WEBVTT - 8am-9am ET: Levy & Gross 0:00:03.560 --> 0:00:06.920 This is Bloomberg surveillance. If we put people back to 0:00:06.960 --> 0:00:09.880 work and drive the unemployment rate down, at some point 0:00:10.000 --> 0:00:12.160 that has to lead to wage growth. That's just first 0:00:12.200 --> 0:00:15.080 principles of economics. If wage growth continues to pick up, 0:00:15.120 --> 0:00:17.799 as I expect it will, that's going to be increasingly 0:00:17.880 --> 0:00:20.759 uncomfortable having raps close to zero. As long as the 0:00:20.800 --> 0:00:24.320 American company continue to hire and Aerial's continue to expand, 0:00:24.360 --> 0:00:26.600 will be fine, and every indication is that they will. 0:00:26.800 --> 0:00:31.080 Bloomberg Surveillance your link to the world of economics, finance 0:00:31.160 --> 0:00:34.920 and investment on Bloomberg Radio. Good Morning, Everyone's job today. 0:00:34.960 --> 0:00:37.760 Michael McKee and Tom Keane. You heard from Robert Gordon, 0:00:37.920 --> 0:00:43.040 Alan Krueger, Michael Darda. Next, Mickey Levy of Barenberg Capital Markets. 0:00:43.080 --> 0:00:47.080 We are not Europe, we are not Japan. His optimism 0:00:47.200 --> 0:00:51.600 on our ability to move forward within this American economy. 0:00:51.680 --> 0:00:56.560 A very important program. Note one thirty this afternoon, Governor 0:00:56.640 --> 0:00:59.680 Romney will be interviewed by our Mark Helper and this 0:00:59.720 --> 0:01:03.560 is what question the important political interview of the day. 0:01:03.880 --> 0:01:08.240 Helper in Romney worldwide radio and television. Look for that 0:01:08.280 --> 0:01:11.640 at one thirty this afternoon. I did watch Governor Romney's 0:01:12.640 --> 0:01:18.720 remarks yesterday and Mr Trump's reaction to them, and UH, 0:01:19.280 --> 0:01:22.440 one told the truth and one to not. We never 0:01:22.480 --> 0:01:25.039 give our opinion here is Michael McKey just skirted the 0:01:25.280 --> 0:01:29.000 UH issues of the moment, Bloomberg surveillance. We're brought to 0:01:29.000 --> 0:01:32.560 you by Cone Resnick Accounting Tax Advisory. Cone RESIDEC will 0:01:32.560 --> 0:01:35.320 provide your business with the industry inside it needs to 0:01:35.360 --> 0:01:39.720 succeed in the dynamic dynamic economy. Sign up for insight 0:01:40.319 --> 0:01:43.600 and find out how at cone Resnick dot com c 0:01:43.760 --> 0:01:46.440 O h N R easy n I c K cone 0:01:46.480 --> 0:01:49.480 Resnick dot com and we thank them for their support. 0:01:49.560 --> 0:01:51.880 This is wonderfully time. Mickey Leavey is one of our 0:01:51.920 --> 0:01:55.000 great students. He's not a FED critic because he has 0:01:55.080 --> 0:01:58.960 too much respect for the institution, but he has always 0:01:59.120 --> 0:02:04.600 questioned the linkage of our theory to our actions away 0:02:04.640 --> 0:02:07.120 from theory. As we've seen for the last seven or 0:02:07.160 --> 0:02:10.200 eight years. He is with Barrenberg Capital Marcus Robert Gordon 0:02:10.280 --> 0:02:13.240 sitting in the chair you're in UH. Dr Levy UH 0:02:13.560 --> 0:02:17.920 within the hour, and he is adamant about his optimism 0:02:18.000 --> 0:02:23.320 on America even without technological progress. Carry this further to 0:02:23.440 --> 0:02:27.280 the fear that America could become like Europe or worse, 0:02:27.600 --> 0:02:31.359 become like Japan. You push against that. Well, the way 0:02:31.360 --> 0:02:35.720 I push against it is, you know, the potential growth 0:02:35.840 --> 0:02:38.480 is endogenous. I mean, if you put in place the 0:02:38.600 --> 0:02:42.160 right policies, which include put the fet aside, When you 0:02:42.240 --> 0:02:46.440 put in place the right policies tax and spending policies, 0:02:46.480 --> 0:02:50.480 how you allocate national resources, regulatory environment, you can you 0:02:50.520 --> 0:02:54.040 can have very healthy potential growth and very healthy sustained 0:02:54.120 --> 0:02:58.200 job creation. If you put in place uh lousy policies 0:02:58.960 --> 0:03:05.440 that er future planning and future investment, um, you know, 0:03:05.480 --> 0:03:07.680 then you're gonna have very weak growth. So it's up 0:03:07.680 --> 0:03:10.400 to our policy makers. And I think that's the beginning 0:03:10.680 --> 0:03:12.440 and end of it. I think I wish, I wish 0:03:12.440 --> 0:03:14.840 the policy makers would really talk about the policies, but 0:03:15.120 --> 0:03:17.600 they don't and they won't and they aren't. So what 0:03:17.680 --> 0:03:21.320 can the FED or anyone else do in the absence 0:03:21.360 --> 0:03:26.440 of that. Not much? Okay. So, so the bottom line is, 0:03:26.840 --> 0:03:31.800 you know, monetary policy cannot by stimulating create permanent jobs, 0:03:32.000 --> 0:03:35.440 and it can't lift long run potential growth. The e 0:03:35.520 --> 0:03:38.880 c B is obviously a financial backstop for Europe, but 0:03:38.960 --> 0:03:41.040 Europe has put in place some countries are put in 0:03:41.040 --> 0:03:45.720 place performance in the United States. Um, all of the 0:03:45.800 --> 0:03:49.720 you know, disappointment about the you know, the moderate rate 0:03:49.760 --> 0:03:52.040 of growth in the last six years has nothing to 0:03:52.080 --> 0:03:54.840 do with FED policy. It has to do with other 0:03:54.960 --> 0:03:58.600 policies that are you know, coming up the credit channels 0:03:58.680 --> 0:04:03.960 and constraining you know, business and investment and planning for 0:04:04.000 --> 0:04:07.920 the future. Well, what would you say to the argument 0:04:07.960 --> 0:04:10.280 that some people make that the FED is in a 0:04:10.400 --> 0:04:15.880 way complicit with this situation because their extraordinary policies have 0:04:16.680 --> 0:04:21.440 enabled Congress and policymakers on the fiscal side to avoid 0:04:21.480 --> 0:04:24.640 doing anything. Mike, I think that's I think that's a 0:04:24.800 --> 0:04:28.440 very valid point. Um. We all know that the quantitative 0:04:28.480 --> 0:04:31.839 easing and and and um, they're all their efforts to 0:04:31.920 --> 0:04:34.600 keep bon yields low has kind of gotten Congress off 0:04:34.600 --> 0:04:38.480 the hook, so they haven't Congress hasn't been forced to reform. Also, 0:04:38.520 --> 0:04:45.360 I think there's this this broader problem that everybody, including policymakers, 0:04:45.839 --> 0:04:50.200 financial markets, and the economic and financial media look to 0:04:50.279 --> 0:04:52.920 the FED to solve all the problems, and they're not 0:04:53.000 --> 0:04:56.480 able to. If you look at the last six years, 0:04:56.800 --> 0:04:59.960 the FED has not been able to stimulate aggregate demand. 0:05:00.000 --> 0:05:02.839 Any helped me with the idea that we move from 0:05:02.880 --> 0:05:06.760 ten percent to five percent unemployment. Dean Mackie at point 0:05:06.800 --> 0:05:09.280 seven two, suggesting we get to the vicinity of four 0:05:09.360 --> 0:05:13.280 point zero. I saw one person quota three nine out 0:05:13.360 --> 0:05:17.440 into the distance. My I should feel better, DR leave you. 0:05:17.480 --> 0:05:20.400 Why don't we feel better if the vectors in a 0:05:20.440 --> 0:05:25.359 wonderful direction? Well, I think that's a very valid question, 0:05:25.400 --> 0:05:28.080 and I and I have a hard time answering it because, 0:05:28.120 --> 0:05:31.680 as you know, the unemployment rate has come down, you six, 0:05:31.760 --> 0:05:37.440 has has come way way down UM adjusted for inflation. 0:05:37.560 --> 0:05:43.200 Of course, real wages UM have been you know, increasing UM. Now, 0:05:43.680 --> 0:05:47.440 the one of the questions is UM, who gets credit 0:05:47.520 --> 0:05:51.400 for this? And I would argue that we're just distancing 0:05:51.400 --> 0:05:55.080 ourselves from the financial crisis. UM. And if you look 0:05:55.200 --> 0:06:01.000 at UM aggregate demand or nominal GDP growth, it hasn't 0:06:01.040 --> 0:06:03.799 been the FED that that that that that could rightly 0:06:03.800 --> 0:06:07.760 take credit for all this. It's just the economy's growing modestly. 