Surveillance: America Is Working, NEC's Kudlow Says

cuts out there. What's the long term price of an accommodation by the Fed Central Bank. I refuse to believe that Chairman Powell cutty rates is a free lunch. What's the price out there? Well, actually, Tom, I think what the question for us right now is whether these rate cuts are just central banks moving to a new reality of lower neutral rate that comes with lower global slower global growth, or whether this is actual, you know, new

accommodation that's going to spur growth. I think that's an open question because we've seen the global economy slow down pretty dramatically. We don't have the engine that we've come to rely on, that of China. China has been fueled by this massive credit growth in recent years. They don't want to go back down that road. They're being very disciplined about it, and growth is staying very low and

likely to slow further. But truly, there's there's a difference between a rate like we have in the US and the negative rates in Europe. That's not adjusting to a new normal, that's just negative. What you mean in Europe? Yes, the negative rates in Europe? Yes, I mean that. I think actually they'll highlights those same structural problems. They don't have an engine of growth. Their demographics are slow, their

productivity is low, So what's going to drive growth? And they've relied on They've turned to negative rates, and as we see, they're not particularly effective. Right, They're not a great engine of growth. So I think that their negative rates highlights that they're just sort of out of ammunition. So, Julie, are you leaning towards that? Then? If you had to make a decision on where this is coming, you leaning towards the idea that we are experiencing much lower neutral

rights and these central banks adjusting to that reality. Yeah, I do think that. I mean, I think if I had to describe the current policy stance for the said it would be slightly accommodative, but not tremendously so despite the rate being so low. So I do think that a lot of this is the reality of lower neutral interest rates. So square that backdrop with a job's report that is likely to be quite good today. Uh, and the figures that we got out of ADP yesterday that

point into such health in the labor market. How can that person is with this backdrop of weakness as you painted well, So I wouldn't say weakness, I just slow growth isn't necessarily weak if that's the reality. And again the job first of all, I don't want to say presume the conclusion of the jobs report. One thing we've been highlighting is the surprises in both directions in the jobs reports. This year has been about fifty percent bigger than the last five years. So you know, we may

be surprised in one direction or another this morning. Um, but the but what we've seen is a healthy job market. We have seen job growth slow. We need to generate about a hundred to a hundred and fifteen thousand jobs a month to just absorb population growth, and we're somewhat above that. So we're not exactly roaring. The economy is fine, it's solid, it's healthy. Consumers are feeling pretty good because the job market is good. But we're not in boom times,

nor are we seeing weakness. So I think we're we're seeing that kind of steady, moderate growth picture reflected in those jobs. Now, Julia, let me ask you a question that I know RBC's Tom Pauselli has been thinking about and talking to clients about as well, the risk of confusing signs of full employment with evidence that the cyclical peak in the labor market is behind us. What are

the risks right now? So, so the risks of thinking that we're overheating, is that what you're asking, you know, The idea being that as GDP comes in in and around trend growth and pay rolls growth starts to desalarate. There's just the belief by some people that we're not returning to trend growth, that the deceleration of payrolls growth is evidence that we've had a cyclical peak in the

labor market and we're rolling go over. Instead of sitting here and worry about recess, precisely, instead of sitting here and saying, you know what, quite we're quite constructive we're back at trend and what you are seeing is just the natural consequence of full employment. Payrolls growth will de salarate. Are we confusing one with the others. It's very easy

to confuse. And of course you know, when you are at that trend growth, that means that policymakers, for example, don't have a lot of margin for error, which is why the FED moved preemptively. Uh. Now I think that they've been a little bit disciplines. They've now moved to the sidelines and they say, you know, we need to see more evidence of what you're suggesting actual weakness. Uh, to conclude that we need to do more. So, Um, it's easy to confuse. It's hard and real time to

disentangle those two. We look at things like the speed of slowing. If we're slowing rapidly and in in a worrisome way, which isn't what we've seen. We've seen sort of a gradual moderation and growth through the year. Are we aggregating too much? I mean, we're gonna come out here in one of and in thirty thirty seven minutes and we're going to aggregate aggregate, aggregate. Can we get away with that? Game given the partitions of the American

labor economy. Well, that's a great point, Tom. I mean, when we see the report this morning, it's likely to show a manufacturing sector that's still that is in recession. Um, that's probably going to lose some jobs. Uh, you know, abstracting from the GM strike effect. Um. But uh. And and meanwhile, all the service sector is humming along. And in fact, the health care sector is in sort of a secular growth strate give uh state given our aging economy.

