WEBVTT - Surveillance: Below-Forecast US Jobs Data 0:00:05.120 --> 0:00:08.480 This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along 0:00:08.520 --> 0:00:12.360 with Jonathan Farrell and Lisa Abramowitz. Join us each day 0:00:12.400 --> 0:00:16.880 for insight from the best an economics, geopolitics, finance and investment. 0:00:17.280 --> 0:00:22.119 Subscribe to Bloomberg Surveillance on demand on Apple, Spotify, and 0:00:22.320 --> 0:00:26.600 anywhere you get your podcasts, and always on Bloomberg dot Com, 0:00:26.640 --> 0:00:29.880 the Bloomberg Terminal, and the Bloomberg Business App. 0:00:30.600 --> 0:00:33.400 Joining us now from Washington is Judy Sue, the acting 0:00:33.520 --> 0:00:36.280 US Secretary of Labor, responding to the labor market report 0:00:36.320 --> 0:00:38.479 from about an hour and fifteen minutes ago. Secretary Sue, 0:00:38.520 --> 0:00:41.040 fantastic to catch up with you. Just your first reaction 0:00:41.320 --> 0:00:43.760 to the payrolls report from earlier this morning and whether 0:00:43.760 --> 0:00:45.960 we're seeing broad based strength in this economy or something 0:00:46.280 --> 0:00:47.760 that's showing us things are slimming down. 0:00:49.440 --> 0:00:52.000 Good morning, Jonathan, Thank you very much. This is a 0:00:52.040 --> 0:00:55.880 good job report. It represents steady and stable growth, which 0:00:55.920 --> 0:00:59.120 is what we want. It shows that the president's policies 0:00:59.320 --> 0:01:03.080 bid nomice is working. It's combined with a three point 0:01:03.160 --> 0:01:06.759 six percent unemployment rate. Many predictions were that it would 0:01:06.760 --> 0:01:10.240 not get below four percent right after the pandemic induced 0:01:10.600 --> 0:01:14.520 economic crisis for a long time, and these policies have 0:01:14.800 --> 0:01:17.440 defied that. And in fact, we've seen less than four 0:01:17.480 --> 0:01:20.840 percent unemployment for seventeen consecutive months now, which is the 0:01:20.880 --> 0:01:22.920 longest duration since the nineteen sixties. 0:01:23.200 --> 0:01:24.759 We know we've got a bit of tension out there 0:01:24.760 --> 0:01:26.480 in the labor market at the moment, and you've been 0:01:26.480 --> 0:01:28.160 involved in some of that, so I want to build 0:01:28.200 --> 0:01:29.840 on some of it with you. We have a tentative 0:01:29.840 --> 0:01:32.560 agreement covering West Coast Port workers that's been an issue 0:01:32.560 --> 0:01:34.080 for a while. I know you've had some involvement, so 0:01:34.120 --> 0:01:36.760 congratulations for that. We now have a new issue, so 0:01:36.800 --> 0:01:39.360 let's talk about that one, the potential for three hundred 0:01:39.360 --> 0:01:42.880 thousand UPS workers to go on strike. How involved are 0:01:42.920 --> 0:01:45.920 you in those discussions with the union and UPS? 0:01:47.080 --> 0:01:49.960 Yeah, thank you, Johnathan. Thanks for mentioning the port because 0:01:50.000 --> 0:01:52.960 those parties worked very hard for over a year and 0:01:53.240 --> 0:01:55.320 did reach a tentative agreement recently. It still has to 0:01:55.360 --> 0:01:57.640 be ratified, so the process is not over, but it 0:01:57.720 --> 0:02:01.120 demonstrates that collective bargaining were and that you can reach 0:02:01.160 --> 0:02:03.840 agreements that are as the President often says, good for 0:02:03.960 --> 0:02:06.880 workers where companies can profit, and that's good for the 0:02:06.920 --> 0:02:10.560 economy as a whole, and there remain other negotiations that 0:02:10.600 --> 0:02:11.120 are going on. 0:02:11.240 --> 0:02:11.400 Right. 