'Bloomberg Surveillance' Full Show (07/02/2021)

i think consumers have money in their pocket and we're going to have a super holiday season i do think we're far enough along that a lot of that scarring should begin to dissipate even if the economy slows rates stay low inflation is going to moderate and we're still going to get positive long-term equity returns we think any pullbacks or any pauses in the market could be short-lived and shallow clearly we're heading towards an environment where they have to consider tapering this is bloomberg surveillance with tom keane jonathan farrell and lisa abramowitz it's payrolls friday from new york city for our audience worldwide good morning good morning this is bloomberg surveillance alongside tom keane and lisa brown with some jonathan farrow friday morning equity futures up two points on the s p 31-12 after six straight days of gains on the s p 500 tom your estimate this morning 720k lots of the series on the terminal are grinding in whatever direction john grinding flatter yields grinding this grinding that and yes equity markets grinding up as well yields lower tom down a basis point or two 144 on 10's going into this that curve now sub 120 twos tens 118. first thing i looked at this morning at 118.475 on the twos tens and spread and with it john look at dxy i mean this is the major dollar index bloomberg dollar index bbdxy has caught up in the last two days stronger dollars showing a bit of strength euro dollar down to 118.21 here's the quote for me from the last 24 hours it's on the labour market in america and it came from the ism lisa labour challenges across the entire value chain continue to be the major obstacle to increasing growth and the key question behind this is how much does this have to do with enhanced unemployment benefits how much does this have to do with the pandemic that continues to ravage certain areas and how much does this have to do with child care probably all of the above but it's going to take time john and until we get work out those kinks these employment numbers are going to remain perhaps a little bit lower than people would like to ask 30 minutes away here's the price action going into that on the s p 500 six days of gains coming into friday can we make this seven forty three thirteen on the s p we advance zero point zero six percent in the bond market it catches your eye your tenure now down to one forty four one forty four twenty 24 and tom pointed out the dollar strength leads the dollar strength euro dollar 1 18 22. reserve to hike rates and that i think is what people are talking about and the reason why the 10-year yield is as low as it is 8 30 a.m we get a little bit of insight into the deliberations of the federal reserve at least the data points they'll be considering the u.s payrolls number comes out the june's jobs report this is one of three data points for the jobs market the federal reserve will be considering at their september meeting when they really decide whether or not to taper or at least that's the expectation the key thing that i'm looking for is momentum how much momentum are you seeing beyond services or is it just isolated to services do we get any kind of insight into how much the enhanced unemployment benefits have affected the willingness for some people to come back into the labor market 10 15 a.m look for the political spin president biden is speaking about the jobs report expecting to talk about the bigger unemployment benefits expect him to talk about the need for more on infrastructure and more spending the disparity the two-tier the k-shaped recovery and today i find this actually really fascinating opec plus is continuing to negotiate output cuts after yesterday's meeting ended frankly in somewhat of a debacle i mean frankly the united arab emirates coming out and saying that they wanted to have a bigger say in how they measure the output and basically if they don't come to an agreement then the current output levels would be rolled over which are a lot lower than people say would be needed to meet demand right now you are seeing brent and uh crude traded on the nymax a little bit lower but earlier in the day it was higher and the question is how much further the prices could climb if they fail to reach an agreement john 75 handle on both wti and brent wti 7516 brent crude 75.75 we know all about fuel we know about oil we know about travel it gets expensive tom over the long weekend it would be really expensive wouldn't it to get a plane right now and fly to say greece it would be and take a long vacation you know and you've got to go really quarantine for like two or three weeks and you know it's very difficult and of course all that we do here uh within her celebrity is try to keep it private so it's there's like 200 islands or i can't even count the islands john and i've been advised by one of her entourage it's not crete it's not creepy we found out it's not crete lisa is going away lisa is going away this weekend and will be gone next week within like three hours but it's not crazy i don't even think she's gonna be can we confirm it's not crazy thank you so much for maintaining my privacy we really appreciate that any time that's what we're here for thanks ronnie crozier joins us now university of chicago booth school professor of economics professor good to catch up randy 8 30 eastern two hours in about 25 minutes away we'll get the payrolls report what are you focused on i really want to look at um the sectors and i want to look at the the labor force participation and then also look at what's happening to wages i think all three of those are going to tell us important pieces of what's going on in the labor market and all three of those are going to feed into the fed's thinking professor crosser uh we we're enjoying here the idea that one of our talents is going away to greece to enjoy a sunscreen seven days and i want to get the lesson from you of the human condition greece was flat on its back and nobody in western economics is recovered like greece when we recover from this pandemic do we underestimate the human condition just to recover here where unemployment will go down to three percent that we will see sustained gdp do we just underestimate the human oomph of coming out of a pandemic well i think uh psychology plays an enormous uh enormous role in these uh these things i think i was less of a behavioral economist before i went to the fed but then during the the the global financial crisis it became much more of a behavior my uh my colleague richard taylor will really uh i was going to say i'm going to cut in here john i know you want to pick this up thaler's rolling over now thaler's watching the club cubs go down in flames and he's got crossing her bad mouth and uh you know gary's gary becker's uh entire legacy and that's that's outrageous krosner wait a minute i didn't i didn't bad nothing i just said i'd become more of a vickie shaw i thought john i pick it up here i mean crosser's got me totally rattled going after the legacy of the great garrison i think we should let lisa do some work tom before she goes away that's awesome do you see my tie today for those of you on radio i wore a lovely blue tie in honor of grease mentioned earlier tom really uh tied in nicely to the u.s jobs report he wasn't gratuitous in any way professor croster please save us and talk a little bit about the idea of transitory and the idea of good inflation and bad inflation we're getting a sense that possibly oil prices could remain as high as they are even ahead toward a hundred dollars a barrel we're looking at food prices spiking higher to the highest levels by some measures since 2011 due to the drought out west in the united states at what point does this become a disinflationary force how much does this uh sort of factor into the fed even though this isn't part of the core uh pce sure i think they're looking at what are exactly you said what are transitory factors what are long-term factors and also the concern is could enough transitory factors lead to a long-term change and that would be through a change in inflation expectations but remember people have been getting low wage increases and facing low prices for quite some time that's now changing over the last few months where we've seen a significant spike up in consumer prices on a whole variety of things and we also see much more pressure in the labor market where we're seeing not only bonuses being offered for people um even applying for jobs but does that turn into just rather than a one-off bonus to higher wages and then the firms say oh well our costs have gone up we can now charge more people are willing to accept higher prices and then individual workers say well i want more wages and labor markets are strong i can demand more or i'm going to go elsewhere we see one a very high number of people who are quitting their jobs we only see that when people feel very confident about the the job market and this gets back to the the human condition where people are that that psychology that that feeling of confidence is something that is very very important affects the labor market and could affect uh the inflation process going forward and that's one of the key things that the fed has to look at they want people to have confidence but they don't want uh people to think oh well that means that prices are going to start to to rise in a consistent way and the fed is just going to support that and uh and lead to much higher inflation than they would like randy if you've got any insight on the metric that's guiding this federal reserve right now they talk about substantial further progress then they won't tell you what it actually is and i think each and every policymaker right now has their own view on that is it the employment to population ratio we've heard that mentioned many times is it the participation rate what is it for you so i think when you ask them you are going to get different different views and i think um there isn't any like one magic bullet i think the employment uh employment ratio the number of people employed relative to population is something that is important and we see that going down because a lot of people have retired no surprise during a pandemic and when there's a lot of uncertainty about the effectiveness of scenes and concerns about health that older people will say it's just not worth it i i i'm going to retire early rather than stay on the market that's going to put more pressure on on wages uh as the job market and the economy comes back and there aren't as many people in that in that labor pool so uh i think that's uh that would be a very important metric and then also looking at the uh just what's happening to wages professor good to catch up good to see you especially on payroll's friday randy crosston of the university of chicago thank you school of professor of economics out of london your estimate today 720 000 your low 400k your high 1050 mr shepherdson over at pantheon economics tom pretty bullish on this one well there's some tendency upward as well i don't have a strong feeling on john and one of the things that would be interesting is if it's a yawn if it's you know if it just sort of comes in and we move on because i think just as important is the month to month to month sequence first thing i'm going to do with the revisions is calculate the three-month moving average first thing i'll do tom is look at how the market responds to it you talk about that quite often there is information in the data there's a lot of information in how a market responds to the data and yesterday we had this strange ism it had this really strong inflationary impulse to it lisa and we ended the day with a curved flatter and yield at the long game lower the idea here is that the pressure would be short-term the more you have the sort of input costs going up the harder it will be to get sustained inflation that's not where inflation has to come from as people say it's from the wages side and frankly if people are having their buying power crimped that's going to slow growth in slow inflation over the long term that's why it's so important to keep parsing out where exactly the job growth is and where exactly salaries are increasing she will be here all morning and she is not going to crete tom every time we say that lisa's not going to creep people are going to start thinking that lisa's going to creep they are they are you know the way i'm not going to creep the way i look at it is we need to compare and contrast here we're talking to governor krosner of the recovery of greece and john i was surprised still the greek unemployment rate 17.3 yeah on a labor basis it's still the basket child a year some of those european countries those labor markets are still pretty difficult you know the the way i look at it is acting on taverna which is on one of the islands i mean they've been around for 90 years and if you were to have lunch at action taverner really on one of the islands uh in which island i don't know you'd probably get marinated anchovies and busy unemployed blue businesses yeah thank you thank you for that lisa is doing her best exactly but not in crete 4313 on the s p and it's payroll's friday this is bloomberg with the first word news i'm leanne garens the opec plus alliance has fallen into bitter infighting a key member the united arab emirates blocked a deal at the last minute that forced the cartel and its allies to postpone their meeting until today and it is casting doubt on whether there will be an agreement on production that could ease a surge in oil prices now economists surveyed by bloomberg forecast that u.s payrolls rose by 720 000 in june but recent forecasts have been much higher than that actual number a variety of issues are probably keeping people from returning to the workforce including enhanced unemployment benefits child care responsibilities and health concerns the jobs report is out at 8 30 a.m new york time u.s forces have less bagram airfield in afghanistan after almost two decades bagram was the epicenter of the war on the taliban and al-qaeda in the aftermath of the 9 11 attacks afghan forces will now run the airfield president biden promised that the last of as many as 3 500 american troops would leave afghanistan by september the 11th after five years of tension over brexit british prime minister boris johnson is laying on the charm for angela merkel's last visit to the uk as a german chancellor today merkel will visit johnson at his country retreat and the queen at windsor castle i'm leanne garens this is bloomberg stay tuned [Music] i couldn't agree more with our treasury secretary and with the use of the word historic not just for economic diplomacy but for fairness in the tax code for multinational corporations paying their fair share and for the american worker and the american middle class to get a fair shake out of a tax code that has been leaning the other way for far too long fair it's a word that's doing a lot of heavy lifting at the moment jared bernstein there council of economic advisors member from new york city this morning good morning alongside tom keane lisa rabbits i'm jonathan ferro equity futures 43 13 on the s p six days of gains coming into friday ahead of the long weekend it's like torture gotta wait for the payrolls report the weekend starts at 8 35. 