Jobs Report, Fed Outlook, Dimon’s Emergency Surgery

on iTunes, SoundCloud, or Bloomberg dot com. You can also listen to our radio show weekdays at two pm Eastern only on Bloomberg Radio the last few hours of the week. They are going to be interesting when it comes to the markets, because we're talking about the virus. We're talking about jobs Day. We've got a couple of experts, some of our favorites, who really weigh on on the job's report, but we're gonna be asking them how the virus is

affecting employment as well. Those numbers not reflected in the latest report very much, but we know they're thinking. And one of the things you're gonna hear me say a lot over the next few hours is what was important about the strength going into the virus concerns that's what that labor market or labor report shows us, and that's why it's really important. But I look forward to hearing you say that. Okay, yeah, try many times. All right, wa and wait uh all I said wait, you know

you said wait what wait, wait what? Yeah, exactly, let's try that again. Um. When I read in this morning Jamie Diamond emergency heart surgery, I was like, what's going on? I know. Yeah, when that headline crossed last night certainly sent people scurrying for their Bloomberg churnals to try and figure out. Look at that bench once again. Obviously, the first concern is Jamie. Okay, he appears to be but

it was emergency surgery, emergency heart surgery. Uh, one of the best known and uh most watch names on Wall Street. For sure. We'll get into what the implications of that are for him and obviously for the band, and talk

about that bench. Honoring women. International Women's Day. Check your calendars, folks, it's not only about pushing your clocks ahead one hour, but it's International Women's Day on Sunday, right, and we're going to catch up with a couple of c e o s, several of whom have been on this show before, including Jillian meet see over at Kd's and Jessica Haniger

one of our faiths. She used to see you at noonday, and and wrap it up with Kate Crater, one of our favorite just people overall, going to talk about the climate and a little bit about noodles. I think we're gonna ask about that. I had some delicious noodles for lunch. All Right, we gotta talk about the markets. I'm happy about your noodles, but let's talk about the markets. Let's

set the business week agenda. Vildonna high Rick is with us Cross that's a reporter at Bloomberg News in our interactive broker studio, along with Dave Wilson, our stocks editor here at Bloomberg News. All Right, Dave, talk us through this market. What are we seeing? You know, I gotta tell you. Here's the comparison that really kind of blows my mind. Okay, if you look at the price of

the thirty year treasury bond. Now we usually focus on yield, and obviously we got record blow yields in the thirty year, the ten year pretty much across the board. The price of the thirty year bond is up six point three percent today. That's up more than all but one stock in the SMP five hundred. So it just goes to show you what's going on today is really as much as anything of function of what's happening in the bond

more market as much as the stock market. I mean, you look at you know, why is it that financial shares are doing as badly as they are the biggest banks. I mean, it's not just Jamie Diamond, and that's part of it, because JP Morgan's down more than its peers, It's off by almost six percent. But you look at Bank of America, City Group, Wells Fargo declines more than four percent for all of them, and you know it's

tied into the idea. You know, yields going down means interest rates are going down, means it gets harder for the banks to make money. We've seen this story before in Europe and Japan where they had negative rates. I mean, it is really something to watch, especially with what's happening in treasuries. All Right, vill Dona Hier, coming in here looking across assets with your team here at Bloomberg, what's the one thing that's really standing out as you talk

to investors and you talk to your colleagues. Well, I was hoping to look back at this entire week with you guys, because if we think about what's driven markets this week, at one point it was Joe Biden. At another point it was tomism over the Fed, then it was pessimism over the Fed. Then it was optimism over the government's response, then pessimism over the government's response. And so what investors have been telling me really is nobody

really knows what's going on. It's really really hard to try to price in what exactly is going to be happening in terms of the coronavirus impact, which is why you have investors shrugging off the job support this morning,

something that would typically move markets. Yeah, exactly. And you know what's interesting, I think was it yesterday that we were looking at the weekly tally and or the day before we're still seeing gains for the week overall, But that's not the case now because of another day of

selling today. Well, it's also a reminder, and I'm glad you brought up that sort of back in forth Fieldana, because you know John Author's when he was on with David Weston just a few minutes ago, made a really important, but you know seemingly obvious point, which is it's a reminder this week feels like that the markets ultimately are the reflection of humans in many ways, and there is a legitimate uncertainty and there's a legitimate dare I say fear that is driving a lot of this with little

doses of optimism, little spites of optimism coming through. So Monday we have an update, and then we have a down date, then we have an update, then we have a down date. So it's really hard and speaking for me in speaking with people, I asked them, is it

time to buy the dip? It's really really hard for for anybody to to make that case right now, just because you're maybe a value guy like pot because people have been so out of favor that I mean, there are some partifying correct and talking with John Thompson yesterday, if I was a capital manament, yeah, but you have to be okay with the idea that you are not going to get the low necessary right because things are going to be that violatile. I mean, you look at

the travel stocks today. It's a perfect example. They were beaten up earlier today now you're seeing more of a mixed bag I mean, you've actually got airlines higher United It's up three and a half percent, and yet the cruise lines are down, the hotels are down. You know, booking holdings in online travel is down. So you know, this is a market that really is is kind of trying to figure out where we go from here as much as anything, and struggling to do it with the

fluctuations that we're seeing in share prices. And I think the problem is we don't have any clarity still about the virus, Like just the conversations that we have around the newsroom, it's like, wow, did you hear about this? Did you hear about this? And then every saying but we still haven't done a lot of testing, like we don't know. Other folks are saying, I think it's overblown. I think we're going to be okay, And I do think this is something that you will be able to

at some point book end. Here was the start, and we're starting to see less cases. It's being contained, and I do think there is the potential for a v shaped recovery where when people start to see the end of this. But that's the problem. We just don't know where the end As far as book ending goes. I mean, one sort of detail that comes to mind. Starbucks has reopened of the Chinese coffee shops that were closed because of the coronavirus. So it's already starting to happen there.

Of course, it's gonna be a while before you see a similar sort of recovery around you know what we're talking about it yesterday we've seen a lot of the ones from that company, and so that's you can see that we know in terms of what China's doing and book ending again, all right, thank you both so much. Phil, Donna Hyrick, cross set reporter for Bloomberg. A busy week, we know. Dave Wilson, stocks editor, Uh, that is so true. Charlie Pellet is dancing in the studio and that's exactly

how we fail feel. Um. We did get the monthly jobs report US hiring surges. It was the biggest game since May of twenty eight. But keep in mind, yes it shows a labor market on solid footing, but it's all before the spread of the virus and the concerns. So as we've been staying around here at Bloomberg, it's stale data. So what do you need to know about the labor market and the economy. Joining us once again is Sendet Caffezi, chief economist at Lending Tree, here back

in our Bloomberg Interactor Broker studio. Really really nice to be here with you once again. So it is whoops, my mic just felt it is still data, stay stale data, right, Yeah, I mean it's uh, it's irrelevant in a way, but it's important that we have a strong label market going into this crisis. Uh So it does, you know, give us some room or some uh some cushion, uh, you know,

as we deal with this health crisis that's affecting the economy. Alright, So knowing all that going into it, what jumped out at you in terms of specific pockets of strength it we always count on you and you always deliver to really sort of take us down the level. What do you see? Yeah, So before coronavirus, the big story of the economy was that we were having a really mild winter that was boosting a lot of weather sensitive sectors,

particularly the housing markets. We've seen big jumps in housing starts and in this report and January's report both had construction jobs over forty tho. So that was kind of

the detail that stood out to me. Well, and I want to go back to this whole idea of that we went into the virus on rather strong footing, and how much better than if we said you were going to bring it up a lot, because I think it's a solid point and I heard it this morning, like listening into Bloomberg Radio, this whole idea that if we had gone into it on a weaker footing, this could be potentially more problematic. It would probably hear the R

word talked about a lot more recession. So how do you see that going into this virus on strong footing, perhaps more solid foundation, How does that help us perhaps on the other side when we get out of the virus. Yeah, So I one, I don't actually have like a recession probability for this particular crisis, but I don't, But I would say it would be higher if we were going in on week of footing, right, um, and then coming

out the other side. It's really difficult to say. It really depends on the persistence, uh, and how widespread the crisis gets. But you know, certainly strong housing demand which is probably going to continue because rates are now even lower than they were before, so that should be something that supports the economy depending on how much this this health scares spreads like wanting at each other. Such an important point, well, I said to Jason, and I tweeted

out because I was listening to Surveillance this morning. They had a guest on it and they said, you know, the financial folks want to talk about the markets and what's going on. Doctors want to talk about refinancing their mortgages, which I find it's such a great way of summing up what's going on. I mean, there is a reality and upside to this low rate environment, especially if you own a home. Yeah, I mean it's the greatest time

in history ever to refinance a mortgage. Rates are down, you know, forty basis points from just three months ago, and really with the moves yesterday and today are probably going to be down fifties sixty basis points, which means even if you refinance three months ago, you can save

even more money by refinancing again today. For each hundred thousand dollars that you've borrowed versus three months ago, say forty fifty basis points decline in rates, you can save an extra ten thousand dollars over the life of the loan, which is big money. Yeah, and so what are you here? I mean, you guys do an amazing amount of research.

I know you also have a window. One of the reasons and one of the other reasons we love talking to you other than you'd be very smart, is you have so much data at your fingertips through your platform to understand customer behavior. Given what we know about the uncertainty the economy right now, what are you hearing what's sort of bubbling up through that data? Yeah, so our data is mortgage data, A lot of it is refinance data.

So I'll say our data is actually um kind of not telling us what's really going on in the acroning, right, because we're seeing volumes up just for this week compared to a week the same week last year, up six percent, right, and it's because of the fallen rates. Uh. And even January and February were already up to so it's already a very strong time for like mortgage and refinancing, and it's gotten even stronger, which is, you know, probably the

opposite of what's happening in most of the economy. Well, but I do have to ask you, like synthesize that with the fear candidly that's out there. At some point, do you anticipate paid that some of that enthusiasm to refinance wears off a little bit because people are more for lack of better terms, sort of existentially worried about like civilization, for you know, not to be too over the top about it. I mean, yeah, I think that's

a that's a fair point. Uh, what I will say, I think because when you refinance one, you don't really have to interact with anybody. You can just sit at home and do it. It's one of the few economic actions that you can already say the house. So it's not like you're having out and buying you know, you're not sort of putting a lot of money to work. In fact, you're probably saving a little money ultimately. Yeah, yeah,

you're saving a good amount of money. Um. The bigger risk is on actually on like home sales where you know one you know, I was originally the whole week I've been talking about, Hey, people won't want to go out and like look at homes, uh, you know, social distancing. But the other interesting thing that I've picked up the past couple of days is that people who are selling their houses don't want. Stranger is walking through the house

touching everything. Um, so there's actually going to be both a demand and a supply constraint on home sales if this continues and gets bigger and bass right, So somebody who wants to make a first time purchase, like there might not be the inventory because people are like, I don't want it my home. Yeah, totally. Yeah, it's interesting. I just saw a stat about how much attendance at open houses has fallen in New York City. Already, all right to die, kept feezy. Always great to catch up

with you, chief economists. The sweatshirt, I know you look great. We're making it casual Friday for somewhere. Mike Bloomberg, another alum of Johns Hopkins, is smiling. Thank you so much and great to see you. You are listening to Bloomberg Business Week. Well, let's move to one of the most read stories of the day, and that has to do with Jamie Diamond, the CEO and chairman of Morgan Morgan JP Morgan Cheapers. It's been a crazy week. Michael Moore

is with this US finance team leader. Uh, tell us what happened with Jamie? I mean, this was a shock. I mean they the bank had their investor day last week and he was on stage as always holding fourth but yesterday before work, had some chest pains and took himself straight to the hospital rather than going into the office. And that probably saved him because this is a very acute condition. Um. And you know a lot of people die before they even make it to the hospital if

they don't think it's something serious. Uh. But luckily doctors were able to catch it early and uh repair it. Has he had any heart problems before, or heart related problems, not that they were aware of. He had broke cancer several years ago and had to take some time away, but this seemed to be an acute thing, right, Um,

So happily he seems to be recovering and is doing okay. Uh. Meanwhile, it has brought to the four one of the most probably talked about succession issues on Wall Street, maybe across all of corporate and mayor Rika. You know, it's been a running joke, as you know better than I that every time he's asked when he's gonna retire, he says in five years. He said that, I believe over the last six years. Uh, but what does this mean, what are people talking about now in the wake of this,

UH of the surgery. Yeah, I think you know, they are talking about kind of on two tracks. There's the short term, which is Gordon Smith and Daniel Pinto or the co presidents. They're kind of stepping in and running day to day while he's out. UM. You know, the expectation right now is that he'll be back and that he UH. Typically it takes a month of recovery, according

to the doctors we talked to. UH. But you know, you never know someone's state of mind or you know, how how things progress, so UH in the short term, it's those two. Longer term there has been the succession plan of UH and as you mentioned, with Jamie always saying five years, you never really know when that's real and when it's not. UM. So Marian Ake and Gen peep Sack, we're seen as too that we're being groomed. In that longer term. They both have served as chief

financial Officer. They somewhat swapped roles last year to try to get them both broader experiences. But they're, you know, both less than a year into that swap and UH and are seen perhaps needing a little more time so younger than Smith and Pinto right right by about a decade. So uh so that does seem like there are kind of two tracks here, the short term issue and what

this means for the long term timing. Like you do wonder too, if you know, you know, Jamie Diamond comes back and kind of you know, maybe I'm reading too much into it, but I've seen enough individuals where they go through, you know, an illness or something and they kind of rethink, you know, how do I want to spend the rest of my life? And I do wonder this. You know, he has been with what fifteen years with

JP Morgan. You think about what he did and steering the firm through the crisis and and really you know, the financial community looks to him for Q when we're in a state of financial uncertainty. But I do wonder you know, what's to come. Yeah, you do wonder that. Um, you know, everyone reacts to it differently. For Lloyd Blank find joking that you know, when he went through cancer, he said, I think you're supposed to learn something from this, But I didn't get that moment. Well on some double

down because they're like I love this job. I'm just know or whatever, and Diamond has always expressed that he

loves that perch. It's a very powerful seat. He has in the last five years moved two more kind of like a policy focus of you know, expressing not just what's good for banking, but you know, his ideas for fixing America or politics, like you do wonder right constantly whether he would run for president um and it's because he's been out there publicly on some issues, so he does seem to like that perch, right, And even if we do see a change in administration, you do wonder

whether he, you know, does take some sort of job in a Biden or probably not a Sanders, but you know, potential a Biden administration. Uh so what happens next sort of wait and see. At this point, right, a month, you said, is the typical recovery, Yeah, I mean, and you know, this is of course complicated by the fact that you have this huge logistical problem of the coronavirus and people and JP Morgan splitting up trading times and having people work from home. So certainly that does complicate

things at the moment. But yes, the typical recovery is at least a month, and you know, after that it's not, you know, fully in the clear. You have to monitor your blood sure and so forth, and these are not easy, low stress jobs to say the least. All right, Michael Moore, thank you so much, US finance team leader looking after all things Wall Street for us here at Bloomberg. Some great context on Jamie Dimond, and I should say we wish Jamie, oh absolutely what a titan in this business.

And you know someone who has been at the four recovery you alluded to during one of the most uh difficult times in financial market. Yeah, Chippy Morgan chairs by the way, down a seven point at their lows today, still down about six point three percent, but they've bounced off a little bit off of that low level. Thanks Sex. All right, well, that's up for debate. But farmers definitely

fighting our fixes a thank you anything. Tractors are alright, well, farmers are definitely fighting over fixes when it comes to UM, the company that makes so many of them. John Dear that story in our Bloomberg Business Week magazine, currently on newstands on the Terminal and at Bloomberg dot com. Let's get into it with Bloomberg News Projects and Investigations. Reporter Peter Waldman. He is in our San Francisco bureau along with our Bloomberg Business Week editor Jill Webber. He's in

our Interactor Broker studio right here in New York. Um, Peter, fascinating story set the scene. What exactly is going on? Sure? Um, Well, across the Midwest, you've got farmers who are accustomed to repairing their own machines for deck, It's in decades and decades. Um. They're quite manually inclined and like to do their own mechanical work. Nowadays, with computers digitization UM, software controls literally

modem under the farmers tractors seat. Uh, it's much harder to work on a John Dear or any of the big manufacturers stuff. It's all software driven and they can't fix their own stuff. And the right to repair has become the catchphrase here, Peter. It's also become a political issue, and some of the candidates. Democratic candidate candidates have have really um prioritized it. Um. Why why does it have

such political undertones? Well, Elizabeth Warren in particular, a former candidate she last year campaigning in Iowa, which she did for quite a bit, UM, was smitten with the issue.

She talked to farmers. She heard that the right to repair their own farm equipment was meaningful to them, that they were concerned that the big equipment manufacturers were monopolizing parts and services, that they couldn't just hire an independent mechanic to fix their tractor, and that they always had to get someone from a dealership to come out with software to reflash and recalibrate, and it was very expensive and time consuming. So there was a real kind of

grassroots interest and effort. And in that case, Elizabeth Warren caught on and she said, there ought to be a national law that allows independent mechanics and farmers to have all the same software that the dealerships have. And the big equipment manufacturers and their dealerships, most of whom are independent, disagree. They have rejected that idea. And why why does John Dear want to keep it this way? Well, there are

multiple reasons. The one that they talk about the most is they cite safety concerns that these up to twenty ton combines and megatractors are dangerous if people go meddling with the software, uh hacker or even a well intended farmer or independent mechanic could do something wrong and the next thing, you know, a big harvester is harvesting a house or a bunch of farm workers in a field when it goes awry. So they're very concerned about that.

The second concern they frequently site is the interest of some farmers and some of their consultants and software providers and mechanics perhaps in modifying things such as a mission controls, which is a big deal. There are strict E p A emission requirements on these big diesel systems and UM and therefore a lot of things equivalent to our catalytic converters, but even larger that really sap power and UH and

energy efficiency or mileage so to speak. And there's a big farmer interest in in delete eating that stuff through software, and the big companies don't want them to do that. There's also a third reason, of course, which is money.

Um these are virtual monopolies. Well and and Peter, it does feel like part of the reason this is caught on the way to did that this has and you alluded to this through the political discussion as well, is this is such an iconic company in so many ways, and it's one of these things that it's one of these issues. Rather that feels relatively straightforward, in part because everybody knows John Deer. You know, I mean, we just played the song. There are many country songs we could

have played that reference John Deer. The public profile and the iconography of this company shouldn't be overlooked here. It sounds like absolutely not. It's literally a nineteenth century company founded by someone who forged one of the early plows um of that era. Anyway, and uh and then has increasingly automated things for the next hundred and fifty years. And they're at the point now that they're automateding them sort of out of the hands of farmers, and that's

what's upsetting people. At the same time, you can ask, you know, across the farm belt and even on the coasts where they farm a bit differently and usually smaller scale, But you can ask people, well, you know, are you loyal to Deer? How do you feel about their systems? And they'll they're they're common refrain as well. We bleed green around here. They love those green machines. So there's a great deal of loyalty to John dear right, and

this is sort of causing some some tension. Paul Paul rather um Peter, you know, what I want to ask you is that these machines and the amount of data flow that's being accumulated sent up into the cloud, and I guess letting John, dear you know, figure out how to make everything better has made these farmers much more productive. And so do they have a case, dear being, you know, have a case in saying that will wait a minute, we really need to be in control of this data

and you farmers are benefiting as a result of it. Yeah, you're right. It cuts both ways. Absolutely that we all know automation computers really improve efficiency or in this case, harvest and yields, So there's no question that they've benefited as well. On the software side, I'd say it's probably a mix. I mean, they do certainly have a case that they cannot repair their systems, and there's some really

debilitating situations. I mean, it's very often these complex emission control devices on the newer systems that will go bad on a very cold day and that takes a few hours for someone to come out from the dealer with a ten or fifteen minute software fixed. It's ridiculous how simple it is. So there probably is a compromise. It's reachable here where they can make available a lot more diagnostic and repair software and limit the modification side of things,

which the companies certainly want to do. Peter, when you think about where Big Deaton guess kind of headed, where where do you think, uh, where do you think the puck could go here? Um? I think that the tide is is inevitable right, that there are people mechanically minded, and we profile one very very closely in this magazine piece. His name is Kevin Kenny, and and he's a very firm believer that, uh as he call it, hot riding

is a national birthright. That he ought to be able to work on a system, or a farmer who pays six or eight hundred thousand dollars for a combine ought to be able to get in there and fix it him or sometimes herself. But the companies disagree. I think the companies are gonna are gonna have their way on this one. There's just too much embedded software, too many,

too many safety considerations, and too much efficiency efficiency gain. So, as I said, you're going to see an increasing amount of digitization in the whole farming agricultural field, literally down to the point where you'll get these prescriptions and software messages that will literally drive these things and control the steering wheels in the field down to a quarter inch where they where they plant it. It's believes that incredible. It's amazing, and it's a great read, and there's so

much in that story. I'm Peter. Thank you so much. Peter Waldan Projects and Investigations reporter, joining us from our bureau in San Francisco. Joe Weber, Do Not Touch It editor, a Bloomberg Business Thanks for listening to Bloomberg Business Week. You can subscribe to the podcast on iTunes, SoundCloud, or Bloomberg dot com. You can also listen to our radio show every weekday at two pm Eastern only on Bloomberg Radio