1 00:00:03,360 --> 00:00:07,360 Speaker 1: This is Bloomberg Surveillance. The labor market is approaching full employment. 2 00:00:07,360 --> 00:00:09,959 Speaker 1: In my view, I'm more looking at the relationship between 3 00:00:10,039 --> 00:00:12,680 Speaker 1: employment gained and the increase in the labor force. If 4 00:00:12,680 --> 00:00:15,960 Speaker 1: that does believe the jobs and the unemployment rate is 5 00:00:16,040 --> 00:00:19,480 Speaker 1: critical to future inflation over the medium term. That has 6 00:00:19,480 --> 00:00:22,840 Speaker 1: been communicating very effectively for the past six plus months 7 00:00:22,920 --> 00:00:25,000 Speaker 1: that they're going to be focused on that data. And 8 00:00:25,000 --> 00:00:26,760 Speaker 1: that's the one thing that they stayed the course on 9 00:00:26,840 --> 00:00:31,080 Speaker 1: Bloomberg Surveillance, your link to the world of economics, finance, 10 00:00:31,200 --> 00:00:34,880 Speaker 1: and investment on Bloomberg Radio. Good morning everyone, Michael McKee 11 00:00:34,880 --> 00:00:37,960 Speaker 1: and Tom Keen Bloomberg Surveillance. It's our super Bowl twelve 12 00:00:37,960 --> 00:00:41,320 Speaker 1: times a year. Job's day. No, not the Broncos. No, 13 00:00:41,479 --> 00:00:45,920 Speaker 1: not Carolina. Jim Glastman with us right now with Morgan Stanley. Uh. 14 00:00:45,920 --> 00:00:48,560 Speaker 1: With JP Morgan, I got my Morrigan's mixed up there, 15 00:00:48,600 --> 00:00:53,400 Speaker 1: Morgan Stanley, j Jake, I've done that before. John, Yeah, 16 00:00:53,479 --> 00:00:56,800 Speaker 1: that's very good. I'm sorry, Mr Diamond, I didn't mean 17 00:00:56,840 --> 00:00:59,680 Speaker 1: to say that. With JP Morgan, Jim Blastman with JP 18 00:00:59,800 --> 00:01:02,400 Speaker 1: Moore and Bill Gross with Pimco. No, I mean, Janice, 19 00:01:03,040 --> 00:01:06,240 Speaker 1: it's two for two. Should we start over. Jim blast 20 00:01:06,280 --> 00:01:10,200 Speaker 1: one with JP Morgan, Uh, Bill Gross with Janice Uh. 21 00:01:11,560 --> 00:01:15,160 Speaker 1: Everybody should walk out. No, we have no guess. But seriously, folks, 22 00:01:15,200 --> 00:01:18,839 Speaker 1: it's an important hour and the backdrop is the most 23 00:01:18,959 --> 00:01:22,400 Speaker 1: amazing January that we see. Let's get right to it 24 00:01:22,440 --> 00:01:25,120 Speaker 1: with a quiet data screen that's warning. Jim blasts. First 25 00:01:25,120 --> 00:01:27,319 Speaker 1: of all, thank you for your comments on Robert Gordon 26 00:01:28,000 --> 00:01:31,160 Speaker 1: and the splash and the debate that his book has made. 27 00:01:33,319 --> 00:01:36,240 Speaker 1: It's it's an important argument to get out there, but 28 00:01:36,319 --> 00:01:40,040 Speaker 1: time will tell. The argument is is we're losing our aspiration, 29 00:01:40,160 --> 00:01:44,280 Speaker 1: We're losing our technological progress, and it's impacting these two 30 00:01:44,319 --> 00:01:47,240 Speaker 1: Americas of jobs. You don't buy it. I know that. 31 00:01:47,440 --> 00:01:50,440 Speaker 1: I think it's I think it's the energy going on 32 00:01:50,480 --> 00:01:54,640 Speaker 1: in innovation that's really contributing to this divide that's going on. 33 00:01:55,080 --> 00:01:59,600 Speaker 1: Technology is a very disruptive process. It's displacing routine work 34 00:02:00,120 --> 00:02:02,520 Speaker 1: people who a lot of people have found their jobs 35 00:02:02,520 --> 00:02:04,600 Speaker 1: don't no longer exist. I think it is part of 36 00:02:04,640 --> 00:02:07,720 Speaker 1: that mix. So it's not showing up in our numbers yet. 37 00:02:07,760 --> 00:02:09,520 Speaker 1: I mean, for guys like Bob Gordon are looking at 38 00:02:09,520 --> 00:02:12,120 Speaker 1: the numbers and they say, we're not seeing much productivity. 39 00:02:12,320 --> 00:02:15,560 Speaker 1: But I think all of us see it everywhere. You 40 00:02:15,680 --> 00:02:19,680 Speaker 1: or we do innovation everywhere. Yeah, and were but what 41 00:02:19,840 --> 00:02:23,400 Speaker 1: is an iPhone gonna? You know, how does that increase? 42 00:02:24,639 --> 00:02:29,480 Speaker 1: I think it does totally. I aggressively believe it increases 43 00:02:29,520 --> 00:02:31,760 Speaker 1: our standard living. I agree with you, Mike. I'm not 44 00:02:31,800 --> 00:02:35,799 Speaker 1: sure where it's what. It's what the iPhone are, It's 45 00:02:35,840 --> 00:02:39,280 Speaker 1: what it represents. Its iPhone is just the very tiny 46 00:02:39,320 --> 00:02:42,079 Speaker 1: sliver of a much bigger process that's going on. The 47 00:02:42,480 --> 00:02:44,600 Speaker 1: big data is something what people some people refer to 48 00:02:44,800 --> 00:02:48,120 Speaker 1: businesses have become far more efficient in running operations, and 49 00:02:48,200 --> 00:02:51,120 Speaker 1: this is true of the shale operations, the airlines. You 50 00:02:51,120 --> 00:02:53,600 Speaker 1: can see it everywhere. And I think the iPhone is 51 00:02:53,680 --> 00:02:56,520 Speaker 1: just where we're benefiting from. This is spinoff, but it's 52 00:02:56,520 --> 00:02:58,720 Speaker 1: really e commerce and we're not measuring a lot of 53 00:02:58,720 --> 00:03:00,959 Speaker 1: this stuff very well. Caun I is a basic job 54 00:03:01,000 --> 00:03:03,519 Speaker 1: to day question which came up like four times on 55 00:03:03,639 --> 00:03:08,200 Speaker 1: my travels. Here are we creating good jobs? Hundred fifty 56 00:03:08,480 --> 00:03:11,919 Speaker 1: hundred thirty gloom today one ten, maybe we do two 57 00:03:12,000 --> 00:03:15,320 Speaker 1: hundred or two twenty. Are they good jobs? You know? 58 00:03:15,360 --> 00:03:18,240 Speaker 1: I think so myself, because when you look at where 59 00:03:18,280 --> 00:03:21,000 Speaker 1: is the job growth by pay level, it's kind of 60 00:03:21,000 --> 00:03:24,600 Speaker 1: across the board, high paying jobs, lower paying jobs. We're 61 00:03:24,600 --> 00:03:27,640 Speaker 1: seeing job growth across the board, and no surprise, this 62 00:03:27,720 --> 00:03:30,960 Speaker 1: is what recoveries looked like. But honestly, the first job 63 00:03:31,040 --> 00:03:32,800 Speaker 1: you get, remember your first job you got, it's not 64 00:03:32,919 --> 00:03:35,040 Speaker 1: the best job you had in your life, right, So 65 00:03:35,120 --> 00:03:38,720 Speaker 1: those initial jobs, when people get hired, they're always often 66 00:03:38,840 --> 00:03:41,800 Speaker 1: beginner jobs, and then they progress through time if the 67 00:03:41,800 --> 00:03:45,119 Speaker 1: economy stays on course. But I really think right now 68 00:03:46,000 --> 00:03:49,600 Speaker 1: we are totally confused by two big things that are 69 00:03:49,640 --> 00:03:53,440 Speaker 1: going on. Number One, this this downswing and oil prices 70 00:03:53,520 --> 00:03:55,760 Speaker 1: is creating hav it for a lot of people, but 71 00:03:55,760 --> 00:03:58,720 Speaker 1: it's a huge benefit, and consumers aren't really spending all 72 00:03:58,760 --> 00:04:01,440 Speaker 1: of this yet. There it's me, but it's it, But 73 00:04:01,440 --> 00:04:03,640 Speaker 1: but it leaves it leaves a lot of mixed things 74 00:04:03,640 --> 00:04:06,120 Speaker 1: going on in the economy. And the second thing is 75 00:04:06,440 --> 00:04:10,680 Speaker 1: because our demographics is shifted, we're getting much more improvement 76 00:04:10,680 --> 00:04:12,760 Speaker 1: in the job market than you would have expected with 77 00:04:12,760 --> 00:04:16,080 Speaker 1: two jobs. If you look at job growth relative to 78 00:04:16,200 --> 00:04:19,360 Speaker 1: labor force growth, this is one of the better recoveries 79 00:04:19,400 --> 00:04:23,200 Speaker 1: we've ever seen, and that completely goes against anything anybody 80 00:04:23,240 --> 00:04:25,760 Speaker 1: thinks about when they think about this recovery. We all 81 00:04:25,800 --> 00:04:29,080 Speaker 1: think of this as the slow moving recovery. And I 82 00:04:29,120 --> 00:04:32,960 Speaker 1: think the underlying demographics is really complicated how we view 83 00:04:33,000 --> 00:04:34,719 Speaker 1: things at the end of day, that this matter is 84 00:04:34,760 --> 00:04:39,120 Speaker 1: because it's relative growth that matters for the FED potential inflation, 85 00:04:39,320 --> 00:04:41,120 Speaker 1: and that's why they kind of have to stay focused 86 00:04:41,160 --> 00:04:45,160 Speaker 1: on the ore, you know, unemployment levels and things like that. 87 00:04:45,839 --> 00:04:48,520 Speaker 1: So I can understand why we're we're all over the 88 00:04:48,560 --> 00:04:50,320 Speaker 1: map in terms of trying to figure out what's going on, 89 00:04:50,360 --> 00:04:52,520 Speaker 1: because there's a lot of cross currents. And then we've 90 00:04:52,520 --> 00:04:55,279 Speaker 1: got this backdrop of a globally on me around us. 91 00:04:56,040 --> 00:04:58,279 Speaker 1: Right before we jump into headline out of VW, are 92 00:04:58,320 --> 00:05:02,440 Speaker 1: gonna be careful here. VW del as annual results. Anytime 93 00:05:02,480 --> 00:05:06,000 Speaker 1: a big company does that, that snows. VW delays annual 94 00:05:06,080 --> 00:05:14,440 Speaker 1: results due to open issues on open issues on admissions. 