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Claudia Sam joins as chief Economist at News Century Advisors or PhD at Michigan with Giant of Inflation Analysis Matthew D.
Shapiro. Claudia, I gotta get this out of the way before we go to jobs.
You are acclaimed for the same rule. There seems to be a bet of slowing GDP. Are you in any way on a recession, not an NBR recession, but are you with a Sam rule in any way looking at a new analysis of slowdown?
So absolutely looking at believe market any signs of slow down. We are not at a place where we're close to kind of that historical trigger for this SOM rule. I mean we would need to, you know, see the unemployment rate probably rise this year up to four and a half percent before we start to get kind of in that danger zone. But of course there are certain you know, sectors looking at something like government the government sector. We could see a contraction there, and it doesn't necessarily have
to show up as a national contraction. So there's a lot to watch in the labor market in terms of.
Things, Claudiah with revision, I got two months and we'll get much more later of one hundred and thirty eight thousand and sixty day runway.
Is that a buoyant job economy.
I'm not sure i'd use the word buoyant, but you know that these numbers added like at a first look, are I mean, there's solid, they're you know, showing you know, the difference between one hundred and one hundred and sixty thousand on the month is not like, let's you know, let's be real about the statistical precision of what we're doing here. But it's not you know, it's kind of a tre treading water that picked up was you know,
a tenth, but again also staying very low. So you know, I think that's it's a I mean, this report we should see a lot as a baseline before we're headed into what is been a very chaotic period with Harris and with the Doge action. So you know, it's you know, the better this was today, that's more resilient. So it's great, it's you know, it's not great, but it's good.
Well, I got a futures lifted out at Paul.
Can we describe how unfair it is to Claudiusamer to warbled gaily here with the data come out the green Span statistic, Paul, the under employment rate from seven and a half percent last month out to eight percent this month. So there's just one tea leaf within the bucket of the ship of tea.
Yeah, a little bit again on some of these revisions coming in lower from last month as well. We want to put that in context as well. Uh, Claudia, how do you think the Federal Reserve will look at this data print here today? I think so.
I don't see anything here that will will change their near term course. So they're not they're not set up to be cutting cutting interest rates. I don't you know this doesn't you know a really negative print might have a really weak print, might have like kind of pushed some of you know, that the growth issues might come up more quickly. I think this still puts them on and just puts them in their wait and see. This
is not that far off of expectations. This is not this is a sustainable number, and.
We see it within the market. With ten, you're really lifting up. Futures come up a bit. VIX is better behaved. Claudia Sam, thank you so much. Please call us if the sum rule clicks in here anytime twenty four to seven. Will take call Claudia Sam with New Century Advisors with us in the studio right now, we are on We have one of the best students of the American consumer
in American economics. Ellen Zentner joins from Morgan Stanley. Let me go to the wheelhouse, Ellen, before we get to the jobs day.
With the absolute.
Historic moment including inflation, sea change in Japan, the Europe of yesterday. You know, I can't imagine Morgan Stanley economics in the last twenty four hours.
Is there a resilience to the American consumer.
There's a resilience depending on what income group you're in. And the thing that I'm concerned about is that we've had all our eggs in one basket for some time now. With the wealthy propping up aggregate spending in the US and with tariffs coming on goods, it's going to disproportionately hit lower income groups. Create that continued drag on them.
The wealthy groups.
Probably won't be there to pick up the slack in good spending. We're spending on services, and services aren't where tariffs are hitting.
So in twenty twenty five, I know one of the themes and you guys think about that, the big themes out there that could be moving the market, and we did not see it necessarily in this job's data. But you know, if you're going to have tariffs potentially an impact on a negative impact on growth, economic growth, maybe an impact on inflation moving higher, changes in immigration, also maybe having some inflationary at some growth issues. When do you think we'll start to see that in the data?
Is that a second half of twenty five issue?
Yes, I think depending on which I don't know what's going to happen from day to day, just or hour to hour, minute to minute, but depending on when tariffs are put in place, and we know already they're coming through from China. The reason why the FED has to remain data dependent is because tariffs fall here, there, and everywhere, and you don't know how much of it it's going to be absorbed by manufacturers along intermediate goods route or FONT to final goods for consumers, and so you just
have to wait to see what happens. I suspect that households in the US are not indiscriminate buyers here, that we do have a degree of price tolerance, and that you are going to get a hit to aggregate demand. And as a policymaker, you should look through that the price effects because eventually they're going to come off because demand is going to be lower. So for the FED, the big question now, and I guess for all of us in the economics communities, is you know that terrible
word stagflation? Does the flation come before the stag or the stag before the flation?
