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Right now, joining us, Jordan Rochester with a wonderful set of overnight notes.
He's with FIC macro strategy, you know, with Miszuo. Jordan.
Let's go a little walk as year right now as Cam Dawston was talking about this trust series, so for ten year, I'm looking at it out three standard deviations.
It's been worse over the last four days.
Where's the trip point for these liquidity trust series for you?
Where we get to market chaos?
I think that's the biggest question to it.
Was one of my big key concerns earlier this week was about dollar funding because the whole world was facing such higher.
Tariff rates for the US.
What you're going to see is that exporters to the US were no longer going to receive their dollar receipts, and then dollar funding would become an issue. The only good news that I can give you is that you just had a record Q one imports in America and so a lot of these exporters around the world will be sitting on a dollar cash pile. That's a little bit more healthier than usual. Now we've had this ninety
day reprieve at ten percent tariff rates. I do see the flows of commerce still taking place between Europe and the rest. But the problem is with China with these extreme tariffs that we have. We've got one hundred and forty five percent tariff rate on China. It's the largest, one of the largest trading partners in the world with the US, and so you're going to see a dollar a quizy issue at some point unless we have are climbed out.
Jordan Rochester with this Missouri.
We welcome all of you on your commute this morning across the nation this Friday of Bloomberg's Veillance. Very much market focus. We'll do a little bit of Washington and certainly those announcements out of the White House will be Key John Tucker with us for Lisa Matteo in this hour. Damien sasaur In for Paul Sweeney with this wonderful emerging market focus at Bloomberg Intelligence.
Damien a question to mister Rochester.
Yes, mister Rochester formerly fic Macro at Nomor and out in the zoo. So really in a great place to talk about China here. And look, everybody's blaming the thirty year move on the basis on leverage, selling or buying or whatever it is. But you know, I just got to ask you. I'm getting a lot of questions about China and what role it pad in these treasury swings.
I know you're well, not your colleagues, but your peers over at SNBC are basically saying that China was involved in that, and now City Group's getting, you know, getting on board.
What are your thoughts there?
I could never say whether China is involved not. We just don't have the data yet until at next the end of the month for next month. That's the irritating thing about data.
It's slow.
But what we can say is that if you're a central bank and you're facing extreme currency pressures, it makes sense to selling US treasuries to defend your currency. It's been very smooth in dollar ramimbi and so that's kind of possibly been behind it, I would add.
So let me ask you this now that you know the dollars declining in the face of all this very unusual. Do you think Asian central banks have more scope to cut rates here?
I think the whole world does.
This is going to be a huge growth shock to the US, but a big growth shop to the rest of the world. And what's going to happen is the Chinese exports are no longer going to go to the US at the same rate. We'll be looking for the next consumer. Europe stands out to me, but parts of Asia too. We'll see excess supply of Chinese goods hit their markets and that's going to load the selling price.
Jordan, Rochester within all the research capabilities of your shop, do you people just look at the various supply chains and almost frankly the demand chains.
Where China belieguered by the White House, runs their products through Vietnam, runs their product through Indonesia, runs their next to Kazakhstan.
Long term, that's probably what's going to happen. Short term.
How quickly they can do it is difficult. For example, Chinese exporters were discussing in an FT article just over over the past few days they had set up in Jordan, which has an FTA Jordan, the country not me an FTA with the US, but Jordan as a result has
a twenty percent tariff rate. Now under these the sort of expected levels of reciprocal and so even countries with FDAs where China exporters had sort of hedged themselves by moving into countries to do the final production part there and sell on to the US that the plans scuffered. If everybody has a ten percent taraf rate, it's really
hard to do the rerouting. But for Chinese exports at one hundred and forty five percent, sure they will take ten percent by rerouting, but it it takes time and it's not going to happen in the next few weeks.
I mean, Danian, we got to focus this down here because we have Danian Sasar with us.
The bottom line is Fuscheng is making.
A lot of the golf heads for callaway, ping and tidiness. Going to have to run that through Vietnam, Damien SASA or hey to help improve your lousy game.
