WEBVTT - Surveillance: US Jobs Data Gives Mixed Signals 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.200 --> 0:00:13.160 with Jonathan Farrell and Lisa Abramowitz Jaily, we bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.800 --> 0:00:23.840 To find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:29.200 and of course, on the Bloomberg terminal. He is one 0:00:29.200 --> 0:00:33.280 of the most interesting politicians across all of America and 0:00:33.360 --> 0:00:37.560 certainly his Democrat party. He's a twenty ninth United States 0:00:37.560 --> 0:00:41.440 Secretary of Labor and always in forever will be the 0:00:41.479 --> 0:00:45.120 former mayor of Boston. Marty Walsh is served President Biden 0:00:45.479 --> 0:00:48.320 as they go to election day and as we do 0:00:48.440 --> 0:00:53.159 on Jobs Day. A conversation John Farrow with Marty Walsh. 0:00:53.479 --> 0:00:55.960 Let's listen in from New York and place the site 0:00:55.960 --> 0:00:58.040 that joining us now is a US labor sectary. Marty 0:00:58.080 --> 0:01:00.560 Walsh on TV and on radio, he joins us in Washington. 0:01:00.760 --> 0:01:03.720 Mighty fantastic to have you with us on the program sir, First, 0:01:03.960 --> 0:01:06.640 on this show to respond to this payrolls report, the 0:01:06.640 --> 0:01:08.880 big question for many of us right now. Secondly, Walsh 0:01:08.920 --> 0:01:10.520 is how much do you think this labor market needs 0:01:10.560 --> 0:01:14.640 to cool to help get inflation lower. Well, I think that. 0:01:14.680 --> 0:01:17.280 I think what we're seeing here is obviously saw good 0:01:17.319 --> 0:01:20.520 games this month, lower unemployment, and that's really strong. I 0:01:20.520 --> 0:01:22.000 think what we're sat in to see now is as 0:01:22.000 --> 0:01:24.600 transition to a slower and steady economy as we move 0:01:24.640 --> 0:01:27.759 forward here. I mean, we're seeing there's still jobs available 0:01:27.800 --> 0:01:30.520 out there. We're seeing the wages have gone up a 0:01:30.560 --> 0:01:33.440 little bit a little less than last month, and what 0:01:33.440 --> 0:01:35.440 we are seeing gains in the in those sectors that's 0:01:35.480 --> 0:01:37.920 still a hiring people that need people to work on them. 0:01:38.040 --> 0:01:40.920 The question many people are asking is whether higher unemployment 0:01:41.160 --> 0:01:43.559 is a price worth paying to get inflation down. Secondary Walsh, 0:01:43.560 --> 0:01:45.640 you and I have talked about that. That question has 0:01:45.680 --> 0:01:48.480 taken on renewed importance this week after some of your 0:01:48.480 --> 0:01:50.960 Democratic colleagues down in d C have sent a letter 0:01:50.960 --> 0:01:53.240 to Chairman Pou. Do you think higher unemployment is a 0:01:53.280 --> 0:01:57.440 price worth pag to get inflation lower? Certainly? I don't 0:01:57.480 --> 0:01:59.280 want to see high unemployment because I think too many 0:01:59.320 --> 0:02:00.840 people in this count we need to go to work. 0:02:01.160 --> 0:02:04.440 Uh the seeing opportunities where where workers across the board 0:02:04.440 --> 0:02:07.960 average of higher wages right now for four point seven percent. 0:02:08.000 --> 0:02:10.760 I think this a month. UH. The wages are at 0:02:11.080 --> 0:02:13.919 UH in the hospitality and they're higher. I think there's 0:02:13.960 --> 0:02:16.560 an opportunity for us to bring inflation down UH and 0:02:16.760 --> 0:02:19.720 as well as having employment going on the country. We're 0:02:19.720 --> 0:02:21.800 living in a very and I've said this many many 0:02:21.800 --> 0:02:24.400 times now, but in a very different economic times, and 0:02:24.440 --> 0:02:26.280 I certainly don't want to see our n employment rate 0:02:26.320 --> 0:02:29.200 go high three point seven percent. We've been averaging between 0:02:29.400 --> 0:02:31.400 three point five and three point seven percent over the 0:02:31.480 --> 0:02:34.119 last I think pretty much the last year, and that's 0:02:34.120 --> 0:02:36.240 a good place to be. What's the mechanism for that 0:02:36.320 --> 0:02:40.680 