four
Speaker 1: percent for the last forty years. It's an exorbitant privilege
Speaker 1: that the US has relative to the rest of the world.
Speaker 1: So I don't really see any pressure to reduce the deficit,
Speaker 1: despite the Republican rhetoric. I see it increasing, perhaps not
Speaker 1: the four or five percent, but two or three percent annually.
Speaker 1: And the problem being, as I mentioned before Tom, the
Speaker 1: interest rate, and to the extent the interest rates to
Speaker 1: go up, I don't think they will. They can then
Speaker 1: the economy is threatened. We're gonna come back with Bill
Speaker 1: gross on radio. But very quickly here Bill Gross on TV.
Speaker 1: Do you believe in a three percent g d P
Speaker 1: American economy? I do not. It depends on productivity. Productivity
Speaker 1: has been less than one percent, close to zero. Labor
Speaker 1: growth is less than a half a percent. Those two
Speaker 1: numbers to gether, you know, produce real GDP and it's
Speaker 1: a two percent at max real GDP. Bill. This again
Speaker 1: is about elasticities or responsiveness of market to economics, in
Speaker 1: that Mario dragging has a plan and it's good. People
Speaker 1: in Farmford have a plan and we've had a massive
Speaker 1: move in euro trade weighted euro folks is well out
Speaker 1: over two standard deviations back nine years strong euro Bill?
Speaker 1: Is this about the market, the euro vigilantes telling Mario
Speaker 1: Draggy what to do. Oh, I don't think so, Tommy.
Speaker 1: You know, and you know I was well impressed by
Speaker 1: the bond vigilantes and the nineties, and I guess in
Speaker 1: the early part of the century. But now I think
Speaker 1: central banks dominate. There's no doubt that they have conversations
Speaker 1: between the two, between the private market and the vigilantes
Speaker 1: and the central banks, and they take feedback from each other.
Speaker 1: But I think ultimately it's Druggy. Ultimately I think it's
Speaker 1: corrode I. Ultimately I think it's Janet Yellen. And so
Speaker 1: we'll see. And I agree with you this this news
Speaker 1: on December as a little startling because, Uh, while dr
Speaker 1: has always been a dove, uh, this is a continuation
Speaker 1: of his devilishness. Do what we see from Carney, from Corota,
Speaker 1: from drag? Does it migrate over to the United States
Speaker 1: if they get a bill gross sub three g d P,
Speaker 1: if they get any sense of a job report like
Speaker 1: today and the tepid wage growth like today, Does yelling
Speaker 1: become like drag where we see articles from our Washington
Speaker 1: team saying the federal delay. Well perhaps, although I think
Speaker 1: the Fed's fairly well committed because they've they've you know,
Speaker 1: put on the line such a small amount of treasuries
Speaker 1: in terms of you know, taking off the balance sheet.
Speaker 1: So I think there's safety there. But I do think
Speaker 1: that you know, you know, central banks, especially the ECB
Speaker 1: and the b o J are addicted que and balance
Speaker 1: sheet expand and low and negative yields. You know, Japan,
Speaker 1: as I've mentioned his cap their tenure JGB at ten
Speaker 1: basis points it's now zero. Uh, and the e CBS
Speaker 1: balance sheet. Historically the world's most conservative central bank has
Speaker 1: expanded its balance sheet via que eat nearly five trillion dollars.
Speaker 1: It's larger than the FEDS. And uh so these are
Speaker 1: and I think there are legitimate questions as to how
Speaker 1: many bonds these central banks can buy before they effectively
Speaker 1: destroy the private market that capitalism requires. I don't want
Speaker 1: to ask you about Mario drag communicator. There was this
Speaker 1: moment of miscommunication with the market in central Portugal just
Speaker 1: a couple of weeks ago. He spoke in Jackson Hole
Speaker 1: and we were talking with Dennis Gartman yesterday. He was
Speaker 1: saying that he couldn't quite figure out what it was
Speaker 1: Mario d was trying to lay out in that speech,
Speaker 1: at least at least initially. I wonder if if if
Speaker 1: you're experiencing similar difficulty interpreting what he has to say,
Speaker 1: and if you think there was maybe a missed opportunity
Speaker 1: for him at it's an hold to talk more about
Speaker 1: the year at a job on the year a little bit, Well,
Speaker 1: I think so. And I think both the drug and
Speaker 1: yell And deferred in terms of monetary policy and simply
Speaker 1: shifted to regulation, which is fine and A and a
Speaker 1: target and a legitimate target of central banks. They should
Speaker 1: have focused on that and the early part of the
Speaker 1: twenty one century. But nonetheless, drug he didn't tell us much.
