Blame China for Not Playing Ball, Kudlow Says

other thing. Let us remember that he is a former chairman of the President's Council of Economic Advisors and has had a distinguished career in thinking about American labor. He has been a lightning rod of debate on the minimum wage. His exceptionally important book What Makes a Terrorist was a mustard ten years ago and painful years ago, and is out again with a new redo by Professor Krueger, and he joins us on this Job's Day. Um this morning,

we talked to Iowa. Yesterday, we talked to people who are working on the reality of labor in the field. Most of the debate seems to be esoteric, and within that the President seems to have what I would call a classical, more static view of labor versus The Miracle of the Marginal with a guy named William Stanley Jevons onto Alfred Marshall a hundred and thirty years ago. How do we drag Trump policy into modern economic theory? You know, I'd like to see the Justice Department become more active.

How would they do that? Let me give you an example. At the end of the Obama administration, the Justice Department in the Federal Trade Commission issued guidelines to human resource professionals advising them that it's illegal for them to have agreements not the not not to rate each other's workers like Disney, Pixar and all that out in me exactly

or what hospitals had been doing. And the current Assistant Attorney General for n I Trust has said that they're continuing to enforce those those guidelines, And just this week they brought charges against two companies agreed that they had violated the law or um uh rems UH Manufacturing company makes breaks for trains, and then Westinghouse Air Brake Technologies wob Tech, and there was a third company and tom this is actually kind of what's going on in the U.

S economy, and a microcosm third company called FAVOLEI was part of its cabal, but Bob Tech took over Favoley, so now they could actually do what was illegal before because they're within the same company. And I think that's the sign of the lack of competition that workers are facing in the job market. John, you live this growing up in the United Kingdom, where they are all sorts of agreements, and Paul Krugman brings it up. Paul Kruman, I believe is no longer at Princeton. He's the the

University of New York's June He's emeritus. He's emeritus. Are you emeritus? John Farrell is very sameritus to tell you that since you've been trying to get me a job at at at Deutsche Bank and god knows where else, watching to know I've got probably the best job I

could possibly have. Alan just to get to the payrolls figures today and to white just most specifically, to what extent of the structural issues that you've identified and done so much research on, to what extent are they actually holding back those headline wage numbers that we look at every month. Now, I think wage growth has been a half a percent to a percent lower than you would

predict based on the historical relationship. So something has changed in the job market, and I think the most obvious candidate is a lack of competition. The job markets less dynamic. We're seeing less mobility across areas. Workers aren't blowing to higher paying areas areas where there's greater demand. And we also have seen a proliferation of these practices by companies to require workers to sign non computer gree mints they

enter into these no poaching agreements. Franchise companies have no poaching agreements, and I think that's restricting competition in the job market. And companies are not bidding up wages even though they say time after time they can't get enough workers. Every month, we have this discussion about whether the labor market is tight, whether we're at full employment. Just from a simple sort of layman point of view, if the labor market was that tight, how we able to add

the payrolls figures that we are every single month? How can we have a month of three hundred and thirteen thousand when a couple of years ago, pretty much every single economist I spoke to said, get ready for something in the one hundreds. Every single month we can't keep this up, but we have. How we doing that? Well, that's what's driven the unemployment right down. Don't forget the unemployment rates come down very rapidly. We're not seeing workers

come back who are out of the labor force. We're seeing workers who uh would otherwise retire early staying in the labor force longer. And we're seeing people move from unemployment to employment. Is their monopsidy, Professor crewe when it's a great phrase. It's been one of my pets study projects over the year. Not monopoly, folks, but think of a coal mine. A coal mine owner in a coal mining town is the only employer. Good Morning West Virginia

for for listening in parts of Kentucky. But do you agree with Professor Krugman that there's a little bit of monopsony out there or a little bit too much? Absolutely, I've been saying that for twenty five years. You know, you go back to the book David Carton I wrote on the minimum wage, our explanation for why we did not find job losses from the minimum wage, but the Republican pushback to that. I'm not saying ed Lazio out of Stanford because i think Professor Lazier would agree with you.

But the Republican pushback is everyone for themselves, the lockey in theory. You know, everybody's in this. They can move if they don't like West Virginia, they can move to New York City. But it's costly to move. And that's what gives the monopsony power. You know, in the in the classical neo classical model of the job market, if you have perfect competition, if a company were to cut it to pay by one any would lose its whole workforce.

And we know that that's not the case. Or if a company is having trouble recruiting, which many companies are today, all they have to do is offer the going wage and they'll get a flood of qualified applicants. And that's not the case. So I think our understanding of the nature of monopsony has changed. We can have monopsony even if we don't have a company town. Okay, but within that,

let's say health care is an example. Whether it's doctors, young doctors, or nurses or whatever, they're all screaming that they're paid. Compensations won't go up even though there's a

shortage of their skill set. Well, that's a great example because that's an error where we've seen increased employer concentration, UH large number of mergers where in many cities now that industry is not competitive, so the doctors and the nurses are UH at risk of being Professor Krueger, are we going to become like the health system that John Farrell grew up with in England? I don't mean that disparagingly, John,

but are we going to become a British system? I don't think where we are right now is stable, So I think we are going to move in one direction or another um. But I think we should also be very proud of the fact that we expanded coverage for so many other Americans. All of these issues sound like

very structural issues to me. Alan. When the Fed Chess speaks later today and he reflects on the payrolls report not of today, but on the payrolls reports of the last few years, can he look at the labor market and safe for the Federal Reserve, it's mission complete. Look, the Federal Reserves mission is never complete, so I think

he certainly wouldn't say that. But one of the real challenges for the FED is that monetary policy operates with the lag so they have to be thinking about what's going to happen six months from now, what's gonna happen nine months from now. They have to anticipate whether whether we're gonna have imbalances and whether they need to address them to keep the recovery going. Now. Uh, And I think that's the outlook that that the FED should have.

So I understand there is that we can get him on the board of Governors at the FMC if he doesn't want the Deutsche Bank job. So so Alan, if you're on the board and you were advising them about the labor markets six to nine months out, what would you be saying. You know, we've seen over the past seven years there's graduate a healing of the job market. It's been painfully slow, but we're now we are at a point where all of that hard work is paid off.

It took us a long time to get here. But the unappointment rate is poised to go below four percent. I'd like to see wage growth get above three percent, and from the feed standpoint, that is kind of kind of their target. And inflation is has been edging up. It's now looking like it's right around two percent. So I think the feed should be looking at things and saying, how can we keep this going? What's our best our best monetary policy to ensure that we can kind of

uh keep this um recovery going and growing. Yeah, well this is good. We're trying to get your job because we know you're underemployed. We're going to four hour professorial work. We get Princeton. The other job we had for you was to coach a C. Milan, but they get out too. That's it. You ally doesn't want well, they but they advanced to John explained to me this guy who had to try out as a coach, and he's done so

well with these I wouldn't say he's done that. He used to be a player a C. Malan, a fantastic player of a World Cup winner for Italy as well in two thousand and six, and I guess there's some nostalgia here or something. Tom, Will you stay around long enough to eat the panotoni? That's the question. That is a great question. Alan Kruger knows knows the Italian saying will he be around long enough to wake the panotoni?

That is a joke. When you take the job at the start of the season, you were around until Christmas to have the Panotoni. That's a joke, Elyn. Have you know that the only professional soccer game I've ever gotten to Milan and I love Panatoni. So to fall asleep it was to nothing. It was there are a lot of people there, Yeah, it was. It was so different to watching American football that you couldn't get food. I couldn't believe it. At the halftime, it was almost impossible

to answer my question. Did you fall asleep like I did? Thousand people at the san Cerro? There is no falling asleep. It's like it's like going to chanting coast to coast across America. We now have a debate going Bloomberg to play the Simpsons tape of the soccer game. Get to that. It is job today. We love having Professor Krueger with US of Princeton University. We're now welcome on Bloomberg Radio, Bloomberg Television worldwide. Good morning, William Gross with US of

Janice Henderson. Bill Gross, is just one month's data. You take those moving averages. Do you look at the moving averages or do you give caution by a non farm statistic of one oh three and a two month payroll revision of negative fifty. Is it a fifty three thousand month lousy or is it a better report than that? Well, it's lows. And I do look at moving average. Is too many to tell you the truth to under day and uh several years in many cases, but uh yeah,

I think this is a weakesh type of reef. What is true that? And I would have said, um, going in that wages where the key consideration point three was what was expected over a point one last month, so that average is that point too, and two point seven on an annual basis, which isn't much change, and so um, you know, I would think this makes for more cautious FED, especially in light of the global trade situation that we see on an overnight basis where we're just gonna have

to see. But I think the FED will be cautious going forward. My forecast is one or two hike nineteen or two thousand and eighteen type of year bill gross. If we got wage growth is John Farrell mentioned spot on, you've got to take inflation out of that to get to real or inflation adjusted wage growth. Do we have inflation adjusted wage growth. Well, I don't think they have much. And I've got an interesting chart in front of me. You can't show it, but it starts. It looks good

on it looks so good on radio. That chart on radios gorgeous. Bill continue, Well, let's talk about it then. Since real wages have flatlined, it's almost like this patient is dead and real output has basically doubled. And so where has that productivity gone to. Certainly hasn't gone to wages. It's going to corporations. And it's good for stocks, I suppose in terms of earnings. But if the Fed's goal basically is to get wages up and to get the inflation rate at two and war, I don't think they're

really doing much of a job. Bill. I want to talk about how you positioned. You've talked about this short that you've got in high yield over the last couple of months with us Blomberg Radio and Don Blomberg TV. It's a shot that seems to be struggling to pay off. We've had risk appetite take a real hit over the last couple of months, but all the volatility or the downside seems to be in equities and high yield seems

to be whether relative out performances in risk assets. Can you explain why you think that is, Bill, Yeah, hi yield is doing okay. Um, you know, hi yield tends to in terms of volatility, say the VIX is twenty um. High yield tends to have a VIX related volatility of about five, you know, about a quarter of what the stock market does. And uh, you know, it's a slower moving type of type of average. And the investors wait on how yield to see, you know, the expected number

of defaults going forward, and so far they've been relative benign. Jonathan. So I think that's the main point. What I do say, in addition to that, and the things that are making the short work out over the past month or so, is that, you know, the global trade situation and the potential you know, economic problems. Uh that higher interest rates you know, place on low low quality corporate credits, you know, eventually forces those spreads a little wider. And that's basically

what the beds about. I guess what I'm trying to watch, Bill, is there is there a more optimal way of expressing this sort of hit against risk appetite from credit insight equities where the volatility seems to be contained and isolated right now, well volatilely maybe contained. I guess, um, it's hard for me to make that description, but I think what I'm doing in high yield it's a little sophisticated, but basically I'm selling calls and selling puts on the h y c d X, which is the you know,

the benchmark for the high yield market. And to the extent that it doesn't move by more than fifty basis points one way or the other over a month speriod of time, then you're captured a premium. So I'm expecting how yield to gradually move higher, but if it doesn't significantly move lower than the bed pays off Bill Gross with us of Janice Henderson and Bloomberg Television and Bloomberg Radio.

This Morning, Bill, I do want to turn to the politics and folded into your decades of work in financial theory and economic theory, I'm going to cut to the chase that you're, my guests, a critic of what the presidents saying and maybe even doing. What does the president most get wrong? Well, he gets the trade deficit wrong. I mean the trade deficit is most economists would affirm, you know, as a result of over consumption and under

saving on the part of the United States. Are our savings ratio is down to two percent, which is historically low. The trade deficit at three plus of g d P is um you know, basically relatively high. And to the extent that we like to buy things and not save, then we're gonna have a trade deficit because we buy things here in the United States and then when we can't buy enough, we buy it overseas. And so Trump

basically has it wrong. It doesn't mean that we're not being gamed by some countries in terms of uh, you know, tariffs are in terms of technology or or cheaper goods and services. But it does mean that there's a little way to change this situation by imposing tariffs on four in good conservice. So then what do you need from Larry Cudlo. Mr Cudlo is going to join John Farrell here in about I'm guessing forty five minutes, maybe it's

thirty five minutes. I'm serious, Bill, What does Lawrence Cudlow and other free traders, even Secretary Ross, what do they need to do to stop the discourse that has a political tinge. I understand that we all understand the president's angle on that, but it's effect on China. What does Cudlow need to do to jump start that process this weekend? Well, he needs to calm the verbal tweeting down, so to speak.

He needs to basically acknowledge that Trump is a negotiator and that part of the process of negotiation is to go to extremes like you did last night with a hundred billion dollars more. You know, the question that the markets have to ascertain us whether or not you know, there's a semblance of truth to that and they're not.

There might be a hundred billion behind that, and so you know, I think in the equity markets that there are risk premiums, as you know, and that you know, this continued type of verbalization and tweeting on the part of of trade and not only tweeting but real terrorists being imposed basically raises the equity premium by a half a percent or so relative to what it is, say it's a four to five percent premium. It raises it by a half of percent. What does that do to prices?

It lowers it by about three or four percent in terms of the stock market bill gross of Jennas Henderson. Uh, this morning, futures at negative twenty down, futures negative two zero eight. Really the major impact off this jobs report with a MOULDI report in a lousy revision, but other than that, a pretty buoyant report, as we heard from Jim Glassman and Bill Grows. Yeah, I'm pleased to say.

We're now joined on Bloomberg Television and on Bloomberg Radio by Larry Cudlow, the National Economic Council Director, who joins us from outside the White House. Larry, it's great to catch up with you and get your thoughts on the payrolls figure, the labor market, and what has been happening with the trade discussion. The back and forth continues over

trade and the tensions continue to escalate as well. Larry, there is a risk that the damage could be done and undermine what this administration is done around things like the tax bill, around the deregulation push. Do you see the trade effort undermining those things? Larry, I sure don't. I absolutely do not. In fact, I think, Uh, to rephrase this narrative, China is the problem. Okay, China is

the problem. President Trump is the solution. In my judgment, This is the first president twenty years to have the backbone to go in and challenge China on the kind of unfair and illegal trading practices that they have adopted for the past several decades. I just want to make that point, and second directly to your question about growth. Look, China is stealing our technology, all right, their intellectual property

rights for being stone these forced technology transfers. I was on the phone last evening with my friend and trade ambassador Bob Lyheiser, have known for years in great person, and we kind of walked through you know, what is the heart of the American economy. It's entrepreneurship, it's innovation, and it's based on technology. I think this is a very important point, and I want to transmit his his views on this because they're terribly important and they're on target.

We cannot allow our technology breakthroughs, which is what's made America competitive and great, and with lower taxes and regulations, it's going to be even better. But we cannot give them away to be stolen by the Chinese government anymore. It doesn't work. Larry, just to jump in the narrative of this last weeks important let me let me finish, because the narrative of this program has always been that

China is a problem. China is a problem. The debate I want to have with you, the discussion I want to have with you, and what our audience needs is details on the approach and when you're gonna get results. So if we can spend less time talking about the problem that I want to talk about the approach. Are you actually having discussions with the Chinese? You're either gonna let me talk or you're not my friend. You're either gonna let me talk or that okay, you wanted me

to come on, I'm happy to do it. Well, Larry Talks. I want you to give me the idea of what is happening behind the scenes. Are you having discussions with the Chinese? They're always ongoing discussions with the Chinese always. And President Trump, I traveled with him all day yesterday.

President Trump indicated to me for the mpteen time that he has great respect for President She and she has respect for President Trump, and President Trump regards she as somebody who would be a very talented negotiator if and when negotiations begin. They have not really begun yet China's response to our complaints. Their response has been unsatisfactory, all right, and that's why we're looking. I used the word looking. We haven't proposed anything. They're considering a second round of

tariff actions, but it has not come to pass. There is no execution of this. It's just consideration. It's really up to the U. S TR below the President, and so therefore the conversations go on as they always do. The President speaks to she, the second and third level speak to each other. Perhaps perhaps there will be some fruitful negotiations so far, but I would say they've been unsatisfactory.

So we to see. So Larry, help me understand when the negotiations will actually begin, because people are trying to find out all the time. Aarris no timetable. There's no timetable whatsoever. So you can tell me what the sixty days, Larry, Right, that's the thing I really encourage everybody to read carefully. Uh the President's announcement yesterday, the White House press release

and also Ambassador Lighthouses press release. We are considering adding tariff pressures considering I don't even want to call that a negotiating point. There may be negotiations in the next couple of months. I hope so. I think everybody hopes so, because I guess to your point in the beginning, UM, I don't want to disrupt the economy. President doesn't want to disrupt economy. We need not disrupt the economy. But the point here is we're gonna have several months open discussion.

People will submit comments, the public will submit comments, They will be reviewed by the U. S TR and elsewhere. And at that point, I don't want to put a deadline on and I'll use the phrase couple of months. We will then the administration will then make a decision with respect to whether these UH proposed terrofs um will be put into place. There can be look, there can and will be conversations during this whole period. I'm just gonna say several months. I can't discussions. There will be

discussions along the way. And to be honest with you, I want to use the phrase Ambassador Life has used with me last night. This is a moderate tempered approach that we are taking. It is moderate, temperate, and proportional. This is not a trade war. There's no war here. All we're trying to do is save and defend American technology, which is crucial to American economic growth and by the way,

global economic growth. This whole program out, whether it's tax rate reduction or rollback of regulatory costs, or rollback of energy problems UH and now trade, this is all designed to promote faster economic growth in the United States. And I believe we will. I believe time pushed for time, and your pio shout at you, and my producer will shout at you. And I want to fit a few more questions in. I want to understand what the Chinese can do to satisfy the concerns of the President in

this administration over the next several months. What can they do tomorrow that can make all of this go away? Well, look, I think there'll be a discussion. I want to tread lightly here because I don't want to get ahead of the game. I think Ambassador Leightheiser and the President are thinking about submitting a list of suggestions to the Chinese, and I underscore I think, but that is a possibility, Okay, possibility. If so, then hopefully the Chinese would respond with some

ideas that will solve this technology transfer and stealing. What would you put on the list. Well, look, my friend, there's no secret here. Uh. They've got enormous trade and tariff barriers, all right, they have technology uh force technology transfers. They got to stop their um stealing of the intellectual property that we try to use in any company around the world. Those are good places to start. Um. China has probably gonna work with this. Look. They have to

open their markets. Is that a surprise? Their markets are relatively closed. Remember, even though twenty years ago they made good movement in free markets. I give them credit for that absolutely. Nonetheless, in recent years they have moved backwards. Half the economy remains state run. The state run corporations and the state run banks are operating. Half the economy is incredibly inefficient. And they want to stock American exports.

They have to lower those barriers. They have to open markets. They have to look at opening investment opportunities, and they have to look at the technology transfers and stealing. And in the meantime, markets looking really soft here again, And I just wanted just to finish up which market, which the equity market. We're down about six tenths of one percent, We're off by about seven tenths of one percent. On

the down, we're raising the weekly gain. I guess my final question to you is I understand the problem tremendous program and everyone understands around it. Don't correcting, Larry. I'm saying the fact of what's on the screen in the moment. I can tell you what the year to date prices. I can tell you the one year price. Have a final ask you this one final question, the question do you answer them? Larry? Always struggling to identify the difference

and policy? And does the White House a communication problem? Does the White Does the White House have a communication here? You're talking over me so much. I can asked the question and you answer it. Does the White House have a communication problem? Because so many people don't understand the difference between retric policy and proposals. Do you have a communication problem, because it appears to me that you do. Well. Look, if you read the press releases, it spells out in

great detail what we're doing here. So I don't know how better to communicate. I'm on your show, so when you let me talk, I'm trying to communicate exactly what this is. We have not by the way, I just go through this one more time. We have not executed implemented any new tariffs. We haven't even declared our absolute

hundred percent intention. If you read the press release, the President has asked the str Bastard Lightheiser to consider whether or not additional tariff discussions or actions will be necessary in the future. Nothing has been done so far. As I said earlier, these things uh will be put out for public comment. Those comments will be received and evaluated. SCR will come back to the President with its own report.

You know, just on at one point str Lightheiser, they did a hundred eighty page report over the past year which shows not only the centrality of technology as central to our economy, but why China and their actions which break all the laws of the World Trade Organization, why they are taking away our technology which is our most valuable asset. Right so we can't stand by on this.

So to answer your question, it's very clear to me we are looking evaluating, putting out for public comment the worth or utility of additional tariff actions to make our point that China's illegal activity in trade and elsewhere can no longer be tolerated. Blame China for not playing ball, don't blame the president. He standing up for American companies in business. That's my take. I don't see how I

can communicate that more clearly. Hi, Larry, you're a good sport and I appreciate your time and thanks for coming on the program. I'm giving us your time and hopefully, Larry, you'll be back in front of the camera with me next month. Larry Cardlo, National Economic Council Director, we appreciate his time with us. Michael Darda chief economist m cam Holdings.

What was not discussed in that conversation, Michael, and you, of course have a this is part of your fabric with your academics out of Wisconsin, is the discussion of this not between the aggregate of the United States the aggregate of China, but the distinction between West Virginia and Iowa. Could any pre is it in have a trade policy that satisfies West Virginia and at the same time Iowa follow the hippocratic oath here, which is, first, do no harm.

You know, we've seen the market reaction to some of the verbal bluster coming out of the administration. It's been negative, and it's negative for a reason. I mean, if this is simply over, you know, if this if this is due to a concern about intellectual property. That's very legitimate. But you know, what is the proper channel here? Is that a legal channel? Is it the w t O or is it is it moving forward aggressively with with

tariffs trade protectionism? And if it's the latter, unfortunately that will be disruptive and it will hurt growth and it is hurting confidence. Now whether their proposals that become realities or not. Um, you know, markets do discount and that's where we are, Michael Darda, what have you could just look into the future little bit because many of these issues have to do with intellectual property, which go into

products that have yet to even reach the market. We don't we know for example, you know every iteration of new smartphones, computers and technology and so on, but the actual consumer market for those products is shifting to Asia,

not the United States. And just in terms of just the demographics that exists, you know, India is going to overtake China's the most populous country by fifty What if you could speak to that issue and whether this is kind of fighting you know, last centuries wars, Yeah, Pham, I think it is. I mean, look, if it's a. If it's a matter of intellectual property theft. I mean,

if that's a that's a legitimate concern. The question is what is the proper channel through which to deal with that, the w t O, the Justice Department, or if this is simply a concern about trade deficits. You know, when I listened to President Trump speak, you guys have had Peter Navarro on your show, Commerce Secretary Wilbert Ross. You know, they seem to be focused on the trade deficit is an issue, you know, rather than what we were just

hearing about intellectual property concerns. And the trade deficit is just the reciprocal of a capital inflow coming into the country. And if we're moving into larger late cycle deficits and as a result investment is higher, you know, than the sum of private and public savings, we're going to have

a bigger trade deficit. The fear I have is that if the administration is fighting an accounting identity here with protectionist trade efforts, then we end up in sort of a smooth holly loop to loop where the trade deficit figures the worse the trade the protection is rhetoric is ratcheted up. You know, we saw the trade trade deficit figures for February. They came in worse than expected. And then you know last night, you know we had uh

news of greater tear of considerations. I don't know if they're left, but that kind of the thing scares well. The news to meet Pim Fox at Michael Darda is Mr Cuddlo and Mr will move the market. I rarely say this, folks, but we got a nice hundred point lift in the market. And when you see the Bloomberg headlines that go out to everybody in finance and economics, Pim Fox, Cudlos says there are always discussions with China.

Cudlos as second round of tariffs just a consideration. Cuddler hopes for negotiations with China in the next months, and you see SMP and down pair gains. Yeah, but I would also I also mentioned that you're seeing a little bit more buying of treasuries right up thirteen thirty seconds for the thirty years three point five and the dollar

at one oh seven kerve flattening. Yes, indeed, all right, So so Michael Darda, this idea of a trade wars, trade confrontation, it doesn't just exist when it comes to China, but also Mexico and Canada. Do you have any thoughts on how that is going to be resolved, how that will work out, and whether that will have a much larger effect on US investors? Well, I think, you know, most investors probably hope that the bark is worse than the bike here. You know, we've heard a lot of bluster.

Will have to see what the actual policy follow through is. But you know, we've heard a lot about tax reform in regulatory relief. Investors have been focused on those things. Is potentially boosting growth, but we should be thinking about more restrictive trade policies and more restrictive immigration policies. Is things that retard growth from the supply side, offsetting you know, any potential supply side lift coming from tax reformer, regulatory relief.

So to me, when I look at you know, the whole suite of policies here, it's a real mixed bag at best. Looking at Mexico, for example, a big importer of US energy products. Absolutely listen, the less disruptive we can be, the better outcome that you know that will be for the for the business cycle and the equity markets. I think we have to be very careful here, and I'll just reiterate again, if the concern is over the

a deficit, that is an accounting identity. If you want the trade deficit to fall, the US is going to have to save more relative to what it invests. You are not going to remedy that with tariff walls. And we're at a point now where US consumers are actually saving less than they did let's say three months ago, well in the sum of public and private savings. That's

really the issue. So so right with the latest GDP statistics, we actually saw the household savings rate moving down pretty significantly. Fiscal deficits are headed up nine years into a business cycle because we just did a big tax cut and raised government spending over the next two years at the

same time. So you know, look, I'm in favor of supply side policies as much as anyone else, but we do need to be concerned about responsible fiscal actions as well, and doing a tax reform reform really means revenue neutrality, at least in my book, and we've utterly failed on that score. Mike. One final question, and it goes back to what Pitton was talking about. Earlier about the markets. What does Michael Darted do with cash right now? Is cash avail you to you? Or do you need to

be in the market? Well, Tom, I mean, I you know, I think that is going to have to do a lot with a person's age, with their risk tolerances. You know, Um, he's just trying to get the April fift. I'm just trying to clear my bitcoin trade. I am so underwater. I think it always makes sense to you know, to to have some cash on hand. Now, it's going to

depend on on someone's age. You mean, if you're in your if you're in your early twenties and you're just starting your career and you're mainly investing through your four oh one K, then yeah, you don't want to be sitting on hoards and words of cash. But especially for anyone that's closer to middle age or even moving out of middle age. I won't mention any names. Um, you know,

having that cash, keep it at work, good work. Yeah, having that cash cook can come in very handy, right, So you know, if you if we do have a significant market pullback, let's say there's a recession in a bear market out there sometime in the next three to five years. You want the ability to be able to add to equity positions if we do end up down

more an equity market, so they can come in quite handy. Well, I'll tell you, Michael Data, I am so ready to buy into the Long Tuition Fund, which is a good place to go. Michael Data, MKM partners with us with a terrific perspective, particularly him right at the top, A Data, acclaimed for his animal spirits and nominal GDP analysis, talking about a dampany of nominal GDP. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on

Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane before the podcast. You can always catch us worldwide. I'm Bloomberg Radio.