AFL-CIO Won’t Support USMCA Without Mexico Wage Fix (Podcast)

the new NAFTA. But interestingly, the largest federation of unions in the United States is going to oppose this deal if there is an early vote called Joining us now to talk about that and in general about the backdrop for labor as Richard Trumka, president of the a f l c I, oh, thank you so much for being with us. So let's start with the U S m c A trade agreement. Why won't the a f l c I O support this this treaty if an early

vote is pursued. Well, first of all, the labor movement is committed to ensuring that trade union deals benefit working people. That requires you have strong labor provisions and strong enforcement provisions. In order for this to work, Mexico has to abandon its low wage model, and it requires Mexico to change its laws, enforce its laws, and then have the resources

necessary and the will necessary to do that. If we're forced to vote on NAP on the new NAFTA before they have changed their laws, effectively put them in place, and started to enforce them, we would have no choice but to impose them because the old system, the old low wage model of such jobs out of the United States, would remain in place. So the agreement itself says they have to be in place first. We don't want to premature vote. If we're forced to, we would have to

oppose a that point. So, Richard, you talk about greater enforcement, does that mean that the negotiations of the agreement need to be opened back up the There are a number of ways to do enforcement. In fact, the agreement so far Paul could be looked at as having less enforcement than previous agreements. And here's how under the current system, you when of two countries have a dispute, they in panel, they go to a mechanism that they go through. They

try to solve it. If they can't, they put together a panel. That panel acts like an arbitrator. That arbitrator makes a decision that is binding on them the new law, the new negotiated. When abandoned those panels, either party has the ability to block the paneling of those of the panel and therefore block any mechanism. There's no no way to enforce the Act at that point or the trade agreement at that point, so it has to be changed.

You can do some of it in the implementing language. Uh. And we've been told a lot of that will be done, although we haven't seen it yet to be able to evaluate it. If he didn't, it isn't done. It isn't changed. Uh. And the ability to force the agreement isn't there. It's a useless agreement and it will actually be worse than the current When do we have Richard Trump cut from

your perspective? Is representing thousands of workers out there? Do you think President Trump's policies have been good in general for them? You know, if you look at things, uh objectively, some of the stuff he's done, you could say that he's made a lot of our members lives harder. You know, he denied paychecks the federal workforce while he made him work. He jammed through a corporate tax cut on the backs

of working people that encourages further outsourcing and automation. Uh. If you look at that, he's made our our pockets fly her. He just changed the rule that took over time away from over two million people, and he's made our jobs more dangerous. He slashed the number of safety regulations, He slashed the number of OCEHA inspectors. Just last month, he gutted the rule requiring employers to submit detailed reports on all workplace injuries. And so you can make the

case that workers along those lines are worse off. We'll have my richard. As it relates to China, are you satisfied with the President's trade stance towards China or do you have any concerns? Well, you know, first of all, I paud the president for being willing to take trade on and actually talk about changing after that. That's an important step. So I give him credit for that. I

also give him credit for for looking at China. You know, trade relationships are an opportunity really to strengthen democracies, to stimulate economies, and to uplift the well being a people here around the world. But they can also be used the other way to harm people and to undermine those rights. UH. And right now China has been doing that. We have the worst deficit, the largest deficite we've ever had in the world, uh four hundred and nineteen billion dollars in

growing uh. And so looking at that relationship, trying to change it is very very important, and we'll continue to work with the administration try to make sure that that relationship gets right it because currently it's off course Richard, a lot of people say there has been too much emphasis placed on trade as the sort of villain here in terms of people losing their jobs, and that really

the issue is automation. Uh. The lot of jobs previously that we're unionized and UH and that that gave people decent salaries are now eliminated through automation. How are you, as the head of the a f l c I O, addressing that, Well, we have a committee on the Future of Work that looks at not only automation, but artificial intelligence, robotics and everything else that goes along with it changing

our ways. But you have to understand one thing, I don't except your original premise, because by design, NAPTA distorted the power relationships in favor of global employers over workers. It weakened workers bargaining power, and it encouraged the d industrialization of the US economy. UH. Those that caused wage stagnation that continues to this very day. It's a tandem. You can't just say it's only trade, but trade is

a significant portion of wage stagnation and job loss. Automation actually can be a job creator in the future if we do things right. We're changing our apprentice programs to train our people are members for the jobs of the future. We're working with universities like Carnegie Mellon and m I T the leaders in artificial intelligence, robotics, UH and New the Thing the jobs of the future, to get in front of that curve so that we figure out how

those things affect people. Here's a simple question, Lisa, Uh. Right now, we have a system that is leaving more and more and more people behind inequalities. Growing, artificial intelligence, robotics, all the automation, all of those things can accelerate that process if it's not done right. And what happens when a system no longer can provide a rising standard of living from majority of its citizens, a growing majority of existence.

What happens to that system, It's actually a threat to democracy itself, and so we're trying to get in front of it, harness it, and make sure that communities, people in the community benefit from automation and not just a very few people at the very top. Richard Trumpka, thank you so much. Richard Trumpka, President at the a f l C i OH based on Washington, d C. Joining us to discuss the new NAFTA, which is winding its

way through the congressional approval process. The U. S Treasury curve today inverts for the first time since two thousand seven. The move follows FED policy shift earlier in the week, as well as gloomier economic data, particularly out of Europe today. To help us kind of wind through this issue, we have Matt Egan. Matt is a portfolio manager and co head of the full Discretion team at Loomas Sales and Companies based in Boston, but Matt joins us in our

Bloomberg Interactive Broker studio. Matt, welcome to Bloomberg. Thank you. What do you make of this yield curve? News today? A bit surprising to me. I think there's a lot of pessimism built into the Yeld curve. UM. You know, clearly the data has been weak, UM, and you know, there's definitely been centered in the manufacturing side of the

of the global economy. And I guess in some ways it's not too surprising because there's been a lot of distortions thrown into that side of the economy through the trade war that being in last year. And it's not surprising it's affecting places like Germany, you know, more because they feed into that, you know, that manufacturing cycle on

the earliest stages. So what does it say to you the fact that the Fed is holding off on rate hikes is not enough to give people a boost in terms of their longer inflation expectations and their longer term growth expectations. This is really fascinating. I think the FED is um paying closer attention to this or opening this

up for broader dialogue. And I was UM watching. I mean, everybody probably pays attention to the Monetary Policy Forum in Farry, right, everybody's got down on their calendar, but it came out nine year old has so, but I think what was interesting is they came out pretty forcefully. We're talking about, hey, we're gonna really take a look at our monetary policy and our ability to both fight recessions and drive inflation. And they started talking about, uh, you know, concepts like

average inflation targeting. And I think that there's a good chance over the next year or so where they some somehow adopt some formal policy revolving around that too, because I think, I mean, to a certain extent, this is what their m O has been, right, They've been going lower for longer, trying to get inflation up. They've talked about it. In some ways, you could say they haven't been successful. It's been a failure, and so I think

they're they're sensitive to that. And um, you know, it's an open question whether a central bank can really drive up inflation or not. I mean, Japan has been trying to do this for years. Uh so, but there's a feeling that they have to do something, and I think that it it has broader implications though well I'm not I'm fixed income expert like Lisa. However, I do know that an inverted yield curve oftentimes suggests a recession. Do you think that now is a higher probability than maybe

three to six months ago. It is certainly a higher probability. I think that the inversion of the yield curve means less than it used to when it when it was in um what it would mean before. I think because of the unusual nature of monetary policy and how it's being affected. Uh, but relative to say three or four months ago, is clearly that you know, the probability recession

has risen. I personally think that if I had to guess the net next rate hike, it's going to be up rather than down, because I think this is similar to two thousands fifteen sixteen, a mid cycle correction. Uh. It's mainly coming through the inventory channels, and you know, this may be a leap, but I think we're going to see it bottoming here. Problem with that is the market is looking at the data and hasn't inflected up yet,

and that's disconcerting. So as a fixed income investor, is this a good time to go into risk your corporate debt considering the fact that the FED is backstopping the market and that you think that there's over that there's too much pessimism baked into the into markets. Right now. I do. I think that there is too much pessimism baked into concerns about the economy. I think, uh my, my mantra recently has been bad news is good news for risky assets to the extent that it keeps central

bankers on the sidelines. And that still holds true even today, even given how much stimulus and how long there are

already has been zero rates. It holds true today. Uh And and I think, um, you know, when when you think of what usually would drive our recession or or an unwind, and say that the credit market, it will talk about high yield and things like that, it's usually the FED raining on everybody's parade, right tightening policy, And they're far from I mean, it depends on you know, how you perceive that, but I would say they are

certainly not tight. And so I think that based on the way the FED is kind of approaching things, this new regime in central bank monetary policy, you know, being so close to the zero zero lower bound, the surprise might be that the expansion lasts longer than people people really think it. I think it can so just between investment grade and hi yield just right now, How how are you allocated. So I'm pretty sanguine on on high yield.

You know what, fundamentally what drives hi yield risk premiums is default risk through the cycle, and as far as we can look at look out into the future, over the next twelve months or so, the faults are going to stay low and spread. You know, it's surprisingly like even though spreads seemed tight, they're right on the screws for where they should be in terms of the premium that you should earn. Matt Igan, we continue to listen

to your conversation. We're excited to continue to listen to your conversation on real yield The Bloomber Television Show today at twelve thirty Eastern time. Eader Today Matt Egan, portfolio manager and cohead of Loomis Sales Full Discretion Team. Really interesting to get some perspective. Perhaps there is too much pessimism baked into markets at a time when there really isn't an evidence that we're super close to a recession or an uptick in uh in default. The pain just

continues in Germany's manufacturing sector. Really disappointing data today which is sending bond yields lower across the world German bond yields UH ensuring in ten years yields now negative for the first time since two thousands sixteen. Joining us out to discuss h is Marcus Ashworth, Bloomberg opinion columnist covering the European markets, joining us from our London studios. So Marcus, just give us a sense of why this particular data

point was so important from markets. Well, in some senses, I'm not sure it's quite as interesting as perhaps people think it is, because this is a continuation of a trend when a trend was expected to reverse. In a sense, it's surprising because people thought we'd seen the bottom or close to the bottom. The signs out of China, signs out of other other aspects, indeed services and wages, which

suggest the German economy is doing pretty well. Um, and that the whole bad news from last year of the diesel emissions, the rhine level being too low, and again indeed China had sort of played out. So it is disappointing. But then sentiment, sentiment, and this is then the day. This is what it is. It's a person managers survey, it's an expectation. Uh. But slightly more concerning is that that that France has reversed, but services aren't doing too badly,

which is the largest share of the economy. So I think what everyone's realized that everyone was hoping and banking on this, and we've had a of us spit the dummy moment where everyone's gone, bunt yields won't go below zero, will they, and everyone's sort of reverse. We've also got this China Italy talks going on at the moment that's causing a few bits of nervousness. And much more importantly actually is looked to the States, look to the US.

The U s yields are dropping and therefore there's less excuse to defend even indeed people were that level of positive tenure bunt yields. So the combination all this, I wouldn't read too much into that one particle number is what I'm saying. I think the US move is probably here actually more important. So Marcos, you mentioned France, just give us an update what's going on there, because it

is not just Germany. No, um, well, France has had this is La jone, there's yellow vests, h problems, should we say, which is morph into more of a problem. It's become it's got out of hand. It's turning into much more of a left wing than allegedly initially right wing movement. But the point is that it's not going away, and we have ongoing every weekend. We have real problems here and it's really hitting confidence in France and clearly also France, which is far less dependent on China. Per se.

It's based implicity say that Germany's dependent on China, but certainly they're less dependent and they are, you know, looking at different errors and therefore we're showing this is the global manufacturing slowdown is not backing away. Both France and Germany are very alliance on orders for their manufacturing across the world. And it's a sign that growth everywhere is dipping and that that has to surprised people because people had expected a bit of a bounce this month and

doesn't look like we're getting it just yet. Anyway, what does this mean for the ECBAT Can they raise rates ever? Again? If you speak to anyone how you say, I mean, I used to help you, and you know I always used to say to you that that the easy people will never raise rates in my lifetime, and certainly I'm talking about my children's are posting my grandchildren's life done now,

so you know, no, of course they can't. And the thing is they try bless them to up constantly leasing with all the right reasons, just a year too late. They've done it in twenty seventeen. Everyone has sort of backed it, but they waited because everything has to pan out. By the time they waited, the cycler turned and they're looking rather foolish at the moment. The point is that they also try to preempt by getting some extra cheap

super bank funding. But then the media music that that the rates going to raise as much as forty maybe even fifty basis points for banks funding themselves previously, and they had the reverse effects. So they try to be dovish and end up being having the reverse effects. So they are stump. But look, the reason why we're still debating this is because the ECB is not the problem. It's a lack of fiscal response in Europe. The monitor

response is played out. They try to tighten or stop being so dovish is the correct way of putting it, and still they have to keep on pumping money in the banks, pumping money. Ever, you know, they haven't got rid of their problems. They didn't do tarp or tell for whole after different things, and they're left as bad as they were five years ago. So Marcus, let's just stay in Germany for a moment, real quickly. What's the

latest on Deutsche Bank. I know they're out some news saying hey, we're going to start growing again, But really I think what's going on there? And is it the commerce deal almost a fitter complete? Well, you know it is, and well and this is this is what funny is not the right right word here because it's very unfunny. But you know, Ireland essentially got bankrupted by the sense that they had to collapse their banks, Greece likewise, Cyprus likewise,

Italy clearly ongoing. And yet it seems Germany, when it comes to Germany, they can they can beat out their own two banks. These are two drunks being lashed together to try and stay standing. And and and it's not

a good not a good look. And I think that the you know, Deutsche Bank has got a whole world of level three as an unmarked remarkable assets and a vaster of the book which is beyond the size of all comprehension comments Bank has got huge positions in Italian bonds, and both of them have got a over competitive banking market domestic too many branch is too much toff, not enough capital, no chance of making And the keyword here

is profit ever on their business models and lumping together. Yes, to keep going for a bit longer, but it doesn't solve anyone's problems. Wow, that is a stark review of German banking. But you know, I think it's probably pretty spot on because I think not and shared by many people and shared by many people. It's you know, you put two bad banks together, what do you have? Maybe you know one bigger bad bank. Well, there was a

conference earlier this week in Boston, Massachusetts. Not an investor conference per se, but a conference entitled Inside Quantum Technologies. This is the first conference dedicated to the business of quantum computing, quantum cryptography, and quantum sensors. To get a sense of all that quantum stuff, and all that stuff means. Let's welcome our guess, Alan Meckler. Allen is a managing partner of assam Off Ventures. He joins us in our

bloom Brick Interactive Brooker Studio. Alan, thank you so much. Can you just define briefly what quantum technology is for for me at least, and I think our audience that that's actually quite hard to do. In a few words, I first saw, I'm not a scientist or a technologist. I've just been good at spotting trends and doing shows

on them. But essentially, if you a lot of people, I'm sure only and listening, I've heard of super computing, and this would uh, quantum computing would make super computing look like stone age in terms of the speed and the rapidity of and and and the and the depth of of what it can solve and um. It has huge ramifications for all kinds of security, cybersecurity, uh, and the threat to being able if and getting into the wrong hands, being able to open up bank counts, and

all kinds of things. All Right, so let's talk about some of the practical applications of this incredibly abstract concept, because there are incredibly practical applications, from three D printing to some of the pharmaceutical advancements. I want to talk about three D printing in particular, because a lot of people were expecting that everyone would have a three D printer in their home, they would print their chocolate bars, they would print their chairs, they would print their you

know tables. How much has three D printing actually gained traction and wear? Three D printing most is most significant in uh AN actual manufacturing. There was a theory and a lot of companies went out of business that there would be three D printer in every home, maybe up

through two thousand, fifteen or sixteen. But the real benefit of it is and and and the real power and and where the money is being made is very expensive three D printers several hundred thousand to a million dollars that print in medals, and and and and other materials, but are revolutionizing the way certain types of manufacturing are taking place. For example, probably within four or five years, fifty percent of every jet engine will be three D printed.

There are a lot of reasons what we could go into why that is. But you can make it more efficiently, you can make it lighter, you can make it faster and less expensively than traditional manufacturing ways. So we talked about some of the practical applications of quantum computing and technologies. What are some of the technology who are some of the technology companies that are really leading the way here,

What are the names. Again, it's very important for listeners to know that there is no such thing yet as a quantum computer. And there's a new term that I think you're going to hear pretty soon called uh why why to Q if you remember why two K, which is years to quantum and we're probably a ten year countdown to getting quantum computers. There is a company called d Wave that has a version of a quantum computer.

But uh. At the show we just had inside Quantum Technology in Boston, we had many speakers, we had thirty two. But for example, IBM has now something called IBM Q. They've set up a whole division just to delve into being hopefully one of the big players. Microsoft was there too, and they've set up their own initiative. And their speaker, who is in charge of business development for quantum computing,

a fellow named Ben Porter. He was saying that they're going to concentrate on AI, financial services and chemistry, and and they're linking up with a whole bunch of universities. A lot of the research, much like my early days in the Internet, is coming out of research at universities, because again it's not a consumer product. The other really key issue is UH security and UH it's a shame what's happening that the United States is going to be

taking a backseat to the Chinese. The Chinese are building a facility right now in China. They're spending billion dollars on it just to study this. That's actually exactly where I wanted to go, which is UH what some of the challenges are in this race to develop technology that

most people agree would be the future. And I'm wondering when we talk with executives, they often talk about a lack of of people who are trained in the right things, and I'm wondering how much you know, some of the executives in attendance at your conference talked about that, are there enough people in the United States who are who you can hire to do these things, to develop these programs? Well,

there's UH. There is a Quantum National Initiative that I think actually the Hudson Institute came up with which the government, our government is endorsed. But right now my understanding is the US is spending you know, maybe about a billion dollars a year UH in all forms and developing quantum computing. A Chinese or spending over five billion and then they're also doing a ten billion dollar center. Okay, so let's say the United States decided to put more money into

quantum computing. Which areas would you think would be the best areas for those investments. Well, one area for sure is the military. Um is very important that Chinese actually have a quantum mechanic UH satellite that everyone said couldn't be done. But it's out. It's out there right now, and we don't have enough time to talk about what it does. I don't personally know everything that it does, but it's very significant. How they're using it in their

country and how how how they're planning. Uh. The other is uh protection for the future. We're going to have what we call quantum networks, your cell phones, everything is going to be the quantum internet, so everything will be much faster. Uh. There's going to be again this situation like Y two K where we're going to have to have this amazing changeover, and then the security for for all the financial institute this is going to be threatened.

Now that doesn't mean that someone couldn't counter that if you were at a bank or whatever. But I still think that in this country and at the financial institutions and the government. They're they're really not focusing on something that is going to be a critical problem. Allen Meckler, thank you so much for being with us. A pleasure speaking with you. Alan Mackler, managing partner at Asimov Adventures, based in New York and Seattle, talking about the Inside

Quantum Technology conference that just took place in Boston. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa Abram Woyds. I'm on Twitter at Lisa Abram Woyds one Before the podcast. You can always catch us worldwide on Bloomberg Radio.