1
00:00:02,360 --> 00:00:05,720
Speaker 1: Global business news twenty four hours a day at Bloomberg

2
00:00:05,800 --> 00:00:08,880
Speaker 1: dot com, the Radio plus mobile app and on your radio.

3
00:00:09,160 --> 00:00:13,560
Speaker 1: This is a Bloomberg Business Flash, and this Bloomberg Business

4
00:00:13,560 --> 00:00:16,840
Speaker 1: Flash being brought to you by the American Arbitration Association.

5
00:00:16,920 --> 00:00:21,759
Speaker 1: Business disputes are inevitable resolved faster with the American Arbitration Association,

6
00:00:22,000 --> 00:00:24,680
Speaker 1: the global leader in an alternative dispute resolution for over

7
00:00:24,800 --> 00:00:28,880
Speaker 1: eighty five years. Learn more at a d R dot org.

8
00:00:29,360 --> 00:00:32,360
Speaker 1: In this risk off environment for investors, this wearring some

9
00:00:32,640 --> 00:00:36,320
Speaker 1: encouraging economic data. Retail sales actually rose more than forecast

10
00:00:36,360 --> 00:00:39,080
Speaker 1: for the month of May. That shows consumer spending will

11
00:00:39,080 --> 00:00:42,080
Speaker 1: help boost the economic growth in the second quarter was

12
00:00:42,159 --> 00:00:45,680
Speaker 1: a half a percent increase in purchases following a one

13
00:00:45,720 --> 00:00:49,040
Speaker 1: point three percent jump that was the previous month and

14
00:00:49,159 --> 00:00:52,680
Speaker 1: that was the biggest game in a year. Also earlier today,

15
00:00:52,720 --> 00:00:56,960
Speaker 1: we've got reading on small business small business optimism rising

16
00:00:57,120 --> 00:01:01,160
Speaker 1: modestly in May, the Index of Small Business Optimism rising

17
00:01:01,200 --> 00:01:03,640
Speaker 1: two tenths of a point in May to ninety three

18
00:01:04,400 --> 00:01:09,319
Speaker 1: point eight. That's according to the National Federation of Independent Business.

19
00:01:09,640 --> 00:01:12,520
Speaker 1: As they'll continue to see risk off, SMP futures down

20
00:01:12,600 --> 00:01:15,679
Speaker 1: six and the down future is forty nine points lower.

21
00:01:15,720 --> 00:01:17,880
Speaker 1: That's down three tenths. The nastac even the future is

22
00:01:17,920 --> 00:01:22,080
Speaker 1: down sixteen has down a uh four tenths of a percent.

23
00:01:22,760 --> 00:01:26,480
Speaker 1: And as the bregsit vote draws closer, we seeing the

24
00:01:26,480 --> 00:01:32,560
Speaker 1: British pound continuing to fall down eight ten fifty four

25
00:01:32,680 --> 00:01:36,280
Speaker 1: at British pound sterling, and also the German ten year

26
00:01:37,000 --> 00:01:41,280
Speaker 1: that is negative, just barely negative point zero one percent.

27
00:01:41,720 --> 00:01:44,240
Speaker 1: We checked the markets for you every fifteen mins during

28
00:01:44,280 --> 00:01:48,320
Speaker 1: the Trader Day right here of Bloomberg Radio, and Michael

29
00:01:48,360 --> 00:01:50,840
Speaker 1: and Tom Jenn Chucker thank you guys so much. It

30
00:01:51,080 --> 00:01:55,000
Speaker 1: is eight forty nine on Wall Street. The following is

31
00:01:55,040 --> 00:01:59,360
Speaker 1: from Bloomberg View opinions and commentary from Bloomberg columnists. I'm

32
00:01:59,440 --> 00:02:02,960
Speaker 1: Mark White, Us, an editor for Bloomberg View. US consumers

33
00:02:03,000 --> 00:02:06,360
Speaker 1: have long had an impressive propensity to get into debt. Lately,

34
00:02:06,440 --> 00:02:09,160
Speaker 1: though Uncle Sam has been playing a much bigger role

35
00:02:09,240 --> 00:02:11,959
Speaker 1: in enabling them. As of March, the government accounted for

36
00:02:12,000 --> 00:02:15,480
Speaker 1: almost twenty percent of the three point five trillion dollars

37
00:02:15,960 --> 00:02:19,760
Speaker 1: in consumer credit outstanding, a number that includes credit cards,

38
00:02:19,800 --> 00:02:23,360
Speaker 1: auto loans, and student debt but not mortgages. That's up

39
00:02:23,400 --> 00:02:26,520
Speaker 1: from less than five percent before the last procession, thanks

40
00:02:26,560 --> 00:02:28,720
Speaker 1: in large part to hundreds of billions of dollars in

41
00:02:28,800 --> 00:02:31,880
Speaker 1: new federal student loans. The government's aim was to help

42
00:02:31,919 --> 00:02:35,200
Speaker 1: Americans who wanted to improve their job prospects through education.

