Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at seven am Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
We are honored at this moment of a view of the American labor economy. You've speak to Claudia Sam with all of our affiliations with Michigan, whether the definitive de Sam rule, We're thrilled she could join us today. From New Century Advisors, I'm looking at this report. First of all, mister Myron looks pretty good here on his path to six rate cuts. Very simply, the revision is a negative seventy six thousand. That is a negative twenty six thousand
combined statistic the three months moving average. Thank you Scott and in our team Vince gollin Off for this the three months moving average change. Paul, look at that negative twenty two thousand exactly.
Claudia saw, I'm here joining us still chief economist and New Century Advisors.
Quick read from you, Claudia on some of.
These numbers, I mean, I don't know the unemployment rate tick down to four point four percent.
Yeah, no, that is very encouraging.
I mean, we've seen the unemployment rate moving up since the middle of the year. There were some reasons to think that maybe the November number, the four point six percent, was somewhat elevated with the government shutdown ending, and so it is reassuring to see some of that come back off.
But it has risen over the course of the year. That is problematic.
And then you know, you do point to these payroll numbers are really weak, and next month we're going to get the annual revisions in which we know is going to take a good chunk out of over the last year. So we do have this very slow job creation unemployment rates rising. It's not it is very reassuring to see this steady march and the unemployment rate kind of take a little bit of edge off. But you know, we're
not all clear here. This is not this is a very confusing and risky, potentially risky picture.
Doctor. Someone just right where I wanted to go. We're at Jackson Hole.
She and I are looking out over, you know, through the big window in the mountains in the backcheon and she's so delicate. She says, hey, stupid, it's about the revision report in February, Claudia Simon, I mean, with futures of fifteen year folks, a nice lift to the market.
Claudia Sam this revision coming up.
You and Anna Wong have really really emphasized what do you glean from the new BLS about what that big revision in thirty days is going to tell us?
Right? Well, I think you know we've I mean, there's going to be a large downward revision in the prior year. So we've had, you know, we just haven't had a lot of job creation. Now the again, the unemployed rate has been rising, not dramatically, so there has been in the payrolls. There has been kind of a slowing supply of labor and a slowing demand of labor. The slowing demand is winning out. The unemployer rate is coming up.
But the big sure looks much more ominous.
If you only look at payrolls, And maybe it doesn't look ominous enough if we only look at the unplayer rate. Like you got to kind of put all the pieces together, but it's it's certainly a concern and a risk, and
this is exactly what the FED was responding to. I mean, they cut rate seventy five basis points last year with inflation outivated on concerns about where So this is also validating I think FED as a hole, like they are moving on concerns about the labor market and it's we are seeing it in the data.
Okay, but Governor Sam see how I'm like, I'm running the next job for governor some If you look at the three rate cuts in all, it's a nonlinear function. I mean, when does a twenty five beat rate cut kick in to advance that demand for jobs to get job formation going again?
Right?
Well, I think this is where the FED really took the view of front loading these cuts on concerns about where the labor market might go that do that really raises the bar for them to do more cuts in January. It's kind of like they took an effort there and takes time for that to work its way through the economy.
They're looking out at seeing some fiscal policy.
That should come online that should be somewhat supportive early in this year, Like we have the ingredients here to stabilize labor market, get hiring, you know, back on track. But we don't really have many signs of that happening yet, but the Fed has kind of done their work, and I think they're going to want to see.
How this plays out, you know, keeping a care fly on it.
But the fact that we saw the unemployment rate take down that gives them some breathing room.
We continue with Claudia's futures advance up fourteen fifteen, now up twenty one, a bid into the market and down features up one point thirty. Oh and I don't have a fifty thousand on futures print right now in now, but it's remarkable where they're The vix comes in constructively fifteen point twenty three.
The Sweeny yield was shock the unched here.
I wonder if that's a typo on the Bloomberg but a little bit higher yield structure. I noticed dollar strength as well. Oil on Venezuela really not doing much today. Gold you're kidding me, Paul, up thirty six dollars and you're forty five hundred ounce Sweeney with car with Claudia.
Sam Claudia. Let's look at the wage side here.
