WEBVTT - Bloomberg Surveillance TV: November 20th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordernt. 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 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 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 --> 0:00:37.440 Terminal and the Bloomberg Business app. Calsey Barrow of JP 0:00:37.520 --> 0:00:39.680 Morgan Asset Management has this to say. While the Fed 0:00:39.920 --> 0:00:42.160 may have been uncomfortable with the lack of government data, 0:00:42.240 --> 0:00:45.519 our conclusion from the information that is available is that 0:00:45.560 --> 0:00:48.519 the labor market continues to gradually weaken. Calsei joins us 0:00:48.520 --> 0:00:50.760 now from More Cassie, good morning, Good morning, and looking 0:00:50.760 --> 0:00:52.360 forward to having you through the jobs number in about 0:00:52.360 --> 0:00:54.760 ten minutes time. Let's talk about that job's number. Is 0:00:54.800 --> 0:00:56.920 it stou? Does it make a difference to the debate 0:00:57.000 --> 0:00:58.040 on December. 0:00:57.640 --> 0:01:00.800 Tenth, Well, if we look at it, it's been seventy 0:01:00.920 --> 0:01:04.640 six days since the last jobs report, So if anything 0:01:04.680 --> 0:01:08.200 was in my fridge for seventy six days, I would say, yeah, 0:01:08.280 --> 0:01:11.280 that's stale. Now, I think the most important thing that 0:01:11.319 --> 0:01:13.720 we've learned over the last twenty four hours as it 0:01:13.760 --> 0:01:17.520 relates to the rates market is the new BLS schedule. 0:01:18.240 --> 0:01:20.679 So the fact that the FED is not going to 0:01:20.760 --> 0:01:25.680 see the October or November jobs report until after the decision, 0:01:26.120 --> 0:01:29.640 and as a result, probabilities that the FED is going 0:01:29.720 --> 0:01:32.600 to cut in December has come down. Now I'm going 0:01:32.640 --> 0:01:34.520 to go into a little bit of what the Fed 0:01:34.840 --> 0:01:38.000 could do or will do, versus should do. Now, what 0:01:38.080 --> 0:01:41.240 they will do, I think is probably skip the meeting 0:01:41.400 --> 0:01:44.720 unless we get a really poor payrolls report today because 0:01:44.720 --> 0:01:47.680 of the lack of data, because they are quote flying blind, 0:01:48.120 --> 0:01:51.240 but I don't really believe they're flying blind. You know, 0:01:51.240 --> 0:01:54.040 we've all been in planes. You go on a plane, 0:01:54.120 --> 0:01:58.120 you fly through clouds, you fly through a fog. Right, 0:01:58.240 --> 0:02:00.440 If I'm not a pilot, but I'm pretty sure sure 0:02:00.800 --> 0:02:03.120 that when a pilot is slying a plane, they're not 0:02:03.120 --> 0:02:03.919 looking out the window. 0:02:04.040 --> 0:02:04.200 Right. 0:02:04.240 --> 0:02:07.640 They have all of these technical radars and instruments that 0:02:07.680 --> 0:02:11.600 they're using, and honestly, I think that there is enough 0:02:11.720 --> 0:02:14.200 data out there for them to assess the labor market, 0:02:14.400 --> 0:02:17.400 and as I said in that opening, to view it 0:02:17.480 --> 0:02:21.240 as generally weakening over time. And that's even if this 0:02:21.400 --> 0:02:24.240 job's report today comes out a little stronger. And if 0:02:24.240 --> 0:02:25.960 we were to do a whisper number, which I know 0:02:25.960 --> 0:02:28.760 we don't have for today's number, I would say it 0:02:28.880 --> 0:02:31.600 feels like the market is prepared for a modestly stronger 0:02:31.680 --> 0:02:34.639 number relative to what's on the echo screen for consensus. 0:02:34.720 --> 0:02:37.280 So let's say it is moderately stronger and you don't 0:02:37.280 --> 0:02:40.200 get a twenty five basis point rate cut next month, 0:02:40.480 --> 0:02:42.520 Does that mean that a fifty basis point rate cut 0:02:42.600 --> 0:02:43.840 in January is more likely? 