1 00:00:09,840 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jaily. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:30,200 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg The 5 00:00:30,240 --> 00:00:33,640 Speaker 1: Interview of the Day on the American labor economy will 6 00:00:33,640 --> 00:00:36,080 Speaker 1: occur in the nine o'clock hour with Kevin Hassett our 7 00:00:36,159 --> 00:00:39,120 Speaker 1: John Farrell speaking with the Chairman of the President's Council 8 00:00:39,120 --> 00:00:42,960 Speaker 1: of Economic Advisors. Except as not Hassett's lame duck. He's 9 00:00:42,960 --> 00:00:45,440 Speaker 1: out the door and we all know in advance, depending 10 00:00:45,479 --> 00:00:48,120 Speaker 1: on what the report is, what Dr Hassett will say. 11 00:00:48,320 --> 00:00:51,360 Speaker 1: This is the Interview of the Day. Jason Furman links 12 00:00:51,400 --> 00:00:54,960 Speaker 1: economics with policy like no one in America. He's the 13 00:00:55,080 --> 00:00:59,000 Speaker 1: liberal the conservatives have to read on the American economy, 14 00:00:59,000 --> 00:01:02,080 Speaker 1: and Dr Furman joins us right now, Jason, I'm gonna 15 00:01:02,080 --> 00:01:05,080 Speaker 1: cut to the chase. Do we know what technology is 16 00:01:05,160 --> 00:01:11,360 Speaker 1: doing to our labor economy? Technology is a good thing 17 00:01:12,400 --> 00:01:16,240 Speaker 1: that creates a high class problem. It gives us more options, 18 00:01:17,000 --> 00:01:20,200 Speaker 1: it gives us potentially higher incomes. But if we don't 19 00:01:20,200 --> 00:01:23,280 Speaker 1: invest in education, training and the like. You know, we 20 00:01:23,319 --> 00:01:27,000 Speaker 1: won't get that. Are we seeing the investment now? I 21 00:01:27,040 --> 00:01:29,360 Speaker 1: mean this is something John and I were just traveling, 22 00:01:29,360 --> 00:01:32,520 Speaker 1: and you see the investment in infrastructure of the investment 23 00:01:32,520 --> 00:01:36,039 Speaker 1: in education. Uh. We had a David Rubinstein interview with 24 00:01:36,080 --> 00:01:40,399 Speaker 1: Melinda Gates about investment in young kids? Where is the 25 00:01:40,600 --> 00:01:44,160 Speaker 1: state of investment on a long term basis leads to 26 00:01:44,240 --> 00:01:48,040 Speaker 1: a better labor economy? Too little? On all of those 27 00:01:49,120 --> 00:01:51,320 Speaker 1: young kids were about twenty second in the O E 28 00:01:51,400 --> 00:01:56,520 Speaker 1: C D in terms of preschool R and D. Private 29 00:01:56,640 --> 00:01:59,840 Speaker 1: is great. Our companies are investing in research, but we're 30 00:01:59,840 --> 00:02:02,600 Speaker 1: not doing the basic research on the government side that 31 00:02:02,960 --> 00:02:05,720 Speaker 1: has been falling for decades as a share of the 32 00:02:07,000 --> 00:02:09,480 Speaker 1: UM and our infrastructure. You know, in many ways it's 33 00:02:09,560 --> 00:02:12,160 Speaker 1: very good. We have great ports in America UM, but 34 00:02:12,280 --> 00:02:15,160 Speaker 1: there's there's a lot more we could do. Jason, I 35 00:02:15,160 --> 00:02:16,360 Speaker 1: want you to give us a little bit of a 36 00:02:16,360 --> 00:02:18,640 Speaker 1: clinic and it can almost clinic if possible, on the 37 00:02:18,639 --> 00:02:21,880 Speaker 1: difference between g D P what is it versus g 38 00:02:22,040 --> 00:02:25,200 Speaker 1: D I? What is it? And then walk me through 39 00:02:25,280 --> 00:02:28,160 Speaker 1: the spread between them both right now and what that 40 00:02:28,280 --> 00:02:31,640 Speaker 1: story is. Talent you you're all able bernanke this morning. 41 00:02:31,680 --> 00:02:33,280 Speaker 1: That's very cool. This is this is one of my 42 00:02:33,320 --> 00:02:36,799 Speaker 1: favorite topics, and I'm thrilled you asked. We can. As 43 00:02:36,800 --> 00:02:40,040 Speaker 1: I teach my students, you can measure the economy two ways. 44 00:02:40,680 --> 00:02:44,639 Speaker 1: You can add up everything everyone spends, or you can 45 00:02:44,680 --> 00:02:49,320 Speaker 1: add up one's income, profits, etcetera. And in theory does 46 00:02:49,400 --> 00:02:53,000 Speaker 1: come to the same number. In practice, both of them 47 00:02:53,040 --> 00:02:55,960 Speaker 1: are measured with error, and so the actual measures you 48 00:02:56,000 --> 00:02:59,840 Speaker 1: get are different. Right now, over the last year, GDP 49 00:03:00,120 --> 00:03:03,480 Speaker 1: has grown at three point two. G d I, which 50 00:03:03,480 --> 00:03:06,679 Speaker 1: adds up everyone's income, has only grown at one point eight. 51 00:03:07,880 --> 00:03:10,800 Speaker 1: That is the biggest gap between those two measures that 52 00:03:10,800 --> 00:03:14,040 Speaker 1: we've seen since the Great Recession. It's an unusually large 53 00:03:14,080 --> 00:03:17,679 Speaker 1: gap for any time in the last seventy years. All 54 00:03:17,720 --> 00:03:21,200 Speaker 1: the headline numbers are about the GDP at three point two. 55 00:03:21,560 --> 00:03:26,000 Speaker 1: Based on my analysis, historically, the truth is about halfway between. 56 00:03:26,040 --> 00:03:28,079 Speaker 1: When you have two bad measures, the best thing to 57 00:03:28,200 --> 00:03:30,960 Speaker 1: imperfect measures, the best thing to do is combine them. 58 00:03:31,040 --> 00:03:33,840 Speaker 1: In this case, combined them about fifty fifty. So I 59 00:03:33,880 --> 00:03:36,880 Speaker 1: think our economy could be running more like a two 60 00:03:36,960 --> 00:03:39,800 Speaker 1: two and a half percent growth rate route now rather 61 00:03:39,880 --> 00:03:42,040 Speaker 1: than the three point to a lot of people seem 62 00:03:42,120 --> 00:03:45,040 Speaker 1: to think it's growing up. And that's okay, Jason, that's 63 00:03:45,080 --> 00:03:48,000 Speaker 1: not bad. But what is it about adverse scenarios that 64 00:03:48,080 --> 00:03:51,520 Speaker 1: explains why there is this massive spread between both g 65 00:03:51,640 --> 00:03:54,760 Speaker 1: d I and g d P. You know, it's just 66 00:03:55,160 --> 00:03:57,880 Speaker 1: pure measurement. Art's not something you can explain because in 67 00:03:58,000 --> 00:04:00,520 Speaker 1: theory are the same and you're just adding stuff up 68 00:04:00,560 --> 00:04:02,800 Speaker 1: and it's a different set in the data and sometimes 69 00:04:02,840 --> 00:04:05,280 Speaker 1: they give you different answers. And that's why, um, you 70 00:04:05,280 --> 00:04:08,000 Speaker 1: want to combine. And that's actually especially important around turning points. 