to happen? As far as you assume what to get 0:02:40.720 --> 0:02:44.080 inflation down without unemployment going up? Well, I think you know, 0:02:44.120 --> 0:02:46.480 the feed is raised. Rates were seeing a little bit 0:02:46.480 --> 0:02:48.240 of a little bit of steadiness now a little bit 0:02:48.240 --> 0:02:51.600 of cooling off. We're also seeing opportunities, as I mentioned, 0:02:51.760 --> 0:02:53.440 we're seeing we're sat in there to see signs of 0:02:53.480 --> 0:02:55.519 a slow and steady economy. I think we're getting back 0:02:55.560 --> 0:02:58.040 to UH pre pandemic where we were. We're not going 0:02:58.040 --> 0:03:00.200 to continue to see these gains of hundreds of dollars 0:03:00.240 --> 0:03:03.400 of jobs every month in our economy because eventually, you know, 0:03:03.639 --> 0:03:06.079 we're gonna run out of people to fill those jobs. 0:03:06.520 --> 0:03:08.880 We're seeing the supply chain. You I didn't see that 0:03:09.040 --> 0:03:11.480 here your whole segment right before this, But as China 0:03:11.560 --> 0:03:13.520 opens up, we're gonna start to see more supplies coming 0:03:13.520 --> 0:03:17.079 across the ocean. We're seeing pressure on gas prices coming 0:03:17.120 --> 0:03:19.680 down a bit. We need to continue to stay focused 0:03:19.639 --> 0:03:22.040 on on our on our gas prices and natural gas. 0:03:22.240 --> 0:03:24.120 We need to continue to bring carts down at the 0:03:24.200 --> 0:03:27.079 kitchen table every every past of the way we can, uh, 0:03:27.120 --> 0:03:29.120 and we're just gonna continue to do it month over month. 0:03:29.200 --> 0:03:31.160 There's not just one quick fix to it, as you know, 0:03:31.280 --> 0:03:33.560 and you know you guys talk about it all day long. 0:03:33.639 --> 0:03:35.800 There's lots of different things that have to happen here. Well, 0:03:35.840 --> 0:03:39.000 the Federals earves talking about causing pain. Chairman Power talked 0:03:39.040 --> 0:03:40.920 about that in Jackson whole way and Making said well, 0:03:41.000 --> 0:03:43.400 higher interest rates and slower growth and softer labor market 0:03:43.400 --> 0:03:46.360 conditions will bring down inflation. They will also bring some 0:03:46.360 --> 0:03:49.320 pain to households and businesses. These are the unfortunate cost 0:03:49.400 --> 0:03:52.600 of reducing inflation, but a failure to restore price stability 0:03:52.640 --> 0:03:55.720 would mean far greater pain. Secondly, well, what would you 0:03:55.720 --> 0:03:58.440 say to those that may say to you that you're 0:03:58.480 --> 0:04:00.560 not being up front about the pain that we need 0:04:00.600 --> 0:04:03.360 to go through to get inflation down, Well, I could 0:04:03.360 --> 0:04:05.160 say this, people went through a lot of pain in 0:04:05.160 --> 0:04:06.720 this country in the last two and a half years 0:04:06.760 --> 0:04:09.640 with the pandemic. People lost their job, people were concerned 0:04:09.680 --> 0:04:11.840 about what the future is and we're living in a 0:04:11.960 --> 0:04:15.080 very interesting time coming out of a pandemic. UH, and 0:04:15.120 --> 0:04:17.160 I think that people are feeling pain. They feeling pain 0:04:17.160 --> 0:04:18.760 at the kitchen table, and we have to do everything 0:04:18.760 --> 0:04:22.680 we can as an administration. The President's passed legislation UH 0:04:22.720 --> 0:04:24.920 Inflation Reduction Act that long term will help us bring 0:04:24.960 --> 0:04:27.880 down inflationary pressures. We're working on supply chain issues to 0:04:27.880 --> 0:04:31.239 bring down to play story pressures. UH. The FED doing 0:04:31.480 --> 0:04:33.560 what they have to do to bring down pressures, and 0:04:33.600 --> 0:04:36.440 we have to continue to work an all government approach, 0:04:36.480 --> 0:04:38.320 if you will, UH and do everything we can to 0:04:38.320 --> 0:04:40.479 bring those pressures down at the kitchen table, I think 0:04:40.480 --> 0:04:43.719 by having having unemployment rates around seven percent, that that's 0:04:43.839 --> 0:04:45.760 a lot a lot of unnecessary pain that people