WEBVTT - Bloomberg Surveillance TV: September 5th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.640 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordert. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.720 live on Bloomberg Television weekday mornings from six to nine 0:00:27.760 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify, or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:38.320 Terminal and the Bloomberg Business app. President Donald Trump signing 0:00:38.320 --> 0:00:41.440 an executive order putting his trade deal with Japan into place. 0:00:41.479 --> 0:00:44.280 The agreement will apply a baseline fifteen percent off on 0:00:44.320 --> 0:00:48.080 nearly all Japanese imports entering the US, including automobiles. The 0:00:48.159 --> 0:00:50.600 government of Japan has also agreed to invest five hundred 0:00:50.640 --> 0:00:53.000 and fifty billion dollars in the United States. 0:00:53.200 --> 0:00:53.640 Joining us. 0:00:53.680 --> 0:00:56.000 Now, I'm very pleased to say, is the United States 0:00:56.000 --> 0:01:00.000 Secretary of Commas, Howard Lutner. Mister Secretary, Welcome to the programs. 0:01:00.400 --> 0:01:02.160 I know you wanted to talk about Japan, so let's 0:01:02.160 --> 0:01:04.080 do that. I want you to share with us the 0:01:04.160 --> 0:01:07.440 terms of this five hundred and fifty billion dollar investment fund, 0:01:07.560 --> 0:01:10.160 a collpitarive course of the negotiations that you've been helping 0:01:10.160 --> 0:01:12.640 to lead with the Japanese. Can you share with us 0:01:12.640 --> 0:01:13.800 the details this morning, sir. 0:01:15.560 --> 0:01:15.840 Sure. 0:01:15.880 --> 0:01:19.199 So this is a completely different kind of trade deal 0:01:19.240 --> 0:01:22.840 that anyone's ever seen before. So the idea is, the 0:01:22.959 --> 0:01:27.840 Japanese government will give five hundred and fifty billion dollars 0:01:28.080 --> 0:01:32.080 to Donald Trump to invest as the United States and 0:01:32.120 --> 0:01:36.200 Donald Trump sees fit in America. So the Japanese will 0:01:36.240 --> 0:01:39.919 get back their money and ninety percent of the profits 0:01:40.360 --> 0:01:44.160 will go to the American citizens, the American taxpayer. So 0:01:44.240 --> 0:01:47.880 Donald Trump, I'll give you an example. We buy all 0:01:47.960 --> 0:01:52.720 of our antibiotics, generic antibiotics in China. So Donald Trump 0:01:52.800 --> 0:01:57.200 can say, let's go build generic pharmaceuticals in America. Let's 0:01:57.200 --> 0:02:01.040 build those antibiotics in America. The Japanese will fund it, 0:02:01.440 --> 0:02:04.960 and then we will have generic antibiotics in America, will 0:02:05.000 --> 0:02:08.240 no longer be reliant on China. So it's in his 0:02:08.360 --> 0:02:13.519 hands to invest. This is not ordinary foreign companies investing. 0:02:13.600 --> 0:02:17.440 This is not Mitsubishi building a plant in America. This 0:02:17.520 --> 0:02:20.920 is five hundred and fifty billion dollars by the Japanese 0:02:20.960 --> 0:02:24.239 government put in the hands of Donald Trump that he 0:02:24.280 --> 0:02:27.560 can then invest in America. It's amazing. I mean, it's 0:02:27.600 --> 0:02:30.120 the thing I am most proud of it. It's the 0:02:30.160 --> 0:02:32.200 most proud of ever been on a business deal I've 0:02:32.200 --> 0:02:32.560 ever done. 0:02:32.639 --> 0:02:35.160 So it sounds amazing. Do the Japanese think it's amazing? 0:02:35.280 --> 0:02:36.840 And have they codified this agreement? 