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Speaker 1: Who you put your trust in matters. Investors have put

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Speaker 1: their trust in independent registered investment advisors to the tune

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Speaker 1: of four trillion dollars. Why learn more and find your

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Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast.

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Speaker 1: I'm Tom Keane. Always with Michael McKee. Daily we bring

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Speaker 1: you insight from the best in economics, finance, investment, and

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Speaker 1: international relations. Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com,

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Speaker 1: and of course, on the Bloomberg Michael. I know it's

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Speaker 1: job today. I believe we have a few guests qualified

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Speaker 1: to talk about the unemployment rate, labor participation, maybe even

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Speaker 1: someone qualified to talk about wage growth. That would be

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Speaker 1: Alan Cruer from Princeton University, who is the former Chief

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Speaker 1: Economists at the Labor Department of the Treasury Department and

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Speaker 1: the Chairman of the Council of Economic Advisors. I just

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Speaker 1: can't hold a job. I don't know what his problem is,

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Speaker 1: but all is with this as always on Job's Day.

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Speaker 1: Let me just mention Tom before we get started with Alan,

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Speaker 1: that the consensus forecasts are for one and seventy two

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Speaker 1: thousand jobs to have been created in the month of September,

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Speaker 1: and interestingly enough, that is bang on the six month

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Speaker 1: average three thousand, So a number today that meets consensus

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Speaker 1: would probably uh not lead to a whole lot of

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Speaker 1: additional trading. Four nine is the forecast for unemployment. But Alan,

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Speaker 1: as Tom touched on, the one change that you do

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Speaker 1: see in the forecast is a significant increase in average

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Speaker 1: hourly earnings. Uh. The question is is this going to

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Speaker 1: be a statistical fluke or are we really seeing wages

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Speaker 1: rise because we're running out of workers the old Phillips curve.

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Speaker 1: I think we are seeing the Phillips curve. I think

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Speaker 1: it's a gradually sloped Philip's curve. But over the past year,

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Speaker 1: we have seen wages pick up both nominal and after

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Speaker 1: adjusting for inflation UM, which is encouraging. I chose that

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Speaker 1: we're continuing to dig our way out of the deep

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Speaker 1: problems from the recession. The deep problems of the recession

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Speaker 1: UM left us sort of flat and left us with

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Speaker 1: this populist anger. We see rage wages rising fast enough

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Speaker 1: that it will affect people's view of the world. That's

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Speaker 1: a very good question, Mike, and you look at the

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Speaker 1: data that came out on we had the fastest growth

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Speaker 1: in real median household income since the sense of Spiro

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Speaker 1: started collecting the data. So I think it's clear that

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Speaker 1: households are doing better, but they went through such a

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Speaker 1: traumatic experience that I think it's going to take a

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Speaker 1: while before people are feeling good about their economic situation.

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Speaker 1: And when I look at the unimp ployment rate, people

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Speaker 1: drive low. Is it a constructive lower unemployment rate or

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Speaker 1: is it a bad thing If the unemployment rate drops, well,

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Speaker 1: I think it's a good thing. On on that, I

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Speaker 1: think a tighter labor market will help to support wages.

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Speaker 1: We saw inequality decline in mainly because of more job

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Speaker 1: growth that year and higher wage growth, particularly for lower

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Speaker 1: income families. UM. I think this recovery is not going

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Speaker 1: to be the strongest one we've had, but it could

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Speaker 1: well be the longest. Alan Krueger is with this Princeton

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Speaker 1: University economics professor, former chief economist at various government agencies,

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Speaker 1: including the Labor Department. So here's a man who knows

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Speaker 1: the labor economy. One of the issues in the presidential

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Speaker 1: race has been the declining rate of labor force participation

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Speaker 1: and why people are not in the labor force You've

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Speaker 1: just done some new work on it, UM and oddly

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Speaker 1: titled it, We'll have all the workers God? What have

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Speaker 1: you found? First of all, labor force participation has been

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Speaker 1: declining since two thousands, so I find it somewhat curious

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Speaker 1: that a lot of the people who are complaining about

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Speaker 1: it now didn't start complaining about it until after President

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Speaker 1: Obama was elected. UM. The main driver over the last

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Speaker 1: decade of the decline in labor force participation has been

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Speaker 1: the baby boom reaching retirement age, and the increase in

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Speaker 1: retirements just about equals decline in the participation rate. That said,

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Speaker 1: there are some other trends that have been taking place

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Speaker 1: for a long period of time. Prime age men have

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Speaker 1: been reducing their labor force participation for the last fifty years,

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Speaker 1: and one of the things I found is that if

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Speaker 1: you look at that twelve percent of men fifty four

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Speaker 1: who are not working, about half of them have a

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Speaker 1: serious health condition. And I think if we are too

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Speaker 1: uh look for ways to increase the participation right, we

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Speaker 1: need to deal with the health issues that are barrier

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Speaker 1: to work for many many workers. I look at on

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Speaker 1: Krueger on a job's day that I guess is a

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Speaker 1: dead Job's Day because I'm told the November meeting is

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Speaker 1: a dead meeting of the f O. M C is

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Speaker 1: a media animal. I refuse to succumb to that. Does

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Speaker 1: a grizzled pro like you look at this as a

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Speaker 1: dead report, you know, I think people tend to uh

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Speaker 1: amplify the reports and other months, and in this month

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Speaker 1: they're probably underplaying it. You know. The Job's report gives

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Speaker 1: us the best picture of how the economy is doing

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Speaker 1: in the short run, and at the same time, it's

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Speaker 1: a volatile statistic. Like all of the statistics we get.

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Speaker 1: What does it say about small business percolating? Is a yeah?

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Speaker 1: But which is everything's great? Yeah, but small business isn't there?

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Speaker 1: What do you see there after a financial crisis. I

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Speaker 1: think it's typically the case that small business struggles. That's

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Speaker 1: who's dependent on bank financing. They have difficulty getting credit

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Speaker 1: there homes are often under water, which is a source

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Speaker 1: of credit. So the longer that this recovery goes on,

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Speaker 1: the likelier I think it is that small businesses will

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Speaker 1: start to be able to get credit, that their credit

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Speaker 1: records will improve, and that will be one reason why

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Speaker 1: I think we can see this recovery go on for

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Speaker 1: some time if we don't make policy mistakes. How how

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Speaker 1: would you define a policy mistake? UM? When you have

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Speaker 1: interest rates as low as they are, and when you

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Speaker 1: have the FED promising to be as slow and cautious

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Speaker 1: as they have UM. The traditionally we think of a

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Speaker 1: policy make mistake is the FED raising interest rates too quickly. Well,

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Speaker 1: that has been a cause of most of our recessions. UM.