71 00:04:08,000 --> 00:04:11,480 Speaker 1: I mean GDP. In the middle of two thousand seven, 72 00:04:11,880 --> 00:04:16,920 Speaker 1: GDP was growing at nearly a five percent rate. It 73 00:04:16,960 --> 00:04:21,839 Speaker 1: looks great. The economy looked really really hot, um, you know, 74 00:04:21,880 --> 00:04:25,200 Speaker 1: as as late as December two thousand seven. But um, 75 00:04:25,240 --> 00:04:27,760 Speaker 1: you know, but it actually was turning and that was 76 00:04:28,240 --> 00:04:31,880 Speaker 1: showed up in the revised data years later. Along the 77 00:04:31,920 --> 00:04:35,200 Speaker 1: lines of John's wonderful questions on how we Parsons split 78 00:04:35,240 --> 00:04:38,359 Speaker 1: the economy, Dr Ferman, we have the idea of a 79 00:04:38,440 --> 00:04:41,760 Speaker 1: better than good domestic economy and then you bolt on 80 00:04:41,880 --> 00:04:44,880 Speaker 1: trade dynamics and it's not as pretty obviously trade war 81 00:04:45,360 --> 00:04:49,359 Speaker 1: and all that. Do you, as an adviser to presidents 82 00:04:49,400 --> 00:04:53,400 Speaker 1: aggregate in the sum of the economy, or right now, 83 00:04:53,440 --> 00:04:58,440 Speaker 1: should our listeners and viewers should they partition a domestic 84 00:04:58,560 --> 00:05:02,720 Speaker 1: performance verse is a really ugly trade side or external 85 00:05:02,800 --> 00:05:07,000 Speaker 1: side right now? Yeah, I mean the external sides about 86 00:05:07,720 --> 00:05:10,880 Speaker 1: of the US economy. So I think sometimes people make 87 00:05:10,920 --> 00:05:15,360 Speaker 1: the mistake of overstating it. You know, the steel tariffs. 88 00:05:15,360 --> 00:05:18,320 Speaker 1: I think they were a bad policy, but I never 89 00:05:18,360 --> 00:05:22,920 Speaker 1: expected a large macro consequence of them. If you layer 90 00:05:22,960 --> 00:05:26,880 Speaker 1: the Mexico on top of the China, you're now starting 91 00:05:26,880 --> 00:05:30,080 Speaker 1: to talk about potentially more than a percent of GDP, 92 00:05:31,080 --> 00:05:35,000 Speaker 1: at which point you're talking about phine up the difference 93 00:05:35,000 --> 00:05:38,839 Speaker 1: between a boom and a recession, but definitely increasing the 94 00:05:38,920 --> 00:05:43,400 Speaker 1: risks of a recession by by a reasoning in some ways, Jason, 95 00:05:43,440 --> 00:05:45,200 Speaker 1: do you think the issue with Mexico might be more 96 00:05:45,240 --> 00:05:48,479 Speaker 1: important for the domestic US economy than the tension with 97 00:05:48,520 --> 00:05:52,360 Speaker 1: the Chinese at the moment? Oh? Yeah. Our exports to 98 00:05:52,440 --> 00:05:55,080 Speaker 1: Mexico are about twice as large as a share of 99 00:05:55,080 --> 00:05:57,600 Speaker 1: our economy, and that actually understates it. If you look 100 00:05:57,640 --> 00:06:00,960 Speaker 1: at value added all of the things that move back 101 00:06:00,960 --> 00:06:03,919 Speaker 1: and forth. Um, it's it's a lot more than that 102 00:06:03,960 --> 00:06:07,520 Speaker 1: and a five percent tariff. If if only five percent 103 00:06:07,560 --> 00:06:09,599 Speaker 1: of the content comes from Mexico, that's like a hundred 104 00:06:09,640 --> 00:06:13,520 Speaker 1: percent on Mexico. Third of our auto parts are coming 105 00:06:13,520 --> 00:06:16,159 Speaker 1: from there. I think it's a potentially really big deal 106 00:06:16,200 --> 00:06:19,000 Speaker 1: for the U. S economy. What's the log linear function 107 00:06:19,040 --> 00:06:22,000 Speaker 1: of five percent tears, ten percent tears and ump up 108 00:06:22,080 --> 00:06:26,160 Speaker 1: up we go. What's the impact is President Trump increases 109 00:06:26,200 --> 00:06:30,360 Speaker 1: the tariffs on Mexico over time? Yeah, I think it's 110 00:06:30,400 --> 00:06:32,600 Speaker 1: I think it's not log linear. I think it goes 111 00:06:32,400 --> 00:06:35,120 Speaker 1: the other way. Um that you know, for ver each 112 00:06:35,160 --> 00:06:40,039 Speaker 1: increment you do up, um, it could potentially get even worse. 113 00:06:40,200 --> 00:06:43,760 Speaker 1: Do we know that? Or is it a mystery? Oh? People? 114 00:06:43,800 --> 00:06:46,240 Speaker 1: People were people turned through those numbers and and and 115 00:06:46,240 --> 00:06:49,800 Speaker 1: and tend tend tend to find that what you is 116 00:06:49,839 --> 00:06:52,320 Speaker 1: a mystery? Is what is it? Jeod expectations? You know, 117 00:06:52,600 --> 00:06:56,000 Speaker 1: if this dread is pulled back later today on Mexico, 118 00:06:57,000 --> 00:07:00,839 Speaker 1: will businesses that are building supply chains thinks that the 119 00:07:00,880 --> 00:07:03,520 Speaker 1: thread is gone forever or will they feel they need 120 00:07:03,560 --> 00:07:06,000 Speaker 1: to redo their supply chains just in case it comes back. 121 00:07:06,440 --> 00:07:08,320 Speaker 1: I have a strong suspicion about the answer to that, 122 00:07:08,400 --> 00:07:10,720 Speaker 1: but I can't prove it is Jason Furman. What a 123 00:07:10,800 --> 00:07:13,760 Speaker 1: joy yesterday to speak to Austin gouls Be of Chicago 124 00:07:14,200 --> 00:07:17,000 Speaker 1: about Alan Krueger's new book on rock eComics. This is 125 00:07:17,040 --> 00:07:22,600 Speaker 1: the final book of Alan Krueger, who recently died, Jason Furman. 126 00:07:23,280 --> 00:07:25,520 Speaker 1: When we look at Alan Kruger's work, it is about 127 00:07:25,520 --> 00:07:27,960 Speaker 1: the minimum wage. Do you have any study of the 128 00:07:28,080 --> 00:07:33,160 Speaker 1: fifteen dollars in our hour is causing harm? We've only 129 00:07:33,160 --> 00:07:37,160 Speaker 1: done fifteen dollars an hour in high wage places. There 130 00:07:37,200 --> 00:07:40,320 Speaker 1: was one study or Seattle. I think unfortunately it was 131 00:07:40,400 --> 00:07:43,880 Speaker 1: flawed and I wouldn't take anything from good today. UM, 132 00:07:44,160 --> 00:07:47,400 Speaker 1: I personally would be nervous if we very rapidly went 133 00:07:47,440 --> 00:07:52,280 Speaker 1: to fifteen dollars an hour UM for Alabama, New Mexico 134 00:07:53,120 --> 00:07:58,560 Speaker 1: and um Main those are much lower wage places than 135 00:07:58,840 --> 00:08:02,640 Speaker 1: Seattle or the parts of Scala foreigners have gotten they're already. Jason, 136 00:08:02,720 --> 00:08:05,200 Speaker 1: is great to catch out with your Friday. Really appreciate 137 00:08:05,240 --> 00:08:08,000 Speaker 1: your time, really intri instance staff Jason firm. And there 138 00:08:08,000 --> 00:08:26,040 Speaker 1: the former Council of Economics chair John Ferrell. Why don't 139 00:08:26,040 --> 00:08:30,160 Speaker 1: you bring him Dr Cornado and the forty seven flavors 140 00:08:30,200 --> 00:08:32,960 Speaker 1: of Jobs Day today. Let's do it right now, so 141 00:08:33,120 --> 00:08:36,520 Speaker 1: payrolls Friday is what ten eleven minutes away the median 142 00:08:36,720 --> 00:08:39,720 Speaker 1: estimate here at Bloomberg in our survey is one hundred 143 00:08:39,760 --> 00:08:44,640 Speaker 1: and seventy five thousand is two hundred and sixty three, Julia, 144 00:08:44,760 --> 00:08:47,480 Speaker 1: you're looking for ten k south of the median estimate. 