0:02:38.720 --> 0:02:41.120 They have so yesterday it was all signed. So the 0:02:41.160 --> 0:02:45.520 President signed the EO, I signed the MoU with Minister 0:02:45.919 --> 0:02:50.960 A Kazawa in the Commerce Department. This is signed, it 0:02:51.000 --> 0:02:54.960 is written. So what happens is Donald Trump can select 0:02:55.360 --> 0:02:58.200 the project that he wants. We put a capital call 0:02:58.240 --> 0:03:01.480 into the Japanese, they send in the money, and we 0:03:01.560 --> 0:03:03.960 build the project in America. So if you think about this, 0:03:04.520 --> 0:03:08.000 five hundred and fifty billion dollars invested during Donald Trump's 0:03:08.080 --> 0:03:12.200 term is a half a point of GDP given to 0:03:12.320 --> 0:03:16.560 the United States of America's president by the Japanese government. 0:03:16.840 --> 0:03:18.680 I mean, this is amazing. 0:03:18.800 --> 0:03:23.000 In order to have a fifteen percent tariff and so 0:03:23.040 --> 0:03:25.519 they can keep making their cars in Japan. 0:03:25.639 --> 0:03:27.960 Let's just down the details, mister secretary. So the timeline 0:03:28.000 --> 0:03:30.320 you talked about the rest of the president's term, is 0:03:30.360 --> 0:03:33.240 the reclear timeline here, and what's the enforcement mechanism to 0:03:33.240 --> 0:03:34.120 make sure it happens. 0:03:36.240 --> 0:03:37.160 Well, two things. 0:03:37.240 --> 0:03:41.320 Number One, they've committed that they will meet the Capitol call. 0:03:41.440 --> 0:03:44.320 So when we're building a project, they will fund the 0:03:44.360 --> 0:03:49.840 project's building during the term this investment lasts through, meaning 0:03:49.880 --> 0:03:52.840 they will put out the money through the rest of 0:03:52.880 --> 0:03:57.080 Donald Trump's term. So January twenty twenty nine, and let's 0:03:57.080 --> 0:03:59.680 say halfway through and they've invested two hundred and fifty 0:03:59.720 --> 0:04:01.920 billion dollars, they stop. 0:04:02.200 --> 0:04:03.880 Saying, I don't want to send you any more money. 0:04:04.120 --> 0:04:07.000 The tariffs pack, you know, pop right back up. 0:04:07.080 --> 0:04:12.560 And they no longer receive the cash flow from these projects. 0:04:12.800 --> 0:04:15.640 They would all just stay with the United States of America. 0:04:15.720 --> 0:04:18.480 So there is just no way they're going to not 0:04:18.880 --> 0:04:22.440 fund these projects. And Donald Trump is going to deliver 0:04:23.160 --> 0:04:24.200 to the American people. 0:04:24.240 --> 0:04:26.240 And this deal is really it's. 0:04:26.279 --> 0:04:28.880 If you think about it, five hundred and fifty billion 0:04:28.920 --> 0:04:33.279 dollars of Japanese government's money in order to buy down 0:04:33.360 --> 0:04:37.680 their tariff in Donald Trump's hands for his availability to 0:04:37.880 --> 0:04:43.040 invest and build in America. Alaska pipeline scale fifty billion, 0:04:43.080 --> 0:04:44.080 one hundred billion. 0:04:44.360 --> 0:04:45.480 Donald Trump wants. 0:04:45.279 --> 0:04:50.040 To unleash the Alaska pipelines. The Japanese will finance it, 0:04:50.160 --> 0:04:51.440 and it's great for America. 0:04:51.920 --> 0:04:52.800 It's fantastic. 0:04:52.960 --> 0:04:54.839 It's the Secretary to appreciate. We've got a number of 0:04:54.839 --> 0:04:56.599 topics to get through with you in a short amount 0:04:56.600 --> 0:04:57.800 of time, so I wanted to turn to one of 0:04:57.800 --> 0:05:00.320 the issues in India. This came from the present this 0:05:00.360 --> 0:05:03.239 morning on social media. It looks like we've lost India 0:05:03.400 --> 0:05:07.080 and Russia for that matter, to deepest darkest China. May 0:05:07.120 --> 0:05:10.839 they have a long and prosperous future together. This relationship 0:05:10.920 --> 0:05:13.200 between the US and India has clearly soured. 0:05:13.279 --> 0:05:13.440 You. 0:05:13.440 --> 0:05:15.640 Your South said earlier this year that India rubbed the 0:05:15.760 --> 0:05:19.840 US the wrong way. There's an understandable tension that continues 0:05:19.880 --> 0:05:22.720 to build. But they're not the only ones buying Russian energy. 