43
00:02:35,680 --> 00:02:38,280
Speaker 1: Much of the money, however, went to rising tuition costs

44
00:02:38,639 --> 00:02:41,000
Speaker 1: or two courses that didn't do enough to improve people's

45
00:02:41,000 --> 00:02:44,679
Speaker 1: earning potential. The remaining student debt is extremely difficult to

46
00:02:44,760 --> 00:02:47,760
Speaker 1: discharge through bankruptcy, so it will weigh on the borrowers

47
00:02:47,919 --> 00:02:51,160
Speaker 1: and on the economy for decades to come. The Obama

48
00:02:51,200 --> 00:02:54,440
Speaker 1: administration has sought to ease the burden, for example, by

49
00:02:54,560 --> 00:02:57,639
Speaker 1: limiting payments to a certain share of income. Ultimately, though,

50
00:02:57,680 --> 00:02:59,320
Speaker 1: the government may have to write off a lot of

51
00:02:59,360 --> 00:03:02,919
Speaker 1: the debt at taxpayer expense. I'm Mark white House. For

52
00:03:03,040 --> 00:03:05,280
Speaker 1: more of you, please go to Bloomberg View dot com

53
00:03:05,680 --> 00:03:08,799
Speaker 1: or view go on the Bloomberg terminal. This has been

54
00:03:08,840 --> 00:03:11,960
Speaker 1: Bloomberg View. Have Bloombergview. Commentary can be here in hourly

55
00:03:12,000 --> 00:03:17,040
Speaker 1: weekdays and Bloomberg Radio. Michael I thought an incredibly nuanced

56
00:03:17,120 --> 00:03:19,959
Speaker 1: small business report this month. Why don't you dive in

57
00:03:20,080 --> 00:03:24,040
Speaker 1: with your observation. I wanna ask Bill Dunkelberg, you know,

58
00:03:24,200 --> 00:03:27,480
Speaker 1: he's the chief economist for the National Federation of Independive Business.

59
00:03:27,560 --> 00:03:29,919
Speaker 1: If it is indeed nuance because I see some good

60
00:03:30,000 --> 00:03:32,600
Speaker 1: news in here, and maybe I'm just putting it bill

61
00:03:32,880 --> 00:03:36,600
Speaker 1: Um in the context of the mood that everybody's in

62
00:03:36,720 --> 00:03:40,720
Speaker 1: these days. But the Small Business Optimism Index increases uh

63
00:03:40,960 --> 00:03:43,480
Speaker 1: two tenths of a point to ninety three point eight

64
00:03:44,160 --> 00:03:47,880
Speaker 1: off four of the ten index components posted a game

65
00:03:47,920 --> 00:03:51,360
Speaker 1: four declined to unchanged, so six you know, and net

66
00:03:51,560 --> 00:03:56,400
Speaker 1: not bad news, and then three point game four um

67
00:03:56,880 --> 00:04:02,320
Speaker 1: labor markets in terms of people trying to hire or hiring, now,

68
00:04:02,680 --> 00:04:05,760
Speaker 1: there was a high level of people reporting they can't

69
00:04:05,800 --> 00:04:08,240
Speaker 1: find qualified applicants, which is a problem, but it's a

70
00:04:08,280 --> 00:04:11,520
Speaker 1: different kind of problem for the economy to have. So

71
00:04:11,880 --> 00:04:14,280
Speaker 1: I mean, I don't see this is is all that

72
00:04:14,440 --> 00:04:18,400
Speaker 1: bad news here? Well, you know, I agree if we

73
00:04:18,480 --> 00:04:21,000
Speaker 1: scratch around their hard enough, we can find some good news.

74
00:04:21,920 --> 00:04:24,719
Speaker 1: Thanks for example, the five point gain in the percent

75
00:04:24,800 --> 00:04:28,080
Speaker 1: who expect business conditions to be better six months from now.