145 00:08:47,480 --> 00:08:49,760 Speaker 1: It's not a big move lower from there. But what 146 00:08:49,880 --> 00:08:52,800 Speaker 1: has been impressive, and we usually discussed it every Friday 147 00:08:52,880 --> 00:08:55,559 Speaker 1: of the first Friday of every single month here at Bloomberg, 148 00:08:55,880 --> 00:08:58,880 Speaker 1: is just how strong this economy has been able to 149 00:08:58,880 --> 00:09:03,600 Speaker 1: produce in and around every single month. Can we keep 150 00:09:03,600 --> 00:09:08,000 Speaker 1: doing that way above what we think is sort of equilibrium, 151 00:09:08,080 --> 00:09:11,800 Speaker 1: which is closer to a hundred to k. So that 152 00:09:11,920 --> 00:09:16,320 Speaker 1: has been sustained by improvement in labor force participation amongst 153 00:09:16,320 --> 00:09:19,920 Speaker 1: primate workers, and that kind of faded in the last 154 00:09:19,960 --> 00:09:22,480 Speaker 1: couple of months, but I expect that to be one 155 00:09:22,559 --> 00:09:25,240 Speaker 1: area where we see it returned this month. So I 156 00:09:25,280 --> 00:09:28,600 Speaker 1: expect to pop up in primate participation. I still see 157 00:09:28,600 --> 00:09:31,400 Speaker 1: an upward trend there and that that's what helps sustain 158 00:09:31,480 --> 00:09:35,080 Speaker 1: these these gargantuan job games month after months. So I 159 00:09:35,120 --> 00:09:37,079 Speaker 1: do think there's some room to run there too. I 160 00:09:37,440 --> 00:09:40,760 Speaker 1: primate participation for both men and women. And again we're 161 00:09:40,760 --> 00:09:44,640 Speaker 1: talking about twenty five fifty four year old tire. It's 162 00:09:44,640 --> 00:09:48,200 Speaker 1: still below last cycle and certainly the nineties cycle. So 163 00:09:48,280 --> 00:09:51,880 Speaker 1: there's no reason that these workers can't re engage with 164 00:09:51,960 --> 00:09:54,720 Speaker 1: the workforce. Let's talk about that. Some people that think 165 00:09:54,760 --> 00:09:56,880 Speaker 1: this may be unique, this cycle might be unique, and 166 00:09:56,920 --> 00:09:59,880 Speaker 1: maybe the participation rate can stay somewhere in and around 167 00:10:00,240 --> 00:10:03,360 Speaker 1: the low sixties. Where do you see a heading. Well, 168 00:10:03,400 --> 00:10:07,120 Speaker 1: we do have the downward pressure from the retiring baby boomers. 169 00:10:07,160 --> 00:10:10,319 Speaker 1: So that is sort of a demographic reality that may 170 00:10:10,360 --> 00:10:13,400 Speaker 1: fluctuate to some greater or lesser degree depending on whether 171 00:10:13,440 --> 00:10:16,720 Speaker 1: they retire earlier or later. But we know that's a 172 00:10:16,800 --> 00:10:20,440 Speaker 1: depressing force. It's going to hold it relatively black. And 173 00:10:20,480 --> 00:10:24,760 Speaker 1: the question really revolved around how much younger workers are 174 00:10:25,080 --> 00:10:29,920 Speaker 1: able to engage um and and return after periods outside 175 00:10:29,920 --> 00:10:35,400 Speaker 1: the labor force. Julia Mrs Keene emails in and says 176 00:10:35,480 --> 00:10:42,320 Speaker 1: Dr Coronado, please define prime age? Is that is that 177 00:10:42,440 --> 00:10:45,280 Speaker 1: fifty nine to sixty two? What's so? I don't mean 178 00:10:45,320 --> 00:10:47,840 Speaker 1: to say that you're not prime in your prime time, 179 00:10:47,920 --> 00:10:51,880 Speaker 1: because you certainly are you um and uh and in 180 00:10:52,000 --> 00:10:56,679 Speaker 1: trime you know, probably should expand the definition. Yes, I 181 00:10:57,040 --> 00:11:00,520 Speaker 1: agree with that. What is primate? Surely to to people 182 00:11:00,559 --> 00:11:05,000 Speaker 1: like you? What is primates? The typical definition from the 183 00:11:05,040 --> 00:11:08,920 Speaker 1: Bureau of Labor Statistics is people aged twenty five to 184 00:11:09,040 --> 00:11:13,599 Speaker 1: thirty excuse me, to fifty four. So you're definitely post schooling. 185 00:11:14,160 --> 00:11:18,320 Speaker 1: You know, whether you've gotten a and or a master's degree, 186 00:11:18,559 --> 00:11:23,040 Speaker 1: you're probably largely done. And then uh, you're probably not 187 00:11:23,160 --> 00:11:26,920 Speaker 1: yet moving into retirement. So that's that's when you should Well, 188 00:11:26,960 --> 00:11:31,800 Speaker 1: I got that one nailed. What is the prime ates 189 00:11:31,880 --> 00:11:35,320 Speaker 1: changed over thirty fifty years? I mean, do you shift 190 00:11:35,400 --> 00:11:38,760 Speaker 1: that out and expand to an older audience like we're 191 00:11:38,760 --> 00:11:41,840 Speaker 1: all doing with our kids. We I mean, so the 192 00:11:41,880 --> 00:11:44,960 Speaker 1: BLF has not done that, but you know you can 193 00:11:45,080 --> 00:11:47,760 Speaker 1: expand it certainly, you can look at whatever age groups 194 00:11:48,280 --> 00:11:50,760 Speaker 1: that you're interested in. And we have seen a trend 195 00:11:50,840 --> 00:11:55,520 Speaker 1: towards later retirements, both for economic reasons because people took 196 00:11:55,559 --> 00:11:58,920 Speaker 1: a huge hit in the Great Recession and couldn't retire 197 00:11:59,559 --> 00:12:03,760 Speaker 1: um and then also because people are you know, living longer, 198 00:12:04,000 --> 00:12:08,160 Speaker 1: they're more in service after jobs where they can work longer. Uh, 199 00:12:08,200 --> 00:12:11,360 Speaker 1: And so we are seeing people engage in the labor 200 00:12:11,440 --> 00:12:13,800 Speaker 1: force for longer and longer. If you talk to people 201 00:12:13,840 --> 00:12:16,559 Speaker 1: like David John at a RP who spoke at the 202 00:12:16,640 --> 00:12:21,520 Speaker 1: Chicago He thinks there's a lot of scope for engagement 203 00:12:21,520 --> 00:12:24,480 Speaker 1: of older workers, you know, even on a part time basis, 204 00:12:24,920 --> 00:12:26,760 Speaker 1: Like a lot of people do want to engage in 205 00:12:26,800 --> 00:12:29,960 Speaker 1: the labor force at older age. The Bloomberg And of 206 00:12:29,960 --> 00:12:32,640 Speaker 1: course this is from a pewer of labor statistics. Folks. 