Surveillance: Gross Says Job Report Won't Bar Fed Rate Increase

and of course, on the Bloomberg Michael. I know it's job today. I believe we have a few guests qualified to talk about the unemployment rate, labor participation, maybe even someone qualified to talk about wage growth. That would be Alan Cruer from Princeton University, who is the former Chief Economists at the Labor Department of the Treasury Department and the Chairman of the Council of Economic Advisors. I just

can't hold a job. I don't know what his problem is, but all is with this as always on Job's Day. Let me just mention Tom before we get started with Alan, that the consensus forecasts are for one and seventy two thousand jobs to have been created in the month of September, and interestingly enough, that is bang on the six month average three thousand, So a number today that meets consensus would probably uh not lead to a whole lot of

additional trading. Four nine is the forecast for unemployment. But Alan, as Tom touched on, the one change that you do see in the forecast is a significant increase in average hourly earnings. Uh. The question is is this going to be a statistical fluke or are we really seeing wages rise because we're running out of workers the old Phillips curve. I think we are seeing the Phillips curve. I think

it's a gradually sloped Philip's curve. But over the past year, we have seen wages pick up both nominal and after adjusting for inflation UM, which is encouraging. I chose that we're continuing to dig our way out of the deep problems from the recession. The deep problems of the recession UM left us sort of flat and left us with this populist anger. We see rage wages rising fast enough

that it will affect people's view of the world. That's a very good question, Mike, and you look at the data that came out on we had the fastest growth in real median household income since the sense of Spiro started collecting the data. So I think it's clear that households are doing better, but they went through such a traumatic experience that I think it's going to take a while before people are feeling good about their economic situation. And when I look at the unimp ployment rate, people

drive low. Is it a constructive lower unemployment rate or is it a bad thing If the unemployment rate drops, well, I think it's a good thing. On on that, I think a tighter labor market will help to support wages. We saw inequality decline in mainly because of more job growth that year and higher wage growth, particularly for lower income families. UM. I think this recovery is not going to be the strongest one we've had, but it could

well be the longest. Alan Krueger is with this Princeton University economics professor, former chief economist at various government agencies, including the Labor Department. So here's a man who knows the labor economy. One of the issues in the presidential race has been the declining rate of labor force participation and why people are not in the labor force You've just done some new work on it, UM and oddly titled it, We'll have all the workers God? What have

you found? First of all, labor force participation has been declining since two thousands, so I find it somewhat curious that a lot of the people who are complaining about it now didn't start complaining about it until after President Obama was elected. UM. The main driver over the last decade of the decline in labor force participation has been the baby boom reaching retirement age, and the increase in

retirements just about equals decline in the participation rate. That said, there are some other trends that have been taking place for a long period of time. Prime age men have been reducing their labor force participation for the last fifty years, and one of the things I found is that if you look at that twelve percent of men fifty four who are not working, about half of them have a

serious health condition. And I think if we are too uh look for ways to increase the participation right, we need to deal with the health issues that are barrier to work for many many workers. I look at on Krueger on a job's day that I guess is a dead Job's Day because I'm told the November meeting is a dead meeting of the f O. M C is

a media animal. I refuse to succumb to that. Does a grizzled pro like you look at this as a dead report, you know, I think people tend to uh amplify the reports and other months, and in this month they're probably underplaying it. You know. The Job's report gives us the best picture of how the economy is doing in the short run, and at the same time, it's a volatile statistic. Like all of the statistics we get. What does it say about small business percolating? Is a yeah?

But which is everything's great? Yeah, but small business isn't there? What do you see there after a financial crisis. I think it's typically the case that small business struggles. That's who's dependent on bank financing. They have difficulty getting credit there homes are often under water, which is a source

of credit. So the longer that this recovery goes on, the likelier I think it is that small businesses will start to be able to get credit, that their credit records will improve, and that will be one reason why I think we can see this recovery go on for some time if we don't make policy mistakes. How how would you define a policy mistake? UM? When you have interest rates as low as they are, and when you have the FED promising to be as slow and cautious

as they have UM. The traditionally we think of a policy make mistake is the FED raising interest rates too quickly. Well, that has been a cause of most of our recessions. UM. On the other hand, you also have to worry about bubbles building up, which is a risk to the recovery.

