1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's the power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:26,400 Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:26,440 --> 00:00:29,920 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:29,960 --> 00:00:34,800 Speaker 1: insight from the best of economics, finance, investment, and international relations. 7 00:00:35,240 --> 00:00:40,760 Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, 8 00:00:40,800 --> 00:00:48,120 Speaker 1: and of course on the Bloomberg. Joining us now in 9 00:00:48,159 --> 00:00:50,599 Speaker 1: Paris is Jean flu Crich. He doesn't really need much 10 00:00:50,600 --> 00:00:53,920 Speaker 1: of an introduction. Former ECP President and honorary chairman of 11 00:00:54,120 --> 00:00:56,480 Speaker 1: the Group of Thirty. Also with us in New York 12 00:00:56,800 --> 00:01:00,000 Speaker 1: is Villain Bout, Chief Economist of City, Mr Triche, Well, 13 00:01:00,000 --> 00:01:02,560 Speaker 1: come to the program. Thank you so much for coming on. 14 00:01:03,160 --> 00:01:05,840 Speaker 1: Let's assume that the polls are right. Let's assume that 15 00:01:05,959 --> 00:01:09,640 Speaker 1: so we get something like six for President mccron on Sunday. 16 00:01:09,959 --> 00:01:13,280 Speaker 1: What happened next? What kind of message does the President 17 00:01:13,400 --> 00:01:17,280 Speaker 1: mccorn give to France and Europe. I think, first of all, 18 00:01:17,680 --> 00:01:21,000 Speaker 1: we have to wait for the election. As Mr mccorn 19 00:01:21,040 --> 00:01:25,000 Speaker 1: said himself. Of course it's never done in advance. It's 20 00:01:25,000 --> 00:01:29,800 Speaker 1: not a dumb deal. The polls are very positive and 21 00:01:30,200 --> 00:01:35,440 Speaker 1: I think really that Macon will have probably a very 22 00:01:35,480 --> 00:01:39,240 Speaker 1: powerful mandate to reform the country because it was his own, 23 00:01:39,400 --> 00:01:44,320 Speaker 1: you know view, since he started to engage in politics. 24 00:01:44,720 --> 00:01:47,120 Speaker 1: But fancy that it's a man who was not known 25 00:01:47,360 --> 00:01:49,840 Speaker 1: by the French only two years and a half ago 26 00:01:50,440 --> 00:01:55,880 Speaker 1: and is perhaps the next future president and perhaps we'll 27 00:01:55,920 --> 00:01:59,600 Speaker 1: have a majority according to certain survey and poles that 28 00:01:59,680 --> 00:02:03,280 Speaker 1: we have on the parliamentary election. It is absolutely clear 29 00:02:03,320 --> 00:02:07,680 Speaker 1: that if he has this togument date, he will have 30 00:02:07,800 --> 00:02:10,440 Speaker 1: a majority in the parliament in my view, and then 31 00:02:10,480 --> 00:02:14,160 Speaker 1: of course all kinds of reforms that are overdue in 32 00:02:14,240 --> 00:02:17,760 Speaker 1: France could start. So we'll talk about deficits and budget 33 00:02:17,800 --> 00:02:20,320 Speaker 1: fiscal rules in a second. But why do the French 34 00:02:20,400 --> 00:02:24,079 Speaker 1: not recognize themselves anymore in the old parties in the 35 00:02:24,440 --> 00:02:29,519 Speaker 1: classic right versus left, or they have they become too centrists. 36 00:02:30,800 --> 00:02:38,560 Speaker 1: Well again, the damage that a large deal of public 37 00:02:38,600 --> 00:02:42,680 Speaker 1: spendings on top of the average of the G seven countries, 38 00:02:42,919 --> 00:02:45,600 Speaker 1: on top of the average of the European countries, is 39 00:02:45,760 --> 00:02:50,160 Speaker 1: something which is not considered by a lot of of 40 00:02:50,200 --> 00:02:55,160 Speaker 1: political parties as absolutely negative for friends and for job creation. 41 00:02:55,720 --> 00:03:00,480 Speaker 1: So the debate which we had but between mc and 42 00:03:00,720 --> 00:03:04,679 Speaker 1: marian lpen showed very clearly that Macron was attached to 43 00:03:04,919 --> 00:03:09,720 Speaker 1: sound policies, was attached to finance everything that would be spent, 44 00:03:10,200 --> 00:03:13,919 Speaker 1: and was certainly with the intention of respecting the rules. 45 00:03:14,400 --> 00:03:17,399 Speaker 1: And I trust that it is something which is very important. 46 00:03:17,880 --> 00:03:20,840 Speaker 1: Mr Uche, good morning from New York. As we look 47 00:03:20,919 --> 00:03:24,160 Speaker 1: at this sea change and the culture, the generational change 48 00:03:24,560 --> 00:03:27,600 Speaker 1: in France, can we get a France that's a little 49 00:03:27,600 --> 00:03:32,480 Speaker 1: more fiscally responsible? You and Mr Deutsenberg and ECB had 50 00:03:32,480 --> 00:03:35,720 Speaker 1: to worry about a France that would spend too much money, 51 00:03:35,720 --> 00:03:38,520 Speaker 1: where the government was too big, too big for all 52 00:03:38,600 --> 00:03:43,040 Speaker 1: of France. Can they get more responsible with the President mccron, 53 00:03:43,680 --> 00:03:45,839 Speaker 1: I think so. Frankly speaking, it's a pleasure, of course 54 00:03:45,880 --> 00:03:48,840 Speaker 1: to it to talk to you, I really think so. 55 00:03:49,040 --> 00:03:53,480 Speaker 1: I think that the message that Macon gave was that 56 00:03:53,560 --> 00:03:57,320 Speaker 1: we have to respect the rules. Of course, he's Cody 57 00:03:57,360 --> 00:04:00,200 Speaker 1: Molso for reform, and I think he's right. It's link 58 00:04:00,240 --> 00:04:02,520 Speaker 1: for a Ministo of finance of the AU area. I 59 00:04:02,640 --> 00:04:05,560 Speaker 1: myself and in full agreement with that is coding for 60 00:04:07,080 --> 00:04:11,280 Speaker 1: new reforms as regards also the budget of the euro 61 00:04:11,400 --> 00:04:15,240 Speaker 1: Area that would be created. But respecting the rule, we 62 00:04:15,280 --> 00:04:18,080 Speaker 1: have the stability and both back and it is important 63 00:04:18,120 --> 00:04:23,760 Speaker 1: of course that France applies in his own interests. It 64 00:04:23,920 --> 00:04:28,160 Speaker 1: is not a question of you know, pleasing partners. It's 65 00:04:28,200 --> 00:04:31,160 Speaker 1: a question of being sure that we do all what 66 00:04:31,240 --> 00:04:35,720 Speaker 1: we can to create jobs and and grow. And I 67 00:04:35,760 --> 00:04:40,719 Speaker 1: think that we can be reasonably confident that there has 68 00:04:40,760 --> 00:04:45,159 Speaker 1: been a change in the overall position of public opinion 69 00:04:45,200 --> 00:04:48,239 Speaker 1: in France. But we will see, and nothing is done yet. 70 00:04:48,760 --> 00:04:52,919 Speaker 1: What can we do about a better trade policy for France, 71 00:04:53,000 --> 00:04:56,039 Speaker 1: not only trade with the rest of the continent, but 72 00:04:56,160 --> 00:04:58,400 Speaker 1: trade with the rest of the world, and even I 73 00:04:58,480 --> 00:05:01,240 Speaker 1: may suggest trade with the United in Kingdom. What can 74 00:05:01,279 --> 00:05:06,840 Speaker 1: be a new trade policy for France? Well, as you know, 75 00:05:06,960 --> 00:05:13,080 Speaker 1: the trade policy is influenced by each particular government, of course, 76 00:05:13,120 --> 00:05:16,000 Speaker 1: but is done at the level of the Single Market 77 00:05:16,160 --> 00:05:19,679 Speaker 1: and of the Area and of course the European Union 78 00:05:19,720 --> 00:05:23,359 Speaker 1: as a whole. So from that standpoint, I expect France 79 00:05:23,760 --> 00:05:28,000 Speaker 1: to be open, of course, as was said very very clearly, 80 00:05:28,400 --> 00:05:31,880 Speaker 1: to global trade, and of course you open trade that 81 00:05:31,960 --> 00:05:36,320 Speaker 1: being said, of course, with the appropriate influence for the 82 00:05:36,440 --> 00:05:39,880 Speaker 1: deals to be fair. And it is clearly what what 83 00:05:40,000 --> 00:05:43,760 Speaker 1: has been said. It seems to me very very openly 84 00:05:43,880 --> 00:05:47,919 Speaker 1: and frankly in particular in the debate but also in 85 00:05:48,000 --> 00:05:52,760 Speaker 1: the various declaration of the candidate paper. Right, the reforms 86 00:05:52,760 --> 00:05:56,080 Speaker 1: are strong. But what has changed since alone promised the 87 00:05:56,120 --> 00:05:59,799 Speaker 1: same fiscal rule changes back in is you're really ready 88 00:05:59,839 --> 00:06:02,200 Speaker 1: to sit down at the table and say, you know, 89 00:06:02,279 --> 00:06:04,440 Speaker 1: let's start from scratch and think exactly what we want 90 00:06:04,480 --> 00:06:08,080 Speaker 1: to do on fiscal Well again, we will see exactly 91 00:06:08,440 --> 00:06:11,240 Speaker 1: what is the policy of the new president and of 92 00:06:11,279 --> 00:06:14,000 Speaker 1: the new government, because we will leve also a government, 93 00:06:14,000 --> 00:06:16,039 Speaker 1: so a lot of things have to be done. What 94 00:06:16,279 --> 00:06:19,480 Speaker 1: is clear is that there is a very very powerful 95 00:06:19,640 --> 00:06:24,080 Speaker 1: will on the side of the new possible French government 96 00:06:24,080 --> 00:06:27,080 Speaker 1: and president, and on the side of the German partners 97 00:06:27,160 --> 00:06:30,720 Speaker 1: also and the other partners in Europe to discuss and 98 00:06:30,960 --> 00:06:34,919 Speaker 1: not to discuss our need to settle the present, but 99 00:06:35,080 --> 00:06:37,440 Speaker 1: also to have a view of the future and of 100 00:06:37,560 --> 00:06:40,360 Speaker 1: the reform that are at stake and of the new 101 00:06:40,440 --> 00:06:43,760 Speaker 1: course of action for Europe as a whole. So from 102 00:06:43,800 --> 00:06:47,400 Speaker 1: that standpoint, I think that we are in circumstances that 103 00:06:47,440 --> 00:06:50,600 Speaker 1: are probably the best since quite a long period of time, 104 00:06:50,839 --> 00:06:53,719 Speaker 1: because you remember at the very beginning of the Alarmed 105 00:06:54,080 --> 00:06:59,000 Speaker 1: Mandate there was not not such a close relationship potentially 106 00:06:59,040 --> 00:07:02,280 Speaker 1: close relationship beween Germany and France and the other partners. Well, 107 00:07:02,360 --> 00:07:04,359 Speaker 1: let me bring in our partner from the Netherlands with 108 00:07:04,480 --> 00:07:08,520 Speaker 1: us Jan Clauche today, Folks is Villain Pouder. He is 109 00:07:08,560 --> 00:07:10,840 Speaker 1: professor of the London School of Economics and the course 110 00:07:10,880 --> 00:07:14,200 Speaker 1: head of all economics at City Group. Professor. Question from 111 00:07:14,280 --> 00:07:19,880 Speaker 1: Mr Trichet, Please yes, Tricia, France still spends well over 112 00:07:20,040 --> 00:07:24,800 Speaker 1: fifty GDP in the public sector. With all the talk 113 00:07:24,840 --> 00:07:28,440 Speaker 1: about pension former Raby market reform, that number has to 114 00:07:28,520 --> 00:07:33,200 Speaker 1: get much closer to for France to become a dynamic economy. 115 00:07:33,360 --> 00:07:35,680 Speaker 1: Do you see any chance that there will be a 116 00:07:35,680 --> 00:07:39,360 Speaker 1: coalition in France that will not be frustrated by the 117 00:07:39,400 --> 00:07:43,560 Speaker 1: losers of such a drastic reduction desized the public sector. 118 00:07:44,040 --> 00:07:47,840 Speaker 1: Is there any hope that the France will not look 119 00:07:47,920 --> 00:07:50,720 Speaker 1: like Scandinavia and the public spending but more like the 120 00:07:50,720 --> 00:07:55,160 Speaker 1: Euro Area average. Well, we again, I think that you're 121 00:07:55,200 --> 00:07:58,920 Speaker 1: absolutely right. This is one of the dimension of reform 122 00:07:58,960 --> 00:08:01,840 Speaker 1: which is very important. Diminished the public spendings and the 123 00:08:01,840 --> 00:08:05,320 Speaker 1: proportion of GDP, which are much higher than the average. 