You're a claim away from the three zip code focus of this show, Manhattan and Wall Street.
All you have to deal with, Frankly, Morgan Stanley.
Is the charm of Austin, Texas, entrepreneurial Texas and your work at Colorado Denver.
I mean, you're not from here. Can the rest of America with stand this terrific discussion? Do you look at America as one hole within the cacophony now? Or are we separate resilient and discrete from the political fire and heat.
No?
I think that the terrorifts are something that hit very broadly. Now, obviously you've got states that are going to be much more heavy relied, heavy importers for intermediate goods, and so I'm thinking of my state, like Texas is more exposed there than say New York. But it will impact businesses of all sizes everywhere, and especially small and medium businesses cannot absorb the cost increase as much as large multinationals.
Look at the New York Fed survey that came out earlier this week and noted that businesses in its region across services and manufacturing were expecting cost increases. And then you read the comments within the survey from that survey and the ISM manufacturing survey, and there's complete uncertainty about the supply chain impacts and where and how do you absorb those costs, And it's uncertainty itself.
Yep, that's right.
They can start dragging down the economy before taris actually hit.
So given that badaud would our federal reserves say let's do a preemptive cut.
No, no, okay, absolutely not.
So they're going to wait to see a hard.
Yeah, and the data is not rolling over Look at the payroll report today it's not rolling over. And so what you need to gain consensus on the FED to move is something obvious, so that these two sides that those that would want to maybe do preemptive or think that rates are a little more restrictive than they should be, versus those that think we're hanging out here in a
perfectly fine level. Something has to slap them across the face and say, oh my god, we need to move, and something like today's peril report or what we're expecting on inflation. Prince is not going to do that.
In honor of Boost School Chicago, there's wonderful seminar. The Jerome Powell with comments for Bloomberg will have that sometime after twelve noon. This is the panel I was not invited to.
Are you going?
I'm going, You're going, I'm not, Lisa, Are you going?
Everyone else is going?
I guess I got to join the I'm getting a free ride there from Bloomberg.
The car is taking me thereafter.
Yeah, I used to be That's how I wrote it on Friday.
She is going, I'm not going. Did you notice that? Michael Faroli, thank you so much. Ellen's that there.
Frank Knight nineteen twenty one. We all have to read it. They put a gun to our heads that read this, or you can't.
But not many of us read it in real time. Tom, tell me what was that?
Like it? Okay?
Nineteen twenty one, Frank Knight. I want you to describe nighty and uncertainty to our audience worldwide right now. It's not like risk. It's not like Las Vegas, is it?
No, it's very It can be very pervasive. If it's sustained now in the twenties and on through say the seventies, right, uncertainty we would be reflected in sentiment. But and it told you exactly what businesses and households were going to do. And I'm talking specifically about University of Michigan, the rise of the sentiment surveys in the nineteen fifties onwards. Today, uncertainty impacts sentiment, but it doesn't necessarily tell you what
you're going to do. Right, my husband will tell you that I shop when I feel great, I shop when I.
Feel like help.
Okay, But if it is sustained at high levels, it will start to permeate business investment decisions, household spending decisions. When people can't plan and I'm looking at the Trade Policy Uncertainty Index, which has gone through the roof, and it has surpassed the previous record set in August of twenty nineteen. And that is what you're seeing in these surveys, and businesses are saying, I can't do this, so we're going to use.
The surveillance sentiment indicator. Are you going to be at Fendy Friday afternoon?
Uh No, I'm probably tapped out on good spending. I've also been warned by my husband that went a little too far late last year, so I would short luxury retail stocks because Zentner has closed her wallet.
JP Morgan actually out of the report saying enough on luxury right now. We'll see how that works out over the last number of months. Let's get back to jobs Day one more. You're going to write about this SETH Carpenter team, you and Thematic Investing. What's your message pre your written report on.
This Job's report. I believe you just said you know what, it's resilient.
So today it's still showing resilient numbers. Now, there are a lot of folks that came int this report and soid this report doesn't matter because federal layoffs have only just begun and it's going to really be reflected in the next report, so you are going to get deeper cuts to federal in the next report. We saw a drop in participation and still the unemployment rate went up. That's an interesting combination. Probably reverse next month. I'm looking
for big outflows from labor supply because of immigration. We have not seen that switch yet, even though for six months we've seen a really big drop in flows.
You want to stay. This is going to be a clinic.
Rebecca Patterson's going to join us right now with the console formulations. Ellen, if you want to stay, please do it. If you have to go to the Boost school panel, which I was not invited to, please leave.