Speaker 1: And perhaps today's statement is telling us something. I don't
Speaker 1: know where it's coming from, but you know, the drug
Speaker 1: is very deficient. And to not criticize, but to compliment.
Speaker 1: I suppose their economy is doing well, Inflation is contained,
Speaker 1: although not as high as they want. And so you know,
Speaker 1: you'd have to give these central bankers at the moment
Speaker 1: in terms of cyclical results, uh, you know, somewhere in
Speaker 1: the B plus A category. But as I've mentioned in
Speaker 1: the past, over a long period of time, these uh,
Speaker 1: financial repressive types of strategies have negative consequences on savers,
Speaker 1: have negative consequences on insurance companies, pension funds, and ultimately
Speaker 1: capitalism does not do well under these circumstances. The girls,
Speaker 1: I want to rip up the script of the time
Speaker 1: we've got left the number one talking point for me
Speaker 1: and David Garrow this morning. I don't know if you've
Speaker 1: seen it, Bill, but the essay in the Washington Post
Speaker 1: by a grievously ill uh John McCain of your U. S. Navy.
Speaker 1: Bill Gross served in the U. S. Navy a few
Speaker 1: tours of duty ago. Uh Senator McCain. Bill Gross begs
Speaker 1: for bipartisan solutions in Washington. He begs for a return
Speaker 1: to the processes of another time and place. Can we
Speaker 1: get tax reform, can we get infrastructure build out? Can
Speaker 1: we get Washington to do constructively in the present milieu?
Speaker 1: Or do we have to get back to what we
Speaker 1: knew long ago? Well, I don't. I don't think it
Speaker 1: would get much change under the current administration, to be critical,
Speaker 1: and under the current Congress, so less addressed. Tax cuts,
Speaker 1: uh you know. The other day President Trump suggested that
Speaker 1: tax cuts would be good for the middle class because
Speaker 1: when corporations have higher profits, they provide for higher wages, etcetera, etcetera. Well,
Speaker 1: has that really happened over the past five to ten years.
Speaker 1: Not really, It's a different geopolitical world. I think tax cuts, um,
Speaker 1: while not the highest in the world, is Trump claims,
Speaker 1: you know, are about average for the world at about
Speaker 1: when you include all of our uh you know, special situations.
Speaker 1: I think tax cuts will continue the fabled carried interest policy,
Speaker 1: which is, to my way of thinking, one of the
Speaker 1: most ridiculous policies that ever existed. I think we're moving
Speaker 1: towards a twenty two or average corporate tax rate. Uh.
Speaker 1: I do think these policies will leave the middle class
Speaker 1: even more behind. And I do think ultimately that the
Speaker 1: universal income in the next ten or twenty years, perhaps
Speaker 1: two different administrations, is where we're headed, and not to
Speaker 1: lower and lower tax cuts and supply side economics. David
Speaker 1: does it sound like he's running for office Newport Beach?
Speaker 1: That the council very very good, phil Growth. I want
Speaker 1: to ask you about trade. We're seeing the resumption of
Speaker 1: trade talks in Mexico City today. I believe between the US,
Speaker 1: Mexico and Canada, we've had a president use increasingly heated
Speaker 1: rhetoric about what might happen to NAFTA, talking openly about
Speaker 1: terminating that particular deal. What would the effect of that
Speaker 1: be to to say, how we're going to scrap this
Speaker 1: now long existing plan and uh, you know, I guess
Speaker 1: he hopes to rebuild it or start from scratch. What
Speaker 1: would the effect of that be, as you see in well,
Speaker 1: it would be disastrous, you know, ten or fifteen years
Speaker 1: on in terms of NAFTA, and to reoriin it or
Speaker 1: to uh, you know, to to cancel it. Um. You know,
Speaker 1: obviously NAFTA has had some negative effects in terms of
Speaker 1: American wages that should have been expected. And to the
Speaker 1: extent that it's what Trump is trying to attack, you know,
Speaker 1: then find perhaps something else in terms of the UH
Speaker 1: the agreement could could take place. But yes, you know,
Speaker 1: Trump is art of the deal. Out of the talk.