0:02:44.120 --> 0:02:47.040 I don't think so. I think that they feel moving 0:02:47.080 --> 0:02:51.120 gradually is appropriate, particularly when you're so close to neutral. 0:02:51.960 --> 0:02:55.600 So I think that if they do skip, we're still 0:02:55.639 --> 0:02:58.840 looking for twenty five basis point rate cut in January. 0:02:59.200 --> 0:03:02.239 The market has been very efficient in terms of its repricing, 0:03:02.480 --> 0:03:04.680 so the past few days you've seen the probability of 0:03:04.720 --> 0:03:08.040 December go down. But all of those rate cuts have 0:03:08.120 --> 0:03:10.880 really just been pushed into twenty twenty six, and the 0:03:11.000 --> 0:03:13.640 terminal rate for the Fed Funds rate hasn't actually changed 0:03:13.720 --> 0:03:18.679 very much, so it's still around three point one percent approximately, 0:03:19.400 --> 0:03:22.520 So the market is really looking at this as a skip, 0:03:22.840 --> 0:03:25.920 not a pause, not a hold. And I think that 0:03:25.960 --> 0:03:28.880 the dot plot is also going to communicate that, meaning, 0:03:28.919 --> 0:03:32.440 even if they don't cut in December, the twenty twenty 0:03:32.440 --> 0:03:35.040 six dot is going to be below the current Fed 0:03:35.080 --> 0:03:35.600 funds rate. 0:03:35.880 --> 0:03:37.720 I don't want to go back to this, but the 0:03:37.800 --> 0:03:40.640 idea of the expiration date of the food in your fridge, 0:03:40.800 --> 0:03:44.040 seventy six day oled wonderbread or canned beans are very 0:03:44.080 --> 0:03:47.240 different than seventy six day old strawberries, And I just 0:03:47.360 --> 0:03:50.560 wonder how useful it potentially could be. Even if fee 0:03:50.560 --> 0:03:52.400 maybe you don't want to eat it, you could eat 0:03:52.400 --> 0:03:54.080 it and not get sick. I mean, is there something 0:03:54.120 --> 0:03:56.520 in this job data that's going to be relevant how 0:03:56.560 --> 0:03:58.440 you see the trajectory for the Fed Reserve? 0:03:58.680 --> 0:03:58.960 Yeah? 0:03:59.000 --> 0:04:02.120 Absolutely, But what I would say is if you look 0:04:02.160 --> 0:04:06.040 at the NFPCHR, you pull it up on the Bloomberg terminal, 0:04:06.280 --> 0:04:08.440 you type in GP, what you're going to see is 0:04:08.480 --> 0:04:11.520 a saw tooth pattern. Right, The jobs numbers don't go 0:04:11.560 --> 0:04:13.600 in a straight line. You have a slightly hotter, you 0:04:13.600 --> 0:04:16.240 have a slightly weaker. You have to focus on the trend, 0:04:16.920 --> 0:04:18.720 and so that's what I'm going to be focused on. 0:04:18.839 --> 0:04:20.880 In a few minutes time, I'm going to be looking 0:04:20.920 --> 0:04:23.040 at what the three and six month moving averages are. 0:04:23.120 --> 0:04:25.000 I'm also going to be looking at how much of 0:04:25.040 --> 0:04:29.719 the jobs are cyclical versus a cyclical So most of 0:04:29.760 --> 0:04:32.560 the hiring that we've been seeing really in the last 0:04:32.600 --> 0:04:36.400 six to twelve months has been a cyclical hiring, which 0:04:36.440 --> 0:04:38.800 is I think an indication of the fact that the 0:04:38.880 --> 0:04:41.840 labor market under the surface is a little bit more squishy. 0:04:42.240 --> 0:04:44.280 Why that matters for the Fed. It doesn't mean that 0:04:44.320 --> 0:04:47.000 they need to do emergency cuts, but it does mean 0:04:47.000 --> 0:04:49.760 that if they do continue to cut, it doesn't threaten 0:04:50.000 --> 0:04:54.040 their inflation mandate. And that's really the question here is 0:04:54.120 --> 0:04:57.680 if they continue to cut, does that threaten their ability 0:04:57.720 --> 0:04:59.839 to get back to two percent on inflation? And we 0:05:00.040 --> 0:05:03.320 would say no, that we're not really seeing evidence in 0:05:03.360 --> 0:05:06.279 the cyclical sides of the economy that wages are reaccelerating 0:05:06.360 --> 0:05:07.920 or the labor market is retightening. 0:05:08.120 --> 0:05:10.880 From your view, how political has December gotten. 