You've got to get my free breakfast. If not from Bloomberg, they're from Chicago booth.
Okay, well this.
Swinging break this morning, the ex Benedict zagnstin.
It's great joining us now, Rebecca Pattison after Ellen Zannier as well. Rebecca, I got to go to currency market is litmus paper the system. Do we have a new dollar entrenched given this political chaos?
I think for the short term we do. The question to me is does it continue. I think the dollar is down against most peers this year because of worries about growth, and we're seeing that reflected and interest rate expectations for FED funds. So now three cuts this year, So the yield's coming down and FED funds coming down. Fed fund expectations coming down is bringing down the dollar. But the other part of this tom that we're seeing,
I believe is repatriation. The last ten years, foreign investors thought the US was the only game in town. A lot of capital came here. They helped prop up our stock market. They're taking their toys home, so they sell the dollar and they sell the stocks, and then they put it back in their home markets, whether that's Japan, up, et cetera.
I had lunch yesterday. I had the number three value meal. It's really really.
Good at the Priest and Baser Hoss was sitting next to me, of course, inventing the modern counsul and foreign relations and what Richard Hass would say Rebecca Patterson on that is it all devolves back to China. Is China part of our domestic financial dynamics?
Now?
It has been for decades, I mean, about sixteen percent of our imports come from China. So if China is continuing to cut prices to make its good more attractive in foreign countries like the United States, we're going to import that deflation to a degree. A degree, yes, and then right now, and this is a really interesting topic, not to get too far away from jobs, but we are going to see lower Well here's the trick. Do we continue to see lower import prices with the tariffs
we had been over last year? Import prices we had deflation in them. That should change now, right, but not necessarily from China per se. And then we have lower oil prices that deal with Saudi to get Opec to increase supply. Oil prices are down almost ten percent year to date, although I think they're up a little this morning.
But then on the other side of things, as Ellen was just pointing out, if we start seeing immigration turn negative, the labor market's tightening, that's going to be an underlying support to wages. So we have these cross currents going on, and I think it's going to make the inflation picture money and to me, that's still the main priority for the FED, and I think we'll hear that come through from Chairman palt.
Today Treasury Secretary Scott Besson is making the rounds of media. Yes, and he's talking about how he likes lower yields. We're getting yields. I'm not sure this is how he wants these yields to go down, but we are getting them lower.
I guess you know.
It's interesting, and I know I respect anyone in public service and especially to take a job as difficult as that. But on one hand, you're hearing Besen say, well, the economy isn't ours yet, we need six months to twelve months before our policies are reflected, and at the same time he's doing a victory lap on lower yields. Well, you own it or you don't. But the lower yields, to your point, I think are coming primarily because of worries overgrowth, not happiness over deregulation and inflation.
Stay with us after the jobs report and your community across the nation.
Good morning to the West Coast.
Waking up on YouTube, Subscribe to Bloomberg Podcast. It's where Rebecca Patterson watches as she's with us with a console and foreign relations and Paul. All I got to say is I got a lift in the market, but then it fades avics twenty five into twenty four point two.
Seven anything as good as a Sweeny yield and four basis points. I mean, can I say it's a jumble. I mean, it's just newsmaking. But that's sort of what we got today.
Now we've kind of lost a little bit of that lift off of it.
So I guess, Rebecca, for better or worse, we are left to And I'm economic policy that's driven a large part by soundbites. As related to tariffs, How do you kind of frame out the whole terriff discs for clients because it shifts every single day.
Yeah, I mean, and you all talk about this so well and thoughtfully, but the keyword is uncertainty. Right, we have a tariff, we get exemptions, we have a pause. It's still coming April second, the shoe will drop, you know. And so the fact that we don't have clarity on where this is going by degree direction I think we do. Tarifs are coming, but how much, how fast, how big?
And that causes consumers to get nervous and they're pulling money out of stocks, and it gets business business is nervous, and that goes against this whole idea of Trump's relaunching of animal spirits there, which was real.
I think after the election for a number of weeks, yes.
People people thought we were going to have deregulation. It was going to help M and A and IPOs and that would support the stock market and the economy. And I think that is all still possible, but right now that's on the back burner, and the front burner is trade policy and deportation and what all that means.
The budget lab has after the gyrations a depression of a negative zero point four percent on the GDP number. I calculate that as a sixteen percent hit to real GDP within the dynamic of that real GDP somehow depressed, we don't know, and the mystery of inflation for business people out there like you sitting on the desk at JP Morgan years ago, do you just assume a damp and nominal GDP.