0:02:11.440 --> 0:02:14.679 That's what it means to be in an economy where 0:02:14.760 --> 0:02:17.800 workers have some power, where unions are at the table 0:02:18.080 --> 0:02:21.000 and we are monitoring the negotiations, but trust that the 0:02:21.040 --> 0:02:22.120 parties are going to do what they. 0:02:22.040 --> 0:02:24.000 Need to do. Have you spoken to ups? Have you 0:02:24.040 --> 0:02:26.000 spoken to the union involved this week? 0:02:27.360 --> 0:02:30.080 Yeah, I've been in touch with both parties. I've also 0:02:30.200 --> 0:02:33.480 just in my role as Acting Secretary, talked to parties 0:02:33.480 --> 0:02:37.320 to these negotiations as well as unions and employers across 0:02:37.320 --> 0:02:40.560 the economy. And so again I'm hopeful and know that 0:02:41.200 --> 0:02:44.000 that they're going to continue to do what they need 0:02:44.040 --> 0:02:46.320 to do and that a fair contract is something that 0:02:47.320 --> 0:02:49.840 everybody hopes that there's there can be win wins, as 0:02:49.840 --> 0:02:50.959 we saw at the Port Cercaly. 0:02:51.040 --> 0:02:52.920 So I've heard that word thrown around quite a lot 0:02:52.960 --> 0:02:56.360 by this administration. This word fair and language is important, 0:02:56.400 --> 0:02:57.040 it's meaningful. 0:02:57.280 --> 0:02:58.160 What would fair be. 0:03:00.400 --> 0:03:00.600 Right? 0:03:00.760 --> 0:03:04.400 So this president has been very clear that fairness and 0:03:04.480 --> 0:03:06.920 equity is very important and that we can build an 0:03:06.960 --> 0:03:09.800 economy to this fair and equitable meaning from the bottom 0:03:09.880 --> 0:03:11.760 up in the middle out right where nobody gets left 0:03:11.760 --> 0:03:14.200 behind where we invest in the middle class. You know, 0:03:14.240 --> 0:03:17.639 Bidenomics is all about investing in America and in particular 0:03:17.680 --> 0:03:22.200 industries like semiconductors and manufacturing and infrastructure, but also investing 0:03:22.200 --> 0:03:26.240 in American workers and also increasing competition to decrease prices. 0:03:26.480 --> 0:03:28.640 All those things are part of what President Biden believes 0:03:28.720 --> 0:03:32.000 is fair and what we believe. This jobs report demonstrates 0:03:32.040 --> 0:03:33.600 that a strong and fair economy can be. 0:03:33.880 --> 0:03:35.720 That's so great, But we have to define what it 0:03:35.720 --> 0:03:39.040 means for ups specifically, and this agreement they're going to 0:03:39.080 --> 0:03:41.440 try and strike with this union, what would a fair 0:03:41.680 --> 0:03:43.720 white increase be? Can you put a number on it? 0:03:44.640 --> 0:03:46.400 Well, I will say the same thing that I said 0:03:46.440 --> 0:03:48.240 when I was out the ports talking to the parties. 0:03:48.400 --> 0:03:50.200 A fair contract is one that the members are going 0:03:50.240 --> 0:03:54.600 to ratify. So a fair contract is something that workers 0:03:54.760 --> 0:03:55.920 choose at the end of the day. 0:03:56.600 --> 0:03:58.200 And again that process. 0:03:57.800 --> 0:04:00.000 Is important for the parties to be able to negotiate, 0:04:00.320 --> 0:04:02.120 to be able to stay at the bargaining table, and 0:04:02.200 --> 0:04:04.080 to be able to resolve issues. And I do believe, 0:04:04.120 --> 0:04:06.160 and as has been shown time and time again, there 0:04:06.160 --> 0:04:07.640 are win win solutions. 0:04:07.160 --> 0:04:08.960 There, don't We have to be careful there though, if 0:04:09.000 --> 0:04:15.200 we start saying things like fair is whatever the union wants, right. 0:04:15.080 --> 0:04:17.360 So I mean at the bargaining table, right, there's all 0:04:17.440 --> 0:04:20.800 kinds of issues that we have seen throughout history that 0:04:21.279 --> 0:04:24.919 when workers can bargain alongside employers who are committed to 0:04:25.200 --> 0:04:27.360 you know, employers who understand that the best investment they 0:04:27.360 --> 0:04:29.880 can make as an investment in their workers. There's all 0:04:30.000 --> 0:04:32.560 kinds of things that can happen when it comes to 0:04:32.600 --> 0:04:35.520 wages and working conditions and benefits. And those are the 0:04:35.640 --> 0:04:38.280 kinds of things we want for every American worker, right. 