WEBVTT - Solid Jobs Report, Visa CEO, Opportunities in Equities 0:00:00.560 --> 0:00:03.040 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:03.120 --> 0:00:05.600 Jason Kelly. We're here every day bringing you the latest 0:00:05.600 --> 0:00:09.880 news from the world's of business and finance, plus technology, politics, economics, 0:00:09.960 --> 0:00:13.520 all harnessing the power of Bloomberg Business Week reporters and editors, 0:00:13.600 --> 0:00:16.760 not to mention our hundred journalists and analysts more than 0:00:16.800 --> 0:00:19.440 a hundred and twenty countries. You can download Bloomberg Business 0:00:19.440 --> 0:00:22.280 Week on iTunes, SoundCloud, or Bloomberg dot Com. You can 0:00:22.320 --> 0:00:24.600 also listen to our radio show weekdays at two pm 0:00:24.640 --> 0:00:32.520 Eastern only on Bloomberg Radio. So US hiring was unexpectedly 0:00:32.600 --> 0:00:36.360 resilient in the month of October. Priirements saw sharp upward revisions, 0:00:36.440 --> 0:00:39.279 validating the FED signal of a pause from interest rate 0:00:39.320 --> 0:00:42.080 cuts and really indicating consumers will extend the record long 0:00:42.159 --> 0:00:45.640 expansion despite week business investment and despite trade tensions of 0:00:45.720 --> 0:00:48.559 the little lightning of that load as well. Chris lu Is, 0:00:48.600 --> 0:00:52.159 former Deputy Secretary of Labor under the Obama administration, now 0:00:52.200 --> 0:00:54.960 senior fellow at the University of Virginia Miller Center, on 0:00:54.960 --> 0:00:58.760 the phone from Charlottesville, Virginia. Chris, so great to have 0:00:58.800 --> 0:01:01.880 you back here on Bloomberg It's been an interesting week, 0:01:02.000 --> 0:01:05.440 chock full of news on so many different fronts. You know, 0:01:05.480 --> 0:01:07.679 the thing came out and I think initially I was like, 0:01:07.720 --> 0:01:09.800 you know, where's the Fed getting all their optimism from. 0:01:09.800 --> 0:01:11.840 But you know, you look at these jobs report, there 0:01:11.840 --> 0:01:16.240 are reasons to be optimistic. Yeah. Let me, I'll take 0:01:16.280 --> 0:01:17.880 a slightly contro of you on this. I mean, this 0:01:18.040 --> 0:01:21.000 was a very solid report, and I think in part 0:01:21.080 --> 0:01:24.920 because the initial expectations had been so low. Um, not 0:01:24.959 --> 0:01:27.640 only just based on other signs that the economy might 0:01:27.640 --> 0:01:30.560 be slowing, but obviously the GM strike. UM. I think 0:01:30.600 --> 0:01:32.480 this one. If we had simply said, hey, this is 0:01:32.520 --> 0:01:34.119 going to come in at a hundred and twenty eight 0:01:34.120 --> 0:01:36.240 thousand in the abstract, we would say, you know, this 0:01:36.280 --> 0:01:38.440 is kind of a so so report. And so again 0:01:38.520 --> 0:01:40.720 we always say don't look at one month. This was 0:01:40.760 --> 0:01:42.800 a solid report given where I think we thought it 0:01:42.880 --> 0:01:44.800 was going to be. But I think when you look 0:01:44.840 --> 0:01:46.880 at some of the other signals in the economy, the 0:01:46.920 --> 0:01:49.320 economy is still slowing. It just may not be slowing 0:01:49.320 --> 0:01:51.520 as much as we all thought it was. All right, 0:01:51.600 --> 0:01:54.800 so synthesize that for us. Chris said, what else should 0:01:54.880 --> 0:01:57.200 we be looking at? To essentially sort of compliment or 0:01:57.200 --> 0:02:01.600 give us a more holistic picture that of what's it there. Well, 0:02:01.680 --> 0:02:04.360 we saw today's manufacturing in deck that showed for the 0:02:04.480 --> 0:02:09.280 third straight month, uh, the manufacturing session UH sectors in recession. 