0:06:07.839 --> 0:06:12.599 But yours is a good question. UM. The US economy, 0:06:12.880 --> 0:06:15.320 we would like it to be growing faster, and I 0:06:15.360 --> 0:06:18.760 can think of some policies that would would really lift 0:06:18.800 --> 0:06:22.520 its rate of growth. But we're doing just a lot 0:06:22.640 --> 0:06:25.760 better than than than we have been. Okay, will bite 0:06:26.160 --> 0:06:29.160 give me a couple of policies. Oh boy, I I 0:06:30.000 --> 0:06:34.000 would love to see the next president, regardless of of 0:06:34.200 --> 0:06:38.599 UM who who that is? UM, sit down and say, okay, 0:06:38.640 --> 0:06:43.640 my first objective is corporate tax reform, and let's um 0:06:43.720 --> 0:06:47.080 and let's get people from both sides of the political 0:06:47.120 --> 0:06:49.960 aisle and talk about and build a base on what 0:06:50.000 --> 0:06:54.159 we agree on rather than focusing on the polemics. UM. 0:06:54.560 --> 0:06:57.039 And I think that would that would really lift a 0:06:57.040 --> 0:06:59.400 gray a gray cloud. And I think it would be 0:06:59.480 --> 0:07:01.960 pretty easy, cebes. I think reasonable people on both sides 0:07:02.000 --> 0:07:06.040 of the political aisle, you know, agree on large portions 0:07:06.080 --> 0:07:08.560 of what needs to be done on corporate taxes. And 0:07:08.600 --> 0:07:13.680 that's that's just the beginning. Another concern I have, uh 0:07:14.000 --> 0:07:17.440 lurking beneath the surface that I think has definitely had 0:07:17.480 --> 0:07:20.600 a negative impact on on the pace of economic growth, 0:07:20.640 --> 0:07:28.360 particularly capital spending, is the growing web of the regulations. 0:07:28.840 --> 0:07:32.360 And it's not the things we see in the headlines. 0:07:32.440 --> 0:07:36.200 It's the fine print and the implementation of a lot 0:07:36.240 --> 0:07:39.360 of regulations, not in the financial sector, but in the 0:07:39.440 --> 0:07:44.320 non financial sector that is on the margin leading businesses 0:07:44.440 --> 0:07:48.920 in a number of industries to temper back their expectations. 0:07:49.480 --> 0:07:53.040 Just published moments ago, Thomas had sold the Great Liberal, 0:07:54.080 --> 0:07:57.040 an essay in The New York Times on Mr Trump 0:07:57.160 --> 0:08:00.880 and all Mark Mike, Mike McKinnon and Mickey Lee. There's 0:08:00.920 --> 0:08:05.400 a wonderful statistic in here from Lucas Caravan Unas of 0:08:05.440 --> 0:08:09.400 Booth Schools Chicago. Mike, you just attended their wonderful panel. 0:08:10.280 --> 0:08:14.560 Labor share of our economy is down twelve percent from 0:08:14.640 --> 0:08:20.800 six to I mean, that's that's a structural change. With 0:08:20.960 --> 0:08:25.679 Larry Summers talks about secular stagnation, that's a definition labor 0:08:25.760 --> 0:08:29.840 is getting a smaller pie. Why is that, Dr Levy? 0:08:29.920 --> 0:08:33.840 Why is it? Is it that we've innovated ourselves out 0:08:33.880 --> 0:08:41.040 of jobs formation sixty nine to over a generation. I 0:08:41.080 --> 0:08:43.000 think part of the reason is the change in the 0:08:43.080 --> 0:08:49.160 composition of GDP higher higher portion is in service producing industries. 0:08:49.320 --> 0:08:51.760 Some of what your high productivity, high paying jobs, but 0:08:51.880 --> 0:08:57.400 but a large number are in lower productivity jobs that 0:08:57.559 --> 0:09:02.200 command or or are associated with lower wages. And I 0:09:02.240 --> 0:09:05.160 think that's that's clearly one of the factors. The other 0:09:05.360 --> 0:09:10.040 is the measurement issue. Okay, um, there is a growing 0:09:10.120 --> 0:09:16.520 wedge between business costs of employing people and those workers 0:09:16.559 --> 0:09:20.760 take home pay. And so if that decline in the 0:09:20.880 --> 0:09:25.120 labor share of g d p M reflects just take 0:09:25.160 --> 0:09:28.360 home pay the paps of unit, right, And I think 0:09:28.520 --> 0:09:30.920 I think that's important and and and and so this 0:09:31.040 --> 0:09:34.040 is one of the areas where um, I would love 0:09:34.080 --> 0:09:38.880 to see higher productivity and higher compensation for for skilled workers. 0:09:39.200 --> 0:09:41.400 We're going to do that, Bicky leader. We're gonna come 0:09:41.440 --> 0:09:43.160 back on what has been the theme through the morning, 0:09:43.200 --> 0:09:46.240 which is the efficiency of the economy. The productivity of 0:09:46.280 --> 0:09:48.440 the economy. As you all know, it's flat on its 0:09:48.679 --> 0:09:51.000 Like Mica has said, Okay, you and I don't have 0:09:51.080 --> 0:09:55.760 real jobs. We know that. We go from Greenspan, Vin Weber, 0:09:56.520 --> 0:10:00.880 the Senator for New Answer, Judd Gregg, Robert Gordon, Alan Krueger, 0:10:00.960 --> 0:10:06.280 Michael Darda Levy onto a guy named Gross. I mean 0:10:06.320 --> 0:10:08.439 this is pretty good. I'm like, this is pretty good. 0:10:08.480 --> 0:10:10.120 And the great thing is we get to share it 0:10:10.160 --> 0:10:12.679 with all of you listening. And yeah, stay tuned, because 0:10:13.200 --> 0:10:15.680 what a great children And it's out on our podcast. 0:10:15.760 --> 0:10:19.800 We're pleased to announce again free and you can subscribe iTunes. 0:10:20.520 --> 0:10:23.839 Mickey Levy not only the entire show for those that 0:10:24.000 --> 0:10:28.000 desire that, but individual podcasts is well. We've got a 0:10:28.080 --> 0:10:30.000 huge jump start to this and hope to roll it 0:10:30.040 --> 0:10:34.200 out over the next coming days. Again, an important interview 0:10:34.400 --> 0:10:38.600 one thirty this afternoon, Mark Helpred in conversation with a 0:10:38.640 --> 0:10:43.240 former governor of the Commonwealth of Massachusetts, Mitt Romney. Look 0:10:43.280 --> 0:10:46.520 for that at one thirty uh this afternoon. Without question, 0:10:46.760 --> 0:10:53.560 the interview of the day. Time out to check with 0:10:53.559 --> 0:10:56.200 blacam bar and get the latest world and national headlines. Miael, 0:10:56.280 --> 0:10:59.360 Mike Tom, thank you very much. Donald Trump's Republican presidential 0:10:59.440 --> 0:11:03.559 rivals aim out swinging at last night's debate. The echoed 0:11:03.600 --> 0:11:08.080 party establishment figures that Trump is a phony, but Trump, 0:11:08.240 --> 0:11:12.520 Marco Rubio, Ted Cruz, and John Kasik all said at 0:11:12.520 --> 0:11:14.760 the end of the debate that they would support the Dominique. 0:11:15.360 --> 0:11:19.160 Brazilian police are questioning former President Louis Ignatio Lula da 0:11:19.200 --> 0:11:22.920 Silva in a corruption case. Police are also searching his home. 0:11:23.480 --> 0:11:29.120 Diamond smuggling has caused Zimbabwe's economy more than thirteen billion dollars. 0:11:29.440 --> 0:11:33.160 That's according to Zimbabwe President Robert Mgabe. The state has 0:11:33.240 --> 0:11:36.320 created a new company to take control of the controlling mining. 0:11:36.960 --> 0:11:40.199 Global news twenty four hours a day, powered by our 0:11:40.559 --> 0:11:43.160 journalists more than a hundred fifty news bureaus from around 0:11:43.160 --> 0:11:45.840 the world. Michael Barr, Tom and Michael, thanks so much. 0:11:45.880 --> 0:11:48.720 We are fifteen making nineteen minutes away from the jobs 0:11:48.760 --> 0:11:52.400 report again beneath the headline data with Mickey Leany Barrenberg 0:11:52.440 --> 0:11:55.520 Capital Markets, and then Bill Gross of Janice at Capital 0:11:55.800 --> 0:11:58.600 coming up next. This is what we want to talk about, 0:11:58.920 --> 0:12:07.199 the lack of amy productivity. This is Bloomberg's surveillance. This 0:12:07.240 --> 0:12:09.480 news update brought to you by the New York Community Trust, 0:12:09.480 --> 0:12:12.120 where donors like you help them make New York better. 0:12:22.400 --> 0:12:25.800 Global business news twenty four hours a day at Bloomberg 0:12:25.880 --> 0:12:28.920 dot Com, the radio plus mobile lapp and on your radio. 0:12:29.240 --> 0:12:33.079 This is a Bloomberg Business Flash and I'm Karen Moscow. 0:12:33.200 --> 0:12:35.400 Futures are higher. Let's go to the first Bird breaking 0:12:35.400 --> 0:12:38.280 news desk for today's morning call. Here's Bill Maloney. Good 0:12:38.280 --> 0:12:40.920 morning Bill, Good morning Karen. U s you just have 0:12:41.080 --> 0:12:43.600 added to their games since the last time we spoke down. 0:12:43.640 --> 0:12:46.320 Future is currently hired by thirty six point scipes Game 0:12:46.360 --> 0:12:49.800 four and as a features rise by fifteen The US 0:12:49.840 --> 0:12:53.160 ten yield at one point eight three percent. Main up 0:12:53.240 --> 0:12:57.040 of markets except Italy are trading