0:04:38.320 --> 0:04:41.520 We want stable work, we want a path to the 0:04:41.560 --> 0:04:45.760 middle class. We want security and retirement, we want health benefits, 0:04:45.760 --> 0:04:48.279 we want leave. Those are all things that the President 0:04:48.320 --> 0:04:50.720 has prioritized, and I think those are all elements of 0:04:50.720 --> 0:04:52.040 what it means to have a good job. 0:04:52.200 --> 0:04:54.040 There are issues you're working on, Secretary, So I know 0:04:54.120 --> 0:04:57.280 that your nomination hasn't been progressing. So that take you 0:04:57.320 --> 0:05:01.800 from Acting Secretary of Labor to Secretary of Labor. What's 0:05:01.800 --> 0:05:03.560 going on with that? Can you give us some information 0:05:03.640 --> 0:05:05.880 on the timeline you're hoping that this gets out with? 0:05:07.360 --> 0:05:10.599 So the President has expressed great confidence in me. He's 0:05:10.600 --> 0:05:13.840 nominated me to serve as US Labor Secretary. I am 0:05:13.920 --> 0:05:16.839 doing that job. The confirmation question is certainly one for 0:05:16.880 --> 0:05:19.680 the Senate, but I've also appreciated the broad support I've 0:05:19.680 --> 0:05:21.919 had from a number of Senators, and we remain hopeful 0:05:22.200 --> 0:05:24.919 about confirmation. And meanwhile, I am here to do the 0:05:25.000 --> 0:05:26.839 job and do what the President asks, which has helped 0:05:26.880 --> 0:05:29.600 him finish the job. And we're again seeing progress and 0:05:29.640 --> 0:05:31.600 continued growth, and we know we have more work to do, 0:05:31.640 --> 0:05:33.440 and I'm all in to help get that done. 0:05:33.480 --> 0:05:36.080 Do you concern it's holding up the Department's agenda at all? 0:05:37.560 --> 0:05:40.680 No, So the work the Department continues full steam. We 0:05:40.800 --> 0:05:43.479 are you know, we have enforcement work to do to 0:05:43.560 --> 0:05:47.559 ensure that every worker gets the wages that they're owed 0:05:47.680 --> 0:05:49.800 and comes home healthy and safe at the end of 0:05:49.839 --> 0:05:54.240 the day. We are laser focused on connecting employers who 0:05:54.279 --> 0:05:58.160 need workers to the good jobs that are being created 0:05:58.160 --> 0:06:01.760 in the economy to people who are looking for those jobs. 0:06:01.760 --> 0:06:04.200 So that's another big party for us, and those are 0:06:04.320 --> 0:06:08.000 very important and we will continue to do them and 0:06:08.040 --> 0:06:10.200 I'm proud to lead the Department in these efforts. 0:06:10.360 --> 0:06:12.200 Secretly say, we're happy to catch up with you this morning. 0:06:12.360 --> 0:06:14.240 Following the Piro Report. Thanks for being with us. 0:06:24.880 --> 0:06:27.159 Uncertainty is an order and that is a good place 0:06:27.200 --> 0:06:30.640 to start with. Randall Krassner, Randy, the Bloomberg interns have 0:06:30.720 --> 0:06:33.719 invaded the building. I was speaking to a whip smart 0:06:34.040 --> 0:06:39.400 intern yesterday, newly admitted after reading Krosner out of Babson College, 0:06:39.520 --> 0:06:43.080 the Pride of Wellesley, Massachusetts, and that intern he said, 0:06:43.080 --> 0:06:45.479 what should I read? And I said, You've got to 0:06:45.480 --> 0:06:50.520 read Peter Bernstein. It's required at Chicago on risk and uncertainty. 0:06:51.080 --> 0:06:55.080 Tell me right now how uncertain you are about the 0:06:55.120 --> 0:07:00.839 American economy, the American labor economy, this jobs report pandemic. 