So there are different sub economies. We always have to keep that in mind when we're thinking about, for example, Jonathan's question, are we slowing in a broad based way? Are we driven by weakness in one sector? I think it's worrisome in the composition of of growth and hiring that the weakness is in in investment um and in sectors that have high productivity, whereas the resiliency is in sectors with relatively low productivity. That's not a great pattern

in terms of thinking about the future. So I think the details do matter a lot um, But we have a gigantic service sector. It's what powers the economy, and it has given us a really solid base where we're an ocean liner of an economy. It's very hard to put an ocean liner of an economy was dancing ocean lining. I love the sort of the noir version of the

of the ocean liner of an economy. I am thinking about that, this idea that slow growth could be positive and that we're chugging along and all of these nuances. And I was speaking with David Lafferty yesterday, chief market strategist. It takes this investment managers, and he was saying, honestly, I'm looking at a blank screen for outlook, my blinker blinking. I have nothing that interesting to say with this type of backdrop, because things are going to just sort of

chug along. It's kind of a boring market now heading into Julia, be careful what you say. Though. Again, whenever we think it's going to be the most worrying, that's when something can, you know, blindside us. So UM, I wouldn't say a year where we're still going to be grappling with things like trade tensions between the US and China and now a US presidential election that is on the front burner and has consequences for different sectors. Um, I don't think that's going to be a boring year.

I'm not too worried about being bored next year. Judaicarnada, great to get your thoughts macro policy perspectives, President and found it. Hey, it is is ny down to John. The jobs nevers crushing the Bloomberg wire, contrary to ordinary, A gain of more than a quarter million jobs in November Topping Wall Street forecast the prior month or Vice higher again November versus October. The unemployment eight down three

point five percent, a half century low average. I really earnings meantime, well, they missed the mark up point two percent versus point three percent again. Change in non farm payrolls from the Labor Department a gain of two hundred sixty six thousand Topping forecasts the prior month October revised higher. Unemployment down down at three point five percent. I'm Niel Boomberg Radio. Let's go back to me, ord if any,

thank you. Here's the price action. Just wow. Equities advanced futures higher by four tents of one percent, bonds decline, yields up by three basis points on a ten year now to one eighty five yelds were coming in just a little bit so big reversal, especially at the front end, yields up by five basis points to one sixty four and affirm a dollar a big payrolls print John Ferroll to the claims number in Carl Kadona way out front on that among others, I go to three decimal points

on the rate and it's what I would call a good three point five percent to three decimals three point five three five, So it's no la statistical fluky flukiness that we got to three point five. You get to Jim Glassman of JP Morgan standing by for reaction to this one. Your thoughts, Jim. Pretty impressive And to keep in mind though, the settlement of the GM strike is driving allow this. You get manufacturing bounced back. We didn't know how much guys were actually on strike. Maybe another

thirty thousand were indirectly affected. And I think this is a reminder that all the manufacturer data coming out and that we're going to see over the next several weeks is going to be showing this balance back from the GM strike. So pretty impressive. And I think the unemployment rate is the key to the whole thing, because we just don't know. I think job growth is slowing down very gradually. Not here, but I think for the year it is, and I think we're gonna see you just

see his unemployment stay at three and a half. It's going to be a really good story. Jim Glassman, thank you so much for the time we treasure speaking to you, particularly today from Tucson, Arizona. Mr Glassman is with Dr Glassman, I should say it's with JP Moore, John. What is so distinctive here is the U six grim unemployment number comes into recent lows six point nine percent. That's not seven percent. And I also know media duration and average duration.

Those are very very good statistics as well. There's a there's a solidity to the data. And look at the yields now out four base points vaulting out to a one. Also, we should say everyone talks about the trend line being important, not necessarily one number. The revisions also were positive, adding jobs, bringing the three month average to a ten month high of two and five thousand. This is key when you talk about the longer term implications. Let's get to the

longer term implications in the market moves as well. Really placed to say that you want to us from PAGM it's Mike Collinsy dropped by to the studio to give us his thoughts. Mike, your initial response place, you know, it's the same story. The job market has not been the problem for this economy. Right, it is rock solid um, very robust um. But if you look through the numbers, see the same trend we've seen, which is one of the reasons we haven't seen a big spike in wage growth.