higher. Germany gains one percent, 0:12:57.400 --> 0:13:01.120 while in South America Brazil jumps three per cent. On 0:13:01.200 --> 0:13:04.360 the US Economic Friday thirty job numbers, changing Non Farm 0:13:04.440 --> 0:13:07.560 Peril's estimate a hundred and ninety five thousand, and after 0:13:07.600 --> 0:13:11.400 the Las Night HP Enterprise EPs beat, Broadcom quch revenue 0:13:11.760 --> 0:13:14.760 was in line, and Smith and Wesson boost the rps 0:13:14.800 --> 0:13:18.440 and revenue views. In deal news, Sampson Night is buying 0:13:18.480 --> 0:13:21.920 Toomey for seventy five a share at AMC Theaters to 0:13:21.960 --> 0:13:25.560 buy Carmikey Cinemas for thirty hours a share. Finally, some 0:13:25.640 --> 0:13:28.480 of your key walshot upgrades and downgrades brought inform and 0:13:28.520 --> 0:13:31.080 cut the neutral over at Bank of America. Hewitt Packard 0:13:31.160 --> 0:13:34.640 Enterprise raised out performer Bernstein h and R Block cut 0:13:34.640 --> 0:13:37.680 to market perform at BMO. Barkley's cut the whole versus 0:13:37.679 --> 0:13:40.600 by a Deutsche Bank JS Penny raised to buy it. Ever, 0:13:40.640 --> 0:13:43.800 courts I s I Qualcom cut to perform at Oppenheimer, 0:13:44.040 --> 0:13:47.040 and finally Goldman Sachs Xcel Group cut to neutral and 0:13:47.160 --> 0:13:50.160 monts Santo cut the cell live from the first breaking 0:13:50.200 --> 0:13:53.520 news desk gone, Bill Maloney, care, all right, thanks Villa 0:13:53.600 --> 0:13:56.160 to hear live breaking news over your Bloomberg type squawk 0:13:56.160 --> 0:13:58.400 a goo on your terminal, that's squ you a w 0:13:58.559 --> 0:14:00.960 u k go, that's a Bloomberg? Is this flash? Tom 0:14:00.960 --> 0:14:03.280 and Mike, Karen and thanks so much. This Job's Day 0:14:03.320 --> 0:14:07.480 Bloomberg surveillance brought to by Investco. Investco believes it's trying 0:14:07.520 --> 0:14:11.160 to bench the benchmarks and to consider active management and 0:14:11.240 --> 0:14:15.240 factor based strategies. Find out more at investco dot com. 0:14:15.240 --> 0:14:18.880 Slash high conviction. We moved to Job's Day. First of all, 0:14:18.880 --> 0:14:21.760 I do want to mention the series of headlines out 0:14:21.760 --> 0:14:25.280 of Brazil are simply stunning. We're not gonna dwell on 0:14:25.320 --> 0:14:32.080 this a lot here today, but markets explode higher, Petro 0:14:32.160 --> 0:14:37.640 bruss rises eighteen percent. Is President Lula Mike? Is it 0:14:37.840 --> 0:14:42.160 unfair to say under house arrest? Uh, it's hard to 0:14:42.200 --> 0:14:44.240 know his exact status. He has been detained by the 0:14:44.280 --> 0:14:47.320 police for questioning. They took him to the airport for 0:14:47.920 --> 0:14:52.520 security reasons, so question. It isn't exactly clear what he 0:14:53.160 --> 0:14:56.640 is doing or the status. Brazilian real is stronger. We've 0:14:56.640 --> 0:14:59.080 had a wonderful morning looking at our economic history that 0:14:59.160 --> 0:15:02.080 broader themes and make you leave you a baringer capital 0:15:02.120 --> 0:15:04.840 markets with us. Mickey, let's fold into this immediate jobs 0:15:04.880 --> 0:15:10.320 report that we see in exactly ten minutes. It's about productivity, capital, labor, 0:15:10.400 --> 0:15:14.120 and technological progress. Give us the y. We're flat on 0:15:14.160 --> 0:15:17.480 our back with productivity. I think part of it is 0:15:17.720 --> 0:15:23.800 a missmeasurement problem. I see everywhere anecdotal evidence of technological innovations, 0:15:25.440 --> 0:15:29.680 not only new products, but but but but improved production 0:15:29.920 --> 0:15:35.320 facilities and capabilities. I see record breaking near record breaking 0:15:35.360 --> 0:15:39.280 corporate profits, and then the productivity data are so weak. 0:15:39.520 --> 0:15:43.960 I think there is a mismeasurement problem that the US 0:15:44.800 --> 0:15:48.360 Department of Commerce will eventually get to. But it's a 0:15:48.480 --> 0:15:52.200 very technical issue. Let me just bring out an example. Um, 0:15:52.280 --> 0:15:55.160 all of you who are looking at your iPhones now, UM, 0:15:55.400 --> 0:15:59.200 when you buy an iPhone because it's because it's produced 0:15:59.200 --> 0:16:01.600 in China nets out to close to zero in g 0:16:01.760 --> 0:16:05.200 d P. Are you telling me that over the last 0:16:05.200 --> 0:16:10.000 seven eight years this has had zero impact. Mr McKinney, 0:16:10.280 --> 0:16:14.560 the sainted one needed a new iPhone yesterday. Uh it 0:16:14.640 --> 0:16:19.160 did not. It directly affected the GDP of the American economy. 