in 0:04:45.800 --> 0:04:47.960 America don't need right now, and working people that are 0:04:47.960 --> 0:04:49.760 working won't need that pain either. You can see that 0:04:49.800 --> 0:04:53.200 has to go higher. Though no I'm not there yet. 0:04:53.400 --> 0:04:55.360 I'm one of the people that that hold out saying 0:04:55.400 --> 0:04:57.600 that I would like to see the unemployment rate continue 0:04:57.640 --> 0:04:59.600 to to stay where we are, even go lower if 0:04:59.640 --> 0:05:01.840 we can uh and and work out the ways through 0:05:01.880 --> 0:05:04.120 this inflationary pressures that people are failing. I've got to 0:05:04.160 --> 0:05:05.560 put you on the spot their second Welsh how does 0:05:05.640 --> 0:05:09.320 unemployment got lower and inflation comes down to? How do 0:05:09.360 --> 0:05:12.359 you think that happens over the next twelve months. I 0:05:12.400 --> 0:05:15.159 think that people are trying to compare this economy to 0:05:15.520 --> 0:05:18.400 what we've had previous economies, and we've heard people talk 0:05:18.480 --> 0:05:20.839 about on on shows all across America and people in 0:05:20.880 --> 0:05:24.279 boardrooms talking about recessions and comparing this time moment in 0:05:24.320 --> 0:05:28.320 time to pass times where we had recessions. It's very different. 0:05:28.480 --> 0:05:30.680 It's a very different period of time. And we've never 0:05:30.720 --> 0:05:34.040 seen inflation at such a high rate and unemployment at 0:05:34.040 --> 0:05:35.760 such a low rate in the history of our country. 0:05:35.880 --> 0:05:37.720 So we have to just continue to do everything we 0:05:37.760 --> 0:05:39.920 can use all the all the all the tools, all 0:05:39.920 --> 0:05:42.520 the mechanism we have to bring those costs down a lot. 0:05:42.600 --> 0:05:44.760 Some of this was due cause because of a pandemic, 0:05:44.800 --> 0:05:47.120 because the supply chain issues in the very beginning. Part 0:05:47.120 --> 0:05:49.080 of this is because of gas prices. You know, this 0:05:49.160 --> 0:05:51.919 is a worldwide crisis that that people are failing with 0:05:52.040 --> 0:05:54.840 inflation and and things that we're doing here in the 0:05:54.880 --> 0:05:56.960 United States we are bringing you know, I think we're 0:05:57.000 --> 0:05:58.680 being a little more successful here in the United States 0:05:58.720 --> 0:06:01.719 and other parts of the world. You talked about the mechanism. 0:06:01.880 --> 0:06:03.760 Forgive me for calling that a lot of words sounded 0:06:03.760 --> 0:06:05.400 because it felt that way on my side of it 0:06:05.440 --> 0:06:08.000 listening to its. Secondly, Welsh, you talked about the mechanism 0:06:08.040 --> 0:06:10.960 for this to happen. Yes, unemployment is very low and 0:06:11.040 --> 0:06:13.880 inflation is very high, and that's why most people assume 0:06:13.920 --> 0:06:16.479 the unemployment will have to go up for inflation to 0:06:16.520 --> 0:06:19.320 come down. You still haven't really told me how you 0:06:19.360 --> 0:06:21.600 think that's going to happen. What are you to make 0:06:21.640 --> 0:06:24.800 that happen? Because understand that's the world you want, that's 0:06:24.839 --> 0:06:27.000 not the world we have. How's that going to work? 0:06:27.320 --> 0:06:29.960 I'm not I'm not an economist, number one, and I 0:06:30.000 --> 0:06:32.440 think that it has to be very clear. And number two, 0:06:32.480 --> 0:06:34.400 when you think about where we are at this moment 0:06:34.400 --> 0:06:37.080 in time, what I'm gonna do as my job as 0:06:37.080 --> 0:06:39.480 Secretary of Labors were an iken is to make sure 0:06:39.520 --> 0:06:43.160 that Americans have opportunities to do good paying jobs, whether 0:06:43.200 --> 0:06:46.120 it's to workforce development, apprentice programs, working with states and 0:06:46.160 --> 0:06:49.760 cities all across America. That's my role and responsibility right now. 0:06:49.960 --> 0:06:52.440 My role and responsibility when it comes to inflation was 0:06:52.480 --> 0:06:54.960 making sure the supply chains and moving forward, making