0:02:09.840 --> 0:02:12.280 We obviously have the third quarter GDP numbers that came 0:02:12.280 --> 0:02:14.880 out this week, again not as bad as expected, but 0:02:14.960 --> 0:02:17.800 still at one point nine a slowing from where it 0:02:17.840 --> 0:02:21.040 has been. Uh. And even in these numbers, UM, we're 0:02:21.040 --> 0:02:25.880 seeing us slowing from eighteen to UM. And so again 0:02:26.440 --> 0:02:29.120 there's a bunch of other you know, farm bankruptcies are 0:02:29.200 --> 0:02:31.240 up with you know, there's a bunch of indications that 0:02:31.520 --> 0:02:35.280 show we're kind of flowing, but we're probably not moving 0:02:35.280 --> 0:02:37.959 into recession. And I think the other sort of interesting 0:02:38.000 --> 0:02:40.080 and probably concerning thing for me as well, is that 0:02:40.440 --> 0:02:42.960 wage growth still is not what we thought it would be. 0:02:43.000 --> 0:02:46.000 In for all the people talking about full employment. Uh, 0:02:46.040 --> 0:02:49.440 you know, we're still only seeing three point uh year 0:02:49.520 --> 0:02:51.679 over year wage growth, which is really not what you 0:02:51.680 --> 0:02:55.680 would expect to see at this point in an economic expansion. 0:02:55.840 --> 0:02:58.760 But to be fair, I think this economic expansion, Chris, 0:02:58.800 --> 0:03:02.280 is unlike any we've seen before. Just it's already you know, 0:03:02.320 --> 0:03:05.160 the longest on record in terms of duration. Isn't it 0:03:05.240 --> 0:03:08.280 still surprising to see the kind of strength that we 0:03:08.360 --> 0:03:11.080 are seeing in the labor market, you know where we 0:03:11.120 --> 0:03:14.519 are considering where we are in this cycle. Yeah, no, 0:03:14.600 --> 0:03:16.480 you're absolutely right. I mean this has gone on, I think, 0:03:16.520 --> 0:03:20.120 far longer than anyone thought it would go. And you know, 0:03:20.160 --> 0:03:23.720 when I think the SAIDs move this week probably gives 0:03:23.760 --> 0:03:26.840 a little bit of more oxygen to this recovery. But 0:03:27.080 --> 0:03:29.440 it does feel like we are, you know, I don't 0:03:29.440 --> 0:03:32.320 know for three months to the end of this recovery, 0:03:32.360 --> 0:03:34.040 six months a year, but it does sort of feel 0:03:34.040 --> 0:03:37.120 like it is slowing down. Um, although just as I said, 0:03:37.160 --> 0:03:39.040 not as dramatically as I think we all thought it was. 0:03:39.560 --> 0:03:42.680 All right, So Chris, help us understand one one thing 0:03:42.760 --> 0:03:46.200 that I think caught our attention, because you know, we're bloomberg. 0:03:46.280 --> 0:03:48.160 We look at the numbers and we see this tweet 0:03:48.200 --> 0:03:52.000 from the President earlier, um, you know, celebrating as as 0:03:52.000 --> 0:03:54.640 many gave him credit for, uh, you know, a really 0:03:54.720 --> 0:03:58.520 solid number. But he put a number out via Twitter. 0:03:58.600 --> 0:04:01.840 I believe it was three three thousand, with adjustments and whatnot. 0:04:02.400 --> 0:04:04.240 Can you help me understand what what he may be 0:04:04.280 --> 0:04:08.800 talking about there. Yeah. Look, I mean you don't do this. 0:04:08.920 --> 0:04:10.640 I mean, you know, the jobs numbers are what the 0:04:10.720 --> 0:04:12.800 jobs numbers are. You know, we can all say, look, 0:04:12.800 --> 0:04:16.040 a hundred twenty thousand was good, especially given you know, 0:04:16.160 --> 0:04:19.279 the forty to sixty thousand GM workers that were on strike. 0:04:19.600 --> 0:04:22.560 But then to somehow then start to lump together you know, 0:04:22.640 --> 0:04:26.440 the previous months revisions, which again we're good, Uh, and 0:04:26.480 --> 0:04:29.440 then sort of speculate what the GM effect was. And 0:04:29.440 --> 0:04:32.400 then they also did this kind of UM addition for 0:04:32.960 --> 0:04:35.960 census workers. Uh, they somehow come up with three hundred 0:04:35.960 --> 0:04:37.760 and three thousand. I mean, the numbers are what they are. 0:04:37.760 --> 0:04:40.520 I mean, you don't say, well, but for the Great Recession, 0:04:41.000 --> 0:04:43.480 Barack Obama would have created x million jobs. I mean, 0:04:43.800 --> 0:04:45.400 you know, we we look at these numbers in the 0:04:45.400 --> 0:04:48.479 broader context, and I think the President of all people, 0:04:48.520 --> 0:04:52.120 who sits atop these statistical agencies UM should not be 0:04:52.160 --> 0:04:54.120 gaming around with these numbers, are trying to put a 0:04:54.120 --> 0:04:56.960 different spin on them. You