76
00:04:28,640 --> 00:04:30,560
Speaker 1: But of course there was a five point gain up

77
00:04:30,600 --> 00:04:34,040
Speaker 1: to a minus thirteen percent, and we expect that who

78
00:04:34,080 --> 00:04:36,920
Speaker 1: expect business condition would be better, meaning more owners think

79
00:04:36,960 --> 00:04:39,440
Speaker 1: it's going to be worse than better. Nonetheless, you know,

80
00:04:39,600 --> 00:04:42,120
Speaker 1: your point is that the job market indicators seemed to

81
00:04:42,160 --> 00:04:46,880
Speaker 1: hold up reasonably well because we're still hiring now. It's

82
00:04:47,240 --> 00:04:49,240
Speaker 1: you know, we we think two hundred thousand is a

83
00:04:49,320 --> 00:04:52,280
Speaker 1: good number. Um, we've gotten used to that, I guess

84
00:04:52,400 --> 00:04:55,080
Speaker 1: compared to you know, four hundred and five hundred thousand

85
00:04:55,320 --> 00:04:58,200
Speaker 1: a month that we saw back in the early nineteen

86
00:04:58,240 --> 00:05:01,160
Speaker 1: eighties and that expansion. So uh, you know, so, I

87
00:05:01,240 --> 00:05:03,120
Speaker 1: guess the good news is it didn't They didn't go

88
00:05:03,240 --> 00:05:07,320
Speaker 1: down really very much. The indicators on balance, they were

89
00:05:07,440 --> 00:05:09,920
Speaker 1: basically unchanged. Two tends to a point on the index

90
00:05:10,040 --> 00:05:13,480
Speaker 1: is a much. But but you know, where do we

91
00:05:13,560 --> 00:05:16,080
Speaker 1: get the up front? I mean, we need we're going

92
00:05:16,120 --> 00:05:18,960
Speaker 1: to have to look someplace for some growth. We're not

93
00:05:19,120 --> 00:05:21,720
Speaker 1: getting it in capital spending. That that was off two

94
00:05:21,800 --> 00:05:27,200
Speaker 1: points plan capital spending. Inventory plans are are very low. Um,

95
00:05:27,480 --> 00:05:30,640
Speaker 1: so the spending isn't there. And and not a lot

96
00:05:30,720 --> 00:05:32,920
Speaker 1: of hiring is They're they're trying to hire, of course,

97
00:05:32,960 --> 00:05:38,000
Speaker 1: as you point out, but of those trying to hire, said,

98
00:05:38,000 --> 00:05:42,479
Speaker 1: a few are no qualified applicants for their for their positions. Yeah. Again,

99
00:05:42,520 --> 00:05:44,039
Speaker 1: I go back to what I said about this being

100
00:05:44,080 --> 00:05:48,359
Speaker 1: in the context of the general zeitgeist about the comite

101
00:05:48,480 --> 00:05:51,840
Speaker 1: these days. Um, this does not fit the narrative of

102
00:05:51,920 --> 00:05:56,040
Speaker 1: an economy that is going south, right, It's just kind

103
00:05:56,080 --> 00:05:59,840
Speaker 1: of noodling along, you know, I think. And something I

104
00:06:00,400 --> 00:06:02,600
Speaker 1: was writing, I pointed out that the kind of growth

105
00:06:02,720 --> 00:06:06,400
Speaker 1: that we're seeing, that of course the policymakers take credit

106
00:06:06,480 --> 00:06:10,200
Speaker 1: for it is probably mostly accounted for by this population growth,

107
00:06:10,760 --> 00:06:13,080
Speaker 1: so which I don't think they have a whole lot

108
00:06:13,120 --> 00:06:16,080
Speaker 1: of impact on. So there's there's really not had a

109
00:06:16,200 --> 00:06:18,719
Speaker 1: lot happening. And you know, today or tomorrow, the FA

110
00:06:18,839 --> 00:06:21,080
Speaker 1: is going to tell us that, you know, the economy

111
00:06:21,160 --> 00:06:24,400
Speaker 1: is too weak in their opinion, to raise rates the

112
00:06:24,480 --> 00:06:28,400
Speaker 1: whole point. And that's not a good sign. Bill. What

113
00:06:28,480 --> 00:06:30,599
Speaker 1: I love about your report is like on page twenty

114
00:06:30,680 --> 00:06:32,800
Speaker 1: four you and everybody just goes small business, thumb up,

115
00:06:32,839 --> 00:06:36,840
Speaker 1: thumb down. You have a spectacular chart of the lack

116
00:06:36,960 --> 00:06:40,279
Speaker 1: of loan demand. Now, I am certain you didn't study

117
00:06:40,360 --> 00:06:44,480
Speaker 1: negative interest rates in Michigan a million years ago. Nobody