Average hourly earnings on a year on year basis up three point eight percent. That's consensus. That's pretty solid. Consensus was three point six. The revised last period was up a little bit to three point six. So three point eight percent earnings growth? What do you make of that?
So, I mean that is a I mean that's a bump up on Yes, that's above expectations. I think it'll be you know, always kind of concerned about one month and looking at composition, but you know that we've seen big picture, We've seen moderation and wage growth, but it
has been very gradual right over time. So that does you know, fit within the you know, wage grows still and this is still elevated, which does fit with I mean productivity is higher too, So I don't think this is a number that would necessarily cause concern about you know, spillovers to inflation, but it is, you know, something to keep an eye on.
So what I mean, you've alluded to this, But to you, is the January meeting now a big We got CPI, but it's January meeting now a bigger deal? Or is Claudia sam out to March and beyond?
Well, every every meeting is a live meeting.
But I to me this they really put effort into getting the rate cuts done last year, putting together even though there were questions, abou.
Should we way for more data? Is it really necessary?
I think this front loading, which is a smart thing because the policy takes a while to take effect, so I think to get that done, there's probably going to be a we want to, you know, really assess the situation. So I don't I don't see them having their urgency with January, particularly with this report.
Today.
Claudia sam with us and we continue commercial free in this hour. Michael McGee coming up. Christina CAMMANI comes in the studio and drops everything. She dropped Lisa's breakfast. I mean we'll get to her in a moment.
With Invesco as well. We're going to continue with doctor some Paul. We continue with the bid moving up, futures up twenty.
Four, absolutely laudy.
We're gonna get some inflation data coming up soon here just on the other mandate for this FED kind of what are you looking for there?
Yeah, we had the last inflation reading we have with the CPI was very distorted by all the disruptions from missing a month of data basically with inflation. So I think next week is just seeing how much of those distortions shake their way out and to get a little bit cleaner read on inflation.
I think today with employment, we.
Probably shook out a lot of any of the distortions from the government shutdown on the employment data. I don't think we're going to get fully back to normal in terms of CPI with next week's report, but I think that's just getting something back to a more normal reading, which you know is inflation is still elevated, and then
trying to peace out. Are there any signs, like real signs, not some measurement quirk, but real signs of inflation turning the corner and really making you know, pointing towards two percent. I think, you know, we're not going to get any like super clarity on Monday, but hopefully we'll clear out some of the distortions.
Oh, I just moved it ahead. The tweets are coming out. I mean, everybody's working on Twitter and LinkedIn now to get an immediate message in vesco does that is well? CLAUDIUSA just you know, is the analysis comes out here, What is the efficacy of taking a three month moving average or taking three months of shut down and non shut down data and annualizing that.
Is that a good University of Michigan experiment.
Yeah, well, I have to say, I mean, you know, with my recession indicator, I need a three month average at the unemployment rate. I can't even take the app like October doesn't exist, right, So I mean we're in a moment and we've had more distortions in the data.
So just and it's a moment.
Where you take these averages because you're trying to smooth out just some of the noise that comes from trying to measure a thirty trillion dollar economy. And you know, we're just it's been hard to even do that exercise. So I continue to you know, that is the way to think about this, Like you want to smooth out and you also want to step back and look at
trends not just over three months. Like to me, the fact that we've had an unemployment rate rising gradually over two and a half years by a percentage point, I mean, like you got to like look at the big picture too.
Claudia, thank you so much, just really really really valuable. Her labor share of the economy is jaw dropping. I can't say enough about it. I'll effort that chart out on Twitter and LinkedIn stealing it from doctor Some. She's chief economist New Century Advisors.
Stay with us.
More from Bloomberg Surveillance coming up after this.
You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Applecarplay and Android Atto with the Bloomberg Business app, or watch us live on YouTube.
Christina camp Many Joints is here, Senior portfolio Manager, Global Debt at Invesco. Here, Christina, you see a labor number here today that if you just look at the you know, the headline unemployment rate, it seems like the labor market's okay. Does that lend you to believe that the FED may wait a little bit, give them some confidence to wait a little bit?
I think, morning, and thank you again for having me. And I dropped all my thanks because I was so excited to log into the terminal.
And see what the data was.