124 00:08:05,800 --> 00:08:09,000 Speaker 1: And second we have also these structural reforms and the 125 00:08:09,080 --> 00:08:13,840 Speaker 1: liberal market appropriate reform, and we also have the cost 126 00:08:13,880 --> 00:08:16,640 Speaker 1: competitiveness of the country, of course, of the economy. But 127 00:08:16,760 --> 00:08:20,280 Speaker 1: on the first point, I think that this idea that 128 00:08:20,360 --> 00:08:24,120 Speaker 1: it is of course a progressive march in the direction 129 00:08:24,240 --> 00:08:28,280 Speaker 1: of diminishing public spendings and the proportion of GDP, as Sweden, 130 00:08:28,680 --> 00:08:32,360 Speaker 1: for instance, did a number of countries proved that it 131 00:08:32,440 --> 00:08:35,920 Speaker 1: was possible. Of course, it cannot be done overnight. But 132 00:08:36,080 --> 00:08:42,120 Speaker 1: the winners in such an orientation are the unemployed, because 133 00:08:42,240 --> 00:08:45,560 Speaker 1: it's absolutely clear that the weight of this uh public 134 00:08:45,600 --> 00:08:50,160 Speaker 1: spendings is much too high and hamper the appropriate competitiveness 135 00:08:50,160 --> 00:08:52,840 Speaker 1: of the economy. So the winners will be the unemployed, 136 00:08:53,480 --> 00:08:57,480 Speaker 1: young people and also all the unemployed in France. Thank 137 00:08:57,480 --> 00:09:00,560 Speaker 1: you so much for now the former recently Prince angel 138 00:09:00,640 --> 00:09:17,000 Speaker 1: and Bowker, Bloomberg, Surveillance, David Gerr and Tom Keene. Of course, 139 00:09:17,080 --> 00:09:19,720 Speaker 1: much to talk about here. Jim Glassman and Bill gross 140 00:09:19,720 --> 00:09:22,719 Speaker 1: will join us, and always Alan Krueger joins us from 141 00:09:22,760 --> 00:09:26,439 Speaker 1: Princeton University, and Alan, we must take a moment on 142 00:09:26,520 --> 00:09:29,800 Speaker 1: the passing UH in the last day. The death of 143 00:09:30,120 --> 00:09:36,400 Speaker 1: William Bauma of Princeton University absolutely definitive, the giant of 144 00:09:36,520 --> 00:09:41,000 Speaker 1: what I would call entrepreneurial economics. His book, his textbook 145 00:09:41,040 --> 00:09:45,839 Speaker 1: with Alan Blinder, is truly classic. Uh. What did he 146 00:09:46,000 --> 00:09:50,240 Speaker 1: mean for the students of Princeton University. I was mesmerized 147 00:09:50,600 --> 00:09:54,559 Speaker 1: at how gentle and yet how distinct in assertive his 148 00:09:54,720 --> 00:09:59,200 Speaker 1: lecturing was well. Obama was a giant in the field 149 00:09:59,240 --> 00:10:02,719 Speaker 1: of economics, and he was truly a renaissance man. He 150 00:10:02,840 --> 00:10:06,599 Speaker 1: was five years old. He moved at the end of 151 00:10:06,679 --> 00:10:08,959 Speaker 1: his career from Princeton to n y U. So it's 152 00:10:09,000 --> 00:10:13,599 Speaker 1: more a loss for the Yuan. That's true for n 153 00:10:13,720 --> 00:10:17,439 Speaker 1: y U. But he is forever associated with your in. 154 00:10:19,120 --> 00:10:22,040 Speaker 1: He was Uh. He was at Princeton forty two years. 155 00:10:22,320 --> 00:10:26,319 Speaker 1: I interviewed him tom in two thousand one UM in 156 00:10:26,400 --> 00:10:29,520 Speaker 1: the Journal of Economic Perspectives, which I tweeted out yesterday 157 00:10:29,679 --> 00:10:31,400 Speaker 1: in case people wanted to read. He was truly a 158 00:10:31,440 --> 00:10:36,160 Speaker 1: remarkable man, remarkable career, made lasting contributions to economics. I 159 00:10:36,320 --> 00:10:39,199 Speaker 1: was inspired by his words. A humility was wonderful. He 160 00:10:39,360 --> 00:10:42,400 Speaker 1: was a master student at LSC and Lionel Robbins. I 161 00:10:42,480 --> 00:10:44,720 Speaker 1: believe I may be wrong in this, but I believe 162 00:10:44,760 --> 00:10:48,840 Speaker 1: the story is Robbins, the giant of Elisi, personally intervened 163 00:10:49,120 --> 00:10:52,240 Speaker 1: to make him a PhD candidate. He was so good 164 00:10:52,440 --> 00:10:56,400 Speaker 1: at speaking well. In this interview he told that story 165 00:10:56,440 --> 00:10:58,559 Speaker 1: where he first applied and they had never heard of 166 00:10:58,600 --> 00:11:01,120 Speaker 1: City College. So he was turned down, and he applied 167 00:11:01,120 --> 00:11:03,520 Speaker 1: a second time and Ladle Robbins intervened. He said, this 168 00:11:03,600 --> 00:11:05,559 Speaker 1: man really wants to come here, and the end of 169 00:11:05,640 --> 00:11:07,959 Speaker 1: three weeks they had him joined the faculty. Yeah. I 170 00:11:08,040 --> 00:11:11,200 Speaker 1: mean that was the giant sense of it. His spirit 171 00:11:11,280 --> 00:11:13,000 Speaker 1: to me, and there's so many things, but almost cost 172 00:11:13,080 --> 00:11:16,480 Speaker 1: disease and the rest of it, and works Tobin and others. 173 00:11:16,600 --> 00:11:21,240 Speaker 1: To me, it was his fearlessness about don't forget the entrepreneur, 174 00:11:21,600 --> 00:11:25,000 Speaker 1: which dovetails into your work on labor economics. How did 175 00:11:25,040 --> 00:11:30,400 Speaker 1: he describe where the entrepreneur fits in to price and firm? Well, 176 00:11:30,720 --> 00:11:34,400 Speaker 1: his contributions and industrial organization, I think we're quite significant. 177 00:11:34,760 --> 00:11:36,920 Speaker 1: The work he did on contestable markets where you have 178 00:11:37,000 --> 00:11:41,120 Speaker 1: a natural monopoly, yet you still want government regulation so 179 00:11:41,240 --> 00:11:44,840 Speaker 1: that you have the degree of competition that's optimal um 180 00:11:45,320 --> 00:11:50,440 Speaker 1: and that enabled I think many many firms to develop 181 00:11:50,520 --> 00:11:54,000 Speaker 1: new technology because often the technology was the barrier to entry. 182 00:11:54,840 --> 00:11:57,800 Speaker 1: He worked on ways for firms to collaborate on R 183 00:11:57,880 --> 00:12:04,199 Speaker 1: and D without colluding, uh to um monopolize the market. UM. So, 184 00:12:04,360 --> 00:12:07,400 Speaker 1: I think every American is benefiting from the work that 185 00:12:07,520 --> 00:12:10,520 Speaker 1: he did. The work he did on cost disease, which 186 00:12:10,520 --> 00:12:12,800 Speaker 1: you mentioned is relevant today for healthcare reform. You know 187 00:12:12,920 --> 00:12:15,400 Speaker 1: he was involved in in the mid nineties and the 188 00:12:15,440 --> 00:12:18,760 Speaker 1: Clinton health care effort, and he explained that the reason 189 00:12:18,800 --> 00:12:21,280 Speaker 1: why healthcare costs are growing so quickly is that there's 190 00:12:21,320 --> 00:12:25,679 Speaker 1: been faster productivity growth outside of healthcare. UH. And when 191 00:12:25,760 --> 00:12:28,439 Speaker 1: impact of his model or implication of his model is 192 00:12:28,480 --> 00:12:30,760 Speaker 1: that the government services that are provided, which tend to 193 00:12:30,800 --> 00:12:33,240 Speaker 1: have slower productivity growth, are going to become more costly 194 00:12:33,320 --> 00:12:38,079 Speaker 1: over time. William Bauma did, of course speak soon to 195 00:12:38,200 --> 00:12:41,679 Speaker 1: Alan Blinder of Princeton, who was so associated with a 196 00:12:41,800 --> 00:12:46,400 Speaker 1: professor Obama's effort and education Alan Krueger very quickly here 197 00:12:46,679 --> 00:12:51,480 Speaker 1: Obamacare trump Care. Does it matter to our listeners? Well, 198 00:12:51,520 --> 00:12:54,240 Speaker 1: I think it matters to all Americans. Certainly matters to 199 00:12:54,320 --> 00:12:56,959 Speaker 1: the twenty four million Americans who would lose their health 200 00:12:57,040 --> 00:12:59,800 Speaker 1: insurance under the bill that passed the House yesterday. But 201 00:12:59,880 --> 00:13:02,480 Speaker 1: it matters, uh to everyone else, because it will affect 202 00:13:02,520 --> 00:13:06,160 Speaker 1: our costs um And you know, the estimates are for 203 00:13:06,480 --> 00:13:09,160 Speaker 1: a large number of Americans the net cost of health 204 00:13:09,200 --> 00:13:11,719 Speaker 1: insurance would be situately higher under this bill. Do you 205 00:13:11,800 --> 00:13:14,520 Speaker 1: presume on first blush that the CBO scoring will be 206 00:13:14,640 --> 00:13:18,440 Speaker 1: remarkably like the previous CBO scoring. I don't see how 207 00:13:18,480 --> 00:13:20,280 Speaker 1: it could be all that different, and what I understand 208 00:13:20,320 --> 00:13:23,079 Speaker 1: that the bill they're quite similar. Yeah, let's come back 209 00:13:23,120 --> 00:13:25,000 Speaker 1: Alan Krueger with us. Thank you so much for those 210 00:13:25,040 --> 00:13:28,920 Speaker 1: comments on Professor Bama. That's one of those special things 211 00:13:28,960 --> 00:13:32,440 Speaker 1: about surveillance, folks, is our guest quality is so good 212 00:13:32,480 --> 00:13:37,000 Speaker 1: that when someone dies within the realm of economics, financial investment, 213 00:13:37,040 --> 00:13:39,839 Speaker 1: it's amazing the perspective we hope to deliver to you 214 00:13:39,920 --> 00:13:43,240 Speaker 1: when we hear uh this news. If you have kids, 215 00:13:43,600 --> 00:13:46,400 Speaker 1: this is the most important conversation of the day. Alan 216 00:13:46,440 --> 00:13:50,319 Speaker 1: Krueger is at Princeton University and he has been eclectic 217 00:13:50,440 --> 00:13:54,000 Speaker 1: writing on terrorism, has acclaim with David Carter on the 218 00:13:54,080 --> 00:13:57,160 Speaker 1: minimum wage, and Professor Krueger. Here's a single sentence. I 219 00:13:57,280 --> 00:13:59,920 Speaker 1: take it from Jeff go over to the Washington Poe 220 00:14:00,160 --> 00:14:05,160 Speaker 1: Professor Krueger finds of male prime age labor force dropouts 221 00:14:05,559 --> 00:14:08,800 Speaker 1: say they took pain medication the day prior. Your work 222 00:14:08,880 --> 00:14:11,839 Speaker 1: on opioid is not a lot of political broather. It 223 00:14:12,000 --> 00:14:16,239 Speaker 1: is careful and accurate analysis of the drugs and dropouts 224 00:14:16,559 --> 00:14:20,040 Speaker 1: in America. What's the policy prescription to get us away 225 00:14:20,120 --> 00:14:23,760 Speaker 1: from heroin and the opioids that are destroying so much, 226 00:14:23,840 --> 00:14:27,720 Speaker 1: particularly of the Midwest. First of all, I think I 227 00:14:27,800 --> 00:14:29,920 Speaker 1: might use that as a title for a paper that 228 00:14:30,000 --> 00:14:34,840 Speaker 1: I'm writing, Dropouts. We'll take the surveillance royalty from that place. 229 00:14:35,880 --> 00:14:39,800 Speaker 1: Brookings will hand that right over to you. Um. You know, 230 00:14:39,880 --> 00:14:42,120 Speaker 1: there's not an easy answer. There are I think many 231 00:14:42,160 --> 00:14:45,120 Speaker 1: components the answer. The first is to prevent the problem 232 00:14:45,160 --> 00:14:47,600 Speaker 1: in the first place. And if we could keep people 233 00:14:47,600 --> 00:14:49,560 Speaker 1: in the labor force, that we can keep them engaged. 234 00:14:49,640 --> 00:14:51,720 Speaker 1: If we can keep the unemployed searching for a job, 235 00:14:51,800 --> 00:14:54,760 Speaker 1: If we can help those who are on the margins 236 00:14:54,760 --> 00:14:57,320 Speaker 1: of the labor market to even volunteer so that they 237 00:14:57,840 --> 00:15:01,480 Speaker 1: are learning new skills and staying engaged than networking, I 238 00:15:01,560 --> 00:15:04,560 Speaker 1: think that's one important step to prevent the problem from 239 00:15:04,600 --> 00:15:08,400 Speaker 1: growing where the problem exists, especially for those who are 240 00:15:08,400 --> 00:15:13,400 Speaker 1: on disability insurance and receiving medicare. Something like forty of 241 00:15:13,560 --> 00:15:16,640 Speaker 1: them receive opioid prescriptions during the course of the year. 242 00:15:17,440 --> 00:15:19,600 Speaker 1: I think we need to use rehabilitation, we need to 243 00:15:19,680 --> 00:15:23,280 Speaker 1: use treatment, We need physical therapy. But the jobs do 244 00:15:23,600 --> 00:15:26,840 Speaker 1: you have in your history going to Lynden, Lyndon, Maines, Johnson, 245 00:15:27,400 --> 00:15:30,800 Speaker 1: frank and Dolor, Roosevelt and others. Is there a incentive 246 00:15:30,880 --> 00:15:37,160 Speaker 1: prescription to create investment for lower education goods producing jobs 247 00:15:37,440 --> 00:15:39,840 Speaker 1: in America. They're not going to go to Princeton. They're 248 00:15:39,880 --> 00:15:43,000 Speaker 1: not gonna work for pick your accounting firm or legal firm. 249 00:15:43,160 --> 00:15:45,360 Speaker 1: They're not going to do radio here in New York. 250 00:15:45,840 --> 00:15:49,080 Speaker 1: Where does that policy prescription come to help people in 251 00:15:49,200 --> 00:15:54,000 Speaker 1: West Virginia, Ohio, Kentucky and westward. This is why it's 252 00:15:54,040 --> 00:15:57,040 Speaker 1: a tragedy. We weren't able to invest more in infrastructure 253 00:15:57,080 --> 00:15:59,440 Speaker 1: in America. We need to rebuild our roads and our 254 00:15:59,480 --> 00:16:02,920 Speaker 1: highways bridges. President Obama tried for eight years to ramp 255 00:16:03,040 --> 00:16:06,720 Speaker 1: up in and I wish him luck and succeeding in 256 00:16:06,760 --> 00:16:08,480 Speaker 1: that because I think that will help our country and 257 00:16:08,560 --> 00:16:12,120 Speaker 1: I think it will improve our competitiveness in the future. 258 00:16:12,240 --> 00:16:15,240 Speaker 1: And just as importantly, help this demographic that you're discussing. 259 00:16:15,840 --> 00:16:17,640 Speaker 1: When you when you look at the field of economics 260 00:16:17,680 --> 00:16:21,480 Speaker 1: and the field of policy today, make a Venn diagram 261 00:16:21,560 --> 00:16:24,080 Speaker 1: of politics and policy, how much crossover is there? Having 262 00:16:24,160 --> 00:16:26,960 Speaker 1: gone through this fight recently here over healthcare reform, you 263 00:16:27,040 --> 00:16:30,160 Speaker 1: talked to doctors, you talk to people in health insurance, 264 00:16:30,160 --> 00:16:33,760 Speaker 1: talk to people at health companies, healthcare companies. There's a 265 00:16:33,800 --> 00:16:36,280 Speaker 1: sense that policy isn't driving it. How do you get 266 00:16:36,320 --> 00:16:38,680 Speaker 1: back to a point where the conversation in Washington is 267 00:16:38,760 --> 00:16:40,880 Speaker 1: less focused on the politics and more on the policy. 268 00:16:41,200 --> 00:16:43,800 Speaker 1: Well today, the overlap in the Venn diagrams is an 269 00:16:43,840 --> 00:16:46,400 Speaker 1: old set. And I once went back and I went 270 00:16:46,440 --> 00:16:48,000 Speaker 1: through all of the issues I worked on when I 271 00:16:48,040 --> 00:16:50,680 Speaker 1: worked for President Obama, and I reviewed what evidence did 272 00:16:50,760 --> 00:16:52,960 Speaker 1: we look at, what type of evidence was it relevant? 273 00:16:53,440 --> 00:16:57,600 Speaker 1: And it was quite an impressive list. The current administration 274 00:16:57,720 --> 00:17:01,200 Speaker 1: seems to be intimidated by experts. Experts aren't always right, 275 00:17:01,240 --> 00:17:03,560 Speaker 1: but I think we do have something to add. I 276 00:17:03,600 --> 00:17:06,840 Speaker 1: think it's unfortunate the way that President Trump has criticized 277 00:17:07,119 --> 00:17:12,560 Speaker 1: federal statistics. The impartial civil servants who toil away earned 278 00:17:12,720 --> 00:17:15,000 Speaker 1: too little. In my view, they're overworked. In my view, 279 00:17:15,359 --> 00:17:18,600 Speaker 1: they do the best job they can. Yet attacking the 280 00:17:18,720 --> 00:17:23,560 Speaker 1: unemployment rate, um other economic measures I think is very 281 00:17:23,640 --> 00:17:29,120 Speaker 1: counterproductive and I think it's uh symbolic of the disdain 282 00:17:29,760 --> 00:17:33,359 Speaker 1: for using evidence and policy development. Thomas a very important 283 00:17:33,400 --> 00:17:35,560 Speaker 1: question about young people and drug addiction. How about just 284 00:17:35,960 --> 00:17:39,320 Speaker 1: stepping back from that more broadly, Uh, you teach you 285 00:17:39,359 --> 00:17:42,160 Speaker 1: to college, you you interact with a lot of young people. 286 00:17:42,160 --> 00:17:44,720 Speaker 1: How does the labor market look for the young men 287 00:17:44,800 --> 00:17:46,600 Speaker 1: and women who will be graduating school here over these 288 00:17:46,640 --> 00:17:49,399 Speaker 1: next few weeks. I think the job market has clearly 289 00:17:49,480 --> 00:17:51,840 Speaker 1: picked up over the last seven years, and I think 290 00:17:51,880 --> 00:17:55,000 Speaker 1: we're seeing many manifestations of that. One is that more 291 00:17:55,080 --> 00:17:57,119 Speaker 1: students are going directly to work instead of on too 292 00:17:57,160 --> 00:18:01,280 Speaker 1: graduate school. Uh. First. For older workers, however, I think 293 00:18:01,280 --> 00:18:04,520 Speaker 1: they're still struggling. And where we're seeing I think, uh 294 00:18:05,240 --> 00:18:09,639 Speaker 1: tremendous difficulty are workers in their fifties early sixties who 295 00:18:09,680 --> 00:18:11,879 Speaker 1: lose a job and they're finding a lot of difficulty 296 00:18:11,920 --> 00:18:15,560 Speaker 1: getting a W two traditional job. And many of them 297 00:18:15,600 --> 00:18:18,680 Speaker 1: are hanging up their own shingle, which can have some benefits, 298 00:18:19,000 --> 00:18:21,879 Speaker 1: but they're not necessarily prepared for being their own boss. 299 00:18:22,640 --> 00:18:25,760 Speaker 1: In hindsight, when you look at tax revenue as a 300 00:18:25,880 --> 00:18:29,159 Speaker 1: percentage GDP. And let's not get carried away. It's the 301 00:18:29,320 --> 00:18:32,800 Speaker 1: chart is clear, folks, it's elevated, but not that much. 302 00:18:33,840 --> 00:18:37,680 Speaker 1: We're taxes raised too much within the era of Obama. 303 00:18:38,200 --> 00:18:41,840 Speaker 1: Could they tweak it a little bit lower? Well, you know, 304 00:18:42,640 --> 00:18:45,359 Speaker 1: I think taxes should be as low as possible, but 305 00:18:46,119 --> 00:18:48,640 Speaker 1: high enough to pay for the services that the public demands. 306 00:18:49,160 --> 00:18:51,440 Speaker 1: And the public demands a lot of services. But trend. 307 00:18:51,520 --> 00:18:54,359 Speaker 1: If I'm a Republican sitting here like the two congressmen 308 00:18:54,400 --> 00:18:57,760 Speaker 1: I interviewed in Washington, the fact of the matter is, Professor, 309 00:18:57,840 --> 00:19:00,720 Speaker 1: we're off trend. We're We're right, we're elevan needed were 310 00:19:01,240 --> 00:19:03,720 Speaker 1: We're certainly not in an outlier position to create to 311 00:19:03,760 --> 00:19:05,920 Speaker 1: our history. And Tom, the proof of the pudding is 312 00:19:05,960 --> 00:19:08,320 Speaker 1: in the economic recovery. You know, people said that the 313 00:19:08,359 --> 00:19:11,240 Speaker 1: tax increases, that Obamacare would destroy jobs. Well what about 314 00:19:11,280 --> 00:19:13,359 Speaker 1: those fifteen and a half million jobs that were created 315 00:19:13,400 --> 00:19:18,399 Speaker 1: over the last taxes to create more jobs? Saying I 316 00:19:18,600 --> 00:19:21,160 Speaker 1: get get Mike, can you get Mike red Hat please 317 00:19:21,280 --> 00:19:23,480 Speaker 1: bring it in here, you know. But by the way, Tom, 318 00:19:23,520 --> 00:19:25,640 Speaker 1: I fought for years for corporate tax reform. I think 319 00:19:25,680 --> 00:19:28,879 Speaker 1: our corporate tax system is very uh inefficient. So can 320 00:19:28,960 --> 00:19:31,960 Speaker 1: we say that Krueger and Trump are on common ground here? Well, 321 00:19:32,200 --> 00:19:33,920 Speaker 1: I think we're in common around and that we say 322 00:19:33,960 --> 00:19:36,119 Speaker 1: that we should have corporate tax reform. Now, the nature 323 00:19:36,160 --> 00:19:38,200 Speaker 1: of the reform is a bit different, and I think 324 00:19:38,240 --> 00:19:42,280 Speaker 1: we can reform our system and remain revenue neutral. What 325 00:19:42,400 --> 00:19:45,080 Speaker 1: did you make of the one pager, as it's called, 326 00:19:45,160 --> 00:19:48,520 Speaker 1: the White House handed out after a hundred days in office, 327 00:19:48,600 --> 00:19:51,440 Speaker 1: the plan the principles for tax reform. Uh. You know, 328 00:19:51,520 --> 00:19:54,040 Speaker 1: you say there's this commonality of you and the administration 329 00:19:54,080 --> 00:19:55,760 Speaker 1: being in favor of corporate taxes from did you see 330 00:19:55,760 --> 00:19:58,639 Speaker 1: anything in the detail? I'm not gonna say it with 331 00:19:58,680 --> 00:20:01,840 Speaker 1: granular detail in the detail that sheet where you think 332 00:20:01,920 --> 00:20:04,520 Speaker 1: that the administration has head in the right direction? Look, 333 00:20:04,600 --> 00:20:07,040 Speaker 1: that was rushed out, and I felt sorry for the 334 00:20:07,600 --> 00:20:13,480 Speaker 1: professional career employees at the Treasury Department. Um, it's not 335 00:20:13,640 --> 00:20:16,760 Speaker 1: the type of work product they're accustomed to producing. UM. 336 00:20:17,280 --> 00:20:20,200 Speaker 1: I think, Uh, the idea of lowering the corporate tax 337 00:20:20,320 --> 00:20:23,320 Speaker 1: rate and getting rid of some of the preferences that 338 00:20:23,400 --> 00:20:25,440 Speaker 1: we have to pay for that, I think that makes 339 00:20:25,440 --> 00:20:29,040 Speaker 1: a lot of sense. Tax rate for past through companies 340 00:20:29,080 --> 00:20:33,960 Speaker 1: I think would be extremely abused. So I had a 341 00:20:34,000 --> 00:20:37,240 Speaker 1: lot of concerns. Um, there were no budget numbers that 342 00:20:37,359 --> 00:20:40,160 Speaker 1: came along with the proposal, which is which is kind 343 00:20:40,160 --> 00:20:43,840 Speaker 1: of remarkable. Um, how is one supposed to consider a 344 00:20:43,920 --> 00:20:47,960 Speaker 1: proposal which would probably, you know, add trillions and trillions 345 00:20:48,000 --> 00:20:51,040 Speaker 1: of dollars to the deficit without having the administration do 346 00:20:51,160 --> 00:20:52,960 Speaker 1: that type of analysis. I don't know how they could 347 00:20:53,000 --> 00:20:56,800 Speaker 1: in good faith say that this is their proposal, that 348 00:20:56,840 --> 00:20:59,119 Speaker 1: they haven't done that type of analysis. And if they 349 00:20:59,160 --> 00:21:01,040 Speaker 1: did that type of an elsis, why wouldn't they share 350 00:21:01,040 --> 00:21:03,119 Speaker 1: it with the American people so we could evaluate it. 351 00:21:03,600 --> 00:21:05,000 Speaker 1: Let me get back here to job stay in the 352 00:21:05,160 --> 00:21:07,200 Speaker 1: last couple of minutes we have with you. I spoke 353 00:21:07,240 --> 00:21:09,040 Speaker 1: with the Secretary of Commerce Earliver this week, and he 354 00:21:09,160 --> 00:21:12,399 Speaker 1: was very proud to talk about the efforts the administration 355 00:21:12,520 --> 00:21:15,400 Speaker 1: is working on when it comes to training. Going back 356 00:21:15,400 --> 00:21:17,320 Speaker 1: to that meeting with Chancellor Lamerko when she was at 357 00:21:17,320 --> 00:21:19,480 Speaker 1: the White House, the trip that Devanka Trump, daughter and 358 00:21:19,520 --> 00:21:21,680 Speaker 1: advisor to the President, took to Germany to meet with 359 00:21:22,119 --> 00:21:24,920 Speaker 1: German executives to see how they train workers and keep 360 00:21:24,960 --> 00:21:27,800 Speaker 1: workers at those companies. Is that a step in the 361 00:21:27,920 --> 00:21:30,040 Speaker 1: right direction? Do you think what's been the biggest hurdle 362 00:21:30,119 --> 00:21:33,679 Speaker 1: to getting training programs built into our corporate structures here 363 00:21:33,720 --> 00:21:35,960 Speaker 1: in the U s. As they are in Germany. I 364 00:21:36,040 --> 00:21:37,760 Speaker 1: think it is a step in the right direction, But 365 00:21:37,920 --> 00:21:40,879 Speaker 1: Germany also mandates that companies spend a certain share of 366 00:21:40,920 --> 00:21:43,160 Speaker 1: their budget on training, and I don't see the current 367 00:21:43,160 --> 00:21:46,480 Speaker 1: administration interested in that type of an idea. Also, in 368 00:21:46,520 --> 00:21:49,920 Speaker 1: the president's budget outline wasn't really a budget proposal. He 369 00:21:50,040 --> 00:21:53,320 Speaker 1: cuts job training. So I think there are many things 370 00:21:53,359 --> 00:21:55,160 Speaker 1: we can do. I would like to see a much 371 00:21:55,240 --> 00:21:59,680 Speaker 1: better school to work training program where students who are 372 00:21:59,840 --> 00:22:01,840 Speaker 1: not at the time college bound they might be college 373 00:22:01,880 --> 00:22:05,399 Speaker 1: bound later on, can apprentice with companies, can learn skills 374 00:22:05,440 --> 00:22:07,800 Speaker 1: while they're going to school. I think that strengthens both 375 00:22:07,840 --> 00:22:10,520 Speaker 1: their school work and their ability to navigate the job market. 376 00:22:11,600 --> 00:22:14,080 Speaker 1: Alan Krueger, thank you so much, particularly for those kind 377 00:22:14,200 --> 00:22:17,919 Speaker 1: comments on his colleague at Princeton, William BAUMO now at 378 00:22:17,960 --> 00:22:29,640 Speaker 1: New York University. Uh uh. This day brought you by 379 00:22:29,920 --> 00:22:33,600 Speaker 1: Bank of America Mary Lynch, dedicated to bringing our clients 380 00:22:33,720 --> 00:22:37,840 Speaker 1: insights and solutions to meet the challenges of a transforming world. 381 00:22:38,359 --> 00:22:42,200 Speaker 1: That's the power of global connections. Mary Lynch Pierce Federan 382 00:22:42,280 --> 00:22:51,800 Speaker 1: Smith Incorporated Member s I p C. There's something new 383 00:22:51,880 --> 00:22:55,239 Speaker 1: from Bloomberg. It's called Lens. Starting right now, you can 384 00:22:55,359 --> 00:22:59,800 Speaker 1: use the Bloomberg iosa off your iPhone or iPad or 385 00:23:00,200 --> 00:23:04,000 Speaker 1: our new Google Chrome extension to read any news story 386 00:23:04,160 --> 00:23:08,119 Speaker 1: on any website, scan it, and then instantly see the 387 00:23:08,200 --> 00:23:12,760 Speaker 1: news stories relevant market data from Bloomberg. 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Learn more at Bloomberg dot com, slash lens, 395 00:23:42,800 --> 00:23:46,639 Speaker 1: Chip Lastsman of Northwestern and JP Morgan with us today. 396 00:23:46,920 --> 00:23:50,600 Speaker 1: We're just speaking with Alan Krueger about the death of 397 00:23:50,720 --> 00:23:54,960 Speaker 1: William Boma of Princeton University in New York University and 398 00:23:55,080 --> 00:23:58,960 Speaker 1: his professor. Krueger. Of course, Riley mentioned his work is 399 00:23:59,119 --> 00:24:02,320 Speaker 1: front and center in your work and Frankie, the work 400 00:24:02,359 --> 00:24:06,560 Speaker 1: of every politician in Washington on healthcare. It's called bombs, 401 00:24:06,840 --> 00:24:10,920 Speaker 1: cost disease, and it's where you you raise wages because 402 00:24:10,960 --> 00:24:14,040 Speaker 1: you've got to raise wages, but there's no productivity gain 403 00:24:14,440 --> 00:24:16,639 Speaker 1: and bad things happen. Is there where we are right now? 404 00:24:17,119 --> 00:24:18,439 Speaker 1: I don't think so. I think that's where we were 405 00:24:18,440 --> 00:24:21,119 Speaker 1: in the nineteen seventies and early nineteen eighties. But I 406 00:24:21,200 --> 00:24:23,560 Speaker 1: think people we live in a more competitive world, so 407 00:24:23,720 --> 00:24:27,520 Speaker 1: companies aren't as quick to grant wage increases that they 408 00:24:27,560 --> 00:24:30,680 Speaker 1: can't be matched by productivity improvement. So I don't really 409 00:24:30,720 --> 00:24:34,120 Speaker 1: think that's our problem today, but it is a problem 410 00:24:34,160 --> 00:24:37,120 Speaker 1: for the worker because it is productivity that really lifts 411 00:24:37,160 --> 00:24:41,240 Speaker 1: our living standards. And I talked to Ben Bernanke, and 412 00:24:41,359 --> 00:24:43,840 Speaker 1: let me ask you the same question. Which part of 413 00:24:43,920 --> 00:24:47,440 Speaker 1: productivity are we most challenged by? Is a capital dynamics, 414 00:24:47,920 --> 00:24:51,040 Speaker 1: labor dynamics, or is it something unknowable like all this 415 00:24:51,200 --> 00:24:54,120 Speaker 1: technology we're dealing with each and every day. I think 416 00:24:54,160 --> 00:24:57,560 Speaker 1: it's unknowable because here here we have a massive amount 417 00:24:57,560 --> 00:25:00,560 Speaker 1: of innovation going on in the technology sector, and in fact, 418 00:25:00,600 --> 00:25:03,040 Speaker 1: we all think that they're not really measuring that properly. 419 00:25:03,080 --> 00:25:05,159 Speaker 1: But then on the other hand, we're not seeing the 420 00:25:05,600 --> 00:25:08,320 Speaker 1: productivity gains that you expect from innovation. I have a 421 00:25:08,359 --> 00:25:11,840 Speaker 1: feeling it's just really volatile and random and it takes 422 00:25:11,880 --> 00:25:14,359 Speaker 1: time for us to sort of milk the benefits of 423 00:25:14,400 --> 00:25:16,520 Speaker 1: all this innovation, and there's so much going on. Maybe 424 00:25:16,600 --> 00:25:20,240 Speaker 1: that's that's part of the issue. But um, I wouldn't 425 00:25:20,240 --> 00:25:23,000 Speaker 1: be writing oh bits yet for productivity because I think 426 00:25:23,520 --> 00:25:26,520 Speaker 1: looking around it just feels like we're living at a 427 00:25:26,600 --> 00:25:29,680 Speaker 1: time of rapid innovation and it just know whether that 428 00:25:29,720 --> 00:25:31,240 Speaker 1: show you know, how long does that take to show up? 429 00:25:31,280 --> 00:25:33,479 Speaker 1: I don't know. It could be a decade. Chris Rupie 430 00:25:33,520 --> 00:25:36,200 Speaker 1: writing yesterday that the productivity read was a big ouch 431 00:25:36,280 --> 00:25:38,560 Speaker 1: for the economic right, big ouch for the economy plainly 432 00:25:38,600 --> 00:25:41,320 Speaker 1: sputtering in the first quarters we we start the year. 433 00:25:42,080 --> 00:25:45,359 Speaker 1: Uh yeah, but that's all because of the bizarre not 434 00:25:45,560 --> 00:25:49,000 Speaker 1: to be believed GDP estimate that the things slow down 435 00:25:49,119 --> 00:25:52,920 Speaker 1: practical Transtorp, I don't even think it's transitory. Frankly, I 436 00:25:53,000 --> 00:25:56,600 Speaker 1: think it's fake slowdown, because the truth is, if there's 437 00:25:56,600 --> 00:26:00,280 Speaker 1: a seasonal distortion, as the b e A and everybody things, 438 00:26:00,400 --> 00:26:03,840 Speaker 1: including the FED, then it's not really transitory. It's mismeasurement 439 00:26:04,160 --> 00:26:06,560 Speaker 1: of the quarterly GDP figures. And I think that's what's 440 00:26:06,600 --> 00:26:08,879 Speaker 1: so useful about the labor market data. You sort of 441 00:26:08,920 --> 00:26:11,840 Speaker 1: have two different perspectives on the economy. And interestingly, the 442 00:26:11,960 --> 00:26:16,359 Speaker 1: labor market data suggested that things accelerated at least through February. 443 00:26:16,400 --> 00:26:18,760 Speaker 1: We had a soft March paywall figure. But the employment 444 00:26:18,800 --> 00:26:22,080 Speaker 1: picture looks quite good. The GDP figure figure is not 445 00:26:22,400 --> 00:26:25,440 Speaker 1: and this is, by the way, probably going to be corrected. 446 00:26:25,720 --> 00:26:28,119 Speaker 1: When you look at the second quarter or third quarter GDP, 447 00:26:28,600 --> 00:26:30,520 Speaker 1: we'll see everything kind of line up again in the 448 00:26:30,680 --> 00:26:33,680 Speaker 1: in the panoply of economic data, giving you some indication 449 00:26:33,720 --> 00:26:36,160 Speaker 1: of growth in this economy. How much does GDP matter 450 00:26:36,240 --> 00:26:38,760 Speaker 1: to you? Given that, uh, it can beast to volo. 451 00:26:38,880 --> 00:26:41,480 Speaker 1: It doesn't matter at all to me. Quarterly figures I 452 00:26:41,760 --> 00:26:43,600 Speaker 1: don't really pay attention to. The one thing I pay 453 00:26:43,680 --> 00:26:46,879 Speaker 1: most attention to is jobless claims because they are the 454 00:26:47,000 --> 00:26:50,160 Speaker 1: most accurate indicator we have of the pulse of the economy. 455 00:26:50,480 --> 00:26:52,840 Speaker 1: It only tells you what's going on with the businesses 456 00:26:52,880 --> 00:26:55,280 Speaker 1: that are operating and what we've seen so far in 457 00:26:55,320 --> 00:26:57,879 Speaker 1: the first quarter. Uh, the trends. You know, it's a 458 00:26:57,880 --> 00:27:00,159 Speaker 1: steady economy and in fact, if anything, it feels like 459 00:27:00,200 --> 00:27:02,640 Speaker 1: the economy is still growing a little faster than trend, 460 00:27:02,840 --> 00:27:05,880 Speaker 1: thank god, because we still have some populations of people 461 00:27:05,920 --> 00:27:08,480 Speaker 1: out there who dropped out, there were discouraged, and they're 462 00:27:08,520 --> 00:27:10,199 Speaker 1: coming back in. We need we need a little bit 463 00:27:10,280 --> 00:27:12,720 Speaker 1: more above trend growth to get everybody back to work. 464 00:27:12,800 --> 00:27:14,840 Speaker 1: What you're talking with the professor Kruger just a moment 465 00:27:14,880 --> 00:27:18,879 Speaker 1: ago about job opportunity for new graduates of colleges and universities, 466 00:27:18,880 --> 00:27:20,920 Speaker 1: a lot of them facing that crude reality. And just 467 00:27:21,000 --> 00:27:23,240 Speaker 1: a couple of weeks here, let me go beyond the 468 00:27:23,320 --> 00:27:25,760 Speaker 1: headline numbers just a little bit here as well. You 469 00:27:25,800 --> 00:27:28,119 Speaker 1: look at employment among African Americans, say, it's still you 470 00:27:28,160 --> 00:27:30,560 Speaker 1: know what, upwards of eight percent. Why have we not 471 00:27:30,720 --> 00:27:34,360 Speaker 1: been able to target smaller sectors or parts of the economy, 472 00:27:34,600 --> 00:27:37,879 Speaker 1: different demographic groups. Now that this recovery has continued for 473 00:27:37,920 --> 00:27:39,680 Speaker 1: as long as it has been, where where is that 474 00:27:39,800 --> 00:27:43,080 Speaker 1: deficit come from? Well, it always happens, right if you 475 00:27:43,160 --> 00:27:50,119 Speaker 1: look at unemployment by level of education or um ethnic background, 476 00:27:50,440 --> 00:27:52,359 Speaker 1: what you always see that pattern. And I think that 477 00:27:52,480 --> 00:27:54,520 Speaker 1: that's why the best thing that we can do, I mean, 478 00:27:54,560 --> 00:27:56,119 Speaker 1: the only thing that we can really do is make 479 00:27:56,160 --> 00:28:01,119 Speaker 1: sure that the macro economy continue is to recover and 480 00:28:01,240 --> 00:28:03,080 Speaker 1: I think a lot of those problems start to get fixed. 481 00:28:03,119 --> 00:28:06,359 Speaker 1: But but the truth is looking deeper, it's really about 482 00:28:06,640 --> 00:28:11,480 Speaker 1: education and lack of education, lack of skills UM and 483 00:28:11,520 --> 00:28:13,920 Speaker 1: a lot of those jobs are not in the urban 484 00:28:13,960 --> 00:28:16,840 Speaker 1: areas where people need the jobs. Is the problem. It's 485 00:28:16,880 --> 00:28:19,040 Speaker 1: tough to it's tough to commute to the jobs. So 486 00:28:19,119 --> 00:28:21,480 Speaker 1: I think this is a chronic problem and a problem 487 00:28:21,520 --> 00:28:25,359 Speaker 1: that we always have uh in every cycle wait for uce. 488 00:28:25,560 --> 00:28:28,480 Speaker 1: This goes back to Laurence Summer's idea of secular stagnation, 489 00:28:28,640 --> 00:28:33,320 Speaker 1: which is a secular view versus a cyclical view. Are 490 00:28:33,400 --> 00:28:38,560 Speaker 1: we conflating the two ideas too much? Probably because the yeah, 491 00:28:38,640 --> 00:28:41,120 Speaker 1: because the demographics. You know, the problem is the very 492 00:28:41,200 --> 00:28:43,640 Speaker 1: negative view that everybody had about the economy comes from 493 00:28:43,680 --> 00:28:46,240 Speaker 1: this slow growth. We're doing getting well. The slow growth 494 00:28:46,280 --> 00:28:48,360 Speaker 1: didn't prevent us from getting back on our feet, and 495 00:28:48,440 --> 00:28:51,320 Speaker 1: it hasn't prevented the US living standard from rising. We're 496 00:28:51,320 --> 00:28:54,560 Speaker 1: now a record levels. The problem is, um, the slow 497 00:28:54,640 --> 00:28:57,760 Speaker 1: growth is not really it's about demographics a lot of it, 498 00:28:58,360 --> 00:29:02,000 Speaker 1: and so it's very easy to can use the cycle 499 00:29:02,560 --> 00:29:05,160 Speaker 1: strains with all the other stuff that's going on, the 500 00:29:05,960 --> 00:29:10,200 Speaker 1: disruption from innovation the globalization, the demographic shift, and I 501 00:29:10,240 --> 00:29:12,560 Speaker 1: think that's the problem that we were still thinking, well, 502 00:29:12,600 --> 00:29:16,360 Speaker 1: this is about the cycle. Truth is, we're pretty much recovered. 503 00:29:16,760 --> 00:29:19,440 Speaker 1: We're not fully recovered, but we're pretty much there. Most 504 00:29:19,520 --> 00:29:21,800 Speaker 1: people have a job for a half percent unemployment is 505 00:29:21,840 --> 00:29:24,520 Speaker 1: not bad. There's still our pockets of unemployed. But the 506 00:29:24,600 --> 00:29:27,240 Speaker 1: truth is the cycle is behind us, and now we're 507 00:29:27,520 --> 00:29:29,680 Speaker 1: The stresses that we're feeling are more related to these 508 00:29:29,720 --> 00:29:32,640 Speaker 1: things I've been going on long before the downturn in 509 00:29:32,720 --> 00:29:35,840 Speaker 1: two thousand eight. Let's ask about the economic promise here 510 00:29:35,880 --> 00:29:38,320 Speaker 1: after the election, and we're talking with them about at 511 00:29:38,320 --> 00:29:41,080 Speaker 1: the top of the show about trumponomics and what we 512 00:29:41,160 --> 00:29:43,440 Speaker 1: can read into trumponomics from what we saw on Capitol 513 00:29:43,480 --> 00:29:46,200 Speaker 1: Hill this week the vote on another iteration of of 514 00:29:46,280 --> 00:29:50,400 Speaker 1: healthcare reform. Uh. You note in a recent recent note 515 00:29:50,440 --> 00:29:52,320 Speaker 1: that equity investors have been patient. Why do you think 516 00:29:52,320 --> 00:29:54,240 Speaker 1: they've been so patient here? And how long do you 517 00:29:54,400 --> 00:29:55,920 Speaker 1: do you do you expect they will be? Yeah? You know, 518 00:29:55,920 --> 00:29:58,520 Speaker 1: if that's interesting because I I think what we're learning 519 00:29:58,560 --> 00:30:01,240 Speaker 1: in the markets is that the this is not so 520 00:30:01,400 --> 00:30:04,360 Speaker 1: easy coming up with all these grand ideas tax reform 521 00:30:04,440 --> 00:30:07,320 Speaker 1: and infrastructure spending, healthcare reform. We could barely get it 522 00:30:07,360 --> 00:30:09,160 Speaker 1: out of the House. I think what's going on the 523 00:30:09,200 --> 00:30:11,840 Speaker 1: empty market, though, is it's not that they're counting so 524 00:30:12,000 --> 00:30:14,960 Speaker 1: much on something specific to the legislided process. It's more 525 00:30:15,000 --> 00:30:18,040 Speaker 1: of that they feel that the mindset in Washington is 526 00:30:18,080 --> 00:30:21,040 Speaker 1: turning more pro growth. I imagine that must be what's 527 00:30:21,040 --> 00:30:23,520 Speaker 1: going on, and so if that's the case, I think 528 00:30:23,600 --> 00:30:26,360 Speaker 1: their patients it's probably longer than we think. I don't know, 529 00:30:26,960 --> 00:30:28,360 Speaker 1: you know, I think after a year or so, if 530 00:30:28,400 --> 00:30:30,480 Speaker 1: you don't see any more progress, maybe that's an issue. 