And you have to worry about the potential election of a candidate who says he'll slap a forty five pers and tariff on China, potentially reneg on the full faith and credit of the US dollar, h deport millions of UH immigrants, all of those things I think would devastate the economy. I look at all and it's a terrific set of guests that we've got lined up. And there's an international feel to this report. I mean, fold in here the better American economy? How much better is it

than some of the other challenges around the world. The answers it gets wider and wider, doesn't it. Well, we certainly have a lot of problems, but I wouldn't trade all our problems for any other country's problems. I was just in Korea, actually flew back late last night, and Uh, they have a demographics tsunami that's about to hit them. They're going to go from the fourth youngest country in the O e c D to the oldest in the

matter of twenty five years. You look at the problems in Japan, which has never recovered from the recession in the early nineties. China has enormous challenge at ahead of it. Uh. Europe, Uh, the UK just go on and on, and our problems are solvable. If we have the political will to address them. Well that will be uh the question. Come January, when

we have a new Congress and a new president. We shall see Alan Krueger, thanks for Hobsdalen Krueger sitting in my chair in New York without a bow tie on. Actually he actually was not wearing a tie point and we moved him. He couldn't sit there. I knew I shouldn't have tweeted that picture. Tom Alan Krueger and Tom Kane. Um, this is a real pleasure and honor, folks. Peter Fisher is uh, someone who has served the nation at treasury. He has served a nation in academics, and he actually

served a nation doing finance in a small shop called Blackstone. Uh. He is right now, I would say, associated more with Tuck and Dartmouth uh than the other eight places he works. Peter, good morning. Um. I guess I could start up by saying have you ever seen anything like this? But let me get to the what Jack lewis looking at this morning,

the Secretary of the Treasury. I just did a fancy pants log extrapolation of sterling to one point to zero, and somewhere in the vicinity of the middle of November, we're going to enjoy a good old G seven currency depreciation. Can the United Kingdom work in a vacuum or there are there present in near future knock on effects of weaker sterling? Um, well, that they're they're bound to be. I think we can see the Brexit is hard to price other than in the exchange rate that we think

it slows the UK economy down. We think it makes the Bank of England tend towards the easier side of whatever they can pull off. And that's everything else is so uncertain about Brexit. We see the sort of anomaly driving Sterling lower and lower. Um Uh. Clearly they're gonna be knock on effects. Given the size of the UK economy, it still matters to us all and and it may

pick up the terms of trade. This may be what's annoying European leaders, even if they're not saying it that Sterling is benefiting from the depreciation they hoped the euro would get over the exactly years um. So it's about

to have those consequences. A little hard to see how it all shakes out, but yeah, and yakulm Fell's moments ago, folks on surveillance talking about eurostability or even strength flows Peter Fisher, Uh, this redounds back onto a United States and clearly day two here, folks of the I m F meetings, the idea is the US, evermore, is stronger and better and in good shape compared to so many other nations and regional systems. Do you agree, Peter, Yes, I mean it's we wish we'd had more of an

acceleration in this recovery. We wish we were doing better in some terms, but we're going pretty well, especially compared with the rest of the world. Just looking at UM the level of our unemployment, level of GDP both it's disappointing, but it's better than the neighborhood. Absolutely, Peter, when we look at job's day coming up, and I guess we'll focus on that within the hour. And this is something you're quite good at. There's a macro economic system of

one view of a nation. John Edwards among others started talking about two America's do you is I'm going to call you a non macro expert, but yet with great micro realities. Do you look at America is a two system job economy or can you really blend it all in as we did for decades and decades? No, I I think we know UM our labor market is fractured, or we have a decline in the participation rate. We've

got the discouraged UH, middle age and working age. I should a men who aren't participating in the labor force, UM that we should all scratch our heads about that and think that that's that's a big challenge for us. UM. I think it's such a disappointment that this campaign has not focused on what we should be doing to really invigorate our our labor market structural reforms we should be undertaking.