207 00:12:32,840 --> 00:12:36,360 Speaker 1: We're making jokes about it, but their granularity of participation 208 00:12:36,960 --> 00:12:40,520 Speaker 1: is wonderful. They have here John and statistic US labor 209 00:12:40,600 --> 00:12:46,360 Speaker 1: force participation for World War two, Korean War in Vietnam males, 210 00:12:47,120 --> 00:12:50,000 Speaker 1: which has obviously been declining with death. But but I 211 00:12:50,040 --> 00:12:53,120 Speaker 1: mean the granularity is extraordinaries some real day town. Yeah, 212 00:12:53,200 --> 00:12:58,439 Speaker 1: Julia Cornado, thank you so much. Really appreciated than sticking 213 00:12:58,440 --> 00:12:59,959 Speaker 1: with this, you know, as we approached the pay for 214 00:13:00,240 --> 00:13:02,240 Speaker 1: I don't know, there's some quick reaction with Julia. So 215 00:13:02,320 --> 00:13:05,199 Speaker 1: let's digest some of that data, shall we. Seventy five 216 00:13:05,320 --> 00:13:09,559 Speaker 1: K the median estimate one seventy five A big downside 217 00:13:09,559 --> 00:13:12,040 Speaker 1: surprise in the FX market a week a dollar down 218 00:13:12,080 --> 00:13:15,000 Speaker 1: a third of one percent, back to a ninety six 219 00:13:15,040 --> 00:13:17,280 Speaker 1: handle on the dollar index. In the bond market, this 220 00:13:17,360 --> 00:13:20,280 Speaker 1: is how treasuries shape up. Yields coming in four basis 221 00:13:20,280 --> 00:13:23,200 Speaker 1: points on tens, coming in seven basis points on a 222 00:13:23,200 --> 00:13:25,679 Speaker 1: two year yield, Your two year yield one eighty one, 223 00:13:25,760 --> 00:13:28,880 Speaker 1: your ten year two point zero eight percent. The interesting 224 00:13:28,920 --> 00:13:32,760 Speaker 1: part though, risk assets hanging in their future still just 225 00:13:32,880 --> 00:13:35,640 Speaker 1: about positive up five points and positive two tents of 226 00:13:35,679 --> 00:13:38,319 Speaker 1: one percent. But looking at the economic data tom to 227 00:13:38,480 --> 00:13:41,439 Speaker 1: Julius point earlier in the program, there were some concerns 228 00:13:41,480 --> 00:13:44,280 Speaker 1: around the big census story and how volatile it might 229 00:13:44,280 --> 00:13:46,440 Speaker 1: make the headline number. If you look at the change 230 00:13:46,440 --> 00:13:51,800 Speaker 1: in private payrolls ninety k that's a massive downside surprise 231 00:13:51,840 --> 00:13:55,600 Speaker 1: as well. The estimate was one and with revisions down 232 00:13:55,720 --> 00:13:58,840 Speaker 1: as well. Dr Cornetta could help us with that, Julia. 233 00:13:58,920 --> 00:14:02,439 Speaker 1: We get a report our that has some constructive elements. 234 00:14:02,520 --> 00:14:04,280 Speaker 1: I think, I think we need to go to the 235 00:14:04,360 --> 00:14:09,560 Speaker 1: ADP Mouldy double digit number over to non farm payrolls 236 00:14:09,559 --> 00:14:12,840 Speaker 1: seventy five, the two month revision. This is something. This 237 00:14:12,880 --> 00:14:17,679 Speaker 1: is important, folks. Negative seventy thousand one month doesn't make 238 00:14:17,720 --> 00:14:22,920 Speaker 1: your report, but if this extrapolates out what happens. Yeah, 239 00:14:22,960 --> 00:14:25,480 Speaker 1: this is a worrisome report. I mean, we're seeing the 240 00:14:25,560 --> 00:14:29,160 Speaker 1: weakness isn't just doesn't look to be concentrated in one sector. 241 00:14:29,240 --> 00:14:32,520 Speaker 1: It looks we got the expected weakness in manufacturing and 242 00:14:32,600 --> 00:14:36,560 Speaker 1: goods producing sectors, but also weakness and private service sectors. 243 00:14:36,600 --> 00:14:42,120 Speaker 1: So retail was job losses, information technology saw job losses, 244 00:14:42,400 --> 00:14:46,440 Speaker 1: and the government actually subtracted seventeen excuse me, fifteen thousand 245 00:14:46,480 --> 00:14:49,720 Speaker 1: workers instead of adding about this thing, which is what 246 00:14:49,800 --> 00:14:52,960 Speaker 1: was mostly expected. Do you see your census in there? 247 00:14:52,960 --> 00:14:54,560 Speaker 1: Did you have time? You have to see a sense 248 00:14:54,600 --> 00:14:58,160 Speaker 1: of statistic So so it looks like census is not 249 00:14:58,240 --> 00:15:01,200 Speaker 1: only not hiring, but the uh actually most of the 250 00:15:01,280 --> 00:15:03,240 Speaker 1: job losses in the government sector were on the state 251 00:15:03,280 --> 00:15:06,600 Speaker 1: and local side. So um, yeah, a lot of a 252 00:15:06,600 --> 00:15:09,760 Speaker 1: lot of a lot of weakness here. You know. To 253 00:15:09,800 --> 00:15:12,760 Speaker 1: see the service sector crack like this is is something 254 00:15:12,800 --> 00:15:15,960 Speaker 1: we definitely need to keep an eye on. Okay, Julia Cornado, 255 00:15:16,040 --> 00:15:18,920 Speaker 1: thank you so much, greatly, greatly appreciate the perspective today 256 00:15:18,960 --> 00:15:35,160 Speaker 1: with the macro policy perspective, working in fixed income but 257 00:15:35,240 --> 00:15:37,960 Speaker 1: with a wonderfully holistic and I should also point out 258 00:15:38,080 --> 00:15:42,480 Speaker 1: mathematical bassis. Jeffrey Rosenberg of Black Rock, Jeff, I want 259 00:15:42,480 --> 00:15:44,840 Speaker 1: to rip up the script right now and go to 260 00:15:44,920 --> 00:15:49,440 Speaker 1: Walton out on Twitter. Who's got a brilliant observation. Let 261 00:15:49,440 --> 00:15:52,400 Speaker 1: me quote it exactly, Jeff Rosenberg, just like we quote 262 00:15:52,400 --> 00:15:56,080 Speaker 1: the President when he tweets. I wonder how retirees in 263 00:15:56,160 --> 00:15:59,440 Speaker 1: Germany are supposed to live off of a negative fixed income. 