know. As the Deputy Secretary 0:04:56.960 --> 0:04:59.920 of Labor, i UM was in charge or oversaw the 0:05:00.000 --> 0:05:03.760 Bureau of Labor Statistics. This is one of the premier 0:05:03.839 --> 0:05:07.200 statistical agencies in the world. Uh. They just do such 0:05:07.240 --> 0:05:10.680 fantastic workman, we should just let the numbers speak for themselves. Well, 0:05:10.760 --> 0:05:13.400 And Chris, and this is I'm certainly not making an 0:05:13.440 --> 0:05:16.560 excuse for endorsing it, but this is a very important 0:05:16.600 --> 0:05:22.920 political number as we get closer and closer to November. Right, Yeah, no, absolutely, 0:05:22.920 --> 0:05:27.600 I mean, looks for all the president's political problems, Um, 0:05:27.640 --> 0:05:30.320 the economist states strong on his watch, um, and he 0:05:30.360 --> 0:05:33.960 will obviously be trying to that that will be really 0:05:33.960 --> 0:05:37.560 the cornerstone of his reelection strategy. So it's certainly in 0:05:37.560 --> 0:05:40.320 common upon him to put the best positive spin on it. 0:05:40.760 --> 0:05:42.719 But you could simply say, look, we created a hundred 0:05:42.760 --> 0:05:45.520 twenty thousand jobs and given everything else that that's a 0:05:45.560 --> 0:05:48.120 really positive number. But then to put out their three 0:05:48.200 --> 0:05:50.760 hundred and three thousand, I think it's just horribly misleading, 0:05:51.080 --> 0:05:52.960 and I think it sort of does a disservice to 0:05:53.160 --> 0:05:56.839 the UM, not only just to you know, the career 0:05:57.400 --> 0:05:59.560 employees at the Bureau of Labor Statistics, but I just 0:05:59.560 --> 0:06:02.920 think it's horribly misleading. All right, Well, we're gonna leave 0:06:02.960 --> 0:06:05.600 it there. We always appreciate your context. Chris Lew Senior 0:06:05.640 --> 0:06:09.200 Fellow at the University of Virginia Miller Center and the 0:06:09.240 --> 0:06:12.760 former Deputy Secretary of Labor under President Obama. He joined 0:06:12.839 --> 0:06:16.000 us on the phone from Charlottesville. I've checking in with 0:06:16.080 --> 0:06:18.800 Chris Well. Earlier today at Bloomberg headquarters, Jason I caught 0:06:18.880 --> 0:06:21.159 up at the CEO of the world's largest payments network. 0:06:21.160 --> 0:06:24.360 We're talking about Visa. They are huge, three point three 0:06:24.360 --> 0:06:28.159 billion Visa cards and use. We got some details on 0:06:28.200 --> 0:06:30.640 the business. This was for another edition of Business Week Talks. 0:06:30.680 --> 0:06:34.239 Al Kelly is Visa's chairman and CEO. We began by asking, 0:06:34.680 --> 0:06:37.200 with his vast network advantage point, what is the state 0:06:37.200 --> 0:06:40.760 of the consumer and the economy? Actually, you know, despite 0:06:40.760 --> 0:06:44.360 all of this thought that there was a recession coming, 0:06:44.800 --> 0:06:46.840 we don't see it. You know. In fact, our fourth 0:06:46.880 --> 0:06:49.600 quarter numbers, which for US were September thirty numbers, were 0:06:49.640 --> 0:06:51.360 better than the third quarter. In the US it was 0:06:51.480 --> 0:06:56.320 up eight percent, the internationals up twelve percent excluding China, uh, 0:06:56.440 --> 0:06:59.120 Europe was up percent when you exclude the UK, which 0:06:59.120 --> 0:07:01.479 has done a little bit of self inflicted wound to this. 0:07:01.640 --> 0:07:04.280 What's wrong with everyone that we're talking so much about recession. 0:07:04.320 --> 0:07:05.919 I think it must just be the cycle. You know, 0:07:05.960 --> 0:07:08.120 it's been a long time that we've had this upswing, 0:07:08.200 --> 0:07:10.680 and I think that people just look at the history 0:07:10.680 --> 0:07:12.760 and say it's it's got to go down at some point. 