I think we have to assume a more moderate nominal GDP number this year. Absolutely.
Why did jer Own Powell address that he won't address that at the Bous School Chicago, where I was not invited today.
Just in case you didn't hear that, Yes.
Exactly what does the chairman of the FED do with a new set of nominal GDP damp it.
You know, I think after the payrolls today and the recent data and the recent tariffs, he's going to just continue to say we're data dependent. We're watching right now most of the impact from the policy uncertainty is coming through consumer and business sentiment. It's quote unquote soft data. We aren't We didn't see it really in payrolls today. We haven't seen it much in hard data. To the degree the coming months see the hard data, then growth
becomes a bigger concern for the Fed. But right now, again, as Ellen and your other guests have said, to date, the real economy, the consumer businesses have been resilient. Q four earnings were very strong. So it's the question of does the past continue, and I think increasingly the market's telling us they are nervous that it won't.
Do.
You expect growth to materially, you expect to see reports coming off the south side on Wall Street.
We're cutting our economic outlook. We're cutting our economic outlook.
Our GDP call for twenty five, for twenty six, I haven't seen that that much yet yet.
I've seen a few so JP Morgan, I know, has already cut its us GDP forecast twice since the beginning of the year. I haven't checked every other bank, but I would assume there's similar trends underway at most shops. So it is a softer environments getting priced in. And it's important to remember that soft growth does not mean necessarily bad equity returns. You can have decent equity returns with moderate growth. You don't have to have booming growth.
It's different types of companies that perform well, but don't we shouldn't panic.
Yep, it's CFR Maria Ferragamo writing it up on fentanyl, Canada, Mexico. It's maybe outside your remit. What are you learning from the Council on Foreign Relations on the politics of the moment?
What are you leaning over and reading a second time?
Well, the politics drives the policy, and the policy will then influence the financial markets and economy, and then the feedback loop goes the other way.
Right.
What happens in markets is we're hearing from Bessent about yields, then will affect the policy. You know when you mentioned Canada Mexico, those politics. I do believe the administration appreciates the magnitude of hurt that could come to the United States from large prolonged tariffs on Canada and Mexico. And I think that's why we did see major exemptions, yes, and the pause, but I don't think we're going to
get them back to zero anytime soon. The challenge is that we don't have the fiscal room this time to bail out industries. In twenty eighteen, the United States gave unprecedented subsidies to the as farmers. We don't where are we going to get the money this time from the new bitcoin reserve.
Okay, you can stay with us, because the Bond girls just showed of Christina can'st excellent right now, Rebecca's clueless, I'm clueless.
Paul's cluss. What is it? Paul mentioned it earlier. It is brilliant. Is there a new vector to lower yields? Or is it transient?
Look, I think it's still transient. I think we're arranged bound, and I think you guys have talked about it this morning, and there is so much uncertain The uncertainty we have is uncertainty going forward, and there's so many push and pulls of all of these policies and we've gotten a lot more delivery of some of the growth negative policies, so flower and inflationary policies and immigration, and we were
really lacking still on deregulation. And I think your point on the fiscal support in twenty eighteen, we're talking about fiscal cuts now, so we don't have that cushion when we talk about supporting growth with all of these other pullbacks. And I think the market's patients on kind of the positive boost from drag is waning finn at this point.
And you look at the bond market on a global basis and there's changes in Europe.
Yeah, I mean they're significantly unbelievable. We're talking it's generational.
Ye, some of the things we've seen from absolutely announcements out of Germany and so forth. So does that shift maybe your focus away from the US to Europe.
Yeah, So I think that there's a few things. So the we're finally I mean, we've been talking for a decade maybe more about really getting a step up and spending in Europe, certainly from Germany and the will and the willingness to have kind of fiscal support there, and even from the start of the Ukraine conflict, there was an expectation that you'd have more defense spending and we haven't seen it. So I think it is really a meaningful thing. And you've seen yields in Europe reprice almost
fifty basis points. I think there's some opportunities there. And then Japan is the other market that rates have.
Made that's truly historic.
Rebecca Parson a question for Christina Catmany of Invesco.
Yeah, so when I think about Europe stepping up spending and this huge move relatively that we've seen in the bond yields, there Germany can afford it. They still have relatively low debt to GDP ratios, relatively small deficits. Other countries in Europe, including France, Italy, on and on can't. They can't afford to have suddenly higher yields. Do you think there's any risk that we could get the so
called Liz Trust moment? Not in Germany per se, but perhaps in some of these other markets if this bond sell off continues.