0:07:02.600 --> 0:07:05.640 I think the uncertainty is pretty high because, you know, 0:07:05.680 --> 0:07:10.000 as you guys were discussing before, it seems like the 0:07:10.120 --> 0:07:13.280 labor markets should have started to slow down a bit, 0:07:13.920 --> 0:07:16.280 but we haven't seen much evidence of that. Certainly, the 0:07:16.320 --> 0:07:19.880 ADP numbers yesterday and other data suggest that the lave 0:07:19.920 --> 0:07:21.280 market's still pretty hot. 0:07:21.960 --> 0:07:22.160 Yeah. 0:07:22.240 --> 0:07:25.000 The long and variable lags is my you know, great 0:07:25.440 --> 0:07:31.640 predecessor at University of Chicago, Treatman, had talked about. But man, 0:07:31.720 --> 0:07:34.440 these are really getting to be very long on lags. 0:07:34.440 --> 0:07:36.320 You start to think, you start to see something by 0:07:36.360 --> 0:07:39.360 Now that's the uncertainty. How high is the FED going 0:07:39.400 --> 0:07:41.320 to have to go? Because the fen's not going to 0:07:41.400 --> 0:07:43.280 quit into the labor market if. 0:07:43.240 --> 0:07:45.720 The FED in the mystery is how high do they 0:07:45.800 --> 0:07:50.880 have to go? Are these normal meetings forward or the 0:07:50.920 --> 0:07:55.080 PhDs the people that worship your financial economics? Do they 0:07:55.080 --> 0:07:58.960 have to amend every discussion? Is they get out to 0:07:59.080 --> 0:08:00.160 November one meets. 0:08:01.680 --> 0:08:01.800 Well? 0:08:01.800 --> 0:08:03.000 I think what they've got to do is try to 0:08:03.040 --> 0:08:06.400 see are there some structural changes in the economy, and 0:08:06.440 --> 0:08:08.960 I think there have been at least some changes, whether 0:08:08.960 --> 0:08:14.000 they're permanent structural or not so sure about probably something structural. 0:08:14.080 --> 0:08:17.280 For the labor market, we certainly see lower labor force participation. 0:08:17.360 --> 0:08:19.360 A lot of older workers have said, there's no way 0:08:19.360 --> 0:08:21.600 I'm going back into the labor market. I don't care 0:08:21.640 --> 0:08:24.000 that wages are high. I know too many people who 0:08:24.040 --> 0:08:26.280 didn't make it through COVID. I want to see my kids, 0:08:26.320 --> 0:08:31.120 my grandkids. We also have seen with the very low 0:08:31.160 --> 0:08:35.439 interest rates during during the pandemic and just coming out 0:08:35.440 --> 0:08:39.040 of it, that everybody refinanced. So normally you have the 0:08:39.040 --> 0:08:43.040 transmission mechanism of monetary policy having an impact on interest 0:08:43.080 --> 0:08:45.560 rates and so having an impact on people's payments and houses, 0:08:45.559 --> 0:08:51.400 et cetera. But so many people refinance into very low 0:08:51.679 --> 0:08:54.880 fixed thirty year mortgages. It doesn't matter as much to 0:08:54.960 --> 0:08:57.440 the economy that interest rates are going up. 0:08:57.880 --> 0:08:58.760 Because people aren't. 0:08:58.760 --> 0:09:01.280 People's income is not being affected by that, or at 0:09:01.320 --> 0:09:04.280 least a smaller fraction of people's income is affected by 0:09:04.280 --> 0:09:04.839 that than normal. 0:09:04.960 --> 0:09:06.719 So, Randy, with that in mind, what's the appropriate role 0:09:06.720 --> 0:09:08.640 of the feder Reserve with that as your backdrop, is 0:09:08.679 --> 0:09:11.880 it to just keep pushing or acknowledge everything you just acknowledged. 0:09:13.120 --> 0:09:15.800 Well, it might mean that they need to go further 0:09:16.040 --> 0:09:17.760 than in the past. Now, I don't think they're going 0:09:17.800 --> 0:09:19.200 to have to go as far as in the late 0:09:19.240 --> 0:09:23.400 seventies early nineteen eighties, because fortunately they started before inflation 0:09:23.480 --> 0:09:26.280 expectations got out of control, because that's what happened back then. 0:09:26.800 --> 0:09:30.839 Inflation was in the load double digits. 0:09:30.800 --> 0:09:33.760 And they had to bring in astrates to fifteen twenty 0:09:33.760 --> 0:09:38.600 percent because the feathered lost credibility. Inflation expectation expectations went out, 0:09:38.640 --> 0:09:39.760 but really not that much. 0:09:40.080 --> 0:09:41.440 So that's a positive. 0:09:41.720 --> 0:09:43.679 But it may need mean that they need to do 0:09:43.760 --> 0:09:46.720 more work in raising rates to get the same impact 0:09:46.840 --> 0:09:48.880 on the economy of sort of slowing taking some of 0:09:48.880 --> 0:09:51.679 the heat, particularly out of the wage demands. 0:09:51.760 --> 0:09:54.040 So, Randy, this debate often comes down to one or 0:09:54.040 --> 0:09:56.760 two hikes. Now twenty five to fifty basis points is 0:09:56.880 --> 0:09:59.199 it's nothing. What kind of numbers are you talking about 0:09:59.280 --> 0:09:59.840 thinking about? 0:10:01.320 --> 0:10:05.560 Well, I certainly I think we'll see what the data 0:10:05.559 --> 0:10:07.600 say about the labor market. Maybe the labor market's about 0:10:07.640 --> 0:10:10.719 to crack. Certainly that they don't suggest it. But if 0:10:10.720 --> 0:10:13.520 it doesn't, they're going to keep at it. And you know, 0:10:13.520 --> 0:10:14.160 I think they're going to. 0:10:14.200 --> 0:10:14.679 End the year. 0:10:14.960 --> 0:10:16.520 Those are the sticks and they will to five. 0:10:17.880 --> 0:10:20.560 Okay, Randy, this is great. We're gonna get a jobs report, 0:10:20.920 --> 0:10:23.680 we're going to talk about all the knobabbel and that. 0:10:23.800 --> 0:10:26.040 But I want to bring it over to finance. I 0:10:26.040 --> 0:10:27.839 want to bring it over to what you actually teach 0:10:27.840 --> 0:10:30.760 at the Booth school. Can you tell the students at 0:10:30.800 --> 0:10:33.920 Booth entering last week of August, whenever it is they 0:10:33.920 --> 0:10:36.880 get through their eight week orientation, can you tell them 0:10:36.880 --> 0:10:40.520 that we've reached financial stability. 0:10:41.720 --> 0:10:42.400 We're not sure. 0:10:42.760 --> 0:10:45.600 So it gets back to the uncertainty that you had 0:10:45.600 --> 0:10:48.920 talked about before, because obviously, with the very rapid increase 0:10:48.960 --> 0:10:52.240 in interest rates. We've had an impact on banks like 0:10:52.280 --> 0:10:56.760 Silicon Valley banks. They thought they were geniuses by buying 0:10:57.040 --> 0:11:00.600 long dated securities. That was fine until just rates went 0:11:00.679 --> 0:11:03.480 up so much that the valuable securities plummeted. And uh, 0:11:03.920 --> 0:11:07.160 You've got some other other institutions that also have a 0:11:07.200 --> 0:11:10.319 lot of effectively long term fixed rate things in their 0:11:10.559 --> 0:11:14.599 talent sheet. Long term is commercial real estate, particularly commercial 0:11:14.480 --> 0:11:17.280 real estate. That's I think going to be a challenge. 0:11:17.400 --> 0:11:20.040 And so we're going to see how that that plays out. 0:11:20.360 --> 0:11:22.480 And I think when we start getting the next round 0:11:22.480 --> 0:11:24.680 of bank earning reports right there may be a little 0:11:24.720 --> 0:11:25.720 bit of tumult around that. 0:11:25.840 --> 0:11:27.960 I mean, I'm not going to miss words, Professor Krausner. 0:11:28.040 --> 0:11:30.800 I look at the stress Trust. The stress tests is 0:11:30.840 --> 0:11:33.199 a comedy. I mean, I just I just don't think 0:11:33.240 --> 0:11:37.040 they had any value at all. But after SVB from 0:11:37.040 --> 0:11:41.920 where you sit, have we seen a new enhanced financial supervision? 0:11:42.320 --> 0:11:44.440 Is there something new in the religion of looking at 0:11:44.480 --> 0:11:46.960 the banks after what we saw a number of weeks ago. 0:11:48.280 --> 0:11:50.280 I think one thing that they are now focusing on 0:11:50.400 --> 0:11:55.000 is interest rate risk. So other signatories to the so 0:11:55.080 --> 0:11:58.600 called Basil three regulations the capital standards that came out 0:11:58.640 --> 0:12:03.120 from from the financial crisis. Virtually everybody has an important 0:12:03.200 --> 0:12:07.800 rule related to interest rates and interest rate risk. We 0:12:07.840 --> 0:12:10.360 didn't have that in the US, and so I think 0:12:10.400 --> 0:12:12.440 that's going to be the key thing that changes. And 0:12:12.480 --> 0:12:15.360 my hunches at my former colleagues at the FED and 0:12:15.440 --> 0:12:18.920 the other regulators are keenly focused on that issue now 0:12:19.040 --> 0:12:19.839 and they weren't before. 0:12:20.080 --> 0:12:22.920 Randy Steiklaus jobs repul seven minutes to why we'll catch 0:12:23.000 --> 0:12:24.400 up with Randy christ went just a moment to get 0:12:24.400 --> 0:12:25.319 his reaction to that. 0:12:30.760 --> 0:12:33.240 We're going to see some bond market movement. Here is 0:12:33.400 --> 0:12:35.920 we digest this data? Joining us on Lindsay Pigs, a 0:12:36.000 --> 0:12:39.360 chief economist at Stefel as well, and to me, it's 0:12:39.360 --> 0:12:43.240 a hallmark announcement. Lindsay, with the revisions, let me go 0:12:43.280 --> 0:12:46.400 through the math again, it's simple to Eldra can handle this, Lindsay. 0:12:46.480 --> 0:12:49.480 I can't do the differentuential equations like you, and that 0:12:49.600 --> 0:12:52.679 is two hundred and nine thousand, take away one hundred 0:12:52.679 --> 0:12:55.880 and ten thousand. Can you frame this out with the revisions? 0:12:56.040 --> 0:12:58.200 Is a sub one hundred thousand report? 0:12:59.000 --> 0:13:01.800 Well, I do think it fell well short of expectations, 0:13:01.960 --> 0:13:05.840 but that being said, it's still a solid headline number, 0:13:06.200 --> 0:13:09.160 and for the FED, the focus is not that top 0:13:09.200 --> 0:13:12.760 line non farm pail WORL report. They're looking at the details. 0:13:12.760 --> 0:13:16.040 They're looking at the inflationary components, and with the unemployment 0:13:16.080 --> 0:13:20.600 rate declining, wage growth gaining momentum. This is the exact 0:13:20.640 --> 0:13:23.280 opposite of what the FED wanted to see. This keeps 0:13:23.320 --> 0:13:26.439 the FED on the path for an additional rate increase 0:13:26.520 --> 0:13:29.360 later this month, and depending on what we see from 0:13:29.360 --> 0:13:33.080 the inflation data next week, we could see another rate 0:13:33.160 --> 0:13:34.760 increase shortly thereafter. 0:13:34.880 --> 0:13:37.720 Our audiences on radio and television are saying, wait, wage 0:13:37.720 --> 0:13:41.280 growth four point four percent, take away five or six 0:13:41.320 --> 0:13:44.520 percent inflation, depending on whether I'm buying stake this weekend, 0:13:45.000 --> 0:13:48.319 And the answer is they're not getting ahead. Which nominal 0:13:48.480 --> 0:13:51.679 wage growth does a FED need to see? Three point 0:13:51.720 --> 0:13:55.000 five percent? Dare I say two point nine percent? How 0:13:55.040 --> 0:13:56.920 low do we have to bring down wage growth? 0:13:57.600 --> 0:14:00.480 I think? I think if we saw a two handle, 0:14:00.559 --> 0:14:03.000 the FED would be very comfortable with that. I think 0:14:03.040 --> 0:14:05.840 that would give the FED confidence that we're on a 0:14:05.880 --> 0:14:09.600 sustainable downward trajectory. That's what the FED wants to see. 0:14:09.640 --> 0:14:12.160 It's not about getting inflation under control from eight down 0:14:12.200 --> 0:14:15.640 to six. It's continuing that trajectory back to that two 0:14:15.720 --> 0:14:16.679 percent time, giving. 0:14:16.520 --> 0:14:20.720 The access that on a two point nine percent nominal 0:14:20.880 --> 0:14:23.040 wage growth, we're distant from that. 0:14:23.040 --> 0:14:23.440 Aren't we? 0:14:23.640 --> 0:14:26.800 Absolutely? Absolutely, And one of the biggest fears for the 0:14:26.840 --> 0:14:30.320 FED is that wages are continuing to rise. Growth is 0:14:30.360 --> 0:14:34.680 continuing to accelerate without any improvements in productivity, and so 0:14:34.800 --> 0:14:37.720 there we start to see this wage price spiral leaving 0:14:37.760 --> 0:14:41.560 the economy behind. Growth is slowing, we know that, but 0:14:41.640 --> 0:14:45.360 if underlying wage components continue to increase, what is the 0:14:45.400 --> 0:14:47.920 economy gaining from that? It goes back to the old 0:14:47.920 --> 0:14:50.600 adage of we could hire a million workers to make windows, 0:14:50.640 --> 0:14:54.600 a million workers to break windows. If the supply of 0:14:54.720 --> 0:14:56.960 labor falls short of that, wages go up, but we're 0:14:57.000 --> 0:14:58.520 not adding anything to the economy. 0:14:58.640 --> 0:15:01.200 Want to make clear, we've really got of flightiness on 0:15:01.240 --> 0:15:03.440 the data screen as well. Right now red and green 0:15:03.480 --> 0:15:06.080 in the screen features a negative eight Nasdaq barely to 0:15:06.120 --> 0:15:07.000 the green side. 0:15:07.480 --> 0:15:08.200 As well. 0:15:08.280 --> 0:15:10.560 In the yield space, there is some movement four point 0:15:10.640 --> 0:15:12.520 ninety six percent of the two year the ten year 0:15:12.640 --> 0:15:15.640 yield four point zero four percent. These are all new 0:15:15.720 --> 0:15:18.000 numbers for me. They're really a shock to see in 0:15:18.040 --> 0:15:22.480 this high four point zero one percent as well, how 0:15:22.520 --> 0:15:25.360 many quarters of you know, as you say, two oh 0:15:25.520 --> 0:15:29.440 nine is still a substantial non firm payrolls number. But 0:15:29.520 --> 0:15:31.760 if we developed a three month moving average of one 0:15:31.840 --> 0:15:34.320 hundred and ninety thousand, my reading is that doesn't get 0:15:34.320 --> 0:15:35.200 it done for the FED. 0:15:35.480 --> 0:15:36.400 Well, there's still. 0:15:36.160 --> 0:15:38.640 Got to sustain where wages. At that point, we. 0:15:38.800 --> 0:15:40.800 Have to see inge everything on wages. 0:15:40.880 --> 0:15:45.240 Well, inflation wages, that's one component of inflation, but we 0:15:45.360 --> 0:15:47.480 need to get that under control. We need to see 0:15:47.480 --> 0:15:50.880 some of that tight labor market conditions ease so that 0:15:50.920 --> 0:15:54.160 the FED feels more confident that wages will begin to ease. 0:15:54.440 --> 0:15:56.600 Now that doesn't mean that they're going to tackle overall 0:15:56.640 --> 0:16:00.200 inflation then, just by getting the labor market to to 0:16:00.680 --> 0:16:05.040 become less tight. There's other components of inflation, but that's 0:16:05.120 --> 0:16:08.120 the component that the Fed mean control. That will determine 0:16:08.160 --> 0:16:11.680 the terminal level. The other components of inflation will determine 0:16:11.680 --> 0:16:14.880 how long the FED is forced to maintain that elevated 0:16:14.960 --> 0:16:15.480 level of rating. 0:16:15.640 --> 0:16:19.280 Give us a steephul granularity of what mister McKee talked about, 0:16:19.320 --> 0:16:21.640 which is a racial makeup of jobs. You saw some 0:16:21.760 --> 0:16:26.520 higher unemployment, some jumps in unemployment among minorities, and also 0:16:26.640 --> 0:16:30.560 on the education basis as well. The stereotype within financial 0:16:30.640 --> 0:16:33.880 media is we have a lot of service sector bartenders 0:16:33.880 --> 0:16:37.360 and waitresses still being employed. Biat s are a different 0:16:37.400 --> 0:16:38.000 story here. 0:16:38.280 --> 0:16:41.320 Well, I think there's two different storylines. Certainly when we 0:16:41.360 --> 0:16:45.120 look at where the most unemployment is gaining momentum, that's 0:16:45.160 --> 0:16:48.520 at the lower skills level. We're starting to see technology 0:16:48.560 --> 0:16:51.160 replace those lower skills. This was something that was happening 0:16:51.200 --> 0:16:53.640 before the pandemic, but this is a trend that has 0:16:53.640 --> 0:16:57.400 certainly been exacerbated more recently. But I also think that 0:16:57.520 --> 0:17:01.600 we haven't yet seen that cyclical component suggesting that weakness 0:17:01.960 --> 0:17:04.640 is lurking around the corner just yet. As we heard 0:17:04.640 --> 0:17:08.720 about leisure and hospitality still posting a sizable increase this month, 0:17:09.119 --> 0:17:11.840 that would be assumed to be the one area where 0:17:11.840 --> 0:17:17.120 we would start to see that weakness gain credibility gain evidence, 0:17:17.280 --> 0:17:19.119 but we haven't seen that quite yet. 0:17:19.400 --> 0:17:22.440 Is it still a pandemic tinged report? 0:17:24.200 --> 0:17:26.280 I don't know if we can necessarily say that the 0:17:26.280 --> 0:17:30.480 pandemic is influencing this report, but I think the aftermath 0:17:30.520 --> 0:17:34.639 of the pandemic, the change in psychology is impacting this 0:17:34.760 --> 0:17:38.320 report because we're still seeing millions of workers sitting on 0:17:38.359 --> 0:17:42.280 the sideline, not actively participating as we would expect in 0:17:42.320 --> 0:17:45.000 the traditional manner in the labor force. So we do 0:17:45.160 --> 0:17:48.320 need to still think about providing an incentive to pull 0:17:48.359 --> 0:17:51.240 some of those sideline workers in. That may help to 0:17:51.320 --> 0:17:55.639 expand the labor supply and then organically reduce wages. But 0:17:55.680 --> 0:17:58.040 we're not going to see that downward pressure unless we 0:17:58.080 --> 0:18:01.960 see demand for labor precipitous decline or the supply of 0:18:02.040 --> 0:18:03.600 workers dramatically increased. 0:18:03.680 --> 0:18:06.560 We do you, Thank you so much, Lindsay from Steford. 0:18:17.760 --> 0:18:19.800 We can catch up with Christian Horner, the team principal 0:18:20.000 --> 0:18:23.040 for Red Bull Racing. Christian, wonderful to catch up with you, sir. 0:18:23.119 --> 0:18:26.360 Going into race weekend in Silverston. Can we start there? 0:18:26.359 --> 0:18:28.720 As my colleague Tom pointed out, just how special is 0:18:28.760 --> 0:18:30.879 this race, this circuit for you and the team. 0:18:31.400 --> 0:18:33.800 Well, look, it's one of the best circuits on the tour. 0:18:34.520 --> 0:18:37.960 It's fast, it's demanding, it's source of men out from 0:18:38.000 --> 0:18:41.960 the boys, it's a big challenge, and it's it's old school. 0:18:42.000 --> 0:18:43.440 I mean, this track goes back. 0:18:43.240 --> 0:18:46.720 To just after the Second World War, so an old 0:18:46.760 --> 0:18:50.480 airfield with a brims of road converted into a racing 0:18:50.520 --> 0:18:52.840 circuit that has developed over the years, but. 0:18:52.800 --> 0:18:54.840 It's one of the big tests for the drivers and 0:18:54.880 --> 0:18:55.400 the teams. 0:18:55.920 --> 0:18:59.000 Max was absolutely dominant last weekend. There was this amazing 0:18:59.040 --> 0:19:00.760 moment at the end of the with a couple of 0:19:00.840 --> 0:19:03.280 laps to go, he came in for a pit stop 0:19:03.640 --> 0:19:06.399 just to get the quickest lap. Christin, can you describe 0:19:06.520 --> 0:19:09.520 the guy that you're working with every single day? How 0:19:09.560 --> 0:19:10.920 special is Max Verstappen. 0:19:12.040 --> 0:19:12.800 I think what we're. 0:19:12.600 --> 0:19:14.960 Witnessing at the moment is a sportsman that's just a 0:19:15.200 --> 0:19:17.399 really at the top of his game, and you know, 0:19:17.440 --> 0:19:20.159 he's a joy to work with, and he continues to 0:19:20.240 --> 0:19:24.560 surprise us with the levels that he's that he's reaching, 0:19:24.600 --> 0:19:26.919 and you know the hype that he's hitting. 0:19:27.000 --> 0:19:30.120 So yeah, as I. 0:19:30.080 --> 0:19:33.960 Say, nothing is, nothing is, he continues just to continue 0:19:34.000 --> 0:19:35.080 to surprise us at the moment. 0:19:35.160 --> 0:19:37.040 But he's in the form of his life and I 0:19:37.040 --> 0:19:37.960 think there's more to come. 0:19:38.359 --> 0:19:41.000 Christian, I think Americans are fascinated by this. I look 0:19:41.000 --> 0:19:45.040 at the wonderful coverage Sky Sports is doing and basically 0:19:45.080 --> 0:19:48.440 they forget about vers step and five minutes into the race, 0:19:48.760 --> 0:19:51.239 to look at all the Netflix sub races and all 0:19:51.280 --> 0:19:54.199 that baloney. We have an America, a guy for the 0:19:54.240 --> 0:19:58.680 Los Angeles Angels in baseball name O Tony, who's once 0:19:58.720 --> 0:20:01.639 in a generation, is for stepping like that. 0:20:03.119 --> 0:20:06.200