0:05:12.279 --> 0:05:16.800 I'm not sure it's gotten particularly political. I think this 0:05:16.920 --> 0:05:19.480 is actually more about the fact that we are getting 0:05:19.520 --> 0:05:23.800 close to estimates of neutral, and so every single decision 0:05:23.839 --> 0:05:26.840 from here on out just gets harder. And to be fair, 0:05:27.920 --> 0:05:31.000 it is harder for them without some of the data 0:05:31.279 --> 0:05:34.839 that they had, So I wouldn't necessarily say it's more political. 0:05:34.880 --> 0:05:37.000 I just think that it's a tougher part of the 0:05:37.040 --> 0:05:39.320 economic cycle to try to determine what's going on. 0:05:39.360 --> 0:05:41.800 I'm really asked this question earlier on. I'd love your view, 0:05:41.920 --> 0:05:44.440 your opinion as a market participant, how you would react 0:05:44.480 --> 0:05:46.719 if they delayed the meeting until after the dates had 0:05:46.760 --> 0:05:49.000 dropped on December sixteenth. I'm not saying they're going to 0:05:49.000 --> 0:05:51.279 do that, just as a market participant, how would you 0:05:51.279 --> 0:05:52.480 respond to that? Is that a good thing? 0:05:52.920 --> 0:05:56.080 I would be very surprised. I think the market would 0:05:56.080 --> 0:05:56.920 be very surprised. 0:05:57.120 --> 0:06:00.320 I mean that's surprisingly in a negative way, though. 0:06:00.720 --> 0:06:03.360 I mean I'm thinking through this as as you're laying 0:06:03.400 --> 0:06:06.600 it out your net worries, and I guess the market 0:06:06.640 --> 0:06:11.159 would probably view that as the risk that the data 0:06:11.160 --> 0:06:13.919 that they're going to receive is weaker, and so you know, 0:06:13.960 --> 0:06:16.680 the Fed wants to pause so that they don't miss 0:06:16.720 --> 0:06:19.680 an opportunity to cut and then have to wait all 0:06:19.720 --> 0:06:23.239 the way till January. But it seems like a pretty 0:06:23.360 --> 0:06:26.039 high hurdle. I mean, they put out those dates for 0:06:26.240 --> 0:06:28.719 the schedule years in advance. 0:06:28.520 --> 0:06:30.760 In the number drop just moments ago. Payrolls came in 0:06:30.800 --> 0:06:33.680 at one nineteen. That's an upside surprise. The estimate was 0:06:33.720 --> 0:06:36.279 fifty one k. That's a big upside surprise, but a 0:06:36.320 --> 0:06:38.320 lot of nuance now swear a few of the data 0:06:38.360 --> 0:06:42.080 points that points out negative revisions. Unemployment climb into four 0:06:42.120 --> 0:06:45.120 point four percent from four point three The estimate was 0:06:45.160 --> 0:06:47.200 for that to stay at four point three percent, and 0:06:47.240 --> 0:06:49.600 some more timely data. If you're looking at continuing claims. 0:06:49.600 --> 0:06:52.200 Continuing claims the wrong kind of upside surprise. So if 0:06:52.200 --> 0:06:54.520 you're out of work in America at the moment, it's 0:06:54.560 --> 0:06:57.520 getting harder and harder to get back into the labor force. 0:06:57.520 --> 0:06:59.880 And that's what you see from that number. Almost repeatedly 0:07:00.120 --> 0:07:02.159 over the last several months, they got the market reaction 0:07:02.480 --> 0:07:04.640 equity features stillness, session highs on the S and P 0:07:04.839 --> 0:07:07.880 five hundred and on the NASTAK supported by decent earnings 0:07:07.880 --> 0:07:11.480 from Nvidia. Bond yields off the back of this initially lower, 0:07:11.640 --> 0:07:13.800 they stay lower, down by three basis points on a 0:07:13.840 --> 0:07:17.000 two year at three fifty five Calsie Barrow. If JP 0:07:17.120 --> 0:07:19.320 Morgan still with us, Calsie, You've had ten minutes to 0:07:19.320 --> 0:07:20.120 go over these numbers. 0:07:20.160 --> 0:07:21.000 What jumps down to you? 0:07:21.480 --> 0:07:24.360 Yeah, So, first of all, on the market reaction, clearly 0:07:24.440 --> 0:07:28.120 the market was somewhat prepared for a stronger number as 0:07:28.160 --> 0:07:32.560 it relates to September. But then what you had in 0:07:32.600 --> 0:07:34.800 the mix of it is a number of things that 0:07:35.480 --> 0:07:39.160 pointed to less strength than just the headline number alone. 