118
00:06:44,480 --> 00:06:48,320
Speaker 1: even knew how to spell negative. But tell me about

119
00:06:48,600 --> 00:06:52,520
Speaker 1: loan demand in what you hear about small business and

120
00:06:52,640 --> 00:06:56,240
Speaker 1: people they talked to that are called banks. Yeah, and

121
00:06:56,360 --> 00:06:58,240
Speaker 1: I one of those, you know, as you remember, I'm

122
00:06:58,279 --> 00:07:01,120
Speaker 1: the chairman of a little three branch bank in New Jersey,

123
00:07:01,200 --> 00:07:04,400
Speaker 1: and you know, we we have people coming in getting loans,

124
00:07:04,440 --> 00:07:06,320
Speaker 1: but it's pretty weak. And what we see in our

125
00:07:06,440 --> 00:07:09,440
Speaker 1: survey of our three or fifty thousand members that indeed,

126
00:07:09,920 --> 00:07:14,960
Speaker 1: uh you know, fifty two fifty every month tell us

127
00:07:15,000 --> 00:07:17,280
Speaker 1: they have no interest in loan and that's fifteen ten,

128
00:07:17,400 --> 00:07:21,520
Speaker 1: fifteen percentage points higher than a normal than a normal time.

129
00:07:21,600 --> 00:07:23,880
Speaker 1: So we've got a lot of people sitting on the sidelines,

130
00:07:24,480 --> 00:07:27,920
Speaker 1: uncertain about where the economy is going to go, and

131
00:07:28,000 --> 00:07:31,240
Speaker 1: therefore unwilling to borrow money to of course, you have

132
00:07:31,320 --> 00:07:32,880
Speaker 1: to borrow money, you put it to work, you have

133
00:07:33,040 --> 00:07:35,320
Speaker 1: to put it into your business. And they don't see

134
00:07:35,320 --> 00:07:37,960
Speaker 1: the opportunity there, so they're not doing it. If you

135
00:07:38,000 --> 00:07:40,440
Speaker 1: look at the flow funds numbers that just came out,

136
00:07:40,560 --> 00:07:44,000
Speaker 1: you'll see that that most of all of the growth

137
00:07:44,040 --> 00:07:47,040
Speaker 1: and credit has been on bonds and and most of

138
00:07:47,120 --> 00:07:50,640
Speaker 1: the credits gone to big firms into government, and it

139
00:07:50,760 --> 00:07:53,920
Speaker 1: hasn't gone to the small business sector or to consumers.

140
00:07:54,040 --> 00:07:57,320
Speaker 1: So we're not taking a lot of credit down. But

141
00:07:57,440 --> 00:08:00,760
Speaker 1: it's not because we can't get it because we don't

142
00:08:00,800 --> 00:08:03,920
Speaker 1: see any use for it. You know, pretty soon, making

143
00:08:03,920 --> 00:08:06,280
Speaker 1: at these negative interest rate talks, pretty soon you're going

144
00:08:06,320 --> 00:08:09,240
Speaker 1: to be paying a premium to buy a five euro note.

145
00:08:10,160 --> 00:08:14,520
Speaker 1: They'll they'll have negative interest rates. Your small businessman, as

146
00:08:14,960 --> 00:08:18,560
Speaker 1: you note, you've got three branches for your small bank

147
00:08:18,880 --> 00:08:23,400
Speaker 1: Liberty State Bank. Um, why not build a fourth? Uh?

148
00:08:23,720 --> 00:08:26,000
Speaker 1: You're you're not going to get people to deposit money

149
00:08:26,240 --> 00:08:28,440
Speaker 1: at your fourth branch unless you build that fourth branch.

150
00:08:28,520 --> 00:08:30,160
Speaker 1: What's it going to In other words, what I'm getting

151
00:08:30,200 --> 00:08:32,559
Speaker 1: at is, as a small business person who doesn't want

152
00:08:32,559 --> 00:08:34,839
Speaker 1: to borrow to expand, what's it going to take to

153
00:08:34,920 --> 00:08:38,640
Speaker 1: get you to do that? Yeah? Well, having having closed

154
00:08:38,760 --> 00:08:42,280
Speaker 1: my fourth branch uh and and going down to three,

155
00:08:42,640 --> 00:08:44,480
Speaker 1: you know it takes it will take a lot more.