We've been too much focused on the negative, if you will, of Secretary Clinton coined years ago, Years ago, folks, Senator Clinton coined an idea of fair trade. What is fair trade? To Peter Fisher, um well, I think fair trade says we think we should get our fair access to other markets and only give people fair access to our markets. I think that's putting the shoe on the wrong foot, if you will, I think we should be doing more

for people who are displaced by free trade. I think we should doing much much more to retrain those who lose their jobs, to provide adjustment assistance to those counties where we see the job lost from the benefits of trade. We know the benefits to trade flow to all of us but are hard to measure, and the costs of free trade are easy to identify. People who have lost their jobs feel it we should do much more for that. I don't think we should hold back on trade because

someone else isn't being fair to us. I think we should be fair to our own people. We should be fair to our workers and do much much more on the trade adjustment assistant side. Peter Fisher with his time for surveillance correction. I'm good at those. There will be many today. I believe I identified Mr Fisher with Blackstone, and I should have migrated over to black Rock. Is thank the place of former employment. Let's go to what

you used to do at black Rock. You'd wander in the door your leisurely day starting at nine am you'd wander over to the liquidity desk and say are we liquid? You rarely said are we solving? Peter? For sure, I've been linking the word trust into liquidity and there's some real questions about that within the banking system. How liquid are the European banks right now? Uh? Well, I I'm not close to the European banks or the trading market system as I used to be when I did it

full time. Um, I think they are liquid. I think they're running out of income. The constraint I think has coming on the other side. UM So, I don't think people are worried about You know that they can't pay their bills when they're due. But where they're worried about is the margin compression UM and and earnings power. And I think you see the rumblings out of the e c B about Uh, the system being over banks, Well, that's been true in Europe for thirty years. They're overbanked.

They've got too many banks. They should have once they've invented the euro they should have worked much harder on a rationalization consolidation of the banking system. So this is overdue, and that would be one way to try to deal with the earnings compression of the European banking system. I think that's where the constraint is. And this has been a theme folks of the meetings. Pure Moscovici was just wonderful yesterday on this profitability conundrum. Let me bring in

Michael McKee in New York with Peter Fisher. Michael, Peter, I guess a lot of the question that revolves around all of this is, uh, confidence, do we have confidence in the European banking system? But here as we see people come in and out of the labor forces, we see wages start to rise, do we have enough confidence to whether any kind of FED rate move, small FED rate move? Will people keep borrowing? Will people keep spending? If the FED does something that that would seem to

be the key question that surrounds all this. I don't think the Fed funds rate twenty five basic points higher. Is it really going to constrain anyone? UM, That's not what I think is is uh. I think the Fed is likely to confront pick up an inflation. I'm not very fussed about inflation, but most of the measures of inflation have already accelerated to two and higher. The Fed's preferred PCE measure is lacking. I think there's gonna be a catch up here, and I think that's gonna give

a little pressure to the long end of the yield curve. UM. I think today's employment report fits on the stronger side, will add to that pressure that well, yeah, if that's going to have to do something. But it's not about the next twenty five basis points. It's about whether the Fed will do one next year or three or four moves next year. That's what is going to hang in the balance over the next few months of economic data. Peter Fisher is with us right now lecture at the

Toch School of Business at Dartmouth College. Formerly the man who ran the open market operations for the Federal Reserve, worked at the Treasury Department, is under Secretary for Domestic Finance. And then I had a career at black Rock in the markets, and I want to go to the markets and their relationship to the FED. There's been, Peter a big question raised recently about whether or not the FED is and its policies are distorting anything in the markets.