0:05:22.960 --> 0:05:25.200 The Chinese are buying Russian energy, and for that matter, 0:05:25.279 --> 0:05:27.480 the Europeans too. And I think there's a sense from 0:05:27.480 --> 0:05:30.080 the Indian side, mister Secretary, that they feel singled out, 0:05:30.120 --> 0:05:33.719 perhaps unfairly. What's your comment, your message for them this morning? 0:05:35.800 --> 0:05:42.279 Well, remember before the Russian conflict, the Indians bought less 0:05:42.320 --> 0:05:47.480 than two percent of their oil from Russia. Less than 0:05:47.480 --> 0:05:51.920 two percent and now they're buying forty percent. 0:05:52.040 --> 0:05:53.280 Of their oil from Russia. 0:05:53.320 --> 0:05:57.640 What they're doing is because the oil is sanctioned, it's 0:05:57.800 --> 0:06:01.000 really really cheap because the Russia trying to find people 0:06:01.040 --> 0:06:04.159 to buy it, and so the Indians have just decided, ah, 0:06:04.240 --> 0:06:07.000 the heck with it, let's buy cheap and make a 0:06:07.040 --> 0:06:07.840 ton of money. 0:06:08.120 --> 0:06:11.960 But you know what, that is just plain wrong. 0:06:12.600 --> 0:06:17.000 It's ridiculous, and they either need to decide which side they. 0:06:16.920 --> 0:06:19.480 Want to be on. You know what's funny is I 0:06:19.600 --> 0:06:21.200 remember the Chinese. 0:06:20.880 --> 0:06:24.400 Sell the Chinese, Well, we're always willing to talk. The 0:06:24.520 --> 0:06:28.440 Chinese sell to us, the Indians sell to us. They're 0:06:28.440 --> 0:06:30.040 not going to be able to sell to each other. 0:06:30.600 --> 0:06:34.200 We are the consumer of the world. People have to 0:06:34.200 --> 0:06:39.040 remember it's our thirty trillion dollar economy that is the 0:06:39.080 --> 0:06:42.240 consumer of the world. So eventually they all have to 0:06:42.279 --> 0:06:46.080 come back to the customer, because we all know eventually 0:06:46.160 --> 0:06:47.880 the customer is always right. 0:06:48.200 --> 0:06:50.919 When you are talking with India, mister Secretary, I know 0:06:50.920 --> 0:06:53.640 a lot of companies in the US have shifted manufacturing 0:06:53.680 --> 0:06:56.440 to India from China's there's a real interest in this 0:06:57.040 --> 0:07:00.400 in terms of their costs. How much do you feel 0:07:00.440 --> 0:07:02.440 like you've lost leverage as a result of the court 0:07:02.520 --> 0:07:05.240 case that came out fairly recently. 0:07:07.080 --> 0:07:11.840 We haven't lost any thing with respect to the court case. 0:07:11.960 --> 0:07:12.720 If you look at the. 0:07:12.720 --> 0:07:16.400 Descent right, it was seven to four. Read the descent cheat. 0:07:16.440 --> 0:07:20.040 The current Chief Justice sided with President Trump, the former 0:07:20.120 --> 0:07:24.720 Chief Justice sided with President Trump, and the incoming Chief 0:07:24.880 --> 0:07:28.400 Justice sided with President Trump. And the smartest guy on 0:07:28.440 --> 0:07:31.280 the bench, which is well known who the smartest guy. 0:07:31.200 --> 0:07:33.240 On the bench is, he sided with Donald Trump. 0:07:33.280 --> 0:07:35.560 So I think you are going to see the Supreme 0:07:35.600 --> 0:07:38.440 Court side with Donald Trump. And I don't think we've 0:07:38.480 --> 0:07:42.560 lost leverage. What we've lost is that India doesn't yet 0:07:42.640 --> 0:07:47.000 want to open their market. Stop buying Russian oil, right, 0:07:47.280 --> 0:07:50.640 and stop being a part of bricks right. They're the 0:07:50.760 --> 0:07:54.240 vowel between Russia and China. If that's who you want 0:07:54.240 --> 0:07:57.679 to be, go be it. But either support the dollar, 0:07:58.040 --> 0:08:01.960 support the United States of America, support your biggest client, 0:08:02.720 --> 0:08:05.760 who was the American consumer, or I guess you're going 0:08:05.840 --> 0:08:08.120 to be a fifty percent tariff and let's see how 0:08:08.120 --> 0:08:09.040 long this lasts. 