Speaker 1: UH to this point, out of the talk hasn't really
Speaker 1: gained as much anywhere in terms of legislation. But I
Speaker 1: think it would be disastrous and I think at all
Speaker 1: costs it should be avoided. A free trade agreement between
Speaker 1: Mexico and Canada and North America has perhaps one of
Speaker 1: the strongest and most productive free trade agreements in the world. Bill,
Speaker 1: What are you doing with your portfolio? What is the
Speaker 1: gross strategy? September is the new year for business. Everybody's
Speaker 1: struggle struggling to find alpha in fixed income? What are
Speaker 1: you doing? What is the gross strategy with janis unconstrained? Well,
Speaker 1: janison constrained. UH, it's objective Thomas four to five percent.
Speaker 1: It's not a hedge fund. It isn't looking for double
Speaker 1: digit gains. How do you do that in this type
Speaker 1: of world with the treasury at two point one percent
Speaker 1: and stocks at a near historic pe ratio. It's very difficult.
Speaker 1: What I've done over the past few months and a
Speaker 1: few quarters is to sell volatility, not to buy it,
Speaker 1: but to sell volatility to volatility, and to assume the
Speaker 1: interest rates take the tenure treasury stay between two percent
Speaker 1: and two point three percent, and if that happens, then, uh,
Speaker 1: you know, a fortified percent number it can be can
Speaker 1: be garnered based upon the premiums that options seller it
Speaker 1: can provide. And so that in combination with you know,
Speaker 1: two percent yields on eighteen month corporate paper, produce a
Speaker 1: conservative but very low volatility type of portfolio with a
Speaker 1: fortified percent return. Bill Gross, thank you so much, greatly,
Speaker 1: greatly appreciate that. Today he is with Janis Anderson David
Speaker 1: what we learned there. I I'm still amazed that he
Speaker 1: can't get above a three percent GDP. Yeah, no, it's uh,
Speaker 1: you know, I'm I can tell he said the draft
Speaker 1: jobs report was weak, and uh, you know, looking at
Speaker 1: these data, one has to sympathize with that assessment of it,
Speaker 1: I think, and it'll be interesting to hear what Garrit
Speaker 1: Cone has to say with the White House, to say
Speaker 1: how the President reacts to UH, to this job's report
Speaker 1: as well, in light of the numbers that we that
Speaker 1: we got today. UH. And I was impressed also just
Speaker 1: by how confident he is that we're not going to
Speaker 1: see much differing when it comes to the dead ceiling,
Speaker 1: when it comes to funding the government here over these
Speaker 1: next few weeks. I know there are a lot of
Speaker 1: economists and strangers I've talked to have more anxiety this
Speaker 1: time around, saying that the terrain somehow different. I think
Speaker 1: anxiety perfectly captures UH, the path forward for the next
Speaker 1: thirty days. I we don't even got October, you know.
Speaker 1: I am f meetings in October. That's what I can.
Speaker 1: You bought your ticket right now? Yeah, I think I'm
Speaker 1: slotted in. I don't know what we're doing. We'll figure
Speaker 1: out what to do. This is Gary Khen, National Economic
Speaker 1: Council Director, Gary Real, pleasure to have you with us.
Speaker 1: How do you interpret the number today? Are we sort
Speaker 1: of back to normal in the jobs market or is
Speaker 1: this the beginning of a weaker cycle? Well, thanks for
Speaker 1: having me, And before I get started, look I just
Speaker 1: want to reach out to everyone in Louisiana and Texas,
Speaker 1: and you'll remind all of your viewers, you know, all
Speaker 1: the tragedy that they're still going through, and they remind
Speaker 1: everyone that we at the White House, you know, are
Speaker 1: not forgetting about them for a second, and we're laser
Speaker 1: focused on what's going on out there. Look on the
Speaker 1: on the economic data today. You know, it's part of
Speaker 1: the natural growth that we're seeing in the economy. You know,
Speaker 1: if you look at the data we had this week,
Speaker 1: we had a GDP number of three percent. This week
Speaker 1: we had the jobs number that is still very good.
Speaker 1: If I would have told you at the beginning of
Speaker 1: the year, told you inauguration day that we'd be at
Speaker 1: three percent GDP and four point four percent unemployment, you
Speaker 1: would have said, hey, those are great numbers that that
Speaker 1: that would be an amazing accomplishment by Labor day what
Speaker 1: we're there. So overall, we're very, very pleased with where
Speaker 1: we are in the economy, where we are in the cycle.