95 00:05:14,960 --> 00:05:19,680 Speaker 1: And now we have something that's important, Bloomberger correction coming out. 96 00:05:19,720 --> 00:05:21,360 Speaker 1: Help me with this, Michael. Now we've got a lot 97 00:05:21,400 --> 00:05:26,360 Speaker 1: of confusion going on. Dissemination help boating, help me here. 98 00:05:26,520 --> 00:05:29,360 Speaker 1: Volkswagen delays the reporting. Give it to annual results an 99 00:05:29,400 --> 00:05:33,680 Speaker 1: annual general meeting. They'll set a new date for fiscal 100 00:05:33,800 --> 00:05:37,840 Speaker 1: year fifteen due to remaining open questions and the resulting 101 00:05:37,920 --> 00:05:42,560 Speaker 1: valuation calculation the annual results. But they are going to 102 00:05:42,600 --> 00:05:47,119 Speaker 1: publish their findings of the report in April. Yeah, okay, 103 00:05:47,160 --> 00:05:49,440 Speaker 1: we got it, I think with a little confusion. That 104 00:05:49,520 --> 00:05:52,320 Speaker 1: was surveillance confusion. This morning, Michael pick it up with 105 00:05:52,400 --> 00:06:00,000 Speaker 1: James use that would be the jobs report has been 106 00:06:00,080 --> 00:06:04,080 Speaker 1: come sort of the the be all and end all 107 00:06:04,400 --> 00:06:10,920 Speaker 1: for people in the markets. Is it that important? Absolutely? Measure? 108 00:06:11,320 --> 00:06:14,080 Speaker 1: It's absolutely. It's not just the job support, it's the 109 00:06:14,120 --> 00:06:17,040 Speaker 1: combination of jobless claims, which is probably the best indicator 110 00:06:17,120 --> 00:06:20,280 Speaker 1: we have of what's really going on ADP and payrolls. 111 00:06:20,480 --> 00:06:23,640 Speaker 1: The reason why it's it's absolutely the most important information 112 00:06:23,800 --> 00:06:26,440 Speaker 1: we get because our GDP accounting it takes a long 113 00:06:26,480 --> 00:06:29,240 Speaker 1: time to get a real picture put together. It's very volatile, 114 00:06:29,279 --> 00:06:33,000 Speaker 1: it's proven to be very unreliable. A little known fact. 115 00:06:33,360 --> 00:06:35,960 Speaker 1: It used to be that when you saw GDP slow 116 00:06:36,000 --> 00:06:38,560 Speaker 1: down it he told you there was something coming in 117 00:06:38,640 --> 00:06:41,600 Speaker 1: the job market. Since two thousand and ten, the correlation 118 00:06:41,640 --> 00:06:44,919 Speaker 1: between GDP and the job market has been virtually zero. 119 00:06:45,400 --> 00:06:47,720 Speaker 1: There's no correlation. It doesn't give you any information. So 120 00:06:48,200 --> 00:06:50,360 Speaker 1: if you're trying to figure out what's really going on 121 00:06:50,320 --> 00:06:52,279 Speaker 1: in the economy. The job figures I think are among 122 00:06:52,320 --> 00:06:57,240 Speaker 1: our best. Secondly, the job story is all about relative growth. 123 00:06:57,320 --> 00:07:00,680 Speaker 1: So here here we have two percent GDP grow. How 124 00:07:00,720 --> 00:07:05,159 Speaker 1: in God's name did this economy recover with two GDP growth? 125 00:07:05,400 --> 00:07:08,240 Speaker 1: We're not used to Well, it's because the underlying growth 126 00:07:08,560 --> 00:07:10,920 Speaker 1: in the economy, labor force growth has slowed down very 127 00:07:11,000 --> 00:07:14,480 Speaker 1: dramatically as the Baby boom generation is moving into retirement, 128 00:07:14,880 --> 00:07:18,000 Speaker 1: and our productivity levels have been slower. So what really matters? 129 00:07:18,680 --> 00:07:20,640 Speaker 1: You know, growth is nice to know, but it means 130 00:07:20,680 --> 00:07:23,200 Speaker 1: nothing if you don't know what our potential growth because 131 00:07:23,480 --> 00:07:25,360 Speaker 1: I think we need to review this, like the basic 132 00:07:25,400 --> 00:07:29,800 Speaker 1: economics here, potential growth is a guest of it. It's 133 00:07:29,840 --> 00:07:33,120 Speaker 1: come down the FETE has brought the potential growth guests 134 00:07:33,800 --> 00:07:37,800 Speaker 1: down right, and so you but you only know the story. 135 00:07:37,960 --> 00:07:40,440 Speaker 1: You don't You never know what potential growth is. Sometimes 136 00:07:40,440 --> 00:07:42,440 Speaker 1: we don't even know what ashore growth is. That's why 137 00:07:42,480 --> 00:07:45,440 Speaker 1: the job market is so important, because employment is the 138 00:07:45,480 --> 00:07:48,840 Speaker 1: net result of those two guys agreed, And so when 139 00:07:48,840 --> 00:07:51,160 Speaker 1: you look at employment, you're looking if people are hiring, 140 00:07:51,160 --> 00:07:53,400 Speaker 1: they must be hiring for a reason. Mike, help be 141 00:07:53,440 --> 00:07:56,560 Speaker 1: on here, particularly with your interviews with FED presidents. Is 142 00:07:56,600 --> 00:08:00,560 Speaker 1: a hundred and fifty thousand job growth today the same 143 00:08:00,600 --> 00:08:03,559 Speaker 1: as a hundred and fifty thousand job growth in July 144 00:08:03,680 --> 00:08:08,040 Speaker 1: of two thousand seven, Michael, No, because the population growth 145 00:08:08,160 --> 00:08:10,640 Speaker 1: is slower, The number of people coming into the workforce 146 00:08:10,680 --> 00:08:13,040 Speaker 1: is lower, So the number of people you need to 147 00:08:13,120 --> 00:08:15,840 Speaker 1: keep the labor market absorbing all the new entrants and 148 00:08:15,840 --> 00:08:18,600 Speaker 1: bring unemployment down is lower. And the FET knows that, 149 00:08:18,640 --> 00:08:21,400 Speaker 1: and they've said that it may not have penetrated the 150 00:08:21,400 --> 00:08:26,320 Speaker 1: American consciousness yet. Hundred fifty print would be just fine 151 00:08:26,320 --> 00:08:28,720 Speaker 1: at Street in Washington, but the rest of the country 152 00:08:28,760 --> 00:08:30,880 Speaker 1: is gonna go, oh my god, things are terrible. We 153 00:08:30,920 --> 00:08:33,120 Speaker 1: need seventy five thousand jobs in months to clear that. 154 00:08:33,120 --> 00:08:34,880 Speaker 1: That's that's that's the bar with the next the number, 155 00:08:36,480 --> 00:08:41,240 Speaker 1: the number used to be What was that? Numbers were 156 00:08:41,480 --> 00:08:44,120 Speaker 1: so important? What you're hearing this is why we have 157 00:08:44,200 --> 00:08:47,800 Speaker 1: Jim glassment on the bogey. The hurdle, right, Mike and 158 00:08:47,880 --> 00:08:51,520 Speaker 1: my right used to be one and now it's under 159 00:08:51,559 --> 00:08:54,200 Speaker 1: a hundred thousands. We've actually have only been growing sixty 160 00:08:54,240 --> 00:08:56,880 Speaker 1: thousand since two thousand seven. How would the market react 161 00:08:56,880 --> 00:08:59,640 Speaker 1: this morning. If we got number, it won't like it. 162 00:09:00,040 --> 00:09:02,679 Speaker 1: Well anything digested the meaning of this, they might like it. 163 00:09:03,400 --> 00:09:06,320 Speaker 1: I mean, if well, they're gonna say, okay, the FED 164 00:09:06,440 --> 00:09:09,240 Speaker 1: is they've already said, ruled out the FED this year. 165 00:09:09,520 --> 00:09:12,600 Speaker 1: I mean, but it wouldn't be bad. All of our 166 00:09:12,640 --> 00:09:15,680 Speaker 1: listeners and me, look at a ninety five thousand job 167 00:09:15,760 --> 00:09:18,360 Speaker 1: number is a failure. Yeah, the two of you were 168 00:09:18,400 --> 00:09:21,199 Speaker 1: telling me it's not. No, it would be a failure 169 00:09:21,400 --> 00:09:24,199 Speaker 1: early days of recovery. But now that we're started getting there, 170 00:09:24,200 --> 00:09:25,800 Speaker 1: I mean, I think we're a full employment yet, but 171 00:09:25,920 --> 00:09:28,560 Speaker 1: we're getting there. We in the long run, we really 172 00:09:28,559 --> 00:09:33,480 Speaker 1: only need employment to grow roughly month given current trends. Now, 173 00:09:33,880 --> 00:09:36,120 Speaker 1: if more people start coming back into the workforce who 174 00:09:36,200 --> 00:09:38,640 Speaker 1: dropped out, that may change a little bit. Right now, 175 00:09:38,679 --> 00:09:41,280 Speaker 1: it's been very slow, and that's really all about demographics. 176 00:09:41,280 --> 00:09:44,640 Speaker 1: The working age population has slowed down very dramatically. It 177 00:09:44,800 --> 00:09:48,320 Speaker 1: happened the day Bill Clinton turned sixty two in two 178 00:09:48,360 --> 00:09:50,720 Speaker 1: thousand and eight. He's the leading edge of the Baby 179 00:09:50,720 --> 00:09:53,280 Speaker 1: boom generation. And that's when you started to see the 180 00:09:53,320 --> 00:09:56,640 Speaker 1: working age population slowed down really dramatically. More people are 181 00:09:56,720 --> 00:09:58,559 Speaker 1: leaving than we're coming in, and it has been going 182 00:09:58,600 --> 00:10:00,959 Speaker 1: on for a long time, as Jim says, because um, 183 00:10:01,320 --> 00:10:05,200 Speaker 1: the labor force participation has been dropping long before the 184 00:10:05,240 --> 00:10:08,000 Speaker 1: great procession. It's not just that shooting blast one with us. 185 00:10:08,000 --> 00:10:09,959 Speaker 1: He'll stay with us another block and then he'll be 186 00:10:10,000 --> 00:10:12,720 Speaker 1: He'll be with us for a bit after the results 187 00:10:12,720 --> 00:10:20,880 Speaker 1: to interpret belief this is good news. You love economics, 188 00:10:20,960 --> 00:10:23,200 Speaker 1: and then Bill Gross will be with us. Who has 189 00:10:23,240 --> 00:10:27,439 Speaker 1: been most opinionated about the linkage is the uncertainties that 190 00:10:27,480 --> 00:10:31,520 Speaker 1: are out there across economics, finance, investment as usual, a 191 00:10:31,640 --> 00:10:35,319 Speaker 1: quiet screen, I would point out yen even with fractional 192 00:10:35,559 --> 00:10:40,120 Speaker 1: further yen strength one six seventy three, the German two 193 00:10:40,240 --> 00:10:45,040 Speaker 1: year negative point four eight nine. Again, global trends in 194 00:10:45,120 --> 00:10:52,960 Speaker 1: place around the American jobs report, futures are flat. Now 195 00:10:53,000 --> 00:10:54,760 Speaker 1: let's check out with Michael R and get the latest 196 00:10:54,800 --> 00:10:57,880 Speaker 1: world and national headlights. Michael, Mike, Tom, thank you very much. 197 00:10:57,960 --> 00:11:00,080 Speaker 1: Drivers in the New York City area, I have a 198 00:11:00,080 --> 00:11:03,400 Speaker 1: slashy commute from snowfall this morning. Bloomberg needed around with 199 00:11:03,480 --> 00:11:05,760 Speaker 1: just Rob Carolyn as more. It looks like the worst 200 00:11:05,800 --> 00:11:08,160 Speaker 1: the weather is between now and nine am in New York. 201 00:11:08,200 --> 00:11:10,320 Speaker 1: That's when we'll see the accumulating snowfalls of the roads 202 00:11:10,320 --> 00:11:12,800 Speaker 1: have become treacherous. Looks like a couple of inches around 203 00:11:12,840 --> 00:11:14,800 Speaker 1: New York City, a little bit more towards the island. 