8 35 eastern in your bond market yields in a basis point 144 41 dollars stronger lisa euro dollar 1 18 26 just in case you might be interested in what a single currency is when is the real yield if the day ends at 8 35 i am taping that at 8 40. now i'm gonna be here at one eastern thank you lisa for reminding me live on blimbo tv one eastern time just to get you into the weekend mood is anyone going to watch that tom will anyone watch that i think the people in greece in anticipate really what the real yield is increasing an empowering crate now we welcome all of you on radio and television we have a little bit of fun today into this important jobs report and market seriously beginning the second half with some real sobering movement for those cautious as well never cautious is emily wilkins looking at the pulse of washington emily i want to go 45 miles north of kabul we saw it overnight some of the reports that the united states abandons bagram airfield in afghanistan what is the symbolism of that i mean this is an airfield that the us has been at for around two decades and it's part of the withdrawal as troops returned back home after president biden's orders that the us would be getting out of the country and i think there is a lot of people who are watching what is happening over the long term trying to see what the actual impacts are going to be a lot of concern that when the u.s leaves that you know other terrorist groups will regain a foothold within the country and that could be a problem for a lot of residents there foreign policy magazine a few years ago did a wonderful map of afghanistan of the many plural strongholds strongholds of the taliban many of those are near the airfield is this somewhat like the abandonment of saigon where they will move right in is that just anticipated by the administration and the pentagon when you hear the administration be questions about their withdrawal from afghanistan one of the things that they say is you know we're not completely leaving sure the troops are going but we're still going to have individuals on the ground in helping roles in diplomacy roles the us tourists the bite administration at least is trying to frame it as though they are not abandoning the country but of course i think it time will tell right we're just going to see how it plays out in the next months as far as exactly what happens when u.s forces leave these areas that they have been in for so long emily just to turn to domestic policy briefly the big tax effort on an international basis everything they're doing at home here in america i keep hearing this word fair and the word fair's doing a lot of heavy lifting because i'm trying to work out what the actual objectives are the numerical objectives this is a program where we try and look at the data when they say fair what do they mean well remember that these tax proposals are supposed to be doing two things i mean number one they are supposed to be giving lower and middle income americans who have a sense that the tax ism is stacked in favor of wealthy corporations and wealthy elites that it's going to be fair for them as well we've seen things in the u.s there was a article that came out uh just a few weeks ago i think by publica that showed that some of the biggest names of billionaires in the us paid little to nothing in taxes and there is a growing sense within the american public that that's not fair that they're not getting the right shake but remember the whole point of this as well is to actually pay for other programs that the biden administration is putting forward they're proposing expanding child care they're proposing expanding elder care there's a potential they could expand health care medicare climate change initiatives all these things need to be paid for and the way to pay for them are these tax proposals that are being put forward and that senator bernie sanders is currently working into a potential six trillion dollar reconciliation package that democrats are trying to find some way to pass within their their party which is obviously split between moderates progressives lots of different ideas there president biden meanwhile emily is going to be speaking at 10 15 after the jobs report what is the political angle that you expect to hear from him president biden the train in washington dc to get this infrastructure package done as well as the reconciliation package it's not going to stop for a couple of job numbers uh obviously the jobs report is closely watched in washington it is very much paid attention to uh you have a bunch of releases that will come out republicans will say oh the jobs numbers show that you know we shouldn't be passing these big spending packages democrats will say the job numbers show that we need the big spending packages everyone's just going to spend this to their own ends and then they're going to go back to try and negotiating a way forward on these uh two bipartisan infrastructure and then the democrat only reconciliation bills emily wilkins down in dc of bloomberg government thank you if we can just focus for a moment on tax policy in america emily mentioned that pro-public a piece that came out a couple of weeks ago the issue i always have with these pieces is they're almost hit jobs to achieve something else where if i ask you a question how many billionaires are there in america would you come up with the answer of 800 and given the way that some people speak in dc it's as if there are tens of thousands of people with excessive amounts of wealth in this country now lisa i'm not here sitting trying to defend anyone that's not what i'm doing i'm just trying to make sure that we don't conflate the extreme amounts of concentrated wealth held by just a few people with some people who have gone to work they're very well educated and they're getting monthly income of a certain amount that this government wants to go after now i don't think you can say that this is unfair over here which means we need to do something about over here as well they're conflating two very different issues the thing i'm struggling with i think this is a good point what i'm struggling with is why is this the agenda versus what we want to get done and how we're going to pay for it why is it a matter of justice and fairness which are these subjective kinds of terms when it could just come down to you know what the goals are and i think that you said this earlier the word fair kind of doing a lot of heavy lifting john for uh some of the objectives which are a lot less clear because there isn't necessarily consensus and you remember they used to talk about millionaires down in washington and they don't anymore because many of those senators are millionaires themselves so the billionaire stuff is almost red meat to try and do something somewhere else and tom we have in america a very progressive income tax code it's highly progressive in america and i think if you want to do something about wealth and concentrated wealth by all means that's a policy decision it's not for me to say you shouldn't what i'm saying is that you have concentrated wealth that's one issue and then you have flow you have income monthly income annual income that people do pay their fair share of taxes on because they have to they get paid and it gets taxed before it hits their bank account tom it's a convenience to conflate wealth dynamics with income precisely and john what is so important and i can i've lived this of course over years is the summation of your taxes if you summa sum your taxes now the answer is it's a very high total percentage of your income that's the agony that you're hearing from so much of america tom keane lisa abrams jonathan ferro equity futures on his payrolls friday 4113 with positive zero point zero five percent george two hours five minutes away your estimate this morning 720k from new york this is bloomberg [Music] live from new york city for our audience worldwide on this payrolls friday going into payroll six straight days of gains on the s p longest winning streak going back to february of this year 4312 is where we are in the s p 500 this morning advancing around about two points that's the equity price action here's the bond market twos tens and thirties and here are the estimates 720 k is your median the low end 400k the top end 1050 this really big grouping getting around 700 800 000. go against that yields just a little bit lower down by about a basis point on tens to 144 24 just a little north of 2 on a 30-year yield but we've been coming in over the last couple of days just grinding a little bit lower even with an ism with a really strong inflationary impulse the curve yesterday ended the day a little bit flatter what's the fed going to wait for switch at the board and finish on this i think it's an important chart an important visual it's the employment to population ratio in america big gap blower through march of last year and then the recovery and then we stall we start to flatten out a little bit and tk the federal reserve and a lot of people on the fymc they want to see that gap close and right now it's not closing quickly enough yeah and it's the x-axis as well how long is this going to take we've certainly had a number of conversations john over the last couple days about the mystery of what august looks like or november or even the first few months of 2022 always focused on the x-axis carl riccidona joins us right now bloomberg intelligence chief industry economist carl you absolutely nail an observation that restaurants and bars bartenders and waitresses it's a new york california thing maybe the rest of the nation's okay but you go further and say if you pull out restaurants and bars it's a different labor picture tom good morning absolutely it's a different labor picture so we all knew that of course the most severely impacted uh categories during lockdowns would be the drivers of hiring uh in the uh recovery so uh that's not a surprise if we want to really understand the underlying momentum in the economy in terms of growth inflation etc what we have to do is strip out those categories so if we take out leisure and hospitality uh what we see is an economy that certainly is growing but not at those robust uh types of gains that we're seeing in the headline numbers and if we even further dig into the details uh if we take out all of the vulnerable categories so it's dominated by leisure and hospitality but take out other categories that also showed a significant impact during lockdown we're looking at a three month average on hiring of about a hundred and sixty thousand per month now adp the consensus a lot of folks have overestimated payrolls over the last couple of months and i think that tells you about some bias and the uh in the in the talking heads versus uh what's actually happening in the details uh and so what my best is that again today we're going to uh you know show some acceleration relative to last month but i i'm i'm okay my personal opinion is we could be setting up for another uh soft softer than expected number see guys how he he slams us by calling us talking heads nice job carl uh carl if we look to the the jobs report we tear it apart part of it is wages i note wages less burgeoning inflation is a negative real wage how long do we sustain a negative inflation-adjusted wage well i think we're going to sustain that uh well into the back half of the year so those uh retail workers and warehouse workers who got a 15 minimum uh this year that was a great uh improvement in their immediate economic situation but that's getting very rapidly eroded away unless those wages are adjusted to inflation which in most cases uh that is not what's happening cal can we get to the mystery the mystery chart the employment population ratio has flattened out hasn't improved with the pace that i think a lot of people wanted to see the participation rate in america captures the same thing flattened out i think we're pretty much where we were in fall still right now what explains that for you carl well i think we have to be uh non-partisan and objective in thinking about that and it's a number of factors lisa highlighted them earlier on the program whether it's at-home learning uh lingering concerns over the uh you know what public health issues uh also uh perhaps some discouraged workers in specific industries and whatnot it's really a confluence of factors uh that huge collapse and participation i absolutely think can be mended so maybe there's some retirements that to factor in there but uh what's interesting uh earlier uh we heard from philadelphia fed president harker who said uh the the powell deficit uh which chair powell keeps highlighting at about 7.6 million workers relative to the start of the pandemic uh president harker said that could be closer to about 10 and a half million given growth in the labor force so what if we are truly focused on economic scarring and that is something the fed is very much focused on maybe some of the hawks are a little bit less concerned about that but jay powell clarida the center of the committee new york fed president they are very much focused on this economic scarring issue and that means we don't have to look at a vast array of metrics when we think about the dashboard we have to look at that labor market deficit relative to february of 2020. it's 7.6 million right now john that's basically where we stood at the end of the recession in 2009 and so as we think about labor pressures and inflation pressures in the economy with that much slack in the labor market i don't think we should be expecting a very different outcome for inflation uh this time around compared to the last time we saw such a large deficit which was coming out of the 09 recession carl i just want to break out a few things you said when i asked you that question what explains it you went point by point and lisa's been talking about it as well over the last several weeks and many of those points including things like the additional unemployment insurance the care for children child care all of those things that's temporary can be solved with time then you mentioned retirement and then you went to scaring now i don't want to get into the semantics too much but scars are permanent and i wonder if scarring is actually the best justification for being a hawk on the federal reserve right now because quite simply maybe the participation rate won't recover in the way that some of the dubs are anticipating if they wait longer and quite simply maybe for some people on the federal reserve they might not be the ones to help here well scoring uh doesn't have to be permanent if it's you know that the main point of the doves on the committee is that if they put the right policies in place we can avoid uh some degree of scarring now there will be obviously some consequences uh but uh fed policy will very much impact how much those long-term economic consequences exist uh in the post-covet economy and so that's why jay powell wants to run a high-pressure economy run things hot to bring folks off of that sidelines either they were permanently on the sidelines and maybe now are entering the labor force for the first time uh or had become discouraged and can be encouraged to re-enter uh the labor force this has vast social consequences and we were there in 2019 uh as people were saying the economy is overheating and uh powell was taking the uh the benefit of the doubt and trying to run things hot and wasn't seeing things hot as he said to run things hot you have to see heat we weren't seeing that in 2019 so i think we can get back down to the debate of three and a half or lower on full unemployment and the fed wants to get there so i think pulling back policy too soon uh would then uh you know potentially lead to that type of scarring in the economy and one additional point i want to make john uh folks are considering these uh extended jobless benefits as a reason uh that uh you know we're seeing uh elevated uh unemployment and sluggishness uh to return uh back to the labor force so that doesn't really get solved in this jobs report there were only four states uh that terminated the extended jobless benefits so if you're looking for a big pickup and hiring because those jobless benefits are expiring don't look for it in the june data and you're only going to see it in relatively small states in the july data it's going to take until later this summer uh to really see the consequences playing out in those specific industries carl this may be a particularly granular but i think it's really important to dig into the concept of scarring how much of this is a mismatch in skills a necessary retraining for people based on some of the big shifts in the economy that have been turbocharged toward e-commerce that have been turbocharged toward the internet well i think we can see that this is uh you know very significant if you look at things like the beverage curve and whatnot we can see that you know there's a lot of job openings and not as much job placement as one would expect happening in that environment that's telling you that there's some frictions here speed limit effects in the economy in general and more specifically the ability to land skilled labor in the right positions and very importantly here john beveridge is not the beverage of your choice that would be the esteemed economist and leader of london school of economics arguably mr beverage saved the london school of economics a few years ago i appreciate you clarifying the point thank you count ricky donna flynn speaking of beverages they serve a chat and this is you know our listeners have really come in here on this sojourn to greece here um dr ellerian celebrating the general admission of queen's college yesterday a great honor as president of queens college notes and of course he is a global traveler that ticket to crete is it's it's it's like the edge of shanghai it's like seven thousand large seven thousand he says that's that is that business class that's of course well that's the only way mr brown was just gonna go of course the value add is really tremendous i think it's with seven stars i just think your privacy is important lisa so we can't keep communicating to our audience she's not going to creep no no no or the dodecanese i believe john the dodecanese have been pushed out as well we're done with this now no no no no no i'm gonna keep it going it's gonna end right until she goes out the door your market this friday 43-11 going into the payroll sprint and i want to reflect on that i sam a little bit more reflect what the ism doing i think it's quite nice and lisa i know you read through it too tom i'm not so sure when you go through the industry responses point by point chemical products manpower has been a concern machinery supplier costs up materials labor shipping electoral appliances lack of available labor metals the lack of labor is killing us that's where the tension is right now still in this economy and what is it that's causing people to remain out of the labor force given that the participation rate is so low relative to where it was pre-pandemic we don't really know and i think that that's what carl was pointing to we don't know how much of this is scarring and to the effect that we do understand that more uh later in the year we'll understand more about what the fed's thinking is and perhaps why the bond market is so sanguine about inflationary prospects well tom makes this point and has done for a long long time when you have this kind of gap between demand and supply what fixes it tom price wages always yes and no i mean yes and no because if people do not have the skills they cannot fill some of these jobs and when you talk about coding when you talk about certain jobs i mean that's idiosyncratic i understand that but there is a question of whether there's a skills mismatch and who's going to pay for the retraining there was a phenomenal study done out of iowa i'll say 15 years ago on welders the elasticity point is wage they come out of the woodwork with wage 144 on tens this morning 43-12 on the s p up next andrew perkos johns hopkins bloomberg school a public health professor and virologist from new york city this morning good morning all-time highs going into payrolls friday just ahead of a long weekend full coverage right here on bloomberg tv and radio this is bloomberg [Music] with the first world news i'm leanne gerens there's growing doubt there will be an agreement between opec and its allies that will ease the surge in oil prices the alliance fell into bitter infighting after a key member the united arab emirates blocked a deal at the very last minute that forced opec plus to postpone its meeting until today it could mean there will not be any increase in production now the imf predicts that the federal reserve probably will need to begin raising interest rates as soon as late 2022 staff at the washington based fund also said the fed will likely begin scaling back asset per purchases in the first half of next year at last month's meeting seven of 18 fed policy makers indicated they want to raise interest rates in 2022 and richard branson plans to beat fallow billionaire jeff bezos into space branson will fly on the virgin galactic test flight on july the 11th along with five others that's just nine days before bezos plans a trip to space aboard his rocket made by his company blue origin he and the crew will be joined by 82 year old wally funk she was one of the first woman to train for space flight but she actually never made it on a mission global news 24 hours a day on air and on bloomberg quick take powered by more than 2 700 journalists and analysts in more than 120 countries i'm leanne garens this is bloomberg [Music] good morning i'm romaine bostic outside the gates of the beautiful tanglewood music festival right here which in just a few moments these gates will open and we will begin rehearsals for the july 4th boston pop spectacular of course this is going to be the first event at the tanglewood venue since the covid crisis we'll feature mavis staples john batiste of course all under the helm of conductor keith lockhart of the boston pops the symphony orchestra here will be performing of course we'll also have the six singing sergeants of the us army as well uh as the u.s air force band here right here in the foothills of the berkshire hills it will air of course on sunday july 4th 8 p.m this is bloomberg [Music] we observe something really interesting when we compare wars and pandemics right because both have loss of life but pandemics there is an increase in real wages after the pandemic and it seems like there is some hesitancy to go back to in person work after pandemics constant hands are there the kpmg chief economist from new york city this morning good morning alongside tom keane lisa bradford i'm jonathan farrow on this payrolls friday let's get you set up with some price action this morning 6 48 eastern time in new york 43-11 on the s p totally unchanged six days of gains coming into friday quite a winning streak on a daily basis the longest we've had since february of this year yields have been coming in again we're down two basis points this is becoming a grind down towards 140 now 143 56 tk we come in another two basis points yeah the grind is there and it goes both ways you see in the stronger dollar as well 92.61 i'm actually watching dollar carefully with euro not much but yen is weak in this week 111 42 as well on the pandemic in on los angeles andrew peckhoffs from baltimore with johns hopkins uh bloomberg school of public health this morning andrew i was really taken aback by l.a with some you know very measured tone no panic saying hey delta india variant maybe we ought to kind of like have the vaccinated wear masks again were you surprised by that news i wasn't surprised because we have to think about things in terms of the local spread of the virus so for example here in baltimore we have a very low uh case positivity rate we have a very low testing rate a good vaccination rate so we don't have those kind of restrictions that are being considered to put in place los angeles is a very different story the delta variant there is moving very quickly it's moving through unvaccinated populations and even though the vaccine does provide protection against delta it's always good to have more than one thing in place particularly when the risk is going is getting higher and masks would represent one extra thing that a vaccinated person even can do to prevent infections in a situation where you might have a higher chance of being exposed to the virus any number of studies including bloomberg i noticed the washington post this morning with a round number 47 totally vaccinated what number do we need to see it keeps getting higher and higher as we find variants that are more easily transmitted we were using the 70 percent number early in the vaccination campaign that was before alpha variant came through and that was before delta variant came through when viruses become more transmissible the number of vaccinated people we need to reach that herd immunity threshold gets higher and higher people are coming up with numbers now but i wouldn't be surprised if you saw a number now of 80 or 85 percent to really reach that level of hurt immunity where we get the population benefits not just the individual benefits of vaccination professor pekash i feel like i google this every night and get a different answer so please provide some professional advice and guidance here what does it mean the vaccines protect people against the delta variant that they protect people against the coronavirus is it simply that they don't get fatally ill or is it that they actually do not get sick and cannot transmit the disease yeah so with delta the data is still coming out we have about three studies that are out there right now that show that if you're fully vaccinated meaning for the mrna vaccines in particular that you've gotten both doses and you're at least two to three weeks out from your booster dose in those situations you're seeing protection against all aspects of disease severe disease hospitalization as well as what we call symptomatic infection so the data with delta looks good although again it's it's just a few studies right now we need more data from that you know the risk though is not um minimal right vaccines are not perfect and with a variant that's more transmissible you might expect to have a slightly increased risk even if you're vaccinated of getting infected but the vaccines are protecting and that's the important message to get out there when we talk about surges with delta we're probably talking about surges that are going to be primarily in the unvaccinated population because the vaccinated individuals in our population will be protected dr pekash is it concerning to you that the delta variant is something like 60 more transmissible according to some studies than even the b117 variant which was itself much more transmissible than the original strain the trajectory here does not seem to be that great are we seeing a similar type of evolution in the gamma strains that people are picking up and others so so far delta is the one that i think we're most worried about because that increased transmission is really giving the virus which you can call a new platform to accumulate more mutations on you know we're always concerned about mutations that'll evade vaccine-induced immunity but those mutations put on a highly transmissible virus makes it a higher risk we have something called we call viral fitness that we measure all the time and a virus that's more fit can handle some mutations that may be a little deleterious but it still lets that virus circuit in the population so as we get variants that are better and better at circulating the potential for getting the vaccine escape mutations in those backgrounds represents a risk in the that scientists like myself are very very concerned about andy it's always good to catch up and get your insight some clarity on some important issues there andrew perkos there the johns hopkins bloomberg school a public health professor and virologist is july 4 still independence day from the virus in america lisa if we push that to one side i haven't heard anything about that in dc this week the messaging is so delicate here because on one hand you do have pockets of the population that are very highly vaccinated i'm thinking of the of new york city and other more urban regions then you have places particularly in the south where the delta variant is spreading very rapidly and where people are not vaccinated and president biden isn't going to want to sound the all clear if you have that kind of mismatch in patches of unvaccinated individuals the imf sound in the all clear for the path forward i don't know if you both saw this yesterday but they put out some new assessments of u.s growth gdp in america for the imf 7 this year and an upgrade to next year as well tom this might get your attention up to close to 5 for gdp growth for 2022. that's the call coming out of the imf yeah i thought the imf's uh it got attention but also john what i'm looking at is the earnings before the earnings and we saw earnings yesterday any number of uh people including mccormick of baltimore the spice people were you know what they were pretty good and to me it sort of overlays on to the improved imf view july 13th jp morgan up first and i've got to say tom i'm looking for the commentary about how they're dealing with higher prices the ism price is paid for materials measure 42 year high you've got to go back to the iranian revolution tom in the late 70s for when we had a read that big coming up prior misra on prices in america and what it means for this bond market the head of race strategy at td joining us shortly 143.90 yields are in two basis points on its payrolls friday from new york city this is bloomberg i think consumers have money in their pocket and we're going to have a super holiday season i do think we're far enough along that a lot of that scarring should begin to dissipate even if the economy slows rates stay low inflation is going to moderate and we're still going to get positive long-term equity returns we think any pullbacks or any pauses in the market could be short-lived and shallow clearly we're heading towards an environment where they have to consider tapering this is bloomberg surveillance with tom keane jonathan farrow and lisa abramowitz 90 minutes away from the payrolls report from new york city for our audience worldwide good morning good morning this is bloomberg surveillance live on tv and radio alongside tom keane and lisa bradford i'm jonathan ferro friday morning good morning 43-13 on the s p all-time highs tk going into the jobs report all-time high is a boom economy and i think it's really important to focus on the labor economy and how it folds into two things john one is that guesstimate on the economy guess what the guesstimates have gotten more positive and constructive and the other is the inflation dialogue over overlaying it maybe that's a mystery but most people summing up higher inflation big nominal gdp i'm sorry that means job formation words matter guesstimate and i think that is just what it is tom yeah going into payrolls with a wide wide wide range of estimates once again with 400k at the low end 10.50 at the high end you know so yeah the numbers are there i mean we're going to look at that headline number john i'm going to go to wages less what i was talking about which is rising inflation there is a negative real wage in america that's never good do higher prices fix the problem in the labor market lisa not unless those higher wages turn into equally higher equally higher wages than higher prices the question i have as you guys were talking is if you have wages that are lagging behind these other input prices in terms of inflation you do not get persistent inflation that the federal reserve is looking at and i think that that perhaps john is what you're seeing in the ism data and that's what you're seeing with respect to the commodity prices and the response in the bond market we need to work out the response to the bond market i think that's where we've got to start this morning yesterday we had this really really strong guy say i'm still north of 60 but with a really really strong inflationary reimpulse to it price is paid 42-year highs now yeah if i gave you that information what would you do with it what would you expect higher yields tom's deeper curve lower yields flatter curve that is what we got so i think you've got two choices right now either this market believes like the fed that this high rate of change of inflation is transitory or an alternative explanation over the last couple of weeks is that you believe now that when higher prices start to come through you question the reaction function of the fed you believe the fed has to move quicker and it chokes off what could happen with inflation translating into higher yields what are two options there tom i you know i i'm going to go with i don't know what the dynamics are going to be it's like you know newtonian plumbing system of the 19th century and also we're in an area john we've never been before i'm going to go back to the three-month moving average on non-farm payrolls and my guess is it's going to be pretty constructive i could be wrong 720 that's the estimate going to the payrolls report it is 90 minutes away here's the price action six days of gains on the s p 500 could it turn into seven the fate of the training day may be in the hands of a jobs report that comes at 8 30 eastern time 43 14 on the s p 500 advancing almost a tenth of one percent yields are in again this morning down a basis point to 144 and in euro dollar euro dollar 118 31 tom pointed it out earlier a stronger dollar in the mix again this morning later against the single currency yeah perhaps the belief that they will have to raise rates although unclear perhaps that europe will remain easier than the us for longer hard to understand the dollar strength if you do believe the reflationary story which obviously is getting challenged at least by the yield curve 8 30 a.m we get that u.s june jobs report i'm going to be looking at the services dynamic that uh that cara cadano was talking about how much of the job gains really are stemming from some of the main areas that were shut down during the pandemic that are restarting most quickly versus the rest of the economy how much momentum is there under these gains 10 15 am we hear the political spin president biden is speaking about the jobs report expect him to talk about enhanced unemployment benefits the highly political issue of if you're paying people more to stay out of work why would they go back and get a job people have blamed this for some of the lag some of that friction and there have been number of states that have ended it as we've been talking about and today opec plus will continue to negotiate output cuts and i think this is actually one of the big sleeper issues tom and i think i think it's important to take a minute on this basically there was a disagreement in the opec plus members and the united arab emirates pushed back on the process by which they measured output they did not come to an agreement if they do not come to an agreement and they don't raise production to meet the increased demand you will have a rollover of being right now the production limits which means that the supply will not necessarily meet demand in the same way leading to higher prices a key question john as we go forward tom do you have something i got to jump in here because i just think it's important john that we see ms abramo it's with a european focus on her uh work today of course you know john and i will be enjoying rain swept new york city here it's one of the islands it's not creep but let's go to the greek data check right now john we can do that with athens equities up at an 888 level you're a dollar you've got to look at i believe they use the euro on one of those islands in greece 118 33. thank you and i think that's the price of fed no that's a nash i thought it was a price of feta cheese it's the national bank of greece john don't offend too many people will you tell me no i'm working on it you keep working on it good good to have you watch us this morning prime minister euro dollar 1 18 33 lisa do you make the change at the airport do you just pay on your card what's the plan here it's a card what's the plan there there's a system in place we have these throws oh you have some euros already yeah what was the exchange rate for you clearly not at spot at 118 what did you get i don't remember remember to go away and just not remember we're not even telling you i mean we couldn't even buy you know would you like to know anything else yeah i'd like you know we're looking at guesstimates this morning on the jobs report and i'm looking john at the guesstimate of which greek island we're we we're we're not crazy move on not crete listen thank you thank you i'm going to enjoy next week thanks we all will maybe she'll stay around for a reason you tune in might get a remote from lisa in the field not from crete priya mizra joins us now td securities global header race strategy priya what a start where we open the show and i know you're on the same page yields and the behavior and how markets are responding to economic data yesterday a nice case study what explains it i think it's the market pricing in a more hawkish reaction function frankly i mean if you look at long end inflation expectations they've declined the market's taken the terminal rate of the hiking cycle and lowered that we were pricing in two percent at the end point of the hiking cycle in march it's pricing in less than one and a half percent so the front end i think the market's telling you that uh the fed is going to be forced into hiking for some reason perhaps inflation and that the economy can't handle it which is why the hiking cycle will be cut short and it could potentially you know slow down growth going forward that's why that yield curve has been flattening and i think it's a misinterpretation of the june fomc i think there was a lot of confusion huge market reaction on the back of that meeting i don't think it was a change reaction function i think it was an acknowledgement of the upside risks out here but i think the market sort of running with a more hawkish reaction function and perhaps that the fed's commitment to that fait approach is is weaker does this jobs report adjust the taper talk or adjust the guesstimates of what we'll see at jackson hole i think both i mean they are sort of linked because you know we know that the fed has sort of opened the door now they are they're at least talking about talking about tapering so now i would argue every data point now is going to be a market event i think you know because they've put the market on notice so whether it's jackson or if you get a really strong number if we see high wages i think the market's going to say okay maybe jackson hole or the july fed the fed might signal tapering sooner and the issue is tapering in the first hike are linked i mean you know what's the time period between the end of tapering and hiking some fed officials think it's a couple of months others think it's it's a year out we don't know that time period um and that's why i think if the tapering time frame moves sooner based on today's number i think that hiking timing and the hiking pace could also increase so it could be another flattening reaction which will seem a little bizarre if the if the data is good and we really need to see how the fed pushes back do they actually say that they want to see the supply chain disruptions and you know even in the labor market i would argue there's a lot of frictions and they'd want to at least wait until september before they can you know sort of take the victory lap so just to take the flip side of this priya that means that if it's a disappointment on the number that you could see yield curve steepening i do think so yeah i think that front end is going to push out the timing of the first hike to potentially early 2023 mid 2023 and the long and then maybe the reflation trade comes back it seems a little counter-intuitive but i would say price action in the last couple of weeks is symptomatic of a reaction function shift not economic data which is why we're getting weird reactions i would argue to economic data so yeah i think a weaker number pins the front end a little bit more and the long end then inflation risk can start to rise in the long end if you can just reiterate your year-end on a 10-year now what is it we're looking for two percent um on the 10-year because we're we're looking for the fed by december to actually announce tapering now it's a long way from hiking our hiking call is much further out so you can probably tell why i like the steepness i think the bar to hike for the fed is much higher they want an inclusive recovery they want inflation to persistently you know be or or at sustained basis be a two percent overshoot so but but you know the the tapering bar is not that high so the reason i've got this higher um rates in the in the long end is is this idea that the fed will taper we have a ton of treasury supply that we have to take down so to attract that marginal buyer both real rates as well as inflation expectations will need to rise bria thank you good to catch up with you on payroll friday premium mr there of td securities your yield right now on tens 144 year-end the forecast coming from td two percent john can you imagine getting a 30 or 1.99 i mean nobody's expecting that five basis points away right now tom yeah down two basis points on the day in that way as well i mentioned the imf a little bit early this morning tom lisa they also offered a timeline for the federal reserve which i found quite interesting i didn't understand this and i'm wondering whether they're basically trying to get the u.s to move first to give some sort of uh leeway to other central banks around the world to start raising rates but honestly for them to say you should probably start to raise rates by the end of 2022 and probably should start tapering pretty soon when is there a precedent for the imf giving the federal reserve recommendations on policy i remember a certain president of guard tom do you remember that that news conference where madame lagarde said about not doing too much too soon and try to push back and there was a tantrum i mean that's the big fear here john is to repeat what we saw a couple years ago and you know to be honest john everyone's managing the message i mean you're going to see that with the secretary of labor later this morning 145 on 10's going into payrolls we will catch up with the labor secretary marty walsh a little bit later this morning following that payroll report the number out at 8 30. about 60 minutes later we're here from the white house maria today oh killing it with research she's also reviewed things not peros not eos so we've taken three islands off the list we have it's good thank you maria today thank you we might find out by the end of the show we may where lisa is going on vacation it's like a game show yields down two basis points all-time highs in the equity market payrolls friday from new york on radio and tv this is bloomberg with the first word news i'm leanne garens the opec plus alliance has fallen into bitter infighting a key member the united arab emirates blocked a deal at the last minute forcing the cartel and its allies to postpone their meeting until today it's casting doubt on whether there will be an agreement on production that could ease surging oil prices now economists surveyed by bloomberg forecasts at u.s payrolls rose by 720 000 in june recent forecasts have been much higher than that actual number a variety of issues are probably keeping people from returning to the workforce including enhanced unemployment benefits child care responsibilities and health concerns the jobs report is out at 8 30 a.m new york time now a group of republican senators want president joe biden to end the trade war initiated by donald trump the seven lawmakers wrote to the president asking him to revoke tariffs and other barriers imposed on china and european allies they referred to the trade war as self-inflicted harm after five years of tensions over brexit british prime minister boris johnson is laying on the charm for angela merkel's last visit to the uk as german chancellor merkel will visit johnson at his country retreat and the queen at windsor castle she'll also have the very rare opportunity to address the british cabinet global news 24 hours a day on air and on bloomberg quick take powered by more than 2 700 journalists and analysts in more than 120 countries i'm leanne guerins this is bloomberg of course the nascent recovery still faces uncertainty also due to the spread of virus mutations in the current phase of the pandemic our concerns about financial stability are shifting from liquidity risks in the non-financial corporate sector to balance sheet vulnerabilities in that very same sector the ecb president there christine lagarde on the situation in european markets from new york city this morning good morning alongside tom keane lisa brown with some jonathan ferro equity futures 43-14 pushing 43-15 up around about a tenth of one percent after six straight days of gains on the s p 500 it has been all-time high after all-time high through the week so far your payrolls report one hour 12 minutes away going into that yields are grinding lower down a basis point to 144 24 and in the fx market euro dollar 118 34 down a little more than a tenth of one percent on the euro earlier this week tom i think it was you that sent me the research of kit jukes potentially over at sock gen envisioning a 110 going into say 2023 with a dominant factor being short-term rates in america and what happens there is going gonna drive that us dollar well some of the mystery to see what the dollar move is off of 8 30 this morning john makes a joke at 8 32 at all ends well you guess what a lot of research will be written and we'll bring that to you through the morning and on to the real yield uh this afternoon right now joining us and it is an acclaimed spot particularly on a july morning where at any moment she could be drowned out by the lawn mowers of the north lawn of the white house the history here is great they were on the lawn the journalists ruined the lawn then they put gravel down they called it bevel p uh pebble beach so joining us in the asphalt in front of the white house commonly called stonehenge henry horton uh joins us from the stone ends today emery july 4th is always hugely symbolic for senators and representatives they go home they kiss babies etc what's their biggest worry right now with their constituents well tom i think the biggest one of the biggest worries right now is twofold one of course is jobs given we're going to have that jobs report today are enough people getting back into the labor force some states we already see are taking away some of that supplemental supplemental unemployment benefits because of that some states of progressives are worried about child care we have some especially women on the sidelines of this job recovery because they cannot get that child care second there was a covet briefing here and the cdc is incredibly more worried about yes that started from india and the southwest and the midwest that is a key concern for a lot of counties that just don't have the vaccinations i'm so glad you brought bring this up anne marie because this is front center we talked to pecos at johns hopkins about los angeles you mentioned the southwest and for the rest of us fat and happy i mean this is a real deal for los angeles this fourth of july weekend it certainly is and i just was in the united kingdom where the delta variant is yeah the delta of course i was the delta variant tom is just the main driver of all the uptick of cases they are a little bit longer and rolling out the vaccines than the united states they have a longer lag time between the first and second jabs but that is the concern here if you have a county that is not vaccinated the delta variant spreads much more quickly and that is a key concern of the cdc and some states they say right now it is already the leading variant and marie so what's president biden's message to americans especially as he tries to highlight the progress that the united states has made with vaccinations but also the uneven progress in specific places yeah i think he's going to have to really walk this fine line for the last week we've seen a lot of press releases from the white house touting their economic growth and the recovery they even put out how to have a cheaper fourth of july their take that inflation is transitory that your fourth of july barbecue this year is cheaper but at the same time they want to make sure people are a looking for jobs there are jobs out there are people looking are they just still accepting those unemployment benefits and two to get vaccine if you have not been vaccinated as a key message from this administration because what could derail this economic recovery some would say in question is potentially this delta variant and marie you talked about jobs in the spin after the jobs report comes out you pointed to those enhanced unemployment benefits what's the democratic line on these the democratic line is that they want to keep these un these enhanced unemployment benefits many progressives especially speak to the fact that there are a number of people who have not been able because of the pandemic to get back into the workforce and until they're able to get efficient child care schools are fully reopened and they're able to get a job with wages to keep up with the pace of the country and inflation at the moment so their take is that you keep them at least till september but some states we already see definitely gop ones are doing away anne-marie we don't have jan for politics today we've got to get a briefing here you were in london you were closer to greece than any of us as well and i need a briefing on the island of lesvos in the making of uzo's uzo including uzo gio nazi i mean is it is is lesvos the kind of island that that lisa should go to i haven't been to lesbos i've been to a number of greek islands i don't know where elise is going maybe car we don't know matt is cranny he was my day break anchor in london he's currently in mykonos so if you go to mykonos you have to at least have one night at namos this is special one night at namos and i've frequented some night clubs in mayfair with anne-marie i have no doubt and if there's one person in our staff that knows where to take a night out tom i think it probably is anne-marie what i want everybody to notice here and for those of you on radio this is really serious these people have these romantic lies pharaoh's three weeks in capri and anne marie and manus are flying around they've been to every greek island lisa to her you know leads a break this will be great what am i doing i'm going to three guys on medicine is that why you're going this way yeah i'm going to three guys this morning for a quick break you're not taking a break no no i got to read all weekend i'm ready i know you've got to run run and marie she's never coming in and corresponding down in dc we're trying to work out where lisa's going on vacation it's not creed it's not no crate i saw eos and i thought it was apple ios i mean that's a clueless eye classy tom yeah thank you classy you're really not going anywhere this weekend no i just was up in maine for two fun-filled days you've had your break is that your summer vacation you're so old school take some time off no i don't i work every day then you can tell him that he's been on seriously the cfo the cfo of the trump organization and the reporting on his important indictments he said he never takes vacation i'm embarrassed by that it's a culture and i'm not proud of it john it's it's a uniquely american idiocy have we done something to address it after the last 12 months we've just i think so yeah i think so we make that adjustment finally i i haven't but i i do agree john there's going to be a reassessment lisa do you think we need to yeah i mean yes and i think that people are aware of the need especially with the lack of divide between work and home when people are working from home whether that's actually going to be the case i don't know i mean if people are going to be working from home more does that just mean an extra 40 minutes on average of work we should state here and bloomberg's done great reporting on this there's a serious mental health crisis coming out of this natural disaster without a doubt absolutely yeah we're making jokes about it but this is serious i'm going to catch up with megan green the economist a little bit later tom she's doing some work on that it's really important she's trying to talk about lisa whether it's holding back this labor market as well and particularly among kids and people entering the labor force now i mean if you think about kids who've been out of school and not able to socialize it's been a very difficult period particularly the people going to greece coming up sarah house wells fargo corporate and investment bank secretary economist from new york city this morning 43-15 on the s p payrolls one hour five minutes away your estimate 720k heard on radio seen on tv this is bloomberg surveillance this show is so much better in the commercial break if only the mics were hot from new york city live on tv and radio here's the price action 43-15 on the s p 500 advancing about four points up about a tenth of one percent after six straight days of gains yesterday's gains at an all-time high driven by the cyclical parts of this market energy had a nice pick up off the back of that rally and crude time we'll get to the bond market just briefly twos tens and thirties just to give you a flavor of where things stand going into the payrolls report 60 minutes away yields come at a better basis point 144 24 on tens on 30s yields in again by two basis points just above two percent at two point zero four percent and john this is a sensitive issue it's well understood it's within our agreements with bloomberg lp john and i are not allowed to be on the same plane ever there's been a couple times particularly the davos where this is really uh really important and and you know for good reason and i really think john we've got to begin to consider that policy from isabel bramowitz and miss lyons it's going to get yes it's going to get you know it's it's serious stuff just wait time comedy is just to build it up and then get to the punch line really let's just go through this bond market just i thought you already went through it now i haven't finished yet that's twos tens and thirties i want to talk about the shape of the curve as well tom switch out the ball to get to that the data's one thing how a market responds to the data is the other part of the story the second part for market participants the most important important important part of the story twos tens right now a break at 118 at 117 94. that's a flatter curve over the last couple of weeks and even in the last hour and again in the last now so tommy's the question for you what's driving this we've talked about it briefly with priya misera on the one side you could say the market is very much on side with the views of the core of the federal reserve inflation and that higher rate of inflation will be transitory therefore the curve should be a little bit flatter break evens off the highs from may all of that good stuff okay the other explanation is this market is starting to believe and question the flexible average inflation targeting of this federal reserve the very reaction function that they've worked on over the last year the belief perhaps that with a inflationary read on growth like the ism yesterday there is a belief now that the fed steps in a little bit too early and chokes things off pre and misery of td on a little bit earlier making that point she thinks it's the wrong way to go and tom that's why she's looking for a steeper curve and tends out to two by year end okay that may be i'm going to go with deutsche bank here and the two-part yield market they see and economy they see which is their short-term dynamic and they're also looking at the long-term dynamic which affects that 30-year bond uh you know what are we going to see at 199 at 8 32 this morning we'll find out at 8 32. we will should we get there tom i'd have thought who would have thought that lisa would go to greece that kaylee would go to greece and they'd be on the same plane tk the same flight it's you know it's against surveillance policy there's too much risk there the only thing we know so far this morning is that lisa is not going to crete and kaylee is not going to crete yes that's all we know but they're on the same flight i won't ask you which airport we do respect your privacy teddy lies good morning lisa and i are going to have a great time at the airport bar later on tonight but forget about commercial flight let's talk space flight richard branson is going up to space on a virgin galactic test flight on july 11th and when is that it is nine days before jeff bezos he's beating him to the punch here as a result space ticker shares are up by about 28 in early hours and of course lisa and i are allowed to go to greece because we're vaccinated americans it's not necessarily the reverse but speaking of vaccines johnson and johnson saying that theirs protects you against the delta variant that stock is higher today cureback though not having as much success with its vaccine those shares are lower and then i also wanted to point to intelia therapeutics this is about gene editing it's a really nice boost on wednesday today though it is just fractionally higher up about four tenths of one percent and of course it has also been a really busy week for ipos i wanted to check on how some of those newly public newly listed stocks are doing one of them is a pop culture group this is a chinese hip-hop producer tom i know hip-hop is your absolute favorite music genre this is an insane story ipod at six dollars a share spiked 405 percent in its debut then doubled again yesterday so this morning it is trading at 67 a share you out do have didi another chinese listed company uh listing here in the us it actually didn't have a great debut then rallied yesterday today though slightly lower xometry had a good debut it is up and then krispy kreme donuts i'd have been outed on television this week as someone who has never had a donut apparently maybe that is weighing on the minds of krispy kreme investors because yeah there's a lot this morning kaylee there's a real legacy on krispy kreme within wall street and the first time they came around it was hugely anticipated if you had a hedge fund prime brokers would offer you that you could short krispy kreme yeah and they would get you the stock to do that and of course this is a whole new iteration uh this time around john and i just kayla we're just like we you know just can i carry your suitcases uh kaylee uh 10 a.m this morning uh as well right now moving forward here uh economics sarah house wells fargo here of course on what we're going to see today with the jobs report sarah the great conundrum is a service sector what is your partition this morning between good producing and service sector jobs well i think we'll definitely be looking at what's happening in the leisure and hospitality sector since that's where you still have the biggest deficit between where we were back in february of 2020 and where we are today and of course that's the area with the biggest upside coming from reopening the fact that people are again traveling again um you know even domestically as lisa takes off but as we we look at the the breakdown of what we're of what we're seeing i think we'll still be paying very close attention to the good side of the economy too so we did have a dip in construction last month how much of that is also because of supply issues there builders getting getting materials and so i think there's going to be a lot to parse through in terms of whether we're seeing these supply constraints beginning to ease and whether workers are coming back how much of it is a skills mismatch versus maybe just some some hesitation have you tweaked your non-farm payrolls number and what's the direction of that adjustment so we're looking for a gain of 750 000 new jobs and so that would suggest some momentum so we didn't tweak after yesterday's ism or adp on on wednesday but we do see signs that demand improved further over the past month so you can see that with the continuation of job openings the hiring plans numbers that came out for june from the nfib survey yesterday but importantly we're also seeing at least some small signs of constraints beginning to ease so less fears about getting coveted we've seen as well drop in in continuing claims suggesting more people might be might be moving back um to work as well so we think together that stronger demand and ease and supply constraints gives us some upward momentum in terms of the payroll numbers sarah i remember earlier this year i think you had one of the quotes at the moment when you said no one said reopening would be cheap that was your line is there anything you've been surprised by about how the data has come in though i think it has been pretty surprising in terms of the the wage number so we've seen some big increases in average hourly earnings the past two months and what's been remarkable is that's coming as we're seeing more jobs being added in the very low wage sectors and really just how much employers are increasing pay so yes we're seeing a lot of signing bonuses but the average hourly earnings numbers that reflects that that hourly pay these are not one you know this is not just a one-time pass-off these are are going to be at least a permanently higher level of wages it remains to be seen what happens to the pace of growth going forward but we have had to see businesses really pony up for for labor and that's being reflected in some some pretty massive gains in terms of that pay for leisure and hospitality retail trade and transportation all those low-paced sectors workers are have been more hesitant to come back to them and and it's costing businesses more john uh earlier today sarah was talking about the participation rate and how it hasn't come back to where it was and it still remains far behind i think more than seven million americans still out of work when will we have a clear sense of how much of this is more permanent in nature versus some of these other concerns whether it's child care or covid or even perhaps just taking advantage of enhanced unemployment benefits right so i think we're going to have to wait for the fall to see that to see how much of this is just a timing mismatch where businesses have been ready to reopen faster than workers have been ready to come back whether that's because you know we've been told to stay away from other people for the past 15 months or it is these child care issues with school having been remote last year and and needing to get back full-time in person to the classroom this fall how much of it is perhaps those um enhanced unemployment insurance and so i think it's going to take you know probably until october maybe even november when after you get the october jobs report that we're going to get a better sense of how much of that is just this this timing issue that it takes timing to rehire it takes timing to line up your child care to find that that new job where maybe you also want more of a career so workers are rethinking what what they want versus how much of this is maybe some more longer-term um damage around okay um to the labor supply retirements um different views of of you know family considerations and and how um the degree to which parents come back sarah our focus this morning is the greek islands i mean the distance from corfu to crete is 500 miles i know you're an expert on corfu is as well did you find corfu to be equivalent to crete far to the south having never been to crete can't can't quite compare it but i think um but i i'm jealous of lisa and her travels next week i'll i'll i'll be trying to get some research done she deserves it she's not going to create either don't worry sarah house of wow sarah thank you if you tuned in from outside of america i think you might have guessed already there's a long weekend coming up stateside tom we got to get to payrolls first 8 30. i mean we're an hour away from a really important report again john i'm going to look at wage dynamics because i'm really focused on the negative real wage but also i'm going to take the three-month moving average after those important revisions sarah house is saying wait until the october payrolls report lisa to figure some of this out yes yeah but the fed can't wait because at a certain point they have to start tapering and they have to give some indication otherwise markets will predict what they're going to do for them and they'll have to disrupt the markets if they want to go against that really i mean you go uh but right now the market is implying that they're going to make a policy error and then you know if they wait too long they could get worried about runaway inflation oh so that's the side of the argument you'd come out on then because that's important because there are two options here that we've been discussing all morning either some people do think exactly that the fed's going to come in early and choke off growth or the market is quite well aligned with what the federal reserve and the core of the fed are suggesting i would put out there that perhaps the fed will go with what the market wants because that's what it's done in the past interesting lisa brambids tom king jonathan ferro counting you down to payrolls at 8 30 eastern time 720 000 is your median estimate right now we stack up as follows the scores look like this this friday morning the s p 500 advancing four points up by almost a tenth of one percent to 43 and close to 15. from new york city up a little bit later 8 30 eastern time after that jobs report drops we'll catch up with jeff rosenberg of blackrock a portfolio manager here in new york from new york this is bloomberg [Music] with the first word news i'm leanne gerens opec and its allies are trying to resolve a dispute that is blocking measures to ease oil prices a potential deal to increase production fell apart late yesterday the united arab emirates is at odds with the cartel's leaders saudi arabia and russia if efforts do fail today the world may not get the extra oil supplies it was indeed expecting now johnson johnson has said its single shot coronavirus vaccine neutralizes the fast-spreading delta variant the vaccine is also said to provide durable protection against infection more broadly delta is expected to become the dominant strain in the u.s in the coming weeks richard branson plans to beat fallow billionaire jeff bezos into space branson will fly on a virgin galactic test flight on july the 11th along with five others that is just nine days before basis plans a trip to space aboard a rocket made by his company blue origin he and the crew will be joined by 82 year old wally funk she was one of the first women to train for space flight but never actually made it on to a mission global news 24 hours a day i'm leanne garens this is bloomberg the business is recovering very strongly the two markets that are lagging that are clearly the uk and ireland where still there are travel restrictions code restrictions still in place and in my view people overreacting to what the delta variant which has seen an upward spike in cases in the uk but not any significant move in serious illnesses hospitalizations or morbidity it is tough to run an airline right now michael o'leary the ryanair ceo from new york city this morning good morning alongside tom keane lisa brambis i'm jonathan ferro counting you down to the payrolls report in about 42 minutes time here's the price action going into that equity futures up four on the s p 43-15 a six-day winning streak into friday all-time highs on the s p 500. i want to slice up this market just a little bit for your cross asset yields down two basis points 144 the grind lower continues yields are lower the curve's flatter but this is what i wanted to pick up on some news in the last five minutes get to dd in the pre-market this is the ride-hailing giant out of china closed its u.s trading debut a couple of days ago raised 4.4 billion dollars and then bank china launches a cyber security review of the company they will halt registration of new users during the review and this is according to a statement from cyberspace administration of china and that stock tom down in the pre-market by five and a half percent to 1550. and not only that but i'm going to suggest it maybe has a weight on the tape here i mean you know things have just softened up a little bit i don't want to make a big deal about it i don't associate it directly with didi john but but all of a sudden there's a little bit of a weight in the yield space lower yields and you wonder if it's needing people will be asking this question tom is it just a coincidence that after a couple of days after listing stateside china has a big review yeah well there it is it's a back and forth the back and forth that we see also with russia we've seen that recently as well what we also see is a david wilson chart on jobs day that's important what do you have well we're talking about what you'd call the dividend aristocrats it's sort of a group of stocks wonderful actually on both sides of the atlantic that andrew garthwaite over credit suisse is recommending and uh what the chart does it focuses on the u.s piece of it uh there's an s p 500 dividend aristocrats index so if you get into that indicator you've raised your payouts every year for at least 25 years so we're talking about a real track record of you know rewarding shareholders you are expert at this david wilson and you're not going to touch your own home so i'm going to do it for you you've written books about this in article after article have the dividend aristocrats changed because of the effort to buy back shares well i mean they've shifted to some extent but you have to remember some of the biggest technology companies the ones you know with with cash flow you know i mean they're just not making payouts you know think about google's owner alphabet think about amazon.com those kinds of companies so the shift is not as extreme as it could be one thing that has shifted though is the relationship between these aristocrats and the s p 500 when it comes to dividends you look at the you know the aristocrat index 2.3 percent doesn't sound like a lot but that's a full percentage point more than what you're getting on the s p 500 these days as the dividend yield has come down very good david wilson have to leave it there as we wander up to lennox massachusetts it is the boston pops and this year a different boston pops they travel to their hollow ground it is no question the most historic summer place in america for classical uh music uh romaine bostic is at the shed romaine it was the final concert of leonard bernstein among other things built in 1938 and you will grace its presence this weekend yeah i'm really honored to be here of course i am in the shed this is the summer home of the boston pops this is their venue tanglewood of course on that stage behind me tom in just a couple of days we're going to have a real star-studded event here of course mavis staples legendary soul singer and of course john batiste just sort of a new breed of singer out there jazz the standards and everything in between they're going to be on that stage of course under the helm of keith lockhart the conductor of the boston pops here a big celebration here of our nation's independence but also tom it's a real celebration too of our reopening this is going to be the first major event here at tanglewood since the pandemic shut everything down so there's a lot of excitement here a lot of people really want to get out they want to be of course with their fellow americans and really just come out here and celebrate and have fun on sunday romaine that's exactly where i wanted to go the reopening of america this idea of the end of the pandemic what will it look like what kind of measures will be taken that still recognize that the pandemic has not yet really gone away well there are still going to be some social distance measures in place here total capacity that it's going to be allowed is about 9 000 people both here in the shed as well as out on the lawn uh just off camera here that's less than what you would normally have at full capacity here at tanglewood so there will be a lot of precautions in place here uh however we should point out we are sort of moving at least hopefully towards the end of this pandemic and the folks who run this place and the folks who run a lot of the venues here uh in the boston area and lenox massachusetts area have said they are eager that hopefully by the end of the summer into the fall a lot of these restrictions will be gone hopefully by then we hope so roman is good to see you enjoy the long weekend won't you a lot of work for you too remain bostick there bloomberg markets the close anchor and tune in to the boston pops july 4th spectacular this sunday at 8 p.m eastern time on bloomberg tv radio dot com and of course on quick take too before we get there before your weekend starts we've got to deal with the payrolls report in the united states of america and going into that we're looking for 720 000 tom that is your estimate going into this number and the revisions as i said important john i'm going to go to the most important chart we're not going to show it because of radio lisa showed it yesterday john claims is not related thursday claims is not related really to what we're going to see today but i'm sorry it is a persistently constructive and optimistic chart maybe that's what we see over the next 90 days direction of travel is important and we need to see that persistence that continue lisa that improvement and get better and better from here pace and composition are two really important characteristics here because it's definitely the pace how long can we keep this up and also the composition i mean i really go back to what carl cardona was saying how much momentum is there under the hood how much of the job losses has been a result of some of the key areas of the uh of the economy like leisure going dark versus some real lagging effects in the rest of the areas in the rest of the industries and this is really something needs to be done let's talk about something that hasn't improved over the last six months or so the participation rate in america hasn't really improved improved therefore the employment of population rate in america has not really improved either they're two of the things that we know we know lisa that officials on this federal reserve are focused on that is driving policy and the key is when do we know how much is scarring how much is more permanent in nature versus just sort of a reopening effect a lag time with people perhaps staying out because of illness fears or because of their kids these are really unknowns at this point and john we have to also emphasize there's been a huge technological shift underpinning this recent year i mean the idea of the move to the cloud the move to remote work how much does this shift uh the skills that are required for some of these individuals so is it structural or is it cyclical and the answer to that question tom tells you how much the fed can do about it in the coming months and years yeah i i'm not really focused on structural and cyclical john i think there's so much noise out there who can split the two apart i just think we stagger day by day look at the imf numbers pulling up to some extraordinary numbers and again i'm going to go back john to the immediate data and to me the beginning of the earnings season frankly it's as important as this jobs report well and honestly john though this is the real key point at what point is the fed not helping anything with their policies to your point how much is this structural and needs other kinds of remedies and that i think is a really important question a conversation through the next couple of hours on bloomberg tv and radio joe kerry hall of bank for america on the equity market and then we'll catch up with the labor secretary a little bit later this morning following the jobs report we'll do that at around 9 30 9 45 eastern time from new york on radio on tv on this payrolls friday thank you for choosing bloomberg we see a very high number of people who are quitting their jobs we only see that when people feel very confident about the market i think consumers have money in their pocket and we're going to have a super holiday season i do think we're far enough along that a lot of that scarring should begin to dissipate clearly we're heading towards an environment where they have to consider tapering i would argue every data point now is going to be a market event because they've put the market on notice this is bloomberg surveillance with tom keane jonathan farrell and lisa abramowitz good morning everyone jonathan ferro lisa bramwitz and tom king jobs day in america we are focused on 30 minutes from now an update on the american labor economy and you have to fold it john into all of this boom american economy and a boom equity market too tom 4315 and the equity market all-time highs up another tenth of one percent bond market that's what gets my attention yields lower curve flatter over the last couple of weeks right now 144 going into this jobs report 29 minutes away let's do this different now we're going to go right now into why we're seeing flattening the two of you john why do we see flattening right now in the yield curve i'll give you the range of options right now there are two either this market is well in line with the core of the federal reserve and believes that inflation is transit tree or this market and some market participants are starting its position for a fed that they think will choke off growth and inflation early maybe that would explain the flatter curve prior measure of td thinks it's the latter and not the former lisa to me it's also the secondary effect of the great build like 2006 price up up up up up and yield in on ig and high yield yeah well you can see that but they're two different stories here the credit market pricing you think so i do think so i mean to some degree there is a separation between credit and full faith and credit uh full faith in the united states backing their debts this idea here of a good economy is better for companies that are more leveraged on the flip side government debt you don't want to own if you have a really rapid growth if you expect inflation what i'm looking out though is frankly people who are acknowledging that nothing structurally has changed over the pandemic to lead to a higher inflationary rate and that i think is one message that's loud and clear i am wondering about those real yields though that when are people going to start worrying about supply and demand well i'm glad you're welcome i'm so glad you bring that up a negative 0.91 a much lower greater negative statistic on the real yield of course some this afternoon by jonathan pharaoh who's not going uh to greece he'll have that on the real yield here in the afternoon all sorts of people watching uh today we thank some government officials for watching we'll get to that in a moment in academics as well but john i think we need to get to the data check right now to get to the conversation into this jobs report john green on the screen and the vix 15.14 near a 14 handle 4316 on the s p we shape up as follows on the s p coming into friday six days of gains can we make it seven up six points we advance by zero point one three percent we've talked about the bond market through the morning 144 is your yield on a ten year we come in two basis points crude got your attention yesterday it does not this morning 74 81 we're down by six tenths of one percent there and tom you mentioned it a couple of hours ago dollar stronger euro weaker that currency pair negative a quarter of one percent euro dollar one eighteen twenty two one eighteen twenty two is a huge deal a one print would confirm japanese weakness that we see as well a 111 43 on a dollar yen let's jump to it now and get to the conversation a moment jill carrie hall with bank of america looking at the equity markets the senior u.s equity strategist jill what did you tweak at mid-year waiting for this jobs report to adjust to the earnings season that comes well look i think one of the the important parts of the jobs report will be the wage data and questions persist as to how transitory the the inflation backdrop is going to be you know we we've seen companies this past earnings season have their margins hold up very well given the inflation pressures that we've seen so i think that'll be you know one of the key factors to watch for the the coming earnings season and you know that was one of the reasons that given the the stronger wage data that we've seen we lowered industrials uh from an overweight view to a market week view it's the second most labor-intensive sector after consumer discretionary which we had also uh recently downgraded to an underweight view so these sectors have a higher ratio of employees relative to sales so there's there's more margin risk if we continue to see wage inflation rise jill i know you're bullish on the cyclical parts of this market outside of industrials i want to talk about your index level price target just for a moment though you and a team along with savita the most bearish on the street right now at 3 800 year end we're at 4 300 right now what do you think is going to take us back down to those kind of levels look we we do think that the the market can end the u will end the year lower than the levels that it's at today and i think one of the reasons is just the euphoric equity sentiment that we've seen our our measure of wall street equity sentiment even though it took a bit of a breather this past month is still you know at levels that we have not seen in many years so you know equity allocations recommended equity allocations have been rising um valuations are obviously extended uh so so obviously from a sentiment and valuation perspective we don't see much upside here to the market and we really think that that the rest of this year will be more about investing in those rotations within the market and that's where we continue to prefer value over growth where you know given the tilt of the s p 500 toward a lot of those you know big mega cap growth stocks that continue to rotation to value is actually something that that can cause you know the market to go down rather than up jill i want to just sit on what you just said for a minute the sell side indicator reaching its uh most strong sell signal since the great financial crisis as you pointed out in your note what is the what is the precedent in previous times in history maybe the great financial crisis is one but other times that you think are important to look at to reflect in terms of positioning and views for possibly giving some guide for how quickly the market could turn yeah so we we survey other wall street strategists about what they're recommending that investors put into equities in a balanced fund and that indicator while it's still in neutral territory it's less than a percentage point away from a cell signal as you mentioned um when wall street strategists all together are super bullish that tends to be a contrarian negative signal to to do the opposite and sell equity so you know we've been in an environment where equity allocations were secularly lower post the financial prices but you know this this indicator is at highest level closest to a sell signal that we've seen since 2007 um so you know as i mentioned i think we'd be we'd be more cautious on the market overall but you know we would rotate into some of the styles that i've been mentioning and quality is another one i think that if we see earnings peak out in the fourth quarter of 2021 on a trailing basis if we see peak stimulus these are supportive of high quality stocks which should start to outperform low quality stocks but right now or are trading at a distance joe i'm absolutely fascinated how you're constructing your earnings guess for next year do you have a real belief in it or you just have to simply wait to the beginning of earnings season july 13th so this year we're expecting over 30 earnings growth in 2021 and then that'll slow to about 11 in 2022 uh but you know obviously given the super strong beat that we saw in the first quarter there there could be upside to this year um but you know for next year there's there's some potential downside risk if we were to see tax reform um which could have you know kind of a mid single digit uh impact to s p 500 earnings obviously depending on where the corporate tax rate goes um but that you know higher taxes could put some of the sectors like tech um at risk that could be targeted from some of the tax reform proposals so you know i think as i mentioned inflation and wages will be important to to watch for to look at the margin outlook as we come up into the second quarter earnings and and then beyond that i think tax reform will be an important thing to watch as well jill it is payroll's friday we'll get the report in about 22 minutes time you and the team have done some really nice work on jobs intensity in some of this market just how jobs intensive is the equity market the s p 500 and how's that shaped up over the last several decades yeah so you know even though as i mentioned we we are watching the the wage inflation data closely the the labor intensity of the s p 500 the good news there is that the index is a lot less labor intensive than it was multiple decades ago so when you look at that ratio of employees relative to sales that is produced by companies within the index it's about 70 percent lower than than we were tracking about 30 years ago so um more labor light uh and certainly you know you have bigger areas like like tech within the index um but but the areas that we would watch that are the the more labor-intensive areas are parts of the industrial sector parts of the consumer discretionary sector so areas like hotels and restaurants and some traditional retailers that hire a lot of people and could see margins of risk jill really smart and always appreciate your time so not best for the team weren't you jill kerry hall of bank for america at least the labour intensity of this market is something we're all increasingly focused on as we look for payrolls in 20 minutes and i keep thinking about the participation rate as part of that i mean if people are funneling more capital to companies that can automate or don't need as many people as other companies what does that say in terms of access to capital in terms of the direction of the economy and it just sort of goes to this idea of a structural shift that we're seeing and bear out in employment there's a really tiny ratio for this that bank of america have done the work on tom the employee to revenue ratio and to put it simply over the last several decades is head south it's been heading south why just take a look at some of these tech firms and just do a des on the bloomberg scream and have a look at how many employees they have compared to say the companies of yesteryear yeah yeah there's no question i mean the dynamics have changed john and sure there's the boom in employment at amazon we all understand that and some of these others but right the tech has just changed the labor share so much john it's just a joy to have an international audience i mean you've been so part of of building that out thanks well the prime minister of greece has taken note of our show this morning he's from one of the most esteemed families of greece his ancestors back to 1910 literally kept greece on the side of the allies in world war one and we are honored that the prime minister's office notes that lisa is not going to creep lisa began to agree just for the record prime minister mitsutakis promised us an interview tom in mykonos do you remember that yeah i do we had that conversation that was confirmed right i'm still waiting for the follow-up september from the pm's office well we're looking for the pm maybe we should do that next week tom i will or yeah i i think you're gonna enjoy it next week it says october as well you know could you imagine if we took a studio and just set up on the beach that lisa was on well it's important though i mean it's one symbol that things are open right i agree things are open a symbol of something tom i agree tk i'm looking forward to that okay let's get it set up 19 minutes away from the opening bell 19 minutes away from the jobs report had an hour for the opening bell not creep yielded basis points i know that 144 on tens 43-14 on the s p your jobs report 20 minutes away from new york city heard on radio i've seen on tv this is bloomberg with the first word news i'm leanne gerens the opec plus coalition is trying to find a way out of a standoff that is blocking an increase in oil supply one of the cartel's key members a united arab emirates is at odds with saudi arabia and russia if the dispute cannot be resolved that could mean the global economy won't get the extra oil it was counting on and that could lead to higher prices now london is once again europe's largest share trading center the city moved back ahead of amsterdam in june it's the first time this year london's been on top brexit pushed much of the city's volumes to the continent paris was the third largest venue now charles schwab will take a 200 million dollars charge in the second quarter linked to an sec investigation the inquiry relates to disclosures around the firm's schwab intelligent portfolios product schwab purchased rival brokerage td ameritrade in october that gave america's original discount broker even more influence over the industry it pioneered nearly half a century ago a group of republican senators wants president biden to end the trade war initiated by donald trump the seven lawmakers wrote to the president asking him to revoke tariffs and other barriers imposed on china and european allies they referred to the trade war as a self-inflicted harm global news 24 hours a day on air and on bloomberg quick take powered by more than 2 700 journalists and analysts in more than 120 countries i'm leanne guerins this is bloomberg [Music] romaine basic here live from tanglewood in just a couple of days on that stage behind me the boston pops july 4th spectacular mavis staples john battis they're going to be performing on that stage the six string soldiers of the u.s army field band the singing sergeants of course of our very own united states air force all under the direction of our conductor keith lockhart the boston pops july 4th spectacular you don't want to miss it it's going to be at 8 pm on sunday right here on bloomberg certainly we have seen large consumer price movements in recent months and we think that those fairly high inflation readings will continue for a few months i want to emphasize however that the evidence suggests that this inflation will be transitory and it is largely a product of relative price movements that are occurring as the economy rebounds that was christine at george over there the imf managing director on the us economy bullish the u.s economy this year and next time for the imf from new york this is bloomberg alongside tom keane lisa bradford i'm jonathan ferro we are 12 minutes away call it 11 from the jobs report in america going into that here's the price action equity futures are drifting higher again up four five points we advance a tenth of one percent six day winning streak into friday all-time highs the jobs report 11 minutes away 720 k is what the estimate is right now the immediate estimate in our bloomberg survey yields a lower into this print we're down two basis points tom to 144. fascinating tape it's not a fragile tape but it's just a very tentative tape here into 8 30 and again that's in 10 minutes as he always does he provides perspective but frankly never more so than right now james glassman he was a jp morgan chase commercial banking and he's been definitive in his research on the labor economy for years and on the many help wanted signs coast to coast jim i was just away on a sojourn it's not as romantic as lisa going to greece i went up to maine and had a lobster uh and and jim glass and what i would note is there's a different character to the help wanted signs what's the desperation across america to find the next employee you know uh it's interesting isn't it the they're pretty desperate and i think the problem for them is that if you can't find the people as you as you've been hearing they just can't serve as many people so it's lost opportunity and but i think it takes you know this is this was really a massive dislocations that were caused by the pandemic and it's just going to take my guess is it's going to take until the fall you get a lot of this ironed out and you know when you you if you don't have a job and maybe you're an unemployment you can't really live in the city that long they might have scattered and went home to family now they got to be coming back and i think uh i think but actually i think by the early fall we're not going to hear about this but it is a concern and you hear it every what what's in short supply is help on his signs but what yeah but jim glassman very very importantly here if wages went up are there employees there to accept those jobs well i i don't think that would really solve the issue i think it's really more all the dislocations and the problem for a business is they got to ask themselves can we absorb this if we have to pay people well right now you're hearing about one-time bonuses but if you have to if you have to raise the pay significantly will the customer bear it that's the that's what they're having to deal with and i think for a lot of people who are in a in a global world competing globally this is a you know they have to be really careful about this well yeah and just to point that out i mean tom went up to maine and he said he just went there but he did buy a lobster roll for forty dollars talking about prices going up jim there is a question of what data you're looking at that determines the stickiness of those wage increases what are you looking for i think the wage information is not going to be that helpful frankly because a lot of the folks who are still out of work are say earning below the average so as they come back in you're going to have paid trends looking like they're slowing down the employment cost index is usually the best indicator for this kind of thing because when you have lots of changes going on in the economy they do a better job of fixating on the changing composition of the economy but you know honestly i don't worry to me this is not an inflation story if if if we have to pay more for workers this is not gonna this is this is not something that creates inflation this is what we used to think this is the old days uh this has not been happening we we have noticed over the last several decades patrons have been doing better than they used to they're keeping up with productivity at least in real terms and that's a good thing but uh we what we've learned over the last two decades is inflation doesn't come from paying workers it comes from how good are your markets how much competition do you have what's going on with technology and so i think i think this this recent round of worry about inflation is really all connected to the bottlenecks in the supply chain and a lot of these are a lot of these are easy now if you look at futures prices you're seeing some of this noise is fading back jim we've got to leave it there it's going to catch up as always jim glassman jp morgan chase commercial banking head economist going into pay rolls in about seven minutes time we've talked about this massive range into the print tom all the way from 720 that's your median to 10.50 at the upper end of 400k at the low end yeah well i mean the numbers are there and up we go and we're going to see it but john again i'm going to wages and revisions and what are you going to look for john i mean what beneath the headline data is that is the point your anticipation rate i think tom because it has absolutely stalled through the whole of this year and it's nowhere near where it was february of 2020. and how quickly that bounces back goes some way i think to shaping fed policy no we'll have to see i mean lisa what do you see there well the idea here is what are the factors that are keeping people out of the labor market is it simply a transitory issue of child care and virus and enhanced unemployment benefits compensating people or is there a stickier kind of persistence to this uh lack of participation it's a good question and it kind of goes to karakodona's point about which areas of the market are adding jobs fastest versus not seeing the same momentum and participation rates tom for me the key variable because that would define basically how quickly unemployment falls and how quickly wages rise well yeah bottom line yeah again again and john the the good idea of look at the participation rate in these different ratios is to look at the ratios of actual employed and i'm going to look in the middle of the band i'm guessing 25 to 54 years old that hugely employable america that dynamic as well look at that employment to population ratio lisa it's just another way of telling the same story we had this sharp improvement as we reopened and then we flattened out again and fed official after fed officials especially the dubs in fact the doves over on the fymc they're making the point they want to see that get back to where it was well but you raised this question and i think it's a really important one how much does the fed affect that at what point is this structural and jill kerry hall was talking about how people are looking to companies that don't employ as many people well that is the shift how efficient can you be as an employer so are there going to be the jobs that make people's uh pay worthwhile going forward especially as things get more automated i mean this seems like a big picture issue but it was accelerated john by what we saw during the pandemic and this shift to online everything yeah well there's a calendar issue at play here tom as well and you will see guest after guest come on this program and keep talking about the end of summer september october to iron out some of these issues can we just solve them address them more just simply with time with the calendar i'm looking at moving averages the data's been so lumpy i gotta go to three months moving average the jobs report up next on bloomberg tv and radio we are four and a half minutes away your estimate is 720 k the high-end 1050 the low end 400 after a couple of downside surprises over the last couple of months what is in store the answer to that question comes up next 43-15 on the s p 144 on tens yield to lower the equity market target going into this one the jobs reports next this is bloomberg from new york city live on tv and radio for our audience worldwide going into this jobs print seconds away equities higher yield to lower the curve is flatter with your jobs report in america here's mike mckee well again more jobs than expected john for the first time in a couple of months 850 000 jobs restored in the month of june the two-month net payroll revision 15 thousand so you can add another fifteen thousand to the eight fifty come up with eight sixty five uh change in private payrolls six hundred and sixty two thousand manufacturing up by fifteen thousand there was some question about that yesterday when the ism report showed contraction in a hiring but that may be because the manufacturers couldn't find workers the unemployment rate goes up to 5.9 percent and i've got a double check but i think that is because we see a rise in the labor force the number of people in the labor force goes up by 151 000 so yes that is an issue no change in the participation rate 61.6 percent the employment to population ratio uh is also unchanged at 58. so uh it looks like we are attracting more people into the labor force which pushes the unemployment rate a little bit higher it's one of those things where you say it's good news uh that the unemployment rate goes up average hourly earnings 3.6 bang on with forecasts last month it was 1.9 uh that's a the year-over-year number so all in all it looks like a pretty good jobs report a little bit better than expected in most categories and the unemployment rate is something you can look past mike keep going through it i'll go through the price action a lift in the equity market we advance by two tenths of one percent add a little bit more weight to the s p 500 out to the bond market let's slice it up twos out to tens two-year yield higher by about a basis point we fade the long gain move just a little bit on tens yields are in about a basis point on 30s that sticks we're down by two basis points on a third year to two point zero four two percent tom that's the shape of things coming out of this in a bond market end in equities struggle to read this one to get a clear direction on what this means for a fed meeting through the next several months i'm gonna call equity lift and what i'm literally looking at john is dxy went stronger right away and then ebbed in a little bit mike mckeeve totally unfair question but it's unfair friday how does this change fed policy and the answer is as john says we're not seeing much on the screen no it doesn't change fed policy and you're not going to see much reaction in the markets if you get some reaction it's probably going to be because it's a low volume day with an early close on before a holiday weekend at this point this just tells you that we're headed in the right direction and i was discussing this last night with somebody and they said how do you read this number and i would say you put it in the context of what jay pal has said that you're looking for substantial further improvement in their goals before they start tapering and this keeps you moving in that direction beyond that you can't say a whole lot about fed people we do 700 000 and we do it over 10 months that's 7 million jobs created is that how you mop up are not fully employed america well yes and you hope that you get a little bit faster rate of uh employment absorption and the feeling is is that we may get more of that come the fall when you have kids go back to school so child care responsibilities aren't as uh heavy and when all states are no longer playing paying supplemental uninsurance unemployment benefits lisa the dollar turns around and weakens right now the question i have is how much momentum is there in the broad economy how much is this isolated to restaurants and bars that are reopening now do you have a sense of that mike well i can give you a number on that the leisure and hospitality group uh increased by 343 194 000 of those almost half is in restaurants and bars now that's lower than last month but we are seeing the uh the states reopen and so people are going back to work but one would imagine there are still shortages in that area of available workers because it didn't rise nearly as much as the the month before the other issue is government education and this may be something we have to look into the seasonal issue because the seasonals expect that you will see a lot of layoffs in government state and local government education but this month we added 75 000 at the state level 39 000 at the local level because probably people weren't working because the schools were closed in many cases and so the seasonals anticipate the wrong thing so again it kind of goes back to the issue of this is the the exact numbers don't give you much to go on other than the general feeling that we're going in the right direction i think tom kit jukes put it best today when he said this is going to be more like an abstract painting than a realistic one i like that abstract painting as well as we move forward with the equity markets features up 12 down futures up 72. the vix comes in very nicely that's important from a 15 level in 0.71 points to 14 14.77 jeffrey rosenberg doesn't care about the vix he's at blackrock portfolio manager of their systematic multi-strategy fund and he is systematically seeing curve flattening the last number of days perhaps with a view to this jobs report jeff rosenberg let's start right away with a linkage of a better american employment to a flattening yield curve why yeah that that's a great point tom that was what i was going to highlight interesting market reaction you know initially you you certainly saw that flattening it's continuing here you know the report is pretty much on the screws in terms of market expectations i think mike hit the the kind of surprising piece uh right on the head with uh the unemployment rate higher uh good news reflection of more people coming back into the labor market you know the positive report in the curve flattening you know reminds me of what we saw after the fomc which is that the good news brings forward the idea of earlier possible increases in interest rates we saw that after the dot plot and i think you're seeing a little bit of market reaction on that again here i wouldn't overstate it it's you know these are small moves but if we're looking for some kind of message it's that you know continued progress on the reopening on the strength of the economy is raising expectations here that the fed's going to raise rates perhaps faster than what the market had been pricing in and that's getting you to a curve flattening where the bulk of the increases in the front end of the curve and then longer term interest rates which have already priced in a fair amount of relative value you know potentially signaling here that that's gonna you know look through to the slow down after the surge the economic activity uh passes from the from the fiscal stimulus so i think that's what the curve flattening is kind of the main message from the markets today it's tough to be in this bond market right now jeff q1 is where we saw the peak of the 10-year yield at the end of march it's where the yield curve peaked too and we saw breakeven's peak potentially back in may so the curve is flatter and we've had calls on this program of tens getting back to two percent jeff how difficult would it be for tens to get back to two percent well that would be a you know that would be a pretty significant reversal um i i think you're highlighting really the the important point that we peaked in terms of the reflationary narrative there was a it was kind of a double peak there was a march then it kind of flattened out and then mid-may we saw it again and in that period since then we've basically been pushing downward this reflation narrative out of the bond market and it's really quite notable the longer end forwards have been falling as you mentioned inflation expectations you know outside of kind of the impact of energy really stopped rising and it's a reflection of kind of buy the rumor sell the news that is the markets were moving well ahead of the economic data the economic data has has kind of borne that out but without kind of the breakout of the inflation outside of this transitory story you know look at something that came out earlier this week the dallas trimmed fed uh trimmed mean measures of of inflation you know they're they're continuing to basically show that the story of transitory inflation is holding up and so you can't really get further curves deepening further inflation expectations until we see you know what we're seeing in some of the survey data you know the price pressures building pass through into a broader array of of prices outside of the pandemic related stories we've heard so much about that's still you know going to be the future and until then you know the curves are and market pricing are really starting to price out some of this reflation story we'll say in the last couple of minutes we've faded some of that flattening in the treasury curve just a little bit particularly at the long end we've given some of that move up for people just tuning in it's an upside surprise 850k the median estimate was 720 that's what we want to see wages 3.6 in line with expectations to pick up from the previous month that is what we want to see in your equity market if you're bullish this is what you want to see another 10 points higher on the s p potentially a seventh day of gains the s p 500 4320 will continue this conversation live on tv and radio in about 20 minutes time i'll head over to a different studio and catch up with rick reader of black rock alongside mohammed al aryan of course our jobs line up is always stellar in the nine o'clock in the open and then we'll catch up with secretary walsh the labor secretary live on tv and radio in the next ad tom very good look forward to that there's a lot to talk about here uh to say uh the least jeff rosenberg i got 3.12 million jobs that's with revisions formed in 2001. that's a slow-motion path to 10 11 12 million jobs to fully employed america how does blackrock frame the goal of fully employed america to all the summer emotions of fed policy taper tantrum jackson hall and what the yield market does i mean how do you frame that out that x axis yeah the the key is that the fed has kind of moved its dual objectives towards more favoring of the employment objective relative to the inflation expectations and the inflation objective and so while in past cycles this kind of full employment might have led to preemptive fed tightening the movement towards flexible average inflation targeting is really a wholesale change in how the market reacts to the payroll figures with respect to interest rate expectations now that doesn't mean that they're never going to raise interest rates and that's part of the earlier conversation would follow to the dots but what it means is that the kind of the way we hung on every payroll report is not quite the same as it was when we were kind of growing up and and that's because we've missed on inflation for so long that the fed is really focused on achieving its inflation target and they're not going to jump the gun when it comes to full employment they're going to let the labor market run hot and today is another piece of evidence that that's working that strategy is working the labor market is is improving and that's what they want to see the risk of course you know what everybody's worried about is is you know what happens if you let the inflation genie out of the bottle and powell and and and the fed policy makers have been very clear that they're willing to take that risk because the last 10 years the post global financial crisis they've missed on inflation inflation has been too low so we've tilted the axes here and it's an important change when we read the the payroll reports jeff that's what the fed says that they are willing to look past near-term inflation that they want this economy to run hot that they are not that concerned about runaway inflation is your message from the market that the market doesn't believe them because they believe still as priya miser was saying at least priced in and that is sort of the flattening in the yield curve that there will be a policy error that they will taper and then hike rates too soon is the market misreading what the fed is saying you know i i can understand how a little bit you might interpret the yield curve flattening uh that way that i i think it would overstate how much of a concern there is right now on on the policy error of too fast of tightening i think right now mostly the read from the market is that they price in the transitory story and and perhaps the market got a little ahead of itself when it came to the reflationary story you've got some technicals and and trading and momentum strategies and that's a little bit behind the flattening as well but mostly when you look at kind of longer term forward prices of inflation expectations they're kind of right on the screws of the transitory story just above two percent and i think so far that's been you know validated by the data still to be seen long term whether it will be but that's where the markets are at jeff rosenberg thank you so much the blackrock uh this morning the market's really moving here some of the nuance here no doubt thinking of what mike mckee's thinking because what he does is he comes on and he gives us the report and then he actually digests the pages and pages of data and mike mckee the market's doing the same thing and the market goes the other way with cursed steepening and equities on a tear futures up 12. yeah it's a it's a sort of a report that tells you that things are getting better but they're not getting better at a hugely improved pace one of the things the fed's been looking at is minority unemployment and we're looking at employment of black americans is uh at 9.2 percent that's a tick up hispanic americans 7.4 that's a tick up so they follow the general unemployment rate a little bit higher so not as much improvement there but more jobs created than expected and that's good because uh over the longer run we're heading in the right direction average weekly hours dropped to 34.7 from 34.8 or vice 34.8 and that's a bit of a problem because it takes earnings out of the economy the the money that you would have earned for those extra hours so we got to keep an eye on that as well michael mckee i want to go to that point that you raised initially the idea that the unemployment rate actually ticked higher as more people came back into the labor market do we have a sense of what the character of those entrants or those re-entrants i should say was what jobs they were going to and how quickly those people are starting to re-emerge and look for work well the biggest hiring was in the leisure and hospitality area and also in retail retail rising services rising and it does show that the lower end is coming back some of those jobs are getting filled but a closer look at the household data does suggest that it wasn't as good as it seems the idea that more people came into the labor force because what we saw was an actual decline in employment in the household survey uh and so we didn't get the the best news of all which would be more people coming into the labor force and more people getting jobs it was kind of a mixed picture declined by 18 000 where those unemployed rose by 168 000. so we'll have to figure out kind of what's going on with that why we didn't see more jobs in the household survey it diverges from the establishment survey all the time but that's an interesting uh fact to pull out immediately there's a political issue obviously there will be much discussed in both today as well as next month in the month after after and that's the enhanced unemployment benefits you said that it was too early to really see the ramifications of certain states ending those enhanced benefits early however are there any signs in this data as to how that affected things no and there probably wouldn't be because lisa the survey for this report was taken before any of the states had ended their enhanced unemployment benefits we do have some data just the first preliminary data in the jobless claims numbers from yesterday the first four states that saw that took away the enhanced benefits alaska iowa mississippi and missouri they split alaska and iowa saw lower unemployment claims these are total claims not initial claims and missouri and mississippi saw a significantly higher level of claims so it doesn't appear to have any kind of empirical evidence one way or the other yet well michael mckee thank you so much greatly appreciate it the empirical evidence is markets uh lifting spx says record high uh right now four three two three on the futures up 12 solid s p points dow up 87 points and the vix a big change they're coming off a 15 level we enjoy 14.78 right now forward not looking back at the anciently dated what uh 12 minutes ago excuse me 17 minutes ago jobs report gina martin adams must look forward chief u.s equity strategist for bloomberg intelligence gina what i see with the earnings filtering in now this is a look-back earnings are there earnings to come with jp morgan is the difficult sport of reassessing the actual earnings we're going to see and those ideas of the look forward what is the what is the the tone that you and your colleagues have gleaned yeah i think it's going to continue to be more of a look forward than it is uh second quarter in particular because second quarter is the easiest comparison quarter recall second quarter last year was an absolute devastation for s p 500 profitability we had just a scant number of even companies on the index actually recording profit growth a year ago so we're going to have greater than 50 growth in earnings in the second quarter the read through on that is is minimal what companies need to do and what investors are looking for is establish a baseline for where we are going and where we're going into 2022 in particular as the comps get tougher as we move into a more normalized environment where is our steady state of growth are we looking at faster growth than we had during the last cycle which i think the market is starting to warm up to that idea or are we going to normalize back at those sort of pre-covered recession levels well it's gonna be fascinating to see and of course it comes up to a phrase i frankly avoid but right now it works there is no alternative give me the tina here for q3 i mean does it by by definition put a bid under the market well i think as long as the economy is growing and in particular when the economy is growing at an accelerated space there really is no other alternative but to be relatively opportunistic on the equity market whether it's u.s or global stocks i think is some nuance to discuss where you are in the equity market in terms of sector and style exposure is obviously something to discuss in that environment but the reality is as long as the economy is accelerating stocks tend to do very very well that's been the environment for the last 12 months i think what's happening in the equity market right now is we have some confidence that we're going to continue to see economic growth but we also need to absorb the idea that momentum is flowing so we're probably at peak inflation right now we're probably at peak growth we're probably at peak eps growth we're also probably at peak monetary policy support so we see all of those factors shift somewhat into the next two three four quarters while generally the conditions will remain supportive for risk i think that loss of momentum is going to create a little bit of volatility in particular in sector factor and regional market strategy there's a question about goldilocks and this idea that we could have low rates low inflation but rapid growth how long can goldilocks last for equities yeah i think it's a really great question because goldilocks was certainly a huge part of the last cycle story where we had you know maybe slower than average growth but very very low inflation and low interest rates which created this incredibly low volatile sort of story that drove the last cycle and going forward well we're all talking about whether or not inflation is transitory or not the signs are pointing to the idea that inflation is going to settle at a faster pace so on a secular basis than it was in the last cycle will we see growth and a demand recovery really drive that higher pace of inflation or will it still be a story of supply constraints is a very big question that equity investors are asking themselves going into the next cycle we because where are we going to settle is a huge question mark if we're going to settle at faster growth and faster inflation that commands a very different longer-term equity investment strategy than existed in the 2010 to 2020 cycle which was really characterized by that low slow growth but very very low inflation we've heard a lot of investors come on the show and say that they're looking for companies that have pricing power that can pass along those increases in prices to their consumers has that trade already been played out i think it's just beginning frankly we've started to see that trade really take fire over the last two months once we saw inflation peaked in may and then again in june we saw expectations for the fed start to shift company um performance has been very closely tied to margin forecasts what we're seeing on the s p 500 right now is about a third of companies in the index have reported a down draft in margin expectations those companies specifically are dramatically underperforming the s p 500 over the last two months where the companies that are experiencing still an uplift in margin forecasts are outperforming materially i think this is one of the key characteristics for that stock level sector level and style level discussion is where are margins headed and who has pricing power this cycle relative to last cycle because the companies that are actually experiencing the margin pressure right now are growth companies they're healthcare and tech companies that was certainly not the case pre-coveted or even during the the peak covid crisis of 2020 2021 has already shown some really different characteristics will that carry on into 2022 is a question we need to ask ourselves gina we have citigroup out today with a you know it's a citigroup memo to their staff where they're saying look you need a pay raise you need twenty five thousand dollars a year more right now okay that's the fancy people on the island of manhattan and four zip codes does that permeate across america are we gonna see every industry every sector say we're going to give you a pay raise right now because we need to keep you i think it's absolutely a risk and it's the first time we've had this risk in a very long time we've now had four straight months i believe it is of average hourly earnings growth uh or at least four of the first six months of this year we saw average hourly earnings growth earnings growth is growing three and a half percent wages are accelerating there is we do appear to be at this moment in time where labor is starting to gather some degree of power that also is a key characteristic change relative to the last cycle if labor continues to command some degree of power if we start to see wages rise that is a completely alternative inflationary environment to the one we just came from we are starting to see also this play into performance in the equity market historically the segments of the equity market that are most exposed to rising labor costs are also starting to underperform i think it's something to watch we haven't seen enough momentum in wage growth and real sort of labor power to suggest that things have materially changed but we are potentially on the verge of that shift and we need to watch it pretty carefully because this could be a massive shift in the way that we think about margins for the s p 500. we had a brilliant essay from your bloomberg intelligence today this from the debt side and shiffman and the idea of all that cash out there and sprucing up balance sheets what are they going to do with use of cash are they going to spruce up the balance sheets as mr schiffman says of amazon and others that have all that money or is there another trend that you foresee for cash yeah so i think buybacks are a big part of this story uh you know we think about deployment of capital in a number of ways you can obviously shore up the balance sheet you can deploy buybacks you can increase dividends or you can spend it uh in terms of capital spending r d i think right now the the bulk of the s p 500 is focused on re-establishing buybacks which were cut significantly in 2020 and shoring up the balance sheet so if you're a distressed company you're shoring up the balance sheet um if you're some of these companies with just exorbitant amount of cash you're focused on the balance sheet the rest of the index however is starting to think about where do we deploy the capital buybacks are the first foray of that capital deployment next in our opinion is capital spending i see scope for capital spending to rise 25 over the next 12 to 18 months for the s p 500 just to catch up with its standard ratio relative to sales so as long as you're going to see double digit growth in sales you're probably going to see capex accelerate which only improves the economic outlook at large just to recap if you're just joining us now we did get a better than expected non-farm payrolls report of 850 000 new jobs added versus the expectation for 720 000 an interesting note from nick bunker of indeed.com the job site tom i was looking and he said that employment is still down about 13 from pre-crisis levels a strong month of gain particularly for the leisure and hospitality sector but still a lot of carnage and you know tom i'm struck when we walk down the streets in manhattan or other places so many empty storefronts there are shifts that have been really happening throughout the economy that are persistent and i wonder how long it will take for those to be worked out and if we already priced all of those into the stock market and out of the stock market have we gotten past the uh the pain that still is very much at the presence that's a conflation of the of where we are now with the cyclicals as well and of course onto structural gena martin adams thank you so much uh with bloomberg intelligence this morning she will be with us very much so in this exciting july as i've said before it is uh an earning season like i truly have never seen uh lisa i looked at some of the earnings yesterday some of the retail companies coming out later earnings within the cycle it's typical to see that before any true earnings season and you know all their forward guidance is it's a boom economy well the bar is set really high can they clear it at an even higher pace and i'm curious particularly with the banks and they're coming out not the week but the week after july 13th i believe is the big day for a number of the banks to kick off how much are they going to indicate demand picking up for loans how much are they going to indicate more spending on credit cards how much is the consumer deploying this two trillion dollars of cash versus stockpiling it for a better day should they be still out of work because there still are more than seven million americans not in the labor force look at the screen uh lisa before you go away on your three-week trip and you know i i look at it and it confirms to me that if anything we're going to go even tighter on ig and high-yield is that possible it's possible i mean people are talking about the tightest ever in terms of spreads the least ever in terms of compensation over benchmark rates to own this these securities and not only do you have a credit cycle that isn't near necessarily the end you also have a fed put you have the idea that the fed could swoop in if there is some sort of market disruption again where do you get yield right now yeah i don't know where you get yields what i do know lisa and this is something that we've really the entire team has worked on this through the morning is is when you look and you mentioned maine and the lobsters up in maine while they can't compare to what you can see in greece even better i can't pronounce it aster coma coronado i know that it's not it's more down near thera and some of the islands south of uh athens i i think it's more theorethera or whatever but it's like lobster i'll bring you a souvenir awesome send me a yes uh you know an ig of the of the lobster asta coma you're nailing it no it's good look a lot of people are going on vacation and that's what you're seeing in this jobs report and an opening of the global economy you know we make jokes about it folks but the symbolism of people starting to travel again as well future's up 12 now futures of 72. unambiguously the tape improves off this jobs report we will continue consid consider i'll say the nuance of this labor economy the secretary of labor martin walsh joining john farrell here in a bit please stay with us on radio and television this is bloomberg you

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Length: 142min 56sec (8576 seconds)

Published: Sat Jul 03 2021