264 00:16:00,000 --> 00:16:03,000 Speaker 1: Where do people in Germany think the money for retirees 265 00:16:03,520 --> 00:16:08,000 Speaker 1: comes from the tooth ferry? Jeff. This this was something 266 00:16:08,040 --> 00:16:13,720 Speaker 1: in London a theme. How do savers exist in negative 267 00:16:13,760 --> 00:16:19,160 Speaker 1: interest rate nations? Well, they camp with their savings into 268 00:16:19,360 --> 00:16:25,120 Speaker 1: safe assets and um you basically force savers out of 269 00:16:25,160 --> 00:16:28,120 Speaker 1: the currency, which means you know something U s and 270 00:16:28,160 --> 00:16:30,040 Speaker 1: msters don't think a lot about. But in the rest 271 00:16:30,040 --> 00:16:33,720 Speaker 1: of the world there's a lot more willingness. And when 272 00:16:33,760 --> 00:16:36,400 Speaker 1: you have a negative interest rate structure, you're forced to 273 00:16:36,520 --> 00:16:39,840 Speaker 1: take your money outside of the U outside of your 274 00:16:39,840 --> 00:16:41,800 Speaker 1: home country. You know, you look in Japan where they've 275 00:16:41,840 --> 00:16:45,040 Speaker 1: had zero interest rates for a much longer experience. It's 276 00:16:45,040 --> 00:16:50,560 Speaker 1: just a much longer experience with foreign investing, and you're 277 00:16:50,600 --> 00:16:52,440 Speaker 1: forced to do that. So you have to move out 278 00:16:52,440 --> 00:16:56,160 Speaker 1: the risk spectrum. It's uncomfortable. Um or you have to 279 00:16:56,240 --> 00:16:59,880 Speaker 1: change your expectations in terms of how you plan for 280 00:17:00,040 --> 00:17:02,920 Speaker 1: retirement and what you're expected return is. And even though 281 00:17:02,920 --> 00:17:05,359 Speaker 1: we don't face negative interest rates, we face the same 282 00:17:06,480 --> 00:17:10,560 Speaker 1: issues of the lower expected returns. Jeff, I'm looking at 283 00:17:10,600 --> 00:17:14,040 Speaker 1: the German tenure yield. I'm looking at, folks, what's called 284 00:17:14,040 --> 00:17:17,040 Speaker 1: a two standard deviation study. You and I took this 285 00:17:17,359 --> 00:17:19,639 Speaker 1: final year where you know, we had to take a 286 00:17:19,640 --> 00:17:21,720 Speaker 1: break because we were going to Fort Lauderdale or whatever. 287 00:17:21,920 --> 00:17:26,719 Speaker 1: Rosenberg did standard deviations in fourth grade. I mean, Jeff Rosenberg, 288 00:17:27,240 --> 00:17:31,840 Speaker 1: I'm sorry. The vector on the German tenure yield speaks 289 00:17:31,880 --> 00:17:37,879 Speaker 1: of instabilities to come. What are those instabilities? Well know, 290 00:17:38,200 --> 00:17:42,119 Speaker 1: the German tenure yield has been declining alongside of the 291 00:17:42,240 --> 00:17:45,600 Speaker 1: U S yield and global yields, all pricing in a 292 00:17:45,600 --> 00:17:49,080 Speaker 1: global growth slow down, the differences. They're starting from a 293 00:17:49,200 --> 00:17:52,000 Speaker 1: much lower point. So right now the German tenure yield 294 00:17:52,480 --> 00:17:57,280 Speaker 1: is negative two point negative point to five five and 295 00:17:57,320 --> 00:18:00,479 Speaker 1: it's done a very steep downward trajectory. A lot of 296 00:18:00,520 --> 00:18:02,560 Speaker 1: the other stories in the rest of the world away 297 00:18:02,560 --> 00:18:04,680 Speaker 1: from the US, is that the growth has been slowing 298 00:18:04,720 --> 00:18:07,960 Speaker 1: there as well. Uh, there's a lot more challenge when 299 00:18:08,040 --> 00:18:12,480 Speaker 1: when the ECB is at the effective lower bound um, 300 00:18:13,080 --> 00:18:16,320 Speaker 1: they have fewer tools. This was yesterday's news in terms 301 00:18:16,359 --> 00:18:19,280 Speaker 1: of the ECB meeting. UH, and they're they're going to 302 00:18:19,400 --> 00:18:23,879 Speaker 1: have to continue to try to support with perpetually, you know, 303 00:18:24,400 --> 00:18:28,000 Speaker 1: negative interest rates. Jeff Rozenberg, We're gonna fold you over 304 00:18:28,040 --> 00:18:30,560 Speaker 1: to being a trade expert. We see futures advanced, they 305 00:18:30,560 --> 00:18:35,640 Speaker 1: explode from flat, DWAL futures up, SMP futures up eleven. 306 00:18:36,119 --> 00:18:38,800 Speaker 1: I think it's called a bull market, and the yields churn. 307 00:18:39,320 --> 00:18:42,640 Speaker 1: Here is the sequence of headlines that have come out 308 00:18:43,119 --> 00:18:45,399 Speaker 1: a moment ago. I'm going to be very careful with this, folks, 309 00:18:45,560 --> 00:18:48,679 Speaker 1: because this is a moving UH target. The president of 310 00:18:48,720 --> 00:18:53,640 Speaker 1: Mexico feels Mexico thinks economy is doing fine. We respect 311 00:18:53,760 --> 00:18:56,720 Speaker 1: rating companies points of view, of course, to rating companies, 312 00:18:57,240 --> 00:19:02,480 Speaker 1: UH modifying their constructive view on Mexico. The oil company 313 00:19:02,520 --> 00:19:07,040 Speaker 1: paymex has no problem to restructure debt, the oil company 314 00:19:07,080 --> 00:19:09,879 Speaker 1: to start producing more by year end. He goes on 315 00:19:10,000 --> 00:19:13,520 Speaker 1: to say, um, I am optimistic. Will we will reach 316 00:19:13,600 --> 00:19:17,320 Speaker 1: a deal with the United States. I will review my 317 00:19:17,600 --> 00:19:23,120 Speaker 1: stance on US situation on Saturday, and Bloomberg would note 318 00:19:23,119 --> 00:19:27,880 Speaker 1: that the Mexican pace erases losses as the US payrolls. Uh, 319 00:19:28,440 --> 00:19:32,520 Speaker 1: excuse me. Information came in this show's Jeff Rosenberg. If 320 00:19:32,520 --> 00:19:36,520 Speaker 1: we get constructive Mexico and Chinese trade talk, how markets 321 00:19:36,560 --> 00:19:40,400 Speaker 1: flip on a dying doesn't it? Well, it's been the issue, 322 00:19:40,560 --> 00:19:43,520 Speaker 1: and the issue is that, going back to May six 323 00:19:44,000 --> 00:19:48,480 Speaker 1: and and the China breakdown, that markets were really expecting 324 00:19:48,760 --> 00:19:51,760 Speaker 1: a very different outcome than what they got. They were 325 00:19:51,800 --> 00:19:56,200 Speaker 1: expecting a deal to go through unnecessarily sure how much 326 00:19:56,280 --> 00:19:59,479 Speaker 1: teeth that deal would have, and that whole expectation has 327 00:19:59,520 --> 00:20:02,000 Speaker 1: been under mind and in the aftermath has been a 328 00:20:02,119 --> 00:20:05,120 Speaker 1: ratcheting up. Now, the Mexico thing was a new development. 329 00:20:05,480 --> 00:20:08,959 Speaker 1: Let's use tariffs to address a non trade related issue, 330 00:20:09,160 --> 00:20:13,520 Speaker 1: which only further heightens uncertainty. But the but the punchline 331 00:20:13,600 --> 00:20:18,359 Speaker 1: here is that policy has moved from expansionary and supportive 332 00:20:18,840 --> 00:20:24,000 Speaker 1: to to contractionary through the degree it increases uncertainty, and 333 00:20:24,000 --> 00:20:27,200 Speaker 1: businesses don't like uncertainty. Uncertainty is bad for growth. Jeff, 334 00:20:27,240 --> 00:20:28,719 Speaker 1: I want to get a little wonky here. We can 335 00:20:28,760 --> 00:20:31,480 Speaker 1: do that with a gentleman from Carnegie Mellon, and that 336 00:20:31,680 --> 00:20:35,639 Speaker 1: is the left tail of all that we observe. We 337 00:20:35,680 --> 00:20:38,679 Speaker 1: had a wonderful conversation this morning with our Cameron christ 338 00:20:39,160 --> 00:20:41,960 Speaker 1: about the difference in yield between three months and two 339 00:20:42,040 --> 00:20:45,240 Speaker 1: year and then the difference in yield between two year 340 00:20:45,400 --> 00:20:50,800 Speaker 1: in tenure and the dynamics there are extraordinary. What do 341 00:20:50,920 --> 00:20:57,159 Speaker 1: these extraordinary yield curve discontinuities, what do they mean to 342 00:20:57,240 --> 00:21:00,640 Speaker 1: the stability of the real risk part of the curve 343 00:21:00,640 --> 00:21:05,080 Speaker 1: of the left tail? Well, it's it's clearly and this 344 00:21:05,119 --> 00:21:07,080 Speaker 1: has been the story for a while. But the bond 345 00:21:07,160 --> 00:21:12,879 Speaker 1: market is telling you about its concerns. Everything we've been 346 00:21:12,880 --> 00:21:16,440 Speaker 1: talking about this morning, from the payroll report to uncertainties 347 00:21:16,480 --> 00:21:19,840 Speaker 1: created by trade is a decline in growth and a 348 00:21:19,920 --> 00:21:23,399 Speaker 1: potential shock thank you growth, And that's what the bond 349 00:21:23,400 --> 00:21:26,400 Speaker 1: market is, This is saying and expecting. This is why 350 00:21:26,400 --> 00:21:29,640 Speaker 1: we have Jeff Rosenberg on, folks. This is so so 351 00:21:29,640 --> 00:21:34,760 Speaker 1: so important. There are four or five, three, seven things 352 00:21:34,880 --> 00:21:38,000 Speaker 1: that always make a determinant of price. And on the 353 00:21:38,119 --> 00:21:41,600 Speaker 1: Fisherian rule going back a zillion years, Irving Fisher it's 354 00:21:41,760 --> 00:21:44,080 Speaker 1: you see it in the bond market. Price up, you'll 355 00:21:44,160 --> 00:21:46,800 Speaker 1: down or the other way as well. And Jeff, I 356 00:21:46,880 --> 00:21:53,200 Speaker 1: agree with you that growth worries have overwhelmed every other analysis. 357 00:21:53,320 --> 00:21:55,960 Speaker 1: Is that correct? That is correct, and it's a real 358 00:21:56,040 --> 00:21:59,200 Speaker 1: pivot from where we were only you know, six seven 359 00:21:59,200 --> 00:22:01,800 Speaker 1: weeks for where the pivot on trade that were the 360 00:22:01,840 --> 00:22:05,520 Speaker 1: concern was on inflation and what that meant for the 361 00:22:05,560 --> 00:22:08,600 Speaker 1: ability of the Fed to raise rates in the process 362 00:22:08,640 --> 00:22:12,080 Speaker 1: of normalization. And and this is occurring again in an 363 00:22:12,160 --> 00:22:16,040 Speaker 1: environment where global growth has been weakening, and with the 364 00:22:16,080 --> 00:22:20,440 Speaker 1: weakening in the outlook from trade and uncertainty, you added 365 00:22:20,480 --> 00:22:23,359 Speaker 1: to a sense that this is really a new risk 366 00:22:23,600 --> 00:22:26,840 Speaker 1: to a recessionary outcome. And that's what the bond markets 367 00:22:26,840 --> 00:22:30,440 Speaker 1: basically started pricing in. And then with that comes the expectation, 368 00:22:30,480 --> 00:22:32,479 Speaker 1: of course that the it is going to react, and 369 00:22:32,560 --> 00:22:35,760 Speaker 1: now all the narrative around the insurance cut and when 370 00:22:35,800 --> 00:22:37,840 Speaker 1: will they move and how much will they move by 371 00:22:37,880 --> 00:22:40,320 Speaker 1: and the bond markets pricing in a lot. Jeff Rosen, 372 00:22:40,560 --> 00:22:56,560 Speaker 1: thank you so much. Kevin Hasset is out of the 373 00:22:56,760 --> 00:23:00,879 Speaker 1: Wonderful Economics Program at the University of Pennsylvania. He has 374 00:23:00,920 --> 00:23:04,160 Speaker 1: been on the show in different guys as many times 375 00:23:04,600 --> 00:23:09,040 Speaker 1: recently as chairman of President Trump's Council of Economic Advisors. 376 00:23:09,080 --> 00:23:12,720 Speaker 1: He has been someone who was always pushed for free trade. 377 00:23:13,160 --> 00:23:16,359 Speaker 1: It is good to have a job today conversation with 378 00:23:16,760 --> 00:23:19,479 Speaker 1: Kevin Hassett is leaving the White House. Here he is 379 00:23:20,080 --> 00:23:23,640 Speaker 1: with John Pharaoh. Now we can get the Trump administration's 380 00:23:23,680 --> 00:23:25,760 Speaker 1: views on the job for a called we joined on 381 00:23:25,840 --> 00:23:28,719 Speaker 1: TV and on radio by Kevin Hassett, Council of Economic 382 00:23:28,720 --> 00:23:31,080 Speaker 1: Advisors Chairman, Kevin. Great to see you, as it always. 383 00:23:31,160 --> 00:23:34,119 Speaker 1: Let's just stop arose report your initial thoughts, Kevin on 384 00:23:34,160 --> 00:23:37,720 Speaker 1: that downside surprise, Well, you know, I think that it 385 00:23:37,800 --> 00:23:40,480 Speaker 1: was a little bit below our expectation and the market expectation, 386 00:23:40,560 --> 00:23:42,520 Speaker 1: but there were some special factors. I think one of 387 00:23:42,560 --> 00:23:44,760 Speaker 1: the special factors that we were following closely that have 388 00:23:44,880 --> 00:23:46,720 Speaker 1: not seen a lot of people talk about is the 389 00:23:46,720 --> 00:23:49,320 Speaker 1: impact of the flooding, which you know, shut down I 390 00:23:49,520 --> 00:23:51,920 Speaker 1: twenty nine made it so that a whole bunch of 391 00:23:51,960 --> 00:23:54,280 Speaker 1: the ports could not operate. And our estimate is that 392 00:23:54,400 --> 00:23:56,879 Speaker 1: knocked maybe about forty thousand jobs off the number. And 393 00:23:56,920 --> 00:23:58,480 Speaker 1: if you had that back in then you know, it's 394 00:23:58,600 --> 00:24:01,000 Speaker 1: pretty much close to a normal up and down. For sure, 395 00:24:01,000 --> 00:24:02,800 Speaker 1: there's a little bit of job slowing, but we're still 396 00:24:02,800 --> 00:24:05,000 Speaker 1: looking at I think, you know, controlling for that a 397 00:24:05,040 --> 00:24:07,680 Speaker 1: three month average that's probably you know, next week is 398 00:24:07,680 --> 00:24:09,920 Speaker 1: going to look in the one range, which is about 399 00:24:09,920 --> 00:24:11,800 Speaker 1: what we've had for the last two years, just in 400 00:24:11,960 --> 00:24:13,720 Speaker 1: terms of a trade story and the damage that it 401 00:24:13,760 --> 00:24:16,120 Speaker 1: may or may not be doing to certain industries. Right now, 402 00:24:16,240 --> 00:24:20,160 Speaker 1: if you look at primary metal, steel, aluminum, metal fabricators 403 00:24:20,359 --> 00:24:23,840 Speaker 1: all down for a third straight month. Here many economists 404 00:24:23,880 --> 00:24:26,320 Speaker 1: predicted this would happen. Kevin, do you think that is 405 00:24:26,359 --> 00:24:29,360 Speaker 1: a consequence and result of the tariffs of this administration 406 00:24:29,440 --> 00:24:32,879 Speaker 1: wang on those sectors at the moment? Well, I think that, 407 00:24:33,040 --> 00:24:35,760 Speaker 1: you know, for steel at aluminum, the tariffs definitely you 408 00:24:35,840 --> 00:24:37,840 Speaker 1: to have help to the you know, I've looked at 409 00:24:38,080 --> 00:24:40,639 Speaker 1: the numbers and they inflected quite a bit when they 410 00:24:40,640 --> 00:24:43,439 Speaker 1: went in. The thing about the job's number just just 411 00:24:43,520 --> 00:24:45,960 Speaker 1: a pivot. I've heard a lot of folks also talking 412 00:24:45,960 --> 00:24:48,960 Speaker 1: about how well, maybe the job's number reflects, you know, 413 00:24:49,000 --> 00:24:51,760 Speaker 1: the trade problems. But remember that this is May, and 414 00:24:51,840 --> 00:24:55,879 Speaker 1: so this job's number comes before anything regarding Mexico. And 415 00:24:55,960 --> 00:24:58,000 Speaker 1: also the only thing that really happened me was that 416 00:24:58,160 --> 00:25:01,359 Speaker 1: the Chinese talks that are wood block, and so I 417 00:25:01,400 --> 00:25:03,600 Speaker 1: think that it's hard to imagine that a roadblock of 418 00:25:03,600 --> 00:25:06,720 Speaker 1: the Chinese talks could have a really big macroeconomic effects 419 00:25:06,920 --> 00:25:08,760 Speaker 1: so I think that looking at the effect of trade 420 00:25:08,760 --> 00:25:11,080 Speaker 1: on the numbers right now. For sure, there are specific 421 00:25:11,119 --> 00:25:13,760 Speaker 1: things and specific industries, but overall, I don't think it's 422 00:25:13,760 --> 00:25:15,320 Speaker 1: a really big part of the storage. Kevin sending that 423 00:25:15,400 --> 00:25:18,320 Speaker 1: persistent tension that is wank on financial conditions, it's wank 424 00:25:18,359 --> 00:25:20,280 Speaker 1: on confidence, and it seems to be wank on investment 425 00:25:20,280 --> 00:25:22,359 Speaker 1: as well. There is quite a clear read through. Are 426 00:25:22,400 --> 00:25:26,560 Speaker 1: you saying this no, Well, I think that absolutely uncertainty, 427 00:25:26,680 --> 00:25:28,440 Speaker 1: you know, can be a negative for the economy, but 428 00:25:28,480 --> 00:25:31,240 Speaker 1: there's upside risks and downside risks. And I think that 429 00:25:31,600 --> 00:25:34,240 Speaker 1: with China, you know, if we if we remember how 430 00:25:34,280 --> 00:25:35,960 Speaker 1: happy markets send it to me every day that we 431 00:25:36,000 --> 00:25:37,880 Speaker 1: got closer to a deal, you know, if we at 432 00:25:37,880 --> 00:25:40,320 Speaker 1: the G twenty talks, can can finally you know, get 433 00:25:40,359 --> 00:25:42,560 Speaker 1: that thing over the hub. That's a really big upside 434 00:25:42,600 --> 00:25:45,119 Speaker 1: risk with the outlook for I think that you know, 435 00:25:45,160 --> 00:25:48,320 Speaker 1: we're trying, we're shooting for yeah, but we're shooting for reform, 436 00:25:48,480 --> 00:25:51,480 Speaker 1: right and I think that reform is uncertain. But I 437 00:25:51,480 --> 00:25:52,959 Speaker 1: think that if you look at how broke at our 438 00:25:53,000 --> 00:25:55,320 Speaker 1: trade relationship with China was that it makes sense for 439 00:25:55,320 --> 00:25:58,840 Speaker 1: the president to prioritize reform and many many economists would 440 00:25:58,840 --> 00:26:00,800 Speaker 1: agree with you. It's an economic so for a positive 441 00:26:00,800 --> 00:26:04,680 Speaker 1: economic accountcome. Mexico is very very different. It's an economic 442 00:26:04,720 --> 00:26:07,760 Speaker 1: tool for a political outcome. So talk to me about 443 00:26:07,760 --> 00:26:10,240 Speaker 1: what is happening with talks and why you think progress 444 00:26:10,280 --> 00:26:12,120 Speaker 1: has been made. What is it about these talks where 445 00:26:12,119 --> 00:26:15,600 Speaker 1: the progress has been made, Kevin, what specifically right? Well, 446 00:26:15,600 --> 00:26:17,560 Speaker 1: the specifics are going to be presented to the President 447 00:26:17,560 --> 00:26:20,240 Speaker 1: when he lands about four thirty today and then he's 448 00:26:20,240 --> 00:26:22,520 Speaker 1: gonna weigh all his options. But but you know, they've 449 00:26:22,560 --> 00:26:25,800 Speaker 1: been ongoing talks throughout the week. Secretary of Pompeo has 450 00:26:25,840 --> 00:26:29,480 Speaker 1: been meeting for the Foreign Minister of Mexico, and you know, 451 00:26:29,920 --> 00:26:31,960 Speaker 1: my briefing on their talks have been that they're they've 452 00:26:31,960 --> 00:26:33,439 Speaker 1: made a lot of progress that a lot of the 453 00:26:33,480 --> 00:26:36,720 Speaker 1: material things that our professionals have said that they need 454 00:26:36,760 --> 00:26:38,679 Speaker 1: to be done by Mexico to help with secure the 455 00:26:38,680 --> 00:26:41,239 Speaker 1: border that they're agreeing to do. I don't know if 456 00:26:41,240 --> 00:26:43,440 Speaker 1: they're gonna go all the way to what the president wants, 457 00:26:43,440 --> 00:26:46,040 Speaker 1: but I'm sure the President will have some important evidence 458 00:26:46,080 --> 00:26:47,960 Speaker 1: to weigh when he lands at the end of the day. 459 00:26:48,000 --> 00:26:50,000 Speaker 1: In the meantime, Kevin of the Council of Economic Advice 460 00:26:50,040 --> 00:26:52,720 Speaker 1: has modeled the impact of tariffs on the U. S. Economy, 461 00:26:52,800 --> 00:26:55,399 Speaker 1: tariffs on Mexico and what it means for U. S GDP. 462 00:26:57,200 --> 00:26:59,320 Speaker 1: You know, our our job is to is to provide 463 00:26:59,359 --> 00:27:01,960 Speaker 1: a material advice to the President on all of his decisions. 