U.S. Hiring Downshifted Abruptly in August

You can also listen to our radio show at two pm Eastern Time on the Bloomberg Radio or watch us on YouTube. Searched Bloomberg clovel News today's jobs report showing that US hiring down shifted abruptly in August, with the smallest jobs gained in seven months. As Charlie mentioned, it complicates a potential decision by the Federal Reserve to begin scaling back monetary policy support by year end. The number we got today non farm payrolls increasing two d and

thirty five thousand last month. Economists surveyed by Bloomberg they wanted to see something more in line with seven hundred and thirty five thousand, so a big miss there. Let's get in to it with Becky franco Witz, president of Manpower Group in North America. She joins us as she does many jobs days on the phone from Chicago. Becky, Really great to have you back on the show. Is there any silver lining to this job's report today? Yeah, Tim,

so definitely not a report anyone wanted to see. Um. I would tell you that I'd characterize August is a report of dashed hopes on both sides of the labor you know, environment. UM employers were hoping for the September sunrise that we've spoken about before with increased labor supply and recovery of supply chains, you know in delta dash fat and workers were hoping for the smooth transition, you know, sending kids off to school, returning to work without fear

of of you know, COVID. That's been dashed too, UM. But I will tell you that we believe the situation is temporary, and I have real time data that tells us why. Well, let's hear about that real time data. What does the future look like? Yeah, so hi, Katie. Um, you know, we know we still know where in a worker's market and here's why. There are ten point one million open jobs, so jobs unfilled in our country today.

Demand remains right now above pre pandemic levels, and unemployment continues to decline, So that that is a silver lining, Tim's your question. And we also know, and this is some new data, we know that the talent shortage is especially acute in blue collar rolls. So let's just step back and say, you know, in the past year, UM demand for knowledge workers so think medical, you know, I T space, that demand is increased four and you're you're

thinking that's a pretty good number. Yet demand for blue collar jobs is increased with a fifty percent rise in operations logistics alone, as the shift online is here to stay. So you know, we anticipate hiring spikes and ops logistics retail as we prepare for the holiday period. So that is the silver lining. Um. But this job's report in August, you know, ahead of the stimulus stoppages we go into September. You know, it was a disappointing one. There's no way

around it. There is, though, still this mismatch between supply and demand demand. If there are ten point one million open jobs and still millions of people who are on the sidelines working looking for work, right now, why aren't they hopping off the sidelines. Yeah, so it's it's unfortunately complicated. So you know, part of it definitely is stimulus, but

that can't answer everything. There is fear, you know, rising fear now around you, health safety in the workplace, and there's complications that you know, some schools are opening, schools are constantly threatening or we're gonna go hybrid or not go hybrid um. So it's really an uncertain time personally and professionally for workers in our country, and and they

are still fitting on the sidelines. And again, what's so disappointing is we all hoped and wanted to believe that we would be past this as we went back into the back to school season, but we're not quite out of the woods yet. Yeah. It's definitely not the start to September that I think many companies and just people expected. But Becky, I want to pick up on your point on stimulus, because we do have those enhanced unemployment benefits starting to roll off next week, and like you said,

there's still ten point one million jobs unfilled. I'm curious what you think that the end of those sorts of pro ms could mean for the labor market and jobs reports going forward. Yeah, so we've been tracking at state by state Katie, as the as the stimulus has ended, and what we found is it's very uneven. So in some states, you know, especially in states in the South, where when stimulus came in it didn't have as big of a dampening effect, we didn't see as big of

a recovery effect when the stimulus came off. Um. In other states, we're just starting to see it roll off. Now. We have seen some positive momentum come out of a couple of the states since the stimulus stops. But I can tell you one thing, no matter what the state does, Um, this is not stopping stimulus is not going to have the you know, solve effect that we all wanted it

to have. We're going to have to make sure that workers feel safe, they feel valued, they can trust their employers to send people home they're sick um that are around them, and that really is becoming. You know, This trust and care economy is truly the way forward for

the American worker. Becky Manpower Group is the world's third largest staffing firm, so you do have a really good understanding of what is happening in different areas of the world when it comes to people going back to work or what they want at a at a at a firm. What are you seeing in terms of the return to the office, especially among large Wall Street banks and financial