204 00:11:15,040 --> 00:11:18,560 Speaker 1: It's done in New York. By midday, two city police 205 00:11:18,600 --> 00:11:20,959 Speaker 1: officers are in stable condition after he was shot and 206 00:11:21,040 --> 00:11:24,520 Speaker 1: wounded by a gunman encountered in a Bronx Housing Projects 207 00:11:24,520 --> 00:11:28,400 Speaker 1: stairwell last night. The suspected gunman apparently killed himself. A 208 00:11:28,520 --> 00:11:31,600 Speaker 1: United Nations human rights panel says Wiki Leak's founder Julian 209 00:11:31,600 --> 00:11:35,080 Speaker 1: Assange should be freed from the Ecuadorian embassy in London 210 00:11:35,080 --> 00:11:39,960 Speaker 1: immediately and compensated for lost time. Massage faces extradition for 211 00:11:40,000 --> 00:11:44,120 Speaker 1: sexual assault allegations in Sweden. Global News twenty four hours 212 00:11:44,120 --> 00:11:46,920 Speaker 1: a day, powered by our twenty four hundred journalists and 213 00:11:46,960 --> 00:11:49,400 Speaker 1: more than a hundred fifty news bureaus from around the world. 214 00:11:49,679 --> 00:11:53,000 Speaker 1: I'm Michael Barr, Mike Tom, Michael Barr, Thanks so much. 215 00:11:53,040 --> 00:11:55,199 Speaker 1: We'll continue with Jim Glass from the Bill Gross On 216 00:11:55,320 --> 00:11:59,679 Speaker 1: Job Say just Out, Simon Kennedy Plaza Accord to Faces 217 00:12:00,240 --> 00:12:06,840 Speaker 1: Hurdles that on Bloomberg. Good Morning. The news update brought 218 00:12:06,840 --> 00:12:08,720 Speaker 1: to you by a flushing back open a complete business 219 00:12:08,800 --> 00:12:10,880 Speaker 1: checking account with fifteen thousand dollars or more and get 220 00:12:10,880 --> 00:12:13,960 Speaker 1: a free sixteen gig WiFi tablet. Visit flushing Back dot 221 00:12:14,040 --> 00:12:16,439 Speaker 1: com for details. Remember f D I C Equal Housing, 222 00:12:16,640 --> 00:12:25,319 Speaker 1: Linden Global Business News twenty four hours a day at 223 00:12:25,320 --> 00:12:28,960 Speaker 1: Bloomberg dot com, the radio plus mobile and on your radio. 224 00:12:29,280 --> 00:12:33,360 Speaker 1: This is a Bloomberg Business Flash and I'm Karen Moscow 225 00:12:33,400 --> 00:12:36,960 Speaker 1: and US dot index futures have turned lower ahead of 226 00:12:37,000 --> 00:12:39,520 Speaker 1: the jobs report. Let's go to the first word breaking 227 00:12:39,559 --> 00:12:42,440 Speaker 1: news desk, and here is Bill Maloney. Good morning Bill, 228 00:12:42,760 --> 00:12:45,199 Speaker 1: Good morning Karen. That's right, small losses in the US 229 00:12:45,240 --> 00:12:48,040 Speaker 1: teaches ahead of those jobs numbers. Doubt future is currently 230 00:12:48,040 --> 00:12:51,320 Speaker 1: lowered by six points, sysps dropped two and NAZI futures 231 00:12:51,360 --> 00:12:54,280 Speaker 1: declined by four. The ten yield at one point eight 232 00:12:54,440 --> 00:12:57,680 Speaker 1: three per cent. On the economic front, those job numbers, 233 00:12:57,760 --> 00:13:00,839 Speaker 1: that's been a hundred ninety thousand on deploying rate estimate 234 00:13:01,200 --> 00:13:04,640 Speaker 1: five percent after develos and that Athena Health was mixed. 235 00:13:04,800 --> 00:13:09,280 Speaker 1: Deckers cut forecast linked into one adjust EPs and revenue 236 00:13:09,320 --> 00:13:12,640 Speaker 1: views trailed estimates. Shares it down thirty percent pre market 237 00:13:12,920 --> 00:13:16,120 Speaker 1: and tablow. Software license revenue growth slowed to thirty one 238 00:13:17,000 --> 00:13:20,880 Speaker 1: it shares it down fort pre market, another news smantech 239 00:13:20,920 --> 00:13:23,800 Speaker 1: report at five hundred million dollar investment by silver Lake. 240 00:13:24,160 --> 00:13:27,640 Speaker 1: Regarding earnings today, State Lauder cut your just DPS forecast, 241 00:13:28,040 --> 00:13:33,200 Speaker 1: Moody's view trailed estimates, and Tyson Foods boosted RPS forecast 242 00:13:33,440 --> 00:13:37,120 Speaker 1: while cutting sales views finding somebody key Wall shoot upgrades 243 00:13:37,160 --> 00:13:39,920 Speaker 1: and downgrades this morning. All State raised to buy its 244 00:13:39,960 --> 00:13:42,959 Speaker 1: City Group at JP Morgan, Cree and Marathon Petroleum cut 245 00:13:43,040 --> 00:13:45,880 Speaker 1: to neutral credit Sweez cut Taqa wait at Morgan, Stanley, 246 00:13:46,160 --> 00:13:49,679 Speaker 1: Decker's cut under performance, stern A g JP Morgan, and 247 00:13:49,720 --> 00:13:53,520 Speaker 1: Goldman Sachs raised by UBS and finally LinkedIn. Downgraded at 248 00:13:53,559 --> 00:13:57,400 Speaker 1: ten firms this morning, including JP, Morgan and sun Trust. 249 00:13:57,880 --> 00:14:00,000 Speaker 1: Live from the first of breaking news desk gone, Bill Malone, 250 00:14:00,160 --> 00:14:03,400 Speaker 1: Karen all right, thanks VLAN to hear live breaking news 251 00:14:03,440 --> 00:14:05,880 Speaker 1: over your Bloomberg type squawk go and your terminal. Let's 252 00:14:05,880 --> 00:14:07,800 Speaker 1: ask you you a w K go and that's a 253 00:14:07,840 --> 00:14:10,760 Speaker 1: Bloomberg business flash. Tom and Mike Karen, thanks so much. 254 00:14:10,800 --> 00:14:13,160 Speaker 1: Eleven minutes away from the jobs report will go beneath 255 00:14:13,200 --> 00:14:15,959 Speaker 1: the headline data. Bill Gross will be with this. Jim 256 00:14:16,040 --> 00:14:18,520 Speaker 1: glass one right now, Michael, Uh, you look at the 257 00:14:18,679 --> 00:14:23,840 Speaker 1: squirrel of data out there. What has your attention? You know, Uh, 258 00:14:24,040 --> 00:14:25,840 Speaker 1: this is something that a couple of people have mentioned 259 00:14:25,880 --> 00:14:28,320 Speaker 1: in the last couple of days. To me that that 260 00:14:28,520 --> 00:14:30,360 Speaker 1: they're looking at. And let me put it to Jim 261 00:14:30,560 --> 00:14:35,840 Speaker 1: the senior loan officers report, Uh New Cen Islands. But 262 00:14:36,240 --> 00:14:40,920 Speaker 1: look business lending, you know, commercial and industrial loans. Business 263 00:14:41,000 --> 00:14:47,280 Speaker 1: lending gone down for the last standards tightening tightening. It's 264 00:14:47,320 --> 00:14:50,240 Speaker 1: harder to get those loans for two quarters in a row. 265 00:14:50,640 --> 00:14:53,280 Speaker 1: And I'm seeing some notes from banks saying that that 266 00:14:54,600 --> 00:14:57,880 Speaker 1: data point is a key ingredient in a lot of 267 00:14:57,960 --> 00:15:01,160 Speaker 1: people's recession models. No, that to me, that's not true, 268 00:15:01,280 --> 00:15:03,480 Speaker 1: that this is the same story that's been unfolding in 269 00:15:03,480 --> 00:15:06,800 Speaker 1: the high yield universe. What what is the problem? There 270 00:15:06,840 --> 00:15:09,240 Speaker 1: are a lot of energy guys who are struggling. If 271 00:15:09,240 --> 00:15:11,360 Speaker 1: you're a bank, you're gonna you're gonna be tightening standards 272 00:15:11,720 --> 00:15:13,640 Speaker 1: for that kind of lending activity. So I think it's 273 00:15:14,040 --> 00:15:16,880 Speaker 1: it's murky. It's very hard to sort out the direct 274 00:15:16,960 --> 00:15:19,640 Speaker 1: and indirect effect of the oil sector. I mean, I 275 00:15:19,640 --> 00:15:22,000 Speaker 1: would worry about this if we had been living in 276 00:15:22,080 --> 00:15:25,040 Speaker 1: a credit boom, then you'd say, gee, maybe banks are 277 00:15:25,040 --> 00:15:27,640 Speaker 1: getting more cautious. To me, what you're seeing here is 278 00:15:27,680 --> 00:15:31,440 Speaker 1: a rational reaction to dangers that are popping up around 279 00:15:31,520 --> 00:15:34,400 Speaker 1: the the energy universe. But when you look away from 280 00:15:34,400 --> 00:15:37,560 Speaker 1: the energy universe, there's huge benefits coming. We haven't seen 281 00:15:37,600 --> 00:15:40,480 Speaker 1: it all yet, but so it's it's really more to me, 282 00:15:41,360 --> 00:15:44,000 Speaker 1: part of this story of this divide that's caused by 283 00:15:44,200 --> 00:15:48,720 Speaker 1: low oil prices. But this is just another point out there. 