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Speaker 1: On the other hand, you also have to worry about

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Speaker 1: bubbles building up, which is a risk to the recovery.

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Speaker 1: And you have to worry about the potential election of

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Speaker 1: a candidate who says he'll slap a forty five pers

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Speaker 1: and tariff on China, potentially reneg on the full faith

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Speaker 1: and credit of the US dollar, h deport millions of

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Speaker 1: UH immigrants, all of those things I think would devastate

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Speaker 1: the economy. I look at all and it's a terrific

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Speaker 1: set of guests that we've got lined up. And there's

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Speaker 1: an international feel to this report. I mean, fold in

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Speaker 1: here the better American economy? How much better is it

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Speaker 1: than some of the other challenges around the world. The

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Speaker 1: answers it gets wider and wider, doesn't it. Well, we

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Speaker 1: certainly have a lot of problems, but I wouldn't trade

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Speaker 1: all our problems for any other country's problems. I was

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Speaker 1: just in Korea, actually flew back late last night, and Uh,

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Speaker 1: they have a demographics tsunami that's about to hit them.

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Speaker 1: They're going to go from the fourth youngest country in

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Speaker 1: the O e c D to the oldest in the

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Speaker 1: matter of twenty five years. You look at the problems

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Speaker 1: in Japan, which has never recovered from the recession in

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Speaker 1: the early nineties. China has enormous challenge at ahead of it. Uh. Europe, Uh,

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Speaker 1: the UK just go on and on, and our problems

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Speaker 1: are solvable. If we have the political will to address them.

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Speaker 1: Well that will be uh the question. Come January, when

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Speaker 1: we have a new Congress and a new president. We

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Speaker 1: shall see Alan Krueger, thanks for Hobsdalen Krueger sitting in

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Speaker 1: my chair in New York without a bow tie on.

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Speaker 1: Actually he actually was not wearing a tie point and

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Speaker 1: we moved him. He couldn't sit there. I knew I

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Speaker 1: shouldn't have tweeted that picture. Tom Alan Krueger and Tom Kane. Um,

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Speaker 1: this is a real pleasure and honor, folks. Peter Fisher

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Speaker 1: is uh, someone who has served the nation at treasury.

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Speaker 1: He has served a nation in academics, and he actually

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Speaker 1: served a nation doing finance in a small shop called Blackstone. Uh.

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Speaker 1: He is right now, I would say, associated more with

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Speaker 1: Tuck and Dartmouth uh than the other eight places he works. Peter,

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Speaker 1: good morning. Um. I guess I could start up by

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Speaker 1: saying have you ever seen anything like this? But let

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Speaker 1: me get to the what Jack lewis looking at this morning,

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Speaker 1: the Secretary of the Treasury. I just did a fancy

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Speaker 1: pants log extrapolation of sterling to one point to zero,

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Speaker 1: and somewhere in the vicinity of the middle of November,

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Speaker 1: we're going to enjoy a good old G seven currency depreciation.

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Speaker 1: Can the United Kingdom work in a vacuum or there

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Speaker 1: are there present in near future knock on effects of

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Speaker 1: weaker sterling? Um, well, that they're they're bound to be.

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Speaker 1: I think we can see the Brexit is hard to

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Speaker 1: price other than in the exchange rate that we think

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Speaker 1: it slows the UK economy down. We think it makes

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Speaker 1: the Bank of England tend towards the easier side of

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Speaker 1: whatever they can pull off. And that's everything else is

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Speaker 1: so uncertain about Brexit. We see the sort of anomaly

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Speaker 1: driving Sterling lower and lower. Um Uh. Clearly they're gonna

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Speaker 1: be knock on effects. Given the size of the UK economy,

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Speaker 1: it still matters to us all and and it may

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Speaker 1: pick up the terms of trade. This may be what's

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Speaker 1: annoying European leaders, even if they're not saying it that

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Speaker 1: Sterling is benefiting from the depreciation they hoped the euro

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Speaker 1: would get over the exactly years um. So it's about

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Speaker 1: to have those consequences. A little hard to see how

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Speaker 1: it all shakes out, but yeah, and yakulm Fell's moments ago,

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Speaker 1: folks on surveillance talking about eurostability or even strength flows

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Speaker 1: Peter Fisher, Uh, this redounds back onto a United States

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Speaker 1: and clearly day two here, folks of the I m

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Speaker 1: F meetings, the idea is the US, evermore, is stronger

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Speaker 1: and better and in good shape compared to so many

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Speaker 1: other nations and regional systems. Do you agree, Peter, Yes,

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Speaker 1: I mean it's we wish we'd had more of an

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Speaker 1: acceleration in this recovery. We wish we were doing better

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Speaker 1: in some terms, but we're going pretty well, especially compared

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Speaker 1: with the rest of the world. Just looking at UM

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Speaker 1: the level of our unemployment, level of GDP both it's disappointing,

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Speaker 1: but it's better than the neighborhood. Absolutely, Peter, when we

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Speaker 1: look at job's day coming up, and I guess we'll

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Speaker 1: focus on that within the hour. And this is something

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Speaker 1: you're quite good at. There's a macro economic system of

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Speaker 1: one view of a nation. John Edwards among others started

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Speaker 1: talking about two America's do you is I'm going to

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Speaker 1: call you a non macro expert, but yet with great

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Speaker 1: micro realities. Do you look at America is a two

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Speaker 1: system job economy or can you really blend it all

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Speaker 1: in as we did for decades and decades? No, I

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Speaker 1: I think we know UM our labor market is fractured,

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Speaker 1: or we have a decline in the participation rate. We've

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Speaker 1: got the discouraged UH, middle age and working age. I

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Speaker 1: should a men who aren't participating in the labor force,

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Speaker 1: UM that we should all scratch our heads about that

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Speaker 1: and think that that's that's a big challenge for us. UM.

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Speaker 1: I think it's such a disappointment that this campaign has

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Speaker 1: not focused on what we should be doing to really

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Speaker 1: invigorate our our labor market structural reforms we should be undertaking.

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Speaker 1: We've been too much focused on the negative, if you will,

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Speaker 1: of Secretary Clinton coined years ago, Years ago, folks, Senator

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Speaker 1: Clinton coined an idea of fair trade. What is fair trade?

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Speaker 1: To Peter Fisher, um well, I think fair trade says

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Speaker 1: we think we should get our fair access to other

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Speaker 1: markets and only give people fair access to our markets.

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Speaker 1: I think that's putting the shoe on the wrong foot,

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Speaker 1: if you will, I think we should be doing more

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Speaker 1: for people who are displaced by free trade. I think

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Speaker 1: we should doing much much more to retrain those who

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Speaker 1: lose their jobs, to provide adjustment assistance to those counties

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Speaker 1: where we see the job lost from the benefits of trade.

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Speaker 1: We know the benefits to trade flow to all of

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Speaker 1: us but are hard to measure, and the costs of

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Speaker 1: free trade are easy to identify. People who have lost

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Speaker 1: their jobs feel it we should do much more for that.

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Speaker 1: I don't think we should hold back on trade because

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Speaker 1: someone else isn't being fair to us. I think we

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Speaker 1: should be fair to our own people. We should be

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Speaker 1: fair to our workers and do much much more on

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Speaker 1: the trade adjustment assistant side. Peter Fisher with his time

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Speaker 1: for surveillance correction. I'm good at those. There will be

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Speaker 1: many today. I believe I identified Mr Fisher with Blackstone,

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Speaker 1: and I should have migrated over to black Rock. Is

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Speaker 1: thank the place of former employment. Let's go to what

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Speaker 1: you used to do at black Rock. You'd wander in

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Speaker 1: the door your leisurely day starting at nine am you'd

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Speaker 1: wander over to the liquidity desk and say are we liquid?

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Speaker 1: You rarely said are we solving? Peter? For sure, I've

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Speaker 1: been linking the word trust into liquidity and there's some

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Speaker 1: real questions about that within the banking system. How liquid

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Speaker 1: are the European banks right now? Uh? Well, I I'm

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Speaker 1: not close to the European banks or the trading market

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Speaker 1: system as I used to be when I did it

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Speaker 1: full time. Um, I think they are liquid. I think

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Speaker 1: they're running out of income. The constraint I think has

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Speaker 1: coming on the other side. UM So, I don't think

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Speaker 1: people are worried about You know that they can't pay

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Speaker 1: their bills when they're due. But where they're worried about

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Speaker 1: is the margin compression UM and and earnings power. And

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Speaker 1: I think you see the rumblings out of the e

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Speaker 1: c B about Uh, the system being over banks, Well,

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Speaker 1: that's been true in Europe for thirty years. They're overbanked.

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Speaker 1: They've got too many banks. They should have once they've

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Speaker 1: invented the euro they should have worked much harder on

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Speaker 1: a rationalization consolidation of the banking system. So this is overdue,

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Speaker 1: and that would be one way to try to deal

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Speaker 1: with the earnings compression of the European banking system. I

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Speaker 1: think that's where the constraint is. And this has been

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Speaker 1: a theme folks of the meetings. Pure Moscovici was just

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Speaker 1: wonderful yesterday on this profitability conundrum. Let me bring in

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Speaker 1: Michael McKee in New York with Peter Fisher. Michael, Peter,

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Speaker 1: I guess a lot of the question that revolves around

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Speaker 1: all of this is, uh, confidence, do we have confidence

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Speaker 1: in the European banking system? But here as we see

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Speaker 1: people come in and out of the labor forces, we

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Speaker 1: see wages start to rise, do we have enough confidence

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Speaker 1: to whether any kind of FED rate move, small FED

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Speaker 1: rate move? Will people keep borrowing? Will people keep spending?

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Speaker 1: If the FED does something that that would seem to

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Speaker 1: be the key question that surrounds all this. I don't

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Speaker 1: think the Fed funds rate twenty five basic points higher.

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Speaker 1: Is it really going to constrain anyone? UM, That's not

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Speaker 1: what I think is is uh. I think the Fed

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Speaker 1: is likely to confront pick up an inflation. I'm not

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Speaker 1: very fussed about inflation, but most of the measures of

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Speaker 1: inflation have already accelerated to two and higher. The Fed's

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Speaker 1: preferred PCE measure is lacking. I think there's gonna be

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Speaker 1: a catch up here, and I think that's gonna give

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Speaker 1: a little pressure to the long end of the yield curve. UM.

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Speaker 1: I think today's employment report fits on the stronger side,

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Speaker 1: will add to that pressure that well, yeah, if that's

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Speaker 1: going to have to do something. But it's not about

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Speaker 1: the next twenty five basis points. It's about whether the

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Speaker 1: Fed will do one next year or three or four

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Speaker 1: moves next year. That's what is going to hang in

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Speaker 1: the balance over the next few months of economic data.

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Speaker 1: Peter Fisher is with us right now lecture at the

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Speaker 1: Toch School of Business at Dartmouth College. Formerly the man

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Speaker 1: who ran the open market operations for the Federal Reserve,

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Speaker 1: worked at the Treasury Department, is under Secretary for Domestic Finance.

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Speaker 1: And then I had a career at black Rock in

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Speaker 1: the markets, and I want to go to the markets

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Speaker 1: and their relationship to the FED. There's been, Peter a

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Speaker 1: big question raised recently about whether or not the FED

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Speaker 1: is and its policies are distorting anything in the markets.

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Speaker 1: How do you see it? If you were going to

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Speaker 1: be producing for the next FED meeting, the market report

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Speaker 1: that goes into the meeting, what would you be telling them? Uh, Well,

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Speaker 1: they might be shocked to hear what I'll tell them. Um,

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Speaker 1: we know the yield curve has been dragged down by

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Speaker 1: the qui le policies in Japan and Europe. That is

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Speaker 1: our long end. You can see it. It was coming

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Speaker 1: down when the FED really wasn't doing anything over the

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Speaker 1: last year. As the two attend spread tightened, that was

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Speaker 1: more of a tightening than the FED expected. That's one anomaly.

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Speaker 1: But I think what I'd be telling the committee they

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Speaker 1: might not want to hear is they've been targeting low

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Speaker 1: level of volatility as if it is a third policy goal. Um.

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Speaker 1: And so they've been that they are uncomfortable when asset

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Speaker 1: prices jump around too much. Uh, it's it's like a

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Speaker 1: third in addition to inflation and employment. UM. They get

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Speaker 1: squeamish about volatility. UM. I think that's a big mistake.

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Speaker 1: I think it's a natural consequence of monetary policy doing

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Speaker 1: its thing. UM. But you can see this very low

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Speaker 1: level of all that that we've had UM that I

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Speaker 1: think is creating the distortions. That's the most important one

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Speaker 1: to improve, Mr Fisher a negative rates strategy. Do we

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Speaker 1: need to disperse the effect of negative rates to a

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Speaker 1: broader public nation to nation? Do we need to stop

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Speaker 1: using negative rates and migrate back to the zero bound?

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Speaker 1: What's the Peter Fisher calculus there? Well, I think negative

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Speaker 1: rates were a mistake. I think it UM. I think

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Speaker 1: the Bank of Japan has not quite admitted it, but

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Speaker 1: they're working their way out of them so that they've

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Speaker 1: come up with an exit strategy from negative rates, and

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Speaker 1: that's to manage their yield curve um negative rates. There

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Speaker 1: are lots of fallacies that go into thinking that negative

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Speaker 1: rates would work. One is that the human reaction function

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Speaker 1: is linear, that if we lower rates from four to

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Speaker 1: three percent, that all courage consumption. So if we lower

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Speaker 1: them from zero to minus one, that will encourage consumption. No,

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Speaker 1: it looks like it encourages savings. Uh, we can see

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Speaker 1: why negative rate might help you weaken your currency if

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Speaker 1: you're trying to steal demand from your trading partners, um.

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Speaker 1: But it doesn't look like it's going to encourage consumption,

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Speaker 1: in part because banks aren't willing to pass it on.

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Speaker 1: And so banks really face in Japan and Europe and

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Speaker 1: in very deal curve already they have trouble passing on

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Speaker 1: the negative rates. So it's zero at the short end

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Speaker 1: and then it's negative at the long end. That's terrible

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Speaker 1: for the credit channel. So pretty much the Bank of

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Speaker 1: Japan and ECB have acknowledged that it didn't help the

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Speaker 1: credit channel. UM, so it really doesn't. It hasn't helped.

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Speaker 1: So this is I think the most embarrassing thing for

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Speaker 1: the central bankers is for the last eight years they've

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Speaker 1: said they had to experiment, the economy was in difficult

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Speaker 1: circumstances and it was up to them to be bold

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Speaker 1: and experiment. But they never can admit when their experiments

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Speaker 1: don't work, the experimental method or choires that people acknowledge

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Speaker 1: what the results were, and they've had a hard time

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Speaker 1: doing that. Well, I can't I can't say enough Michael,

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Speaker 1: the importance of this non linearity. This is a huge deal.

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Speaker 1: We Uh, we do see evidence of what you're talking about,

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Speaker 1: Peter here in the headlines. Just crossing now. Mario Draggy

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Speaker 1: in Washington for the I m F meetings, giving a

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Speaker 1: speech behind closed doors, but the text released. Uh. Droggy

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Speaker 1: saying that they will let que continue to run and

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Speaker 1: he sees rates at current or lower levels for an

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Speaker 1: extended period, repeats that they will use all instruments within

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Speaker 1: their mandate if needed. Uh. And he at the same

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Speaker 1: time says that low rates are hurting banks relying on

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Speaker 1: maturity transformation. Um, so, yes, we're causing harm, but no,

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Speaker 1: we're not going to stop. Yeah. Well he I mean,

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Speaker 1: at least in Japan, the Bank of Japan by by

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Speaker 1: committing to try to manage their yield curve, they're going

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Speaker 1: to try to have a great will exit. I think

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Speaker 1: it's a very wise thing to do if you've made

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Speaker 1: the mistake of negative rates, now you're trying to undo

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Speaker 1: the damage. They want to control how fast the curve steepens.

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Speaker 1: And that's one way of passing the football over to

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Speaker 1: the Abbe government and fiscal policy. But Droggy doesn't have

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Speaker 1: that option. He doesn't have anyone to pass the football

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Speaker 1: to Um on the fiscal side, and so he he's

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Speaker 1: left Um, you know, spinning his wheels. I'm afraid it's

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Speaker 1: it's very awkward for him. Peter Fisher. Let's leave it there.

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Speaker 1: Thank you so much, very generous for you to be

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Speaker 1: with us today with Tuck at Dartmouth College. Uh and

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Speaker 1: of course with the service to the Treasury, the Treasury

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Speaker 1: Department number of years ago. The who you put your

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Speaker 1: trust in matters. Investors have put their trust in independent

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Speaker 1: registered investment advisors to the tune of four trillion dollars.

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Speaker 1: Why they see their role is to serve, not sell.

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Speaker 1: That's why Charles Schwab is committed to the success of

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00:21:59,840 --> 00:22:05,040
Speaker 1: a seven thousand independent financial advisors who passionately dedicate themselves

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00:22:05,359 --> 00:22:09,200
Speaker 1: to helping people achieve their financial goals. Learn more and

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00:22:09,400 --> 00:22:19,720
Speaker 1: find your independent advisor dot com. The question now is

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Speaker 1: how the treasury market trades all of this. We'd like

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Speaker 1: to welcome to Bloomberg Radio and Television, Bill Gross of

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Speaker 1: Janice Capital and Bill, you've seen the numbers at one

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Speaker 1: commentator already out with the phrase, mech but does it matter?

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Speaker 1: The question I put to Peter Fisher a minute ago

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Speaker 1: does it matter to anybody except short term treasury traders

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Speaker 1: at this point? Yeah, I know. Thanks, So I don't

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Speaker 1: know how you spell or but in any case, you know,

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Speaker 1: pretty milk toast, you can you can spell that, and

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Speaker 1: and pretty on the number in terms of what we're

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Speaker 1: expecting the work week was, I guess, And as you mentioned,

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Speaker 1: wage is a point two percent. So there's nothing much

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Speaker 1: there to keep the FED from raising interest rates. And

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Speaker 1: whether it's November or December, I'm not sure, but I

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Speaker 1: think at some point they have to. I mean, the

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Speaker 1: central banks tend to be a little weak need at

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Speaker 1: the moment, including the FED. They've talked tough and stressed

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Speaker 1: data dependence and here we are. But you know, they've

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Speaker 1: only been three Hawks willing to back up their words

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Speaker 1: with the dissension at the last month's vote. And so

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Speaker 1: I I think that there's the important thing. I think, like,

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Speaker 1: I think the growing outcry from financial institutions about negative

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Speaker 1: interest rates are starting to have some effect. Boston's Rosen

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Speaker 1: Grin as the most recent example, he's sort of done.

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Speaker 1: And in addition to b O G and the ECB

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Speaker 1: maybe running out of bonds, Dubai, so their policies might

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Speaker 1: shift to a little less devilish and a little more

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Speaker 1: price bullish. Bill Gross, good morning from Washington and the

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Speaker 1: meetings of the International's on Terry fun You're terribly missed here.

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Speaker 1: Everybody wants to know what you're gonna do with the marginal?

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Speaker 1: Janis uh move? What I would note, Bill, and I've

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Speaker 1: never seen this the conflation of non farm payrolls moving averages,

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Speaker 1: the three months off the Bloomberg a hundred and ninety

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Speaker 1: two thousand, the one year non farm payrolls average two

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Speaker 1: hundred four thousand, and Bill, for the first time I

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Speaker 1: took a presidential moving average of non farm payrolls, what

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Speaker 1: a success, two hundred twelve thousand. I've never seen the

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Speaker 1: conflation in of the trend in job formation. Why are

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Speaker 1: we so miserable if we're generating a good number of

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Speaker 1: jobs every month? Well, that that's the the old question.

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Speaker 1: I think they are coming down. I've got my moving

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Speaker 1: averages to just like you, and they're they're right on

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Speaker 1: the money in terms of what you just mentioned. So um,

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Speaker 1: you know, they gradually coming down. That's what happens to

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Speaker 1: during your recovery. I think the unhappiness comes from from

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Speaker 1: wages I think the unhappiness comes from the real nature

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Speaker 1: of wages over fifteen year period of time. And I

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Speaker 1: think ultimately that labor, uh, you know, it's beginning to

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Speaker 1: to feel some Oh it's not necessarily some you know,

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Speaker 1: a big porridge bowl full, but uh, you know, they're

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Speaker 1: they're starting to feel that it's their turn and and

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Speaker 1: so um. Yeah. It's it's been this long term trend

430
00:25:26,000 --> 00:25:30,080
Speaker 1: of of capital versus labor and stock market versus wages.

431
00:25:30,119 --> 00:25:33,840
Speaker 1: And I think maybe not over the next election, but

432
00:25:33,920 --> 00:25:35,640
Speaker 1: certainly over the next few years, we're going to see

433
00:25:35,680 --> 00:25:39,240
Speaker 1: some type of shift in fiscal policy that advantages labor

434
00:25:39,280 --> 00:25:42,920
Speaker 1: as opposed to business and capital. I don't want to

435
00:25:42,920 --> 00:25:45,680
Speaker 1: make too much of this, of course, because it's it's

436
00:25:45,720 --> 00:25:49,560
Speaker 1: one day trading, but when you look at the market reaction,

437
00:25:49,640 --> 00:25:52,040
Speaker 1: not just to this number, but over the last couple

438
00:25:52,080 --> 00:25:55,440
Speaker 1: of days, we do seem to be seeing people sell

439
00:25:55,560 --> 00:25:58,560
Speaker 1: treasuries around the world. The bond market in the U

440
00:25:58,640 --> 00:26:01,600
Speaker 1: S tenure note yield one point having six and the

441
00:26:01,640 --> 00:26:04,160
Speaker 1: two year at eighty five basis points. They've moved up

442
00:26:04,600 --> 00:26:08,680
Speaker 1: since this may job support as we said, and Germany

443
00:26:08,760 --> 00:26:12,000
Speaker 1: now three basis points. They've moved back into positive for

444
00:26:12,040 --> 00:26:16,000
Speaker 1: their tenure. The Japanese tenure yield is higher. Is they're

445
00:26:16,000 --> 00:26:20,200
Speaker 1: starting to be a change in bond market psychology about

446
00:26:20,240 --> 00:26:25,159
Speaker 1: the inflation and other risk risks going forward. Well, and

447
00:26:25,240 --> 00:26:28,600
Speaker 1: I don't think inflation Mike. Perhaps you know, we're seeing

448
00:26:28,680 --> 00:26:31,480
Speaker 1: inflation take up a little bit UH in the PC

449
00:26:31,800 --> 00:26:34,919
Speaker 1: in the United States and certainly above the line elsewhere

450
00:26:34,960 --> 00:26:37,800
Speaker 1: with the exception of Japan. But I do think that

451
00:26:38,760 --> 00:26:41,280
Speaker 1: you know, Japan has changed the nature of the game

452
00:26:41,359 --> 00:26:45,399
Speaker 1: to some extent quantitati vising they continue, but they have

453
00:26:45,560 --> 00:26:49,840
Speaker 1: this fixed tenure, as you've mentioned, at zero percent, and

454
00:26:50,160 --> 00:26:52,720
Speaker 1: I think when that happened, that's sort of put all

455
00:26:52,720 --> 00:26:55,880
Speaker 1: of the other bond markets in play. It It basically

456
00:26:56,000 --> 00:27:00,520
Speaker 1: meant that, you know, the US treasury and guilt market

457
00:27:00,520 --> 00:27:04,200
Speaker 1: and bund market didn't have to track jgbs one for one,

458
00:27:04,320 --> 00:27:07,320
Speaker 1: but it it you know, push produced some type of

459
00:27:07,480 --> 00:27:13,000
Speaker 1: marginal UH increase or possibility of increase um. You know

460
00:27:13,080 --> 00:27:17,120
Speaker 1: that that allowed inflation to have some type of an effect,

461
00:27:17,119 --> 00:27:19,280
Speaker 1: and that allowed the Fed to you know, to be

462
00:27:19,320 --> 00:27:21,560
Speaker 1: able to go ahead in December and to raise rates.

463
00:27:21,600 --> 00:27:24,880
Speaker 1: So I think an analysis of what's going on with

464
00:27:24,960 --> 00:27:28,560
Speaker 1: this fixed rate policy in one country which may spread

465
00:27:29,040 --> 00:27:31,760
Speaker 1: to other countries. I think it's important and I think

466
00:27:31,840 --> 00:27:35,200
Speaker 1: that's what did it in terms of the the two

467
00:27:35,280 --> 00:27:41,439
Speaker 1: day taper tantrum and in Germany being that's that's another story.

468
00:27:41,440 --> 00:27:44,400
Speaker 1: But yeah, central banks are starting to sort of move

469
00:27:44,440 --> 00:27:48,600
Speaker 1: in another direction, and I think investors since it is

470
00:27:48,640 --> 00:27:51,680
Speaker 1: that other direction. Bill Gross, the idea of a stronger dollar,

471
00:27:51,800 --> 00:27:54,119
Speaker 1: and will it be a brutal move? I mean, we

472
00:27:54,160 --> 00:27:57,359
Speaker 1: can go any number of ways here. Yakham Fells was

473
00:27:57,440 --> 00:28:00,080
Speaker 1: just on talking about a euro that is stabled. It

474
00:28:00,119 --> 00:28:03,159
Speaker 1: won't strengthen. We've got the soare in Britain, in the

475
00:28:03,240 --> 00:28:06,960
Speaker 1: United Kingdom. But Bill Gross, do you look for stronger dollars?

476
00:28:07,000 --> 00:28:10,960
Speaker 1: And how you work day to day at Janice, Well,

477
00:28:10,960 --> 00:28:13,200
Speaker 1: that's what I'm seeing, you know. I would say a

478
00:28:13,280 --> 00:28:16,000
Speaker 1: longer term and that's that's where I hang out tom As,

479
00:28:16,040 --> 00:28:18,000
Speaker 1: you know, But I would say longer term that the

480
00:28:18,280 --> 00:28:20,600
Speaker 1: you know, the recent trend in the dollar d x

481
00:28:20,720 --> 00:28:23,199
Speaker 1: Y put them all or most of them together and

482
00:28:23,240 --> 00:28:26,520
Speaker 1: look at the trend um. You know, it's certainly upward,

483
00:28:26,600 --> 00:28:30,960
Speaker 1: not to its peak or its cyclical peak, but it's upward.

484
00:28:30,960 --> 00:28:33,960
Speaker 1: And I would say that the world needs a weaker dollar,

485
00:28:34,040 --> 00:28:37,000
Speaker 1: not a stronger dollar. Um. You know, the dollar is

486
00:28:37,040 --> 00:28:39,760
Speaker 1: the world's reserve currency, and when you think about it,

487
00:28:39,800 --> 00:28:43,280
Speaker 1: to the extent that the world's reserve currency strengthens and

488
00:28:43,400 --> 00:28:47,280
Speaker 1: uh and other countries currencies weekends, then you know that

489
00:28:47,400 --> 00:28:50,480
Speaker 1: to me is a tightening type of effect. And it

490
00:28:50,600 --> 00:28:54,160
Speaker 1: supposedly reflects it tightening in terms of higher yields in

491
00:28:54,200 --> 00:28:58,200
Speaker 1: the US relative to to the ural Land, or to

492
00:28:58,360 --> 00:29:02,280
Speaker 1: Japan or the UK, and some extent that's happened. Um,

493
00:29:02,320 --> 00:29:04,760
Speaker 1: but I think it's a negative trend as certainly negative

494
00:29:04,800 --> 00:29:07,360
Speaker 1: trend for emerging markets. We're seeing in the Mexican pay

495
00:29:07,440 --> 00:29:11,680
Speaker 1: so you know, down today again and and that's the

496
00:29:11,760 --> 00:29:15,240
Speaker 1: leading emerging market currency. So to me, it's a tightening

497
00:29:15,280 --> 00:29:20,000
Speaker 1: that the FED hasn't really initiated yet. They've only moved

498
00:29:20,080 --> 00:29:22,440
Speaker 1: up once. But I don't think it are goes well

499
00:29:22,480 --> 00:29:25,760
Speaker 1: for global economic growth. I think the world needs a

500
00:29:25,800 --> 00:29:29,680
Speaker 1: weaker dollar. The story of the moment. The payrolls report

501
00:29:29,800 --> 00:29:34,240
Speaker 1: for the month of September one or fifty six thousand

502
00:29:34,360 --> 00:29:38,000
Speaker 1: jobs were created, five unemployment. We are back now with

503
00:29:38,160 --> 00:29:41,080
Speaker 1: Bill Gross of Janice Capital here on Bloomberg Radio, and

504
00:29:41,120 --> 00:29:44,680
Speaker 1: we welcome everybody joining us on Bloomberg Television. Built before

505
00:29:45,040 --> 00:29:47,920
Speaker 1: the break, you suggested that this number is enough to

506
00:29:48,040 --> 00:29:50,520
Speaker 1: keep the FED in play. I don't know whether it

507
00:29:50,600 --> 00:29:52,560
Speaker 1: was because you did your yoga or maybe you didn't

508
00:29:52,560 --> 00:29:55,440
Speaker 1: watch the forty Niners game last night, but you seem

509
00:29:55,560 --> 00:29:59,720
Speaker 1: very you seem very relaxed about that. Um, you don't

510
00:30:00,080 --> 00:30:03,120
Speaker 1: seem upset at all that we're going to see an

511
00:30:03,120 --> 00:30:06,440
Speaker 1: interest rate rise. Well though, I think we will in

512
00:30:07,320 --> 00:30:10,600
Speaker 1: December for sure, and maybe even in November. They've promised

513
00:30:10,720 --> 00:30:13,600
Speaker 1: so much that at that at some point they've they've

514
00:30:13,680 --> 00:30:16,080
Speaker 1: got to come out and do something or else there

515
00:30:16,240 --> 00:30:19,960
Speaker 1: credibility is is really going to sink to a low point.

516
00:30:20,040 --> 00:30:23,240
Speaker 1: So I think the Fed will raise interest rates, you know, Mike,

517
00:30:23,280 --> 00:30:26,560
Speaker 1: I've I've been thinking that the Fed should raise interest

518
00:30:26,640 --> 00:30:29,640
Speaker 1: rates for a long time, if only to provide for

519
00:30:30,080 --> 00:30:34,160
Speaker 1: a more attractive savings rate in terms of not only

520
00:30:34,240 --> 00:30:37,440
Speaker 1: short term yields, but longer term yields. I think insurance

521
00:30:37,480 --> 00:30:42,120
Speaker 1: companies and banks and pension funds are rather desperate for income,

522
00:30:42,120 --> 00:30:44,320
Speaker 1: and the only way to do it really is to

523
00:30:44,360 --> 00:30:47,640
Speaker 1: extend out in terms of risk, which probably isn't a

524
00:30:47,640 --> 00:30:50,920
Speaker 1: good idea, or to extend out in duration, but duration

525
00:30:51,000 --> 00:30:54,480
Speaker 1: provides nothing. So I think the FED will move. They're

526
00:30:54,760 --> 00:30:58,480
Speaker 1: they're limited, they're cautious. They'll move perhaps once every nine

527
00:30:58,520 --> 00:31:01,920
Speaker 1: to twelve months, unless circum stance has changed significantly. But

528
00:31:02,000 --> 00:31:05,400
Speaker 1: I think an upward move, a renormalization is at least

529
00:31:05,400 --> 00:31:09,800
Speaker 1: appropriate at this time. Bill Gross, you made worldwide headlines

530
00:31:09,920 --> 00:31:12,440
Speaker 1: a number of years ago by talking about ten years

531
00:31:12,440 --> 00:31:17,600
Speaker 1: of financial repression. Stephen Major at HSBC really reaffirmed the

532
00:31:17,600 --> 00:31:20,680
Speaker 1: Gross call the other day at one point three five

533
00:31:21,160 --> 00:31:25,760
Speaker 1: ten year yield end of seventeen and particularly lower yields

534
00:31:25,800 --> 00:31:28,959
Speaker 1: for longer out to two thousand twenty one. Do you

535
00:31:29,000 --> 00:31:32,400
Speaker 1: assume even if the FED brings up the short term

536
00:31:32,400 --> 00:31:36,840
Speaker 1: of the curve, flat curve forever and the idea of

537
00:31:36,920 --> 00:31:42,320
Speaker 1: financial repression for our viewers and listeners forever, Well, not

538
00:31:42,640 --> 00:31:44,800
Speaker 1: forever is a long term, And you're baiting me with

539
00:31:44,840 --> 00:31:46,640
Speaker 1: that one time, but yes, for a long time. And

540
00:31:46,680 --> 00:31:49,560
Speaker 1: I think ro Golf and Reinhardt with their either ten

541
00:31:49,640 --> 00:31:52,440
Speaker 1: years or twenty years or the biblical equivalent of seven

542
00:31:52,480 --> 00:31:55,800
Speaker 1: years of you know, feast and seven years of famine,

543
00:31:55,800 --> 00:31:59,560
Speaker 1: which would be financial repression. Uh. In terms of the

544
00:31:59,640 --> 00:32:02,520
Speaker 1: lad um you know is something that has to be

545
00:32:02,560 --> 00:32:05,800
Speaker 1: with us. I mean when you build up leverage, and

546
00:32:05,840 --> 00:32:08,440
Speaker 1: the world built up leverage until two thousand and eight.

547
00:32:08,480 --> 00:32:11,160
Speaker 1: And by the way, where you are Tom in Washington,

548
00:32:11,200 --> 00:32:13,840
Speaker 1: the I m F has come out very strongly, you know,

549
00:32:14,160 --> 00:32:17,040
Speaker 1: with not with the suggestion, but with the statistics that

550
00:32:17,800 --> 00:32:22,000
Speaker 1: emerging markets and developed markets in the both in the

551
00:32:22,120 --> 00:32:26,560
Speaker 1: sovereign and the private sector have increased their leverage significantly

552
00:32:26,600 --> 00:32:29,600
Speaker 1: since then. And so you know, because of that, because

553
00:32:29,640 --> 00:32:33,000
Speaker 1: of this highly leveled world which I don't think we've

554
00:32:33,000 --> 00:32:37,560
Speaker 1: ever experienced in this era of financialization, which could go

555
00:32:37,640 --> 00:32:40,480
Speaker 1: back as far as fifty sixty seventy years, I don't

556
00:32:40,560 --> 00:32:43,920
Speaker 1: think the central banks can afford to raise interest rich

557
00:32:44,080 --> 00:32:47,959
Speaker 1: because a quarter or a half or one hundred basis

558
00:32:48,000 --> 00:32:51,960
Speaker 1: points might might just break break the system. Bill, this

559
00:32:52,120 --> 00:32:54,920
Speaker 1: is critical you run an unconstrained fund. Buried in the

560
00:32:54,920 --> 00:32:57,800
Speaker 1: green book of the I m F is a terse

561
00:32:58,080 --> 00:33:01,360
Speaker 1: sentence about the damn it just the great distortion is

562
00:33:01,400 --> 00:33:06,560
Speaker 1: doing to insurance companies. Two pensions to long term investible assets.

563
00:33:06,880 --> 00:33:10,640
Speaker 1: Help us right now? Where is Bill Gross's actual real

564
00:33:10,720 --> 00:33:15,880
Speaker 1: assumption on a blended sixty forty portfolio? Are you below

565
00:33:16,400 --> 00:33:23,400
Speaker 1: a four percent actuarial assumption. Well, you know that's hard. Um,

566
00:33:23,440 --> 00:33:26,880
Speaker 1: you know, I've been around four four to five, and

567
00:33:26,880 --> 00:33:29,360
Speaker 1: that would assume equities at the six to seven and

568
00:33:29,400 --> 00:33:32,320
Speaker 1: bonds at two to three, and you mix them in

569
00:33:32,360 --> 00:33:35,520
Speaker 1: some proportion. Let's just say fifty fifty, and that's where

570
00:33:35,560 --> 00:33:38,200
Speaker 1: you get. But most pensrum funds, as you know, are

571
00:33:38,280 --> 00:33:41,920
Speaker 1: at seven or seven plus. And uh, insurance companies you

572
00:33:41,960 --> 00:33:45,800
Speaker 1: can't measure it that way, but their liabilities are significant

573
00:33:45,840 --> 00:33:49,000
Speaker 1: relative to what they've promised. And and ultimately tom uh

574
00:33:49,280 --> 00:33:52,000
Speaker 1: you know mom and pop on Main Street. Uh, you know,

575
00:33:52,040 --> 00:33:56,080
Speaker 1: we talk about companies and you know, the foundational support

576
00:33:56,080 --> 00:33:59,120
Speaker 1: of capitalism, but actually, you know, mom and pop has

577
00:33:59,160 --> 00:34:02,720
Speaker 1: savers are the the support of capitalism going forward. And

578
00:34:02,800 --> 00:34:05,520
Speaker 1: unless they can get something on their savings, they either

579
00:34:05,640 --> 00:34:10,120
Speaker 1: save more, which sends the system into a mild reverse,

580
00:34:10,640 --> 00:34:13,040
Speaker 1: or they you know, they take their money out of

581
00:34:13,080 --> 00:34:16,279
Speaker 1: the bank and and not literally but figured it will

582
00:34:16,320 --> 00:34:21,360
Speaker 1: be stuff in a mattress and that itself breaks down financialization.

583
00:34:21,400 --> 00:34:24,000
Speaker 1: And so yeah, we're at a point where the system

584
00:34:24,040 --> 00:34:27,120
Speaker 1: needs higher interest rates, but central bankers, you know, are

585
00:34:27,239 --> 00:34:29,799
Speaker 1: modeled on lower interest rates. And it will be an

586
00:34:29,840 --> 00:34:33,520
Speaker 1: interesting challenge going forward, not just with monetary policy, but

587
00:34:33,600 --> 00:34:38,120
Speaker 1: of course with fiscal policy and who's elected. Well, building

588
00:34:38,120 --> 00:34:41,800
Speaker 1: on that in your most recent market commentary, you suggest

589
00:34:41,840 --> 00:34:45,560
Speaker 1: that it is in your words, capitalism that's threatened by

590
00:34:45,760 --> 00:34:49,440
Speaker 1: the ongoing strategies of the central banks because we're seeing

591
00:34:49,480 --> 00:34:53,640
Speaker 1: inefficient allocation of capital relative to risk. Well, that's true.

592
00:34:53,719 --> 00:34:57,040
Speaker 1: You know, the lower interest rates do keep a common

593
00:34:57,080 --> 00:35:01,240
Speaker 1: sensically zombie corporations alive. You know, that happened in Japan

594
00:35:01,360 --> 00:35:05,040
Speaker 1: and has happened for twenty years. So that's a decent example.

595
00:35:05,080 --> 00:35:08,040
Speaker 1: And let's just put some common sense into you know,

596
00:35:08,160 --> 00:35:13,320
Speaker 1: some central bankers model to the extent that um risk

597
00:35:13,560 --> 00:35:18,200
Speaker 1: is not proportionate to return, or put it the other way,

598
00:35:18,239 --> 00:35:22,680
Speaker 1: return is not proportionate to risk. Then then investors and

599
00:35:22,800 --> 00:35:27,120
Speaker 1: businesses don't invest. You know, it's it's the margin, it's

600
00:35:27,160 --> 00:35:30,560
Speaker 1: the NYM for banks, and it's the spread as Tom asked,

601
00:35:30,600 --> 00:35:33,600
Speaker 1: in terms of uh, you know, longer term liabilities, and

602
00:35:33,640 --> 00:35:37,000
Speaker 1: so it sort of freezes the system. Dalio talked about

603
00:35:37,040 --> 00:35:39,160
Speaker 1: this week and he's talked about it for a long time,

604
00:35:39,200 --> 00:35:42,319
Speaker 1: about pushing on a string. That's the old metaphor. But

605
00:35:42,480 --> 00:35:46,160
Speaker 1: basically that's the point where we're at, where investors and

606
00:35:46,320 --> 00:35:50,760
Speaker 1: savers basically look at their options and UH and decide

607
00:35:50,840 --> 00:35:55,040
Speaker 1: that they're not so attractive, and and capitalism blast point.

608
00:35:55,120 --> 00:35:59,800
Speaker 1: Capitalism depends upon it depends upon the assumption of risk

609
00:36:00,040 --> 00:36:05,400
Speaker 1: as opposed to UH no risk. And if if investors

610
00:36:05,440 --> 00:36:08,200
Speaker 1: and savers and businesses are not willing to risk it

611
00:36:08,280 --> 00:36:12,720
Speaker 1: a spread and an attractive spread, then capitalism itself starts

612
00:36:12,760 --> 00:36:17,000
Speaker 1: to at the margin, starts to turn inward. You mentioned

613
00:36:17,040 --> 00:36:20,319
Speaker 1: the elections would be were missing asked not asking you

614
00:36:20,800 --> 00:36:23,719
Speaker 1: whether or not the election is actually going to be

615
00:36:23,840 --> 00:36:30,040
Speaker 1: a major investable event before or after November eight. Yeah,

616
00:36:30,160 --> 00:36:33,200
Speaker 1: I think so, but I don't obviously I don't know

617
00:36:33,200 --> 00:36:35,279
Speaker 1: who's going to win. I think there'll be one to

618
00:36:35,520 --> 00:36:39,280
Speaker 1: three day type of reaction. But to be fair, I

619
00:36:39,440 --> 00:36:41,560
Speaker 1: think that all countries, and of course you're talking about

620
00:36:41,600 --> 00:36:44,120
Speaker 1: the United States, but there are elections elsewhere as well,

621
00:36:44,160 --> 00:36:48,279
Speaker 1: and their referendums in Italy and so on. Um, you know,

622
00:36:48,360 --> 00:36:51,440
Speaker 1: everyone begins to speak now to infrastructure, and that's the

623
00:36:51,520 --> 00:36:55,680
Speaker 1: easy word, that's the code word. That's something that you know,

624
00:36:55,760 --> 00:36:59,799
Speaker 1: both parties can get behind. But it's more than infrastructure there.

625
00:37:01,320 --> 00:37:04,440
Speaker 1: What has to happen is a program to take care

626
00:37:04,520 --> 00:37:08,399
Speaker 1: of individuals, displaced individuals in the workforce, and we see

627
00:37:08,440 --> 00:37:11,160
Speaker 1: that obviously in many of the numbers today, and to

628
00:37:11,239 --> 00:37:14,799
Speaker 1: the extent that you can't take care of either through

629
00:37:15,040 --> 00:37:18,759
Speaker 1: increased social security or some type of benefits than the consumer,

630
00:37:18,880 --> 00:37:23,560
Speaker 1: which is the ultimate driving force behind capitalism. That consumer,

631
00:37:23,800 --> 00:37:29,000
Speaker 1: you know, can't simply get started. Bill, help us here

632
00:37:29,000 --> 00:37:34,200
Speaker 1: with the idea of where we will be in our politics.

633
00:37:34,320 --> 00:37:36,120
Speaker 1: I know, you know, we'd love for you to predict

634
00:37:36,200 --> 00:37:38,040
Speaker 1: the election, but we're not going to pin that on

635
00:37:38,160 --> 00:37:42,919
Speaker 1: you right now. These are two candidates against trade. They

636
00:37:42,960 --> 00:37:46,759
Speaker 1: want to wallop the borders in this way or that way.

637
00:37:46,800 --> 00:37:51,160
Speaker 1: There's almost an isolation as tone to the entire election.

638
00:37:51,640 --> 00:37:55,359
Speaker 1: Help us with that. We can't do business and finance

639
00:37:55,840 --> 00:38:00,760
Speaker 1: with an isolation as tone can be. No, I agree

640
00:38:00,760 --> 00:38:05,319
Speaker 1: with you and agree free trade. Free trade is beneficial,

641
00:38:05,440 --> 00:38:09,400
Speaker 1: has been beneficial ever since Adam Smith in the Invisible

642
00:38:09,440 --> 00:38:13,680
Speaker 1: Hand came out with the theory. You know, most most economists,

643
00:38:13,680 --> 00:38:17,200
Speaker 1: most investors, no common sensically that that's that's the case,

644
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Speaker 1: and and and so free trade is a good thing.

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Speaker 1: The problem, Tom, is that that society and governments haven't

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Speaker 1: recognized the repercussions of free trade because free trade displaces workers.

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Speaker 1: You know, it produces imbalances between countries in terms of

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Speaker 1: a growing workforce or or stable or shrinking labor force

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Speaker 1: as in Japan, and so you know, governments have to

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Speaker 1: address the hard work in terms of what do they

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Speaker 1: do with displaced workers. Trade is wonderful for economies, and

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Speaker 1: trade is wonderful for profits, and trade is wonderful for

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Speaker 1: rising wages, But um, lots of people are not working.

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Speaker 1: Bill Gross, Janice Capital, thank you very much for joining

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Speaker 1: us as always on Jobs Day in the United States,

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Speaker 1: a hundred and fifty six thousand jobs creative five unemployment rank.

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Speaker 1: This is Bloomberg. Thanks for listening to the Bloomberg Surveillance podcast.

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Speaker 1: Subscribe and listen to interviews on iTunes, SoundCloud, or whichever

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Speaker 1: podcast platform you prefer. I'm on Twitter at Tom Keane,

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Speaker 1: Michael McKee is at Economy Before the podcast. You can

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Speaker 1: always catch us worldwide. I'm Bloomberg Radio. Who you put

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