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Speaker 1: This is Bloomberg Surveillance. We don't know where the next

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Speaker 1: procession is. All we know is that this expansion is

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Speaker 1: about six and a half years old, and that's longer

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Speaker 1: than the average expansion. We're getting signals which are the

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Speaker 1: starting cause interest rates for two role. It would be

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Speaker 1: a terrible commentary and a terrible thing in reality if

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Speaker 1: it takes an overt crisis to get agreement or get progress,

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Speaker 1: and then you're risking things going crazy. Bloomberg Surveillance your

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Speaker 1: link to the world of economics, finance and investment on

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Speaker 1: Bloomberg Radio. Good runing everyone, Michael McKain, Tom Keene This

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Speaker 1: Thursday before Job'sday. Coming up Stewart Offman of p n C.

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Speaker 1: We'll look at a fair, using balanced view of the

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Speaker 1: American economy from Dr Hoffman. Really looking forward to talking

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Speaker 1: to Stewart Hoffman. Bloomberg Surveillance this morning brought to by

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Speaker 1: Cone Resnick Accounting, tax, advisory, regulatory changes can impact your business.

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Speaker 1: See how the experts at Cone Resneck can help you

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Speaker 1: navigate these complexities. Find out more at cone Resnik dot com.

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Speaker 1: C O h n R e z n I c

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Speaker 1: K cone Resnik dot com. Jobs Today tomorrow started catching up.

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Speaker 1: I mean, we've got Governor Romney speaking today. There'll be

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Speaker 1: a lot of political news out of that. With all

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Speaker 1: due respect, with perspective this evening, Mark Halperin and John Heileman,

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Speaker 1: we're trying to get back into economics, finance, investment, the

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Speaker 1: linkages into our international relations, and I guess you do

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Speaker 1: that at eight thirty tomorrow morning, Alan Krueger, Bill Gross

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Speaker 1: joining us among other worthies right now, Michael McKee, Stewart

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Speaker 1: Hoffman joining us, which is wonderful because what I've never

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Speaker 1: seen anything plunge, crater, surge, dominate whatever in the research

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Speaker 1: work of Stewart Hoffman. It is a careful, measured look

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Speaker 1: it where we are. That's a good thing. Stewart off,

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Speaker 1: what's been too long? Good morning very much. Try to

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Speaker 1: be measured, but never afraid to take a stand within

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Speaker 1: to take the stand. What is the linkage of this

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Speaker 1: job's report to what you are yelling and other worthies

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Speaker 1: will do at the March sixteen meeting. Are they linked?

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Speaker 1: Of course they're linked, But I think it's a very

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Speaker 1: high bar to get the Fed to move, you know,

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Speaker 1: in in in their meeting in two weeks. You know,

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Speaker 1: I suppose if this number, we're just off the charts,

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Speaker 1: three or four hundred thousand jobs. Another five tenths increase

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Speaker 1: in the average GARY earnings, maybe that could change the dynamics.

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Speaker 1: But I think the number is important. But given what

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Speaker 1: the Fed has said that they're monitoring and they need

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Speaker 1: some more time to figure out what these international events

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Speaker 1: and start market events and tighter or wider spreads, I

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Speaker 1: think they just say let's buy some time no matter

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Speaker 1: what this job's report shows us tomorrow. Interesting because if

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Speaker 1: the the markets had not cratered in January, would the

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Speaker 1: Fed be on track to raise rates in March given

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Speaker 1: the data that we have. The hypothetical, given that the

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Speaker 1: inflation data, not the expectation numbers, but the actual inflation data,

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Speaker 1: the PC deflator, the core was cruising along one point

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Speaker 1: three percent in the first three quarters of last year

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Speaker 1: with some upward revisions, and now turns out to eat

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Speaker 1: up a little to one four in the fourth quarter.

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Speaker 1: And then that January number, although it's still one month,

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Speaker 1: you know, it was a biggest increase we've seen in years.