services firms. Yeah, so it's quite interesting. We just did a big fourteen thousand people's survey in fourteen countries to your to your question, Tim, and what we found is really generationally demographically, we're seeing some differences. So if you say, who's most excited to come back in the office, gen z, they're fresh out of college, they're looking to make their friends. It's where they find their dating pool. Like they're they're learning,

they're excited to be back in the office. Who's least excited, and this is global data. Millennials. You know, millennials are of childbearing, you know, child raising years. They're very they're very concerned about their children getting the virus now, which you know a year ago we were saying kids aren't really susceptible. That's okay, So now we know that that was inaccurate, and so there's concerned there. I'm also excited

to come back in the workplace. Our our gen X and our boomers and think about who's running the world, you know, companies right now it is the gen X and boomers, and so we see really varied interest about coming back into the workplace. Now from a vaccination perspective, you know that is giving some employees some confidence, particularly as headquarters for rolling out vaccinations um. But still, you know, it's it's very uneven in terms of the excitement of

coming back in the office every day the week. Becky Frankowitz, President at Manpower Group North America, joining us on the phone from Chicago on this job's Friday. Becky, thank you so much for taking the time. We really appreciate it. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic from Bloomberg Radio. Well. Senate Democrats are discussing a wider range of tax proposals than President Joe Biden has proposed. This could include levies on stock buybacks,

carbon emissions, and even executive compensation. This as part of a package of measures to help fund a ramping up in a social spending so writes Stephen at T Dennis. He is Senate reporter for Bloomberg News, and he joins us now on the phone from Washington at d C. Stephen, it's really great to have you on the show this afternoon. Who are the Senate Democrats who are who are doing this? Because we know that not all Democrats feel the same

when it comes to taxation. Yeah, so basically the first thing they need to do is to get the Senate Finance Committee Democrats on board. And this is what's circulating among those Senate Finance Committee Democrats. They have yet to settle on a particular plan amongst themselves, but we do basically have the menu. You know, you're either you're either a lunch or you're on the menu or something or other. Even that's the old thing. Uh, this is this is the menu of who's gonna who's gonna make it to

the lunch and who's gonna get eaten? And uh and so you have all kinds of things that would potentially affect a lot of stocks, a lot of markets. You know, if you start saying, well, stock buybacks should be tax just like dividends, or have an excise tax on stock buybacks, that would be a huge deal. Uh, supersized CEO pay you know they're they're they're talking about having an excise tax on CEO pay that exceeds the average worker at

that company by a margin they considered to be too high. Uh, and even things like mark to market rules for billionaires with large unrealized cap gains, which would be a big tax on a lot of entrepreneurs like Elon Musk or Jeff Bezos who have very large amounts of unrealized capital gains. And so yeah, the implications widespread. I mean, just this year, we've already seen about three hundred and sixty billion worth of buy back. So Stephen, I'm curious does this have

a shot of passing. I mean, like you said, you have to get the Senate Finance Committee Democrats on board. How likely is that to happen? I think basically any one of these proposals is going to have a hard road. You know, right now, Joe Mansion wants to press the pause button on the whole thing, and he wants a much smaller package. Um. He's also, however, taken aim at some of the more traditional tax increases that Joe Biden's proposed, Like, you know, he doesn't want to go to on the

corporate tax rate. By He's talked about five percent of the corporate tax rate. Well, if you lose several hundred billion dollars there, you might be able to make it up somewhere else. And the question is whether Joe By, whether Joe Manchin would stand in the way of some of these things. Now, certainly, I think you're gonna have a hard time getting fifty Senate votes for some kind of a carbon tax, even if it turns into rebates for lower income folks. Uh, taxing plastic. You know, I

could see some Democrats supporting that. That might be a harder sell even with the White House. Um and uh. But there are these things that seem to be relatively low hanging fruit, like these supersized i ra s. There are some people with tens of millions of dollars they've accumulated in their iras, and you could just say, well, we're gonna cap those at five million, and anything over that you have to have a distribution and pay taxes

on it. So some of these things I think could very well end up in the package and are a little bit more likely to happen than others. We should note that even today, when the President was speaking after that dismal jobs report came out, he did once again repeat the line that he will not raise taxes on people who make less than four hundred thousand dollars a year. It's something that he continues to uh to talk about, what what do the Democrats who are proposing these um

want this money to pay for? Yeah, so there's you know, there's three hundred three point five trillion dollar package of social spending um everything from childcare benefits to free community college, to expanding Medicare benefits for dental and vision and hearing um. There's there's just an enormous array of things that have been building up, frankly for decades that Democrats have wanted, as well as things like paid sick leave and paid

family leave and maternity leave and all these things. Well, that bill cobbles out to about three point five trillion over ten years, which is about a five percent increase in federal spending. And you're gonna have to find money to pay for it. And it gets if your universe of who has to pay for it is people making more than four dollars a year. That's not a lot

of people, but that is a lot of money. And you know, I think it's going to be very challenging to get it through because those people with the biggest pockets on earth can afford a lot of good lobbyists. And guess what, a lot of those people are voting members of Congress. Steven Dennis, Senate reporter at Bloomberg News, running us on the phone from Washington, d C. Steven, thank you so much for it taking the time. We

really appreciate it. Check out his story on the Bloomberg Terminal Senate Democrats, I taxes on stock buybacks and excess CEO pay. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes tim's Stenovic on Bloomberg Radio. Well. In the current issue of Bloomberg business Week, it's the New City's issue.

It's Bloomberg business Week magazine. It's available on newsstands and at Bloomberg dot com slash business Week. It's an issue that is focused on cities in one city that it does take a very close look at in an area of the city is Seattle, and a Seattle commercial district that has undergone trial by virus. The pandemic change the heartbeat of urban areas across the US, few more so than the Pike Pine Corridor of Seattle's Capitol Hill neighborhood.

So writes Noah bou Hire, finance reporter for Bloomberg News, and he joins us now on the phone from Seattle, Noah, for people who haven't been to Seattle or visited this particular area of Seattle, the Pike Pine Corridor of Capitol Hill, what's it like? Well, it's um, I think what a lot of people would imagine as a Biberne at all hours,

retail arts, commercial district. There's music venues on a restaurant. UM. It's not uh, giant buildings, but you've got a lot of you know, for six seven eight story UM apartment blocks that have retail at the ground floor. So it was really the part of Seattle that that that felt most city like outside of UM downtown. And what happened over the last year is the pandemic took hold and commuters started staying home and not going to those restaurants.

And and then just a few months later, in the aftermath of the murder of George Floyd, UM activists took to the streets there to demand racial justice. Yeah. So look, it was an interesting UM neighborhood to follow for all those reasons you just mentioned. UM. You know, a lot of the businesses in in this corridor UH were the kinds of places that you know, relied on a vibrant street life and and and people being able to get together.

And obviously the pandemic UM made that difficult. And UM, the other thing that was interesting about this neighborhood is that there are just a ton of UM, smaller businesses. So you know, uh, Amazon has one of their Grocery Stories stores there. There's a Starbucks reserve roster in the neighborhood, so there's some corporate presence, but there were also a lot of small, uh scrappy businesses that just had to

figure it out. UM. And UH you know, with this piece, I I followed UM a number of them uh through the last year and a half to figure out how they did it. Because while you know a number of businesses did UM go under during the pandemic, UM, a lot managed to get to this point uh through UM the generosity of customers, through UM government assistance programs, and just a lot of scrappiness that I don't think um uh people have fully appreciated. And so No, it's a

great piece. And one of the reasons why it's such a good read is because you did track a group of four businesses over the past year and a half. And I'm curious. You know, you mentioned the scrappiness of the businesses and the business owners, but I'm curious if there was a uniting common denominator and how they were all able to get through the pandemic. Yeah, that's a great question. UM I I really think it is the

constellation of factors. It was. It was you know, these these were established businesses with with loyal customers and UM you know, to the extent UH some of them were able to do go fund means government assistance, which is absolutely key UH programs like the Paycheck Protection Program. Pretty much everyone took that money. UM. It was either a form of bridge financing or um uh to get them to other federal grants or UM or or it was the thing itself that that helped get them through UM.

And then you know, I think another uh under appreciated part of this is that, UM we're talking about a city where a lot of people have been willing to get vaccinated. And even though we've had pretty strong, UM strong public health restrictions here in Washington State throughout the pandemic, UM people were willing to go back to this neighborhood when when those things lifted, because we're talking about a city where, you know, seventy five more than seventy of

UH people twelve and up have have gotten their jobs. Well, it's interesting because one of the one of the elements of this that really sticks out to me, that really caught my attention is the graphical representation of the change in weekly visits from nine that are in here charts that just show how foot traffic has not returned to retail establishments there too, restaurants there even after the vaccine rollout, to music venues for example, in some cases restaurant visits

they're still down even after vaccinations from How are these business owners dealing with that? Yeah, that's a that's a great question. I do. I do want to highlight that the data here is really interesting. We were able to get UM foot traffic data on about fifty locations around this neighborhood. Most of them were you know, commercial establishments and UM I think that data really does show you, like you said, that things are a far are far,

far far from being back to normal. Um. And the reason these businesses are still you know, any of these owners will tell you things are not back to normal. I mean they are. They are still very much in the thick of this and we're you know, going into the fall when things like outdoor dining are going to be harder to do and frankly in Seattle just not

comfortable because it rains so much here. So I think that's a big part of this part of this story is that these businesses have been resilient, but they are by no means, you know, out of the woods yet and so no. One of the stats that caught my eyes in the story is that the medium income in the city is over one hundred thousand dollars, which, as you note, is more than fifty percent higher than the national average. I'm curious how important was that factor in

explaining the resiliency of some of these businesses. I don't think it can be understated. Um. Look, there are academics who you know, started studying the pandemics effect on small business and um, you know, while the lens of of this story is one particular neighborhood. What I can say is anecdotally, UM, having customers and people who like your businesses and supported them, and who were willing to come in and spend more money, and who you know, maybe

kept their jobs throughout the pandemic has just been crucial. Um. You know, two of these businesses had had fundraisers and they raised tens of thousands of dollars and that was just um, completely instrumental to them, you know, being able

to survive to this point. Yeah, not something that would necessarily be possible in other parts of the country where the clientele who frequent these places don't have these same household incomes and wouldn't necessarily be able to afford, at least during a pandemic and during a time of uncertainty, to throw money and support throw money at these businesses and support them even in difficult times. Noah bou Hire is finance reporter for Bloomberg News. Noah, thank you so

much for joining us. The story is a Seattle Commercial Districts trial by virus. Bloomberg tract a group of businesses in the Capitol Hill neighborhood for a year and a half and were amazed by their resilience. Check it out. It's featured in the New City's issue of Bloomberg Business Week magazine. It's available on newsstands and at Bloomberg dot com slash business Week. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on

Bloomberg Radio. We cannot, Katie Graidfeld, talk enough about crypto. Share a bitcoin, I almost said, shares a bitcoin bitcoin price higher by eight hundred and thirty four dollars right now. That's trading at fifty dollars three hundred and eighty three right now. David Knitski is chief executive officer at Kracking Bank. Cracking Bank is one of the largest crypto exchanges, with

over eight million users world ride. They've had approximately one point five million new sign ups over the course of the second quarter of one. That is why I'm saying we cannot talk enough about crypto. David, thanks so much for joining us. You were joining us live from Cheyenne, Wyoming, where you are based. Katie and I were both talking during the breaking We said, Wyoming, Why Wyoming? Tell us why? Yeah? Well, Wyoming A pass the first of its kind new regulatory

license here for a special special purpose depository institution. It's a state chartered bank. Uh. And up until now, crypto companies have really been round peg square hold into existing licenses and regimes that didn't make a ton of sense. And we're kind of locked out of the existing banking world. UH. So for that reason, we'll bring in the US business under a more certain, more formal, and better regulatory regime, as well as expanding into new opportunities, new products and markets.

As you see, everything's converging between crypto, neo bank, spintech, traditional and so were we want to be at the heart of that market. But you do call yourself a bank, Yeah, we are. We are state chartered bank. And so Wyoming is interesting obviously has positioned itself to be a crypto hotbed. Where does that stand with the rest of the United States? Are other states uh moving towards Wyoming? Or is Wyoming really an outlier at this point? Wyoming definitely got the

ball started, but the ball rolling. But a number of states have let's say, borrowed liberally from the Wyoming playbook and enacted their own version of a similar charter. UH And it's provoking federal regulators to take action as well. That's kind of the beauty of our republic and our system here where states can be uh the laboratories of innovation and push things forward faster than the federal government have. So it's really been a spark that's moved the whole

industry forward. David, you say that Cracking will be the first United States crypto bank, it's I'm wondering the problem that you're you're setting out to solve here, what is not being met by traditional finance. Yeah, so in the traditional regimes right now, you can either apply for fifty state money transmission licenses or you can try and none of them have like crypto specific language. They're built for

like Western unions and fin techs of the world. Uh. And then or you could try to pursue a banking license. But the federal regulators, the s i C, have been inconsistent about that UM and they don't have written moved about how they're going to treat crypto UM that has a dedicated supervisory and over site manual. We just want to know, Hey, this is how we're going to be regulated and what our expectations are. And we can meet them. So for those reasons, the lack of clarity around some

of the stuff in other states is really suboptimal. Um and banking has been a traditional problem for crypto cracking. Is lucky to have a swath of good third party banking partners, but there's nothing like vertically integrating, controlling your own destiny direct to the FED. And so, David, I've

always been curious, you know, how do you scale? Obviously there are regulatory hurdles, but in terms of the average American who maybe only has a passing understanding of what bitcoin and what cryptocurrencies are, how do you convince them that this is the next uh you know wave of banking, This is the next evolution of how you handle money. How do you bring that message beyond just the cryptocurrency community. Now, well, one, the crypto currency community is growing rapidly, and more and

more kind of mainstream adopt is taking place. We think that's going to continue. So on the one hand, the market is coming to us. But on the other hand, yeah, this banking license lets us offer online mobile uh checking accounts and savings accounts and traditional equities brokerage things like that that you know, mainstream America are used to. And so if you put that side by side for crypto, it's a kind of a great conversion mechanism. You do know on Cracking Bank's website that you are not f

d I c ensured. The money that you put in, the crypto you put in is not f d I c ensured. Um, explain why that is a little bit and and why you think that consumers from who might be a little concerned about that should or should not

be yeah anything, Uh, their advantages to our structure. So the way that the the SPDI charter works is we are required to be a fully reserved, fully back bank, so we maintained we take customer deposits and we keep a hundred percent of it in cash, so we don't have the types of market or credit risk or insolvency risk that the FBI c was meant to protect against. So as a result, we're kind of exempt from having

to apply for that. There is no you know risk because we're not lending money out in the mortgage portfolios, we're not putting it into we're not even putting the treasury, let alone longer duration or riskier instruments, and so quickly David, I'm curious. You know, Cracking was the first crypto exchange to receive a banking charter, and Cracking, along with Crypto Bank of Auntie, have tried to tap into the Federal

Reserves payment system. Little luck so far, and I'm curious whenn't using the FEDS payment system sort of go against the spirit of crypto. And David, we just have about thirty seconds, but then we're gonna come back with you have to readA some news. Yeah. Well, one our our mission is to kind of promote the adoption of cryptocurrency

to enable more financial freedom. One way to do that is to get a bridge from the legacy or traditional system to crypto, and then once they're in crypto, they can take all advantage of the crypto centric kind of eat up. Let's get back to David Knitski, CEO at Kracking Bank, joining us once again on the phone from Cheyenne, Wyoming. David, Kracking Bank, and I should say Crackton was the first

crypto exchange ever to receive a banking charter. I'm wondering, given the increased interest in crypto, the way we do see traditional financial institutions starting to embrace it, if you expect to get significant competition from the big names in banking and even community banks. Yeah, I mean I expect more and more to realize the opportunity and coming to the market. Um, we welcome them, not particularly concerned about it.

As you see any news like technology medium, normally it's the folks who are kind of that native to that medium are the ones that do best. I think it'll be pretty challenging for institutions and incumbents to really adopt the crypto fully, but I think it does help the market more broadly, and I do think the question is to find the existing financial industry coming to crypto rather than crypto coming to the financial industry. And so I want to switch gears and talk about stable coins because

I'm kind of sessed with them. Uh. For those listening who don't know, stable coins are cryptocurrencies that try to maintain a fixed exchange rate with another fiat With a fiat currency, usually it's the dollar. They try to maintain a one to one peg. They've come under a lot of scrutiny lately. Uh. Some people might have heard of Tether. It's the largest stable coin. It was supposed to be

back to one for one by US dollars. We learned in May that it wasn't that actually holds a ton of commercial paper, maybe thirty one billion if you look at Tether's market cap. I'm curious what that could look like going forward. We know that UM Treasury Secretary Jennet Yellen is concerned about stable coins. Some FED policymakers have made worried noises as well. I'm curious, David, whether you think that we could see regulation in that space. Yeah.

I always expect regulation in new financial markets, no doubt. UM. I think the stable coins are a net U in a boon. In fact, the US should love stable coins. It is the best way to uh maintain our dollar reserve and hegemony uh and for our kind of global reach and global economic clouds, and so the U s should love stable coins. But we know that the US doesn't love stable coins, and you do have banks like Barkley's warning that this could raise some really thorny issues

for the FED. If there is a run on Tether people trying to redeem their holdings, that could cause Tether to dump commercial paper on mass. And the commercial paper market is crucially important to just the functioning of companies. So I'm curious what would get the US on board if they should love stable coins. Yeah, I mean, look, I think that looks it's not surprising that a bank would be wary of something that definitely is competitive to it.

Um And there are certain areas of stable coins that you know, could potentially use a little bit more transparency, no doubt. And in fact, even teather, which is certainly the more questionable ones in the market, like, it's getting better and it is definitely changing. It's kind of like balance sheet, uh to to these concerns. Um So, I do think that's going to change over time, and there's going to be more transparency, whether by force or just by market dynamics. Um So, I expect that to happen,

um sooner rather than later. Hey, David, and really have a minute left, give us an idea of the type of regulation you'd like to see on a federal level so we can see these types of charters become more widespread. Yeah. So again, like I as I said before, I think kind of the framing has been backwards a bit. It's not the main question is not how to fit crypto in the existing frameworks in financial world today, is how to update our financial industry for the economy of the

future and stay innovative. H and so, what I'd like to see is clarity, right so, and lack like less discretion, more clarity, defined treatment of crypto assets and expectations in terms of compliance, and require and dedicated supervisory and oversight programs that understand how crypto works. All right, We're gonna have to leave it there. David Knitsky, CEO of Cracking Bank, joining us on the phone from Cheyenne, Wyoming. David, thank

you so much for taking the time. A fascinating conversation, Katie. Um, I know we got to get him on our other show, Quick Take Stocks, each and every day at noon Eastern time at Bloomberg dot com slash quick Take. Yeah, and I mean stable coins. They're in almost every cryptocurrency transaction. It's the perfect interscction of fixed income with cryptocurrencies. You can't ask for anything better. If you're Katie Griffield, you can't ask for anything better. I'm brother journal Yeah, but

you let me drive. Oh no, no, no, all right, please, I'll do right. I want to try it the Drive to the close down on Bloomberg Radio. It is the drive to the close. We're just over ten minutes away from the close of trading on this job's Friday, September one. Brian Jacobson is joining US now senior investment strategist at Wells Fargo Asset Management, six hundred and four billion dollars of assets under management. Brian joins us on the phone

from Milwaukee. We heard an update from Charlie Pellett just moments ago about what exactly is happening in the markets right now? Stock struggling to find a direction. Uh, the SMP five hundred is just down, not even a full point, so pretty much flat right now. Well, the NASDAC is in the green and the Dow is lower by one tenth of one per cent. Brian talked to us a little bit about the equity market reaction to today's jobs numbers.

The US hiring slow sharply amaled a delta variant non from perils increasing only two thousand last month, a huge miss. Why not a bigger equity market reaction? Well, you know that's a good question. When I saw the headline, my eye brows went up. Yeah, I said a little bit of shock, But you know, when and I think it's

just because the equity market in resists in general. Are looking at the details here, right, that leisure and hospitality was very weak, Retail is very weak, and so I think people can attribute it mainly to the rise of the delta variant, just affecting consumer behavior, maybe potential employee behavior that they're not as willing to go in those kind of high contact jobs. So there was strengthen the manufacturing sector. And so I think that's really the explanation

is it's still a good number. It's not great, right, going from great to good doesn't have to be bad when we can attribute. But it was such a big miss. I mean, seven thirty three thousand is the survey of economists that from Bloomberg. That's what that's what we're looking for. Well, that's truly, Yeah, it is an awfully big miss. But it is I think, to use the term that the FED has really enjoyed using. It looks transitory to the extent that the delta variant looks like it might be peaky.

I think that we could see a nice surge in September or October for job creation. Well, it's let's wrap that into what we're expecting out of the FED if September is a really strong month for the labor market, I don't know. In conversations today, it feels like a FED September tapering announcement is off the table. I'm curious how you think, UH, Federal Reserve policymakers and Jero and Pal are looking at today's number knowing that we have,

for example, enhanced unemployment benefits rolling off just next week. Yeah, that is one of the factors that could lead to a September urge in hiring, if it's the rolling over

of delta, the expiration of those enhanced benefits. UH, and our position is that we think that the said wasn't going to announce spring per se in September, that they would actually likely like to tee up capering in September, and so ever since the Jackson Hole speech, that's been our position is that they would like to see that further progress on the labor front, and that likely in September.

They'll still say that if we continue to see decent gains and high inflation, that would be appropriate in the next few meetings, which for us then that would mean likely in December to actually start caperingber I'm sorry, would this be considered a decent gain. Well, I think so. I think that they would likely look through this, look at the details the s that, you know, it's still

a decent number on a three month moving average. We're not going to get another employment situation report by the September one, so they'll look at some of the other data. But I don't think they want to uh pooh pooh

this job's report too much. So I'd like to talk a little bit more about tapering regardless of when we get the announcement, when tapering actually starts, When the FED does start to reduce the pace of its monthly bond buying, how do you expect that to play out in markets, and particularly the bond market, because theoretically there will be less demand for bonds. I would think, just buy the laws of supply and demand. That should make yields go higher.

But you haven't really seen that happen in the wake of Pal's Jackson Hole appearance. Well, no, you know, and the Fed is a quite price insensitive buyer of bonds eight billion a month for treasuries and forty billion a

month for mortgage backed securities. We also know that we have the debt ceiling so maybe issuance isn't quite what it will be uh come October, assuming that Congress passes a new budget and perhaps with the death ceiling, and so we could have those technical factors at play where simple supply and demand would suggest that we should likely

see yields rise, and that's been our position. We are expecting to see that, especially on the long end of the yield curve, because we know that the said has wanted to be somewhat neutral along the curve as far as what they're buying, and so we think that we could see the ten year treasury move up. We're actually more position for the longer and say the thirty year to move back above two percent. We're kind of down

around one point nine five is percent. We think we could get back up to uh you know too and a quarter maybe two point one five to two and a quarter by the end of the year. So a pretty decent move from here. Hey, how are you thinking about inflation? Because we did see in this report. I guess you could say the silver lining was wage growth, and I'm wondering how what that signal that sends you about potential price increases. In other words, inflation not necessarily

being transitory, because wages aren't necessarily something that go down. Yeah, that is one of the factors I think that could play into the Fed's thinking on this, that maybe they don't want to uh kind of remove or push out the timeline for tapering is that you do see the wage growth. Uh. Some economists fear a wage price spiral. I personally don't think that that's necessarily always in the data.

We haven't really seen real wage games, especially for lower income workers, for this recovery or over the last few months. So if you look at the inflation numbers, those have increased faster than what we have seen the wages, especially on the lower end of the spectrum. So you know, in a way, I think that the FED would be kind of welcomes to see that wage game, but you don't want it to want to see it jump too much to instill fear and investors that you are going

to see some sort of wage wage price spiral. And so, Brian, I'm going to bring up a kind of taboo topic because, like you say, inflation is high, we know there's wage pressure. If you look at the labor markets, still millions of jobs short uh, and the rate of economic growth is slowing, So when can we talk about stagflation. Well, I don't think we can really get to stag inflation until we

see negative growth. Um. And it's mainly because the stag inflation of the nine seventies, right, you had a double digit inflation growth and uh, you know right now we're running uh anywhere from three to five percent. So until we get above say seven percent with inflation, and if we see economic growth rancheting down to something closer to maybe one percent real, I don't think that stag inflation

is appropriate. It's more about reflation. So you have the higher inflation, but you still have a reco free pace of economic growth. And that's why I think that the equity markets can still remain fairly attractive. You have low yields, Yes, you have high inflation. Hopefully it's transitory, but there is still decent growth. Going from great growth to good growth doesn't have to be bad. Brian Jacobsen, we're gonna have to leave it there. Thank you so much for taking

the time and joining us on Bloomberg Business Week. Brian senior investment strategist at Wells Fargo Asset Management. More than six hundred billion dollars in assets under management. He joins us on the phone from Milwaukee. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube search Bloomberg Global News.