284 00:15:49,120 --> 00:15:52,760 Speaker 1: And with all this stuff going on, Uh, if you're 285 00:15:52,800 --> 00:15:56,200 Speaker 1: a CEO, why don't you just say the heck with it. 286 00:15:56,440 --> 00:15:58,560 Speaker 1: I'm gonna I'm gonna pull in my horns. I'm gonna 287 00:15:58,680 --> 00:16:00,680 Speaker 1: wait like I've been doing to let a couple of years. 288 00:16:01,360 --> 00:16:05,600 Speaker 1: And uh, you know, we don't. We don't do any 289 00:16:05,640 --> 00:16:08,120 Speaker 1: better than model along and maybe do worse. Well, well, 290 00:16:08,160 --> 00:16:13,320 Speaker 1: you know, because stressful times, you know, bankers look for opportunities, 291 00:16:13,440 --> 00:16:16,200 Speaker 1: and stressful times bring lots of opportunities, and there there 292 00:16:16,240 --> 00:16:18,040 Speaker 1: are some areas where you have to be more cautious. 293 00:16:18,080 --> 00:16:21,520 Speaker 1: That's probably what we're seeing. But then when the world 294 00:16:21,680 --> 00:16:25,520 Speaker 1: is nervous about you know, global growth slowing down, it 295 00:16:25,600 --> 00:16:28,400 Speaker 1: creates opportunities for people, so you know, it's in banker's 296 00:16:28,440 --> 00:16:31,040 Speaker 1: interest to find the opportunities. And I think the big 297 00:16:31,120 --> 00:16:32,960 Speaker 1: complaint but I've been hearing for the last five years, 298 00:16:33,080 --> 00:16:35,920 Speaker 1: is nobody wants to borrow banks. You know, banks have 299 00:16:35,960 --> 00:16:38,400 Speaker 1: been struggling because we really haven't seen a lot of 300 00:16:38,440 --> 00:16:41,880 Speaker 1: growth in CNI landing, partly because businesses are generating earnings 301 00:16:41,880 --> 00:16:44,160 Speaker 1: they don't need it, and partly because they're very cautious. 302 00:16:44,240 --> 00:16:46,880 Speaker 1: Good morning, Dan Alpert. Does that mean there's an oversupply 303 00:16:47,000 --> 00:16:48,960 Speaker 1: out there and stuff and we're just at a cyclical 304 00:16:49,080 --> 00:16:51,720 Speaker 1: point where we've got to demind I sound like Watson 305 00:16:51,760 --> 00:16:54,520 Speaker 1: in about nineteen. I mean, is there just too much 306 00:16:54,560 --> 00:16:56,840 Speaker 1: stuff out there? You know in some markets? I'm sure 307 00:16:56,880 --> 00:16:58,480 Speaker 1: there there is, but I think this is just all 308 00:16:58,560 --> 00:17:01,400 Speaker 1: sort of a really uncertain advice, Amen. And businesses have 309 00:17:01,640 --> 00:17:04,399 Speaker 1: no compelling reason to be borrowing aggressively. They've got a 310 00:17:04,440 --> 00:17:07,760 Speaker 1: lot of resources themselves, and they're cautious. And when you 311 00:17:07,840 --> 00:17:11,120 Speaker 1: have the landscape uh confusing right now, you're you're gonna 312 00:17:11,119 --> 00:17:12,639 Speaker 1: be it's gonna make you much more. How do you 313 00:17:12,840 --> 00:17:15,080 Speaker 1: measure wage growth? I mean there's like eight ways to 314 00:17:15,119 --> 00:17:18,640 Speaker 1: do what there's seven flavors? What's the gym glass and measurement? 315 00:17:18,680 --> 00:17:22,920 Speaker 1: I like the most comprehensive measure employment which included benefits, 316 00:17:23,280 --> 00:17:28,320 Speaker 1: includes bonuses, benefits, healthcare costs. All the research that we 317 00:17:28,400 --> 00:17:30,960 Speaker 1: look at our benefits as part of our compensation. It 318 00:17:31,080 --> 00:17:34,800 Speaker 1: drives me insane that Bloomberg lpe the number of people 319 00:17:35,280 --> 00:17:37,639 Speaker 1: that don't sum up even though it's provided them by 320 00:17:37,680 --> 00:17:41,440 Speaker 1: our good human resources people. They really don't get the 321 00:17:41,640 --> 00:17:44,480 Speaker 1: check that's written on benefits and they don't see that. 322 00:17:44,760 --> 00:17:47,879 Speaker 1: That's the problem. A lot of businesses realized companies pay 323 00:17:48,080 --> 00:17:50,640 Speaker 1: for all out these benefits and but when you pick 324 00:17:50,680 --> 00:17:53,560 Speaker 1: you get your paycheck, you don't see the costs in there. 325 00:17:54,080 --> 00:17:56,680 Speaker 1: So you tend to think, well, that's something you're own. 326 00:17:56,800 --> 00:17:58,119 Speaker 1: You don't you tend not to think of that it 327 00:17:58,160 --> 00:17:59,879 Speaker 1: is a part of your compensation, but it is. The 328 00:18:00,400 --> 00:18:04,040 Speaker 1: companies should put the whole bundle in your face. I mean, 329 00:18:04,119 --> 00:18:08,480 Speaker 1: we we all know what. Yeah, some big companies, I 330 00:18:08,560 --> 00:18:10,879 Speaker 1: think big companies more, but it's hard. I mean, people 331 00:18:11,280 --> 00:18:13,680 Speaker 1: look at what they have to spend. Well, that's part 332 00:18:13,680 --> 00:18:15,680 Speaker 1: of the problem. If if my company is paying a 333 00:18:15,760 --> 00:18:18,560 Speaker 1: lot more for health insurance, that doesn't give me much 334 00:18:18,560 --> 00:18:20,520 Speaker 1: to I don't I can't spend that money myself. They're 335 00:18:20,520 --> 00:18:22,680 Speaker 1: spending it on my head. Behalf. What I care about 336 00:18:22,760 --> 00:18:25,240 Speaker 1: is what do I have? It's available for discretionary purchases. 337 00:18:25,240 --> 00:18:30,440 Speaker 1: And that's the problem. Are we over text? You know, 338 00:18:31,160 --> 00:18:33,199 Speaker 1: I don't know how you would know. I look at 339 00:18:33,240 --> 00:18:36,159 Speaker 1: my paycheck. I got tax one. It's like it's like 340 00:18:36,280 --> 00:18:39,480 Speaker 1: thing one thing to text one text two, tax three, 341 00:18:39,640 --> 00:18:43,000 Speaker 1: text four, tax five six seven. Welcome to New York. 342 00:18:43,720 --> 00:18:49,440 Speaker 1: My daughter thinks she got her first paycheck. That's real world. 343 00:18:49,760 --> 00:18:52,239 Speaker 1: Oh my gosh, said she realized. I said, well, you're 344 00:18:52,280 --> 00:18:55,120 Speaker 1: helping to pay. Yeah, somebody's gotta pay for all this time. 345 00:18:55,160 --> 00:18:58,080 Speaker 1: I'm like cash flow got his first check. He looks. 346 00:18:58,160 --> 00:19:00,159 Speaker 1: I'm standing next to him, and I'm very proud and 347 00:19:00,280 --> 00:19:06,000 Speaker 1: all that, he said. He go Jesus Christ d Yeah, 348 00:19:06,080 --> 00:19:09,960 Speaker 1: nobody realizes. But that's it. That's see, we're we're I'm 349 00:19:10,040 --> 00:19:11,560 Speaker 1: used to it, so I don't I don't know how 350 00:19:11,600 --> 00:19:14,840 Speaker 1: to answer the question. My owner. My kids think they're 351 00:19:14,840 --> 00:19:17,520 Speaker 1: overtas the first time they're We thought the numbers were great. 352 00:19:17,560 --> 00:19:19,520 Speaker 1: We're gonna have youre for some perspective. What's your non 353 00:19:19,600 --> 00:19:25,359 Speaker 1: firm payroll call consensus is one ninety Um, I am 354 00:19:25,440 --> 00:19:28,280 Speaker 1: at one seventy nine, So I mean I'm in your neighborhood, 355 00:19:28,320 --> 00:19:31,280 Speaker 1: and I would have said one eighty. But everybody's round 356 00:19:31,359 --> 00:19:33,840 Speaker 1: numbers I nailed at plus or mine is five thousand. 357 00:19:33,880 --> 00:19:35,960 Speaker 1: About a year and a half, I haven't made a guy. 358 00:19:37,040 --> 00:19:39,440 Speaker 1: I haven't made just last year, which last month was 359 00:19:39,520 --> 00:19:41,200 Speaker 1: so off the church. I don't even know how to 360 00:19:41,240 --> 00:19:43,280 Speaker 1: think about it well, but revisions are important. We do 361 00:19:43,440 --> 00:19:46,639 Speaker 1: that again. I know this. We're gonna come back with 362 00:19:46,760 --> 00:19:48,800 Speaker 1: Jim Glassman and give you what we think is the 363 00:19:48,880 --> 00:19:52,280 Speaker 1: best jobs coverage we can do, and in the world. 364 00:19:52,400 --> 00:19:54,920 Speaker 1: We think all of you for listening worldwide Bloomberg Radio 365 00:19:54,920 --> 00:20:00,240 Speaker 1: plus Bloomberg twelve, Boston one, f M Washington nine, see 366 00:20:00,280 --> 00:20:02,719 Speaker 1: the Bay Area, and here in New York stay with us. 367 00:20:03,000 --> 00:20:07,960 Speaker 1: Job's day coming up the with all due respect, highlight 368 00:20:08,000 --> 00:20:09,720 Speaker 1: brought you by land Rover. If it's in your nature 369 00:20:09,760 --> 00:20:11,359 Speaker 1: to cast off the every day and seek adventure, the 370 00:20:11,400 --> 00:20:13,840 Speaker 1: Discovery Sport was built to help your search. Visit land 371 00:20:13,920 --> 00:20:16,080 Speaker 1: Rover try stay dot com for special offers during the 372 00:20:16,160 --> 00:20:24,200 Speaker 1: only Adventure Sales event. Land Rover Above and beyond broadcasting 373 00:20:24,320 --> 00:20:28,040 Speaker 1: live to New York, Bloomberg eleventh to Washington, d C, 374 00:20:28,280 --> 00:20:33,520 Speaker 1: Bloomberg to Boston Bloomberg twelve Honors to San Francisco, Bloomberg 375 00:20:34,400 --> 00:20:38,600 Speaker 1: to the Country Series, Channel one and around the globe, 376 00:20:38,720 --> 00:20:42,119 Speaker 1: the Bloomberg Radio Plus happened Bloomberg dot Com. This is 377 00:20:42,200 --> 00:20:46,800 Speaker 1: Bloomberg Surveillance. It is Jobs Day and Michael McKee, along 378 00:20:46,840 --> 00:20:50,680 Speaker 1: with Tom Keene Vinnie Dell Judais has the numbers. Michael, 379 00:20:50,760 --> 00:20:54,240 Speaker 1: the headline. Payrolls falling short of forecast up one hundred 380 00:20:54,359 --> 00:20:59,240 