I pay an awful lot for my probi one excess. But here's what I have to ask Jordan. I mean, look, we know that the China dumping is on the rest of the world is going to happen where we know transhipments are going to happen. We know Europe's the clear winner. But here's my question. How will bilateral trade negotiations with the US evolve? And here's what I'm thinking here. You have active discussions going on right now with India, Japan, South Korea. Are non tara variables going to play a
role here? I mean, are they going to start talking about currency manipulation and start holding some of these Asian economies you know to bear for that? I mean, how do you how do you even begin to talk about that and regulate that.
I don't know about your experience with government officials, but it never goes quickly, does it. Whenever your life involves dealing with the government, it's quite difficult to get things via email chains over the line. So I am skeptical about how quickly you can get complete free trade agreements in the next ninety days.
What I can think that.
A lot of these countries can do is buy themselves more time extensions. Way, there's more time to deliberate. The EUS offering zero for zero tariff rates, for example, but the US is claiming that non tariff barriers are their issue. Non tariff barriers requires regulation, changes, requires votes in parts, it's a bit more difficult to do than just simple
tariff manipulation stories. And on the FX side, I do agree Lessons made it clear several times informally and formally about Japan, for example, having two weeks of an exchange rate and the Bank Japan perhaps needing to hike rates more so these will be a factor in the talks.
I got John Tucker's thinking, long yen here to be stronger again? Can you model out as you did the other day, Jordan Rochester one for five yen down to one thirty five? Dare I say, short term, given dollar malignancy, that we get yen to a strong one thirty per dollar.
Yeah.
What's quite clear is we're having a d dollarization theme play out in the market. The theme's gone from slow to rapid in the past forty eight hours.
A lot of that has.
Been corporate demands as well that the market's been seeing, pushing up the likes of euro dollar and dollien and the yen stronger for the Japanese yen. I think that we could have another five percent devaluation in the.
Dollar from here.
If we are truly pricing in the US, exceeptionism come to an end. Once you have a ten percent trade weighted fall in the dollar, typically that's when it bottoms out and rebounds. So we're using the twenty eighteen the COVID nineteen playbooks, and we've won another five percent at least to go here. That gets dolly En quite close to one thirty five and lower. That's the sort of view I have for where we get to over.
The next few months.
And it was something I thought would happen next year. So it's all happening very quickly.
Jordan, Thank you so much. Jordan Rochester with us with Missoul.
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What does Kathy say at Schwab joining us now Kathy Jones to straighten out our fixed income portfolio?
Do people buy the dip in bonds?
Yeah, I think you have to be careful, but I think that is probably a very good idea. The question is, are we at the yield level that's really attractive in some parts of the market. I think we are. I think in municipal bonds you're looking at, you know, tax equivalent yields or a high earner in the eight nine percent area, the high st equality. I think that that's the place you start to nimble.
Okay, But on the commercial break, John Tucker's over here with robinhood Day trading in Nvidia. He's buying the dip. When you buy the Kathy Jones dip? Are you buying duration? Are you, like saying, extending out your maturity? Are you what's the what's the math of buying the fixed income dip?
Yeah, so right now we're still at benchmark, which is consistent with the Bloomberg egg, and that's around six years and we've been kind of hugging the benchmark for a long time because of all the uncertainty. We feel like you're still clipping a pretty good coupon of four and a half upwards to five percent in high quality bonds.
That's a good base. We're not extending duration yet. We have to wait and see how things play out, but I think that will be a move that we make probably some time later this year, but you know, high credit quality. For We're we're really just focused on high credit quality and making sure we have enough liquidity, not going into instruments that they're ill liquid at this stage of the game, trying to play it safe. But I think the opportunities are starting to emerge.
Jamien, is a dollar an a liquid instrument?
Well, you know, Kathy, I have to agree with you. Muni's mortgages as well. You know, I think you know high quality mortgages. But you know what really stands out in this move. Guess what acid class woke up within fixed income credit and we saw spreads blow And now I'm looking at IG and high yield, you know, down two and a half three percent, you know, just since the second of April. What are your thoughts on credit markets going forward?
Yeah, we're so a little bit cautious, although again we're getting tempted. We have been and kind of on the sidelines and credit for a while, just staying up in credit quality because the spreads were so tight. It didn't get paid for taking risk. But now you know, we're
starting to get paid for taking risk. The problem is, I think the mix of policies we have right now is so difficult to interpret or even come up with an investment thesis that you can carry through the end of the year, because it could change in the heartbeat. That's where we're that's where we're having trouble. But I do think as we get if those spreads blow out some more, you know, we will start looking at more credit.
We've also seen a massive steepening dare I say, in US yield curve, not just the US, really global yield curves, you know, And so you know when it talks, when Tom asks about positioning along the yield curve, I'm just curious, you know, I'm hearing a lot of people saying they still want to be, you know, along the short end of the curve, you know, as opposed to the long end. I'm just curious to hear thoughts there.
Yeah.
No, I think that thesis makes sense because we are anticipating rate cuts down the road, and if this continues, I don't see how the FED holds off because you see higher unemployment on the horizon. But I don't want to just hug the short end and miss out on grasping some of these yields for the long run, because I do think we're going to get a slower economy. I do think the FED will at some point have to lower rate, and I want to capture some of that, right.
I want to report, Damien Damiens stay there right now the market moving futures are up like forty and they're now at eleven.
We actually had read in the screen for a bit the Secretary.
Of treasurer with Maria right now, maybe he can have the same effect as James Diamond a few days ago.
Damien Kathy US Treasury demanded this, you know, kind of downtick really took a bit of a knock, and you know, I'm just curious. You know, we know we've been transitioning away from the FED, from US banks and foreigners, and you know, what does this mean in your opinion to term premium over time? I mean, are you thinking that this steepening of the curve is structural, that it's going to last for a long period.
That's a really good pa.
I do think it's going to last. Okay, term premium. We actually came into this year calling at the year of the term premium because we have to. We have to incorporate now these risks that are out there, and I do think we'll continue to see the term premium move up, not just here but globally, but especially here because this is the source of uncertainty.
I got twenty more questions. We don't have time, Kathy Jones, your trooper to come in today. I can't imagine what the Kathy Jones calendar looks like at Charles Schwab today Chief Fixed Income Strategists, and ye'll curve watcher at Charles Schwab.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Applecarplay and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty.
Within the span of this week, this historic week, it is a good time to speak to Sevita Supermanian. She is with the Bank of America, but far more than that, delivers Berkeley mathematics, philosophy and massive dead head knowledge and.
Joins us this morning here. She was definitive in making esg adult for.
All all of you that were screaming, stop the peace, love and dope, just give me the math. Savina Supermanian led the charge to a constructive ESG debate more than a few years ago, where through she could joined us at studio.
Wonderful to have you here.
I love what you do in your Bank of America report, which, unlike most ego driven strategists, you actually listen to your securities research. You actually pay attention to what's going on in the trenches. Lorraine Hutchinson has a worst job at Bank of America.
She's got to figure out what Walmart's going to do with China.
I know, what does China do to the consumer and that how does that fold into your world?
Well, I mean, you know, Lorraine has been spot on in calling out that a lot of these companies with exposure to China actually started shifting sourcing out of China into other regions of Asia as well as Mexico, you know, other parts of globe as early as you know, twenty fifteen, even before any of the tariff talk began.
So, you know, I think that the idea that these.
Companies are vulnerable to China alone is nice, is not necessarily the case anymore. But closet China via you know, Vietnam, Mexico, That's what worried us about the initial April second announcement.
A few years ago, you were in high school. I got a phone call in Singapore. Go over to Bank of America.
So I walk in.
It's me and Ken Lewis having a conversation about Bank of America and Asia. You guys have a heritage there, you have a history there really like no one else. So what's China do here? Damien's going to say they dedollarize. Do you just assume China solves the problem without unilateral negotiations with the White House bilateral?
I should say, you know, that's TBD.
I think that where we are now is where corporates have to really think about how they're going to plan. And that's the problem is that it's hard to plan when you just don't know what the playing field looks like.
You know.
What I think is interesting, though, is that there's been this knee jerk reaction to buy treasury bonds instead of stocks as a safe haven. And I think that's exactly wrong because if you look back on what happened in prior periods of protectionism, prior periods of stagflation, whatever we're heading into value stocks outperformed treasury bonds by a massive margin. The last thing you want to be stuck in during
a stagflationary environment is long duration bonds. They have no options, whereas stocks, to me, are the best place to be. In an environment where you need those options, companies can extend or shorten their duration. We saw this with Meta and Google in twenty twenty three. They both initiated dividends and transition from being just pure.
Growth to value.
I think this is a really interesting time to think about value equities. Companies that are returning capital, like utilities, even metals and mining, even you know, energy companies that where the dividends are sacro SYNCD. I think those are areas that you really want to think about.
Sabina, I'd love to ask you whether you prefer Tarpent station or American beauty, but we're not going to ask that. An earning season, it's a great time to be alive. And you know, I don't think it's going to be you know, the earnings at all that moves markets. It's going to be the words, the forward guidance around it. What are you expecting here?
Absolutely?
And I think what's a little bit worrisome is that we have a lot of companies shutting down guidance and going dark, and that's never really good because the worst you know, I think one of the reasons that we were a bullish on US stocks is that they're the most transparent, you know, equity market in the world. All of these companies issue guidance, and now if they stop, that's that's one you know, one more nick in the America you know exceptionalism story. I think, you know, what
do we do with that that information vacuum? I mean, what I think is interesting is that companies are already thinking about how to navigate this period. And it could be something like recasting your costs as IP or you know, thinking about how to shift sourcing more creatively, how to price, how to pass that price along to consumers, and a lot of companies have the option to increase prices as long as wages remain relatively healthy.
With the Bank of America, Savita Supermanian with us, we welcome all over your commute across Bank of America's nation and of course on YouTube and particularly good evening in the Pacific RIM YouTube subscribe to Bloomberg Podcast as CPI. Yesterday, I got negative statistics for that business inflation PPI. I'm not going to go into it other than to say it does show a disinflationary tendency. Pretty much everything said,
futures go from up twenty to up twenty six. The VIX comes in actually forty one point four or five.
Let me say that.
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Damian Savida put on your options hat for me. With all the uncertainty that's out there, implied boles have been all over the map, surfaces or inverting skis or stapening. What are your thoughts on buying and or underwriting equity protection here?
Yeah, I mean I think that protections already probably pretty well uh sought after. Yeah, you know, I think there is actually potentially more upside than downside risk to the S and P five hundred And I know I sound a little bit, you.
Know, out of sync with everybody else.
Here, but you know, again, I see this as a market environment where you want to follow the money. The money is not going into US Treasury bonds. There's a buyers strike on US treasure rebonds. Where is the money going to go? I think it's going to go into inflation protected income. Think about retirees. Retirees right now own this barbell I have to.
Well, let's think about what we all own. We own a barbelle of cash and tim stocks, right.
I mean, if you look at Merrill lynch Our, you know advisor data, four out of five of the top ten holdings of retirees are tech companies. Their yield is lower than the yield of the S and P five hundred. This is the first time in history that we've seen retirees not owning dividends.
Quickly on this then, is apple of value stock as you mentioned value before, Well, I mean.
It's certainly a lot more value now than it was a few months ago.
Peas Templeton would say, shares are on sale.
Yeah, I think that there is an idea there is this notion that the dividends are relatively protected, payout ratios are low for a lot of these companies. That's what I would look at is, what's the payout ratio, what's their dividend growth profile?
What's management's focus on dividends?
Handlers didn't want you to do this interview because they know I'm going to get you in trouble.
Okay, folks, here's the drill.
Savida is so good at the spread market in math that she's one of the few equity people out there. And what do we do with our four oh one k that could go into the office this afternoon with Brian moynihan, And you're going to explain to Brian for the larger Bank of America World the collapse two point eight standard deviations off the log trend back to twenty
twenty three autumn of so for ten year yield. And the answer is the underlining machinery of mister moynihan, a guy building a building on Park Evan and a few other people. The liquidity issue out there is really sport. How do you explain to bank management the tension going into this weekend?
Oh?
I think bank management is well aware and on top of this, But I mean I would say that you know, in environments like this, the trick is getting to the other side.
And who knows this.
Is that how many heads a short term trust market?
Well, I mean I think that you look for areas that are short duration. Short duration is key in a liquidity crisis, and that means you go for cash, short duration bonds, stocks with high dividends. You know, some credit, but not all credit. Credit markets might be healthier than
they have been in prior crises. I mean, you tell me, Tom, but I think this crisis is so different from two thousand and eight or nineteen ninety eight or ninety eight or even the seventies, in that US companies have completely de levered in terms of the larger ones. Right if you think about banks, energy companies, all the old economy companies that were hit in two thousand and eight have become healthier, have really been preparing for this type of crisis.
So I think that's the good news is that within the equity market, you've got a lot of companies with solid balance sheets and you know, the ability to maintain dividends.
Seviea. We're talking about retirees and we're talking about retirement benefits here, and we're talking about equitable institute losses. Between the four trading days between April third, and April eighth, the twenty five top state local US pensions lost almost two hundred billion dollars. Well, yeah, I mean they're calling you, what do you say?
You know why that that's happening.
I think part of the reason is that everybody loaded up on private equity, private credit and long bonds, interesting, which are hardest hit during any sort of cost of capital crisis. Think about all of these areas, They're going to be whacked by higher interest rates. And I think that's the problem, is that pension funds have supplanted all of their active public equity exposure, yeah, with passive or private equity. Interesting, and that's why the S and P
index itself is at risk. This is the most crowded ticker in the world. Nobody owns stocks anymore, they own the index.
But let me ask you that. I mean, aren't private credit funds allowed to mark their books like four times a year, call it once a year when they get the audit, right, So I mean, it's not really showing up in it, you know what I mean? So that four dat decline of two hundred billion, that might not even be including the marks you're getting from private credit yet, So it could be much more, is what you're saying exactly.
That's why I like equities Again.
They're marked to reality every millisecond of the day, and I think that's a very valuable characteristic as well, beautifully.
Explained by you and Damien better than I could do.
Then where is the opportunity if passive is taken over? I mean, as we get this from Eric Bell Chunas, But Savita Supermanian, give me an opportunity looking out past labor day?
Yeah, by the average stock in the S and P, by the equal weighted SMP put by large cat value, by anything but the cap weighted index. Because that's the area that I think has become bloated and potentially risky.
Can you buy Europe?
I mean if if i'm I mean, I mean, let's be honest here, Damien, I mean, you know if I got you one thirteen, Savina Romamian over Lewis Viewton, They're on fifty seventh Street and fifth. They han't a loading up. I mean, is europe an opportunity?
I think Europe's an opportunity. I mean, i'm i'm.
I was more optimistic on Europe when before the tariff wars began because I think there's an opportunity for a lot of really interesting cross border m and a where US companies can buy cheaper growth in Europe than they can in the US. So, you know, I think those are areas that could catalyze Europe. I think Europe also right now certainly looks a lot more attractive on a.
Policy risk perspective.
At least we know a little bit more about what's going to happen there. But I still think Europe's dependence on the US and the interdependence between all of these regions is a risk that that may not be factored in.
Call me if you talk to Brian moyne, Anne, we'd love to know what you know, what you're talking about. Savina Supermanian, thank you so much for.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.
Jennifer Lee joins US Now Senior economist Jennifer to what we heard from Damien sas our overwhelming law.
Is a presumption of a growth slowdown. Where will real GDP head?
Good morning, and thank you very much for having me on. Yes, well, right now, it looks like GDP is headed lower in terms of growth. You know, we're not looking for a recession in the US, but the risk of this continues to run. It's just given obviously this escalating higher and a higher terra form losing the track of all the percentages right now, but it looks like, you know, we are maxed out at one hundred and forty five percent on one side, one hundred and twenty five percent on
the other side. So we'll see how this plays out. But this is you know, obviously not going to use for US consumers. You're going to be paying higher prices, even though you know, we brought all the other countries down to a baseline of ten percent tariff, but you know, prices are heading higher and.
This is what's going to hit the US consumer and this is what's going to.
Are you going to a negative statistic on real GDP for this present quarter?
No, we are not, no, not.
We're still looking for growth, but slower, much slower growth. And it's not just the consumer, by the way, it's also business investment. And you know, even though a lot of these uh you know, this this invitation we can we say, to bring more investment into the US is helping, we're stealing, you know, lots of money coming in now in terms from different companies promising to build and to hire.
At the same time. You know, it's just very hard to make any real strong with conviction investment decisions in this sort of uncertain environment. So I think that's also going to offset a lot of this incoming.
Investment, Jennifer.
As you know, overnight, Beijing raised their tariff on the US to one twenty five percent, But the company statements stood out for me. They said, we're not going to raise anymore. You know why, because it doesn't matter. We're not trading with them anymore. I mean, so in your models, are you modeling zero trade between China and the US on a four basis?
Well, you know it, certainly it looks like we are heading in that direction, but I can't see, you know, I just can't see how that is going to happen, just given how much reliance they are, there is on both both countries on each other for all this trade.
So there's just going to have to be you know, sometimes they're going to have to start talking at some point, but right now, I'm just I'm very curious to see, number one, what the reaction from White House is going to be, and number two, what other tools are going to be coming out of the toolbox to borrow with the language from monetary policy makers about what else can be used? If we are hitting that max of one hundred and forty five one hundred and fine five percent,
what's next? So we're going to start talking about expert restrictions on rare minerals for example, on you know, perhaps treasury on the treasury holdings. I don't know what's next, but you know, but if we're done with terrorists, there's well, there's probably a lot of other things that they.
Can use, Jennifer. Many are referring to the ninety day window by Trump as him having blinked, right, I mean, he saw the devil and he basically blinked. And I'm just curious. You know, if you're sitting there, you're in Beijing, you have to enter into negotiations, or for that matter, any sense, any.
Country entering after why do they have to negotiate as well?
I mean, only if they want to keep creating with the US, or you're right, maybe they just sit tight, sit on their hands, and then them blink back again. I mean, that's my question, Jennifer. You know, how do you negotiate with the US now that Trump has just put this ninety day window and it does seem like he did blink.
It is it.
Looks like he saw the cliff. He goes, oh, there is the after of the cliff. I'm going the other way. You know, there are a lot of different interpretations of what happened, but you know, from one, I think all of us are very relieved that he did that he that he did put in that ninety day pause, and I think that should be very much welcomed. And that was definitely a big step back from the brink, and I think that's what everyone should sort of focus on, and the fact that that.
Is good news.
Now, what's going to happen next Again, that's anyone's guest. But I would really really hope that both sides are going to start saying, okay, let's talk this out. Let's let's plan a summit of some port of some sort of in Beijing or in Washington, DC, or a somewhere in neutral wherever that's going to be now and start hammering out.
What are we going to do to make all of this, to make it both sides.
Happy, because the global economy is really at stake here, you know.
Jennifer, what's so important here is is this oddity on a Friday of While the American economy is great, Morgan Stanley out now has a return on average common equity of seventeen point four percent jp Morgan even better than that, we're moving from a three percent real GDP economy into some great mystery. Can the banks call Secretary Besson and just say stop this because of the liquidity issues, the
bond issues, the dollar issue. Are you confident into the weekend that the big banks have the power to sway the secretary?
I would like to think that would be the case. However, I think there are the administration has.
Bigger, bigger issues or bigger picture that they're that they're focusing on. I mean, I believe President Trump did say that there's good that we're going to be entering this, you know, this volatile period right now, Camemis exact words, but you know it's going to be some choppiness in terms of economy, in terms of prices, so we have to what they're trying to do is look through this and ultimately make this you know, right, this wrong?
You know what they are they are seeing in terms of global trade.
Jennifer, I got gold up fifty six dollars three two three four. I've got so for ten year, folks, which is sort of the heartbeat of the trust market out two point nine standard deviations off the trend ACKed to the fall of last year. Aren't we at a point where the big banks, Diamond, Mooyne and the others can call them up and just say stop it.
Again?
They can?
But does he want to show that he is bending to you know, to corporate America.
That's you know, they're sort of like beet chair Powell right when when he want, you know, people are going to be questioning is he doing it because of local pressure or is he doing it because he's trying to support the US economy. There's there's gonna be a lot of questions about this, and tough questions, of course, and you know they will be posed.
Jen We've got to run here, Damien. I got to run, but this is too important.
I got Looney one forty one to a strong Canadian dollar one thirty nine. Can the next Prime Minister of Canada, whomever it is, can they stand a strong Canadian dollar.
I don't know. I would call it right now very strong.
I mean, it's certainly better than, you know, than what we had before. But I'm going to be curious to me. Our election is at April twenty eighth. Whoever the new Prime minister is going to be, whether or not there's going to be a majority government or not, what measures are.
They going to do to strengthen the Canadian economy? And that will be you know, that's the next focus.
Thank you so much for being this today, Jenniferly huge value at BEMO Capital Market.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Apple Corplay and Android Otto with the Bloomberg Business Up. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
Erica Groschen came out of Harvard and out of University of Wisconsin, Madison and did the thing that's wonderful in research. She wrote up research. I believe it was the new York fed years ago and Damiena jumped out of the page, jumped out.
Of the screen. It was like, who is this person?
And I interviewed Eric Groschen. I don't think she was so young. I don't think she could drive. She's joining us now after a stellar career of public service as commissioner of the United States Bureau of Labor Statistics. When you see dose, say we're going to move him out the door. No one has been in the crosshairs like doctor Groschen. Erica, thank you so much for joining us. It could be a four hour conversation, but we're going to be quick, quick, quick today.
Erica.
What is the damage to the people that you our economic data build in nineteen forty seven, best in the world. How does the labor statistics, How does CEA and the others?
How do they move forward?
Wow, that's a that is a big question. Let me start off by saying, I think up to this point, most of the damage has been collateral. Damage hasn't been aimed at BLS or most of the other statistical agencies, with some exceptions in particular, but it's profound. It's lack.
Right now, we're worried about very worried about the loss of expertise and at BLS in particular, that's going to be exasperated in the next couple of weeks when the Department of Labor announces the reductions force that it's intending to do. Will and then.
There's will we be a little Will we be able doctor Groschen to execut cute the two jobs reports in the first week of the month, or is that going to become a challenge to actually understand the American labor economy.
In the short run, probably not too much disruption, but the damage will grow over time. And we have also what we're doing is getting rid of the necessary sort of option value that BLS has always built into its operations so that when there's a weather event or some other problem, the agency can still put out the jobs report on time. That's going to be harder. And then finally, we are absolutely the devastating the agency's ability to modernize in the way.
That it should.
Doctor Groshen Larry think of Blackrock on the tape right now saying that sweeping US TWERF announcements went way beyond anything I could have ever imagined in my forty nine years in Finance. You had Jamie I'm in on earlier saying pretty much the same thing. What does this mean for the labor markets here in the US? Can we expect layoffs ahead?
Wow?
So one of the things that's characteristic of most recessions is that actually companies stop hiring before they start laying off, and so the place to look for the most immediate damage is just freezing and hiring. And we're already starting. We've already begun to see that in the fact that temporary help services employment has been falling. Erica, Well, that's often companies will stop hiring temp or fire their tempts before they Yeah, Erica.
Get one more question in here. We've got breaking news. You're going to have to run. But let me let me get this in folks.
The headline, which will get to in a moment, the United States has told China to request a g Trump call that according to CNN, and that moved the markets.
We are read on the screen and.
Now we're up twenty three on the Dow fractionally up, I would say, but again, this is the headline by headline sequence, we're seeing a reason to stay with Bloomberg all through this fractures Friday. I can't imagine where we're going to be at three pm this afternoon, Erica. They said you were coming on today, and I said, great.
Finally I can ask someone qualified, Erica Groschen, if we get to a five percent unemployment rate somewhere out there is a five percent unemployment rate in America now, the same as a five percent unemployment rate in nineteen eighty five or nineteen sixty five.
Wow.
The simple answer is yes, that's part of what we expect from our federals to tiss except it's collected in the same way, it's asking the same questions, and so it is comparable. That said, the economy has changed, right, So when we look overall at at who's who's who's unemployed, and who's not unemployed, and who's counted as working and
things like that, there are changes over time. So right now, one of the things I would say is that we've just come off a period of historically low unemployment rates. So five percent wouldn't have seemed that bad, you know, you know, two or three decades ago, but now it's a significant increase in the amount of unemployment.
Erica, for all of us at Bloomberg with great respect led by our Michael McKee. Thank you to you and our public servants in our economic data collection. Can't say that how we rely on you.
Each and every day.
She is at Carnell University, the arecclaimed Industrial and Labor Program Erica Grossen always the Bureau of Labor Statistics.
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