0:16:19.280 --> 0:16:21.280 I could assure you, Mr Levy, you did your pat 0:16:22.400 --> 0:16:25.960 I did my patriotic duty and dropped a large amount 0:16:26.000 --> 0:16:29.040 of money on an iPhone for but it netted out 0:16:29.080 --> 0:16:32.360 to the close to zero in GDP and did not 0:16:32.480 --> 0:16:35.760 push the productivity dial as measured. And I think there's 0:16:35.760 --> 0:16:38.200 a measurement problem. And it's not just Apple, it's just 0:16:38.800 --> 0:16:43.760 almost in every industry. You see technological advances and it's 0:16:43.800 --> 0:16:47.160 just we're just not capturing it in the data. What 0:16:47.240 --> 0:16:50.000 do we uh, what do you think February is going 0:16:50.040 --> 0:16:51.800 to show? You have to follow a day to day 0:16:51.800 --> 0:16:54.240 basis and with a with a disclaimer that of course 0:16:54.320 --> 0:16:57.880 one month is not enough to uh, you know, really 0:16:57.920 --> 0:17:00.320 get a trend. But what do we think? Think it's 0:17:00.320 --> 0:17:02.800 gonna be a healthy number? Um, In fact, it could be. 0:17:03.160 --> 0:17:05.320 I think it's gonna be a little over two hundred thousand. 0:17:05.400 --> 0:17:08.199 On jobs. I think actually job gains have been a 0:17:08.240 --> 0:17:11.159 little too fast relative to g d P. But what 0:17:11.200 --> 0:17:15.119 I'm really looking at for in today's number is in 0:17:15.240 --> 0:17:19.560 January we had a nice increase in wages. If there's 0:17:20.320 --> 0:17:23.480 a second month in a row of healthy wage gains 0:17:24.119 --> 0:17:29.320 um on top of the recent nice news on consumer 0:17:29.440 --> 0:17:34.160 spending in real terms and the increase in the core 0:17:34.440 --> 0:17:37.520 PC deflated to one point seven. I'm wondering if we 0:17:37.600 --> 0:17:41.639 get that that wage increase, it's not only very good 0:17:41.680 --> 0:17:44.080 for the economy, but it really puts the FED into 0:17:44.080 --> 0:17:47.640 a box. Are they really data dependent? We're on the 0:17:47.680 --> 0:17:51.240 front doorstep of them achieving their long run dual mandate. 0:17:51.440 --> 0:17:54.120 What will they do well? What will be the effect 0:17:54.160 --> 0:17:57.199 if they do raise rights? Why the what? What is 0:17:57.240 --> 0:18:01.399 the I S curve real economy of fact, not to 0:18:01.440 --> 0:18:05.000 get to restrictive, not to get to accommodative, but to 0:18:05.040 --> 0:18:12.240 get off stand Fisher's ultra accommodative. Given the data, theoretically 0:18:12.400 --> 0:18:18.040 and historically, it should have close to zero impact on 0:18:18.200 --> 0:18:23.240 economic performance. The FEDS concern is um having gone through 0:18:24.240 --> 0:18:27.840 several queuei's forward guidance, All of that was geared toward 0:18:28.400 --> 0:18:33.120 UH keeping rates low, encouraging portfolio managers globally to take 0:18:33.160 --> 0:18:36.040 more risks, and now one of the FED one of 0:18:36.080 --> 0:18:40.120 the Fed's largest concerns is the reversal of that portfolio 0:18:40.240 --> 0:18:44.440 balance effect that they so touted for several years. MCKI Levis, 0:18:44.520 --> 0:18:47.919 Thank you so much, Dr Levias with Barrenburg Capital Markets. 0:18:47.960 --> 0:18:51.320 As we get ready for the jobs report, we'll see 0:18:51.320 --> 0:18:54.600 that here in six minutes. So we should note a 0:18:55.480 --> 0:18:58.639 thousand jobs forecast, four point nine percent unemployment in a 0:18:58.640 --> 0:19:01.320 two tense gaining wages. Those are the headline numbers. Will 0:19:01.359 --> 0:19:03.760 be watching. I will look at the revisions, and you 0:19:03.840 --> 0:19:06.560 girl always important, Robert Gordon said, he is, uh, he 0:19:06.720 --> 0:19:09.560 is going to be looking at the labor force participation rate. 0:19:09.600 --> 0:19:13.840 He said, that's the key number for the economy going forward. 