You could come back, but I think I think we may be back to a FED sitting on their hands mode and trying to decipher through the data. And again we're still like, these are all noisy numbers. You're like, oh, great headlines fifty. Well, revisions is minus seventy six, but the unemployment rates better, and I think the FED will probably be most focused and comforted by the unemployment rate.
And the market's not really pricing much for the FED really until we get the new chair in June, so I think that that kind of remains our base case for the FED.
Here.
So twenty twenty five for the bond investors a really good year. The AD was up seven percent something along those lines. In twenty twenty six, Am I just clip clipping coupons? Is that how I should think about fixed income?
Look, I think that there's still absolutely an opportunity in fixed income. I think the same pounding the table that we've had for the last year, that there is, especially in this environment, and opportunity for global fixed income when you take a step back, and that doesn't mean not the US, it means including the rest of the world,
which I think investors typically do not do. But I think it's about I think curves should probably still steep in, but there's still some that gives you roll down opportunity, and there's value in the front end, and I think thinking about the long end of the market, we have to think about all these things back to the questions that we had at the beginning last year, what are the policy at the administration's policy objectives going into midterms?
Like what are they trying to accomplish? And then what is the impacts on fundamentals? And I think there are so many moving pieces, but it's still about security and what's going on with like Trump seems to want cheaper oil and cheaper mortgage rates and those focuses, and then what do they mean to the market?
Future's up twenty six right now, there's a bid to the market, Christina out passed. Where your own power controls things, or maybe mister Myron controls things.
What does the spread.
You find most efficacious? Don't give me the vanilla two ten when you walk in the morning and tune into one of your three Bloomberg terminals, which is the spread that matters to you?
So lately we've been looking at two thirties and we laugh that in a lot of places, meaning across a lot of different markets, different regions, it's like the whole curve because we're in this dynamic that the front end offers value right in twos and the FED has done some work and seems to be kind of patient for now, but it feels like the bar or whatever forward FED that we have to hike is very very high, and depending on who we get with the next FED chair,
the bar could be differing in terms of how quick we are to ease. So that's the front end, and then I think because of all of these fiscal dynamics we're talking about increasing the defense budget, spending and all of these things, the long end matters even more so, like we really are zoomed out and looking at the entire curve and looking at two thirty sometimes and again it'll shift depending on what's going on and what we've priced.
But how do you think about in twenty twenty six is as you look ahead here US versus rest of the world, because boy, if you look at the stock market in twenty twenty five, as well as the US did, international markets did even better.
Yeah, how do you think about it? In the fixtion come world.
So again, we run global funds.
So twenty twenty five is an exciting year for US that there's finally some ability to step back. And again it doesn't mean that the US is not investable in a great place to invest, but look at all these opportunities elsewhere, and I think that still is the story in the underlying thesis, right, Like there is growth in the US and there are positive dynamics here, but a strong US is good for the rest of the world too. And I think that there are opportunities in foreign exchange
markets as a standalone. There are certainly across fixed income markets, and I think inequities again, like we're not equity managers our team, but I think that that global story is here to stay. And again, when you zoom out and you talk about dollar cycles or all these cycles, they're normally multi year, if not ten year cycles.
Off the radar is continental Europe. Goldman Sachs publishes today's Spend Your Spend and their EU team that Germany's just simply better than people expect. We've heard that from German banks as well. Is there a hidden value in larger developed EU that I haven't talked about in what, Paul three years.
So I'm not sure.
Again, it's hard to get super excited about, just like European Union across the board different countries because of how tight things are. But I think your first point is right that people you had a lot of excitement in Q one on the German defense spending and all of that. But whether you talk to people, certainly in continental Europe but here too, I think there's a lot of negativity and people just don't believe that Europe can ever get
out of its own way. And I think that there is more positive things happening there than is price or that people give credit to. I think so, I think so. I think we are at a point that you need to see some proof in the pudding. I think maybe equities has it more. I think the euro itself has different like there are different dynamics there and it's funding and it depends what goes on with central banks. But I think there is still opportunities there for sure.
You know, I think in twenty twenty five I heard more discussion about emerging markets and happened many years for sure.
Why is that and how do you guys think about it? Yeah, so.