Speaker 1: fifty one thousand in January. December revised lower. That's said. 381 00:20:59,280 --> 00:21:02,280 Speaker 1: The unemployment it right down. The four point nine percent, 382 00:21:02,520 --> 00:21:07,040 Speaker 1: average hourly earnings up point five percent again. Non farm 383 00:21:07,119 --> 00:21:10,560 Speaker 1: payrolls January a gain of one hundred fifty one thousand 384 00:21:10,840 --> 00:21:14,280 Speaker 1: shorter forecast the prior month December revised lower now two 385 00:21:14,359 --> 00:21:18,400 Speaker 1: hundred sixty two thousands. Unemployment four point nine percent, average 386 00:21:18,480 --> 00:21:21,439 Speaker 1: hourly earnings up point five percent at the blow our 387 00:21:21,520 --> 00:21:23,760 Speaker 1: first squard desk. I'm fit del Juda. Let's go back 388 00:21:23,800 --> 00:21:27,120 Speaker 1: to New York. Thank you. Any our economic indicators today 389 00:21:27,160 --> 00:21:29,320 Speaker 1: brought to you by Commonwealth Financial Network. When it's time 390 00:21:29,359 --> 00:21:31,960 Speaker 1: to change the conversation, talk with a broken dealer, r 391 00:21:32,040 --> 00:21:34,120 Speaker 1: I A that's ready to listen, Call eight six six 392 00:21:34,200 --> 00:21:37,040 Speaker 1: four six two three, six, three eight, or visit commonwealth 393 00:21:37,119 --> 00:21:40,520 Speaker 1: dot com to learn more. And Tom I said earlier, 394 00:21:40,880 --> 00:21:42,960 Speaker 1: if we got a hundred and fifty thousand, it would 395 00:21:43,000 --> 00:21:45,800 Speaker 1: be great to have Jim Glassman here to explain why 396 00:21:45,960 --> 00:21:48,040 Speaker 1: that is not. We got a hundred and fifty and 397 00:21:48,080 --> 00:21:50,560 Speaker 1: the four point nine unemployment rate gets us back to 398 00:21:50,720 --> 00:21:54,560 Speaker 1: February of two thousand eight. Is that a good statistic? 399 00:21:54,680 --> 00:21:57,960 Speaker 1: Four point nine am I supposed to celebrate? Well, yeah, 400 00:21:58,040 --> 00:22:00,879 Speaker 1: it's because it's moving in the right direction. We're getting 401 00:22:00,960 --> 00:22:03,520 Speaker 1: back to full employment. I really think full employment is 402 00:22:03,560 --> 00:22:05,840 Speaker 1: more like four and a half percent. But there's still 403 00:22:06,000 --> 00:22:08,960 Speaker 1: are there are still people who left the job market 404 00:22:09,440 --> 00:22:11,320 Speaker 1: because of the recession that had yet to come back. 405 00:22:11,400 --> 00:22:13,480 Speaker 1: So it's good, it's good news, but it's also a 406 00:22:13,520 --> 00:22:15,879 Speaker 1: reminder when unemployment is coming down even though you're getting 407 00:22:15,920 --> 00:22:17,760 Speaker 1: slower job growth. I think this is gonna be the 408 00:22:17,840 --> 00:22:20,680 Speaker 1: story of two thousand and sixteen. We're gonna we're gonna 409 00:22:20,720 --> 00:22:23,320 Speaker 1: have to come to grips with what is the hurdle 410 00:22:23,400 --> 00:22:26,560 Speaker 1: rate for the job market. So we're we're getting in 411 00:22:26,640 --> 00:22:29,680 Speaker 1: the ballpark of a fully employeed economy. But that but 412 00:22:29,800 --> 00:22:33,399 Speaker 1: because the demographic demographics have changed, we don't need to 413 00:22:33,440 --> 00:22:36,000 Speaker 1: see the two hundred thousand jobs that we were saying, 414 00:22:36,359 --> 00:22:38,680 Speaker 1: But I still think you know, any one number a 415 00:22:38,800 --> 00:22:43,119 Speaker 1: hundred fifty in the context of two last time. Uh, 416 00:22:43,440 --> 00:22:45,400 Speaker 1: you know, the trend probably hasn't changed very much. Still 417 00:22:45,760 --> 00:22:48,760 Speaker 1: we're still running above good news though average hourly earnings 418 00:22:48,840 --> 00:22:51,120 Speaker 1: a half of her said, so two and a half 419 00:22:51,200 --> 00:22:56,000 Speaker 1: percent for the last month. That that's consistent. That's consistent 420 00:22:56,080 --> 00:22:58,960 Speaker 1: because if we're still growing faster in our underlying trend 421 00:22:59,000 --> 00:23:02,240 Speaker 1: and unso unemployment is creeping down and we're getting closer 422 00:23:02,320 --> 00:23:05,600 Speaker 1: to full employment, workers are gonna see better pay games. 423 00:23:05,680 --> 00:23:08,320 Speaker 1: And that's this is what the FAT has been very 424 00:23:08,400 --> 00:23:10,560 Speaker 1: focused on. So you know, you don't want to sit 425 00:23:10,600 --> 00:23:13,800 Speaker 1: around worry about things that you know, while the economy 426 00:23:13,800 --> 00:23:15,920 Speaker 1: continues to get to full employment. You don't want to 427 00:23:15,960 --> 00:23:17,800 Speaker 1: if you're the Fat, to sit around on the sidelines 428 00:23:17,840 --> 00:23:19,760 Speaker 1: and then find out late in the game that you 429 00:23:19,800 --> 00:23:22,640 Speaker 1: gotta move Critically, it's much better to be orderly. Jim Glassman, 430 00:23:22,760 --> 00:23:25,560 Speaker 1: thank you so much. With JP Morgan UH this morning 431 00:23:25,600 --> 00:23:28,200 Speaker 1: and without a question. The headline statistic is four point 432 00:23:28,320 --> 00:23:32,360 Speaker 1: nine percent. Futures negative six down, futures negative forty two 433 00:23:32,480 --> 00:23:38,560 Speaker 1: yields are a bit higher. We said, good morning, I'm 434 00:23:38,960 --> 00:23:42,000 Speaker 1: Bloomberg Surveillance to Bloomberg going all of you on Bloomberg 435 00:23:42,080 --> 00:23:47,040 Speaker 1: Television worldwide, and of course Bloomberg Radio FM in Washington, 436 00:23:47,520 --> 00:23:50,919 Speaker 1: and of course Bloomberg Radio plus worldwide. Job to Day, 437 00:23:50,960 --> 00:23:54,640 Speaker 1: which means we speak with Bill Gross of Jane's capital bill. 438 00:23:55,000 --> 00:23:58,320 Speaker 1: Four point nine percent. I believe in the history books 439 00:23:58,359 --> 00:24:00,400 Speaker 1: that you and I studied as a pretty good number 440 00:24:00,480 --> 00:24:04,040 Speaker 1: for the American economic experiment. Why are we so miserable 441 00:24:04,400 --> 00:24:09,800 Speaker 1: at four point nine unemployment? Well, one of the raisins 442 00:24:09,840 --> 00:24:12,639 Speaker 1: toime would be the under employment rate the USIX and 443 00:24:12,760 --> 00:24:17,120 Speaker 1: that didn't change. That's around I think nine point nine 444 00:24:17,920 --> 00:24:19,600 Speaker 1: or so, and so there are a lot of people 445 00:24:19,760 --> 00:24:23,560 Speaker 1: that are underemployed, meaning just working part time or you know, 446 00:24:23,680 --> 00:24:28,000 Speaker 1: not looking for jobs. You know that the deceptive nature 447 00:24:28,119 --> 00:24:31,639 Speaker 1: of the unemployment rate I think is the problem because 448 00:24:31,680 --> 00:24:34,040 Speaker 1: it speaks to just a smaller and smaller portion of 449 00:24:34,119 --> 00:24:37,040 Speaker 1: the labor force. And I think, unfortunately, because the FED 450 00:24:37,960 --> 00:24:41,960 Speaker 1: uses that rate in models such as the tailor model 451 00:24:42,040 --> 00:24:46,359 Speaker 1: to basically forecast interest rate policy, that they're focusing on 452 00:24:46,520 --> 00:24:50,560 Speaker 1: the wrong thing. Well, your business is investing on whether 453 00:24:50,720 --> 00:24:54,639 Speaker 1: or not we're going to see inflation. We have rising 454 00:24:54,720 --> 00:24:58,280 Speaker 1: wages better than expected this past month. What do you 455 00:24:58,359 --> 00:25:02,600 Speaker 1: think of that? Well, that good for rising wages, but 456 00:25:02,680 --> 00:25:04,960 Speaker 1: we know that they were zero percent last month because 457 00:25:05,040 --> 00:25:08,159 Speaker 1: of some statistical quirk and the y O Y as 458 00:25:08,240 --> 00:25:10,840 Speaker 1: you know, Mike, is around two point five or two 459 00:25:10,920 --> 00:25:13,960 Speaker 1: point six, and that's exactly what the last two months 460 00:25:14,000 --> 00:25:16,239 Speaker 1: have been. So I'm hardened by that, but I think 461 00:25:16,320 --> 00:25:19,680 Speaker 1: it's more statistical than anything. And we know that over 462 00:25:19,760 --> 00:25:23,200 Speaker 1: a longer term basis that the real wages are suffering, 463 00:25:23,720 --> 00:25:27,880 Speaker 1: and that the middle class and the lower class at 464 00:25:27,920 --> 00:25:30,480 Speaker 1: the term that isn't used anymore in political circles, but 465 00:25:30,800 --> 00:25:35,479 Speaker 1: all of those in combination basically aren't earning a wage 466 00:25:35,560 --> 00:25:39,240 Speaker 1: that justifies uh, you know, growth in the economy of 467 00:25:39,359 --> 00:25:43,720 Speaker 1: over two percent, and I think UH FED officials and 468 00:25:43,760 --> 00:25:47,720 Speaker 1: central bankers everywhere you need a certain rate of nominal 469 00:25:47,840 --> 00:25:50,639 Speaker 1: GDP that is real growth plus inflation, and for the 470 00:25:50,760 --> 00:25:54,120 Speaker 1: last twelve months it's been two point nine percent. UH. 471 00:25:54,880 --> 00:25:56,719 Speaker 1: To me, if you if you give me thirty seconds, 472 00:25:56,760 --> 00:25:59,200 Speaker 1: to me that you know that represents the two point 473 00:25:59,280 --> 00:26:03,600 Speaker 1: nine represents the return on capital and it doesn't cover 474 00:26:03,760 --> 00:26:06,760 Speaker 1: the cost of capital, which is hard to estimate, but 475 00:26:06,880 --> 00:26:10,440 Speaker 1: at market for instance, for stocks uh sixteen p s 476 00:26:10,520 --> 00:26:13,240 Speaker 1: a six percent cost the capital, and we know debts 477 00:26:13,280 --> 00:26:15,600 Speaker 1: somewhere around four or five. If you can only grow 478 00:26:15,600 --> 00:26:18,680 Speaker 1: at two point nine percent, you have to basically take 479 00:26:18,760 --> 00:26:21,680 Speaker 1: haircuts in debt or you have to have lower pees. 480 00:26:22,040 --> 00:26:24,600 Speaker 1: You need nominal GDP growth in the United States of 481 00:26:24,600 --> 00:26:27,399 Speaker 1: at least four percent, and that's something that interest rate 482 00:26:27,480 --> 00:26:30,040 Speaker 1: policy has failed to produce over the last five years. 