And even the wage numbers here, the monthly wage games are actually a little bit lighter than expected because it's all services. It's leisure jobs, it's business services, it's hospitality, it's a lot of second average hourly earnings climbed three point one percent from a year earlier. That exceeded projections of three percent, right, Right, The monthly number was a light but right, so we're running at three percent year over year and that's been where we that's where we've been,

so that's not a change. But three percent based on historical expectations is arguably a little bit light. Right. If inflation is to you're talking about one percent real wage growth, which doesn't really pay the bills. So, um, the labor market is not the problem, right, it's the the manufacturing Chector in an international sector and you're still seeing weakness in Europe. We had that yesterday. China is not out

of the woods yet. Um. You know, there's there's seems like on a manufacturing side globally you've got a good number and then a bad number. A good number and a bad numbers. So we're kind of bouncing around the box. Talk about it, Mike, the consensus cool gun into next year. You know what it is is by the rest of the world. We've heard it from Bank alfter bank after

bank alfter bank. The date to this week, the labor market in America rock solid, the dates US where German industrial production Reminder, as you say, they were not out of woods yet. When you think about that consensus cool gun into next year, what does Mike Collins stand on that debate? Yeah, I mean, you know, I'm a general contrarian and a deep value investor, and if you look at the relationships in valuations globally in equities, for sure, um,

it would certainly tilt you to outside the US. But you know, the US economy is clearly the bright spot in the world right now, and we expect that to continue. Right The FED, I think has done a great job. I give them a lot of credit for pivoting when they did, for cutting three times, getting that funds rate back to what I think is probably closer to a neutral rate at least in the near term, and so we're actually poised to continue to do okay in the US.

That's actually I'm glad you were up the FED because I'm watching the yield curve right now and it's kind of struggling to find whether or not it's deepening or flattening. On this news you're seeing two year yields increased just a touch more than ten year yields. Here, What is the risk that the federal take data like this and stop cutting rates or even hike them? Uh and sire me the growth. Yeah, so they've definitely stopped cutting for now.

They are on perma hold for the time being, and this number solidifies that um as as everybody I think is in consensus view now, the hurdle rate hike is really really high. I mean, they talk about this symmetrical inflation target. What that means is they want to see inflation core pc E well above two before they even think about hiking. And that thing is like one five,

one six, right now. There's a long way to go before that thing gets gets above too, So I don't see the risk as being in a hike hike in the next six months. Your view on credit at the moment, Mike, has been fascinating, extremely bifurcated. What we've seen is the spread between the top end of high yield and the bottom end of high yield really start to move out. It's been an upping quality right in high yield. You

started to think about rotating the other way anytimes. Absolutely, Just just yesterday in our trade room, we had a big discussion about this. You're seeing actually that relationship. It looks like it's starting to turn the other way again. There's been so much pessimism in the high old market.

A lot of it's in the energy sector, of course, and you've got some maybe positive news about OPEC cutting production a little bit, maybe bolsters oil prices, but there's so much negativity, there's so many default so much default risk and recessions priced into that tail of the high old market that there I think there is an opportunity if you believe like we do, that you're not going to be in a recession in two thousand twenty. There's value there. I'm itching to get in and ask you

more about this. This is a really important question. We're talking about the triple cs, the bottom of the junk bond market that has really lacked the broader credit market. Through through nineteen, we've had gains of fifteen percent for corporate credit. Triple cs just really haven't been there in the last few months. You're talking about buying triple cs.

Some of these really really beaten down credits, right, But it's about it's about perception in psychology and valuation, right, and all those things are pointing in one direction right now, and we tend to like to go the other way there. And again, if the default probability priced in is in that basket and you're only going to get a ten percent to fault right in that basket, there's value. But obviously you have to pick your spots. I mean, credit

selection is powamount in that space without a doubt. What would you say to push back that they were cheap earlier this year? Uh, they might be less cheap now, what's changed fundamentally to mean that the risk is so much lower going into the bottom of the bottom When we see the default rate actually taking up in certain sectors. I mean, you've had not only the FED cutting three times,

You've had dozens of rate cuts all around the world. Right, Monetary policy has been super stimulative, and now you're finally seeing signs of of potential fiscal policy. You had some in Japan, you you may have more in the US regardless of who wins the election next year, and in Europe you might see more. So I feel like you've seen a bottoming in global economic data for the time being. I think default risk or sushion risk has has moderated

for next year, and and everybody's off sides in that space. Tom, is this time now to go out of triple leverage cash and into the year. This is a stunning report. It completely refutes the gloom crew. Does the FED respond to it or do they do what they genetically do, which is just by time they buy time? They are on hold indefinitely right now. I mean, you would need to see five or ten of these reports. You need to see the stock market up another twenty percent. You

need to see inflation above two Is that feasible? You're a bond guy, I'm gonna ask you that is dividend growth a proxy for the yield the coupon I can't get Let me extend that forward here in the time we've got, We're gonna keep you through the hour. This is so important, Michael. Do you shift with this report from a two thousand and twenty view of clipping up coupon two back to back years a total return pop

you know, in ah in and fixed income. I don't think you're gonna see anywhere near the total returns we had this year. But can I look for any kind of game with coupon? You can? You can clip your coupon in two thousand twenty, I think, I think the long end of the curve, and we've even seen it today, the thirty years barely moving today. It's a bear flatten or the front end is bear in the bear flatteners.