We have a team that has a deep, long history of investing in emerging markets, but again last year was certainly a time that it got broad interest. I think for us we think about em that it's you have to think of it, that it can't just be a consistent allocation blindly because it is super volatile, but there are opportunities there. I think the places that stand out in particular are Brazil, Mexico, South Africa, Aruba.
I don't know about Aruba, but you know.
I heard.
I heard we were supposed to go to Aruba hot for our first baby moon. I got canceled back on twenty sixteenth, so I've never looked, but I think those markets you have Steve curves high real yields, there are opportunities both in rates and in FX, and we are we are involved in those Christians and you.
Thank you so much.
I really really appreciate Senior portfolio manager and Vesco stay with us. More from Bloomberg Surveillance coming up after this.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
He is Magnificent.
The essay at High Frequency Economics is a yield based analysis of the economy. It is what Karl Weinberg did at Lehman Brothers for decades, and it was just thrilled that he could join us here this morning.
Karl.
I love your research note and that you say the labor market's going to hover, but GDP may be light. Link the two together into the first part of twenty twenty six.
Hi, Tom, good morning. Thanks for having me back on the show. It's been a while.
You know.
We're at full employment.
That's my assessment anyhow, others might not agree with that. But even at a four and a half percent unemployment rate, which I think, by the way, is going to go down in this morning's report, and we'll get a revision downward to the figure that we saw for in November. But when we're at full employment like this, all right, the economy has trouble growing. The only way it can grow is either by immigration or getting more people in
the labor force, or by increasing productivity. So productivity was really strong in the third quarter. The economy grew well, but there's no promise that those productivity gains are going to continue into the fourth quarter. So GDP growth may be capped, if you will, by the economy being at full employment right now.
I really I'm more focused folks on the SAGI GDP outlook of selected economists. Mister Myron wants six rate cuts one and a half percent, down, down down.
Is that a Carl Weinberg theme.
Absolutely not. I think Myron is wrong. I think he's abusing and misinterpreting the tailor rule and the estimates and the importance of our star within the tailor rule. Our star certainly has come down, but potential GDP has also come down, potential GDP growth. So when you put the two together, there's no recommendation from the tailor rule or anything that I know about economics for the Fed to continue to cut rates with the economy at full employment.
This is Kerl Weinberg and Michael Faroli at JP Morgan this phrase potential GDP. None of these people within the Trump administration talk about. It's like they're blanked Carl.
The focus obviously today will be on the labor market. But the other side of the Fed mandate is inflation. What's your inflation view. Are you concerned that we may see stick your inflation, that maybe the market's discounting.
I'm concerned about more inflation as twenty twenty six progresses, because if the economy continues to grow, but it can't find the work to make it grow. Then we'll have too much income chasing too few goods, and that will put upward pressure on prices. Once again. To me, that's what the FED should be thinking about. To my clients, that's not what the FED is thinking about. But in my view, that's what the FED should be thinking about.
So given that backdrop, how do you expect the FED to behave this year? Is it one cut, two cuts? Do they need to be more aggressive less aggressive?
I don't know.
I mean, that's really a big question we have. First of all, we have four new voters on the FOMC. We've lost both of the voters who dissented from previous rate cuts, and at least two of the new people coming on board may be more inclined to ease rather than to hold steady. Even as soon as the next meeting against that FED share, Powell still commands probably three votes on the FOMC out of the twelve. And that's the swing, if you will, between those who will ease
and those will settle. So I don't really know where they're going to go on this, but what I'm hoping to see as we move through the year is a change in the perception that payrolls are slowing because the economy is weak. That's where the FED is right now to payrolls are slowing because the labor market is tight and there just aren't enough workers to hire to keep payrolls growing quickly.
Carl, we got some time left here. I want to get you on much more in twenty twenty six. You should see.
Where he lives.
I mean, I took the Nash Rambler once.
Yeah, I had to put you know, the chains on it in I'll enter to get up.
Okay, it's up the toconomy. You know it's it's like God's country. Yes, sure, it's beautiful.
Carl in your note And I got any ways to go your Carl, but I got to go to your legendary reputation on the Pacific rim and on crisis. Do you are your radar up in twenty twenty six for China or other currency or debt upsets.