0:07:13.080 --> 0:07:16.640 But you know, the consumer has stayed extremely strong around 0:07:16.680 --> 0:07:18.880 the world. The only place we see any weaknesses in 0:07:18.920 --> 0:07:21.160 the UK, and as I said, that's kind of related 0:07:21.160 --> 0:07:23.640 to the whole Brexit situation. But other than that, the 0:07:23.640 --> 0:07:25.880 world looks pretty darn good. And so let's talk about 0:07:25.880 --> 0:07:28.600 consumers and go a level down because you have more 0:07:28.680 --> 0:07:32.200 insights probably than almost anyone into where they're spending, how 0:07:32.240 --> 0:07:34.960 they're spending, what they're buying, what are they buying, where, 0:07:34.960 --> 0:07:38.000 where is where's their money going? Is it experiential like 0:07:38.040 --> 0:07:40.680 everybody keeps saying, well, and in our world, there's a 0:07:40.720 --> 0:07:43.880 couple of things that are really driving the increases in 0:07:43.920 --> 0:07:46.640 the number of transactions were seeing. One is obviously e commerce. 0:07:46.920 --> 0:07:49.960 You know, people are jumping on their phones and jumping 0:07:50.000 --> 0:07:53.880 on their iPads and jumping on their computers and and 0:07:54.000 --> 0:07:57.040 buying in big ways. We're seeing every month those numbers. 0:07:57.280 --> 0:07:59.640 The growth in eCOM is anywhere between two and three 0:07:59.680 --> 0:08:02.559 times the growth in the face to face world every 0:08:02.600 --> 0:08:06.600 every single month. Uh, we're also seeing people continuing to travel. UH, 0:08:06.640 --> 0:08:11.040 there was a real downturn and travel back in December 0:08:11.080 --> 0:08:13.800 and January. If you remember, that's during the height of 0:08:13.800 --> 0:08:15.840 the U. S. China trade talks. It was during the 0:08:15.880 --> 0:08:18.120 height of the Brexit conversations, and then we had the 0:08:18.240 --> 0:08:23.520 forty day US government shutdown and almost immediately consumers started 0:08:23.520 --> 0:08:25.400 to just stay at home and not travel. But we've 0:08:25.440 --> 0:08:28.600 seen that pick up, especially in the last six months, 0:08:28.600 --> 0:08:30.760 and that's always a good sign that when people are 0:08:30.760 --> 0:08:33.480 willing to leave their home country and go to another country, 0:08:33.520 --> 0:08:36.240 that's a that's a very very good thing. The other 0:08:36.280 --> 0:08:39.840 thing that we're seeing is an increased amount of smaller 0:08:39.880 --> 0:08:44.120 ticket items being used using digital payments, and a lot 0:08:44.160 --> 0:08:47.120 of that I think is driven by mass transit. We 0:08:47.400 --> 0:08:50.800 are really excited about mass transit. Just in the last 0:08:51.040 --> 0:08:57.040 uh ninety days, we've seen open systems in Edinboro and Salpallo. UH. 0:08:57.280 --> 0:09:00.360 We started in July, I guess June here in the 0:09:00.480 --> 0:09:03.319 m t A in New York where we're only at 0:09:03.360 --> 0:09:07.000 eighteen stations from Grand Central Station to Atlantic Avenue in Brooklyn, 0:09:07.320 --> 0:09:10.760 but by the end of October of the MTA hopes 0:09:10.840 --> 0:09:13.240 to be in all four and twenty four subway stops 0:09:13.280 --> 0:09:16.800 are people using it to and go? Absolutely, it's tap 0:09:16.840 --> 0:09:20.840 and go. It's so convenient, it's better experience for the merchant, 0:09:20.960 --> 0:09:23.559 it's better experience for the consumer. We we had a 0:09:23.600 --> 0:09:26.520 million transactions in the first seven weeks and we had 0:09:26.559 --> 0:09:30.079 no and that's at eighteen stations. Uh, it's truly amazing, 0:09:30.480 --> 0:09:35.280 absolutely continuing to grow. Tap to pay has grown hugely 0:09:35.320 --> 0:09:37.199 around the world, with the exception of the United States. 0:09:37.240 --> 0:09:39.360 Interestingly enough, Well, I was going to ask you about 0:09:39.360 --> 0:09:40.880 that because we've done a lot of work in the 0:09:40.920 --> 0:09:44.280 magazine about the adoption of those sorts of systems, especially 0:09:44.440 --> 0:09:48.240 in Asia, especially mobile payments, all of these things. What 0:09:48.520 --> 0:09:51.200 is it about the United States, which is usually pretty 0:09:51.200 --> 0:09:55.199 innovative in many ways and early adopting in terms of technologies. 