483 00:26:30,520 --> 00:26:34,040 Speaker 1: You don't see then, an inflation issue building the Phillips 484 00:26:34,080 --> 00:26:39,560 Speaker 1: curve not back yet. No, I don't see that. You know, 485 00:26:39,640 --> 00:26:41,720 Speaker 1: to a certain extent, you could say that on a 486 00:26:41,840 --> 00:26:45,879 Speaker 1: global basis, the globalization has provided you know, labor for 487 00:26:45,960 --> 00:26:49,440 Speaker 1: the past ten, fifteen, twenty years, perhaps ever since the 488 00:26:49,960 --> 00:26:52,639 Speaker 1: fall of the curtain in Russia and the late eighties, 489 00:26:52,720 --> 00:26:55,679 Speaker 1: and so you know, some of that is is being absorbed. 490 00:26:55,800 --> 00:26:59,280 Speaker 1: But no, there's there's no real problem in terms of 491 00:26:59,640 --> 00:27:03,560 Speaker 1: labor um And I wonder why a central bank, you know, 492 00:27:03,680 --> 00:27:06,840 Speaker 1: has to be so focused and so absorbed on on 493 00:27:07,000 --> 00:27:09,960 Speaker 1: the cost of labor and wages as opposed to the 494 00:27:10,359 --> 00:27:14,000 Speaker 1: you know, the cost of of interest rates and the 495 00:27:14,240 --> 00:27:16,600 Speaker 1: cost of stock prices. It seems to me to be 496 00:27:16,640 --> 00:27:18,960 Speaker 1: a little unfair if you're just joining starts. Bill Gross 497 00:27:19,119 --> 00:27:22,679 Speaker 1: Channis Capital, Bloomberg Radio, Bloomberg Television Worldwide. Children were us 498 00:27:22,720 --> 00:27:25,320 Speaker 1: this morning, a churn to the market, futures negative eight. 499 00:27:25,359 --> 00:27:27,520 Speaker 1: But I don't even want to overplay what we see 500 00:27:27,560 --> 00:27:30,320 Speaker 1: in the market now, West Texas Intermediate flat thirty one 501 00:27:30,720 --> 00:27:32,760 Speaker 1: eighty two of barrel. Bill goes, I'm gonna say this 502 00:27:33,240 --> 00:27:35,720 Speaker 1: with our question has nothing to do the Super Bowl. 503 00:27:35,760 --> 00:27:38,119 Speaker 1: I'm sure you're at the fifty yard line with your 504 00:27:38,119 --> 00:27:41,200 Speaker 1: San Francisco forty Niners and they're out there in Santa Clara, 505 00:27:41,320 --> 00:27:45,240 Speaker 1: and that America's looking for the big victory on the 506 00:27:45,400 --> 00:27:50,320 Speaker 1: labor economy. It's not there. Can policy fix it? Can 507 00:27:50,440 --> 00:27:53,959 Speaker 1: Senator Clinton fix it? Can Mr? Trump fix it? Can 508 00:27:54,040 --> 00:27:57,399 Speaker 1: President Obama fix it? In this final months? What's the 509 00:27:57,640 --> 00:28:03,560 Speaker 1: policy prescription within the ca uestion of your research notes? Well, 510 00:28:03,640 --> 00:28:07,720 Speaker 1: the policy prescription it is not just mine alone. It 511 00:28:07,840 --> 00:28:10,720 Speaker 1: comes from Summers, and it comes from a very noted 512 00:28:10,760 --> 00:28:14,200 Speaker 1: economis and it's simply common sensical. But you know, once 513 00:28:14,320 --> 00:28:19,199 Speaker 1: monetary policy has been drained of its potency, and certainly 514 00:28:19,280 --> 00:28:22,640 Speaker 1: we're seeing that now on a global basis, and fiscal 515 00:28:22,760 --> 00:28:26,879 Speaker 1: policy has to take you up the up the slack, 516 00:28:27,000 --> 00:28:29,560 Speaker 1: and so why doesn't that take place. It's because the 517 00:28:29,640 --> 00:28:34,280 Speaker 1: mindset is anti Kenzie. And look and what happens in 518 00:28:34,359 --> 00:28:39,280 Speaker 1: Europe with Germany and their balanced budget basically regulation um 519 00:28:39,520 --> 00:28:42,200 Speaker 1: that is enforcing you know, the entire continent. Look at 520 00:28:42,240 --> 00:28:44,960 Speaker 1: the United States in terms of the Republican orthodoxy, look 521 00:28:45,000 --> 00:28:47,560 Speaker 1: at the I m F in terms of its decessity 522 00:28:47,720 --> 00:28:50,320 Speaker 1: to lend money. You know, as long as you know 523 00:28:50,400 --> 00:28:54,440 Speaker 1: these emerging countries in in extremists balance their budget. And 524 00:28:54,560 --> 00:28:57,120 Speaker 1: so you know, if you're going to be anti Keynes, 525 00:28:57,160 --> 00:28:59,320 Speaker 1: if you're not going to spend money on the fiscal side, 526 00:28:59,360 --> 00:29:01,720 Speaker 1: then monetary policy can't do the job. And I think 527 00:29:02,000 --> 00:29:04,640 Speaker 1: to be fair to yell In and to draw gain 528 00:29:04,760 --> 00:29:07,280 Speaker 1: to others, they've complained about it for a long time. 529 00:29:07,720 --> 00:29:12,360 Speaker 1: There's alone is it is simply a limited task. You 530 00:29:12,520 --> 00:29:16,920 Speaker 1: have to invest in it, your clients and your shareholders. 531 00:29:17,800 --> 00:29:20,720 Speaker 1: I have to live in the financial repression we're in. 532 00:29:21,280 --> 00:29:23,920 Speaker 1: If we're anti Kenzie and if we're not going to stimulate, 533 00:29:23,960 --> 00:29:27,600 Speaker 1: as Lord Skodowski and others say that we should, then 534 00:29:27,720 --> 00:29:31,840 Speaker 1: what is the solution to break ourselves out of this 535 00:29:32,080 --> 00:29:37,400 Speaker 1: low return lethargy? That we're in. Well, that to me, 536 00:29:37,640 --> 00:29:40,720 Speaker 1: that simply is the solution of you know, in terms 537 00:29:40,760 --> 00:29:44,680 Speaker 1: of monetary policy, that central banks continue to pursue the 538 00:29:45,440 --> 00:29:48,520 Speaker 1: theology that the lower and lower interest rates go, the 539 00:29:48,680 --> 00:29:51,880 Speaker 1: more and more, uh, you can create a wealth effect 540 00:29:51,920 --> 00:29:55,280 Speaker 1: that eventually flows out into the you know, the overall economy. 541 00:29:55,320 --> 00:29:57,640 Speaker 1: And I think to be fair that to some extent 542 00:29:57,800 --> 00:30:01,080 Speaker 1: that's been true. Europe is above line, in Japan's above 543 00:30:01,120 --> 00:30:03,440 Speaker 1: the line in the United States has averaged two percent. 544 00:30:03,640 --> 00:30:07,640 Speaker 1: But you know, certainly anemic relative to you know, post 545 00:30:07,760 --> 00:30:12,040 Speaker 1: Layman days and so um, lowering, lowering, lowering interest rates, 546 00:30:12,160 --> 00:30:14,880 Speaker 1: you know, into negative territory with no limit, as a 547 00:30:15,240 --> 00:30:19,160 Speaker 1: as Draws suggested in Krona has suggested. You know, to me, 548 00:30:19,680 --> 00:30:23,560 Speaker 1: you know that that it is almost a negative aspect 549 00:30:23,640 --> 00:30:25,640 Speaker 1: at this point in terms of its effects on the 550 00:30:25,720 --> 00:30:27,880 Speaker 1: real account. Build a touch on where we're going on 551 00:30:27,960 --> 00:30:30,760 Speaker 1: the negative rate issue in our next um, we are 552 00:30:30,800 --> 00:30:35,760 Speaker 1: in a time of completely unorthodox economy and investment. How 553 00:30:35,920 --> 00:30:44,400 Speaker 1: do you invest given negative rate monetary economics? Well, you know, 554 00:30:44,440 --> 00:30:46,280 Speaker 1: I think the logic is and it doesn't work all 555 00:30:46,320 --> 00:30:48,760 Speaker 1: the time because interest rates are volatile and stock prices 556 00:30:48,800 --> 00:30:50,880 Speaker 1: go up by one or two percent a day and 557 00:30:50,960 --> 00:30:53,400 Speaker 1: down by one or two percent a day. But um, 558 00:30:53,720 --> 00:30:56,640 Speaker 1: if if central bankers are true to their adage of 559 00:30:57,080 --> 00:31:02,160 Speaker 1: of being gradual in any direction and not surprising markets, 560 00:31:02,720 --> 00:31:07,800 Speaker 1: than what an investor can do basically is is assumed 561 00:31:07,880 --> 00:31:11,000 Speaker 1: that and sell that assumption in the in the form 562 00:31:11,040 --> 00:31:14,600 Speaker 1: of volatile. We're gonna We're gonna come back with Bill 563 00:31:14,680 --> 00:31:18,760 Speaker 1: Gross of Jana's capital. Futures negative eight, down, futures negative 564 00:31:18,800 --> 00:31:24,400 Speaker 1: fifty coming up. We continue our discussion with Bill Gross 565 00:31:24,440 --> 00:31:27,600 Speaker 1: at Jana's Capital not in the jobs report, Bill Gross 566 00:31:27,720 --> 00:31:31,680 Speaker 1: on the most historic nature of a time of negative 567 00:31:31,720 --> 00:31:38,840 Speaker 1: interest rates. Stay with us Bloomberg Surveillance, Global Business News 568 00:31:39,000 --> 00:31:41,880 Speaker 1: twenty four hours a day at Bloomberg dot com, the 569 00:31:42,040 --> 00:31:45,200 Speaker 1: Radio plus Mobile Act and on your radio is a 570 00:31:45,240 --> 00:31:48,800 Speaker 1: Bloomberg Business Flash and I'm covering Moscow. This updates brought 571 00:31:48,840 --> 00:31:51,920 Speaker 1: to you by National Realty Returns on cash and rented 572 00:31:51,960 --> 00:31:55,240 Speaker 1: real estate find them at n r I a dot net. 573 00:31:55,360 --> 00:31:58,280 Speaker 1: And futures are lower following the release of that job's report. 