I'm upset for I'm on the alert for a lot of things coming from China this year that we've never seen before. If you read the IEA's Critical Critical Critical Minerals Outlook, I believe is the proper name of it. Okay, China sits at the root of every supply chain for every critical material for every Western economy, no exceptions to that. So all right, this is a weapon that G tested with rare earths last year that he's testing right now
again with Japan. And G has things that he wants and I think he's going to asking for them with Lee Ridge. I think that's the risk for China in the new year.
Carl, not enough time, Thank you so much, Carl Weinberg with this high frequency economics, just definitive research report.
Stay with us.
More from Bloomberg Surveillance coming up after this.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Apple cor Play 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.
The Newspapers with Lisa Matteo. Good morning.
All right, I have a question for you, which do you think has the priceiest homes?
We're talking Aspen versus Palm Beach. Okay, this is it. Do you go mountains or do you go, I'm going to Aspen in March. Okay, yeah, we get back from a room.
You only go places that are letter.
A yes exactly either of this year. And I'll tell you what we got. The quote from our guy and our group. He always gets the condo force noticeably higher than where we usually do, which we got to Park City in Vale and Tahoe noticeably more expensive, and Aspen this year.
Okay, so lots of answer and answer. Okay, so here here's the reasoning behind us. So the Wall Street Journal kind of did this look into both. So Aspen the data shows thirty four deals above twenty million last year, up one hundred in sixty one percent from twenty twenty four. So if you compare the price, right, you look at the medium single family home price and Aspen about fourteen million during twenty twenty five, the third quarter.
Nine million in Palm Beach.
But then you have the tax factor too, right, Florida is the tax haven, so they have that advantage. Carlado has like a four point four percent state income tax. But then you have to take into consideration the insurance factor too, where Florida it's much higher, So you kind of have to weigh all these factors and figure out which is chosen for the plan.
I'm I like the sunshine. I don't know, but I'm a mountain girls. Stop.
Is there anyone in Palm Beach who doesn't do pilates?
Probably not?
Probably central part. Okay, Wearable health trackers yes, Okay, so popular.
Okay, this is great, this is a great story. It's on the terminal.
You have the or ring, right, the Apple Watch, garment devices, fitbits, all this stuff that can track you. Experts are saying, you know what, they can provide some great health information like your sleep status.
And all this stuff sleeps. But there is a butt to it. Now.
They're saying data overload is causing people anxiety. So they're starting to get anxious, like they always think maybe something's wrong with them or or maybe they're sick, or maybe they're doing this, or maybe something's wrong. So that's kind of the downside of it.
They're saying.
With some of these wearable.
Trackers, everybody's wearing those rings. They have the people come and sit next to me in this studio. They've got the ring and they have the ring. I know the or ring side.
I'm so out of it.
We have to get you on, and that's what we'll do. We'll get an oral ring for Tom he is.
You can see it if you're watching on YouTube.
Is there, it is so and its everything. Point them out. I'll shame these people from.
Afterthoughts Visaya exactly.
That's what we need.
It's a great, great tool, but it can make you a little bit, you know.
Okay, you save yourself.
This is a good one because you know I have Paul going off to Aruba. So I'm gonna set the scene before I get to this story.
Okay, hit it Ken wasting mar we Go Fall.
Okay, there's a reason why I'm playing this. It's because Jimmy Buffett's old recording studio is wasting away in Margaritaville. Okay, it's causing some controversy.
So here it is. It's over in Key West, right.
It's this worn out bunker building, no windows, but Jimmy Buffett.
Record a dozen violins there, right, So many famous names came through there.
But since he died in twenty twenty three, it's become this controversy because they're deciding what to do with it.
So they bring this proposal.
They're asking people for their proposals on what to do with it, and some people are saying, you know what, they want to turn into a bar. But some people are saying, you know what, No, it should be like a museum or like a place.
Keep it as a studio. It's a piece of history.
Huge deal.
Is the Chateau of Elton John outside Paris is in massive disrepair. They're trying to figure out what to do with that. There's the whole Montester at Caribbean thing. Yes, same thing, Georgia Martin. It's all in disrepair. So that was very good. She saved herself.
Jimmy Buffet always do you have flip flops today?
But I got the flips flops ready. That's the only show I'm bringing down.
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 Easter and 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