Speaker 1: We still know there's a lot of work to do
Speaker 1: in a lot more upside and the President is very
Speaker 1: focused on that. That's why we launched our tax agenda
Speaker 1: this week because we think we can really grow the
Speaker 1: economy much further from here before we get to taxes.
Speaker 1: You pointed the picture that jobs are consistently very very solid.
Speaker 1: On the flip side, wages just aren't really going anywhere
Speaker 1: two and a half percent a year on year, and
Speaker 1: also inflation also really stagnant. What is the right monetary
Speaker 1: policy for something like that. So look, look, we we
Speaker 1: are concerned about the wages and that has a lot
Speaker 1: to do with our tax policy. If you listen to
Speaker 1: what the President outlined earlier this week, he talked about
Speaker 1: our corporate tax system or a business tax system, and
Speaker 1: how inefficient our business tax system is, and how we
Speaker 1: really penalize businesses to being American. When you penalize businesses
Speaker 1: to being America, they don't hire American workers. We need
Speaker 1: to get our tax rates down to be competitive with
Speaker 1: the rest of the world. When they get our tax
Speaker 1: rates down, we then compete for labor. You compete for
Speaker 1: labor by driving wages and paying more wages to get
Speaker 1: people to work for you. So we are concerned about
Speaker 1: wage growth. We do want to get wage growth back
Speaker 1: in the system. You're absolutely right. When I saw the
Speaker 1: numbers you know, the first thing I looked at was
Speaker 1: the wage number, and it's been flat at two and
Speaker 1: a half for a long period of time. We need
Speaker 1: to put more money back in US consumers pockets, and
Speaker 1: that's what we're trying to do, both by wage growth
Speaker 1: and by by by tax efficiency. So, yere, you kind
Speaker 1: of diverted my question there, So that seems that it's
Speaker 1: a fiscal policy issue, not a monetary policy issue. Do
Speaker 1: you feel monetary policy then cannot help with the wage
Speaker 1: inflation debate? Look, I think wage inflation has to come
Speaker 1: through demand for more workers at higher price. And the
Speaker 1: way we create demand for workers is we create a
Speaker 1: better operating environment in the United States. You create a
Speaker 1: better operating environment in the United States by making the
Speaker 1: United States more competitive. You create the competition by lowering
Speaker 1: the business tax rate and having businesses have to be
Speaker 1: here and want to be here in the United States.
Speaker 1: And that's exactly what the President laid out earlier this week.
Speaker 1: All right, So let's go to tax reform for a second.
Speaker 1: We've been hearing I feel a lot of mixed messages
Speaker 1: from the White House and lawmakers in terms of that
Speaker 1: next step. For example, are you going to have to
Speaker 1: release additional tax details in a blueprint later this month.
Speaker 1: That's what we heard from Secretary Minution yesterday and some
Speaker 1: news outlets. So as I think you're all acutely aware,
Speaker 1: you know, Secretary Minutum, myself, the leadership of the Senate,
Speaker 1: leadership of the House, we've been working literally since November
Speaker 1: and December on a tax blueprint. We've met NonStop since then.
Speaker 1: The six of us have agreed on a outline of blueprint,
Speaker 1: a skeleton. We agree on what we need to do
Speaker 1: for tax reform. We're now working with the House Ways
Speaker 1: and Means Committee and the Senate Finance Committee to really
Speaker 1: finalize what that blueprint will look like. I would say,
Speaker 1: take a skeleton and put the muscles on and put
Speaker 1: the skin on it. That's going to get released in
Speaker 1: the next in the next whatever weeks or months, as
Speaker 1: those committees get together and finalize all of the details,
Speaker 1: as the natural governing process happens, and that's going to
Speaker 1: start literally next week. So Gary is the legislation in
Speaker 1: the hands of the Tax Writing Committee right now. The
Speaker 1: legislation is in all of our hands. We're working together,
Speaker 1: the group of six, the six of us will be
Speaker 1: in the White House with the President next week. We're
Speaker 1: going to continue to drive Gary, I get that. But
Speaker 1: in order to move it forward, it has to be
Speaker 1: with the Tax Writing Committee. So have you have you
Speaker 1: passed it off yet to them. There's a communal effort
Speaker 1: going on here. We're trying to we we're not trying.