0:19:14.040 --> 0:19:16.480 It's gotten better prospects for the economy. Of course, he's 0:19:16.520 --> 0:19:20.200 looking at it from the academic tower of Northwestern University, 0:19:20.280 --> 0:19:22.760 where market economists are trying to figure out what the 0:19:22.760 --> 0:19:25.480 tenure yield will do to four digits UH at eight 0:19:25.560 --> 0:19:28.600 thirty two. We will do that with Bill gross one 0:19:28.640 --> 0:19:33.080 point eight to eight six one on the tenure yield 0:19:33.160 --> 0:19:36.400 right now. Curve flattening over the last couple of days. 0:19:36.440 --> 0:19:38.120 Don't want to make too much about it. It's been 0:19:38.600 --> 0:19:42.359 range bounds. Is a lot of other data. The dollar 0:19:42.680 --> 0:19:46.359 fractionally weaker after a few good days. Opposite warning in 0:19:46.440 --> 0:19:50.040 Michael McKey mentioned gold elevated here an hour ago twelve 0:19:50.119 --> 0:19:54.560 sixty one. The ounce right now, Michael McKee and Tom Keane, 0:19:54.760 --> 0:19:57.959 please stay with us for this Job's Report in five minutes, 0:19:58.359 --> 0:20:02.000 the Report on the American Aber Economy. This is Bloomberg 0:20:02.080 --> 0:20:07.920 Surveillance coming up there, with all due respect, highlight brought 0:20:07.960 --> 0:20:09.480 you by land Rover. If it's in your nature to 0:20:09.520 --> 0:20:11.360 cast off the every day and seek adventure, the Discovery 0:20:11.359 --> 0:20:13.160 sport was built to help your search. Visit land Rover 0:20:13.240 --> 0:20:15.600 tri State dot com for special offers during the only 0:20:15.640 --> 0:20:25.200 Adventure Sales event. Land Rover above and b L broadcasting 0:20:25.280 --> 0:20:29.000 live to New York, Bloomberg eleventh, Ryo to Washington, d C, 0:20:29.240 --> 0:20:34.480 Bloomberg to Boston, Bloomberg twelve hundreds to San Francisco, Bloomberg 0:20:35.359 --> 0:20:38.960 to the Country series Exam Channel one nine and around 0:20:39.000 --> 0:20:42.600 the globe the Bloomberg Radio plus Aben Bloomberg dot Com. 0:20:42.600 --> 0:20:46.560 This is Bloomberg Surveillance. Good morning. It is a thirty 0:20:46.640 --> 0:20:49.160 on Wall Street of surprise. In the Jobs or Port, 0:20:49.240 --> 0:20:51.480 Vinny del Judas is at the first Word desk with 0:20:51.600 --> 0:20:55.280 the numbers. Michael assizeable gain almost a quarter million new 0:20:55.400 --> 0:20:59.360 jobs added in February, up two hundred and forty two thousand. 0:20:59.560 --> 0:21:01.600 Going in to the report, economists have been looking for 0:21:01.640 --> 0:21:05.119 a game of just one hundred nine thousand. Also payrolls 0:21:05.160 --> 0:21:08.320 the prior month revised up to one hundred seventy two thousand, 0:21:08.480 --> 0:21:11.240 so a big number. Almost a quarter million non farm 0:21:11.359 --> 0:21:15.800 jobs added last month. We see the unemployment rate holding 0:21:16.080 --> 0:21:19.840 four point nine percent, eight year low, so the four 0:21:19.880 --> 0:21:23.119 point nine percent on the unemployment rate. Average hourly earning 0:21:23.119 --> 0:21:25.119 is a bit of a sore spot this month down 0:21:25.200 --> 0:21:28.400 point one percent. They had surged the prior month, registering 0:21:28.440 --> 0:21:31.200 the biggest increase in the year. Again to recap, non 0:21:31.280 --> 0:21:34.360 farm payrolls up two hundred forty two thousand in February 0:21:34.400 --> 0:21:38.800 more than forecast. January revised higher. We see a four 0:21:38.840 --> 0:21:41.360 point nine percent unemployment rate, tying an eight year low, 0:21:41.560 --> 0:21:44.240 average hourly earnings down point one percent, and the trade 0:21:44.240 --> 0:21:47.720 deficit also when that widened to forty five point six 0:21:47.760 --> 0:21:50.480 eight billion dollars in January. At the Bloomberg First Word Desk, 0:21:50.520 --> 0:21:52.600 I'm fity del judice. Let's go back to New York. 0:21:53.200 --> 0:21:56.399 Thank you Anny, and the economic indicators today brought to 0:21:56.400 --> 0:21:58.800 you by Commonwealth Financial Network. When it's time to change 