156
00:08:45,320 --> 00:08:49,199
Speaker 1: Both in the economy. Our problem was that the that

157
00:08:49,360 --> 00:08:54,040
Speaker 1: the having the branch to collect savings was much more expensive,

158
00:08:54,559 --> 00:08:58,480
Speaker 1: you know, than than than getting the money from someplace

159
00:08:58,559 --> 00:09:01,120
Speaker 1: else like CDs. With interest rate so low, you know,

160
00:09:01,280 --> 00:09:03,800
Speaker 1: the overhead costs of a branch to collect the positives

161
00:09:03,960 --> 00:09:08,280
Speaker 1: very high. Um. So what used to be a good, good,

162
00:09:08,520 --> 00:09:11,439
Speaker 1: good cheap money two and a half three all in

163
00:09:11,720 --> 00:09:13,839
Speaker 1: for a branch. You know, there's no way. It is

164
00:09:13,880 --> 00:09:16,560
Speaker 1: way too expensive and loans are being made at three

165
00:09:16,600 --> 00:09:19,439
Speaker 1: and a half percent. And so that's the difficulty that

166
00:09:19,559 --> 00:09:21,400
Speaker 1: we say, so you know, we have to have a

167
00:09:21,480 --> 00:09:24,800
Speaker 1: lot more business or we're not gonna be interested in

168
00:09:24,920 --> 00:09:28,640
Speaker 1: doing that. The small business people, do they pay benefits?

169
00:09:29,280 --> 00:09:33,040
Speaker 1: Maybe not in your survey, but within your research. Is

170
00:09:33,120 --> 00:09:36,960
Speaker 1: it just wages or are they actually picking up benefits

171
00:09:37,200 --> 00:09:39,719
Speaker 1: equivalent to this, say the e c I Index that

172
00:09:39,840 --> 00:09:42,600
Speaker 1: big nas, lots of them pay, lots of them pay benefits.

173
00:09:43,920 --> 00:09:46,839
Speaker 1: We've got an ongoing panel studying the impact, of course

174
00:09:46,960 --> 00:09:51,160
Speaker 1: of of Obamacare on the offering of the healthcare benefits

175
00:09:51,200 --> 00:09:55,400
Speaker 1: in particular of so, yes, we pay a lot of benefits,

176
00:09:55,440 --> 00:09:57,480
Speaker 1: and we provide you know, the family leave and all

177
00:09:57,520 --> 00:10:01,440
Speaker 1: that other kind of stuff of and that's that's going

178
00:10:01,559 --> 00:10:04,199
Speaker 1: up in costs as you've as you well know, so

179
00:10:04,640 --> 00:10:09,360
Speaker 1: all the benefit costs are are certainly rising by mandate. Uh.

180
00:10:09,480 --> 00:10:12,240
Speaker 1: And of course if you're trying to provide healthcare for

181
00:10:12,880 --> 00:10:17,240
Speaker 1: your employees, why that's getting expensive as well. And so

182
00:10:17,920 --> 00:10:21,360
Speaker 1: those benefits aren't rising and uh. And so I think

183
00:10:21,360 --> 00:10:24,640
Speaker 1: a lot of them the who say they raised work

184
00:10:24,720 --> 00:10:27,520
Speaker 1: or cop are talking about the benefit piece rather than

185
00:10:27,559 --> 00:10:30,640
Speaker 1: to take home wage piece. Bill Dunkleberg, thank you so much.

186
00:10:31,320 --> 00:10:35,600
Speaker 1: I guess a thumb up on small business optimism within

187
00:10:35,720 --> 00:10:38,320
Speaker 1: it is sort of what Janet Yellen is talking about tomorrow, Mike,

188
00:10:38,440 --> 00:10:42,559
Speaker 1: isn't she well the bill, Bill put his finger on

189
00:10:42,640 --> 00:10:45,160
Speaker 1: it when he said, um. The question is why is

190
00:10:45,200 --> 00:10:48,240
Speaker 1: it the economy? Is the e commy two weak for

191
00:10:48,360 --> 00:10:51,600
Speaker 1: Janet Ellen to raise rates or are they just too uncertain?

192
00:10:51,640 --> 00:10:55,720
Speaker 1: I think it's a new terminal value. Culturally, we're hardwired

193
00:10:55,800 --> 00:10:58,920
Speaker 1: from warning in America in three percent plus g d

194
00:10:59,080 --> 00:11:03,240
Speaker 1: P and as mister Dunkerbergers said, maybe not gloom, but

195
00:11:03,440 --> 00:11:08,199
Speaker 1: we're stuck somewhere in the middle. Scarlet Fruit Michael McKee

196
00:11:08,240 --> 00:11:11,960
Speaker 1: and tom Key Tomorrow one p m our special Fed

197
00:11:12,080 --> 00:11:12,560
Speaker 1: coverage