Speaker 1: We are working very collegially together to get tax reform
Speaker 1: done in a way that everyone buys in in every
Speaker 1: step of the way. And that's exactly what's going on here. Ultimately,
Speaker 1: tax reform has to be voted on in the House
Speaker 1: and the Senate. So yes, we're working with the House
Speaker 1: and the Senate to do that. Well, okay, fair enough,
Speaker 1: so you're talking more. We're all working together. But then
Speaker 1: you have Senator McCain coming out in the Washington Post
Speaker 1: with a very very scathing review on President Trump. Um,
Speaker 1: he's saying, we need to compromise, even if we have
Speaker 1: to take something off the table, well that we didn't want,
Speaker 1: but saying that we have a president without any experience,
Speaker 1: he's poorly informed, he's impulsive. We don't answer to him.
Speaker 1: We answered to the American people. Doesn't stuff like that
Speaker 1: make the cooperation you're talking about impossible. It seems like
Speaker 1: we have a lot of cooperation, a lot of momentum
Speaker 1: on tax reform. I think a lot of us understand
Speaker 1: the importance of getting taxes right, of simplifying the tax code,
Speaker 1: of returning more of people's heart earned income back to
Speaker 1: the American public, not sending it to the government to spend,
Speaker 1: allowing people to spend their own money, simplifying the tax code.
Speaker 1: The basic principles that the present laid out earlier this
Speaker 1: week appeal to everyone in this country. Why shouldn't we
Speaker 1: get out of the way and allow more Americans to
Speaker 1: keep more of their hard EARA. I don't think there's
Speaker 1: a politician doesn't agree with that. I agree with you,
Speaker 1: I think as a person in the world who doesn't
Speaker 1: agree with that right. But then you have a Mitch McConnell,
Speaker 1: who's a Trump has said very disparaging things on Twitter
Speaker 1: about you, Speaker Paul Ryan, who is at odds with
Speaker 1: the President. Now you have Senator McCain coming out and
Speaker 1: do very scathing review. You might want it, but how
Speaker 1: you get their matters and doesn't. How you get there
Speaker 1: doesn't work anymore. If we're like this in Congress, I'm
Speaker 1: confident that we're working well with comngregrants because I'm and
Speaker 1: I'm speaking to many of the people you just mentioned.
Speaker 1: We're speaking on a daily basis, and we've got great
Speaker 1: momentum on taxes right now. Okay, So tell me what
Speaker 1: you're gonna do in February. What job are you going
Speaker 1: to have. I'm gonna be right here doing what I'm
Speaker 1: doing right now. You're gonna be in front of the
Speaker 1: White House, in front of a different building. I'm gonna
Speaker 1: be doing right exactly what I'm doing right now, being
Speaker 1: front the White House, with this beautiful new infrastructure being
Speaker 1: built out here. We'll be working on infrastructure in February. Okay,
Speaker 1: nice semm, Gary, But I asked the question because a
Speaker 1: lot of heat has been made about the fact that
Speaker 1: you weren't mentioned in that Missouri speech by President Trump
Speaker 1: on Wednesday in terms of those working towards tax reform.
Speaker 1: So there's questions about whether you want to stick around
Speaker 1: to even be considered for FED chair. Now. I'm extremely
Speaker 1: happy doing what I'm doing. I have a once in
Speaker 1: a lifetime opportunity something that hasn't been done in over
Speaker 1: thirty years, to reform the U S tax code. I
Speaker 1: passionately believe it needs to be done, and I'm one
Speaker 1: of the luckiest people in the world. Do we have
Speaker 1: the opportun who to work on it. I'm really excited
Speaker 1: about what I'm doing, So you do not want to
Speaker 1: be head of the FED. I'm really excited about doing
Speaker 1: what I'm doing. All right, let let's wind up on Harvey.
Speaker 1: You brought it up in terms of extending your condolences
Speaker 1: to those in Texas and Louisiana. Many say that Harvey
Speaker 1: could be the most expensive natural disaster in US history.
Speaker 1: How much harder does the tax and budget debate become
Speaker 1: now because you have deficit hawks in Congress in the
Speaker 1: Republican Party. Look, we have to deal with the Harvey situation.