How do you see it? If you were going to be producing for the next FED meeting, the market report that goes into the meeting, what would you be telling them? Uh, Well, they might be shocked to hear what I'll tell them. Um, we know the yield curve has been dragged down by the qui le policies in Japan and Europe. That is our long end. You can see it. It was coming down when the FED really wasn't doing anything over the last year. As the two attend spread tightened, that was

more of a tightening than the FED expected. That's one anomaly. But I think what I'd be telling the committee they might not want to hear is they've been targeting low level of volatility as if it is a third policy goal. Um. And so they've been that they are uncomfortable when asset prices jump around too much. Uh, it's it's like a third in addition to inflation and employment. UM. They get squeamish about volatility. UM. I think that's a big mistake.

I think it's a natural consequence of monetary policy doing its thing. UM. But you can see this very low level of all that that we've had UM that I think is creating the distortions. That's the most important one to improve, Mr Fisher a negative rates strategy. Do we need to disperse the effect of negative rates to a broader public nation to nation? Do we need to stop using negative rates and migrate back to the zero bound? What's the Peter Fisher calculus there? Well, I think negative

rates were a mistake. I think it UM. I think the Bank of Japan has not quite admitted it, but they're working their way out of them so that they've come up with an exit strategy from negative rates, and that's to manage their yield curve um negative rates. There are lots of fallacies that go into thinking that negative rates would work. One is that the human reaction function is linear, that if we lower rates from four to three percent, that all courage consumption. So if we lower

them from zero to minus one, that will encourage consumption. No, it looks like it encourages savings. Uh, we can see why negative rate might help you weaken your currency if you're trying to steal demand from your trading partners, um. But it doesn't look like it's going to encourage consumption, in part because banks aren't willing to pass it on. And so banks really face in Japan and Europe and in very deal curve already they have trouble passing on

the negative rates. So it's zero at the short end and then it's negative at the long end. That's terrible for the credit channel. So pretty much the Bank of Japan and ECB have acknowledged that it didn't help the credit channel. UM, so it really doesn't. It hasn't helped. So this is I think the most embarrassing thing for the central bankers is for the last eight years they've said they had to experiment, the economy was in difficult circumstances and it was up to them to be bold

and experiment. But they never can admit when their experiments don't work, the experimental method or choires that people acknowledge what the results were, and they've had a hard time doing that. Well, I can't I can't say enough Michael, the importance of this non linearity. This is a huge deal. We Uh, we do see evidence of what you're talking about, Peter here in the headlines. Just crossing now. Mario Draggy in Washington for the I m F meetings, giving a

speech behind closed doors, but the text released. Uh. Droggy saying that they will let que continue to run and he sees rates at current or lower levels for an extended period, repeats that they will use all instruments within their mandate if needed. Uh. And he at the same time says that low rates are hurting banks relying on maturity transformation. Um, so, yes, we're causing harm, but no,

we're not going to stop. Yeah. Well he I mean, at least in Japan, the Bank of Japan by by committing to try to manage their yield curve, they're going to try to have a great will exit. I think it's a very wise thing to do if you've made the mistake of negative rates, now you're trying to undo the damage. They want to control how fast the curve steepens. And that's one way of passing the football over to the Abbe government and fiscal policy. But Droggy doesn't have

that option. He doesn't have anyone to pass the football to Um on the fiscal side, and so he he's left Um, you know, spinning his wheels. I'm afraid it's it's very awkward for him. Peter Fisher. Let's leave it there. Thank you so much, very generous for you to be with us today with Tuck at Dartmouth College. Uh and of course with the service to the Treasury, the Treasury Department number of years ago. The who you put your

trust in matters. Investors have put their trust in independent registered investment advisors to the tune of four trillion dollars. Why they see their role is to serve, not sell. That's why Charles Schwab is committed to the success of a seven thousand independent financial advisors who passionately dedicate themselves to helping people achieve their financial goals. Learn more and find your independent advisor dot com. The question now is

how the treasury market trades all of this. We'd like to welcome to Bloomberg Radio and Television, Bill Gross of Janice Capital and Bill, you've seen the numbers at one commentator already out with the phrase, mech but does it matter? The question I put to Peter Fisher a minute ago does it matter to anybody except short term treasury traders