0:21:58.800 --> 0:22:01.480 the conversation with the broker dealer, r I A that's 0:22:01.480 --> 0:22:04.200 ready to listen called six six or six two three, 0:22:04.280 --> 0:22:07.120 six three eight or visit Commonwealth dot com to learn more. 0:22:07.400 --> 0:22:11.360 Tom One important point. Ian Shepherdson Pantheon Economics says there 0:22:11.440 --> 0:22:15.560 is a calendar quirk in February that likely accounted for 0:22:15.640 --> 0:22:19.320 the drop in earnings. So maybe a technical thing and 0:22:19.320 --> 0:22:21.440 that we said we won't know for a month or so, 0:22:21.520 --> 0:22:24.320 but certainly Wilson has to like the job creatures they do. 0:22:24.359 --> 0:22:28.240 The interest rates hied UH, equity futures rise up up 0:22:28.280 --> 0:22:31.359 to now up seven and yields do much nicer higher 0:22:31.400 --> 0:22:34.520 two basis points in the tenure one point eight five percent, 0:22:34.560 --> 0:22:37.359 and the two year yield spikes up. We went through 0:22:37.600 --> 0:22:40.840 zero point eight six right now zero point eight five. 0:22:40.880 --> 0:22:46.000 But nevertheless a lift and curve, a solid curve steepening 0:22:46.119 --> 0:22:49.879 year off of the report. Let me point out Robert 0:22:49.880 --> 0:22:53.000 Gordon told us to look at the participation jumps to 0:22:53.080 --> 0:22:57.640 sixty two point nine percent from sixty two point seven. Yeah, 0:22:57.720 --> 0:23:00.280 absolutely a real lift here. Four point nine were sent 0:23:00.359 --> 0:23:04.680 on the unemployment rate, two hundred seventy two thousand jobs formed. 0:23:05.840 --> 0:23:08.679 And now Bloomberg Radio, Bloomberg Television, we welcome all of 0:23:08.720 --> 0:23:12.560 you worldwide. Bill Gross with us UH this morning. We'll 0:23:12.600 --> 0:23:15.680 get to him in a moment Michael McKee and Tom Keane, 0:23:15.760 --> 0:23:18.280 and uh, you know, I gotta say, Michael, it's an 0:23:18.280 --> 0:23:23.120 extraordinary report this morning with a revision, a positive thirty thousand, yeah, 0:23:23.160 --> 0:23:25.840 two seventy two thousand jobs over the last two months, 0:23:25.880 --> 0:23:28.919 according to the revisions, and that is way ahead of 0:23:29.000 --> 0:23:31.879 where people thought we would be. Bill Gross with Jan's capitol, 0:23:31.960 --> 0:23:34.679 joins us now after a quick digestion and markets lifting 0:23:35.119 --> 0:23:38.800 on the move. Bill, we are creating jobs. I see 0:23:38.800 --> 0:23:42.240 the temporary employment dynamics and all are these good jobs 0:23:42.280 --> 0:23:46.879 were creating? Well, that's the question. Are they good jobs? Um? 0:23:47.400 --> 0:23:49.720 You know, I suspect that some of them are are 0:23:49.760 --> 0:23:53.080 not great jobs. Some of them are at the minimum 0:23:53.080 --> 0:23:55.719 wage and a little bit higher. And um, you know, 0:23:55.800 --> 0:24:01.119 the the average income of American workers is proceeding higher, 0:24:01.160 --> 0:24:04.199 but not at a very rapid pace. I noticed that 0:24:04.280 --> 0:24:08.320 the hours worked in this particular report didn't increase. Yes, 0:24:08.359 --> 0:24:10.840 the participation rate went up, and I think Yelling and 0:24:10.920 --> 0:24:15.320 Company would be heartened by that because the extent that 0:24:15.320 --> 0:24:17.680 it keeps going up, it means more and more people 0:24:17.760 --> 0:24:20.560 are coming back into the workforce and takes pressure off 0:24:20.640 --> 0:24:24.720 of their Phillips curve and off of their tailor models, 0:24:24.760 --> 0:24:29.560 So it's not exactly a a robust model from the 0:24:29.600 --> 0:24:33.160 standpoint of a hike, uh and maybe a robust model 0:24:33.200 --> 0:24:37.120 from the standpoint of increasing economic growth, which I expect 0:24:37.160 --> 0:24:40.160 in this quarter to be about two. How far away 0:24:40.440 --> 0:24:47.160 from normal is Janet Yellen's Fed? I think they're at 0:24:47.240 --> 0:24:52.399 least um a hundred two hunter basis points higher in 0:24:52.480 --> 0:24:56.040 their dots than normal, and the the normal is really 0:24:56.080 --> 0:24:59.800 being fought out and academic circles. Most of the research 0:24:59.840 --> 0:25:03.679