574 00:31:58,440 --> 00:32:01,719 Speaker 1: SNP e Manate futures down eight points, Dowie Mini futures 575 00:32:01,760 --> 00:32:05,080 Speaker 1: down forty eight and NASDAKI many futures down seventeen decks. 576 00:32:05,120 --> 00:32:07,200 Speaker 1: In Germany's down a tenth of a percent. Ten year 577 00:32:07,240 --> 00:32:09,640 Speaker 1: treasury down ten thirty seconds, the yield one point it's 578 00:32:09,680 --> 00:32:12,479 Speaker 1: seven percent. Nim Ex screwed oil down six tenths per 579 00:32:12,520 --> 00:32:15,520 Speaker 1: cent or nineteen cents, comes go down half percent or 580 00:32:15,560 --> 00:32:18,880 Speaker 1: six dollars thirty cents. The euro a dollar eleven fifty seven, 581 00:32:18,960 --> 00:32:21,880 Speaker 1: the yen one seventeen point one five. And that's a 582 00:32:21,920 --> 00:32:25,480 Speaker 1: blutom Berg business flash. Tom and Mike Karen, thanks so much, 583 00:32:25,680 --> 00:32:29,240 Speaker 1: very quickly here data check few yield four basis points. 584 00:32:29,280 --> 00:32:34,640 Speaker 1: How are you, Mike? Unambiguously good numbers underneath the headlines. Yes, 585 00:32:34,720 --> 00:32:38,040 Speaker 1: we've got not only the hours of the earnings that 586 00:32:38,120 --> 00:32:40,400 Speaker 1: we talked about being better, but hours worked went up 587 00:32:40,440 --> 00:32:44,040 Speaker 1: by a tenth to thirty four point six. And we're 588 00:32:44,080 --> 00:32:47,320 Speaker 1: also looking at the participation rate, which so many people 589 00:32:47,400 --> 00:32:50,800 Speaker 1: have been following. We talked about it with Alan Krueger earlier, 590 00:32:51,160 --> 00:32:54,720 Speaker 1: up to sixty two point seven percent, and that's the 591 00:32:54,800 --> 00:32:58,280 Speaker 1: highest I can see in definitely more than a year. 592 00:32:58,720 --> 00:33:01,320 Speaker 1: UM I have to check that out. Dollar strengths. We 593 00:33:01,440 --> 00:33:05,560 Speaker 1: got interest rates again four based point one on the tenure. 594 00:33:06,120 --> 00:33:09,400 Speaker 1: We welcome Bloomberg go Bloomberg Television worldwide, and of course 595 00:33:09,440 --> 00:33:11,760 Speaker 1: here in our radio studios we are with Bill Gross 596 00:33:12,240 --> 00:33:14,920 Speaker 1: of Janic's capital bill. We've got negative interest rates. I 597 00:33:14,960 --> 00:33:16,600 Speaker 1: want to give you a two part questions. I'm gonna 598 00:33:16,600 --> 00:33:19,520 Speaker 1: break a rule here. If I look at now and 599 00:33:19,600 --> 00:33:21,320 Speaker 1: if you look at two or three years from now, 600 00:33:21,840 --> 00:33:24,600 Speaker 1: and I've got negative rates and they're going even more 601 00:33:24,720 --> 00:33:28,480 Speaker 1: negative in certain countries or in new countries, how much 602 00:33:28,520 --> 00:33:31,880 Speaker 1: of the ten year yield now is affected at present 603 00:33:32,440 --> 00:33:35,600 Speaker 1: by the flows into the US And where will that 604 00:33:35,800 --> 00:33:37,880 Speaker 1: be in a couple of years if the new tool 605 00:33:38,000 --> 00:33:44,480 Speaker 1: de jure is negative interest rates. Very complicated questions, but 606 00:33:44,560 --> 00:33:49,960 Speaker 1: it's important. Yeah, I think so. And uh, you know, 607 00:33:50,200 --> 00:33:54,000 Speaker 1: it's hard to gauge. We know, for instance, that that 608 00:33:54,200 --> 00:33:57,720 Speaker 1: OPEC related countries and their sovereign wealth funds have been 609 00:33:58,160 --> 00:34:02,320 Speaker 1: selling treasuries because they're they're not as profitable as they 610 00:34:02,400 --> 00:34:04,840 Speaker 1: used to be. We know that China and their efforts 611 00:34:04,960 --> 00:34:09,120 Speaker 1: to maintain a peg relative to the dollar, has been 612 00:34:09,400 --> 00:34:13,080 Speaker 1: selling treasures and draining reserves and so um. You know, 613 00:34:13,239 --> 00:34:16,880 Speaker 1: the purchase or sale of treasuries is significantly dependent on 614 00:34:17,000 --> 00:34:20,400 Speaker 1: the price of oil and on the currency level. That 615 00:34:20,560 --> 00:34:24,080 Speaker 1: major countries want to maintain. So, UM, is that a 616 00:34:24,239 --> 00:34:27,000 Speaker 1: right hand left hand to answer? Um? I suppose it is. 617 00:34:27,800 --> 00:34:30,200 Speaker 1: It's very difficult to know. One third point is is 618 00:34:30,280 --> 00:34:34,239 Speaker 1: that the budget UH deficit is declining, and that the 619 00:34:34,400 --> 00:34:38,319 Speaker 1: issuance of treasuries, especially thesuance of long term treasuries, as 620 00:34:38,400 --> 00:34:42,080 Speaker 1: being cut a quarter by quarter. UH. The treasury seems 621 00:34:42,080 --> 00:34:44,320 Speaker 1: to be going to bills as opposed to long bonds, 622 00:34:44,360 --> 00:34:48,279 Speaker 1: which to me is astounding and surprising at the low 623 00:34:48,360 --> 00:34:50,480 Speaker 1: interest rates that we have. But in any case, you've 624 00:34:50,520 --> 00:34:54,080 Speaker 1: got the treasury, you've got China, you've got opaque and 625 00:34:54,200 --> 00:34:57,839 Speaker 1: oil all related in terms of cross flows, and it's yeah, 626 00:34:57,880 --> 00:35:00,920 Speaker 1: it's very difficult to know. I I would say ultimately 627 00:35:01,040 --> 00:35:04,840 Speaker 1: that it's the FED funds rate that determines the tenure, 628 00:35:04,920 --> 00:35:07,239 Speaker 1: and that determines the five year and those are the 629 00:35:07,760 --> 00:35:10,839 Speaker 1: critical elements going forward. And if the FED stays where 630 00:35:10,880 --> 00:35:13,319 Speaker 1: it is, then I don't think fives and things are 631 00:35:13,320 --> 00:35:15,880 Speaker 1: going to move much from where they are. Does that 632 00:35:16,000 --> 00:35:20,560 Speaker 1: suggest Bill that the FED isn't able to target monetary 633 00:35:20,640 --> 00:35:25,200 Speaker 1: policy where it wants to? Yeah? I think so, and 634 00:35:25,280 --> 00:35:27,880 Speaker 1: I think it to send this to other central banks. 635 00:35:28,000 --> 00:35:30,919 Speaker 1: Might that once you get close to the zero bound 636 00:35:31,000 --> 00:35:34,760 Speaker 1: and go negative the rules change. For instance, the ultimate 637 00:35:35,360 --> 00:35:39,239 Speaker 1: um attack against central banks on the part of the 638 00:35:39,360 --> 00:35:42,320 Speaker 1: consumer is basically the whole cash. Now, we've seen in 639 00:35:42,400 --> 00:35:44,759 Speaker 1: the last week or two lots of papers from the I, 640 00:35:45,000 --> 00:35:48,400 Speaker 1: m F and others about why central banks can compare 641 00:35:48,520 --> 00:35:52,160 Speaker 1: this and can basically, you know, avoid the problem of 642 00:35:52,600 --> 00:35:56,279 Speaker 1: of consumers taking cash as opposed to negative interest rates. 643 00:35:56,360 --> 00:35:58,640 Speaker 1: But I think at the margin that that really is 644 00:35:58,760 --> 00:36:01,960 Speaker 1: the significant aspect that for instance, the ECB went down 645 00:36:02,000 --> 00:36:04,360 Speaker 1: to minus one or minus two, the people would simply 646 00:36:04,440 --> 00:36:08,760 Speaker 1: hold euros, and that perhaps the financial economy would invent 647 00:36:08,920 --> 00:36:11,920 Speaker 1: something like a a c CEO instead of a CMO, 648 00:36:12,040 --> 00:36:15,640 Speaker 1: would be a you know, collateralized cash obligation in which 649 00:36:15,880 --> 00:36:19,120 Speaker 1: you know, you can invest in cash. So um, let's 650 00:36:19,239 --> 00:36:21,560 Speaker 1: you know, let's go there. But but cash is a 651 00:36:22,160 --> 00:36:24,800 Speaker 1: is a significant aspect of how hello they can go. 652 00:36:25,040 --> 00:36:26,920 Speaker 1: And this is really important, folks. This is the switch 653 00:36:26,960 --> 00:36:30,000 Speaker 1: in the last three weeks we've seen with cash not 654 00:36:30,200 --> 00:36:33,319 Speaker 1: being a residual to a portfolio, but cash is being 655 00:36:33,440 --> 00:36:36,919 Speaker 1: something you actually manage. Here's the first read of the weekend, folks. 656 00:36:37,000 --> 00:36:40,120 Speaker 1: It's at Bloomberg and at Bloomberg News. Simon Kennedy and 657 00:36:40,320 --> 00:36:42,960 Speaker 1: the current out of Hong Kong and Andrea Wong. The 658 00:36:43,040 --> 00:36:46,600 Speaker 1: Plaza accord to faces a high hurdle and Bill Gross 659 00:36:46,640 --> 00:36:49,920 Speaker 1: Alan Ruskins in here Michael Hartnett with some interesting thoughts 660 00:36:50,239 --> 00:36:54,040 Speaker 1: of a reverse plaza accord to help China. Bill Gross, 661 00:36:54,080 --> 00:36:57,480 Speaker 1: do you need to attend a plaza accord in the 662 00:36:57,600 --> 00:37:00,680 Speaker 1: next twenty months or so? Michael, I have lunch with 663 00:37:00,760 --> 00:37:05,200 Speaker 1: you at the Plaza Hotel. I would love to have 664 00:37:05,320 --> 00:37:06,960 Speaker 1: lunch with you. Guys. I'm not sure they would have 665 00:37:07,640 --> 00:37:10,719 Speaker 1: lunch with me. I'm to count I'm too commons I'm 666 00:37:10,760 --> 00:37:14,319 Speaker 1: too common sensical, and they depend upon models and statistical 667 00:37:14,480 --> 00:37:16,800 Speaker 1: data that goes back thirty or forty years and the 668 00:37:16,920 --> 00:37:20,239 Speaker 1: old financial economy and which you could earn, you know, 669 00:37:20,320 --> 00:37:23,960 Speaker 1: an appropriate rate of return on your capital. It's difficult 670 00:37:24,040 --> 00:37:26,080 Speaker 1: these days, and the rules to my way thinking change, 671 00:37:26,160 --> 00:37:29,360 Speaker 1: and so perhaps you can represent me at the plaza. 