Spreads across Europe have are still so historically tight that I that's not an issue that we think is kind of on the precipice. Even with kind of this free price. So Italy Germany is still one hundred, one hundred and ten. I think yesterday when I looked at it, I mean, these are historically tight levels in the post twenty eleven European sovereign deck crisis. So I don't I think you
have a lot of room to get there. And I think the inflation in the last few years in Europe has actually really supported the fiscal situation.
First chart I looked.
At yesterday in Bloomberg, Paul, when I came in, it's six point fifty two was Italy Germany.
And it hasn't moved, which is good.
That's good.
So here's my other worry. Scott Bessen, our Treasury secretary, yesterday and today, both at the European Economic Club of New York and then on another channel today basically was trashing it's a death star. But he's been on Bloomberg a lot, yes, a lot, a lot.
On the death some amazing headlines continue.
So thank you. He's trashing the CBO, right, So this is the entity that scores our budget proposals, tells us what the deaf it's to do. It increasingly feels like if they don't like the answer from the CBO, they're going to say it doesn't count and move on anyway. Do bond like it's not market moving? But at the same time, it's putting in a question our institutional processes. Do you think bond investors eventually care that we're ignoring the math?
I mean, we certainly do care, And I think the dialogue for the last kind of number of years, as you've had all these pressures have been why are yields not higher? Why are we not pricing in some of these fiscal risks. I think it takes the rest of the world sometime to get there, but I think we are. All of these policy changes and kind of the change in tone from the administration towards the rest of the world I think is changing the world order, and it
will change. We'll have negative long term repercussions of how the rest of the world interacts with the US and thinks about it. I think there are there will be lasting effects.
Paul, try to get a question in there.
Well, Christine, I just wanted to ask taking over are you taking are you filing back your risk here? To reflect the fact that we've kind of got a lot of uncertainty out there. Maybe we're not seeing it yet in the numbers, but it's out there.
Look, I think that there's been a lot of uncertainty leading into the election and coming out of the election, it's shifted what it is like where the uncertainty is coming from. We still think and I think you guys touched on it earlier, a lot of what Shane's the narrative in the last week we can have has been tier two data, like we haven't seen a lot of weakness yet in the year one meaning confidence measures like
not in CPI and headline like the big numbers. So I think that there's still kind of there's some disconnect there and we've swung with the sentiment in the market has swung a lot more So, I think that there are opportunities and it's a matter of with these like when you have volatile reprices, where are now the opportunities. There's some opportunity maybe more to own front end European duration rather than the US with how much we've f reep.
Rebecca, is there a concern out there?
Should we be concerned that given some of the unsurty that seems to be building in this country that may impact our ability to finance our deficit, finance our debt. I mean we keep having these auctions and that people keep showing up. The people tell me, don't worry about the debt until they stop buying our treasury.
That's the smartest question I've heard this week.
The bottom line is for our lives, everybody showed up at the margin to buy our full faith in credit.
Rebecca, is that at risk?
I think longer term, there's a risk that we see less demand and not enough demand to meet what will have to be increasing supply. So I think that the bias of risk is toward a repricing, a new range for the ten year yield, which at the end of the day is the cost of capital for all of us and everyone listening to this show.
Final Christian Christina Kappany just really important. Then how does Investo see full faith and credit repricing.
Given this turmoil?
Look, I think we've talked about it many times over the last kind of six months. Is you have to have term premium in the market, like you still have a very flat treasury curve, and there needs to be a repricing. So we've talked about four twenty five, four to seventy five range intents we're sitting at or below. Kind of the sentiment has pushed us to those levels. We need to reprice the long end higher. And it's not it's not quite. It's not a list trust moment.
It's not we need to be at six percent ten years, but there we do over time need to price that.
This has been wonderful? Can we we can do this again?
I think yeah, all start every.
Job today, get them in here and on a Friday.
We're enjoying it. We're having fun.
Chrisman, he drove the market.
Thank you so much, and our thanks as well to Ellen Zettner, Claudia's son terrific hour here.
We thank all of you.
Out on YouTube, subscribe to Bloomberg podcasts, and of course, on your commute across the nation. Good morning ninety nine one FM, Washington ninety two nine in Boston. Bloomberg Surveillance our economic indo caters in this job.
Today.
You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Gina Martin Adams Chaps, market strategist for Bloomberg Intelligence joints us here Gina just seems like, you know, we've got the S and P kind of seven percent ish off of its recent high. A lot of this uncertainty really weighing on the market. What kind of conversations are you having with clients these days about how to navigate these times?