0:07:39.400 --> 0:07:41.520 So to me, you know, the number of the things 0:07:41.520 --> 0:07:44.640 that stood out were the unemployment rate moving higher and 0:07:44.680 --> 0:07:47.679 on an unrounded basis that actually moved to four point 0:07:47.720 --> 0:07:52.160 four to four, so not far away from four point five, 0:07:52.720 --> 0:07:56.040 So you know, that's a meaningful thing to me. Continuing 0:07:56.080 --> 0:08:00.480 claims also, new cycle high, as you mentioned, means it 0:08:00.520 --> 0:08:03.040 is harder to find a job. And then the third 0:08:03.040 --> 0:08:06.600 thing I would say is the concentration of job growth 0:08:06.720 --> 0:08:10.120 is still very high. So as I see it, fifty 0:08:10.200 --> 0:08:14.080 nine thousand jobs created in healthcare and education, which is 0:08:14.120 --> 0:08:18.400 an acyclical area of the economy, and that's more than 0:08:18.440 --> 0:08:21.360 half of the job gains. Where you have the cyclical 0:08:21.400 --> 0:08:24.520 areas like manufacturing, professional business services. 0:08:24.160 --> 0:08:26.960 Negative ay Stein, there's a chance we might get a 0:08:27.040 --> 0:08:28.400 right cut next month. 0:08:28.560 --> 0:08:32.199 Yeah, this really is an interesting development. I mean, our 0:08:32.240 --> 0:08:34.920 base case has been that you will see a December 0:08:35.000 --> 0:08:38.840 rate cut. We tempered our expectations because of the announcement 0:08:38.920 --> 0:08:42.320 from the BLS, but our general view is that the 0:08:42.320 --> 0:08:45.120 FED is going to maintain an easing bias, and that's 0:08:45.240 --> 0:08:49.559 ultimately what's important. What's most important for the FED is 0:08:49.600 --> 0:08:53.480 that the labor market is cooling, and as a result, 0:08:53.520 --> 0:08:56.840 it means they're able to cut rates without threatening their 0:08:56.960 --> 0:09:01.319 inflation objective. We see wages continue to mind moderate, We 0:09:01.360 --> 0:09:05.160 see inflation outside of tariffs as fairly benign. The bond 0:09:05.160 --> 0:09:07.680 market tends to agree with us as it relates to 0:09:08.840 --> 0:09:13.520 you look at the inflation market itself, fairly benign pricing there. 0:09:13.960 --> 0:09:19.240 And so I think this is an interesting report that 0:09:19.600 --> 0:09:23.440 leaves December potentially still on the table, although it's going 0:09:23.520 --> 0:09:24.760 to remain a pretty close. 0:09:24.520 --> 0:09:27.280 Call if they do. If they decide not to cut 0:09:27.320 --> 0:09:29.760 in December, do you get more conviction to go into 0:09:29.760 --> 0:09:32.680 long duration bonds the idea that this actually will cause 0:09:32.720 --> 0:09:35.720 the cracks to widen that we're seeing in the labor market. 0:09:36.040 --> 0:09:38.520 So I think what we've experienced over the last few 0:09:38.600 --> 0:09:43.640 weeks are great examples of fixed income behaving the way 0:09:43.679 --> 0:09:47.960 that you would expect in periods when the market is 0:09:48.040 --> 0:09:51.600 trading risk off, serving as the ballast, serving as the 0:09:51.640 --> 0:09:55.160 diversifier within your portfolio, and that obviously comes down to 0:09:55.760 --> 0:09:57.480 having duration in your portfolio. 0:09:57.600 --> 0:09:58.120 So that is. 0:09:58.040 --> 0:10:01.280 Something that we have liked. We have a range for 0:10:01.360 --> 0:10:04.079 the tenure of three seventy five to four and a quarter. 0:10:04.320 --> 0:10:06.640 When we're at the top of that range, you have 0:10:06.720 --> 0:10:11.760 the opportunity to increase that position. When we move down 0:10:11.800 --> 0:10:13.800 to the bottom of that range, we need to be 0:10:14.400 --> 0:10:16.640 thinking about two things. Are we still in a soft 0:10:16.720 --> 0:10:19.640 landing or is the economy changing. If we're still in 0:10:19.640 --> 0:10:22.199 a soft landing, there's a limit to how much lower 0:10:22.240 --> 0:10:25.679 yields can go. If we are concerned about a harder landing, 0:10:26.960 --> 0:10:30.480 then there's even more space for rates to rally from here. 0:10:30.640 --> 0:10:32.360 Kelsey, you brought up a great point. We're a hair 0:10:32.400 --> 0:10:34.400 away from that line in the sand, really that Jay 0:10:34.440 --> 0:10:37.880 Powell's outlined four point five percent unemployment rate. We were 0:10:37.920 --> 0:10:40.880 almost just there. Isn't that going to give the impetus 0:10:40.880 --> 0:10:42.800 on the FED that they should be concerned with the 0:10:42.880 --> 0:10:43.480 labor market. 0:10:44.520 --> 0:10:48.040 Quite possibly, But I do think that there are still 0:10:48.360 --> 0:10:54.640 two core groups that are going to not necessarily change 0:10:54.640 --> 0:10:56.960 their view as a result of this job support. I 0:10:57.040 --> 0:10:58.880 just don't think it's enough so that the people who 0:10:58.920 --> 0:11:01.760 wanted to stay on hold probably aren't going to look 0:11:01.760 --> 0:11:04.840 at this immediately and say I need to change my view, 0:11:05.280 --> 0:11:09.120 but they may be more likely to be less vocal 0:11:09.200 --> 0:11:13.200 in terms of their descent. So it's kind of maybe 0:11:13.280 --> 0:11:19.000 a nuance there of they're less intensely against it because 0:11:19.040 --> 0:11:21.080 they are seeing that there are things happening on the 0:11:21.080 --> 0:11:23.800 other side. But you know, for those who are more 0:11:23.800 --> 0:11:27.280 concerned about inflation, that picture hasn't changed. We didn't get 0:11:27.320 --> 0:11:29.679 any new data on inflation yet. Maybe a little bit 0:11:29.760 --> 0:11:34.280 on the wage side, but you know that's limited, and 0:11:34.600 --> 0:11:36.640 you know they can still say for four and a 0:11:36.679 --> 0:11:39.320 half percent, that was what was in our forecast, So 0:11:39.400 --> 0:11:43.040 not surprising us to the upside, and still a relatively 0:11:43.200 --> 0:11:45.200 low unemployment rate versus history. 0:11:47.280 --> 0:11:50.520 Stay with US multile impag Savannah's coming up off to 0:11:50.640 --> 0:12:02.280 this iterprise on the headline number, but plenty of nuance 0:12:02.480 --> 0:12:05.040 beyond that. Slightly one key but another number that's interesting 0:12:05.120 --> 0:12:08.240 is eighty point two percent. Here's what's coming from the BLS. Today. 0:12:08.280 --> 0:12:11.640 The September estimates from the Establishment Survey include both data 0:12:11.640 --> 0:12:13.839 collected on our normal schedule prior to the shutdown and 0:12:13.920 --> 0:12:18.160 also September data that business is self reported electronically during 0:12:18.160 --> 0:12:21.040 the shutdown. As a result, the Establishment Survey collection rate 0:12:21.320 --> 0:12:24.240 eighty point two percent for this initial release of September 0:12:24.280 --> 0:12:27.040 twenty five data is higher than usual, So a higher 0:12:27.120 --> 0:12:29.080 quality report, if we can call it that. 0:12:29.280 --> 0:12:31.200 Yeah, so what does this leave us? Does this leave 0:12:31.280 --> 0:12:32.880 us with a good report or a bad report? And 0:12:32.920 --> 0:12:34.160 you talk about how it's going to be a roar 0:12:34.240 --> 0:12:37.079 shock test. That said, the fact that this is backward 0:12:37.080 --> 0:12:40.080 looking at seventy six day old data at the same 0:12:40.120 --> 0:12:43.480 time that you're seeing the ongoing continuing claims tick even 0:12:43.559 --> 0:12:46.440 higher does seem to indicate there could be some kind 0:12:46.480 --> 0:12:48.959 of shift on the FMC that leans toward where the 0:12:49.000 --> 0:12:49.800 market would like it to be. 0:12:49.920 --> 0:12:52.440 Nida Richardson of ADP joins us now for more, Nila, 0:12:52.480 --> 0:12:55.000 welcome to the program. Some timely data, some not so 0:12:55.120 --> 0:12:57.000 timely data. How many things set up in the labor 0:12:57.040 --> 0:12:58.600 market from your vantage point? 