672 00:37:29,760 --> 00:37:32,640 Speaker 1: I can tell you if from talking with government officials 673 00:37:32,680 --> 00:37:36,560 Speaker 1: here in the US there's no Plaza Corse. But the 674 00:37:36,640 --> 00:37:42,880 Speaker 1: fact is my people are talking about it. Yeah there's ahead, Bill, Yeah, yeah, okay, 675 00:37:43,040 --> 00:37:46,200 Speaker 1: let me make it. I listened to your your piece 676 00:37:46,239 --> 00:37:50,160 Speaker 1: on Robert Gordon Um and can I make a comment 677 00:37:50,200 --> 00:37:54,279 Speaker 1: on because obviously productivity has come down, and that's part 678 00:37:54,360 --> 00:37:57,279 Speaker 1: of real growth. And one of the things that you know, 679 00:37:57,360 --> 00:37:59,919 Speaker 1: the FED and perhaps fiscal policy is trying to stay 680 00:38:00,000 --> 00:38:02,439 Speaker 1: relate to get us back to two to three percent 681 00:38:02,600 --> 00:38:05,640 Speaker 1: real rates of growth. But um, I think, and there's 682 00:38:05,640 --> 00:38:07,440 Speaker 1: been a lot of papers in the past five or 683 00:38:07,480 --> 00:38:10,160 Speaker 1: ten years on this that supported that that part of 684 00:38:10,239 --> 00:38:13,600 Speaker 1: the high productivity of the past twenty or thirty years. 685 00:38:13,680 --> 00:38:16,239 Speaker 1: This isn't Gordon's thesis, and it was a little bit 686 00:38:16,280 --> 00:38:18,839 Speaker 1: absent from his book, but part of the reason why 687 00:38:19,160 --> 00:38:22,800 Speaker 1: we had productivity at those levels was the productivity of finance. 688 00:38:22,920 --> 00:38:25,719 Speaker 1: I mean, think about it, credit cards, think about it, 689 00:38:26,040 --> 00:38:29,880 Speaker 1: buying a car on on on loan, think about a mortgage. 690 00:38:30,200 --> 00:38:33,160 Speaker 1: All of this facilitated the growth of the real economy. 691 00:38:33,239 --> 00:38:38,160 Speaker 1: More cars, more consumption, more homes. When you get interest 692 00:38:38,239 --> 00:38:42,320 Speaker 1: rates down to these levels, product productivity of finance diminishes 693 00:38:42,480 --> 00:38:46,040 Speaker 1: or or is absent. And so you know, some estimates 694 00:38:46,080 --> 00:38:49,080 Speaker 1: have suggested that productivity of finance has been as highest 695 00:38:49,200 --> 00:38:52,120 Speaker 1: a half to one percent over a long period of time. 696 00:38:52,200 --> 00:38:54,560 Speaker 1: And now with that absence, that's one of the reasons 697 00:38:54,640 --> 00:38:58,080 Speaker 1: why real growth can't go any higher and must get 698 00:38:58,239 --> 00:39:01,719 Speaker 1: lower because finance has based cliff financed out right bill 699 00:39:01,840 --> 00:39:06,440 Speaker 1: are least sophisticated listener and viewer knows that we're on 700 00:39:06,560 --> 00:39:10,480 Speaker 1: an unorthodox territory. None of this is in the textbooks. 701 00:39:10,520 --> 00:39:12,120 Speaker 1: None of this were in the books you were reading 702 00:39:12,160 --> 00:39:14,360 Speaker 1: in the mail room at PIMCO when you were clipping 703 00:39:14,440 --> 00:39:18,040 Speaker 1: coupons a million years ago. Mid that said, what is 704 00:39:18,120 --> 00:39:23,799 Speaker 1: your portfolio your unconstrained strategy to adapt in this odd 705 00:39:24,280 --> 00:39:28,520 Speaker 1: low yield environment. Well, I was mentioned just before the break, 706 00:39:28,600 --> 00:39:30,880 Speaker 1: and it's a little complicated, but let me say this. 707 00:39:31,000 --> 00:39:33,279 Speaker 1: If central banks are true to their word, if they 708 00:39:33,480 --> 00:39:36,200 Speaker 1: are gradual in one direction or another, depending up on 709 00:39:36,280 --> 00:39:38,880 Speaker 1: how the economy goes. And we know there are shocks, 710 00:39:38,920 --> 00:39:42,960 Speaker 1: there are tapered tantrums, and there are uh you know, Germans, 711 00:39:43,920 --> 00:39:48,359 Speaker 1: German sinkholes, etcetera, etcetera. But say, uh, say they're true 712 00:39:48,400 --> 00:39:51,440 Speaker 1: to the word and interest rates move gradually, then what 713 00:39:51,560 --> 00:39:54,120 Speaker 1: you want to do is not accept the points seven 714 00:39:54,200 --> 00:39:57,440 Speaker 1: percent from a two year, but so volatility around it, 715 00:39:57,719 --> 00:39:59,879 Speaker 1: you know, pretend that the two year in the next 716 00:40:00,040 --> 00:40:02,040 Speaker 1: month or two can't go higher than point nine or 717 00:40:02,120 --> 00:40:04,759 Speaker 1: can't go lower than point five. And when you do that, 718 00:40:05,239 --> 00:40:07,799 Speaker 1: you know, you can basically take a point seven two 719 00:40:07,920 --> 00:40:09,680 Speaker 1: year and turn it into a two and a half 720 00:40:09,760 --> 00:40:13,360 Speaker 1: to three percent two year. Now does that come without risk, No, 721 00:40:13,560 --> 00:40:17,960 Speaker 1: it doesn't, but it allows an investor to earn more 722 00:40:18,760 --> 00:40:22,120 Speaker 1: on you know, what is a government guaranteed security with 723 00:40:22,239 --> 00:40:24,640 Speaker 1: a little bit of volatiary risk by in a sense 724 00:40:24,920 --> 00:40:28,240 Speaker 1: selling it well as you set up that kind of strategy. 725 00:40:28,320 --> 00:40:31,080 Speaker 1: Let me go back to something you've been talking about lately. Uh, 726 00:40:31,320 --> 00:40:35,680 Speaker 1: everybody with the Great Recession talked about Himan Minsky brought 727 00:40:35,760 --> 00:40:39,600 Speaker 1: him back. Uh, stability leads to instability, is what he said, 728 00:40:39,880 --> 00:40:42,680 Speaker 1: Look at the markets today, doesn't work the other way. 729 00:40:43,040 --> 00:40:45,719 Speaker 1: Are we ringing some excess out of the markets? Are 730 00:40:45,760 --> 00:40:47,680 Speaker 1: we going to be in better shape? Or is the 731 00:40:47,719 --> 00:40:51,160 Speaker 1: world still such a confusing place that nobody knows what 732 00:40:51,360 --> 00:40:54,240 Speaker 1: to put money into right now unless you're buying insurance 733 00:40:54,280 --> 00:41:00,239 Speaker 1: like you're selling well, the you know, the Minsky stability 734 00:41:00,280 --> 00:41:04,000 Speaker 1: instability was significantly dominated by finance and by you know, 735 00:41:04,120 --> 00:41:07,520 Speaker 1: higher levels of debt. And certainly there are areas that 736 00:41:07,640 --> 00:41:12,440 Speaker 1: have stabilized, But in terms of finance, it's true that 737 00:41:13,040 --> 00:41:15,440 Speaker 1: aside from the household sector in the United States, that 738 00:41:16,080 --> 00:41:19,920 Speaker 1: almost all other areas in the US corporate debt, certainly 739 00:41:20,040 --> 00:41:24,360 Speaker 1: government debt, and globally and emerging markets huge expansion in 740 00:41:24,520 --> 00:41:27,520 Speaker 1: terms of debt, China being the best example. Then you 741 00:41:27,600 --> 00:41:32,120 Speaker 1: know that represents a source of potential instability. Why because ultimately, 742 00:41:32,280 --> 00:41:36,400 Speaker 1: once that growth of debt slows down and the bubbles 743 00:41:36,440 --> 00:41:39,280 Speaker 1: that it's created in either in terms of Potentican villages 744 00:41:39,360 --> 00:41:43,400 Speaker 1: in China or markets financial markets on a global basis 745 00:41:43,480 --> 00:41:47,360 Speaker 1: and emerging markets, then uh, the instability takes place in 746 00:41:47,520 --> 00:41:50,440 Speaker 1: terms of bubble popping. And with interest rates so low 747 00:41:50,520 --> 00:41:52,840 Speaker 1: and in many cases negative, it's hard to believe that 748 00:41:52,880 --> 00:41:57,239 Speaker 1: a central bank can contain that bubble popping if, in fact, 749 00:41:57,480 --> 00:42:01,480 Speaker 1: you know, debt becomes unstable. Bill Gross, thank you so 750 00:42:01,640 --> 00:42:05,399 Speaker 1: much with Janni's capital and always valuable to see him 751 00:42:05,400 --> 00:42:07,279 Speaker 1: on a job's day. And of course, to move forward 752 00:42:07,320 --> 00:42:11,840 Speaker 1: to the tumultuous financial times in economic times we're in, 753 00:42:12,000 --> 00:42:17,600 Speaker 1: Mike unambiguously rates a just from the gloom before is 754 00:42:17,640 --> 00:42:20,880 Speaker 1: Peter book Far says that lindsay group payroll soft. But 755 00:42:22,000 --> 00:42:25,040 Speaker 1: and but I'm sorry, Mike four point nine percent. I 756 00:42:25,160 --> 00:42:28,200 Speaker 1: believe it was back to February of O eight four 757 00:42:28,280 --> 00:42:32,799 Speaker 1: point nine as a striking statistic, and the underlying statistics 758 00:42:32,920 --> 00:42:36,759 Speaker 1: are all better. So let's see how we train today. Well, 759 00:42:36,800 --> 00:42:39,440 Speaker 1: there we are, Jim Glassman and Bill gross We are 760 00:42:39,520 --> 00:42:42,640 Speaker 1: going to continue on our job to day coverage the 761 00:42:42,719 --> 00:42:46,800 Speaker 1: futures at negative five bonus round. Another snowy hour of 762 00:42:46,880 --> 00:42:48,040 Speaker 1: Bloomberg surveillance