sure 0:06:55.000 --> 0:06:56.880 we didn't have seven hundred ships off the coast of 0:06:56.920 --> 0:07:00.120 California in Seattle and Portland and in the West US 0:07:00.120 --> 0:07:02.120 where we did have it, making sure that those those 0:07:02.120 --> 0:07:04.560 goods and services came into our country, making sure that 0:07:04.600 --> 0:07:06.800 we don't have disruption in our supply chain, whether it's 0:07:06.800 --> 0:07:10.200 through negotiations and ports or negotiations on rails. Those are 0:07:10.240 --> 0:07:12.600 things that I'm focused on right now forward looking to 0:07:12.640 --> 0:07:14.560 make sure that we're doing everything we can that we 0:07:14.600 --> 0:07:16.800 don't add to the inflationary pressures that people are filling 0:07:16.840 --> 0:07:20.800 in America. Other folks are working. Secretary Yelling, Secretary Mundo, 0:07:21.240 --> 0:07:24.320 and the Chairman Chairman, all those folks are also working 0:07:24.320 --> 0:07:27.360 collectively on making sure of bringing down inflationary pressures. You've 0:07:27.400 --> 0:07:29.720 been pound of the negotiations with the rail union. She 0:07:29.840 --> 0:07:32.480 mentioned that just there why haven't I signed the agreement. 0:07:33.880 --> 0:07:36.200 We have six of the twelve agreed upon. We have 0:07:36.280 --> 0:07:38.960 four contracts still out, and we have two contracts that 0:07:38.960 --> 0:07:41.920 were voted down by the members that we're currently I'm 0:07:42.000 --> 0:07:45.000 encouraging both sides, the rail and the companies to stay 0:07:45.040 --> 0:07:47.320 at the table and get another opportunity to get another 0:07:47.400 --> 0:07:50.800 vote on before we hit our deadline in November and December. 0:07:50.840 --> 0:07:54.440 Are you actively involved in the negotiation again, I'm not 0:07:54.480 --> 0:07:57.240 actively involved in persue the negotiation as far as what's 0:07:57.320 --> 0:07:59.160 what's in and out of the contract, but I am 0:07:59.240 --> 0:08:02.320 very active in making sure and talking to I talked 0:08:02.320 --> 0:08:05.120 to the representatives of the companies on a daily basis, 0:08:05.320 --> 0:08:07.360 and I talked to union different unions almost on a 0:08:07.440 --> 0:08:10.040 daily basis well, UH, to make sure, particularly the two 0:08:10.160 --> 0:08:13.920 unions that that didn't ratify the contract. UH. Six unions 0:08:13.920 --> 0:08:15.760 have ratified. There's another one going to come in the 0:08:15.760 --> 0:08:17.760 next couple of days, and then we'll have three left 0:08:17.800 --> 0:08:20.840 out there. So hopefully by by hopefully, by this time 0:08:20.880 --> 0:08:23.400 next week, we will have many of these contracts ratified. 0:08:23.400 --> 0:08:26.320 And we were down to the last two. What if 0:08:26.320 --> 0:08:28.920 we don't get that? What preparations you've done just in 0:08:28.920 --> 0:08:31.920 case this falls apart, Well, there's a process that goes 0:08:31.920 --> 0:08:33.880 in place and the worst case scenario. I'll play worst 0:08:33.880 --> 0:08:36.240 case scenario a minute. If we don't get to an agreement, 0:08:36.440 --> 0:08:39.480 Congress will have to take action, and that is by 0:08:39.559 --> 0:08:43.040 design and the and the Railway Act. Uh. The President 0:08:43.040 --> 0:08:45.959 has the ability authority to put together an emergency board, 0:08:46.000 --> 0:08:48.800 which he did. Uh. They came back at recommendations. The 0:08:48.880 --> 0:08:51.600 unions have to ratify. There's twelve different unions. And if 0:08:51.600 --> 0:08:54.679 the unions don't ratify, if we have two right now 0:08:54.800 --> 0:08:58.520 not ratified, Uh, Congress is the last stop that would 0:08:58.520 --> 0:09:00.680 have to take action. It's likely. Well, thank you, sir 0:09:00.840 --> 0:09:02.800 for your time against We appreciate it. The life of 0:09:02.800 --> 0:09:18.760 Secretary that Monty Walsh. Tiffany Wilding with this with Pimco. Tiffany, 0:09:18.800 --> 0:09:20.880 I want to go back to black and tackle here, 0:09:21.440 --> 0:09:23.839 which is you've got to figure out real g d P, 0:09:25.200 --> 0:09:33.000 inflation in nominal GDP, the animal spirit, current economy, economic growth, etcetera. 