So the two year note is rising in yield today because the markets before this number, it was actually pricing in a small probability of a cut next year, and that's being taken out of the mark. Can you stay with us, He's coming to TV with me, He's going to TV with you. He has a few more minutes. I'm going to let you have about ninety more seconds worked. I've got I've forgot worked. That's good to do. Michael Collins was a PGM, and we thank him for being

with this. We areing. Uh, the gains get extended as the US markets open on the heels of that blockbuster jobs. There are two hundred and sixties six thousand jobs added well passed expectations joining US now. Tiffany Wilding pimpco U S economists. Tiffany, can you use as a sense of just how big of a surprise this was to the upside when it comes to the job's numbers. Yeah, well, thanks for having me. Well, I think, you know, interestingly,

the so Bloomberg obviously has a panel of economists. I think there's maybe a hundred and seventy eight economists on that panel. Um that that has that that present forecasts for each employment report, and and this report was above every one of those economists forecasts on the underlying panel. So that doesn't happen very frequently. I think I can only remember, you know, maybe one other time within the last several years that that's happened. So, I mean, certainly

this isn't an important report, you know. Um, you know, I think there's some some interesting things going on underlying the report as well. Um, you know, obviously you had some noise because we had a strike at GM plants that um you know, that happened in October. That was resolved, so people came back to work in November. But even if you exclude those around forty to fifty workers that were coming back to work, this is still a very strong report. Yes, it really was, Tiffany, And I think

the markets are reflecting that. What is your sense that's really driving this? Are these what types of jobs are being created at this late stage in the cycle. Yeah, I mean so kind of you know, again, we like to look at um, you know, any any given report obviously as noisy as we like to look at the given trends. So what you're seeing is an interesting bifurcation

I think in in services versus good sector jobs. You know, so excluding the kind of the GM you know, sort of one off factors if you will, goods, uh, good sector employment has actually been decelerating this year, and that's you know, manufacturing, construction, other sectors that are related to that, like trade and transport. But on the other side, services, which looked earlier in the year like it was decelerating has actually picked up more recently, um. And and this

report healthcare has was really strong. Health care sector has been really strong, you know. And I think the important thing to remember about the services sector is that that's a sector that really economists look at in the employment report because most of the other economic data that we get, at least high frequency economic data is really geared towards the good side of the US economy, you know, So we tend to get service sector data, you know, with

the lag other than the employment report, you know. So it's really good news to see service sector hiring UM kind of pick up after dipping earlier this year. Michael Collins from Pigeon was in here earlier, and he was talking about how the type of jobs getting added leaves something to be desired because the job gains have really been made on the lower paying end of the spectrum. Can you give us a sense of how much this matters when people look at this data? I mean, in

other words, are all job gains equal? Um? Well, so I agree with that. I think that's kind of a I think that's a bit of a longer term trend that we've seen, um, you know, as manufacturing jobs for example, has decelerated more of a secular trend over the last ten years. You've seen it just a general decline in manufacturing jobs in the US, and and service the service sector side of the economy has UM, you know, kind of picked up or absorbed you know, some of those

people that that lost the manufacturing jobs. But I think one of the more interesting trends right now actually is is looking at the jobs created at large companies versus small and mid sized companies. You know, So the real acceleration in labor market growth, you know, in eighteen when growth accelerated was really coming from those small to mid size firms, and we really, UM, you know, hadn't seen that UM prior to UM you know, kind of in

the in the wake of the financial crisis. So that's good news, you know, but kind of more recently, UM, that started to slow down a bit. As I mentioned, similarly to the to the good side. UM. You know, So you want to see an economy that has UM job creation across you know, many different sectors obviously, UM, many entrepreneurial, small and mid sized companies increasing jobs. That's good news. UM. So hopefully that picks up as well. So toffy. Let's gowk to the wage side of the equation.