Yeah, it varies, frankly fallen, a lot of confusion, a lot again, on again, off again. Tariffs have been a big source of discussion for the last month or so. Now we're starting to talk about weakness in the job market that is emerging, not only because of layoffs at the federal level with respect to DOJE, but also because of public sector layoffs. So this week we had two pretty negative employment reports, even though the official payroll report
today was somewhat benign. Earlier this week we got news from ism manufacturers that their employment prospects are now in contraction. Then we got layoffs announced by the Challenger team that are the highest levels we've seen in a single month since back in the pandemic.
So very clearly there.
Is some budding weakness in the economy, but it's coming in small waves. And not necessarily in all of the reports at once, and so investors are trying to weigh that out. The other thing that's happening is a non economic and discussion, and that is suddenly tech has competition. Right, So earlier in January we got the news from Deep Seek.
Then this week we got news from Ali Baba that there are competitors emerging in China in the race for AI technology implementation, and that is creating waves in the market as well.
Given the turmoil in the Oval Office. Gina Martin Adams given a tweet on Ukraine, what does a long term investor do?
How do you take part in Bloomberg's surveillance but not let it affect wisdom out three years?
I think that's a very great that's a great point, and because right now we are caught in a lot of short termism. But there is one big trend that has emerged so far this year that I think will only be exacerbated by the Trump policies, and that is performance of non domestic stocks, where we have seen over the course of the last several years, US stocks outperform materially in an environment of quote unquote US exceptionalism. US stocks outperform materially. Tech stocks in particular in the US
really drove that outperformance. But we're starting to see so far this year a rotation to non domestic equities. Europe especially is starting to outperform. It's very relative to, very
related to the Ukraine question that you started with. If Europe does ultimately come together with a cohesive strategy for defense spending, with the cohesive economic strategy, with the cohesive strategy to try to promote growth and promote Europe as a European entity, that could be one of the single most impactful outcomes of policy that we're not talking about as much on a day to day as maybe we should. But it's starting to bubble up into the equity market. Likewise,
China is becoming an investable market once again. As China is coming into the scene for AI competitiveness. We're seeing Ali Baba make announcements. Deep Sea made the announcement earlier this year, so we're starting to see a competitive landscape shift in tech which is favoring non domestic assets as well.
So probably the biggest question you want to ask yourself as a global investor is should I be continually so overweighted toward the UA, or should I be thinking about this new world order creating new opportunities in non domestic equities. And our view is that non domestic stocks have been the place to be so far in twenty twenty five. They may continue to be the leaders in the global equity markets as we sort of assess the outcomes of this policy making that's happening from Washington.
Wow, that would be a big, big sea change, because I think as recent as late last year GIN we were seeing reporting about big flows into US equities by international investors.
In those days you're suggesting maybe waning.
It appears to be the case, especially because we got to a point where US assets were extremely overvalued relative to the rest of the world. If you think back to twenty twenty one, when stocks peaked just after the pandemic, basically every global equity market was overvalued, But when we got to twenty twenty four, most global equity markets were actually extremely discounted by comparison to the US. We had built up an incredible store of optimism toward the US,
specifically through the last several years. That optimism appears to have peaked with twenty twenty four, and now we're going through this big adjustment period. As we go through that adjustment period in the US as well as globally, it's allowing for opportunities to bubble up in the rest of
the world equity markets. It's allowing for growth to start to recover in those non domestic equity markets, and we're starting to see capital flow accordingly, not necessarily from the US investor abroad yet, but the Europeans very clearly are investing in Europe. The Asian markets are clearly focused on China. It's up to the US investor if they're going to
diversify ultimately. But I think we want to question this idea in an environment in which we are deglobalizing, in an environment in which we are not going to continue to lead the global trade order, in the US may no longer be the best place to access global growth, and we have to think about diversifying our portfolios.
According to I got.
Thirty seconds, what are you going to think about this weekend? I mean, what's what within the massive Bloomberg intelligence combine? Yeah, what's your curiosity this weekend?
That's a great question. Hopefully not as much on tariffs, but I'll still be thinking about tariffs. I think we have to think about where these reciprocal tariffs are going to go interesting and ultimately what that will mean for global trade. I do think we have to really spend a lot of time on Europe as well. You know, the news out of Germany this week was potentially game changing. Where is Europe going to head with respect to defending
the continent against what's happening with Russia and Ukraine. I think that Europe is going to be a big part of the conversation over the course of the year.
This has been wonderful Gina, Martin Adams, and thank you so much for this.
Is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Apple Corplay 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.