0:09:33.600 --> 0:09:35.840 And I don't even know, not to be rude, how 0:09:35.920 --> 0:09:39.199 far out you should go? Can you get out just 0:09:39.520 --> 0:09:42.800 like the end of second quarter two thousand twenty three, 0:09:43.440 --> 0:09:46.040 Dare I say, Tiffany, can you go out to the 0:09:46.160 --> 0:09:48.760 end of next year. Dare I say you can be 0:09:48.800 --> 0:09:51.320 like Governor Bailey in England and call for a two 0:09:51.440 --> 0:09:54.280 year recession. I fell off my chair, Tiffany, when I 0:09:54.320 --> 0:09:58.160 saw that, how far out can you guess? Estimate real 0:09:58.240 --> 0:10:01.200 g d P. I mean, I think you're you're picking 0:10:01.280 --> 0:10:03.440 up on a really important point here. Is just there's 0:10:03.440 --> 0:10:05.760 a lot of uncertainty, um, you know, and we do 0:10:05.920 --> 0:10:08.880 try to model these things right, but models aren't perfect. 0:10:08.920 --> 0:10:11.599 They're stylized, and you know, you have to understand that 0:10:11.640 --> 0:10:13.360 it's never going to capture everything. And I think there 0:10:13.400 --> 0:10:15.360 is a lot of uncertainty. I thought that to your 0:10:15.360 --> 0:10:18.839 point on the Bank of England projections, I don't think 0:10:18.880 --> 0:10:22.160 that we've ever seen a two year a recession lasting 0:10:22.160 --> 0:10:25.320 two years. Those are quite dramatic, um, you know, quite 0:10:25.400 --> 0:10:28.240 dramatic forecast that they that they came out. But of 0:10:28.240 --> 0:10:32.120 course they're also using market pricing um in order to um, 0:10:32.200 --> 0:10:34.240 you know, to help bake that forecast. So you know, 0:10:34.280 --> 0:10:36.559 I think I think overall, you know, we are focused 0:10:36.640 --> 0:10:40.560 on how the data looks and the economic momentum that 0:10:40.600 --> 0:10:43.920 we're seeing. You know, we do think the US economy 0:10:44.120 --> 0:10:48.000 and others across the developed markets will flip into recessions, 0:10:48.280 --> 0:10:50.040 you know, going in you know to the first quarter, 0:10:50.480 --> 0:10:53.080 you know, the last into the second um and and 0:10:53.120 --> 0:10:55.720 the reason for that is is that you were already 0:10:55.800 --> 0:10:58.800 seeing of you know, what we call final domestic demand, 0:10:58.880 --> 0:11:01.120 but just real demanding the growth, and that that was 0:11:01.120 --> 0:11:03.960 already slowing this year. So last year is about five 0:11:04.040 --> 0:11:06.560 percent on a real basis. This year it was less 0:11:06.600 --> 0:11:10.040 than one. And on top of that, we've seen you know, 0:11:10.120 --> 0:11:13.560 pretty dramatic negative shocks to the economy, obviously what the 0:11:13.559 --> 0:11:17.000 Fed is done with raising interest rates broader financial conditions, 0:11:17.000 --> 0:11:18.920 you know, but also you have this you know war 0:11:18.960 --> 0:11:22.160 in Ukraine, which has been basically a global energy supply shock. 0:11:22.559 --> 0:11:25.160 So the combination of those two things, you know, in 0:11:25.200 --> 0:11:28.160 our minds will probably you know, what was already kind 0:11:28.160 --> 0:11:30.960 of a weaker economy in the US, we'll we'll, we'll 0:11:31.280 --> 0:11:34.160 push it into a recession, you know, in the first 0:11:34.200 --> 0:11:36.760 part of next year. Tiffany tom is talking about perhaps 0:11:36.760 --> 0:11:40.040 a two year rise in let's go even longer than that. 0:11:40.400 --> 0:11:42.880 Is it fair for the Federal Reserve to shoot for 0:11:42.920 --> 0:11:45.439 a two percent long term inflation target when you were 0:11:45.480 --> 0:11:49.520 seeing a wage price spiral in the works. Yeah, I mean, 0:11:49.520 --> 0:11:51.440 I don't know that we are. I wouldn't maybe be 0:11:51.480 --> 0:11:53.720 as strong as to say a wage price spiral in 0:11:53.760 --> 0:11:57.360 the works, but I think that there is evidence, certainly, um, 0:11:57.480 --> 0:12:00.040 when you look at at various things, that there's a 0:12:00.160 --> 0:12:03.240 very high risk of that happening, and the FED definitely 0:12:03.280 --> 0:12:05.800 needs to, you know, to rein that in as best 0:12:05.840 --> 0:12:08.160 as it can using very blunt tools. And when I 0:12:08.160 --> 0:12:10.480 say evidence of that happening, obviously you're seeing it in 0:12:10.480 --> 0:12:13.319 the wage data um. You know. Marty Walsh also mentioned 0:12:13.360 --> 0:12:16.720 the negotiations that are happening, you know, with the rail unions. 0:12:17.000 --> 0:12:21.320 You clearly have more bargaining power by employer um you know, 0:12:21.400 --> 0:12:23.920 by workers, you know, as a result of just the 0:12:24.280 --> 0:12:27.160 broader you know, the tightness of the labor market you know. 0:12:27.240 --> 0:12:29.600 But you know, the other thing is is that you know, 0:12:29.600 --> 0:12:32.160 it's all it's it's also all about how much UM 0:12:32.520 --> 0:12:35.520 our company is able to defend their margins. That's the 0:12:35.559 --> 0:12:37.720 other key piece of a wage price spiral, you know. 0:12:37.720 --> 0:12:40.000 And I would say there it's not great news either 0:12:40.160 --> 0:12:43.080 because it does look like you're getting some companies are 0:12:43.120 --> 0:12:46.760 able to defend their margins. So there is evidence of it. UM. 0:12:46.960 --> 0:12:49.440 You know, but the FED is doing something about it. Tiffity. 0:12:49.440 --> 0:12:52.920 We're in an extraordinary week, and particularly coming from the 0:12:53.080 --> 0:12:57.240 bizarre FED meeting and press conference in an extraordinary year 0:12:58.200 --> 0:13:01.120 into an election, and folks will be surveillance will be 0:13:01.720 --> 0:13:06.120 in Washington Tuesday and Wednesday mornings for the election, along 0:13:06.160 --> 0:13:10.040 with David Weston's wonderful work Election Night and Tiffany Welding 0:13:11.040 --> 0:13:15.559 the great thrust I get from all the fan mail, emails, tweets. 0:13:15.600 --> 0:13:19.880 Whatever is the divide? I mean, someone like you is 0:13:19.920 --> 0:13:22.679 down at No Boo Newport Beach with Bob de Niro 0:13:23.000 --> 0:13:25.960 and you're having some fancy Japanese meals, you know, and 0:13:26.000 --> 0:13:28.800 the rest of them. That's the perception, Tiffany, that it's 0:13:28.800 --> 0:13:31.560 the West Coast and the East Coast booming and everybody 0:13:31.559 --> 0:13:34.840 else is flat on their back. How polarized is the 0:13:34.880 --> 0:13:39.439 American labor economy? Now? Yeah, I mean, well they're clearly, 0:13:39.679 --> 0:13:42.720 you know, they're obviously clearly big political divides. Um. You know, 0:13:42.760 --> 0:13:45.920 in that polarization is not a new thing. Um. You know, 0:13:45.960 --> 0:13:49.200 that's been happening over the you know, over a number 0:13:49.240 --> 0:13:51.960 of decades. You know, obviously, you know, I think in 0:13:52.080 --> 0:13:55.160 terms of you know, how it impacts our outlook, you know, 0:13:55.200 --> 0:13:57.400 That's what I mean. I'm not a political Um, I'm 0:13:57.400 --> 0:14:00.320 not a political analyst. You can be. You got these 0:14:00.320 --> 0:14:04.080 seconds continue. I'm not a political analyst, but I do 0:14:04.200 --> 0:14:06.760 think that, um, you know, in terms of our outlook 0:14:06.880 --> 0:14:10.960 and how growth evolves. I think the big takeaway from 0:14:11.000 --> 0:14:13.240 the likely midterm elections is that you're probably going to 0:14:13.320 --> 0:14:15.280 have a divided government and you're not going to get 0:14:15.280 --> 0:14:17.800 a lot done. You're not going to see fiscal stimulus. 