Came in a little bit better than expect at three point one percent annual growth. Um. Is that kind of where we should get comfortable? Is that kind of the best this labor market can give us? There's been some questioning that given the low level of unemployment, shouldn't wage growth actually maybe be even a little better. Yeah, Well, wage growth, even though it was revised higher today. So average hourly earnings I think on a year on your basis,

was around three point one. That's actually below a recent peak that we've seen, um, you know, kind of at the end of of of of last year of three point four. So it looks like average hourly earnings growth has peeked out a little bit um. You know, I think, which presents a bit of a goldilocks environment because you're still seeing the labor market which is able to generate um, you know, two hundred and sixty six thousand job gains without a lot of wage inflation. You know. No, I

think there are secular reasons still why that's happening. You know, we talk a lot about what we call labor bargaining power. UM. You know, you you hope that in a what we call a hot economy or a tight labor market, you hope that labor bargaining power starts to increase. But of course these things take time, you know. Now, I think the GM strike, the recent GM strike that we saw was kind of an anecdote of more labor market bargaining

power happening in tight labor markets. But again, this takes time. UM. So you know, I think that's that that continues to be UM sort of did damp in wage pressures. You know, we're we're also just a secular decline in productivity growth. UM. That also, uh, you know, dampens wage pressures because you know, you should get paid for you know, how much uh price inflation that you we're seeing, and then how productive

we are um on on the job. So those two things I think are secular reasons why you know, average EARLIE earnings are still um, you know, somewhat below the peak that we saw last cycle, UM, and they're probably likely to stay there. Tiffany Weilding of PIMCO joining us right now. We're speaking with her. She's a U S

economist about the jobs figures in particular. Tiffany, people are wondering what this means for the federal reserve markets now discounting any additional rate cuts in I'm wondering whether uh FED is right to be on pause here given the job gains that we're seeing. In other words, are we in a new Goldilocks? Well, yeah, I mean I think

I think we might be. Um. Certainly, the wage pressures would suggest that the FED does not need to be in a hurry to hike interest rates, you know, but at the same time, you know the fact that the US economy and job creation does look like it is re accelerating a bit after after dipping more notably over the summer or earlier this year, that would suggest that it certainly find to be on hold. So the the accommodation that the FED has already provided this year is

starting to support the economy. We're starting to see that, um, and it it suggests they don't need to provide additional support at this time, and then they can remain on hold. So, Tiffany, given that scenario, as you think about your DP outlook, give us a sense of kind of how you think this maybe strengthening job market may impact economic growth next year. Yeah, well, so, labor markets do tend to lag broader economy revenues um and and profits and and things like that, you know,

so you have to be a little bit careful. And the reason why economists, as I mentioned, the reason why economists look at this so uh so closely is because, um, you know, just in terms of the noisiness of this report, it is a little bit better you know than some of the other revenues or other production type of reports that we get. But we do have to remember that

the labor market lags. So you know, if growth does start to decelerate again, um you know, then ultimately the labor market will decelerate again with the lag to that you know. Now, I think I think just kind of thinking about this, you know a little bit more broadly, and certainly the labor market has has been stronger, um you know, then I think many would have expected in the context of some of the uh, you know, the

trade tensions that we've seen. We've also seen consumer sentiment hold up a lot better, you know, So I that that's I think also good news, um you know, for for the U. S economy, given that there has been some some disruption um and and potentially you know some negative headlines around that. Tiffany Weilding, thank you so much for taking such a time with us this morning. Tiffany Weilding, is you as economist at PIMCO joining us on the

jobs figures. We welcome Bloomberg TV and of course Blomberger Radio. I'm Jonathan Faraoh for the White House's views on the jobs report were joined by Larry Cudlo, now the National Economic Council Director. Larry, it's great to see you a stunning payrolls report. I'm sure the day feels a little bit better down in d C now these numbers are out well. It does it sugny day down here. And

the key point is America's working. America is working, and despite whatever you know, cynicism or criticism, the fact is the jobs numbers are actually getting better in recent months. And we scored two hundred and sixties this time around. Plus you got forty one thousand revision so from the two prior months, so they actually get you about three hundred thousand. My point is, despite I don't know a certain amount of pessimism, uh, the economy is outperforming expectations.

Economic policies from the President are working and America is going back to work. And I just think that's crucial because, you know what, Jonathan, I can't remember who wrote the book. My pal over at the American Enterprise Institute, Um Brooks, right, who was his name Brooks? Anyway, America is a happy place when it's working. I mean that, and America is

a cranky place when it's not working. And I think as this new rebuilding of the economy with new incentives from taxes and regulations and energy and protecting ourselves on trade, as the numbers come in, as people come out of the woodwork, as the you know, production workers are getting higher wages or faster wages than their bosses are. Anyway, all these things, this is a country that's going back to work, Jonathan, and I think it's a happier country

as a result of it. Was just a couple of months. Think you said that protecting our sounds on trade? Are you saying that the current trade stance you think is actually helping the US economy? And with that in mind, is there any reason to pull back these terrists if that's the case, Well, look, I don't want to. We're in negotiations right now. As a president has said, in recent days, they're constructive, almost round the clock negotiations. Doesn't mean he's going to sign the deal. He hasn't seen

the final deal yet. He's holding back, but he basically likes what he sees. So we'll see how that is if you want to pursue that in a moment or two. Uh fine, No, I had something different in mind, Jonathan, almost psychological. I think that one of press in it Trump's most important accomplishments in his first three years in office is to change and clarify the narrative on China and that this country, the USA, cannot cannot permit unfair

trading practices either by our allies or are non allies. Technology, innovation, invention application, as you well know, this is the heart of the American economy. We have the freedom to create, and that freedom is what drives our economy forward at the fastest rate of any country in the world for all these years. So here's my point. His job, as he sees it, is to defend America, to protect the workers, the farmers, the manufacturers, the people working in technology. That's

his job. And so when I say people are happy, I think the country has come around to the President's narrative, Yeah, we must be tough. We must be tough with China and anybody else who thinks they can willy nearly steal our, not just our technology advances, but our god given creativity. I think most people would narrative, you've been with China. Most people would argue that you have. You said the

President likes what he sees. October eleventh, The President said, we have come to a deal pretty much, subject to getting it written. It will probably take three weeks, four weeks or five weeks. That was eight weeks ago. What has the president seen, what's been agreed? Well, look, presidents up to speed on everything. We're almost in around the clock negotiations. The deputy level met um. Let's see not last night, but the night before. The final strokes are

not there were coming down to short strokes. We've been there now. Some of the most delicate matters have to be adjudicated, discussed, analyzed, and evaluated, and then it will be presented to President Trump and he'll take a look at it. As he said in London, and he said when he got back from London, he thinks the talks are moving ahead very nicely. He likes that they're very constructive. But but but but he's not ready yet to sign or he hasn't seen everything he wants to see. So

we're moving forward nicely, covering a lot of ground. And I've learned never in forecast the outcome. And ultimately it is President Trump's gonna make the final call. As you know. That's the story, Larry. But I'm still trying to work out what's happened in the last eight weeks or so. The President on October eleventh said a tremendous deal for the farmers, a purchase from forty to fifty billion dollars of ACT products. This was his message to the farmers.

I'd suggest the farmers have to go and immediately buy more land and get big attractors. What has been negotiated and what has been agreed? Can I just ask you again, was there ever any agreement whatsoever in October eleventh that involved forty two fifty billion dollars of US and agricultural products. Well, Jonathan, as you might guess, I am not going to be specific about these details. They're on the table. I think

your narrative is basically correct. I can't say yes, and I can't say no. These are part of the final strokes agriculturely agricultural spending by the way, but also opening up the ag market so that we are able to export a lot of different areas that they had preventice in doing so. It's not my place today to reveal you know, these um, shall we say secret or you know, closely held talks, but I will continue to suggest that we are those. Progress has been made, great progress has

been made, and we'll see how it ends up. It's almost around the clock discussions right now. But letty, the President did reveal that eight weeks ago, and I'm trying to understand whether that is still on the table or not. So I'll ask it in vaga terms, perhaps not in such specific terms. Has China shown any willingness whatsoever to agree to a dollar amount of US agricultural products? Well,

I sure can't speak for them. And we have not papered, you know, we have not codified and papered and translated these lengthy documents. So we'll have to wait and see. It takes two to tango, so both sides have to agree. Um, we're waiting for that, both paperwork and translations, so we will see. I might head if I'm not mistaken, Jonathan, I don't know whether it was your organization. Somebody reported today that China withdrew some barriers to agriculture as a

good will gesture. I'm not sure on all the d tales, but if it's a good will gesture, we appreciate good will gestures. They're in the process of way. You think returned tree tariffs on some of the imputs off us Paul Consoy by domestic companies. That seems to be the latest turn of things, Larry, would your message still be for the American farmer to go out and buy more land, to buy more tractors or would you tell them to wait? Um?

You know it's funny. I, as a broadcaster and a Wall Street economists even before that, used to love to make forecasts. I'm kind of, um more cautious now. I don't really want to tell the farmers what they should and should not do. I'm gonna hold back on that, uh, you know, just in case any of them actually followed

my advice. I I don't want to go there. I'm just saying that what I believe the President was inferring is that the discussions that we had a month or so ago with the top people, you, Hey and so forth. Uh certainly had those numbers on the table, and that our farm community great patriots that they are. They've taken some hits and they've stayed behind us and defending this China trade effort. Um. If they get it, then they probably will be buying a lot more equipment, and perhaps

they should buy land. I'm just not good at forecasting farm land. I have been Iowa's Jathan. I've covered the primaries, and I where the carcasses several times. Iowa nice, it's a lovely place. But I'm not going to give them any free advice on how they should run their businesses. Okay, Well, let's pick up on December fift Investors want to know the big one. If there's no Phase one deal by December fifteenth, Larry, and we're getting closer and closer to

that day, what actually happens, what's the next step? Well, I wouldn't want to speculate on Matt look Um. On the one hand, as sex Terry, Mnusians said, I think yesterday, there are no arbitrary deadlines and any of this. On the other hand, December is a very important date. Because if the trade negotiations or the deal or the agreement is not complete, our current law would restore tariffs on a number of items, as you probably know, I don't know what the exact number is, uh hundred maybe a

hundred fifty billion. So December is an important date. There are no arbitrary deadlines, and we will wait and see these of course, our decisions that will be made by President Trump, depending on how the talks go between now and then, whether we have buttoned down all the buttons, and whether it is a satisfactory agreement that is great for America. So it's an important date to keep an eye on. But I don't want this morning with you. I don't want to make any conclusions and anyone of

a lead anybody. I appreciate that, Larry. So let's just talk about process just a little bit. There is the December fifty round of tariffs, and then there are the October ones that were suspended. With the next move from the White House b to look back at the October round of tariffs that were suspended or move forward with the December fifty tariffs. How should we be thinking about this?

I didn't want to speculate it's all very hypothetical. I was kind of hoping you were going to grill me on U S m c A and how I was going to work through China one and then get to U S m c A last, Larry, So let's finish with China just a little bit. It's not it's worth a while and it's not speculating though, is it, Larry, to try and get an understanding of where the proty is. Do we look back to October or is that done with?

Or do we go forward as the next step? To go forward with the December fifteenth round of tariffs, Well, look, it's a day at the time, you know, as I said, as you noted, we have certain markers in the process. I mean, we had an a peck marker, but unfortunately all that got canceled a couple of weeks ago, So now we have a December marker. As I said, there

are no arbitrary deadlines. But on the other hand, by current agreement and law, the President has suggested tariffs might be I say, might be restored on December fifte that's the arrangement. These are decisions that are up to the Commander in Chief, and he will make those decisions based on the available information. How the talks go between now and then what's today December four or December five, So we got about a week left, a little more than a week left, um President She on the other side

will go through the same process. So one of the things I've learned, and you and I have been working together on this now for well over year, it very hard to make predictions, very hard to make predictions I don't expect you to make predictions today. Larry, just a little bit of insights of clarity into the discussions that you are a part of with the President of the United States. We want to understand my audience as well.

The minimum condition that China needs to meet from the U. S side to avoid that December fifteenth from out of tariffs, if it's not a deal, what is the minimum condition of success, so to speak, to avoid that. I don't think that Mr Leightheiser and bastamor Liheiser has ever suggested

a quote minimum condition. We have a discussion of a package that we call Phase one agriculture access, agriculture purchases, intellectual property, theft, forced transfer of technology, various tariff and non tariff barriers, uh, ownership financial services current see currency manipulation. So I probably left stuff out, but that's the package that is being discussed. There are big chapters in these big documents, as I think you know, so I do

not want to single one out. There is no certain condition. Uh. We will work towards Phase one, and then what is left to be done over time would spill over into Phase two. I think it was a very sensible approach. It reflected a change in President Trump's thinking that he was willing to do this in pieces sequentially if you will, and Phase two could well be out there, but I would not. I would tell you and advise you there is no one single condition that would make or break

the talks. Right now, the talks have been gone gone, they've been going on. Many people think perhaps that China is still link for the Sember fifth thinks around the tarists. To be credible, there needs to be a belief that the President of United States will actually go through with it. It's on the final one and sixty billion dollars of Chinese imports that haven't been hit from tariffs sans yet,

and they include many many consumer items. As you know, Larry, from your understanding does the president that have the appetite to follow through on that if the Chinese keeps stalling, well, look, the President has proven himself and then there can be no doubt that he is a very tough negotiator. He's got in his quiver of arrows. He has various tariffs, sometimes sanctions, now negotiations. So he has proven to be a tough, canny, widely negotiator, and that is his style.

I believe he wrote a book on the art of the deal, and you probably read it. I read it, and I don't want to predict what his moves will be. He will have the best information that our trade principal team gets him, and he will sit down and think

things through. I do not want to forecast that, but I think we've all learned that if he is not satisfied with these talks, just as he was not satisfied with the China talks last spring and summer, as you may recall, then he would not hesitate to increase terrence. He's shown that to us. I'm not saying that's going

to happen. Please don't misunderstand. I'm just saying, in terms of your open and the question, he has proven to be a very tough and very widely negotiated and Larry, what we found is that when the president is face to face with someone, that is often when we can get a result. When it's the next round of face to face talks actually schedule full You mean with me, I'm with the United States, I'm with China, with the president,

with Ambassador Lighthouser, with Secretary Manu Chin. When can we get the US delegation together with a Chinese delegation and does that need to happen again before we get a phase one truce. Well, I don't know the answer to that. At the present time. No plans are on the table between the two leaders um regarding Secretary Munition and Ambassador Lightheuser. So far as I know, they have no plans to travel,

but but they might travel. You know. Bear in mind you that I don't want to emphasize this too much, but I want to put it into the mix. If if, if, if a discore you have an agreement, the two heads of state don't necessarily have to sign it, or at least simultaneously in the same room. You could begin the signing process at the ministry a real level which I think on our side would be Lightheiser and Volution, I

presume on their side. Vice Premier leu Hey, you could do it as a ministerial matter, you could do it as a presidential matter, or you can do both. So there's options there. I feel I can say to you directly, none of those decisions have been made. And to quote President Trump, let's get a deal first and then we'll

figure out how, when, where we all do the signing. So, Larry, I understand your people would like us to wrap up this interview in if I'm allowed, I'd love to ask you just one final question, and it's a delicate one, So forgive me for going care. The administration, as you point out, and I've agreed with you, has done a fantastic job of putting real pressure on China to highlight i P theft, to highlight the issues around Falce technology

transfer as well. You've changed the dialogue around those issues. But there there are serious, serious allegations of human rights abuses taking place in the country. Why is this a country to the United States wants to do a treat deal with Well, okay, interstant question, John Um. We have made it very clear President Trump, Secretary State Pompeo, Mr. Manutian, myself and others. We have made it very clear that we America always stand on the side of freedom and democracy.

We have made that clear. We will that is in our bones, that is in America's DNA, that is who we are, and we will continue to make that clear. That includes not only the Hong Kong story, but as you know, disturbances and disruptions on the Chinese mainland with various groups as well. Having said that, having said that, I don't think those issues are interfering with the trade talks. You know, these are complicated relationships. You've got two big powers.

A lot goes on. There's national security issues which you and I could bring up. That's another point. There is the human rights, freedom of democracy issues. That's a key point, religious freedom particularly, but also political freedom. Uh. Then we have the trade freedoms. We're looking to get trade freedoms

from China. So I don't think at this stage, and I'm pretty confident about this, that the difficulties in Hong Kong, and again we have come out on the side of the freedom fighters, those have not spilled over into the trade talks. So the complexity of the issue you can still separate one from the other. And I think it's fair to say, and I've spoken to the masterd Lightiser about this, uh misdimnution, is that really the the difficulties

in Hong Kong. We signed the Congressional resolution, they had their local elections which were a gigantic victory from freedom of democracy, but that never really spilled over into the trade talks. I think that's where that stands right now. But please make no mistake about where America's heart is, where our basic soul and DNA are on freedom and democracy, and of course where our diplomacy has made the same

very clear, Larry, I appreciate that authenticity. To wrap up this particular interview, Larry, if we don't get to talk again before the end of the year, I just wanted to take the opportunity to say thank you for your regular contributions to to the network into the program, have

a wonderful Christmas, Larry. If you and I don't get to talk again, and saying to you right back at you, Johns And it's been my great pleasure, Larry Cudler that the National Economic Council director from the White House, guys, thank you, Thanks for listening to the Bloomberg Surveillance podcast, Subscribe and listen to interviews on Apple, pud cast, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane before the podcast. You can always catch us worldwide.

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