0:08:09.080 --> 0:08:10.840 It seems like there's been a hardening of the line, 0:08:10.880 --> 0:08:14.000 both with President Trump as well as Mody, and a 0:08:14.080 --> 0:08:16.559 sense that there isn't really a coming together. In fact, 0:08:16.840 --> 0:08:20.720 that meeting with Jujenpang and Vladimir Putin and FRIM Minister 0:08:20.800 --> 0:08:24.080 Mody seemed to indicate a coalescing of the bricks. 0:08:24.360 --> 0:08:25.760 Do you see anywhere in. 0:08:25.720 --> 0:08:28.240 The next month two months any type of deal or 0:08:28.280 --> 0:08:34.960 backing down to a lower rate with India. 0:08:32.920 --> 0:08:33.600 I would expect. 0:08:33.800 --> 0:08:37.480 You saw it in Canada, right the Carney got elected 0:08:37.480 --> 0:08:41.720 with this term elbows up, meaning let's fight with America. 0:08:41.760 --> 0:08:45.520 They put on retaliatory tariffs. They were all bravado, and 0:08:45.600 --> 0:08:50.760 what happened? Their GDP negative one point six percent, unemployment 0:08:50.960 --> 0:08:54.280 rocketing towards eight percent, and what did Carney just do? 0:08:54.679 --> 0:08:59.400 He just finally finally dropped his retaliatory tariffs. So I 0:08:59.400 --> 0:09:02.760 think what happens is it's all bravado because you think 0:09:02.800 --> 0:09:05.600 it feels good to fight with the biggest client in 0:09:05.640 --> 0:09:09.240 the world. But eventually your businesses are going to say, 0:09:09.559 --> 0:09:11.600 you've got to stop this and go make your deal 0:09:11.679 --> 0:09:14.240 with America. So I think, yes, in a month or 0:09:14.280 --> 0:09:16.320 two months, I think India is going to be at 0:09:16.320 --> 0:09:18.880 the table and they're going to say they're sorry, and 0:09:18.920 --> 0:09:20.960 they're going to try to make a deal with Donald Trump. 0:09:21.200 --> 0:09:23.440 And it will be on Donald Trump's desk how he 0:09:23.480 --> 0:09:26.600 wants to deal with Mody and we leave that to him. 0:09:26.600 --> 0:09:27.960 That's why he's the president. 0:09:27.800 --> 0:09:29.880 Speaking of making a deal. I understand the Swiss are 0:09:29.880 --> 0:09:32.640 in town, just tearing that the Swiss Vice president has 0:09:32.679 --> 0:09:34.560 turned up in the Nat of Stice again. Is there 0:09:34.559 --> 0:09:37.240 a meeting on the agenda to today going into the weekend. 0:09:39.160 --> 0:09:42.520 Yes, so I'm going to meet with the Swiss delegation. 0:09:42.960 --> 0:09:45.880 They're coming in to make a new proposal, and the 0:09:45.920 --> 0:09:47.440 Trump administration is. 0:09:47.440 --> 0:09:48.680 Always willing to listen. 0:09:49.040 --> 0:09:51.480 But you have to remember, you know, the Swiss like 0:09:51.559 --> 0:09:54.480 to say they're a small country of only nine million people, 0:09:54.720 --> 0:09:56.400 a small rich country. 0:09:56.559 --> 0:09:58.040 And how do they become so rich? 0:09:58.520 --> 0:10:01.640 They sell us pharmacuit articles like it's going out of style, 0:10:01.679 --> 0:10:04.840 all right. They make so much money off of America. 0:10:05.360 --> 0:10:07.880 That's why they're rich. So let's hear what they have 0:10:07.960 --> 0:10:10.560 to say. We'll discuss it with the president. You know, 0:10:10.679 --> 0:10:14.080 I'm not optimistic, but I'm always willing to listen, and 0:10:14.120 --> 0:10:15.280 Donald Trump is always. 0:10:15.040 --> 0:10:18.520 Why are you not optimistic? Traditionally there's been a decent relationship. 0:10:18.559 --> 0:10:21.440 Then the president's first term relied on the Swiss a 0:10:21.440 --> 0:10:23.560 lot when it came to foreign policy and developments in 0:10:23.600 --> 0:10:26.120 places like Iran. What's happened this time? 0:10:27.960 --> 0:10:28.800 Well, if you. 0:10:29.120 --> 0:10:33.559 Just consider trade, right, you know, the European Union, right, 0:10:33.640 --> 0:10:37.440 they open their market four hundred and fifty million people, 0:10:37.880 --> 0:10:41.320 twenty trillion dollar economy, and they say, well, take our 0:10:41.400 --> 0:10:45.680 tariffs down to zero. You the American exporters can sell 0:10:45.800 --> 0:10:47.000 us everything. 