531 00:30:31,160 --> 00:30:33,160 Speaker 1: What are you gonna look for today? I mean, we're 532 00:30:33,160 --> 00:30:35,440 Speaker 1: supposed to do this in the next section. We've got 533 00:30:35,480 --> 00:30:37,800 Speaker 1: so many distractions going What do you look for? Yeah, 534 00:30:38,040 --> 00:30:40,520 Speaker 1: somewhere between a hundred seenty five and two hundred thousand. 535 00:30:41,200 --> 00:30:44,120 Speaker 1: The last month was weird, and particularly in contrast to 536 00:30:44,200 --> 00:30:46,240 Speaker 1: a dB I don't get I don't really I don't 537 00:30:46,240 --> 00:30:48,360 Speaker 1: really know what's going on. People think it's whether I 538 00:30:48,440 --> 00:30:50,800 Speaker 1: don't know, is it? Because and we're back to forty 539 00:30:50,880 --> 00:30:54,440 Speaker 1: five dollars a barrel, the oil hunk of the American 540 00:30:54,520 --> 00:30:58,880 Speaker 1: economy gets in the way of all the smoothness, the vectors, 541 00:30:58,960 --> 00:31:01,160 Speaker 1: the gradients, that you want to deal with. You know, 542 00:31:01,240 --> 00:31:03,400 Speaker 1: it could down the road. It's only very recently that 543 00:31:03,520 --> 00:31:06,040 Speaker 1: oils pulled back, and that's sort of leaving a cloud 544 00:31:06,040 --> 00:31:08,080 Speaker 1: over the market. But the truth is the oil sectors 545 00:31:08,160 --> 00:31:10,880 Speaker 1: still has been picking up quite a bit and until 546 00:31:11,000 --> 00:31:13,320 Speaker 1: very recently. I think if oil prices don't sort of 547 00:31:13,360 --> 00:31:15,640 Speaker 1: get back to like that fifty dollar range, maybe this 548 00:31:15,760 --> 00:31:18,040 Speaker 1: is gonna be a drag. The odd thing about oil, though, 549 00:31:18,160 --> 00:31:20,600 Speaker 1: is we all tend to react to it like this 550 00:31:20,760 --> 00:31:22,800 Speaker 1: is a bad thing for the US economy. When oil 551 00:31:22,800 --> 00:31:25,560 Speaker 1: prices go down, it's a bad thing for the energy sector, 552 00:31:25,840 --> 00:31:28,240 Speaker 1: it's a good thing for Americans, and in fact, we 553 00:31:28,360 --> 00:31:31,040 Speaker 1: as a country still used twice as much oil as 554 00:31:31,080 --> 00:31:33,560 Speaker 1: we produce. So the problem is it's hard to see 555 00:31:33,600 --> 00:31:36,240 Speaker 1: what consumers are doing, how they're spending their windfall. And 556 00:31:36,360 --> 00:31:39,280 Speaker 1: I think that's why equity investors, when they see oil 557 00:31:39,320 --> 00:31:42,040 Speaker 1: prices go down, they think negative because they can't quite 558 00:31:42,080 --> 00:31:46,320 Speaker 1: see where the beef offsetting benefits are. Jim Lastman was 559 00:31:46,320 --> 00:31:48,320 Speaker 1: this year on Jobs Day. We're just a few minutes 560 00:31:48,360 --> 00:31:50,880 Speaker 1: away from getting that data from the Labor Department, and 561 00:31:51,160 --> 00:31:54,120 Speaker 1: always value the perspective of Professor Krueger. Jim Glassman. Bill 562 00:31:54,120 --> 00:31:56,120 Speaker 1: Gross will join us in just a little while. Are 563 00:31:56,160 --> 00:31:58,560 Speaker 1: really lucky here? What very lucky? I come off the 564 00:31:58,600 --> 00:32:00,720 Speaker 1: TV set this morning to the top of the shows, 565 00:32:00,720 --> 00:32:02,560 Speaker 1: the usual suspects, but we are very honored to have 566 00:32:02,920 --> 00:32:04,280 Speaker 1: each and every one of them here with us. I 567 00:32:04,360 --> 00:32:06,560 Speaker 1: come off the TV. So just to give you a vignette, folks, 568 00:32:06,640 --> 00:32:08,920 Speaker 1: it's uh, you know, they take me down and they 569 00:32:09,000 --> 00:32:11,880 Speaker 1: give me my walker to get you over the radio. 570 00:32:12,920 --> 00:32:15,520 Speaker 1: There's Philip but he's standing with Edward Morris, and I go, 571 00:32:15,640 --> 00:32:17,920 Speaker 1: how good is this? We get to talk to the 572 00:32:18,000 --> 00:32:20,080 Speaker 1: smart people from JP Morgan as we get to talk 573 00:32:20,120 --> 00:32:23,000 Speaker 1: to John Tucker. I mean, you know, there's no there's 574 00:32:23,040 --> 00:32:27,280 Speaker 1: no he's bringing the for the he's the downer with 575 00:32:27,360 --> 00:32:30,920 Speaker 1: the traffic flow. Yeah, well he's we're working on it. Uh. 576 00:32:31,080 --> 00:32:33,520 Speaker 1: This morning, we're joined by James Glassman here in our 577 00:32:33,520 --> 00:32:36,760 Speaker 1: studios at head Economists for Commercial Banking at JP Morgan Chase. 578 00:32:36,800 --> 00:32:38,440 Speaker 1: We talked a lot about uncertainty and the degree to 579 00:32:38,440 --> 00:32:40,800 Speaker 1: which that's weighing on investors, how it's weighing on the 580 00:32:40,880 --> 00:32:43,640 Speaker 1: economy generally. How about the labor market. Are there are 581 00:32:43,680 --> 00:32:45,960 Speaker 1: there people reluctant to hire because they don't know what's 582 00:32:46,000 --> 00:32:48,720 Speaker 1: going to happen with regulation or with taxes, said, I 583 00:32:48,760 --> 00:32:51,720 Speaker 1: don't think so, you know, uh, I frankly, we're always 584 00:32:51,760 --> 00:32:53,520 Speaker 1: doing anything with uncertainty. I don't know a time that 585 00:32:53,600 --> 00:32:56,080 Speaker 1: we weren't dealing with uncertainty. And I think what's happening 586 00:32:56,200 --> 00:32:59,720 Speaker 1: is when work, when employers see what's going on in 587 00:32:59,720 --> 00:33:02,600 Speaker 1: the job market. Everybody has noticed we're getting job growth 588 00:33:02,640 --> 00:33:05,000 Speaker 1: a pretty decent up sixteen million in the last several years, 589 00:33:05,440 --> 00:33:07,560 Speaker 1: the last eight years. So what that's doing is this 590 00:33:07,680 --> 00:33:10,120 Speaker 1: making people realize they need to get ahead of their 591 00:33:10,480 --> 00:33:13,280 Speaker 1: staff needs. And so I think regardless of the uncertainty, 592 00:33:13,680 --> 00:33:15,800 Speaker 1: they realize that it's getting gonna get harder and harder 593 00:33:15,800 --> 00:33:18,440 Speaker 1: to find people, and so it makes people want to 594 00:33:18,560 --> 00:33:20,640 Speaker 1: look harder for folks. So I think that's really been 595 00:33:20,640 --> 00:33:23,840 Speaker 1: a real change in attitude about hiring. And maybe and 596 00:33:23,880 --> 00:33:25,840 Speaker 1: maybe we're that maybe that's one reason why we're getting 597 00:33:25,840 --> 00:33:27,400 Speaker 1: a little more hiring than you might expect. What the 598 00:33:27,480 --> 00:33:29,280 Speaker 1: kind of growth we get. What can you tell from 599 00:33:29,320 --> 00:33:31,720 Speaker 1: looking at layoffs? Average number of layoffs? What does that 600 00:33:31,760 --> 00:33:34,920 Speaker 1: figure tell you about the economy. They're just about as 601 00:33:35,000 --> 00:33:36,800 Speaker 1: low as I've ever seen them, and relative to the 602 00:33:36,840 --> 00:33:39,760 Speaker 1: size of the labor force. UH nothing going on the 603 00:33:39,880 --> 00:33:44,200 Speaker 1: jobless claims trend. UH is telling you that there's nothing 604 00:33:44,240 --> 00:33:46,280 Speaker 1: bad going on in the economy. Then, in fact, if anything, 605 00:33:46,520 --> 00:33:49,080 Speaker 1: we're still probably growing fastive in our trend. If there 606 00:33:49,160 --> 00:33:51,840 Speaker 1: was a problem somewhere, you would see layoffs picking up 607 00:33:51,840 --> 00:33:54,280 Speaker 1: a little bit. And you know, we're we're it's a 608 00:33:54,440 --> 00:33:58,080 Speaker 1: it's a really spectacular view of a very flattering view 609 00:33:58,080 --> 00:33:59,920 Speaker 1: of the economy. What you see from the from the 610 00:34:00,040 --> 00:34:03,959 Speaker 1: layoff story. When you look at this labor market as 611 00:34:04,000 --> 00:34:05,880 Speaker 1: a whole, what are the pockets are the corners of 612 00:34:05,960 --> 00:34:09,719 Speaker 1: it that are still lagging? Be that demographic, be that 613 00:34:09,880 --> 00:34:13,120 Speaker 1: in terms of educational timent, what still needs improvement? Well, 614 00:34:13,120 --> 00:34:16,520 Speaker 1: there's two things. Really, There still are just a few 615 00:34:16,560 --> 00:34:19,160 Speaker 1: folks who are working, a few folks more of a 616 00:34:19,200 --> 00:34:21,759 Speaker 1: normal who are working part time involuntarily. That problem is 617 00:34:21,880 --> 00:34:24,480 Speaker 1: rapidly disappearing, though. I think that's a story about family 618 00:34:24,520 --> 00:34:27,399 Speaker 1: owned businesses. And then and then the young people from 619 00:34:28,440 --> 00:34:31,080 Speaker 1: five year old people in their prime working years. A 620 00:34:31,120 --> 00:34:33,680 Speaker 1: lot of folks got discouraged during the recession. About three 621 00:34:33,719 --> 00:34:36,600 Speaker 1: million dropped out. That number has now come down to 622 00:34:36,600 --> 00:34:38,759 Speaker 1: about one and a half million. So people are coming 623 00:34:38,800 --> 00:34:40,440 Speaker 1: back in. But I would say we still have a 624 00:34:41,000 --> 00:34:43,799 Speaker 1: year's worth of good job growth. We need to get 625 00:34:43,840 --> 00:34:46,000 Speaker 1: all those people back in. About a million and a 626 00:34:46,080 --> 00:34:48,360 Speaker 1: half young people still to come back and living with 627 00:34:48,520 --> 00:34:51,400 Speaker 1: family against still in school. Maybe yeah, but they claimed 628 00:34:51,480 --> 00:34:55,759 Speaker 1: James Glassman power point which is treasured and captain Mr. 629 00:34:56,239 --> 00:34:59,759 Speaker 1: My favorite notes is the invisible unemployment. What do you 630 00:34:59,800 --> 00:35:03,359 Speaker 1: mean by invisible unemployment? The folks who just gave up, 631 00:35:03,800 --> 00:35:07,600 Speaker 1: dropped out and did something else. The smart ones went 632 00:35:07,640 --> 00:35:09,919 Speaker 1: back to school for special job skills. They don't show 633 00:35:09,960 --> 00:35:12,000 Speaker 1: up as unemployed because if I give up looking for 634 00:35:12,040 --> 00:35:14,800 Speaker 1: a job, I'm not gonna show up. So if a 635 00:35:14,840 --> 00:35:18,200 Speaker 1: Trump and Goose of nominal GDP of fifty basis points 636 00:35:18,239 --> 00:35:21,040 Speaker 1: half a percentage point, does that mean anything that you're 637 00:35:21,080 --> 00:35:24,399 Speaker 1: invisible helps to pull them back? You think? So? Yeah. 638 00:35:24,920 --> 00:35:26,479 Speaker 1: They wake up in the morning and I go, jeez, 639 00:35:26,520 --> 00:35:29,080 Speaker 1: I feel better. I just well, I got a tweet. 640 00:35:29,920 --> 00:35:32,040 Speaker 1: Their friends are telling him, hey, there's a job here, um, 641 00:35:32,800 --> 00:35:35,879 Speaker 1: And I think that's how it happens. The kids find 642 00:35:35,920 --> 00:35:38,359 Speaker 1: out that there's opportunities. And you're starting to see that happen. 