0:14:17.800 --> 0:14:21.320 So even though we're calling for a recession, there's not 0:14:21.400 --> 0:14:24.240 going to be the usual response you know from the 0:14:24.240 --> 0:14:27.040 Fed or from the government, you know, to help and 0:14:27.080 --> 0:14:29.440 so and so. That's going to result in not only 0:14:29.520 --> 0:14:32.880 a recession, but probably when the economy comes out of recession, 0:14:32.960 --> 0:14:36.120 it's going to come to some sluggish growth level that's 0:14:36.120 --> 0:14:38.880 really not that great either until inflation comes down to 0:14:39.040 --> 0:14:40.760 for you next time, you know, but you gotta try 0:14:40.800 --> 0:14:44.480 the whitefish shashimi with dry mesa. It is just to 0:14:44.640 --> 0:14:52.120 die for, you know. Here, silence with that, every well, 0:14:52.160 --> 0:14:59.960 and thank you so much, greatly appreciated. Randall Crasser knows 0:15:00.000 --> 0:15:02.880 these are abrupt moves. He mentioned that earlier. He's at 0:15:02.880 --> 0:15:06.160 the boost school the former FED governor as well. Randy, 0:15:06.200 --> 0:15:09.920 you are a student of economic history. Let's say we 0:15:09.960 --> 0:15:13.240 get a terminal rate of five point x percent. Let's 0:15:13.240 --> 0:15:16.760 say we go back to c D rates of a 0:15:16.960 --> 0:15:20.400 of a time twenty thirty forty years ago. Is it 0:15:20.520 --> 0:15:24.160 the same this time? Are we reverting back to a 0:15:24.280 --> 0:15:28.440 financial structure that we know? Are we in new territory? 0:15:29.960 --> 0:15:31.800 I don't think we're gonna be going back to UH 0:15:31.960 --> 0:15:35.040 interest rates at double digit levels, which is where we 0:15:35.040 --> 0:15:38.440 were with when inflation was this high forty years ago. 0:15:38.880 --> 0:15:40.640 So I don't think the FED is going to need 0:15:40.680 --> 0:15:42.640 to go that high. But I think, as you can 0:15:42.680 --> 0:15:46.360 see with the two year moving up, the markets are saying, hey, 0:15:46.400 --> 0:15:48.960 this is a pretty strong employment report. We're not seeing 0:15:48.960 --> 0:15:51.320 cracks in the labor market yet. And so the FIT 0:15:51.480 --> 0:15:53.920 is going to have to continue on its path and 0:15:54.120 --> 0:15:56.720 will um its terminal rate will be a bit higher 0:15:56.760 --> 0:16:00.120 than we thought. What do corporations do? How do they 0:16:00.240 --> 0:16:03.240 adapt as we see the nominal yield and the real 0:16:03.360 --> 0:16:07.640 yield come up. So that's you know, one of the 0:16:07.720 --> 0:16:11.640 things that the Fed's toolboxes to try to make findacial 0:16:11.720 --> 0:16:16.000 conditions tighter, make it less attractive for firms to hire 0:16:16.040 --> 0:16:19.680 and less attractive to to invest as hurdle rates go up, 0:16:19.720 --> 0:16:23.320 because both real anominal rates would be would be going up, 0:16:23.920 --> 0:16:27.160 and that's their main tool for trying to slow the 0:16:27.160 --> 0:16:30.000 economy down. And tried to take some of the uh, 0:16:31.120 --> 0:16:34.080 the excitement out of demand and and so supply and 0:16:34.120 --> 0:16:37.360 demands can come together without as much price pressure. I said, 0:16:37.440 --> 0:16:39.720 let it breathe, and we have done for a couple 0:16:39.760 --> 0:16:42.080 of minutes, and equities have raised the losses post pay 0:16:42.200 --> 0:16:44.560 roles so S and P five back up Hart by 0:16:44.560 --> 0:16:46.440 eight tensive one percent. That move at the front end 0:16:46.640 --> 0:16:49.200 has faded back to basically where it was going into 0:16:49.200 --> 0:16:52.160 the print at four seventy six. You're time by four 0:16:52.200 --> 0:16:54.400 basis points or so. I don't think this is the 0:16:54.440 --> 0:16:56.760 game change or at all for anyone out there. And 0:16:56.800 --> 0:16:59.120 by the time we get to CPO November tenth next week, 0:16:59.120 --> 0:17:01.640 we won't even be talking about what's just happened here 0:17:01.880 --> 0:17:03.960 in the labor market time. We're still waiting to see 0:17:04.160 --> 0:17:06.800 real cracks in our labor market to get a better 0:17:06.880 --> 0:17:08.880 understanding that the dual man date at the Federal Reserve, 0:17:08.960 --> 0:17:11.800 it's in conflict and right now for the Fed it's not. 0:17:11.840 --> 0:17:14.600 I'm gonna have this conversation with Rick Reader over a 0:17:14.640 --> 0:17:17.480 black rock in just a moment. Anastasia Amarosa vi Capital, 0:17:17.520 --> 0:17:20.840 Mike comins PGIM and we will catch up with secondary market. 0:17:21.000 --> 0:17:25.760 Marty Walsh, Tom of the Labor Department at this administration, 0:17:25.840 --> 0:17:27.399 looking forward to that a little bit later in the 0:17:27.400 --> 0:17:30.040 next hour. Very good. We'll continue the features up thirty 0:17:30.560 --> 0:17:33.760 the VIX. The VIX comes in twenty four point nine eight. 0:17:33.840 --> 0:17:36.760 Lisa gets my attention of a more buoyant market. Yeah, 0:17:36.760 --> 0:17:39.320 and also the Fed funds rate was now praising in 0:17:39.359 --> 0:17:43.560 a peak of perhaps five point to five in June 0:17:43.600 --> 0:17:45.880 of next year, although that's fading a little bit as 0:17:46.000 --> 0:17:48.520 we start to go on. Randy Krasner, I'm looking at 0:17:48.560 --> 0:17:50.119 some of the details here, and this is actually a 0:17:50.200 --> 0:17:53.320 very confusing report to me. The unemployment rate now getting 0:17:53.320 --> 0:17:56.639 people's attention, perhaps, but the wage picture very confusing to 0:17:56.640 --> 0:17:59.760 me as well. What can you glean from the composition 0:18:00.040 --> 0:18:03.119 of jobs that perhaps are getting added or cut and 0:18:03.160 --> 0:18:06.640 how that might be affecting the wage dynamic more than 0:18:06.760 --> 0:18:09.959 per se an entire inflation picture that the Fed can 0:18:10.000 --> 0:18:12.879 take away. True, there's always one of the issues that 0:18:12.920 --> 0:18:14.760 you have to be careful about is exactly what you're 0:18:14.760 --> 0:18:18.399 pointing out, the so called composition effect. What what areas 0:18:18.520 --> 0:18:21.679 are seeing job increases more than others. Are those in 0:18:21.720 --> 0:18:25.040 general high wage or low wage low wage areas. I 0:18:25.040 --> 0:18:27.240 haven't had a chance to dig into the details of 0:18:27.280 --> 0:18:29.760 the report, but that's obviously something one needs to look at. 0:18:30.200 --> 0:18:33.320 The FED will be heartened that the that we're not 0:18:33.359 --> 0:18:37.680 seeing in an acceleration in the UH in the wage 0:18:37.920 --> 0:18:40.200 in wage growth, that it's still around four point seven 0:18:40.240 --> 0:18:43.840 percent where it had been, but it is hoping that 0:18:43.840 --> 0:18:47.320 that that is not going to rise, and it's hoping 0:18:47.359 --> 0:18:49.440 that it may come down a bit as they try 0:18:49.440 --> 0:18:52.480 to bring inflation down. Yeah, I look at this, Mike McKee. 0:18:52.520 --> 0:18:55.080 I wanted to jump in here if you would right 0:18:55.119 --> 0:18:57.719 now you I'm watching, Mike. Folks look at the real report, 0:18:57.800 --> 0:19:01.560 which is ten pages law. I've given another number there 0:19:01.600 --> 0:19:05.160 for us in Professor Krassner. What matters to you, well, 0:19:05.280 --> 0:19:08.679 unemployment is what's been the interesting number today because it 0:19:08.760 --> 0:19:12.719 went up and it's largely because of what we in 0:19:12.760 --> 0:19:16.119 the past would have said is bad news, but uh, 0:19:16.240 --> 0:19:18.120 this time it is kind of what the FED wants 0:19:18.160 --> 0:19:20.800 to see in the household survey, the number of people 0:19:21.240 --> 0:19:24.680 employed falls by three hundred and twenty eight thousand, while 0:19:24.680 --> 0:19:28.320 the number of people unemployed rises by three hundred and 0:19:28.600 --> 0:19:32.440 six thousands, So a real difference between that and the 0:19:32.600 --> 0:19:35.960 Establishment survey, which is not unusual, but it does tell 0:19:36.000 --> 0:19:40.080 you why the unemployment rate went up. We also had 0:19:40.200 --> 0:19:44.639 uh two thousand people leave the labor force after fifty 0:19:44.680 --> 0:19:48.399 seven thousand left the labor force the month prior, and 0:19:48.440 --> 0:19:52.080 so it's kind of interesting. It maybe because kids have 0:19:52.119 --> 0:19:54.680 gone back to school and mothers have decided to stay 0:19:54.680 --> 0:19:58.240 home or something like that, but we're not seeing people 0:19:58.320 --> 0:20:00.480 drawn back in by the fact that they so many 0:20:00.720 --> 0:20:02.960