0:10:47.160 --> 0:10:48.839 I mean, how fantastic is that? 0:10:49.160 --> 0:10:51.960 And they say we'll pay you fifteen percent and you 0:10:52.120 --> 0:10:55.960 pay us nothing. I mean, that is really really attractive. 0:10:56.000 --> 0:10:59.679 Now you go to Switzerland, nine million people. I mean, 0:11:00.040 --> 0:11:03.240 they're going to offer the American exporter as compared to 0:11:03.840 --> 0:11:07.680 the size and scale by which they export and earn 0:11:07.760 --> 0:11:10.600 money off of us. So the idea is we need 0:11:10.760 --> 0:11:14.160 balanced in fair trade. And that's a difficult thing. Now 0:11:14.200 --> 0:11:18.000 you saw the Japanese. They decided to take a completely 0:11:18.120 --> 0:11:21.720 different path, and what they said is we will give 0:11:22.120 --> 0:11:25.760 Donald Trump the power to invest five hundred and fifty 0:11:25.920 --> 0:11:30.280 billion dollars as he at his direction, for the benefit 0:11:30.320 --> 0:11:31.040 of America. 0:11:31.400 --> 0:11:32.960 Now that's a different way of thinking. 0:11:33.000 --> 0:11:35.000 Now, if the Swiss come out of the box with 0:11:35.120 --> 0:11:37.920 a whole new way of thinking, I'm open minded. But 0:11:37.960 --> 0:11:41.400 if they just say our rich companies are going to 0:11:41.520 --> 0:11:44.640 buy more of America. I mean, that's what Donald Trump 0:11:44.679 --> 0:11:48.640 is complaining about. You realized in nineteen eighty five, we 0:11:49.000 --> 0:11:51.679 America owned more of the rest of the world. We 0:11:51.720 --> 0:11:54.040 owned one hundred and just about one hundred and fifty 0:11:54.080 --> 0:11:55.920 billion of the rest of the world. And you know, 0:11:55.960 --> 0:11:58.760 in twenty twenty five, when Donald Trump takes office, the 0:11:58.800 --> 0:12:00.079 rest of the world owns. 0:12:00.160 --> 0:12:03.400 Twenty six trillion more. 0:12:03.240 --> 0:12:05.400 Of us because they just use all the money they 0:12:05.400 --> 0:12:08.079 make off of us to buy us, and sooner or 0:12:08.120 --> 0:12:10.600 later they're just going to own us. And Donald Trump 0:12:10.600 --> 0:12:13.480 has said enough of this, We are going to own 0:12:13.520 --> 0:12:14.960 ourselves going forward. 0:12:15.040 --> 0:12:17.400 Mister Secretary, I know you're your own boss on your 0:12:17.440 --> 0:12:19.199 own time, but your team is telling us we've got 0:12:19.200 --> 0:12:20.920 to go shortly, so I'm gonna squeeze out a few 0:12:20.920 --> 0:12:23.400 more minutes if I can. At a thirty Eastern time. 0:12:23.400 --> 0:12:25.400 We're meant to get a job's number. This is what 0:12:25.440 --> 0:12:27.760 we heard from the BLS just moments ago that the 0:12:27.840 --> 0:12:31.280 Bureau of Labor Statistics says it's experiencing a technical problem 0:12:31.559 --> 0:12:35.800 and data retrieval tools are currently not available on the website. Sir, 0:12:36.080 --> 0:12:38.280 are we going to see a number in ten minutes time. 0:12:39.880 --> 0:12:41.120 I don't know if we're gonna see the number, but 0:12:41.200 --> 0:12:43.400 I tell you it makes it crystal clear. You should 0:12:43.400 --> 0:12:45.800 have fired the person who was running that group right. 0:12:45.840 --> 0:12:48.240 Because it didn't fire them two weeks ago, you sure 0:12:48.280 --> 0:12:50.839 at heck would be firing them today. So they need 0:12:50.920 --> 0:12:53.679 new leadership in BLS, that's for sure. 0:12:53.800 --> 0:12:56.600 They need new tech and BLS, that's for sure. 0:12:56.840 --> 0:13:00.520 And Donald Trump needs to rely upon the numbers. America 0:13:00.600 --> 0:13:03.120 needs to rely upon the numbers. You can't have these 0:13:03.200 --> 0:13:07.280 bent former administration people who have a view and who 0:13:07.320 --> 0:13:11.160 want to harm the president. We need accurate numbers coming 0:13:11.160 --> 0:13:14.720 from BLS and finally we'll have new leadership. 0:13:14.280 --> 0:13:14.840 To deliver it. 0:13:14.960 --> 0:13:17.400 Mister secretary, you're also going to promise new resources for 0:13:17.440 --> 0:13:20.400 them to increase their collection and increase some of their 0:13:20.440 --> 0:13:23.320 staff to go out and make this data accurate. 0:13:25.400 --> 0:13:25.600 Yeah. 0:13:25.640 --> 0:13:28.600 Can you imagine they had people calling around. I mean, 0:13:28.679 --> 0:13:33.920 come on, computers, computers, Wow, it's twenty twenty five and 0:13:33.960 --> 0:13:39.960 a half. Computers, new resources, new technology, wildly better information. 0:13:40.400 --> 0:13:43.720 That's what America demands. That's what Donald Trump's going to 0:13:43.720 --> 0:13:46.120 give them. And you just need to change leadership every 0:13:46.160 --> 0:13:48.360 once in a while and make sure we get it right. 0:13:48.480 --> 0:13:52.240 I'm excited about what's coming. Of course, you fire the person, 0:13:52.320 --> 0:13:54.680 what do you learn? You learn that their technology is 0:13:54.840 --> 0:13:55.880 just voet. 0:13:56.520 --> 0:13:58.160 But we'll fix it. We'll fix it. 0:13:59.280 --> 0:14:02.800 Stay with us. More Bloomberg surveillance coming up after this. 0:14:11.960 --> 0:14:14.520 Payrolls report did drop on time four minutes ago twenty 0:14:14.559 --> 0:14:18.320 two thousand downside surprise seventy five was the estimate. You're 0:14:18.320 --> 0:14:21.000 looking at a three month average now for payrolls of 0:14:21.120 --> 0:14:24.480 just twenty nine thousand captured in the bond market, with 0:14:24.520 --> 0:14:26.560 lower yields in the FX market, with a week of 0:14:26.640 --> 0:14:30.480 dollar inequities, equities still positive on the session by a 0:14:30.560 --> 0:14:32.800 quarter of one percent on the S and P five hundred, 0:14:33.040 --> 0:14:36.240 the NASNAK sell up nicely by zero point seven. The russell, 0:14:36.600 --> 0:14:39.960 after a seven percent surge in August, up again this morning. 0:14:40.080 --> 0:14:42.960 This idea that this could lead to a reignition of 0:14:43.000 --> 0:14:44.960 the cycle, and it goes back to the question that 0:14:45.000 --> 0:14:47.520 you asked yesterday. Is this a FED that will be 0:14:47.520 --> 0:14:51.320 cutting into something of a reacceleration or that will cut 0:14:51.360 --> 0:14:54.280 and spur that reacceleration. Right now, the market, based on 0:14:54.320 --> 0:14:56.800 the market activity, seems to think that raycut could be 0:14:56.880 --> 0:15:00.440 very helpful. In allowing the reignition of cycle. 0:15:00.480 --> 0:15:02.480 We've got a fantastic lineup for the next twenty five 0:15:02.520 --> 0:15:04.360 minutes or so. We can kick it off with Stephanie 0:15:04.440 --> 0:15:07.320 Roth of Wolf Research. Stephanie Gimonic. No morning, you've had 0:15:07.360 --> 0:15:09.120 five minutes to go over this, so what's your first take? 0:15:09.440 --> 0:15:13.640 First take is another week summer employment report. Immigration seems 0:15:13.680 --> 0:15:15.680 to be having another impact on the data. When you 0:15:15.680 --> 0:15:18.360 look at the household survey, the foreign worm population was 0:15:18.400 --> 0:15:22.040 again sort of the weaker part of it. Looking ahead, 0:15:22.080 --> 0:15:24.880 we expect that you'll have one more piece of negative news. 0:15:24.880 --> 0:15:28.280 So September ninth, once we get the annual preliminary benchmark revisions, 0:15:28.440 --> 0:15:30.360 that's going to be revised down to the tune of 0:15:30.360 --> 0:15:32.480 something like six hundred thousand. That's going to be another 0:15:32.520 --> 0:15:35.000 really bad negative headline. Then beyond that, we think that 0:15:35.960 --> 0:15:38.120 the signs will look a little bit better. So we 0:15:38.160 --> 0:15:39.920 have another couple of weeks of this. It should be 0:15:40.240 --> 0:15:43.360 a dubbsh September FMC, And then beyond that we think 0:15:43.400 --> 0:15:44.920 that the tides could turn up a little bit, and 0:15:44.960 --> 0:15:47.760 then you'll start to see the economy start to pick 0:15:47.840 --> 0:15:50.400 up cyclically. You'll have a bit of a trough and 0:15:50.440 --> 0:15:51.800 then the dynamics could look. 0:15:51.720 --> 0:15:52.200 A bit different. 