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Speaker 1: So I suppose if the Judge report tomorrow was super

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Speaker 1: strong and the stock market was higher than it was

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Speaker 1: at the beginning of the year and spreads were narrower,

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Speaker 1: maybe the Fed would be on track. But you know,

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Speaker 1: they're going to deal with the reality that the markets

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Speaker 1: are telling them at least BI little time, go a

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Speaker 1: little slower. They probably don't want to see the dollar

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Speaker 1: go up a lot, especially if next week the e

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Speaker 1: c B is they're highly likely to do, are going

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Speaker 1: to expand their monetary policy, go deeper on negative rates,

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Speaker 1: extend and probably in large QUEWI so, yes, how many heads,

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Speaker 1: how many pin? How many angels can you fit on

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Speaker 1: the head of the pin? But right now is the

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Speaker 1: data they have? You know, you know, I look, I

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Speaker 1: look stewarted it why will C plusiples gles and it's

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Speaker 1: let's start with the basic idea. Mike and I address

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Speaker 1: this in our trip to Washington the last few days.

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Speaker 1: I think we have a handle of the state of

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Speaker 1: austerity in the United Kingdom. What is the state of

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Speaker 1: austerity within the g part of GDP. I wouldn't call

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Speaker 1: it austerity. I mean it's pretty neutral. It certainly was

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Speaker 1: austere in the sense that for the last three years

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Speaker 1: federal spending was pretty flat, which maybe in the short

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Speaker 1: run is a little austere, but you know precisely what

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Speaker 1: we need for the intermediate or longer run. Of course,

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Speaker 1: the tax hikes often have you know, been absorbed. Last year,

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Speaker 1: we did get a budget, uh, and federal spending is

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Speaker 1: going to go up a bit this year defense and

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Speaker 1: non defense. We didn't get any additional tax hikes. So

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Speaker 1: at the federal level, I would say it is not

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Speaker 1: austere neutral. At the state and local level, I think

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Speaker 1: it's actually positive. We're seeing you know, we're seeing jobs growing. Uh.

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Speaker 1: In the construction report that came out on public instruction,

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Speaker 1: and you know, those numbers are very jumpy. That's why

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Speaker 1: I don't use words like plunge, because I'd like to

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Speaker 1: use three months moving average, which often smooth out a

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Speaker 1: lot of the plunges and the and the spikes. But

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Speaker 1: if you look now over the last or four months,

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Speaker 1: construction at the public level, highways, roads, bridges, its deaths.

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Speaker 1: But we needed is definitely doing better. And certainly you

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Speaker 1: see construction jobs going up, so they're not hiring those

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Speaker 1: people to do to sit around and do nothing, both

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Speaker 1: on the public side and on the private side. So yes,

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Speaker 1: I think I would say government, state, local, and federal

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Speaker 1: is a positive for the US economy this year. Well,

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Speaker 1: we have the job's report tomorrow. Everybody, we're looking at

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Speaker 1: a wage growth when we get a little more of

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Speaker 1: a hint from the unit labor costs number that comes

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Speaker 1: out today. But what are you expecting are is the

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Speaker 1: trend going to continue? Yeah? I think the trend of

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Speaker 1: going up slowly is going to continue, you know. We

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Speaker 1: you know, you can use the employment cost index or

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Speaker 1: the number that of course comes out is the average

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Speaker 1: hourly earnings index comes out monthly with the employment report.

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Speaker 1: I mean that measure. Really both measures were stuck at

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Speaker 1: two percent or a little under thirteen fourteen. I'm sure

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Speaker 1: that's where some of this angst, not only that short

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Speaker 1: run but longer run uh we see in the in

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Speaker 1: the political environment. But last year, finally, particularly the second

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Speaker 1: half of the year, we started to see some acceleration

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Speaker 1: in that. I tend to like to look at it

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Speaker 1: as a two quarter moving average or year over year.

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Speaker 1: In the year over year number in January was two

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Speaker 1: point five. I think the MARS number for just for

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Speaker 1: the month of February will back off maybe a tenth

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Speaker 1: or two, but still be up two and a half

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Speaker 1: percent from uh this time last year. So I think

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Speaker 1: wages at acceleration. Let me recast what I asked Scott

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Speaker 1: ran earlier, who's an investment equity strategist, same question, folks,

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Speaker 1: For an economist like Stewart, often the basic idea of

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Speaker 1: a single digit world in your language, Stewart, a new

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Speaker 1: lower damn phenomenal g d P, a new terminal rate

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Speaker 1: or potential g d P. Are we prepared for that?

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Speaker 1: By we, do you mean the minty or the country.

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Speaker 1: I don't think the nation, whether they're prepared or not,

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Speaker 1: they're not taking it well. And you know, we look

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Speaker 1: back at this recovery. It has fortunately continued this long,

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Speaker 1: and I still think we're maybe in the seventh inning.