0:09:55.280 --> 0:09:58.000 Why is the US lagging? The US is lagging because 0:09:58.000 --> 0:10:00.200 it first it goes back you have to go act 0:10:00.200 --> 0:10:02.280 about six or seven years at least, where the US 0:10:02.400 --> 0:10:06.120 was much slower to adapt chip in the card, and 0:10:06.720 --> 0:10:09.280 they it took so long to adopt chip at that 0:10:09.320 --> 0:10:11.080 point in time, people around the rest of the world 0:10:11.080 --> 0:10:16.000 we're moving past actually just dipping the card to actually tapping. 0:10:16.520 --> 0:10:20.520 And the reality is that the other countries have moved 0:10:20.840 --> 0:10:23.000 hugely ahead of US. You have countries like Poland and 0:10:23.120 --> 0:10:26.200 Hungry that are over tap to pay in the face 0:10:26.240 --> 0:10:28.280 to face world. In the US, we have a very 0:10:28.280 --> 0:10:32.560 interesting situation. The vast majority of the businesses are set 0:10:32.720 --> 0:10:35.800 and plumbed to be able to facilitate tap to pay. 0:10:35.880 --> 0:10:39.080 It's replacing the hundreds and hundreds of millions of cards, 0:10:39.440 --> 0:10:41.720 and the banks rightly so want to do it on 0:10:41.880 --> 0:10:44.240 their normal cycle. So by the end of this year, 0:10:44.280 --> 0:10:47.120 we'll have over a hundred million cards in the United 0:10:47.160 --> 0:10:51.240 States that will be tapped to pay uh Enable, and 0:10:51.280 --> 0:10:52.800 by the end of next year will be over three 0:10:52.880 --> 0:10:55.120 hundred million. So this will take a little time. Right now, 0:10:55.200 --> 0:10:56.839 tap to pay in the United States is about two 0:10:56.840 --> 0:10:59.360 percent penetration. I think we'll get to five or six 0:10:59.440 --> 0:11:01.920 next year, and then based on our experience around the world, 0:11:01.960 --> 0:11:05.600 it will really take off. And that is Al Kelly, 0:11:05.600 --> 0:11:09.200 he's the CEO chairman of Visa, speaking with us earlier 0:11:09.240 --> 0:11:11.520 today at Bloomberg headquarters. And this is part of a 0:11:11.720 --> 0:11:14.160 series that we've been doing for a little less than 0:11:14.200 --> 0:11:16.000 a year now. It's been a lot of fun. It's 0:11:16.000 --> 0:11:19.920 called b W Talks, So you'll get the full extent 0:11:19.960 --> 0:11:23.720 of that conversation in a few weeks in Business Week magazine. 0:11:24.080 --> 0:11:26.480 So much going on in the world of economics, So 0:11:26.559 --> 0:11:29.479 let's break it down. Alex Harris, Bond, reporter for Bloomberg 0:11:29.600 --> 0:11:33.679 and Elena shall Letcha, a senior US economists for Bloomberg Economics. 0:11:33.679 --> 0:11:37.280 They're both here in our Bloomberg Interactive broker's studio. You're 0:11:37.320 --> 0:11:40.920 pointing because I know it's important. I know your guns. 0:11:41.120 --> 0:11:42.920 I know I know, But Yelena, I want to I 0:11:42.920 --> 0:11:45.040 want to ask you when Richard Clara says what he 0:11:45.200 --> 0:11:47.280 said today, he's the vice chairman of the FED, what's 0:11:47.280 --> 0:11:50.080 the significance of him of he speaking versus one of 0:11:50.080 --> 0:11:53.960 the other speakers. I think all of them, including the 0:11:54.080 --> 0:11:58.160 Vice chair have just been ret rating the same exact 0:11:58.200 --> 0:12:01.760 message that we heard from Cheer Powell and UH. I 0:12:01.800 --> 0:12:05.560 guess that's the idea, right, So you hear from the 0:12:05.640 --> 0:12:09.480 chairman and then all of them come back and talk 0:12:09.520 --> 0:12:14.320 about it, just to really get the message across. If 0:12:14.360 --> 0:12:17.400 you didn't hear, that's what we are going to say. 0:12:17.440 --> 0:12:20.440 So we heard the same from UH, you know, from 0:12:20.440 --> 0:12:24.240 other board members, from Randy Quarrels. We so we heard 0:12:24.320 --> 0:12:29.280 that from UH President coupland I think, and it's really 0:12:29.320 --> 0:12:33.560 where they believe the current stance of policy is. But 0:12:34.360 --> 0:12:38.360 let's see what happens comes the December meeting. Where we 0:12:38.440 --> 0:12:43.760 are in terms of economic growth, consumer spending and things 0:12:43.800 --> 0:12:47.120 like that. All right, so Alex, come on in. What 0:12:47.200 --> 0:12:50.760 did you see in the bond market today? You were 0:12:50.800 --> 0:12:55.000 not literally but figuratively yawning at some of what we heard. 0:12:55.000 --> 0:12:58.160 You were doing the opposite of finger guns. Yeah. And 0:12:58.600 --> 0:13:02.360 I think the the data and the headlines coming out 0:13:02.360 --> 0:13:05.520 on trade sort of it's the epitome and echoes why 0:13:05.679 --> 0:13:08.480 I think the FED is on hold right now, because 0:13:08.960 --> 0:13:12.280 it feels like after looking at everything, after looking at jobs, 0:13:12.320 --> 0:13:14.079 after looking at I s M, and looking at the 0:13:14.440 --> 0:13:17.960 myriad FED speakers, that it was like and and the 0:13:18.000 --> 0:13:20.880 trade headlines, it was like riding a bike, and it's 0:13:20.920 --> 0:13:22.880 like the scene where it's like it looks like you're 0:13:22.960 --> 0:13:24.840 riding a bike really fast and moving and then they 0:13:24.840 --> 0:13:27.320 pull it back and you're in fact going nowhere. That's 0:13:27.320 --> 0:13:29.760 what it kind of felt like today because you know, 0:13:29.880 --> 0:13:33.320 you still have one rate hike Priceton for or excuse me, 0:13:33.360 --> 0:13:36.200 one rate cut Priceton for. And it was sort of 0:13:36.280 --> 0:13:38.719 vacillating between the end of the first half of the 0:13:38.800 --> 0:13:41.079 year and the second half of the year. So now 0:13:41.120 --> 0:13:43.040 I think we're back to somewhere in the second half 0:13:43.080 --> 0:13:46.600 of the year. Um so nothing really changed. You just 0:13:46.679 --> 0:13:50.120 kind of saw all these like, um, you know, they 0:13:50.120 --> 0:13:52.360 were they were sort of working against each other. You 0:13:52.400 --> 0:13:54.880 know that jobs looked okay, but I s M did not. 0:13:55.080 --> 0:13:57.640 And then you had, oh, they've agreed to something in 0:13:57.679 --> 0:14:00.240 principle in terms of the US and China on trade aid, 0:14:00.280 --> 0:14:03.280 but really, like what are the details, and and the 0:14:03.280 --> 0:14:06.679 market kind of went, yeah, great, but we don't have 0:14:06.720 --> 0:14:08.640 any details, and we really don't know what those brings, 0:14:08.640 --> 0:14:11.560 and so we're just kind of running in place, essentially. 0:14:11.600 --> 0:14:14.200 But the equity markets rallied, and the equity markets rally, 0:14:14.280 --> 0:14:16.560 but I think, you know, everyone wants a reason for 0:14:16.559 --> 0:14:19.080 the equity markets to rally, But I honestly think the 0:14:19.080 --> 0:14:22.000 bond markets are a little bit tired here and they're 0:14:22.040 --> 0:14:25.240 going to need a little bit more information to make 0:14:25.240 --> 0:14:27.080 a move one way or another. I think we're just 0:14:27.160 --> 0:14:30.120 kind of stuck here for a bit until we get 0:14:30.160 --> 0:14:33.360 some confirmation that you know, there there are more downside 0:14:33.440 --> 0:14:35.680 risks in place, or you know, we're getting really some 0:14:35.760 --> 0:14:38.040 sort of resolution. Why are you making that face because 0:14:38.080 --> 0:14:42.640 you're sort of a Debbie downer here. But the bond 0:14:42.640 --> 0:14:44.840 market tends to, I think, move ahead of the equity 0:14:44.880 --> 0:14:47.120 markets here, and I think the bond market tends to 0:14:47.200 --> 0:14:50.000 read things a little bit differently than the equity markets 0:14:50.000 --> 0:14:53.080 as well. And look, every you know, equity markets are 0:14:53.080 --> 0:14:55.520 still making record of highs, and I think you do 0:14:55.640 --> 0:14:58.240 have some people who are getting nervous. Isn't see continuing 0:14:58.280 --> 0:15:01.560 to go up and there's no correct and insight. Okay, 0:15:01.640 --> 0:15:04.040 let's just step back and look at some facts. Okay, 0:15:04.080 --> 0:15:07.640 So obviously everybody was talking today about how great the 0:15:07.760 --> 0:15:12.040 job's report was, and yes, it was better than expected number. 0:15:12.120 --> 0:15:15.720 The impact from GM strike was not as big, but 0:15:15.920 --> 0:15:19.360 you know, you have to look at some details and 0:15:20.120 --> 0:15:22.960 it's not that rosy if you just look at the 0:15:23.800 --> 0:15:28.320 headline numbers. So first of all, income growth is decelerating. 0:15:28.400 --> 0:15:32.880 So we have seen deceleration to the levels we've probably 0:15:32.960 --> 0:15:36.720 lost so back in thousands seventeen, and it's been happening 0:15:36.880 --> 0:15:42.760 since since the end of last year. So, uh, really, 0:15:42.840 --> 0:15:46.640 what you are going to get if this trends continues, 0:15:46.920 --> 0:15:50.160 you will get deceleration and consumer spending, which is the 0:15:50.240 --> 0:15:55.320 only engine running now behind economic growth. Why is that, Yelena. 0:15:55.400 --> 0:15:58.640 If people still have jobs and they feel comfortable and 0:15:58.680 --> 0:16:02.000 confident about, you know, keeping those jobs, even though they're 0:16:02.000 --> 0:16:04.280 not getting higher wages, why does that mean we're going 0:16:04.320 --> 0:16:06.760 to see a slowdown in consumer space. That's the fact 0:16:06.760 --> 0:16:09.480 that we all have enough stuff. But that's got another story. 0:16:09.560 --> 0:16:14.240 This makes them vulnerable to exogenous shocks. So something happens, 0:16:14.680 --> 0:16:19.000 consumer confidence goes down, and they don't have enough of 0:16:19.120 --> 0:16:22.160 this extra cash in hand. What are they going to 0:16:22.320 --> 0:16:24.800 What kind of shock considering the amount of shocks that 0:16:24.840 --> 0:16:27.840 I feel like the consumer has lived with over the 0:16:27.880 --> 0:16:30.880 past year or so, what kind of shock would would 0:16:30.960 --> 0:16:33.160 make that Well, if I knew that, I would make 0:16:33.200 --> 0:16:36.800 a lot of money. But I mean, I don't think that, 0:16:37.000 --> 0:16:38.680 you know what I mean, you know, I feel like 0:16:38.680 --> 0:16:41.040 there's a resiliency out there when it comes to both 0:16:41.040 --> 0:16:43.480 the markets, the financial markets, and the consumer. I'm not 0:16:43.600 --> 0:16:47.160 saying the consumer is cracking. That's the word that Reach 0:16:47.200 --> 0:16:51.960 Clara they use. But you know, if if they have 0:16:52.160 --> 0:16:55.080 less of accursion, you know, if they have less of 0:16:55.160 --> 0:16:58.360 a little bit of this cash cursion, at some point 0:16:58.560 --> 0:17:02.960 and they feel like they to save because the confidence 0:17:03.080 --> 0:17:06.680 is not that great in economic cult Look, that will 0:17:06.720 --> 0:17:10.639 impact economic grows to a disproportionate degree at the time 0:17:10.680 --> 0:17:15.639 when they remain the only engine behind economic grows. All right, 0:17:15.680 --> 0:17:17.439 we're gonna leave it there with both of you. We 0:17:17.520 --> 0:17:19.919 appreciate it as always, Elena shall let you have us 0:17:20.000 --> 0:17:23.160 in US economists for Bloomberg Economics to Alex Harris Bond, 0:17:23.200 --> 0:17:33.719 reporter for Bloomberg Newsroom Journal. Yeah, but you let me drive. No, no, no, no, 0:17:34.680 --> 0:17:38.200 drive home an night, please out of the right drivel 0:17:38.960 --> 0:17:46.960 let me I want to drive, Just drive, baby, the 0:17:47.160 --> 0:17:58.320 questions trying This is the drive to the globe. Fumm, thanks, 0:17:58.320 --> 0:18:03.320 We'll try us Dawn Radio. It is time for the 0:18:03.400 --> 0:18:06.760 drive to the close. Wrapping up this trading, we packed 0:18:06.920 --> 0:18:10.120 full of news. Uh and we did see the equity 0:18:10.160 --> 0:18:12.760 markets rally on that jobs report today. Let's get into 0:18:12.840 --> 0:18:16.040 this with Melda Morgen. She is Deputy Global head of 0:18:16.040 --> 0:18:19.080 Equities of at Columbia thread Needle Investment. She joins us 0:18:19.119 --> 0:18:23.440 on the phone from Boston. The enthusiasm, Melda, that we're 0:18:23.440 --> 0:18:25.720 seeing in the equity markets today, does it make sense 0:18:25.760 --> 0:18:30.840 to you? Um? Yes, because we know that US economy 0:18:31.080 --> 0:18:34.480 is pretty much driven by consumer and if the consumer 0:18:34.920 --> 0:18:38.240 balance sheet is healthy, it's good for the economy. We 0:18:38.320 --> 0:18:41.040 know that we had the challenges in the manufacturing part 0:18:41.040 --> 0:18:44.199 of the economy, but even that is coming to a 0:18:44.240 --> 0:18:47.840 trough in our opinion, which gives another like for the 0:18:47.880 --> 0:18:50.480 for the market to be excited. And so when you 0:18:50.520 --> 0:18:53.320 look at a day like today, Melda, how much of 0:18:53.359 --> 0:18:55.840 it do you feel like it is driven by jobs 0:18:56.320 --> 0:18:59.159 and the jobs report? And how much of it is 0:18:59.560 --> 0:19:07.040 driven by the enthusiasm maybe that the trade all the 0:19:07.240 --> 0:19:10.720 sort of trade drama, maybe at least coming to something 0:19:10.760 --> 0:19:15.119 resembling a conclusion. I think both of them are the 0:19:15.200 --> 0:19:20.159 factors today, again for different reasons. The job report is 0:19:20.280 --> 0:19:24.840 the confirmation as the US economy staying strong uh in 0:19:24.920 --> 0:19:27.119 that part of the of the g d P. And 0:19:27.160 --> 0:19:30.639 then the trade is important from here of course, to 0:19:30.760 --> 0:19:34.880 get the manufacturing sectors and the global growth accelerating. So 0:19:35.400 --> 0:19:38.920 uh and and it looks like both sides are trying 0:19:38.960 --> 0:19:42.359 to to make this work and showing the willingness to 0:19:42.359 --> 0:19:45.399 to be at the table and make the first phase 0:19:45.480 --> 0:19:47.520 one deal. Hey, Meldon, I want to ask you, you 0:19:47.520 --> 0:19:49.600 know we caught up Jason myself caught up with the 0:19:49.600 --> 0:19:52.000 CEO of Visa and we asked him, you know, they've 0:19:52.040 --> 0:19:54.000 got a great vantage point in terms of what's going 0:19:54.040 --> 0:19:56.520 on with the consumer. They're seeing transactions where people are 0:19:56.520 --> 0:19:59.560 spending money, whether trends are growing. He doesn't see any 0:19:59.600 --> 0:20:02.359 signs of a recession. And what's interesting a loyal viewer 0:20:02.400 --> 0:20:05.720 a Bloomberg Radio, you know, reached out message means that, 0:20:05.840 --> 0:20:07.840 you know, if the consumer is so strong, you know, 0:20:07.960 --> 0:20:11.520 why do we see folks, you know, so many like 0:20:11.640 --> 0:20:14.680 retirees and minimum wage jobs trying to pay their bills. 0:20:15.359 --> 0:20:18.199 We're talking about you know, homeless and cities trying to 0:20:18.200 --> 0:20:21.840 give people you know, um, you know, some support and 0:20:21.840 --> 0:20:25.320 and and um assistance. I mean, it doesn't feel like 0:20:25.480 --> 0:20:30.720 everyone is doing so well. And increasingly automation and AI uh, 0:20:30.760 --> 0:20:33.240 you know are really kind of up ending the workforce. 0:20:33.720 --> 0:20:37.359 And maybe we haven't you know, filled or or educated 0:20:37.440 --> 0:20:40.000 the public in the jobs that really are in demand. 0:20:40.080 --> 0:20:44.440 So how do you reconcile it? How do you see it? Um? 0:20:44.680 --> 0:20:49.400 Definitely not everybody's doing great, and there's a lot of concentration, 0:20:49.520 --> 0:20:52.520 I would say where the problems are in big cities 0:20:53.000 --> 0:20:57.040 with the homeless and other problems that you mentioned. Uh, 0:20:57.600 --> 0:21:01.600 the economy itself and where the investment is being made 0:21:01.720 --> 0:21:05.480 and how the economy is growing from here is different 0:21:05.640 --> 0:21:09.000 again in the sense of manufacturing still an important part 0:21:09.040 --> 0:21:12.320 of it, but not the primary driver of the economy. 0:21:12.640 --> 0:21:15.520 And within that group, there's definitely, I agree with you, 0:21:15.680 --> 0:21:19.160 there's a gap in education, the skill set what today 0:21:19.240 --> 0:21:24.240 is manufacturing environment required versus what we have with um 0:21:24.280 --> 0:21:26.720 some of the of the workforce. So that gap, as 0:21:26.720 --> 0:21:30.000 long as it's not filled, is going to be a problem, 0:21:30.080 --> 0:21:34.040 and that part of the of the population will definitely 0:21:34.040 --> 0:21:37.320 feel more pressure from here. But on the other hand, 0:21:37.359 --> 0:21:41.760