at this point? Yeah, I know. Thanks, So I don't know how you spell or but in any case, you know, pretty milk toast, you can you can spell that, and and pretty on the number in terms of what we're expecting the work week was, I guess, And as you mentioned, wage is a point two percent. So there's nothing much there to keep the FED from raising interest rates. And whether it's November or December, I'm not sure, but I

think at some point they have to. I mean, the central banks tend to be a little weak need at the moment, including the FED. They've talked tough and stressed data dependence and here we are. But you know, they've only been three Hawks willing to back up their words with the dissension at the last month's vote. And so I I think that there's the important thing. I think, like, I think the growing outcry from financial institutions about negative

interest rates are starting to have some effect. Boston's Rosen Grin as the most recent example, he's sort of done. And in addition to b O G and the ECB maybe running out of bonds, Dubai, so their policies might shift to a little less devilish and a little more price bullish. Bill Gross, good morning from Washington and the meetings of the International's on Terry fun You're terribly missed here. Everybody wants to know what you're gonna do with the marginal?

Janis uh move? What I would note, Bill, and I've never seen this the conflation of non farm payrolls moving averages, the three months off the Bloomberg a hundred and ninety two thousand, the one year non farm payrolls average two hundred four thousand, and Bill, for the first time I took a presidential moving average of non farm payrolls, what a success, two hundred twelve thousand. I've never seen the

conflation in of the trend in job formation. Why are we so miserable if we're generating a good number of jobs every month? Well, that that's the the old question. I think they are coming down. I've got my moving averages to just like you, and they're they're right on the money in terms of what you just mentioned. So um, you know, they gradually coming down. That's what happens to

during your recovery. I think the unhappiness comes from from wages I think the unhappiness comes from the real nature of wages over fifteen year period of time. And I think ultimately that labor, uh, you know, it's beginning to to feel some Oh it's not necessarily some you know, a big porridge bowl full, but uh, you know, they're they're starting to feel that it's their turn and and so um. Yeah. It's it's been this long term trend of of capital versus labor and stock market versus wages.

And I think maybe not over the next election, but certainly over the next few years, we're going to see some type of shift in fiscal policy that advantages labor as opposed to business and capital. I don't want to make too much of this, of course, because it's it's one day trading, but when you look at the market reaction, not just to this number, but over the last couple of days, we do seem to be seeing people sell

treasuries around the world. The bond market in the U S tenure note yield one point having six and the two year at eighty five basis points. They've moved up since this may job support as we said, and Germany now three basis points. They've moved back into positive for their tenure. The Japanese tenure yield is higher. Is they're starting to be a change in bond market psychology about the inflation and other risk risks going forward. Well, and

I don't think inflation Mike. Perhaps you know, we're seeing inflation take up a little bit UH in the PC in the United States and certainly above the line elsewhere with the exception of Japan. But I do think that you know, Japan has changed the nature of the game to some extent quantitati vising they continue, but they have this fixed tenure, as you've mentioned, at zero percent, and I think when that happened, that's sort of put all

of the other bond markets in play. It It basically meant that, you know, the US treasury and guilt market and bund market didn't have to track jgbs one for one, but it it you know, push produced some type of marginal UH increase or possibility of increase um. You know that that allowed inflation to have some type of an effect, and that allowed the Fed to you know, to be able to go ahead in December and to raise rates.