643 00:35:38,680 --> 00:35:41,520 Speaker 1: The participation of young people now because coming back in 644 00:35:41,719 --> 00:35:44,960 Speaker 1: the farthest west tenth Avenue. You actually traveled, do you 645 00:35:45,000 --> 00:35:46,879 Speaker 1: see a lot of you see a lot of help want? 646 00:35:47,520 --> 00:35:50,640 Speaker 1: They do? Actually? Uh? And in places that I always wondering, 647 00:35:50,680 --> 00:35:53,080 Speaker 1: how do you how would you find somebody here? Uh? 648 00:35:53,160 --> 00:35:54,840 Speaker 1: That there? You know, And the fact that you're posting 649 00:35:54,880 --> 00:35:57,280 Speaker 1: help wanted means it must be you must be desperate, 650 00:35:57,640 --> 00:36:01,080 Speaker 1: because there's many ways of finding job. Is desperation translating 651 00:36:01,080 --> 00:36:03,279 Speaker 1: to higher wages? In other words, of this an employees 652 00:36:03,360 --> 00:36:07,400 Speaker 1: market in technology In some markets that there there are stories, 653 00:36:07,440 --> 00:36:10,080 Speaker 1: but overall not yet, not on tenth Avenue, not in 654 00:36:10,120 --> 00:36:12,480 Speaker 1: the bodeg on tenth Avenue. You've been to tenth Avenue 655 00:36:12,520 --> 00:36:19,800 Speaker 1: till twice. Let me ask you how manufacturing. There is 656 00:36:19,880 --> 00:36:22,879 Speaker 1: this clarion from this administration about bringing manufacturing jobs back. 657 00:36:22,960 --> 00:36:25,440 Speaker 1: How does the manufacturing sector look in this country at 658 00:36:25,480 --> 00:36:27,560 Speaker 1: this point in terms of it's it's relative health. Well, 659 00:36:27,600 --> 00:36:29,360 Speaker 1: it's been hit by the all that was going on 660 00:36:29,440 --> 00:36:32,600 Speaker 1: the energy sector. When energy prices came down, all the 661 00:36:32,760 --> 00:36:36,120 Speaker 1: activity related to energy kind of died and CAPEX slowed 662 00:36:36,120 --> 00:36:39,040 Speaker 1: down industrial production. That began to change late last year 663 00:36:39,080 --> 00:36:43,040 Speaker 1: as activity picked up again. So we'll see, you know, 664 00:36:43,160 --> 00:36:45,600 Speaker 1: But but the big, but the big wind hitting manufacturing 665 00:36:45,680 --> 00:36:48,520 Speaker 1: is all about innovation and technology. And all you gotta 666 00:36:48,520 --> 00:36:51,440 Speaker 1: do is go to an autopoint in Electington, Kentucky, UH 667 00:36:51,600 --> 00:36:53,160 Speaker 1: just to see what's going on. You don't see too 668 00:36:53,200 --> 00:36:56,279 Speaker 1: many human beings. It's a huge issue and sustains through 669 00:36:56,360 --> 00:37:01,719 Speaker 1: this generational shift. We have a generation constancy on Jobs Day. 670 00:37:02,160 --> 00:37:05,000 Speaker 1: The perspective of James Glassman of JP Morgan, we do 671 00:37:05,160 --> 00:37:07,800 Speaker 1: that now. He will stay with us through the statistics 672 00:37:07,840 --> 00:37:10,680 Speaker 1: will see in five and a half minutes, and then 673 00:37:10,719 --> 00:37:13,520 Speaker 1: perspective from Jana's Capital and Bill Gross. He has been 674 00:37:13,600 --> 00:37:17,719 Speaker 1: most generous to talk to us about the Central Bank 675 00:37:17,800 --> 00:37:20,200 Speaker 1: of this nation and of course the impact on fixed 676 00:37:20,239 --> 00:37:22,560 Speaker 1: income Jobs Day. Let's get straight to the numbers here. 677 00:37:22,560 --> 00:37:24,719 Speaker 1: The April numbers from the Labor Department, starting with the 678 00:37:24,800 --> 00:37:27,480 Speaker 1: change in non farm payrolls survey was a d and 679 00:37:27,520 --> 00:37:30,320 Speaker 1: the actual read two hundred eleven thousand. But catching my 680 00:37:30,520 --> 00:37:33,040 Speaker 1: I here is the revision for the March numbers, revised 681 00:37:33,360 --> 00:37:36,399 Speaker 1: down from what was a disappointing number thousand revised down 682 00:37:36,440 --> 00:37:39,520 Speaker 1: to seventy nine thousand. Looking at the unemployment rate here 683 00:37:39,560 --> 00:37:42,480 Speaker 1: four point six percent. The survey was four point rather sorry, 684 00:37:42,560 --> 00:37:45,040 Speaker 1: survey was four point six percent. The actual four point 685 00:37:45,080 --> 00:37:47,560 Speaker 1: four percent. Uh, what do you make of that March revision? 686 00:37:47,600 --> 00:37:50,000 Speaker 1: Down of a churn here yields moving a little bit. 687 00:37:50,120 --> 00:37:52,239 Speaker 1: I don't see that much of a market movement. I mean, 688 00:37:52,360 --> 00:37:56,399 Speaker 1: still focused on oil. But wage growth isn't all that good. 689 00:37:56,400 --> 00:37:58,560 Speaker 1: I mean, let's start with the unemployment rate. Jim Glassmow 690 00:37:58,600 --> 00:38:01,759 Speaker 1: with JP Morgan with US four point six per was 691 00:38:01,800 --> 00:38:04,360 Speaker 1: to survey a lovely four point four percent. But you 692 00:38:04,440 --> 00:38:07,160 Speaker 1: know that's not for good reasons, right, yeah, not with 693 00:38:07,320 --> 00:38:10,640 Speaker 1: not people are disappearing, um, but still we're kind of 694 00:38:10,680 --> 00:38:13,360 Speaker 1: in that zone of um, what the fat things of 695 00:38:13,440 --> 00:38:15,440 Speaker 1: its full employment? So I think they'll be encouraged by 696 00:38:15,440 --> 00:38:17,600 Speaker 1: the report it you know, it tells you we're not 697 00:38:17,680 --> 00:38:19,400 Speaker 1: quite there yet, but I think it keeps them on 698 00:38:19,560 --> 00:38:22,960 Speaker 1: board with the idea of getting their funds right back up. 699 00:38:23,320 --> 00:38:26,040 Speaker 1: That revision negative six is certainly not what you want 700 00:38:26,080 --> 00:38:28,520 Speaker 1: to see, almost like a second derivative of pop up 701 00:38:29,040 --> 00:38:32,160 Speaker 1: and in wage growth. Uh, you know, it's it's just 702 00:38:32,360 --> 00:38:36,480 Speaker 1: a mixed store here. Every year hourly earnings two point 703 00:38:36,640 --> 00:38:42,200 Speaker 1: five with a bad revision is the average hourly earnings number? 704 00:38:42,480 --> 00:38:46,200 Speaker 1: Jim Glassman, is it a blue collar statistic, or does 705 00:38:46,239 --> 00:38:49,239 Speaker 1: it capture all of America? Well, it doesn't capture all 706 00:38:49,280 --> 00:38:51,360 Speaker 1: of America and it doesn't capture all of pay. So 707 00:38:51,480 --> 00:38:55,279 Speaker 1: there's a lot of benefits and healthcare insurance premiums and 708 00:38:55,600 --> 00:38:58,880 Speaker 1: things like that that are not in there. But remember 709 00:38:58,960 --> 00:39:01,480 Speaker 1: this thing was stuck at two sent forever, so it's 710 00:39:01,520 --> 00:39:04,120 Speaker 1: come up a little bit. Look at the labor force change, 711 00:39:04,160 --> 00:39:07,040 Speaker 1: which goes right into that unemployment rate next to nothing 712 00:39:07,360 --> 00:39:10,920 Speaker 1: three thousand than a hundred and forty five thousand. Those 713 00:39:10,960 --> 00:39:15,200 Speaker 1: are buoyant numbers in a terrible twelve. Yeah, so we 714 00:39:15,320 --> 00:39:17,160 Speaker 1: had you know, these numbers are very volatile on the 715 00:39:17,200 --> 00:39:20,200 Speaker 1: monthly basis, had a surge of labor force earlier in 716 00:39:20,239 --> 00:39:22,400 Speaker 1: the year, so it's hard to tell. Sometimes you need 717 00:39:22,440 --> 00:39:25,040 Speaker 1: about six months behind you to see what's really going 718 00:39:25,080 --> 00:39:27,640 Speaker 1: on with these numbers. They get very volatile. How do 719 00:39:27,680 --> 00:39:30,279 Speaker 1: you link this into the productivity reports that we saw 720 00:39:30,320 --> 00:39:32,759 Speaker 1: the other way quickly here? Please? Well, you know slop 721 00:39:32,840 --> 00:39:35,719 Speaker 1: aarctivity means that's what's the restraint on pay. So if 722 00:39:35,719 --> 00:39:38,360 Speaker 1: parctivity were booming, we would be seeing stronger gains and 723 00:39:38,400 --> 00:39:41,520 Speaker 1: average oly earn. He's probably okay, Jim Glassman with this 724 00:39:41,800 --> 00:39:58,120 Speaker 1: JP Morgan, and we say thank you for that. And 725 00:39:58,200 --> 00:40:00,720 Speaker 1: now joining us Bill Gross, he is with Janice Capital. 726 00:40:00,760 --> 00:40:03,640 Speaker 1: We welcome all on Bloomberg Television into our cozy aboard 727 00:40:03,800 --> 00:40:07,719 Speaker 1: our radio studios here David Gura and Tom Keane to 728 00:40:07,840 --> 00:40:11,080 Speaker 1: speak to Mr Gross. Bill. Wonderful to speak to you again, 729 00:40:11,120 --> 00:40:13,560 Speaker 1: and we really value your being with us each and 730 00:40:13,680 --> 00:40:16,799 Speaker 1: every job's day. I'm going to suggest, even though there's 731 00:40:16,800 --> 00:40:20,080 Speaker 1: not much market action, when you look at last month's 732 00:40:20,360 --> 00:40:24,040 Speaker 1: multi report, this is certainly not the bang up report 733 00:40:24,120 --> 00:40:28,719 Speaker 1: the job optimists would have wanted to see. Well, that's 734 00:40:28,760 --> 00:40:32,440 Speaker 1: certainly not in terms of wages, in terms of the 735 00:40:32,680 --> 00:40:36,640 Speaker 1: potential for the FED to be a little stronger and 736 00:40:36,640 --> 00:40:40,279 Speaker 1: a little more hawkish. Uh. You know, the job's number, 737 00:40:40,320 --> 00:40:42,839 Speaker 1: I think is a good number. And the U six, 738 00:40:42,920 --> 00:40:47,920 Speaker 1: the underployment number came down from eight six to from 739 00:40:47,960 --> 00:40:50,600 Speaker 1: eight nine eight six, which is a pretty substantial change. 740 00:40:50,640 --> 00:40:53,600 Speaker 1: So there's something in there for everybody. To me. It's 741 00:40:53,920 --> 00:40:56,759 Speaker 1: simply suggests that the FED continues on its course of 742 00:40:57,400 --> 00:41:01,080 Speaker 1: gradual increases, and that, of course is the the primary question. 743 00:41:01,200 --> 00:41:04,880 Speaker 1: What does gradual mean to the market. Gradual means like 744 00:41:05,520 --> 00:41:08,120 Speaker 1: forty basis points for the year and to the FED 745 00:41:08,239 --> 00:41:10,919 Speaker 1: in terms of the dots, that means fifty to seventy five. 746 00:41:11,000 --> 00:41:14,279 Speaker 1: And there's the conundrum, as you know, cher Yelling does 747 00:41:14,400 --> 00:41:17,000 Speaker 1: focus on this labor report. Does she need to focus 748 00:41:17,080 --> 00:41:19,960 Speaker 1: on in her usual months to month and quarter to 749 00:41:20,040 --> 00:41:22,680 Speaker 1: quarter away or does she really need to focus away 750 00:41:22,760 --> 00:41:25,160 Speaker 1: from the jobs report on at a lot of other 751 00:41:25,360 --> 00:41:29,919 Speaker 1: themes within our American economy. Well, I think she needs 752 00:41:29,960 --> 00:41:33,400 Speaker 1: to focus away. There's been a number of reports, supportive 753 00:41:33,440 --> 00:41:37,239 Speaker 1: reports that suggests that low and negative interest rates do 754 00:41:37,440 --> 00:41:41,920 Speaker 1: strange things as they approach or punched through the zero bound. 755 00:41:42,480 --> 00:41:44,600 Speaker 1: I've been talking about that for several years, and I 756 00:41:44,640 --> 00:41:47,480 Speaker 1: don't think the FIT or other central banks really focus 757 00:41:47,560 --> 00:41:50,759 Speaker 1: on enough the fact that low low interest rates keep 758 00:41:50,880 --> 00:41:55,480 Speaker 1: zombie corporations alive. And that feeds into your question for productivity, 759 00:41:56,040 --> 00:41:59,040 Speaker 1: the fact that low interest rates destroy you know, very 760 00:41:59,120 --> 00:42:02,600 Speaker 1: productive business models like insurance companies and pension funds and 761 00:42:03,040 --> 00:42:05,799 Speaker 1: savings in general. And so the FED, to my way 762 00:42:05,840 --> 00:42:09,160 Speaker 1: of thinking, is a model driven type of institution, and 763 00:42:09,239 --> 00:42:13,000 Speaker 1: their models are outdated. So they need to get into 764 00:42:13,040 --> 00:42:15,839 Speaker 1: the future as opposed to come back from the past. Bill, 765 00:42:15,880 --> 00:42:17,920 Speaker 1: We've got to go to the market dynamics right now 766 00:42:18,080 --> 00:42:20,480 Speaker 1: from this important jobs report, and I want to go 767 00:42:20,760 --> 00:42:23,000 Speaker 1: right to the research chase that's going on in the 768 00:42:23,080 --> 00:42:27,360 Speaker 1: last forty eight hours. Would you presume commodity dynamics that 769 00:42:27,440 --> 00:42:31,040 Speaker 1: we've seen and the worries about China, which are always 770 00:42:31,120 --> 00:42:36,280 Speaker 1: their link to commodities fold right back to a central 771 00:42:36,320 --> 00:42:39,839 Speaker 1: bank discussion of the United States of America, Or maybe 772 00:42:39,880 --> 00:42:43,160 Speaker 1: it's not a taper tantrum, but it's an oil tantrum. 773 00:42:43,280 --> 00:42:45,759 Speaker 1: Is that what we're seeing if we presume a more 774 00:42:45,840 --> 00:42:51,239 Speaker 1: restrictive fed Well, you mentioned China, and China is a 775 00:42:51,320 --> 00:42:54,239 Speaker 1: tough one. Uh, certainly in terms of their policies and 776 00:42:54,440 --> 00:42:58,120 Speaker 1: their credit creation. Uh. You know, China, to my way thinking, 777 00:42:58,560 --> 00:43:03,279 Speaker 1: a year ago, UH jumped up credit to a type 778 00:43:03,280 --> 00:43:07,680 Speaker 1: of annual rate and created global growth more than expected. 779 00:43:08,080 --> 00:43:11,640 Speaker 1: Now they tend to be tightening the reins, so to speak. 