464 00:27:02,000 --> 00:27:04,800 Speaker 1: But unless we publish it, then we're not meant to 465 00:27:04,840 --> 00:27:07,200 Speaker 1: talk about it again. So yeah, I can't talk about 466 00:27:07,200 --> 00:27:08,760 Speaker 1: what I've presented to the president or not. Well, you 467 00:27:08,800 --> 00:27:10,040 Speaker 1: can told to me about a kind of advice you 468 00:27:10,119 --> 00:27:11,480 Speaker 1: given to the president and the kind of damage you 469 00:27:11,480 --> 00:27:12,919 Speaker 1: think it would do to the U. S. Economy. Do 470 00:27:12,920 --> 00:27:15,200 Speaker 1: you think it could be positive for the U. S. Economy? 471 00:27:16,400 --> 00:27:18,320 Speaker 1: You know, I think that that the crucial thing for 472 00:27:18,320 --> 00:27:20,959 Speaker 1: the c h AIR is to advise the president, you know, 473 00:27:21,000 --> 00:27:23,640 Speaker 1: and to make that advice, you know, be between them 474 00:27:24,359 --> 00:27:27,320 Speaker 1: when decisions are made. No, it's true, and then would 475 00:27:27,720 --> 00:27:30,119 Speaker 1: not a loyal team player. I can't disagree with the decision. 476 00:27:30,960 --> 00:27:34,240 Speaker 1: You say you disagree with the decision, then no, that's 477 00:27:34,240 --> 00:27:36,240 Speaker 1: what you're trying to know. I'm asking you, did you 478 00:27:36,320 --> 00:27:38,959 Speaker 1: disagree with the decision. I think that the President's right 479 00:27:39,000 --> 00:27:41,639 Speaker 1: to emphasize reform and with Mexico. I think we have 480 00:27:41,680 --> 00:27:44,480 Speaker 1: a border crisis, and if you weigh the costs of 481 00:27:44,480 --> 00:27:47,080 Speaker 1: of the border crisis, that it's very easy to think that, 482 00:27:47,160 --> 00:27:49,320 Speaker 1: you know, the leverage that he's gained with Mexico could 483 00:27:49,359 --> 00:27:51,320 Speaker 1: easily pass a cost spend of the test. Did you 484 00:27:51,359 --> 00:27:56,720 Speaker 1: disagree on the tariff decision, Kevin? Did you disagree on 485 00:27:56,720 --> 00:28:01,680 Speaker 1: the taff decision? Did you agree with him? Uh? I'm 486 00:28:01,720 --> 00:28:05,240 Speaker 1: not supposed to talk about my my private conversations with 487 00:28:05,320 --> 00:28:08,960 Speaker 1: the president, but not about the private conversations with Say, 488 00:28:09,000 --> 00:28:11,640 Speaker 1: if you do this, let's let me talk. Please carry 489 00:28:11,640 --> 00:28:13,720 Speaker 1: on to say, if you do this, here's what happens. 490 00:28:13,760 --> 00:28:17,199 Speaker 1: If you do that, that's what happens. You come on 491 00:28:17,200 --> 00:28:19,080 Speaker 1: this program to tell us what you also think about 492 00:28:19,119 --> 00:28:21,119 Speaker 1: the damage that could be done from the tariffs. I mean, 493 00:28:21,119 --> 00:28:23,479 Speaker 1: you don't have to reveal the private conversation with the president. 494 00:28:23,520 --> 00:28:25,879 Speaker 1: Please tell me in your assessment do you think it 495 00:28:25,880 --> 00:28:28,240 Speaker 1: could weigh on US GDP this year if these tariffs 496 00:28:28,280 --> 00:28:33,160 Speaker 1: go into effect on Monday. I think that the five 497 00:28:33,160 --> 00:28:35,719 Speaker 1: percent tariff is a much worse problem for Mexico, as 498 00:28:35,720 --> 00:28:37,879 Speaker 1: I've said in previous interviews this week, than it is 499 00:28:37,920 --> 00:28:41,880 Speaker 1: for the US. But I think that, you know, beyond that, 500 00:28:41,920 --> 00:28:43,360 Speaker 1: we'll have to wait and see. I think Mexico is 501 00:28:43,400 --> 00:28:45,920 Speaker 1: highly motivated because of that to make sure that that 502 00:28:45,960 --> 00:28:48,360 Speaker 1: doesn't happen by helping us secure the border. Kevin. Many 503 00:28:48,360 --> 00:28:50,800 Speaker 1: people think that you're stepping down because you do disagree 504 00:28:50,920 --> 00:28:53,440 Speaker 1: with the President on the tariffs. Just put the record 505 00:28:53,480 --> 00:28:55,320 Speaker 1: straight there for us as you are on your way out. 506 00:28:55,360 --> 00:28:58,840 Speaker 1: What are your thoughts? What actually happened? Oh? I mean, 507 00:28:58,880 --> 00:29:00,440 Speaker 1: what do you mean? What I actually have? But it's 508 00:29:00,480 --> 00:29:02,960 Speaker 1: their utterly separate things. The chair is almost all you 509 00:29:02,960 --> 00:29:06,040 Speaker 1: could go back and look surfer about two years. I've 510 00:29:06,040 --> 00:29:07,760 Speaker 1: got a son who is about to be a senior 511 00:29:07,800 --> 00:29:09,400 Speaker 1: in high school as the youngest, and it's a good 512 00:29:09,400 --> 00:29:12,040 Speaker 1: time to spend more time with Bailey. And it's also 513 00:29:12,080 --> 00:29:14,320 Speaker 1: a normal circle of life for c A to hand 514 00:29:14,360 --> 00:29:16,880 Speaker 1: the slot off to somebody else after a couple of years. 515 00:29:16,920 --> 00:29:18,840 Speaker 1: We'd love to know what's coming next for you, Kevin. 516 00:29:18,880 --> 00:29:21,240 Speaker 1: What is coming next? And have you spoken to the President? Yeah? 517 00:29:21,240 --> 00:29:23,320 Speaker 1: I really don't know yet, but thanks for for asking. 518 00:29:23,400 --> 00:29:25,720 Speaker 1: But but you know, I really haven't made any friend. 519 00:29:25,800 --> 00:29:27,160 Speaker 1: What about a job at the Fed? Would you be 520 00:29:27,240 --> 00:29:29,520 Speaker 1: interested in a job at the Fed? Kevin? Absolutely not, 521 00:29:29,680 --> 00:29:31,720 Speaker 1: absolutely not. You can rule that one out? Is there 522 00:29:31,760 --> 00:29:33,480 Speaker 1: a chance you can rule that one out? Kevin has it. 523 00:29:33,520 --> 00:29:36,240 Speaker 1: Always great to get your thoughts and your thoughts on 524 00:29:36,280 --> 00:29:37,920 Speaker 1: the things you can't tell us as well. Kevin has 525 00:29:37,960 --> 00:29:40,280 Speaker 1: it there. Thank you very much, good luck for the 526 00:29:40,280 --> 00:29:42,080 Speaker 1: rest of the month before you step down. Thank you 527 00:29:42,080 --> 00:29:45,480 Speaker 1: for joining us as always. John Ferroll in conversation with 528 00:29:45,560 --> 00:29:50,120 Speaker 1: the Chairman Presidents Council of Economic Advisors. Thanks for listening 529 00:29:50,160 --> 00:29:54,720 Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews 530 00:29:54,720 --> 00:29:59,920 Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 531 00:30:00,520 --> 00:30:03,880 Speaker 1: I'm on Twitter at Tom Keane before the podcast. You 532 00:30:03,920 --> 00:30:07,280 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.