0:13:00.080 --> 0:13:02.199 The rule of my house is three days and it's out. 0:13:02.280 --> 0:13:06.240 That's why we have a weekly But I'm going to 0:13:06.280 --> 0:13:09.079 say that good news bad news, it's always good needs 0:13:09.160 --> 0:13:12.240 to see job gains. So I'm cheering this September number. 0:13:12.280 --> 0:13:15.000 I'm sharing the fact that seems to be stronger in 0:13:15.080 --> 0:13:17.320 terms of the response rate, But I have to go 0:13:17.400 --> 0:13:20.880 back to August because that's where the ADP numbers and 0:13:20.920 --> 0:13:23.520 the BLS numbers are almost in sync. We saw four 0:13:23.559 --> 0:13:29.600 thousand drop in August at ADP and that's very similar 0:13:29.600 --> 0:13:34.280 to what the BLS saw as well. So going into September, 0:13:35.160 --> 0:13:38.320 there's strength there, but we note that in October that 0:13:38.440 --> 0:13:41.800 strength may have been mollified. September is an easy month 0:13:41.880 --> 0:13:44.839 for seasonal adjustment. There's not as much hiring, but when 0:13:44.840 --> 0:13:49.599 you go into that October November December period of seasonal workers, 0:13:50.040 --> 0:13:52.080 it's going to be a little bit more challenging to 0:13:52.160 --> 0:13:57.360 offset the seasonal factors. And to note, the private sector 0:13:57.480 --> 0:14:01.439 was driving this jobs report, but it was the consumer 0:14:01.679 --> 0:14:05.840 facing private sector that really carried the water in this 0:14:05.960 --> 0:14:09.120 jobs reports. So so goes the consumer when it comes 0:14:09.160 --> 0:14:12.120 to healthcare, when it comes to leisure and hospitality, so 0:14:12.240 --> 0:14:15.960 goes the labor market. The connection between the consumer and 0:14:15.960 --> 0:14:18.160 the labor market has never been stronger. 0:14:18.960 --> 0:14:20.520 When you look at this report. 0:14:20.320 --> 0:14:22.840 Right now, Neila, given that backdrop, does this give you 0:14:22.880 --> 0:14:25.040 the justification in your head for the Federal Reserve to 0:14:25.040 --> 0:14:26.800 cut rates next month? If you could just sort of 0:14:27.080 --> 0:14:29.200 go there and get a sense. Is this a strong 0:14:29.280 --> 0:14:31.560 read or a weak read in your view? 0:14:32.960 --> 0:14:37.840 The whole context of the FED view of the labor 0:14:37.920 --> 0:14:41.880 market is that labor demand and labor supply are falling 0:14:42.000 --> 0:14:47.240 in lockstep. I think this report challenges that notion because 0:14:47.280 --> 0:14:50.160 you see what you see is that the unemployment rate 0:14:50.280 --> 0:14:53.840 ticked up, and on the worker side, you also saw 0:14:54.040 --> 0:14:56.720 a bit of a rise in the labor force participation rate. 0:14:56.960 --> 0:14:59.360 To me, that suggests that more people came into this 0:14:59.520 --> 0:15:02.840 market looking for work and didn't find it. And that's 0:15:02.960 --> 0:15:06.160 especially supported if you look at the continuing claims number 0:15:06.360 --> 0:15:10.040 that is continuing to edge up, telling us it's taking 0:15:10.320 --> 0:15:13.400 longer to get a job. This is a highly concentrated 0:15:13.480 --> 0:15:17.800 labor market. Only a few sectors are strongly producing jobs. 0:15:18.000 --> 0:15:21.320 It makes it challenging for workers with a general skill 0:15:21.360 --> 0:15:24.560 set to find employment. And I think that's what's going 0:15:24.600 --> 0:15:27.600 to challenge the Fed in December. It's not just a 0:15:27.680 --> 0:15:30.960 strong jobs market. They have to look at the demand side. 0:15:31.080 --> 0:15:33.920 It's how the supply side is faring in a very 0:15:34.000 --> 0:15:35.760 concentrated labor market. 0:15:35.920 --> 0:15:38.440 Does a FED rate cut change this picture? I guess 0:15:38.440 --> 0:15:40.800 that is the key question that everyone keeps start coming 0:15:40.840 --> 0:15:41.120 back to. 0:15:42.680 --> 0:15:46.440 Well, if this data is backward looking, a FED policy 0:15:46.520 --> 0:15:50.480 move is very much forward looking, right. We won't immediately 0:15:50.560 --> 0:15:53.960 see if the effect of a rate cut on main street. 0:15:54.160 --> 0:15:58.680 It will take several months for that apparatus to trickle in, 0:15:59.080 --> 0:16:02.840 especially when you look at the key way that FED 0:16:02.880 --> 0:16:07.240 policy transitions into main street is through the borrowing markets, 0:16:07.240 --> 0:16:10.520 through the credit markets. Our consumer's positioned right now for 0:16:10.560 --> 0:16:14.640 those big ticket purchases a house, a car, a refrigerator, 0:16:14.760 --> 0:16:17.200 that really drives the labor market forward. 0:16:17.240 --> 0:16:18.480 In terms of new hires. 0:16:18.720 --> 0:16:21.840 I think when you come to the holiday season, that's 0:16:21.880 --> 0:16:24.480 where the rubber meets the road. That's where the disconnect 0:16:24.560 --> 0:16:28.520 between the wealthy consumer and the low in consumer really matters. 0:16:28.640 --> 0:16:32.200 Because if that low end consumer, that low income consumer, 0:16:32.640 --> 0:16:35.920 can't purchase in the same way as they do over 0:16:35.920 --> 0:16:40.240 the holidays generally, then we won't get the growth factor 0:16:40.520 --> 0:16:43.640 leading into the first quarter of the year. So a 0:16:43.720 --> 0:16:46.320 lot is going to be born on the shoulders of 0:16:46.360 --> 0:16:49.400 that low and can come consumer over the next three months, 0:16:49.520 --> 0:16:52.160 both when it comes to seasonal hiring and when it 0:16:52.200 --> 0:16:53.680 comes to seasonal spending. 0:16:53.960 --> 0:16:57.360 Stay with US mult Bloomberg Surveillance coming up off to this. 0:17:05.960 --> 0:17:08.159 Looking ahead to the Federal Reserve meeting, Sarah manx b 0:17:08.280 --> 0:17:11.360 C Iowa moving writing December rate cut as a toss up, 0:17:11.640 --> 0:17:14.160 but three rate cuts are expected over the next twelve 0:17:14.240 --> 0:17:17.120 months as the Fed leans incrementally davish in the second 0:17:17.160 --> 0:17:19.120 half of twenty six. Sarah joins us now for more 0:17:19.320 --> 0:17:21.600 Sarah welcome. We've got to reflect on the data around 0:17:21.640 --> 0:17:24.880 just moments ago. Something for absolutely everyone is it changed 0:17:24.880 --> 0:17:27.520 the debate for December tenth on the f WEBC. 0:17:28.760 --> 0:17:29.960 But we got two new. 0:17:29.840 --> 0:17:32.360 Data points today to help us determine whether we're going 0:17:32.359 --> 0:17:34.760 to get that rate cut in December. This is first 0:17:34.760 --> 0:17:37.639 of all economic data trickling in with this employment data 0:17:37.680 --> 0:17:39.920 and also technology. 0:17:39.320 --> 0:17:40.240 And consumer earning. 0:17:40.320 --> 0:17:43.480 So first of all, on the payils number for September, 0:17:43.800 --> 0:17:45.359 the number scale, so. 0:17:45.280 --> 0:17:46.680 There's something for everybody in it. 0:17:46.800 --> 0:17:49.440 While we beat on paerils, we have downward revisions and 0:17:49.640 --> 0:17:52.679 increasing unemployment rate, so I think that's mixed. In general, 0:17:52.720 --> 0:17:54.680 we saw the odds of a rate cut move up 0:17:54.720 --> 0:17:58.720 from thirty percent to forty percent on this number four December. Second, 0:17:58.720 --> 0:18:00.520 the good news is earnings, which has been the good 0:18:00.560 --> 0:18:03.159 news for the past few weeks, and video earning strong 0:18:03.400 --> 0:18:06.399 Walmart showing the consumer is still shopping. That's good for 0:18:06.480 --> 0:18:09.240 earnings and good for large cat tech. The bubble that 0:18:09.240 --> 0:18:12.280 people were talking about in the markets was mostly in 0:18:12.520 --> 0:18:15.680 unprofitable tech and speculative tech. But I think from here, 0:18:15.720 --> 0:18:18.560 given in Vidia soothing the markets, tech will lead. We 0:18:18.600 --> 0:18:20.800 will get three rate cuts over the next twelve months, 0:18:20.880 --> 0:18:23.400 but December still a toss of We may approach close 0:18:23.440 --> 0:18:26.040 to fifty percent chances of a rate cut, but most 0:18:26.080 --> 0:18:28.360 of the FED has been leaning pockets recently. We heard 0:18:28.400 --> 0:18:29.840 that in the Fed Minutes yesterday. 0:18:30.160 --> 0:18:31.960 So you said that tech will lead, and this is 0:18:31.960 --> 0:18:35.320 an important point. Will tech lead because the FED has 0:18:35.359 --> 0:18:38.879 been more reluctant to cut rates aggressively, or will it 0:18:39.000 --> 0:18:42.320 lead despite the fact that the FED is more reluctant 0:18:42.320 --> 0:18:43.040 to cut rates. 0:18:44.359 --> 0:18:45.760 Tech leads for two reasons. 0:18:45.800 --> 0:18:49.200 The first one is a moderately weakening economy we are 0:18:49.240 --> 0:18:51.880 seeing that in the payroll data, and second is a 0:18:51.920 --> 0:18:55.040 slower pace of rate cuts. The moderate growth is good 0:18:55.040 --> 0:18:58.120 for tech because they have their own structural drivers. Artificial 0:18:58.119 --> 0:19:01.400 intelligence is alive and well debate when where we see 0:19:01.400 --> 0:19:03.960 the ROI on all of the dollars spent on AI, 0:19:04.080 --> 0:19:07.439 But we will see AI continue to increase productivity for 0:19:07.480 --> 0:19:10.320 companies and eventually boost their revenues out of That's the 0:19:10.320 --> 0:19:12.760 main structural driver for technology stocks, and I think they 0:19:12.760 --> 0:19:15.879 will continue to lead from here unless the economy shows 0:19:16.080 --> 0:19:20.639 significant signs of accelerating or the FED dramatically decreases rates. 0:19:20.800 --> 0:19:23.080 Talk about timely. Speaking of the labor market, this from 0:19:23.160 --> 0:19:26.000 Verizon just moments ago. Today, we will begin reducing our 0:19:26.000 --> 0:19:29.240 workforce by more than thirteen thousand employees across the organization 0:19:29.680 --> 0:19:35.040 and significantly reduce our outsourced and other outside labor expenses. Sarah. 0:19:35.160 --> 0:19:38.600 Efficiency and operational efficiency? Is that going to be a 0:19:38.600 --> 0:19:40.120 big theme for next year? 0:19:41.560 --> 0:19:43.680 The two themes will be for twenty twenty six. 0:19:43.720 --> 0:19:47.040 First of all, is that efficiency because of artificial intelligence, 0:19:47.080 --> 0:19:49.960 every company seems to be talking about that. And also 0:19:50.200 --> 0:19:53.159 because of inflation, we're hearing more and more about affordability 0:19:53.320 --> 0:19:56.200 and actually some decreases in tariffs and areas like beef 0:19:56.240 --> 0:19:56.919 and coffee. 0:19:57.160 --> 0:19:59.800 Is the economy still affordable for the consumer? 0:20:00.080 --> 0:20:02.560 Hearing a lot out of walmart on that today those 0:20:02.600 --> 0:20:04.320 are two themes I think that are bubbling up and 0:20:04.320 --> 0:20:07.400 will continue through twenty twenty six as we talk about 0:20:07.400 --> 0:20:09.920 how are we going to incorporate the value of artificial 0:20:09.920 --> 0:20:11.439 intelligence into our business models? 0:20:11.520 --> 0:20:14.280 Sarah, just before you go topics right now into the 0:20:14.440 --> 0:20:15.760 new year, what are they at the moment? 0:20:16.880 --> 0:20:21.040 We love infrastructure infrastructures has tailwinds more building in the 0:20:21.200 --> 0:20:25.440 United States, shift to artificial intelligence and electrification of our economy. 0:20:25.560 --> 0:20:29.119 One stock, in particular, Ni Source in Indiana based utility, 0:20:29.280 --> 0:20:30.439