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Speaker 1: I don't think I've never been in the recession camp.

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Speaker 1: You know, a month or two ago, it kind of

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Speaker 1: felt like the markets were saying the economies in the

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Speaker 1: ninth inning, there's two out and the pictures of bat

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Speaker 1: and the home team is about to go down. Well,

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Speaker 1: I never bought that that that view anyway, But if

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Speaker 1: you look at the as I said, slow Waite growth

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Speaker 1: of the last five years, over the last fifteen years, uh,

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Speaker 1: I think the country wants to grow faster. It needs

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Speaker 1: to grow faster, and I think that's where, you know,

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Speaker 1: some of this frustration we're seeing both on the coach,

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Speaker 1: i'll call it left and right is coming from that

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Speaker 1: that what we got to do better, and it's productivity.

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Speaker 1: It's in the prescriptions I had to do. It are

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Speaker 1: quite different between less government regulations or you know, on

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Speaker 1: the left, a big tax site. But there's a feeling

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Speaker 1: that the US economy is not living up to its

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Speaker 1: potential and that if that's the best our potential is,

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Speaker 1: we've got to figure out a way to get it.

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Speaker 1: Let's try that for our conversation continues with Stewart often

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Speaker 1: of P and C. Mike Herban Life has a bid

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Speaker 1: UH to review fifty six down to a printed bid

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Speaker 1: of forty eight. I'm not sure the pre market stock

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Speaker 1: price got there, but that forty eight is lifted up

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Speaker 1: to fifty one thirty. There's a i'm gonna call it,

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Speaker 1: you know, an eight percent mover. So fifty six down

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Speaker 1: to fifty one, yeah, is the drop UH, And and

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Speaker 1: that's better than where we were earlier. Again, some real

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Speaker 1: challenges all in all UH with their unit accounting UH

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Speaker 1: complex and convoluted set of headlines. You wonder where this

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Speaker 1: story will move drive forward, Price, Waterhouse Coopers, is there,

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Speaker 1: um there auditors? According to Bloomberg, Herban Life right now

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Speaker 1: fifty one, I'm gonna center tendency fifty on Herbal Life

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Speaker 1: future is a negative one. Doubt features negative ten. We

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Speaker 1: look at equities, bonds, currencies, commodities, oil thirty four sixty two,

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Speaker 1: Flat Brant Your thirty seven, thirty six, seventy nine. Michael

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Speaker 1: McKee Manchity gold earlier elevated twelve forty four. Good morning

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Speaker 1: to h not the goldbugs, but people that have rationally

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Speaker 1: talked about a stronger gold market, all of an extended

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Speaker 1: two and three year bearer market, people like James Steele

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Speaker 1: at HSBC the Yen one thirteen ninety weaker yen this morning.

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Speaker 1: Let's check out with Michael bar at the Latest World

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Speaker 1: in national Headlines, Michael, Mike Town, thank you very much.

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Speaker 1: Former Massachusetts Governor Mitt Romney will give us speech later

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Speaker 1: today calling out Donald Trump. Romney, who was the Republican

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Speaker 1: presidential nominee in twelve, says Trump is a phony. Four

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Speaker 1: Republicans will gather on stage for tonight's Fox News presidential

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Speaker 1: debate in Detroit. Ben Carson will be a no show,

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Speaker 1: having signaled that he is on the verge of officially

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Speaker 1: quitting his white house bid. A white Alabama police officer

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Speaker 1: has charged with murder in the shooting death of a

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Speaker 1: black man. A family lawyer says Greg Gunn was walking

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Speaker 1: home when he was killed outside a neighbor's house. An

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Speaker 1: attorney for Montgomery officer, Aaron Smith, calls the arrest a

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Speaker 1: political witch hunt. Global News twenty four hours a day,

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Speaker 1: powered by ours twenty four hundred journalists and more than

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Speaker 1: a hundred fifty news bureaus from around the world. I'm

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Speaker 1: Michael Barr. Mike, Michael, thanks so much. We're gonna rip

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Speaker 1: up the script of Stewart off in P and C.

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Speaker 1: Neil Dutta just out with a fabulous chart showing the

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Speaker 1: bipolar nature of this American economy. You need to stay

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Speaker 1: tuned for that future negative to Bloomberg Surveillance. The news

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