0:15:52.240 --> 0:15:54.400 The first thing you went to, though, was population growth. 0:15:54.760 --> 0:15:56.920 Do you think there's still a big supply side story 0:15:56.920 --> 0:15:59.000 that's under appreciated in these numbers. 0:15:59.160 --> 0:16:01.600 Yes, I do. I think that's a large part of 0:16:01.640 --> 0:16:03.560 what's going on. Of course, it's hard to sort of 0:16:03.600 --> 0:16:05.120 decipher months a month, but if you look at the 0:16:05.160 --> 0:16:08.240 household survey, foreign born employment was down three hundred and 0:16:08.240 --> 0:16:10.560 forty two thousand, when native born was up four hundred 0:16:10.560 --> 0:16:14.840 and fifty one thousand. The label force participation rate for 0:16:14.840 --> 0:16:18.080 foreign born take down again, So it does look like 0:16:18.440 --> 0:16:21.520 you're seeing some continued weakness out. 0:16:21.360 --> 0:16:21.880 Of the immigration. 0:16:22.000 --> 0:16:24.760 That's helps explain why PARA growth was negative. In June, 0:16:24.800 --> 0:16:27.800 we had five hundred thousand people from the HNV program 0:16:27.840 --> 0:16:30.160 whose visas got expired overnight from May to June. 0:16:30.400 --> 0:16:33.000 If that's the case, why aren't we seeing faster wage growth? 0:16:33.120 --> 0:16:36.120 Why are we seeing the underemployment rate going up? Why 0:16:36.160 --> 0:16:38.600 are we seeing the average number of hours worked in 0:16:38.600 --> 0:16:41.600 a week kind of stay stagnant or even go down. Right, 0:16:41.600 --> 0:16:43.720 These are the sides of weakness that people look at 0:16:44.040 --> 0:16:46.320 on the corners and say, wait a second, there is 0:16:46.360 --> 0:16:49.240 something here that speaks to the demand side as much 0:16:49.280 --> 0:16:51.480 as there is this also supply side story. 0:16:51.600 --> 0:16:56.000 Yeah, I mean the wages were fine zo point three percent, 0:16:56.000 --> 0:16:58.200 which is an okay number, not a number that you 0:16:58.200 --> 0:17:00.680 would expect if the belid market is really falling apart. 0:17:01.040 --> 0:17:03.200 So what we're seeing is a combination of supplying demand. 0:17:03.240 --> 0:17:05.400 It's certainly not just a supply side story. The band 0:17:05.480 --> 0:17:07.439 is also softened, but when you look at for the 0:17:07.480 --> 0:17:10.000 months ahead, that demand should start to pick up as 0:17:10.040 --> 0:17:12.040 the tarif uncertainty starts to fade. So we had a 0:17:12.080 --> 0:17:15.200 lot of things, largely policy driven, that hit the economy 0:17:15.240 --> 0:17:17.640 over the summer that should go the other way later 0:17:17.720 --> 0:17:19.919 this year. But right now it's a combination of a 0:17:19.960 --> 0:17:23.080 supply side shock and also some significant hits to the 0:17:23.080 --> 0:17:23.800 demand side as well. 0:17:23.880 --> 0:17:28.480 Mam McKay standing by Mike, you've got some moll Yeah. 0:17:28.560 --> 0:17:31.360 John, to the issue you're just talking about now, I'm 0:17:31.359 --> 0:17:34.240 not sure it holds a lot of water. Because the 0:17:34.280 --> 0:17:37.560 civilian labor force grew by four hundred and thirty six 0:17:37.640 --> 0:17:40.840 thousand during the month, which is the biggest since April, 0:17:41.160 --> 0:17:44.080 and April was when the month that we saw the 0:17:44.200 --> 0:17:48.480 market the labor data start to weaken. The participation rate 0:17:48.600 --> 0:17:52.120 actually ticked up, and at this point it doesn't look 0:17:52.200 --> 0:17:53.920 like immigration played a big role. 0:17:54.000 --> 0:17:55.280 I have to mention here. 0:17:55.160 --> 0:17:58.400 That the BLS cautions on its website and in its 0:17:58.640 --> 0:18:02.960 literature not to use the foreign board native born population 0:18:03.080 --> 0:18:06.359 statistics to just tell you what happened this month, because 0:18:06.359 --> 0:18:10.399 there are statistical reasons that they don't. It's complicated. I 0:18:10.400 --> 0:18:12.000 won't go into it on the air, but I'm not 0:18:12.040 --> 0:18:14.880 sure that gives us a whole lot of information. It's 0:18:14.920 --> 0:18:19.439 been a talking point used by administrations from both parties, 0:18:19.480 --> 0:18:21.879 but I'm not sure that that makes a lot of difference. 0:18:21.880 --> 0:18:24.640 The biggest thing that we saw in the numbers here 0:18:24.720 --> 0:18:29.080 quickly is that leisure and hospitality, and also education and 0:18:29.160 --> 0:18:32.240 health are the only two categories that really show any 0:18:32.280 --> 0:18:35.919 growth at all. Education and health about forty six thousand, 0:18:36.000 --> 0:18:40.080 leisure hospitality twenty eight thousand. There are an awful lot 0:18:40.160 --> 0:18:42.320 of categories that lost jobs. 0:18:42.000 --> 0:18:42.800 During the month. 0:18:43.080 --> 0:18:45.760 I will point out that construction jobs were down by 0:18:45.760 --> 0:18:48.840 seven thousand, ADP had them up by sixteen thousand. And 0:18:48.880 --> 0:18:52.080 in that strange comment the President made last night about 0:18:52.119 --> 0:18:56.199 the payroll report, which suggested he already knew what the 0:18:56.240 --> 0:18:58.840 numbers were He said, it's all construction now, but it 0:18:58.840 --> 0:18:59.560 doesn't seem. 0:18:59.320 --> 0:18:59.880 To be construction. 0:19:00.440 --> 0:19:03.119 Mike McKay with Elysis might thank you, Stephanie. You were 0:19:03.119 --> 0:19:05.359 following that explanation. Please I want to give you some 0:19:05.400 --> 0:19:06.040 time to respond. 0:19:06.280 --> 0:19:08.000 Yeah, so, I mean, I think it's fair. 0:19:08.040 --> 0:19:09.720 The data are certainly volid a month a month, but 0:19:09.720 --> 0:19:12.920 if you look at the foreign born statistics out of 0:19:12.960 --> 0:19:16.080 the household survey, it's been fairly weak for the past 0:19:16.080 --> 0:19:18.720 couple of months. So it to the extent that, of 0:19:18.760 --> 0:19:20.600 course it's not a perfect picture, but we do know 0:19:20.840 --> 0:19:24.480 that there's significant crackdown from an immigration perspective that is 0:19:24.560 --> 0:19:27.520 likely having some impact. Although it's very difficult to get 0:19:27.560 --> 0:19:29.520 a clean read out of the data. You saw the 0:19:29.520 --> 0:19:32.080 foreign born employment fall threeinge of forty two thousand in 0:19:32.119 --> 0:19:35.560 August four and sixteen in July. It's hard to say 0:19:35.560 --> 0:19:37.720 that there's no impact from an immigration perspective. Of course, 0:19:37.760 --> 0:19:40.159 it's difficult to get the exact precise numbers out of 0:19:40.160 --> 0:19:42.479 the household survey because it is notoriously validile as might 0:19:42.560 --> 0:19:44.200 just mention, yeah, but it's hard to say that there's 0:19:44.200 --> 0:19:45.840 no impact from immigrate Getting a range. 0:19:45.640 --> 0:19:48.720 Of responses already this morning. This from nil Data of Renmak. 0:19:48.800 --> 0:19:51.760 The Hawks have lost on their own terms. Employment growth 0:19:51.800 --> 0:19:54.919 is still calling and the unemployment rate is rising. 0:19:55.200 --> 0:19:57.199 You have right now one hundred percent chance of a 0:19:57.280 --> 0:20:00.760