So I think an analysis of what's going on with this fixed rate policy in one country which may spread to other countries. I think it's important and I think that's what did it in terms of the the two day taper tantrum and in Germany being that's that's another story. But yeah, central banks are starting to sort of move in another direction, and I think investors since it is that other direction. Bill Gross, the idea of a stronger dollar, and will it be a brutal move? I mean, we

can go any number of ways here. Yakham Fells was just on talking about a euro that is stabled. It won't strengthen. We've got the soare in Britain, in the United Kingdom. But Bill Gross, do you look for stronger dollars? And how you work day to day at Janice, Well,

that's what I'm seeing, you know. I would say a longer term and that's that's where I hang out tom As, you know, But I would say longer term that the you know, the recent trend in the dollar d x Y put them all or most of them together and look at the trend um. You know, it's certainly upward, not to its peak or its cyclical peak, but it's upward. And I would say that the world needs a weaker dollar,

not a stronger dollar. Um. You know, the dollar is the world's reserve currency, and when you think about it, to the extent that the world's reserve currency strengthens and uh and other countries currencies weekends, then you know that to me is a tightening type of effect. And it supposedly reflects it tightening in terms of higher yields in the US relative to to the ural Land, or to Japan or the UK, and some extent that's happened. Um, but I think it's a negative trend as certainly negative

trend for emerging markets. We're seeing in the Mexican pay so you know, down today again and and that's the leading emerging market currency. So to me, it's a tightening that the FED hasn't really initiated yet. They've only moved up once. But I don't think it are goes well for global economic growth. I think the world needs a weaker dollar. The story of the moment. The payrolls report for the month of September one or fifty six thousand

jobs were created, five unemployment. We are back now with Bill Gross of Janice Capital here on Bloomberg Radio, and we welcome everybody joining us on Bloomberg Television. Built before the break, you suggested that this number is enough to keep the FED in play. I don't know whether it was because you did your yoga or maybe you didn't watch the forty Niners game last night, but you seem very you seem very relaxed about that. Um, you don't seem upset at all that we're going to see an

interest rate rise. Well though, I think we will in December for sure, and maybe even in November. They've promised so much that at that at some point they've they've got to come out and do something or else there credibility is is really going to sink to a low point. So I think the Fed will raise interest rates, you know, Mike, I've I've been thinking that the Fed should raise interest rates for a long time, if only to provide for a more attractive savings rate in terms of not only

short term yields, but longer term yields. I think insurance companies and banks and pension funds are rather desperate for income, and the only way to do it really is to extend out in terms of risk, which probably isn't a good idea, or to extend out in duration, but duration provides nothing. So I think the FED will move. They're they're limited, they're cautious. They'll move perhaps once every nine

to twelve months, unless circum stance has changed significantly. But I think an upward move, a renormalization is at least appropriate at this time. Bill Gross, you made worldwide headlines a number of years ago by talking about ten years of financial repression. Stephen Major at HSBC really reaffirmed the Gross call the other day at one point three five ten year yield end of seventeen and particularly lower yields

for longer out to two thousand twenty one. Do you assume even if the FED brings up the short term of the curve, flat curve forever and the idea of financial repression for our viewers and listeners forever, Well, not forever is a long term, And you're baiting me with that one time, but yes, for a long time. And I think ro Golf and Reinhardt with their either ten years or twenty years or the biblical equivalent of seven years of you know, feast and seven years of famine,

which would be financial repression. Uh. In terms of the lad um you know is something that has to be with us. I mean when you build up leverage, and the world built up leverage until two thousand and eight. And by the way, where you are Tom in Washington, the I m F has come out very strongly, you know, with not with the suggestion, but with the statistics that emerging markets and developed markets in the both in the sovereign and the private sector have increased their leverage significantly

since then. And so you know, because of that, because of this highly leveled world which I don't think we've ever experienced in this era of financialization, which could go back as far as fifty sixty seventy years, I don't think the central banks can afford to raise interest rich because a quarter or a half or one hundred basis points might might just break break the system. Bill, this

is critical you run an unconstrained fund. Buried in the green book of the I m F is a terse sentence about the damn it just the great distortion is doing to insurance companies. Two pensions to long term investible assets. Help us right now? Where is Bill Gross's actual real assumption on a blended sixty forty portfolio? Are you below

a four percent actuarial assumption. Well, you know that's hard. Um, you know, I've been around four four to five, and that would assume equities at the six to seven and bonds at two to three, and you mix them in some proportion. Let's just say fifty fifty, and that's where you get. But most pensrum funds, as you know, are at seven or seven plus. And uh, insurance companies you can't measure it that way, but their liabilities are significant

relative to what they've promised. And and ultimately tom uh you know mom and pop on Main Street. Uh, you know, we talk about companies and you know, the foundational support of capitalism, but actually, you know, mom and pop has

savers are the the support of capitalism going forward. And unless they can get something on their savings, they either save more, which sends the system into a mild reverse, or they you know, they take their money out of the bank and and not literally but figured it will be stuff in a mattress and that itself breaks down financialization. And so yeah, we're at a point where the system needs higher interest rates, but central bankers, you know, are

modeled on lower interest rates. And it will be an interesting challenge going forward, not just with monetary policy, but of course with fiscal policy and who's elected. Well, building on that in your most recent market commentary, you suggest that it is in your words, capitalism that's threatened by the ongoing strategies of the central banks because we're seeing inefficient allocation of capital relative to risk. Well, that's true. You know, the lower interest rates do keep a common

sensically zombie corporations alive. You know, that happened in Japan and has happened for twenty years. So that's a decent example. And let's just put some common sense into you know, some central bankers model to the extent that um risk is not proportionate to return, or put it the other way, return is not proportionate to risk. Then then investors and

businesses don't invest. You know, it's it's the margin, it's the NYM for banks, and it's the spread as Tom asked, in terms of uh, you know, longer term liabilities, and so it sort of freezes the system. Dalio talked about this week and he's talked about it for a long time,

about pushing on a string. That's the old metaphor. But basically that's the point where we're at, where investors and savers basically look at their options and UH and decide that they're not so attractive, and and capitalism blast point. Capitalism depends upon it depends upon the assumption of risk as opposed to UH no risk. And if if investors and savers and businesses are not willing to risk it a spread and an attractive spread, then capitalism itself starts

to at the margin, starts to turn inward. You mentioned the elections would be were missing asked not asking you whether or not the election is actually going to be a major investable event before or after November eight. Yeah, I think so, but I don't obviously I don't know who's going to win. I think there'll be one to three day type of reaction. But to be fair, I think that all countries, and of course you're talking about the United States, but there are elections elsewhere as well,

and their referendums in Italy and so on. Um, you know, everyone begins to speak now to infrastructure, and that's the easy word, that's the code word. That's something that you know, both parties can get behind. But it's more than infrastructure there.

What has to happen is a program to take care of individuals, displaced individuals in the workforce, and we see that obviously in many of the numbers today, and to the extent that you can't take care of either through increased social security or some type of benefits than the consumer, which is the ultimate driving force behind capitalism. That consumer, you know, can't simply get started. Bill, help us here with the idea of where we will be in our politics.

I know, you know, we'd love for you to predict the election, but we're not going to pin that on you right now. These are two candidates against trade. They want to wallop the borders in this way or that way. There's almost an isolation as tone to the entire election. Help us with that. We can't do business and finance with an isolation as tone can be. No, I agree with you and agree free trade. Free trade is beneficial, has been beneficial ever since Adam Smith in the Invisible

Hand came out with the theory. You know, most most economists, most investors, no common sensically that that's that's the case, and and and so free trade is a good thing. The problem, Tom, is that that society and governments haven't recognized the repercussions of free trade because free trade displaces workers.

You know, it produces imbalances between countries in terms of a growing workforce or or stable or shrinking labor force as in Japan, and so you know, governments have to address the hard work in terms of what do they do with displaced workers. Trade is wonderful for economies, and trade is wonderful for profits, and trade is wonderful for rising wages, But um, lots of people are not working.

Bill Gross, Janice Capital, thank you very much for joining us as always on Jobs Day in the United States, a hundred and fifty six thousand jobs creative five unemployment rank. This is Bloomberg. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane, Michael McKee is at Economy Before the podcast. You can

always catch us worldwide. I'm Bloomberg Radio. Who you put your trust in? Matters Investors have put their trust in independent registered investment advisors to the tune of four trillion dollars. Why learn more and find your independent advisor dot com