WEBVTT - Levy: Fed is struggling to boost aggregate demand

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<v Speaker 1>Global business news twenty four hours a day. That's Bloomberg

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<v Speaker 1>dot Com, the Radio plus mobile. Last, and on your radio,

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<v Speaker 1>this is a Bloomberg Business Flash and I'm Karen Moscow.

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<v Speaker 1>Futures are higher. Let's go to the First Word Breaking

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<v Speaker 1>news desk for today's morning call. Here's Bill Maloney. Good

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<v Speaker 1>morning Bill, Good morning Karen. U s Futures have added

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<v Speaker 1>to their games since the last time we spoke down.

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<v Speaker 1>Futures currently hired by a thirty six point scipes game

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<v Speaker 1>four and as a Futures rise by fifteen US ten

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<v Speaker 1>yield at one point eight three percent. Main up of

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<v Speaker 1>markets except Italy are trading higher. Germany gains one percent,

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<v Speaker 1>while in South America Brazil jumps three percent. On the

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<v Speaker 1>US Economic Friday thirty job numbers changing on from Peril's

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<v Speaker 1>estimate a hundred ninety five thousand and after develops night,

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<v Speaker 1>HP Enterprise EPs beat Broadcom, Fuchre Remnview was in line,

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<v Speaker 1>and Smith and Wesson boost the ups and revenue views.

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<v Speaker 1>In deal news, Sampson is buying too Mey for sv

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<v Speaker 1>to share at AMC Theaters, to buy Carmikey Cinemas for

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<v Speaker 1>thirty hours to share. Finally, semi Key Walsheet upgrades and

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<v Speaker 1>downgrades brought Informant cut the neutral over at Bank of America,

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<v Speaker 1>Hewitt Packard Enterprise raised out perform at Bernstein h R,

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<v Speaker 1>cut to market perform at BMO. Barkley's cut the whole

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<v Speaker 1>versus by a Deutsche Bank. J Z Penny raised to

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<v Speaker 1>buy it, Evercore I s I Qualcom cut to perform

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<v Speaker 1>at Oppenheimer, and finally Godman Sachs, Excel Group cut to

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<v Speaker 1>neutral and monts Santo cut to sell. Live in the

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<v Speaker 1>first breaking news desk, go on, Bill Maloney care alright,

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<v Speaker 1>thanks Villa to hear live breaking news over your Bloomberg

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<v Speaker 1>type squawk and go on your terminal. That's su you

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<v Speaker 1>a w k go, that's a Bloomberg business flash, Tom

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<v Speaker 1>and Mike, Karen, and thanks so much. Since Job's Day,

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<v Speaker 1>Bloomberg Surveillance bronch you by Investco, Investco believes it's time

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<v Speaker 1>to bench the benchmarks and to consider active management and

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<v Speaker 1>factor based strategies. Find out more Investco dot com slash

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<v Speaker 1>high conviction. We moved to Job's Day. First of all,

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<v Speaker 1>I do want to mention the series of headlines out

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<v Speaker 1>of Brazil are simply stunning. We're not gonna dwell on

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<v Speaker 1>this a lot hereay, but markets explode higher. Petro bruss

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<v Speaker 1>rises eighteen percent. Is president Lula Mike? Is it unfair

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<v Speaker 1>to say under house arrest? Uh, It's hard to know

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<v Speaker 1>his exact status. He has been detained by the police

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<v Speaker 1>for questioning. They took him to the airport for security reasons.

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<v Speaker 1>So question it isn't exactly care what he is doing

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<v Speaker 1>or status. Brazilian real is stronger. We've had a wonderful

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<v Speaker 1>morning looking at our economic history, the broader themes Mickey,

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<v Speaker 1>Levia Baringer capital markets with us. Mickey, let's fold into

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<v Speaker 1>this immediate jobs report that we see in exactly ten minutes.

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<v Speaker 1>It's about productivity, capital, labor, and technological progress. Give us

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<v Speaker 1>the y. We're flat on our back with productivity. I

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<v Speaker 1>think part of it is a missmeasurement problem. I see

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<v Speaker 1>everywhere anecdotal evidence of technological innovations, not only new products,

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<v Speaker 1>but but but but improved production facilities and capabilities. I

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<v Speaker 1>see record breaking near record breaking corporate profits, and then

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<v Speaker 1>the productivity data are so weak. I think there's a

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<v Speaker 1>mismeasurement problem that the US Department of Commerce will eventually

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<v Speaker 1>get to. But it's a very technical issue. Let me

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<v Speaker 1>just bring out an example, um, all of you who

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<v Speaker 1>are looking at your iPhones now, UM, when you buy

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<v Speaker 1>an iPhone because because it's because it's produced in China,

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<v Speaker 1>it nets out to close to zero in GDP. Are

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<v Speaker 1>you telling me that over the last seven eight years

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<v Speaker 1>this has had zero impact? Mr mckeeney, the sainted one

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<v Speaker 1>needed a new iPhone yesterday. It did not. It directly

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<v Speaker 1>affected the GDP of American economy. I can assure you

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<v Speaker 1>I did my patriotic duty and dropped a large amount

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<v Speaker 1>of money on an iPhone, but it netted out to

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<v Speaker 1>close to zero in GDP and did not push the

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<v Speaker 1>productivity dial as measured. And I think there's a measurement problem.

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<v Speaker 1>And it's not just Apple, it's just almost in every industry.

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<v Speaker 1>You see technological advances and it's just we're just not

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<v Speaker 1>capturing it in the data. What do we uh, what

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<v Speaker 1>do you think February is going to show? You have

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<v Speaker 1>to follow a day to day basis and with a

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<v Speaker 1>with a disclaimer that of course one month is not

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<v Speaker 1>enough to uh, you know, really get a trend. But

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<v Speaker 1>what do we think? I think it's gonna be a

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<v Speaker 1>healthy number UM. In fact, it could be. I think

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<v Speaker 1>it's gonna be a little over two hundred thousand. On jobs,

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<v Speaker 1>I think actually job gains have been a little too

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<v Speaker 1>fast relative to g d P. But what I'm really

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<v Speaker 1>looking at for in today's number is in January we

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<v Speaker 1>had a nice increase in wages. If there's an a

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<v Speaker 1>second month in a row of healthy wage gains UM

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<v Speaker 1>on top of the recent nice news on consumer spending

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<v Speaker 1>in real terms and the increase in the core PCE

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<v Speaker 1>deflated to one point seven, I'm wondering if we get

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<v Speaker 1>that that wage increase, it's not only very good for

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<v Speaker 1>the economy, but it really puts the FED into a box.

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<v Speaker 1>Are they really data dependent? We're on the front doorstep

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<v Speaker 1>of them achieving their long run dual mandate. What will

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<v Speaker 1>they do well? What will be the effect if they

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<v Speaker 1>do raise rights? Why the what? What is the I

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<v Speaker 1>S curve real economy effect? Not to get the restrictive,

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<v Speaker 1>not to get to accommodative, but to get off stand

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<v Speaker 1>Fisher's ultra accommodative. Given the data, theoretically and historically, it

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<v Speaker 1>should have close to zero impact on economic performance. The

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<v Speaker 1>FEDS can sarn is um having gone through several queuei's

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<v Speaker 1>forward guidance. All of that was geared toward UH keeping

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<v Speaker 1>rates low, encouraging portfolio managers globally to take more risks.

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<v Speaker 1>And now one of the FED, one of the fed's

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<v Speaker 1>largest concerns is the reversal of that portfolio balance effect

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<v Speaker 1>that they so touted for several years. Mickey Levis, thank

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<v Speaker 1>you so much, Dr Leavis with Barrenberg Capital Markets. As

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<v Speaker 1>we get ready for h the jobs report will see

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<v Speaker 1>that here in six minutes, so we should note a

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<v Speaker 1>thousand jobs forecast, four point nine percent unemployment, and a

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<v Speaker 1>two tense gaining wages. Those are the headline numbers will

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<v Speaker 1>be watching. I will look at the revisions and he

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<v Speaker 1>grew always important, Robert Gordon said, he is, uh. He

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<v Speaker 1>is going to be looking at the labor force participation rate.

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<v Speaker 1>He said, that's the key number for the economy going forward.

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<v Speaker 1>It's gotten better prospects for the economy. Of course, he's

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<v Speaker 1>looking at it from the academic tower of Northwestern University.

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<v Speaker 1>They where market economists are trying to figure out what

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<v Speaker 1>the tenure yield will do to four digits UH at

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<v Speaker 1>eight thirty two. We will do that with Bill gross

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<v Speaker 1>one eight to eight six one on the tenure yield

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<v Speaker 1>right now. Curve flattening over the last couple of days.

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<v Speaker 1>Don't want to make too much about it. It's been

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<v Speaker 1>range bound, as is a lot of other data. The

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<v Speaker 1>dollar fractionally weaker after a few good days up its

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<v Speaker 1>warning and Michael McKee mentioned gold elevated here an hour ago,

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<v Speaker 1>twelve sixty one the ounce right now, Michael McKee and

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<v Speaker 1>Tom Keane, please stay with us for this job's report

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<v Speaker 1>in five minutes, the report on the American labor economy.

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<v Speaker 1>This is Bloomberg's surveillance coming up. With all due respect.

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