Speaker 1: It's it's it's it's not a debatable issue. What people
Speaker 1: in Texas and Louisa Zana are going through is unthinkable, unimaginable.
Speaker 1: I I've seen a lot of data. You've seen the data.
Speaker 1: We're analyzing it literally twenty four hours a day. Here.
Speaker 1: We have to help the people, We have to help
Speaker 1: Houston return. It's just not a debate. So we're gonna
Speaker 1: have to spend money, We're gonna have to pass some
Speaker 1: incremental relief bills, and we're just gonna have to do that.
Speaker 1: It's not a choice. So it's just part of governing. Look,
Speaker 1: part of running the government is dealing with unforeseen issues.
Speaker 1: We're gonna deal with this and we're gonna move on. Um. Look,
Speaker 1: the part that it's gonna be more troubling is it's
Speaker 1: gonna it's gonna have impact on a lot of the
Speaker 1: economic data. You know, the economic data that we've just gotten.
Speaker 1: This unemployment data is probably the last that a clean
Speaker 1: unemployment data we're gonna have for many, many months. As
Speaker 1: we go through the recovery process and people go in
Speaker 1: and out of unemployment, as they rebuild their houses and
Speaker 1: they rebuild their lives, we're gonna have a bunch of
Speaker 1: data that maybe won't make as much sense for the
Speaker 1: next three or four five months. So, you know, normalizing
Speaker 1: data for hurricanes and natural disasters is going to be
Speaker 1: more difficult for us to truly get a bigger picture
Speaker 1: of what's going on in the U. S. Economy. Gary Cohen,
Speaker 1: real pleasure, Thank you so much for joining us. Gary Cohn,
Speaker 1: pointing to the infrastructure happening behind him on the White
Speaker 1: House Law and US National Economic Council Director Alex Steel
Speaker 1: on Bloomberg Television to radio worldwide with a lively interview.
Speaker 1: I would state that that's the single most Gary tone
Speaker 1: I've heard, Gary Cone. He's getting used to the job,
Speaker 1: is how I would put it. Yeah, I'm mixing it up,
Speaker 1: I would say at Tessling a bit. She asked him
Speaker 1: several times if he wanted to be fed cheered directly,
Speaker 1: and he said repeatedly, he's happy doing what he's doing.
Speaker 1: Is there is with all of this, there is on
Speaker 1: the job training. One of the things I always cite
Speaker 1: when I talked to college students about this is Greg Mankou,
Speaker 1: the acclaimed professor at Harvard, and he talked to everybody
Speaker 1: the first three or four months he was chairman of
Speaker 1: the president Council of Economic Advisors, like it was a
Speaker 1: lecture at ted lecture, and it took him a while
Speaker 1: to try to get towards the cadence it's expected, Yeah,
Speaker 1: of executive officials. And of course, I think teaching that
Speaker 1: introductory economics course to thousands at Harvard probably prepares you
Speaker 1: well for the public speaking component. But you're right, you're right,
Speaker 1: there is a learning curve here. And uh, you know
Speaker 1: this is this is a regular thing that Gary Cone
Speaker 1: has to do now in this capacity. And I agree
Speaker 1: with you. I think he's seemingly more comfortable with the role.
Speaker 1: He talked around the news of the day, which is
Speaker 1: the McCain essay and the Washington Post, but that he
Speaker 1: did circle back and and it really address the delicacies
Speaker 1: of the administration, David speaking to legislative leaders as compared
Speaker 1: to the president. That was an indirect illusion. Yeah, I'd said.
Speaker 1: We We've brought this piece up a couple of times today.
Speaker 1: If you read anything today, read that piece in the
Speaker 1: Washington Post by the senior Senator from Arizona, John McCain,
Speaker 1: writing about, yes, the relationship between Congress and the White House,
Speaker 1: but also just about the institution he has served for
Speaker 1: so many decades now, A very important piece in the
Speaker 1: Washington Post today. Usually when we get the points guy in,
Speaker 1: we chit chat about banks and Miles and all that.
Speaker 1: We will do that today because that's what you expect
Speaker 1: from Brian Kelly, but we must direct our attention to
Speaker 1: his real real abilities to synthesize all going on at
Speaker 1: George Bush Intercontinental and also hobbyist or Cobby Airport as well.
Speaker 1: Brian Kelly, tell us your perspective on the damaged airplane
Speaker 1: travel in and out of Houston. Yeah, Houston, it's going
Speaker 1: to take a long time to get back up and running. Today.
Speaker 1: Actually yesterday I think they had United had twenty seven
Speaker 1: departures and they normally have about five hundred, so we
Speaker 1: are way way behind. You know, basically, avoid Houston at
Speaker 1: all costs. You know, most airlines actually every airline will
Speaker 1: let you reroute for free or change your flight. So basically,
Speaker 1: avoid Houston at all costs. But that being said, this
Speaker 1: weekend is still going to be a record weekend for
Speaker 1: Labor Day travel. So even if you're not going to
Speaker 1: Houston or through it, the planes are going to be
Speaker 1: packed this weekend. How do how do airlines change or
Speaker 1: or or express some flexibility when we see a natural
Speaker 1: disaster like this one. I imagine there are a lot
Speaker 1: of people keen to get to the area to help out,
Speaker 1: to respond to the disaster. Do we see airlines accommodating
Speaker 1: interest in doing that. Yeah, well, in terms of giving
Speaker 1: away free flights for relief help, some airlines will do that.
Speaker 1: I think on the opposite side, airlines you know, because
Speaker 1: it's a huge stress on their systems and their customer service,
Speaker 1: so they'll let people rebook for free, uh, to change
Speaker 1: their flights. Um. So they're called weather waivers, So anytime
Speaker 1: there's a storm coming most airlines it behooves them to
Speaker 1: to let consumers switch their flights for free. Um. Some
Speaker 1: airlines are more generous than others with you know, the
Speaker 1: time frames in which you can change. Brian, let's get
Speaker 1: back to the business at hand, which is everybody's telling
Speaker 1: me airplane travels cheap. I look on the screens. You've
Speaker 1: gotta be kidding me. I've never seen fairs as expensive
Speaker 1: as they are. Which way is it right now? Well,
Speaker 1: it depends on which cabin you're looking at. You know.
Speaker 1: Coach fairs are actually ridiculous on the blog if you
Speaker 1: go to the points got a comp slash deals. We've
Speaker 1: seen yesterday with two nine four round trip to Argentina. Uh,
Speaker 1: we've been seeing you want to put ian baggage. You know,
Speaker 1: Air Canada had a fair mistake last week and then
Speaker 1: also to to Israel. So um. But you know, even
Speaker 1: in the life lap business class we had South America
Speaker 1: sixty eight round trips, so you know, these deals, you
Speaker 1: gotta you gotta act fast when you see it on
Speaker 1: social media. You always booked the deal and then talk,
Speaker 1: you know, think about it later because the airlines usually
Speaker 1: give you twenty four hours to cancel, So don't try
Speaker 1: to round up fifty five friends. You know, you just
Speaker 1: like book a flight and then you know, figure out
Speaker 1: taking off work or whatever in the twenty four hour
Speaker 1: safety period. But there are live fair one less flexible time.
Speaker 1: Who's driving the points guy bus right now? Are the
Speaker 1: banks driving the bus or the airlines driving the bus?
Speaker 1: I mean, everybody's addicted to your world. We get what
Speaker 1: you do, you save us some money, we hate you, etcetera.
Speaker 1: But who's driving the bus? In September of this year,
Speaker 1: credit card companies are driving the bus. Actually, in September,
Speaker 1: Bank of America is popping into the rewards game. They're
Speaker 1: launching a new credit card. UM. The full details haven't
Speaker 1: been released, but they have confirmed UM they have this
Speaker 1: premium rewards credit card coming in September and it looks
Speaker 1: really you know, fifty point bonus. So we've seen you know,
Speaker 1: Chase really up to a year ago with the Sapphire Reserve.
Speaker 1: AMX is up their platinum. I mean, the competitions at
Speaker 1: all time high, so the credit card companies are in
Speaker 1: the pilot seat of of the points industry, so to speak.
Speaker 1: Brian Kelly, thank you so much and congratulations for changing
Speaker 1: everybody's life. Go to folks. You don't even have to
Speaker 1: do the charge good thing. You can just go and
Speaker 1: be an absolute awe of what Brian Kelly and others
Speaker 1: have wrought with this, this symbiotic relationship. Thanks for listening
Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews
Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.
Speaker 1: I'm on Twitter at Tom Key. David Gura is at
Speaker 1: David Gura. Before the podcast, you can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio.