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Terminal and the Bloomberg Business App. Terry Haynes of Pangaeepolicy, Terry, Welcome to the program. There is always a temptation to move on to the next thing. I just want to talk about the last thing for a little bit longer. Just frame what we witnessed over the weekend. To see European Commission president except fifteen percent and essentially say thank you, we will rebalance and almost apologizing about the situation.
Well, it's a it's a triumph of a lot of things. Certainly the president ought to take a victory lap. I think it's I think it ends up being good for the European Union. It's a blow against the conventional wisdom, which of course, in the last quarter saw a lot of this as disastrous. The markets see the fact of the deal and the ratification of trade and the expansion of trade is the most important thing and number one.
Number two, I think there's a situation here where as you've alluded to when you're questioning with Tyler, that the geopolitical element of this also remains front and center. Whether we're talking about the continued interdependence of the US and European Union economies, or whether we're talking about investments in
the United States and purchases of military equipment. You're seeing a You're seeing a tightening of the alliance, and I think, frankly an attempt by both parties to push back a bit against against China terry.
Just to build on that theme, we're hearing from the EU Trade Commissioner morro Sekovich this morning in Brussels, and he commented on how overcapacity is destroying the EU steel industry. Over Capacity is sort of code from steel from China, and I wonder how much that is. Ongoing discussions that are happening now that have pushed Europeans to make this deal with the United States, even if it's being perceived by the market as being better for the.
US, well, they'll they'll certainly try to make a deal on this. But at the same time, you know, the europe sees in the United States sees as well.
I think the.
China using the economic sectors and industries as geopolitical weapons. And there's nothing there's nothing more stark than China trying to flood the European market with evs for example, on this. And you know, we even see Bloomberg reported recently Starbucks under assault now by a Chinese coffee company starting in
New York, vastly undercutting prices. So you'll see this throughout and it is a light motif these trade deals and the fulcrum of kind of pushing back against China, limiting China's ability to try to use industries and sectors to frankly hollow out and destroy industrial capacity in the West.
What have we learned from both the Japanese deal and the EU deal in terms of the structure of the sustainable trade conversation going forward? Is it the fifteen percent is a new floor and that you have to have some sort of investment fund alongside that. The details of which haven't really been disclosed on either side.
I tend to go outside in on this instead of
inside out. What I mean by this is I think I think markets, and I've said this many times on this program, I think markets are focusing entirely too much on tariffs and entirely not too much on the broader benefits of the rest of Trump trade and trade policy and tax policy, whether it be the tax bill and the variety of things that are that are coming from that or these trade deals, and how they're trying to reorient in ways that frankly continue and expand investment in
the United States as a compliment to onshoing and reshoring in critical critical industries, as Secretary best and puts it.
In fairness, though, stops are at record high. So if you're reaching record high after record high and what capacity, are you saying that markets are not aware of some of the positive benefits from this, Well.
I'm saying that they haven't been, first of all, And second of all, I'm saying that there's there continues to be a focus on tariffs as a negative without the countervailing positives and attached. Certainly, markets had gotten over a lot of the tariff shock in the last quarter, and you know got past the idea from the conventional wisdom
that this was going to cause a hole in the economy. Now, what your situation is, Steve put it very well in the last segment, is you've got a variety of hoops that have been jumped through all of what your market positives. And now we're turning to for example, the FED this week as well as earnings to see if the proofs and the putting on that.
Side the narrative has changed quickly. Let's put it that way, Terry, appreciate your time. Terry Haynes. There of panchee policy. Steve Reshoot of Mazoo with a bullish forecast for Friday's payrolls report, calling for one hundred and forty thousand jobs to be added and expecting the unemployment rate to tick up slightly. Steve joined us now for more Steve Goomonic, good morning. Some of the times that maybe one forty is called bullish. Now for the labor market, what's changed, Well.
You are further into a business cycle. You do have a labor market shortage. You do have a very very tight labor market, so it's hard to continue to add large scales without causing a certain amount of disruptions and a dramatic rise in wages, and I think companies have
been resistant on that. I also think there's a bit of a technology shift taking price, and I don't think it's all the AI, but I think it's further adopting of the traditional types of technology that we need to do things in the service industry with more and more kiosks popping up everywhere, and I think that helps the situation as well. So we're supplementing labor or get a little bit with capital where we can.
You have some people like Chris Waller, governor who's expected to send the first ascent on the Federal Reserve since nineteen ninety three, potentially on Wednesday, coming out and saying he's seeing cracks, he's seeing signs that there is instability in the labor market. Do you reject that wholesale or do you just say that that is something that comes along with the changes in technology and demographics.
Well, I do reject at wholesale because what we see in terms of the claims numbers, what we see in terms of the continuing claims numbers leave us in an environment in which you know there's a healthy labor marketing environment. We see no evidence whatsoever in the data that's less likely to be disrupted by any kind of flow differentials.
We also seen in terms of the Jolts numbers, which I don't particularly like, but the FED seems to like in terms of hiring quits going back up, in terms of hirings being healthy, in terms of job openings going back up. So I don't see where there really are cracks in the labor market. It's a traditional slowing that takes place as you get this far into an environment. And oh, by the way, adjust it for how tight the labor market fundamental he.
Is, given the fact that we do see some sort of slowing at least at the very least, Is there anything inflationary about this labor market? Is there anything about wage growth that would give you confidence that we could see more than just a one time price adjustment from tariffs?
Oh, I think you grew up going towards a three percent inflation rate, and that's part of the issue. I think it's from a labor market tight standpoint, I don't necessarily have to talk about tariffs to tell you I think we're going to three percent inflation, and I question whether or not tariffs themselves will be reflected in prices substantially, because you look at quorter margins, they're very, very wide.
You look at exporter margins with the dollar going down, you've got that benefit coming through a little bit of goods prices. We've seen given the fact that the dollar is depreciated six or seven percent in the last year, and not surprising you see a little upward movement in prices that would typically just take place from the currency standpoint, and actually it's not even keeping place with the currency standpoint,
because global deflation is real. And that's the other thing that's offsetting and helping the exporter margins widing, because as China dumps all its goods everywhere else in the world, these people are sitting there with their run material base starting to get cheaper, and therefore they could absorb the margins where and China is dumping goods everywhere that they can't dump here anymore.
Other capacity is a massive issue, particularly for the Europeans. That's for sure. You said something really interested that we need to unpack the labor market might be a reason to be hawk issh still, Governor Walla was in your seat a week two weeks ago. I made the case the labor market is increasingly becoming a reason to be dumbished. So I just want to give you some time. What's happening in the labor market right now that you think is going to keep them on the back foot.
I think the fact that the unemployment rate is not going to go higher. I think the you know, movement to four point two, we've been there and they've done nothing. But I think when you look at the fundamentals of the labor market and what will drive that unemployment rate up a little bit, you can discover that it's positive science. An expansion in the labor force from not having expanded
for two months in a row. That's going to be the kind of thing that you know, gives you an environment where and that's probably going to wind up in a little bit increase in unemployment. Temporarily, you're going to wind up in an environment where it's a healthy expansion in the labor market help you up with adjustment in the unemployment rate. I don't think there's cracks in the
system when I look at the earnings numbers. You know, my earnings revision tracker is now positive after being negative for weeks on end, It's now been positive for three weeks in a row. Companies are revising up earnings. We're at ten point nine percent for this year, thirteen point nine percent for next year. These are solid earnings numbers. These aren't kind of an earning number of peop will sit back and say I have to scale back on
employment dramatically. I think a lot of the announcements that you're picking up on in the labor market are taking place in states where you're required to announce the layoffs, but you're not required to announce the net hirings, and I think that becomes part.
Of the problem.
It's selective decision to look at the information. And this is a confirmation bias I think comes from the dots. If I were to drop Jonathan Ferroll out of an alien spacecraft, you had been studying the Federal Reserve for years, you'd been studying the US economy for years, but you didn't know any about the dots, and I dropped you in Arizona right now, Okay, you would come out of that spacecraft and you would be like, Oh, the FED shouldn't be cutting rates. But everyone else says the Fed's
cutting rates. Why because the dots are there, so everyone's biased by the dots.
Other people might cherry peck some labor market data. Right now, at least, I've talked about a few things. Entry level hiring not great at all, job switches not getting that boost to pay. You talked about the labor market and the tightness there, sufficiently tight to generate stronger pay rolls growth, stronger wage growth. It keeps this FED reluctant account interest rights.
We've got an hoarurwly earnings number of zero point four percent. That's again consistent with a four percent rise. A four percent rise is consistent with three percent inflation. FEDS targets too. We're a two point seven our estimate for the upcoming PCE deflator. There's seven tenths off the mark, three tenths closer to my number, seven tenths away from their number. I'm sorry. I think they're not in the position to cut rates. And if they were to cut rates, I
think it would be a mistake. And I think you'd discover exactly what happened last year when they cut rates, and that is the long end of the curve. Would sell off, so it would be a bear steepener.
Which at a certain point is the reason why people are also looking to the auctions. Sorry, I had to say that I've been ormissed. There are auctions today and tomorrow two year, five year, and seven year notes, but also the Treasury refunding announcement that comes on Wednesday, when maybe we get a sense of whether any of this will matter for the US government's dep financing costs because maybe they'll issue everything in t bills and just retire
all of their coupon all of their treasury bonds. I mean, how much are you looking at that to really understand exactly how this Treasure Department is going to manage this and whether it's going to have any market immifications.
Well, I think there's lots of reasons to expect bill issue sizes will go up. Back when I began, which was ancient history in terms of the markets, one of the things I had to do was estimate the treasuries operating cash balance. So I had to figure out financy and I had to figure out the net cash flows, and we assumed every single quarter a third of all the net new money would be raised in bills. That's not happening now. So yeah, there's more bill issuance coming relative to coupon issuance.
When you came in, you said that there's something else that you're looking for.
Stable Coin is something that I'm going to be looking to see whether or not Treasure Secretary of pressent a if he's back from his overseas trip and talks further about stable coin than he did at the May Were funding announcement, And he made a statement at that point in time that I think get stuck in a lot
of people's minds. And I visited a lot of accounts, and some of these accounts are very, very interested in the whole stable coin concept and where do we go with stable coin and how much of it will be financed through bills, And he talked about two trillion dollars market cap. You look at stable coin now, it's about three hundred two hundred billion dollars. So that's telling it
there's a long way to go. And I question whether or not if you wind up with it being done properly, if you want it, For example, the Federal Reserve issuing its own stable coin, could you then be in a situation where we might actually replace a lot of our electronic transfers of wires and replace the swift system with something more simple and less costly for the end result user. And know the banks don't want this because clearly it influences a business they make a lot of money on.
But clearly the end user wants it. I can imagine a place like Walmart, Target, Boeing, these big people, these exporters, these importers, all sitting there saying, you know, this would be great.
It reduces my costs.
I really think we have to do this right now. We've got lots of stable coins going in different directions and trying to do different things. If we could find one way of unifying it and putting them all on one network, creating it all in terms of one large ability to do it, for example, with a treasury coin hosted on a Federal Reserve website, I think you can get a very fast adoption of the technology.
You think it leads to increased tea build demand.
I do think it leads to increased tea build demand, because I do not believe it'll affect currency in circulation, which affects the rest of the Federal Reserves portfolio. Currency in circulation is a percentage of the economy's percent of financial transactions is not going down. Yes, a lot of the currency in circulation is outside the country, but we still have the currency that's in circulation once up outside
the country. But we do have as a result of that, the big federal reserve portfolio, and I don't think it changes. So Yes, what happens in terms of stable coin, I think will be a net new demand.
Interesting.
Happy to catch Shelby this morning Church a lot of the audience Ryan and as well Steved shouldov missoo, I have an a tremendous yes, so far dead on so far this year on a lot of issues. Well, it's nice watched football league making its way across the Atlantic. The English Premier League is playing six matches for sold out crowds in New Jersey, Chicago, and Atlanta this summer, the series kicking off this past weekend with Manchester United
beating West Ham joining us. Now, I'm very pleased to say the CEO of the English Premier League, Richard Master's Richard and Monic.
Good morning, thank you for having me.
Welcome to the studio here in New York. It's going to see you, sir, let's just talk about your involvement in the sport. I think it's almost twenty years of direct involvement with the Premier League. Are you surprised by the amount of growth we've seen? Not in the UK, forget all of that, the amount of growth we've seen in America.
Twenty years next January at the Premier League seven years a CEO in December, what's the Premier League gets? Get bigger and bigger and bigger and out here in the US we've got a fantastic broadcast relationship NBC. We've opened offices here in New York. We're committed to grow in the game. About thirty percent of the US population not interested in soccer or football, and about two thirds of those followed the Premier League.
And that's a brilliant foundation which to growth.
Reason we're out here with six of our teams playing matches to give our fans a taste to the Premier League.
As a Britain New York I can tell you the experience of NBC is amazing. I get to wake up on a Saturday morning on a Sunday and I get to watch absolutely everything. That's not the experience in the UK with Sky. It's a very different experience. You only get to watch so much. Why do we get to see so much more through NBC than maybe fans in the UK get to see at home.
Well, in the UK, the matches between two and five o'clock on a Saturday afternoon, which is the traditional time to go and watch football in the country, aren't broadcast.
So it's not just the Premier League. The FFL as well aren't.
Broadcast, and that's part of the decision we've made. It's long term commitment to what's called Article forty eight. But anywhere else outside of the UK, it's all three hundred and eighty games throughout the season you can watch.
And of course here in the US, as you.
Say, there are millions of people getting up on a Saturday and Sunday morning watching their favorite team and you can sit there from seven AMS or lunchtime watch the entire thing if you want to, And that's a brilliant thing for us.
Does it kind of hurt your soul to say soccer instead of football at all?
I think they're interchangeable. When I grew up, I grew up in the Midlands, I watched soccer Sunday on Star soccer rather on a Sunday lunchtime, so it's interchangeable at this.
Point, though, does it dilute the pelayer's ability to really commit to not only a team but a season if they're playing at all times in all places and their bodies have to be exhausted at a certain point.
Now that's true.
I mean there is a starter of players at the top of the game who are playing a lot, and it's a big issue within the game. The Premier League, obviously, since ninety four, has been twenty clubs to in gen eighty games August to May, but we've seen the gradual expansion of European competitions and now global competitions as well.
Next summer, the US will host.
The World Cup first time forty eight teams, and of course in the last summer we've seen the Club World Cup,
a brand new competition put into the calendar. And I think that from my perspective, not just as CEO the Premi League, but also my other role as chair of the World League's Sociation, which is about representing domestic leagues around the world, there has to be a big conversation now about how you balance this out properly and make sure that players are looked after and that these competitions are additive and not subtractive from the competitions they bump into.
Well, it's have that conversation right now. I can speak as a fan. I hate it. I don't want to see an expanded FIFA Club World Cub. In fact, for most fans of the English Premier League, we get annoyed whenever there's an international break. We don't want to see more tournaments. What we loved was just the cadence of every two years you had a major tournament. The Euro's, the World Cup, the Euro's the World Cub. Why have
we gotten away from there? And what's your message to FIFA to UEFA, as in the minds of many fans they just seem to be chasing money, the expense of the game and maybe the player's health.
Well, the message is talk.
You know that there is actually strong dialogue between domestic leagues in Europe and New AFA about competitions and that's a coalition of stakeholders, clubs, leagues, club players as well talking about it. That dialogue doesn't happen at all for the game and it should do. So that's the key message. Sit down and talk to the leaguees, talk to all the stakeholders and find a way through all of this, because it has a limit and I think we've gone
past it. We've gone past saturation point. My job, obviously is to look after the Premier League, and we're going great guns, thank you very much. And I want the purity of that competition to remain. I want people to be able to enjoy that, enjoy their football because I want the best players on the pitch all the time in the Premier League and not worrying about how to balance everything out.
Let's talk about the purity of the game. It's a polarizing topic and very controversial, as you know, Manchester City in this number one hundred and fifteen the number of charges for alleged breaches of financial regulations. What can you share with us this morning about where things stand.
Nothing is the honest truth.
The case was heard last year and we wait for the decision to be made. We can't hurry the people whose job it is to make that decision, and it will happen when it happens, and I don't know when it's going to be. We'll find out with everybody else.
What's your se of why it's taking so long.
I don't know, and it's difficult for me to speculate. I'm sorry.
It's just difficult for a lot of people in the game who follow the game to see how quickly things concluded with a club like Habitat and how long it's taking with a club like Manchester City. And some people can't help but conclude that maybe different clubs are being treated differently because of these status they have in the Premier League.
Yeah.
Well, I do want to sign of frustration and share some of those but in the end, this process is very different.
These allegations are very different. Makes it different too.
They just said that the charge themselves and the number of them, but I can't really get into it.
I really can't talk about and you.
Can't get into the details. But do you think it's hurting the reputation of the league?
Well, at the center of this is a football competition, and I think people want to basically watch the football.
That's the main event.
And when you get dragged into whatever it may be, financial affairs, I think people think that maybe there's something going wrong here. I do accept all of that. The competition remains strong, the economics, the primileague remain strong and fundamentally, as long as we can put the best players on the pitch and give people a fantastic competition, I think we can get through this period.
I've been an outsider and I've been studying the rules of the game and the sustainability rule that kind of led to this investigation into Man's City and this idea that a club has to bring in and just spend the same amount of money that it brings in. Do you think that that rule has become outdated or unenforceable in any kind of real time way.
So, if you're talking.
About the financial regulations within football, our clubs are all really subject to two sets of regulations, our own, the profitable and sustainability rules and also u waifers rules, So they're looking at two sets of financial rules to comply with. And essentially in England our rules are there. It's a spending rule really about profitability. So there is the ability to invest and that's what we want our clubs to do.
We've got a fantastic set of owners that invest in the stadiums, in fan experience and players on the pitch, and that's what we want. Whatever, as I said, the great set of owners that want to invest, and so there has to be a limit ultimately to ensure they've got a competitive league, which we do have.
So I think we're known as look at investing in the Premier League.
They can see that you can aspire to do better in the league and now seeing more clubs qualifying for European competition. Our clubs are in incredibly successful in Europe and that's all down to investment. So there has to be a limit ultimately on what you can spend. Clubs have all signed up to these rules and we are enforcing them.
Well, how much does the Saudi League really kind of I don't know, skew the financials of this in a way that creates a sort of complicated dynamic.
Well, the Saudi League is an investment phase. Sally League's been around for many decades and now we're seeing local investment into that and they're becoming very active in the marketplace. Sometimes that good for Premierley clubs. Some sids they take clubs, take players that Premi leagu clubs want to sign. It's just a new dynamic and we have to observe it and we have to cope with it.
Richard, you'll be generous with your time. We appreciate it. Thanks for dropping by, Thanks for having me, Thank you very much for being here. Richard Masters there the English Premier League CEO. This is the Bloomberg Surveillance podcast, bringing you the best in markets, economics, and giot politics. You can watch the show live on Bloomberg TV weekday mornings
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