780 00:43:11,719 --> 00:43:15,040 Speaker 1: But no one really knows about the shadow banking system 781 00:43:15,080 --> 00:43:17,120 Speaker 1: in China, little on the shadow banking system in the 782 00:43:17,239 --> 00:43:21,160 Speaker 1: United States. I have a sense though, that that credit 783 00:43:21,320 --> 00:43:23,799 Speaker 1: is being restricted, that their short term rate has moved 784 00:43:23,840 --> 00:43:26,360 Speaker 1: up by two to three basis points, and the ultimately 785 00:43:26,719 --> 00:43:28,839 Speaker 1: that makes a difference on a global basis and that's 786 00:43:28,880 --> 00:43:31,759 Speaker 1: why you're seeing oil prices and that's why you're seeing 787 00:43:31,800 --> 00:43:34,640 Speaker 1: other commodity prices come down by five ten in in 788 00:43:34,760 --> 00:43:39,280 Speaker 1: some cases of simply because China, as the growth creator 789 00:43:39,400 --> 00:43:42,560 Speaker 1: and the credit creator, is simply slowing down. So we 790 00:43:42,640 --> 00:43:44,600 Speaker 1: were talking with Villain Batter a little earlier today from 791 00:43:44,640 --> 00:43:46,520 Speaker 1: City Group, and he said he does not think that 792 00:43:46,600 --> 00:43:48,920 Speaker 1: Trump and omics, as it's come to be called his 793 00:43:49,000 --> 00:43:51,560 Speaker 1: run its course. When when you look at that still 794 00:43:51,719 --> 00:43:56,520 Speaker 1: nascent brand of economics, where do you think we are? Well, 795 00:43:56,560 --> 00:43:59,160 Speaker 1: I think it, uh, it's still running its course in 796 00:43:59,320 --> 00:44:02,279 Speaker 1: terms of mark gets and and that's where you have to, uh, 797 00:44:03,239 --> 00:44:05,400 Speaker 1: that's where you have to discriminate between markets and the 798 00:44:05,440 --> 00:44:08,600 Speaker 1: real economy. Obviously, the real economy is only three or 799 00:44:08,680 --> 00:44:12,560 Speaker 1: four months old in terms of Trump and the administration, 800 00:44:12,600 --> 00:44:14,680 Speaker 1: and the policies haven't had a chance to work yet, 801 00:44:14,800 --> 00:44:18,160 Speaker 1: let alone to be put into law. But I think 802 00:44:18,200 --> 00:44:21,479 Speaker 1: the potential of course for lower corporate tax rates whatever 803 00:44:21,600 --> 00:44:25,480 Speaker 1: that is, the potential for reregulate deregulation in terms of 804 00:44:26,120 --> 00:44:32,279 Speaker 1: significant industries, the potential for um uh you know globalization. Uh, 805 00:44:32,680 --> 00:44:35,800 Speaker 1: you know, there's there's lots there that have affected markets 806 00:44:35,880 --> 00:44:39,120 Speaker 1: and affected currencies as you and Tom follow but the 807 00:44:39,160 --> 00:44:42,759 Speaker 1: real economy is yet to punch in. I think I'm 808 00:44:42,800 --> 00:44:45,800 Speaker 1: a skeptic. I think that the real economy in the 809 00:44:45,960 --> 00:44:49,000 Speaker 1: US and in globally, but the US economy is a 810 00:44:49,040 --> 00:44:51,720 Speaker 1: two percent number going forward, and that it's a function 811 00:44:51,760 --> 00:44:55,680 Speaker 1: of productivity, and the productivity you really can't be affected 812 00:44:55,719 --> 00:44:58,120 Speaker 1: by corporate tax rates. Just look at it this way. 813 00:44:58,280 --> 00:45:00,680 Speaker 1: Let me finish the thought, and I'll let to ask 814 00:45:00,760 --> 00:45:05,480 Speaker 1: another question. Um, you know, productivity is a function of 815 00:45:05,600 --> 00:45:08,719 Speaker 1: investment and and corporations have had lots of money they 816 00:45:08,760 --> 00:45:12,880 Speaker 1: can borrow money at the cheapest rate possible in in decades, 817 00:45:12,960 --> 00:45:15,520 Speaker 1: but yet they failed to do that. And so cutting 818 00:45:15,600 --> 00:45:18,959 Speaker 1: corporate taxes, giving them cash flow, letting them repatriate money 819 00:45:19,080 --> 00:45:21,759 Speaker 1: from outside the United States, will that do a lot 820 00:45:21,800 --> 00:45:23,920 Speaker 1: of good in terms of investment? I don't think so. 821 00:45:24,160 --> 00:45:25,680 Speaker 1: I don't think I'll make much of a difference. And 822 00:45:25,760 --> 00:45:28,680 Speaker 1: so two percent real growth, I think is where we're heading. Yeah, 823 00:45:28,680 --> 00:45:30,839 Speaker 1: I think that the saying goes if if if ands 824 00:45:30,880 --> 00:45:32,880 Speaker 1: and butts were candies and nuts, every day would be 825 00:45:33,120 --> 00:45:36,640 Speaker 1: would be Christmas. I'm increasingly interested in in patients, how 826 00:45:36,719 --> 00:45:39,239 Speaker 1: long someone like you is willing to give Washington willing 827 00:45:39,280 --> 00:45:42,240 Speaker 1: to give this administration to do something like tax reform 828 00:45:42,480 --> 00:45:47,160 Speaker 1: or healthcare reform or regulatory reform. Well, I think it 829 00:45:47,239 --> 00:45:51,000 Speaker 1: gets down to David to the to the number, to 830 00:45:51,120 --> 00:45:53,319 Speaker 1: the real growth number. If it's three percent, if they 831 00:45:53,360 --> 00:45:58,120 Speaker 1: can really recreate three percent type of economy, then investors 832 00:45:58,200 --> 00:46:00,520 Speaker 1: can be patient and they need to see that as 833 00:46:00,560 --> 00:46:02,560 Speaker 1: we move along. We didn't see that in the first quarter. 834 00:46:02,680 --> 00:46:07,120 Speaker 1: We're seeing a potential four percent second quarters, so still 835 00:46:07,239 --> 00:46:09,319 Speaker 1: up in the air. But three percent is the number 836 00:46:09,360 --> 00:46:12,960 Speaker 1: that risk markets, that equities, that pe ratios, that HI 837 00:46:13,040 --> 00:46:16,000 Speaker 1: yield spreads in terms of their compression are all based on. 838 00:46:16,400 --> 00:46:18,920 Speaker 1: And so I think there's some disappointment ahead of it's 839 00:46:18,960 --> 00:46:23,160 Speaker 1: two and there's some optimistic uh movement in terms of 840 00:46:23,239 --> 00:46:25,879 Speaker 1: prices if it's three. Bill girls very quickly her How 841 00:46:26,000 --> 00:46:28,160 Speaker 1: correlated are the markets right now? Is over at New 842 00:46:28,239 --> 00:46:31,120 Speaker 1: Burger Birming yesterday talking with their good folks, and there 843 00:46:31,160 --> 00:46:34,040 Speaker 1: was a real statement of the new genus of the markets, 844 00:46:34,080 --> 00:46:37,239 Speaker 1: the lack of correlation. How would lock step are the 845 00:46:37,360 --> 00:46:41,880 Speaker 1: different asset classes right now? Well, I think they're in 846 00:46:41,920 --> 00:46:44,080 Speaker 1: pretty lockstep. I mean, you can talk about the last 847 00:46:44,160 --> 00:46:46,279 Speaker 1: three months in terms of the correlation, but to my 848 00:46:46,400 --> 00:46:48,600 Speaker 1: way of thinking, I always go back to the most 849 00:46:48,640 --> 00:46:51,480 Speaker 1: asset prices, and almost all asset prices are correlated to 850 00:46:51,560 --> 00:46:55,239 Speaker 1: the neutral FED funds rate, to the existing Fed funds rate, 851 00:46:55,320 --> 00:46:58,640 Speaker 1: the forward Fed funds rate, and from there, uh, we 852 00:46:58,840 --> 00:47:02,000 Speaker 1: derived the you know, the Gordon discount model, the dividend 853 00:47:02,000 --> 00:47:04,719 Speaker 1: discound model, and others. And so I think the correlation 854 00:47:04,880 --> 00:47:06,880 Speaker 1: is really in terms of interest rates. And as long 855 00:47:06,960 --> 00:47:11,359 Speaker 1: as we stay stable and relatively low, then markets can 856 00:47:11,640 --> 00:47:14,520 Speaker 1: stay stable and relatively low. But there's risk there, and 857 00:47:14,920 --> 00:47:17,480 Speaker 1: perhaps we can talk about that, and let's do that. 858 00:47:17,560 --> 00:47:19,319 Speaker 1: We'll talk to you. It's like Uncle Wiggily. He's telling 859 00:47:19,400 --> 00:47:21,680 Speaker 1: us what's gonna happen in the next chapter as well, 860 00:47:21,800 --> 00:47:24,800 Speaker 1: Bill Gross with us the janis at Capital and Bloomberg 861 00:47:24,840 --> 00:47:30,480 Speaker 1: Television and Bloomberg Radio worldwide built. We're talking about the 862 00:47:30,560 --> 00:47:32,920 Speaker 1: correlations within the market, and you were linking them to 863 00:47:33,000 --> 00:47:37,239 Speaker 1: the anchor of central bank action. And yet the commodities 864 00:47:37,360 --> 00:47:40,840 Speaker 1: are in free fall. How do you how do you 865 00:47:41,120 --> 00:47:45,160 Speaker 1: use commodity dynamics within your work? Are they an opportunity 866 00:47:45,239 --> 00:47:48,279 Speaker 1: when they plunge like this to make alpha down the road? 867 00:47:48,600 --> 00:47:51,080 Speaker 1: Do you go long and oil? Do you go along Canada. 868 00:47:51,160 --> 00:47:53,600 Speaker 1: Do you go along Looney rather, how do you play 869 00:47:54,000 --> 00:47:59,239 Speaker 1: a commodity plunge? Yeah? Uh? In two ways. Tom first, 870 00:47:59,280 --> 00:48:00,800 Speaker 1: in terms of car and says, you look for a 871 00:48:00,960 --> 00:48:04,600 Speaker 1: very undervalued currency. I like the Mexican pay so so. 872 00:48:04,760 --> 00:48:10,040 Speaker 1: I recognize their obvious problems in terms of Trumpian policies 873 00:48:10,080 --> 00:48:13,360 Speaker 1: going forward, but I think it's a very attractive situation 874 00:48:13,440 --> 00:48:16,719 Speaker 1: and very volatile, which which makes it possible to you know, 875 00:48:16,880 --> 00:48:20,080 Speaker 1: to basically to sell puts on the Mexican pay so so. 876 00:48:20,200 --> 00:48:22,960 Speaker 1: In terms of commodities, what I look for, and I'm 877 00:48:23,000 --> 00:48:27,200 Speaker 1: a volatility seller at relatively high volatilities, I look for 878 00:48:27,320 --> 00:48:30,759 Speaker 1: those commodities that have been most recently volatile. Let's take 879 00:48:30,800 --> 00:48:32,680 Speaker 1: gold for the last two or three days. You know, 880 00:48:32,800 --> 00:48:36,560 Speaker 1: a pretty dramatic decline in terms of gold following on 881 00:48:36,760 --> 00:48:40,640 Speaker 1: a pretty dramatic decline in real interest rates. UM are 882 00:48:40,800 --> 00:48:43,600 Speaker 1: arising in real interest rates which produced that, and so 883 00:48:44,280 --> 00:48:48,799 Speaker 1: UM gold, to my way thinking, has a relatively high volatility. 884 00:48:49,080 --> 00:48:52,080 Speaker 1: UM oil is creeping up there with US downdraft in 885 00:48:52,160 --> 00:48:54,919 Speaker 1: the past few days, and so i'd rather than look 886 00:48:54,960 --> 00:48:58,200 Speaker 1: for price distortions to go long or short, I look 887 00:48:58,280 --> 00:49:02,000 Speaker 1: for higher volatility to sell on the wings and to 888 00:49:02,200 --> 00:49:05,000 Speaker 1: take advantage of uh, you know, of the premiums as 889 00:49:05,040 --> 00:49:08,560 Speaker 1: opposed to the potential price drop or price increase. Tom 890 00:49:08,640 --> 00:49:11,440 Speaker 1: touched upon this a few minutes ago briefly, But when 891 00:49:11,480 --> 00:49:12,920 Speaker 1: you look at oil right now, what do you think 892 00:49:13,040 --> 00:49:14,800 Speaker 1: is is driving the price lower? We were talking with 893 00:49:14,840 --> 00:49:17,279 Speaker 1: Steven Short yesterday and he suggested that this had nothing 894 00:49:17,360 --> 00:49:20,040 Speaker 1: to do with with OPEC. It was a different story 895 00:49:20,080 --> 00:49:22,720 Speaker 1: than that. What's your sense of what's motivating this downturn 896 00:49:22,760 --> 00:49:26,320 Speaker 1: that we're seeing. Well, you looked at oil both in 897 00:49:26,440 --> 00:49:30,080 Speaker 1: terms of supply and demands. Sometimes that the supply is 898 00:49:30,120 --> 00:49:33,000 Speaker 1: a mystery, especially with the shale in the United States 899 00:49:33,080 --> 00:49:37,080 Speaker 1: and the marginal price for production. But you also looked 900 00:49:37,120 --> 00:49:40,320 Speaker 1: at demand, and to my way of thinking, global demand 901 00:49:40,520 --> 00:49:43,880 Speaker 1: for oil is a reflection of global growth and a 902 00:49:43,960 --> 00:49:48,880 Speaker 1: reflection of potential Chinese growth. And we've talked about this 903 00:49:49,080 --> 00:49:51,960 Speaker 1: ten minutes ago. But I think the Chinese economy is 904 00:49:52,040 --> 00:49:55,320 Speaker 1: in the process of slowing raising credit, and that in 905 00:49:55,480 --> 00:49:59,000 Speaker 1: turn reflects in terms of a lower oil price down 906 00:49:59,040 --> 00:50:01,960 Speaker 1: the road. So um, both of those things. I don't 907 00:50:02,000 --> 00:50:05,000 Speaker 1: think oil has a lot further to go. Um, you know, 908 00:50:05,320 --> 00:50:07,680 Speaker 1: it's a close to forty five can go down to 909 00:50:07,760 --> 00:50:10,200 Speaker 1: forty I suppose, But I think we're in a zone 910 00:50:10,280 --> 00:50:14,640 Speaker 1: here where where oil can be sold in terms of 911 00:50:14,680 --> 00:50:19,640 Speaker 1: its volatility, both at levels of fifty plus and at 912 00:50:19,719 --> 00:50:23,720 Speaker 1: levels of forty minus. It's it's a it's a pleasure 913 00:50:23,760 --> 00:50:25,759 Speaker 1: to privilege to talk with you on jobs Day. And 914 00:50:26,040 --> 00:50:28,600 Speaker 1: I wonder, aside from that being a good peg, how 915 00:50:28,680 --> 00:50:31,160 Speaker 1: you how you rate the importance of data on the 916 00:50:31,280 --> 00:50:33,200 Speaker 1: labor economy when you look at the health of the 917 00:50:33,320 --> 00:50:35,640 Speaker 1: U S economy overall, in other words, when you're looking 918 00:50:35,640 --> 00:50:37,960 Speaker 1: at all of this data, this panoply of data, how 919 00:50:38,040 --> 00:50:43,200 Speaker 1: important is that is the labor market at this point? Well, 920 00:50:43,239 --> 00:50:45,600 Speaker 1: I think it is uh. And ultimately to my way 921 00:50:45,640 --> 00:50:49,960 Speaker 1: of thinking, David, I I moved from jobs to retail sales. 922 00:50:50,280 --> 00:50:53,560 Speaker 1: That there's definitely a connection, right, not a direct connection, 923 00:50:53,640 --> 00:50:56,520 Speaker 1: but to my way of thinking, that an economy is 924 00:50:56,560 --> 00:51:00,320 Speaker 1: a reflection of demand, consumer demand. That's why we have 925 00:51:00,440 --> 00:51:04,840 Speaker 1: economies to provide consumer products. And so you know, I 926 00:51:05,000 --> 00:51:08,840 Speaker 1: look straight from job creation to its effect on retail sales, 927 00:51:09,200 --> 00:51:12,359 Speaker 1: and of course we've seen some pretty disappointing numbers. That's 928 00:51:12,480 --> 00:51:14,799 Speaker 1: a lot of it. Of course, because of the transition 929 00:51:14,920 --> 00:51:18,600 Speaker 1: to UM you know to the internet as opposed to 930 00:51:18,600 --> 00:51:22,959 Speaker 1: to to hardline stores. But in any case, retail sales 931 00:51:23,000 --> 00:51:24,600 Speaker 1: have been very slow, and so you would have to 932 00:51:24,680 --> 00:51:28,680 Speaker 1: wonder how you know job creation has affected that and 933 00:51:28,800 --> 00:51:31,800 Speaker 1: why it hasn't affected it more positively. But you know, 934 00:51:31,920 --> 00:51:33,920 Speaker 1: to my way thinking, the weak economy in the first 935 00:51:34,040 --> 00:51:37,399 Speaker 1: quarter is a reflection of sales even in the face 936 00:51:37,480 --> 00:51:41,040 Speaker 1: of higher UH employment numbers that we experienced. No, there's 937 00:51:41,080 --> 00:51:43,400 Speaker 1: been no one more than you that is spoken of 938 00:51:43,480 --> 00:51:47,319 Speaker 1: this nation's financial repression. A few visits ago, you made 939 00:51:47,400 --> 00:51:49,600 Speaker 1: very clear to us you look at financial repression in 940 00:51:49,719 --> 00:51:52,480 Speaker 1: seven eight years, and I believe your language was even 941 00:51:52,560 --> 00:51:55,640 Speaker 1: a decade. I spoke to Sherman Bernanke earlier this week. 942 00:51:55,719 --> 00:51:59,319 Speaker 1: I believe I mentioned you about his Dylan South Carolina. 943 00:51:59,760 --> 00:52:03,840 Speaker 1: In the crushing weight on savers and investors? What do 944 00:52:04,080 --> 00:52:07,840 Speaker 1: they do? Let's revisit this again. What do our listeners 945 00:52:08,120 --> 00:52:15,160 Speaker 1: actually do about the dearth of yield in their investments? Well, 946 00:52:15,200 --> 00:52:16,719 Speaker 1: there are number of ways to do it. I don't 947 00:52:16,760 --> 00:52:19,720 Speaker 1: think you do it by taking more risk. Obviously, that's 948 00:52:20,160 --> 00:52:23,080 Speaker 1: one way. By taking high yield bonds as supposed to 949 00:52:23,280 --> 00:52:27,200 Speaker 1: treasuries at the extreme example, um that would not be 950 00:52:27,360 --> 00:52:30,400 Speaker 1: my recommendation simply because of the compression of spreads and 951 00:52:30,480 --> 00:52:34,960 Speaker 1: the inherent risk at these price levels. What do investors do? 952 00:52:35,160 --> 00:52:39,399 Speaker 1: What the savers do? Um? Do they sit it out? Um? Yeah, 953 00:52:39,480 --> 00:52:41,279 Speaker 1: to a certain extent, I think they do, and they 954 00:52:41,360 --> 00:52:43,840 Speaker 1: wait for a central bank, hopefully the Fed. They're on 955 00:52:43,920 --> 00:52:46,640 Speaker 1: the move upwards, although very gradually, they wait for a 956 00:52:46,719 --> 00:52:50,879 Speaker 1: central bank to to renormalize. To some extent, I don't 957 00:52:50,920 --> 00:52:53,719 Speaker 1: think that's ever going to happen relative to ten or 958 00:52:53,840 --> 00:52:56,160 Speaker 1: twenty years ago. We're not going back to a two 959 00:52:56,239 --> 00:52:59,440 Speaker 1: percent real rate of interest simply because there's too much leverage. 960 00:53:00,120 --> 00:53:04,040 Speaker 1: But savers have to be careful as as we move 961 00:53:04,120 --> 00:53:07,560 Speaker 1: higher in terms of interest rates. Uh, simply because there's 962 00:53:07,840 --> 00:53:10,920 Speaker 1: a price declines ahead. If they invest in junk bonds 963 00:53:10,960 --> 00:53:15,560 Speaker 1: and even long treasuries. What a savers doing a long term? Uh? 964 00:53:16,280 --> 00:53:19,440 Speaker 1: They save more? What do they do? They work longer? Um? 965 00:53:19,560 --> 00:53:21,560 Speaker 1: What do they do? They lower their standard of living? 966 00:53:21,600 --> 00:53:25,520 Speaker 1: And those are the repercussions basically of a low interest 967 00:53:25,640 --> 00:53:29,160 Speaker 1: rate that is a reflection of central bank policies that 968 00:53:29,239 --> 00:53:32,040 Speaker 1: have kept interest rates down. That rest interest rates like 969 00:53:32,160 --> 00:53:34,239 Speaker 1: you talked about for the last six or seven years, 970 00:53:34,400 --> 00:53:36,840 Speaker 1: is this generational and that we migrate back to what 971 00:53:37,080 --> 00:53:39,800 Speaker 1: you and I saw our grandparents doing in the twenties 972 00:53:39,840 --> 00:53:41,520 Speaker 1: and the thirties. Do we need to get the use 973 00:53:41,880 --> 00:53:46,799 Speaker 1: to a three percent coupon being a big deal? Yeah, 974 00:53:46,840 --> 00:53:49,319 Speaker 1: I think we do for a long time. I think 975 00:53:49,600 --> 00:53:52,160 Speaker 1: tonk to a certain extent. It's a function of demographics, 976 00:53:52,239 --> 00:53:55,760 Speaker 1: and a demographic wave is something that's hard to resist. 977 00:53:56,200 --> 00:53:58,480 Speaker 1: We know about the boomers and the retirement of the boomers, 978 00:53:58,520 --> 00:54:01,680 Speaker 1: and the fact that all older people spend less and 979 00:54:01,800 --> 00:54:07,240 Speaker 1: therefore the real interest rate should be uh, you nconcomminally lower. 980 00:54:07,560 --> 00:54:10,360 Speaker 1: We know that globally it's the same situation with Japan. 981 00:54:10,560 --> 00:54:14,279 Speaker 1: Is are Petra edition so uh? With demographics alone and 982 00:54:14,760 --> 00:54:18,120 Speaker 1: the high level of debt relative to GDP in most countries, 983 00:54:18,400 --> 00:54:20,719 Speaker 1: you know, it's a situation where you have to get 984 00:54:20,840 --> 00:54:24,320 Speaker 1: used to lower interest rates, if only because if central 985 00:54:24,360 --> 00:54:27,680 Speaker 1: banks raised them too much like they did in two 986 00:54:27,760 --> 00:54:30,440 Speaker 1: thousand and five and six to five and a quarter percent, 987 00:54:30,840 --> 00:54:34,400 Speaker 1: you can break the bank. Milkings to Global conference just 988 00:54:34,480 --> 00:54:36,319 Speaker 1: wrapped up in the Secretary of the Treasury was there 989 00:54:36,320 --> 00:54:38,520 Speaker 1: in conversation with our editor in chief at John Michel. 990 00:54:39,280 --> 00:54:44,880 Speaker 1: Mr Gross was pool side at the Milk conference of course, 991 00:54:45,400 --> 00:54:48,600 Speaker 1: of course, but one of the things they discussed with 992 00:54:48,680 --> 00:54:51,840 Speaker 1: the prospect of their being long bonds of Secretary monution 993 00:54:52,320 --> 00:54:55,440 Speaker 1: issuing bonds of fifty years or longer in duration. And 994 00:54:55,760 --> 00:54:57,920 Speaker 1: he says, there's a working group at Treasury looking into that. 995 00:54:58,440 --> 00:55:00,719 Speaker 1: Right now, what should they be think about, how should 996 00:55:00,719 --> 00:55:03,480 Speaker 1: they be approaching whether or not the Treasury Department shouldn't 997 00:55:03,480 --> 00:55:07,960 Speaker 1: fact issue bonds of longer duration. Well, simply, I mean, 998 00:55:08,040 --> 00:55:10,680 Speaker 1: Warren Buffett would simply say if he was asked, I 999 00:55:10,719 --> 00:55:12,680 Speaker 1: don't know if he's been asked, but he would simply say, 1000 00:55:12,800 --> 00:55:16,480 Speaker 1: you should issue debt when interest rates are exceedingly low. 1001 00:55:16,640 --> 00:55:19,640 Speaker 1: And from the Treasury standpoint, and you know, they're not 1002 00:55:19,719 --> 00:55:23,320 Speaker 1: a profit making institution, but they certainly look towards, you know, 1003 00:55:23,400 --> 00:55:26,399 Speaker 1: the attractiveness of either issuing debt at high interest rates 1004 00:55:26,440 --> 00:55:28,640 Speaker 1: or low interustrates. It's better to issue with them when 1005 00:55:28,640 --> 00:55:31,960 Speaker 1: they're low. And and and yes, it's being opposed by 1006 00:55:32,040 --> 00:55:35,239 Speaker 1: the street, by the investment banking world, and to some 1007 00:55:35,400 --> 00:55:40,160 Speaker 1: extent by the uh you know, investment institutions like Janice, 1008 00:55:40,239 --> 00:55:42,840 Speaker 1: I Guess and Pimpco. But the fact is that the 1009 00:55:42,920 --> 00:55:45,480 Speaker 1: Treasure should be loading up on fifty year dead and 1010 00:55:45,520 --> 00:55:48,520 Speaker 1: maybe even a hundred you're dead simply because at three 1011 00:55:48,560 --> 00:55:50,960 Speaker 1: and a half percent, it's about as attractive as it's 1012 00:55:51,000 --> 00:55:53,239 Speaker 1: ever going. Again, if you if you take out a mortgage, 1013 00:55:53,400 --> 00:55:55,480 Speaker 1: you want to take it out at three percent as 1014 00:55:55,520 --> 00:55:58,920 Speaker 1: opposed to five percent. And so come on, okay, Bill, 1015 00:55:59,040 --> 00:56:01,600 Speaker 1: this is really important. Everything we've talked about before is 1016 00:56:01,680 --> 00:56:06,120 Speaker 1: absolutely useless. I want you to explain the geniosity that 1017 00:56:06,239 --> 00:56:10,000 Speaker 1: the San Francisco forty Niners gave up Mitchell Trobinsky of 1018 00:56:10,160 --> 00:56:14,759 Speaker 1: David Gura's North Carolina to the Chicago Bears and yet 1019 00:56:14,840 --> 00:56:18,640 Speaker 1: took a motherload of draft excellence. Are your forty Niners 1020 00:56:18,719 --> 00:56:21,759 Speaker 1: super Bowl bound? Because he said no to Trabinsky of 1021 00:56:21,880 --> 00:56:26,880 Speaker 1: Chapel Hill, Well, certainly there's one or tim more wins 1022 00:56:26,960 --> 00:56:32,000 Speaker 1: ahead because of that. That's up ever heard of. You know, 1023 00:56:32,120 --> 00:56:34,239 Speaker 1: if I were a Chicago Bear fan, I'd be hanging 1024 00:56:34,360 --> 00:56:37,920 Speaker 1: my head and uh in shame because they moved up 1025 00:56:37,960 --> 00:56:40,160 Speaker 1: from three to two. They got the same person that 1026 00:56:40,239 --> 00:56:41,719 Speaker 1: they were going to get anyway, and they gave away 1027 00:56:41,800 --> 00:56:46,440 Speaker 1: draft choice about there you go. We we thank ESPN 1028 00:56:46,560 --> 00:56:48,640 Speaker 1: for their wisdom because I had no idea what I 1029 00:56:48,760 --> 00:56:51,440 Speaker 1: was talking about. Their nick wagon or over to ESPN 1030 00:56:51,680 --> 00:56:54,600 Speaker 1: helping me out there with Bill Gross on how the 1031 00:56:54,680 --> 00:56:58,080 Speaker 1: Bears failed on this mission. Mr Gross, thank you so much. 1032 00:56:58,440 --> 00:57:01,160 Speaker 1: With Janice Cappel and of course uh an affection for 1033 00:57:01,360 --> 00:57:03,200 Speaker 1: what they do they want if they want one or 1034 00:57:03,239 --> 00:57:06,319 Speaker 1: two more games, David, they double right double their own 1035 00:57:07,160 --> 00:57:10,799 Speaker 1: this year. David Mitchell Trobinski, He's like the real deal. Yeah, well, 1036 00:57:10,800 --> 00:57:14,840 Speaker 1: I mean highly touted. Who do you follow it? I 1037 00:57:15,120 --> 00:57:19,800 Speaker 1: follow Manchester United? I can't. I mean there's too much 1038 00:57:20,160 --> 00:57:23,200 Speaker 1: is everybody knows listening. There's just too much to watch 1039 00:57:23,440 --> 00:57:25,960 Speaker 1: right now. I will say I don't follow the NBA, 1040 00:57:26,120 --> 00:57:29,919 Speaker 1: and I love watching the busted Celtics. It's just they're 1041 00:57:29,960 --> 00:57:32,320 Speaker 1: just they're just fun. I have no idea what I'm 1042 00:57:32,360 --> 00:57:35,000 Speaker 1: looking at, but they're fun. I like it a lot. 1043 00:57:44,240 --> 00:57:48,280 Speaker 1: Thanks for listening to the Bloomberg Surveillance Podcast. Subscribe and 1044 00:57:48,440 --> 00:57:53,760 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 1045 00:57:53,920 --> 00:57:57,760 Speaker 1: platform you prefer. I'm on Twitter at Tom Keene David Gura. 1046 00:57:58,320 --> 00:58:02,000 Speaker 1: Is that David Gura? Before the podcast? You can always 1047 00:58:02,040 --> 00:58:16,640 Speaker 1: catch us worldwide. I'm Bloomberg Radio, brought you by Bank 1048 00:58:16,720 --> 00:58:20,720 Speaker 1: of America Mary Lynch, dedicated to bringing our clients insights 1049 00:58:20,760 --> 00:58:24,360 Speaker 1: and solutions to meet the challenges of a transforming world. 1050 00:58:24,880 --> 00:58:28,600 Speaker 1: That's the power of global connections. Mary Lynch, Pierce, Fenner 1051 00:58:28,680 --> 00:58:32,160 Speaker 1: and Smith Incorporated, Member s i p C