Anna Wong joins us right now from the University of Chicago. It has been so profound this year that you have the gentleman from Penn Kevin has said, quoting her, let me read you the first sentence of the pr from Caroline levi Att the White House moments ago. In one month, in the President Trump, the American economy is soaring back to greatness after the economic calamity.
Left by Joe Biden.
What is the mathematics on a labor basis when an administration begins, it's not when they put the hand on the Bible.
How many months later is it for you?
Well, according to the administration, it'll be six to twelve month when it becomes Trump economy. But in today's Johns you for me. I thought that the surprising element in the jobs report was that the shrinkage of the federal government is apparently already showing evidence in this report. So one of the reason why we were expecting a much lower print than today was we expect a trinkage in the government hiring. Apparently it's even worse than what we thought.
We had expected a slow down of twenty eight thousand in the government sector. It was actually a slow down of thirty three thousand.
Okay, I want to cut to the chase here. This run rate of non firm payrolls, which is like the speed of the economy. You are acquaimed for gaining that. Where is the run rate now? And with policy like those, where are we going.
To be right? So the runway right based on six month moving average is about one hundred and ninety thousand, and a factor in the overstatement in the birth and death model, it's about ninety thousand. However, the employment break even to stayalize the unemployment rate has also fallen, so Bostic, the Atlanta Fed President, estimates seventy five to one thousand.
One hundred thousand per month is about break even. We estimate one hundred and five thousand, So you know, at a pace of ninety thousand is just slightly below the break even and so Empowell's worth that means the unemployment rate should be inching up about by point one percentage point every other month. This is why we expect the unemployment rate to hit four point five percent at the
end of the year. And you calculate this math of point one percentage point every other month in terms of the dose we're expecting the federal government shrinkage will lead to about half a million federal workers going into the
job market this year. So the question is how can the privacy, whether the private sector can quickly absorb this, and in today's prime what we saw the strength, which surprised me was in the goods producing sector, particularly manufacturing, which is not a consoling sign because I think what we're seeing is that with the front running of these goods ahead of the tariffs, it's ramping up manufacturing activity. You see that China's exports soaring, but that's not a
permanent thing. It's definitely a temporary thing. And as all these tariffs come into effect in April second, I think what you're going to see is this steep patch up and drop off from.
Moll months ago.
The Laureate Krugman, agreeing with Anna Lawn that with the mid month math here and haul, we're still within a Biden economy with today's it's today's statistics. That from Paul Krugman out on a substet.
So we've had a commentary from the administration from National Economic Council, has it on Bloomberg Television from the spokesperson.
We have just heard White House spokesperson.
Saying this economy's greatest economy is coming back. The President's policies are working very well.
YEP.
Financial markets are not necess necessarily reflecting that the stock market's off seven percent from its high just just recently. How do you think this is all going to play out? Should we be concerned about tariffs, should we be concerned about changes in immigration?
How do you think about that?
Yeah, I think I think the on the tearff front, I think the financial market is calling the bluff on President Trump because they I don't think that a lot of the tariffs are priced in the inflation compensations or financial markets yet. And uh and I think rightly so for them to be doubtful because in the past month and a half it seems that President Trump has been delaying these waves of tariff and also I think it part of it also has to do with this expectation
of a Trump put on the stock market. And if economic activity in the labor market, is the tear going to be deteriorating faster because of Doge layoff, it's going to call the bluff on President I.
Just looked away from the screen, Paul, to see if my blue school panel invite was in my inis, and I look at the lift of the market.
Op here anaalong Citty in the big chairs. That's what happens.
So Anna, what are you looking at over the next coming weeks, maybe months, to get a sense of where this economy is going.
I think the fastest indicator you can look at that reflect the changing, rapidly changing temperature of the labor market is the jobless claims that with the federal government jobless claims, and in fact it is one of the Bloomberg reporters here Mark Nikutt to discover that the Labor Department of Labor already published the jobless claims for federal workers yesterday for next week, which everybody thought is only going to be out next week, and we're seeing a sustained increase
in jobless claims from federal workers.
I mean, this is a brutal question, a really rude question. Your ex on this and you a lot of us talk, you've lived it. Where are those people going to get jobs? All those doze exiting people.
You could have been one of those people. Where are they going to get jobs?
And Tom, that is an excellent question, right. So, for example, in today's jobs report, one of the plays which surprised me, where I had forecast that lower jock growth is professional and businesses, and I now saw that much of the pop is in waste management.
Waste yes, always a growth business.
So like when Stevie Nicks with Fleetwood Mac. When Stevie Nicks was starving, she was in waste management, cleaning houses and cleaning the bathrooms. Seriously, where are the people of Bethesda, Maryland going to get jobs?
Exactly? Seriously, Tom, That's exactly the point that the match skill mismatch of these government workers who are actually very highly skilled and highly specialized.
You know what, are you a Biden supporter?
Continue, They're not gonna they want to find jobs and administrative for all informational sectors, you know, these these financial sector but those sectors hiring a pace is not keeping up with the inflows into the unemployment of in those sectors, whereas the places where we need more workers are like waste management and professional businesses. So there's a skill mismatch.
Annamon the Bloomberg Economics. She's been on fire over the last eighteen months with her analysis of our labor economy.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Apple Corplay and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.
We got to do the papers, and that means, Lisa Monteore, have you recovered from costco?
I did, I did. I'm good now. It was very sad, but shares are still lower this morning. You guys are always talking college basketball, right, so I wanted to kind of bring it in here, get myself involved in the action. This is from the post. Okay, So they're saying that March Madness is just that it's it's March. They're saying that that that's failed to kind of bring this buzz to the regular season. They list a couple of reasons why.
They talk about, you know, they're competing with football, women's college hoops getting more popular because the women actually stay in the sport longer, so people get more familiar with them. Well, does the guys they you know, move on to the NBA coaches coming going the transfer portal NL They say that, you know, they've tried to expand the March Madness Tournament to sparks. It Did that do it for you? Expanding the tournament? Did that spark excitement?
Yeah?
I mean it's it's a little bit better, just get some more teams in there. But you're right, there's there's just there's more and more. I again, I think, just speaking from the perspective of Duke, all my guys are one and done, and so the our connection with our team, and I speak from a lot of alumni, is much much less. Now can you extrapolate that out there the entire college game?
I don't know, but so so this weekend it's a huge game.
Let's say there's twenty five gifted players playing. Are there any seniors on.
The Duke team? None to speak of? With just what will have say and stay and then again in the.
Transfer portal, for better or worse, it gives the kids freedom to go where they think they can have the most success. That's great for them and they deserve that. Now, the downside is, you know, there's no stability within teams and programs, and therefore you know loyalty.
David from Washington emails in and says, how much do you think who's the guy for Duke?
The young freshman Connor oh Cooper, flat Cooper? How much is Cooper piling in name, image, and likeness.
Of six seven eight million dollars this year? Probably is a freshman?
Yes, God, let's Lisa ma tail Bunny.
So next, my God, Okay, so the egg shortage drama continuing, price is higher, stores limiting purchases. So now the US is on this like global egg hunt. So they have a goal here it is they you need up to one hundred million eggs within the next month or two. So they're going out. They're countries like Poland, France, Indonesia to ask about eggs. The problem, like we've talked about,
you know, the shelf life isn't that great. Eggs still, you know they break in transit and there's flu outbreaks in other countries too.
But I sent Lisa, I sent Alex, I sent Carol Master. I was in the shop right yesterday in Jersey. Plenty of eggs, but they're a little pricey, probably little prize. I didn't check the prices, you were right, but they were there.
They're there, so there were signs like limiting.
Now I opened the old ge.
We got the little old g E made in nineteen fifty. The engine makes loonas And there's my twelve ninety nine eggs scaring me in the face.
You only got five weeks. I got to eat those, okay? That the last one. People are as a kid say, throwing shade at Meghan Markele, Meghan Sussex. Okay, there you want to put it. Her new Netflix show With Love Meghan. She cooked right, she tends to be high. She picks berries. But it was this pasta dish that she called single skillet spaghetti that threw people all over the edge. Okay, so what she does is that it's an almond dish.
She lays the pasta out like raw in the pot, and then she throws the tomatoes, the garlic, and the olive oil, and then she pours the boiling water on top of it. Really, so she lets everything kind of cook at once instead of boiling. Separate word. So everyone's up in an operar.
I don't. They don't like it.
They say, you can't do that, arth to do that?
About nineteen eighty three.
Well, I didn't get past the second line, which says Megan Sussex.
Yes, that's her British oil name she goes by. I didn't know that was the thing.
I can see that is her thing now the paper.
Oh, I could say, there's so many things I could say where mister Bloomberg would call me up put the surveillance cork.
But the reason she says it gives it a creamy sure because it keeps starching it. So that's why she does it that way, and it's a less pot less pots to wash.
Lisato, thank you so much, greatly appreciated the newspapers with Lisa Matteo.
This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, seven to ten am Eastern on Bloomberg dot com, the iHeartRadio app tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal